What is a Strategy?

1
What is a Strategy?
2
What is a Strategy?

• Examples of Corporate Strategy in 2008
• InBev purchase of Anheuser Busch
• Domestic airlines charging fees for meals, bags,
  etc.
• GE selling its appliance division
• A strategy is a business approach to a set of
  competitive moves that are designed to generate a
  successful outcome
• A strategy is managements game plan for
• Strengthening the organizations competitive
  position
• Satisfying customers
• Achieving performance targets
• Three big questions involved in a strategy
• Where are we now?
• Where do we want to go?
• How will we get there?

3
Tasks Involved in Strategic Management

• Defining business and stating a mission
• Setting measurable objectives
• Crafting a strategy to achieve objectives
• Implementing a strategy
• Evaluating performance of the strategy, reviewing
  new developments and taking corrective action

4
Developing a Mission Objectives

• An organizations Mission
• Reflects managements vision of what the
  organization seeks to do and become
• Provides a clear view of what the organization is
  trying to accomplish for its customers
• Indicates intent to take a business position
• An organizations Objectives
• Convert the mission into performance targets
• Track performance over time
• Must be achievable
• Two types
• Financial outcomes that relate to improving
  financial performance
• Strategic outcomes that will result in greater
  competitiveness stronger long-term market
  position

5
Examples of Types of Objectives

• Financial
• Increase earnings growth from 10 to 15 per year
• Boost return on equity investment from 15 to 20
  in 2009
• Achieve and maintain a AAA bond rating
• Strategic
• Increase market share from 18 to 22 in 2009
• Overtake rivals on quality or customer service by
  2010
• Attain lower overall costs that rivals by 2011
• Become leader in new product introductions by
  2010
• Achieve technological superiority by 2012

6
What Does a Strategy Include?

• How to satisfy customers
• How to grow the business
• Organic growth
• Acquisition
• How to respond to changing industry and market
  conditions
• How to best capitalize on new opportunities
• How to manage each functional piece of business
• How to achieve strategic and financial objectives

7
What is a Strategic Plan

• A strategic plan maps
• Where the organization is headed
• Short and long range performance targets
• Actions of management to achieve desired outcomes
• A strategic plan consists of
• Mission statement
• Strategic and financial performance objectives
• Comprehensive strategy for achieving the
  objectives

8
Implementing Strategy

• Implementing a strategy involves
• Creating fits between the way things are done and
  what it takes for effective strategy execution
• Executing strategy efficiently and effectively
• Producing desired results on time
• The most important fit is between a strategy and
• Organizational capabilities
• A reward structure
• Internal support systems
• Organizational culture

9
Evaluating Performance

• The tasks of strategic management are not
  one-time only exercises because
• Times and conditions change
• Events change over time
• New ways to do things surface
• New managers have different ideas take over
• Managers must
• Constantly evaluate performance
• Monitor situation and decide how well things are
  working
• Make necessary adjustments
• Alter organizations long-term direction
• Raise or lower performance objectives
• Modify strategy