MS Lecture 2 strategic management
- 1. Strategic Management (Part 1) QSB2413 Management Science
- 2. Recap • In the previous lecture we have learned the four basic managerial functions: Planning, Organizing, Leading and Controlling. • In this chapter, we will expand upon the Planning function of a manager.
- 3. Planning • Planning takes place in organization in 2 ways. • There are short-term, operational plans and tactics that guide the day-to-day activities. • Next, there are long-term, overarching plans that serve to direct an organization’s strategic position for years to come.
- 4. Planning • Planning provides a foundation for all organizational activities. • Through planning, managers coordinate organizational activities so that the goals of the organization can be achieved. • Organizational success depends on the ability of managers to develop a plan which able to prescribe / set the activities necessary for the organization to realize its goals.
- 5. Planning Planning is an act of:- • creating a goal and • writing a blueprint for that goal. ** Without this first step, nothing else will work! *** Once the plan has been formulated, the manager or owner must then communicate them to every employees, so that everyone knows what the goal is and can work towards it.
- 6. Planning • There are 3 parts to planning: – 1) Setting a goal – what do you want to achieve? – 2) Develop a strategy – how do you achieve your goal? – 3) Determine your tactics – what are the specific details involved in the strategy?
- 7. Example of Planning Goal Complete the project in this year. Strategy 24 hours operation. Tactics Increase the number of employees, work by shifts, pay more to workers.
- 8. Strategy • Strategy is a plan of action designed to achieve a long-term or overall aim. • Strategy is a term that refers to a complex web of thoughts, ideas, insights, experiences, goals, expertise, perceptions and expectations that provides general guidance for specific actions in pursuit of particular ends.
- 9. Strategic Planning • Plan is a method for doing or making something, consisting of a goal and a course of action. • Planning is the process of setting goals and courses of action, developing rules and procedures and forecasting future outcomes. • Strategic Planning is identifying the current business of a firm and the business it wants for the future and the course of action or strategy it will pursue.
- 10. Strategic Planning • Strategic planning is a process by which an organization determines where it wants to be (goal) and how it will get there (how to achieve the goal). • Strategic planning is essential for organizational success and it is an ongoing process that should be responsive to changes in the environment of the organization.
- 11. Strategic Planning • Strategic planning typically originates / initiates at the highest level of the organization and focuses on enhancing the competitive position and overall performance of the organization in the long term. • The purposes are to develop and maintain a competitive advantage within the industries to compete.
- 12. Strategic Management • Strategic management is the process of identifying and executing the organization’s mission by matching the organizations capabilities with the demands of its environment. • Strategic management is the highest level of managerial activity.
- 14. Elements of Strategic Management Strategic Management is a combination of three main processes which are as follows: 1. Strategy Formulation (Step 1 to 4) - Determining where you are now - Determining where you want to go - Determining how to get there These 3 questions are the essence of strategic planning.
- 15. Elements of Strategic Management 2. Strategy Implementation (Step 5) - Allocation and management of sufficient resources (financial, personnel, time, technology support). - Assigning responsibility of specific tasks or processes to specific individuals or groups. - It involves managing the process, including monitoring results, comparing to benchmarks and evaluating the efficiency of the process, controlling the variances and making adjustments.
- 16. Elements of Strategic Management 3. Strategy Evaluation (Step 6) - Measuring the effectiveness of the organizational strategy.
- 18. Strategic Analysis • Strategic analysis is the critical part of the strategic planning process. • Its purpose is to understand the current position of the organization so its strategy for moving the organization forward can be developed.
- 19. Strategic Analysis • The important components of a strategic analysis include: (1) An assessment of the organization’s vision, mission and values, (2) An assessment of the internal environment for the organization, (3) Review of external environment trends that impact the strategy of the organization.
- 20. Let’s start with exploring vision, mission and values.
- 21. Step 1: Develop Vision and Mission Statement • Vision is a general statement of an organization’s intended direction that evokes emotional feelings in its members. • Mission is more specific and short-term. • Goal is a specific result to be achieved; the end result of a plan. (To complete the piling job in a day) • Objectives are the specific results toward which effort is directed. (Liaises with contractors from time to time to ensure completion of the specific job)
- 22. Why have a mission statement? • Mission statement is a statement that broadly outlines the enterprise’s (firm / organization) purpose and serves to communicate “who the organization is, what it does, and where it’s headed.”
- 23. Mission Statement • It is the fundamental reason the organization exists. • Mission statements are usually crafted by owners, top managers, and/or the board of directors (representatives of the stockholders). • Creating an effective mission statement is a critical part of the strategic planning process as an organization’s mission is the foundation upon which its strategy will be built.
- 24. How to create an effective / a good mission statement?
- 25. Good Mission Statement • A good mission statement provides strategic direction for employees and focuses directions on the organization’s basic charge. (e.g. cheaper price) • There are three primary questions should answers: (1) WHO will the organization serve? (2) WHAT needs will the organization fulfill? (3) HOW will the organization fulfill those needs? • Mission statement serves as a framework for making future strategic decisions.
- 27. Is the below example considered a good mission statement?
- 29. What is Facebook’s mission statement?
- 30. To give people the power to share and make the world more open and connected. To stay people connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.
- 31. Vision Statement • In addition to the mission statement, many companies choose to develop vision statements. • Mission statement describes an organization’s fundamental purpose. • A vision statement describes what the organization aspires to become over time. • Organizations must live their mission in order to realize their vision.
- 32. Values Statement • Many organizations have strong values statements that help set the tone for its culture and communicate the qualities that are important to the organization. • Values statements reflect the core ethical beliefs or standards that exist within an organization.
- 33. Assume that you own a construction company in Malaysia. What would be your mission, vision and values statements?
- 35. EcoWorld
- 36. Step 2: Internal and External Analysis • SWOT analysis is a process that identifies the strengths, weaknesses, opportunities and threats of an organization.
- 37. To be continued in Part 2