Establishing the strategic control ppt (Stratergic Management)
Strategic management process and stratergic implementation PPT MBA FINANCE
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Transcript of Strategic management process and stratergic implementation PPT MBA FINANCE
Strategic management process
Strategic management process
Vision
and
Mission
External
Audit
Internal
Audit
Long-
term
objectives
Generates
evaluates
select
strategy
Implement
strategy
mgt issues
Implement
strategies
marketing,
Finance/A/c
R&D &CIS
Measure&
evaluate
performance
Strategy Implementation
So far we have studied strategy formulation, analysis of alternative strategies, and then making a strategic choice.
What Next ?
The strategy must be translated into concrete action, and
That action must be carefully implemented.
Implementation is initiated in three stages:
1. Identification of annual objectives
2. Development of specific functional strategies
3. Development and communication of concise policies to guide decisions.
Implementing Strategy:
Strategy
Implementer’s
Action
Agenda
Building a
Capable
Organization
Allocating Resources
Establishing Strategy-
Supportive Policies
Instituting Best
Practices for
Continuous
Improvement
Installing Support
Systems to Carry
out Strategic Roles Tying Rewards
to Achievement
of Key Strategic Targets
Exercising
Strategic
Leadership
Shaping Corporate
Culture to Fit
Strategy
Factors Influencing Managers in Leading Implementation Process
Experience and knowledge of business
New to job or seasoned
Network of personal relationships
Diagnostic, administrative, interpersonal, and problem-solving skills
Authority given manager
Leadership style most comfortable with
View of role to get things done
Context of organization’s situation
Strategy choice & implementation – the ‘Nestle’ story.
Nestle has a presence in India over a century !!
For a long time it imported condensed milk (milk maid) & infant food items.
Lately, it woke up to the food- market potentials in India and set long-term objectives:
Launch variety of dairy products – Milk, Butter, curd
Increase food products – instant coffee (nescafe), Maggie, KitKat, Cerelac, Nestrum, Munch etc.
Penetrate vast rural, middle-class segments
Maintain competitive edge (HLL. Cadburry, Heinz & locals)
The Strategy
Nurture the best selling brand, Price cuts, economy packs at different price points, strengthen distribution network, expand product base to include daily consumable items, build volumes through price cuts, reach out with appealing adds.
Nestle Story – the current market scenario:
Milk Products & Baby food: Amul has focussed on Milk Products and Babyfood- giving tough competition. Local coops. Entering the market, Britania JV with Fonterra is a big challenge.
Beverages: HLL’s Bru favoured in South India, the coffee belt, Barista-Tata coffee poses threat, Bisleri & Kinley price war
Processed Food: HLL making strong bid, locals like MTR in the fray.
Chocolate & Confectionery: Cadbury adopting Nestle’s strategy, ITC, Amul, HLL in the fray using their distribution network to their advantage.
Strategy Implementation
Operationalizing strategy
This phase is the translation of the agreed upon long term objectives, the strategic plan, into organizational action.
Here the focus shifts from strategy formulation to strategy implementation.
There are four important things to be done well to make this transition:
1. Identify short term objectives
They translate long term objectives into annual targets for action.
They provide clarity and can be very powerful motivator and facilitator of effective strategy implementation.
2. Initiate specific functional strategies
They translate business strategy into daily activities.
Functional managers are involved in developing these tactics and their participation helps in clarifying what needs to be done to implement the strategy.
3. Communicate policies that empower people in the organization
Policies are empowerment tools that simplify decision making by empowering operational managers and their subordinates.
They empower the people involved in execution by reducing the time required to decide and act.
4. Design effective rewards
It is aimed at rewarding the desired actions and results.
Annual or short term objectives
They provide a guidance to the people in the organization as to what needs to be done currently to make the long term objectives become reality.
They provide specific guidelines about the things to be done.
They "operationalize" long -term objectives. e.g. if the long term, say five year plan is to gain forty percent market share from the current twenty percent, then what needs to be done in this year to increase the current market share by "X" percent
Annual or short term objectives
Discussion and agreement on short-term strategies help raise issues and potential conflicts that requires coordination to avoid serious consequences.
It identifies measurable outcomes of action plans or functional activities, which can be used to make feedback, correction, and evaluation more relevant and acceptable.
Short-term objectives are accompanied by action plans, which help short-term objectives in three ways:
1. These action plans identify functional tactics and activities that will be undertaken in the next week, month or quarter to build competitive advantage. They specify what exactly needs to be done.
2. They provide a time frame for completion - a schedule with starting and ending dates.
3. It identifies who is responsible for each action in the plan.
Qualities of effective short-term objectives
1. Measurable
Short-term objectives are more consistent when they clearly state
what is to be accomplished
when it will be accomplished
how its accomplishment will be measured
This helps in effectively monitoring each activity and the progress across several interrelated activities.
Measurable objectives make misunderstanding less likely among interdependent managers who must act on the plans.
It is easier to quantify objectives of line units (e.g. production) than staff areas (e.g. personal).
Difficulties in quantifying objectives often can be overcome by initially focusing on measurable activity and then identifying measurable outcomes.
2. Priorities Some annual objectives would require higher priority either because of the timing considerations or because of their effect on a strategy's success. E.g. new product development may be more important than promotional activities
Not prioritizing will lead to conflicting assumptions which may inhibit progress towards strategic effectiveness.
The various ways on which priorities can be established are:
1. Ranking method
2. Terms such as primary, top and secondary can be used.
3. Objectives can be given weights (e.g. 0 to 100 percent) to establish and communicate the relative priority.
3. Linked to long-term objectives
Short-term objectives can add specificity in identifying what must be accomplished to achieve long-term objective.
e.g. Adobe systems has an long-term objective of achieving five percent of its total revenue to come from India in the next 5 years. To achieve this it can have a series of short-term objectives like focusing on particular products.
The link between the short-term and long-term objectives should resemble cascades through the firm, from basic long-term objectives to specific short-term objectives in key operational areas.
The cascading effect provides a clear reference for communications and negotiation, which may be necessary to integrate and coordinate objectives and activities at the operating level.