STRATEGIC MANAGEMENT : STRATEGIC MANAGEMENT LECTURER Pedro Coelhoso STRATEGY : STRATEGY a plan, a description of a means to an objective; a move or tactic, especially where competition with others is concerned; a pattern, something that can be recognised in an organisation’s decisions or actions; a position, an organisation’s place in its environment; a perspective, how an organisation’s collective consciousness views the outside world. STRATEGIC MANAGEMENT IS MARKED BY THE FOLLOWING FEATURES: : STRATEGIC MANAGEMENT IS MARKED BY THE FOLLOWING FEATURES: Planned evolution Specific mental attitude Strategic thinking and action as a conscious response Collective learning process The creation and retention of potential for success. CONCEPTION OF STRATEGIC MANAGEMENT: CONCEPTION OF STRATEGIC MANAGEMENT The conception of strategic management involves integrating various basic elements of the strategic development process. The elements to be examined and included in an integrated conception process are contents, actors, processes, and instruments. Initially, these aspects are to be considered and analysed in and of themselves. At the same time, an overall picture of a strategic management conception emerges only in the integration and coordination of these elements. Strategic management assumes that strategic change will be influenced by the shaping of these elements and their coordination. Thus, contents, actors, processes, and instruments are elements that can be shaped and managed and used to initiate and realise change in administrations. Such change is directed at developing administrative capabilities and using them as preset or developed standards of success. CONCEPTION OF STRATEGIC MANAGEMENT: CONCEPTION OF STRATEGIC MANAGEMENT The dimension of content describes the purposes of strategic development processes, that is to say, the “what” question: What is the strategy? What are the objectives? In contents, distinctions are often made between strategic issues, objectives, and strategies. These are interrelated but different content components. Strategic issues serve to determine emphasis and delimit the purpose of strategic action. Objectives provide reference and – in a rational understanding of management – set a standard for evaluating success. The strategies already discussed represent the core content of strategic management (as plan, as pattern, etc.). The interplay and interaction among these three content components can vary according to the conception of strategic management. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT One of the first empiric researches that related the technology with the activities organizations was sociologist Joan Woodward’s, in 1958 in England, in which took the conclusions that the technology influences strongly the structure and the behaviour organizational. The author characterized this fact of “technological imperative” that conditions the structure and the behaviour of the companies. In compensation the Group of Aston - English researchers' group - they showed that the size of the company constitutes the most important determinant of the effect of the technology on the organizational structure. So, the influence of the technology is powerful, but it is not decisive. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT Actors are the active, participant organisations, groups, individuals in the strategic development process. At the same time, actors are as a rule the senior managers within the administration, politicians, administration employees, and other stakeholders. The most important actors in strategic management are the senior managers in the administration. They bear the main responsibility for strategic processes and contents as well as for the application and integration of instruments. Moreover, where strategic management in public administration is concerned, the role of political actors is of great importance. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT This overview of the process addresses the question how strategies are developed or how strategy develops. In strategic processes, distinctions are typically made between the phases of strategic development or formulation, implementation, and evaluation. Even if these phases are often represented in ideal form as a control circuit, cohesive control systems or cyclically performing strategic processes cannot be assumed in reality. The consideration of processes is important for understanding evidence from and functionality of other elements of conception, for they provide insight, for example into how certain strategies or goals come into being or how instruments are applied and developed. PowerPoint Presentation: Sensibilization Mission Definition of the general objectives Strategic segmentation Strategic diagnosis Definitions of the objectives for segment Possible strategies Chosen strategy Implementation Control Internal analysis External analysis METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 1 - S ensibilization - It is the first stage of the strategic planning, that consists of the manager's sensibilization, as the need of the application of this methodology and as a way of structuring the actions of the company. This methodology requests the accompaniment of the management in all the stages, otherwise, the success of this tool can be beyond of its real benefits. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 2 - Mission - The objective of this stage is to define the managerial action and to legitimate its function front the society. Through the definition of the mission, it’s try to identify, which the reason of being of the company and the activities that the same should concentrate on the future. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 3 - Definition of the general objectives - In this third stage the company defines the objectives reached through its operations. It’s easy to make mistakes between objectives and strategy; objectives are the means to reach an objective. The importance of settling down the objectives is that aids in the taking of decisions, it supplies patterns for performance measures and the objectives can be easily transformed in action forms than the mission of the company. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 4 - Strategic segmentation - It is a process of dividing product/market in groups of similar characteristics. The segmentation can be made through several approaches, such as; technology, the buyer's profile, geographical location, positions social, economical and others. The objectives of the segmentation are; evaluation of the performance of the company at a level of details bigger than the group of the company, allocation of resources of the different units of the company, identification of the competitors in each segment, identification of new segments the company can act. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 5 - Strategic diagnosis - This stage can be divided in two phases: 5.1. Internal analysis; 5.2. External analysis. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 5.1 – Internal analysis - it tries to approach the weak and strong points (threats/opportunities) company, competitive direct or in potential companies. This analysis can be made through a checklist of all the areas of the company (human resources, organization, finances, researches and development, production and marketing) facilitate to trace a strategic profile and to place the company in the market in relation to its competitors. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 5.2 - External analysis - has for purpose to study the relationship between company and its environment in terms of opportunities and menaces, as well as the current position of its products and the markets in what it acts. There are several factors that can affect the strategy of the companies, some of them are: economic, social, technological, government and others. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 6 - Definition of the objectives for segment - this phase consists of quantifying the general objectives of the company. They are given quantitative data that the company intends to reach in a pre-certain period. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 7 - Possible strategies - in this phase it is necessary to do an analysis of the possible applied strategies, already considering the aspects established in the previous phases. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 8 - Chosen strategy - at this phase owning several possible strategies, it should be selected the most appropriate the reality and the needs of the company. The viability of the strategies an be analyzed through a meticulous study basing on some data, such as: possible investments, working capital, on attribution margin, projection of sales, analysis of costs and others. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 9 - Implementation - it consists of placing in practice, through the action plans, the strategies that were established. The action plans translate the strategies in operational actions, articulated around the objectives, and the strategic actions are constituted of projects distributed along the time, where these represent the link way to strategic decisions with the budget economic financier of the company. METODOLOGY OF STRATEGIC MANAGEMENT: METODOLOGY OF STRATEGIC MANAGEMENT 10 - Evaluation and control - This is the phase which the company makes an analysis, if the decisions takings in the previous phases reached the pre-certain results. This last stage allows identifying problems and existent flaws allowing the taking of right decisions. ANALYSING THE EXTERNAL ENVIRONMENT : ANALYSING THE EXTERNAL ENVIRONMENT It consists to identify environmental opportunities and threats. To analyze the environment it is very important to confront the company to factors of the environment. In particular importance at the industry level is Porter's five forces model and the stage of the life cycle model . Which factors in the macro environment will appear salient depends on the specific company being analyzed. However, use each factor in turn (for instance, demographic factors) to see whether it is relevant for the company in question. ANALYSING THE EXTERNAL ENVIRONMENT: ANALYSING THE EXTERNAL ENVIRONMENT Five Forces Analysis helps the marketer and the company manager to contrast a competitive environment. Five Forces Analsysis looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry. ANALYSING THE EXTERNAL ENVIRONMENT: ANALYSING THE EXTERNAL ENVIRONMENT The threat of entry: Economies of scale e.g. the benefits associated with bulk purchasing. The high or low cost of entry how much will it costs for the latest technology? Ease of access to distribution channels. Do our competitors have the distribution channels sewn up? Cost advantages not related to the size of the company, ersonal contacts or knowledge that larger companies do not own or learning curve effects. ANALYSING THE EXTERNAL ENVIRONMENT: ANALYSING THE EXTERNAL ENVIRONMENT The threat of entry (sequel): Will competitors retaliate? Government action e.g. will new laws be introduced that will weaken our competitive position? How important is differentiation? The Champagne brand cannot be copied. This desensitises the influence of the environment. ANALYSING THE EXTERNAL ENVIRONMENT: ANALYSING THE EXTERNAL ENVIRONMENT The power of buyers: This is high where there a few, large players in a market e.g. the large grocery chains. If there are a large number of undifferentiated, small suppliers small farming businesses supplying the large grocery chains. The cost of switching between suppliers is low from one fleet supplier of trucks to another. ANALYSING THE EXTERNAL ENVIRONMENT: ANALYSING THE EXTERNAL ENVIRONMENT The power of suppliers: The power of suppliers tends to be a reversal of the power of buyers. Where the switching costs are high e.g. Switching from one software supplier to another. Power is high where the brand is powerful ex: Cadillac, Pizza Hut, Microsoft. There is a possibility of the supplier integrating forward ex: Brewers buying bars. Customers are fragmented (not in clusters) so that they have little bargaining power, ex: Gas/Petrol stations in remote places. ANALYSING THE EXTERNAL ENVIRONMENT: ANALYSING THE EXTERNAL ENVIRONMENT The threat of substitutes: Where there is product-for-product substitution e.g. email for fax Where there is substitution of need e.g. better toothpaste reduces the need for dentists. Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies. We could always do without ex: cigarettes. ANALYSING THE EXTERNAL ENVIRONMENT: ANALYSING THE EXTERNAL ENVIRONMENT Competitive Rivalry: This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is always seen in the center of the diagram. ANALYSING THE EXTERNAL ENVIRONMENT: ANALYSING THE EXTERNAL ENVIRONMENT Porter's five forces model: threat of entry the power competitive the power of buyers rivalry of suppliers the threat of substitutes ANALYSING THE COMPETITIVE ENVIRONMENT: ANALYSING THE COMPETITIVE ENVIRONMENT In formulating business strategy, managers must consider the strategies of the firm's competitors. While in highly fragmented commodity industries the moves of any single competitor may be less important, in concentrated industries competitor analysis becomes a vital part of strategic planning. Competitor analysis has two primary activities: Obtaining information about important competitors Using that information to predict competitor behaviour. ANALYSING THE COMPETITIVE ENVIRONMENT: ANALYSING THE COMPETITIVE ENVIRONMENT The goal of competitor analysis is to understand with which competitors to compete, competitors' strategies and planned actions, how competitors might react to a firm's actions, how to influence competitor behaviour to the firm's own advantage casual knowledge about competitors usually is insufficient in Competitor Analysis. Rather, competitors should be analyzed systematically, using organized competitor intelligence-gathering to compile a wide array of information so that well informed strategy decisions can be made. ANALYSING THE COMPETITIVE ENVIRONMENT: ANALYSING THE COMPETITIVE ENVIRONMENT Competitor Analysis Framework: Michael Porter presented a framework for analyzing competitors. This framework is based on the following four key aspects of a competitor: Competitor's objectives; Competitor's assumptions; Competitor's strategy; Competitor's capabilities. Objectives and assumptions are what drive the competitor, and strategy and capabilities are what the competitor is doing or is capable of doing. ANALYSING THE COMPETITIVE ENVIRONMENT: ANALYSING THE COMPETITIVE ENVIRONMENT Competitor's Resources and Capabilities: Knowledge of the competitor's assumptions, objectives, and current strategy is useful in understanding how the competitor might want to respond to a competitive attack. However, its resources and capabilities determine its ability to respond effectively. A competitor's capabilities can be analyzed according to its strengths and weaknesses in various functional areas, as is done in a swot analysis. Finally, since the competitive environment is dynamic, the competitor's ability to react swiftly to change should be evaluated. Some firms have heavy momentum and may continue for many years in the same direction before adapting. ANALYSING THE COMPETITIVE ENVIRONMENT: ANALYSING THE COMPETITIVE ENVIRONMENT Competitor Response Profile: Information from an analysis of the competitor's objectives, assumptions, strategy, and capabilities can be compiled into a response profile of possible moves that might be made by the competitor. This profile includes both potential offensive and defensive moves. The specific moves and their expected strength can be estimated using information gleaned from the analysis. The result of the competitor analysis should be an improved ability to predict the competitor's behaviour and even to influence that behaviour to the firm's advantage. ANALYSING CONSUMERS: ANALYSING CONSUMERS Trends in the behaviour of the consumer makes question that afflicts the companies currently is the constant modification of behaviour of the consumer, example of this fact, is the preference of the consumer however for a durable expensive product, however for a cheap dismissible product. In the diverse branches of the industry and the commerce, the competition between the companies, most of the time, makes with this behaviour is with frequent modifications. The behaviour of the consumer in elapsing of the times comes if transforming and the accompaniment of this profile it is of basic importance for adoption of the product line to be used in the current market. The consumers of today are attributing to bigger weight in the quality and the price of the product when taking its decisions of purchase. The principle to offer each time more, with bigger quality and charging each time less is basic for the survival of the company. ANALYSING CONSUMERS: ANALYSING CONSUMERS The relationship of the company with its customer must obey the quality with price just. Traditionally a rule in the consuming market exists of that the product most expensive is connected to the one of bigger quality. The question of as to promote the differentiation of the product of a company who possesses the product with quality just/price, before the power of purchase of the consumer is decisive. In this work they will be boarded aspects in the behaviour of the consumer (marketing, psychological, etc.) and general lines for companies in what it refers to the important factors that they influence the consumption market. The great mass of the current consumers, clam for products with quality and right prices. ANALYSING CONSUMERS: ANALYSING CONSUMERS The first step for the guarantee of market of a product with quality is to know the answers of the following questions: The customer perceives the product quality? The customer identifies, beyond the quality, the price just? Know the profile of our current customer? Identify the competing current right-handers? Identify the factors of change of the behaviour of purchase of the consumer? We have strategy of marketing with the objective of keep the mark next to the market? ANALYSING CONSUMERS: ANALYSING CONSUMERS It swims just guarantees the success of sells of a product with price (of market) and of high quality. We must always be intent to the behaviour of the consumer as, for example: what they buy, why they buy, when buy, where they buy, with that frequency purchase and with that frequency uses what they buy. The diversity in the human behaviour, normally, in takes them to leave to observe that the people in fact are much seemed. Basic similarities exist that serve to explain and to clarify the consumption behaviour. ANALYSING CONSUMERS: ANALYSING CONSUMERS The majority of the people tend to try the same types of necessities and reasons; they simply express these different reasons. Therefore, the agreement of the human reasons is very important for the companies, therefore it allows that these understand and can foresee the human behaviour in the consuming market. For this case the entrepreneur must be sufficiently intent. The positive image of the mark helps the consumer if to incline favourably for future purchases of this mark and to resist the changes for the competitors. When the consumers do not have experience with a product, them they tend to trust a preferred or known mark. The consumers frequently find that known marks are better and that valley the penalty to buy them for the implicit security of quality, trustworthiness, performance and service. ANALYSING CONSUMERS: ANALYSING CONSUMERS The basic strategy for the success of a launching of a product is based on the premise of that the company, first, identifies the necessities of the consumer and, later, develops products and services to satisfy these necessities. The “research of the consumer” offers a set of diverse methods to identify such necessities, being also used to understand the consumption behaviour better. He is used to identify and to locate market-target appropriate and to learn itself on the habits of media of the target. She is used in such a way to identify to the sensible necessities how much the not-sensible (latent), to learn itself as the consumers perceive products, marks and store, which its attitudes before and after promotions campaigns and as and why they take its decisions of consumption. Many of these applications of the research of the consumer have management perspective the product, price, promotion and distribution. ANALYSING CONSUMERS:
ANALYSING CONSUMERS The field of research of the consumer if develops as an extension of the
field, focus almost that exclusively the behaviour of the consumer instead of other aspects of the marketing process. The initial reason to study the behaviour of the consumer was to enable the companies to foresee as the consumers would react the promotional messages and to understand because they decided to buy what they bought. The companies must be guided for the market and the production does not stop therefore the companies do not create needs, only presume that they will go to satisfy definitive necessities. An orientation for the market is concentrated in the necessities of the purchaser. Already the orientation for production is concentrated in the necessity of the salesman. So that the companies obtain to presume these necessities in the consumer, she has of if understanding that the consumer must be motivated to acquire definitive product.
ANALYSING FINANCIAL RESOURCES: ANALYSING FINANCIAL RESOURCES Another important aspect of analyzing a case study and writing a case study analysis is the role and use of financial information. A careful analysis of the company's financial condition immensely improves a case write-up. After all, financial data represent the concrete results of the company's strategy and structure. Although analyzing financial statements can be quite complex, a general idea of a company's financial position can be determined through the use of ratio analysis. ANALYSING FINANCIAL RESOURCES: ANALYSING FINANCIAL RESOURCES Financial performance ratios can be calculated from the balance sheet and income statement. These ratios can be classified into five different subgroups: profit ratios , liquidity ratios , activity ratios , leverage ratios , and shareholder-return ratios . These ratios should be compared with the industry average or the company's prior years of performance. It should be noted, however, that deviation from the average is not necessarily bad; it simply warrants further investigation. For example, young companies will have purchased assets at a different price and will likely have a different capital structure than older companies. In addition to ratio analysis, a company's cash flow position is of critical importance and should be assessed. Cash flow shows how much actual cash a company possesses. ANALYSING FINANCIAL RESOURCES: ANALYSING FINANCIAL RESOURCES Profit Ratios : Profit ratios measure the efficiency with which the company uses its resources. The more efficient the company, the greater is its profitability. It is useful to compare a company's profitability against that of its major competitors in its industry. Such a comparison tells whether the company is operating more or less efficiently than its rivals. In addition, the change in a company's profit ratios over time tells whether its performance is improving or declining. A number of different profit ratios can be used, and each of them measures a different aspect of a company's performance. The most commonly used profit ratios are gross profit margin , net profit margin , return on total assets , and return on stockholders' equity . ANALYSING HUMAN RESOURCES:
The management of human resources (HR) serves these key functions: Hiring (recruitment) Compensation Evaluation and Management (of Performance) Promotions Managing Relations It is the responsibility of human resource managers to conduct these activities in an effective, legal, fair, and consistent manner. The objective of HR is to maximize the return on investment from the organization's human capital.
ANALYSING HUMAN RESOURCES: ANALYSING HUMAN RESOURCES In order to know the business environment in which any organization operates, three major trends should be considered: Demographics – the characteristics of a population/workforce, for example, age, gender or social class. This type of trend may have an effect in relation to pension offerings, insurance packages etc. ANALYSING HUMAN RESOURCES: ANALYSING HUMAN RESOURCES Diversity – the variation within the population/workplace. Changes in society now mean that a larger proportion of organizations are made up of female employees in comparison to thirty years ago. Also over recent years organizations have become more culturally diverse and have increased the number of working patterns (part-time, casual, seasonal positions) to cope with the changes in both society and the global market. It is important to note here that an organization must consider the ethical and legal implications of their decisions in relation to the HR management policies they enact to protect employees. ANALYSING HUMAN RESOURCES: ANALYSING HUMAN RESOURCES Diversity : Employers have to be acutely aware of the rise in discrimination, unfair dismissal and sexual/racial harassment cases in recent years and the detrimental effects this can have on the employees and the organization. Anti-discrimination legislation over the past 30 years has provided a foundation for an increasing interest in diversity at work which is “about creating a working culture that seeks, respects and values difference.” ANALYSING HUMAN RESOURCES: ANALYSING HUMAN RESOURCES Skills and qualifications – as industries move from manual to a more managerial professions so does the need for more highly skilled graduates. If the market is ‘tight’ not enough staff for the jobs, employers will have to compete for employees by offering financial rewards, community investment etc.also the political issues. ANALYSING HUMAN RESOURCES: ANALYSING HUMAN RESOURCES In regards to how individuals respond to the changes in a labour market the following should be understood: Geographical spread – how far is the job from the individual? The distance to travel to work should be in line with the pay offered by the organization and the transportation and infrastructure of the area will also be an influencing factor in deciding who will apply for a post. Occupational structure – the norms and values of the different careers within an organization. Mahoney 1989 developed 3 different types of occupational structure namely craft (loyalty to the profession), organization career (promotion through the firm) and unstructured (lower/unskilled workers who work when needed). Generational difference –different age categories of employees have certain characteristics, for example their behaviour and their expectations of the organization. ANALYSING MATERIAL RESOURCES: ANALYSING MATERIAL RESOURCES The organization vision is an important factor for the success. Strategic plan should be converted to tactical plan and the tactical plan to the operational plan. There should be a drive to synchronize the major functions of the organization, such as Sales and marketing, Production, Purchasing (Materials Management) and Finance. Clearly the business plan at the strategic level sets the blue print for the organization. Production Plan and the Material Resources Plan at Tactical plan will convert the business plan into a workable plan. This should be the input for the Material Requirements Plan which is an operational plan. There should be owners for each of these stages. A detailed feedback mechanism for the transactional update to the tactical plan is necessary. PROCESS OF DETERMINING THE COMPANY’S STRATEGY: PROCESS OF DETERMINING THE COMPANY’S STRATEGY Every plan should: Serve as a framework for decisions or for securing support/approval. Provide a basis for more detailed planning. Explain the business to others in order to inform, motivate & involve. Assist benchmarking & performance monitoring. Stimulate change and become building block for next plan. PROCESS OF DETERMINING THE COMPANY’S STRATEGY: PROCESS OF DETERMINING THE COMPANY’S STRATEGY A strategic plan should not be confused with a business plan. The former is likely to be a very short document whereas a business plan is usually a much more substantial and detailed document. A strategic plan can provide the foundation and frame work for a business plan. A strategic plan is not the same thing as an operational plan. The former should be visionary, conceptual and directional in contrast to an operational plan which is likely to be shorter term, tactical, focused, implementable and measurable. PROCESS OF DETERMINING THE COMPANY’S STRATEGY: PROCESS OF DETERMINING THE COMPANY’S STRATEGY As an example, compare the process of planning a vacation (where, when, duration, budget, who goes, how travel are all strategic issues) with the final preparations (tasks, deadlines, funding, weather, packing, transport and so on are all operational matters). A satisfactory strategic plan must be realistic and attainable so as to allow managers and entrepreneurs to think strategically and act operationally. Devising Business Strategies for further insights. Basic Approach to Strategic Planning . PROCESS OF DETERMINING THE COMPANY’S STRATEGY: PROCESS OF DETERMINING THE COMPANY’S STRATEGY A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and predisposition. Some essential points which should to be observed during the review and planning process include the following: Relate to the medium term ex: 2/4 years Be undertaken by owners/directors Focus on matters of strategic importance Be separated from day-to-day work Be realistic, detached and critical Distinguish between cause and effect Be reviewed periodically Be written down. PROCESS OF DETERMINING THE COMPANY’S STRATEGY: PROCESS OF DETERMINING THE COMPANY’S STRATEGY As the precursor to developing a strategic plan, it is desirable to clearly identify the current status, objectives and strategies of an existing business or the latest thinking in respect of a new venture. Correctly defined, these can be used as the basis for a critical examination to probe existing or perceived strengths, weaknesses, threats and opportunities. This then leads to strategy development covering the following issues discussed in more detail below: Vision Mission Values Objectives Strategies Goals Programs MAKING STRATEGIC DECISIONS: MAKING STRATEGIC DECISIONS In making strategic decisions process you must compare: Facts (conditions, which come from the environment of the company); Wishes (external and internal of the company); Needs (external and internal of the company); Opportunities (external and internal of the company). After such analysis, you must find main aims (goals), find alternatives to achieve them, then to choose one from alternatives’ amount, to implement it and compare with your main aims (goals). And the cycle of decisions making starts again. EVALUATION OF ALTERNATYVES: EVALUATION OF ALTERNATYVES Simulation has an important role in modelling and analyzing the activities in introducing since it enables quantitative estimations on influence of the redesigned process on system performances. The simulation of business processes represents one of the most widely used applications of operational research as it allows understanding the essence of business systems, identifying opportunities for change, and evaluating the impact of proposed changes on key performance indicators. The design of business simulation models is proposed as a suitable tool for some projects; it will incorporate the costs and effects of e-business implementation and will allow for experimentation and analysis of alternative investments. Many different methods and techniques can be used for modelling business processes in order to give an understanding of possible scenarios for improvement. EVALUATION OF ALTERNATYVES: EVALUATION OF ALTERNATYVES The reasons for the introduction of simulation modelling into process modelling can be summarized as follows: Simulation enables modelling of process dynamics, Influence of random variables on process development can be investigated, Anticipation of reengineering effects can be specified in a quantitative way, Process visualization and animation are provided Simulation models facilitate communication between clients and an analyst. PROCESS OF STRATEGY IMPLEMENTATION: PROCESS OF STRATEGY IMPLEMENTATION Despite the experience of many organizations, it is possible to turn strategies and plans into individual actions, necessary to produce a great business performance. Strategy Realisation Essential Elements: motivational leadership - concentrates on achieving sustained performance through personal growth, values-based leadership and planning that recognises human dynamics. turning strategy into action - entails a phased approach, linking identified performance factors with strategic initiatives and projects designed to develop and optimise departmental and individual activities. performance management - involving the construction of organizational processes and capabilities necessary to achieve performance through people delivering results. SOCIAL SYSTEM OF THE COMAPNY: SOCIAL SYSTEM OF THE COMAPNY The term social structure, used in a general sense, refers to entities or groups in definite relation to each other, to relatively enduring patterns of behaviour and relationship within social systems , or to social institutions and norms becoming embedded into social systems in such a way that they shape the behaviour of actors within those social systems. The notion of social structure as relationships between different entities or groups or as enduring and relatively stable patterns of relationship emphasises the idea that society is grouped into structurally related groups or sets of roles, with different functions, meanings or purposes. Social structure may be seen to underly important social systems including the economic system , legal system , political system , cultural system , and others. SOCIAL SYSTEM OF THE COMAPNY: SOCIAL SYSTEM OF THE COMAPNY The notion of structure as embedded institutions or norms that shape the actions of social agents is important, as structural determination may occur as the actions of people and organisations are guided partially by the underlying structures in the social system. Social structure must be identified as: the relationship of definite entities or groups to each other, as enduring patterns of behaviour by participants in a social system in relation to each other, and as institutionalised norms or cognitive frameworks that structure the actions of actors in the social system. SOCIAL SYSTEM OF THE COMAPNY: SOCIAL SYSTEM OF THE COMAPNY Sociologists distinguish between: normative structure — pattern of relations in given structure (organisation) between norms and modes of operations of people of varying social positions ideal structure — pattern of relations between beliefs and views of people of varying social positions interest structure — pattern of relations between goals and desires of people of varying social positions interaction structure — forms of communications of people of varying social positions ADMINISTRATION OF STRATEGIC CHANGES: ADMINISTRATION OF STRATEGIC CHANGES Organisations are always involved in a variety of change, and this is not just confined to internal projects, for example it could also encompass interaction with suppliers and customers. The change being undertaken by organisations now is inherently complex and often impacts diverse stakeholder groups both internally and externally. As the change portfolio grows the level of complexity grows with it, with many organisations now finding it difficult to understand and track the plethora of change initiatives underway. An added complexity is a reduction in manpower: when rapid and complex change is needed the skilled resources required to deliver it are at their scarcest. ADMINISTRATION OF STRATEGIC CHANGES: ADMINISTRATION OF STRATEGIC CHANGES Strategic change management is the process of delivering the strategy of an organisation in a controlled, efficient and effective manner. Strategic change management is not about the delivery of a single project or monitoring business as usual activities. Strategic change management is the process of governing a portfolio of programmes, projects and initiatives within the context of a wider strategy for the organisation. The purpose of the whole exercise is to deliver value to the organisation, and there are three key groups of people who will need to work together to achieve this aim. ADMINISTRATION OF STRATEGIC CHANGES: ADMINISTRATION OF STRATEGIC CHANGES Strategic management is undertaken by executives, who have the responsibility of interpreting the outside world and defining the strategic direction and priorities of the organisation. Coordinators have the role of portfolio management which involves prioritising and selecting the right portfolio of initiatives to deliver against the strategic priorities of the organisation, whilst reflecting their inherent resource, time and budget constraints. ADMINISTRATION OF STRATEGIC CHANGES: ADMINISTRATION OF STRATEGIC CHANGES Executives: Set the strategic direction Understand the outside world Communicate a clear vision Track a balanced scorecard of strategic indexes Respond to changing scenarios Co-ordinators: Select and prioritise the portfolio Ensure strategic alignment Enable project prioritisation Understand inter-project dependencies ADMINISTRATION OF STRATEGIC CHANGES: ADMINISTRATION OF STRATEGIC CHANGES Implementers: Deliver the initiatives Ensure effective programme and project planning Manage scarce resources Resolve issues, risks and changes Clarify initiative ownership Executives and Initiative Sponsors: Realise the benefits Define the benefit realisation activities Ensure benefit ownership Understand the benefit assumptions Organisation: Ensure governance Govern the change lifecycle Track status Provide effective reporting