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STRATEGIC MANAGEMENT Specific way to manage the company aimed at adjusting the companys activities to future changes in the environment and taking up decisions focused on the long term.
Irwin/McGraw-Hill
To think Strategically
means:
# Strive to recognize opportunities and threats many years ahead # Apply methods of analysis and planning facilitating creation and implementation of the strategic plans
# Do not get used to the existing plans and be ready to alter the way the company acts in line with the changing vision and the changing environment
Katedra Zarzdzania w Gospodarce SGH
STRATEGIC MANAGEMENT
Focus on the future Taking into account various time horizons Adjustment of the resources to the level of organizational goals Comprehensive approach to the organization integrating its functions and areas of activity Very strong consideration of external and internal conditions Taking into account various stakeholders
Mirosaw Jarosiski Katedra Zarzdzania w Gospodarce, SGH
Stakeholders
Individuals or groups of people having a stake in organisations actions who can affect the organisation (who make demands/file requests towards the organisation and have the means to execute them)
Stakeholders
Internal
Managers Employees Committees
Mixed
Labour Unions Employees families Local environment Partners in the network
External
Consumers Buyers Suppliers Banks Shareholders Regulatory bodies Government Ministries
Stakeholders Analysis
Identification of main stakeholders Stakeholders distance to organisation assessment Stakeholders power assessment Conclusions for the organisation: Whom to keep in touch with on everyday basis? Whom to invite to cooperate? Whom to defend against?
Mirosaw Jarosiski Katedra Zarzdzania w Gospodarce, SGH
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Stakeholders Analysis
The Minister of Health
Patients
County Council
Local media
Pharmaceutical companies
HOSPITAL
Energy traders
Competitors
State Sanitary Inspection
Founding authority
Chambers of different professions
Labour Unions
Other suppliers
Mirosaw Jarosiski Katedra Zarzdzania w Gospodarce, SGH
Tax Office
Task 2
Set Objectives
Task 3
Craft a Strategy to Achieve Objectives
Task 4
Implement & Execute Strategy
Task 5
Evaluate & Make Corrections
Revise as Needed
Revise as Needed
Improve/ Change
Improve/ Change
Recycle as Needed
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Irwin/McGraw-Hill
Indicates the long-term course management has charted for the organization
Our future direction will be . . .
Irwin/McGraw-Hill
A strategic vision describes the route a company intends to take in developing and strengthening its business.
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Irwin/McGraw-Hill
Irwin/McGraw-Hill
Irwin/McGraw-Hill
McDonalds Corporation
McDonalds vision is to dominate the global foodservice industry. Global dominance means setting the performance standards for customer satisfaction while increasing market share and profitability through our Convenience, Value, and Execution Strategies.
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Irwin/McGraw-Hill
Intel
Our vision: Getting to a billion connected computers worldwide, millions of servers, and trillions of dollars of e-commerce.
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Irwin/McGraw-Hill
eBay
Provide a global trading platform where practically anyone can trade practically anything.
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Irwin/McGraw-Hill
Irwin/McGraw-Hill
Irwin/McGraw-Hill
Narrow Definition
Soft drinks Toys Wrought iron lawn furniture Overnight package delivery Ship cruises in the Caribbean
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DEVELOPING MISSION An organizations MISSION Reflects managements vision of what firm seeks to do & become Provides clear view of what firm is trying to accomplish for its customers Indicates intent to stake out a particular business position
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Irwin/McGraw-Hill
Managers
COMPANY'S MISSION
Investors
A strategic vision concerns a firms future business path The kind of company it is trying to become Customer needs to be satisfied in the future
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Otis Elevator
Our mission is to provide any customer a means of moving people and things up, down, and sideways over short distances with higher reliability than any similar enterprise in the world.
Avis Rent-a-Car
Our business is renting cars. Our mission is total customer satisfaction.
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Irwin/McGraw-Hill
Irwin/McGraw-Hill
Irwin/McGraw-Hill
Intel
To be the preeminent building block supplier to the new computing industry worldwide.
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Irwin/McGraw-Hill
Intel
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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Irwin/McGraw-Hill
New vision
Business declines
McDonalds serves approximately 30 million customers daily at 20,000-plus restaurants in over 90 countries.
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Irwin/McGraw-Hill
A good mission statement describes a companys business makeup and purpose in language specific enough to give the company its own identity and distinguish it from other enterprises in the same or other industries!
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Irwin/McGraw-Hill
Home Depot
Helping people improve the places where they live and work.
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Irwin/McGraw-Hill
Task 2
Set Objectives
Task 3
Craft a Strategy to Achieve Objectives
Task 4
Implement & Execute Strategy
Task 5
Evaluate & Make Corrections
Revise as Needed
Revise as Needed
Improve/ Change
Improve/ Change
Recycle as Needed
36
Irwin/McGraw-Hill
Setting Objectives
The Second Task of Strategic Management
Establishing OBJECTIVES Converts vision into specific performance targets Creates yardsticks to track performance Pushes firm to be inventive and focused
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Irwin/McGraw-Hill
Strategic Objectives
Outcomes focused on improving a firms competitiveness and its long-term business position
$
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Long-Term objectives
Targets to be achieved within longer period (3 to 5 years) Calls for actions now that will permit reaching targeted long-range performance later Push managers to weigh impact of todays decisions on future performance
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Irwin/McGraw-Hill
S.M.A.R.T.
S.M.A.R.T. - Simple, Measurable, Achievable, Relevant, Timely defined. S.M.A.R.T. - Simple, Measurable, Ambitious, Realistic, Timely defined. S.M.A.R.T. - Specific, Measurable, Ambitious, Realistic, Tangible.
S.M.A.R.T.E.R.
Task 2
Set Objectives
Task 3
Craft a Strategy to Achieve Objectives
Task 4
Implement & Execute Strategy
Task 5
Evaluate & Make Corrections
Revise as Needed
Revise as Needed
Improve/ Change
Improve/ Change
Recycle as Needed
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Irwin/McGraw-Hill
Crafting a Strategy
The Third Task of Strategic Management
A companys strategy consists of combined actions management has taken & intends to take that deal with
How to make managements strategic vision a reality Achieving strategic & financial objectives
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Irwin/McGraw-Hill
Definitions of Strategy
1947 Von Neuman & Morgenstern
Strategy is a series of actions by a firm that are dedicated on according to the particular situation.
1969 Andrews
Strategy is the pattern of objectives, purposes or goals and major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be.
1976 McCarthy
Strategy is an unified, comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved.
1979 Minzberg
Strategy is a mediating force between the organization and its environment: consistent patterns in streams of organizational decisions to deal with the environment.
Katedra Zarzdzania w Gospodarce SGH
Moment of planning
Time
Strategizing Is HOW To . . .
Make the strategic vision a reality Achieve performance targets Please customers Out-compete rivals Achieve sustainable competitive advantage Strengthen firms long-term competitive position Respond to changing market conditions
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Levels of Strategy-Making
Corporate strategy
Corp. HQ
Business strategies
SBU
SBU
SBU
SBU
Functional strategies
Plant/ Unit
Plant/ Unit
Plant/ Unit
Plant/ Unit
Plant/ Unit
Operational strategies
Approach to Capital Allocation (investment priorities) Moves to Divest Weak Units and Add New Businesses
Corporate Strategy
Efforts to Build Competitive Advantage Via Diversification Moves to Strengthen Positions and Profits in Present Businesses
Irwin/McGraw-Hill
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Business Strategy
Level 2
Business-Level Managers
Level 3
Functional Managers
Functional Objectives
Two-Way Influence
Functional Strategies
Two-Way Influence
Level 4
Plant Managers, Lower-Level Supervisors
Irwin/McGraw-Hill
Operating Objectives
Operating Strategies
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Irwin/McGraw-Hill
Irwin/McGraw-Hill
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Irwin/McGraw-Hill
Task 2
Set Objectives
Task 3
Craft a Strategy to Achieve Objectives
Task 4
Implement & Execute Strategy
Task 5
Evaluate & Make Corrections
Revise as Needed
Revise as Needed
Improve/ Change
Improve/ Change
Recycle as Needed
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Irwin/McGraw-Hill
Creating fits between way things are done and what it takes for effective strategy execution Producing excellent results in a timely manner
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Irwin/McGraw-Hill
Strategy Implementation
Strategy implementation is an internal, operations-driven activity involving organizing, budgeting, motivating, culture-building, supervising, and leading to make the strategy work as intended!
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Irwin/McGraw-Hill
Irwin/McGraw-Hill
Task 2
Set Objectives
Task 3
Craft a Strategy to Achieve Objectives
Task 4
Implement & Execute Strategy
Task 5
Evaluate & Make Corrections
Revise as Needed
Revise as Needed
Improve/ Change
Improve/ Change
Recycle as Needed
72
Irwin/McGraw-Hill
Evaluating Performance
The Fifth Task of Strategic Management
Constant checking of strategic plans and their implementation to see if they are up-to-date in order to foresee the need for change of strategic direction
rdo: H. Steinmann, G. Schreygg, Zarzdzanie, podstawy kierowania przedsibiorstwem, Oficyna wydawnicza Politechniki Wrocawskiej, Wrocaw 1995.
Objectives
Strategy
Strategy Execution
Revise as needed
Revise as needed
Improve/ change
Improve/ change
Strategic Control
Strategic Management
To reduce risks companies should perform strategic analysis and prepare strategies for growth and competitive strategies
Strategic Management
Even a deficient strategic plan or a strategic plan which has not been executed properly is better than being unaware of the direction the company should take