Enterprise Module Sect 7

8/2/2019 Enterprise Module Sect 7

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DEVELOPING STRATEGY:LONG-TERM BUSINESS

PLANNINGJEAN CLARKE

LEEDS UNIVERSITY BUSINESSSCHOOL


2/20

AIMS OF THE LECTURE To understand the meaning and importance of

strategic management

To understand what a companys mission andobjectives should contain

To be able to conduct a PESTLE analysis

To understand the various levels of planning

To complete a group task through drawing on the

case study of Dyson


3/20

MANAGING STRATEGY Pearce and Robinson (1991) define strategic

management as the set of decisions and actions that

result in the formulation and implementation of

plans designed to achieve a companys objectives.

It is an ongoing iterative process

Wider than initial business planningsets long-term

objectives and sets the business on a particular path

In todays uncertain environment must be open to

revision and change


4/20

MANAGEMENT AND CHANGE

(Johnson, 1987) Strategic Management:

Process by which organisations determine their purpose

Objectives and desired levels of attainment

Decide on actions for achieving these objectives in anappropriate time-scale, and frequently in a changingenvironment

Implement the actions and assess progress and results.

Actions may be changed or modified whenever and

wherever necessary Strategic change:

Changes which take place over time to the strategies andobjectives of the organisation.

Change can be gradual or evolutionary, dramatic or even

revolutionary


5/20

IMPORTANCE OF STRATEGIC

MANAGEMENT The flame of competition has changed from

smoky yellow to intense white heat. For

companies to survive and prosper they willhave to have a vision, a mission and a

strategy. They will pursue the action arising

from that strategy with entrepreneurial skill

and total dedication and commitment to win.

Peter B. Ellwood, Chief Executive, Lloyds TSB Group


6/20

GROUP TASK Individuals should divide into groups of five

Discuss the statement above

Why do you think competition has increased?

Why is it more than important than ever to

attend to strategic management?

What are the potential problems if firms do

not consider strategic management?


7/20

MISSION AND OBJECTIVES Therefore an essential element is setting

companys mission and objectives

Mission: Essential purpose of the organisation

Why its in existence

Nature of the business(es) it is in

Customers it seeks to serve and satisfy

Objectives/goals: Desired results linked to particular time-scales

Size or type of organisation

Nature and variety of the areas of interest

Levels of success


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THE STRATEGIC PLANNING

APPROACH (Ansoff, 1987) Strategic analysis

Appraisal of the current situation & current

strategiesSWOT Determination of desirable changes to

objectives & strategies

Strategic creation and choice

Search for & choose suitable courses of action

Strategy implementation

Implementation of changes

Monitoring progress, ongoing appraisal


9/20

THE BUSINES ENVIRONMENT

The business environment:political, economic, social,technological &environmental & legal

aspects

Industry competitors,customers & suppliers

The organisation


10/20

PESTELA FRAMEWORK FOR

ANALYSING THE ENVIRONMENT

Political/legal

Economic

Socio-cultural Technological

Environmental

Legal

Used to look at the future impact of

environmental factors

Identify opportunities and threats


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PESTEL (Johnson and Scholes, 2003)

Political/legal

Monopolies legislation

Taxation policy

Foreign trade regulations

Employment law Government - organisation

relationship

Socio-cultural factors

Population demographics

Income distribution Social mobility

Lifestyle changes

Attitudes to work & leisure

Environmental

Environmental protection laws Energy consumption

Economic factors

GNP trends

Interest rates

Currency fluctuations & exchange rates

Inflation Unemployment

Disposal income

Technological

Government spending on research

Government and industry focus ontechnological effort

New developments

Speed of technology transfer

Legal

Monopolies legislation Employment law


12/20

LEVELS OF PLANNING

(Bracker and Pearson, 1986)Corporate plan

Strategic plan

Department plans

Business level plans

Product market plans

Functional level plans

Time-based plans

Single-use plans

Production plansFinancial plans &Budgets

Programmes &projects

SBUs,business

portfolios,division plans

Global

Local


13/20

CORPORATE STRATEGY

attempts to define the domain of businesses the

firm intends to operate in

Sense of purpose

Corporate parenting

Portfolio issues

Value adding

Which industries

Becomes international as an organisation is

influenced by

Competition, currency, country


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BUSINESS STRATEGY

How should we compete in our chosen product

markets?

Products/services

Markets

Competition

Advantage


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FUNCTIONAL STRATEGIES

How we manage the functions of finance,

marketing, operations, human resources and

R&D in ways consistent with our international

corporate and business strategies

About

resource application

implementation

impact of technology

competitive advantage


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Situation appraisal

Review of corporateobjectives

Corporatestrategy

Clarification of

objectives

Situationassessment

Monitor progress

Implementation

Competitivestrategy

Strategicdecisions

Leadership & culture

Where are we?

Where are

we going?

How arewe getting

there?

THE STRATEGIC MANAGEMENT APPROACH


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BENEFITS OF STRATEGIC

THINKING(Miller and Cardinal, 1994)

Identify more effectively the key success factorsinherent in the economics of the business

Segment markets to gain decisive competitive

advantages Base strategies on measurement and analysis of

competitive advantage Anticipate competitors responses

Exploit more, different degrees of freedom thancompetitors

Give investment priority to business/areas thatpromise competitive advantage


18/20

STRATEGIC MANAGEMENT

FAILURES

Strategic Management is not something that many

companies are thought to be very good at

Mistakes made in recent years:

Misguided strategic choices

Poor strategy implementation

Technical weaknesses

Market complacency

A failure to maximise the potential and

contribution of people


19/20

FORCES INFLUENCING BUSINESS

STRATEGY

Nature of the competitive environment

What do customers/users value?

Does the business unit have competenceswhich allow it to deliver the desired

competitive strategy => is competitive

advantage likely? Constraints upon strategy in terms of

stakeholder expectations


20/20

GROUP TASK

Divide into groups of five individuals

All students should have read the Dyson case study whichaccompanies the lecture notes

What was the mission/objectives of the Dyson company? Outline the Corporate, business and functional strategies of

Dyson

What type of strategy did James Dyson pursue?

Why was this the most effective strategy? What are the challenges facing this still young company?

Conduct a PESTLE analysis of the Dyson company

Draw up presentation and present to other groups

Documents

Enterprise Module Sect 7