Strategic management raafat 2019 sent

Strategic management
By
Dr. Raafat Youssef Shehata

Chapter 1
Introduction to Strategic management

When NASA first started sending up astronauts, they
quickly discovered that ball-point pens would not work in
zero gravity. To combat this problem, NASA scientists
spent a decade and $12 million developing a pen that
writes in zero gravity, upside down, on almost any
surface, and at a temperature ranging from below
freezing to over 300 C
Strategic Thinking!!!

Ch 1 -4
Art & science of formulating, implementing,
and evaluating, cross-functional decisions that
enable an organization to achieve its objectives
Strategic Management –Defined

Copyright © 2011 Pearson Education
Strategic Management – Model

Ways of classifying organizations
1-Size :
Small/ medium(SMEs) or large.
2-Legal status :
Sole trader, partnership, limited & public limited.
3-Ownership :
Private, public & co-operatives.
7

Sole trader
• Mainly British term for sole proprietor.
• Sole owner of a business; a self-employed person such
as a grocer, plumber, or taxi driver. He or she directs the
affairs of the enterprise, bears its risks and losses, and
takes the profits and benefits. Also called sole trader.
8

Partnership
• A type of business organization in which two or
more individuals pool money, skills, and
other resources, and share profit and loss in
accordance with terms of the partnership agreement.
In absence of such agreement, a partnership is
assumed to exit where the participants in
an enterprise agree to share
the associated risks and rewards proportionately .
9

• 2 types of partnership
Active Silent
Limited LiabilityCopy & paste of
solo trader
Partnership

• Joint stock companies ‫مساهمة‬ ‫.شركة‬
Types
(LTD) limited (PLC) public limited company
• Friends & Family Business
• Controlled.
• Friends and families own shares,
shares do not rating in stock rating
market. ‫العربى‬ ‫توشيبا‬,‫كاسيو‬
• Trading shares in the stock market.
• Not easily controlled.
• IPO( Initially Public Offering)…….. For
first time to issue stocks in market.
3- Corporate

Types of Companies (cont)
4- Holding Company:‫قابضة‬ ‫شركة‬
It is not for production, just owner of subsidiaries
(companies).
ROLE: to improve the industry it works in.

 Regarding the
Corporate…………………………..
Shareholders elect BOD ( Board of
director) to be responsible for the
performance of the corporate and to
guarantee their profit at its maximum
value.
 AGM ( annual general meeting)… as
BOD represents the performance of the
corporate, consequently, the
shareholders either vote for or against
the continuity of the BOD.
Corporate

Types of Capital
1- Authorized Capital:
Divided to equal values= shares= votes= decision takers.
- Capital market authority.
N.B: authorized capital is the ceiling.
2- Paid in Capital:
It is 10% cash of the authorized capital.
Capital = Equity + Long term Liability
Working Capital = Current Asset - Current Liabilities

limited company
• A business structure used in Europe and Canada,
in which shareholder responsibility
for company debt is limited to the amount he/she
has invested in the company. Abbreviated Ltd .
• The company itself, as a legal entity, is liable for
the rest. Also called limited personal liability.
15

public limited company (plc)
• A UK company that issues shares of publicly
traded stock. Companies organized as a PLC
are highly regulated but their management has limited
liability in their operation.
• The plc designation is similar to the Inc. or LLC designation
that follows the name of companies incorporated in the
U.S.
16

public limited company (plc)
• A company whose securities are traded on a stock exchange and
can be bought and sold by anyone. Public companies are strictly
regulated, and are required by law to publish their complete
and true financial position so that investors can determine the
true worth of its stock (shares).
• Also called publicly held company. Public limited company and
its abbreviation plc are commonly used in the UK in the way
that corporation and Inc. is used in the United States.
17

4-Profit : profit oriented & non profit oriented
5-Activity : Supplier, manufacturer and distributor
6-Accountability: shareholders & government.
Ways of classifying organizations
18

 A method or plan chosen to bring about a desired
future, such as achievement of a goal or solution to a
problem.
The art and science of planning and marshalling
resources for their most efficient and effective use.
Strategy

The organization and coordination of
the activities of an enterprise in accordance with
certain policies and in achievement of
defined objectives.
Management

Set of managerial decisions and actions that
determines the long-run performance of a firm.
Strategic Management

It includes environmental scanning (internal &
external), strategy formulation (long range planning)
strategy implementation, and Evaluation & control.
It emphasizes the monitoring and evaluating of
external opportunities and threats in light of the
corporation’s strengths and weakness.
Strategic Management will lead to better
alignment of corporate policies and strategic priorities.
Strategic Management

1. Clearer Sense of strategic vision for the firm.
2. Sharper focus on what is strategically important.
3. Improved understanding of a rapidly changing
environment.
Benefits of Strategic Management

1. Basic financial planning
{Little analysis, time consuming, one year horizon}.
2. Forecast-based planning.
{collecting information, endless meetings to evaluate
proposals, funds competition, five years horizon}
3. Externally oriented (strategic) planning.
{Away from lower levels, planning staff, consultants for
innovative techniques, Top-down planning, five years
horizon}
4. Strategic Management.
{Planning is interactive across all levels}
Phases of Strategic Management

Basic Elements of the Strategic Management Process
Basic Model of Strategic Management

Strategic Management Model
Performance
Actual
Results
Evaluation
&
Control
Programs
Budget
Procedures
Activities
needed
to
accomplish
a plan
Cost of the
programs
Sequences
of steps
needed to
do the job
Objectives
StrategiesWhat
results to
accomplish
when
Plan to
achieve
mission &
objectives
Broad
guidelines
for
decision
making
Mission
Reasons
for
existence
Environmental
Scanning
Policies
Country
Analysis:
PEST Forces
Industry
Analysis:
Porter 5 Forces
Internal
Company
Analysis:
Value Chain
External
Strategy Formulation Strategy Implementation
Feedback Learning
VISON
27

Monitoring, evaluation, and disseminating information
from external and internal environments –to key people
in the firm
I-Environmental Scanning

The Strategic Management Process

Analysis phase
Environmental Scanning

How you capitalize on them
How you avoid them
How maximize them
How minimize their effects
Strengths
Weaknesses
Opportunities
Threats
Internal
External
SWOT Analysis

Strengths
1. Availability of Time
2. Good Reputation of
Researcher
3. Links with Ministry
Weakness
1. No links in other parts
of the Government.
2. Small Skill base
3. Little alternative in
case of absentees.
Opportunities
1. Working on topical
issue.
2. Government support
to NGO.
3. NGO support.
Maxi Max Mini Max
Threats
1. Reaction to Report.
2. Chances of
Nullification of
Findings by
Government
Departments
Maxi Min Mini Min

The WT Strategy (mini-min)
• In general, the aim of the WT strategy is to minimize both
weaknesses and threats.
• An organization faced with external threats and internal
weaknesses may indeed be in a precarious position.
• In fact, such a firm may have to fight for its survival or may
even have to choose liquidation.
• But there are other choices.
• For example, such a firm may prefer a merger, or may cut back
its operations, with the intent of either overcoming the
weaknesses or hoping that the threat will diminish over time
(too often wishful thinking).
• Whatever strategy is selected, the WT position is one that any
firm will try to avoid.

The WO Strategy (mini-max)
• The second strategy attempts to minimize the weaknesses
and to maximize tile opportunities.
• A company may identify opportunities ill the external
environment but have organizational weaknesses which
prevent the firm from taking advantage of an opportunity. For
example, lack of Skills/technology in certain areas.
• One possible strategy would be to acquire this
Skills/technology through cooperation with a firm having
competency in this field.
• An alternative tactic would be to hire and train people with
the required technical capabilities.
• Of course, the firm also has the choice of doing nothing, thus
leaving the opportunity to competitors.

The ST Strategy (maxi-min)
• This strategy is based on the strengths of the
organization that can deal with threats in the
environment. The aim is to maximize the
former while minimizing the latter.
• This, however, does not mean that a strong
organization can meet threats in the external
environment head-on.

The SO Strategy (maxi-max)
• Any company would like to be in a position where it can
maximize both, strengths and opportunities.
• Such an enterprise can lead from strengths, utilizing resources
to take advantage
• Successful enterprises, even if they temporarily use one of
the three previously mentioned strategies, will attempt to get
into a situation where they can work from strengths to take
advantage of opportunities.
• If they have weaknesses, they will strive to overcome them,
making them strengths. If they face threats, they will cope
with them so that they can focus on opportunities.

Country Analysis – PEST
Economic
Forces
•GDP
•Interest Rates
•Money Supply
•Inflation rate
•Unemployment Level
•Wages
•Price control
•Devaluation
•Reevaluation
•Energy costs and
availability
•Disposal income
Technological
Forces
•Government Spending
on R&D
•Industry Spending
on R&D
•Patent protection
•Telecom infrastructure
•Internet availability
•Availability of certain
Technology need to
improve productivity
Political-Legal
Forces
•Anti-trust regulations
•Tax laws
•Attitude toward
foreign companies
•Employment laws
•Stability of government
•Foreign trade laws
•Customs regulations
Socio-Cultural
Forces
•Life Style changes
•Population growth rate
•Age distribution
•Life expectancies
•Birth rate
•Mortality rate
•Religious orientation

Industry Analysis
Porter’s 5-Forces
Rivalry among
Competition
Bargaining Power
Of Suppliers
Entry barriers
Bargaining Power
Of Buyers
Threat of
Substitute

Threat of new Entrants
Barriers to entry:
• Economies of scale
• Product differentiation
• Switching costs
• Capital requirement
• Access to distribution Channels
• Government Policy

Rivalry among Competition
Intense rivalry related to :
• Number of competitors (Monopoly, Monopolistic
Competition, Fragmented)
• Rate of industry growth
• Product or service characteristics
• Amount of fixed costs
• Capacity
• High exit barriers

Threat of Substitute
Threat of substitute :
• Availability of substitutes
• Switching costs

Bargaining Power of Buyers
Buyers Power :
• Buyer buys large portion of seller’s product
• Buyer can integrate backward
• Undifferentiated product
• Availability of sellers
• Buyer orientation (price oriented vs quality oriented )
• Switching costs

Bargaining Power of Suppliers
Suppliers Power :
• Number of suppliers and buyers (Petroleum)
• Suppliers product characteristics (unique or commodity)
• Switching costs
• Availability of substitutes
• Suppliers forward integration
• Amount purchased from supplier

Firm’s Resources
Resource: an asset, competency, skills, knowledge
controlled by the corporation
1. Value: does it provide competitive advantage?
2. Rareness: Do other competitors possess it?
3. Imitability: is it costly for others to imitate?
4. Organization: is the firm organized to exploit the resource?

Value Chain Analysis
Value Chain:
Set of value-added activities begins with basic raw material
sourcing and ending with handling the product to the consumer
Center of Gravity:
The part of the value chain where the company has its greatest
expertise and capabilities.

Firm Infrastructure
(general management, accounting, finance, strategic planning)
Human Resource Management
(recruiting, training, development)
Technology Development
(R&D, product and process improvement)
Procurement
(purchasing of raw material, machines and supplies)
Inbound
Logistics
(raw material
Handling and
Warehousing)
Operations
(machining,
Assembling,
Testing)
Outbound
Logistics
(warehousing,
distribution
Of finished
goods)
Marketing
And Sales
(Ads,
promotion
Pricing,
Channel )
Services
(insulation,
Repair,
Parts)
Company - Value Chain Analysis
Profit
Margin
Support
Activities
Primary Activities

Strategic Position and
Action Evaluation Matrix
(SPACE)

Internal strategic factors
External strategic factors
Financial
strength
Competitive
advantage
Industry
strength
Environmental
stability

Financial Strength (FS)
• Return on Investment
• Liquidity
• Cash Flow
• Ease of market exit
• Risk involved in business
Competitive Advantage (CA)
• Market share
• Product quality
• Product life cycle
• Customer loyalty
• Competition’s capacity utilization
• Technological know-how
• Control over suppliers &
distributors
Environmental stability (ES)
• Technological changes
• Rate of inflation
•Price range of competing products
• Price elasticity of demand
•Taxation
Industry Strength (IS)
• Growth potential
• Profit potential
•Technological know-how
• Resource utilization
• Ease of entry into market
Important determinants
of organization’s overall
strategic position

Finance’s role in the organization
• Acquiring needed capital.
• Preparing financial budgets.
• Support investment decisions.
• Developing financial statements.

1- Acquiring needed capital
• Raise capital for future projects through short-
term, long-term loans or common stock according
to the lowest cost of capital.

2- Preparing financial budgets
• Details on how funds will be spent for a specified
period of time.

3- Support investment decisions
• By determining the required rate of return
then conducting feasibility studies.

3- Developing financial statements
The Basic FSs are:
1- Income Statement
2- Retained Earnings Statement
3- Financial Position Statement
( AKA Balance sheet)
4- Statement of Cash Flows

Sales
COGS
-----------------
Gross Profit
Expenses
-----------------
EBIT
Interest
----------------
EBT
Taxes
--------------
Net Profit
Preferred share
--------------------------------
Net Distributable Profit ‫للتوزيع‬ ‫القابل‬ ‫الربح‬ ‫صافى‬
Dividends
-----------------------------
Retained Earning
-
-
-
-
-
-
Income Statement
P&L

The Income Statement
• Reports revenues, expenses and the result of
operating and non- operating activities for an
accounting period on Accrual Basis
• Net income = Revenues – Expenses
(Net loss) and gains and losses

73
Income Statement example
2013 2014
Sales $5,834,400 $7,035,600
COGS 4,980,000 5,800,000
Other expenses 720,000 612,960
Deprec. 116,960 120,000
Tot. op. costs 5,816,960 6,532,960
EBIT 17,440 502,640
Int. expense 176,000 80,000
EBT (158,560) 422,640
Taxes (40%) (63,424) 169,056
Net income ($ 95,136) $ 253,584

The Retained Earnings Statement
• Retained earnings refer to the cumulative portion
of net income kept by the company and not
distributed to shareholder and is reinvested in the
business.
• Ending retained earnings= Beginning retained
earnings +net income (- net loss) – Dividends

Retained earnings Statement
example

Financial Position statement
(Balance Sheet)
• The balance sheet is a list of assets, liabilities, and
shareholders’ equity of an accounting entity
(organization) at a particular point of time.

Elements of the balance sheet
• Assets:
Are economic resources with probable future benefits owned
or controlled by the company and it’s divided into current
(cash- inventory) and fixed assets (property- equipment).
• Liabilities:
Are current obligations (short-term or long-term) of the entity
that result from past transactions which will be settled by
payment of cash.
• shareholders’ equity:
Is the financing provided by the owners .

79
Example of Balance Sheets: Assets
2013 2014
Cash $ 7,282 $ 14,000
S-T invest. 20,000 71,632
AR 632,160 878,000
Inventories 1,287,360 1,716,480
Total CA 1,946,802 2,680,112
Net FA 939,790 836,840
Total assets $2,886,592 $3,516,952

80
Liabilities & Equity
2013 2014
Accts. payable $ 324,000 $ 359,800
Notes payable 720,000 300,000
Accruals 284,960 380,000
Total CL 1,328,960 1,039,800
Long-term debt 1,000,000 500,000
Common stock 460,000 1,680,936
Ret. earnings 97,632 296,216
Total equity 557,632 1,977,152
Total L&E $2,886,592 $3,516,952

Statement of Cash Flows
• The statement reports cash flows from operating,
investing, and financing activities for a particular
accounting period.

First: Cash flows from operating activities
Include inflows and outflows that relate directly to
revenues and expenses reported on the income
statement.
Second: Cash flows from investing activities:
Include inflows and outflows related to the
purchase and disposal of long-lived productive
assets and investments in the securities of other
companies. It also includes lending cash and
retrieving it.
Third: Cash Flows from Financing Activities:
Include exchange of cash with creditors (debt
holders) and owners (shareholders).

ABC Corporation Statement of cash flows
For the year ended 12/31/2014
Cash flows from operating activities:
Cash inflows $ 280,000
Cash outflows (190,000)
Net cash flows provided by operating activities 90,000
Cash flows from investing activities:
Cash inflows 70,000
Net cash used by investing activities (60,000)
Cash flows from financing activities:
Cash inflows 32,000
Net cash used by financing activities (13,000)
Net increase in cash 17,000
Add.: cash at the beginning 54,000
Cash at end of the period 71,000

Analysis of Financial Statements
(financial ratios)
• Ratios facilitate comparison of:
– One company over time
– One company versus other companies
• Ratios are used by:
– Lenders to determine creditworthiness
– Stockholders to estimate future cash flows and risk
– Managers to identify areas of weakness and strength

Main financial ratios types
1- Liquidity Ratios:
It measures the company’s ability to meet its short-
term obligations using the resources it currently has on
hand (current ratio- quick ratio)
2- Debt Management Ratios:
It determines if the company has too much debt and
whether the company’s earnings meet its debt servicing
requirements(debt ratio- TIE- EBITDA Coverage)

3-Asset Management Ratios
It determines if the company is using its assets efficiently
(inventory turn over- FATO- TATO- DSO)
4- Profitability Ratios:
• It determines the the company’s rate of return on:
– Sales
– Assets
(gross profit margin- operating profit margin- net profit
margin- return on equity{ROE}- return on assets {ROA})

Performance
Actual
Results
Evaluation
&
Control
Programs
Budget
Procedures
Activities
needed
to
accomplish
a plan
Cost of the
programs
Sequences
of steps
needed to
do the job
Objectives
StrategiesWhat
results to
accomplish
when
Plan to
achieve
mission &
objectives
Broad
guidelines
for
decision
making
Mission
Reasons
for
existence
Environmental
Scanning
Policies
Societal
Environment:
General Forces
Task
Environment
Industry Analysis
Internal
Structure:
Chain of
command
Culture:
Beliefs,
Expectations
Resources:
Assets, skills
Competencies
knowledge
External
Feedback Learning

Vision
1st Objective
2nd Objective
3rd Objective
4th Objective
Strategy
Where do you want to go at
the end?
What is the road
map and major mile
stones?
How will
you reach
your
objectives?
Vision
Objectives

“What do we want to become?”
Vision

General Motors’ vision is to be the
world leader in transportation
products and related services.
Vision Statement Examples

Dell’s vision is to create a company culture
where environmental excellence is second
nature.
Vision Statement Examples

• Answers the question:
– “What is our business?”
Mission Statement

CIA Mission:
We are the eyes and ears of the nation and at times
its hidden hand. We accomplish this by collecting
intelligence that matters, providing relevant, timely,
and objective all-source analysis, and conducting
covert action at the direction of the president to
avoid threats or achieve United states policy
objectives.
Mission Statement Examples

Proctor & Gamble will provide branded
products and services of superior quality and
value that improve the lives of the world’s
consumers. As a result, consumers will reward
us with industry leadership in sales, profit, and
value creation, allowing our people, our
shareholders, and the communities in which we
live and work to prosper.

57357 Hospital
The Foundation of Children's Cancer Hospital
plan is to provide effective administrative,
financial, and meaningful aids to ensure and
guarantee the survival of children's cancer
hospital in a leadership position for the
provision of health care for children of
cancer patients in Egypt and the Middle East
and Africa.

Mission
Components
Customers
Markets
Employees
Public
Image
Self-Concept Philosophy
Survival,
Growth,
Profits
Products or
Services
Technology

Importance of a short term objective

Factorsconsideredinshort-termobjectives

Organic versus inorganic growth

Organic growth is the process of business expansion by
increased output, customer base expansion, or new product
development, as opposed to mergers and acquisitions, which is
inorganic growth.
Organic versus inorganic growth

Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Higher profit margins
Higher Earnings per share
Improved cash flow

Types of Strategies
Vertical
Integration
Strategies
Forward
Integration
Backward
Integration
Horizontal
Integration

Vertical Integration Strategies
Gain Control Over --
Distributors
Suppliers
Competitors

Forward Integration Strategies
Gain Control Over --
Distributors
Retailers

Forward Integration Strategies
Guidelines --
Current distributors – expensive or unreliable
Availability of quality distributors – limited
Firm competes in industry expected to grow
noticeably
Firm has both capital & HR to manage new
business of distribution
Current distributors have high profit margins

Backward Integration Strategies
Ownership or Control --
Firm’s suppliers

Backward Integration Strategies
Guidelines --
Current suppliers – expensive or unreliable
# of suppliers is small; # competitors is large
High growth in industry sector
Firm has both capital & HR to manage new business
Stable prices are important
Current suppliers have high profit margins

Horizontal Integration
Strategies
Ownership or Control --
Firm’s competitors

Horizontal Integration
Strategies
Guidelines --
Gain monopolistic characteristics
Competes in growing industry
Increased economies of scale – major competitive
advantages
Hesitating due to lack of managerial expertise or
need for particular resource

Types of Strategies
Intensive
Strategies
Market
Penetration
Market
Development
Product
Development

Intensive Strategies
Intensive Efforts --
Improve competitive position with
existing products

Market Penetration Strategies
Increased Market Share --
Present products/services
Present markets
Greater marketing efforts

Market Penetration Strategies
Guidelines --
Current markets not saturated
Usage rate of present customers can be increased
significantly
Shares of competitors declining; industry sales
increasing
Increased economies of scale provide major
competitive advantage

Market Development
Strategies
New Markets --
Present products/services to new
geographic areas

Market Development
Strategies
Guidelines --
New channels of distribution – reliable, inexpensive,
good quality
Firm is successful at what it does
Untapped/unsaturated markets
Excess production capacity
Basic industry rapidly becoming global

Product Development
Strategies
Increased Sales --
Improving present products/services
Developing new products/services

Product Development
Strategies
Guidelines --
Products in maturity stage of life cycle
Industry characterized by rapid technological
development
Competitors offer better-quality products @
comparable prices
Compete in high-growth industry
Strong R&D capabilities

Types of Strategies
Diversification
Strategies
Concentric
Diversification
Conglomerate
Diversification
Horizontal
Diversification

Diversification Strategies
Less Popular --
More difficult to manage diverse
business activities

Concentric Diversification
Strategies
Addition --
New & related products/services

Concentric Diversification
Strategies
Guidelines --
Compete in no/slow growth industry
New & related products increases sales of current
products
New & related products offered at competitive
prices
Current products—decline stage of product life
cycle
Strong management team

Conglomerate Diversification
Strategies (lateral)
Addition --
New & unrelated products/services

Conglomerate Diversification
Strategies
Guidelines --
Declining annual sales & profits
Capital & managerial ability to compete in new
industry
Financial synergy between acquired and acquiring
firms
Current markets for present products - saturated

Horizontal Diversification
Strategies
Guidelines --
Adding new products/services would significantly
increase revenues
Highly competitive and/or no-growth industry; low
margins & returns
Current distribution channels can be used
New products have counter cyclical sales patterns

Types of Strategies
Defensive
Strategies
Retrenchment
Divestiture
Liquidation

Retrenchment Strategies
Guidelines --
Failed to meet objectives & goals consistency; has
distinctive competencies
Firm is one of weaker competitors
Inefficiency, low profitability, poor employee morale,
pressure for stockholders
Strategic managers have failed
Rapid growth in size; major internal reorganization
necessary

Divestiture Strategies
Selling a division or part of an
organization.

Divestiture Strategies
Guidelines --
Retrenchment failed to attain improvements
Division needs more resources than are available
Division responsible for firm’s overall poor
performance
Division is a mis-fit with organization
Large amount of cash is needed and cannot be
raised through other sources

Liquidation Strategies
Company’s assets, in parts, for
their tangible worth
Selling

Liquidation Strategies
Guidelines --
Retrenchment & divestiture failed
Only alternative is bankruptcy
Minimize stockholder loss by selling firm’s assets

Michael Porter’s Generic Strategies
Cost Leadership Strategies
(Low-Cost & Best-Value)
Differentiation Strategies
Focus Strategies
(Low-Cost Focus &
Best-Value Focus)

Cost focus/ Ikea
• No sales persons
• Low quality materials
• No transportation
• Targeting expat

Red versus blue ocean strategies

The Profit and Growth Consequences
of Blue Oceans
39%
62%
86%
61%
38%
14%
Profit Impact
revenue impact
Business Launch
Launches With Red Oceans
Launches With Blue Oceans

low
high
Industry Variables
Strategy Canvas

Four Actions:
Eliminate/Reduce/Raise/Create
• Which of the factors that the industry takes for
granted should be eliminated?
• Which should be reduced?
• Which should be raised well above standard?
• Which factors should be created that have not
existed before?

Four Actions Framework: Key to Value Curve
Reduce
What factors should
be reduced well
below the industry
standard?
Raise
What factors should
be raised well above
the industry
standard?
The key to discovering a
new value curve lies in
answering four basic
questions
Creating
new markets:
A new value
curve
Eliminate
What factors that the
industry has taken for
granted should be
eliminated?
Create/Add
What factors that the
industry has never
offered should be
created or added?
Cirque du Soleil example

Tactics(action plan)
No. Action Date Budget Responsible Accountable Consulted Informed Status Outcome KPIs Notes
Status Planned
On progress
Completed
Pending
Cancelled
Postponed

Chapter 4
Strategy evaluation and control

Performance
Actual
Results
Evaluation
&
Control
Programs
Budget
Procedures
Activities
needed
to
accomplish
a plan
Cost of the
programs
Sequences
of steps
needed to
do the job
Objectives
StrategiesWhat
results to
accomplish
when
Plan to
achieve
mission &
objectives
Broad
guidelines
for
decision
making
Mission
Reasons
for
existence
Environmental
Scanning
Policies
Country
Analysis:
PEST Forces
Industry
Analysis:
Porter 5 Forces
Internal
Company
Analysis:
Value Chain
External
Feedback Learning
VISON
169

The Management Cycle
Needs
Assessment
Operating plans
and budgets
Project
management
Performance
Measurement

171
EXAMPLES OF “KEY RESULT” AREAS
• Customer
• Product/service
• Public/society/natural environment
• Marketing
• Human Resources
• Production
• Maintenance
• Operations
• Finance
• Good measurement systems don’t just measure things
done according to the organizational chart. Good systems
measure things done to satisfy stakeholders.

Definition of an Indicator
Specific information that provides evidence
about the achievement of planned
impacts, results and activities
Ideally indicators should be reported
quantitatively but this will not always be
possible - don’t limit M&E to
only what can be measured

What is a Key Performance Indicator
• Gives a good indication of performance
• Commonly used in business
• Metrics to define and measure business goals
• Examples:
– GNP (Gross National Product)
– ARPU (Average Revenue Per User)
– Dow Jones Index

Types of indicators
• Indicators are either qualitative or quantitative
criteria used to check whether planned changes have
taken place as intended.
• They (indicators) are designed to provide a standard
against which to measure or assess or even show the
success or progress of a programme against stated
targets

Types of indicators
• Quantitative indicators
– Should be reported in terms of a specific number
(number, mean, or median) or percentage.
– Assessing the significance of an outcome requires data
on both number and percent.
• Qualitative indicators
– Qualitative statements
– Measure perceptions
– Measure attitude, behavior

Quantitative indicators
Examples
• Number of
• Proportion of
• Percentage of
• Amount of
• The ratio of
• Length of distance
• Weight of
• Size of
• Areas of/spread of
• Value of
• etc.

Qualitative Indicators
Examples
• Level of
• Presence of
• Evidence of
• Availability of
• Quality of
• Accessibility of
• Existence of
• Sustainability of
• Improvement of
• Ability to (e.g. skills)
• Potential of
• etc.

KPI - Finance
• Finance:
1. Inventory Turnover
2. Gross Margin % or $
3. Profit or Net Income Before Tax % or $
4. Current Ratio – Assets to Liabilities
5. ROA - Return on Assets
6. GMROI
7. Operation costs as % of sales
8. “Other” income in $

Strategic management raafat 2019 sent

Strategic management raafat 2019 sent

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Ähnlich wie Strategic management raafat 2019 sent

Ähnlich wie Strategic management raafat 2019 sent (20)

Mehr von Ahmed Elgazzar

Mehr von Ahmed Elgazzar (17)

Kürzlich hochgeladen

Kürzlich hochgeladen (14)

Strategic management raafat 2019 sent