the nature of strategy

a strategy example
Levi Strauss San Francisco-based Levi Strauss added 30 new stores and acquired 72 others during the second quarter of 2009. Known worldwide for its jeans, Levi Strauss is expanding and entrenching worldwide while other retailers are faltering in the ailing economy. For that quarter, Levis revenues in the Americas were up 8 percent to $518 million, although its Europe and Asia/Pacific revenues declined 17 percent and 13 percent respectively. Levis CEO, John Anderson, says slim fit and skinny jeans are selling best; the two most popular colours today are very dark and the distressed look.

strategy defined
It is the art & science of formulating, implementing, and evaluating, crossfunctional decisions that enable an organisation to achieve its objectives. In essence, the strategic plan is a companys game plan Strategy is gaining and maintaining competitive advantage.

strategy success through integration

Management Finance/Accounting

Marketing

Production/Operations

Research and Development

strategic management process

Vision and Mission Opportunities and Threats Strengths and Weaknesses Long-term Objectives Alternative Strategies Selection of Strategies

Strategy Implementation
Issues: Most difficult stage Mobilisation of employees and managers Interpersonal skills critical Consensus on goal pursuit

Internal Reviews External Reviews Performance Metrics Corrective Action

Strategy Formulation
Issues: New business opportunities Businesses to abandon Allocation of resources Expansion or diversification International markets Mergers or joint ventures Avoidance of hostile takeover

Strategy Evaluation
Issues: Subject to future modification Todays success no guarantee of future success New & different problems Complacency leads to demise

Annual Objectives Policies Employee Motivation Resource Allocation

integrating intuition and analysis

The strategy process attempts to organise quantitative and qualitative information under conditions of uncertainty Intuition based upon: Past experiences Judgement Feelings

Involves management at all levels Influences analyses

Intuitive thinking Analytical thinking

achieving sustained competitive advantage

Requires ability to adapt to change and effective adaptation in turn requires long-term focus
What kind of business should we become? Are we in the right fields Are there new competitors? What strategies should we pursue? How are our customers changing?

benefits of strategy
Proactive in shaping firms future Initiate and influence firms activities Formulate better strategies Systematic, logical, rational

Financial benefits: Improvement in sales Improvement in profitability Productivity improvement

Non-financial benefits: Improve understanding of competitors strategies Enhanced awareness of threats Reduced resistance to change Enhanced problem-prevention capabilities

why some firms do no strategic planning

Poor reward structure Fire fighting Waste of time

Too expensive

Laziness

Content with success Prior bad confidence

Fear of failure

Overconfidence

Self interest

Fear of the unknown

Suspicion

vision & mission

Clear Business Vision Comprehensive Mission Statement

vision & mission

Shared Vision: Creates commonality of interests Reduce daily monotony Provides opportunity & challenge Should answer the basic question of what do we want to become? Mission Statement: Enduring statement of purpose Distinguishes one firm from another Declares the firms reason for being Also referred to as creed statement, statement of purpose, statement of philosophy, statement of business principles Should answer the question of what is our business?

developing vision & mission

Profit & vision are necessary to effectively motivate a workforce

Shared vision creates a community of interests Clear mission is needed before alternative strategies can be formulated and implemented Participation from diverse managers is important in developing the mission

examples of vision statements

Tyson Foods vision is to be the worlds first choice for protein solutions while maximising shareholder value. General Motors vision is to be the world leader in transportation products and related services. PepsiCos responsibility is to continually improve all aspects of the world in which we operate environment, social, economic creating a better tomorrow than today. Dells vision is to create a company culture where environmental excellence is second nature.

examples of mission statements

We aspire to make PepsiCo the worlds premier consumer products company, focused on convenient foods and beverages. We seek to produce healthy financial rewards for investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive to act with honesty, openness, fairness and integrity. Dells mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet consumer expectations of highest quality; leading technology; competitive pricing; individual and company accountability; best-in-class service and support; flexible customisation capability; superior corporate citizenship; financial stability.

importance of mission

Unanimity of Purpose

Resource Allocation

Mission
Organisational Climate Focal point for work structure

effective missions
Broad in scope Generate strategic alternatives Not overly specific Reconciles interests among diverse stakeholders Finely balanced between specificity & generality Arouse positive feelings & emotions Motivate readers to action Generate favourable impression of the firm Reflect future growth Provide criteria for strategy selection Basis for generating & evaluating strategic options Are dynamic in nature

social policy & mission

Managerial philosophy shapes social policy:
Affects development of vision & mission Responsibilities to consumers, environmentalists, minorities, communities

Social policy should be integrated in all strategic-management activities

Mission should convey the social responsibility of the firm

components of a mission statement

Products Services Customers Markets

Employees

Mission Elements
Public Image Self-Concept

Technology

Survival Growth Profit Philosophy

characteristics of a mission statement

concern for employees concern for public image x x organisation x customers x x x x x x

mission statement matrix

self-concept philosophy concern for survival, growth and profitability technology markets products or services