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STRATEGIC MANAGEMENT MODELS

Examines various strategies of ten different organizations (Coca-Cola, Walt Disney Co., Time-Warner, Johnson & Johnson and other real world companies). Analysis of principles & purpose of strategic management. Short-term planning and long-term goals. Establishing performance objectives. A strategic management model & the process by which companies develop & implement & execute their strategies.

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Introduction
When economies are healthy and businesses are doing well, it is easy for managers to become complacent and not pay attention to long-term direction. Healthy economic conditions can be forgiving of such inattention. When the economy changes and the business environment becomes more competitive, those companies which have established a tradition of long-term goals in conjunction with short-term planning are the companies which survive and even prosper. Companies which ignored that aspect of their business find that the increased competition for resources, customers and market share does not long tolerate poor or no planning. This research considers the strategic management model, and the various strategies employed by ten different organizations.
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Efficient and effectiveimplementation of the plan, with full-company support, is key to itssuccess. This corporate culture is the resultof a number of factors, but includes the reward and incentive system, andputting strong strategic leaders in key positions throughout theorganization. The Strategic Management Model Thompson and Strickland define strategic management as "the moves andapproaches devised by management to produce successful organizationperformance" (1992, p. Implementing strategies also includes creating a corporate culturewhich is supportive of the strategy. FAQs. Ten Real-World Strategies Coca-Cola pursues a global strategy in that its product is the same innearly every country in which it participates, and the company does notalter its primary image or packaging to accommodate local tastes. Introduction When economies are healthy and businesses are doing well, it is easyfor managers to become complacent and not pay attention to long-termdirection. However, there is a danger that either too much or toolittle will be allocated to one or more organizations. In addition, the strategic plan also includes information about howthe various strategies will be implemented. Another factor that is key to successful implementation is theinstallation of appropriate support systems, including policies andprocedures that will help achieve the desired objectives. 1). Create a Strategy After objectives have been set, a strategy can be developed in orderto reach the performance objectives. The company reserves other brands(including Touchstone) for more "adult" fare. Theincentive program should extend to all workers, managers and employeesalike, rather than to just one group. Thecompany's strategic alliances can be seen in recent announcements ofalliances with Aircell, Primex, Flight Level and Safeair, all announcedsince August 2 ("Airshow Signs," 2 , p. Onecompany will continue to sell energy to traditional utility customers whilethe other will focus on high-technology interests ("Reliant Energy," 2 ,p. A., & Strickland, A. Global strategies work well with products such as softdrinks, which can be standardized, but less well with products such asclothing, which have to undergo changes for specific markets. During this process, all direction-setting managementfunctions are examined and used to determine which strategies areappropriate for the company. Houston, TX: Reliant Energy, Inc. When the economy changes and the business environment becomesmore competitive, those companies which have established a tradition oflong-term goals in conjunction with short-term planning are the companieswhich survive and even prosper. Once managers have identified the necessaryconditions, it is up to them to establish those conditions as quickly aspossible. Corporate strategy is rarely found in a single document or a single,complete corporate entity. Marketingmanagers can look at results of direct mail campaigns or issue pressreleases to shape a company's image. While there are various types ofmanagement (personnel management, financial management, marketingmanagement, production management, for example), strategic managementencompasses all of these areas. This divestiture allows forspecialization (another strategy) which enhances the value chain. 1). Internetaddress: http://www.pepsico.com/corp/content.shtml. Strategic Management Long-term and short-term planning falls under the scope of strategicmanagement. Evaluating and Monitoring the Strategy Once a strategic plan has been formulated, developed and implemented,it must be reviewed on a regular basis to evaluate its performance.Successful strategic plans are not designed to be set in motion and thennot changed. J. The differentiation can be seen mostnotably with the Walt Disney brand, which when affixed to theme parks andfilmed entertainment is a highly valued brand denoting "family"entertainment ("Fact Book," 1999, p. Internet address:http://www.reliantenergy.com/newsroom/pressrelease.asp?releaseid=163. Thisvision provides the organization with its reason for being, offers long-term guidance, and sets the stage for a mission. 4). PepsiCo also recently divested its fast food companies (including TacoBell, KFC and Pizza Hut) in order to focus on its core business ofbeverages ("Corporate History," 2 , p. 1). Corporate strategy is an interactiveprocess through which managers gain experience and expertise in handlingtheir environment. There are few such prescribed measures within the realmof strategic management. Because of this, the statementshould be clearly stated, concise and broad in scope (Thompson &Strickland, 1992, p. In this regard, strategic management decisions carryboth the greatest risk, and the greatest reward, for the decision makers. (2 ). This strategy has the advantage of allowing a newcompany to build a following, but if the specialty is too narrow, thecompany may not succeed. When putting together an organization, managers first determine whatis to be organized and what the organizational chart should be like. Atlanta, GA: Sobe Beverages, Inc. Companies which ignored that aspect oftheir business find that the increased competition for resources, customersand market share does not long tolerate poor or no planning. 1). (1992). Failing to respond to changing conditionsmeans that the company is working from an outdated plan, and the resultsare likely to be disappointing, and possibly seriously damaging. Long-range objectives areto be reached within three to five years, or each year on an ongoing basis. Internet address:http://www.sobebev.com/healthyrefreshment/faq.htm. On the one hand, each part of the company involved in thestrategy needs the right equipment, people and associated resources inorder to achieve their strategy and thus contribute to the overall successof the company. Purchase, NY: PepsiCo, Inc. (2 ). 1). Internetaddress: http://www.thecoca-colacompany.com/world/index.html. For incentives to be successful, the dollar amounts involved shouldrepresent a significant percentage of the total compensation package. The growth through acquisition can be seen in the acquisition ofPacific Systems, a company which had considerable success in the businessjet market and which gave Airshow entry into that market ("Airshow Buys,"1998, p. Healthy economic conditions can be forgiving of suchinattention. Sometimes,resources must be shifted after the strategy has been implemented andmanagers determine the exact effects of the implementation. Airshow buys Pacific Systems. Corporate strategy comes about as a result ofmany events, both internal and external to the company, which have resultsthat affect the overall strategy. Short-range objectives are those which are to be achieved in one year orless, and are developed in order to reach the long-range objectives(Thompson & Strickland, 1992, p. The diversification is both related (entertainment) andnot related (consumer products). The budget aspect of the strategy implementation is critical andproblematic. From here, they are able to recruit andput in place people whose skills match those required by the organization.There are different types of organizational structures, and the appropriateone for any given organization will vary with the characteristics of theorganization itself. 6). Production managers can invest in newequipment to boost productivity or implement quality assurance proceduresto reduce errors. If all employees are not in support of the plan, the company islikely to fall short of its stated objectives. Theinternal and external environments in which the company operates are alsogenerally included in the strategic plan since they directly affect thecompany's ability to accomplish what the plan sets forth (Thompson &Strickland, 1992, p. In this case, the divestedcompanies were not performing as well as expected, and the increasedspecialization allowed by the divestiture should help their performance. This plan presents the company's mission and direction,clearly states the company's short-range and long-range objectives, andpresents the strategies that will be used to achieve those objectives. Starting in early 2 1, Reliant Energy will implement a divestiturestrategy designed to create two strong independent organizations. 1). The company most likely performed a SWOT analysis (looking at itsown internal strengths and weaknesses as well as external opportunities andthreats) prior to making this decision. In some cases, such action may take the form ofchanging objectives; in other cases, the entire mission of the organizationmay be called into question. Those activities which are critical to the success ofthe strategy should be used as the primary building blocks, the overalldesign should be as simple as possible, and decisions should be put thehands of those closest to the activity. New York, NY: Time Warner, Inc.Internet address: http://www.timewarner.com/corp/about/timewarnerinc/corporate/index.html. Too often, incentive programs aredeveloped by managers for management on the theory that the managers areresponsible for implementing and controlling the strategy. Sobe Beverages pursues a specialist strategy. Fact Book, 1999. (2 ). At this point, thecompany faces anti-trust problems which arise when companies grow too large(whether through acquisition or sheer market dominance). Atlanta, GA: Coca-Cola, Inc. The process of putting the strategic plan together is that of strategyformulation. Information is gathered, strategieslaunched, results evaluated, additional information gathered, changes made,and new results evaluated and so on. References About Time Warner. The Walt Disney Company follows a strategy of diversification(participating in retail stores, theme parks, filmed entertainment,television networks and product licensing) as well as differentiationwithin its brands. (1998). Incentives and rewards are considered by Thompson andStrickland to be the most powerful tool available to managers forencouraging employee support and participation in implementing the strategy(Thompson & Strickland, 1992, p. New Brunswick,NJ: Johnson & Johnson, Inc. Implementing and Executing the Strategy Strategic plans require that certain internal conditions exist. Tools for evaluating theplan and making revisions to it should also be included in the strategicplan. Thesemight include implementing cost accounting or a quality management program. There are four primary objectives whichneed to be established: financial, strategic, long-range and short-range.Financial objectives are the levels that management wants to achieve withregard to financial performance (the relationship between debt and assets,for example) Ratio analysis can be a useful tool for measuring financialposition and developing objectives, and value chain analysis (determiningthe value added by each process) can also be brought into play here.Strategic objectives are those objectives which the company establishes inorder to build up the competitive position of the company and the generalplace that the company occupies in the market. 274). Johnson & Johnson frequently asked questions. Johnson & Johnson follows a strategy of related diversification, andowns more than 19 operating companies in 51 countries. Around the world. Strategic management itself is more nebulous than other areas ofmanagement. 4). Through the strategic management process, managersbecome increasingly better at anticipating problems, predicting outcomesand leading their companies to profitable and successful results. Faced with a given set of circumstances,personnel, information and options, two managers might well make twodifferent decisions regarding strategies, and both might work out well forthe organization. Tustin, CA: Airshow, Inc.Internet address: http://www.airshowinc.com/Home/News/press15/press15.html. They have also identified a five-step processthrough which companies develop and implement strategies: develop aconcept, convert the mission into performance objectives; craft a strategy;implement the strategy; and, evaluate the performance of the strategy anddevelop new objectives as needed (Thompson & Strickland, 1992, p. Theseconditions vary based on the exact characteristics and cultures of theorganizations in question. Financial managers work with facts and figures and use ratioanalysis to determine the shape of the company's finances. This researchconsiders the strategic management model, and the various strategiesemployed by ten different organizations. 1). Where objectives state what the company wantsto accomplish, and the mission states what the company does, the strategypresents how the company is going to reach the objectives and achieve itsmission. (2 ). 1). As the name implies, strategic management seeks to define thepurpose of an organization and set in place the strategy for how thatorganization will achieve its purpose. Set Performance Objectives From the vision and mission, specific performance objectives can beestablished. merged,and the company is now trying to merge with America On Line (AOL) to giveit additional access to Internet providers (Time Warner is largely acontent provider) ("About Time Warner," 2 , p. Tustin, CA:Internet address: http://www.airshowinc.com/Home/News/news.html. Other types ofsupport systems including information systems that can provide appropriateand relevant data in a timely manner, customer service guidelines, andother administrative systems that work in support of the strategy. (2 ). The mission takes on theissue of what the company is today, and what it will be in the future.Many companies put the mission statement into writing and use it as theoverarching principle by which the company operates. Internet address:http://www.johnsonandjohnson.com/faq.html#q1 . Strategies are the plan by which theobjectives will be achieved. Corporate history. Performance objectives can be considered the targets whichthe organization wants to achieve. Thompson, A. Thenthey examine the skills and talents needed to bring about the successfulimplementation of the strategy. Burbank, CA: Walt Disney Company, Inc.Internet address: http://disney.go.com/investors/fact1999.html. Developing the Vision Strategic management begins by developing a concept of the businessand forming a vision of where the organization needs to be headed. 3). Thecurrent organization was formed when Warner Brothers and Time, Inc. They were not the firstto bring healthy drinks to the market, but they have focused on creating adistinctive combination of flavors and nutrients to meet specific needs("FAQs," 2 , p. (2 ). (2 ). Thecompany also has strategic alliances in place with bottlers locatedthroughout the world to support this global strategy ("Around the World,"2 , p. Airshow, a provider of in-flight entertainment, has used both growththrough acquisition as well as strategic alliances to expand its marketshare. 5). 2). Instead, managers must gauge how the plan is performing inlight of changing external and internal circumstances, and take action tokeep the plan on track. This strategydilutes the risk that the company faces, but provides some synergy sincethe companies are all in the consumer, professional, orpharmaceutical/diagnostic areas of healthcare ("Johnson & Johnson," 2 ,p. This philosophyignores the fact that it is the individual employee who makes the strategysuccessful through their efforts as well, and that any incentive programneeds to take that contribution into account. This missionstatement can be made available to employees, investors, creditors,customers and any other stakeholders associated with the organization.Ideally, all activities undertaken by individuals within the organizationare in support of the mission statement. Reliant Energy names top-level executives for separated company.(2 ). Planswhich are difficult to evaluate or which may encounter too much resistancemay be discarded as a result of the strategy formulation. Airshow signs strategic alliance with Primex. Strategies are developed and presented through the use of astrategic plan. Time Warner has followed a growth through acquisition strategy. The vision and mission of the company areparamount during this stage, and consideration must be given not only toplanning and implementation, but also to evaluating and revising. This strategy has the advantage of allowing Airshow to enterthe market quickly and without incurring start-up costs, but relies on theexpertise and reputation of the acquired organization for success. Strategic Management.Homewood, IL: Irwin. The closer thatthe strategy fits into each of these areas, the greater the chances forsuccess due to the powerful execution environment. There must be careful co-ordination and good support between thestrategy and the following areas: organization structure; organizationalskills and strengths; budget allocations; internal policies, procedures andsupport systems; reward structure; and, corporate culture. The advantage ofstrategic alliances is that companies can benefit from the other'sknowledge of the market; the disadvantage is that they can be difficult tomanage, particularly when so many are implemented in a short period oftime.

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