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What path company should followWhat areas of business we are required tochange
Strategic visionPaints company destinationProvide path
Global Leaders of the world No 1The best Amongst the world
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Revised: Seven Tasks ofStrategic management
Mission/VisionGoals/ObjectivesInternal AnalysisExternal Analysis
Craft StrategyImplement Strategy
Evaluation
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Key Elements of a StrategicVision
Provides a panoramic view ofwhere we are going Is dis t inct ive and specif ic to aparticular organization
Avoids use ofgeneric languagethat is dull andthat could applyto most any company
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Strategic Vision vs. Mission
A st ra tegicvis ion concerns afirms future
business path -where w e are go ing &why
Markets to be pursuedFutureproduct/market/customer/technologyfocus
The miss ionstatement of afirm focuses on its
present businesspurpose - whow e are and w hatwe do & why we
are here Current product andservice offeringsCustomer needsbeing served
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Incomplete
Vague
BlandNot dis t inct ive
Too Generic
Too Broad
Shortcoming of a ClearStrategic Vision
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Characteristics of EffectivelyWorded Vision Statements
Graphic Paints a picture of thekind of company that managementis trying to createDirectional Is forward lookingFocused Is specific enough toprovide guidance in decisionmakingFlexible Is not so focused that itmakes it difficult to adjust to change
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Characteristics of EffectivelyWorded Vision Statements
Feasible Is within the real ofwhat is possible
Desirable Indicates why thedirectional path makes sense
Easy to Communicate Canbe explained in simple terms
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Example of a Strategic Vision
Provide a global trading platform wherepractically anyone can trade practically
anything.
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Example of a Mission Statement
To give our customers the best food and beveragevalues that they can find anywhere and to providethem with the information required for informed
buying decisions. We provide these with adedication to the highest quality of customersatisfaction delivered with a sense of warmth,
friendliness, fun, individual pride, and companyspirit.
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Linking Vision with value
ValuesBeliefs, Business Principles & Practices
Values:
Treatment of employeesEthicsInnovativenessResponsibility
Well developed Values & VisionWeak Values & MissionResult of Gap
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Communicating Strategic Vision
Well Communicated Arouse Positive SupportDevelop Catchy Slogans
Microsoft: Empower people through Great software-anytime anyplace & on any Device
Removal of Resistance from Employees
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Benefits of Clear Vision
Clarity about firms long -term directionDirectional Decision makingSupport from employeesTrickle down effect at all levels of OrganizationPreparation of future
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Setting Objectives
Purpose of set ting ob ject ives
Converts vision into specific
performance targetsCreates yardsticks to trackperformance
Well-st ated ob jectives areQuantif iableMeasurable
Contain a deadline for achievement
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Achieving g ood f inancial perform anc eis not enoug h
Current financial results are laggingindicators reflecting results of past decisions and actions
Good strategic performance is thus a
leading indicator of a companyscapability to deliver improved fu ture financial performance
The Need for a BalancedScorecard
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You cant manage what you cant measure &what gets measured gets done How much of what kind of performance &
when Stretch objectivesVague obejectives
Increase profitReduce cost
More efficiencyIncrease sales
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Balanced Scorecard Objectives
FinancialObjectives
Outcomes focusedon improving
FinancialPerformance
StrategicObjectives
Customer Value creation
Internal Processes Value creating processes
Learning and Growth Aligning organizational,information, and humancapital with strategy
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Examples of FinancialObjectives
X % increase in annualrevenuesX % increase annually in
after-tax profitsProfit margins of X %X % return on capitalemployed (ROCE)
Sufficient internal cashflows to fund 100% ofnew capital investment
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CustomerWinning an X % market share
Achieving a customer retention rate of X %
Acquire X number of new customersIntern al Proc esses
Reduce product defects to X %Introduction of X number of new products inthe next three years
Learning and Grow thIncrease employee training to X hours/year
Reduce turnover to X % per year
Examples of StrategicObjectives
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Unilever (financial & strategic objective)
Grow annual revenues by 5%-6%;increaseoperating profits margin by 11-16% within5 years; trim the company's 1200 food,
household & personal care products downto 400 core brands. Focus sales andmarketing efforts on brands with potentialto become respected, market`-leading
global brands; & streamline the companys supply chain.
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Leading Vs Lagging indicators
Finical performance (past &present)
Achievement of aggressivestrategic achievements
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Short-Term vs.Long-Term Objectives
Short-term ob ject ives
Targets to be achieved soon
Milestones or stair steps for reachinglong-range performance
Lo ng -term ob ject ives
Targets to be achieved within 3 to 5years
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Strategic intent
Ambitious strategic objective Application of full economicresources
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Objectives Are Needed at AllLevels
1. First, set business- level objectives
2. Next, establish functional-area objectives
3. Then, operating-level objectives areestablished last
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Crafting a Strategy
Whose primary responsibility?Strategic Roles
Business size & Strategyformulation process
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Crafting a Strategy
Strategy Making Hierarchy fora Single Business Company
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Strategy Making Hierarchy
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Levels of Strategy Makings
Corporate StrategyFor all the businesses of a company
Business StrategySpecific line of BusinessTwo Fold thinking
Functional StrategyStrategy within business
Operational Strategy
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Corporate
Strategy
Business Strateg ies
Functional Strategies
Two-Way Influence
Corporate-LevelManagers
Business-LevelManagers
FunctionalManagers
Levels of Strategy-Makingin a Diversified Company
Two-Way Influence
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Levels of Strategy-Making ina Single-Business Company
BusinessStrategy
Two-Way Influence
Functional Strategies
Business-LevelManagers
FunctionalManagers
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Uniting the Companys Strategy-Making Effort
A firms strategy is a co l lect ion ofinitiatives undertaken by managersat all levelsin the organizational hierarchyPieces of strategy should fit together
like the piecesof a puzzle