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Part III:Organizational Strategy Formulation: Dealing with the Bureaucracy’s Environment
Topics Last Week
I enjoyed the case last week, watch out for the quality of your presentation. Do you stand in a corner? Are you standing in front of the audience for questions? The simple stuff is important.
Topics Housekeeping:
The library should be okay now Have a look at the book
team management Exam Did you “listen” to a problematic person? Statistics Themes of case Antonio
Strategy
StrategyWhat did you think of the differences between
the two chapters?
When did we mention goals before? budget as strategy performance program/project management goals define boundaries of an organization conflicting goals in public administration
Where does the term strategy come from?
What do you think of the difference between mission, goals, and objectives?
Strategy Definition:
Strategy as the basic pattern of current and planned resource deployments and environmental interactions that indicate how an organization will achieve its goals.
“If its grand strategy is correct, any number of tactical errors can be made and yet the enterprise proves to be successful”
“Predicting is easy except for the future”, in other words all strategies have to be updated
It’s not just a document, it is a way of connecting objectives to activities and resource allocations
Goals and Objectives Provide Direction
to know what your final goal is. Unite forces/galvanize
priorities. Are the basis for planning & decision-making
will this plan/decision takes us closer to our goal? Help to measure progress & identify problems
essential for control (cost, quality, time, etc.).
GOALS must be SMART
Specific (e.g., place, who is responsible, etc.)
Measurable Acceptable/commitment Realistic Time bound
& support the Mission Statement
Plans
Strategic: broad long term relation with the
environment top-management
Operational: limited short term internal line-
management
Tactical
Analyzing the Environment (O & T)Analyzing the Environment (O & T)
Assessing Capacities (S & W) Assessing Capacities (S & W)
Identifying Activities (Profit, Growth, Power)Identifying Activities (Profit, Growth, Power)
What Is Strategic Management?What Is Strategic Management?What Is Strategic Management?What Is Strategic Management?
Why Is StrategicWhy Is StrategicManagement ImportantManagement Important?
GlobalGlobalCompetitionCompetition
TechnologicalTechnologicalChanges Changes
EnergyEnergyCrisesCrises
DeregulationDeregulationof Industryof Industry
Levels of StrategyLevels of Strategy
Corporate/Corporate/OrganizationOrganization
Functional Functional or Program/or Program/
ProjectProject
Business/Business/DepartmentDepartment
Top ManagementTop ManagementSets OrganizationalSets Organizational
StrategyStrategy
Manufacturing or Manufacturing or Service DeliveryService Delivery
& Marketing& Marketing
HumanHumanResourcesResources
StrategicStrategicBusiness Unit orBusiness Unit or
Department 1Department 1
StrategicStrategicBusiness Unit orBusiness Unit or
Department 2Department 2
StrategicStrategicBusiness Unit orBusiness Unit or
Department 3Department 3
ResearchResearch& Development& Development
FinanceFinance& Accounting& Accounting
Strategic Business Unit/Department
A single business (or collection of businesses) or large chunk of the bureaucracy that is independent and formulates its own strategy
MultibusinessCorporation
StrategicBusiness Unit
StrategicBusiness Unit
StrategicBusiness Unit
HRR&D FinanceProductionMarketing
Functionallevel
Businesslevel
Corporatelevel
LEVELS OF STRATEGY
Four levels of strategy Mission Organization-level strategy
Seeks to determine what businesses an organization should be in: Product, Market, Identity
Business-level strategy Seeks to determine how an organization should
compete/act in each of its businesses: (Portfolio analyses, Lifecycle analyses)
Functional-level strategy Seeks how to support the business level strategy.
Mission statement components
Product/Service: in families Customer market: segmented Geographical domain Technology Policy: concern for survival Concept: capabilities, structure Public image: environment.
Mission Statement
Central reason for existence. Recognizable identity. ‘core business’, core activity. Your market/target groups. Relatively permanent. Broad goals. Place in the world.
GrandGrand
StrategiesStrategiesGrandGrand
StrategiesStrategies
StabilityStabilityStabilityStability
GrowthGrowthGrowthGrowth
CombinationCombinationCombinationCombination
Identify CurrentIdentify CurrentMission, (GrandMission, (Grand
Strategy)Strategy)
Identify CurrentIdentify CurrentMission, (GrandMission, (Grand
Strategy)Strategy)
Formulate & select Formulate & select (alternative)(alternative)StrategiesStrategies
Formulate & select Formulate & select (alternative)(alternative)StrategiesStrategies
Implement & Implement & adjustadjust
StrategiesStrategies
Implement & Implement & adjustadjust
StrategiesStrategies
EvaluateEvaluateResultsResults
EvaluateEvaluateResultsResults
1
AnalyzeAnalyzeResources/Resources/CapacitiesCapacities
AnalyzeAnalyzeResources/Resources/CapacitiesCapacities
NoteNote WeaknessesWeaknessesand Strengthsand Strengths
NoteNote WeaknessesWeaknessesand Strengthsand Strengths
AnalyzeAnalyzeEnvironmentEnvironment
AnalyzeAnalyzeEnvironmentEnvironment
NoteNoteThreats andThreats and
OpportunitiesOpportunities
NoteNoteThreats andThreats and
OpportunitiesOpportunities
2
3
4
5
6
7
8 StrategyStrategy
SWOTSWOTAnalysisAnalysis
ThreatsThreatsOpportunitiesOpportunities
StrengthsStrengths WeaknessesWeaknesses
J.S . van Dam 00.PPT 10
J.S . van Dam 00.PPT 11
“SWOT” -analysis Strengths. Weaknesses. Opportunities. Threats.
I prefer OTWS (organization needs to be outward looking
(customer centered, if you will)). Do analysis in light of your mission (product(s)/service(s),
marktets/clients, the identity of the organization). You can start with brainstorming. Watch out for disruptive
events. There are also more quantitative methods. Be participatory
MANAGEMENT OF
ORGANIZATIONS
Demographics
Political system
Economic system
COMPETITIVE
Competitors New Entrants
Substitute Products
CustomersSuppliers
TECHNOLOGICAL
Knowledge Equipment
ToolsTechnical
POLITICAL-LEGAL
Governments
Unions
Laws
Interest
Share holders
CULTURAL
Values
Language
Religion
ENVIRONMENTAL FORCES
Natural Resources
groups
External
Strategy Staff
Structure
Systems(SOP,e.g.,
budget, program)
Superordinategoals
(mission)
Style(Leadership)
Skills(capacities, competence)
Internal
Task 4: Generate ALTERNATIVE STRATEGIES
Task 5: Develop STRATEGIC PLAN
Task 6: Develop TACTICAL PLANS
Task 7: Control and asses RESULTS
Task 8: Repeat PLANNING PROCESS
Task 3
Assess
STRENGTH &
WEAKNESSES
Strategic Planning Process
Task 1
Develop
MISSION &
OBJECTIVES
Task 2
Diagnose
THREADS &
OPPORTUNITIES
EXTERNFORMULATION
OPPORTUNITIESTHREATS
INTERNALANALYSIS
STRENGTHSWEAKNESSES
STRATEGYFORMULATION
MANAGEMENTVALUES
STAKEHOLDERS
CAPACITIESSUCCESFACTOS
STRATEGYSELECTION
STRATEGYIMPLEMENTATION
Prentice Hall, 1998 12Chapter 8
AbundantEnvironmentalOpportunities
CriticalEnvironmental
Threats
CriticalWeaknesses
Environmental Status
FirmStatus
ValuableStrengths Organi-Organi-
zationalzationalGrowthGrowth
Org.Org.StabilityStability
Org.Org.RetrenchmentRetrenchment
SWOT Analysis and Grand Strategies
MISSION STATEMENTFounder, Board of Directors, Parliament
Decades
STRATEGIC PLANSTop Management and Middle Management
1 - 3 Years, wide scope
OPERATIONAL PLANSMiddle and First Line Managers
Budget Year, Day to Day, narrow scope
Hierarchy of plans
phase 1Organizational
Mission
phase 2Strategic
Objectives
phase 3Departmental
Objectives
phase 4Team + Individual
Participation
phase 5Action
Planning
phase 6Implementation
phase 7Performance Reviews
Control
Strategicplanning
Tacticalplanning
Operationalplanning
Strategy Process
MakeROI of
20% after taxes
Increase salesup to $ 6000
Increasegross profitup to $ 800
Reduceproduction cost
by 8%
Increase work-forceproductivity
by 5%
- Refocus advertising efforts- Penetrate new markets- Develop new products
- Consolidate functions- Clean out stock- Sell obsolete equipment
- Improve equipment + tools- Improve material handling- Improve planning
- Management training prgms- Work fore training prgms- Hire skilled labor
For 2000:
For 2000:
ROI = Return On Investment
Strategic Tactical Operational
Strategy
Many other forms of analysis stakeholder historical cost/benefit institutional core competencies / new markets
Implementation Remember: routine drives out
planning. Many plans don’t get implemented. Many decisions don’t get follow-up.
Selection of strategy(ies) also implies pre-implementation feasibility
Good strategy helps implementation: sense of purpose higher expectations
Implementation
Some do’s and don’t’s especially in public administration
don’t stop ongoing activities you can loose support, get delays yet, high workload
use pilots be incremental (muddling through)
are tasks simple & manageable great ideas fail, because they can be
too much to swallow at once
Implementation Check your capacities regularly, e.g.,
if pilot project fails, establish why this is the case
When restaffing is possible, this can greatly help, but it is not always possible. Same holds often true for changing structure (structure follows strategy)
Sequester resources for strategy formulation and entrepreneurial projects.
Implementation Do you need to simplify
organizational processes (procurement, delegation of authority)?
Leadership is important: to infuse the organization with value; to develop the organization’s
distinctive competence to distribute incentives to structure & mediate conflicts
Why goals are unimportant Do people always follow their
goals? Meaning is retrospective Attack on rationality Sometimes people start working on
something, and then justify it. Discussion on rational approaches.