BPMN 3023 Strategic Management PDF

BPMN 3023 STRATEGIC MANAGEMENT CHAPTER 1: INTRODUCTION TO STRATEGIC MANAGEMENT 1  CHAPTER 1: INTRODUCTION TO STRATEGIC MANAGEMENT Students will be able to: 1) Explain the background and history of strategic management. 2) Define strategic management 3) Describe the strateg...

BPMN 3023 STRATEGIC MANAGEMENT CHAPTER 1: INTRODUCTION TO STRATEGIC MANAGEMENT 1  CHAPTER 1: INTRODUCTION TO STRATEGIC MANAGEMENT Students will be able to: 1) Explain the background and history of strategic management. 2) Define strategic management 3) Describe the strategic management process 4) Explain the strategic management model 5) Elaborate basic elements in strategic management which consist of vision, mission, objective, strategy, and policy. 2  HISTORY IN STRATEGIC MANAGEMENT Strategic management originated in the 1950s and 60s. The most influential pioneers of strategic management : 01 02 03 04 Alfred Chandler Philip Selznick Igor Ansoff (1965) Peter E. Drucker (1962) – (1957) - - developed the (1954) - introduced developed the concept of “gap developed the Strategy and idea of matching analysis” - to concept of Structure - a long- an organization’s understand the management by term coordinated internal factors gap between objectives (MBO). strategy was with external where we are necessary to give environmental presently and a company circumstances. where we would structure, like to be. direction, and 3 HISTORY IN STRATEGIC MANAGEMENT : PHASES OF STRATEGIC MANAGEMENT Phase 1: Basic financial planning Phase 2: Forecast- based planning Phase 3: Externally oriented strategic planning Phase 4: Strategic management 4 5  STRATEGIC MANAGEMENT VS STRATEGY Strategic Management  a set of managerial decisions and actions that determines the long-run performance of a corporation Strategy A company’s strategy is the set of actions its managers take to outperform its competitors and achieve superior profitability. 6  WHAT IS STRATEGY? The strategy involves choosing how to compete. How to create products or services that attract and please customers. How to position the company in its industry. How to develop and deploy resources to build valuable competitive capabilities. How each functional piece of the business (R&D, supply chain activities, production, sales and marketing, distribution, finance, and human resources) will be operated. How to achieve the firm’s performance targets WHY STRATEGY EVOLVES OVER TIME A strategy changes over time due to: Unexpected moves of competitors Shifting buyer needs and preferences Emerging market opportunities Managers’ new ideas for improving the strategy Mounting evidence strategy is not working well A strategy evolves: Incremental (minor) adjustments or dramatic (major) shifts Proactively and adaptively A COMPANY’S STRATEGY IS A BLEND OF PLANNED INITIATIVES AND UNPLANNED REACTIVE ADJUSTMENTS A company’s realized strategy is a combination of deliberate planned elements and unplanned emergent elements. Some components of a company’s deliberate strategy will fail in the marketplace and become  Strategic Management process includes: Internal and external environment scanning Strategy formulation STRATEGI Strategy implementation C Evaluation and Control MANAGE MENT PROCESS 10 BASIC MODEL OF STRATEGIC MANAGEMENT Strategic management consists of four basic elements: Environmental scanning Strategy formulation Strategy implementation Evaluation and control 11 STRATEGIC MANAGEMENT MODEL 12 BASIC MODEL OF STRATEGIC MANAGEMENT 1. Environmental Scanning  the monitoring, evaluating and disseminating of information from the external and internal environments to key people within the organization  SWOT analysis 13  Describes what the organization would BASIC MODEL Visi on like to become OF STRATEGIC MANAGEMENT Mis The purpose or reason for the 2. Strategy formulation sio organization’s existence  process of investigation, n analysis and decision- making that provides the Obj The end results of planned activity ect company with the criteria ive for attaining a s competitive advantage A comprehensive master approach that  includes Str states how the corporation will achieve its defining the ate mission and objectives competitive advantages gy of the business A broad guideline for decision making that (Strategy), crafting the links the formulation of a strategy with its corporate mission, Poli implementation cy specifying achievable objectives, and setting 14 STAGE 1: DEVELOPING A STRATEGIC VISION Vision is a picture of what the firm wants to be and, in broad terms, what it wants to achieve. Articulates the ideal description of A an vision statement: organization and gives shapes to its intended Tends to be relatively short and concise future Is developed by AnIs consistent effective and inspirational vision: Enlists the commitment of the C E O and with the Provides Makes the company Stretches and other top-level Evokes positive decisions and direction and organization’s case personnel to challenges managers, for “where we are support and engage in actions people employees, actions of those energizes going and why” excitement that move the suppliers, and involved with employees company in its customers developing it intended direction Conditions in the firm’s external environment and internal organization influence the forming of a vision statement. TABLE 2.2 CHARACTERISTICS OF EFFECTIVELY WORDED VISION STATEMENTS TYPE DESCRIPTION Graphic Paints a picture of the kind of company that management is trying to create and the market position(s) the company is striving to stake out. Directional Is forward looking; describes the strategic course that management has charted and the kinds of product-market- customer-technology changes that will help the company prepare for the future. Focused Is specific enough to provide managers with guidance in making decisions and allocating resources. Flexible Is not so focused that it makes it difficult for management to adjust to changing circumstances in markets, customer preferences, or technology. Feasible Is within the realm of what the company can reasonably expect to achieve. Desirable Indicates why the directional path makes good business sense. Easy to Is explainable in 5 to 10 minutes and, ideally, can be reduced to a communicate simple, memorable “slogan” TABLE 2.3 COMMON SHORTCOMINGS IN COMPANY VISION STATEMENTS Shortcomi Description ng Vague or Short on specifics about where the company is headed incomplet or what the e company is doing to prepare for the future. Not Doesn’t indicate whether or how management intends to forward alter the company’s current product-market-customer- looking technology focus. Too broad So all-inclusive that the company could head in most any direction, pursue most any opportunity, or enter most any business. Bland or Lacks the power to motivate company personnel or uninspirin inspire shareholder confidence about the company’s g direction. Not Provides no unique firm identity; could apply to firms in distinctive any of several industries (including rivals operating in the same market arena). Too reliant Doesn’t say anything specific about the company’s  EXPRESSING THE ESSENCE OF THE VISION IN A SLOGAN Disney To "create happiness by providing the finest in entertainment for people of all ages, everywhere" The Mayo Clinic The best care to every patient every day Greenpeace To halt environmental abuse and promote environmental solutions STAGE 2 : DEVELOP A MISSION STATEMENT A mission specifies the businesses in which the firm intends to compete and the customers it intends to serve. Is more concrete than a firm’s vision Should establish a firm’s individuality A mission: Should be inspiring and relevant to all stakeholders Deals more directly with product markets and customers Should be developed by the C E O, top-level managers, and other organizational members Has a higher probability of being effective when employees have a strong sense of ethics  STRATEGIC VISION VERSUS MISSION STATEMENT A strategic vision A firm’s mission concerns a firm’s statement focuses on future strategic its present business course— scope and purpose— “where we are “who we are, what we headed and our do, and why we are future focus.” here.” Markets to be Current product and pursued service offerings Future product, Customer needs being market, customer served Exampleand technology Company identity focus vision and mission https://www.uum.edu.my/about/overview/vision- statement of mission 2. DEVELOPING A COMPANY MISSION STATEMENT Ideally, a company mission statement is sufficiently descriptive to: Identify the company’s products or services. Specify the buyer needs it seeks to satisfy. Specify the customer groups or markets it is endeavoring to serve. Specify its approach to pleasing customers. Give the company its own identity. EXAMPLES OF MISSION STATEMENTS “to assure the safety and health of America’s workers by setting and enforcing standards; providing training, outreach, and education; establishing partnerships; and encouraging continual improvement in workplace safety and health.” To help people and businesses throughout the world realize their full potential. To organize the world’s information and make it universally accessible and useful. 2–22 2. DEVELOPING A MISSION STATEMENT- COMPONENTS OF A MISSION STATEMENT 1. Customers - Who are the firm’s customers? 2. Products or services - What are the firm’s major products or services? 3. Markets - Geographically, where does the firm compete? 4. Technology - Is the firm technologically current? 5. Concern for survival, growth, and profitability - Is the firm committed to growth and financial soundness? 23. 2. DEVELOPING A MISSION STATEMENT- COMPONENTS OF A MISSION STATEMENT 6. Philosophy - What are the basic beliefs, values, aspirations, and ethical priorities of the firm? 7. Self-concept - What is the firm’s distinctive competence or major competitive advantage? 8. Concern for public image - Is the firm responsive to social, community, and environmental concerns? 9. Concern for employees - Are employees a valuable asset of the firm 24. STRATEGIC MISSION, VISION AND PROFIT Occasionally, companies state that their mission is to simply earn a profit. Profit is more correctly an objective and a result of what a firm does. Profit is the obvious intent of every commercial enterprise. Profit is not “who we are and what we do.”  LINKING THE STRATEGIC VISION AND MISSION WITH COMPANY VALUES Values Fair treatment Provide guidance Honor and for desired integrity actions and Ethical behavior behaviors of Innovativeness employees as Teamwork they conduct the company’s A passion for business excellence Social responsibility Community citizenship STAGE 3: SETTING OBJECTIVES Managerial Purpose in Setting Objectives To convert the strategic vision into specific performance targets To create yardsticks to track progress and measure performanceValuable Objectives Managerially Are well-stated (clearly worded) Are challenging, yet achievable such that they stretch the organization to perform at its full potential Are quantifiable (measurable) Contain a specific deadline for achievement STAGE 3: SETTING OBJECTIVES What Kinds of Objectives to Set Financial objectives Communicate management’s targets for financial performance Are lagging indicators reflecting the results of past decisions and organizational activities Relate to revenue growth, profitability, and return on investment Strategic objectives Are related to a firm’s marketing standing and competitive vitality Are leading indicators of a firm’s future financial performance and business prospects If achieved, indicate that a firm’s future financial performance will be better than its current or past performance THE BALANCED SCORECARD APPROACH TO PERFORMANCE MEASUREMENT Financial Objectives Strategic Objectives An x percent increase Win an x percent market share in annual revenues Achieve customer satisfaction rates of x Annual increases in earnings per share percent of x percent Achieve a customer retention rate of x An x percent return on capital percent employed (ROCE) or shareholder Acquire x number of new customers investment (ROE) Introduce x number of new products in the Bond and credit ratings of x next three years Internal cash flows of Reduce product development times to x x to fund new capital investment months Increase the percentage of sales coming from new products to x percent Improve information systems capabilities to give frontline managers defect information in x minutes  SHORT-TERM AND LONG-TERM OBJECTIVES Short-term Long-term Objectives Objectives Are targets to be Are targets to be achieved soon achieved within 3 to 5 Represent milestones years or stair steps for reaching long-range performance STAGE 4 : FORMULATE A STRATEGY Strategy  forms a comprehensive master approach that states how the corporation will achieve its mission and objectives  maximizes competitive advantage and minimizes competitive disadvantage  corporate, business, functional 31 STAGE 5: SET A COMPANY POLICY Policy  a broad guideline for decision-making that links the formulation of a strategy with its implementation 32  BASIC MODEL Program OF STRATEGIC MANAGEMENT  3. STRATEGY IMPLEMENTATION  Strategy Implementation is a process by which Budget strategies and policies are put into action through the development of programs, budgets and procedures Procedures 33  BASIC MODEL OF STRATEGIC MANAGEMENT Performance  3. Evaluation and control the end result of organizational activities  Evaluation and Control includes the actual outcomes is a process in which of the strategic management corporate activities process and performance results are monitored so that actual Feedback/Learning process performance can be revise or correct decisions compared with desired performance based on performance 34  Clearer sense of strategic vision for the BENEFITS firm OF STRATEGI Sharper focus on what is strategically C important MANAGE Improved MENT understanding of a rapidly changing environment 35 IMPACT Globalization OF GLOBALI the integrated internationalization of SATION markets and corporations ON has changed the way STRATEGI modern corporations do C business MANAGE MENT 36  REFERENCES MAIN TEXT Bamford, C., Hoffman, A., Wheelen, T. & Hunger, J. (2024). Strategic Management and Business Policy: Globalization, Innovation and Sustainability. (16th ed.). New York: Pearson Dess, G.G., McNamara, G., Eisner, A.B. & Lee, Seung-Hyun (2021). Strategic Management: Text and Cases (10th ed.). New York: McGraw-Hill. David, F. R., David, F.R. & David, M.E. (2023). Strategic Management: A Competitive Advantage Approach, Concepts and Cases (17th ed.). New York: Pearson. Gamble, John, Thompson, Arthur A., & Peteraf, Margaret A (2014). Essentials of Strategic Management: The Quest for Competitive Advantage. (4th ed.). New York: McGraw-Hill. Hitt, M.A., Ireland, R.D. and Hoskisson, R.E. (2020). Strategic Management: Competitiveness & Globalization: Concepts and Cases (13th Ed.). Singapore:Cengage Learning Asia Pte Ltd Jones, Gareth R., & Hill, Charles W.L. (2013). Theory of Strategic Management (10th ed.). Stamford: South-Western, Cengage Learning. Rothaermel, Frank T. (2021). Strategic Management (4rd ed.). New York: McGraw-Hill Thompson, Arthur A., Peteraf, Margaret A., Gamble, John E., & Strickland, A.J. (2012). Crafting and Executing Strategy: Concepts and Cases. (18th ed.). New York: McGraw-Hill. Wheelen, T., Hunger, J., Hoffman, A. & Bamford, C. (2018). Strategic Management and Business Policy: Globalization, Innovation and Sustainability. (15th ed.). New York: Pearson. 37