Strategic management process:

1
TODAYS AGENDA (1/15/09)

• Strategic management process
• Integrating key dimensions of the BIG picture
• Getting the hang of strategic thinking
• Mission statements
• Case 1 preparation questions

2
Which of the following clearly represents a
strategic decision?

• 1. Ingersoll-Rands sale of Bobcat to Korean firm
• 2. Hornbachers canvas shopping bags
• 3. Bison athletics seasonal promotion campaign
• 4. NDSU downtown campus
• 5. Targets sale of Marshall Fields
  globalization?
• 6. New payroll system

3
WHAT IS STRATEGIC MANAGEMENT?

• Long-term planning/direction/vision, with
• significant organizational implications ?
• CHOICES that are difficult to reverse,
• carving out a position in the marketplace.
• Being RESPONSIVE TO THE (continually changing)
  EXTERNAL ENVIRONMENT yet
• internally realistic (using core competencies).
• Successfully fitting the organization into the
  changing environment, in view of sunk costs.
• Aiming for sustainable competitive advantages and
  above average profits.

4
Strategic Management Process
Involves the full set of
Actions
Commitments
Decisions
formulation implementat
ion
which are required for firms to achieve
Sustained Competitive Advantage
Above-Average Returns
5
Unless we change our direction we are likely to
end up where we are headed. Ancient Chinese
proverb Without strategic management the
organization is like a ship without a rudder.
Ross and Kami, strategy consultants

6
Strategic Management Process -not always so
neatly planned . . .
The process of developing superior strategies
is part planning, part trial and error, until you
hit upon something that works. Professor
Costas Markides, London Business School
7
Strategic Management Process proactive and
reactive components, planned and emergent
components
abandoned parts ?
latest prior version continued
parts version of the firms ? new
planned parts of the strategy new
emergent parts firms ?
strategy adaptive reactions
8
Increasing pace of organizational adaptation due
to

• HYPERCOMPETITION
• (the new competitive landscape, according to
  our text)
• ? ?
• ______________ _____________
• ?
• increasing knowledge intensity

9
Due to hypercompetition,

• competitive advantages are ________ sustainable
  over time
• an organization must become
• POISED FOR CHANGE, while still
• formulating and implementing
• planned strategies.
• Implications of hypercompetition for strategic
  management ?

10
Strategic Management shooting at a moving
target of co-alignment (Thompson, 1967)

• External Strategic Fit
• Strategy formulation to
• -match internal capabilities
• with specific attractive
• external opportunities
• -create strategies
• that effectively adapt to
• external (industry and
• competitive) trends.

• Internal Strategic Fit
• Strategy implementation to
• -match the skills and
• resources of the firm to
• requirements for
• successful strategy
• execution
• -ensure that actions and
• resources facilitate
• strategy accomplishment.

11

• Vision and Mission
• ? ?
• External analysis Internal analysis
• ? ?
• Opportunities threats Strengths
  weaknesses
• Key success factors Distinctive competence
• ? ?
• Strategy
• ? ? ?
• Managerial values Social responsibility
• Implementation
• ?
• Sustainable competitive advantage
• Above average returns

12
2 models (theories) of how to best achieve
above-average returns

• 1. Industrial-organization (I/O) model
• 2. Resource-based model (RBV)

13
Mission Statements

• typically the starting point for
• strategic thinking
• provide a relatively enduring yet basic
  description of an organizations domain
• ideally express the essence or unique
  personality of an organization, in a compelling
  and memorable way

14
Mission Statements

• Three essential components
• 1.
• 2.
• 3.

15
Rape and Abuse Crisis Center provides crisis
intervention, advocacy, and counseling services
free of charge to all persons in the region
who have been victims of domestic violence or
sexual assault.
16
To create meaningful and strategically useful
mission statements . . .

• PRODUCT description should be carefully balanced
  - not too broad, not too narrow
• TARGET MARKET should be expressed as specifically
  as possible
• DIFFERENTIATING FEATURE should be meaningful and
  realistic

17
Target market (BUSN 360 review!)

• Ways to delineate various market segments?

18
Phoenix International

• . . . designs and manufactures electronics
• for harsh environments for the worldwide
• original equipment manufacturer market.

19
ELDERHOSTELs mission statement

• We are the nations first and the worlds
• largest education and travel organization for
• adults 55 and over, dedicated to providing
• exceptional learning opportunities at
• remarkable value.
• We value stimulating, expert information
• adventure and the spirit of camaraderie.

20
Organizational Values

• values and beliefs that are widely shared and
  endorsed by organizational participants
• part of the organizational culture
• can lead to an ingrained way of thinking and
  acting within the organization
• often linked to competitive advantage
• the organizational compass directional guide
• ? an underutilized strategic tool ?

21
Yahoos Mission and Values

• Our mission is to be the most essential
• global Internet service for
• consumers and businesses.
• Core values
• Excellence, innovation, customer fixation,
  teamwork, community, and fun.
• Yahoo doesnt value bureaucracy, losing,
  arrogance, being good enough, the status quo,
  quick fixes, passing the buck, missing the boat,
  following, punching the clock . . .

22
Mission Statement for NDSUs College of Business?

• Be sure to clearly and appropriately include
• Product(s)
• Target market(s)
• Differentiating feature(s)
• Also consider
• any prominent/important organizational values?

23
Why is it so difficult to create a concise,
compelling, and agreed-upon mission statement?

24
NDSUs mission statement

• With energy and momentum,
• North Dakota State University
• addresses the needs and aspirations
• of people in a changing world by
• building on our land-grant foundation.

25
Mission statements are often accompanied by
supplemental pieces

26
NDSUS VISION STATEMENT

• We envision
• a vibrant university
• that will be globally identified
• as a contemporary metropolitan
• land-grant university.

27
NDSUs goals

• Student population gt 12,000
• Annual research expenditures gt 100 M
• ? graduate programs and PhD graduates
• Successful launch to D1 athletics
• Key role in technology transfer, economic
• development

28
NDSU core values

• People are paramount
• Scholarship
• Teaching and learning
• Ethics
• Culture
• Accountability
• NEW IN FALL 2008 -
• Inclusive, responsive, excellent

29
NDSU CoB values?

• Interpersonal accessible
• Non-hierarchical respectful
• Conscientious
• Resourceful
• Frugal
• Participative governance
• For the good of the whole

30
Peter Drucker . . .
Establishing a mission should never be made on
plausibility alone, should never be made fast,
and should never be made painlessly. The
mission decision is far too important to be made
by acclamation.
31
Mission Statement

• SO WHAT? WHO CARES? WHY BOTHER?

32

Vision and Mission ? ? 1.External
analysis 2.Internal analysis ?
? Opportunities threats Strengths
weaknesses Key success factors
Distinctive competence ?
? Strategy 4.Social ? ?
?3.Managerial responsibility values Implementat
ion ? Sustainable competitive advantage Above
average returns
33
Role of managerial values

• Set internal value standards
• Work toward shared value system (regarding
  products, conduct of business activities, and
  interactions both inside and outside the orgn)
• Develop a strong organizational culture, which
  can be an extremely powerful competitive asset
  linked to distinctive competence

34
Role of social responsibility

• To anticipate and meet social expectations.
• To look out for the long-term interests of
  society, ABOVE AND BEYOND legal requirements
• To conduct business in a manner consistent with
  good corporate citizenship
• To balance the needs and expectations of a
  variety of stakeholders

35
Total social responsibilies

• Archie Carroll

36
Stakeholders

• stakeholder analysis identifying and
  prioritizing key stakeholder groups anticipating
  their opinions modifying strategic
  decisions/actions as appropriate.

37
Groups who are affected by a firms performance
and who have claims on its performance
Stakeholders
The firm must maintain performance at an adequate
level in order to maintain the participation of
key stakeholders
Capital Market
Firm
Product Market
Organizational
Employees Managers Non-Managers
38
A Stakeholder (SH) Analysis Tool

• SH (priority) agree neutral disagree
• 1Customers X
• ________________________________________
• 2Shareholders X
• ________________________________________
• 3Employees
  X
• ________________________________________
• 4Interest
  X
• Groups

39
A Stakeholder Analysis Tool

• high
• SH
• priority
• 
  
• low
  high
• SH
  interest

customers
Stockholders, employees
interest groups
40
Issues involved with social responsibility . .
.

41
Social Responsibility

• So what? Who cares? Why bother? /-?

42

Vision and Mission ? ? 1.External
analysis 2.Internal analysis ?
? Opportunities threats Strengths
weaknesses Key success factors
Distinctive competence ?
? Strategy 4.Social ? ?
?3.Managerial responsibility values Implementat
ion ? Sustainable competitive advantage Above
average returns
43

? Mission ? External analysis
Internal analysis What MIGHT we do? What CAN
we do? ? ? Opportunities
and Strengths and threats weaknesses ? Stra
tegy ? ? ? Social responsibility Manageri
al values What SHOULD we do? What do we
WANT to do?