Professional Documents
Culture Documents
&
MANAGEMENT
0
Definition:
The on-going process of formulating,
implementing and controlling broad plans guide
the organization in achieving the strategic goods
given its internal and external environment.
2
STRATEGIC 0
MANAGEMENT
Globalization: The survival for business
3
MODEL FOR STRATEGY FORMULATION
Scenarios
Visions, Missions,Values
Strategy Implementation
INTERPRETATION
5
0
STAGES OF SM
The strategic management process
consists of three stages:
Strategy Formulation (strategy planning)
Strategy Implementations
Strategy Evaluation
6
0
THREE ASPECTS OF STRATEGIC
FORMULATION
7
0
Standardizes global
Combines
products/advertising
standardization and
strategies
customization for
product/advertising
strategies
Export
Strategy Multi-domestic Strategy
Domestically focused Handles markets
independently for each
Exports a few country
domestically Adapts
produced products to
selected countries product/advertising to
local tastes and needs
Low
Low Need for National Responsiveness High
8
0
Global Strategy
Globalization = product design and
advertising strategies are standardized
around the world
Multi-domestic = adapt product and
promotion for each country
Transnational = combine both
globalization and national
responsiveness
9
0
10
Tools for Putting Strategy 0
into Action
Environment
Organization
Leadership
Persuasion
Motivation
Structural Design Culture/values
Organization Chart Human Resources
Strategy
Teams
Recruitment/selection Performance
Centralization
Decentralization, Transfers/promotions
Facilities, task design Training
Layoffs/recalls
Systems
Information and Control
Portfolio Strategy
Mix of business units
and product lines that Exhibit 8.5
BCG Matrix
fit together in a logical
way to provide
synergy and
competitive
advantage
12
Strategic Management 0
Process
13
0
conclusion
In order to formulate Business functions
strategy is to be formulated as well as
implemented with the right approach
Management is basically managing the
strategies and making them function.
Strategic management of an
organization leads to the benefits as well
as growth of the organization.
14
Strategic Planning:
Strategic planning is concerned with the growth and
future of a business enterprise.
It consists of a stream of decisions and actions that lead
to effective strategies and which, in turn, help the firm
achieve its growth objectives.
The process involves a thorough self-appraisal by the
corporation, including an appraisal of the business it is
engaged in and the environment in which it operates.
Marketing environment keeps changing fast. Practically
everything outside the four walls of the firm is changing
fast, resulting in a discontinuity with the past.
Strategic planning provides the road map and ensures
that the enterprise keeps moving in the right direction.
Strategic Planning (contd.)
Starting from the corporations mission and philosophy, down to choice
of businesses and strategies, all vital aspects in the governance of
business are chartered through strategic planning.
It is through strategic planning that the corporation takes decisions
concerning its mission, the business it will pursue and the markets it
will serve; it is through strategic planning that it lays down its growth
objectives and formulates its strategies.
In other words, all decisions of high significance and consequence to a
corporation are taken through the strategic planning process.
The mission carries the grand design of the firm and communicates what it
wants to be. It subtly indicates the business the firm will pursue and the
customer needs it will seek to satisfy.
The mission is a reference point and the guiding spirit for the growth plan of
a firm.
It brings the corporate purpose or the long-term objective of the firm into
focus.
2. Defining the business
A business definition is a pithy, clear-cut statement of the business
or businesses the firm is engaged in or is planning to purse. It
prescribes the boundaries of the firms business.
STRATEGIC
MANAGEMENT
0
28
COMPARISON
STRATEGIC TACTICAL OPERATIONAL
Business-Level
Functional -Level
Elements of a Strategy
Goals
Scope
Competitive Advantage
Logic
Various types of strategies
MASTER
STRATEGIES
PROGRAMME STRATEGIES
SUB-STRATEGIES
TACTICS
BUSINESS POLICY
Business policy provides a basic framework defining
fundamental issues of a company, its purpose,
mission and broad business objectives and a set of
guideline governing the company's conduct of
business within its total perspective.
Overall Guide
SECONDARY POLICIES:
Selection of geographic area
Identification of major customers
Major products
Types of Policies
FUNCTIONAL POLICIES:
Production
Marketing
Finance
Personnel
Research
RULES:
Salary & wage Adm.
Discipline& discharge
Welfare Adm
Safety & health
Types of Policies
PROCEDURES & STANDARD OP. PLANS:
(SMP)
1. Vision formulation which leads to the
statement of the Mission.
2. The mission is then converted into
performance Objectives
3. To achieve objectives you develop
Strategies
4. Strategy Implementation
5. Evaluation of performance
Diagram
(Strategic mgt by VSP Rao and V Hari
Krishna)
Purpose of SMP
CORE COMPETENCE
SYNERGY
VALUE Creation
CORE COMPETENCE:
An orgs core competence is something it
does exceptionally well in comparison to
its competitors. It reflects a distinct
competitive advantage like superior
research, development etc..
SYNERGY:
External Analysis
Internal analysis
DETAILED IN (Strategic mgt by VSP
Rao and V Hari Krishna)
STRATEGY FORMULATION
CORPORATE LEVEL STRATEGIES:
Growth/Expansion Strategy
Stability Strategy
Retrenchment Strategy
Combination Strategy
FUNCTIONAL LEVEL STRATEGY:
R & D Strategy
Operations Strategy
Financial Strategy
Marketing Strategy
Human Resource Strategy
STRATEGY FORMULATION &
IMPLEMENTATION
Detail & Diagram :
(Strategic mgt by VSP Rao and V Hari
Krishna)
Motivational Techniques To
Implement Strategy
MBO
Incentives
Performance appraisal
Salary Administration
Recruiting & termination
Security
Power & Influence
STRATEGIC INTENT:
Vision,Mission,Objectives
Strategic intent is
about clarity, focus VISION
and inspiration.
MISSION
OBJECTIVES
GOALS
PLANS
VISION
Corporate vision is a short and inspiring
statement of what the organization intends to
become and to achieve at some point in the
future, often stated in competitive terms. Vision
refers to the category of intentions that are
broad, all-inclusive and forward-thinking. It is
the image that a business must have of its goals
before it sets out to reach them. It describes
aspirations for the future, without specifying the
means that will be used to achieve those desired
ends .
Mission
Mission Statement describes what business youre in
and who your customer is. As such, it captures the very
essence of your enterprise - its relationship with its
customer.
Developing mission statement is the step which moves
your strategic planning process from the present to the
future. It depicts the mission statement connects today
with the future. Your mission statement must work not
only today but for the intended life of your strategic plan
of which your mission statement is a part. If youre
developing a five year strategic plan, for example, you
develop a mission statement which you believe will
work for the next five years.
Values
For any statement, whether mission or vision, to
be embraced and acted upon, it must reflect the
values of your organization.
Values describe what your management team
really cares about. What it holds dear. What
makes em tick. How would your managers
respond to a trade-off between product quality
and profit? Thats really a question of value.
Corporate Goals & Objectives
Role of Objectives:
1. Legitimacy
2. Direction
3. Coordination
4. Benchmarks for success
5. motivation
Characteristics of obj;
Obj. form a HIRERACY
Network
Multiplicity of Obj
Long and short-range obj
ENVIRONMENTAL ANALYSIS
Env. may be defined as the set of external factors such
as economic, socio cultural, Govt. & legal, demographic,
which are uncontrollable in nature & affect the business
decisions of a firm or company.
1) Micro Environment 2) Macro Environment
Micro Environment-
1) Supplier
2) Customers-industrial, retailers, wholesalers, Govt.,
foreigners
3) Market intermediates- middlemen, physical distribution
firms, marketing service agencies, and financial
intermediaries
Competitors-
Desire competitions limited disposable income many
unsatisfied desires T.V./washing machine/ investment
Generic competition-among alternatives which satisfied
particular category of desire- Investment in
U.T.I./P.O./Bank/Any other.
Product form competition- Washing machine, semi/ automotive
Brand competition- videocon/godrej
Public
media
citizen action public
local public
Macro Environment-uncontrollable
1. Economic Environment
Eco. Conditions- business cycle, growth of economy, size of
domestic Market & its dynamic effect
Eco. Policies- budgets, industrial regulations, eco planning,
import & export regulations, business laws, , industrial policy,
control on price & wages, trade & transport policy, size of
national income, demand & supply of various goods
Economic Systemof a country
free enterprise i.e. capitalist
socialist
communist
mixed
2. Political & Govt. Environment. -
Legislature- decide particularly course
of action
Executive -implementation
Judiciary -to see above both working
public interest.
3. Socio Cultural Environment- people
attitude to work & health, role of family,
marriage, religion & education, ethical
issues, social responsibilities of business
4. Natural Environment- geographical &
ecological factors- natural resources
endowments, weather & climatic
conditions, topographical factors,
locational aspects, port facilities
5. Demographic Environment. - Size
growth age composition of population,
family size, economic stratification of
population, educational level, caste
religion etc.
6. Technological Environment-
marketing, innovation, R & D
7. International Environment-liberation
force of view global perspectives
Environmental Scanning: helps every mgt in
attaining maximum profits and growth and the
same time helps in minimization of future threats.
Environment analysis has 3 basic objectives
Under taking of current & potential changes
Should provide inputs for strategic decision making
Rich source of idea & understanding of the context,
bring fresh views
Environmental Analysis-
Scanning general supervision of all env. Factors & their interaction in order
Competitor
Industry Analysis
Analysis
SWOT
(Strength-Weakness-Opportunity-Threat)
creating
By exploiting core competencies, firms can develop value-
strategies superior to their competitors.
Capabilities
Core
Competencies
Competitive Above-Average
Advantage Returns
Internal Analysis
Resources and Capabilities:
Resources
Types:
Tangible
Intangible
Brand Equity
Internal Analysis
Tangible Resources Assets that can be seen, touched or
quantified.
Brand Equity
- Brand name
- maintaining brand equity (Mercedes example
value/performance
and Japanese automakers)
VALUE CHAIN ANALYSIS
A value chain identifies and isolates the
various economic value adding activities
that occur in every firm. It portrays
activities required to crate value for
customer for a given product.
The Value Chain System
Inbound > Operations > Outbound > Marketing & > Service > A
Logistics Logistics Sales R
Firm Infrastructure
HR Management
Technology Development
Procurement
The primary value chain activities
are:
Inbound Logistics: the receiving and
warehousing of raw materials, and their
distribution to manufacturing as they are
required.
Operations: the processes of transforming
inputs into finished products and services.
Outbound Logistics: the warehousing and
distribution of finished goods.
Process
Materials
Machine tools
Material handling
Packaging
Operations Technologies
Maintenance
Testing
Building design & operation
Information systems
Outbound Logistics
Technologies
Transportation
Material handling
Packaging
Communications
Information systems
Marketing & Sales
Technologies
Media
Audio/video
Communications
Information systems
Service Technologies
Testing
Communications
Information systems
Linkages Between Value Chain
Activities
Value chain activities are not isolated
from one another. Rather, one value
chain activity often affects the cost or
performance of other ones. Linkages may
exist between primary activities and also
between primary and support activities.
Linkages Between Value Chain
Activities
Consider the case in which the design of a
product is changed in order to reduce
manufacturing costs. Suppose that
inadvertently the new product design
results increased service costs; the cost
reduction could be less than anticipated
and even worse, there could be a net cost
increase.
Outsourcing Value Chain
Activities
Whether the activity can be performed
cheaper or better by suppliers.
Whether the activity is one of the firm's
core competencies from which stems a
cost advantage or product
differentiation.
Outsourcing Value Chain
Activities
The risk of performing the activity in-
house. If the activity relies on fast
changing technology or the product is
sold in a rapidly-changing market, it may
be advantageous to outsource the activity
in order to maintain flexibility and avoid
the risk of investing in specialized assets.
Outsourcing Value Chain
Activities
Whether the outsourcing of an activity
can result in business process
improvements such as reduced lead time,
higher flexibility, reduced inventory, etc.
Financial Analysis
Assessment of the firms past, present and
future financial conditions
Done to find firms financial strengths and
weaknesses
Primary Tools:
Financial Statements
Comparison of financial ratios to past,
industry, sector and all firms
Types of Ratios
Financial Ratios:
Liquidity Ratios
Assess ability to cover current obligations
Leverage Ratios
Assess ability to cover long term debt obligations
Operational Ratios:
Activity (Turnover) Ratios
Assess amount of activity relative to amount of
resources used
Profitability Ratios
Assess profits relative to amount of resources used
Valuation Ratios:
Assess market price relative to assets or earnings
LIQUIDITY RATIO:
N.P.ratio=NP/Net sales
Learning &
growth
Translate Strategy to Operational terms
The Strategy
Financial Perspective
If we succeed, how will we look A Strat
egy Is
to our shareholders A
Set of o
f
Hypoth
eses
Customer Perspective About C
ause &
To achieve my vision, how Effect
must we look to our customers?
Internal Perspective
To satisfy my customer, at
which processes must I excel?
Organization Learning
To achieve my vision, how must my
organization learn and improve?
STRATEGY 85% of
60% of
management
organization
Strategic teams spend less
s Learning Loop than
dont link
one hour per
strategy &
month on strategy
budgets BALANCED
SCORECAR issues
D
A good Balanced scorecard describes the
Organizational Strategy
Strategy
Balanced
Scorecard
Measures are Balanced between
Growth
Cash flow
t ive e
Financial perspective p ec ill w
ers w w ers
l P ho old
cia ed, reh
a n ce ha
n c s
Increase EVA to +2% Fi su our
f w e k to
I loo
Basic Requirement
Clean
Quality
Variability within
specified limits
Internal Business-process perspective
e a t
ctiv er, I
Achieve Operational s pe tom ust
r
Pe c us s m
excellence n al my se
t er sfy ces l?
In ati pro xce
s h e
o i c
T wh
Learning and growth perspective
e? y
People based measures
ov t m
pr us
an , ho ning
im m
ar on ar
d w
ESI
le visi Le
n
tio my tio
a
Competencies
ni ve niz
n
ga hie a
or ac Org
n
Skill Mix
za
o
T
Systems (Technology)
Learning and growth perspective
ROCE
Customer
Loyalty
On-line
delivery
Process Process
Quality Cycle Time
Employee
Competency
Four perspectives: Are they sufficient
Suppliers perspective
Customer /
able to find a team
Donor
Community Volunteer
Athlete
Controlled Cost Cities wit
retention / recruitment registered athletes
Involvement New donors Quality Programs Fee incre
Athlete Outreach / Donor Community For Family
feedback feedback
Program Expansion # athletes in Athletes # of acti
outreach program outside of competit
Objectives Measures
Operations
distributed team
Public Relations meetings # area management
team
$ raised
Training # training classes
offered outreach # first time athletes
Objectives Measures
Knowledge of MSO Volunteers trained in MSO
Operations
and sports
Internal
Internal Processes
Wait Time Quality Productivity
Admissions Infection Rates Length of Stay
Discharge Blood Culture Readmission Rate
Contaminate Rate Daily Staffing vs.
Use of Clinical Occupancy
Pathways (Top 10)
Strategic Competency
and Skills
Availability
L3 Access to Strategic Strategic Information
Information Availability
MAKE STRATEGY EVERYONES JOB
CORP
SBU
Top-Down Bridging
Process To Share the EDUCATION Bottom-Up Process
Strategy & Align the to Internalize &
Workforce PERSONAL GOAL Execute the Strategy
ALIGNMENT
BALANCED PAYCHECKS
1 Mobilize Change
through Executive
Leadership
Mobilization
Governance Processes 5
Strategic Management Make Strategy
2 Translate the a Continual
Strategy to process
Operational Terms
Link Budgets & Strategy
Strategy Mape Strategic Learning
Balanced Scorecards STRATEG Analysis & Information System
Y
4
Make Strategy
3 Align the Everyones Job
Organization to
the Strategy Strategic Awareness
Personal Scorecard
Corporate Role Balanced Paychecks
Business Unit Synergic
Support Unit Synergic
Describing Strategy : Strategy Is a Step in a
Continuum
MISSION
Why we exist
VALUES
What we believe In
VISION
What we want to be
STRATEGY
Our game plan
BALANCED SOCRECARD
Implementation & Focus
STRATEGIC INITIATIVES
What we need to do
PERSONAL OBJECTIVES
What I need to do
STRATEGIC OUTCOMES
#2 Cause-and-Effect Relationships
Every objective selected should be part
of a chain of cause and effect that
represents the strategy
#3 Performance Drivers
A balance of outcome measures and
leading measures facilitates anticipatory
management
#4 Linked to Budget/Financials
Every measure selected can ultimately
be supported/enabled by Budgetary
Funds
#5 Change Initiatives
Aligned Strategic Initiatives that change
the behavior of the organization
CORPORATE LEVEL
STRATEGIES
Types of CLS
Growth/expansion
Stability
Retrenchment
combination
Growth/Expansion
A) INTENSIFICATION
Market penetration
Market development
Product development
Innovation
B) DIVERSIFICATION
Concentric
Conglomerate
Forward
Backward
Concentric Diversification(RELATED)
Differentiation Strategy
Focus Strategy
COST LEADERSHIP
Cost-leadership strategies require firms to
develop policies aimed at becoming and
remaining the lowest cost producer and/or
distributor in the industry. Note here that the
focus is on cost leadership, not price leadership.
This may at first appear to be only a semantic
difference, but consider how this fine-grained
definition places emphases on controlling costs
while giving firms alternatives when it comes to
pricing (thus ultimately influencing total
revenues).
DIFFERENTIATION STRATEGY
Differentiation strategies require a firm to create something
about its product that is perceived as unique within its market.
Whether the features are real, or just in the mind of the
customer, customers must perceive the product as having
desirable features not commonly found in competing products.
The customers also must be relatively price-insensitive.
Adding product features means that the production or
distribution costs of a differentiated product will be somewhat
higher than the price of a generic, non-differentiated product.
Customers must be willing to pay more than the marginal cost
of adding the differentiating feature if a differentiation strategy
is to succeed.
FOCUS STRATEGY
Focus, the third generic strategy, involves concentrating on a
particular customer, product line, geographical area, channel
of distribution, stage in the production process, or market
niche. The underlying premise of the focus strategy is that the
firm is better able to serve its limited segment than
competitors serving a broader range of customers. Firms using
a focus strategy simply apply a cost-leader or differentiation
strategy to a segment of the larger market. Firms may thus be
able to differentiate themselves based on meeting customer
needs through differentiation or through low costs and
competitive pricing for specialty goods.
COMPETITIVE ADVANTAGE
Competitive advantage occurs when a organization
acquires or develops an attribute or combination of
attributes that allows it to outperform its competitors.
These attributes can include access to natural
resources, such as high grade ores or inexpensive
power, or access to highly trained and skilled personnel
human resources. New technologies such as robotics
and information technology either to be included as a
part of the product, or to assist making it. The term
competitive advantage is the ability gained through
attributes and resources to perform at a higher level than
others in the same industry or market
How to build/acquire CA?
Innovation
Integration
Alliances/mergers/acquisitions
R&D
Entry Barriers
Benchmarking
Value chain approach
How to build/acquire CORE
COMPETENCE?
Focus on two or more skills
Low cost strategies
Benefits of cost leadership
STRATEGIC ANALYSIS AND CHOICE
STRATEGY CHOICE
How effective has the existing strategy
been?
How effective will that strategy be in the
future?
What will be the effectiveness of selected
strategies?
STRATEGY CHOICE
Strategists collect and evaluate information to assess strengths and
weaknesses of the internal environment and opportunities and
threats of the external environment. Such an assessment presents a
list of possible strategic alternatives.From among those alternatives,
choices are made.
It determines the characteristics and forms of an organization's
strategic direction.
BCG Portfolio
GE Multifactor Portfolio Matrix
Hofers Product-Market Evolution Matrix
Shell Direction Policy
Industrys level policy
Porters five forces model
Portfolio Analysis
And
BCG Matrix
The Growth Share Matrix
1. Industry attractiveness
(market growth)
And
2. Competitive strength
(relative market share)
The Growth Share Matrix
Question
Market growth rate
Stars
marks
Low
High Relative market share Low
Source: Perspectives, No. 66, The Product Portfolio, Adapted by permission from The Boston Consulting Group, Inc., 1970.
BCG Matrix
?
Market growth rate
$
Cash Cows Dogs
Revenue + + + Revenue + +
++ Expenses _ _ _ _
Expenses _ Net ___
Net +++
+ Cows
Cash Dogs
HOLD
Can you maintain and preserve market share?
HARVEST
.
Increase the short-term return without
Four impacting long-run prospects.
Portfolio
Strategies DIVEST
Is it appropriate to dump SBUs
with low-growth potential?
Limitations of the BCG Matrix
1. Market Growth rate is an inadequate descriptor of
overall industry attractiveness.
High
GROW
AVERAGE
HOLD
Try harder Average capabilities but operating in attractive prospects. New additional
resources top strengthen their position.
Double or quit Business prospects are attractive but companys own resources are
weak. Two possibilities either INVEST MORE or QUIT
Custodial Average position in both the cases bear with the situation with little help
from other product divisions.
Cash Generator strong capabilities but unattractive prospects .May continue for
satisfactory profits.
Divest Business Capabilities are weak here.SBU;s running in losses with uncertain
cash flows. Not likely o improve in future..
Business-Level Strategic Analysis
Industry analysis
Strategic Group analysis
Competitor analysis
Life cycle analysis
SWOT Analysis
Subjective Factors influencing
Strategic Choice
Commitment of past strategies
Attitudes towards risk
Degree of firms external dependence
Internal political considerations
Time constraints
Competitive reactions
Corporate culture.
STRATEGIC
IMPLEMENTATION
Implementation of strategies is concerned
with the design and management of
systems to achieve the best integration of
people,structures,processes and
resources in reaching organizational
purpose.
RESOURCE ALLOCATION
While implementing strategies, the scarce
resources (financial,physical,human,etc)
resources need to be allocated carefully. In this
regard, one can follow, top-down and bottom-up
approach.
In top -down approach resources are
allocated through a process of segregation
down to operating levels.
In the bottom-up approach resources are
distributed after a process of aggregation
from the operating level
.
Means of resource allocation
Strategic Budget
Capital budget
Performance budget
ZBB
Decision package
Ranking
Resource allocation
Structural Issues
FUNCTIONAL STRUCTURE:A company
organized with a functional structure
groups people together into functional
departments such as purchasing,
accounts, production, sales, marketing.
These departments would normally have
functional heads who may be called
managers or directors depending on
whether the function is represented at
board level.
Advantages
Clarity
Economies of scale
Specialization
Coordination
In-depth skill development
Suitability
Limitations
Effort Focus
Poor decision-making
Sub-unit conflicts
Managerial vacuum
PRODUCT DEPARTMENTATION
The purpose of product departmentation is that every product is
handled by separate management team and the problems faced in
the development of a product are carried out by single group of
employees working in that unit.
Technology
Environment
People
PROJECT MANAGEMENT
Social pressures
Leader
Situation
communication
types of leaders
Authoritarian
Team Leader
Country Club
Impoverished
Authoritarian Leader (high task, low relationship)
:
People who get this rating are very much task oriented
and are hard on their workers (autocratic). There is little
or no allowance for cooperation or collaboration. Heavily
task oriented people display these characteristics: they
are very strong on schedules; they expect people to do
what they are told without question or debate; when
something goes wrong they tend to focus on who is to
blame rather than concentrate on exactly what is wrong
and how to prevent it; they are intolerant of what they
see as dissent (it may just be someone's creativity),
Team Leader (high task, high relationship)
2. A vision- This is an idealized goal that proposes a future better than the status quo. The greater the disparity between
idealized goal and the status quo, the more likely that followers will attribute extraordinary vision to the leader.
3. Ability to articulate the vision- They are able to clarify and state the vision in terms that are understandable to others.
This articulation demonstrates an understanding of the followers needs and, hence acts as a motivating force.
4. Strong convictions about vision- Charismatic leaders are perceived as being strongly committed, and willing to take
on high personal risk, incur high costs, and engage in self-sacrifice to achieve their vision.
5. Behavior that is out of the ordinary- Those with charisma engage in behavior that is perceived as being novel,
unconventional, and counter to norms. When successful , these behaviors evoke surprise and admiration in followers.
6. Perceived as being a change agent- Charismatic leaders are perceived as agents of radical change rather than as
caretakers of the status quo.
7. Environmental sensitivity- These leaders are able to make realistic assessments of the environmental constraints
and resources needed to bring about change.
Transactional vs Transformational leaders
Transactional Leaders
Contingent Reward: Contracts exchange of rewards for effort, promises rewards for good
performance, recognizes accomplishment
Management by exception (active): Watches and searches for deviations from rules and standards,
takes corrective action.
Management by exception (passive): Intervenes only if standards are not met
Laissez faire: Abdicates responsibilities, avoids making decisions
Transformational Leaders
Charisma : Provides vision and sense of mission, instills pride, gains respect trust.
Inspiration: Communicates high expectations, uses symbols to focus efforts, expresses important
purposes in simple ways.
Intellectual Stimulations: Promotes intelligence, rationality, and careful problem solving.
Individualized consideration: Gives personal attention, treats each employee individually, coaches,
advises.
The Activities of Successful & Effective leaders
Description categories
Type of Activity
Derived from free Observation
Exchange Information
Routine Communication
Handling paperwork
Planning
Traditional Management Decision Making
Controlling
Motivating/Reinforcing
Disciplining/Punishing
Human Resource Management
Managing conflict
staffing
Training/Developing
What skills do leaders need?
Personal Skills
1.Developing 3. Solving
Self-awareness Problems
creatively
Using the rational approach
Determining values Using the creative approach
and priorities Fostering innovation in others
Identifying cognitive style
Assessing attitude toward change
Interpersonal Skills
Gaining power
Coaching Exercise influence
Counseling Empowering others
Listening 5. Gaining power
and influences
7. Management
conflict
Limits of Controls
Difficulties in measurement
Resistance to evaluation
Short-termism
Relying on efficiency versus effectiveness
Requirements of Effective Evaluation
Qualitative Factors
Quantative Factors
Quantitative Factors
Companys performance over a period of time,
Feasibility
Advantage
Strategic Control
Four Types of Strategic Controls
Premise Control
Implementation Control
Strategic Surveillance
Measurement of performance
Analyzing variances
:
Efficiency measures how many units of inputs
are being used to produce a single unit of output
Must also measure how many units are
produced
The control system should contain these
measures
The importance of Strategic Control
& quality:
:
Managers must create an environment in
which people feel free to experiment and
take risks
Managers are challenged to build control
systems that encourage risk taking
Measures cost reduction, process
improvement and improved quality
measures.
Control and Innovation
Problem: Time wasted due to unavailable parts
from central store. Electrical workshop not close to
central store (Witbank Municipality)
Electricians designed a innovative solution through
simple measures (trips to stores per electrician per
day
Applied 80/20 principle Established decentralized
store
Major savings
STRATEGIC CONTROL
Strategic Control Systems
are the formal target setting ,
measurement and feedback systems that
allow strategic managers to evaluate
whether the company is achieving on the
four building blocks of a competitive
advantage..
Types of Control systems
Financial controls
Output controls
Behavior controls
Organization culture
STRATEGIC CONTROL
Financial controls
Growth
Profitability
ROCE
Share prices( Private sector)
Is a favorite control because it is objective
STRATEGIC CONTROL
Types of Control systems
Output controls: It is a system of control in which
managers estimate or forecast appropriate performance
goals for each division, department and employee and
measure achievement against these goals
Divisional Goals
Functional Goals
Individual Goals
STRATEGIC CONTROL
Types of Control systems
Divisional Goal
Goal: To be the number 1 or 2 in the
industry in terms of market share
STRATEGIC CONTROL
Types of Control systems
Behavior controls: happens through the
establishment of a comprehensive systems of
rules and procedures to direct the actions of
divisions, functions and individuals
Operating budgets
HR rules & regulations
Standardization
STRATEGIC CONTROL
Strategic Control Systems
Characteristics
Be flexible to allow managers to respond as
necessary to unexpected events;
Should provide accurate information, giving a
true picture of organizational performance;
Should provide information in a timely manner
STRATEGIC CONTROL PROCESS