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Transcript of Introduction to Strategic Management HM 01.3.3 The content 1.Concept 2.Organizing direction...
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Introduction to Strategic Management
HM 01.3.3The content
1.Concept2.Organizing direction 3.Feasibility 4.Strategy 5.Evaluation 6. Change
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• From here to there !
• Preparation – forecast
• Operational & Strategic
What is Planning?
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Planning categories
• Operational Planning
– Shorter course – 01 year
– Narrow more limited scope
– Finer detail
– Sub set of a Strategic plan
• Strategic planning
– Long term – few years - 05
– Wider scope , many organizational activities
– Broader details
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• Alexander - 22 year old young man with an army of 220,000
conquered the massive Persian army consisted of 1,040,000
Strategy
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The Battle of Gaugamela
• Took place in 331 BC
• Alexander the Great vs. Darius III of Persia.
• Ancient Macedonians Vs. Persians
• The video 01 ……………….
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Lesson learnt from the Battle
• The dream & the pathway • The assessment of the opponent & Him self • Observing the battle environment • The challenge changing the mind set • The evening before the battle
– Direction – Motivation
• The battle – Before – During – After
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The Dream & the pathway ……..!
“To be the empire of the whole world “
Direction !
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Assessment of the opponent
•Strengths – largest army , many fighters, maximum variety, never lost a battle , large force, lack of experience •Weakness - language, training , flexibility , movement , undermining the opposition , traditional army with old equipments
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Size of Persian armyUnits Number
Infantry 1,000,000
Calvary 40,000
Total 1,040,000
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Assessment of him self
Strengths –, strong few fighters, minimum variety, never lost a battle , battle hardened, Flexibility, modern army and equipments Weakness - small army
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Size of Macedonian Army
Units Numbers
Heavy Infantry 310,000
Palates 9,000 Calvary 7,000
Total 470,000
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Assessment of the battle field
Opportunities – “Ideal for a smaller army”Threats - “If cornered nowhere else to go”
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The Challenge
“Making uneasiness among the opponents” “Making the king laughing at him”
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Evening before the battle
•Direction – one clear message “kill the king” • Motivation – “can do attitude “, •Culture - “with the people “/
- I vs. We attitude
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The battle
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Phase 1
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Phase 1
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After
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• Strategic plan
– Comprehensive plan to accomplished goals &
objectives of the organization
• Strategic thinking
– Creative, Critical, Crucial , Forward , Out ward,
Collective
• Strategic Management
What is a Strategy?
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• Comprehensive management process ,
• performed by considering
– the dynamic external environment ,
– Internal environment
– Industry Competition
• organizing a comprehensive plan
• to achieve organizational goals & objectives
• to be successful in the competition
• Process
Strategy formulation - Implementation - Evaluation - Change
Strategic Management
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A. Strategy Formulation
– The Direction - Concepts and Vision , Mission & Values
– Formulation of Objectives and Goals
– Environmental assessment – External , Internal & Competitive
– Development of Strategies
B. Strategy Implementation
– Policy development, Organizational design, Quality & Resource allocation
C. Strategy Evaluation
– External & Internal Audit
D. Strategic change
– Organizational Culture / Behouvior
Process of Strategic Management
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Video 02
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1. Developing a Vision – Road Map
2. Developing a Mission – The Vehicle
3. Developing Values - The Fuel
4. Developing Objectives & Goals - The Milestones
5. Environmental assessment – the watch
6. Strategy – the most effective & efficient schedule
Formulation of Strategies “The Journey ”
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Strategy Formulation 1. The Direction
2. Formulation of Objectives and Goals
3. Environmental assessment – External , Internal & Competitive
4. Development of Strategies
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“If you don’t know where you
are going, any road will take
you there.”
The Koran
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• A strategic vision concerns a organization’s future
path
• “Where we are going”
Vision
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Video 03
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• Picture of Destination – more than 05 years
clear, futuristic
• Inspiring
steers energies of employees in a common direction
• Challenging
about excellence, uncomfortable, nail biting
• Expose
management aspirations
Features of Effective Vision
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• Empower
own people first & then clients
• Prepare
for future while honoring the past
• Make sense
to the relevant community
• Organizational identity
is distinctive and specific to a particular organization
Feature of Effective Vision
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1. Current state - What are the areas of focus
now ?
– Teaching languages
2. Future state - What are the areas of focus in
future?
– Global market
3. Future aspirations
– Future aspirations staff / stake holders - What are the
expectations of our stakeholders?
Developing a Vision : Key Questions
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4. Future market - What will our Clients want us to
do in future?
– International trade
5. Future environment
– Who will be our competitors and Partners?
– How will technological impact our industry?
6. Clearly demarcate the area of business - What
should our scope be?
Developing a Vision : Key Questions
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03 AREAS TO FOCUS- Vision
• People – Aspirations • Process – Method • Perspective – long term
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• Wyeth
“Our vision is to lead the way to a healthier world”
• Nike “ To bring innovation & inspiration to every athlete in the
world”IIHS “To bring innovation to the training of healthcare professional”
Vision examples
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“ The Canadian Red Cross is the leading humanitarian
organization through which people voluntarily demonstrate
their caring for others in need.”
Canadian Red cross
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Activity 01
• Come-up with a business idea from last weeks input from the opportunities in the healthcare industry
• Develop a Vision for future your organization• Look at effective features –” the spices”
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Mission
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Developing Mission
• The vehicle that drives the organization to the
destination…. …
• “How to get there ?”
• Why you exist in this world ? ?….....what was
said in vision !
• Core purpose !
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Video 04
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• The mission statement of most organizations focuses on and describes- current organizational activities - all present tense –
• DESCRIBE
“Who we are ?
What we do ?
Why are we here ?”
– Current service offerings
– Organizations needs & how it is being served
– Technological and organizational capabilities
Mission
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FOCUS
What is the Key area of focus?
Who are the customer groups served?
METHOD
How customer needs are satisfied?
Technologies/resources/organizational approaches used and activities
performed
DISTINCTION
What is the Current Distinction from others?
Developing Mission
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Features of an effective Mission – THE SPICES
• Short • Memorable • Market focus • People • Information • Process
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The Canadian Red Cross mission is to improve the lives of
vulnerable people by mobilizing the power of humanity in
Canada and around the world
Canadian Red cross
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“ We are a Healthcare training organization born to bring
innovation to healthcare training at a green campus, infusing
the traditional values of Healthcare professionalism, whilst
adhering to international training standards to improve the
quality of lives of healthcare professionals through developing
their personalities, by partnering with international
organizations, to provide a total solution to the global need of
healthcare professional.”
IIHS
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Activity 02
• Develop a Mission for future your organization
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• The driving force of the mission, the vehicle……….
fuel for the vehicle………
Values
Values
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Video 05
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– Should be between four and eight values
– Are ideally tightly connected to and reinforce
company’s vision, strategy, and operating practices
Values
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Du Pont
Safety Ethics
Environmental stewardship
Respect for people
Organizational Values
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• We are a caring organization
• We respect dignity honesty and compassion
• We encourage innovation and positively respond
to change.
• We are committed to excellence & highest
standards of quality
• We value team work
Teaching Hospital, Ragama – Value statements
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• Accessibility
• Inclusivity
• Professionalism
• Quality
• Comfort
• Support
IIHS – Values
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Triangle of care
• Convenience
• Comfort
• Confidence
IRC
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1. Quality
2. Innovation
3. Caring
4. Confidence
Teaching Hospital, Ragama
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Objectives and Goals
• Millstones of the journey
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• Establishing objectives converts the vision into concrete
measurable performance outcomes!
• Milestones of the journey………..
• 03 to 05 year journey
• Profitability , Market share , Operational efficiency • More qualification no quantification – broad pictrue
– “To achieve ISO standards “– “To win the cricket world cup”
Objectives
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V 06
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• Represent commitment to achieve specific
performance targets within objectives
• Short term – 1- 3 years
• Spell-out
– what kind : Qualify
– how much : Measurable
– by when : Contain a deadline for achievement
• Long term / short term
Goals
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V 07
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• Establishing goals shows the direction of the vision• Short term 1 to 02 year
• S- specific
• M- measurable
• A- achievable
• R- realistic
• T – timely
Goals
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V 08
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Strategy Formulation 1. The Direction
2. Formulation of Objectives and Goals
3. Environmental assessment – External , Internal & Competitive
4. Development of Strategies
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1. External environment
2. Internal environment
3. Competitive environment
Source : Word Health Report , World Bank 2002
Environment Assessment
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Internal and external SWOT
• V 09
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External Environment
PEST ANALYSIS
• Political
• Economical
• Social
• Technological
• Health sector related issues
OPPORTUNTIES - Major favorable situation
THREATS –Major unfavorable situation
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• Identify the leading Opportunities & Threats for each PEST-H
about 03 each –
• Give marks scale of 1- 10
• Prioritize the key O & T 02 from each
• Place it on the matrix and select best 10
External Environment Assessment
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External Environment Assessment
Opportunities
Threats Selection
Political 1.2.
1.2.
Best O & best T
Economical 1.2.
1.2.
Best O & best T
Social 1.2
1.2.
Best O & best T
Technological 1.2.
1.2.
Best O & best T
Health sector 1.2.
1.2.
Best O & best T
05 Opportunities & 05 Threats
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Internal Environment
ORGANIZATIONAL CAPABILITY ANALYSIS
- Skill – Resources- Capabilities
1. Leadership (Management)
2. Personal (HR)
3. Services delivery capacity & structure
4. Information (MIS)
STREGNTHS – Distinctive competence in Skill & Resource & Capabilities
WEAKNESS - Limitation or deficiency in Skill & Resource & Capabilities
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Internal Environment
5. Quality
6. Finance
7. Cost
8. Development
STREGNTHS – Distinctive competence in Skill & Resource & Capabilities
WEAKNESS - Limitation or deficiency in Skill & Resource & Capabilities
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• Identify the leading Strengths & weakness for each of 08
items - about 03 each
• Give marks scale of 1- 10
• Prioritize the key O & T 02 from each
• Place it on the matrix and select the best
Internal Environment Assessment
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Internal Environment Assessment
Strengths Weakness Selection Leadership 1.
2.1.2.
Best S & best W
Personnel 1.2.
1.2.
Best S & best W
Service delivery
1.2
1.2.
Best S & best W
MIS 1. 2. 1. 2. Best S & best W
Quality 1. 2. 1. 2. Best S & best W
Finance
Cost
Development
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EEA + IEA = SWOT
• Strengths
– What are we good at?
• Weaknesses
– Where do we need improvement?
• Opportunities
– Where/What is the next big thing?
• Threats
– What can kill us?
SWOT Analysis
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V 10
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Competitive Analysis
http://www.youtube.com/watch?v=mYF2_FBCvXw
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Michael Porter - Five force analysis
1. Revelry among competitors - FORCE & WEAPONS
2. Threat of new entry - ENTRY BARRIES
3. Threat of substitutes – FORCE & PROBABILITY
4. Power of supplies - FORCE
5. Power of consumers - FORCE
Grade it as WEAK , MODERATE & STRONG
Competitive Analysis
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Description of the competition
WEAK MODERATE STRONG
Revelry among competitors
Threat of new entry
Threat of substitutes
Power of supplies
Power of consumers
Michael Porters Competitive Analysis
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Strategy Formulation 1. The Direction
2. Formulation of Objectives and Goals
3. Environmental assessment – External , Internal & Competitive
4. Development of Strategies
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TOWS matrix
• List strengths & weakness
• List Opportunities & Threats
• Use strengths to take advantage of opportunities
• Overcome weakness by taking advantage of opportunities
• Use strengths to avoid threats
• Minimize weakness and avoid threats
Developing Strategies
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Always leave blank STRENGTHS - SList Strengths 1.2.
WEAKNESS – W List Weakness
OPPORTUNITIES - OList Opportunities 1.2.
SO STRATEGIES
Use strengths to take advantage of opportunities
WO STRATEGIES
Overcome weakness by taking advantage of opportunities
THREATS - T List Threats 1.2.
ST STRATEGIES
Use strengths to avoid threats
WT STRATEGIES
Minimize weakness and avoid threats
TOWS matrix
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Use competitive analysis to improve the
effectiveness of the strategies….
http://www.youtube.com/watch?v=8DllJxaaU
Gc
Final product
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CORE & GENERIC
A. CORE STRATEGIES
• Integration - MERGE
• Diversification – NEW MARKETS
• Intensification – DO BETTER WHAT YOU ARE GOOD AT
• Restructuring – NEW EFFECTIVE STRUCUTRE
Types of Strategies
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B. GENERIC STRATEGIES
• Cost leadership – LOW COST
• Differentiation - SAME PRODUCT DIFFERENT MARKETS
• Focused – ONE SEGMENT
• Value chain – SAME PRODUCT ADD VALUE
Types of Strategies
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B. Strategy Implementation
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• Strategies are inculcate in to organizational policies
• “Operationalization of strategies “
• Policy development
– Organizational policies & Unit policies
• Organizational design
• Quality management
• Resource management
– HR
– Material
– Facility
– Equipment
Developing Policies
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C. Strategy Evaluation
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Strategy Evaluation
• External - Consumer & market studies
• Internal Audit – medical / accounting audits
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D. Strategic Change
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Strategic change
• Organizational Culture conducive for
strategies
• ORGANIZATIONAL BEHAVIOUR
• Continuous improvement
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Strategy assignment
• Develop a strategic plan for your organized
business concept
– Individual presentation
– PowerPoint presentation
– 04 page word document
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Thank You !