To help delegates explore the concept of strategy and to practice using key tools and techniques used in the formulation of strategic plans.

Transcription

1 Aim Executive Diploma in Management Management To help delegates explore the concept of strategy and to practice using key tools and techniques used in the formulation of strategic plans. Objectives By the end of the workshop the delegates will be able to: Define strategy and explain its relevance to an effective management process State the characteristics of strategic thinking and its application Describe the elements of the strategic planning process. Carry out an environmental analysis using the SPELT model. Describe 3 generic options for strategic choice. Open Systems Perspective A system is in a dynamic relationship with its environment where it receives various inputs, it then transforms those inputs in some way and exports outputs back into the environment Open Systems An Integrated Planning Process Competitors Resources Contractors Information People Machinery IT INPUTS S.P.E.L.T. Strategy Vision Purpose Planning Transformation Process FEEDBACK Customers Consumers Shareholders Stakeholders OUTPUTS INTEGRATED No part of the overall planning process is carried out in isolation PLANNING The on-going efforts that helps an organisation confirm: where it wants to be, where it is going, and how it will get there PROCESS A flexible sequence of events relying on specific skills and knowledge underpinned with active communication, involvement and ownership 1

2 Integrated Approach Operational Plan Plan Operations Performance Review Elements Of The Integrated Approach STRATEGIC PLANNING Focuses on the purpose and direction of the organisation in related to critical issues in the environment OPERATIONAL PLANNING Focuses on the translation of long term objectives into specific plans and short term results PERFORMANCE MANAGEMENT Focuses on the mechanism for monitoring the implementation and results of both the strategic and operational plans What is a Plan? What is an Operational Plan? Planning Purpose/Vision Analysis Areas Long Term Objectives Integrated Process Financial Projections Operational Planning Operational Analysis Key Result Areas Performance Indicators Objectives Action Plans Budgets What Is Performance Review? Thinking Performance Review Control Mechanisms Management Information Departmental Results Team Results Individual Reviews Improvement/Corrective Actions Reward Mechanisms Analysis Choice Implementation 2

3 Why Strategy? Forms a basis for coordinating effort Provides a focus for decision making Forces close examination of choices or options Prepares the organisation for change Encourages development and progress Gives a feeling of continuity Provides a source of motivation through purposeful activity Enables the organisation to establish best fit A Definition of Strategy Strategy is that set of managerial decisions and actions that determines the long term performance of an organisation Characteristics of Strategy The ability to sustain the organisation s ambitions The direction the organisation will move The scope of an organisations activities Matching activities to the organisation s environment Matching activities to the organisation s resource capability The allocation or re-allocation of resources The implications of change Criteria of Strategy Consistency Must not present mutually inconsistent goals, policies and objectives Consonance Must represent an adaptive response to the external environment and the critical changes within it Advantage Must provide for and/or maintain a competitive advantage Feasibility Must neither over burden available resources nor create unsolvable problems within the organisation Components of Planning VISION/PURPOSE STRATEGIC ANALYSIS STRATEGIC CHOICE LONG-TERM OBJECTIVES INTEGRATED ACTION PLANNING FINANCIAL PROJECTIONS Purpose of Each Component PURPOSE AND VISION Forms the foundation of the entire planning process, as all other activities must support the purpose STRATEGIC ANALYSIS Provides the data that legitimises plan STRATEGIC CHOICES Specifies direction organisation must move LONG TERM OBJECTIVES Identifies results that indicate progression INTEGRATED ACTIONS Identifies cross-functional actions required FINANCIAL PROJECTIONS Identifies financial implications 3

4 Some Definitions to Consider Vision: An image of our desired future Values How we expect to travel to where we want to go Purpose or Mission What the organisation is here to do Goals Milestones we expect to reach before too long WE NEED A VISION WHEN: We are confused about the overall purpose We are pessimistic about the future and cynical of the present We have a hyperactive rumour mill We have an absence of a shared sense of progress We have excessive risk avoidance We seem out-of-tune with trends in the environment We lack pride AN EFFECTIVE VISION: Is appropriate to the organisation Bridges present and future Attracts commitment and energises people Clarifies purpose and direction Creates meaning for everyone s role Establishes a standard of excellence Reflects the uniqueness of the organisation Is ambitious Criteria For Effective Vision/Purpose Statements Clear, understandable, and pertinent to all employees Brief enough to keep in mind Clearly specifies what the organisation is all about Should reflect the distinct competencies of the organisation continued An Example Vision Broad enough to allow flexibility but not a lack of focus Should serve as the template for all decisions Must reflect values, beliefs and the philosophy of operations Must be achievable Our vision is to achieve the highest standards of service and efficiency, and to operate our business in an enterprising and innovative manner so as to create value for our customers and a supportive climate for our employees. 4

5 An Example Mission/Purpose Company Feel the Difference? Product Related Customer Related We will achieve our vision by seeking to establish and understand our customer s needs, focus our business on meeting those needs and ensure our employees are developed and empowered to deliver our service. Revlon Xerox Standard Oil We make cosmetics We make copiers We sell petrol Columbia Pictures We make movies IMAC Encyclopaedia Britannia Carrier We sell fertiliser We sell encyclopaedias We make air conditioners We sell hope We improve efficiency We supply energy We market entertainment We improve agricultural efficiency We produce and distribute information We provide comfortable climates Strategy Statement We intend to move from a service - offered to a customer-needs strategy. The primary reasons are to offset the impact of new competition brought about by privatisation. For this to happen successfully the following must take place: Increased product diversification related to customer need Accurate analysis of profitability by customer grouping Enhance company image as a customer-needs driven organisation Improved definition of customer service requirements Internal focus to broaden the capabilities of all employees to meet the customer needs posture Culture shift to reflect customer-needs posture Analysis Environmental Monitoring SPELT Industry Competitors Customer/consumer Key Stakeholders Supplier base Application considerations SWOT Seven Part Model Sub Systems Analysis continued Is the analysis bringing to the surface critical issues? Is sufficient information and judgement being used to support selection of issues? Are the issues being thoroughly analysed? Is the analysis producing conclusions about the causes? 5

6 SPELT Analysis External Stakeholders SOCIAL ECONOMIC POLITICAL LEGAL Stakeholders are those individuals or groups who depend on the organisation to fulfil their own goals and on whom, in turn, the organisation depends TECHNOLOGICAL Johnson and Scholes Stakeholders in the Business Owners Shareholders Loan Financiers Creditors / debtors Suppliers Customers Managers Other Employees Consumers and Society Stakeholder Mapping/Analysis Identifies stakeholders, their expectations and power and helps in establishing political priorities. It consists of making judgements on two issues : How interested each stakeholder group is to impress its expectations on the organisation s choice of strategies Whether they have the means to do so - the power of stakeholder groups Stakeholder Analysis Your organisation Strengths Effective Internal processes SWOT ANALYSIS Opportunities External events that could be advantageous Strategies to utilise strengths in order to take advantage of opportunities Weaknesses Strategies to improve Ineffective or eliminate Internal weaknesses in order Processes to take advantage of opportunities Threats External events that could be problematic Strategies to utilise strengths in order to minimise impact of any threats Strategies to improve or eliminate weaknesses in order to minimise impact of any threats 6

7 An Organisation Development Model THE SEVEN PART MODEL Five Sub-SystemsSystems EXTERNAL ENVIRONMENT ABILITY TO ADAPT/ COPE WHAT BUSINESS? MISSION/ VISION AIMS/GOALS TASK/ TECHNOLOGICAL HUMAN/ SOCIAL RESOURCE & FINANCIAL MANAGEMENT ORGANISATION MANAGEMENT STYLE -MANAGEMENT INDIVIDUALS/TEAMS STRUCTURES CULTURES TYPE/STAGE ROLES OF DIRECTORS OR LEADERS CONTROL POLITICAL AGE GROWTH EVOLUTION Three Levels of Business Ethics Macro level - broad ethical stance about the role of business in the national and international organisation of society Within the macro framework, corporate social responsibility beyond minimum obligations of corporate governance Individual level - behaviour and actions of individuals within organisations Four Ethical Stances Short-term term shareholder interests Longer-term shareholder interests Multiple stakeholder interests Shaper of society Choices Products Offered Services Offered Market Needs Customer Needs Technology Innovation Production Capability Size/Growth Return/Profit Image Human Resources Vertical/Horizontal Integration Choices continued Defining discrete strategic areas that affect the direction of the company. Prioritising these areas Determining the driving force for the present and the future Identifying changes that must take place Helping establish a clear direction 7

8 Long Term Objectives What are they? They focus on a a position to be achieved rather than specific accomplishments. Describes what the organisation desires to have or become Where do they originate? They derive from the purpose/vision, analysis and strategic areas. Criteria Measurable or assessable; Achievable or feasible flexible or adaptable; Consistent Integrated Actions Identify the results needed to accomplish each long term objective and then ask: What are the measurable results and time frames? What are the specific actions required? Who is accountable? What resources should be allocated What feedback mechanisms are in place? What s the Link? Do you ever feel that you and others are too focussed on individual tasks and not aware of where it all fits in the big picture? Do you ever feel that you know what you need to achieve the goal but unsure of how everything fits to get you there? Do you ever consider re-arranging what we have in order to achieve your goals or do you focus on what you re missing? Have you ever viewed something as impossible without first clarifying what is expected and then consider solutions? 8