sm process
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8/8/2019 SM Process
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Alice in Wonderland Chesire Puss, she [Alice] began . would you tell me, please, which way Iought to go from here?
That depends a good deal on whereyou want to get to said the Cat
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Peter Drucker Strategic management is not a box of
tricks or a bundle of techniques. It isanalytical thinking and commitment of resources to action
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Strategic Management Process Unify organisations
More alert to environment (opportunities and threats)
To steer resources to desirable areaspromising growth and profits
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Characteristics of Strategy Typical strategic moves:
Alter geographical coverage
Mergers and acquisitions Strategic and/or collaborative alliances Managing internal R&D, production, finance and
other key functions Strengthen competitive capabilities
New industries or business entry React to external changes Turn around a company in crises Double digit growth
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Characteristics of Strategy Typical types:
Planned strategy new initiative (proactive)
Reactive strategy- emerging circumstances Abandoned strategy
Company strategies are partly visible andpartly hidden to outside view
Strategies develop over time to matchinternal and external factors in congruencewith company values
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Characteristics of Strategy Developing strategy is partly an
exercise in entrepreneurship
Seeking new opportunities
Doing existing things in new ways
Risk taking capabilities
Strategy making is an ongoing process
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Performers of Strategic
Management Tasks Ultimate responsibility for leading the tasks of
forming, planning and implementing strategic
plan for the whole organisation rests withCEO
Every major organisational unit of a company business unit, division, plant, regional
office-has leading/supportive role in evolvingand implementing strategic plan
Every manager is strategy maker &implementer for area he/she supervises
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Performers of Strategic
Management Tasks For diversified companies, usually there are 4
levels of strategy managers
CEO & senior level officers have primaryresponsibility for critical strategic decisionseffecting total enterprise
Managers who are profit centre heads
Functional area heads within a given or acrossbusiness unit who have direct authority
Managers of major operating units (plants,regional centres, country heads) who have on the
scene responsibility
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Performers of Strategic
Management Tasks Proprietorships, partnerships and owner
managed enterprises, typically have one or
two strategy managers Strategy managers are also relevant in non-
profit organisation and Government bodies
Managers approach to strategic management process depends on different roles:
Chief architect of strategy for his division
Team member when it comes to corporate
strategy
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Crafting a Strategy Business Strategy:
Match companys/businesss/divisions internal
resources to external environment so as toproduce sustainable competitive advantage
Functional Strategy: Preparing plans for key functional areas like R&D,
Marketing, HR, Materials, IT etc.
Operating Strategy: Plans for Plants, Distribution Centres, Regions and
sets targets for such key activities as inventorycontrol, advertising, maintenance etc
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Different Approaches to
Strategy Development Chief architect approach:
Generally seen in companies founded byentrepreneurs, family-owned businesseswith contribution from key employers andoutside advisers
Weakness - -depends on one personsacumen
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Different Approaches to
Strategy Development Delegation approach:
CEO delegates to trusted subordinates
Through a high-level task force of knowledgeable & talented executives, withthe help of outside consultant, if needed
Allows for broader participation, useful in
multi-product, multi-business enterprises Weakness: Its success depends on
business judgement of junior level Execs
Lacks breadth of vision or experience
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Different Approaches to
Strategy Development Collaborative or team approach:
Middle of the road approach
Involve peers and subordinates
Helps win participants commitment toimplementation
Weakness: politics & power are most likelyto play
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Different Approaches to
Strategy Development Corporate Intrapreneur approach:
Management encourages individuals andteams, hand picked, having drive andentrepreneurship bent of mind
Suitable where technological changes are
rapid Weakness: resistance to get accepted and
implement
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Role of BOD Critical review of Strategy
Guide Strategy Team and CEO Evaluate strategic leadership of CEO /
key executives
Take care of interest of share holdersand stakeholders
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Strategic Management Process Five Task Process
1
2
3
4
5
Developing Strategic Vision & Business Mission
Setting Objectives
Crafting Strategy to achieve Objectives
Implementing & Executing Strategy
Feedback LoopMonitoring, Evaluation
And Control
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Strategic Management Process Vision: Managements aspiration for
Organisation and its Business Where weare going
Mission: is a statement of Companys present Business Scope who we are and what wedo
Objectives: Specific performance targets Two important dimensions measurement value
and time period Financial Objectives Strategic Objectives
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Mission Statement Give organisation its own identity, business
emphasis and path for development
Mission statement sets company apart fromother similarly situated company
Incorporate in mission statement:
What is being satisfied Who is being satisfied (customer groups)
How the company delivers value to customers
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Mission Statement Good mission statements are highly
unique to the company for which theyare developed
Diversified companies have broadermission statements
Large organisations (Corporates) havemission statements for key functionalareas / departments / divisions
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Mission Statements We are in picture business Eastman Kodak Our business is renting cars. Our business is total
customer satisfaction Our mission is to provide any customer a means of
moving people and things up and down, andsideways over short distances with higher reliabilitythan any other similar enterprises in the world
Our vision: Getting to a billion connected computers
worldwide, millions of servers and trillions of dollarsof e-commerce. Our mission: Being the building blocksupplier to the Internet economy and spurring effortsto make the Internet more useful
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Mission Statements A computer on every desk and in every home using
great software as an empowering tool changed to:Empower people through great software, any time,
any place and on any device. Vision: Our vision of persuasive networking is of a
world where connections are simpler, more powerful,more affordable, more global and more available toall. Mission: To connect more people andorganisations to information in more innovative,simple and reliable ways than any other networkingcompany in the world
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Developing Strategic Vision To take the organisation in the desired
direction
Defining mission statement
Deciding on long-term course and actionplan
Communicating to elicit commitment
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Mission to Strategic Vision Entrepreneurial ability to force market
growth, development/change, technology
impact and buyer needs Develop a vision to help create a roadmap
Warn about inflection points threats/opportunities that will come alongneeding strategic corrections
A well articulated vision creates enthusiasm
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Establishing Objectives Objectives represent managerial commitment
to achieving specific performance targets
within specific time Financial Vs Strategic Objectives
Aim is to have both on the above priority, but more often trade-off situations are common
Objectives should aim at building strongerlong term competitive position than havingshort term priority
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Establishing Objectives Establish SMART goal/objectives
S Stretched
M Measurable A Agreed
R Realistic
T Time bound
Top down Vs bottom up objective setting Long term & short term objectives
Corporate objectives are split intodivisional/functional/operational objectives