Introduction to Strategic Management Business Management Strategic Management

Defining the company’s business (direction) requires a great deal of thought! Warren Bennis and Bert Manus say: To choose a direction , a leader must first have developed a mental image of a possible and desirable future state for the organization-vision…. the critical point is that a vision articulates a view of a realistic, credible, attractive future for the organization, a condition that is better in some important ways than what now exist !

Managers use mission and vision in order to define their Company’s direction! Vision: a general statement of an organisation’s intended direction that evokes emotional feelings in its members. Mission Statement: a statement that broadly outlines the enterpsrise’s purpose and serves to communicate ‘who the organisation is? what it does where it is headed

Mission and Vision Statements Mission: More specific and shorter term. What the business is supposed to be NOW. Vision: Lay out in very broad terms what the business should be. What you want your organisation to be ; Your dream. Image of the company- inspiring. . . Strategy: What you will do to achieve your vision (large scale plan – how to achieve and when)

Managers use Vision and Mission in order to define their Company’s direction! �vision: tends to be a ‘general statement of its intended direction that evokes emotional feelings in organisation members. ‘CEO Jeffrey Arnold launched his business based on a vision of a website supplying everything a consumer might want to know about madicalrelated issues. Vision articulates a view of a realistic, credible, attractive future for the organisation.

To be the most reliable airline in the industry for on time arrivals and lowest no. of costomer complaints, We help families and business travelers to have a stress-free and enjoyable travels. We get people to their destination happy and on time Which one is V and M?

M: Core purpose: Why employees do what they do? Primary objectives distinquish from competitors and how the success will be measured V: More emotional and kind of partnership between firm and customers.

Mc Donalds: to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality, service, cheeriness and value so that we make every customer in every restaurant smile. Amazon: to be earth’s most customer centric company. to build a place where people can come together to find and discover anything they might want to buy.

Strategic management process cont �Step 2 -Perform external and internal audits �Opportunities and threats (external) �strengths and weaknesses (internal) Firms need to check their situation internally and externally.

Step 3 - Translate the mission into strategic goals �California energy mission: assess and act through pubic/private partnership to improve energy systems What will this company’s managers think in coming 5 years? How many partnership? � what types of partnerships? � For how long and when? � with whom and when? etc �

• Step 4 - Formulate a Strategy and reach strategic goals Strategy: is a bridge connecting where it is today with where it wants to be tomorrow. �Ex: Wal-Mart years ago decided moving form being a small southern based chain of retail discount stores to becoming the national leader (market share) � To achieve this company chooses several strategies; To pursue a LOST- COST leader strategy – reduce distribution costs and minimize inventory and delivery times through satellite based distribution system

Step 5 -Implement the strategy �Means action and result �Means applying four functions of mgmt : planning, organizing, leading and controlling � Entering into new markets � Hiring or firing new people � Closing down some branches/plants � Eliminating product lines or opening new product lines � Adding new products, e. g. Wallmart: Low prices every day.

�So strategy must be brief!

• Step 6 - Evaluate performance Strategies do not always work out. So we need to evaluate. Strategic control=is the process of assessing progress toward its strategic objectives and taking corrective action as needed to ensure optimal iimplementation. It keeps company’s strategy up to Date.

3. Evaluating Good Strategy Marketing Strategy at Delta Airlines In the mid 1980 s Delta’s market researchers found that customers (particularly business customers) were strongly influenced to choose a particular airline by the airline’s frequent flyer program. Consequently, to motivate customers to choose Delta, they teamed up with American Express (an exclusive arrangement) to offer a special program: customers could receive triple miles if they would fly on Delta and purchase the tickets using the American Express card. How would you evaluate Delta’s strategy? (Good or bad? )

3. Evaluating Good Strategy �What is the cost of the strategic initiative? �How long will it take for competitors to imitate the strategic initiative? �What are the barriers to imitation?

Types of strategies � 3 main types of strategies �A. Corporate level strategy � Plan that identifies the portfolio of business that comprise a corporation and how they relate to each other �B. Competitive strategy � Identifies how to build and strengthen the business’s long term competitive position in the marketplace (how Disney will compete with Warner films e. g G-rated films) �C. Functional strategy � The overall course of action and basic policies that each department is to follow in helping the business accomplish its strategic goals

a. Corporate level strategies �Concentration or One Product Strategy One product or product line exist ex: Mc. Donald's, KFC, Coca Cola, Mercedes, Gerber (Main adv. They concentrate on the business it knows well. Disadv. Putting all eggs into one basket). But still you can; � � Market penetration: a growth strategy boost sales of present products by more aggressively selling and marketing into the organization’s current market Geographical expansion: aggressively expanding into new geographic markets Horizontal integration : acquiring ownership or control of competitors who are competing in the same or similar markets with the same or similar product Vertical Integration: acquiring ownership or control of competitors who are competing at the different markets.

Swot analysis �It supplies illustrative generic �opportunities, threats , strengths and weakness �to guide the manager’s analysis �It provides a standardized four quadrant format for compiling the company’s situational information

Swot analysis �It is the first step for planning, helps for decieion making. It should be specific. It tells you TODAT so that you can plan for tomorrow. �It provides a good framework for reviewing strategy, position and direction of the company/idea. �SWOT measure the business PEST measure the market.

Swot analysis �S+W: tend to be present (relating to product/pricing/cost/profitability/performance/q uality/people/skills/brands) �O+T: tend to be future (markets/sectors/audince/fashion/seasonability/tr ends/competition/economics/culture/technology)

Swot analysis S: very profitable org. earning in excess of 600 m is a global coffee brand the fortune top 100 comp. has strong ethical values &MS Sturbucks. . W: reputation for new development and creativity remain vulnerable Portfolio in orther countr.

Swot analysis S: very competitive no factories strong R&D global brand W: not have diversified range of sport prod. income dependent on footwares Price sensitive- retail sector They dont have their own retailer in Nike Town O: People dont only buy T: Inter. Comp. Sell in different sports but also fashion currencies. So cost, margins are develop products: glasses, not stable jewellery, etc. Very competitive market price sensitive industry

Environmental Scanning �Managers traditionally scan 6 areas � Economic trends � � Competitive trends � � Ex: introduction of new products, distribution technologies, rate of product obsolesce, trends in availability of supplies and raw materials Social Tends � � Ex: Election results, legislation, regulation, deregulation, special interest results Technological Trends � � ex: competitor’s strategy changes, customer trends, market trends, exit of competitors, new product from competitors Political trends � � ex: recession, inflation, monetary policies Ex: demographic trends, mobility, education, evolving values Geographical Trends � Opening/closing new markets, factors affecting current plant/office facilities, location of decisions

How managers scan? BRING ME INFO! �Some have employees search for �publications, �internet, � reports , �newsletters ex: New York times and wall street journal �Use consultants-environmental scanners �Built up Internet news services

Benchmarking �Is a process through which a company learn how to become the best in one or more areas by analyzing and comparing the practices of other companies that excel in those areas.

Two strategic planning tool �TOWS =a strategic planning tool that presents possible strategies for addressing the firms SWOT �From your environmental scan, benchmarking and swot analysis you fill in the SWOT

PORTFOLIO ANALYSIS �HOW DO YOU DECIDE WHICH BUSINESS YOU KEEP UP IN (OR DROP FROM)A PROTFOLIO? �ASSUMES THE BUSINESS ATTRACTIVENESS DEPEND ON TWO FACTORS � GROWTH RATE OF A BUSINESS AND BUSINESS MARKET SHARE

BCG MATRIX �A strategic planning tool that helps a manager asses a business unit's attractiveness based on growth rate and market share

�Visit Fraft Foods Web site fnd out vision and mission. �Make a research and explain its competitive advantages. �Visit Ülkerbisküvi web site find vision, discover companies strategies make a SWOT analysis and comment.