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2 CHAPTER The Strategic The Strategic Management Management Process Process McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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Page 1: Roth 0102 Pp

2CHAPTER

The Strategic The Strategic Management ProcessManagement Process

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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LO 2-1 Explain the role of vision, mission, and values in the strategic management process.

LO 2-2 Describe and evaluate the role of strategic intent in achieving long-term goals.

LO 2-3 Distinguish between customer-oriented and product-oriented missions and identify strategic implications.

LO 2-4 Critically evaluate the relationship between mission statements and competitive advantage.

LO 2-5 Explain why anchoring a firm in ethical values is essential for long-term success.

LO 2-6 Compare and contrast strategic planning, scenario planning, and strategy as planned emergence, and discuss strategic implications.

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ChapterCase 2 Teach For America: Inspiring Future Leaders

• TFA Mission: Eliminate educational inequalityTFA Mission: Eliminate educational inequality

Started by an undergraduate studentStarted by an undergraduate student

Inspiring mission Inspiring mission

Provide a meaningful service option for bright young peopleProvide a meaningful service option for bright young people

• Make teaching to the neediest Make teaching to the neediest high prestige high prestige

Over 40,000 applicants for 4,500 jobsOver 40,000 applicants for 4,500 jobs

TFA Video2-3

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VISION, MISSION, AND VALUES

• What are visionary organizations? What are visionary organizations? Begin with the end in mindBegin with the end in mind

Similar to designing & building a homeSimilar to designing & building a home

Vision – what to ultimately accomplish? Vision – what to ultimately accomplish?

Mission – what is the firm about? Mission – what is the firm about?

Values – how to accomplish goals? Values – how to accomplish goals?

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VISION, MISSION, AND VALUES

• What is forming strategic intent? What is forming strategic intent? Staking out a Staking out a desired leadership position desired leadership position in the long in the long

term that term that far exceeds far exceeds a company's current situationa company's current situation

Often used in Japanese corporate settingsOften used in Japanese corporate settings Canon will "beat Xerox" Canon will "beat Xerox"

Effective use of stretch goalsEffective use of stretch goals Competitive advantage for Competitive advantage for tomorrowtomorrow

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VISION, MISSION, AND VALUES

• CUSTOMER-ORIENTED MISSIONSCUSTOMER-ORIENTED MISSIONS• Define the firm in terms of solutions for customersDefine the firm in terms of solutions for customers

Disney: "Make People Happy"Disney: "Make People Happy" Enhanced strategic flexibility Enhanced strategic flexibility NOT the same as listening to customersNOT the same as listening to customers

• PRODUCT-ORIENTED MISSIONSPRODUCT-ORIENTED MISSIONS• Define the firm in terms of products or servicesDefine the firm in terms of products or services

U.S. Railroads: "Safest… N. American railroad” U.S. Railroads: "Safest… N. American railroad” Missed the chance to move into delivery before Missed the chance to move into delivery before

UPS & Federal ExpressUPS & Federal Express

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MISSION STATEMENTS ANDCOMPETITIVE ADVANTAGE

• Do mission statements help gain & sustain Do mission statements help gain & sustain

competitive advantage? competitive advantage? Results are inconclusiveResults are inconclusive

Need strategic commitments to succeedNeed strategic commitments to succeed

• Positive associations – Visionary firmsPositive associations – Visionary firms

• Negative associations – Better World BooksNegative associations – Better World Books

• No associations – IntelNo associations – Intel

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Living the ValuesLiving the Values• Ethical standards and norms that govern Ethical standards and norms that govern

behavior.behavior. How do we accomplish our goals?How do we accomplish our goals?

• McKesson – ICAREMcKesson – ICARE Shared principles a framework for daily interactionsShared principles a framework for daily interactions

• Dark side of valuesDark side of values Bernard MadoffBernard Madoff

Ponzi scheme estimated at Ponzi scheme estimated at $65 billion$65 billion in fraud in fraud EnronEnron

One of the largest bankruptcies in U.S. historyOne of the largest bankruptcies in U.S. history Over 50,000 jobs lost (Enron & Arthur Anderson)Over 50,000 jobs lost (Enron & Arthur Anderson)

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The Strategic Management Process1.1. Strategic PlanningStrategic Planning

2.2. Scenario PlanningScenario Planning

3.3. Strategy as Planned EmergenceStrategy as Planned Emergence

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Strategy as Strategic Planning

• Top-down rational planningTop-down rational planning

Define mission, vision, & goal (strategic intent)Define mission, vision, & goal (strategic intent)

External analysis of opportunities and threatsExternal analysis of opportunities and threats

Internal analysis of strengths and weaknessesInternal analysis of strengths and weaknesses

Create strategic fit through SWOTCreate strategic fit through SWOT

Formulate appropriate strategyFormulate appropriate strategy

Implement chosen strategyImplement chosen strategy

Monitor performance & modify if necessaryMonitor performance & modify if necessary

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Strategy as Scenario Planning

• Scenario planning Scenario planning Envision different "what-if" plansEnvision different "what-if" plans

Generates a dominant plan Generates a dominant plan Must Must implementimplement the most probable option the most probable option

Keeps other scenarios in the event of changes… Keeps other scenarios in the event of changes… "Arab Spring" impact on the oil industry?"Arab Spring" impact on the oil industry?

Good example of the AFI frameworkGood example of the AFI framework

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Strategy as Planned Emergence

• Strategic InitiativeStrategic Initiative Google 50% from the "20% rule" Google 50% from the "20% rule" Enron wind investment…Enron wind investment…

• Mintzberg Planned EmergenceMintzberg Planned Emergence• Strategy can come from top or bottom Strategy can come from top or bottom

Some intended strategies drop off in the processSome intended strategies drop off in the process Allows for new emerging ideas to become realizedAllows for new emerging ideas to become realized Resource allocation process (RAP)Resource allocation process (RAP) Serendipity can have dramatic effectsSerendipity can have dramatic effects

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Bottom-up Strategic Initiatives / Autonomous Actions• MicrosoftMicrosoft

Internet ExplorerInternet Explorer XboxXbox

• IntelIntel DRAM exit and entry into semiconductorsDRAM exit and entry into semiconductors

• StarbucksStarbucks FrappuccinoFrappuccino

• GoogleGoogle 50% of new products come from 20% autonomous 50% of new products come from 20% autonomous

timetime

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STRATEGY HIGHLIGHT 2.3 ”It’s Not What We Do!”

• StarbucksStarbucks

Autonomous action of mid-level managerAutonomous action of mid-level manager

Tenacity and persistence of a store managerTenacity and persistence of a store manager Risk of failureRisk of failure

Possible career-limiting actionPossible career-limiting action

Organization must be willing to accept new ideasOrganization must be willing to accept new ideas

Frappuccino was born! Frappuccino was born! Contributing 20% of revenues for Starbucks recentlyContributing 20% of revenues for Starbucks recently

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CHAPTERCASE 2 /Consider This…• Teach For America is TWENTY years old! Teach For America is TWENTY years old!

• A $200 million dollar organizationA $200 million dollar organization Teacher effectiveness improves with…Teacher effectiveness improves with…

Student–oriented achievement course objectivesStudent–oriented achievement course objectives

• What role did TFA’s vision statement have?What role did TFA’s vision statement have?

• How have they recruited so many into teaching?How have they recruited so many into teaching?

• Could it have worked as a for-profit firm?Could it have worked as a for-profit firm?

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