1. Strategic Management By Dr. Harold D. Harlow
EHRMA
Strategic Management By
Dr. Harold D. Harlow

2. Strategic Management Defined:
Set of managerial decisions and actions that determines the long-run performance of a firm.
Set of managerial actions and decision,separate from operations, that determines the future profitability/success of the firm.

3. Managers Two Primary Responsibilities
Operational Work
Actions and plans less than one year.
Daily and weekly activities to “get the work of the business done well”
Strategic Work
More than one year future orientation.
Often crowded out by operational work.
The most important work is strategic. Although not usually urgent in most environments, essential to the future profit making potential of the firm.

4. Business Policy Defined:
General management orientation that looks inward for properly integrating the firm’s functional activities.

5. Four Phases of Strategic Management
Basic financial planning
Forecast-based planning
Externally-oriented planning (strategic)
Strategic management(Choose functional strategies to support firm and SBU strategies)

6. Strategic Management Benefits:
Clearer sense of strategic vision for the firm
Sharper focus on what is strategically important
Improved understanding of a rapidly changing environment

7. Strategic Management Not always a formal process can be ad hoc:
Where is the organization now? (Not where do we hope it is!)
If no changes are made, where will the organization be in 1 year, 2 years, 5 years, 10 years?
What specific actions should management undertake? What are the risks and payoffs involved?

8. Global Stategic Issues
European Union (EU)
Economic integration of 15 member countries
North American Free Trade Agreement (NAFTA)
Improved trade among 3 member countries
Mercosur
Free-trade area among Argentina, Brazil, Uruguay, and Paraguay
Association of South East Asian Nations (ASEAN)
Attempting to link members into a borderless economic zone

9. E-Commerce
7 Trends:
Internet forcing companies to transform themselves
Market access and branding are changing, causing disintermediation of traditional distribution channels
Balance of power shifting to the consumer
Competition is changing

10. 7 Trends (continued) Pace of business increasing drastically
Internet purchasing corporations out of their traditional boundaries
Knowledge becoming a key asset and source of competitive advantage

11. Adaptation to Changing Environmental Conditions
Strategic flexibility:
Demands a long-term commitment to the development and nurturing of critical resources
Demands that the firm become a learning organization

12. Learning Organizations
Defined:
An organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights.

13. Learning Organizations
Four Main Activities:
Solving problems systematically
Experimenting with new approaches
Learning from their won experiences and that of others
Transferring knowledge quickly and efficiently throughout the organization

14. Strategic Management Model
Environmental
Strategy
Strategy
Evaluation
and Control
Evaluation
and Control
and Control
Scanning
Formulation
Implementation
External
Mission
Reason for
Societal
existence
Environment
Objectives
General Forces
What results to
Task
Strategies
accomplish
Environment
by when
Plan to
Industry Analysis
achieve the
Policies
mission &
Internal
objectives
Broad
guidelines for
Programs
Structure
decision
Process
Chain of Command
making
Activities
to monitor
needed to
performance
Culture
Budgets
accomplish
and take
Beliefs, Expectations,
a plan
corrective
Cost of the
Values
action
programs
Procedures
Resources
Sequence
Assets, Skills
of steps
Competencies,
needed to
Knowledge
do the job
Performance
Feedback/Learning

15. Basic Model of Strategic Management
Four Basic Elements

16. Environmental Scanning
Defined:
The monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the firm.

17. Environmental Scanning

18. Environmental Scanning
Identify strategic factors
SWOT Analysis
Strengths, Weaknesses
Opportunities, Threats
Internal Environment
Strengths & Weaknesses
Within the organization but not subject to short-run control of management
External Environment
Opportunities & Threats
External to the organization but not subject to short-run control of management

19. Strategy Formulation Defined:
Development of long-range plans for the effective management of environmental opportunities and threats in light of corporate strengths and weaknesses.

20. Strategy Formulation Mission Statement
Purpose or reason for the organization’s existence
Promotes shared expectations among employees
Communicates public image important to stakeholders
Who we are, what we do, what we’d like to become

21. Strategy Formulation Maytag Corporation Mission Statement
To improve the quality of home life by designing, building, marketing, and servicing the best appliances in the world.

22. Strategy Formulation Objectives The end results of planned activity
What is to be accomplished
Time in which to accomplish it
Quantified when possible

23. Strategy Formulation Goals vs. Objectives
A goal is an open-ended statement of what one wants to accomplish with no quantification of what is to be achieved and no time criteria for completion.

24. Goals & Objectives Corporate goals and objectives include:
Profitability (net profits)
Growth (increase in total assets, etc.)
Utilization of resources (ROE or ROI)
Market leadership (market share)

25. Strategies
Defined:
A strategy of a corporation forms a comprehensive master plan stating how the corporation will achieve its mission and objectives. It maximizes competitive advantage and minimizes competitive disadvantage.

26. Strategies 3 Types of Strategy Corporate strategy Business strategy
Functional strategy

27. Strategies
Corporate Strategy
Stability
Growth
Retrenchment

28. Strategies Business Strategy Competitive strategies
Cooperative strategies

29. Strategies Functional Strategy Technological leadership
Technological followership

30. Hierarchy of Strategy Corporate Strategy Functional Strategy Business
(Division Level)
Strategy
Functional
Strategy

31. Policies
Defined:
Broad guidelines for decision making that link the formulation of strategy with its implementation.

32. Strategy Implementation
Programs
Strategy
Implementation
Budgets
Procedures

33. Initiation of Strategy
New CEO
External intervention
Threat of change in
ownership
Performance gap
Strategic inflection point
Stimulus
for change in
strategy
Triggering
event

34. Strategic Decision Making
Strategic Decisions
Rare
Consequential
Directive

35. Strategic Decision Making

36. Strategic Decision Making

38. Strategy Basic Concepts

39. Who Makes Strategy? General Management Function.
Top level managers develop strategy of the firm.
Not operations activity
Must be allowed adequate time and resources to be successful.
Key point: Operational work tends to crowd out strategic management work.

40. What is Strategy? Strategy has three levels:
Firm level
Business level or Strategic Business Unit Level
Functional or departmental level.
Directional goals to guide future decision making
Formal planning sessions may occur

41. Strategy Questions What is the current strategy, implicit or explicit?
What assumptions have to hold for the current strategy to be viable?
What is happening in the larger, social and educational environments?
What are our growth, size, and profitability goals?
In which markets will we compete?
In which businesses?
In which geographic areas?

42. Strategy Questions-Continued
To what customers or users?
How will the selling/buying decisions be made?
How will we distribute our products and services?
What technologies will we employ?
What capabilities and capacities will we require?
Which ones are core?
What are our management capabilities and capacities?
Is our “corporate culture” supportive of our strategy?
What will we make, what will we buy, and what will we acquire through alliance?
What are our options?
On what basis will we compete

43. Why
Proven significant gains in performance from explicit strategy development
Different functional areas may have different strategies.
Dysfunctional suboptimal decisions dependent on functional manager professional orientation.
What is needed is a “guiding strategic hand” for each business function.

44. Where strategy comes from?
Formal planning
Ad hoc by consensus of firm managers
External-Reaction to environment
Internal-Firm Resources available

45. When is ( New) Strategy Needed?
When firm performance does not meet expectations.
When firm is changed in some significant way.
New managers
Firm is sold or merged with another firm.
When paradigmic changes occur in business model.

46. Firm Level Strategies Growth Disinvestment / Retrenchment
Mergers and Acquisitions
Organic (Depends on Industry Life cycle and competitiveness)
Vertical or Horizontal Integration
Economies of Scale or Scope
Disinvestment / Retrenchment

47. Mission Rationale for the firm: Its reason for existance.
Needed to drive the firm to the intermediate goals and objectives
Specific within a certain time period.
Specific about competition and markets to be captured.

48. Vision
An overriding very long range view of the firm and where it might be in years.
Corporate vision is a short, succinct, and inspiring statement of
what the organization intends to become and to achieve
at some point in the future, often stated in competitive terms.
Vision refers to the category of intentions that are broad, all-inclusive and forward-thinking.  It is the image that a business must have of its goals before it sets out to reach them.
It describes aspirations for the future, without specifying the means that will be used to achieve those desired ends.

49. Mission and Vision Answer the Strategic Questions
Who are we?
What do we do?
Why are we here?
What kind of company are we?
What kind of company do we want to become?
What kind of company must we become to survive and prosper in our community

50. Emergent Strategy Mintzberg
Strategy is a plan, a "how," a means of getting from here to there.
Strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a "high end" strategy.
Strategy is position; that is, it reflects decisions to offer particular products or services in particular markets.
Strategy is perspective, that is, vision and direction.

52. EBBC Introduction to Strategy Vodafone Egypt
Ian Gray, Chairman, Vodafone Egypt
17 November 2007

53. If you do not know where you are going – you will never get there!

54. Have a plan!
Failure to plan =
Planning to fail !

55. Key Drivers for Success
Market led
Customer focused
Competitor aware
Employee driven

56. Strategy issues ref Vodafone Egypt Contents
Summary

57. Egypt – good macroeconomic environment
Demographic facts
Population
77.5m (1.8% p.a. growth)
Literacy
58% of population
Population distribution
50% aged 20 or less
GDP per capita
US$953 (US$4,400 adjusted for PPP)(1)
GDP growth
~6% per annum(2)
Income distribution
Economic facts
US$ per month
Economy steadily improving since July 2004
Strong growth in tourism and Suez Canal revenues
Increasing FDI and significant acceleration of privatisation
Inflation rate at circa 10%; stable exchange rate +
397 A 5%
Population of 71 million
50% of the population are below 20 years
72% of the population earn below US$ 160 / month
238 -
397 B 6% B
159 -
238
17% C 84 -
159
28% D
< 84
44% E
(1) 2005 estimates, (2) Estimate for 12 months to June 2006
Source: CIA World Fact book, 9th Euromoney Arab Financial Forum

58. Mobile continues to outgrow fixed
Egyptian telecom market overview
Fixed vs. mobile revenue
Fast growing mobile market
21% penetration; 27% YoY growth(1)
99% population coverage (8% of land mass)
mostly prepaid; SIM only with no handset subsidies
low blended minute rates (<5€c)
few mobile HVCs generating high ARPUs
Slow growing fixed market
14% penetration; 6% YoY growth(1)
Only 2.5m PCs; 120,000 DSL connections
Regulator influenced by politics and must approve tariffs
Source: Company data and analyst consensus estimates, (1) 3 months to September 2006

59. Two player market with a recently launched 3rd entrant
Vodafone Egypt
Mobinil
Etisalat
Joint Venture ORASCOM/ Orange
Launched May 1998 (with early lead of 100,000 HVCs)
Customers 8.1m(2,3)
Twelve months revenues LE6.0bn(3)
UAE controlled; with local partners
Launched April 2007
Paid LE16.7bn (US$2.9bn) for 2G/3G licence (3.4% of Egypt GDP)
Vodafone controlled; with Telecom Egypt as strategic partner(1)
Launched November 1998
Customers 7.8m(2,3)
Twelve months revenues LE6.8bn(3)
Ownership 4%
20%
National Bank of Egypt
20%
Free Float
37%
ORASCOM
31%
CIB 4%
Telecom
Egypt
45%
Vodafone
Group
55%
Etisalat
66%
Egypt Post
10%
Orange
32%
(1) Vodafone Egypt remaining free float 0.44%, (2) Active customers, (3) September 2006
Source: Vodafone & Mobinil company data and Egyptian Government data

60. Promising outlook with rapid mobile market growth
Drivers for hitting the “S” Curve
Total mobile market penetration
Reported customers (m)
Mobile penetration (%)
Macro-economic environment
economy improving since 2004
Mass market appeal
mobile moving to mass market “necessity”; no longer a luxury product
Reduced entry and usage barriers
entry handset now around US$20
prepaid tariff reductions
lower customer activation charges
Source: Company data

61. Contents
Egypt
Vodafone Egypt
Strategy
Summary

62. To connect people and communities Accelerating the advancement
‘Core Purpose’
To connect people and communities
Accelerating the advancement
of Egypt

63. Vodafone Egypt is growing rapidly
Revenue
EBITDA
38% CAGR
44% CAGR
Revenue components H1 FY06/07(1)
YoY% growth H1 FY06/07
Outbound voice
70%
Inbound voice
11%
Visitors
10%
Data (including SMS) 4%
Activation fees and other 5%
100%
(1) % of total revenue, (2) Active customers
Source: Company data, Egyptian LE (IFRS)

64. Vodafone Egypt is outperforming
Customer share (%)(1)
Revenue share (%)
EBITDA share (%)(2)
EBITDA margins (%)(2)
Vodafone Egypt
Mobinil
Active customers, (2) Both operators were released from liability to pay 1800 spectrum fees in Sep 2006 – LE100m impact excl. from Mobinil EBITDA. LE92m impact incl. in Vodafone Egypt depreciation
Source: Company data

65. Growth in prepaid with reduction in minute rate
Prepaid vs. contract closing customer split(1)
Outbound minute rate evolution
Contract
Prepaid
Contract
Low outbound minute rate: 30pt (<4€c)
Customer growth slowing indicating maturity
Prepaid
Growth accelerating from late 2004
Tariff options increased and price per minute reduced to encourage usage
(1) Active customers, estimated prior to October 2003
Source: Company data

66. Driving usage through positive elasticity
Prepaid vs. contract closing customer split(1)
Outbound minute rate evolution
Contract
Prepaid
Contract outbound MOU vs. total ARPU
Prepaid outbound MOU vs. total ARPU
Monthly MOU
Monthly ARPU
Monthly MOU
Monthly ARPU
(1) Active customers, estimated prior to October 2003
Source: Company data

67. Vodafone Egypt outperforms on customer satisfaction
Vodafone Egypt vs. Mobinil
Voice quality
Network availability
Call continuity
Sending/receiving SMS
Vodafone Egypt
Mobinil
11%
Source: Network Satisfaction Tracker (Logic Consulting Group). October 2006

68. Cost management is critical in low ARPU environment
Cost principles
Margin breakdown H1 FY06/07
(%)
Break even or better on activations
No unprofitable tariffs
Utilise and build on Group buying power
Front line accountability
Marginal cash cost per marginal customer
Every piaster matters
Total revenue
Inter-connect costs
Other direct costs
Acquisition & retention costs
Operating expenses
EBITDA
Network utilisation
(%)
Sep
2006 75 80 85 90 95
100
May
2005
Jul
Nov
Jan
Mar
Source: Company data

69. Being part of Vodafone Group offers many benefits
Benefits from Vodafone Group …
Brand
Buying power
Market intelligence (product innovation, technical support, market trends)
Resource
People development
… and in return from Vodafone Egypt
Australian call centre
Professional IT services
International help desk

70. Vodafone Egypt generates healthy cash flows
Free cash flow FY05/06
100 33 22
(7)
(18)
(20)
(11)
(22) 10 20 30 40 50 60 70 80 90
Revenue(1)
Government
charges(2)
Direct costs
Operating
expenses
Capex
free cash
Corporate
tax
Free cash
flow
(%)
Operating
flow
(1) Revenue excluding sales tax, (2) Various charges including national training fund, telecom fund, NTRA fees (excl. 2G licence fees)
Source: Company data

71. Contents
Egypt
Vodafone Egypt
Strategy
Summary

72. Unrelenting focus and attention on six key areas1
Consistency 2
Image and quality 3
Small price premium 4
Managing market competitiveness 5
Values based culture 6
Best team

73. Company Vision Strategy & Values Profitable Growth Based on Value and Differentiation
Grow market at appropriate cost
Focus on value
Grow adjacent market
Network quality and coverage
First to market with key products
Excellence in customer service
Relevant brand for the people of Egypt
Synergies from the Group
Cost conscious culture
No compromise on quality
Experienced management team
Hiring the best
Emphasis on training
Brand
Preference
Cost
Containment
& Synergies
Management
Capabilities

74. Market Leadership Our Objective is Building a Strong Vodafone Brand
To delight our customers and build our market leadership without having to compete on pricing.
Our brand is a global one yet with a local tone that keeps it close to our customers hearts.
We have the best marketing talents from the local market and industry knowledge through our links into the Vodafone Group.
Our tools to build that strong brand is to excel and communicate in the following areas:
Superior Coverage
Better Sound Quality
Excellent Customer Care
Leadership in Customer Relevant Product Innovation

75. From Strategy to Operational Plans
Tasks
Processes
Resourcing
Behaviour
Market led
Customer focused
Competitor aware
Employee driven

76. Thank You