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Strategic Management formulation
Denis Manley
Assessment/exam type question
• Discuss how you, as head of the school of computing, would utilise an enterprise systems architecture to formulate strategies for increasing the popularity of the school’s degree programs.
The Organisation
Production Finance/
accounting
Sales/
marketing
Human
Resources
Organisational
Problem
Organisational
Level
Strategic
Tactical
Knowledge
Operations
Senior Management
General or Middle
Knowledge or Data
Production Workers
Management
Workers
Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives
Strategic Management – Defined
Strategies for taking the hill won’t necessarily hold it. –Amar Bhide
Strategies in Action
The early bird may get the worm, but the second mouse gets the cheese. – Unknown
Vision & Mission and Objectives
Strategy Formulation
Internal evaluation
External evaluation
Develop Alternative Strategies
Strategy Selection
Strategy Implementation
Annual Objectives
Organisational structure
Employee Motivation
Resource Allocation
Strategy Evaluation
Internal Review
External Review
Performance Metrics
Corrective Actions
Vision
“What do we want to become?”
Agreement on the basic vision for which the firm strives to achieve in the long run is critically important to the firm’s success.
Examples of vision statements: Ryanair’s (proposed) vision is:
Ryanair wants to become the number one travel choice for all local residents and tourists in Europe.
What is our business?”Basically reveal what an organization wants to be and whom it wants to serve
• It is essential for effectively establishing objectives and formulating strategies
• Ryanair’s (actual) 2011 mission statement is:
– Ryan air mission statement is to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost containment and efficiency operation. Ryan airs objective is to firmly establish itself as Europe?s leading low-fares scheduled passenger airline.
Mission Statements
Mission Elements
CustomersMarkets
Employees
PublicImage
Self-Concept Philosophy
SurvivalGrowthProfit
ProductsServices
Technology
The essential components of a mission statement
• Components and Questions That a Mission Statement Should Answer• 1. Customers: Who are the firm’s customers?• 2. Products or services: What are the firm’s major products?• 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?• 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?
Ryanair mission statement
• With Ryanair’s new technological planes we hope to please all of our European customers on their travel.(4,3) We hope to serve people of all ages while providing the best service money can buy.(1,2) We will bring our low price travel, with our dedication to helping our community(7,8) and with our marketing plan we hope to grow, while providing the best work experience for our employees. (5,9) We will treat everyone equally and with the upmost respect.
• 2x average return on shareholder’s equity• Positive relationship to company performance• 30% higher return on certain financial measures
Vision & Mission
Research results are mixed, however, firms with formal mission statements generally see a:
Coke’s (proposed) Mission statement
At Coca Cola we aspire to stay the world’s leader focused on producing and selling superior quality carbonated beverages in the soft drink industry. We strive to treat our employees, customers, and our communities with respect. We also seek to provide healthy financial rewards to our shareholders and business partners by using the latest technology and hiring the most skill employees. We always use ethical practices that assist in displaying Coca Cola’s public image as being trustworthy, loyal, and honest.
• Strategies represent “actions” to accomplish long-term objectives (results)
• Objectives are commonly stated in terms such as – growth in assets, – growth in sales, – profitability, – market share, – degree and nature of diversification.
• Long-term objectives are needed at many levels in an organisation the corporate, divisional, and functional levels in an organization (including I.T. function)
What are Long-Term Objectives
Long-Term Objectives
Objectives --
Measurable
Realistic
Understandable
Challenging
Hierarchical: corporate/ divisional/functional
Time-line
Financial v. Strategic Objectives
Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Higher profit margins
Higher earnings per share
Improved cash flow
Larger market share
Quicker on-time delivery than rivals
Quicker design-to-market times than rivals
Lower costs than rivals
Higher product quality than rivals
Wider geographic coverage than rivals
Strategic Objectives
Financial vs. Strategic Objectives
It is a Trade-Off between both
Maximize short-term financial objectives – harm long-term strategic objectives
Pursue increased market share at the expense of short-term profitability
Tradeoffs related to risk of actions
Align IT with business objectives• 75 percent of businesses fail to align their IT with their
business objectives, leading to lower profitability
• The first step in using information systems to serve your firm is to make sure the IS objectives are lined up with the business objectives.
To align IT:
• Identify business goals and strategies
• Break strategic goals into concrete activities and processes
• Identify metrics for measuring progress
• Determine how IT can help achieve business goals
• Measure actual performance
Sample Question
• Discuss, using suitable examples, what you would consider to be three of most important elements of an “ideal mission statement “ for an organisation of your choice. (15 marks)
Assessment/exam type question
• Discuss how you, as head of the school of computing, would utilise an enterprise systems architecture to formulate strategies for increasing the popularity of the schools Degree programs.
• What parts of the lecture could you use to help answer the above?