MSU Burkland MGT 340 Exam 3

How to keep strategic planning on track

- engage people - keep it simple - stay focused - keep moving

Strategy/Strategic Plans can be expressed as:

- grow your business organically - commitment to continuous evolution

Action Plan

-Defines the course of action (the tactics) needed to achieve a stated goal -Contains a projected date for completing the desired activities for each tactic

Porter's Competitive Strategies

1. Cost-leadership: keep the costs/prices of a product or service below those of competitors and target a wide market (IKEA/Walmart) 2. Differentiation: offer products that are of unique and superior value compared to those of competitors and target a wide market (Ritz-Carlton Hotels, Lexus automobiles) 3. Cost-focus: keep the costs of a product below those of competitors and target a narrow market (low cost beer/cigarettes, Red Box) 4. Focused-differentiation: offer products that are of unique and superior value compared to those of competitors and target a narrow market (Lush, Ltd.)

Strategic Management Process Steps

1. Establish the mission and vision and values 2. Assess the current reality 3. Formulate the grand strategy, and strategic, tactical, and operational plans 4. Implement the strategy 5. Maintain strategic control

Strategic Management Process

1. Establish the mission, vision, and value statements 2. Assess the current reality 3. Formulate corporate, business, and functional strategies 4. Execute the strategies 5. Maintain strategic control

3 Sources of a unique and valuable strategic position

1. Few needs, many customers (ex: Jiffy Lube - only lubricants but all kinds of cars) 2. Broad needs, few customers (ex: Bessemer Trust - wealth management and investment advisory firm for only high net worth clients) 3. Broad needs, many customers (ex: Carmike Cinemas - movie theater only operates in cities with populations of fewer than 200,000 people)

3 Types of Grand Strategies

1. Growth Strategy - involves expansion, as in sales revenues, market share, number of employees, or number of customers 2. Stability - involves little or no significant change 3. Defensive - involves reduction in the organization's efforts (retrenchment is another term for this)

MBO - 4 Steps

1. Managers and employees jointly set objectives for the employee. 2. Managers develop action plans. 3. Managers and employees periodically review the employee's performance. 4. Managers make a performance appraisal and reward the employee according to results

MBO - 3 Objectives

1. Performance - express the objective as an outcome or end-result (ex: "increase sport utility sales by 10%") 2. Behavioral - express the objective as the behaviors needed to achieve an outcome (ex: "greet all potential automobile customers with a smile" "attend five days of leadership training") 3. Learning - express the objective in terms of acquiring knowledge or competencies (ex: "learn how the features in our vehicles compare to customers" "attend sales training class")

Vision Statement

A clear sense of the future and the actions needed to get there -what do we want to become? -where do we want to go strategically? Ex: Coke's vision statement serves as the framework for their roadmap by describing what they need to accomplish to achieve quality growth - people/profit/planet/productivity/etc.

Operating Plan

A plan that breaks long-term output into short-term targets or goals Turns strategic plans into actionable short-term goals and action plans

Benchmarking

A process by which a company compares its performance with that of high-performing organizations

Forecasting

A vision or projection of the future

3 Core Processes of Business

Bossidy and Charan believe a company's overall ability to execute is a function of effectively executing according to these: 1. People - consider who will benefit you in the future (MOST IMPORTANT - all work entails some human interaction) 2. Strategy - consider how success will be accomplished 3. Operations - consider what path will be followed

Contingency planning

Creation of alternative hypothetical but equally likely future conditions

Rule

Designates specific required action ex: campus has a rule about no smoking inside

Program

Encompasses a range of projects or activities ex: the government has a space program

Operational Planning

Executed by first-line management Lasts 1-52 weeks Direct daily tasks of nonmanagerial personnel; decisions often predictable, following well-defined set of routine procedures

Tactical Planning

Executed by middle management (functional managers, product-line managers, department managers) Lasts 6-24 months Implement policies and plans of top management, supervise and coordinate activities of first-line managers, and make decisions often without base of clearly defined information procedures

Strategic Planning

Executed by top management (CEO/president/GM's/etc.) Lasts 1-5 years Make long-term decisions about overall direction of organization. Managers need to pay attention to environment outside the organization, be future-oriented, deal with uncertain and highly competitive conditions

Vertical Integration

Firm expands into businesses that provide the supplies it needs to make its products or that distribute and sell its products

Single-use Plan

For activities not likely to be repeated in the future

Standing Plan

For activities that occur repeatedly over a period of time

Project

Has less scope and complexity than a program ex: the space program has several projects like the space shuttle project

Trend analysis

Hypothetical extension of a past series of events into the future Basic assumption that the picture of the present can be projected into the future

Mission Statement

Made to express the purpose of the organization -what is our reason for being? -why are we here? Ex: Coca-Cola's mission statement declares their purpose as a company: "to refresh the world.." "to create value and make a difference.."

Strategic Control and Feedback Loop

Monitoring the execution of strategy and taking corrective action, if necessary. The feedback loop is important to monitor progress so that corrective action can take place

Policy

Outlines general response to a designated problem or situation ex: your syllabus outlines policies on tardiness/late work/etc

Procedure

Outlines response to particular problems or circumstances ex: Mcdonalds has procedures on the order of toppings for a hamburger

Porter's Five Competitive Forces

Porter contends that business-level strategies originate in five primary competitive forces in the firm's environment: 1. threat of new entrants 2. bargaining power of suppliers 3. bargaining power of buyers 4. threats of substitute products or services 5. rivalry among competitors

Long-term goals

Referred to as strategic goals Tend to span 1-5 years and focus on achieving the strategies identified in a strategic plan Revision of strategic plan best if done closer to every 1-2 years

Short-term goals

Sometimes referred to as tactical or operational goals, or just plain goals Generally span 12 months and connected to strategic goals in a hierarchy known as a means-end chain

SMART Goals

Specific: goals should be stated in specifics rather than vague terms Measurable: needs to be quantifiable Attainable: goals should be challenging, yet realistic and attainable Results-oriented (Realistic): only a few goals should be chosen, and they should support the organization's vision (results-oriented) -Target Dates (Timely): goals should specify the target dates or deadlines

SWOT Analysis

Strengths - (internal) could be work processes, organization, culture, staff, product quality, production capacity, image, financial resources and requirements, service levels, and other internal matters Weaknesses - (internal) could be in same categories as strengths, work processes, organization, culture, etc. Opportunities - (external) could be market segment analysis, industry and competition analysis, impact of technology on organization, product analysis, governmental impacts, other external matters Threats - (external) could be in the same categories as opportunities, market analysis, technology, etc.

Management by Objectives (MBO)

Suggested by Peter Drucker in 1954, MBO spread largely because of the appeal of its emphasis on converting general objectives into specific ones for all members of an organization

Planning/Control Cycle

Used to ensure the plans are moving in the right direction 1. Make the plan (planning) 2. Carry out the plan (planning) 3. Control the direction by comparing the results with the plan (control) 4. Control the direction in two ways: a.) by correcting deviations in the plan being carried out (return to step 2), or b.) by improving future plans (go to step 1 to start over)

Critical Thinking/Problem Solving

Using sound reasoning to analyze a situation, make decisions, and solve problems Most job interviews will include questions where you are asked to respond to a scenario in which a problem is presented - make sure to include a brief introduction, what you did, and then the results if applicable

Value Statement

What the company stands for: its core priorities, the values its employees embody, and what its products contribute to the world -what values do we want to emphasize? Ex: Coke's value statement serve as a compass for their actions - leadership/accountability/passion/quality/etc

Goals

a specific commitment to achieve a measurable result within a stated period of time

Execution

•Consists of using questioning, analysis, and follow-through in order to mesh strategy with reality, align people with goals, and achieve results promised. •A survey of 769 global CEOs reviled that "excellence in execution" as their most important concern. This is the BEST way to turn a company around

Strategic Positioning

•Developed by famous strategist Michael Porter. •Attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. •"Performing different activities from rivals, or performing similar activities in different ways."

MBO - how to be effective

•MBO is to motivate rather than control subordinates •An MBO program must be put in place throughout the entire organization •Managers should meet with employees reasonably often to review progress (informally as needed and formally every three months)