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    The Managerial Process of Crafting and Executing Strategy

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    The Managerial Process of Crafting and Executing Strategy

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    aliaffan16
    23 views24 pages

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    Ch002

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    Download as ppt, pdf, or txt
    23 views24 pages

    The Managerial Process of Crafting and Executing Strategy

    Uploaded by

    aliaffan16

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
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    2

    The Managerial
    Chapter Title
    Process of Crafting
    and Executing
    Strategy

    Screen graphics created by:


    16/e PPT Jana F. Kuzmicki, Ph.D.
    Troy University-Florida Region

    McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved.


    Fig. 2.1: The Strategy-Making, Strategy-Executing Process

    2-2
    Developing a Strategic Vision
    Phase 1 of the Strategy-Making Process
     Involves thinking strategically about
     Future direction of company
     Changes in company’s product/market/customer
    technology to improve
     Current market position
     Future prospects

    A strategic vision describes the route a company


    intends to take in developing and strengthening
    its business. It lays out the company’s strategic
    course in preparing for the future.
    2-3
    2-4
    2-5
    2-6
    Strategic Vision vs. Mission
     A strategic vision  The mission statement of
    concerns a firm’s future a firm focuses on its
    business path - “where present business purpose
    we are going” - “who we are and what
     Markets to be pursued we do”
     Future product/market/  Current product and
    customer/technology service offerings
    focus  Customer needs being
     Kind of company served
    management is  Technological
    trying to create and business
    capabilities

    2-7
    Characteristics of a Mission Statement

     Identifiesthe boundaries of the current business


    and highlights
     Present products and services
     Types of customers served
     Geographic coverage
     Conveys
     Who we are,
     What we do, and
     Why we are here

    A well-conceived mission statement distinguishes a company’s


    business makeup from that of other profit-seeking enterprises in
    language specific enough to give the company its own identify!
    2-8
    Setting Objectives
    Phase 2 of the Strategy-Making Process
     Purpose of setting objectives
     Converts vision into specific performance targets
     Creates yardsticks to track performance
     Well-stated objectives are
     Quantifiable
     Measurable
     Contain a deadline for achievement
     Spell-out how much of what kind
    of performance by when
    2-9
    Types of Objectives Required

    Financial Objectives Strategic Objectives

    Outcomes focused Outcomes focused on


    on improving financial improving competitive
    vitality and future
    performance
    business position

    2-10
    A Balanced Scorecard Approach –
    Setting Strategic and Financial Objectives
     A balanced scorecard for measuring
    company performance is optimal; it entails
     Setting financial and strategic objectives
     Placing balanced emphasis on achieving
    both types of objectives
    (However, if a company’s financial performance is dismal or if its very
    survival is in doubt because of poor financial results, then stressing the
    achievement of the financial objectives and temporarily de-emphasizing
    the strategic objectives may have merit)
     Just tracking financial performance overlooks the
    importance of measuring whether a company is
    strengthening its competitiveness and market position.
    The surest path to sustained future profitability year after
    year is to relentlessly pursue strategic outcomes
    that strengthen a company’s business position and
    give it a growing competitive advantage over rivals!
    2-11
    Short-Term vs.
    Long-Term Objectives
     Short-term objectives
     Targets to be achieved soon
     Milestones or stair steps for reaching long-range
    performance

     Long-term objectives
     Targets to be achieved within
    3 to 5 years
     Prompt actions now that will
    permit reaching targeted
    long-range performance later
    2-12
    Crafting a Strategy
    Phase 3 of the Strategy-Making Process
     Strategy-making involves entrepreneurship
     Actively searching for opportunities to do new things
    or
     Actively searching for opportunities to do
    existing things in new or better ways
     Strategizing involves
     Developing timely responses to happenings
    in the external environment
    and
     Steering company activities in new directions dictated by
    shifting market conditions

    2-13
    Fig. 2.1: A Company’s Strategy-Making Hierarchy

    2-14
    Tasks of Corporate Strategy

     Moves to achieve diversification

     Actionsto boost performance of individual


    businesses

     Capturing valuable cross-business synergies to


    provide 1 + 1 = 3 effects!

     Establishing investment
    priorities and steering
    corporate resources into the
    most attractive businesses
    2-15
    Tasks of Business Strategy

     Initiating
    approaches to produce successful
    performance in a specific business
     Craftingcompetitive moves to build
    sustainable competitive advantage
     Developing
    competitively valuable
    competencies and capabilities
     Uniting strategic activities of functional areas
     Gaining approval of business strategies by
    corporate-level officers and directors
    2-16
    Tasks of Functional Strategies

     Game plan for a strategically-relevant


    function, activity, or business process

     Detail how key activities


    will be managed

     Providesupport for
    business strategy

     Specify how functional objectives


    are to be achieved
    2-17
    Tasks of Operating Strategies

     Concern narrow strategic approaches to manage


    key operating units and strategically-relevant
    operating activities

     Adddetail to business
    and functional strategies

     Delegation of responsibility
    to frontline managers
    2-18
    What Is a Strategic Plan?

    Its strategic vision


    and business mission
    A
    Company’s Its strategic and
    financial objectives
    Strategic Plan
    Consists of
    Its strategy

    2-19
    Implementing and Executing Strategy
    Phase 4 of the Strategy-Making Process
     Operations-oriented activity aimed at
    performing core business activities in a
    strategy-supportive manner
     Tougher and more time-consuming
    than crafting strategy
     Key tasks include
     Improving efficiency of strategy being executed
     Showing measurable progress in achieving targeted
    results
    2-20
    What Does Strategy Implementation Involve?

     Building a capable organization


     Allocating resources to strategy-critical activities
     Establishing strategy-supportive policies
     Instituting best practices and programs for
    continuous improvement
     Installing information, communication,|
    and operating systems
     Motivating people to pursue the target objectives
     Tying rewards to achievement of results
     Creating a strategy-supportive corporate culture
     Exerting the leadership necessary to drive the process
    forward and keep improving
    2-21
    Evaluating Performance and
    Making Corrective Adjustments
    Phase 5 of the Strategy-Making Process
     Tasks of crafting and implementing the strategy are
    not a one-time exercise
     Customer needs and competitive conditions change
     New opportunities appear; technology
    advances; any number of other
    outside developments occur
     One or more aspects of executing the
    strategy may not be going well
     New managers with different ideas take over
     Organizational learning occurs
     Allthese trigger a need for corrective actions and
    adjustments on an as-needed basis
    2-22
    Corporate Governance:
    Strategic Role of a Board of Directors
     Exercise strong oversight to ensure five tasks of
    strategic management are executed to benefit
     Shareholders or
     Stakeholders
     Make sure executive actions are not only proper
    but also aligned with interests of stakeholders

    2-23
    Obligations of a Board of Directors

     Be inquiring critics and overseers


     Evaluate caliber of senior executives’ strategy-
    making and strategy-executing skills
     Institute a compensation plan for
    top executives rewarding them for
    results that serve interests of
     Stakeholders and
     Shareholders
     Oversee a company’s
    financial accounting
    and reporting practices
    2-24

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