STRATEGIC LOGISTICS MANAGEMENT AYSU GÖÇER LOG 404

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION STRATEGIES A strategy of a corporation forms a comprehensive master plan stating how the corporation will achieve its mission, objectives and reach to its vision CORPORATEBUSINESSFUCNTIONAL CLASSIFICATION OF STRATEGIES

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION CORPORATE STRATEGY Describes a company’s overall direction in terms of general attitude toward growth and the management of its various businesses and product lines Stability, growth and retrenchment Rockwell International Corporation ended the strategy of diversification into multiple lines of businesses sold aerospace and defense units to Boeing focused on commercial electronics

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION CORPORATE STRATEGY Vertical integration Diversification Strategic alliances Acquisitions New ventures Business portfolio Restructuring

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION BUSINESS STRATEGY (Division Level) Business strategy usually occurs at the business unit or product level, and it emphasizes improvement of the competitive position of a corporation’s products or services in the specific industry or market segment served by that business unit. Competitive and cooperative strategies (cost leadership, differentiation, market niche focus..) Apple Computer iMac design and color differentiation in competitiveness

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION BUSINESS STRATEGY (Division Level)  Structural analysis of competitive forces Threat of new entrants Bargaining power of suppliers Bargaining power of buyers Threat of substitute products Rivalry among existing competitors Strategic alternatives

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION FUNCTIONAL STRATEGY Functional strategy is the approach taken by a functional area to achieve corporate and business unit objectives and strategies by maximizing resource productivity Developing a distinctive competence Operations, Manufacturing, Marketing, Materials Management, Research &Ddevelopment, Human Resources, Financial Arçelik R&D Functions

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION GLOBAL LEVEL STRATEGY Multi-domestic International Global Transnational

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION POLICIES A policy is a broad guideline for decision making that links the formulation of strategy with its implementation Companies use policies to make sure that the employees throughout the firm make decisions and take actions that support the corporation’s mission, its objectives and its strategies

BASIC MODEL OF STRATEGIC MANAGEMENT 2. STRATEGY FORMULATION 3M Policy “ Researchers should spend 15 % of their time working on something other rather than their primary projects”—product development strategy Mission of 3M: To solve unsolved problems innovatively Intel Policy “Cannibalize your product line with better products before a competitor does it to you.” Mission of Intel: "Do a great job for our customers, employees and stockholders by being the preeminent building block supplier to the computing industry worldwide"

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION The process by which strategies and policies are put into action through the development of programs, budgets and procedures Programs Budgets Procedures

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION PROGRAMS The statement of the activities or steps needed to accomplish a single-use plan FedEx Program: to install an information system to enable its customers to track their shipments at any point of time  FedEx installed computer terminals at 100,000 customers and gave software to another 650,000 so shippers could label much of their own packages

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION BUDGETS A budget is a statement of a corporation ‘s programs in terms of money. Lists the detailed cost of each program General Motors budgeted $ 4.3 billion during 2000 through 2004 to update and expand its Cadillac line of automobiles

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION PROCEDURES Standard operating procedures (SOP) System of sequential steps or techniques that describe in detail how a particular task or job is to be done. Airline Boarding Procedures Purchasing procedures

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION Commander approach Organizational change approach Collaborative approach Cultural approach Crescive approach

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION Commander Approach "How can I, as a general manager, develop a strategy for my business which will guide day- today decisions in support of my longer-term objectives?  Manager determines “best” strategy  Manager uses power to see strategy implemented  Three conditions must be met  Manager must have power  Accurate and timely information is available  No personal biases should be present  Limitations  Can reduce employee motivation and innovation  Advantages  Managers focus on strategy formulation  Works well for younger managers  Focuses on objective rather than subjective

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION Organizational Change Approach "I Have a strategy -now how do I get my organization to implement it?"  Focuses on the organization  Behavioral tools are used  The role of the strategic leader is that of an architect, designing administrative systems for effective strategy implementation  Includes focusing on the organization’s staffing and structure  Often more effective than Commander  Used to implement difficult strategies  Limitations  Managers don’t stay informed of changes occurring within the environment  Doesn’t take politics and personal agendas into account  Imposes strategies in a “top-down” format  Can backfire in rapidly changing industries

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION Collaborative Approach "How can I get my top management team to help develop and commit to a good set of goals and strategies?  Enlarges the Organizational Change Approach  Manager is a coordinator  Management team members provide input  Group wisdom is the goal  Advantages  Increased quality and timeliness of information  Improved chances of effective implementation  Limitations  Contributing managers have different points of view and goals  Management retains control over the process

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION Cultural Approach "How can I get my whole organization committed to our goals and strategies?  Includes lower levels of the company  Breaks down barriers between management and workers  Everyone has input into the formulation and implementation of strategies  Works best in high resource firms  Advantage  More enthusiastic implementation  Limitations  Workers should be informed, intelligent  Consumes large amounts of time  Strong company identity becomes handicap  Can discourage change and innovation

BASIC MODEL OF STRATEGIC MANAGEMENT 3. STRATEGY IMPLEMENTATION Crescive Approach "How can I encourage my managers to develop, champion, and implement sound strategies?’  Addresses formulation and implementation simultaneously  Subordinates develop, champion, and implement strategies on their own  “Bottoms-up” approach  Ultimate strategy is sum of all “successful” approaches  Advantages  Encourages middle management to participate  Strategies are more operationally sound  Limitations  Resources must be available  Tolerance must be extended

BASIC MODEL OF STRATEGIC MANAGEMENT 3. EVALUATION AND CONTROL  The process in which corporate activities and performance results are monitored  Performance is the end result of activities.  Feedback, corrective action and learning

STRATEGIC CONTROL Typically consists of three steps : Monitoring performance Comparing performance to standards Taking corrective action where needed BASIC MODEL OF STRATEGIC MANAGEMENT