Strategic Management Overview-1

8/3/2019 Strategic Management Overview-1

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Strategic Management: An Overview

Dr A Jagan Mohan Reddy

Institute of Public Enterprise


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Strategic Management

Why do we exist? (Mission/Vision)

Where are we? (Situational Analysis)

Where do we want to be? (Goals/Objectives)

How are we going to get there? (Who,

Resources, When, Success/Failure)


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Mission/Vision

Top Management Establishes the Mission/Vision

Involves thinking strategically about

Future of company

Where are we going?

Tasks include

Creating a roadmap of the future

Deciding future business position to stake out

Providing long-term direction

Giving company a strong identity


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Entity

Strategy

Business Strategies

Functional Strategies

Operating Strategies

Two-Way Influence

Entity - Level

Managers

Business - Level

Managers

Operating

Managers

Functional

Managers

Two-Way Influence

Two-Way Influence

Strategy: Two-Way Process

Top Down

Bottom Up


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Three Considerations

External environment

Internal environment

How well are we doing now?

Situational Analysis

Current and Future Analysis of factors that can affect the

future


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. Economic conditions

. Legislative and regulatory conditions

. Political conditions

. Legal environment

. Technology

. Competition

.

Markets

. Suppliers

. Other

External Environment

1. Identify those forces likely to exert greatest influence overnext 1 - 3 years - Usuallyno more than 3 - 4 factors

quality as real drivers of change

2.Assess impact


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Internal Environment

. Skills, expertise, human capital

. Facilities and equipment

. Financial resources

. Customers

. Products/services

. Technology

. Quality

. Alliances

. Internal politics

S W O T represents the first letter in

S trengths

Weaknesses

Opportunities

Threats

A core competence is a well-performed

internal activity that is central to a

companys competitiveness and viability

A distinctive competence is a

competitively valuable activitythat a

companyperforms better than its rivals

S W

O T


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How Well Are We Doing Now?

Qualitative Assessment --

What is the Strategy?

Company

Scope

Recent Accomplishments

Alignment with functional

strategies, goals and

objectives

Quantitative Assessment --

What are the Results?

Measurement against

financial and strategicobjectives?

Two Key Steps


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Strategy to Tactics

Deliverables

Projects

Programs

Strategic Initiatives

Business Goals

Entity Goals

Vision


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Organizational Vision

Strategic

Initiative 1

Strategic

Initiative N

Program

Project 1 Project 2

Program

Project 1

Project 2

Project 3

Program

Project 1

Project 2

Project 3

Program

Project 1

Project 2

Project 3

Multiple Initiatives Multiple Projects

Prioritize

Dont over commit resources


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Goals/Objectives

without the last minute nothing would ever get done

Setting Goals/Objectives

Converts strategic mission/vision, and situational

assessment into specific performance targets

Creates yardsticks to track and measure performance

Pushes company to focus on results

Helpsprevent complacency and coasting


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Goals/Objectives

Objective-setting process is mostly

top-down, not bottom-up!

1. First, establish organization-wide objectives andperformance targets

2. Next, set business objectives

3. Then, establish functional

and departmentalobjectives

4. Individualobjectives are established last

EntityObjectives

Business Objectives

Functional Objectives

Operating Objectives

Top Down


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Goals/Objectives

Characteristics of Goals/Objectives

Represent commitment to achieve specific

performance targets

Well-stated objectives are Quantifiable

Measurable

Contain a deadline for achievement

Communicated in writing and spell-out how

much ofwhat kindof performance by when

and by who

Measureperformance


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Short range objectives lay the

foundation for long range objectives

Short-Range objectives

Targets to be achieved soon Serve as stair steps for reaching long-range

performance

Long-Range objectives

Targets to be achieved within3 to 5 years

Prompt actions nowthat willpermit reaching targetedlong-range performance later

Short or Long Range


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Crafting the Strategy Primarily a market-driven activity

Successful strategy developmentdepends on

Business vision

Perceptive analysis of theexternal and internal situation

Attracting and pleasingcustomers and stakeholders

Outcompeting rivals

Forging a competitive

advantage

Prioritizing

Executing the Strategy Primarily an operations-driven

activity

Successful strategy executiondepends on managements ability

Direct organizational change Manage multiple initiatives

Good organization-buildingand people management

Creating and nurturing astrategy-supportive culture

Continuous improvement

Getting things done andconsistently deliver goodresults

Is tougher than crafting strategy

Planning vs. Executing


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Executing Strategic Initiativestakes adept leadership to

Convincingly communicate

reasons for the new strategy

Overcome pockets of doubt and

resistance to change

Build consensus and enthusiasm

Resolve priority conflicts

Launch and manage a variety of

strategic initiatives at the same time

Secure commitment of concerned parties

Get all implementation pieces in place

and coordinated

Integrate many different departments to

smoothly function as a whole

Executing


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Implementing and executing strategy involves acompanys whole management team and all

of its employees

Just as every part of a watch plays a role in

making the watch function properly, it takes

all pieces of an organization working

cohesively for a strategyto be well-executed

Top-level managers must lead the

process and orchestrate major initiatives

Butthey must rely on the cooperation of

middle and lower-level managers to see thatthings go well in the various parts of the

organization and on employees to perform

their roles competently on a daily basis

A Team Effort


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How are we going to get there?

Dont confuse a plan withDont confuse a plan withexecutionexecution..

A plan is good intentions.A plan is good intentions.

You dont win with goodYou dont win with goodintentions!intentions!


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Management Cycle

Report Model

Set

Goals

Shared

Info

Plan

Monitor

Analyze

Resources

Constraints

Viability

Budgeting

Resource Allocation

Time Frame Performance

Efficiency

Benchmarking

Variances

Effectiveness

Modifications


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Who?

Ultimately, someone

has to be responsible


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Objectives (projects) may be departmental orcompany wide. In either

case, selection of the project participants is extremely important.

. Team members

.. Departmental

.. From many departments

within the company

. Matrix organization

management support

project member may be assigned to

the project effort on a part time basis

he/she may wind up with multiple

supervisors conflicts will have to

be resolved.

. Project manager/leader

Who?


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Work Quality

Human Resources TimeCommunications Financial Resources

Theproject manageris key to the objective/project success. Many hard

decisions will have to be made and it will test their leadership abilities.

Project Manager


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Project Manager Traits

Create vision

Execute vision

Motivator

Communicator

Empathetic, yet results oriented

Ethical Focused

Tenacious

Creates infrastructure for success

Manages expectations

Understands business risk

Knows when to cut losses Asks the hard questions

Answers the hard questions


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Project

Project Plan

Work Breakdown

Sub-components areidentified

Resources andresponsibilities are allocatedand assigned

Timelines are establishedfor completion

Monitoring schedule isestablished

Reporting requirements aredefined

Project and sub-componentsuccess are established


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MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Work

Breakdown

Tasks

Gantt Chart

Plan Actual

Communications/Monitoring

Effective communications and monitoring of plans is critical to the successful

implementation of strategic initiatives.


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Enthusiasm Disillusionment Panic

Search for the Guilty

Praise and Honors

for the Non-

participants

Punishment of the

Innocent

Unsuccessful Projects


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Successful Projects


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A management system should provideA management system should providea framework for picturing the majora framework for picturing the major

factors in the situation as an integratedfactors in the situation as an integratedwhole. It should be realistic. It shouldwhole. It should be realistic. It should

simplify the complex rather thansimplify the complex rather than

complicate the simple.complicate the simple.

George Odiorne George Odiorne


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MBO

Management by Objectives Peter Drucker, 1954, The Practice

of Management

Is a systematic and organizedapproach that allowsmanagement to focus on

achievable goals and attainthe best possible results fromavailable resources

Aims to increase individual andorganizational effectiveness byaligning organizational goalsand subordinate objectives

Clarifies and quantifiesobjectives to allow formonitoring, evaluation, andfeedbackthroughout thehierarchy of objectives

7. Individual objectives

a. Performance

b. Personal development

6. Department and unit objectives

5. Division objectives

4. More specific overall objectives

3. Overall organization objectives

2. Mission

1. Socio-economic purpose

Hierarchy of Objectives


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Setting Objectives

Objectives are set jointlythroughout the

organization by the superior andsubordinate

written and clearly statedwithemphasis on verifiable results

rather than activities andpersonality

should outline results inquantifiable terms for bothperformance and personaldevelopment (e.g. Quantity, Quality,Time. Cost, Skills, etc.)

should be challenging yetreasonable

should not neglect otherimportant aspects of a job thatcan not be quantified


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Control & Appraisal

Control

refers to the measurement of organizational performance

involves the measurement and, if necessary the correction of performance

Appraisal

refers to the evaluation of individual performance


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Appraisal

focuses on performance, not personalityfocuses on performance, not personality

supervisor self control rather than controlsupervisor self control rather than control

responsibility for evaluation and development rests primarily withresponsibility for evaluation and development rests primarily with

subordinate not supervisorsubordinate not supervisor an opportunity to learn from the past, but to focus on the future a greatan opportunity to learn from the past, but to focus on the future a great

amount of time should be spent on new objectivesamount of time should be spent on new objectives

shared, rational analysis of performance by the supervisor and subordinateshared, rational analysis of performance by the supervisor and subordinate

is not a fault finding session that both thesuperior and subordinate dislike

is a positive, constructive, and orientedtoward the future.


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Benefits of Strategic Management

Good strategic thinking and goodmanagement of the strategy-crafting,

strategy-executing process

guides entire firm regarding what it is

trying to do and to achieve

helps unify numerous strategy-relateddecisions across the company

creates a proactive atmosphere

promotes development of anevolving business model focused

on bottom-line (financial viability) success

provides basis for determining howbest to allocate company resources


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Strategic Planning Measurement & Control

3%

28%

33%

36%

Not clearly

established

General and

verbally

communicated

Written &

measurable

with target

dates

Written &measurable

with target

dates & used

to evaluate

personnel

performance

Goals &

Objectives


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Key Findings (Goals)

Perceived Sophistication

Performance

Goals

Companies who perceive they

have more sophistication in their

planning process tend to have

more clearly defined measurable,

performance objectives.

Companies with more strategic

planning knowledge tend to

have more clearly definedmeasurable, performance

objectives.

Strategic Planning Knowledge

Perform

ance

Goals


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Key Findings (Performance)

Clearly Defined, MeasureablePerformance Goals

Performance

Companies with more

clearly defined measurable,

performance objectives

tend to meet or exceed

their expectations


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Key Findings (Improved Knowledge)

Regardless of current

performance all companies

felt that better performance

results would be obtained

with increased

knowledge of the strategicplanning discipline Increased Knowledge of

Strategic Planning

P

erformance


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59%

30%

11%

0%

0%

Make it worse

No ImpactImprove Slightly

Improve ModeratelyImprove Significantly

Knowledge Impact

Needs

Improvement


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29%

40%

26%

6%

0%

Make it worse



Knowledge Impact

Met Expectations


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38%41%

19%

3%

0%

Make it worse



Knowledge Impact

Exceeded

Expectations


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57%

43%

0%

0%

0%

Make it worse



Knowledge Impact

Superior


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45%

0%

27%

27%

0%

Make it worse



Knowledge Impact

Did Not Do


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Make it worse



Overall Knowledge Impact

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