Strategic Management

Facilitator: K R Sunil
03&17 September 2011

Syllabus
Vision and Mission statements Importance Characteristics Internal & External environment

Page 2

Strategic Management: Syllabus

Strategic Management Model

Mission External environment

Company profile

Strategic analysis & choice

Long term objectives

Grand strategy Policy

Annual objectives

Operating strategy

Institutionalization of strategy
Page 3

Control & evaluation

Strategic Management: Mission, External & Internal analysis

Mission
Definition Fundamental unique process which sets a business apart from other firms of its type and identifies the scope of its operations in product and market terms Components of a Mission statements General enduring statement of companys intent Contains the business philosophy & image of the company it seeks to projects Reflects the firms self concept Indicates the principal product, market or service areas or customer needs the company will attempt to satisfy In short Mission - Reflects the products, market & technological emphasis of the business

Page 4

Strategic Management: Mission, External & Internal analysis

Mission
Examples Hindustan Unilever Limited
Our mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life.

Procter & Gamble

We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.

Page 5

Strategic Management: Mission, External & Internal analysis

Mission
Purpose of a Mission statement
Specify organizational objectives in a measurable manner in terms of time/cost & performance parameters Unanimity of purpose within the organization Develop a basis / standard for resource allocation Develop a basis for motivating use of organization resources Develop an organization tone (i.e. a formal structured set-up) Motivating resources for the organizations objective Facilitate translation of goals/objectives into work-tasks

Page 6

Strategic Management: Mission, External & Internal analysis

Mission
Formulating a Mission statement
Product/service has benefits matching its price Product /service satisfies customer need Technology used would be cost effective & competitive Management philosophy will result in favorable public image and provide financial / psychological rewards Entrepreneurs self-concept can be communicated and adopted by employees & stake holders Hard-work & support of others can result in profitable growth

Page 7

Strategic Management: Mission, External & Internal analysis

Mission
Character
Product/service

HUL
Our mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life We help people feel good, look good and get more out of life with brands and services that are good for them and good for others

P&G
We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.

Customer need

Page 8

Strategic Management: Mission, External & Internal analysis

Mission
Character
Technology

HUL
We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact.

P&G
We attract and recruit the finest people in the world. We build our organization from within, promoting and rewarding people without regard to any difference unrelated to performance. We act on the conviction that the men and women of Procter & Gamble will always be our most important asset. We respect our P&G colleagues, customers, and consumers, and treat them as we want to be treated.

Public image

Page 9

Strategic Management: Mission, External & Internal analysis

Mission
Character
Self-concept

HUL
We work to create a better future every day

P&G
We are all leaders in our area of responsibility, with a deep commitment to deliver leadership results We always try to do the right thing. We are determined to be the best at doing what matters most

Profitable growth

We will inspire people to take small everyday actions that can add up to a big difference for the world

Page 10

Strategic Management: Mission, External & Internal analysis

Mission
Key Components

Product / Service

Primary Market

Principal Technology

What do we do?

Who do we do it for?

How do we do it?

Page 11

Strategic Management: Mission, External & Internal analysis

Mission
Key Components

Survival

Growth

Profitability

Short term focus

Long-term focus

Short term/long term

Necessary to satisfy all stakeholders Suppliers, Customers, Employees, Shareholders & Government

Page 12

Strategic Management: Mission, External & Internal analysis

Mission
Claimant approach
Identification of claimants Understanding the specific claims Reconciliation of claims Coordination of claims with mission statement

Executive officers Board Shareholders Employees

Company Mission

Customers Suppliers Creditors Government Competitors General Public

Page 13

Strategic Management: Mission, External & Internal analysis

External analysis
Porters five point model
Risk of entry of potential competitors Bargaining power of suppliers
High switching costs Fewer substitutes Suppliers can enter into customer domain

Bargaining power of customers

Large suppliers and less buyers Low switching costs Customers can enter into market as suppliers Bulk purchases by suppliers

Threat of substitutes Intensity of rivalry among existing firms

Industry structure Perfect Competition Monopoly Oligopoly Industry demand Exit barriers may cause excess productive capacity & increase firm rivalry
Page 14 Strategic Management: Mission, External & Internal analysis

External analysis
Other Barriers Brand loyalty Governmental regulation Absolute cost advantages
Superior production process Control of particular inputs required for production Access to cheaper funds

Industry life cycle analysis Introduction Growth Maturity Decline Macro Environment Political & legal environment Technological environment Social environment Demographic environment
Page 15 Strategic Management: Mission, External & Internal analysis

Internal analysis
Distinctive Competencies Differentiators for the company through products, innovations or costs Arises from resources & capabilities Resources may be tangible or intangible Capabilities are coordinating the resources to maximize productivity Competitive advantage Arises from value customers place on products Price at which company charges its products Costs of creating value

V-P P-C V-P C V

Page 16

C=Costs V= Value P= Price

Strategic Management: Mission, External & Internal analysis

Internal analysis
Building blocks of competitive advantage Superior efficiency Superior innovation Superior customer responsiveness Superior quality Differentiation

Page 17

Strategic Management: Mission, External & Internal analysis

Internal analysis
Value chain analysis Companys chain of activities create value to customer Process of transformation of number of primary activities and support activities that add value to product Primary activities include: R&D Production Marketing Customer service

Support activities include:

Company infrastructure Information systems Materials Management Human resources

Page 18

Strategic Management: Mission, External & Internal analysis

Internal analysis
Company failure a few causes Inertia Prior strategic commitments Icarus Paradox

Page 19

Strategic Management: Mission, External & Internal analysis