Business Strategy and Policy

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Business Strategy and Policy. Lecture 07. Recap. Importance of Vision and Mission Statement Reason for developing a written Mission Statement Components of Mission Statement. Components of Mission Statement. Customers Productsorservices Markets Technology - PowerPoint PPT Presentation

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<p>Business Strategy and Policy</p> <p>Business Strategy and PolicyLecture 071Business Policy and ManagementRecapImportance of Vision and Mission Statement</p> <p>Reason for developing a written Mission Statement</p> <p> Components of Mission Statement</p> <p>2Business Policy and ManagementComponents of Mission StatementCustomersProductsorservicesMarketsTechnologyConcernforsurvival,growth,andprofitabilityPhilosophySelf ConceptConcernforpublicimageConcernforemployees</p> <p>3Business Policy and ManagementTodays LectureWhy Firms do not Plan strategically?Poor Reward StructuresFire-fightingWaste of TimeToo ExpensiveLazinessContent with Success4Business Policy and ManagementTodays LectureFear of FailureOverconfidencePrior Bad ExperienceSelf-InterestFear of the UnknownHonest Difference of OpinionDisbeliefBenefits of planning Strategically</p> <p>5Business Policy and ManagementWhy Firms do not Plan strategically?</p> <p>Poor Reward Structureswhen an organization assumes success, it often fails to reward success.-Where failure occurs, then the firm may punish. In this situation, it is better for an individual to do nothing (and not draw attention) than risk trying to achieve something, fail, and be punished.6Business Policy and ManagementWhy Firms do not Plan strategically?Fire-fighting:An organization can be so deeply involved in crisis management and fire-fighting that it does not have time to plan.Waste of Time:Some firms see planning as a waste of time since no marketable product is produced. Time spent on planning is an investment.7Business Policy and ManagementWhy Firms do not Plan strategically?Too Expensive:Some organizations are culturally opposed to spending resources.Laziness:People may not want to put forth the effort needed to formulate a planContent with Success:Particularly if a firm is successful, individuals may feel there is no need to plan because things are fine as they stand. But todays success does not guarantee success tomorrow.8Business Policy and ManagementWhy Firms do not Plan strategically?Fear of Failure:By not taking action, there is little risk of failure unless a problem is urgent and pressing. Whenever something worthwhile is attempted, there is some risk of failure.Overconfidence: As individuals build up experience, they may rely less on formalized planning. Rarely, however, is this appropriate. Being overconfident or overestimating experience can bring failure. Forethought is rarely wasted and is often the mark of professionalism.9Business Policy and ManagementWhy Firms do not Plan strategically?Prior Bad Experience:People may have had a previous bad experience with planning, where plans have been long, cumbersome, impractical, or inflexible. Planning, like anything, can be done badly.</p> <p>Self-Interest:When someone has achieved status, privilege, or self-esteem through effectively using an old system, they often see a new plan as a threat.10Business Policy and ManagementWhy Firms do not Plan strategically?Fear of the UnknownPeople may be uncertain of their abilities to learn new skills, their aptitude with new systems, or their ability to take on new roles.Honest Difference of Opinion:People may sincerely believe the plan is wrong. They may view the situation from a different viewpoint, or may have aspirations for themselves or the organization that are different from the plan. Different people in different jobs have different perceptions of a situation.Suspicion:Employees may not trust management.11Business Policy and Management</p> <p>Benefits of planning Strategically</p> <p>Following are the major benefits of Strategic management:</p> <p>Proactive in shaping firms futureInitiate and influence actionsFormulate better strategies (Systematic, logical, rational approach)12Business Policy and ManagementBenefits of planning StrategicallyFinancial benefits:Improved productivityImproved salesImproved profitability</p> <p>Non-Financial benefits:Increased employee productivityImproved understanding of competitors strategiesGreater awareness of external threatsUnderstanding of performance reward relationshipsBetter problem-avoidanceLesser resistance to change13Business Policy and ManagementSummaryWhy Firms do not Plan strategically?</p> <p>Benefits of planning StrategicallyFinancialNon-Financial14Business Policy and ManagementNext LectureHow to conductexternalstrategic-managementaudit.Discuss10majorexternalforcesthataffect organizationsIdentifykeysourcesofexternalinformation,includingtheInternet.15Business Policy and Management</p>