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STRATEGIC MANAGEMENTSTRATEGIC MANAGEMENT
The Dynamics of Strategic PlanningThe Dynamics of Strategic Planning
StrategyStrategy – large-scale action plan that sets the direction for large-scale action plan that sets the direction for
an organizationan organization Strategic management Strategic management
– process that involves managers from all parts of process that involves managers from all parts of the organization in the formulation and the the organization in the formulation and the implementation of strategies and strategic goalsimplementation of strategies and strategic goals
What Is an Effective Strategy?What Is an Effective Strategy?
Strategic positioning Strategic positioning Sustainable competitive advantage by Sustainable competitive advantage by
preserving what is distinctive about a companypreserving what is distinctive about a company– Being responsive to customersBeing responsive to customers– InnovationInnovation– QualityQuality– EffectivenessEffectiveness
The creation of a unique, valuable, inimitable The creation of a unique, valuable, inimitable positionposition
LEVELS OF STRATEGYLEVELS OF STRATEGY
CorporateCorporate– What set of businesses should be in?What set of businesses should be in?
BusinessBusiness– How should we compete in business?How should we compete in business?
FunctionalFunctional– What should our strategy be in each functional area?What should our strategy be in each functional area?
CORPORATE STRATEGY: CORPORATE STRATEGY: BASIC QUESTIONSBASIC QUESTIONS
Grand StrategyGrand Strategy– StabilityStability– GrowthGrowth– RetrenchmentRetrenchment
Single Product vs. DiversificationSingle Product vs. Diversification
Single-Product versus Single-Product versus DiversificationDiversification
Single-product strategy Single-product strategy – company makes and sells only one product company makes and sells only one product
within its marketwithin its market– Benefit?Benefit?– Risk?Risk?
Single-Product versus Single-Product versus DiversificationDiversification
DiversificationDiversification – operating several businesses under one operating several businesses under one
ownership that are not related to one anotherownership that are not related to one another– Related, unrelatedRelated, unrelated– Benefits?Benefits?
CORPORATE STRATEGY:CORPORATE STRATEGY:TOOLSTOOLS
Portfolio MatrixPortfolio Matrix BCG MatrixBCG Matrix
The Product Life CycleThe Product Life Cycle
BCG MATRIXBCG MATRIX
S T A R S
Q U E S T I O N M A R K S
? ?
C A S H C O W S
D O G S
Growth
LOW
HIGH
Market ShareHIGH LOW
BUSINESS-LEVEL STRATEGYBUSINESS-LEVEL STRATEGY
5 forces5 forces SWOTSWOT Generic StrategiesGeneric Strategies
IndustryCompetitors
Intensity of Rivalry
Suppliers Buyers
Substitutes
NewEntrants
Entry BarriersEconomies of ScaleBrand IdentityCapital Requirements
Determinants of Supplier Power
Switching CostsSupplier VolumeImpactForward Integration
Determinants of Substitution Threat
Relative Price PerformanceSwitching Costs
Determinants of Buyer Power
Buyer ConcentrationBuyer VolumeBackward Integration
Rivalry DeterminantsIndustry GrowthFixed CostsProduct DifferencesBrand IdentityExit Barriers
S.W.O.T. ANALYSISS.W.O.T. ANALYSIS
S W O T S W O T represents the first letter inrepresents the first letter in– SS trengths trengths– WW eaknesses eaknesses– OO pportunities pportunities– TT hreats hreats
Strategy-makingStrategy-making must be well-matched to must be well-matched to bothboth– A firm’sA firm’s resource strengths and weaknesses resource strengths and weaknesses– A firm’s A firm’s best market opportunitiesbest market opportunities and and externalexternal threats to its threats to its
well-beingwell-being
S W
O T
4 GENERIC STRATEGIES4 GENERIC STRATEGIES
Cost Leadership
Differentiation
Cost Focus
Differentiation
Focus
Scope
BroadTarget
NarrowTarget
Lower Cost Differentiation
The Strategic Management The Strategic Management ProcessProcess
The Three Core Processes of The Three Core Processes of BusinessBusiness
PeoplePeople StrategyStrategy OperationsOperations
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