Strategic Mgt

Jonam Tabuzo-Valeza Strategic Management •The process of developing a game plan to guide a company as it strives to accomplish its vision, mission, goals, and objectives and to keep it from straying off course. & SWOT •Competitive Advantage apart from its competitors and unique image Developing a Strategic Plan •specific geographic market area. •close contact with their customers, giving them valuable knowledge Strategic management process: •Use a relatively short planning horizon – two years or less for most small companies. •Be in formal and not overly structured; a “shirtsleeve” approach is ideal. •Encourage the participation of employees and outside parties to improve the reliability and creativity of the resulting plan. •Focus on the customer. •Do not begin with setting objectives because extensive objective setting early on may interfere with the creative process of strategic management. •Focus on strategic thinking, not just planning, by linking long-range goals to dayto-day operations. Strategic thinking encourages creativity, innovation, and employee involvement in the entire process. THE STRATEGIC MANAGEMENT PROCESS •Step 1: Develop a Clear Vision and Translate It into a Meaningful Mission Statement •Step 2: Define the Firm’s Core Competencies and target Market •Step 3: Assess the Company’s Strengths and Weaknesses •Step 4: Scan the Environment for Significant Opportunities and Threats •Step 5: Identify the Key Factors for Success in the Business •Step 6. Analyze the Competition •Step 7. Create Company Goals and Objectives •Step 8: Formulate Strategic Options and Select the Appropriate Strategies Step 1: Develop a Clear Vision and Translate It into a Meaningful Mission Statement VISION

•It is an expression of what the owner stands for and believes in. •dream of something that does not exist yet and the ability to paint a compelling picture of that dream for everyone to see. Decisions,motivation, values MISION Elements of a Mission Statement •beliefsWhat do we stand for? •target customers? •basic products and services? What customer needs and wants do they satisfy? •Why should customers do business with us rather than the competitor down the street (or across the town, on the other coast, on the other side of the globe)? •What constitutes value to our customers? How can we offer them better value? •What is our competitive advantage? What is it source? •In which markets (or market segment) will we choose to compete? •Who are the key stakeholders in our company and what effect do they have on it? *To be effective, a mission statement must become a natural part of the organization, embodied in the minds, habits, attitudes and decisions of everyone in the company every day. Step 2:Core Competencies and target Market •The key to success is building these core competencies (or identifying the ones a company already has) and then concentrating them on providing superior service and value for its target customers. •MARKET SEGMENTATION A strategy that involves carving up the mass market into smaller, more homogeneous units and then attacking certain segments with a marketing strategy designed to appeal to its members. POSITIONING •A technique that involves influencing customers’ perceptions to create the desired image for a business and its goods and services.

Step 3: Strength/Weakness Step 4: Opportunities and Threats Step 5: Identify the Key Factors for Success in the Business KEY SUCCESS FACTORS •Relationships between a controllable variable (e.g. plant size, size of sales force, advertising expenditures, product packaging) and a critical factor influencing the firm’s ability to compete in the market.*For example, one restaurant owner identified the following key success factors: •Tight cost control •Trained, dependable, honest in-store managers •Close monitoring of waste •Careful site selection •Maintenance of food quality •Consistency •Cleanliness •Friendly and attentive service from welltrained wait staff. Step 6. Analyze the Competition Business is like a battlefield. And if you want to win it, you have to know who you are up against. This style is significant for several reasons. One is to avoid surprises from existing competitors’ new strategies. Two, to identify potential competitors. It will also help you improve your reaction time to competitors’ actions. Lastly, you will be able to anticipate your rivals’ next strategic moves. Two things are required in this stage. The first one is competitor analysis. This involves gathering information on the situation of your rivals, SWOT analysis, its buyers, financial resources, etc. These things will be your comparison or benchmark in developing your product or service. The cost of gaining rivals’ information can be minimal. Look through magazines, Internet, customers, suppliers, libraries and tv are some of the sources you can consult to get what you need to know. With this information, come up with a competitive profile matrix and evaluate how far ahead or away you are from your competitors.

Step 7. Create Company Goals and Objectives Step 8: Formulate Strategic Options and Select the Appropriate Strategies Strategy • a road map of the actions an entrepreneur draws up to fulfill a company’s mission, goals and objectives •the mission, goals and objectives are the ends, the strategy are the means •master plan that covers all the major parts of the organization and ties them together into a unified whole •the plan must be action oriented •a successful strategy is comprehensive and well integrated “ A flawed strategy-no matter how brilliant the leadership, no matter how effective the implementation-is doomed to fail. A sound strategy, implemented without error, wins every time.” – Joseph Picken and Gregory Dess (Mission Critical: The 7 Strategic Traps That Derail Even the Smartest Companies) THREE BASIC STRATEGIES (Michael Porter) Cost Leadership a strategy in which a company strives to be the low-cost producer relative to its competitors in the industry. –(+) Low-cost leaders have a competitive advantage in reaching buyers whose primary purchase criterion is price. –(-) Sometimes a company focuses exclusively on lower manufacturing costs w/o considering the impact of purchasing, distribution or overhead costs –(-) misunderstanding the firm’s true cost drivers Differentiation a strategy in which a company seeks to build customer loyalty by positioning its goods or services in a unique or different fashion. •(+) A firm strives to be better than its competitors at something that customers value. •(-) Sustainability of a product or service’s differentiation •(-) overdifferentiating and charging so much

Focus a strategy in which a company selects one or more market segments, identifies customers’ special needs, wants, and interests, and approaches them with a good or service designed to excel in meeting those needs, wants and interest. •(+) the focusing firm specializes in serving a specific target segment or niche •(-) Companies must struggle to capture a large enough share of a small market to be profitable •(-) there is danger of larger competitors entering the market and eroding it Step 9: Translate Strategic Plans into Action Plans

•Implement

the strategy by dividing the plan

into projects

•Involving

employees and delegating adequate authority to them is essential because these projects affect them most directly. Step 10: Establish Accurate Controls Accurate Controls… •Control the strategy- plans created in the strategic planning process become the standards against which actual performance is measured •Identify and track key performance indicators •Balanced Scorecard: set of measurements unique to a company that includes both financial and operational measures and gives manager a quick yet comprehensive picture of the company’s performance