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Strategy Management

1-Basic concepts of strategic management

What Is Strategy?

• The determination of long term goals and objectives of the enterprise (Chandler)

• Strategy is the central reason why firm succeed or fail (Porter)

Definition of Strategy
The long term Direction and scope of an organization, which achieves advantages in
changing environment through it’s configuration of resources and competences with aim
of fulfilling stakeholder expectations.

Strategy

• Without strategy the organization is like a ship in the mid of the ocean with out a radar.
• A firm needs to know where it is going? and why?
• Strategic management is not only to see the company as it is But what it can become.
• Forward thinking (future thinking).
• Looking at a range of options that a firm can take and decide which one to take.
• The route that give the best result.

The Ingredients of Strategy

Vision

Leadership Science
What makes a Decision Strategic

• Strategic decisions deal with long-term future of an entire organization and have the
three characteristics:
1. Rare: strategic decisions are unusual and typically have precedent to follow.
2. Consequential: Strategic decisions commit substantial resources and demand a great
deal of commitment from people at all levels
3. Directive: strategic decisions set precedents for lesser decisions and future actions
throughout the organization.

Strategic Management

• Is a set of managerial decisions and actions that help determine the long term
performance of an organization.

The Vocabulary of Strategy


• The three Big strategic questions
• Mission.
• Vision.
• Values
• Objectives (Goals).
• Policies.
• Tactics.
• Core Competency

Three Big Strategic Questions

1. Where are we Now? (Situational Analysis)


2. Where do we want to go? (Vision/ Objectives)
3. How do we get There? (tools / Plans)

A B
Mission and Vision

• Mission explains why you exist as an organization.


• A vision is a future picture, where you want to be?
• Do not mix vision and mission.

A mission statement
• Defines the current business activities.
• It provides a boundary to where the current business is.
• Where are we now?
• What are we doing?
• Why do we exists?
• Gives a specific clarification about what the business does.

Mission Statement
• Answer the question: why your organization exist?
• What is your organization core purpose?
• Characteristics
Short
Memorable
Inspiring
What do you want to be remembered for.
Market focus (who are we serving, what is their need)
Local Example:

• Mission statement: Our mission is to satisfy all communication needs of the

developing markets which we serve. It is our belief that there is viable economic

model to serve emerging markets while availing affordable quality. We are racing

to serve the largest possible number of customers, covering the most populous

countries in the world. We believe that by positioning ourselves as the primary

provider of communication services, we are shaping the future of the markets we

serve.

Microsoft Corporation

Empower people through great software any time, any place, and on any device.

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.
The Vision statement

• Future picture
• Where the organization is heading?
• It is like the north star.
• Some important characteristics:

- It is future casting.( verbs with –ing, creating, leading, becoming, or will be …


- If you can not see your vision, your team can not.
- Think big.
- To be a single or short sentence.
- To be 5-10 years in nature

The Vision statement


• Creates a road map for the future.
• Decide which future business position to take. • Provides long term direction.
• Gives the firm a sense of identity.
• Fixed and should Not to be changed every now and then.

Local Example:

• Vision :To become one of the world’s leading telecom operators providing the reliable
quality services to our customers, value to our shareholders and a dynamic,
challenging and fun environment for our employees.
objectives
• Objectives are converting the vision and mission into specific performance
targets.
• Ensure that the organization is result oriented.
• Decision making is based on results.
• Provides a set of benchmarks for judging organizational performance.
• The success of the firm is measured by how well the firm has achieved it’s objective.

Setting Objectives
• Objectives are needed at all levels in the organization.
• The organization as a whole needs an objectives.
• Each business area needs objectives.
• Each department needs objectives.
• Each individual needs objectives.
• Individuals are evaluated based on how well they achieved their objectives.

How to set smart Objectives


• A goal(objective) is a 1 to 3 years action statement.
• How to be effective
• Should start with a verb: increasing, decreasing, reducing…..
• It should show a movement that the organization is trying to do.

SMARTER Objectives

• Any objective needs to be:

• Specific- not vague


• Measurable- in some way
• Agreed upon
• Responsible person/Realistic .
• Time bound- with dates.
• Evaluated- with success criteria.
• Reviewed- at agreed intervals
example
• Increase customer satisfaction by 10% before the end of 2010 by Ahmed.
• The important thing is to know how people will help you to get this goal happen.
• How to go from the big goal to the smaller goals?
• Break the big goals smaller.

Increase customer
satisfaction with 10%

Customer service department IT department

You need to set goals


for these departments
Values

• Values are defined as the set of beliefs, tendencies and ways of doing and behaving
that management has determined to guide the search of the vision and strategy, the
way company executes its operations as well as personnel’s behavior
• What is important for us
»Values compound a central ideology
»They serve as a junction to unite the organization behind the objectives stated by
management

Values
» The way companies comply and observe its values has a huge degree of variation:
– In some companies, top management imposes employees the responsibility to act as
stated by the values and these values become a genetic code defining the company.
Employees are appraised on the basis of their respect for those values

– Other companies take values as just an aggregation of words and sentences with few, if
any, impact on personnel’s behavior or the way the organization works. As an example,
Enron’s values were summed up in respect, integrity, communication and excellence
Levels of Strategy
1. Corporate strategy: Describes the company’s Overall direction in terms of its general
attitude towards growth and the management of its various businesses and product lines.
(more than one business, with different competitors, and customers in each business).
- Typically fit within the three main categories of stability, growth and retrenchment
2. Business strategy : Usually occur at the business unit or product level, and it emphasizes
improvement of the competitive position of a corporation’s products or services in a
specific market or industry served by the business unit. (in one market )
3. - Typically fit within the two overall strategies competitiveness and cooperativeness
3. Functional strategy: is the approach taken by a functional area to achieve corporate and
business unit objectives and strategies by maximizing resource productivity. It is
concerned with developing and nurturing a distinctive competence to provide a company
with a competitive advantage (marketing Strategy, Financial strategy, Research and
development strategy..) (specific Objectives)

• Magic Chef had been a successful appliance maker by spending little on R&D but by
quickly imitating the innovations of other competitors. This helped the company keep its
costs lower than the competitors


Functional R&D strategy

• Staples, the office supply store had used a competitive strategy to differentiate its
retail store by adding services like copying, UPS shipping and hiring mobile
technicians who can fix computers and install networks

Business strategy (competitive)
Local Example: Orascom

Levels of strategy
Case Study

• Pfizer
• In your opinion which level of management in the company can take such decisions?
• If these decisions are not taken what are the consequences?
• How decisions like the mentioned in the case can be taken, what are the tools needed to
take these decisions?

Policies: Setting guide lines

• A policy is a broad guideline for decision making that links the formulation of a strategy with
the implementation.
• Companies use policies to make sure that employees throughout the organization make
decisions and take actions that support the corporation mission, objectives and strategies.

• 3M : researchers should spend 15% of their time working on something other than their
primary project (this support 3M’s strong product development strategy)

Programs and Tactics

• A program or a tactic is a statement of the activities or steps needed to support a strategy.


• Boeing had a strategy to regain industry leadership by increasing manufacturing
efficiency to keep prices low. To cut cost management decided to implement a serious
of tactics:
1. Outsourcing 70% of manufacturing
2. Reduce final assembly time to three days
3. Use light weight composite material in place of Aluminum.

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