Strategic Planning Chapter 9

Topics Strategic Management Process Organizational Strategies Analysis of Mission, Values, Objectives, Organizational Culture Analysis of Resources & Capabilities Analysis of Industry & Environment Organizational Strategies Levels of Strategy Types of Strategic Plans Group Company Research Assignment & Presentation BOH4M- Chapter 9

Strategic Management Process Basic concepts of strategy Strategy — a comprehensive action plan that identifies long-term direction for an organization and guides resource utilization to accomplish organizational goals with sustainable competitive advantage. BOH4M- Chapter 9

Strategic Management Process Basic concepts of strategy: Competitive advantage — operating with an attribute or set of attributes that allows an organization to outperform its rivals. Example: Walmart (inventory IT) Sustainable competitive advantage — one that is difficult for competitors to imitate. Example: Tim Horton’s (double double, Canadiana, over 2600 shops) BOH4M- Chapter 9

Figure 9.1 Strategy formulation and implementation in the strategic management process. BOH4M- Chapter 9

Strategic Management Process Strategic question for strategy formulation: What is our business mission? Who are our customers? What do our customers consider value? What have been our results? What is our plan? BOH4M- Chapter 9

Strategic Management Process Analysis of mission: The reason for an organization’s existence. Good mission statements identify: http://www.youtube.com/watch?v=fSi4HHNOnd0&safety_mode=true&persist_safety_mode=1&safe=active Customers Products and/or services Location Underlying philosophy An important test of the mission is how well it serves the organization’s stakeholders. Examples BOH4M- Chapter 9

Figure 9.2 How external stakeholders can be valued as strategic constituencies of organizations. BOH4M- Chapter 9

Strategic Management Process Analysis of values: Values are broad beliefs about what is or is not appropriate. Strong core values for an organization helps build institutional identity, gives character to an organization, and it backs up the mission statement. Organizational culture reflects the dominant value system of the organization as a whole. Apple Example BOH4M- Chapter 9

Strategic Management Process Organizational culture  Shapes the values of managers and other organization members. Points people in common directions. Helps build institutional identity. Gives character to the organization in the eyes of employees and external stakeholders. Backs up the mission statement. Guides the behaviour of organizational members in meaningful and consistent ways. BOH4M- Chapter 9

Strategic Management Process Strong cultures: Commit members to do things that are in the best interests of the organization. Discourage dysfunctional work behaviour. Encourage functional work behaviour. The best organizations have strong cultures that: Are performance-oriented. Emphasize teamwork. Allow for risk taking. Encourage innovation. Value the well being of people. BOH4M- Chapter 9

Strategic Management Process 2 Levels of Organizational Culture Core Culture - Underlying assumptions and beliefs that influence behaviour and contribute to the observable culture. Observable Culture - What one sees and hears when walking around an organization. Google Video BOH4M- Chapter 9

Figure 4.4 Levels of organizational culture—observable culture and core culture. BOH4M- Chapter 9

I don’t know how it started, either I don’t know how it started, either. All I know is that it’s part of our corporate culture. BOH4M- Chapter 9

Study Question 4: What is organizational culture? What is observable culture? What one sees and hears when walking around an organization. Elements of observable culture: Stories – tales of events conveying core values Heroes – people (past & Present) who display core values Rites and rituals – celebration of people and events that display core values Symbols – language or symbols conveying core values BOH4M- Chapter 9

Study Question 4: What is organizational culture? What is the core culture? Underlying assumptions and beliefs that influence behaviour and contribute to the observable culture. Core culture and values: Strong cultures have a small but enduring set of core values. Commitment to core values is a key to long-term success. BOH4M- Chapter 9

Strategic Management Process Core culture and values: Strong cultures have a small but enduring set of core values. Commitment to core values is a key to long-term success. Important cultural values include: Performance excellence Innovation Social responsibility Integrity Worker involvement Customer service Teamwork BOH4M- Chapter 9

Strategic Management Process Analysis of objectives: Operating objectives direct activities toward key and specific performance results. Typical operating objectives: Profitability Market share Human talent Financial health Cost efficiency Product quality Innovation Social responsibility BOH4M- Chapter 9

Strategic Management Process Analysis of organizational resources and capabilities: Important goal of assessing core competencies. Potential core competencies: Special knowledge or expertise. Superior technology. Efficient manufacturing approaches. Unique product distribution systems. BOH4M- Chapter 9

Figure 9.3 SWOT analysis of strengths, weaknesses, opportunities, and threats. BOH4M- Chapter 9

Strategic Management Process Analysis of industry and environment: Assessment of macro environment: Technology. Government. Social structures and population demographics. Global economy. Natural environment. Analysis of industry environment: Resource suppliers. Competitors. Customers. BOH4M- Chapter 9

Figure 9.4 Porter’s model of five strategic forces affecting industry competition. Source: Developed from Michael E. Porter, Competitive Strategy (New York: Free Press, 1980). BOH4M- Chapter 9

Strategic Management Process Strategic forces to be examined in conducting an industry analysis: Industry competitors New entrants Suppliers Buyers Substitutes Unattractive industry. 5 forces are favourable for the firm. Attractive industry. 5 forces are unfavourable for the firm. BOH4M- Chapter 9