POLICY vs STRATEGY

1
POLICY vs STRATEGY

• POLICY STUDIES
• INTERNAL FOCUS
• EMPHASIZES EFFICIENCY OF OPERATIONS
• STRATEGIC STUDIES
• EXTERNAL FOCUS
• EMPHASIZES ADAPTING TO A CHANGING ENVIRONMENT
• SEAT-OF-THE-PANTS MANAGEMENT Intuitive
  Management
• We must move away from intuitive approaches as
• THE ORGANIZATION BECOMES LARGER
• THE LAYERS OF MANAGEMENT INCREASE
• THE ENVIRONMENT BECOMES MORE COMPLEX.

2
THE FOUR PHASES OF STRATEGIC PLANNING

• 1--BASIC FINANCIAL PLANNING (Budgeting)
• Seek better control by emphasizing the meeting of
  budgets
• Focus is internal
• 2--FORECAST-BASED PLANNING
• Plan for growth by trying to predict the future
  beyond next year
• Predicting and forecasting the environment
• 3--EXTERNALLY-ORIENTED (Strategic) PLANNING
• Responding and reacting to market shifts and
  competitor actions
• Environmental reaction
• 4--STRATEGIC MANAGEMENT
• Developing a competitive advantage which creates
  your future
• Environmental proaction

3
STRATEGIC PLANNING

• Any organization that doesnt plan for the future
  isnt likely to have one.
• Planning without action is futile, but action
  without planning is fatal.
• STRATEGIC PLANNING
• FORCES MANAGERS TO THINK ANALYTICALLY
• FOCUSES ATTENTION ON THE FUTURE OF THE FIRM
• INCREASES UNDERSTANDING OF THE ENVIRONMENT
• DEVELOPS ABILITY AND OUTLOOK OF MANAGERS
• IS A BASIS FOR PERFORMANCE EVALUATION AND
  ASSESSMENT
• Three most highly rated benefits
• CLEARER SENSE OF THE STRATEGIC VISION OF THE FIRM
  
• SHARPER FOCUS ON WHAT IS STRATEGICALLY IMPORTANT
• IMPROVES UNDERSTANDING OF THE CHANGING
  ENVIRONMENT

4
TRIGGERING EVENTS FOR STRATEGIC CHANGE

• SIGNIFICANT PERFORMANCE GAPS
• CHANGES IN OWNERSHIP
• CHANGES IN LEADERSHIPA NEW CEO
• INTERVENTION BY A SIGNIFICANT EXTERNAL ENTITY
• STRATEGIC INFLECTION POINT
• IN GENERAL, ANY CHANGES, CRISES, OR DEVIATIONS
  FRO THE EXPECTED OR STATUS QUO

5
THE BASIC MODEL OF STRATEGIC MANAGEMENT

• 1--ENVIRONMENTAL SCANNING
• EXTERNAL ENVIRONMENT
• Opportunities and Threats
• INTERNAL ORGANIZATION
• Strengths and Weaknesses
• 2--STRATEGY FORMULATION
• DEVELOPING A MISSION/VISION
• Who are we? What is our business? Where are we
  headed?
• SETTING OBJECTIVES
• Financial Objectives Earnings, ROA, Cash Flow
• Strategic Position Objectives Market Share,
  Customer Service, Competitive Position
• CRAFTING STRATEGIES
• How to achieve the targeted results?What is our
  strategic plan?
• Corporate, Business-level, Functional
• 3--STRATEGY IMPLEMENTATION
• ESTABLISHING PROGRAMS, BUDGETS, AND PROCEDURES
• ASSIGNMENTS
• Who does what by when?
• 4--EVALUATION AND CONTROL

6
THREE STRATEGIC LEVELS

• CORPORATE-LEVEL STRATEGIES
• Are long-term investment strategies
• Is the corporate mission/vision well-served by
  continuing in this business?
• Seek a favorable portfolio of business
  activities for the corporation GROWTH
• STABILITY
• RETRENCHMENT
• BUSINESS-LEVEL (Divisional) STRATEGIES
• Are competitive strategies for each business
  segment the company operates in
• How to improve the relative market position of
  each product/service line?
• Emphasize development of a competitive advantage
  for each business line
• COST LEADERSHIP
• DIFFERENTIATION
• FOCUS
• FUNCTIONAL-LEVEL (Departmental) STRATEGIES
• Are departmental strategies that focus on
  resource utilization and efficiency
• Develop efficiency plans that are in harmony
  with higher-level objectives

7
TESTS FOR A WINNING STRATEGYTHOMPSON STRICKLAND

• GOODNESS-OF-FIT
• HOW WELL IS THIS STRATEGY MATCHED TO THE
  ORGANIZATIONS CAPABILITIES AND ASPIRATIONS?
• COMPETITIVE ADVANTAGE
• DOES THIS STRATEGY LEAD TO A SUSTAINABLE
  COMPETITIVE ADVANTAGE?
• DOES THIS STRATEGY STRENGTHEN OUR COMPETITIVE
  POSITION?
• PERFORMANCE
• IS PROFITABILITY ENHANCED?
• ARE LONG-TERM GAINS REALIZED IN
  STRATEGIC-POSITION AND IN FINANCIAL AREAS?

8
FIVE CRITICAL STRATEGIC QUESTIONSHAMBRICK
FREDERICKSON

• ARENAS
• WHERE WILL WE BE ACTIVE? WHICH AREAS?
• VEHICLES
• HOW WILL WE GET THERE?
• DIFFERENTIATORS
• HOW WILL WE WIN IN THE MARKETPLACE?
• STAGING
• HOW FAST CAN WE DO IT AND IN WHAT SEQUENCE?
• ECONOMIC LOGIC
• WHAT RETURN CAN WE EXPECT AND WHEN WILL WE GET
  IT?

9
IMPLEMENTATION

• FINDING A GOOD FIT BETWEEN STRATEGY AND .
• -- ORGANIZATIONAL CAPABILITIES
• -- THE REWARD STRUCTURE
• -- INTERNAL POLICIES AND PROCEDURES
• -- THE ORGANIZATIONS CULTURE

10
WE IMPLEMENT STRATEGY BY

• -- BUILDING AN ORGANIZATION (STRUCTURE) CAPABLE
  OF SUCCESSFULLY SUPPORTING AND CARRYING OUT THE
  STRATEGY
• -- DEVELOPING BUDGETS THAT STEER RESOURCES INTO
  CRITICAL INTERNAL ACTIVITIES
• -- MOTIVATING PEOPLE TO PURSUE TARGETED
  OBJECTIVES ENERGETICALLY
• -- TYING REWARDS TO ACHIEVEMENT OF TARGETED
  RESULTS
• -- CREATING A WORK ENVIRONMENT CONDUCIVE TO
  SUCCESSFUL IMPLEMENTATION OF STRATEGY
• -- INSTALLING STRATEGY-SUPPORTIVE POLICIES AND
  PROCEDURES
• -- DEVELOPING AN INFORMATION REPORTING SYSTEM TO
  TRACK PROGRESS AND MONITOR PERFORMANCE
• -- EXERTING INTERNAL LEADERSHIP TO DRIVE
  IMPLEMENTATION FORWARD

11
MYTHS OF CORPORATE PLANNINGACKOFF 81

• MOST CORPORATE PLANNING IS LIKE A RITUAL RAIN
  DANCE,
• IT HAS NO EFFECT ON THE WEATHER THAT FOLLOWS,
  BUT IT MAKES THOSE WHO ENGAGE IN IT FEEL THAT
  THEY ARE IN CONTROL.
• MOST DISCUSSIONS OF THE ROLE OF MODELS IN
  PLANNING ARE DIRECTED AT IMPROVING THE DANCING,
  NOT THE WEATHER.
• IMPLICATIONS
• DONT FOCUS EXCLUSIVELY ON THE PROCESS
• KEEP AN EYE ON RESULTS!
• IS THERE PROOF THAT THINGS ARE IMPROVING?