1. The Strategic Management Process

2. Part 1 Strategy Analysis.

3. LO 2-1 Explain the role of vision, mission, and values in the strategic management process.
LO 2-2 Describe and evaluate the role of strategic intent in achieving long-term goals.
LO 2-3 Distinguish between customer-oriented and product-oriented missions and identify strategic implications.
LO 2-4 Critically evaluate the relationship between mission statements and competitive advantage.
LO 2-5 Explain why anchoring a firm in ethical values is essential for long- term success.
LO 2-6 Compare and contrast strategic planning, scenario planning, and strategy as planned emergence, and discuss strategic implications.

4. TFA Mission: Eliminate educational inequality
Chapter Case 2
Teach For America: Inspiring Future Leaders
TFA Mission: Eliminate educational inequality
Started by an undergraduate student, Wendy Kopp
Inspiring mission
Provide a meaningful service option for bright young people
Make teaching to the neediest high prestige
Over 45,000 applicants for 4,500 jobs
INSTRUCTOR: The textbook DVD has a video of TFA founder Wendy Kopp. A shorter video is embedded in the “TFA video” label at the bottom of this slide. Run the slide show and click on this area of the slide to bring up the video if your classroom has Internet access.
The URL link is also below:
TFA Video

5. Vision, Mission, and Values
What are visionary organizations?
Begin with the end in mind
Similar to designing & building a home Frank Lloyd Wright
Vision – what to ultimately accomplish?
Mission – what is the firm about?
Values – how to accomplish goals?

6. Winning Through Strategic Intent: The “Pocketable” Radio
STRATEGY HIGHLIGHT 2.1
Small Japanese Company after WWII, founded by Masura Ibuka
Invented an electric rice cooker
Wanted to license the transistor from Bell Labs in U.S.
Japanese Government & Bell Labs both said NO
Persisted with request – Finally,1953 got transistor.
“Beat Bell Labs” to pocket-sized radio
1957 – Launched world’s FIRST pocket radio
1958 – Changed company name to….

7. LO 2-1 Explain the role of vision, mission, and values in the strategic management process.
LO 2-2 Describe and evaluate the role of strategic intent in achieving long- term goals.
LO 2-3 Distinguish between customer-oriented and product-oriented missions and identify strategic implications.
LO 2-4 Critically evaluate the relationship between mission statements and competitive advantage.
LO 2-5 Explain why anchoring a firm in ethical values is essential for long- term success.
LO 2-6 Compare and contrast strategic planning, scenario planning, and strategy as planned emergence, and discuss strategic implications.

8. Vision, Mission, and Values
Customer-Oriented Missions
Define the firm in terms of solutions for customers
Disney: "Make People Happy"
Enhanced strategic flexibility
NOT the same as listening to customers
Product-Oriented Missions
Define the firm in terms of products or services
U.S. Railroads: "Safest… North American railroad”
Missed the opportunity to move into delivery before
UPS & Federal Express

9. Defining the Business: The Starting Point of Strategy
Example: Fall of the Railroads
“They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry wrong was because they were railroad oriented instead of transport oriented; they were product oriented instead of customer oriented.”
Theodore Levitt “Market Myopia”

10. Mission Statements and Competitive Advantage
Do mission statements help gain and sustain competitive advantage?
Results are inconclusive
Need strategic commitments to succeed (e.g., Boeing Dreamliner)
Positive associations – Visionary firms, like Merck
Negative associations – Better World Books
No associations – Intel

11. LO 2-1 Explain the role of vision, mission, and values in the strategic management process.
LO 2-2 Describe and evaluate the role of strategic intent in achieving long- term goals.
LO 2-3 Distinguish between customer-oriented and product-oriented missions and identify strategic implications.
LO 2-4 Critically evaluate the relationship between mission statements and competitive advantage.
LO 2-5 Explain why anchoring a firm in ethical values is essential for long-term success.
LO 2-6 Compare and contrast strategic planning, scenario planning, and strategy as planned emergence, and discuss strategic implications.

12. Living the Values Ethical standards and norms that govern behavior.
McKesson (health care) – ICARE
Shared principles a framework for daily interactions
Dark side of values
Bernard Madoff
Ponzi scheme estimated at $65 billion in fraud
Enron
One of the largest bankruptcies in U.S. history
Over 50,000 jobs lost (Enron and Arthur Andersen)
INSTRUCTOR: An Interactive video activity with the CEO of McKesson is available online through McGraw-Hill Connect on this section of the text. It is available as an auto-graded homework assignment if desired.

13. LO 2-1 Explain the role of vision, mission, and values in the strategic management process.
LO 2-2 Describe and evaluate the role of strategic intent in achieving long- term goals.
LO 2-3 Distinguish between customer-oriented and product-oriented missions and identify strategic implications.
LO 2-4 Critically evaluate the relationship between mission statements and competitive advantage.
LO 2-5 Explain why anchoring a firm in ethical values is essential for long term success.
LO 2-6 Compare and contrast strategic planning, scenario planning, and strategy as planned emergence, and discuss strategic implications.

14. Strategy as Strategic Planning
Top-down rational planning
Define mission, vision, and goal (strategic intent)
External analysis of opportunities and threats
Internal analysis of strengths and weaknesses
Create strategic fit through SWOT
Formulate appropriate strategy
Implement chosen strategy
Monitor performance and modify if necessary

16. Fundamental Question of the Choice of Goals: Planning for what Purpose(s)?
Profitability (net profits)
Efficiency (low costs)
Market Share
Growth (e.g., increase in total assets, sales, etc)
Shareholder Wealth (dividends plus stock price appreciation)
Utilization of Resources (e.g., ROE, ROI)
Reputation
Contribution to Stakeholders (e.g., employees, society)
Survival (avoid bankruptcy)

17. Strategy as Scenario Planning
Envision different "what-if" plans
Generates a dominant plan
Must implement the most probable option
Keeps other scenarios in the event of changes…
"Arab Spring" impact on the oil industry?
Good example of the AFI framework
Scenario planning at Shell

18. Scenario Planning in the AFI Strategy Framework
EXHIBIT 2.2
Scenario Planning in the AFI Strategy Framework
INSTRUCTOR: An Interactive activity is available online through McGraw-Hill Connect on this section of the text.

19. Shell’s Future Scenarios
STRATEGY HIGHLIGHT 2.2
Shell’s Future Scenarios
Petroleum industry use of scenario planning
Shell made right move in the 1960s
Again in the 1980s
Communism might fall in Soviet Union
Now projecting 20% energy from renewables by 2025

20. Strategy as Planned Emergence
Strategic Initiative
Google 50% of the firm's new products come from the "20% rule" (one day a week on own ideas)
Enron Wind investment by GE
Mintzberg Planned Emergence
Strategy can come from top or bottom:
Some intended strategies drop off in the process
Allows for new emerging ideas to become realized
Resource allocation process
Serendipity can have dramatic effects

21. Strategic Initiatives and Serendipity
Japan Railways
Constructing a bullet train through the
mountains north of Tokyo, which
required many tunnels
Persistent flooding
Complex engineering plans to drain the water
Maintenance worker suggested that the fresh water off the mountains should not be drained, but rather should be bottled
1,000 vending machines on 1,000 railroad platforms in and around Tokyo, and home delivery of water, juices, and coffee followed.
The employee’s proposal had turned this “bottom-up” strategy into a multi-million dollar business.

22. Mintzberg’s Planning Framework
EXHIBIT 2.3
INSTRUCTOR: An Interactive activity is available online through McGraw-Hill Connect on this section of the text.

24. “It’s Not What We Do!” Starbucks
STRATEGY HIGHLIGHT 2.3
“It’s Not What We Do!”
Starbucks
Autonomous action of mid-level manager
Tenacity and persistence of a store manager in Southern California
Risk of failure
Possible career-limiting action
Organization must be willing to accept new ideas
Frappuccino was born!
Contributing 20% of the $11billion in revenues for Starbucks in 2010.