Ch 02-Establishing Direction
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Transcript of Ch 02-Establishing Direction
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2
“If you don’t know whereyou are going, any road
will take you there.”
Cheshire Cat to Alice
Lewis Carroll, Alice in
Wonderland
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“If you articulate a ision
that !akes "eo"le "assionate,
there are so !any a!a#ing things
you can do.”
$r. %o"hie &ande'roek
(ero) Cor"oration
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THE STRATEGY-MAKING, STRATEGY-EXECUTING
PROCESS
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DEVELOPING A STRATEGIC VISION
A Strategic Vision
Mission Statement
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STRATEGIC VISION VS.MISSION
Astrategic vision
concerns a firm’s future business path -“where
we are going”
Themission statement of a firmfocuses on its present business purpose -“who we are and
what we do”
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Vision 'To be a sustainable, quality-driven company that
ensures the continuing prosperity of all its
stakeholders.‘
Mission Statement 'Our goals are to achieve customer satisfaction, and to
build and defend the first position as market leader in
every category in which we compete. In landtransportation, we provide reliable, high quality and
superior services with the efficient use of resources,
and we do it as a team.-
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&ision
To become a leading InfoCom player in the region
Telkom has strong will to become a leading
Information and Communication Player in South-East Asia, Asia and to all over Asia Pacific
ission
! To Provide One Stop InfoCom Services with
Excellent Quality and Competitive Price" To e the !ole "odel as the est "anaged
Indonesian Corporation/
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VISI & MISIUNIVERSITAS GADJAH MADA
Visi Menjadi universitas riset kelas dunia yang unggul, mandiri,
bermartabat, dan dengan dijiwai Pancasila mengabdi kepada
kepentingan dan kemakmuran bangsa.
Misi Misi Umum :
Melaksanakan pembelajaran dan pengabdian berbasis
riset.
Misi Khusus :Meningkatkan kegiatan pendidikan, penelitian dan
pengabdian kepada masyarakat berkelas dunia,beridentitas kerakyatan serta membangun sosio-budaya
IndonesiaMenuntaskan transisi UGM menjadi universitas yang
mandiri dan mempunyai tata kelola yang baik (Good
University Governance).
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MEDCO ENERGY COMPANY
(ANNUAL REPORT 2006)
Vision:
The Energy Company of Choice
Mission:
To develop energy resource potentials into profitable investment portfolios
Strategy:1. Replace or add reserves through acquisition and exploration
2. Replace and increase production volumes through the development ofreserves
3. Development new market for uncommitted gas
4. Maintain financial flexibility and conservative financial structure andcost control
5. Build strategic alliances with international operators
6. Ensure support from local community
7. Focus on maintaining Good Corporate Governance standards 1
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VISION SLOGANS: AN INSPIRATIONALSTATEMENT
Levi Strauss & Company
“We will clothe the world by marketing the most appealing andwidely worn casual clothing in the world.”
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egadaian
“engatasi !asalah tan"a !asalah”
oshi'a
“Leading Innoation
oyota
“oing forward ”
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CHARACTERISTICS OF ANGOOD VISION STATEMENT
Graphic
Directional
Focused
Flexible
Feasible
DesirableEasy to communicate
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COMMON SHORTCOMINGS IN VISION STATEMENT
Vague or incomplete
Not forward-looking
Too broad
Bland or uninspiring
Not distinctive
Too reliant or superlative
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DISCUSSION
What is the importance of strategic vision
for a company?
1*
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ROLE OF A STRATEGIC VISION
Give the organizationa sense ofdirection,
Create acommitted enterpriseInformcompany’s stakeholdersBea reference point to make strategicdecisions
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COMPANY VALUES
Beliefs, traits, and ways of doing things that
management has determined should guide the
pursuit of its vision and strategy
The desired character, identity, and behavioral
norms-the values become the company’sgenetic makeup, its DNA
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EXAMPLE OF CORE VALUES
Disney: Nurturing/promulgation of wholesome American values
Creativity, dreams and imagination
Fanatical attention to consistency and detail
Preservation and control of the “Disney Magic”
Sony:
Elevation of the Japanese culture and national status
Being a pioneer – not following others; doing theimpossible
Encouraging individual ability and creativity1-
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COMPANY VALUES
Custo!er
co!!it!ent
4uality and
Integrity
ea!work5es"ect
for "eo"le
"-!#
1/
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DISCUSSION:
What are the importance of company
value for the company?
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CHANGES FOR A NEWSTRATEGIC DIRECTION:
“STRATEGIC INFLECTIONPOINTS”
PT POS INDONESIANOKIA
INTEL
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Visi
2009 - 2010 :Integrated mail, logistic & financial
services infrastructure
2011 - 2013 :Indonesia’s leader in the mail logistics &financial services
2014 - 2018 :ASEAN Champion of Postal Industries
MisiPos Indonesia menyediakan solusi handal dalam mail,
logistik dan jasa keuangan dengan menggunakan jejaring
bisnis dan infrastruktur terluas dan terpadu serta
mengembangkan hubungan kolaboratif.21
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Produk Pos Kiriman Internasional
Filateli
Hybrid-Mail Ritel
Logistik Keuangan
Paket Pos
Surat Pos
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http://www.posindonesia.co.id/produk_list.php?id=8http://www.posindonesia.co.id/produk_list.php?id=8http://www.posindonesia.co.id/produk_list.php?id=7http://www.posindonesia.co.id/produk_list.php?id=6http://www.posindonesia.co.id/produk_list.php?id=5http://www.posindonesia.co.id/produk_list.php?id=4http://www.posindonesia.co.id/produk_list.php?id=3http://www.posindonesia.co.id/produk_list.php?id=2http://www.posindonesia.co.id/produk_list.php?id=2http://www.posindonesia.co.id/produk_list.php?id=1http://www.posindonesia.co.id/produk_list.php?id=1http://www.posindonesia.co.id/produk_list.php?id=1http://www.posindonesia.co.id/produk_list.php?id=2http://www.posindonesia.co.id/produk_list.php?id=2http://www.posindonesia.co.id/produk_list.php?id=3http://www.posindonesia.co.id/produk_list.php?id=4http://www.posindonesia.co.id/produk_list.php?id=5http://www.posindonesia.co.id/produk_list.php?id=6http://www.posindonesia.co.id/produk_list.php?id=7http://www.posindonesia.co.id/produk_list.php?id=8http://www.posindonesia.co.id/produk_list.php?id=8http://www.posindonesia.co.id/produk_list.php?id=8
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THE STORY OF NOKIA - A CENTURY AND A HALF OF INNOVATION,
FROM A RIVERSIDE PAPER MILL IN SOUTHWESTERN FINLAND
TO A GLOBAL TELECOMMUNICATIONS LEADER.
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$rom roots in %a%er, rubber, and cables, in &ust over !''
years (okia becomes a %owerful industrial conglomerate
The newly formed (okia Cor%oration is ideally %ositioned for a
%ioneering role in the early evolution of mobile
communications
As mobile %hone use booms, (okia makes the sector its core business)y the turn of the century, the com%any is the world leader
(okia sells its billionth mobile %hone as the third generation of
mobile technology emerges
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CHANGES FOR A NEW STRATEGIC DIRECTION:
INTEL’S “STRATEGIC INFLECTION POINTS”
Prior to mid-1980s:Focus on memory chipsThen, facing competition from Japanesemanufacturers with lower-prices strategy
Starting in mid-1980s Although the former business contributed for 70%of Intel revenue, the company switch to be thepreeminent supplier of microprocessors to the PCindustry.
1998Focuses on installing million of servers andbuilding internet infrastructure and serve as aworldwide communication medium
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SETTING OBJECTIVES
Purpose ofsetting objectivesConverts vision into specific performancetargets
Creates milestone to track performance- at the
end as a parameter to the achievement of theestablished vision
Well-stated objectives areQuantifiable
MeasurableContain adeadline for achievementSpell-outhow much ofwhat kind ofperformanceby when
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TYPES OF OBJECTIVES
REQUIRED
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Financial Objectives
Outcomes focused
on improving financial performance
Strategic Objectives
Outcomes focused on improvingcompetitive
vitality and future business position (market)
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OBJECTIVES
Annual revenue growth of X% X % increase in after-tax profits annualEarnings per share growth of X% annually Annual dividend increases of X%
Profit margins of X% X% return on capital employed (ROCE) Annual stock price increases that average X% over timeStrong bond and credit ratings
Sufficient internal cash flows to fund 100% of newcapital investmentStable earnings during periods of recession
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EXAMPLES:STRATEGIC
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EXAMPLES: STRATEGIC
OBJECTIVES
Winning an X% market share within 3 years Achieving lower overall costs than rivalsOvertaking key competitors on product performance or
quality or customer service within 2 yearsDeriving X% of revenues from sale of new products
introduced in past 5 yearsBeing the recognized industry leader in product
innovation and/or technological know-howHaving a wider product line than rivals
Consistently getting new or improved products tomarket ahead of rivals
Having stronger national or global sales and
distribution capabilities than rivals 2/
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MCDONALD’S FINANCIAL AND STRATEGIC OBJECTIVES
Place more emphasis on delivering anexceptional customer experience
Add approximately 350 netnew McDonald’s restaurants
Reduce general and administrativespending as a percent of total revenues
AchievementsSystemwide sales and revenue growth of 3-5%
Annual operating income growth of 6-7% Annual returns on incremental investedcapital in high teens
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H. J. HEINZ COMPANY’S FINANCIAL AND STRATEGIC OBJECTIVES
Achieve 4-6% sales growth, 7-10% growth in operating income,EPS in the range of $2.35 to $2.45, and operating free cash flow of$900 million to $1 billion in fiscal 2006
Pay dividends equal to 45-50% of earnings Increase focus on company’s 15 power brands and give topresource priority to those brands with number one and twomarket positions
Continue to introduce new and improved food products Add to the Heinz portfolio of brands by acquiringcompanies with brands that complement existing brands
Increase sales in Russia, Indonesia, China, and India
by 50% in fiscal year 2006 to roughly 6% of total sales By end of fiscal 2008, derive approximately 50% of sales andprofits from North America, 30% from Europe, and 20% from allother markers
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DISCUSSION:
The relationship between strategic
objectives and financial objectives
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GOOD STRATEGIC PERFORMANCE IS THE KEY
TO BETTER FINANCIAL PERFORMANCE
Current financial results are“laggingindicators” reflecting results of past decisions
and action
Good strategic performance is thus a “leading indicator” of a company’scapability to deliver improved
future financial performance
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A HIERARCHY: CORPORATELEVEL AND BUSINESS
LEVEL33
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3*
Cor"orate
%trategy
6usiness %trategies
7unctional %trategies
8"erating %trategies
wo9:ay Influence
wo9:ay Influence
wo9:ay Influence
Cor%orate-*evel
+anagers
)usiness-*evel+anagers
$unctional
+anagers
8"erating
anagers
Leels of %trategy9aking in a $iersified
Co!"any
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3+
ACOMPANY’SSTRATEGYMAKING
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A COMPANY’S STRATEGY-MAKINGHIERARCHY
Corporate Strategy
todiversify into different industries; toboostthecombined performanceof the company’s different
businesses;
to capturecross-business synergies;
to establishinvestment priorities and steeringcorporate resources into
the most attractive businesses
Business Strategy
toconcern with the actions and approaches crafted to produce
successful performance in one specific line of business
Functional Strategy
to concernsthe game plan for a function, activity, or process within a
business; is usually orchestrated by the functional head and involves Operating Strategy
Concern onmanaging key operating units or strategically-relevant
operating activities(such as advertising, supply chain activities, internet
sales) 3
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MISSION AND VISION ONREFLECTION
1. Are mission or vision important for a
company?
2.Without one or both of them, can the
company be success or survive (in thecompetition)?
3.When a company already have mission,
do you think the company does not need
vision anymore and oppositely4.What is the importance of mission for
vision?30