Dr,Jerry L,Huxell
Business Policies and Strategies
Basic Concepts
Dr,Jerry L,Huxell
Objectives of Subject
? To provide a deeper understanding of strategic
analyses – know the situation.
? To discuss in more detail the strategic options that
a firm can consider – make a decision.
? To explore rational and creative approaches to
strategy implementation – the tough part of
strategy,
? To discuss how to evaluate and control the
strategy selected
Dr,Jerry L,Huxell
Charles Darwin
?,It is not the strongest of the species that
survives,nor the most intelligent; it is the
one that is most adaptable to change.”
? Survival or success depends on the ability to
adapt and compete in today’s ever-changing
world – change or die
Dr,Jerry L,Huxell
Quote
?,Without a strategy,an organization is like
a ship without a rudder,going around in
circles,It’s like a tramp; it has no place to
go.”
? Joel Ross and Michael Kami
Dr,Jerry L,Huxell
Management Challenges
? Power has shifted to the customer
? Size is not necessarily an advantage
? Accelerating rates of change in technology
? Globalization of business – new competitors
? Changing nature of the workforce
? Resource shortages
? Maintaining a competitive advantage
Dr,Jerry L,Huxell
Evolution of Strategy
? 1950s Budgeting
? 1960s Long range planning
? 1970s Strategy planning
? 1980s Strategic management
? 1990s Strategic innovation
? 2000s Strategic flexibility
Dr,Jerry L,Huxell
Strategy
? Strategy is the direction and scope of an
organization over the long term which
achieves advantages for the organization
through its configuration of resources
within a changing environment and to fulfill
stakeholder expectations.
Dr,Jerry L,Huxell
Strategy
? Strategy is the pattern of major objectives,
purposes or goals and essential policies or
plans for achieving those goals,stated in
such a way as to define what business the
company is in or is to be in and the kind of
company it is or is to be.
?Lynch
Dr,Jerry L,Huxell
Characteristics of Strategic
Decisions
? Long-term direction
? Advantage over the competition
? Scope of an organization’s activities
? Concerned with matching the firm’s
resources and competencies to the
environment
? Effects operational decisions
? Affected by stakeholder expectations
Dr,Jerry L,Huxell
Strategic Decisions
? Complex in nature
? Made in situations of uncertainty
? Demand an integrated approach to
managing
? May change external relationships
? May involve difficult internal changes
Dr,Jerry L,Huxell
Levels of Strategy
? Corporate level – overall purpose and scope
and how to add value; what businesses
should we be in
? Business level – how should we compete in
a particular market
? Operational level – how to deliver the above
strategies
Dr,Jerry L,Huxell
Strategic Approaches
? Prescriptive – strategy is a linear and
rational process – starts with the end
objectives.
? Emergent – strategy is emerging,adapting
to human needs and continuing to develop
over time – end objectives are not clear.
Dr,Jerry L,Huxell
Reactive Strategies
? Companies are looking inward and
reengineering processes,downsizing,
improving efficiencies,and reducing costs
? Many fail to look externally at the
competition and market,and do not try to
raise revenues
Dr,Jerry L,Huxell
Corporate Stars,1960s vs 2000s
Industry 1960s 2000s
Airlines Pan Am Southwest
Automobiles General Motors Toyota
Broadcasting CBS CNN
Computers IBM Dell
Information Library Internet
Dr,Jerry L,Huxell
Strategic Management Questions
? Where is the organization now?
? If no changes are made,where will the
organization be in one year? Two years?
Five years? Ten years? Are the answers
acceptable?
? If the answers are not acceptable,what
specific actions should management
undertake? What are the risks and payoffs?
Dr,Jerry L,Huxell
Vision versus Mission
? A vision is an image of where the company
wishes to be in the future and to which the
company may never reach – the desired
future state
? A mission is the purpose or reason for the
corporation’s existence and defines the
boundaries of the business we are in
Dr,Jerry L,Huxell
Specific Mission Questions
? What business are we in now?
? What business do we want to be in?
? What will our customers want in the future?
? What are the expectations of our stakeholders?
? Who will be our future competitors? Suppliers?
Partners?
? How should we compete?
? How will technology affect our business?
Dr,Jerry L,Huxell
Example,McDonalds
? Key Market,To offer the fast food
customers worldwide
? Contribution,food prepared in the same
high quality manner
worldwide,tasty and
reasonably priced
? Distinction,delivered in a consistent,low
key décor and friendly
atmosphere.
Dr,Jerry L,Huxell
Example,Otis Elevator
? Key market,To provide any customer
? Contribution,a means of moving people
and things up,down,and
sideways over a short
distance
? Distinction,with higher reliability than
any similar enterprise in
the world.
Dr,Jerry L,Huxell
Objectives
? Objectives are performance targets to which the
firm can be measured.
– Profitability
– Efficiency
– Growth
– Shareholder wealth
– Utilization of resources
– Reputation
– Market leadership
– Technological leadership
Dr,Jerry L,Huxell
Features of Objectives
? Measurable
? Have assigned responsibilities and due dates
? Specific
? Must stretch the organization
? Achievable and realistic
? Acceptable to stakeholders
? Consistent with strategy
Dr,Jerry L,Huxell
Strategic Fit
? Strategy must be consistent with the firm’s
goals and values,with the external
environment,with the resources and
capabilities of the firm,and with the
organization and systems of the firm.
Dr,Jerry L,Huxell
Key Success Factors
? Those factors that highlight the specific
outcomes crucial to success in the
marketplace,and the required competencies
and capabilities with the most bearing on
the profitability of the organization
Dr,Jerry L,Huxell
Core Competencies
? Core competencies are the collective
learning in the organization,especially how
to coordinate diverse production or service
skills,and integrate multiple streams of
technology.
Dr,Jerry L,Huxell
Learning Organization
? An organization skilled at creating,
acquiring,and transferring knowledge,and
at modifying its behavior to reflect new
knowledge and insights.
– Solve problems systematically
– Experiment with new approaches
– Learn form past experiences and others
– Transfer knowledge quickly and efficiently
Dr,Jerry L,Huxell
Strategic Leadership
? A person’s ability to anticipate,envision,
maintain flexibility,think strategically,and
work with others to initiate changes that
will create a viable future for the
organization.
Dr,Jerry L,Huxell
Work of a Strategic Leader
? Determining the firm’s purpose and vision
? Exploiting and maintaining core
competencies
? Developing human capital
? Sustaining an effective organizational
culture
? Emphasizing ethical practices
? Establishing balanced controls
Dr,Jerry L,Huxell
Common Strategic Mistakes
? Only doing strategic planning once a year
? Not measuring performance to the strategy
? Continuing to do what was successful
? Not concentrating enough on the
competition
? Underestimating the magnitude of the task
Dr,Jerry L,Huxell
Common Strategic Mistakes (cont’d)
? Overestimating capabilities
? Relying on size and resources instead of
speed and mobility
? Being unprepared to fight
? Following traditional rather that new and
creative strategies
? Choosing the wrong enemy at the wrong
time and wrong place
Dr,Jerry L,Huxell
Common Strategic Mistakes (cont’d)
? Not retreating quickly enough
? Over relying on formulas and models
? Strategy was too focused
– Costs
– Expansion
– Innovation
– Selling
Business Policies and Strategies
Basic Concepts
Dr,Jerry L,Huxell
Objectives of Subject
? To provide a deeper understanding of strategic
analyses – know the situation.
? To discuss in more detail the strategic options that
a firm can consider – make a decision.
? To explore rational and creative approaches to
strategy implementation – the tough part of
strategy,
? To discuss how to evaluate and control the
strategy selected
Dr,Jerry L,Huxell
Charles Darwin
?,It is not the strongest of the species that
survives,nor the most intelligent; it is the
one that is most adaptable to change.”
? Survival or success depends on the ability to
adapt and compete in today’s ever-changing
world – change or die
Dr,Jerry L,Huxell
Quote
?,Without a strategy,an organization is like
a ship without a rudder,going around in
circles,It’s like a tramp; it has no place to
go.”
? Joel Ross and Michael Kami
Dr,Jerry L,Huxell
Management Challenges
? Power has shifted to the customer
? Size is not necessarily an advantage
? Accelerating rates of change in technology
? Globalization of business – new competitors
? Changing nature of the workforce
? Resource shortages
? Maintaining a competitive advantage
Dr,Jerry L,Huxell
Evolution of Strategy
? 1950s Budgeting
? 1960s Long range planning
? 1970s Strategy planning
? 1980s Strategic management
? 1990s Strategic innovation
? 2000s Strategic flexibility
Dr,Jerry L,Huxell
Strategy
? Strategy is the direction and scope of an
organization over the long term which
achieves advantages for the organization
through its configuration of resources
within a changing environment and to fulfill
stakeholder expectations.
Dr,Jerry L,Huxell
Strategy
? Strategy is the pattern of major objectives,
purposes or goals and essential policies or
plans for achieving those goals,stated in
such a way as to define what business the
company is in or is to be in and the kind of
company it is or is to be.
?Lynch
Dr,Jerry L,Huxell
Characteristics of Strategic
Decisions
? Long-term direction
? Advantage over the competition
? Scope of an organization’s activities
? Concerned with matching the firm’s
resources and competencies to the
environment
? Effects operational decisions
? Affected by stakeholder expectations
Dr,Jerry L,Huxell
Strategic Decisions
? Complex in nature
? Made in situations of uncertainty
? Demand an integrated approach to
managing
? May change external relationships
? May involve difficult internal changes
Dr,Jerry L,Huxell
Levels of Strategy
? Corporate level – overall purpose and scope
and how to add value; what businesses
should we be in
? Business level – how should we compete in
a particular market
? Operational level – how to deliver the above
strategies
Dr,Jerry L,Huxell
Strategic Approaches
? Prescriptive – strategy is a linear and
rational process – starts with the end
objectives.
? Emergent – strategy is emerging,adapting
to human needs and continuing to develop
over time – end objectives are not clear.
Dr,Jerry L,Huxell
Reactive Strategies
? Companies are looking inward and
reengineering processes,downsizing,
improving efficiencies,and reducing costs
? Many fail to look externally at the
competition and market,and do not try to
raise revenues
Dr,Jerry L,Huxell
Corporate Stars,1960s vs 2000s
Industry 1960s 2000s
Airlines Pan Am Southwest
Automobiles General Motors Toyota
Broadcasting CBS CNN
Computers IBM Dell
Information Library Internet
Dr,Jerry L,Huxell
Strategic Management Questions
? Where is the organization now?
? If no changes are made,where will the
organization be in one year? Two years?
Five years? Ten years? Are the answers
acceptable?
? If the answers are not acceptable,what
specific actions should management
undertake? What are the risks and payoffs?
Dr,Jerry L,Huxell
Vision versus Mission
? A vision is an image of where the company
wishes to be in the future and to which the
company may never reach – the desired
future state
? A mission is the purpose or reason for the
corporation’s existence and defines the
boundaries of the business we are in
Dr,Jerry L,Huxell
Specific Mission Questions
? What business are we in now?
? What business do we want to be in?
? What will our customers want in the future?
? What are the expectations of our stakeholders?
? Who will be our future competitors? Suppliers?
Partners?
? How should we compete?
? How will technology affect our business?
Dr,Jerry L,Huxell
Example,McDonalds
? Key Market,To offer the fast food
customers worldwide
? Contribution,food prepared in the same
high quality manner
worldwide,tasty and
reasonably priced
? Distinction,delivered in a consistent,low
key décor and friendly
atmosphere.
Dr,Jerry L,Huxell
Example,Otis Elevator
? Key market,To provide any customer
? Contribution,a means of moving people
and things up,down,and
sideways over a short
distance
? Distinction,with higher reliability than
any similar enterprise in
the world.
Dr,Jerry L,Huxell
Objectives
? Objectives are performance targets to which the
firm can be measured.
– Profitability
– Efficiency
– Growth
– Shareholder wealth
– Utilization of resources
– Reputation
– Market leadership
– Technological leadership
Dr,Jerry L,Huxell
Features of Objectives
? Measurable
? Have assigned responsibilities and due dates
? Specific
? Must stretch the organization
? Achievable and realistic
? Acceptable to stakeholders
? Consistent with strategy
Dr,Jerry L,Huxell
Strategic Fit
? Strategy must be consistent with the firm’s
goals and values,with the external
environment,with the resources and
capabilities of the firm,and with the
organization and systems of the firm.
Dr,Jerry L,Huxell
Key Success Factors
? Those factors that highlight the specific
outcomes crucial to success in the
marketplace,and the required competencies
and capabilities with the most bearing on
the profitability of the organization
Dr,Jerry L,Huxell
Core Competencies
? Core competencies are the collective
learning in the organization,especially how
to coordinate diverse production or service
skills,and integrate multiple streams of
technology.
Dr,Jerry L,Huxell
Learning Organization
? An organization skilled at creating,
acquiring,and transferring knowledge,and
at modifying its behavior to reflect new
knowledge and insights.
– Solve problems systematically
– Experiment with new approaches
– Learn form past experiences and others
– Transfer knowledge quickly and efficiently
Dr,Jerry L,Huxell
Strategic Leadership
? A person’s ability to anticipate,envision,
maintain flexibility,think strategically,and
work with others to initiate changes that
will create a viable future for the
organization.
Dr,Jerry L,Huxell
Work of a Strategic Leader
? Determining the firm’s purpose and vision
? Exploiting and maintaining core
competencies
? Developing human capital
? Sustaining an effective organizational
culture
? Emphasizing ethical practices
? Establishing balanced controls
Dr,Jerry L,Huxell
Common Strategic Mistakes
? Only doing strategic planning once a year
? Not measuring performance to the strategy
? Continuing to do what was successful
? Not concentrating enough on the
competition
? Underestimating the magnitude of the task
Dr,Jerry L,Huxell
Common Strategic Mistakes (cont’d)
? Overestimating capabilities
? Relying on size and resources instead of
speed and mobility
? Being unprepared to fight
? Following traditional rather that new and
creative strategies
? Choosing the wrong enemy at the wrong
time and wrong place
Dr,Jerry L,Huxell
Common Strategic Mistakes (cont’d)
? Not retreating quickly enough
? Over relying on formulas and models
? Strategy was too focused
– Costs
– Expansion
– Innovation
– Selling
