Strategic Issues


Since strategic decisions overarch several areas of a firm’s operations, they require top management involvement. Usually only top management has the perspective needed to understand the broad implications of such decisions and the power to authorize the necessary resource allocations.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Strategic Management


Strategic management is the set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company’s objectives. It comprises nine critical tasks:

  1. Formulate the company’s mission, including broad statements about its purpose, philosophy, and goals.
  2. Conduct an analysis that reflects the company’s internal conditions and capabilities.
  3. Assess the company’s external environment, including both the competitive and the general contextual factors.
  4. Analyze the company’s options by matching its resources with the external environment.
  5. Identify the most desirable options by evaluating each option in light of the company’s mission.
  6. Select a set of long-term objectives and grand strategies that will achieve the most desirable options.
  7. Develop annual objectives and short-term strategies that are compatible with the selected set of long-term objectives and grand strategies.
  8. Implement the strategic choices by means of budgeted resource allocations in which the matching of tasks, people, structures, technologies, and reward systems is emphasized.
  9. Evaluate the success of the strategic process as an input for future decision-making.

As these nine tasks indicate, strategic management involves the planning, directing, organizing, and controlling of a company’s strategy-related decisions and actions.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Chief Executive Officer


The chief executive officer (CEO) is the person ultimately responsible for setting organizational strategy and policy. Even though the CEO reports to the chair of the board (who has the most legal authority), in a real sense the CEO is the most powerful person in the corporation because he or she controls the allocation of resources. The board of directors gives the CEO the power to set the organization’s strategy and use its resources to create value. Often the same person is both chief executive officer and chair of the board. A person who occupies both positions wields considerable power and directly links the board to corporate management.

How does a CEO actually affect the way an organization operates? A CEO can influence organizational effectiveness and decision making in five principal ways:

  1. The CEO is responsible foe setting the organization’s goals and designing its structure.
  2. The CEO selects key executives to occupy the topmost levels of the managerial hierarchy.
  3.  The CEO determines top management’s rewards and incentives.
  4. The CEO controls the allocation of scarce resources such as money and decision making power among the organization’s functional areas or business divisions.
  5. The CEO’s actions and reputation have a major impact on inside and outside stakeholders’ views of the organization and affect the organization’s ability to attract resources from its environment.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Corporate Political Strategy


Corporate political strategy refers to those activities taken by organizations to acquire, develop, and use of power to obtain an advantage (a particular allocation of resources or no change in the allocation) in a situation of conflict. This definition assumes that the many interests in a society will produce conflict about what to do and how to do it. Whether the issue is as broad as global warming or as specific as the risk posed by dioxin in a particular neighborhood, government is the place where such conflicts are resolved. A corporate political strategy is an approach to such relationships in a way that will enable the company to acquire power, use it, and obtain an advantage from it whenever such conflicts affect the firm or its business activities.

The company has a clear and vital business interest in a wide range of political issues. Companies are likely to be engaged in trying to influence what government does in such areas because of their stake in the outcome. They are, in other words, stakeholders of the public policy process and the political system.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Changing Company’s Culture


A short list of mechanisms leaders can use to establish, embed, and reinforce organizational culture. There are five:

  1. Make it clear to your employees what you pay attention to, measure, and control.
  2. React appropriately to critical incidents and organizational crises.
  3. Deliberately role model, teach, and coach the values you want to emphasize.
  4. Communicate your priorities by the way you allocate rewards and status.
  5. Make your HR procedures and criteria consistent with the values you espouse.

Don’t stop there. Use secondary mechanisms—such as redesigning physical space—to further reinforce the desired cultural changes. These secondary mechanisms are just that secondary, because they work only if they are consistent with the five primary mechanisms:

  1. What leaders pay attention to, measure, and control
  2. Leader reactions to critical incidents and organizational crises
  3. Deliberate role modeling, teaching and coaching
  4. Criteria for allocation of rewards and status
  5. Criteria for recruitment, selection, promotion, retirement, and communication.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Lacking Commitment


Why do so many senior people appear hesitant and half-hearted? Why are the communications concerning change programs so anemic, especially when coming from those who have little difficulty in putting their points across in other contexts?

We have to get at the roots of ambivalence. The reasons for concern, quiet dissent, and reluctance to commit need to be probed:

  • Apparent support may only mean that those concerned are crawlers, bootlickers and toadies. There is often reluctance to accept the reality that all manner of loathsome and self-serving creatures inhabit the corridors of corporate bureaucracy. Their wiles, and the games they play, which are so transparent to outsiders, and destructive of external relationships built upon mutual trust and respect, go unnoticed or are ignored within.
  • Those who appear difficult may be the individuals with intellectual reservations. These could relate to the application of a program in a particular area, or to an initiative as a whole. The objectors could be the ones who have thought it through and uncovered missing elements. An implementation process needs to incorporate a means of listening to, and learning from, those who have valid objections.
  • Also, not all customers have the same preferences. What is added value for one person may be regarded as an expensive luxury by other.

Bland ‘motherhood’ statements suggest people have not thought through what needs to be done. People judge by what they see rather than on the basis of what is said. The informal messages, the examples and the symbols, can undercut formal communications.

Too often the changes of attitudes that are sought are not reflected in the language used by managers, the anecdotes and war stories that make up the mythology of a company, in symbols such as the allocation of parking spaces or use of exercise facilities, and in how a myriad of day-to-day matters are handled. Changing structures and processes may not be followed by attitudes where managers themselves, and particularly senior managers, refuse to act as role models.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Balancing Planning Efforts with Day-to-Day Demands


Managers often allow day-to-day activities to capture their attention while planning and strategy fall by the wayside. Use the following suggestions to ensure that you carry out your plans and spend the time you need for planning:

a)      Keep a log to determine how you are spending your time. Evaluate your time allocations to ensure that you are giving proper time and attention to the “big plan.” Consider delegating more.

b)      When you are faced with many demanding and competing priorities, ask yourself which are the most important ones and make them your first priority. When an urgent matter arises, determine how it fits into your daily plan (is it urgent and important, or simply urgent?) and act accordingly.

c)      Use the 80/20 rule, which states that 80 percent of the value of a group of items is generally concentrated in only 20 percent of the items. Simply put, the 80/20 rule means that you can be 80 percent effective by achieving 20 percent of your goals. If you have a daily “to-do” list of ten items, this means that you can generally expect to be 80 percent effective by successfully completing only the two most important items on your list.

d)     Use a software planning package to plan complex and multiple projects. These tools will help you keep track of what needs to be done.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Deliberate Innovation Strategy


The strategic choice view argues that if an incumbent is not the first to introduce an innovation, it may not be because it has no incentive to invest, its competence has been destroyed, it has not recognized the potential of the innovation, it does not have the complementary assets, it did not use the right adoption mechanism, or it is an environment that is not conducive to innovation. It may be because of the firm’s innovation strategy—its goals, timing, actions, and resource allocation in using new knowledge to offer new products or services. By making the right choices early, a firm can build the right competences and complementary assets, or even shape the kind of environment in which it is going to operate.

There are several innovation strategies: offensive, defensive, imitative, dependent, traditional, and optimistic. A firm with an offensive strategy is the first to introduce new products. If the strategy is to be the first to innovate, it will invest in the innovation and build the capabilities to do so.  In a defensive innovation strategy, a firm waits for a competitor with an offensive strategy to introduce a product first and resolve some of the uncertainties confronting the innovation. The defensive firm then introduces its own product, correcting any mistakes that pioneers may have made.

Firms pursuing a defensive strategy normally have very strong complementary assets—capabilities such as marketing, manufacturing, distribution channels, and reputation which allow a firm to commercialize an invention—and when they decide to move, they do so very quickly. They usually have a strong R&D since it takes knowledge to absorb knowledge. The product is not an imitation of the pioneer’s version but rather a differentiated product, often with better features and lower cost. The firm, in effect, catches up with or leapfrogs the pioneer. Thus not being the first to introduce an innovation may not be a sign of a lack of incentive to invest, competence destruction, absence of appropriate complementary assets, inappropriate adoption mechanism, or being in the wrong environment. It may be because the firm in question has a defensive strategy.

While a firm with a defensive strategy would like to differentiate its products, one with an imitative strategy would like to produce a clone of the pioneer’s product. It has very little attention of catching up with or leapfrogging the pioneer. It usually has such low-cost capabilities as lower labor costs, access to raw materials, and strong manufacturing. In the dependent strategy the firm accepts a subordinate role to a stronger firm. It imitates product changes only when requested by the customer or superior. Many large Japanese firms have these satellite firms. The traditional strategy makes very few changes to products, only striving to offer the lowest cost possible. In the opportunistic strategy the firm looks for some unique needs of a market segment that are not being met—it looks for a niche market. The point in all these other strategies is that a firm’s failure to introduce a product first can be due to its deliberate strategy.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Profit Economics


The following information is required, at a minimum, to understand the profit economics of a business:

  1. How many dollars of assets are committed in each stage of each product/market business (e.g., R&D, materials, plant and equipment, finished stock, post-sale support)?
  2. What is the fixed/variable cost relationship for each product/market business, that is, for each dollar of sales, how many cents are attributable to bedrock fixed costs, how many to structured or discretionary costs, and how many to out-of-pocket costs?
  3. How do costs and profit change with swings in volume?
  4. What is the break-even point at current volume and what actions could be taken to bring that break-even point down should volume potential decline?
  5. What is the rate of incremental profit on each added increment of volume? What are the volume points where new increments of structured cost must be added?

A net profit and loss statement (after all allocations) and a balance sheet for each product line are essential for generating answers to these questions. Despite their claim that “we know all that,” very few managers actually have this information readily available.

Actually, most accounting systems are not designed to provide these kinds of statements and the accountants will argue that you can’t get them because many products run over the same machines, a lot of indirect costs can’t be allocated, and so on. To which we say, baloney! Shared fixed and indirect charges often represent the most serious cost problems in business situations where a cost disadvantage exists. And they are impossible to attack in the aggregate. They must be broken down and assigned to a discrete business unit even if done arbitrarily. Then a manager with hands-on responsibility can argue about fairness and whether there is value received for the costs involved. Although this is obviously not a precise exercise, it is effective and essential. Without full cost profit and loss and balance sheet statements managers cannot really understand the profit economics of their business. Further, they can’t make the types of intelligent business decisions and plans so important in today’s environment.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Linear Programming


Linear programming is a mathematical method used to solve resource allocation problems, which arise “whenever there are a number of activities to be performed, but limitations on either the amount of resources or the way they can be spent.” For example, it can be used to determine the best way to:

  • Distribute merchandise from a number of warehouses to a number of customers;
  • Assign personnel to various jobs;
  • Design shipping schedules;
  • Select the product mix in a factory to make the best use of machine and labor hours available while maximizing the firm’s profit;
  • Route production to optimize the use of machinery.

In order for managers to apply linear programming successfully, the problem must meet certain basic requirements: There must be a stated, quantifiable goal, such as “minimize total shipping costs”; the resources to be utilized must be known (a firm could produce 200 of one item and 300 of another, for instance, or 400 of one or 100 of another); all the necessary relationships must be expressed in the form of mathematical equations or inequalities; and all these relationships must be linear in nature.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

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