Strategic Management by Dr. Dusit Jaul(INTAN Senior Officer)

Program Structure.

• Introduction to strategic management
• Working on your organization’s vision, mission and goals
• Group discussions and presentation
• Setting objectives and crafting a strategy
• Levels of strategies
• Implementing strategic change in the organization through strategy execution

Upon completion of this 3 day course, you’ll get better understanding of :-

• The concept of strategic management
• The strategic management process and its related principal activities
• Key environmental factors that are creating more uncertainty/unpredictable change – thus requiring greater need for strategic management in the organization
• How organization can achieve competitive advantage through the various strategies

PART 1: Introduction to Strategic Management.

Pertinent questions in Strategic Management
• What is a strategy?
• Strategic Management defined
• Objective of Strategic Management
• Five tasks of Strategic Management
• PEST factors

Pertinent questions in Strategic Management
1. Why was your organization created?
- present achievement
- stakeholders expectation
2. Is there a vision for your organization?
3. What is your strategic intent & strategy content? (why, what, how?)
4. What about strategy creation?
- environmental scanning
- types of strategies
5. What about strategy implementation and its impact to your organization?

What is your reaction to these questions?

Driving force of change in organization
• Globalization & liberalization
• Rapid technological development
• Intellectual capital – knowledge as the source of competitive advantage
• Enhancing employee involvement
• Knowledge Management
Determinants of organization performance. Three broad factors

1.Industry context
2.National context
3.Company resources, capabilities, and strategies
* All this three factors will efect company performance

What is strategy ?
Version 1 : “A company’s strategy is a game plan management has for positioning the company in its chosen market arena, competing successfully, pleasing customers, and achieving good business performance” (Thomson Strickland, 1999)

Version 2 : “The determination of a basic long term-goal and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals” (Alfred Chandler)

What this means is that:
• Strategy involve rational planning
• Organization chooses its goal & identify course of action

An organization’s strategy normally comprised the following:
Ø Actions to merge with or acquire a rival company, form strategic alliances, or collaborate closely with certain industry members
Ø Efforts to alter geographic coverage, integrate forward or backward, or stake out a different industry position
Ø Efforts to broaden/narrow the product line, improve product design, alter product quality, alter performance features, or modify customer service
Ø Fresh offensive moves to strengthen the company’s long-term competitive position and secure a competitive advantage
Ø Actions to respond to changing industry conditions (shifting customer preferences, new government regulations, the globalization of competition, exchange rate instability, entry or exit of new competitors
Ø Moves to diversify the company’s revenue base and enter altogether new industries or businesses
Ø Actions to strengthen the company’s resources base and competitive capabilities
Ø Moves and approaches that define how the company manages R&D, manufacturing, marketing, finance, and other key activities
Ø Defensive moves to counter the actions of competitors and defend against external threats
Ø Actions to capitalize on new opportunities (new technologies, product innovation, new trade agreements that open up foreign market

Source: Thomson Strickland, 1999



From Strategy to Strategic
The adjective STRATEGIC has 2 meanings:-
(a) Relating to, or concerned with strategy
(b) Highly important to, or an integral part of a strategy or plan of action (especially
in war)

Strategic Management Defined.Version 1
Ø “Strategic Management is a type of planning process in which the organization set its general direction and objective”
Ø Strategic Management is a tool used to determine mission, vision, values, goals, objectives roles and responsibilities of the organization.
Ø Organization must stretch far beyond where it is today

Strategic Planning Process

Mandate / Stakeholders analysis > Vision, mission > Environment analysis > Strategic issues > Vision of success

Version 2
Strategic Management is the process of specifying an organization’s objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It is the highest level of managerial activity. It provides overall direction to the whole enterprise objectives.

Five important tasks of Strategic Management
• Forming a strategic vision – what the organization’s future business makeup will be & were the organization is headed
• Setting objectives – converting the strategic vision into specific performance, outcomes for the organization to achieve
• Crafting a strategy to achieve the desired outcomes
• Implementing & executing the chosen strategy efficiently & effectively
• Evaluating performance and initiating corrective adjustments in vision, long-term direction, objectives, strategy or implementation in light of actual experience, changing conditions, new ideas, & new opportunities

Factors that shape on organization’s strategy :
PEST, where
P – political
E – economic
S – social
T – technologies

Political factors
Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:
• Tax policy
• Employment laws
• Environmental regulations
• Trade restrictions and tariffs
• Political stability

Economic factors.
Economic factors affect the purchasing power of potential customers and the firm’s cost of capital. The following are examples of factors in the macro economy:
• Economic growth
• Interest rates
• Exchange rates
• Inflation rates

Social factors.
Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factor include :
• Health consciousness
• Population growth rate
• Age distribution
• Career attitudes
• Emphasis on safety

Technological factor.
Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outstanding decisions. Some technological factors include :
• R&D activity
• Automation
• Technology incentives
• Rate of technological change

Faced with PEST, an organization had to constantly carry out process of self analysis. PEST can be opportunities and threats. Analysis of environment under which an organization operate is referred to as SWOT analysis.(Internal strength & weaknesses, external opportunities & threat).

PART 2: Working On Your Vision, Mission & Goal (s)
• The Five Forces model
• SWOT analysis
• Vision, mission
• Organizational goals
• Corporate philosophy

Porter’s Five Forces model – an industry/organization is said to be influenced by five forces.Rivalry Among Established Firms. There are 5 factors :
>Risk of entry by potential competitors
>Bargaining power of suppliers
>Bargaining power of buyers
>Threat of substitute products

In the light of forces of change affecting organization, top management must conduct self analysis of organization. One way this can be done is through SWOT analysis whereby you find out:

• Internal strengths & weaknesses
• External opportunities & threats


Strengths > A firm’s strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Examples of such strengths include :

• Patents
• Strong brand names
• Good reputation among customers
• Cost advantages from proprietary know-how
• Exclusive access to high grade natural resources
• Favorable access to distribution networks

Weaknesses > The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses :

• Lack of patent protection
• A weak brand name
• Poor reputation among customers
• High cost structure
• Lack of access to the best resources
• Lack of access to key distribution channels

Opportunities > The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include :

• An unfulfilled customer need
• Arrival of new technologies
• Loosening of regulations
• Removal of international trade barriers

Threats > Changes in the external environmental also may present threats to the firm. Some examples of such threats include :

• Shifts in customers tastes away from the firm’s products
• Emergence of substitute products
• New regulations
• Increased trade barriers

Causes of corporate decline :-
• Poor management (incompetence, neglecting core business & insufficient number of good managers)
• Over expansion (e.g. as a result of diversification)
• Inadequate financial control
• High cost
• New competition
• Unforeseen demand shift
• Organizational inertia – slow to respond to environmental changes

Selecting/determining an organization's vision, mission & goal(s) – Important component of the strategic management process

What is a vision ? “What you set out your organization to be ……?” – future desirable state/future orientate


What is a mission statement?
Version 1.

An organization’s mission is its purpose, reasons for its existence – It defines in matter of business, what the organization set out to do.

(Hunger & Wheelen, 2001)

The mission sets out why the organization exists and what it should be doing.

The vision is an inspirational resonance of desire, values & possibilities. The vision should be embedded in the mission – Vision 2020 – TO ATTAIN DEVELOPED NATION STATUS BY 2020.



Version 2.

“The mission statement is an organization’s definition of its business, vision, goals and philosophical values.”

(Hill & Jones, 1995)

Relationship between “Mission” and “Vision”.
WE WANT
WE NEED
WE OUGHT } THE ‘VISION’
WE MAY
WE SHOULD
WE CAN

Setting up organizational goals.

Realistic – they seem achievable within the required timescale.

Communicable – it is easy to get others to understand them.

Measurable – it is always possible to answer the question, ‘How will we know when we have achieved them?’ This does not always require the measure to be a quantity. Often, very visible qualitative measures can be more effective than detailed statistics.

Relevant – it is possible to see how their achievement will make a major contribution to the fulfillment of the organization’s ‘vision’ and the pursuit of its’ ‘mission’.

Corporate philosophy – An important components of mission statement refers to:-
• The basic beliefs
• Values
• Aspirations that top management are committed to.

Strategic vision/mission statement are organizational specific not generic.

à The whole idea behind developing a strategic vision/mission statement is to set an organizational apart from others in its industry and give it its own special identity, business emphasis and path for development.

PART 3: Setting Objectives and Crafting A Strategy

Purpose of setting OBJECTIVES is to:
• Convert mission into performance target
• Create yardsticks to track performance
• Establish performance goals requiring stretch
• Push firm to be inventive, intentional, focus
Setting CHALLENGING but ACHIEVEABLE objectives guards against:
• Complacency
• Drift
• Internal confusion
• Status quo performance

Two Types Of Objectives Needed

Financial Objectives :
>Outcomes that relate to improving firm’s financial performance
>Improve financial management

Strategic Objectives :
>Outcomes that will result in greater competitiveness & stronger long-term position for the organization

Examples Of Types Of Objectives

Financial Objectives :

Increase earnings growth from 10 – 15% per year
Prudent financial management

Strategic Objectives :

Up firm’s market share from 18 – 20%
Overtake rivals on quality or customer service
Attain lower overall costs than rivals
Become leader in new product introductions
Achieve technological superiority
The best managed organization

Example: Corporate Objectives

• Protect & improve Nike’s position as the number one athletic brand in America
• Build a strong momentum in growing fitness market
• Intensify the company’s effort to develop products that women need and want
• Explore the market for products specifically designed for the requirements of maturing Americans
• Direct & manage the company’s international business as it continues to develop
• Continue the drive for increasing margins through proper inventory management and fewer, better products

Examples: Strategic & Financial Corporate Objectives

To become the most competitive enterprise in the world by being number one or number two in market share in every business the company is in.

To offer the best possible personal computing technology, and to put that technology in the hands of as many people as possible.

Principle of Strategy
Achieving sustainable superior performance
1.Operational Effectiveness 2.Strategic Positioning
Assimilating, attaining & Creating a unique & sustainable competitive position extending best practices

Run the same race faster Choose to run a different race

Note: Both are important. Real challenge for leader is to do these at the same time. The tendency is that managers spent too much time on best practices, only to realize one day that they are not doing enough for strategy.

Strategy-Making concerns HOW to:-
Achieve desired strategic & financial objectives
• Out-compete rivals & win competitive advantage
• Respond to changing industry & competitive conditions
• Defend against threats to firm’s well-being
• Grow the business

Strategy As Planned & Reactive To Changing Circumstances
Planned Strategy } Actual Strategy
Adaptive Reactions }

>Understanding Organizational Strategy – What To Look For
>The Pattern of Actions That Define Strategy :
>Responses to Changing Conditions
>Fresh Offensive to Gain Market Edge
>Production Line, Quality, or Service
>Geographic Coverage
>Forward or Backward Integration
>Pursuing New Opportunities
>Defensive Moves
>How Key Functions Are Managed
>Actions to Improve Short Term Profits
>Diversification

What Does Strategy Consist Of ?
• How to satisfy customers
• How to grow the business
• How to respond to changing industry & market conditions
• How to best capitalize on new opportunities
• How to manage each functional piece of business
• How to achieve strategic & financial objectives

Crafting Strategy Is An Exercise In Entrepreneurship
Strategy-Making is entrepreneurial
• Risk-taking & venturesomeness
• Innovation and business creativity
• Keen eye for spotting market opportunities
• Choosing among alternatives
Strategy-Making challenge is to keep strategy
• Fresh
• Timely
• Responsive to changing conditions
• Opportunistic


Characteristic of Entrepreneurial Managers
• Boldly pursues new strategic opportunities
• Emphasizes out-innovating the competition
• Leads the way to improve firm performance
• Willing to be a first-mover & take risks
• Responds quickly & opportunistically to new developments
• Devises trail blazing strategies

Why Good Management of Strategy Matters
• Powerful execution of a powerful strategy is a proven recipe for success
• Crafting & implementing strategy are CORE management functions
• To qualify as WELL-MANAGED, a firm should
- Have an attractive strategy
- Demonstrate proficiency in executing strategy
• A good strategy is strong enough to overpower rivals & flexible enough to overcome obstacles
• Without proficient strategy execution, firm cannot achieve peak performance

Why Is An Organization Strategy Constantly Evolving ?
Because firms often need to react to:
• Changing market conditions
• Moves of competitors
• New technologies & production capabilities
• Evolving customer needs & preferences
• Political & regulatory changes
• New windows of opportunity
• Fresh ideas to improve current strategy
• A crisis situation

What is a strategic plan ?
A Strategic Plan maps out:
• Where firm is headed
• Short and long range performance targets
• Actions of management to achieve outcomes
A Strategic Plan consists of:
• A strategic vision & business mission
• Strategic & financial performance objectives
• Comprehensive strategy for achieving the objectives
[End of Part 3]

PART 4: Applying Different Level Strategies to Create Competitive Edge.

What is a strategy – Re-emphasized

“A strategy is a comprehensive master plan stating how the corporation/organization will achieve its mission & objectives.”

Four types of strategies can be applied to create competitive edge for the organization:
• Global strategy
• Corporate strategy
• Business strategy
• Functional level strategy

Global strategy – Entry into foreign market involves a number of choices
• Exporting
• Licensing
• Franchising
• Entering into a joint venture with a host country company
• Setting up a wholly owned subsidiary in the host country

Corporate strategy:
(a) Definition : Corporate strategy is the way an organization creates value through the configuration and coordination of its activities
(b) Major characteristic
• It is a move used to establish business position in different industries
• Extend companywide
(c) Corporate Strategies 3 Questions
“What business or businesses should we be in?”
“Why are we in business?”
“What values do we stand for?”

Crafting on organization corporate strategy involved 4 initiatives:-
• Making move to establish different business & achieve diversification and how (starting new or by means of acquisition?)
• Initiating move to strengthen the businesses the company had diversified into
• Provide synergy among related business unit
• Establish investment priorities & steering corporate resources into the most attractive business units

Who is responsible for corporate strategy?
Corporate strategy is crafted at the highest level of management either leading the responsibility or deciding upon recommendations from managers.

Business Strategy – The basic concept:-
How are we to compete in our chosen business?
>BASIC COMPETITIVE APPROACH: Low cost/low price?; Differentiation (what kind?); Focus on a specific market niche?
>Moves to respond to changing industry conditions and other emerging development in the external environment
>Moves to secure a competitive advantage (accelerate R&D, improve product design, add new features, introduce new technologies, boost quality or service, out compete rivals on the basis of superior resources and competitive capabilities)
>Geographic market coverage and degree or vertical integration (full, partial)
>Collaborative partnerships and strategic alliances with others
>KEY FUNCTIONAL STRATEGIES TO BUILD COMPETITVELY VALUABLE RESOURCE STRENGTHS AND CAPABILITIES

Business strategies addressed the following issues:-
• Customer needs, what is to be satisfied?
• Customer groups, who to be satisfied?
• Distinctive competencies, how are customer needs to be satisfied?

Resolution on these 3 issues are at the heart of business strategies – they provide the source of a company’s competitive advantage over its rivals.

Customer’s needs can be satisfied by:
• Providing products & services as needed or by
• Means of product/services differentiation

Customer group & market segmentation
How a company group its customers based on differences in customers needs and preferences.

Deciding on the distinctive competencies to be pursued. 4 ways it can be done:
• Achieving superior efficiency
• High quality
• Culture of innovation
• Customer responsiveness

Generic strategies to choose from at the Business level.
• Cost leadership
• Differentiation
• Focus

Cost leadership strategy (low cost strategy)
• Out perform competitors by product goods or services at lower cost
• Requires tight production & budget control in the production process

Differentiation strategy
• Different from cost leadership & differentiation strategy
• Focus strategy is directed at serving the needs of a limited customer group or segment – what in marketing is referred to as market niche

Focus strategy is defined by:
Geography – to serve a particular region or locality

Type of customers – serving the very rich, the very young, the very adventurous

Product line – e.g. focus only on vegetarian food, fast cars, or designer clothes

Functional level strategies. This strategy refers to strategies directed at improving the effectiveness of the functional operations within an organization.

• Manufacturing
• Marketing
• Materials management
• R & D
• HRM

How do you ensure that functional units of an organization is effective in discharging their responsibilities? Areas to focus on:

• Achieving superior efficiency
• The TQM concept
• Superior innovation
• Superior customer responsiveness

Achieving superior efficiency
• Reduce cost and increased production
• HRM (employee training, self-managing teams, linking pay to performance)

Achieving superior efficiency is an organization-wide commitment. It requires close co-operation among functions.

The TQM Concept: Its underlying philosophy is based on the following five-step “chain reaction” (Edward Deming)
• Improved quality means that costs decrease because of less rework, fewer mistakes, fewer delays, and better use of time and materials.
• As a result, productivity improves.
• Better quality leads to higher market share and allows the company to raise prices.
• This increases the company’s profitability and allows it to stay in business.
• Thus the company creates more jobs.

Implementing TQM at the Functional level of the organization.
Infrastructure
Provide leadership and commitment to quality
Find ways to measure quality
Set goals and create incentives
Solicit input from employees
Encourage co-operation between functions

Marketing
Focus on the customer
Provide customer feedback or quality

Materials Management
Rationalize supplies
Help suppliers implement TQM
Trace defects to suppliers

R&D Human Resources
Design products that are easy to manufacture
Institute TQM training programs
Organize employees into quality teams

Superior innovation: Five important steps to be taken.
• Building skills in scientific research
• Achieving close integration between R & D and marketing
• Achieving close integration between R & D and manufacturing
• Minimize time to bring products to market – time is the essence
• Good prefect management


Superior customer responsiveness.
• Company must give what the customer wants and when they want it
• It involves giving customer value for money

How different functional units can achieve superior customer responsiveness:

Top Management
Through leadership by example, build a company-wide commitment to customer responsiveness

Manufacturing
Achieve customization by implementing flexible manufacturing
Achieve rapid response through flexible manufacturing

Marketing
Know the customer
Communicate customer feedback to appropriate functions

Materials Management
Develop logistics systems capable of responding quickly to unanticipated customer demands (JIT)

R&D
Bring customers into the product development process

Human Resources
Develop training programs that make employees think of themselves as customers

In summary…
Corporate strategy – describe a company’s overall direction in managing growth and its various business

Business strategy – occurs at the business unit or product level, it emphasize competitive position of the company’s product/services

Functional strategy – an approach used by division/unit to achieve objectives. It focuses on distinctive competence to achieve its competitive edge.

The various level of strategies are used simultaneously

Part 5: Strategy Implementation
• The challenges of strategy implementation
• Leadership & management roles
• Culture aspects of strategy implementation
• Values & ethics of strategy implementation

Implementation is a key part of strategic management.

Implementing Strategic Change In The Organization
Strategy implementation: Strategies are put into action through:

• Building resource capabilities & restructuring the organization
• Working out budgets, adopting clear policy, best practices, reward system
• Adopting the right culture & leadership commitment for change

Involve changes in the culture, structure and management system of the organization.

Strategy Implementation
Implementing strategy is an action-oriented, operation-driven activity revolving around managing people and business processes. It is tougher and more time consuming than crafting strategy and it is where most strategies fail. It is often said that successful strategy is 10% crafting and 90% implementation.

The Task of Implementing Strategy
• Overcome pockets of doubt
• Build consensus
• Secure commitment of concerned parties
• Get all implementation pieces in place and coordinated

Consider these questions…
• Who are the people who will carry out the strategic plan?
• What must be done?
• How are they going to do & what is needed?

Why the need to answer the above questions. Consider the following common problems we often encounter when attempting to initiate strategic change in the organization.

Slower implementation than originally planned
Unanticipated major problems
Ineffective coordination of activities
Competing activities and crises that distracted attention away from implementation
Insufficient capabilities of the involved employees
Inadequate training and instruction of lower-level employees
Uncontrollable external environmental factors
Inadequate leadership and direction by departmental managers
Poor definition of key implementation tasks and activities
Inadequate monitoring of activities by the information system

Culture and leadership aspect of strategy implementation
• Creating supportive corporate culture
• Exerting the internal leadership to drive strategy implementation

Leaders who are preoccupied with the past will have no time for the future.

The Role of Leaders in Strategy Implementation
• Clearly distinguish operational effectiveness from strategy
• Lead the process of choosing the company’s unique position – The choice of strategy cannot be entirely democratic
• Communicate the strategy relentlessly to all constituency
• Maintain discipline around the strategy, in the face of many distractions
• Decide which industry changes, technologies, and customer needs to respond to, and how the response can be tailored to the company’s strategy
• Measure progress against the strategy using metrics that capture the implications of the strategy on multiple levels
• Sell the strategy and how to measure progress to financial markets

Commitment to strategy is tested every day

Communicating A Strategy
• Strategy involves everyone in an organization, not just management
• The benefits of strategy are greatest when it is communicated widely in the organization
• The basic strategy and value proposition must also be communicated to customers, channels, suppliers, and financial markets – What about confidentiality?
• Managers should not assume that subordinates understand the strategy or that they agree with it – A series of open, two way discussions is necessary to increase understanding and buy-in
• Individuals who do not ultimately accept the strategy cannot have an ongoing role in the company

Footnote on Strategy Implementation; Communicating the Strategy
95% of employees do not understand about their organization’s strategy. If employees are not aware of strategy, how in the first place can they implement it?

The managerial task of implementing & executing the chosen strategy
• Building an organization capable of carrying out the strategy successfully
• Developing budgets that steer resources into those internal activities critical to strategic success
• Establishing strategy-supportive policies and operating procedures
• Motivating people in ways that induce them to pursue the target objectives energetically and, if need be, modifying their duties and job behavior to better fit the requirements of successful strategy execution
• Tying the reward structure to the achievement of targeted results
• Creating a culture and work climate conductive to successful strategy implementation and execution
• Installing information, communication, and operating systems that enable company personnel to carry out their strategic roles effectively day in and day out
• Instituting best practices and programs for continuous improvement
• Exerting the internal leadership needed to drive implementation forward and to keep improving on how the strategy is being executed

Building resource capabilities – Building a dynamic organization involves the following:
• Selecting able people for key position
• Making certain that the organization has the skills, core competencies, managerial talents, technical know-how, competitive capabilities, and resource strengths it needs
• Organizing business process, value chain activities, and decision making in a manner that is conductive to successful strategy execution

Culture aspects of strategy implementation
• Culture can contribute to – or hinder – successful strategy execution
• Strategy-supportive cultures shape the mood and temperament of the work force
• Strategy-supportive cultures stimulate people to take on the challenge or realizing the company’s vision, do their job competently.
Every organization has its own corporate culture (“How we do things around here”)
Examples…

Wal-Mart – dedication to customer satisfaction, zealous pursuit of low cost, a strong work ethic

Substantive culture-changing actions include:
• Benchmarking and best practices
• Set world-class performance standard
• Bring in new blood, replacing traditional managers
• Review organizational structure
• Increase commitment to employee training
• Resource allocation

Source of Corporate Culture

Corporate culture is derived from the beliefs and philosophy upheld by people in the organization – It is manifested in the values & principles that management preaches.

Values and Ethics Aspects of Strategy Execution

Topics Covered in Values Statements

• Importance of customers and customers service
• Commitment to quality
• Commitment to innovation
• Respect for the individual employee and the duty the company has to employee
• Importance of honesty, integrity, and ethical standards
• Duty to stockholders
• Duty to suppliers
• Corporate citizenship
• Importance of protecting the environment

Topics Covered in Codes of Ethics

• Honesty and observance of the law
• Conflicts of interest
• Fairness in selling and marketing practices
• Using inside information and securities trading
• Supplier relationships and purchasing practices
• Payments to obtain business/Foreign Corrupt Practices Act
• Acquiring and using information about others
• Political activities
• Use of company assets, resources, and property
• Protection of proprietary information
• Pricing, contracting and billing

Leadership for strategic change. Six leadership roles required.
Staying on top of what is happening and how well things are going
Promoting a culture in which the organization is “energized” to accomplish strategy and perform at high level
Keeping the organization responsive to changing conditions, alert for new opportunities, bubbling with innovative ideas, and ahead of rivals in developing competitively valuable competencies and capabilities
Building consensus, containing “power struggles,” and dealing with the politics of crafting and implementing strategy
Enforcing ethical standards
Pushing corrective actions to improve strategy execution and overall organization performance.

7S Model for Strategy Implementation
STRATEGY
SKILLS
STAFF
STYLE
SYSTEMS
STRUCTURE
SHARED VALUE
The 7S further explained
Strategy – plan or course of an action leading to the allocation of firm’s resources to reach identified goals
Structure – the ways people and tasks relate to each other. The basic grouping of reporting relationships and activities. The way separate entities of an organization are linked
Shared Values – the significant meaning or guiding concepts that give purpose and meaning to the organization
Systems – formal processes and procedures, including management control systems, performance measurement and reward system, and planning and budgeting systems, and the ways people relate to them
Skills – organizational competencies, including the abilities of individuals as well as management practices, technological abilities, and other capabilities that reside in the organization
Style – the leadership style of management and the overall operating style of the organization. A reflection of the norms people act upon and how they work and interact with each other, vendors, and customers
Staff – recruitment, selection, development, socialization, and advancement of people in the organization


Latest thinking on strategy implementation
Office of Strategy Management
• Align the organization
• Review strategy
• Develop strategy
• Communicate strategy
• Manage strategic initiative
• Integrate strategic priorities with other support functions

Footnote on Strategy Implementation
Why strategy implementation really matters:
‘Organizations often fail at strategy execution. Various sources have reported implementation failure rates at between 60 and 90 percent. The successful companies align their key management processes for effective strategy execution’ (Harvard Business Review)

Organization of the future will have the following characteristics:
• Fewer boundaries between different vertical ranks, between functions and disciplines, between its units in different geographic locations, and between the company and its suppliers, distributors/dealers, strategic allies and customers
• A capacity for change and rapid learning
• Collaborative effort among people in different functional specialties and geographic locations – essential to create organization competencies and capabilities
• Extensive use of digital technology – personal computers, wireless telephones, videoconferencing, and other state-of-the-art electronic products

PART 6: Recap Of Important Terms
Strategic Vision
A view of an organization’s future direction and business course: a guiding concept for what the organization is trying to do and to become.

Organization Mission
Represents management’s customized answer to the question “what is our business and what will it be.” A mission statement broadly outlines the organization’s future direction and serves as a guiding concept for what the organization is to do and to become.

Performance Objectives
Organization’s targets for achievement: both short and long range objectives are needed.

Strategic Objectives
Targets relating to strengthening a company’s overall market position and competitive viability.

Long-Range Objectives
Achievements level to be reached within the next three to five years.

Short-Range Objectives
Near-term performance targets: they establish the pace for achieving the long-range objectives.

Strategy
Managerial action plan for achieving organizational objectives: strategy is minored in the PATTERN of moves and approaches devised by management to produce the desired performance. Strategy is the HOW of pursuing an organization’s mission and reaching target objectives.

Strategic Plan
Statement outlining an organization’s mission and future direction: near-term and long-term performance targets, and strategy, in light of organization's external and internal situation

Strategy Formulation
Refers to the entire direction: setting management function – conceptualizing an organization’s mission, setting specific performance objectives, and formulating a strategy. The end product of strategy formulation is a strategic plan.

Strategy Implementation
Includes the full range of managerial activities associated with putting the chosen strategy into place, supervising its pursuit, and achieving the targeted results.

Summary of what we have gone through – The Strategic Planning Process
STEP 1 > Vision, Mission & Objectives (Forward looking)

STEP 2 > Environmental Scanning (PEST, SWOT)

STEP 3 > Strategy Formulation (Global strategy, Corporate strategy, Business strategy, Functional strategy)

STEP 4 > Strategy Implementation (Program, budget/resources, procedures, HRM practices)


Framework for understanding Strategic Management
Continually asking the question, “Are we doing the right things?”
Pay attention to the “big picture”
Willingness to adapt to changing environment/circumstances by:
- formulating the organization’s vision, mission
- development of a competitive strategy to achieve the mission
- creation of organizational structure that will deploy resources to support
strategy implementation.