Planning Business Strategy

Fundamental principals for long term success of an organization:

1. Ability to create a strategic direction and market position (strategic plan)
2. Ability to execute core tactical initiatives within plan
Strategies
Customized for each business given market conditions and desired goals
Understanding what opportunities exist in market place and which to
pursue
Where do we want to play?
How do we plan to win?

Core Elements For Assessing Strategy

1. Purpose
Mission: organizations purpose/reason for existence; companys
broad goals
Vision: a forward-thinking statement that defines what a company
wants to become and where its going
2. Markets
Markets the business sees itself competing in
Harvesting: reducing focus in a certain market given perceived
weak future growth or profitability potential
3. Products & Services
Review of current and potential new products/services
4. Resources
Allocation of a businesss resources in support of strategic
decisions
5. Business System Configuration
Modifying infrastructure and system to ensure success of plan
6. Responsibility & Accountability
Identifying key objectives to be achieved and whos responsible
A businesss strategic plan is its roadmap to success
Defines specific route intended to take
Provides benchmarks to measure success
Identifies where and how business will interacts with customers in
meeting missions & vision

Strategic Planning Process Model

Steps associated with development of strategic plan:

Revisit Purpose (Who are we? Where do we want to go?)
Assess fit of current mission and vision of organization
Undertake Internal/External (I/E) Analysis to Understand Our
Environment
Accessing business risk and change in
o Macro-econ: Use PESTEL Analysis
o Industry: Use Porters Five Forces
o Competitor: Use SWOT (Strengths, Weaknesses, Opportunities,
Threats)
o Company: Use SWOT and 3C (competencies, capabilities, capacity)
Analysis
External:
o Focuses on understanding what is influencing markets today and
what will influence them going forward
o Assessment of magnitude of change in a market arena & associated
shifts in business risk
o Use PESTEL, Porters five forces, competitor SWOT
Internal:
o Focuses on company competencies, resources, capacity &
capabilities (3C analysis)
o Full internal audit
o Company SWOT
Customer:
o Changes in attitudes, behavior, needs
Assess our View of the World: Opportunities & Threats
What are our options given what we know about customers, competitors,
overall environment and ourselves?
Competitive advantage(s)?

Choose a direction
Which opportunities make the most sense, given our market position,
resources, & environmental dynamics?
What threats must we respond to?
Implement Strategy
Develop plan
Define key performance indicators for monitoring it
Execute
Business Models
PESTEL
Guides in developing understanding of macro-econ environment
(political, economic, societal, technological, environmental, legal)
Porters Five Forces
Guides in understanding dynamics of industry within which we compete
1. Intensity of rivalry
2. Threat of new entrants
3. Threat of new product/service substitutes
4. Power or control of supplies
5. Power or control of buyers
Types of Competition
Guides in understanding nature of industrys competitive landscape
o Perfect competition
o Monopolistic competition
o Oligopoly
o Monopoly
SWOT Analysis
Strengths, weaknesses, opportunities, threats
Competitive SWOT: size up competition
Company SWOT: define companys SWOTs
3C Analysis
Assessment of competencies, capabilities, and capacity with respect to
resources we possess
Competitive Advantage Identification
Key outcome of I/E analysis
Why a customer chooses to purchase your products over competitors
Strategic
o First mover actions in marketplace- ability to see how
organization change rules of game in market
Operational
o Being more efficient and effective in transformation and marketing
processes (e.g. superior quality or customer support/response)

Strategy Development
Which opportunities to pursue and how resources will be allocated
1. Corporate Level Strategy
o Defines what the organization intends to accomplish and where it
plans to compete (markets to focus on)
o High level strategy that guides organizations overall activities
o The big picture
2. Business Level Strategy
o Defines how organization intends to accomplish corporate level
strategy
o Outlines specific objectives for each of the organizations identified
business initiatives/business units
o Responds to questions of how to compete in chosen market
sectors
3. Operating Plan
o Defines detailed, immediate-term set of objectives and
corresponding tactics designed to achieve a specific business
initiative and business strategy

SMES (Small and Medium-Size Enterprises)

Need to plan strategically is as important for small businesses as for
major multinational organizations
NFPs (Not-for-Profit)
Must develop strategies and tactics that produce positive financial results
otherwise they will not be able to sustain operations
Involves stronger inclusion of needs delivery based on collective interest
and social goals
1. Mission Balance: Economic base versus social mission and goals
2. Vitality: Ability of NFP to grow and sustain its membership and donor
base
3. Collective Entrepreneurship: Ensuring involvement of community where
NFP is located and population it serves are reflected in strategy
development and implementation
4. Rootedness: Ensuring NFP is interwoven into fabric of community it
serves; strengthening partnerships and networks
5. Operational Effectiveness: Operating in manner that demonstrates NFPs
products/services are priced to ensure accessibility for its target social
audience; provide support for those who are in need but unable to pay

Successful business, one common denominator:

Take time to plan how business will be positioned in market place
What markets it will serve
Execute critical components of strategy better than competitors
Successful businessperson
Knows their competitive advantages
Knows how to leverage them to ensure business is best of breed
Successful Strategy
Properly assesses external environment
Defines changes and opportunities within markets the organization
intends to serve
Effectively allocates resources and maximizes capabilities

Organizing and Human Resources

Primary Management Decision- How to organize work
How do we divide tasks into jobs?
How do we coordinate the work and link jobs?
Through division and integration
Organization architecture: totality of a firms organization
Formal organization structure
o Location of decision-making responsibilities in firm
o Formal division of organization into subunits
o Establishment of integrating mechanisms to coordinate activities
of subunits
Control systems
o Metrics used to measure performance of subunits; judge how well
mangers are running units
Incentive systems
o Devices used to encourage desired employee behavior
Organizational culture
o Values and assumptions shared among employees of organization
People
o Employees of organization
o Strategy used to recruit, compensate, motivate, and retain
individuals
o Type of people they are in terms of skills, values, and orientation
Designing Structure
Vertical differentiation
o Location of decision-making responsibilities within structure
o Centralization or decentralization?
Centralization: concentration of decision-making authority
at high level in management hierarchy
1. Facilitates coordination
2. Ensures decisions are consistent with organizational
objectives
3. Avoid duplication of activities by various subunits
4. Can give top-level managers the means to bring out
needed major organizational changes
Decentralization: decision-making authority in lower level
managers or other employees
1. Top management can become overburdened when
decision-making authority is centralized
2. Motivational research favors decentralization- people
like freedom and control over their work
3. Greater flexibility- more rapid response to
environmental changes
4. Can result in better decisions (e.g. doesnt make sense of
CEO in U.S. to make decisions for branch in Germany)
5. Increase control

Decentralization
of
decisions to a
subunit

Increases
responsibility

Which
increases
accountability

Thereby
enhancing
control.

o Layer in a hierarchy: Tall or flat?

Tall: many layers and narrows spans of control (usually
expanding firms)
Disadvantages:
o Lowers organizational efficiency and
effectiveness
o Tendency for information to get accidentally
distorted or deliberately (influence costs)
as it passes through layers
o Expensive- salaries of multiple managers
Flat: few layers and wide spans of control (usually new
firms)
Horizontal differentiation: Formal division of organization into subunits
o Functional Structure: Structure that follows obvious division of
labor within firm, w/different function focusing on different tasks
o Multidivisional Structure: Structure in which firm is divided into
different division, each of which is responsible of a distinct
business area
o Geographic Structure: structure in which a firm is divided into
different units on basis of geography
o Matrix Structure: organization with two overlapping hierarchies

Formal Integrating mechanisms

o Mechanisms for coordinating subunits

High need for coordination

Firms that face an uncertain and highly turbulent competitive
environment
Rapid adaptation to changing market conditions is required for
survival.
Low need for coordination:
Firm is based in a stable environment characterized by little or no
change
If developing new products is not a central aspect of firms
business strategy

Informal Integrating Mechanisms

Knowledge network: organization structure based on informal contacts

Human Resource Management

Determine HR Needs
1. Prepare HR inventory of organizations employees
Age, names, education, capabilities, trainings...
2. Prepare job analysis
Job analysis: What is done by employees who hold various job
titles
Job description: specifies objectives, type of work, responsibilities
of the job

 Job specifications: summary of minimum qualifications of worker

3. Assess future human resources demand
Training programs
Ensures trained people are available when needed
4. Assess future HR supply
Shortages and oversupply caused by changes in technology and
shifts in society
5. Establish strategic plan
Recruitment, selection, training, development, evaluation
Training and Developing Employees
Employee orientation: introduces new employees to organization, fellow
organization, and supervisors; to policies, practices, values and objectives of firm
On-the-job training: training in which employee immediately begins his/her task
and learns by doing and watching right at the work place
Apprentice programs: training program involving period during which learner
works alongside experience employee
Off-the-job training: training that occurs away from workplace; consists of
internal or external programs to develop variety of skills to foster personal
development
Online training: training programs where employees attend classes online
Vestibule training: training done in schools where employees are taught on
equipment similar to those used on the job
Job simulation: use of equipment that duplicates job conditions and tasks before
attempting them on the job
Management Development
On the job coaching: assisting lower level manager by teaching them skills and
providing direction, advice and feedback
Understudy positions: undersecretary, assistant- develop selected employees
until theyre ready to be managers
Job rotations: learn about different functions of organization; gain broad picture
of organization
Off-the-job courses and training: periodically going to schools, seminars to help
develop skills
Empowering Workers
Enabling: giving workers the education and tools they need to make decisions

Networking: Process of establishing and maintaining contacts with key mangers

in own organization and other organizations and forming informal development
systems
Mentor: experienced employee who supervises, coaches, and guides lower-level
employees by introducing them to right people
Evaluating Employee Performance
Performance appraisal: evaluations in which performance levels of employees
are measure against establish standards to make decisions about promotions,
compensation, additional training, or firing
1. Establish Performance Standards
Must be understandable, subject to measure, reasonable
Must be accepted by both manager and subordinate
2. Communicating Standards
Employees must be clearly and precisely told of standards and
expectations and how they are to be met
3. Evaluating Performance
See if employees behavior matches standards
4. Discuss Results
5. Take Corrective Action
Provide feed back
6. Use results to make decisions
Promotions, compensation, additional training, firing?
Compensating Employees
- Attract people needed by organization and in sufficient numbers
- Provides incentives to work efficiently and productively
- Keep valued employees from leaving to competitors or starting competing
firms
- Provide employees with sense of financial security through insurance and
retirement benefits
Pay Equity: equal pay for work of equal value (male vs. female)
-On average, women get paid less than men.
Scheduling Employees
Flextime plans: gives employees some freedom to choose when to work
as long as they work required number of hours
Compressed workweek: allows an employee to work a full number of
hours per week but in fewer days
Telework (Telecommuting): when workers work away from normal play
of business
Job-sharing plans: arrangement where two part-time employees share
one full-time job
Career Management
Promoting and Reassigning Employees
Allow employees to develop/ display new skills and learn more
about company overall

Motivates experienced employees to remain in company

Terminating Employees
Downsize, restructuring company
Global competition and shifts in technology
Retiring Employees
Offer early retirement benefits (entice older workers to retire)
Increases promotion opportunities for younger employees
Losing Employees
Employees pursuing opportunities elsewhere
Learn why people leave can help prevent it from occurring in the
future

Human Resource Legislation (Laws affecting Human Resources

Management)
The Human Rights Act: equal employment opportunities without regard
to peoples race, national/ethnic origin, color, religion, age, sex, sexual
orientation, marital status, family status, disability, or conviction for
offense which a pardon has been granted
Federal government jurisdictions: banks, insurance companies, airlines,
railways, shipping companies, telephone, radio, TV, cable companies
Province jurisdictions: employment standards (minimum wage, hours of
work, over time, statutory holidays, parental leave, employment of people
under 18)

Leadership
Leaders
Doing the right things
Focus on vision, mission, and goals
Managers
Doing things right
Focuses on preserving the status quo
What Makes Leaders Great?
1. Self-awareness
2. Personal conviction
3. Courage
4. Creativity
5. Curiosity
6. Ability to inspire
7. Ability to listen
8. Eagerness to experience
9. Willingness to reflect
Perspectives on Leadership
Competency Perspective: traits that can be acquired through learning
Emotional intelligence
o Self-awareness
o Self-regulation
o Empathy
o Social skills
o Motivation
Strategic thinking
Achievement motivation
Charisma
Power motivation
Limitations & Implications
Not all traits are equally important
Not all great leaders demonstrate all traits
Importance of traits is context dependent
Behavior Perspective
Assumption: certain leadership behaviors result in greater commitment on the
part of subordinates and hence higher performance in pursuit of organization
goals
People-oriented behavior: leadership style that includes showing mutual trust
and respect for subordinates, demonstrating genuine concern for their needs
Task-oriented behavior: style of leaders who assign employees to specific tasks,
clarify their work duties and procedures, ensure they follow company rules, and
push them to reach performance capacity

Contingency Perspective:
Fiedlers Leadership Theory: based on assumption that leadership style cant be
changed
Contingencies (factors that may affect leadership)
Leader-member relations
Task structure
Position power
Weaknesses of theory
Simplistic
Classification into two broad types (people-oriented/task-oriented)
seems an unwarranted generalization
Some leaders can exhibit both people-oriented & task-oriented characters
Assumes leaders cant change their style
Path-Goal Theory: based on assumption that leadership style can be changed

Effective leadership: Clarifying and clearing path; identifying and offering

rewards
Leadership styles:
1. Directive leadership
If task of subordinates is ambiguous
Helps clarify path subordinates must follow
2. Supportive leadership
If followers lack confidence
Help increase subordinates confidence
3. Participative leadership
Allows leader to clarify needs of subordinates and change rewards
to improve performance
4. Achievement-oriented leadership
If task of subordinates is standardized and dull

Can motivate subordinates by setting high goals and expressing

confidence in their abilities
Limitations of theory
Assumption that leader can adopt only one style at a time
Doesnt explain what is required for effective leadership
Narrow definition of leadership effectiveness
Other potentially important factors of leadership process are ignored
Provides only partial definition
Transformational Leadership: agents of strategic and organizational change
Reenergize troubled organizations, pushes them in new strategic
directions
Transformational Leader:
Envisioning a new future
Communicating persistently
Modeling desired behaviors
Empowering employees
Meaningful changes in strategy and organization
Leading with integrity
Creating an enduring organization
Gender Differences in leadership
Women
More people-oriented, participative leadership
More relationship-oriented, cooperative, nurturing, and emotional in
leadership roles
-However, men and women do not differ in task-oriented or people-oriented
leadership