Chapter 2

Strategic Management: Creating Competitive Advantage

Strategic Management: creating

competitive advantages
 Vision
What organization want to become in future.
 Mission
What is the purpose of the existence of the
organization.
 Objectives
Objectives are the targets towards which
management is directed.
 Strategy
The process of determining appropriate courses of
action for achieving organizational objectives
 Elements of a mission statement
 Clearly articulated. – easy to understand the values and
purpose.
 Relevant – in terms of its history, culture and shared
values.
 Current – not outdated
 Written in a Positive (Inspiring) Tone – capable of inspiring
and stimulating
 Commitment towards fulfilling the mission.
 Unique – not copied from similar units.
 Enduring – Should guide, inspire and challenging.
 Adapted to the Target Audience – stock holders,
consumers, employees through shared values and
standards of behavior.
 The following points are to be
noted to arrive a mission
 statement
Mission should be clear, both in terms of intentions
and words used.
 It should be feasible, neither too high to be
unachievable, nor too low to demotivate the people
for work.
 .It should be precise but explanatory, neither too
narrow so as to restrict the organization’s activities,
nor too broad to make itself meaningless.
 It should be distinctive, both in terms of the
organization’s contributions to the society and how
these contributions can be made.
 Organizations sometimes summarize goals
and objectives into a mission statement
and/or a vision statement:
 While the existence of a shared mission is
extremely useful, many strategy specialists
question the requirement for a written mission
statement. However, there are many models
of strategic planning that start with mission
statements, so it is useful to examine them
here.
 A Mission statement tells you the
fundamental purpose of the organization. It
concentrates on the present. It defines the
customer and the critical processes. It
informs you of the desired level of
performance.
 A Vision statement outlines what the
organization wants to be. It concentrates on
the future. It is a source of inspiration. It
provides clear decision-making criteria.
Mission statements often contain
the following:
 Purpose and aim of the organization
 The organization's primary stakeholders:
clients, stockholders, etc.
 Responsibilities of the organization toward
these stakeholders
 Products and services offered
 Vision & Mission

Infosys' Vision:

"To be a globally respected corporation that provides best-of-

breed business solutions, leveraging technology, delivered by
best-in-class people."

Infosys' Mission Statement :

"To achieve our objectives in an environment of fairness,

honesty, and courtesy towards our clients, employees, vendors
and society at large."
 Motto
‘Science’ as a means to ‘Technology Up-gradation and Development’
Invent -> Perfect -> Implement

Vision
 To establish a centre of excellence for Research & Development in PET homo and co-polymer fibres and resins through
disciplined, motivated and time bound execution of projects.
 To create an environment conducive to intellectual growth, efficient flow of information and accountability in order to achieve
a productive and sustained phase of research activities.
 To closely interact with the business group companies and technical groups for short, medium and long-term quality and
process issues.
 To thrive to become a catalyst to the growth of company's polyester business.
 To leverage synergy between Reliance's PET, Polymers and Fibre intermediate businesses.
 To create, maintain and pursue strategic research alliance for top end research activities.


Mission
Achieve 'Global leadership in Polymers, Fibres and Resin businesses' through innovative Research and Technology
Development in materials, processes, products and applications through efficient, disciplined, target oriented and cost
effective Research and Development activities.

To arrive at a Mission Statement,
following questions are
answered
 What is the basic purpose of your organizations?
 What is unique about your organization?
 What is likely to be different about your business
five years down the road?
 What is in your company that will make it stand out
in a crowd?
 Who are, and who should be, your principal
customers?
 What, and what should be, your principal economic
concerns?
 What are the basic beliefs, values and philosophical
priorities of your firm?
 Vision: Defines the desired or intended future
state of a specific organization or enterprise
in terms of its fundamental objective and/or
strategic direction. Vision is a long term aim,
a view of how the organization would like the
world in which it operates to be.
 Setting Objectives

 Provide direction – direction for the

functioning of the organization. When
objectives are clear, the aims of the activities
of different people in the organization
converge for the achievement of the common
purpose.
 Justify the organization – indicates the
purpose and aims and thereby the social
justification for the existence of the
organization.
 Definition: The desired or needed result to
be achieved by a specific time.
 An objective is broader than a goal, and one
objective can be broken down into a number
of specific goals.
 The guidelines are
 Must be clearly specified.
 Must be set taking into account the various factors affecting their
achievement.
 Should be consistent with organizational mission.
 Should be rational and realistic rather than idealistic
 Should be achievable but must provide challenge to those
responsible for achievement.
 Should yield specific results when achieved.
 Should be desirable for those who are responsible for the
achievement.
 Should start with the word ‘to’ and be followed by an
achievement.
 Should be consistent over the period of time.
 Should be periodically reviewed.
 Basis for Management by Objectives -
Management for results.
 Help strategic planning/management; a
means to achieve objectives, thus help
effective function of the organization in a
given environment.
 Help coordination – the attention of the
employees to desirable standards of behavior
 Provide standards for assessment and
control - . Making clear what the results
should be, provide the basis for control and
assessment of organizational performance.
 Help decentralization – by assigning
decision-making to lower level personnel,
given a subordinate executive or operator
considerable leeway in deciding how to
perform his work.
 Financial Objective

 The primary objective is concerned with the

return to shareholders.
 A satisfactory return; for a company must be
sufficient to reward shareholders adequately
in the long run for the risks they take. The
reward will take the form of profits which can
lead to dividends or in increase in the
market value of shares.
 The size of return which is adequate for ordinary
shareholders will vary according to the risk involved.
 There are different ways of expressing a financial
objective in quantitative terms. Financial objectives
would include the following.
 Profitability - It is just not the profit for every year.
The investment must provide future appreciation of
worth and increased profits in future.
 Return on investment (ROI) or return on capital employed (ROCE) -
The return on investment must be on increase year after year.
 Low Risk - High risk projects might promise a high return but it may be
safer to opt for a project with a lower return but a greater guarantee of
success.
 Share price, earnings, dividends and market value - Earnings per share
or dividend payments are measures which recognize that a company is
owned by its shareholder –investors. Lesser the EPS, shareholders are
likely to sell the shares.
 Market capitalization - total value of business shares on the stock
market. When the earnings and dividends are low, the market value of
shares also drops.
 Price/earnings ratio - measures the relationship between earnings per
share and the price at which the shares are traded. It is the market
value divided by earnings per share. This should not comedown.
 Growth - The financial performance is measured in terms of growth of
the business like turnover, EPS, increase in market share, export etc.
 “Developing a
business strategy is
no longer an iterative
process. It has
become a continuous
cycle of plan, execute,
measure, and adjust”
A & M, 2000
 Balanced Scorecard
(The Basics)

“The Balanced Scorecard provides

executives with a comprehensive
framework that translates a company’s
vision and strategy into a coherent set of
performance measures.”

Kaplan and Norton

Balanced
Scorecard
Process
A Balanced Scorecard is :
…a management and measurement system whose purpose is
to…

 “translate strategy into

 a limited set of measures that
 uniquely communicate
 your vision to the organisation”

 Kaplan and Norton

...its key management perspectives are ...

 Balanced Scorecard
Balanced View of Measures of Performance
Financial
Sales Growth
Customer Return on Equity
Customer Satisfaction EVA Economic Value Added ,
CFROI Cash Flow Return on
New Customers/Month Investment
Customer Profitability

Internal
Process
Defects
Administrative
Expense Ratio
New Product
Launches
Learning and
Growth
Employee Retention
Training Levels
Customer Database Accuracy
What is the Balanced
Scorecard?
 It addresses four basic questions:
 People: How can we develop our people and
their capabilities?
 Business Process: What must we excel at to
meet customer needs?
 Customers: How do customers see us and
value our services?
 Financial: How are we faring with shareholder
returns?
 Kaplan & Norton’s
Balanced Scorecard
 An approach that tries to integrate the different
measures of performance is the balanced
scorecard. Where key linkages between operating
and financial performance are brought to light. This
offers four perspectives
 (1) Financial
 (2) Customer
 (3) Innovation and learning
 (4) Internal business.
 The Balanced Scorecard

Definition:
The Balanced Scorecard is a
management tool that provides
stakeholders with a comprehensive
measure of how the organization is
progressing towards the achievement of
its strategic goals.
The Balanced Scorecard

Purpose of Balanced Scorecard:

A method of implementing a business
strategy by translating it into a set of
performance measures derived from strategic
goals that allocate rewards to executives and
managers based on their success at meeting
or exceeding the performance measures.
 The Balanced Scorecard
What is it?
The Balanced Scorecard:

 Balances financial and non-financial measures

 Balances short and long-term measures

 Balances performance drivers (leading indicators) with outcome

measures (lagging indicators)

 Should contain just enough data to give a complete picture of

organizational performance… and no more!

 Leads to strategic focus and organizational alignment.

 The Balanced Scorecard
Why do it?

• To achieve strategic objectives.

• To provide quality with fewer resources.
• To eliminate non-value added efforts.
• To align customer priorities and
expectations with the customer.
• To track progress.
• To evaluate process changes.
• To continually improve.
• To increase accountability.
 About
Oracle Balanced Scorecard
Balanced Scorecard Strategy Implementation and
Framework Performance Measurement

Company Specific Scorecard

Industry
Wizards
Templates

Feedback and Learning

Strategy and Indicator Libraries
Dynamic Strategy
Cascading Assessment
Communicating

Multimedia

Strategic
Knowledge Competitive
Base Oracle Intelligence

Information Balanced
Interpretation Scorecard Best
Practices
Coaching Identification

Target Budget Budget/BSC

Setting Guidelines Alignment

Planning
 Strategies to Extend Daily
Business Intelligence with
OBSC
Feed from Enable Enable
Build
Oracle and Additional Custom
Needs Custom
non-Oracle Analytical Scorecards
Measures
Sources Functionality and Views
Extract data from • What-if Analysis
Oracle and non- • Cause&Effect • Strategy Maps
• Configure Custom
Oracle sources • Assessment and • Custom Views
Solutions Measures from
scratch
(including Excel) Collaboration • Dashboards
through custom • Performance • Portlets
measures Colors

Balanced Scorecard
Tools BSC
BSC BSC BSC BSC
Optimizer &
KPI Designer Builder Administrator Viewer
Data Loader
The Balanced Scorecard
(Source: Kaplan & Norton, 1996)
Reasons for the Need of a Balanced
Scorecard
1. Focus on traditional financial accounting
measures such as ROA, ROE, EPS gives
misleading signals to executives with regards
to quality and innovation. It is important to
look at the means used to achieve outcomes
such as ROA, not just focus on the outcomes
themselves.
The Balanced Scorecard
(Source: Kaplan & Norton, 1996)
Reasons for the Need of a Balanced
Scorecard
2. Executive performance needs to be judged
on success at meeting a mix of both financial
and non-financial measures to effectively
operate a business.
The Balanced Scorecard
(Source: Kaplan & Norton, 1996)
Reasons for the Need of a Balanced
Scorecard
3. Some non-financial measures are drivers of
financial outcome measures which give
managers more control to take corrective
actions quickly.
(Example: controls in jet cockpit for pilot)
The Balanced Scorecard
(Source: Kaplan & Norton, 1996)
Reasons for the Need of a Balanced
Scorecard
4. Too many measures, such as hundreds of
possible cost accounting index measures,
can confuse and distract an executive from
focusing on important strategic priorities. The
balanced scorecard disciplines an executive
to focus on several important measures that
drive the strategy.
The Balanced Scorecard
(Source: Kaplan & Norton, 1996)
Balanced Scorecard Perspectives
1. Financial: How do we look to our
Shareholders?
2. Customer: How do our Customers See Us?
3. Internal Business Process: What should we
do that is Excellent?
4. Employee and Organization Innovation and
Learning: Can we continue to Improve and
Add Value?
Financial Measures & the Balanced
Scorecard
(Source: Kaplan & Norton, 1996)
 Financial measures are outcomes that
represent the executive’s success at
achieving strategic performance goals

 Financial measures are influenced by the

Stage of the Life Cycle which reflects
different strategic priorities
Internal Business Process Measures and the
Balanced Scorecard (Source: Kaplan & Norton,
1996)

Internal Business Process Measures

 Quality  Order Fulfillment

 Yield  Procurement
 Throughput  Repair service
 Cycle time quality/downtime
 Cost efficiency  Warranty quality
 The scorecard should be used flexibly. The process
of deciding what to measure forces a business to
clarify its strategy. For example, a manufacturing
company may find that 50 -60% of costs are
represented by bought-in components, so
measurements relating to suppliers could usefully
be added to the scorecard. These could include
payment terms, lead times, or quality considerations
etc. For an IT Co., the manpower cost &
establishment cost may go up to 40-50%. Hence it
should concentrate on Manpower cost.
 A method of evaluating performance for a
particular organization that emphasizes
factors that can create long term economic
value such as business processes,
innovation and customer orientation, rather
than traditional financial measure. The
theme is Control through Performance.
 Company Philosophy
 It is in the form of a Statement.
 It projects the ethical and value based
concept (philosophy) a Company contributes
to public.
 This is more related to the Social
Responsibility & Public Good.
 The corporation is a creation of society
whose purpose is the production and
distribution of needed goods and services, for
profit of society and itself.
 The Company in it’s own interest has to
promote the public welfare in a positive way.
 Indeed, the corporate interest broadly defined
by management can support involvement in
helping to solve virtually any social problem,
because people who have good environment,
education and opportunity make better
employees, customers and neighbors for
business than those who are poor, ignorant
and oppressed.
 Pollution control, contributing to public cause
in the areas of health, education & poverty.
 Payment of taxes genuinely, fair wages to
employees, quality products/services to
consumers, all actions are based on legal
and moral foundation etc.
 Hierarchy of Strategic
Intent
 Strategic intent – an obsession with winning,
unfettered (free) by their resource constraints – in
their envisioning of the future.
 The Strategic Intent is one of the approach to
Competitive Advantage. Other approaches are
 (1) Generic competitive strategy
 (2) Benchmarking
 (3) Synergistic approach and
 (4) Critical success factors approach
 Michael Porter …

 “An industry’s profit potential is

largely determined by the
intensity of competitive rivalry
within that industry.”
 According to Michael Porter, the three
methods for creating a sustainable
competitive advantage are through:
 1. Cost leadership - Cost advantage occurs
when a firm delivers the same services as its
competitors but at a lower cost;
 2. Differentiation - Differentiation advantage
occurs when a firm delivers greater services
for the same price of its competitors. They
are collectively known as positional
advantages because they denote the firm's
position in its industry as a leader in either
superior services or cost;
 Strategic Intent implies ambition and
obsession for winning. Hamel and Prahald
emphasized on strategic intent as a means
for competitive advantage view that
competitive battle through competitive
innovation, which is the art of containing
competitive risks within manageable
proportions.
 Keeping score of existing advantages is not
the same as building new advantages.
 The essence of strategy lies in
creating tomorrow’s competitive
advantages faster than competitors
mimic (imitate) the ones you possess
today.
 An organization’s capacity to improve existing
skills and learn new ones is the most
defensible competitive advantage of all.
 Competitive advantage occurs when a
organization acquires or develops an attribute
or combination of attributes that allows it
to outperform its competitors.
 These attributes can include access to
natural resources, such as high grade ores or
inexpensive power, or access to highly
trained and skilled personnel human
resources.
 This is done through,
 (1) Layers of Advantage - involves
generating layers of advantage on top of
another advantage and moving up in value
chain.
 (2) Loose Bricks – creating advantage in
those areas which have been let loose by the
existing competitors.
 (3) Changing the Rules of Engagement -
studying the Critical Success Factors (CSF)
of competitors and innovating for different
environment.
 (4) Collaborating – If you cannot compete on
your own, collaborate with others, who has
better competitive advantage.
 Merging the Strategic Vision,
Objective and Strategy into a
 Strategic Plan
The Vision is the primary statement. Based
on Vision statement, the Mission statement is
formed.
 The Objectives of the Company helps to
prepare Strategic plan in various areas like
marketing, finance, production.
 Hence the genesis is Vision and Objectives
of the Company helps to draw the
Strategic Plan in different
areas of the Organization & Business.
 The strategic plan projects a prescriptive
model based on predictive environment
which is a road map for execution.
 Strategic plan is translated into the
operations planning.
 Any deviation required is to be directed by
strategic plan which takes care of the
corporate objective and factors commanding
the change.
 The emergent strategy is
 “let us try this strategy and continue it or
change it depending in our experience.
 The prescriptive strategy prescribed, “this is
our strategy for the next five years,
administer it.
 “The emergent approach holds that the long
term being uncertain, it is unrealistic to
prescribed in advance a strategy with long
term perspective.
 The strategy should evolve responding to
emerging developments, and therefore, to
some extent, strategy development and
implementation occur concurrently.
 EXAMPLES
 Mission statement always highlights what it can do for the
Nation (society in general) while purpose suggests how this
contribution can be made)
 HINDUSTAN LEVER -Mission: “Hindustan Lever’s
commitment to national priorities ensures that the Co is a part of
people’s lives at the grass roots level, making a difference to
India and Indians – in depth, in width and in size. Hindustan
Level has always identifies itself with the nation’s priorities –
employment generation, development of backward areas,
agricultural linkages, exports, and contribution to the exchequer.
 The Co’s Philosophy indicates the approach that will be
adopted in dealing with various stakeholders.
 Mission: Defines the fundamental purpose of an
organization or an enterprise, basically describing
why it exists. A corporate Mission can last for many
years, or for the life of the organization. It is not an
objective with a timeline, but rather the overall goal
that is accomplished over the years as objectives
are achieved that are aligned with the corporate
mission.
 Values: Beliefs that are shared among the
stakeholders of an organization. Values drive an
organization's culture and priorities.
TATA
 Mission To be a competitive value provider in international
business for Group companies and all our partners.

Vision 2008
 Become a globally networked enterprise seizing opportunities
worldwide to generate USD 25 million annual profits by 2008.
 Vivid Description of Vision
By 2008, we would have
 Achieved aggressive and profitable growth of our 5 core
businesses and initiated new businesses

Become a cohesive, integrated and synergised global entity

providing horizontal and vertical reach and infrastructure to all
our partners worldwide
 Consistently achieved customer delight by focussing on value adding activities throughout
our value chain
Achieved best partner status with Group Companies in international business on a
sustained basis
A strong global supply base for world class goods and services
 Become a learning and knowledge rich organization acknowledged as thought leaders in
international business
 Institutionalized Tata Business Excellence Model and achieved best in class status
 Effective and responsive systems and processes that will underpin our business decisions
to manage risks
 Become an exciting organization which attracts and retains best talent worldwide for global
competitiveness
 Become a proactive, integral and responsible member of our environment and
communities
 Some mission statements are
complex, long, and very broad,
for example
 “Since its inception in 1982, La Unidad
Latina has remained on the vanguard of
political and community empowerment by
developing influential leaders that strive
to exert knowledge and power into its
peers in order to attain mutual success.
 LUL is committed to academic excellence,
leadership development and cultural
enlightenment, enhanced by a diverse
cognizant membership. LUL strives to
preserve and promote an inclusive
intellectual environment for its members,
in addition to the general community.[1]
”In contrast, some mission statements are
simple and direct, for example:
 “To protect and promote the interests of
motorcyclists while serving the needs of its
members.[2]”The classic example of the mission
statement is the Preamble to the Constitution of the
United States:
 “We the People of the United States, in Order to
form a more perfect Union, establish Justice,
insure domestic Tranquility, provide for the
common defence, promote the general Welfare,
and secure the Blessings of Liberty to ourselves
and our Posterity, do ordain and establish this
Constitution for the United States of America.[3]
In developing a mission
statement:
 Encourage as much input as feasible from
employees, volunteers, and other
stakeholders
 Publicize it broadly
 Limit to a few statements.
Infosys‘-VISION-MISSION
 Infosys' Vision:
"To be a globally respected corporation that
provides best-of-breed business solutions,
leveraging technology, delivered by best-in-class
people."
Infosys' Mission Statement :
"To achieve our objectives in an environment of
fairness, honesty, and courtesy towards our clients,
employees, vendors and society at large."
Three Components of the
mission statement
 * the needs to be served by the
company
 * the targeted customer group

 * how the company will provide

the product/service
Reason for Being

This is the soul-searching activity, where the

organisation tries to answer the critical
questions like `why are we here' and 'where
are we today'?
 A mission statement concerns what an
organization is all about.
 A vision statement is what the
organization wants to become.
A mission statement answers
three key questions:
 What do we do?
 For whom do we do it?
 What is the benefit?
Centers for Disease Control

Mission To promote health and quality of life by

preventing and controlling disease,
injury, and disability
Vision Healthy People in a Healthy World
Centers for Disease Control
Mission To protect, maintain and improve the
health of all Minnesotans
Vision Keeping All Minnesotans Healthy
 A vision statement, on the other hand,
describes how the future will look if the
organization achieves its mission.
 A mission statement gives the overall
purpose of an organization,
 while a vision statement describes a picture
of the "preferred future."
 A mission statement explains what the
organization does, for whom and the benefit.
 A vision statement, on the other hand,
describes how the future will look if the
organization achieves its mission.
VISION, MISSION,VALUES AND
OBJECTIVES- BEL
 VISION
- To be a world-class enterprise in professional
electronics.

MISSION

 - To be a customer focused, globally competitive

company in defence electronics and in other
chosen areas of professional electronics, through
quality, technology and innovation.
VALUES 

- Putting customers first.

- Working with transparency, honesty & integrity.
- Trusting and respecting individuals.
- Fostering team work.
- Striving to achieve high employee satisfaction.
- Encouraging flexibility & innovation.
- Endeavouring to fulfill social responsibilities.
- Proud of being a part of the organization.
OBJECTIVES 
 - To be a customer focussed company providing
state-of-the-art products & solutions at competitive
prices, meeting the demands of quality, delivery &
service.
- To generate internal resources for profitable
growth.
- To attain technological leadership in defence
electronics through in-house R&D, partnership with
defence/research laboratories &
 academic institutions.
- To give thrust to exports.
- To create a facilitating environment for people to
realise their full potential through continuous
 learning & team work.
- To give value for money to customers & create
wealth for shareholders.
- To constantly benchmark company’s
performance with best-in-class internationally.
- To raise marketing abilities to global standards.
- To strive for self-reliance through indigenisation
BSNL-VISION  
 To become the largest telecom Service Provider
in Asia.

 MISSION
 To provide world class State-of-art technology
telecom services to its customers on demand at
competitive prices.

 To Provide world class telecom infrastructure in its

area of operation and to contribute to the growth
of the country's economy.
OBJECTIVES  

 To be the Lead Telecom Services Provider.

 To provide quality and reliable fixed telecom service
to our customer and there by increase customer's
confidence.
 To provide mobile telephone service of high quality
and become no. 1 GSM operator in its area of
operation.
 To provide point of interconnection to other service
provider as per their requirement promptly.
 To facilitate R & D activity in the country.
 Contribute towards:
 National Plan Target of 500 million subscriber base
for India by 2010.
 Broadband customers base of 20 million in India by
2010 as per Broadband Policy 2004.
 Providing telephone connection in villages as per
government policy.
 Implementation of Triple play as a regular
commercial proposition.
 Corporate vision is a short, inspiring
statement of what the organization intends to
become and to achieve at some point in the
future,
 often stated in competitive terms.
 Vision refers to the category of intentions that
are broad, all-inclusive and forward-thinking.
 It is the image that a business must have of
its goals before it sets out to reach them.
 It describes aspirations for the future, without
specifying the means that will be used to
achieve those desired ends.
 The Ford Motor Company vision is 'to
become the world's leading
consumer company for automotive
products and services'.
 A five-component approach to
promote successful organizational
performance

 1. Vision formulation which leads to the

statement of the Mission.
 2. The mission is then converted into
performance Objectives
 3. To achieve objectives you develop
Strategies
 4. Strategy Implementation
 5. Evaluation of performance
Mission Statement & its
Purpose
 Sense of Purpose & Aspiration
 Company Image
 Statement of Company Values, Culture and
Ethics
 Role as a Guide for the Strategy Process
Model of Strategic
Management:
 Mission & goals

 Environmental analysis

 Strategic formulation

 Strategy implementation

 Strategy evaluation
Strategic Management
 Strategic management is the study of why
some firms outperform others
 How to compete in order to create competitive
advantages in the marketplace
 How to create competitive advantages in the
market place
 Unique and valuable
 Difficult for competitors to copy or substitute
Strategic Management
 Analysis
 Strategic goals (vision, mission, strategic objectives)
 Internal and external environment of the firm
 Strategic decisions
 What industries should we compete in?
 How should we compete in those industries?
 Actions
 Allocate necessary resources
 Design the organization to bring intended strategies to
reality
Mission Statement

 Business Definition
 Major Goals of the Firm
 Philosophies
 Guiding Principles
 Considerations of stakeholders
1.The vision formulation which leads to
the statement of the Mission

 Mission
 * what is business?
 * what will be the business?
 * it established long-term direction
 * it needs to use simple terminology
 * it needs to be inspirational buy in
 * recognition of threats & opportunities
 * entrepreneurial spirit
2. The mission is then converted into
performance objectives
 * measurable statements
 * specified performance
 * specified time
 * short-range objectives
 * long-range objectives
 * top-down rather than bottom-up
Strategic Management:

 A continuous activity that requires a

constant adjustment of three major
interdependent poles:

 the values of senior management,

 the environment,

 the resources available.

Strategic Management
Social Responsibility

 Social responsibility: the expectation that

businesses or individuals will strive to
improve the overall welfare of society
 Managers must take active steps to make society
better
 Socially responsible behavior changes over time
 Triple bottom line
 Strategic Management
Perspective
 Integrative view of the organization
 Assess how functional areas and activities “fit
together” to achieve goals and objectives
 All managers and employees must take and
integrative, strategic perspective of issues
facing the organization
 Strategic Management
Perspective
 Key driving forces increasing the need for
strategic perspective and involvement
 Globalization
 Technology
 Intellectual capital
 These forces are
 Interrelated
 Accelerating the rate of change and uncertainty
Crafting Strategy Is an
Exercise in Entrepreneurship
 Strategy-making is a market-driven activity that
involves
 Studying market trends and competitors’ actions
 Keen observation of customer needs
 Scrutinizing business possibilities based on new
technologies
 Building firm’s market position via acquisitions or new
product introductions
 Pursuing ways to strengthen firm’s competitive capabilities
 Proactively searching out opportunities to
 Do new things or
 Do existing things in new or better ways
Linking Strategy With Ethics
 Ethical and moral standards go beyond
 Prohibitions of law and the language of “thou shalt not”

to issues of
 Duty and “right” vs. “wrong”
 Ethical and moral standards address
“What is the right thing to do?”
 Two criteria of an ethical strategy:
 Does not entail actions and behaviors that cross the line from “can
do” to “should not do’ and “unsavory” or “shady” and
 Allows management to fulfill its ethical duties to all stakeholders