Characteristics of Strategic Intent

Indicates firms

intent to making quantam gains in competing against key rivals and to establishing itself as a winner in the marketplace, often against long odds
Involves

establishing a grandiose performance target that is out of proportion to its immediate capabilities and market position but then devoting the companys full resources and energies to achieving the target over time
Signals

relentless commitment to achieving a particular market position and competitive standing

Levels of Strategy-Making in a Diversified Company

Corporate-Level Managers Business-Level Managers
Corporate Strategy
Two-Way Influence

Business Strategies
Two-Way Influence

Functional Managers

Functional Strategies
Two-Way Influence

Operating Strategies

Tasks of Corporate Strategy

Moves

to achieve diversification
to boost performance of individual businesses

Actions

Capturing

valuable cross-business synergies to provide 1 + 1 = 3 effects!

Establishing

investment priorities and steering corporate resources into the most attractive businesses

Levels of Strategy-Making in a Single-Business Company

Business-Level Managers
Business Strategy
Two-Way Influence

Functional Managers

Functional Strategies

Two-Way Influence

Operating Managers

Operating Strategies

Tasks of Business Strategy

Initiating approaches

to produce successful performance

in a specific business
Crafting

competitive moves to build sustainable competitive advantage

Developing

competitively valuable competencies and capabilities

Uniting

strategic activities of functional areas

Gaining

approval of business strategies by corporatelevel officers and directors

Tasks of Functional Strategies

Game

plan for a strategically-relevant function, activity, or business process

Detail how

key activities will be managed

Provide

support for business strategy

Specify how

functional objectives are to be achieved

Tasks of Operating Strategies

Concern

narrower strategies for managing grassroots activities and strategically-relevant operating units
Add

detail to business and functional strategies

Delegation

of responsibility to frontline managers

What Is a Strategic Plan?

Its strategic vision and business mission
A Companys Strategic Plan Consists of

Its strategic and financial objectives

Its strategy

Corporate Governance: Strategic Role of a Board of Directors

Exercise strong
Shareholders Stakeholders

oversight to ensure the five tasks of strategic management are executed to benefit
or

Make

sure executive actions are not only proper but also aligned with interests of stakeholders

Good Corporate Governance Matters

The

whole fabric of effective corporate governance is undermined when boards of directors shirk their responsibility to maintain ultimate control over
Companys

strategic direction, of its strategy, and

Major elements

Business approaches management

is using to implement and

execute the strategy

Board

members are obligated to rein in a CEO who oversteps the bounds of sound business principles and ethical behavior
A rubber stamp

board abdicates its responsibility to shareholders

Relationship Between Strategy and Business Model

Strategy - Deals with a companys competitive initiatives and business approaches Business Model -Concerns whether revenues and costs flowing from the strategy demonstrate the business can be amply profitable and viable

Microsofts Business Model

Employ a cadre of highly skilled programmers to develop proprietary code; keep source code hidden from users Sell resulting OS and software packages to PC makers and users at relatively attractive prices and achieve large unit sales

Most costs in developing software are fixed; variable costs are small - once breakeven volume is reached, revenues from additional sales are almost pure profit Provide technical support to users at no cost

Tests of a Winning Strategy

GOODNESS OF FIT TEST
How

well does strategy fit the firms situation?

COMPETITIVE ADVANTAGE

TEST
Does

strategy lead to sustainable competitive advantage?

PERFORMANCE TEST
Does

strategy boost firm performance?

Why Is Strategy Important?

A compelling need exists for managers to

proactively shape how a firms business will be conducted

A strategy-focused firm is more likely

to be a strong bottom-line performer than one that views strategy as secondary

Good Strategy + Good Strategy Execution = Good Management

Crafting and executing strategy are core management functions Among all things managers do, nothing affects a companys

ultimate success or failure more fundamentally than how well its management team
Charts

the companys direction, and business

Develops competitively effective strategic moves

approaches, and
Pursues what

needs to be done internally to produce good day-in/dayout strategy execution

Excellent execution of an excellent strategy is the best test of managerial excellence -- and the most reliable recipe for winning in the marketplace!