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STRATEGIC MANAGEMENT: Concepts and Cases Arthur A. Thompson, Jr. & A. J. Strickland, III Tenth Edition The University of Alabama. Screen graphics created by: Jana F. Kuzmicki, Indiana University Southeast. CHAPTER 1 . THE STRATEGIC MANAGEMENT PROCESS. Screen graphics created by:
Concepts and Cases
Arthur A. Thompson, Jr. &
A. J. Strickland, III
The University of Alabama
Screen graphics created by:
Jana F. Kuzmicki, Indiana University Southeast
THE STRATEGIC MANAGEMENT PROCESS
Screen graphics created by:
Jana F. Kuzmicki, PhD, Indiana University Southeast
Joel Ross and Michael Kami
1. Where are we now -- what is our situation?
2. Where do we want to go?
3. How will we get there?
To mold the independent actions and decisions of managers and employees into a coordinated, companywidegame planWhy Are Strategies Needed ?
Competent execution of a well-conceived strategy is a proven recipe for organizational success and the best test of managerial excellence!
Evaluate & Make Corrections
The First Task of Strategic Management
Business(es) company is in now
Customer needs currently being served
Astrategic vision concerns a firm’sfuture business path
The kind of company it is trying to become
Customer needs to be satisfied in the futureMissions vs. Strategic Visions
McDonald’s vision is to dominate the global foodservice industry. Global dominance means setting the performance standard for customer satisfaction while increasing market share and profitability through our Convenience, Value, and Execution Strategies.
Our mission is to provide any customer a means of moving people and things up, down, and sideways over short distances with higher reliability than any similar enterprise in the world.
One vision drives everything we do: A computer on every desk and in every home using great software as an empowering tool.
Our business is renting cars. Our mission is total customer satisfaction.
American Red Cross
The mission of the American Red Cross is to improve the quality of human life; to enhance self-reliance and concern for others; and to help people avoid, prepare for, and cope with emergencies.
The Body Shop
We aim to achieve commercial success by meeting our customers’ needs through the provision of high quality, good value products with exceptional service and relevant information which enables customers to make informed and responsible choices.
We are in the picture business.
The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission.
We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed yet refined ambiance.
The Ritz-Carlton experiences enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.
Intel supplies the computing industry with chips, boards, systems, and software. Intel’s products are used as “building blocks” to create advanced computing systems for PC users. Intel’s mission is to be the preeminent building block supplier to the new computing industry worldwide.
To be the leading supplier of PCs and PC servers in all customer segments.
Long John Silver’s
To be America’s best quick service restaurant chain. We will provide each guest great tasting, healthful, reasonably priced fish, seafood, and chicken in a fast, friendly manner on every visit.
The mission is to extend and enhance human life by providing the highest quality health and personal care products. We intend to be the preeminent global diversified health and personal care company.
The Second Task of Strategic Management
Banc One Corporation
To be one of the top three banking companies in terms of market share in all significant markets we serve.
To safely deliver a hot, quality pizza in 30 minutes or less at a fair price and a reasonable profit.
Ford Motor Company
To provide shareholders a secure investment with a superior return.
To be the lowest-cost producer of aluminum and to outperform the average return on equity of the Standard and Poor’s industrial stock index.
To become the most competitive enterprise in the world by being number one or number two in market share in every business the company is in. To achieve an average of 10 inventory turns and a corporate operating profit margin of 16% by 1998.
To focus globally on those businesses in health and personal care where we can be number one or number two through delivering superior value to the customer.
To become a low-cost, medium-size gold producer, producing in excess of 125,000 ounces of gold a year and building gold reserves of 1,500,000 ounces.
The Third Task of Strategic Management
Our strategy will be . . .
Planned (or Intended)
Strategy is HOW to . . .
Actions to Strengthen Resources & Capabilities
How Functional Activities Are Managed
Offensive Moves to Gain Edge
Changes in Product Line,
Quality, or Service
Backward Integration, Collaboration
Where firm is headed -- Strategic vision and business mission
Short and long term performance targets --Strategic and financial objectives
Action approaches to achieve targeted results -- A comprehensive strategy
The Fourth Task of Strategic Management
Strategy implementation is an
internal, operations-driven activity
involving organizing, budgeting,
supervising, and leading to
“make the strategy work”
The Fifth Task of Strategic Management
Strategy-making is a job for line managers,nota staff of planners -- doers should be the strategy-makers!
A board of director’s role in the strategic management process is to critically appraise and ultimately approve strategic action plans, but rarely, if ever, to develop the details!
A view of an organization’s future direction and business course; a guiding concept for what the organization is trying to do and to become.
Represents management’s customized answer to the question “what is our business and what will it be.” A mission statement broadly outlines the organization’s future direction and serves as a guiding concept for what the organization is to do and to become.
Organization’s targets for achievement; both short and long range objectives are needed.
Financial performance targets a company wants to achieve.
Targets relating to strengthening a company’s overall market position and competitive viability.
Achievement levels to be reached within the next three to five years.
Near-term performance targets; they establish the pace for achieving the long-range objectives.
Managerial action plan for achieving organizational objectives; strategy is mirrored in the pattern of moves and approaches devised by management to produce the desired performance. Strategy is the how of pursuing an organization’s mission and reaching target objectives.
Statement outlining an organization’s mission and future direction, near-term and long-term performance targets, and strategy, in light of organization’s external and internal situation.
Includes the full range of managerial activities associated with putting the chosen strategy into place, supervising its pursuit, and achieving the targeted results.