Enterprise Module Sect 7
Transcript of Enterprise Module Sect 7
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DEVELOPING STRATEGY:LONG-TERM BUSINESS
PLANNINGJEAN CLARKE
LEEDS UNIVERSITY BUSINESSSCHOOL
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AIMS OF THE LECTURE To understand the meaning and importance of
strategic management
To understand what a companys mission andobjectives should contain
To be able to conduct a PESTLE analysis
To understand the various levels of planning
To complete a group task through drawing on the
case study of Dyson
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MANAGING STRATEGY Pearce and Robinson (1991) define strategic
management as the set of decisions and actions that
result in the formulation and implementation of
plans designed to achieve a companys objectives.
It is an ongoing iterative process
Wider than initial business planningsets long-term
objectives and sets the business on a particular path
In todays uncertain environment must be open to
revision and change
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MANAGEMENT AND CHANGE
(Johnson, 1987) Strategic Management:
Process by which organisations determine their purpose
Objectives and desired levels of attainment
Decide on actions for achieving these objectives in anappropriate time-scale, and frequently in a changingenvironment
Implement the actions and assess progress and results.
Actions may be changed or modified whenever and
wherever necessary Strategic change:
Changes which take place over time to the strategies andobjectives of the organisation.
Change can be gradual or evolutionary, dramatic or even
revolutionary
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IMPORTANCE OF STRATEGIC
MANAGEMENT The flame of competition has changed from
smoky yellow to intense white heat. For
companies to survive and prosper they willhave to have a vision, a mission and a
strategy. They will pursue the action arising
from that strategy with entrepreneurial skill
and total dedication and commitment to win.
Peter B. Ellwood, Chief Executive, Lloyds TSB Group
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GROUP TASK Individuals should divide into groups of five
Discuss the statement above
Why do you think competition has increased?
Why is it more than important than ever to
attend to strategic management?
What are the potential problems if firms do
not consider strategic management?
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MISSION AND OBJECTIVES Therefore an essential element is setting
companys mission and objectives
Mission: Essential purpose of the organisation
Why its in existence
Nature of the business(es) it is in
Customers it seeks to serve and satisfy
Objectives/goals: Desired results linked to particular time-scales
Size or type of organisation
Nature and variety of the areas of interest
Levels of success
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THE STRATEGIC PLANNING
APPROACH (Ansoff, 1987) Strategic analysis
Appraisal of the current situation & current
strategiesSWOT Determination of desirable changes to
objectives & strategies
Strategic creation and choice
Search for & choose suitable courses of action
Strategy implementation
Implementation of changes
Monitoring progress, ongoing appraisal
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THE BUSINES ENVIRONMENT
The business environment:political, economic, social,technological &environmental & legal
aspects
Industry competitors,customers & suppliers
The organisation
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PESTELA FRAMEWORK FOR
ANALYSING THE ENVIRONMENT
Political/legal
Economic
Socio-cultural Technological
Environmental
Legal
Used to look at the future impact of
environmental factors
Identify opportunities and threats
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PESTEL (Johnson and Scholes, 2003)
Political/legal
Monopolies legislation
Taxation policy
Foreign trade regulations
Employment law Government - organisation
relationship
Socio-cultural factors
Population demographics
Income distribution Social mobility
Lifestyle changes
Attitudes to work & leisure
Environmental
Environmental protection laws Energy consumption
Economic factors
GNP trends
Interest rates
Currency fluctuations & exchange rates
Inflation Unemployment
Disposal income
Technological
Government spending on research
Government and industry focus ontechnological effort
New developments
Speed of technology transfer
Legal
Monopolies legislation Employment law
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LEVELS OF PLANNING
(Bracker and Pearson, 1986)Corporate plan
Strategic plan
Department plans
Business level plans
Product market plans
Functional level plans
Time-based plans
Single-use plans
Production plansFinancial plans &Budgets
Programmes &projects
SBUs,business
portfolios,division plans
Global
Local
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CORPORATE STRATEGY
attempts to define the domain of businesses the
firm intends to operate in
Sense of purpose
Corporate parenting
Portfolio issues
Value adding
Which industries
Becomes international as an organisation is
influenced by
Competition, currency, country
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BUSINESS STRATEGY
How should we compete in our chosen product
markets?
Products/services
Markets
Competition
Advantage
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FUNCTIONAL STRATEGIES
How we manage the functions of finance,
marketing, operations, human resources and
R&D in ways consistent with our international
corporate and business strategies
About
resource application
implementation
impact of technology
competitive advantage
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Situation appraisal
Review of corporateobjectives
Corporatestrategy
Clarification of
objectives
Situationassessment
Monitor progress
Implementation
Competitivestrategy
Strategicdecisions
Leadership & culture
Where are we?
Where are
we going?
How arewe getting
there?
THE STRATEGIC MANAGEMENT APPROACH
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BENEFITS OF STRATEGIC
THINKING(Miller and Cardinal, 1994)
Identify more effectively the key success factorsinherent in the economics of the business
Segment markets to gain decisive competitive
advantages Base strategies on measurement and analysis of
competitive advantage Anticipate competitors responses
Exploit more, different degrees of freedom thancompetitors
Give investment priority to business/areas thatpromise competitive advantage
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STRATEGIC MANAGEMENT
FAILURES
Strategic Management is not something that many
companies are thought to be very good at
Mistakes made in recent years:
Misguided strategic choices
Poor strategy implementation
Technical weaknesses
Market complacency
A failure to maximise the potential and
contribution of people
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FORCES INFLUENCING BUSINESS
STRATEGY
Nature of the competitive environment
What do customers/users value?
Does the business unit have competenceswhich allow it to deliver the desired
competitive strategy => is competitive
advantage likely? Constraints upon strategy in terms of
stakeholder expectations
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GROUP TASK
Divide into groups of five individuals
All students should have read the Dyson case study whichaccompanies the lecture notes
What was the mission/objectives of the Dyson company? Outline the Corporate, business and functional strategies of
Dyson
What type of strategy did James Dyson pursue?
Why was this the most effective strategy? What are the challenges facing this still young company?
Conduct a PESTLE analysis of the Dyson company
Draw up presentation and present to other groups