SKILLS IN ORGANIZATIONAL STRATEGY AND PERFORMANCE MANAGEMENT
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WHAT IS STRATEGY
The way (hypothetically determined) an organization seeks to achieve the vision and mission.
Contains
Set of goals/objectives
Distinct method involve people (who), resource (what) and process (how) used by an organization to compete with its competitors
Specifies what you do and what you don't do
Change=[Dissatisfaction.Vision.first step of action]>Resistance
Change occurs when dissatisfaction, vision and first step of action exceed resistance
Change means to move form one state to another to become different from what it was.
Dissatisfaction used as a lever
Change will happen when the product of D.V.F greater than R
Resistance transfer into productive energy
People get excited when they participated
WHY DO ORGANIZATIONS NEED A STRATEGY?
External positioning
need to match internal resource and capabilities to the external environment to achieve sustainable competitive advantages arise from having capabilities for customers that competitors cannot offer
Internal alignment
resources are allocated to support strategic priorities and enable organizational units and employees to make decisions and implement policies that are consistent with achieving and sustain competitive advantage
Johnson G & Scholes: the direction and scope of an organization over the long term, which achieves advantage for the organization through its configuration/resources within a changing environment and to fulfill stakeholder expectation
Objective (similar to vision statement)
the end of strategy is designed to achieve
quantitative target and time frame
Scope
domain (niche) in which the enterprise intends to operate
customer segment, product line breadth, technologies employed, geographic locations served/degree of vertical integration (value chain activities will perform)
Advantage
enterprise will achieve its objective
enterprise do differently/better/uniquely compared to competitors
values proposition company offer to attract customers
broad business options and choices that have organization-wide impact. Always more than one way to achieve a vision/support a mission
hypothesis of the best way for the organization to achieve its vision and mission and satisfy customers and stakeholders
requires selection among alternative ways of doing things, focusing on few things and deferring/rejecting the rest
can be long term or short term
answer the broad questions
different than tactics (answer more narrow questions)
Ronda-Pupo & Guerras-Martin (2011): the dynamics of the firm's relation with its environment for which the necessary actions are taken to achieve its goals and/or to increase performance by means of the rational use of resources
BENEFITS OF STRATEGIZING
encourage forward thinking
provide clear direction and objective
facilitate allocation of resource
facilitate internal communication & cooperation
identify new opportunity for exploitation
prepare for threats
STRATEGY FORMULATION: mental process to create broad formula for how to compete
COMPETITVE STRATEGY: about being different
CATEGORIES OF STRATEGIC IDENTIFY/DIFFERENTIATION
Cost leader-charge the same price as competitor/less but operating with lower costs (operational excellence)
Differentiated Value Provider: operating with same cost as competitors but earning higher revenues by being able to charge higher price than competitors for customer who value their particular form of differentiation
Customer intimacy: focus on customer relationships and experience as the central themes of decision making about the product and services offering
Product leadership: strives to create best-in-class products, with an unbeatable combination of features, form and function
Disruptive innovation: creates a new category of business/attract new category of customer, change the game to new playing field
THE KEY QUESTIONS STRATEGY MUST ANSWER
Where will we compete
which market segment will we compete
which customer will we serve
what will we offer our chosen customers
What do we want to achieve
what is our aim
what will be our measures of success
How will we win
for value creation for customer and investors
What will be our key priorities
how will we concentrate our scarce resource to achieve success
STRATEGIC MANAGEMENT DEFINITION
the identification of the purpose of the organization and the plans and actions to achieve the purpose
set of managerial decision and action that determine the long term performance of business enterprise
involve formulate and implement strategy that will help in align the organization and its environment to achieve organizational goals
IMPORTANCE OF STRATEGIC MANAGEMENT
give broader perspective to the employees of an organization
employee can better understand how their job fits into the entire organizational plan and how it co-related to other organizational member
employee become more trustworthy, committed and satisfied as they co-relate themselves very well with each organizational task
understand reaction of environmental changes on the organization and the probable response of organization with the helps of strategic management
employee can judge impact change of their own job and effectively face the changes. manager & employee do appropriate things in appropriate manner. need to be effective and efficient
major role of strategic management is to incorporate various functional areas of the organization completely to ensure functional areas harmonize and get together well
keep a continuous eye on the goals and objectives of the organization
VISION
statement that outline organization's long term aspirations and desired future state.
should be motivating, challenging, inspiring and provide framework for decision making, goal setting and strategic planning
consistent with an organization's mission and core values and reflects its strengths, capabilities and competitive advantages.
communicated clearly and effectively to stakeholders, employees, customers, investors, community
MISSION
organization's purpose and reason for existence
brief, clear and concise statement outline goal/objective of organization
provide direction for decision-making, strategy and planning
answers questions what organization does, who serves, how it serves
reflect organization core values, beliefs, principles and understood by stakeholders, employees, customers, investors and community
flexible enough to adapt to changes in organization's environment, goals and priorities
CORE VALUES
fundamental belief/principle deeply ingrained and important to an individual, organization, society
guiding principles that helps to shape decision-making, behavior and actions
can be moral/ethical principles, cultural values, beliefs about what is important/valuable/personal convictions
STRATEGIC MANAGEMENT PROCESS
Environment assessment
PESTEL analysis:
identify and analyze external factors that impact on organization's performance and success
Political: taxation policies, trade restriction, political stability and government intervention
Economic: inflation rates, exchange rates, economic growth and unemployment rates
Sociocultural: demographics, lifestyle trends, consumer attitudes and social norms
Technological: new inventions, automation, digitalization, research, development
Environmental: climate change, natural disaster, pollution and sustainability concerns
Legal: employment laws, consumer protection laws, intellectual property laws, health and safety regulation
SWOT analysis
strategic planning tool that helps individuals and organizations identify and evaluate strengths, weaknesses, opportunities and threats
Strength: skills, resource, competitive advantage
Weakness: lack of resource, skills, expertise
Opportunity: market trends, emerging technologies, new partnership
suggest specific strategies that can be used to address the identified strengths, weaknesses, opportunities and threats
Strengths-opportunities
Weakness-opportunities
Strengths-threats
Weaknesses-threats
Identifying enabler and pains
Identifying stakeholder
Strategy formulation
vision & mission
core values & customer value proposition
strategic themes/thrust & result
strategic objectives
strategy map
measures & targets
strategic initiatives
Strategy implementation
Strategy monitoring & controlling
Assessment & strategy review
9 STEPS TO SUCCESS BUILDING & IMPLEMENTING A BALANCED SCORECARD
Assessment
BSC development plan
Strategic elements
Communications & change management plan
Evaluation
results
revised strategies
Cascade
business & support unit scorecards
Automation
software
performance reporting
knowledge sharing
Initiatives
strategic projects
Performance measures
performance measures
targets
baselines
Strategic map
objectives linked in cause-effect relationship
Objectives
strategy elements
Strategy
customer needs & value
strategic themes
strategic results
WHAT IS BALANCED SCORECARD
David P. Norton & Robert Kaplan (1992): method approach company seen in balanced way through chosen perspectives beyond financial measure
Balanced:
To be able to see things from various dimensions or perspective
Perspectives balances: 2-max (dependent on situation)
Outcome: resultant effect of performance
Performance driver: thing/factor that affect future performance
improved strategic planning process
change initiative for visualizing and communicating an organization's long term strategic intent
objective: framework for breaking strategy into actionable components
strategic management system: align day-to-day work to an organization's vision and strategy using strategic performance measures and strategic initiatives
inform strategic budgeting, and allow organization to learn what works and to become more strategy focused
LOGICAL MODEL COMPONENTS
Input: resource used to produce output and outcome
Process/activity: program does with inputs
Output: products and service create/deliver
Intermediate outcome: changes occurred in lives of beneficiaries/participants fallen short of significant benefits (attitudinal changes toward more civic participation)
End outcome: changes occurred in lives of of beneficiaries/participants constitute significant benefits (increased civic knowledge, increased likehood to perform service)
LOGIC MODEL BENEFITS
communicate potential value
clarify results trying to achieve
identify key program elements that must be tracked to assess program's effectiveness
make clear program premises and make visible stakeholder assumptions
improve program planning and performance by identify ways to measure program success and areas for improvement
STRATEGIC PERSPECTIVES
Financial: results that business provide to stakeholders
Customer: identify customer, market segments and value propositions
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