CHAPTER 07 STRATEGIC PLANNING AND LEADERSHIP ABOUT STRATEGIC

CHAPTER # 07 STRATEGIC PLANNING AND LEADERSHIP

ABOUT STRATEGIC PLANNING l l l l l PLANNING GOALS OBJECTIVES STRATEGY PROGRAMS PROJECTS POLICIES PROCEDURES RULES

VISION statement l l It is written by looking ahead into the future. Refers to guiding values, principles, paths and direction of expected development of organization.

MISSION statement l l l It is about why and how. It is the purpose or reason of existence of organization. A declaration of the organization’s purpose and scope of operations Outlines how vision is to be accomplished Establishes key priorities and common goals

EXAMPLE: NJI Life (New Jubilee Insurance Limited Company) VISION STATEMENT: To be Pakistan’s leading and most highly reputed life insurance company, enjoying the confident and trust of its share holders, policy holders, business partners and communications. MISSION STATEMENT: Share holder’s are the backbone of NJI Life business. NJI Life’s policy holders are most valuable assets. Employee are NJI Life’s partners enabling NJI Life to fulfill NJI Life’s Vision and mission.

The Strategic Management Process

Strategic Management Process l Step 1: Identifying the organization’s current mission, goals, and strategies

Characteristics of a Mission Statement l l Defines current business activities Highlights boundaries of current business Conveys – Who we are, – What we do, and – Where we are now A company’s mission is not to make a profit ! The real mission is always—“What will we do to make a profit? ”

Business Mission: Cardinal Health l Cardinal Health is a leading provider of services supporting health care worldwide. l The company offers a broad array of services for health-care providers and manufacturers to help them improve the efficiency and quality of health care. l These services include pharmaceutical distribution, health-care product manufacturing and distribution, drug delivery systems development, . . . , retail pharmacy franchising, and health-care information systems development.

Example: Mission Statement Apple Computer, Inc. , ignited the personal computer revolution in the 1970 s with the Apple II, and reinvented the personal computer in the 1980 s with the Macintosh. Apple is now committed to its original mission--to bring the best personal computing products and support to students, educators, designers, scientists, engineers, business persons and consumers in over 140 countries around the world.

Two Types of Goals Financial Goals Strategic Goals Outcomes that improve Outcomes that strengthen a firm’s competitiveness a firm’s financial and long-term market performance position $

Examples: Corporate Goals Citigroup (strategic goal) To attain one billion customers worldwide. Mc. Donald’s (strategic goal) To achieve 100 percent total customer satisfaction. . . everyday. . . in every restaurant. . . for every customer.

Example: Corporate Goals Motorola (financial goal) ¿ Self-funding revenue growth of 15% annually. ¿ An average return on assets of 13 to 15%. ¿ An average return on shareholders’ equity investment of 16 to 18%. ¿ A strong balance sheet.

Strategic Management Process (cont’d) l Step 2: Doing an external analysis – The environmental scanning of specific and general environments l Focuses threats on identifying opportunities and

Strategic Management Process (cont’d) l Step 3: Doing an internal analysis – Assessing organizational resources, capabilities, and activities: l l – l Strengths create value for the customer and strengthen the competitive position of the firm. Weaknesses can place the firm at a competitive disadvantage. Analyzing financial and physical assets is fairly easy, but assessing intangible assets (employee’s skills, culture, corporate reputation, and so forth) isn’t as easy. Steps 2 and 3 combined are called a SWOT analysis. (Strengths, Weaknesses, Opportunities, and Threats)

SWOT Analysis What to Look For Potential Resource Strengths Potential Resource Weaknesses Potential Company Opportunities Potential External Threats • Powerful strategy • Strong financial condition • Strong brand name image/reputation • Widely recognized market leader • Proprietary technology • Cost advantages • Strong advertising • Product innovation skills • Good customer service • Better product quality • Alliances or JVs • No clear strategic direction • Obsolete facilities • Weak balance sheet; excess debt • Higher overall costs than rivals • Missing some key skills/competencies • Subpar profits • Internal operating problems. . . • Falling behind in R&D • Too narrow product line • Weak marketing skills • Serving additional customer groups • Expanding to new geographic areas • Expanding product line • Transferring skills to new products • Vertical integration • Take market share from rivals • Acquisition of rivals • Alliances or JVs to expand coverage • Openings to exploit new technologies • Openings to extend brand name/image • Entry of potent new competitors • Loss of sales to substitutes • Slowing market growth • Adverse shifts in exchange rates & trade policies • Costly new regulations • Vulnerability to business cycle • Growing leverage of customers or suppliers • Reduced buyer needs for product • Demographic changes

Strategic Management Process (cont’d) l Step 4: Formulating strategies – Develop and evaluate strategic alternatives – Select appropriate strategies for all levels in the organization that provide relative advantage over competitors – Match organizational strengths to environmental opportunities – Correct weaknesses and guard against threats

Types of Competitive Strategies l Cost Leadership Strategy – l Differentiation Strategy – l Seeking to attain the lowest total overall costs relative to other industry competitors. Attempting to create a unique and distinctive product or service for which customers will pay a premium. Focus Strategy – Using a cost or differentiation advantage to exploit a particular market segment rather a larger market.

Types of Differentiation Themes l l l l l Unique taste -- Dr. Pepper Multiple features -- Microsoft Windows and Office Wide selection and one-stop shopping - Amazon. com Superior service -- Fed. Ex Spare parts availability -- Caterpillar More for your money -- Wal-Mart, Mc. Donald’s Prestige -- Rolex Quality manufacture -- Toyota, Honda Technological leadership -- Intel

Examples of Focus Strategies l e. Bay – l Online auctions Porsche – Sports cars

Strategic Management Process (cont’d) l l Step 5: Implementing strategies – Implementation: effectively fitting organizational structure and activities to the environment. – The environment dictates the chosen strategy; effective strategy implementation requires an organizational structure matched to its requirements. Step 6: Evaluating results – How effective have strategies been? – What adjustments, if any, are necessary?

The Role of Competitive Advantage l Competitive Advantage – l An organization’s distinctive competitive edge. Quality as a Competitive Advantage – Differentiates the firm from its competitors. – Can create a sustainable competitive advantage. – Represents the company’s focus on quality management to achieve continuous improvement and meet customers’ demand for quality.

Examples: Distinctive Competencies l l Sharp Corporation – Expertise in flat-panel display technology Toyota, Honda, Nissan – Low-cost, high-quality manufacturing capability Intel – Ability to design and manufacture ever more powerful microprocessors for PCs Motorola – Defect-free manufacture (six-sigma quality) of cell phones

Leadership for quality Leadership styles 1. Authoritarian leadership (Without Ideas) 2. Participative leadership (Final Decision) 3. Delegative leadership (Sub Leaders)

THE DEMING MANAGEMENT PHILOSOPY THE SYSTEM OF PROFOUND KNOWLEDGE 1. Appreciation for a system 2. Theory of variation 3. Theory of knowledge 4. Psychology

DEMING’S 14 POINTS FOR MANAGEMENT 1. 2. 3. 4. 5. 6. 7. 8. 9. Management commitment Learn the new philosophy Understand Inspection End price tag Decisions Improve Constantly Institute training Institute leadership Drive out fear Optimize team efforts

Continued…. 10. Eliminate Exhortations 11. Eliminate Quotas and Management by Objective 12. Remove Barriers to pride workmanship 13. Institute Education 14. Take Action

Thank You…!!!