Strategic Management – Week 2 Assignment

Chapter2.pptx

Home >Business & Finance homework help >Management homework help >Strategic Management – Week 2 Assignment

chapter 2 Charting a Company’s Long-Term Direction: Vision, Mission, Objectives, and Strategy

Arthur A. Thompson The University of Alabama

An e-book published and distributed by McGraw Hill Education

Sixth Edition of Strategy: Core Concepts and Analytical Approaches (2020-2021). Arthur A. Thompson, The University of Alabama. Published and distributed by McGraw Hill Education. Image of globe comprised of puzzle pieces with several pieces dislodged and scattered below the globe. Chapter 2: Charting a Company’s Long-Term Direction: Vision, Mission, Objectives, and Strategy

2–2

“If you don’t know where you are going, any road will take you there.” –the Cheshire Cat to Alice.

Lewis Carroll, Alice in Wonderland

2–3

“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”

Jack Welch, former CEO of General Electric

2–4

“One secret to maintaining a thriving business is recognizing when it needs a fundamental change.”

Mark W. Johnson, Clayton M. Christensen and Henning Kagermann

2–5

“A good goal is like a strenuous exercise—it makes you stretch.”

Mary Kay Ash, Founder of Mary Kay Cosmetics

Learning Objectives

Learn the five tasks that comprise the strategy-making, strategy-executing process.

Grasp why it is critical for managers to think long and hard about where a firm needs to head and why.

Understand the role that a firm’s core values play in conducting its business and pursuing its strategic vision and mission.

Understand the importance of setting objectives and why both strategic and financial objectives are needed.

Become aware of why crafting a strategy is a task for a firm’s entire management team and why its strategy is a collection of strategic initiatives and actions taken by many of its organizational levels.

Learn the role and responsibility of a firm’s board of directors in overseeing the strategy-making, strategy-executing process.

2–6

Chapter 2 Roadmap

What Does the Strategy-Making, Strategy-Executing Process Entail?

Task 1: Developing a Strategic Vision, Mission, and Core Values

Task 2: Setting Objectives

Task 3: Crafting a Strategy

Task 4: Implementing and Executing the Strategy

Task 5: Monitoring Developments, Evaluating Performance and Initiating Corrective Adjustments

Corporate Governance: The Role of the Board of Directors in the Strategy-Making, Strategy-Executing Process

2–7

Five ongoing and interrelated managerial tasks:

Developing a strategic vision that charts the company’s long-term direction, a mission statement that describes the purpose of the company’s business, and a set of core values to guide the pursuit of the vision and mission.

Setting objectives and using them as yardsticks for measuring the company’s performance and the progress it is making in achieving the intended strategic vision and mission.

Crafting a strategy to achieve the objectives and move the company along the path to accomplishing the mission and vision.

Implementing and executing the chosen strategy efficiently and effectively.

Monitoring developments, evaluating performance, and initiating corrective adjustments in the company’s long-term direction, objectives, strategy, or execution in light of actual experience, changing conditions, fresh managerial ideas for improving the strategy, and newly emerging market opportunities.

What Does the Strategy-Making, Strategy-Executing Process Entail?

2–8

Figure 2.1 The Strategy-Making, Strategy-Executing Process

Access alternative text for slide image.

2–9

Developing a strategic vision entails

Thinking strategically about the firm’s future direction—“where we are going.”

Considering how the firm’s competitiveness and overall business performance could be improved by changing:

The products it offers

The markets in which it participates

The customers to which it caters

The businesses in which it engages

Well-conceived visions are distinctive and specific to a particular organization.

Task 1: Developing a Strategic Vision, Mission Statement, and Core Values

2–10

External Considerations	Internal Considerations
Does sticking with the company’s present strategic course present attractive opportunities for growth and profitability?	How well is the company faring vis-à-vis key competitors? Is the company gaining ground or losing ground, and why?
Are the winds of change—most especially those affecting the market and competitive arena—acting to enhance or weaken the company’s prospects?	Is the company competing in too many markets or product categories where profits are skimpy or nonexistent?
What, if any, new customer groups and/or geographic markets should the company get in position to serve?	Does the company have attractively strong resources and competitive capabilities to grow revenues and profits in the years ahead?
Which emerging market opportunities should the company pursue and which ones should not be pursued?	Is the company competing in too many markets or product categories where profits are skimpy or nonexistent?
Are there good reasons why the company should begin to deemphasize or eventually abandon any of the markets or customer groups it is currently serving?	Is the company at risk because of specific resources weaknesses or deficient competitive capabilities or threats of technological obsolescence?

Table 2.1 What to Consider in Deciding on a Firm’s Future Direction

2–11

Core Concept

A strategic vision describes the route a firm intends to take in developing and strengthening its business. It lays out the firm’s strategic course in preparing for the future.

2–12

Strategic Insight

A well-conceived vision statement clearly conveys a company’s long-term direction and says something definitive about what top executives want the company’s product-market-customer-business makeup to be in three to five (or more) years.

2–13

A vision statement remains only a bunch of words that do not matter unless:

It paints a clear picture of “where we are headed”—specifically, the market(s) and competitive arena(s) in which top management wants the firm to compete

There is genuine top management commitment to pursue this strategic course

An Important Point about Vision Statements

2–14

The Dos	The Don’ts
Be graphic in painting a clear picture	Don’t dwell on the present
Be forward-looking and directional	Don’t be vague or incomplete
Keep it focused and specific	Don’t use overly broad language
Have some wiggle room	Don’t state the vision in bland or uninspiring terms
Be sure the journey is feasible	Don’t be generic
Indicate why the directional path makes good business sense	Don’t rely on or overuse superlatives
Make it memorable	Don’t run on and on

Table 2.2 Wording a Vision Statement—The Do’s and Don’ts

2–15

Core Concept

An effectively communicated vision is a valuable tool for managers to use in enlisting the commitment of company personnel to actions that get the company moving in the intended direction.

2–16

Communicating the Strategic Vision

Winning support for the vision involves

Putting “where we are going and why” in writing

Distributing the statement organization-wide

Having executives explain the vision to employees

Making the vision engaging and inspirational (to the extent possible)

Challenging and motivating the workforce

Articulating a compelling case for where a firm is headed

Creating positive support and excitement

Arousing a committed organizational effort to move in a common direction

2–17

There’s merit in capturing the vision in a catchy or easily remembered slogan.

Walmart’s visionary slogan is “saving people money so they can live better”—often shortened to the tag line “Save Money. Live Better.”

A good slogan

Illuminates an organization’s direction and purpose.

Reminds personnel “where we are headed and why.”

Rallies personnel to hurdle any obstacles that lie in the organization’s path and maintains their focus.

Expressing the Essence of the Vision in a Slogan

2–18

It crystallizes senior executives’ views about the firm’s long-term direction

It reduces the risk of rudderless decision making

It is a tool for winning the support of organizational members for changes that will help move the company along the chosen strategic path

It provides guidance to managers at lower organizational levels in making decisions and operating their assigned pieces of the business

It provides a rationale for why the whole organization should begin to take steps and launch efforts to begin its journey into the future

2–19

Why a Sound, Well-Communicated Strategic Vision Matters

Developing a Company Mission Statement

Specifies the buyer needs that it seeks to satisfy and the customer groups or markets it serves

Identifies its products and services

Is specific enough to give the company its own identity

A Company’s Mission Statement

The role of a company’s mission statement is to describe the enterprise’s present business and purpose—“who we are,

what we do, and why we are here.”

2–20

A strategic vision

Focuses on a firm’s strategic course–“the direction we are headed.”

Describes the firm’s intended future makeup:

Customers

Markets

Technologies

Businesses

Is always forward looking

A firm’s mission statement

Focuses on “who we are, what we do, and why we are here.”

Establishes the firm’s present identity by describing:

Products or services offered

Buyer needs being served

Customer groups it sells to

Scope of operations and technologies

Is seldom forward-looking

2–21

A Strategic Vision Covers Different Ground than a Mission Statement

Strategic Insight

The distinction between a strategic vision and a

mission statement is fairly clear-cut: A strategic

vision sets forth a company’s future direction

(“where we are going”), whereas a company’s

mission statement describes its present

business scope and purpose (“who we are, what

we do, and why we are here”).

2–22

Characteristics of a Mission Statement

Has a here and now theme

Provides an overview of the firm’s present business make-up and purpose by identifying:

the firm’s present products/services and/or the industries in which it participates

the types of buyers who purchase the firm’s products

the buyer needs being satisfied

the geographic scope of the firm’s operations

Uses specific language to set the firm apart from other enterprises—hiding behind generic wording that disguises “who we are and what we do” serves no useful purpose

2–23

Strategic Insight

To be well worded, a company mission statement must employ language specific enough to distinguish its business make-up and purpose from those of other enterprises and give the company its own identity.

2–24

What a Firm’s Mission Is NOT About

A firm’s mission is not to make a profit! Making a profit is the intent of every commercial enterprise.

BMW, McDonald’s, and Apple all aspire to make a profit, but are vastly different businesses (and thus their missions are different).

A firm’s answer to “make a profit doing what and for whom?” reveals its true mission and what its business is all about.

Profit is more correctly an objective and a result of what a firm does.

2–25

Mission Statement Examples

The American Red Cross:

“To prevent and alleviate human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.”

Harley-Davidson:

“We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments.”

2–26

The Importance of Core Values

Developing a set of core values serves to guide the actions and behavior of company personnel in conducting the firm’s business

Typically, core values relate to such things as

Fair and equitable treatment, honor and integrity, ethical standards, innovativeness, teamwork, a passion for top-notch quality or superior customer service, and exhibiting good community citizenship

Deeply-held values become core values and part of a firm’s DNA

At some firms, the values are mere window dressing intended to burnish the firm’s public image and have scant impact on the conduct or behaviors of personnel.

2–27

Core Concept

A firm’s values or core values are the beliefs, traits, and behavioral norms that the firm’s personnel are expected to display in conducting the firm’s business and pursuing its strategic vision and mission.

At enterprises where the values are genuine and deeply-entrenched, senior managers craft visions, missions, strategies, and operating practices that match these values, and they hold their personnel responsible for displaying them.

2–28

Linking the Strategic Vision and Mission to the Firm’s Core Values

Managers connect core values to pursuit of the strategic vision and mission by:

Crafting a vision, a mission, a strategy, and a set of operating practices that matches established values

Repeatedly emphasizing how the values-based behavioral norms contribute to the firm’s success

At some firms, the strategic vision, mission, and values are a single statement circulated to all personnel (and posted on the firm’s website)

2–29

2–30

Task 2: Setting Objectives

Objectives represent a managerial commitment to achieving particular results and outcomes by

Focusing organizational attention on what to accomplish

Serving as yardsticks for tracking company performance

Motivating organizational members to perform at a high level and deliver the best possible results

A well-worded and properly-phrased objective:

Is quantifiable or measurable

Contains a deadline for achievement

Spells how much of what kind of performance by when

Core Concept

Objectives are an organization’s performance targets—the results and outcomes management wants to achieve. They function as yardsticks for measuring how well the organization is doing.

There’s no better way to avoid ho-hum results than by setting stretch objectives and compensation incentives to motivate organization members to perform at their full potential and deliver their best results.

2–31

To promote outstanding performance, managers should deliberately set high performance targets to challenge the firm to perform at its full potential and deliver the best possible results

Stretch objectives are an effective means of pushing company personnel to:

Be more inventive

Exhibit more urgency in improving the firm’s business position

Be more focused and intentional in their actions

2–32

The Imperative of Setting Challenging or Stretch Objectives

2–33

How NOT to Handle the Task of Setting Objectives

Setting unspecific performance targets (e.g., “become more efficient” or “reduce costs”) that fail to specify “how much” or “by when”

Setting targets that have no adverse consequences for organizational members if they are not achieved

Objective-setting approaches to be avoided

Setting targets that, if achieved, represent “average” performance

Outcomes focused on improving the firm’s financial performance

Outcomes focused on strengthening the firm’s ability to attract and retain customers, compete more successfully against its rivals, and improve its future business prospects

2–34

Every Firm Needs Two Types of Objectives

Financial Objectives

Strategic Objectives

Core Concept

Financial objectives relate to the financial performance targets management has established for the firm to achieve.

Strategic objectives relate to targeted outcomes that indicate the firm has stronger ability to attract and retain customers, compete more successfully against its rivals, and improve its future business prospects.

2–35

Examples of Financial Objectives

An x percent increase in annual revenues

Annual increases in after-tax profits of x percent

Annual increases in earnings per share of x percent

Annual dividend increases of x percent

Profit margins of x percent

An x percent return on capital employed (ROCE) or return on shareholders’ equity investment (ROE)

Increased shareholder value—in the form of an upward trending stock price

Bond and credit ratings of x

Internal cash flows of x dollars to fund capital investment

2–36

Examples of Strategic Objectives

Winning an x percent market share

Achieving lower overall costs than rivals

Overtaking key competitors on product performance or quality or customer service

Deriving x percent of revenues from the sale of new products introduced within the past five years

Having broader or deeper technological capabilities than rivals

Having a wider product line than rivals

Having a better-known or more powerful brand name than rivals

Having stronger national or global sales and distribution capabilities than rivals

Consistently getting up-to-date products to market ahead of rivals

2–37

Setting and achieving well-chosen strategic objectives is of prime importance!

Setting and achieving financial objectives is necessary but not sufficient: current results are “lagging indicators” that reflect the outcomes of past decisions and actions—good current profitability is an unreliable signal or indicator of even better financial results in upcoming periods.

A firm with growing competitive strength and an improving market position is better able to deliver stronger financial results.

A firm with eroding competitive strength and a deteriorating market position lacks the ability to improve its financial performance

Hence, the degree to which a firm’s managers set, pursue, and achieve stretch strategic objectives is the most reliable “leading indicator” of whether the firm’s future financial performance are likely to improve or stall or deteriorate.

2–38

Good Strategic Performance Fosters Better Financial Performance

Core Insight

A stronger market standing and greater competitive strength vis-à-vis rivals—especially when it results in competitive advantage—is what enables and empowers a company to improve its future financial performance.

An improved likelihood of achieving better financial performance is what makes setting, pursuing, and achieving strategic objectives so important !

2–39

Short-Term Objectives

Are targets to be achieved soon

Serve as milestones or stair steps for reaching long-range performance targets

Long-Term Objectives

Are targets to be achieved within 3 to 5 years

Are important because they require managers to consider what to do now to put the firm in position to perform better later.

Both Short-Term and Long-Term Objectives Are Needed

2–40

Core Concept

A balanced scorecard is a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing.

2–41

A balanced scorecard for measuring a firm’s performance entails:

Setting both financial and strategic objectives

Placing balanced emphasis on achieving both types of objectives

A balanced scorecard approach to measuring company performance gives managers a more complete and balanced view of a firm’s overall performance than does just looking at the latest financial outcomes

The Case for a Balanced Scorecard: Improved Strategic Performance Fosters Better Financial Performance

2–42

A firm’s surest path to boosting future profitability is to relentlessly pursue strategic outcomes that strengthen its market position, boost its competitiveness against rivals and produces a growing competitive advantage over rivals!

However, stronger emphasis on achieving financial objectives is essential whenever a firm is in such dire financial condition that its survival depends on achieving big gains in short-term profitability.

A Balanced Scorecard Is Usually Superior to an Unbalanced Scorecard

2–43

Core Concept

A firm exhibits strategic intent when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.

2–44

A firm with an unshakable—often obsessive—commitment to achieving its strategic intent typically:

Goes all out to marshal resources and capabilities to close in on its strategic target.

Crafts potent offensive strategies to throw rivals off-balance, put them on the defensive, and force them into a game of catch-up.

Strives to alter the market contest and tilt the “rules for competing” in its favor.

Rallies its personnel in efforts to make its strategic intent a reality.

Firms with strategic intent are more formidable competitors than rivals with modest strategic objectives and market ambitions.

2–45

Strategic Intent—The Relentless Pursuit of an Ambitious Long-Term Strategic Objective

Objective setting should not end with top management’s establishment of firm-wide performance targets.

Overall or companywide objectives must be broken down into performance targets for each separate business, product line, functional department, and individual work unit.

Each organizational unit’s performance targets should always support the achievement of firm-wide strategic and financial objectives.

Objective Setting Must Extend to All Organizational Levels

2–46

Questions for Simulation Company Co-Managers

Has your management team considered the merits of crafting a strategic vision for your company?

Has your team established both long-run and short-run stretch objectives?

Do you deliberately strive to craft a strategy and make decision entries calculated to achieve these stretch performance targets?

Or do you just enter decisions until you arrive at projected outcomes that “look pretty good”—without any real managerial commitment to achieving stretch performance targets?

Has your team defined its strategic intent and begun taking actions to achieve it? If not, why haven’t you?

2–47

2–48

Task 3: Crafting a Strategy

Crafting a strategy entails stitching together management’s answers to a series of “hows”:

How to attract and please customers

How to compete against rivals

How to position the firm in the marketplace to capitalize on attractive opportunities to grow the business

How to respond to changing economic and market conditions

How to manage each functional piece of the business

How to achieve the firm’s performance targets

And this stitching together must result in a coherent and coordinated game plan for running the firm successfully.

Good strategy-making always entails astute entrepreneurship in:

Proactively searching for opportunities to do new things or to do existing things in new or better ways

Diagnosing the direction and force of shifting market conditions and other early warnings of future change Masterful strategies involve doing things differently from competitors where it counts—being more innovative, more efficient, more imaginative, and adapting faster—rather than running with the herd.

Strategy-Making and Good Entrepreneurship

2–49

Strategic Insight

The larger and more diverse the operations of an

enterprise, the more points of strategic initiative it

has and the more levels of management that have

a significant strategy-making role.

2–50

Core Concept

In most companies, crafting and executing strategy is a collaborative team effort where every manager has a role for the area he or she heads. It is flawed thinking to view crafting and executing strategy as tasks only high-level executives do.

Crafting and executing strategy involve managers at all organizational levels!

2–51

Crafting Strategy Involves Managers at All Organizational Levels

Chief Executive Officer (CEO)

Has ultimate responsibility for leading the strategy-making process

Is accountable for results that the strategy produces

Other Senior Executives

Have strategy-making roles and help fashion the strategy elements for their areas of responsibility

Managers of subsidiaries, divisions, geographic regions, plants, and other operating units

Also have strategy-making roles and help fashion the strategy elements for their areas of responsibility

2–52

Figure 2.2 A Company’s Strategy-Making Hierarchy

Access alternative test for slide image.

2–53

Corporate Strategy

Concerns strategy initiatives to:

Establish business positions in different industries

Hold or divest existing businesses

Take strategic actions to boost the combined performance of the set of businesses into which the firm has diversified

To capture and turn cross-business synergies into a competitive advantage

Is orchestrated by the CEO and other senior executives

Involves crafting strategic initiatives to:

Diversify into different industries

Boost combined performance of the firm’s different businesses

Capture cross-business synergies for competitive advantage

2–54

Business Strategy

Concerns actions and approaches to produce performance in a specific line of business.

Is the responsibility of the manager in charge of the business and involves:

Crafting responses to changing market circumstances

Initiating actions to build competitive advantage and to develop strong competitive capabilities

Seeing that lower-level strategies are well-matched to the overall business strategy

Getting business-level strategic moves approved at the corporate-level

2–55

Concern actions, approaches, and practices to be employed in managing particular functions or business processes or key activities:

Functional strategies flesh out the details of a firm’s business strategy

Lead responsibility for functional strategies is assigned to the head managers of functional areas

General managers have final approval over the various functional strategies and may exert strong influence over the content of the functional strategies

2–56

Functional-Area Strategies

Operating Strategies

Concern the narrow strategic initiatives and approaches for managing key operating units and strategically-relevant operating activities

Add further detail and completeness to functional-area and business strategies

Are crafted by frontline managers

Are subject to review and approval by higher-ranking managers

2–57

Uniting the Strategy-Making Effort

Ideally, the pieces of a firm’s strategy up and down the strategy pyramid should be cohesive and mutually reinforcing, fitting together like a jigsaw puzzle.

As a general rule, strategy making must start at the top of the organization and proceed downward through the pyramid from the corporate level to the business level and then from the business level to the associated functional and operating levels.

Midlevel and frontline managers cannot craft unified strategic moves without first understanding the firm’s long-term direction and knowing the major components of the corporate and/or business strategies that their strategy-making efforts are supposed to support and enhance.

2–58

Uniting the Strategy-Making Effort (cont’d)

Once strategies up and down the hierarchy have been created, lower-level strategies must be scrutinized for consistency and support of higher-level strategies

Achieving unity entails

Removing or modifying lower-level initiatives or strategy elements that conflict with or do not support higher-level strategies and/or

Adapting higher-level strategies to accommodate more appealing strategy initiatives that have been developed at lower organizational levels in the strategy hierarchy

2–59

Core Concept

A company’s strategy is at full power only when its many pieces are united.

Anything less than a unified collection of strategies weakens the overall strategy and is likely to impair company performance

2–60

2–61

Strategic Vision + Mission + Objectives + Strategy = A Strategic Plan

Its strategic vision, business mission, and core values

Its strategic and financial objectives

Its chosen strategy

The Elements that Comprise a Firm’s Strategic Plan

2–62

Task 4: Implementing and Executing the Strategy

Implementation and execution of strategy

Is an operations-oriented, make-things-happen activity aimed at performing core business activities in a strategy-supportive manner

Is the most demanding and time-consuming part of the strategy management process

Converting plans into actions tests a manager’s ability to:

Direct organizational change

Motivate company personnel

Build and strengthen competencies and competitive capabilities

Create and nurture a strategy-supportive work climate

Meet or beat performance targets

Put the strategy in place and execute it proficiently on many organizational fronts

Staffing the firm with needed skills and expertise to build and strengthen strategy-supportive competencies and competitive capabilities

Allocating ample resources to activities critical to strategic success

Ensuring policies and procedures facilitate rather than impede execution

Using the best known practices to perform core business activities and pushing for continuous improvement in how things are being done

Installing information and operating systems that enable personnel to better carry out their strategic roles

Motivating people and tying rewards and incentives directly to the achievement of performance objectives and good strategy execution

Creating a culture and work climate conducive to strategy execution

Exerting the internal leadership needed to drive implementation and keep improving on how the strategy is being executed

What Does Managing the Strategy Execution Process Involve?

2–63

Good strategy execution

Requires diligent pursuit of operating excellence and is a job for a firm’s entire management team

Hinges upon the skills and cooperation of operating managers who can push needed changes in their organization units and consistently deliver good results

Two tests for determining whether management’s handling of the strategy execution process has been successful:

Has the firm met or exceeded its strategic and financial performance targets?

Is the firm making good progress in achieving top management’s strategic vision?

Judging the Success of a Firm’s Strategy Execution Effort

2–64

Task 5: Evaluating Performance and Initiating Corrective Adjustments

This task involves:

Deciding to continue or to change the firm’s vision, objectives, strategy, and/or strategy execution methods

Stay the course? Fine-tune? Do a major overhaul?

Assessing which of the firm’s operating methods and approaches to strategy execution merit continuation and which need improvement

Making adjustments that will move the firm closer to operating excellence

A firm’s direction, objectives, strategy, and operating methods must be revisited any time external or internal circumstances warrant—over time, revisions are to be expected.

2–65

Core Concept

A company’s vision, objectives, strategy, and approach to strategy execution are never final.

Reviewing whether and when to make revisions is an ongoing process, not an every-now-and-then task.

2–66

Senior managers have lead responsibility for performing all five strategy-making, strategy-executing tasks

It is the duty of a firm’s board of directors to:

Exercise strong oversight of how the firm’s business is being conducted and managed

Make sure that management performs its strategy-making, strategy-executing tasks in the best interests of shareholders and other stakeholders

Corporate Governance: The Role of the Board of Directors in the Strategy-Making, Strategy-Executing Process

2–67

Diligently critique the firm’s direction, strategy, and business approaches

Evaluate caliber of senior executives’ strategy-making and strategy-executing skills

Institute a compensation plan for top executives that rewards them for actions and results that serve stakeholder interests, and most especially those of shareholders

Oversee the firm’s financial accounting and reporting practices

The Four Essential Obligations of a Firm’s Board of Directors

2–68

To be well informed about the firm’s performance

To provide insight and advice to management

To judge the performance of the CEO and other top executives

To have the courage to curb inappropriate or unduly risky management actions

To confirm that the CEO is doing what the board expects and has approved

To be intensely involved in debating pros and cons of key actions and decisions

What Are the Key Responsibilities of Board Members?

2–69

Core Concept

The whole fabric of effective corporate governance is undermined when boards of directors shirk their responsibility to maintain ultimate control over the firm’s strategic direction, the major elements of its strategy, the business approaches management is using to implement and execute the strategy, executive compensation, and the financial reporting process.

2–70

Accessibility Content: Text Alternates

Figure 2.1 The Strategy-Making, Strategy-Executing Process, Text Alternate

Return to slide

Revise as needed in light of the company’s actual performance, changing conditions, new opportunities, and new ideas.

Task 1: Developing a strategic vision, mission, and core values.

Task 2: Setting objectives.

Task 3: Crafting a strategy to achieve the objectives, mission, and vision.

Task 4: Implementing and executing the strategy.

Task 5: Monitoring developments, evaluating performance, and initiating corrective adjustments.

Return to parent-slide containing images.

Figure 2.2 A Company’s Strategy-Making Hierarchy, Text Alternative

Return to slide

All of the strategies have a two-way influence.

Corporate strategy :The overall companywide game plan for managing a set of businesses. Orchestrated by the CEO and other senior executives.

Business Strategy: (one for each business the firm has diversified into): How to strengthen market position and gain competitive advantage. Orchestrated by general managers of each of the firm’s different lines of business, often with advice and input from heads of functional area activities within each business and other key people.

Functional Area Strategies (within each business): Add detail to the hows of overall business strategy. Provide a game plan for managing a particular activity in ways that support the overall business strategy. Orchestrated by heads of major functional activities within a particular business, often in collaboration with other key people.

Operating Strategies (within each business): Add detail and completeness to business and functional strategies. Provide a game plan for managing specific lower-echelon activities with strategic significance. Orchestrated by brand managers; operating managers and managers of strategically important activities like advertising and website operations, often in collaboration with other key people.

In the case of a single-business company, these two levels merge into one level—the business strategy— that is orchestrated by the firm’s CEO and other top executives.

Strategic Management – Week 2 Assignment

image1.png

image2.png

image3.png

image4.png

image5.gif

image6.png

image7.png

image8.png

image9.png

image10.png

image11.tiff