To accompany contemprory strategy analysis concepts techniques application chapter17slides

Current Trends in Strategic Management• The New Economy • New Directions in Strategic Thinking • Redesigning the Organization • New Modes of Leadership OUTLIN E... The Turbulent 21st Cen

Current Trends in Strategic Management

• The New Economy

• New Directions in Strategic Thinking

• Redesigning the Organization

• New Modes of Leadership

OUTLIN

E

The Turbulent 21st Century

The Turbulent 21st Century

Collapse of New

Economy

•Dot.com bubble bursts

•TMT recession

Collapse of New

Economy

•Dot.com bubble bursts

•TMT recession

Corporate Scandals

• Enron, WorldCom, Parmalat

• Jack Welch’s retirement package

Corporate Scandals

• Enron, WorldCom, Parmalat

• Jack Welch’s retirement package

War

• Invasion of Afghanistan

& Iraq

•Civil was in Congo,

Liberia, Sudan

War

• Invasion of Afghanistan

& Iraq

•Civil was in Congo,

Liberia, Sudan

Age of Disbelief

Age of Disbelief

The Curse of

Terrorism

• Sept 11, 2001

•Suicide bombings in

Israel, Iraq, Saudi

Arabia, Turkey,

Afghanistan

The Curse of

Terrorism

• Sept 11, 2001

•Suicide bombings in

Israel, Iraq, Saudi

Arabia, Turkey,

Afghanistan Fear of Disease

•SARS, Mad Cow, Bird Flu

Fear of Disease

•SARS, Mad Cow, Bird Flu

Unstable Currencies

US$ declines by >50% against

Euro 2002-04

Unstable Currencies

US$ declines by >50% against

Euro 2002-04

Decline of Multilateralism

•Collapse of Doha round

• Trade wars between US, EU, China

•Weakening of UN

International competition intensifies

• China as Workshop of the World

• Outsourcing to LDCs

1

2

3

4

5

6

7

1995 1996 1997 1998 1999 2000 2001 2002 2003

Q1 Q2 Q3 Q4

Source: Bureau of Labor Statistics

US Labor Productivity: Changes in Non-Farm Output per Hour Worked from Year ago Quarter, 1995-2003

US Labor Productivity: Changes in Non-Farm Output per Hour Worked from Year ago Quarter, 1995-2003

Return on Equity of US Manufacturing

Corporations, 1990-2003

Return on Equity of US Manufacturing

Corporations, 1990-2003

0

2

4

6

8

10

12

14

16

18

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

ROE ( %)

Source: US Bureau of the Census

0.5

1

1.5

2

2.5

3

3.5

4

4.5

1990 1992 1994 1996 1998 2000 2002

$ trillion

The value of mergers and

acquisitions worldwide

The value of mergers and

acquisitions worldwide

Source: Thomson Financial Securities Data

Key Trends of the 1990s:

•Quest for shareholder value

•Adjusting to increased

turbulence & more intense

competition

Influential Strategy Concepts:

•Modern financial analysis

—shareholder value, economic profit,

option theory

•Core competences and intangible

assets

•Dynamically competitive markets

—“hypercompetition”

•Competitive advantage through

alliances, networks, and standards

Major Themes of Business Strategy:

•Cost cutting—squeezing overhead, business process engineering, increasing labor productivity

•Outsourcing/refocusing/

divestment

•Performance management and incentive alignment

Directions in Strategic Management Practice—Trends of the 1990s

Directions in Strategic Management Practice—Trends of the 1990s

Future Sources of Profit

Limits of downsizing/cost cutting

Where are future sources of

profit?

Technology

Continued advances in ICT

Forces Shaping Company Strategies 2001-04

Concepts & Theories

•Resources & capabilities as

basis for competitive advantage

•Knowledge-based theory

of the firm

•Option theory

•Complexity theory

The Business Environment

•Uncertainty

•Stalling of economic

liberalization

•Intense competition

Demands of society

•Social & environmental responsibility

•Ethics & fairness

•Quest for meaning

•Multiple competitive advantages/multiple capabilities

•Innovation / New Product Development / New

Business Development

•Alliances & networks

MANAGEMENT SYSTEMS

• Knowledge management

(incl best-practice transfer)

• Redesigning incentive systems

• Rethinking performance management

• Capturing human creativity

Emerging Developments

ORGANIZATION STRUCTURE

• Reconciling flexibility & integration

• Modular structures

• Multidimensional structures

• Informal organization &

self-organization

The Need to Redesign Organizations

THE PAST THE FUTURE

Emphasis on control Emphasis on co-ordination

Decisions located

centrally

Decisions located where relevant knowledge exists

Simple structures,

unified line of command

Multidimensional structures

Diffused authority, but clear responsibilities

Single performance

goal Multiple performance goals

Organization by design Self organization

Emerging Organizational Forms

Process-based Organizing around business processes

organizations Organizing around corporate processes

- entrepreneurial process

- competence building process

- renewal process

From unitary to parallel Separate coordination structures for

structures different processes E.g 3M’s product

development structure; separate structures for TQM and change management

Project-based organization E.g engineering cos., consulting firms, also

manufacturing cos e.g Oticon

Network and virtual E.g electronics in Silicon Valley, clothing organization and packaging equipment in Italy

Organizing for capability Shifting emphasis of organization

development design from control to coordination

THE REQUIRED

COMPETENCIES OF BUSINESS LEADERS

• business literacy

• creativity

• cross-cultural

effectiveness

• empathy

• flexibility

• proactivity

• problem-solving

• relation-building

• teamwork

• vision

THE LEADERSHIP

NEEDS

OF ORGANIZATIONS

The ability to:

• build confidence

• build enthusiasm

• cooperate

• deliver results

• form networks

• influence others

• use information

New Models of Leadership:

What Competencies do Top Managers Need?

New Models of Leadership:

What Competencies do Top Managers Need?