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Overview of Strategic Management. Overview. Why do some firms succeed while others fail? A central objective of strategic management is to learn why this happens. What is strategy? An action a company takes to attain superior performance. What is the strategic management process?
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Overview • Why do some firms succeed while others fail? • A central objective of strategic management is to learn why this happens. • What is strategy? • An action a company takes to attain superior performance. • What is the strategic management process? • The process by which managers choose a set of strategies for the enterprise to pursue its vision.
Abandoned strategy features Company Experiences, Know-how, Resource Strengths and Weaknesses, and Competitive Capabilities Planned Strategy New initiatives plus ongoing strategy features continued from prior periods Actual Company Strategy A Company’s Strategy is Partly PlannedandPartlyReactive Adaptive reactions to changing circumstances Reactive Strategy
External Factors Social, political, regulatory and community factors Competitive conditions and industry attractiveness Company opportunities and threats to company’s well-being Craft the strategy Determine relevance of internal and external factors Identify and evaluate alternatives Factors Shaping the Choice of Company Strategy Company’s Strategic Situation Resource strengths, capabilities, and weaknesses Influences of key executives Shared values and company culture Internal Factors
Strategy as an Emergent Process • Strategy making in an unpredictable world • Creates the necessity for flexible strategic approaches. • Strategy making by lower-level managers • Strategy evolves through autonomous action. • Serendipity and strategy • Accidental discoveries and happenstances can have dramatic effects on strategic direction. • Intended and emergent strategies • Realized strategies are combinations of intended and emergent strategies.
Why Do Strategies Evolve? • A company’s strategy is a work in progress • Changes may be necessary to react to • Shifting market conditions • Technological breakthroughs • Fresh moves of competitors • Evolving customer preferences • Emerging market opportunities • New ideas to improve strategy • Crisis situations
Strategic Management • Set of decisions and actions that result to the formulation and implementation of plans designed to achieve a company’s objectives • Study of why and how some firms outperform others
Benefits of Strategic Management • Strategy formulation activities enhance the firm’s ability to prevent problems. • Group-based strategic decisions are likely to be drawn from the best available alternatives. • The involvement of employees in strategy formulation improves their understanding of the productivity-reward relationship in every strategic plan and, thus, heightens their motivation.
Gaps and overlaps in activities among individuals and groups are reduced as participation in strategy formulation clarifies differences in roles. • Resistance to change is reduced.
Risks of Strategic Management • The time that managers spend on the strategic management process may have a negative impact on operational responsibilities. • If the formulators of strategy are not intimately involved in its implementation, they may shirk their individual responsibility for the decision reached. • Strategic managers must be trained to anticipate and respond to the disappointment of participating subordinates over unattained expectations.
Task 1 Task 2 Task 3 Task 4 Task 5 Develop Vision and Mission Set Goals & Objectives Formulate Strategy to Achieve Goals & Objectives Implement and Execute Strategy Monitor, Evaluate, and Take Corrective Action Revise as Needed Revise as Needed Improve/ Change Improve/ Change Recycle as Needed
Develop Mission and Vision What is a Company Mission? This is the fundamental purpose that sets a firm apart from other firms of its type and identifies the scope of its operations in product and market terms. It sets out why the organization exists and what it should be doing. It broadly outlines the organization’s future course and serves to communicate “who we are, what we do, and where we’re headed”
Coca-Cola Company MissionEverything we do is inspired by our enduring mission: • To Refresh the World... in body, mind, and spirit. • To Inspire Moments of Optimism... through our brands and our actions. • To Create Value and Make a Difference... everywhere we engage.
Develop Mission and Vision What is a Vision? This is a general statement of the organization’s intended direction that evokes emotional feelings in organization members. A strategic vision describes the route a company intends to take in developing and strengthening
Coca-Cola Company VisionTo achieve sustainable growth, we have established a vision with clear goals. • Profit: Maximizing return to shareowners while being mindful of our overall responsibilities. • People: Being a great place to work where people are inspired to be the best they can be. • Portfolio: Bringing to the world a portfolio of beverage brands that anticipate and satisfy peoples’ desires and needs. • Partners: Nurturing a winning network of partners and building mutual loyalty. • Planet: Being a responsible global citizen that makes a difference.
Linking the Vision with Company Values • Companies often develop a statement of values to guide a company’s pursuit of its vision and strategy and paint the white lines for how the company’s business is to be conducted • Values statements remain a bunch of nice words until the espoused beliefs, traits, and behaviors are incorporated into company’s operations and work practices and are used as the benchmark for job appraisal, promotions, and rewards.
Coca-Cola Company ValuesWe are guided by shared values that we will live by as a company and as individuals. • Leadership: "The courage to shape a better future" • Passion: "Committed in heart and mind" • Integrity: "Be real" • Accountability: "If it is to be, it’s up to me" • Collaboration: "Leverage collective genius" • Innovation: "Seek, imagine, create, delight" • Quality: "What we do, we do well"
