Slide 81 -
Strategic Management Realized by :
FATIMA EZZAHRA WAJIB A2111
SORAYA TOUIJER T2135
SAFAA MOUNAZIL J2126
BOUCHRA ABOUCHOKR 2738
MERIEM ENNACIRI 2726
SIMOHAMED LAMKATAA 2627
MERYEM HADDADI Supervised by :
M. WAHABI Chapter I Introduction
The key to the long term prosperity of an organization is High-quality strategic Thinking.
It takes into consideration « strategic planing » and « strategic management » 1-1/ Definition of strategy
The art and science of directing military forces
Strategy in business:
How an organization works in order to achieve its objectives and mission
1-1/ Definition of strategy
« A strategy is a comprehensive plan of action that sets critical direction for an organization and guides the allocation of its resources. It is an action focus that represents a « best guess » regarding what must be done to ensure long-run prosperity for the organization or one of its subsystems »
Definition of strategy at Wal Mart 1-2/ The strategist
The strategist has a major responsability to perform the activities associated with a business strategy planing:
Developing a plan to complete the strategy activities.
Ensuring uniformity in the development of the plan
The objectives provided by the functional areas should be compared to those made by the entire firm
The activities have to be supported by training and assistance 1-2/ The strategist
The board of directors
Responsible for the organization’s strategy
The role of « wise counsel »
The same attributions of the BOD
Not obligatory stockholders
Responsible for the strategy’s implementation 1-2/ The strategist
The Supervisory Board
Ensure the supervision of the directory’s management.
The law allows to the entity the right to access to informations, to call for meetings
The chief executive officer(CEO)
The officer of the company who is the accountable to the BOD for the company’s total effort and total results
Responsible for the day-to-day operations to ensure the survival of the firm 1-2/ The strategist
Elected by the BOD
He is usually: the president, vice president, treasurer, secretary…
They have a daily responsabilities in the strategy analysis,formulation and implementation task.
1-2/ The strategist
Employed in large organization(sales over $100 million)
Provide staff assistance to the CEO in his role of chief plannig officer
Develop a plan or a system plannig and initiate the planning cycle
The role of coordinator and an integrator for the planning effort
2) The strategic Management 2-1/ Definition
« Strategic management is a process through which managers formulate and implement strategies geared to optimizing strategic goal achievement given available environment and internal conditions »
Management Kathryn M. Bartol & David C. Martin Strategic management process 2-2/ Integrating Intuition and analysis
Intuition is the key of making a good strategic decision especially in situation of great inccertainly or little precedent.
But Intuitive and experience-based management are inadequate when decisions are strategic and have a major irreversible consequences 2-3/ The importance of strategic management
Strategic Management help organizations to identify and develop a competitive advantage
Provide a sens of direction so that employees know where they expend their efforts
Highlight the need of innovation related to strategies.
Link between strategic management and financial performance
2-4/ Strategic Management: A continuous process
The Intended strategy and Realized strategy usually differ because of unforeseen environmental or organizational events.
2-4/ Strategic Management: A continuous process Deliberate Strategy Emergent Strategy Unrealized Strategy 2-4/ Strategic Management: A continuous process
Strategy Planing Strategy implementation
Creating Putting strategies into actions
Strategic Management is concerned with making decision about an organization’s future direction and implementing those decisions 2-4/ Strategic Management: A continuous process 2-4/ Strategic Management: A continuous process 2-4/ Strategic Management: A continuous process
Strategic competitiveness is achieved when a company successfully formulates and implements a value creating strategy.
When the value creating strategy that is new, unique and not easly imitable, the firm had a sustained competitive advantage.
2-4/ Strategic Management: A continuous process Feedback about firm’s strategic actions comes from various sources but the most important source is provided by firm stakeholder’s.
It helps the firm continuously to adjust and refine strategic inputs and strategic actions.
The society 2-5/ Promoting Innovation:Modes of strategic management
Modes of strategic management are the actual kinds of approaches taken by managers in formulating and implementing strategies
The mode selected is likely to influence the degree of innovation that occurs within the organization. 3)The strategic planning
Before developing plans for the idividual departments, a larger plan for the entire organization must be developed.
Then, objectives and strategies established at the top level provide the planning context for each division. 3-1/ Definition
Strategic planning is the process of formulating and implementing strategic plans. It involves identifying the major objectives of an organization, choosing the strategies needed to achieve them, creating plans to implement the stategies, and then doing the required work. 3-1/ Definition
It involves 5 steps:
Where do we want to be in the future?
How well are we currently doing?
How can we get where we really want to be?
Has everything been done that needs to be done?
Are things working out as planned, and why?
The strategic planning is responsibility of the top-management, although it requires participation of managers at all levels 3-2/ The growth of strategic planning
Many of today’s most successful business organization continue to survive because many years ago they offered the right product at the right time.
In other hand, wisdom and intuition can help to make decisions but still not sufficient to guide the destiny of organization. And because of uncertainty, instability and chaging environment.
Therefore, managers turn to the use of strategic planning
3-2/ The growth of strategic planning
Strategic planning is
A process that involves the review of market condition, customer’s nedds, competitive strenghts and weaknesses, resources and opportunities.
The developement of strategic plans involves taking information from the environment and deciding upon the organizational mission, objectives… 3-3/ The importance of strategic planning
Plans for the future were merely extensions of where the organization had been in the past.
Due to energy crises, deregulation, accelerating technological change, uncertainty of markets, competition… managers are forced to develop a systematic means of analyzing the envirnoment, assessing their organization’s strenghts and weaknesses, and identifying opportunities where the organizations could have a competitive advantage. 3-4/ The nature of strategic planning
Organizations exists to make contributions to society. If it fails, it can disintegrate.
So, strategy is concerned with the grand picture of how organization serve society, and strategic planning is concerned with how organizations intentionnally and systematically make decisions about products, services, customers, and human resources vital both to itself and society. 3-4-1/ Relating Strategic plan- Operational plans 3-4-1/ Relating Strategic plan- Operational plans
Most managers will not directly develop organization’s strategic plan. However, they may be involved to the process in 2 ways:
By providing inputs in the form of informations and suggestions relating to their particular areas of responsibility.
They must be completely aware of what the process of strategic planning as well as the results. 3-4-2/ Relating organizational objectives- Operational objectives 3-4-2/ Organizational objectives- Operational objectives
If planning is done, it will clearly appear in all levels in the organization.
Objectives and strategies plan for the entire organization relate to objectives and strategies that are part of operational plans for individual departments.
As we move down from the top of the organization to lower levels in term of who does the planning, we increase the detail and specificity of the objectives, and we decrease their time span.
4-Ethical and social responsibility in management
Before it is implemented, a potential solution to a problem should be tested by the « ethics double-check », and should meets moral standards.
The ethical and social responsibility of corporations arise from the simple fact that corporations serve multiple stakeholders. And each one has different stakes in the corporation and demands different outputs from it. 4-1/ The realm of ethics
Business decisions are also « good » and « bad ».
Making decisions requires that managers go beyond traditional economic technological, and sociopolitical citeria and make evaluations based on ethical criteria.
Decision making can be simplified if managers can understand ethical issues and if the organization allows ethical considerations to influence strategic decisions. 4-1/ The realm of ethics The examination of ethical issues can be done at three levels: 4-2/ Ethical conflicts The dilemma of ethical decision making in business setting arises out of the tensions or conflicts between what it is good for individuals, organizations, and society. 4-2/ Ethical conflicts
Dealing with ethical conflicts requires companies establish and communicate ethical stadards for their employees. And they must create decision making procedure for resolving ethical conflicts. 4-3/ Corporate social responsiblity and strategy formulation
Corporations are primarily economic entities whose soles purpose is to increase shareholder wealth by producing and selling goods needed by customers
In contrast , corporations have grown to such large size and complexity that they affect many noneconomic aspects of society. These areas include health politics, culture, and social relations. 4-4/ Areas of social resposability
Responsibility for protecting the natural environment.
Responsibility toward customers
Responsibility toward employee welfare
Responsibilities toward local, state and federal government agencies.
Responsibilities to the public or communities where the corporation has operations
Responsibilities toward the media.
4-4/ Procedures for dealing with social responsibilities 1. Forecasting strategic sosial issues
In each area of social responsibility,managers need to forecast the emergence and life cycle of strategic social issues.This can be done by instituting an issues management program in the company.
Issues management refers to early identification,tracking,and resolution of strategic issues that could affect the company; By considering emerging strategic issues early,firms have the opportunity to shape strategies as they become important to the firm and put them on their strategic agenda. 4-4/ Procedures for dealing with social responsibilities
2. Organizing for social responsibility
If socially responsive behaviour is to be seriously and consistently encouraged within organizations,if cannot be left up to the personal preferences of idividual managers.It must be institutionalized with appropriate organizational authority and resources.Managerial roles and functions must be defined that are in charge f monitoring social performance of the firm and ensuring that it fulfils its diverse responsibilities toward its stakeholders 4-4/ Procedures for dealing with social responsibilities 3. Socially resposible strategies
It consits on evaluating the social merits of each corporate and business strategy selected based on financial, technological, and market criteria.
A second approach consists on developing socially responsive strategies is adopting specific strtegies toward all key stakeholders of the firm.
Such stategies pursue multiple stakeholder objectives rather than simple profitability objectives. 4-4/ Procedures for dealing with social responsibilities
4. Social responsibility regulations
Over the past twenty years, establishment of a variety of regulations and regulatory agencies has ensured that corporations meet at least their minimal social responsibilities. Some agencies that adress all the areas of social responsibility identified in this section:
Consumer product safety commission
Environmental protection agency
Equal employment opportunity commission
Faderal emergency management agency
Federal trade commission
Food and drug administration
General accounting office
Interstate commerce commission
Minning enforcement and safety commission
National highway safety administration
Nuclear regulatory commission
Occupational safety health administration
Office of consumer affairs
Office of federal contract compliance programs
Office of technology assessment
Securities and exchange commission
CHAPTER 2: Strategies in action 1.CORPORATE STRATEGY Corporate-level strategy is often called the portfolio-level strategy because board-level decisions are usually concerned with acquisitions, mergers, major expansions, and divestitures that add to or reduce product lines There are many types of strategies that can be pursued to gain a specific sense of overall direction at the corporate and business levels. These four "grand" or "major" strategies fall into four major categories:
Growth: Pursuit of increased organizational size through expanded operations.
Retrenchment: Pursuit of reduced organizational size through operations cutbacks.
Stability: Pursuit of the status quo, or present course of action.
Combination: Pursuit of two or more strategies at the same time.
1-1. TYPES OF GRAND STRATEGIES alternative strategies that an enterprise could pursue can be categorized into thirteen actions: forward integration, backward integration, horizontal integration, market penetration, market development, product development, concentric diversification, conglomerate diversification, horizontal diversification, joint venture, retrenchment, divestiture, liquidation, and a combination strategy. Each alternative strategy has countless variations. 1/ GROWTH STRATEGIE (1/3)
Some organisation try to grow inernally through some form of concentration. That is by using existing strenghs in new and productive ways but with out taking the risk of great shift.
A second set of growth strategies is through some form of diversification .
The acquisition of new businesses in related or unrelated areas, or investment in new ventutres. 1/ GROWTH STRATEGIE (2/3)
FORWARD INTEGRATION: involves gaining ownership or increased control over distributors or retailers.
BACKWARD INTEGRATION: it is a strategy of seeking ownership or increased control of firm’s suppliers.
HORIZONTAL INTEGRATION: refers to a strategy of seeking ownership or increased control over a firm’s competitors. 1/ GROWTH STRATEGIE (3/3)
MARKET PENETRATION : The purpose of this strategy is to increase sales of product in an existing market through the use of more aggressive marketing tactics, especially pricing.
MARKET DEVELOPMENT: it consists on radical modifications of existing product or the creation of new ones with new characteristics that satisfy newly defined needs.
CONCENTRIC DIVERSIFICATION: Adding new but related products or services is widely called concentric diversification.
HORIZONTAL DIVERSIFICATION: Adding new unrelated products or services for present customers is called horizontal diversification .
CONGLOMERATE DIVERSIFICATION: Adding new , unrelated products or services is called conglomerate diversification . Some firms pursue conglomerate diversification based in part on an expectation of profits from breaking up acquired firms and selling divisions piecemeal.
JOINT VENTURE STRATEGY:
Joint venture is a popular strategy that occurs when two or more copanies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity. 2/ TURNAROUND STRATEGIES ( or Defensive strategies) (1/3)
Turnaround strategies attempt to revitalize business in a slump. They involve a combination of cost-cutting and revenue –enhancing strategies. Four turnaround options exists:
Cost-cutting strategies: if the firm has high direct labour costs, high fixed expenses, or is close to the break-even point, cost-cutting may be appropriate. 2/ TURNAROUND STRATEGIES ( or Defensive strategies) (2/3)
Asset-reduction strategies: may be needed if the firm is far from its break-even point, since there is no way to out costs sufficiently. Assets or capacity unneeded in the next two years or so should be the first to go.
Revenue-increasing strategies: If the firm is close to covering its fixed costs and has low variable costs, revenue increasing approches such as price increases may be more beneficial. 2/ TURNAROUND STRATEGIES ( or Defensive strategies) (3/3)
Combination strategies: If the firm is covering fixed costs but significantly below its break-even point, a combination of the previous three approches may be more fruitful.
Selling a divison or part of an organisation is called divestiture. It is often used to raise capital for further strategic acquisitions or investment.
Selling all of a company’s assets, in parts, for their tangible worth is called liquidation. Liquidation is recognition of defeat and consequently can be an emotionally difficult strategy. 3/ STABILITY STRATEGY
A stability strategy is characterized by an abscene of significant change. It involves maintaining the status quo or growing in a methodical but slowmanner. 4/ COMBINATION STRATEGY
A combination strategy is the pursuit of two or more of the previous strategies simultaneously. For exemple, one business in the company may be pursuing growth while another in the same company is contracting. I I ) BUSINESS LEVEL STRATEGIES
Two frameworks in wich business units formulate strategy are the adaptive typology and Porter’s competitive strategies. 1/ ADAPTIVE STRATEGIES Miles and Snow’s Adaptive Strategies 2/ Porter’s generic strategies Part II : Strategy Formulation CHAPTER 1: SETTING CORPORATE PURPOSE AND DIRECTION 1. Vision & Mission 1. Vision & Mission A Vision is a description of the business as you want it to be
The description might include :
How things will be
What you’ll be doing
How you’ll feel 1. Vision & Mission 1.1. Definition
1.2. Corporate mission
1.3. Mission and change
1.4. Mission and strategy
1.5. Organizational mission 1.1. Definition Strategic Mission is a statement of firm’s which reveals the long –term vision of an organization in terms of what it wants to be and whom it want to serve
It anwers the pivatal question « What is our business? » 1.2. Corporate mission
Corporate mission represent the broadest statements of the company’s vision and philosophy
They describe the company’s relationship to its external environment and establish the basic identity of the company for external stakeholders
The following steps can help managers to develop useful missions statements :
1-analyze historical missions , values and business operations and practices
2-consult organizational stakeholders about directions the company should take
3-Resolve conlicting demands
4-Describe the company’s value , guiding philosophy , business domains
5- share the draft mission statement with key managers and stakeholders , seek feedback and make modifications
1.3. Mission and change
Corporate and strategic business level missions will generally change over time
The change may take place rapidly or be slow and gradual 1.4. Mission and strategy
It’s difficult to know where one is going if one does not first know who one is
Effective management requires not only an understanding of the environment but also a focus on the organization’s mission 1.5. Organizational mission Mission statements tend to be made up of some or all of the following nine components :
Products or Services
Concern for survival
Concern for public image
Concern for employees Key elements
In developing a statement of mission , management must take into account three key elements :
The organization’s history