Unit 1 Business Strategies PDF

STRATEGIC MANAGEMENT Unit 1 Dr. Shernaz F Muglai COURSE OUTLINE CANOE THEORY CANOE THEORY Think of your organization as a long canoe The canoe has a destination Everyone in the canoe has a seat and paddle Everyone is expected to paddle Those who won’t paddle have to get out of the can...

STRATEGIC MANAGEMENT Unit 1 Dr. Shernaz F Muglai COURSE OUTLINE CANOE THEORY CANOE THEORY Think of your organization as a long canoe The canoe has a destination Everyone in the canoe has a seat and paddle Everyone is expected to paddle Those who won’t paddle have to get out of the canoe Those who prevent others from paddling have to re-adjust or get out of the canoe There are no passengers in the canoe The canoe theory understands crisis The canoe theory says you have the right to be happy What is a Strategy ?  A strategy is a general plan or set of plans intended to achieve something, especially over a long period.* Strategy is the art of planning the best way to gain an advantage or achieve success, especially in war. Red Ocean vs. Blue Ocean Strategies  ‘The Art of War’: The greatest strategy book ever written | Roger Martin https://www.youtube.com/watch?v=g_tmTYznG3o Strategic Planning vs. Strategic Management Strategic planning is the approach used in forming an organization’s direction (e.g., its vision, mission and priorities). Strategic management is the overall process of achieving that direction, from planning to executing. Managing the action plans, projects and lifecycle of the strategic plan is crucial to accomplishing your business’s long-term priorities. Definition of Strategic Management​ Strategic management is defined as the dynamic process of formulation, implementation, evaluation and control of strategies to realize the organization's strategic intent.​ Levels at which Strategy operates Strategic Management Process Model of Strategic Management Process Strategic Intent Strategic intent envisions a desired leadership position and establishes the criterion the organisation will use to chart its progress. The concept also encompasses an active management process that includes: Focusing the organization's attention on the essence of winning Motivating people by communicating the value of the target Leaving room for individual and team contributions Sustaining enthusiasm by providing new operational definitions as circumstances change Resource allocation VISION El-Namaki considers it as a "mental perception of the kind of environment an individual, or an organization, aspires to create within a broad time horizon and the underlying conditions for the actualization of this perception”. The Benefits a Vision Good visions are inspiring and exhilarating. Visions represent a discontinuity, a step function and a jump ahead so that the company knows what it is to be. Good visions help in the creation of a common identity and a shared sense of purpose. Good visions are competitive, original and unique. They make sense in the marketplace as they are practical. Good vision foster risk taking and experimentation. Good vision fosters long-term thinking. Good visions represent integrity: they are truly genuine and can be used to the benefit of people. A Vision should be An organizational charter of core values and principles The ultimate source of our priorities, plans and goals A puller (not pusher) into the future A determination and publication of what makes us unique A declaration of independence A Vision should not be A ‘high concept’ statement, motto or literature or an advertising slogan A strategy or plan and a view from the top A history of our proud past A “soft” business issue Passionless Mission According to Thompson mission is the "essential purpose of the organization, concerning particularly why it is in existence, the nature of the business(es) it is in, and the customers it seeks to serve and satisfy". The essence of vision is forward-looking view of what an organization wishes to become, mission is what an organization is and why is exists. Mission Statement Ideally, a company mission statement: 1. Identifies the company’s product and/ or services 2. Specifies the buyer needs that the company seeds to satisfy and the customer groups or markets that it serves 3. Gives the company its own identity Distinction between a Strategic Vision and a Mission Statement A strategic vision portrays a company’s aspiration for its future (where we are going”) whereas a company’s mission describes the scope and the purpose of the present business (“who we are, what we do, and why we are here”). Business Model A business model could be defined as “the logic of the firm, the way it operates and how it creates value for its stakeholders.” The core dimensions of the business model (Gassmann et al., 2014) Dimensions of a Business Model Customer dimension Benefit dimension Value-added dimension Partner dimension Financial dimension COMPANY VALUES A company’s values are the beliefs traits and behavioral norms that company personnel are expected to display in conducting the companies business and pursuing its strategic vision and mission. Goals and Objectives Goals denote what an organisation hopes to accomplish in a future period of time. They represent the future state or outcome of effort put in now. Objectives are the ends that state specifically how the goals shall be achieved. They are concrete and specific in contrast to goals that are generalised. Role of Objectives Objectives define the organisation's relationship with its environment. Objectives help an organisation pursue its vision and mission. Objectives provide the basis for strategic decision-making. Objectives provide the standards for performance appraisal. Characteristics of Objectives Objectives should be understandable Objectives should be concrete and specific Objectives should be related to a time frame Objectives should be measurable and controllable Objectives should be challenging Different objectives should correlate with each other Objectives should be set within constraints  What Kind of Objectives to Set? Financial objectives - relate to financial performance target management Financial performance targets management has established for organisation to achieve, precisely in numbers, i.e. the cost, profits, the asset value. eg. X% increase in the annual revenues in the next year Increase stockholder shares every year for the next five years Strategic objectives - relate to target outcomes that indicate a company is strengthening its market standing, competitive position and future business prospects. Indicating a company is strengthening its Market standing, competitive position and future business prospects. e.g. Open ten new locations in three years Increase five-star ratings in the next two quarters CRAFTING A STRATEGY/ STRATEGY FORMULATION The task of crafting has strategy entails addressing a series of “how’s” : How to attract and please customers? How to complete against rivals? How to position the company in the Marketplace? How to respond to changing marketing conditions? How to capitalise on attractive opportunities to grow the business? How to achieve strategic and financial objectives? Entrepreneurship is called for in choosing among the various strategic alternatives and I am proactively searching for opportunities to do you think or to do existing things in new or a better way. STRATEGY IMPLEMENTATION/ EXECUTION Each company manager needs to think through these questions: What need to be done in my area to execute my piece of strategic plan? What action should I take to get the process underway? How much internal change is needed which depends on how much of the strategy is new how far internal practices and competences deviate from what the strategy requires? How will the present work culture supports good strategy execution? EVALUATING PERFORMANCE AND INITIATING CORRECTIVES ADJUSTMENTS This stage is the trigger point for deciding whether to continue or change the company’s vision and mission, objectives, strategy, and / or strategy execution methods. If a company experiences a downturn in its market position or persistent shortfalls in performance, then company managers are obligated to ferret out the causes – do they relate to poor strategy, poor strategy execution, or both? – and take timely corrective action. A company’s direction, objectives and strategy have to be revisited anytime. Approaches to strategic management There are two main approaches to strategic management:  prescriptive  descriptive A prescriptive approach to strategic management focuses on how strategies should be developed. The prescriptive model is more top-down, based on SWOT analysis. A descriptive approach focuses on how strategies should be put into practice. The descriptive model is more guided by experimenting with different methods to find solutions and learning from experience. It applies Agile methodology to strategic management.  Case study