Strategic Mngement- Process of Crafting and Executing Strategy

Grace O' Malley
Flashcards by Grace O' Malley, updated more than 1 year ago
Grace O' Malley
Created by Grace O' Malley over 5 years ago


Topic 2

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PHASE 1: DEVELOPING A STRATEGIC VISION... Companies senior managers decide what path the company shud take and what internal changes would improve its market position and future prospects. Deciding to commit to one path vs. another forces managers to draw some carefully reasoned conclusions about how to modify the make-up of the business and what market position it should stake out. A number of factors need to be considered in deciding where to head and why such a direction makes good business sense.
STRATEGIC VISION... Describes the route the company intends to take in developing and strengthening its business. Thinking about changes in a company's product, market, customer or technology to improve current market position and future prospects. Communicates managers vision to stakeholders. MISSION STATEMENT... Communicates the firm's core ideologies and visionary goals. Contains 3 components: Core Values to Which the firm is Committed, Core Purpose of the Firm, and the visionary goals the firm will pursue to fulfill its mission. Conveys "Who we are, What we do and Why we are here." Current product and service offerings. Customer needs being served.
PHASE 2: SETTING OBJECTIVES... Purpose of setting objectives is to convert the strategic vision into specific performance targets. Results and outcomes management wants to achieve. Objectives represent a managerial commitment to achieving particular results and outcomes. "You cannot manage what you cannot measure"- BILL HEWLETT. A company that meets/beats its objectives is generally a better overall performer than a company who doesn't. Spells out how much of what kind of performance and by when. BALANCED SCORECARD- Financial Performance and Strategic Performance. EG; x% increase in annual revenues Annual increases in earnings per share. Winning x% market share. Achieving low overall costs than rivals. Better product selection than rivals. Achieving technological leadership. STRETCH OBJECTIVES... Objectives shud be set at levels that STRETCH an organisation to; Perform at its full potential, delivering the best possible results. Push firm to be more inventive.
SHORT-TERM OBJECTIVES... Targets to be achieved soon. Milestones for reaching long-range performance. Can be achieved within the next 6 months - 1 year. LONG-TERM OBJECTIVES... Can be achieved within 3-5 years. Include developing new product, growing annual revenue. Must not go on forever. Must be realistic.
PHASE 3: CRAFTING A STRATEGY... Entails answering a series of "how's". How to grow the business, how to please customers, how to achieve financial and strategic objectives, how to out-compete rivals and how to respond to changing market conditions. Proactively searching for opportunities to do new things/ do existing things better. Must pay attention to early warnings of future change. Must out-innovate competitors, be more imaginative and adapt faster. STRATEGY-MAKING HIERARCHY... CEO-- Chief direction setter, chief objective setter, chief strategy maker and chief strategy implementer. Ultimately responsible for the whole process. Chief architect of the strategy personally deciding what the key elements will be in the strategy. May seek advice of other senior managers and key employees. SENIOR EXECUTIVES-- Chief financial officer and Heads of marketing, financial, HR departments have influential strategy-making roles. CHIEF FINANCIAL OFFICER-- in charge of devising and implementing a financial strategy. MARKETING VP-- Orchestrates sales and marketing strategy. PRODUCTION VP-- Takes the lead in developing the company's production strategy. BRAND MANAGER-- In charge of the strategy for a particular brand in company's product line-up. In most companies every company manager has a strategy-making role- minor or major.
PHASE 4: IMPLEMENTING and EXECUTING THE STRATEGY... Operations-orientated activity aimed at performing core business activities. Most demanding and time-consuming part of this process. Tests a managers ability to direct organizational change, motivate people, create and nurture a strategy-supportive work climate. Execute the strategy competently. Achieve the targeted financial and strategic performance. "How much internal change is needed?" Ensuring staff has needed skills and expertise to implement effectively. IMPLEMENTATION INVOLVES... Building a capable organisation. Allocating resources to strategy-critical activities. Instituting best practices and continuous improvement. Motivating people to pursue target objectives. Tying rewards to achievement of results. Exerting required leadership.
PHASE 5: EVALUATING PERFORMANCE AND MAKING CORRECTIVE ADJUSTMENTS... Monitoring new external developments. Evaluating company's performance. Making necessary adjustments. Deciding whether to continue or change the company's vision, objectives, strategy, etc. So long as strategy is well-matched, performance targets are being met, company may stay on course. But whenever it may encounter disruptive changes in its environment, questions needs to be raised if change is needed. It is to be expected the strategy will be modified over time. ROLE of BOARD OFDIRECTORS... known as Corporate Governance. Elected by stakeholders. Given ultimate authority and responsibility. Can consist of both insiders and outsiders. Oversee a company's financial accounting and reporting practices.
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