CHAPTER
2
The Strategic
Management Process
Instructor:
Dr.Gehan Shanmuganathan
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
LO 2-1 Explain the role of vision, mission, and values in the strategic
management process.
LO 2-2 Describe and evaluate the role of strategic intent in achieving
long-term goals.
LO 2-3 Distinguish between customer-oriented and product-oriented
missions and identify strategic implications.
LO 2-4 Critically evaluate the relationship between mission statements and
competitive advantage.
LO 2-5 Explain why anchoring a firm in ethical values is essential for longterm success.
LO 2-6 Compare and contrast strategic planning, scenario planning, and
strategy as planned emergence, and discuss strategic implications.
2-2
ChapterCase 2
Teach For America: Inspiring Future Leaders
• TFA Mission: Eliminate educational inequality
 Started by an undergraduate student
 Inspiring mission

Provide a meaningful service option for bright young people
• Make teaching to the neediest high prestige
 Over 40,000 applicants for 4,500 jobs
TFA Video
2-3
VISION, MISSION, AND VALUES
• What are visionary organizations?
 Begin with the end in mind

Similar to designing & building a home
 Vision – what to ultimately accomplish?
 Mission – what is the firm about?
 Values – how to accomplish goals?
2-4
VISION, MISSION, AND VALUES
• What is forming strategic intent?
 Staking out a desired leadership position in the long
term that far exceeds a company's current situation
 Often used in Japanese corporate settings

Canon will "beat Xerox"
 Effective use of stretch goals

Competitive advantage for tomorrow
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VISION, MISSION, AND VALUES
• CUSTOMER-ORIENTED MISSIONS
• Define the firm in terms of solutions for customers
 Disney: "Make People Happy"
 Enhanced strategic flexibility
 NOT the same as listening to customers
• PRODUCT-ORIENTED MISSIONS
• Define the firm in terms of products or services
 U.S. Railroads: "Safest… N. American railroad”

Missed the chance to move into delivery before
UPS & Federal Express
2-6
MISSION STATEMENTS AND
COMPETITIVE ADVANTAGE
• Do mission statements help gain & sustain
competitive advantage?
 Results are inconclusive
 Need strategic commitments to succeed
• Positive associations – Visionary firms
• Negative associations – Better World Books
• No associations – Intel
2-7
Living the Values
• Ethical standards and norms that govern
behavior.
 How do we accomplish our goals?
• McKesson – ICARE
 Shared principles a framework for daily interactions
• Dark side of values
 Bernard Madoff

Ponzi scheme estimated at $65 billion in fraud
 Enron
One of the largest bankruptcies in U.S. history
 Over 50,000 jobs lost (Enron & Arthur Anderson)

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The Strategic Management Process
1. Strategic Planning
2. Scenario Planning
3. Strategy as Planned Emergence
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Strategy as Strategic Planning
• Top-down rational planning
 Define mission, vision, & goal (strategic intent)
 External analysis of opportunities and threats
 Internal analysis of strengths and weaknesses
 Create strategic fit through SWOT
 Formulate appropriate strategy
 Implement chosen strategy
 Monitor performance & modify if necessary
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Strategy as Scenario Planning
• Scenario planning
 Envision different "what-if" plans
 Generates a dominant plan

Must implement the most probable option
 Keeps other scenarios in the event of changes…

"Arab Spring" impact on the oil industry?
 Good example of the AFI framework
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Strategy as Planned Emergence
• Strategic Initiative
 Google 50% from the "20% rule"
 Enron wind investment…
• Mintzberg Planned Emergence
• Strategy can come from top or bottom
 Some intended strategies drop off in the process
 Allows for new emerging ideas to become realized
 Resource allocation process (RAP)
 Serendipity can have dramatic effects
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Bottom-up Strategic Initiatives /
Autonomous Actions
• Microsoft
 Internet Explorer
 Xbox
• Intel
 DRAM exit and entry into semiconductors
• Starbucks
 Frappuccino
• Google
 50% of new products come from 20% autonomous
time
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STRATEGY HIGHLIGHT 2.3
”It’s Not What We Do!”
• Starbucks
 Autonomous action of mid-level manager
 Tenacity and persistence of a store manager

Risk of failure

Possible career-limiting action
 Organization must be willing to accept new ideas
 Frappuccino was born!

Contributing 20% of revenues for Starbucks recently
2-14
CHAPTERCASE 2 /Consider This…
• Teach For America is TWENTY years old!
• A $200 million dollar organization
 Teacher effectiveness improves with…

Student–oriented achievement course objectives
• What role did TFA’s vision statement have?
• How have they recruited so many into teaching?
• Could it have worked as a for-profit firm?
2-15