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Crafting & Executing Strategy 19e

This document discusses the key elements of strategic management for a company: 1. Developing a strategic vision, mission, and values to guide the company's direction. 2. Creating objectives and strategies to achieve goals and outperform competitors. 3. Executing the strategy efficiently through initiatives at all levels of the organization. 4. Monitoring performance and making adjustments as needed based on feedback and market changes. The board of directors oversees this process to ensure the company is well-managed and accountable. Strategic management involves coordination across divisions to unite around a common strategic plan.

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Debadatta Ratha
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290 views

Crafting & Executing Strategy 19e

This document discusses the key elements of strategic management for a company: 1. Developing a strategic vision, mission, and values to guide the company's direction. 2. Creating objectives and strategies to achieve goals and outperform competitors. 3. Executing the strategy efficiently through initiatives at all levels of the organization. 4. Monitoring performance and making adjustments as needed based on feedback and market changes. The board of directors oversees this process to ensure the company is well-managed and accountable. Strategic management involves coordination across divisions to unite around a common strategic plan.

Uploaded by

Debadatta Ratha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Ch 2: Charting A Companys Direction: Its

Vision, Mission, Objectives, And Strategy

Crafting strategy
A companys strategy-making hierarchy
Executing the strategy
Feedback and control

1. Understand why the strategic initiatives taken at various


organizational levels must be tightly coordinated to achieve
companywide performance targets.
2. Become aware of what a company must do to achieve
operating excellence and to execute its strategy proficiently.
3. Become aware of the role and responsibility of a companys
board of directors in overseeing the strategic management
process.

22

Recap:
WHAT DOES THE STRATEGY-MAKING,
STRATEGY-EXECUTING PROCESS ENTAIL?
1. Developing a strategic vision, a mission statement,
and a set of core values.
2. Setting objectives for measuring the firm's
performance and tracking its progress.

3. Crafting a strategy to move the firm along its


strategic course and to achieve its objectives.
4. Executing the chosen strategy efficiently and
effectively.
5. Monitoring developments, evaluating performance,
and initiating corrective adjustments.
23

FIGURE 2.1

The Strategy-Making, Strategy-Executing Process

Strategic Plan

24

TASK 3: CRAFTING A STRATEGY

Strategy Making:

Addresses a series of strategic hows.

Requires choosing among strategic alternatives.

Promotes actions to do things differently from


competitors rather than running with the herd.

Is a collaborative team effort that involves managers


in various positions at all organizational levels.

25

STRATEGY MAKING INVOLVES MANAGERS


AT ALL ORGANIZATIONAL LEVELS

Chief Executive Officer (CEO)

Senior Executives

Has ultimate responsibility for leading the strategy-making


process as strategic visionary and as chief architect of strategy.

Fashion the major strategy components involving their areas of


responsibility.

Managers of subsidiaries, divisions, geographic regions,


plants, and other operating units (and key employees
with specialized expertise)

Utilize on-the-scene familiarity with their business units to


orchestrate their specific pieces of the strategy.
26

STRATEGIC MANAGEMENT PRINCIPLE


In most companies, crafting and executing
strategy is a collaborative team effort in which
every manager has a role for the area he or
she heads; it is rarely something that only highlevel managers do.

27

WHY IS STRATEGY-MAKING OFTEN


A COLLABORATIVE PROCESS?

The many complex strategic issues involved and


multiple areas of expertise required can make the
strategy-making task too large for one person or a small
executive group.

When operations involve different products, industries


and geographic areas, strategy-making authority must
be delegated to functional and operating unit managers
such that all managers have a strategy-making role
ranging from major to minorfor the area they head!

28

A FIRMS STRATEGY-MAKING HIERARCHY


Corporate
Strategy

Multibusiness Strategyhow to gain synergies from managing a


portfolio of businesses together rather than as separate businesses
Two-Way Influence

Business
Strategy

How to strengthen market position and gain competitive advantage


Actions to build competitive capabilities of single businesses
Monitoring and aligning lower-level strategies
Two-Way Influence

Functional Area
Strategies

Add relevant detail to the hows of the business strategy


Provide a game plan for managing a particular activity in ways that
support the business strategy
Two-Way Influence

Operating
Strategies

Add detail and completeness to business and functional strategies


Provide a game plan for managing specific operating activities with
strategic significance
29

FIGURE 2.2
A Companys StrategyMaking Hierarchy

210

CORE CONCEPTS
Corporate strategy is strategy at the multibusiness level, concerning how to improve
company performance or gain competitive
advantage by managing a set of businesses
simultaneously.
Business strategy is strategy at the singlebusiness level, concerning how to improve the
performance or gain a competitive advantage
in a particular line of business.

211

UNITING THE STRATEGY-MAKING


HIERARCHY
Corporate-level

Business-level

Functional-level

Operational-level

212

STRATEGIC MANAGEMENT PRINCIPLE


A companys strategy is at full power only when
its many pieces are united. Anything less than
a unified collection of strategies weakens the
overall strategy and is likely to impair company
performance.

213

A STRATEGIC VISION + OBJECTIVES +


STRATEGY = A STRATEGIC PLAN
Elements of a Firms
Strategic Plan

Its strategic vision, business


mission, and core values

Its strategic and financial


objectives

Its chosen strategy

214

TASK 4: EXECUTING THE STRATEGY

Converting strategic plans into actions requires:

Directing organizational action.

Motivating people.

Building and strengthening the firms competencies


and competitive capabilities.

Creating and nurturing a strategy-supportive work


climate.

Meeting or beating performance targets.

215

MANAGING THE STRATEGY EXECUTION


PROCESS

Staffing the firm with the needed skills and expertise.

Building and strengthening strategy-supporting


resources and competitive capabilities.

Organizing work effort along the lines of best practice.

Allocating ample resources to the activities critical to


strategic success.

Ensuring that policies and procedures facilitate rather


than impede effective strategy execution.

216

MANAGING THE STRATEGY EXECUTION


PROCESS (CONTD)

Installing information and operating systems that enable


effective and efficient performance.

Motivating people and tying rewards and incentives


directly to the achievement of performance objectives.

Creating an internal culture and work climate conducive


to successful strategy execution.

Exerting the internal leadership needed to propel


implementation forward.

217

TASK 5: EVALUATING PERFORMANCE


AND INITIATING CORRECTIVE
AJUSTMENTS

Evaluating Performance:

Deciding whether the enterprise is passing the three


tests of a winning strategygood fit, competitive
advantage, strong performance.

Initiating Corrective Adjustments:

Deciding whether to continue or change the firms


vision and mission, objectives, strategy, and/or
strategy execution methods.

Based on organizational learning.

218

STRATEGIC MANAGEMENT PRINCIPLE


A companys vision and mission, as well as its
objectives, strategy, and approach to strategy
execution are never final; managing strategy is
an ongoing process.

219

THE ROLE OF THE BOARD OF DIRECTORS


IN CORPORATE GOVERNANCE

Obligations of the Board of Directors:

Critically appraise the firms direction, strategy, and


business approaches.

Evaluate the caliber of senior executives strategic


leadership skills.

Institute a compensation plan that rewards top


executives for actions and results that serve
stakeholder interestsespecially shareholders.

Oversee the firms financial accounting and reporting


practices compliance with the Sarbanes-Oxley Act.
220

ACHIEVING EFFECTIVE
CORPORATE GOVERNANCE

A strong, independent board of directors:

Is well informed about the firms performance.

Guides and judges the CEO and other executives.

Can curb management actions the board believes


are inappropriate or unduly risky.

Can certify to shareholders that the CEO is doing


what the board expects.

Provides insight and advice to top management.

Is actively involved in debating the pros and cons of


key strategic decisions and actions.
221

STRATEGIC MANAGEMENT PRINCIPLE


Effective corporate governance requires the
board of directors to oversee the companys
strategic direction, evaluate its senior
executives, handle executive compensation,
and oversee financial reporting practices.

222

The vocabulary of strategy

Session Recap

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