OSU BA 569 - Leading Strategically Through Effective Vision and Mission

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Slide 1Key points in Chapter 2Managerial Discretion and Decision BiasesDecision-Making BiasesHubrisImplications for IBPStrategic Vision vs. MissionMission StatementsObjectivesControl SystemsSlide 11Controls in Balanced Scorecard FrameworkSlide 13Slide 14Components of External AnalysisGeneral or Macro Environment1) Demographic Segment2) Economic Segment3) Political/Legal Segments4) Sociocultural Segment5) Technological Segment6) EnvironmentalGeneral EnvironmentROIC Across Industries 1995-2004Porter’s Five ForcesSlide 26Slide 27Slide 28Slide 29Potential New EntrantsBarriers to EntrySuppliersBuyersBuyersSubstitutesSubstitutes and Business DefinitionRivalry and ProfitabilityRivalry – What drives it?Industries and SegmentsSegments in the Automotive IndustrySegments in the Automotive IndustryPorter’s..in conclusionStatic model & HypercompetitionAnalysis of Direct CompetitorsImplications from Strategic Group DynamicsCompetitor Analysis ComponentsIdentification of Key Success Factors?Chapter 2Leading Strategically Through Effective Vision and MissionKey points in Chapter 2 The roles that leaders playSkill sets of effective strategic leaders (Level 5 hierarchy)Managerial Discretion and Decision BiasesDiscretion – latitude for action or decision makingHubris – excessive pride, leading to a feeling of invincibility Heuristics – rules of thumb used in decision makingDecision-Making BiasesReliance on previously formed beliefsFocus on limited objectivesExposure to limited decision alternativesIllusion of controlReliance on a limited set of heuristicsHubrisExcessive pride that leads to a feeling of invincibilityMagnifies the effects of decision-making biasesImplications for IBPBe sure you don’t fall prey to decision making biasesBe sure you understand the effects of hubrisPlay the role of Devil’s AdvocateQuestion decisions constructivelyStrategic Vision vs. MissionA strategic vision concerns “wherewe are going” or ”what do we want to be.”Markets to be pursuedFuture product/ market/customer/ technology focusKind of company management is trying to createThe mission statement focuses on its “who we are and what we do”Current product and service offeringsCustomer needs being servedTechnologicaland businesscapabilitiesMission StatementsBoundaries of the current businessFundamental purpose that sets it apart from other firms of its typeConveysWho we are,What we do, andWhy we are hereObjectivesTurns mission into performance outcomesOrganizations produce what is measuredLong and Short termControl SystemsFinancial Controlsfocus on short-term financial outcomes produce risk-averse managerial decisionsStrategic Controlsfocus on the content of strategic actions encourage decisions that incorporate moderate and acceptable levels of riskCurrent financial results are “lagging indicators” reflecting results of past decisions and actions—good profitability now does not translate into stronger capability for delivering better financial results laterHowever, meeting or beating strategic performance targets signals growing competitiveness & strength in the marketplace, thus developing the capability for better financial performance in the years aheadGood strategic performance is thus a “leading indicator” of a company’s capability to deliver improved future financial performanceLeading versus Lagging IndicatorsControls in Balanced Scorecard FrameworkChapter 4Exploring the External Environment: Macro and Industry DynamicsCompetitive strategy must grow out a sophisticated understanding of the rules of competition that determine industry attractiveness.Michael PorterWhen an industry with a reputation for bad economics meets a manager with a reputation for excellence, it’s usually the industry that leaves with its reputation intact.Warren BuffettSkate to where the puck is going, not to where the puck has been.Wayne GretskyComponents of External AnalysisScanning – Identifying early signalsMonitoring – Following signals or change identifies in scanning to identify patternsForecasting – Projections of what might happenAssessing – Determining the timing and significance of forecasted changeGeneral or Macro Environment1) Demographic2) Economic3) Political 4) Sociocultural5) Technological6) Environmental1) Demographic SegmentCharacteristics of the populatione.g., age, race, gender, sexual orientation and social classesEthnic structureIncome distributionGeographic distribution2) Economic SegmentGeneral health/wellbeing of the local, regional, national or global economy.e.g., Interest rates, unemployment rates, consumer spending, confidence and savings, energy costs, personal disposable income, inflation rates, housing costs3) Political/Legal SegmentsTax laws, minimum wages, environmental laws, labor laws, consumer protection, product liability, etc.4) Sociocultural SegmentAttitudes of society towards work, careers, products, services and consumer activism.e.g., concern for quality of life, birth rates, woman in the work force, low-carb dieting, health consciousness, respect for intellectual property, desire for “green retailing”, savings rates, etc.5) Technological SegmentChanges in technology that affect the workplace, and the products and services consumers expecte.g., Information technologies, entertainment technologies, product technologies.6) EnvironmentalEnvironmental and ecological issues (on supple and waste side), including pressure from NGOs and activists.General EnvironmentFirms can not influence them, but they can have a significant influence on the firm, its industry, its strategy, and its performanceCast a wide net and to identify the emerging trendsThen determine which factors are relevant, and how these changes will have an effect upon the firm.ROIC Across Industries 1995-2004Porter’s Five ForcesCompetitive RivalryPower of BuyersPower of SuppliersPotential EntrantsSubstitute ProductsEach of these forces affect costs/prices, therefore, profitabilitySubstituteProducts(of firms inother industries)RivalryAmongCompetingSellersPotentialNewEntrantsSuppliers of Key InputsBuyersPriceCostsProfits{What factors increase/decrease margins within an industry, thus affecting profitability.Porter’s 5-forces is all about marginsPrices can be kept highCosts can be


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OSU BA 569 - Leading Strategically Through Effective Vision and Mission

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