STRATEGIC HUMAN RESOURCE

DEVELOPMENT (8709)
Lecture 1

Presenter:

ISMATULLAH BUTT
PhD (S)
Strategic Management-Introduction

Lecture Plan:
Introduction of Strategic Management

Features of successful Strategic Management

Strategic planning

Strategic Management Model

Strategy formulation

Strategy implementation

Measuring performance
Strategic Management-Introduction

Strategy is the overall plan for deploying

resources to establish a favorable position.
Tactic is a scheme for a specific maneuver.

Strategic Management Process: The full set of

commitments, decisions, and actions required for a
firm to create value and earn above-average returns
Value Creation: What is achieved when a firm
successfully formulates and implements a strategy
that other companies are unable to duplicate or find
too costly to imitate.
Strategic Management-Introduction

What is strategy? An action a company takes to attain

superior performance.
What is the strategic management process? The process by which
managers choose a set of strategies for the enterprise to pursue its vision.
Strategic Management : Set of decisions and actions that result
to the formulation and implementation of plans designed to
achieve a companys objectives
Study of why and how some firms outperform others
 Company
Experiences,
Know-how,
Resource
Actual
Strengths and Company
Weaknesses, Strategy
and
Competitive
Capabilities

A Companys Strategy is Partly Planned and

Partly Reactive
 Social,
Competitive
Company External Factors
political, opportunities
conditions and
regulatory and and threats to
industry
community companys
attractiveness
factors well-being

Determine
relevance
Identify and Craft
of internal
Companys Strategic Situation and
evaluate the
alternatives strategy
external
factors

Resource
strengths, Shared values
Influences of
capabilities, and company
key executives
and
weaknesses
culture
Internal Factors

Factors Shaping the Choice of Company Strategy

Strategy as an Emergent Process

Strategy making in an unpredictable world

Creates the necessity for flexible strategic approaches.

Strategy making by lower-level managers

Strategy evolves through autonomous action.

Serendipity and strategy

Accidental discoveries and happenstances can have
dramatic effects on strategic direction.
Intended and emergent strategies
Realized strategies are combinations of intended and
emergent strategies.
Why Do Strategies Evolve?

A companys strategy is a work in progress

Changes may be necessary to react to
Shifting market conditions
Technological breakthroughs
Fresh moves of competitors
Evolving customer preferences
Emerging market opportunities
New ideas to improve strategy
Crisis situations
Benefits of Strategic Management
Strategy formulation activities enhance the firms ability to
prevent problems.
Group-based strategic decisions are likely to be drawn from
the best available alternatives.
The involvement of employees in strategy formulation improves
their understanding of the productivity-reward relationship in
every strategic plan and, thus, heightens their motivation.
Gaps and overlaps in activities among individuals and groups
are reduced as participation in strategy formulation clarifies
differences in roles.
Resistance to change is reduced.
Risks of Strategic Management

The time that managers spend on the strategic

management process may have a negative impact on
operational responsibilities.
If the formulators of strategy are not intimately
involved in its implementation, they may shirk their
individual responsibility for the decision reached.
Strategic managers must be trained to anticipate and
respond to the disappointment of participating
subordinates over unattained expectations.
CANOE THEORY
Think of your organization as a long canoe
The canoe has a destination
Everyone in the canoe has a seat and paddle
Everyone is expected to paddle
Those who wont paddle have to get out of the canoe
Those who prevent others from paddling have to re-adjust
or get out of the canoe
There are no passengers in the canoe
The canoe theory understands crisis
The canoe theory says you have the right to be happy
Features of Successful Strategic
Management
Has support of organizations executive officer.
Is user friendly.

Is participatory, not left to planners.

Is flexible.

Leads to resources decisions.

Engages and motivates all staff.

Is fresh and continuous, not static and stale.

Features (Continued)
Is Proactive
Not a Quick Fix

Part of Quality Management

Payoffs Increase over Time

Lessons Learned About Strategic
Planning
Plans must be tailored to organization.
No one size fits all.

Time to complete takes longer expect 50%

more than planned.

Process needs a shepherd.

Visionaries needed at beginning and detail

types thereafter.
Why Managers Dont Plan

Time Consuming
High Demands

Not Rewarded

Executives Dont Support It

Too Risky
Strategic Management Model

Scanning
Where are we now?
Strategy Formulation
Where do we want to be?
Strategy Implementation
How do we get there?
Measurement/Performance
How do we measure our progress?
Strategic Management Model
Strategy Formulation
Where do we want to be?
Vision

Mission

Values

Goals

Objectives
VISION
Vision without Action is a Daydream
Action without Vision is a Nightmare

Not Optional
Stretch 30+ Years
8-10 Words in length
Future State
Brief and Memorable
Vision Examples
Light the Fire Within
A Safer Future for All Communities

See the Mountains Breathe Freely

To Be the Happiest Place on Earth

To Be the Worlds Best Quick Service

Restaurant
Vision Levels of People

Some people never see it. (Wanderers)

Some people see it but never pursue it on their own.
(Followers)
Some people see it and pursue it. (Achievers)
Some people see it and pursue it and help others see
it. (Leaders)

(John Maxwell, Developing The Leader Within You, 1993.)

Mission Statement

In the absence of a clearly defined direction

one is forced to concentrate on confusion that
will ultimately consume you.
MISSION
What is our purpose?
Describes current state

Timeline is 3-5 Years

Builds on our distinctive competencies

Tends to focus on Core Business

30-35 Words in length

Mission Examples
To Lead All Communities in Disaster
Preparedness, Mitigation, and Recovery by
Maximizing Assistance and Support.
Caltrans Improves Mobility Across California.

To produce superior financial returns for our

shareholders as we serve our customers with

the highest quality transportation, logistics, and
e-commerce.
Corporate Governance
What is it?
Codes of Governance
Role of the Board of Directors
Role of Top Management Team
Executive Compensation
Corporate Governance

System by which a firms owners control its

affairs.
Does it work?
Codes of Governance
The Cadbury Code: 1992
Sarbanes-Oxley Act: 2002
Public Company Accounting Oversight Board
Triple bottom line
Four major issues:
Ownership structure and influence
Financial Stakeholder rights and relations
Financial transparency and information disclosure
Board structure and processes (audit)
Role of the Board of Directors

Monitor
Evaluate and influence

Initiate and determine

Organization of Board

Insiders versus outsiders

CEO/chair position

Committees Effectiveness
Role of Top Management Team

Who is the TMT?

Executive Leadership and Strategic Vision

Articulates strategic vision for corporation

Sets the model for others to identify and follow

Communicates high performance standards and

builds confidence in followers abilities to meet
standards
Managing strategic planning process
VALUES

Guiding Principles
Help establish Culture

Part of Preserving the Core

Core Ideology
Ethical Awareness Model
Organizational Ethics
Individual Ethics

Personal Values
Strategic Management Model
Scanning:
Where are we now?
Macro Analysis (STEP, PESTEL, ETC.)

Industry Analysis Competitive Intelligence

SWOT Analysis

Internal versus

External Elements
Why Scan?
To know your position in the environment
To respond effectively to constant change

To see the organization as a whole

To avoid surprises

To survive

To lay the foundation for strategic issues

SCANNING: Key Environmental
Variables
Macro Environment: STEP, PESTEL
Task Environment: Industry

Internal Environment: Focal Organization

Socio-Cultural Variables
Lifestyle Changes
Career Expectations
Regional Shifts in Population
Life Expectancies
More women in workforce
Greater concern for fitness
Postponement of family formation
Increase in temporary workers
Technological Variables
Total Federal Spending for R&D
Total Industry Spending for R&D
Focus of Technological Efforts
Patent Protection
Wireless Communications
Nanotechnology
Productivity Improvements
Genetic engineering
Economic Variables

GDP Trends
Interest Rates
Money Supply
Inflation Rates
Unemployment Levels
Wage/Price Controls
Energy Availability & Cost
Disposable & Discretionary Income
Political-Legal Variables
Antitrust Regulations
Tort Reform
Environmental Protection Laws
Taxation at local, state, federal levels
Hiring and Promotion Laws
Americans Disabilities Act of 1990
Sarbanes-Oxley Act of 2002
Demographic Variables
Aging Population
Rising affluence

Changes in Ethnic Composition

Geographic distribution of population

Disparities in income levels

Global Variables
Increasing Global Trade
Currency Exchange Rates

Emergence of Indian and Chinese Economies

Trade agreements (NAFTA, EU, ASEAN)

Creation WTO
STEP EXERCISE
Socio-Cultural
Technological

Economic

Politico-Legal
Industry Analysis
6 Forces Analysis
Industry Competitors
Suppliers/Vendors
Customers/Clients
Potential New Entrants
Substitutes
Other Stakeholders
Role of Complementors
New Entrants and Entry Barriers

Absolute cost advantages

Access to inputs
Government policy
Economies of scale
Capital requirements
Brand identity
Switching costs
Access to distribution
Proprietary products
Buyer Power (Channel and End
Consumer)
Buyer volume and information
Brand identity

Price sensitivity

Threat of backward integration

Product differentiation

Substitutes
Supplier Power
Supplier concentration
Differentiation of inputs
Switching costs
Threat of forward integration
Cost relative to total purchases in industry
Substitutes
Switching costs
Buyer inclination to substitute
Variety of substitutes
Price-performance tradeoff of substitutes
Necessity for product or service
Degree of Rivalry
Exit barriers
Industry concentration
Fixed costs
Industry growth
Intermittent overcapacity
Switching costs
Brand identity
Diversity of rivals
Corporate stakes
Other Stakeholders
Employees
Unions

Government

Trade and Professional Associations

Other Direct Influencers

Role of Complementors
Number of complements
Relative value added

Difficulty of engaging complements

Buyer perception of complements

Complement exclusivity

Tend to increase profits by increasing demand

for an industrys products

Competitive Profile Analysis
Identify Key Competitive Factors
Identify key Competitors
Industry Foresight
Customer
Needs

Unarticulated

Articulated

Customer
Served Unserved Types
Internal Environment
Internal Profile Analysis
SWOT Analysis
SWOT Analysis
Internal Environment
Strengths
Weaknesses

External Environment

Opportunities
Threats
Strategic Management Model

Strategy Formulation
Where do we want to be?
Vision
Mission
Values
Goals
Objectives
Goal Examples
Achieve excellence in the delivery of disaster
recovery and mitigation programs.
Professionally develop our employees as a
reflection of DADs key attributes and values.
Increase the supply of housing, especially
affordable housing.
Become a model for customer service.

To provide benefits in correct amounts and

issued in a timely manner.
Goal Examples
Achieve excellence in the delivery of disaster
recovery and mitigation programs.
Professionally develop our employees as a
reflection of DADs key attributes and values.
Increase the supply of housing, especially
affordable housing.
Become a model for customer service.

To provide benefits in correct amounts and

issued in a timely manner.
OBJECTIVES
Add specificity beyond Goals
Answer the questions

What is to be accomplished?
When?

Should contain the SMART Elements

OBJECTIVES: SMART Model

Specific
Measurable

Aggressive but Attainable

Results-Oriented

Timeframe
Strategic Objective Examples
By June 30, 2005 achieve 75% rating on the DAD
service index from all stakeholders.
Increase sales growth 6-8% in the next 5 years.
(P&G)
Cut corporate overhead costs by $30 million per
year. (Fortune Brands)
Operate 6,000 stores by 2010 up from 3,000 in
the year 2000. (Walgreens)
Reduce greenhouse gases by 10 percent (from a
1990 bast) by 2010. (BP Amoco)
Strategic Management Model

Strategy Implementation
Everyone is Responsible
Few Guidelines
No Easy 10-Step Checklist to Follow
Strategic Management Model

Strategy Implementation
Most open-ended part of Strategic Mgmt
People implement strategies not
Organizations
Strategic Management Model

Strategy Implementation
How do we get there?
Work Action Plans

GOOMs
Strategy Implementation
Considerations
7-S Framework Strategic Fit
Human Resources

Patience
7-S Framework
Shared Values
Strategy

Structure

Systems

Skills

Style

Staff
Human Resource Rule
Hire Smart
Train Hard

Manage Easy
Parable of the Bamboo
It takes patience and discipline to develop and
empower people; in fact, its like growing bamboo.
Once the seed is planted, you must water it daily for
four years before the tree breaks ground then it
grows 60 feet in 90 days! Executives who nurture
people can get similar resultsHow, you ask, can
such rapid growth be possible? It results from the
miles of roots that develop in those first four years.
Preparing people to perform is the task of
leadership.
GOOMs

Goals
Outcomes

Objectives

Measures
Definitions
Goal: Broad, General BHAG
Outcome: Desired end result and report
performance
Objective: What and When

Measure: A quantified unit that

assesses progress or achievement
GOOM Example
Goal 1: Achieve excellence in the delivery of disaster
recovery and mitigation.
Outcome: Increased Customer Satisfaction
Objective 1.1: By June 30, 2005, achieve 75% rating
on the DAD Service Index from all stakeholders.
Measure: DAD Service Index (DSI)
 Work Action Plan Template
Work Action Plan Template
Sponsor: Completion Date
Organization:

n.n Goal

Outcome

n.n Objective

Measure

Task Description Team Lead Staff Hours Completion

Date
Plan- Do-Check-Act
Why Measure Performance?
Reactive Reasons:
Government Intervention

Fewer Resources and Smaller Budgets

Increased Demand for Accountability

Mandated
Why Measure?
Proactive Reasons:
Makes us more responsive to public needs

Provides feedback on mission accomplishment

Creates blueprint for linking budget to

outcomes
Good management and good public policy
Measurement / Performance

How do we measure our progress?

5 Types of Measures
Input
Output
Outcome
Quality
Efficiency
Developing Bench Strength
Drill Down Application
Sponsors, Team Leads, and Team Members

Work Action Plan

Project Champion

Leadership Training

Leadership Conference Presentations

Establishing Organizational
Permanence
Training Emphasis
Certification

Awards & Recognitions

Caught-Ya

Celebrations

Walk the Walk

Strategic Management-Introduction

Questions and Answers

Thank You
And
ALLAH HAFIZ