6/14/2016 Nakato Ruth Introduction and review of strategic management Chapter one

6/14/2016 Nakato Ruth What is strategic management? Strategic management is the art and science of formulating, implementing and evaluating cross functional decisions that enable an organization to achieve its objetives, The set of managerial decisions and actions that determine the long run performance of a corporation. Strategic management can also be defined as a continuous, iterative process aimed at keeping an organisation as a whole appropriately marched to its environment.

6/14/2016 Nakato Ruth What is Strategic management?...  Stream of decisions taken over time by top managers which when understood as a whole reveal the goals they are seeking and the means used to reach those goals. Strategic management focuses on intergrating management, marketing, finance/accounting, operation, research and development and computer information systems, to achieve organisational success.

Characteristics of Strategic management Strategic management as a subject of study and management practice has five major characteristics: Top management viewpoint. ( overall top management, board of directors, and planning staff) A futuristic and long-term orientation. An integrated and complehensive approach A focus on corporate or business strategy as the central theme and the core responsility of top management. The recognition of corporate/business strategy as the main means of achieving the competitive superiority of a firm. 6/14/2016 Nakato Ruth

Benefits of strategic management Recent investigations suggest that an efficient and effective strategic management system can increase profitability. Strategic management can boost the commitment of organisational members to the attainment of long term organisational goals. 6/14/2016 Nakato Ruth

Benefits Strategic management signals that problems may arise before they happen. Helps managers become more genuinely interested in an organisation. Alerts the organisation to changes and allows for action in response to change. Identifies any need to redefine the nature of the business. Improves the channeling of effort toward the attainment of predetermined objectives. 6/14/2016 Nakato Ruth

Benefits… Strategic management enables the managers to have a clearer understanding of the business. Facilitates the identification and exploitation of future marketing opportunities. Offers an objective view of management problems. Provides a framework for reviewing the execution of the plan and for controlling activities. Minimises the ill effects of adverse conditions and changes. Creates a framework for internal communication among personnel. 6/14/2016 Nakato Ruth

Benefits Strategic management helps managers relate major decisions more effectively to established objectives. Renders more effective the allocation of time and resources to identified opportunities. Coordinates the execution of the tactics that make up the plan Allows for the intergration of all marketing functions into a combined effort. 6/14/2016 Nakato Ruth

Benefits Strategic management minimizes the resources and time that must be devoted to correcting erroneous ad hoc decisions. Allows for the ordering of priorities within the time frame of the plan. Gives the firm an advantage over competitors. Helps marshal the behavior of individuals in the organisation into a total effort. 6/14/2016 Nakato Ruth

6/14/2016 Nakato Ruth The Strategic Management Process Define the Business and Set a Mission Statement Step 1 Set Strategic Goals Step 2 Formulate a Strategy Step 3 Implement the Strategy Step 4 Evaluate and Correct as Needed Step 5

6/14/2016 Nakato Ruth Step 1. Define the business (current business) and set a mission statement This involves the following The mission statement; The mission is the fundamental unique aim or purpose that sets an organisation apart from others of its kind –the mission statement explains the reason as to why you exist as an organization. –asking the question ‘What is our business?’ is the same as asking the question –‘What is our mission?’ A business is defined by its mission. –A mission is usually stated in terms of the firm’s products, markets, technologies and position of the firm in the industry..

6/14/2016 Nakato Ruth a mission statement... –The mission defines the long-term vision of the organization in terms of what it wants to be and whom it wants to serve –A company's mission is its reason for being. The mission often is expressed in the form of a mission statement, which conveys a sense of purpose to employees and –potrays a company’s image to customers. –In the strategy formulation process, the mission statement sets the mood of where the company should go.

6/14/2016 Nakato Ruth a mission statement… A good mission statement will contain the following; the purpose of the organization – a statement of the principal activities of a business or organization; its principal business aims – its mission as regards the position it aims to achieve in its chosen business; the key beliefs and values of the company; definitions of who are the major stakeholders in the business; the guiding principles that define the code of conduct that tells employees how to behave.

a mission statement… Don’t underestimate the importance of a mission statement. Every entrepreneur should write a mission statement early on because they provide you and your employees with the framework and purpose. 6/14/2016 Nakato Ruth

a mission statement… four essential questions your company’s mission statement must answer: What do we do? How do we do it? Whom do we do it for? What value are we bringing? If you have a mission statement, make sure it can answer these questions. It makes all the difference. 6/14/2016 Nakato Ruth

a mission statement… For example, Advance Auto Parts mission statement is: “It is the Mission of Advance Auto Parts to provide personal vehicle owners and enthusiasts with the vehicle related products and knowledge that fulfill their wants and needs at the right price. Our friendly, knowledgeable and professional staff will help inspire, educate and problem-solve for our customers.” The company has clearly laid out the answers to those essential questions.Advance Auto Parts 6/14/2016 Nakato Ruth

6/14/2016 Nakato Ruth defining the business… When you are defining the business also; b) Look at the products & services Who are the customers i.e. the present & the previous ones c) Look at competence; what can you do & what cant you do? Do you have the capacity? Business that don’t have the capacity fail! i.e. the capacity to run a school—teachers,

6/14/2016 Nakato Ruth Step 2 Setting strategic goals. –Top management’s broad vision and mission are translated into operational strategic objectives. –These are targets that the enterprise is set out to achieve or accomplish. They guide the enterprise as to where its going and where it wants to be. –Objectives are rules and guidelines i.e. mile stones; objectives are set at all management levels in an organization; at corporate level, strategic business unit level, functional level and operational level. –Objectives should be smart; They may be long-term, medium-term or short-term objectives.

6/14/2016 Nakato Ruth Step 3 Formulating a strategy to achieve the strategic objectives. Where as objectives guides the enterprise as to where it is going, the strategy takes the question “how do we get there?” A strategy is a course of action that explains how the enterprise will move from the business it is in now to the business it wants to be in. A strategy enables you achieve your objectives & target. E.g. what should be done to increase the market share, or want to increase on the customer care.

6/14/2016 Nakato Ruth Step 4 Implementing the strategy  Drawing upon the functions of the management process allows management to translate strategy into actions and results. Actualizing the strategy. It involves looking at the sequence of actions carried out in implementing the strategy and the speed of the implementation strategy. A good strategy with poor implementation is as good a poor strategy.

6/14/2016 Nakato Ruth Step 5 Strategy evaluation, monitoring and control –Evaluating performance and correcting as required. –Strategic control involves assessing the firm’s progress toward its strategic objectives and making corrections as needed. – Strategic control keeps the company’s strategy up to date.

6/14/2016 Nakato Ruth Strategy evaluation… Rumelt suggests that three questions are central to the challenge of strategy evaluation: 1. Are the objectives of the business appropriate? 2. Are the major policies and plans appropriate? 3. Do the results obtained to date confirm or refute critical assumptions on which the strategy rests?

6/14/2016 Nakato Ruth Key questions in strategic management These questions help you to follow the process well

6/14/2016 Nakato Ruth Key questions … Question 1 Where are we now as a business? Here you are looking at the current position. – Do it by SWOT analysis. –If you are in the right position then you are doing the right things. –If it is worse than before then find out where the problem is. This question answers, business definition, current position.

6/14/2016 Nakato Ruth Key questions… Question 2 Where do we want to be? Where are we going? As a business you want to be better than you were before!

6/14/2016 Nakato Ruth Key questions… Question 3 How do we get there? Here you are looking at the strategies. You have to be efficient and effective. You must do the right things (effective). You must do things right (efficient )

6/14/2016 Nakato Ruth Key questions… Question 4 How do we ensure arrival (Do it)? –This is implementation.

6/14/2016 Nakato Ruth Key questions… Question 5 How do we measure our progress? Have we reached there? Have we achieved what we wanted to achieve? Or we boarded a wrong bus? You can use your objectives to monitor your progress. You can also bench mark; looking at what you are doing and what your competitors are doing.

6/14/2016 Nakato Ruth Thank you