Strategic Management
formulation
Denis Manley
Assessment/exam type question
• Discuss how you, as head of the school of
computing, would utilise an enterprise
systems architecture to formulate
strategies for increasing the popularity of
the school’s degree programs.
The Organisation
Organisational
Problem
Organisational
Level
Strategic
Senior Management
General or Middle
Management
Tactical
Knowledge or Data
Workers
Knowledge
Operations
Production Workers
P ro duct io n
Fin an ce/
acco un t in g
Sales/
m ark et in g
Hum an
Reso urces
Strategic Management –
Defined
Art & science of formulating,
implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve
its objectives
Strategies in Action
Strategies for taking the hill won’t
necessarily hold it. –
Amar Bhide
The early bird may get the worm, but the
second mouse gets the cheese. –
Unknown
Strategy Formulation
Vision & Mission and Objectives
Internal evaluation
External evaluation
Develop Alternative Strategies
Strategy Selection
Strategy Implementation
Annual Objectives
Organisational structure
Employee Motivation
Resource Allocation
Strategy Evaluation
Internal Review
External Review
Performance Metrics
Corrective Actions
Vision
“What do we want to become?”
Agreement on the basic vision for which
the firm strives to achieve in the long run is
critically important to the firm’s success.
Examples of vision statements: Ryanair’s
(proposed) vision is:
Ryanair wants to become the number one travel choice for all
local residents and tourists in Europe.
Mission Statements
What is our business?”
Basically reveal what an organization wants
to be and whom it wants to serve
• It is essential for effectively establishing
objectives and formulating strategies
• Ryanair’s (actual) 2011 mission statement
is:
– Ryan air mission statement is to offer low fares that generate increased
passenger traffic while maintaining a continuous focus on cost containment
and efficiency operation. Ryan airs objective is to firmly establish itself as
Europe?s leading low-fares scheduled passenger airline.
Customers
Products
Services
Markets
Technology
Employees
Mission
Elements
Survival
Growth
Profit
Public
Image
Self-Concept
Philosophy
The essential components of a
mission statement
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Components and Questions That a Mission Statement Should Answer
1.
Customers: Who are the firm’s customers?
2.
Products or services: What are the firm’s major products?
3.
Markets: Geographically, where does the firm compete?
4.
Technology: Is the firm technologically current?
5.
Concern for survival, growth, and profitability: Is the firm committed to
growth and financial soundness?
6.
Philosophy: What are the basic beliefs, values, aspirations, and ethical
priorities of the firm?
7.
Self-concept: What is the firm’s distinctive competence or major
competitive advantage?
8.
Concern for public image: Is the firm responsive to social, community,
and environmental concerns?
9.
Concern for employees: Are employees a valuable asset of the firm?
Ryanair mission statement
• With Ryanair’s new technological planes we
hope to please all of our European customers on
their travel.(4,3) We hope to serve people of all
ages while providing the best service money can
buy.(1,2) We will bring our low price travel, with
our dedication to helping our community(7,8)
and with our marketing plan we hope to grow,
while providing the best work experience for our
employees. (5,9) We will treat everyone equally
and with the upmost respect.
Vision & Mission
Research results are mixed, however,
firms with formal mission statements
generally see a:
• 2x average return on shareholder’s equity
• Positive relationship to company
performance
• 30% higher return on certain financial
measures
Coke’s (proposed) Mission statement
At Coca Cola we aspire to stay the world’s
leader focused on producing and selling superior
quality carbonated beverages in the soft drink
industry. We strive to treat our employees,
customers, and our communities with respect.
We also seek to provide healthy financial
rewards to our shareholders and business
partners by using the latest technology and
hiring the most skill employees. We always use
ethical practices that assist in displaying Coca
Cola’s public image as being trustworthy, loyal,
and honest.
What are Long-Term Objectives
• Strategies represent “actions” to accomplish longterm objectives (results)
• Objectives are commonly stated in terms such as
–
–
–
–
–
growth in assets,
growth in sales,
profitability,
market share,
degree and nature of diversification.
• Long-term objectives are needed at many levels in an
organisation the corporate, divisional, and functional
levels in an organization (including I.T. function)
Long-Term Objectives
Objectives -Measurable
Realistic
Understandable
Challenging
Hierarchical: corporate/ divisional/functional
Time-line
Financial
v.
Financial Objectives
Strategic Objectives
Strategic Objectives
Growth in revenues
Larger market share
Growth in earnings
Quicker on-time delivery than rivals
Higher dividends
Quicker design-to-market times than
rivals
Higher profit margins
Higher earnings per
share
Improved cash flow
Lower costs than rivals
Higher product quality than rivals
Wider geographic coverage than rivals
Financial vs. Strategic Objectives
It is a Trade-Off between both
Maximize short-term financial objectives – harm
long-term strategic objectives
Pursue increased market share at the expense
of short-term profitability
Tradeoffs related to risk of actions
Align IT with business objectives
• 75 percent of businesses fail to align their IT with
their business objectives, leading to lower
profitability
• The first step in using information systems to serve your
firm is to make sure the IS objectives are lined up with
the business objectives.
 To align IT:
• Identify business goals and strategies
• Break strategic goals into concrete activities
and processes
• Identify metrics for measuring progress
• Determine how IT can help achieve business
goals
Sample Question
• Discuss, using suitable examples, what
you would consider to be three of most
important elements of an “ideal mission
statement “ for an organisation of your
choice. (15 marks)
Assessment/exam type question
• Discuss how you, as head of the school of
computing, would utilise an enterprise
systems architecture to formulate
strategies for increasing the popularity of
the schools Degree programs.
• What parts of the lecture could you use to
help answer the above?