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STRATEGY : A View From The Top

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Title: STRATEGY : A View From The Top


1
  • STRATEGY A View From The Top
  • Chapter 1, What Is Strategy?
  • January 15, 2009
  • Group 1
  • Anne Sterling
  • Clay Jones
  • Johnnie Davis
  • Kimberly Smith
  • Nolan Bosworth
  • Shaina Weaver
  • Zane Barnes

2
What is Strategy?
  • Strategy is about positioning an organization for
    a competitive advantage.
  • It involves making choices about which industries
    to partake in, what products and services to
    offer, and how to allocate corporate resources.
  • Primary goal is to create value for shareholders
    and other stakeholders by providing customer
    value.

3
Strategy in Successful Companies
  • Good Strategies
  • Reflect a companys clear strategic intent
  • Have a deep understanding of a companys core
    competencies
  • Bad Strategies rarely propel a company to a
    leadership position.

4
Strategys Evolution
  • Early Industrial Economics- environmental
    influences were primary determinants of a
    companys success.
  • Resource-based Perspective- focus on building
    core capabilities that transcend the boundaries
    of the traditional business unit.
  • Human and Intellectual Capital- having the right
    personnel or technology has become the main focus.

5
Business Concepts Technologies (Tactics)
  • Internet ?Six-sigma
  • Innovation ?Quality
    Management
  • Total quality ?Time-based
    competition
  • Flexibility
    ?Benchmarking
  • Speed ?Outsourcing

  • ?Partnering

  • ?Reengineering

6
Result of Initiatives
  • Although these initiatives create positive
    results, it is important to remember that
    enhancing operational effectiveness is crucial,
    but it is not a substitute for strategic thinking.

7
Strategy vs. Operational Effectiveness
  • Operational Effectiveness
  • Tactical
  • Focused on doing things better than the
    competition
  • Strategy
  • Focuses on doing things differently than the
    competition
  • Ultimate goal To have long-term, sustainable
    superior performance
  • Both are important and essential to
    competitiveness

8
Trade-Offs
  • Unique competitive positioning- forces trade-offs
    in terms of what to and not to do, and creates
    barriers to imitation
  • Dells direct sales, made-to-order business model
  • Southwest Airlines different activities (no
    assignments, no meals, 15-minutes turnaround,
    etc.) deters imitators

9
Value Creation
  • The best strategies focus on creating value for
    all parts, especially the customer.
  • Customers needs are constantly changing, so the
    value must be constantly evaluated and
    maintained.
  • Ex Dells strategy starting to fail due to
    changes in consumer wants and needs
  • People now prefer more personalized sales than
    Dells online orders
  • People prefer style and local customer service
    (Apple)

10
Competitive Advantage Cycle
  • Purposes of competitive strategy
  • Slowing down the erosion process by protecting
    current resources of advantage against the
    actions of competitors.
  • Investing in new capabilities that form the basis
    for the next position of competitive advantage.
  • Cycle Shows that at any given point in time,
    companies with a particular mix of resources.

11
STRATEGY IS ABOUT CREATING OPTIONS
  • Position Strategy for Competitive Advantage
  • Allow flexibility
  • Offer alternatives
  • Do not make detailed or specific

12
STRATEGY IS ABOUT CREATING OPTIONS
  • Create a Long-term Vision
  • Expect rapid changes
  • Continually learn

13
STRATEGY AN ECOSYSTEM PERSPECTIVE
  • Companies Succeed or Fail as a Collective Whole
  • Interconnected world
  • Rely on networks of partners, suppliers, and
    customers
  • Widespread throughout banking, biotechnology,
    insurance, and software
  • Fluid boundaries

14
STRATEGY AN ECOSYSTEM PERSPECTIVE
  • Technology is the Connective Tissue that Lets
    Ecosystems Function, Grow, and Develop
  • Share information
  • Collaborate
  • Example Wal-Mart
  • Vast supply-chain ecosystem stretching from
    manufacturer to consumer

15
STRATEGY AS ALIGNMENT
  • Strategies Align Resources and Capabilities with
    Goals
  • Acquiring and allocating resources
  • Building capabilities
  • Shaping corporate culture
  • Support systems

16
STRATEGY AS ALIGNMENT
  • Strategic Capability Gap
  • Disparities in competences, skills, and resources
    between what consumers demand and what can be
    delivered
  • Maintaining Strategic Focus
  • Ensure what is said is in fact done
  • Strategies are created and used by humans and
    thus subject to error, obstruction, or even
    abuse

17
Is All Strategy Planned? p. 13
  • No.
  • When a strategy is created, certain outcomes are
    intended.
  • Many things can change as the plan is
    implemented. For example, new laws can be
    created, or new competitors can emerge.
  • It is important for us to be open minded in the
    business world and realize that many factors can
    influence and change intended strategy.

18
Multiple Levels of Strategy
  • Strategic management consists of corporate,
    business unit, and functional strategies.
  • All of which are used to guide the future of an
    organization.
  • Corporate Strategy
  • Focused on how to manage the overall portfolio of
    a business and who they should compete with.
  • Used in a multibusiness, diversified corporation

19
  • Business Unit Strategy
  • Focused on deciding what product to offer, how to
    create it, and how to get it to the marketplace.
  • Used in a single-product, single-service, or in a
    division of a multibusiness corporation.
  • Functional Strategy
  • Used in a smaller, more focused division such as
    technology or marketing.

20
The Role of Stakeholders
  • Stakeholders include partners, suppliers, and
    even competitors.
  • Internal stakeholders include employees,
    managers, top executives, and directors.
  • Motivating these stakeholders is vital companies
    greatly rely on them to supply their customers
    with value.
  • A mistake with any stakeholder can affect a
    company for years.

21
  • The amount of influence a stakeholder has over a
    company depends on the stake they have.
  • Ownership Stake
  • Usually shareholders, directors, and others
  • Economic Stake
  • Includes creditors, employees, customers, and
    suppliers
  • Social Stake
  • Includes regulatory agencies, charities, the
    local community, and activist groups
  • Stakeholders will have formal, economic, or
    political power.

22
Vision and Mission pg.14-16
  • Vision Statement- Is a road map for upper
    managements long run goals for their
    organization. Inspirational image that will be
    remembered and become synonymous with your
    establishment.
  • Frames a companys strategic focus of the future
  • Expresses core competencies used or needed to
    attain goals
  • Mission- Purpose for an organizations existence.
  • A guide for management to use to reach their
    goals
  • important values and ethics that are essential
    to the company
  • Credo- A Latin word meaning a statement of
    fundamental beliefs or a guiding principle.
  • Ex Wal-Marts Credo Three Basic beliefs
  • 1. Respect the individual
  • 2. Service to our customers
  • 3. Strive for excellence

23
Tips to a successful Vision and Mission Statement
  • Focus on relatively few activities and do them
    extremely well.
  • Deciding What not to do is as important sometimes
    as choosing what activities to focus on.
  • Dream big, think out side the box!
  • Make it feasible so your company can achieve its
    goals someday.
  • Identify important values
  • Ex Honesty, integrity, community issues, ethical
    behaviors, and other key values.
  • Positive, inspirational, Short, and Sweet
  • 2 -4 sentences, and do not get carried away with
    impressive vocabulary.

24
Texas Tech Strategic Plan Mission Statement
Committed to teaching and the advancement of
knowledge, Texas Tech University, a comprehensive
public research university, provides the highest
standards of excellence in higher education,
fosters intellectual and personal development,
and stimulates meaningful research and service to
humankind.

Texas Tech Vision Statement Texas Tech University
will be a national leader in higher
educationmanifesting excellence, embracing
diversity, inspiring confidence, and engaging
society.  The university aspires to a national
recognition of excellence and performance in
scholarship through teaching, research, and
service.  
25
What is Your Vision Statement?
26
Strategic Intent and Stretch pg.16-17
  • Strategic Intent- Is the combination of an
    executive summary of strategic goals and a
    motivational message.
  • Set future goals and discuss which competencies
    and resources must be developed or fine tuned to
    reach them.
  • Stretch- Is the ability to close the gap between
    you companies strategic intent and its future
    opportunities or goals.
  • If you fit, you may not have challenged your
    company to grow to its full potential.
  • If you stretch to far, or over too long of a
    time frame your company may never reach its
    goals.

27
Stretch or Fit?
  • Strategic Intent

Stretch
New Opportunities
Fit
Challenges
28
Strategy and the Nonprofit Sector pg.17-19
  • Three performance metrics used by nonprofits
  • Measure of it success in mobilizing necessary
    resources.
  • Evaluation of the effectiveness of people in
    doing their assigned jobs.
  • Assessment of its progress towards fulfilling its
    chosen mission. This step is the hardest of the
    three and can be aided by the following steps.
  • Create narrow scoped mission so progress can be
    measured directly.
  • Periodically commission independent statistical
    studies.
  • Micro-level goals using baseline data and
    multiple indicators.

29
The Strategy Formulation Process
Steps
  • Where are we now?
  • Look at fundamentals, mission, long-term vision,
    and stakeholders.
  • Where do we go?
  • Explore different strategic scenarios based on
    your answers to the first question.
  • How do we get there?
  • Closing the capability gap, identify how your
    core competences can be used to meet future
    market needs.

30
The Strategy Formulation Process
Strategy
  • Reasons for reevaluating strategy
  • The need to cope with ever changing social,
    political, and legal environments.
  • The need to cope with an ever changing business
    environments.

31
The Strategy Formulation Process
The Planning Cycle
  • Review
  • Top managers look at the competitive environment
    and determine how to best utilize core
    competencies to steer the company where they want
    it to go.
  • Delegation
  • The top management relays their plans to
    divisions and business units and these units
    realign long-term objectives to meet the new
    goals of the company.
  • Refinement
  • The new, rough plans of the various business
    units are fine tuned and honed by both upper and
    middle management until they are ready for
    implementation.

32
The Strategy Formulation Process
The Planning Cycle cont.
  • Approval and Implementation
  • Detailed operating plans to successfully steer
    the company toward its long-term goals are fully
    implemented and relayed throughout all divisions
    and business units. Top management observes and
    makes final approval of operating plans.

33
The Strategy Formulation Process
Environmental Analysis Economic Sociocultural Tec
hnological Political
Opportunities Threats
Industry Analysis Structure Evolution Competition

Eval. Current Performance Mission Goals Objective
s Strategies
Strategy Options Business unit Corporate
Evaluation Resource req. Risk/return Implementio
n
Company Analysis Structure Resources Processes St
affing Culture
Strengths Weaknesses
How do we get there?
Where should we go?
Where are we now?
34
Evaluating Strategic Options
  • Strategy evaluation should focus on a firms
    future competitiveness and ask whether long-term
    objectives are appropriate.
  • The ultimate test of any strategy is whether it
    produces a competitive advantage with above
    average returns.
  • Executives face pressure to forecast corporate
    performance and strategic outcomes. Return on
    investment was the most common measure for
    evaluating a strategy, although today shareholder
    value is one of the most widely accepted.

35
Shareholder Value
  • The Shareholder Value Approach (SVA) to strategy
    evaluation says that the value of a corporation
    is determined by the future cash flows that it is
    likely to generate.
  • The Shareholder Value approach has implementation
    problems as well as issues in the relationship
    between shareholder value and the positioning for
    sustained competitive advantage.

36
Shareholder Value pg 22-24
  • Shareholder value and strategy formulation are
    basically the same thing although they have
    different conceptions of value and view the
    purpose of strategy from a different point of
    view.
  • -Strategists focus on creating a sustainable
    competitive advantage through value delivered to
    customers.
  • -Shareholder value approach measures value to
    shareholders.
  • Shareholder value has not been universally
    embraced as the preferred method for measuring a
    strategys potential.
  • Less restrictive evaluation schemes, such as the
    Balanced Scorecard, have gained acceptance in the
    last few years.

37
  • Thank you!!
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