Current Trends in Strategic ManagementPowerPoint PresentationSlide 3Slide 4Slide 5Slide 7Slide 8The Need to Redesign OrganizationsEmerging Organizational FormsNew Models of Leadership: What Competencies do Top Managers Need?Current Trends in Strategic ManagementCurrent Trends in Strategic Management•The New Economy•New Directions in Strategic Thinking•Redesigning the Organization•New Modes of LeadershipOUTLINEThe Turbulent 21st CenturyThe Turbulent 21st CenturyCollapse of New Economy•Dot.com bubble bursts•TMT recessionCollapse of New Economy•Dot.com bubble bursts•TMT recessionCorporate Scandals• Enron, WorldCom, Parmalat• Jack Welch’s retirement package Corporate Scandals• Enron, WorldCom, Parmalat• Jack Welch’s retirement package War• Invasion of Afghanistan & Iraq•Civil was in Congo, Liberia, Sudan War• Invasion of Afghanistan & Iraq•Civil was in Congo, Liberia, Sudan Age of DisbeliefAge of DisbeliefThe Curse of Terrorism• Sept. 11, 2001•Suicide bombings in Israel, Iraq, Saudi Arabia, Turkey, AfghanistanThe Curse of Terrorism• Sept. 11, 2001•Suicide bombings in Israel, Iraq, Saudi Arabia, Turkey, AfghanistanFear of Disease•SARS, Mad Cow, Bird FluFear of Disease•SARS, Mad Cow, Bird FluUnstable CurrenciesUS$ declines by >50% against Euro 2002-04 Unstable CurrenciesUS$ declines by >50% against Euro 2002-04 Decline of Multilateralism•Collapse of Doha round• Trade wars between US, EU, China•Weakening of UNInternationalcompetition intensifies• China as Workshop of the World• Outsourcing to LDCs012345671995 1996 1997 1998 1999 2000 2001 2002 2003Q1Q2Q3Q4Source: Bureau of Labor StatisticsUS Labor Productivity: Changes in Non-Farm Output per Hour Worked from Year ago Quarter, 1995-2003US Labor Productivity: Changes in Non-Farm Output per Hour Worked from Year ago Quarter, 1995-2003Return on Equity of US Manufacturing Corporations, 1990-2003Return on Equity of US Manufacturing Corporations, 1990-20030246810121416181990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003ROE ( %)Source: US Bureau of the Census00.511.522.533.544.51990 1992 1994 1996 1998 2000 2002$ trillionThe value of mergers and acquisitions worldwideThe value of mergers and acquisitions worldwideSource: Thomson Financial Securities DataKey Trends of the 1990s:•Quest for shareholder value•Adjusting to increased turbulence & more intense competitionInfluential Strategy Concepts:•Modern financial analysis —shareholder value, economic profit, option theory•Core competences and intangible assets•Dynamically competitive markets —“hypercompetition”•Competitive advantage through alliances, networks, and standardsMajor Themes of Business Strategy:•Cost cutting—squeezing overhead, business process re- engineering, increasing labor productivity•Outsourcing/refocusing/ divestment•Performance management and incentive alignment Directions in Strategic Management Practice—Trends of the 1990s Directions in Strategic Management Practice—Trends of the 1990sFuture Sources of ProfitLimits of downsizing/cost cuttingWhere are future sources of profit?TechnologyContinued advances in ICTForces Shaping Company Strategies 2001-04Concepts & Theories•Resources & capabilities as basis for competitive advantage•Knowledge-based theory of the firm•Option theory•Complexity theoryThe Business Environment•Uncertainty•Stalling of economic liberalization•Intense competitionDemands of society•Social & environmental responsibility•Ethics & fairness•Quest for meaningSTRATEGY•Multiple competitive advantages/multiple capabilities•Innovation / New Product Development / New Business Development•Alliances & networksMANAGEMENT SYSTEMS• Knowledge management (incl. best-practice transfer)• Redesigning incentive systems• Rethinking performance management• Capturing human creativityEmerging Developments ORGANIZATION STRUCTURE• Reconciling flexibility & integration• Modular structures• Multidimensional structures• Informal organization & self-organizationThe Need to Redesign OrganizationsThe Need to Redesign OrganizationsTHE PAST THE FUTUREEmphasis on control Emphasis on co-ordinationDecisions located centrallyDecisions located where relevant knowledge existsSimple structures,unified line of commandMultidimensional structuresDiffused authority, but clear responsibilitiesSingle performance goalMultiple performance goalsOrganization by design Self organizationEmerging Organizational FormsEmerging Organizational FormsProcess-based Organizing around business processesorganizations Organizing around corporate processes - entrepreneurial process - competence building process - renewal processFrom unitary to parallel Separate coordination structures forstructures different processes. E.g. 3M’s productdevelopment structure; separate structures for TQM and change managementProject-based organization E.g. engineering cos., consulting firms, alsomanufacturing cos. e.g. OticonNetwork and virtual E.g. electronics in Silicon Valley, clothingorganization and packaging equipment in ItalyOrganizing for capability Shifting emphasis of organizationdevelopment design from control to coordinationTHE REQUIRED COMPETENCIES OF BUSINESS LEADERS• business literacy• creativity• cross-cultural effectiveness• empathy• flexibility• proactivity• problem-solving• relation-building• teamwork• vision THE LEADERSHIP NEEDS OF ORGANIZATIONSThe ability to:• build confidence• build enthusiasm• cooperate• deliver results• form networks• influence others• use informationNew Models of Leadership:What Competencies do Top Managers Need?New Models of Leadership:What Competencies do Top Managers