Module 5 LIS 580: Spring 2006 Instructor- Michael Crandall Strategic Planning Module 5 LIS 580: Spring 2006 Instructor- Michael Crandall

Roadmap The strategic management process Mission and vision statements Analyzing strategic drivers and core competencies SWOT analysis Scenario planning April 11, 2006 LIS580- Spring 2006

Checklist 5.1 The Strategic Management Process Define the business and its mission. Perform external and internal audits. Translate the mission into strategic goals. Generate and select strategies to reach strategic goals. Implement the strategy. Evaluate performance. G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

A Comprehensive Strategic-Management Model Source: Adapted from Fred David, Strategic Management (Upper Saddle River, NJ: Prentice-Hall, 2001), p. 77. FIGURE 5–1 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Vision and Mission A vision statement tells people Where we want to go What we want to become What we want to accomplish Why it is important And a mission expresses the organization’s: Purpose - the needs we exist to address Business - what are we doing to address these Values - what principles or beliefs guide our work April 11, 2006 LIS580- Spring 2006

Examples of Mission Statements APEX ELEVATOR To provide a high-reliability, error-free method for moving people and products up, down, and sideways within a building. UNITED TELEPHONE CORPORATION OF DADE To provide information services in local-exchange and exchange-access markets within its franchised area, as well as cellular phone and paging services. JOSEPHSON DRUG COMPANY, INC. To provide people with longer lives and higher-quality lives by applying research efforts to develop new or improved drugs and health-care products. GRAY COMPUTER, INC. To transform how educators work by providing innovative and easy-to-use multimedia-based computer systems. FIGURE 5–2 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Strategies in Brief April 11, 2006 LIS580- Spring 2006 COMPANY STRATEGIC PRINCIPLE America Online Consumer connectivity first—anytime, anywhere Dell Be direct eBay Focus on trading communities General Electric Be number one or number two in every industry in which we compete, or get out Southwest Airlines Meet customers’ short-haul travel needs at fares competitive with the cost of automobile travel Vanguard Unmatchable value for the investor-owner Wal-Mart Low prices, every day Source: Arit Gadiesh and James Gilbert, “Frontline Action,” Harvard Business Review, May 2001, p. 74. FIGURE 5–3 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Checklist 5.2 How to Test the Quality of Your Strategy Does your strategy fit with what’s going on in the environment? Does your strategy exploit your key resources? Will competitors have difficulty keeping up with you? Are the elements of your strategy internally consistent? Do you have enough resources to pursue this strategy? Can your strategy be implemented? G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Relationships Among Strategies in Multiple-Business Firms FIGURE 5–4 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Strategy Types Corporate Competitive Concentration Vertical integration Diversification Status quo Investment reduction Strategic alliances/joint ventures Competitive Cost leadership Differentiation Focus April 11, 2006 LIS580- Spring 2006

Forces Driving Industry Competition Source: Reprinted with the permission of The Free Press, a division of Simon & Schuster from Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael E. Porter. Copyright © 1980 by The Free Press. FIGURE 5–5 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

How the Internet Influences Industry Structure Source: Adapted from Michael Porter, “Strategy and the Internet,” Harvard Business Review, March 2001, p. 67. FIGURE 5–6 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Examples of a Company’s Strengths, Weaknesses, Opportunities, and Threats FIGURE 7–7 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Worksheet for Environmental Scanning FIGURE 5–8 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Checklist 5.3 How to Benchmark Focus on a specific problem and define it carefully Use employees who will actually implement changes to identify the best- practices companies and to conduct on- site studies. Be willing to share information with others. Avoid sensitive issues such as pricing, and don’t look for new product information. Keep information you receive confidential. G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Cineplex Odeon TOWS Matrix Source: Fred David, Strategic Management (Upper Saddle River, NJ: Prentice-Hall, 2001), p. 207. FIGURE 5–9 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

BCG Matrix April 11, 2006 LIS580- Spring 2006 FIGURE 5–10 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Checklist 5.4 Scenario Planning Principles Scenarios have value only to the extent that they inform decision makers and influence decision making. Scenarios add value to decision making only when managers and others use them to systematically shape questions about the present and the future, and to guide how to go about answering them. In each step of developing scenarios, the emphasis must be on identifying, challenging, and refining the substance of managers’ mindsets and knowledge. G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Checklist 5.4 (cont’d) Scenario Planning Principles Alternative projections about a given future must challenge managers’ current mental models by creating tension among ideas, hypotheses, perspectives, and assumptions. The dialogue and discussion spawned by the consideration of alternative futures should directly affect managers’ knowledge. Scenarios should include enough indicators so that managers can track how the future is actually evolving so that the learning and adaptations stimulated by the scenarios are continuous. Southwest follows Michael Porter’s view that functional strategies should support corporate and competitive strategies Hamel and Prahalad argue that leveraging resources is more important for long-term success Core competencies define key strengths of the organization, and provide the focus for strategic choices Guest lecture Mike Eisenberg, Dean Emeritus, the Information School Read the iSchool Strategic Plan Mike wrote in 1998, and think of it in the context of the discussions we’ve been having over the past several days Come prepared with questions that use class readings and discussion to examine this plan A great chance to hear from someone who’s gone through a full planning cycle G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Southwest Airlines’ Activity System Source: Reprinted by permission of Harvard Business Review. From “What Is Strategy?” by Michael E. Porter, November–December 1996. Copyright © 1996 by the President and Fellows of Harvard College; all rights reserved. FIGURE 5–11 G.Dessler, 2003 April 11, 2006 LIS580- Spring 2006

Strategic Fit vs. Stretch Southwest follows Michael Porter’s view that functional strategies should support corporate and competitive strategies Hamel and Prahalad argue that leveraging resources is more important for long-term success Core competencies define key strengths of the organization, and provide the focus for strategic choices April 11, 2006 LIS580- Spring 2006

Cleveland Public Library How did the library go about building their plan? Did they effectively engage the stakeholders in the process? What kinds of outside help did they seek in formulating their plan? How did the concrete steps they defined relate to their mission and vision statements? Were there any measurements of success built into the plan? April 11, 2006 LIS580- Spring 2006

Next Time Guest lecture Mike Eisenberg, Dean Emeritus, the Information School Read the iSchool Strategic Plan Mike wrote in 1998, and think of it in the context of the discussions we’ve been having over the past several days Come prepared with questions that use class readings and discussion to examine this plan A great chance to hear from someone who’s gone through a full planning cycle April 11, 2006 LIS580- Spring 2006