1-Introduction to Strategy - Strategy Strategy Process,...

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Unformatted text preview: Strategy Strategy Process, Context, Content Process, Dr. Nguyen Kiem Than Strategy Dimensions Process, Content and Context • Strategy context – the set of circumstances under which strategy process and strategy content are determined; where, i.e. in which firm, in which environment • Strategy process – the how, who and when of strategy, the way strategies come about • Strategy content – the product of the strategy process; what is and should be the strategy of the company Strategy Process Strategic Thinking, Strategy Formation, Strategic Change Strategist Strategic Thinking Organization Strategy Formation Strategy Process Environment Strategic Change • High Levels of linkage & interdependence across each element of the strategy process. • Debate, is Strategy Process sequential, intertwined or something in between??? Planning Process Planning Filling Gap Initial State Requires Strategy and Actions Needs Resources ­Financial ­Human ­Technology ­Equipments… Goals End State What do we want to be at a future point in time Challenges Issues Opportunitie Organizational Purpose Creating Values Creating • Value to whom? – – – – – Customers who pay Community, Society Country The World Ourselves, our family • What constitutes value? – Satisfaction of a need – Happiness – Peace of mind • Examples: – Quality, safety, reliability, trust, low cost, health… Vision Vision • Visualization, a picture in our mind, to “see” • Very broad, very long term, quasi permanent objective. Our desire to bring about a new environment • How do we see the world, the country? – Better standard of living for world population – Bill Gate “saw” every home with a PC • How do we see our position within it? – Being a prosperous independent company – Being a member of a larger organization, a wider network Mission Mission • Overarching Strategy • Our commitment to provide value to… • How do we propose to serve? To realize our vision? – “We” include our group, our company, our team, ourselves – By “doing” certain things which require resources – Broad actions Mission Examples Mission • To provide quality products or services in the most friendly manner, at lowest cost • Bill Gate chose the “Software” route to make his vision become reality Stakeholders Stakeholders • • • • • • • • • • Shareholder Board of Director Senior Management Creditor, Bondholder Employee Union Customer Supplier, Vendor, Contractor Regulator, Taxing Authority Local Community Strategy Context Strategy Context You External Environment External • Value – Vision – Mission are the reasons why we exist • Foundation on which long term objectives and strategies are built • Need to be consistent with what is “out there” • Reality of the world is constantly changing Strategy External Context Strategy • Changes in outside world – Some changes could be predicted – planning possible – Some changes are unpredictable – scenario analysis • Strategic Planning will help company navigate in Strategic changing environment changing – Choice of clear direction – Adapt internal structure, organization framework • Past success formula will not guarantee future Past success success Changes in Outside World Changes • • • • • • • • Market research and market forecast Product market Financial market Technology Country politics Globalization Sustainable development New challenge = new opportunity Internal Strategic Issues Internal • Need to overcome silo mentality and Need resistance to change resistance • Most efficient information flow – vertical, Most horizontal or lateral? horizontal • Use bottom up or top down planning Use process? process? • Best structure for adaptation to change: Best hierarchical authority pyramid or flat network organization? organization? • Integration of all stakeholders in planning Integration process process Human Issues Human • Transparency and full disclosure as basis for Transparency corporate ethics corporate • Fair share of fruit derived from common effort to Fair all stakeholders all • Respect for all human beings contributing to the Respect success of the company. As such, employees are full participants and not a “disposable” full human resources, not a tool to manipulate for human not quarterly earnings growth. The human cost paid by workers, their family and their local community should be considered in all corporate decisions. Partnership or Competition? Partnership • Partnership could be defined broadly as Partnership friendly collaboration between various groups of people groups • Not just between company A and Not company B company • But also between stakeholders • Even between competitors – Win-win strategy from alliance with Win-win complementary and friendly partners complementary Strategy Content Strategy Content Business, Corporate and Network Levels Network Level Corporate Level Business Unit Level Functional or Divisional Level • • • LEVELS OF AGGREGATION Individual or Institution Teams and/or Activity Strategic Management Needs Strategic • Need to formulate clear Value-VisionMission and clear objectives and strategies and communicate to stakeholders to gain trust and support • Without trust and support, the corporation would not exist nor grow nor prosper • Once the company moves forward, strategic management is a tool to align all stakeholders participation in the same direction Risk Element Risk • Identify risk associated with each new Identify external trend and internal development • Quantify financial impact of each risk Quantify factor whenever possible factor • Strategy and action plan to mitigate each Strategy risk element risk • In general, the higher the risk, the higher In the required return the • Cost of doing nothing Risk Analysis Risk • Evaluation of risk sometime based on good Evaluation judgment of person responsible for selection of a project, an action plan or a strategy project, • Use internal and external market research, Use which is based on hard facts and statistics, but also on assumption of the analyst. Decision maker should accept or reject recommendation with a critical mind. Price tag of research project is no indication of quality of analyst is Financial Risk Issues Financial • In many businesses, bond holders and saving In public through bank lenders are critical investors investors who commit the most money to the common enterprise. Since they don’t share management responsibility, but tend to loose the most in case of bankruptcy, should they participate in the nomination of corporate leaders and in the selection of company strategies, being fully informed on operation dynamics and financial results? results? Cash Contribution & Distribution Cash • Think in term of Cash Think Flow Flow • Or cost Or • Or contribution to the Or growth of the pie growth • What should be fair What distribution of cash generated? generated? • Confidence is important Shareholders Lenders Lawyers Taxing Authority Management Structuring the Strategy Debates Chapter Topics and strategy tensions Strategy Perspective Rational vs Generative Planning vs Incrementalism Discontinuous vs Continuous Outside-In vs Inside-Out Portfolio vs Integrated Discrete vs Embedded Industry Dynamics vs Leadership Leadership vs Org’n Dynamics Global vs Diversity Shareholder vs Stakeholder Structuring the Strategy Debates Strategy Tensions as Strategy Paradoxes • As a puzzle: a challenging problem with an optimal solution • As a dilemma: a vexing problem with two possible solutions, neither of which is logically best • As a trade-off: problem situation, many possible solutions, strike a balance between conflicting pressures • As a paradox: two seeming contradictory, or even mutually exclusive factors appear to be true at the same time Rational analysis converge on an outcome Generative, divergent synthesis you create an outcome ...
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This note was uploaded on 04/10/2011 for the course STRATEGY SM2011 taught by Professor Hoangduong during the Summer '11 term at American InterContinental University Illinois.

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