Topic 2-sm
- 1. Issues in Strategic Management MGT - 606 Dr. M. Imran Malik COMSATS University Islamabad (Attock Campus), Attock, Pakistan
- 3. Topics to discuss • Current Strategic Themes • Strategic Management – Definition • Mission, Goals, Objectives, Strategy, Tactics • Competitive priorities • Levels of Strategy • Strategic Management Process • Environmental Scanning – PESTLE – SWOT Ch 1 -3
- 4. Ch 1 -4 Current Strategic Themes •Global Considerations – impact virtually all strategic decisions •E-commerce – vital strategic management tool •Natural Environment – important strategic issue
- 5. Ch 1 -5 Art & science of formulating, implementing, and evaluating, cross- functional decisions that enable an organization to achieve its objectives Strategic Management – Defined
- 6. Why Strategic Management Distinctive competency vs. Core competency Distinctive competencies are superior to other competitors Core competency that this organization does exceedingly well
- 7. Strategic Management defined • Strategic management is the process by which managers set an organization’s long-term course, develop plans in the light of internal and external circumstances, and undertake appropriate action to reach those goals. Ch 1 -7
- 8. Mission, Goals, Strategy, Tactic Ch 1 -8
- 9. • Vision – Description of mission in future. • Mission – The reason for existence for an organization • Goals – Provide detail and scope of mission – Objectives are measurable. • Strategies – Plan of action for achieving organizational goals • Tactics – The methods and actions taken to accomplish strategies (implementing the strategy)
- 10. Example Rabia is a university student. She would like to have a career in business, have a good job, and earn enough income to live comfortably Mission: Live a good life • Vision: In the next few years will start a good life. • Goal: Successful career, good income • Objective: Earn Rs. 50,000/- month • Strategy: Obtain a university education • Tactics: Select a university and a major (online/ regular).
- 11. • Goal is a broad aim towards which your efforts are directed. Where you are going? e.g. educate customers for healthy eating. • Objectives are closely tied to goals but are different from each other. It is specific and measureable milestone that must be achieved in order to reach a goal. Increase customer attendance at health base @2% in the first year. Ch 1 -11
- 12. • Strategy is a plan of action designed to achieve an objective. How you going to get there. The overall direction you are going to take. e.g. inform consumers about health through literacy program. • Tactic is a specific action step required to deliver on a strategy. What you do actually. Weekly meetings for health management program and so forth.Ch 1 -12
- 13. What factors allow us continue to win over time? Ch 1 -13
- 14. Competitive Priorities Cost 1. Low-cost operations Quality 2. Top quality 3. Consistent quality Time 4. Delivery speed 5. On-time delivery 6. Development speed Flexibility 7. Customization 8. Variety 9. Volume flexibility
- 15. Levels of Strategy • Corporate level strategy • Business level strategy • Functional level strategy
- 16. Corporate level strategy • Top managers take the decision (Board of Directors) • Value-oriented decisions are taken generally • Major financial decisions include acquisition, diversification, and structural re-design. • What industry should we be in? • For example: Growth in the market
- 17. Business level strategy • It is more like “unit with in the whole”. • The managers at this level translate the general directions into concrete functional objectives. • Generally, the decisions include use of marketing mix, research and development, appropriate use of HR and so forth. • Achieve a 10% growth in 2 years from consumer products.
- 18. Functional level strategy • Decision making with respect to specific functional areas (production, marketing, HR, finance and so forth) • This strategy deals with “doing things right” • It deals with handling “day to day” tasks of strategic significance (carrying our advertising campaign, purchasing materials, inventory control and so forth). • Functional level strategic management is the management of reletively narrow areas of activity that are vital to survival of organization. • For example: Increase marketing and sales efforts
- 19. Strategic Management Process Ch 1 -19
- 20. Strategic Management Process Copyright © 2015 Pearson Education, Inc. 1-20
- 22. Ch 1 -22 Strategic Management Process • Environmental scanning/analysis • Strategy formulation • Strategy implementation • Strategy evaluation.
- 23. Environmental Scanning defiened • Monitoring, evaluation, and disseminating information from external and internal environments Ch 1 -23
- 24. Environmental Scanning • Environmental scanning – the monitoring, evaluating and disseminating of information from the external and internal environments to key people within the organization – PESTLE analysis – SWOT analysis 1-24
- 25. PESTLE Analysis Ch 1 -25
- 26. PESTLE analysis • PESTLE is an analytical tool which considers external factors and helps to think about their impact on the business
- 27. The factors in PESTLE analysis • P – Political – The current and potential influences from political pressures • E - Economic – The local, national and world economic impact • S - Sociological – The ways in which changes in society affect the project • T - Technological – How new and emerging technology affects our project / organization • L - Legal – How local, national and global legislation affects the project • E - Environmental – Local, national and global environmental issues
- 28. • Political: – Government type and stability – Freedom of the press, rule of law and levels of bureaucracy and corruption – Social and employment legislation – Tax policy, and trade and tariff controls – Likely changes in the political environment • Economic: – Stage of a business cycle – Unemployment and supply of labor – Labor costs – Levels of disposable income and income distribution – Impact of globalization PESTLE
- 29. PESTLE • Sociological: – Cultural aspects, health consciousness, population growth rate, age distribution, – Education, occupations, earning capacity, living standards – Ethical issues, diversity, immigration/emigration, ethnic/religious factors – Media views, law changes affecting social factors, trends, advertisements, publicity – Demographics: age, gender, race, family size • Technological: – Maturity of technology, competing technological developments, research funding, technology legislation, new discoveries – Information technology, internet, global and local communications – Technology access, licensing, patents, potential innovation, replacement technology/solutions, inventions, research, intellectual property issues, advances in manufacturing – Transportation, energy uses/sources/fuels, associated/dependent technologies, rates of obsolescence, waste removal/recycling
- 30. PESTLE • Legal: – current home market legislation, future legislation – European/international legislation – environmental regulations, employment law, consumer protection • Environmental: – Ecological – environmental issues, environmental regulations – customer values, market values, stakeholder/ investor values
- 31. SWOT Analysis Ch 1 -31
- 32. SWOT Analysis • SWOT - strengths, weaknesses, opportunities, and threats. • The external environment consists of OT, the outside factors. • The internal environment of a corporation consists of SW, that are within the organization itself and are not usually within the short run control of top management. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 1 -32
- 33. Continued… • Doing internal analysis including SWOT analysis S strengths W weaknesses O opportunities T threats
- 34. Strengths • Financial Resources • Marketing & Advertisement • R & D Department • Corporate Social Responsibility • Distribution Network • Brand Name • Market Share • Customer Loyalty
- 35. Weaknesses • Out-dated Technology • Poor Research & Development • Weak Distribution Network • Poor Decision Making • Negative Publicity (negative word of mouth)
- 36. Opportunities • Diversification • Introduce New Product • Growing Market • New Market
- 37. Threats • New Competitors • Economic Conditions • Taxes • Inflation
- 38. A Case What Business are we in? Boots: the Journey to well-being. Ch 1 -38
- 39. Thank You Ch 1 -39
Editor's Notes
- #21: Figure 1–1 illustrates how these four elements interact
- #22: Figure 1–2 expands each of these elements and serves as the model for this book. This model is both rational and prescriptive.
- #25: Environmental scanning is the monitoring, evaluating and disseminating of information from the external and internal environments to key people within the corporation. Its purpose is to identify strategic factors—those external and internal elements that will assist in the analysis in deciding the strategic decisions of the corporation. The simplest way to conduct environmental scanning is through SWOT analysis.
- #28: The factors in a PESTLE analysis are: Political Environmental Social Technological Legal Economic
- #29: Here we have examples - the list can change depending on the project or focal problem (We should not read out every items on this list, the participants can take a better look at it themselves, because we will focus on our case study)