Strategic Management: Planning and Execution

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Chapter 3 Strategic ManagementPlanning and
Execution
Course Instructor Dr. Syed M. Ahmed,
Ph.D. College of Engineering Computing Florida
International University, Miami, Florida
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Lecture Outline

• What is Strategic Management?
• Components of Strategic Management
• Strategic Planning Overview
• Creative Thinking in Strategic Panning
• Conducting the SWOT Analysis
• Developing the Vision
• Developing the Mission
• Developing the Guiding Principals
• Developing Broad Strategic Objectives
• Developing Specific Tactics (Action Plan)
• Executing the Strategic Plan
• Revolutionary Thinking in Strategic Planning

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What is Strategic Management? (1)
Different Management Strategies

• Cost/leadership strategies Strategies in this
  category seek to improve efficiency and control
  costs throughout an organizations activity-cost
  chain (supplier activity costs, in-house activity
  costs, and distribution activity costs).
• Differentiation strategies Strategies in this
  category seek to add value, as defined by
  customers, to the organizations products or
  services.
• Market-niche strategies Strategies in this
  category focus on a narrowly defined segment of
  the market (market niche) and attempt to make the
  organization in question, the market leader in
  that niche.

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What is Strategic Management? (2)

• Organizational Strategy Organizational
  strategies are the approaches adopted by
  organizations to ensure successful performance in
  the market place. These approaches are typically
  set forth in a comprehensive document called the
  strategic plan.
• Strategic management is management that bases all
  actions, activities, and decisions on what is
  most likely within an ethical framework to
  ensure successful performance in the market
  place.
• From the strategic managers perspective,
  resources are wasted unless they contribute to
  success in the marketplace. (the more direct
  contribution, the better).

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Components of Strategic Management?

• Strategic Planning
• Strategic planning is the process by which an
  organization answers questions such as Who are
  we? Where are we going? How will we get there?
  Who do we hope to accomplish? What are our
  strengths and weaknesses?
• Components of Strategic Plan an organizational
  vision, organizational mission, guiding
  principals, broad strategic objectives and
  specific tactics.
• Strategic Execution
• Strategic execution involves implementing
  strategies set forth in strategic planning,
  monitoring progress towards achievement, and
  adjusting as necessary.

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Strategic Planning Overview (1)

• Before beginning the planning process, an
  organization should conduct a SWOT analysis.
• SWOT Strengths, Weaknesses, Opportunities,
  Threats
• A SWOT analysis answers the following questions
  What are this organizations strengths? What are
  this organizations weakness, What opportunities
  exist in this organizations business
  environment? What threats exist in this
  organizations business environment?
• The SWOT analysis provides a body of knowledge
  that is needed to undertake strategic planning.

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Strategic Planning Overview (2)
The Strategic Planning Process
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Creative Thinking in Strategic Planning

• Bring creative people together in the same room,
  even if they drive each other crazy.
• Listen to every idea, even if 90 seems
  ridicules.
• Make it safe to express even bad ideas.
• Handle argumentative people who put down the
  ideas of other people.
• Support champions of ideas by reinforcing their
  vision.
• Keep an open door and put drawing boards
  everywhere so that creative thinking will become
  a normal, expected, ongoing process.
• If you are not creative, acknowledge and support
  creativity in others.

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Conducting the SWOT Analysis (1)
Identifying Organizational Strengths

• Financial strength
• A good reputation in the market place
• Strategic focus
• High-quality products/services
• Proprietary products/services
• Cost leadership
• Strong management team
• Efficient technological processes
• Talented workforce
• Faster time to market

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Conducting the SWOT Analysis (2)
Identifying Organizational Weaknesses

• Strategic confusion/lack of direction
• Obsolete facilities
• Obsolete processes
• Weak management team
• Insufficient skills/capabilities in the workforce
• Poorly defined operating procedures
• Too narrow a product line
• Products with decreasing demand
• Too diverse a product line
• Poor image in the market place
• Weak distribution system
• Weak financial position
• Poor quality in products/services

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Conducting the SWOT Analysis (3)
Identifying External Opportunities

• Availability of new customers
• An expanding market for existing or
  potential/planned products
• Ability to diversify into related
  products/services
• Removal of barriers that inhibit growth
• Failures of competitors
• New on-line technologies that enhance
  productivity or quality.

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Conducting the SWOT Analysis (4)
Identifying External Threats

• Entry of lower cost companies
• Entry of higher quality competitors
• Increased sales of substitute products/services
• Significant slowdown in market growth
• Introduction of costly new regulatory
  requirements
• Poor supplier relationships
• Changing tastes and habit of consumers
• Potentially damaging demographic changes

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Developing the Vision (1)

• A vision is like a beacon in the distance towards
  which the organization is always moving.
• In an organization with a clear vision, it is
  relatively easy to stay appropriately focused.
• The first step in articulating an organizational
  vision is writing it down. This is called the
  vision statement.

Characteristics of a Well-written Vision Statement

• is easily understood by all stakeholders.
• is briefly stated, yet clear and comprehensive in
  meaning.
• Is challenging, yet attainable.
• Is lofty, yet tangible.
• Is capable of stirring excitement for all
  stakeholders
• Is capable of creating unity of purpose among all
  stakeholders
• Is not concerned with the numbers

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Developing the Vision (2)
Characteristics of a Well-crafted Vision Statement
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Developing the Mission
Rules of Thumb

• Describe the who, what and where of the
  organization, making sure the who component
  describes the organization and its customers.
• Be brief, but comprehensive. Typically one
  paragraph should be sufficient to describe an
  organizations mission.
• Choose wording that is simple, easy to
  understand, and descriptive.
• Avoid how statements. How the mission will be
  accomplished is described in the Strategies
  section of the strategic plan.

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Developing the Guiding Principles (1)

• An organizations guiding principles establish
  the framework within which it will pursue its
  mission.
• Each guiding principal encompasses an important
  organizational value.
• Together, all of the guiding principles represent
  the organizations value system the foundation
  of corporate culture.
• Developing guiding principles is the
  responsibility of an organizations executive
  management team.

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Developing the Guiding Principles (2)
Example
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Developing Broad Strategic Objectives (1)

• Broad strategic objectives translate an
  organizations mission into measurable terms.
• They represent actual targets the organization
  aims at and will expend energy and resources
  trying to achieve.
• Broad objectives are more specific than the
  mission, but they are still broad. They still
  fall into the realm of what rather than how.

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Developing Broad Strategic Objectives (2)
Characteristics of a Well-written Broad Strategic
Objectives
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Developing Broad Strategic Objectives (3)
Steps in writing broad strategic objectives
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Developing Broad Strategic Objectives (4)
Cautions concerning broad strategic objectives
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Developing Specific Tactics (Action Plan) (1)
Characteristics of Specific Tactics
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Developing Specific Tactics (Action Plan) (2)
Tactics Development Form
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Executing the Strategic Plan
Critical Steps for Successful Execution of a
Strategic Plan

• Communicate
• Build capabilities
• Establish strategy-supportive stimuli
• Eliminate administrative barriers
• Identify advocates and resisters
• Exercise strategic leadership
• Be flexible and improvise
• Monitor and adjust as needed

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Revolutionary Thinking in Strategic Planning (1)
Types of Companies on the basis of revolutionary
thinking

• Rule Makers These are the companies that built
  the industry in question. IBM, Sears and
  Coca-Cola are example of rule makers.
• Rule Takers These are the companies that follow
  the rules made by the industry leaders. J.C.
  Penney, Fujitsu and U.S. Air exemplify rule
  takers.
• Rule Breakers These are the maverick companies
  that break the rules, ignore precedent, and cast
  aside convention. IKEA, Charles Schwab, and
  Southwest Airlines are rule breakers.

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Revolutionary Thinking in Strategic Planning (2)
10 Guiding Principles for Revolutionary Thinking

• Strategic planning is not strategic.
• Strategy making must be subversive.
• The bottleneck is at the top.
• Revolutionaries exist in every company.
• Change is not the problem, engagement is.
• Strategy making must be democratic.
• Anyone can be a strategy activist.
• A new perspective can be better than
  intelligence.
• Top down and bottom up are not the alternatives.
• You cannot see the end from the beginning.

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Questions/Queries?