The document discusses strategic management and the process of formulating strategies. It examines the importance of mission statements and defines key terms like strategy, competitive advantage, and superior performance. It outlines the strategic management process, including strategy formulation, implementation, and leadership. It discusses analyzing the external and internal environments, crafting the organization's mission, vision, values and goals. The levels and roles of strategic managers are also summarized.
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1. LO1
Examine the framework of strategic
management process and identify
the context within which strategies
are formulated. Examine the
importance of mission statements.
2. Why do some organizations succeed
while others fail?
Define Strategy: Strategy is a set of related actions that
managers take to increase their companys
performance.
Strategic Leadership
Task of most effectively managing a companys strategy-
making process
Strategy Formulation
Task of determining and selecting strategies
Strategy Implementation
Task of putting strategies into action to improve a companys efficiency
and effectiveness
Competitive Advantage results when a
companys strategies lead to superior
performance compared to competitors
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3. Superior Performance and
Sustainable Competitive
Advantage
Superior Performance
One companys profitability relative to that of other
companies in the same or similar business or industry
Maximizing shareholder value is the ultimate goal of profit
making companies
When a companys profitability is greater than the average
of all other companies in the same industry & competing for
the same customers
Sustained Competitive Advantage
When a companys strategies enable it to maintain
above average profitability for a number of years
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4. Strategic Managers
Corporate-Level Managers
Oversee the development of strategies for the whole organization.
The CEO is the principle general manager who consults with other
senior executives
Allocating resources among businesses, deciding which businesses if
any it needs to get rid of and which new businesses if any it should
acquire
Business-Level Managers
Transfer corporate strategy into concrete strategies for individual
businesses.
Functional-Managers
Responsible for supervising a particular task or operation (e.g.
marketing, operations, accounting, human resources)
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5. Levels of Strategic Management
Figure 1.4
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6. Strategic Leadership
Good leaders of the strategy-making process
have a number of key attributes:
Vision, eloquence, and consistency
Articulation of the business model
Commitment
Being well informed
Willingness to delegate and empower
The astute use of power
Emotional intelligence: self-awareness, self- regulation,
motivation, empathy, social skills
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7. The Five Steps of the
Strategy Making Process
Select the corporate mission and the major corporate
goals.
Analyze the external competitive environment to identify
opportunities and threats.
Analyze the organizations internal environment to
identify its strengths and weaknesses.
Select strategies that:
Build on the organizations strengths and correct its weaknesses in
order to take advantage of external opportunities and counter external
threats
Are consistent with organizations mission and major goals
Are congruent and constitute a viable business model
Implement the strategies.
strat
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8. Crafting the Organizations Mission
Statement
Provides a framework or context within
which strategies are formulated, including:
Mission
The reason for existence what an organization does
Vision
A statement of some desired future state
Values
A statement of key values that an organization is
committed to
Major Goals
The measurable desired future state that an
organization attempts to realize
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9. The Mission
The mission is a statement of a companys
reason for existence today.
What is it that the company does?
Who is being satisfied (what
customer groups)?
What is being satisfied (what
customer needs)?
How customer needs are being satisfied (by what
skills, knowledge, or distinctive competencies)?
A companys mission is best approached from
a customer-oriented business definition.
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10. Abells Framework
for Defining the Business
Figure 1.6
Source: D. F. Abell, Defining the Business: The Starting Point of
Strategic Planning (Englewood Cliffs, Prentice Hall, 1980), p. 7.
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Company. All rights reserved.
11. The Vision
What would the company like to achieve?
A good vision is meant to stretch a company by
articulating an ambitious but attainable future state.
The vision of Ford is to become the worlds
leading consumer company for automotive
products and services.
Nokia is the worlds largest manufacturer of
mobile phones and operates with a simple but
powerful vision: If it can go mobile, it will!
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12. Values
The values of a company should state:
How managers and employees should
conduct themselves
How they should do business
What kind of organization they need to build
to help achieve the companys mission
Organizational culture
The set of values, norms, and standards that control how
employees work to achieve an organizations mission and
goals
Often seen as an important source of competitive advantage
In high-performance organizations, values
respect the interests of key stakeholders.
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13. Values at Nucor
Management is obligated to manage Nucor in such a way that
employees will have the opportunity to earn according to their
productivity.
Employees should be able to feel confident that if they do
their jobs properly, they will have a job tomorrow.
Employees have the right to be treated fairly and must believe
that they will be.
Employees must have an avenue of appeal when they believe
they are being treated unfairly.
At Nucor, values emphasizing pay for performance, job
security, and fair treatment for employees help to create
an atmosphere that leads to high employee productivity.
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14. Major Goals
A goal is a precise and measurable desired
future state that a company must realize if
it is to attain its vision or mission.
Key characteristics of well-constructed goals:
1. Precise and measurable to provide a yardstick or
standard to judge performance
2. Address crucial issues with a limited number of key
goals that help to maintain focus
3. Challenging but realistic to provide employees with
incentive for improving
4. Specify a time period to motivate and inject a
sense of urgency into goal attainment
Focus on long-run performance and
competitiveness.
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15. External Analysis
Purpose is to identify the strategic opportunities and
threats in the organizations operating environment
that will affect how it pursues its mission.
External Analysis requires an assessment of:
Industry environment in which company operates
Competitive structure of industry
Competitive position of the company
Competitiveness and position of major rivals
The country or national environments
in which company competes
The wider socioeconomic or macroenvironment that
may affect the company and its industry
Social Legal Technological
Governmental International Macroeconomic
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16. Internal Analysis
Purpose is to pinpoint the strengths and weaknesses
of the organization. Strengths lead to superior
performance and weaknesses to inferior performance.
Internal analysis includes an assessment of:
Quantity and quality of a
companys resources and
capabilities
Ways of building unique
skills and company-specific
or distinctive competencies
Building & sustaining a competitive advantage
requires a company to achieve superior:
Efficiency Innovations
Quality Responsiveness to customers
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17. Selecting Strategies: SWOT
Analysis and Business Model
SWOT analyses help to identify strategies that align
a companys resources and capabilities to its
environment in order to create and sustain a
competitive advantage.
Functional strategies should be consistent with and
support the companys business level and global
strategies.
Functional-level strategy directed at operational effectiveness
Business-level strategy businesses overall competitive themes
Global strategy expand, grow and prosper at a global level
Corporate-level strategy to maximize profitability and profit growth
When taken together, the various strategies
pursued by a company must lead to a
viable business model.
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18. Strategy Implementation
After choosing a set of congruent strategies to
achieve competitive advantage, managers
must put those strategies into action:
Implementation and execution of the strategic
plans
Design of the best organization structure
Consistency of strategy with company culture
Control systems to measure and monitor progress
Governance systems for legal and ethical
compliance
Consistency with maximizing profit and profit
growth
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19. The Feedback Loop
Managers must monitor strategy execution:
To determine if strategic goals and objectives are
being achieved
To evaluate to what extent competitive advantage is
being created and sustained
Managers must monitor and reevaluate for
the next round of strategy formulation and
implementation
Strategic planning is ongoing.
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20. Group Assignment 1
Craft a mission statement for a company your
group agrees on (assume you are the
executives) (i.e. could be the company you
work in), which includes:
The reason for existence what an organization
does
A statement of some desired future state (vision)
A statement of key values that an organization is
committed to (values)
The measurable desired future goals (goals)