Strategic Management Outline Vision n Mission n 1

Strategic Management Outline Vision n Mission n 1

A Comprehensive Strategic-Management Model Feedback External Assessment Chapter 3 Develop Vision & Mission Statement Chapter 2 Establish Long. Term Objectives Chapter 5 Generate, Evaluation and Select Strategies Chapter 6 Implement Strategies. Management Issues Chapter 7 Implement Strategies--Marketing, Finance, R&D Chapter 8 Measure & Evaluate Performance Chapter 9 Internal Assessment Chapter 4 Strategy Formulation Strategy Implementation Strategy Evaluation 2

Importance of a Vision Statement -Vision statement answers the question: “What do we want to become? ” -A clear vision provides foundation for comprehensive mission statement u Vision statement developed first u Short – preferably one sentence u Broad management involvement 3

Vision Statements---Examples To Be The Best And Biggest World Brand In Apparel Retailing ---Giordano’s Vision. ---Vitasoy’s Vision To maintain the leadership in promoting superior quality of life through the production of high quality, great tasting nutritious products that satisfy customers in all markets 4

Mission Statements n Recent Data indicates that 90% of all companies have used a mission statement sometime in the previous five years. n Mission statement answers the question: “What is our business? ” 5

Mission Statements Mission Statement is to reveal what an organization wants to be and whom it wants to serve n Essential for effectively establishing objectives and formulating strategies n 6

Mission Components 1. 2. 3. 4. 5. 6. 7. 8. 9. Customers Products or services Markets Technology Survival, growth, and profitability Philosophy Self-concept Concern for public image Concern for employees 7

Pepsi. Co Mission Statement ØPepsi. Co’s mission is to increase the value of our shareholders’ investment. We do this through sales growth, cost controls, and wise investment resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity. 8

Vitasoy Mission Statement ØAt Vitasoy, promoting consumer well-being is our number one priority. This is achieved through the provision of a variety of high-quality nutritious foods and beverages. Vitasoy is an innovative company, a reliable employer, and a responsible corporate citizen dedicated to creating value for our shareholders. Giordano Mission Statement ØTo make people “feel good” and “look great” Nike Mission Statement ØTo bring inspiration and innovation to every athlete in the world 9

Chapter 3: External Assessment Outline n The Nature of an External Audit: Five Keys Factors u Economic Forces u Social, Cultural, Demographic & Environmental Forces u Political, Governmental, and Legal Forces u Technological Forces u Competitive Forces 10

Chapter Outline (con’d) Competitive Analysis: u Porter’s Five-Forces Model n Source of External Information n The Global Challenge n Industry Analysis: u The External Factor Evaluation Matrix n The Competitive Profile Matrix n 11

External Strategic Management Audit Also called: u Environmental scanning u Industry analysis Purpose: u Opportunities to be explored u Threats to be avoided 12

Relationships Between Key External Forces and an Organization Key Forces -Economic forces -Social, cultural, demographic & environment forces -Political, legal forces government -Technological force -Competitive forces Competitors Suppliers Distributors Creditors Customers Employees Communities Managers Stockholders Labor Unions Special Interest Groups Products Services Opportunities & Threats 13

Key External Forces Five (5) Key Forces affecting the Opportunities and Threats: 1. 2. 3. 4. 5. Economic forces Social, cultural, demographic, & environmental forces Political, governmental, and legal forces Technological factors Competitive forces 14

Economic Forces Monitor Key Economic Variables: Ø Ø Ø Ø Availability of credit Level of disposable income Interest rates Inflation rates Federal government budget deficits Gross domestic product trend Consumption patterns Unemployment trends Worker productivity levels Value of the dollar in world markets Stock market trends Foreign countries’ economic conditions Import/export factors Demand shifts for goods/services Income differences by region/customer ØPrice fluctuations ØMonetary policies ØFiscal policies ØTax rates ØOPEC policies 15

Social, Cultural, Demographic & Environmental Forces Key variables – Ø Ø Ø Ø Number of special-interest groups Number of marriages Number of divorces Number of births Number of deaths Immigration & emigration rates Life expectancy rates Per capita income Attitudes toward business Average disposable income Buying habits Ethical concerns Attitudes toward saving ØRacial equality ØAverage level of education ØGovernment regulation ØAttitudes toward customer service ØAttitudes toward product quality ØEnergy conservation ØSocial responsibility ØValue placed on leisure time ØRecycling ØWaste management ØAir & water pollution 16

Social, Cultural, Demographic & Environmental Forces Major impact on: Products u Services u Markets u customers u 17

Political, Govt. , & Legal Forces Key Political, govt. , & legal variables: Government regulation/deregulation • Tax law changes • Special tariffs • Number of patents • Changes in patent laws • Import-export regulations • Monetary policy • Political conditions in other countries • Government budgets • World oil, currency & labor markets • Location and severity of terrorist activities • • Environmental protection laws • Equal employment legislation • Level of government subsidies • Antitrust legislation/enforcement • Sino-American relationships 18

Political, Govt. , & Legal Forces Government Regulation q Key opportunities & key threats Antitrust legislation (Microsoft) v Tax rates v Patent laws v q Increasing Global Interdependence q Impact of political variables v Formulation of Strategies v Implementation of Strategies 19

Political, Govt. , & Legal Forces Globalization of Industry • Worldwide trend toward similar consumption patterns • Global buyers & sellers • E-commerce • Instant transmission of money & information across continents 20

Political, Govt. , & Legal Forces Increasing Global Interdependence n Strategists in a global economy • Forecast political climates • Legalistic skills • Diverse world cultures 21

Technological Forces Revolutionary technological forces: Profound impact on organizations • Internet • Semiconductors • XML technologies • 可擴展標示語言」(e. Xtensible Markup Language) 是用於標 示具有結構性資訊的電子文件的標示語言。 XML 是根據 一個國際標準 -- Standard Generalized Markup Language (SGML) -- International Organization for Standardization (ISO) ISO 8879: 1986 所製定而成的. XML 的格式類似 HTML, 但是您可以使用自行定義 的標籤及文件結構. 也可 以由資料庫中取得資料，再用 XML 進行 串列化 (serializing) 的 作。 22

Technological Forces Internet changes the nature of opportunities and threats - • • • Alters life cycle of products Increases speed of distribution Creates new products and services Eases limitations of geographic markets Alters economies of scale Changes entry barriers 23

Technological Forces Capitalizing on Information Technology (IT) n Chief Information Officer (CIO) n Chief Technology Officer (CTO) 24

Competitive Forces Collection and evaluation of information on competitors is essential for successful strategy formulation Identifying rival firms • Strengths • Weaknesses • Capabilities • Opportunities • Threats • Objectives • Strategies 25

Competitive Forces Key Questions About Competitors: • Their strengths • Their weaknesses • Their objectives and strategies • Their responses to all external variables (e. g. social, political, demographic, etc. ) • Their vulnerability to our alternative strategies 26

Competitive Forces Key Questions About Ourselves: Ø Our vulnerability to successful strategic counterattack Ø Our product and service positioning relative to competitors Ø Entry and exit of firms in the industry Ø Key factors for our current position in industry Ø Sales and profit rankings of competitors over time Ø Nature of supplier and distributor relationships Ø The threat of substitute products or services 27

Competitive Forces 7 Characteristics of most competitive U. S. firms: 1. 2. 3. 4. 5. 6. 7. Market share matters Understand what business you are in Broke or not, fix it Innovate or evaporate Acquisition is essential to growth People make a difference No substitute for quality 28

Competitive Analysis: Porter’s Five-Forces Model Potential development of substitute products Bargaining power of suppliers Rivalry among competing firms Bargaining power of consumers Potential entry of new competitors 29

Global Challenge International Challenge faced by U. S. firms: u u How to gain and maintain exports to other nations How to defend domestic markets against imported goods 30

Industry Analysis (EFE) External Factor Evaluation Matrix Summarize & evaluate: Economic Demographic Governmental Social Environmental Technological Cultural Political Competitive 31

Industry Analysis (EFE) Five-Step process: v List key external factors (10 -20) v Opportunities & threats v Assign weight to each (0 to 1. 0) v Sum of all weights = 1. 0 Assign 1 -4 rating to each factor v Firm’s current strategies response to the factor v v Multiply each factor’s weight by its rating v Produces a weighted score 32

Industry Analysis (EFE) Five-step process: n Sum the weighted scores for each ØDetermines the total weighted score for the organization. n Highest possible weighted score for the organization is 4. 0; the lowest, 1. 0. Average = 2. 5 33

UST—Key External Factors Weight Rating Weighted score Global markets untapped . 15 1 . 15 Increased demand . 05 3 . 15 Astronomical Internet growth . 05 1 . 05 Pinkerton leader in discount market . 15 4 . 60 More social pressure to quit smoking . 10 3 . 30 Legislation against the tobacco industry . 10 2 . 20 Production limits on tobacco . 05 3 . 15 Smokeless market SE region U. S. . 05 2 . 10 Bad media exposure from FDA . 10 2 . 20 Clinton Administration . 20 1 . 20 Opportunities Threats TOTAL 1. 00 2. 10 34

Industry Analysis (EFE) Total weighted score of 4. 0 = Organization response is outstanding to threats & weaknesses Total weighted score of 1. 0 = Firm’s strategies not capitalizing on opportunities or avoiding threats 35

Industry Analysis (EFE) UST (in the previous example), has a total weighted score of 2. 10 indicating that the firm is below average in its effort to pursue strategies that capitalize on external opportunities and avoid threats. 36

Industry Analysis (EFE) Important n Understanding of the factors used in the EFE Matrix is more important than the actual weights and ratings assigned. 37

Industry Analysis (CPM) Competitive Profile Matrix n Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic position 38

(CPM) Critical Success Factor Avon L’Oreal Procter & Gamble Weight Rating Score Advertising 0. 20 Product Quality 0. 10 Price Competition 0. 10 Management 0. 10 Financial Position 0. 15 Customer Loyalty 0. 10 Global Expansion 0. 20 Market Share 0. 05 Total 1. 00 1 4 3 4 4 1 0. 20 0. 40 0. 30 0. 40 0. 60 0. 40 0. 80 0. 05 3. 15 4 4 3 3 3 4 2 4 0. 80 3 0. 60 0. 40 3 0. 30 4 0. 40 0. 30 3 0. 30 0. 45 3 0. 45 0. 40 2 0. 20 0. 40 2 0. 40 0. 20 3 0. 15 3. 25 2. 80 39