Strategic Management
Outline
Vision
 Mission

1
A Comprehensive Strategic-Management Model
Feedback
External
Assessment
Chapter3
Develop Vision
& Mission
Statement
Chapter 2
Establish LongTerm Objectives
Chapter 5
Generate,
Evaluation and
Select Strategies
Chapter 6
Implement
StrategiesManagement
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
 Vision statement developed first
 Short – preferably one sentence
 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

Recent Data indicates that 90% of all companies
have used a mission statement sometime in the
previous five years.

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
 Essential for effectively establishing
objectives and formulating strategies

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
PepsiCo Mission Statement
PepsiCo’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
At
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
To make people “feel good” and “look great”
Nike Mission Statement
To bring inspiration and innovation to
every athlete in the world
9
Chapter 3: External Assessment
Outline

The Nature of an External Audit: Five Keys Factors
 Economic Forces
 Social,Cultural,Demographic & Environmental
Forces

Political, Governmental, and Legal Forces

Technological Forces

Competitive Forces
10
Chapter Outline (con’d)
Competitive Analysis:
 Porter’s Five-Forces Model
 Source of External Information
 The Global Challenge
 Industry Analysis:
 The External Factor Evaluation Matrix
 The Competitive Profile Matrix

11
External Strategic Management Audit
Also called:
 Environmental scanning
 Industry analysis
Purpose:
 Opportunities to be explored
 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:















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
Price fluctuations
Monetary policies
Fiscal policies
Tax rates
OPEC policies
15
Social, Cultural, Demographic &
Environmental Forces
Key variables –













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
Racial equality
Average level of education
Government regulation
Attitudes toward customer service
Attitudes toward product quality
Energy conservation
Social responsibility
Value placed on leisure time
Recycling
Waste management
Air & water pollution
16
Social, Cultural, Demographic &
Environmental Forces
Major impact on:
Products
 Services
 Markets
 customers

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

Key opportunities & key threats
Antitrust legislation (Microsoft)
Tax rates
Patent laws

Increasing Global Interdependence
 Impact of political variables
Formulation of Strategies
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

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」(eXtensible 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) 的工作。
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)

Chief Information Officer (CIO)

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:
 Our
vulnerability to successful strategic counterattack
 Our product and service positioning relative to
competitors
 Entry and exit of firms in the industry
 Key factors for our current position in industry
 Sales and profit rankings of competitors over time
 Nature of supplier and distributor relationships
 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:

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:
 List key external factors (10-20)
Opportunities & threats
 Assign weight to each (0 to 1.0)
Sum of all weights = 1.0
 Assign 1-4 rating to each factor
Firm’s current strategies response to the factor
 Multiply each factor’s weight by its rating
Produces a weighted score
32
Industry Analysis (EFE)
Five-step process:

Sum the weighted scores for each
Determines the total weighted score
for the organization.

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

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

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 Rating Score 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
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
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