Operational management

Week2:ASt
rat
egi
cManagementModel



I
ntr
oduct
ion

Hy per
compet it
ion - isaf undamental featur
e of t he new economy .
Hypercompet it
ioncar r
iesanot eofov erexci
tementandagi tati
on.Itoccurswhen
product/serv
ice offer
ings and technologies ar
e so new thatst andar
dsbecome
unstabl
eand compet i
tiv
eadv antageisnotsust ainable.I
ti sacondi ti
on where
strat
egic maneuv eri
ngs hav e escal ated to bigger business exposur e,
more
sophist
icatedmar keti
ngposi t
ioning,aggressi
vesell
ing,andi
nnov ati
veproductsand
servi
ces.

Hypercompetit
ion i
sasi tuati
on wher eboth globali
zat
ionand technology
coll
aboratet o creat
e a heightened cut-t
hroatsit
uation.Itmeanst hatbusi ness
compet ewi theachot herwhethert heyhav esamepr oducts,si
milarpr
oducts,and
di
fferentpr oduct
s.Compet i
torscont inuousl
ystri
vetoout pl
ayandoutsmar teach
other
.Theyneedt odev i
seway sandmeanst osurviveanddealwi tht hi
ssuper
compet it
iveandturbul
entreali
ty.

St
rat
egi
cManagementDef
ined

St
rat
egic Managementis a conti
nuous process ofstrategy cr
eation.It
i
nvolvesst r
ategi
cprocessesli
kestrat
egicanalysi
sanddeci si
on-making,strategy
for
mul ati
onandimplementati
on,andstr
ategycontr
olwiththepri
mar yobjecti
v esof
achi
ev i
ng and maint
aini
ng bett
erali
gnmentofcor por
atepoli
cies,prior
it
ies,and
success.

Def
inedast hescienceofcr eati
ng,executi
ng,andeval
uati
ngcross-f
unctional
deci
sions t
o enabl e an organizati
on to achieveits goal
s and object
ives,the
componentsoft hestr
ategicmanagementpr ocesshavetobeeffect
ive.Asshowni n
Fi
gure1.1,outputmaymat eri
ali
zewheneachoft hecomponentsoft hest r
ategi
c
managementpr ocessisappr opri
atel
yexecuted.



St
rat
egi
cAnal
ysi
s St
rat
egi
cInt
ell
i
gence



St
rat
egi
cDeci
sion-
Maki
ng St
rat
egi
cThi
nki
ng



St
rat
egyFor
mul
ati
on Or
gani
zat
ional
Compet
it
iveness



St
rat
egyI
mpl
ement
ati
on Compar
ati
veAdv
ant
age



St
rat
egi
cCont
rol St
rat
egi
cPer
for
mance



Fi
gur
e1.
1TheSt
rat
egi
cManagementPr
ocess

,Organi
zat
ional St
rat
egi
cMgt
.Pr
ocess Or
gani
zat
ionalSuccess
I
nput
Mgt./Empl oyees St r
ategi
cAnalysi
s Strat
egi
cInt
ell
igence
FinancialResources Strategi
cDecisi
on-Maki
ng St
rat
egi
cThi nki
ng
Facil
ti
es/ Equipment St
rategyFor mul
ati
on Or
gani
zat
ionalCompeti
ti
veness
Infr
astructures StrategyImpl
ementati
on Comparati
veAdvantage
Processes StrategicCont
rol




Fi
gur
e1.
2ASt
rat
egi
cManagementModel

Thest
rategi
cmanagementmodel(Fi
gur
e1.
2)showst
her
elat
ionshi
psbet
weenand
amongtheinput
,pr
ocess,
andout
put.

St
rat
egi
cPl
anni
ng

Strategi
cPlanningisdef i
nedasacont i
nuous,repetit
ive,andcompet i
ti
ve
processofset ti
ngt hegoalsandobj ect
ivesthatanor ganizati
onai mst oatt
ain,
defini
ngt hemeanst oachievethem,andassessi ngthebestwayt oreal
izethem i
n
thecont extofthepr evai
l
ingenvir
onmentwhi lemeasuringper f
ormancet hr
oughset
standards, andperi
odical
lybutcont
inuouslyconducti
ngreassessment s.

St
rat
egi
cpl
anni
ngexhi
bit
sthef
oll
owi
ngpr
oper
ti
es:

1.
Itgener
atest
hebl
uepr
intofwhatt
heor
gani
zat
ioni
ntendst
oaccompl
i
sh.

2.Thestr
ategi
cplanpresentst
hegrandschemeoftheor
gani
zat
ionandoutl
i
nesal
l
thesetact
ivi
ti
es,
rangi
ngf r
om theor
gani
zati
onal
tot
hedepar
tmental
lev
el.

3.I
tist
heprocessofdevelopi
ngastrat
egi
cfitbetweent
heor
gani
zat
ion’
sgoal
sand
capabi
l
iti
esi
nthecontextofchangi
ngoppor
tunit
ies.

4.
Iti
sapr
ocesst
hati
nvol
vescar
eful
l
ydel
i
neat
edst
eps.

5.
Iti
spr
oact
ive,
int
hati
tiswr
it
teni
nthecont
extofant
ici
pat
edf
utur
ereal
i
ties.

6.
Iti
saphil
osophybecausei
tev
olv
esady
nami
cwayofconduct
ingandmanagi
ng
anor
gani
zat
ion.

7.
Itl
i
nkst
heor
gani
zat
ional
planwi
thf
unct
ional
andoper
ati
onal
plans.

8.
Itisint
ricat
elyi
nter
wovenwithi
nthedef
inedmanager
ialf
unct
ionsofor
gani
zi
ng,
di
rect
ing,staf
fi
ng,
andcontr
oll
i
ng.

9.
Itnecessi
tat
estheleadershi
pandsuppor
toft
opmanagementand,att
hesame
ti
me,employeepar
ti
cipat
ionandcommitment
.

Ty
pesofSt
rat
egi
cPl
ans

Ther
ear
etwopr
inci
pal
typesofpl
ans.

1.
Medi
um/l
ong-
rangepl
an-pr
epar
edi
nthecont
extoft
hecomi
ngt
hreet
ofi
ve,
tenor
morey
ear
s.

,2.
Annual/yearl
y plan-
shor
t-
term;succinct
ly descr
ibes t
he organi
zat
ion’
s pr
esent
si
tuati
on,its goal
s and object
ives,st
rat
egi
es,moni tor
ing mechani
sms,and the
budgetfortheyearahead.

St
rengt
hsandLi
mit
ati
onsofSt
rat
egi
cPl
anni
ng

Strategi
c pl anning defines an or ganization’
sv i
sion,mi ssi on,and set
objectives.Itprovidesor ganizat
ionst heopportunitytoassesst hemi l
ieuandspeci f
y
strategiest oachi ev et hei
rgoal s.St r
ategi
cpl anninghel psor ganizat ionst ost ay
focused.I tmakest hingshappen.Fur t
hermore,st r
ategicplanninghel psr educet he
chances ofcommi tt
ing mistakes,t hus,increasing the organization’ s effi
ciency.
Strategicplanninghel psinthemor eeffici
entallocati
onofor gani zat
ionalr esources,
bettercol l
aborationamongcr oss-departmentalempl oyeesandf unctionaluni ts,and
communi cationbet weenmanager s/supervi
sorsofal ll
evel
s.Last ly,whencaut i
ously,
clearly,and pr oactively undertaken,st r
ategic planning prov i
des l everage and
compet i
ti
veadv ant aget otheorganization.

Whi l
e strat
egic planning has i
ts adv antages,i tal so has i tslimitati
ons.
Althoughconduct edy ear
lyorev enmor eoften,thest rategicpl anspr epar
edi nsome
i
nst ancesaregoodonl y“i
npaper ”
.Someor ganizati
onsf ailtof oll
owf ai
thfull
yt hei
r
preparedst r
ategicplans.Ifincasest hesest rategicpl ansar ef ol
lowedr el
igiously
,
someor ganizat
ionsmaynotbef l
exi
bleenought omaket heneeded.Adj ustment s
andr eali
gnmentsduet oi
nev i
tableorf
orthcomi ngext ernal orinternalchal
lenges.

Or
gani
zat
ionalVi
sion

Tohel porganizationsachi
evestrat
egicdir
ecti
on,theyneedt oart
icul
ateand
haveacommonal i
tyinv ision,
missi
on,andgoals.Theint
errel
ati
onshipsbetweenand
amongtheset hr
eev ariablesareessenti
alintheorganizati
ons’t
hrustofachievi
ng
compet
iti
veness.

The organizati
onalv i
sion is an inspir
ati
onalst atement of what the
organi
zati
onhopest oachi eveatsomepoi ntinthefut ure.Iti sshortandsucci
nct
,
butitcar
ri
esanext raordi
nar yforcethatwil
lst
ir,moti
vat e,andi nspi
reempl
oyeesto
workandr ef
ocust owarditsdesi redopti
malfuturestate.Hav ingast r
ongsenseof
vi
sioncanmov etheor gani
zat i
ont obewhatitwantstobe.Li keanunseenforce,
the
organi
zati
onalvi
sionbindst hecompanyandi tsemploy eest oget her.

Mi
ssi
onSt
atement

Themissionst
atementdif
fersfrom t
heorgani
zat
ionalvisi
on.Themissi
on
st
atementdefinesthe cur
rentpurpose ofan or
gani
zat
ion itanswerswhatthe
or
ganizati
ondoes,f
orwhom iti
sdone,andhowitdoeswhatitdoes.

Mission st atement sarelikewiseshortand essaytor emember .Itgives
employ eesabet terperspect i
veonhow t heirt
askscontr
ibut
etot heattai
nmentof
organizati
onalgoal s.Oftenti
mes,visi
onstatementsaremoreenduringcompar edto
missionst atement s.Mi ssionstat
ement sareexpectedtochangeint hecontextof
shif
ti
ngeconomi cr eal
it
iesorunexpectedcircumstancesl
i
kechall
enges,thr
eats,and
evenoppor tunit
ies.

Or
gani
zat
ionalGoal
sandObj
ect
ives

Tooper ati
onali
zethemi ssionstat
ement ,or
gani
zati
onalgoalsandobject
ives
aredef
ined.Allorgani
zat
ionshav esetgoals.Theseareref
err
edtoasor gani
zati
onal
goal
s.Organizati
onalgoalsarepur suedtomaket hespeci
fi
edstrategi
essucceed.

, Theyv ar
yandareessential
lydependentont hei
rrespecti
vepur
poseanddirect
ion.
Oneoft heimpli
edbasicgoalsofanyor gani
zati
onist ouseeconomicresour
ces
eff
ici
entl
yandeffect
ivel
ysucht hatsurvi
val,i
fnotpr of
it
,isatl
eastsecur
ed,thus,
ensuri
ngthecont
inui
tyoftheorgani
zati
on.

 Goal
sprovi
deor ganizationsfocusanddirect
ion.
 Goal
smov eorganizationstoact i
on.
 Goal
sdevelopinorgani zati
onsthetr
aitofpersist
ence.

Never
thel
ess,forgoalstobeatt
ained,t
heyhavetobesuppor
tedbyobj
ecti
ves.
Objecti
vesaredi
ffer
entfrom goal
s,i
nthattheyaremicr
oandspeci
fi
cinper
specti
ve.
Theyshouldpossessthef ol
lowi
ngcharact
eri
sti
cs:

1.Objecti
vesneedt
obecl
ear
lydef
inedandf
ormul
ated,
car
eful
l
ychosen,
speci
fi
c,
anddefinit
e.

2.Obj
ect
ivesmaybei
mmedi
ateorshor
t-
ter
m.

3.Theyneedt
obepr
ior
it
izedi
ntoahi
erar
chyofobj
ect
ives.

4.Object
ives need to be r
eal
i
sti
c and at
tai
nabl
e.Theyneed t
o be f
lexi
ble,
consi
stent
,andstrategi
c.

5.Obj
ect
ivesneedt
obemeasur
abl
eov
ert
ime.

Strat
egicobjecti
vesare,i
ngeneral
,ext
ernal
lyfocused.Accor
dingt
oPet
erDr
ucker
(2008),
objecti
vesfal
li
ntoeightmaj
orcl
assif
icat
ions:

 Marketst
anding(e.
g,desi
redshar
eoft
hecur
rentandnewmar ket
s);
 I
nnovati
on (e.
g.,devel
opmentofnew goods serv
ices,and ofskil
l
s and
met hodsr equiredt osuppl ythem) ;
 Humanr esources( e.g.,selecti
onanddev el
opmentofempl oyees);
 Financial r
esour ces( e.
g, i
dent ifi
cati
onofsour cesofcapitalandthei
ruses) ;
 Phy sicalresources( e.g.,equipmentandf aci
lit
iesandtheiruses);
 Product ivi
ty(e.g.,eff
icientuseoft heresourcesrelat
ivetooutput);
 Soci alresponsi bi
lit
y( e.g.,awar enessandr esponsi
venesst otheef fectson
thecommuni tyoft hest akehol ders)
;and
 Profitrequirement s( e.g.,achievementofmeasur abl
ef i
nancialwell
-beingand
growt h.)

Val
uesandVal
ueSy
stem

Organizat
ionsar eguidedbyv al
ues,whi chv ar
yf r
om oneor gani
zationto
another
.Valuesar einher
entroot
sofmot iv
ationwithi
nanindivi
dual,
anorganizat
ion,
acommuni ty,oranat i
on.Theyarebynat ure,
ingr
ainedandthus,aremorestableand
enduri
ng.They ar e bot
hi nt
ell
ectualand behav ior
al,servi
ng as bases f
ort he
organi
zati
on’sactionsandwayoft hinki
ng.

Or
gani
zat
ionalCl
imat
eandCul
tur
e

The concepts of organizat
ionalcl i
mat e and cul ture arei nt
err
elat
ed,
i
nterdependent,andsequenti
al.Theyareinterr
elated,i
nthatorgani zat
ionalcl
imateis
often defi
ned as the regul
arand r epeti
ti
ve pat t
erns ofat tit
udes and behav i
or
exhibi
tedbyempl oyeesofanor ganizat
ion.Iti sameasur eoft heheal t
hofan
organizati
on.Itmani fest
s whetherits employ ees are happy ,hard-worki
ng,and
mot i
vated,orot
herwise;whethergoodi nt
erpersonalrel
ati
onshi psexistbetweenand