Lecture3
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This document discusses strategic management processes including formulation, implementation, and evaluation of strategies. It describes different types of strategies such as overall cost leadership, differentiation, and focus strategies. The document also outlines various approaches that can be used to implement strategies, including the commander, organizational change, collaborative, cultural, and crescive approaches. Finally, it discusses evaluating strategies through internal and external reviews and taking corrective actions when needed.
Lecture3
- 2. Formulation of Basic Strategies(types of strategies) Formulation of functional strategies Implementation of Strategy Approaches to implementation Conclusion
- 3. At the end of the session you should be able to understand the different types of strategies and also understand the approaches to strategy implementation
- 4. What are the purpose and objective of the organization? Where is the organization presently going? What critical environmental factors does the organization currently face? What can be done to achieve organizational objectives more effectively in the future? 4
- 5. Profitability Growth Market share Social responsibility Employee welfare Product Quality Service R&D Diversification Efficiency Financial stability Resource conservation Mgt & labor development 5
- 6. Overall cost leadership Differentiation Focus on niche markets 6
- 7. Operations strategy Financial strategy Marketing strategy Human resource strategy 7
- 8. 8 Target Setting Gap Analysis Strategic Appraisal Strategic Formation Strategic Implementation
- 9. Copyright 2007 Prentice HallCh 1 -9 Strategy Implementation Annual Objectives Policies Employee Motivation Resource Allocation
- 10. Strategy Implementation Action Stage of Strategic Management – Most difficult stage Mobilization of employees & managers Interpersonal skills critical Consensus on goal pursuit
- 11. Commander approach Organizational change approach Collaborative approach Cultural approach Crescive approach 11
- 12. Manager determines “best” strategy Manager uses power to see strategy implemented Three conditions must be met ◦ Manager must have power ◦ Accurate and timely information is available ◦ No personal biases should be present 12
- 13. Limitations ◦ Can reduce employee motivation and innovation Advantages ◦ Managers focus on strategy formulation ◦ Works well for younger managers ◦ Focuses on objective rather than subjective 13
- 14. Focuses on the organization Behavioral tools are used Includes focusing on the organization’s staffing and structure Often more effective than Commander Used to implement difficult strategies 14
- 15. Limitations ◦ Managers don’t stay informed of changes occurring within the environment ◦ Doesn’t take politics and personal agendas into account ◦ Imposes strategies in a “top-down” format ◦ Can backfire in rapidly changing industries 15
- 16. Enlarges the Organizational Change Approach Manager is a coordinator Management team members provide input Group wisdom is the goal 16
- 17. Advantages ◦ Increased quality and timeliness of information ◦ Improved chances of effective implementation Limitations ◦ Contributing managers have different points of view and goals ◦ Management retains control over the process 17
- 18. Includes lower levels of the company Breaks down barriers between management and workers Everyone has input into the formulation and implementation of strategies Works best in high resource firms 18
- 19. Advantage ◦ More enthusiastic implementation Limitations ◦ Workers should be informed, intelligent ◦ Consumes large amounts of time ◦ Strong company identity becomes handicap ◦ Can discourage change and innovation 19
- 20. Addresses formulation and implementation simultaneously Subordinates develop, champion, and implement strategies on their own “Bottoms-up” approach Ultimate strategy is sum of all “successful” approaches 20
- 21. Advantages ◦ Encourages middle management to participate ◦ Strategies are more operationally sound Limitations ◦ Resources must be available ◦ Tolerance must be extended 21
- 22. Copyright 2007 Prentice HallCh 1 -22 Strategy Evaluation Internal Review External Review Performance Metrics Corrective Actions
- 23. Strategy Evaluation Final Stage of Strategic Management Subject to future modification Today’s success no guarantee of future success New & different problems Complacency leads to demise
- 24. Typically consists of three steps ◦ Monitoring performance ◦ Comparing performance to standards ◦ Taking corrective action where needed 24
- 25. Customer Perspective Financial Perspective Internal Business Process Perspective Learning and Growth Perspective 25
- 26. Using McKinsey 7S framework for looking at strategies implication. 26