Without a strategy the organization

is like a ship without a rudder, going around in circles.

Joel Ross and Michael Kami
Quote

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The Strategic Management Process: An Overview

Chapter 1

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Chapter Outline

Five Tasks of Strategic Management

Developing a Strategic Vision and Mission

Setting Objectives
Crafting a Strategy Implementing and Executing the Strategy Evaluating Performance and Initiating Corrective Adjustments

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What is Strategy?
What is strategy?

What are the major elements of a Firms strategy?

Think of two firms in the same industry and identify

elements of each firms strategy.

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Characteristics of a Strategic Vision

A roadmap of a companys

future

Future technologyproduct-customer focus Geographic and product markets to pursue Capabilities to be developed Kind of company management is trying to create
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Missions vs. Strategic Visions

A mission statement A strategic vision

focuses on current business activities -who we are and what we do

Current

concerns a firms future business path -where we are going

Markets

product and service offerings Customer needs being served Technological and business capabilities
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to be pursued Future technologyproduct-customer focus Kind of company that management is trying to create
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Examples: Mission and Vision Statements

Microsoft Corporation

Empower people through great software anytime, anyplace, and on any device.
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Examples: Mission and Vision Statements

Intel
Our vision: Getting to a billion connected computers worldwide, millions of servers, and trillions of dollars of e-commerce. Intels core mission is being the building block supplier to the Internet economy and spurring efforts to make the Internet more useful. Being

connected is now at the center of peoples computing experience. We are helping to expand the capabilities of the PC platform and the Internet.
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Setting Objectives
Second Task of Strategic Management
Converts strategic vision and

mission into specific performance targets

Creates yardsticks to track

performance
Pushes firm to be inventive

and focused on results

Helps prevent complacency

and coasting
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Types of Objectives Required

Financial Objectives
Outcomes focused on improving financial performance

Strategic Objectives
Outcomes focused on improving long-term, competitive business position

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Examples of Financial Objectives

Grow earnings per share 15% annually Boost annual return on investment (or EVA) from 15% to 20% within three years

Increase annual dividends per share to stockholders by 5% each year

Strive for stock price appreciation equal to or above the S&P 500 average Maintain a positive cash flow every year

Achieve and maintain a AA bond rating

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Examples of Strategic Objectives

Increase firms market share Overtake key rivals on quality or

customer service or product performance

Attain lower overall costs than rivals Boost firms reputation with customers Attain stronger foothold in international markets Achieve technological superiority

Become leader in new product introductions

Capture attractive growth opportunities
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Examples: Strategic Objectives Banc One Corporation

To be one of the top three banking companies in terms of market share in all significant markets we serve.

Dominos Pizza
To safely deliver a hot, quality pizza in 30 minutes or less at a fair price and a reasonable profit.
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Example: Financial and Strategic Objectives

3M Corporation
Annual growth in earnings per share of 10% or

better, on average;
A return on stockholders equity of 20-25%;

A return on capital employed of 27% or better;

and
Have at least 30% of sales come from

products introduced in the past four years.

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Crafting a Strategy
Third Task of Strategic Management
Strategy involves determining whether to
Concentrate

on a single business or several businesses (diversification) Cater to a broad range of customers or focus on a particular niche Develop a wide or narrow product line Pursue a competitive advantage based on Low cost or Product superiority or Unique organizational capabilities
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Crafting a Strategy

Involves deciding how to Respond to changing buyer preferences Respond to new market conditions Grow the business over the long-term Achieve performance targets Outcompete rivals

Our strategy will be . . .

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Figure 1-3: Understanding a Companys Strategy -- What to Look For

Actions to diversify Actions to strengthen resources & capabilities How functional activities are managed Efforts to pursue new opportunities or defend against threats Actions to outcompete rivals Responses to changing external circumstances Actions to alter geographic coverage Actions to merge or acquire rival companies

Pattern of Actions That Define Strategy

Actions to form strategic alliances and collaborative partnerships

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What is a Strategic Plan?

Where firm is headed -Strategic vision and business mission Short and long term performance targets -- Strategic and financial objectives Action approaches to achieve targeted results -- A comprehensive strategy
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Figure 1-1: The Five Tasks of Strategic Management

Task 1
Develop a Strategic Vision and Mission

Task 2

Task 3
Craft a Strategy to Achieve Objectives

Task 4
Implement and Execute Strategy

Task 5
Monitor, Evaluate, and Take Corrective Action

Set Objectives

Revise as Needed

Revise as Needed

Improve/ Change

Improve/ Change

Recycle as Needed

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