Strategic Management

May, 7th - 2012

The Decisions in any organization are divided to:

Operational decisions:

Day to day decisions. Routine. Situational. Functional managers.

Strategic “long-term” decisions:

Long-term directions. Deals with organization’s scope. Provide with competitive

advantage “skills, resources, possession”.

Fit in a dynamic / changing environment “being flexible somehow”.

Build and use resources and competencies.

Meet expectations and values of shareholders.

Strategic thinking:

States how the functions of the whole organization relate to each other within their internal and external environments, both now and in the Future.

Strategic thinking features:

Proactive. Think out of the box. Think long-term. Use the Intuition and Analysis.

Strategic Management:

It’s a style of management or Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives.

Strategic planning: determines how the organization should look like.

Strategic Management Page 1 of 48

Lecture - 1

Operational planning: the procedures and how to do that “implementation”.

Strategic thinking: the accomplishment of the two “step by step approach to strategy”.

Societal / Mega Environment:

External / General Environment. It deals with general factors “PEST factors”. The general factors / PEST factors deals with the long-term objectives, and

they’re beyond control. Outcomes of scanning the Mega Environment are opportunities & threats. The process of studying or analyzing the Mega Environment is called

environmental analysis “PEST analysis”.

Task Environment:

External / General Environment. It deals with specific factors “industry factors”. They deal with short-term objectives. They’re within control “changeable”. Outcomes of scanning the Task Environment are opportunities & threats.


The process of studying or analyzing the Task Environment is called industry analysis.

The tool used in analyzing the Task Environment is called Porter’s Five Forces Model”.

Internal Environment:

Outcomes of scanning the Internal Environment are Strengths & weaknesses.

The process of studying or analyzing the Internal Environment is called

internal analysis.

The tool used in analyzing the Internal Environment is called SWOT analysis.

The Strategic Management Model

I. First stage: (as previous) called


Strategic analysis, Strategy analysis, Environmental scanning, Strategic audit.

II. Strategy Formulation:

The anatomy of strategy formulation is called: VMOSA

V: Vision.

M: Mission.

O: Objectives.

S: Strategies.

A: Actions & Tactics.

III. Stratgy Implementation: Programs, Budgets, Procedures.

IV. Evaluation & control: Monitoring performance, check which the strategy

achieved the objectives or not.

There’re 4 basic strategic questions must be kept in mind:

Where’re we now “as a business”? Strategic analysis.

Where we want to go? Strategy Formulation / Strategy planning.

How to go there? Stratgy Implementation.

Are we there yet? Strategic evaluation & control.

Vision:“Dream”, what do we want to be?

Mission:What we’re as a business?

Basic components should exist in the Mission statement:

1. Customers.2. Product & service.3. Market.4. Technology.5. Survival, growth, profits.6. Philosophy (Code of ethics, values, and beliefs).7. Self-concept (Competitive advantage).8. Public image (Social / environment responsible).9. Employees.

May, 14th - 2012


Lecture - 2

Q1 – Where we’re now?

The external environment:

Anything surrounds the organization (favorite or unfavorite), and have the impact on the organization.

Environmental analysis

Ext. assessment (audit)

Industry analysis

Features:

1. Starting pts. Inputs (O & T).

2. Ending pts. Outputs.

3. Hard to control relatively.

4. Has a high element of uncertainty.

Note:

Expected value of any decision = the value attributable to this decision × the probability of making that decision “from the historical data”

From the previous, we’ve 3 different models of decisions:

Uncertainty: probability & value are missing, so we use the intuition to make

decision.

Certainty: probability & value exist, like the routine or day to day decisions.

Risk: probability exist but & value is missing or known but not guaranteed, so

we do risk analysis.

The Societal Environment analyzed by the PEST factors, or sometimes called PESTC factors where C indicates to Competitive Intelligence (CI) which are some programs that studying the competitors.


The Task Environment

1. Also called the organizational domain.

2. The analysis of this environment called Industry Analysis.

3. The Porter’s Five Forces Model is used make the Industry Analysis.

Potential development of substitute products:“Threat of Substitutes”

1. Switching cost: is the key of moving from product to its substitute.2. Product Price Elasticity: The more the substitutes of any product, the less the

price of this product.

Potential Entry of new competitors:“Threat of Entrants / Mobility”

The more industry profit, the greater the firms enter the market. The less industry profit, the fewer the firms enter the market (till we reach to

market equilibrium). So we make some strategies to prevent firms to enter the market, which

called “Barriers to Entry Strategies”:

- Entry-deterring pricing: A strategy that make the profits artificially low.

- Patents Rights.


- Asset Specificity: Utilizing the organization’s assets to provide specific

sophisticated product through R & D that cannot be imitated.

- Monopoly: When the government give the right of monopoly commodity.

The bargaining power of Buyers “Consumers” & Suppliers:

One buyer “Monopsonist” vs. many suppliers Relation Monopsony.

Many buyers vs. one supplier “Monopolist” Relation Monopoly.

Many buyers vs. many suppliers Relation Oligopoly.

Buyer is powerful if Buyer is weak if

Many suppliers.

Concentrated buyers.

Low switching cost.

Standardized products.

Many substitutes.

Backward integration “taking control

activities over the suppliers on the

value chain”.

Limited suppliers.

Fragmented buyers.

High switching cost.

Differentiated products.

Low / limited substitutes.

Forward integration.

Supplier is powerful if Supplier is weak if

Limited suppliers.

Fragmented buyers.

High switching cost.

Differentiated products.

Low / limited substitutes.

Forward integration.

Many suppliers.

Concentrated buyers.

Low switching cost.

Standardized products.

Many substitutes.

Backward integration.

Mega Environment

The steps of making the Mega Environment Analysis:

1. Strategic Myopia:


A process of filtration, i.e. eliminating all the external factors that don’t have

direct impact or unfamiliar trends on the organization.

2. Prioritization:

A process of giving priority to the factors by the Issue Priority Matrix.

The probability of occurrence

H

M

L

L M H the probable impact on Org.

All the factors (Opportunities & Threats) with low will be eliminated.

Medium & high factors will be considered & quantificated.

3. Quantification:

A process of giving weights and rates to the selected factors.

Conducted by, The EFAS Matrix (External Factors Analysis Summery) / EFE

Matrix (External Factors Evaluation).

EFE / EFAS Matrix

Key Ext. Factors Weight(0 – 1)

(indicates the relative importance of this factor

to firm’s success)

Rate(1 – 4)

(to what extent the current strategy respond

Weighted score

(W × R)


M H HL M H

L L M

to these factors - opportunities & threats)

Opportunities:

O-1 (e.g. population increase by 8 % annually).

O-2 (e.g. acquiring of weak company).

O-3: O-4:

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Threats:

T-1 (e.g. low employee morale).

T-2: T-3:

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0.05

0.15

0.20

2

1

3

0.10

0.15

∑ = 1 ∑ = TWS

Note:

May, 21st - 2012


This number is called TWS (Total Weighted Score) and it’s the answer of the first question: where’re we (or stand) now?

This number must be between 1 - 4, e.g. if it is 2.8 or more, it means that the organization / firm is in a good situation, i.e. it can use the opportunities well & avoid or adopt with threats.

Weight: 0 1

Rate:

- Poor responding.

- Average.

- Above average.

- Superior.

Lecture - 3

Revision: Outcomes

Societal Env. Env. Analysis

Ext. Assess. O & T Task Env. Industry Analysis

==============================

Internal Assess. Org. analysis Outcomes (S & W)

- Structure

- Culture

- Resources

- Values

- Competencies

We study the strengths & weakness of our organization to gain any

opportunity & avoid threats.

Strength: any positive characteristics that help to gain and sustain a

competitive advantage. (Ex.: good facilities, staff, volunteer participation,

programs, recognition, financial resources, etc.).

Weakness: any negative characteristics that the organization may have that

lead to gain disadvantages or make the organization incapable to achieve its

goals. (Ex.: declining funding, aging and limited facilities, lack of expertise,

etc.).

Core

Competencies Distinctive

Ex: branding loyalty "strengths" so according to Porter's 5 forces:-


We have: no threats of entry, no threats of substitutes, and high power of supply.

Sources of strength:

1. Competencies:

The cross functional integration and coordination between different departments and functional divisions inside the organization.

Competencies: (2 levels)

Distinctive Core

Note: Core competencies are not source of strength.

Strength come from competitive advantage, any competitive advantage is a source of strength.

The organization can gain competitive advantage by being superior (in resources, position, & skills) over its competitors.

2. Resources:

How the organization use or utilize its resources in a way to gain comp. advantage.

First we need to classify our resources in order to measure them.

This call RBV (Resource Best View):

Tangible resource (Physical Resources).

Intangible Resources (Human- made Resources).


(Spread outside the org.)

Something the organization can do exceedingly well outside its boundaries.

(Within the org.)

Something the organization can do exceedingly well inside its boundaries.

Org. Resources (Skills, capabilities).

After this we will value the organization resources to know what a source of strength is.

Criteria that make a resource is valuable:

Benefit. Scarcity. Durability / sustainability. Measurable.

There're 4 criteria that tell us which the resource is valuable or not (i.e. does it provide us with comp. advantage or not).

We do it by using VRIO Frame work:

i. Value does this resources add a value to org.?

ii. Rarity can other provide it or not? If rare Strength.

iii. Inimitability can other imitate?

iv. Organization can the org. utilizes this resource efficiently well and

gain a maximum benefit (so it’s not an idle resource).

3. Value chain:

Porter said that any organization should have a value chain / supply chain. 5 primary activities need to be supported by sub-activities.

4. Organizational culture:

The org. has 2 variables Freedom & Fear, when interact each other, they

make us know the strengths and weakness of the organization.

We use Freedom-Fear Matrix.

High fear


Low Highfreedom freedom

Low fear

Every quadrant has its strength and weakness, and this is the best one.

Quantification of S & W:

Conducted by, The IFE Matrix (Internal Factors Evaluation) / IFAS Matrix (Internal Factors Analysis Summary).

Note:

As we did previously in the Mega Environment, we must first filter the strengths & weaknesses and eliminate all the factors (with low-priority) that don’t have direct impact on the organization (Strategic Myopia), as well give

priority to the factors (Prioritization).

IFE Matrix

Weighted Score(W × R)

Rate (1 – 4)“The perception of the

internal factors S / W, i.e. how the internal factors S / W are being perceived - a

major or minor”

Weight (0 – 1)“To what extent this

factor is important to the org. success”

Key Int. factors

0.930.3Strengths: S-1: Brand Loyalty


- No authority

- Resist to change

- Dependence on rules

- Centralization

- Decision making by meetings to share decision

- Innovation (low level)

- Upward delegation

- Challenge of authority

- Frustration

- Creativity

- Acceptance of change

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S-2: S-3:...

Weaknesses:

W-1: W-2: W-3:...

∑ = TWS∑ = 1

Note:

Note:

Till now we just only answered the first strategic question:

Where’re we now?

Ext. Int.


This number is called TWS (Total Weighted Score).

This number must be within 1 - 4, e.g. if it is 2.8 (judgmental figure) or more, it means that the organization / firm is in a good situation or position, i.e. it has enough strengths to obtain opportunities & limited weaknesses to avoid threats.

Weight: 0 1

Rate:1- Major W.

2- Minor W.

3- Minor S.

4- Major S.

Societal / Mega Task

All what we did is a phase of strategic audit.

If any organization wanna make strategic planning, it should do the Int. and Ext. analysis simultaneously (the ext. scanning doesn’t have a time frame, it could take 3 months or 1 year).

All the factors (Int. & Ext.) are changeable or beyond our control, so we must do the strategic audit (Int. & Ext.) simultaneously.

May, 28st - 2012

Wrapping up

I. Where are we now?


Lecture - 4

1) Environmental Scanning (St. Audit / St. Analysis)

Mega (PEST Analysis)

Ext. Env. O & T

Task (Porter’s 5 Forces Model) EFE/EFAS (T.W.S)

Int. Env. S & W (IFE / IFAS)

====================

II. Where do we wanna go?

2) Strategy Formulation ( St. planning )

2. 1 Input (the outputs of stage I, EFE & IFE)

Define strategies

2. 2 Matching

Basic tools will be used:

- SWOT / TOWS

- Space Matrix

- Grand St. Matrix Outcome of them is the recommended solutions / strategies

- B.C.G

- IE Matrix

2. 3 Decision by QSPM “a tool by which you decide which of the

recommended Solution will be chosen in implementation”.

V

M

O What is the organizational objective?

S Define strategies

A


Objective

Financial Obj. (There’s a relation between them) Strategic Obj.

Ex.

Revenue by 6% “long-term” engaged with Max. Market share

"Market penetration" Also there's a conflict:

Financial situation Market share By increasing prices

Specific Measurable Time bounded

So we have to set SMART objectives.

Attainable Relevant “come from mission”

==============================

Define strategies

Types of strategies

Grand Strategies: classified into 4 different families

A. Integration St.

B. Intensive St.

C. Diversification St.

D. Defensive St.

A) Integration Strategies Called “Growth Strategies”


Business / Competitive Strategies

How should every business unit compete to gain CA?

There’re 4 Business Strategies.

Corporate / Grand Strategies

Define the scope of org.

i.e.: what industry & market the

org. compete in?

There’re 12 Grand Strategies.

1. Forward integration strategy:

Value chain

Integration: expand by business function in the same value chain.

Forward Integration means, if we moved one or more step forward in the same

value chain gaining control over distributers on the same value chain.

Motives / reasons / incentive of doing forward integration strategies:

Expansion.

Control.

Improve services.

Exp. Distributer.

Franchising is an integration forward strategy.

2. Backward integration strategy:

Value chain

When we decide to gain control over the suppliers.

Motives:

Quality of suppliers.

Just in time.

Cost & control.

Outsourcing is de-integration activity; it’s not an integration activity because it

provides with business function outside value chain.

3. Horizontal integration strategy:

Gaining control over competitors

Like (merging-acquiring…etc.)


Motives:

Tough /severe competition.

Rapid growing market.

==============================

B) Intensive Strategies Called “Stability / Aggressive Strategies”

When the organization try to improve its competitive position using an existing

products or services.

1. Market penetrations strategy: tending to increase the market share for this

product / service.

The objective is to increase the market share within the same market size, i.e.

same product / service – same market, so the organization won’t open new

markets, or increase the market size.

Motives:

Big market size.

Prevent entry.

Increase revenue.

Unsaturated markets.

Product at maturity.

2. Market development strategy: Opening new markets. Type of markets:

Behavioral.


Company

F. V. Integration St."Distributers"

B. V. Integration St."Suppliers"

Horizontal Integration"Competitors"'

Upstream Integration

Downstream Integration

Geographical.

Psycho-graphic.

Demographic.

Motives :

Growth.

New untargeted market segments.

Profit.

Excess production.

3. Product development strategy: New- developed product

When changing or adding one or more developed product into the same

market.

Motives:

Growth

Targeting new market.

Original product @ maturity extended product Life cycle.

C) Diversification Strategies Called “Growth & Expansion Strategies”

New product / service “related/unrelated”.

A similarity between the original & developed product should exist (e.g. raw

material, business…etc.).

1. Concentric diversification strategy:

Introducing a new related product / service to attract new customers &

increase current customers. “Like Dunlop”

2. Horizontal diversification strategy:

Introducing new unrelated product / service to existing customers (and new

customers as well). “Like Zara”


3. Conglomerate diversification strategy: Introducing new unrelated product / service to new customers.

Philip Moris acquire Craft Cheese Company.

Motives:

Concentric:

Seasonal sales

Existing product @ decline phase.

Competitor better prices.

Horizontal:

Attract new customers.

Expansion.

Grand loyalty.

Conglomerate:

Tough competition.

New market.

Increase profit.

Synergy.

D) Defensive Strategies

1. Retrenchment strategy:

It’s a cutting cost strategy. e.g. Laying-off (Redundancy) Reasons / motives:

Weak position.

Fail to meet objectives.

2. Divestiture strategy:

Partial liquidation; selling the weakest unit / division in the organization and

supporting the other units.

This strategy is applied or conducted when the retrenchment strategy failed.


3. Complete liquidation :

Selling the company assets for its tangible worth.

This strategy is applied or conducted when the divestiture strategy failed.

Business Strategies

Making each single unit in the organization have or gain competitive

advantage by developing some strategies.

How the organization gain competitive advantage in position “positional-

advantage”; a good position that permits the org. to gain competitive

advantage in Low cost / differentiation.

Positional advantage (competitive advantage)

1. Low cost:

Provide the same / standardized product or service with the same

benefits (of competitors) @ the lowest possible cost (economy of

scale) Cost positional advantage “competitive advantage”.

2. Differentiation:

Provide a unique product or service with benefits exceeding competitors’

benefits @ the best value Differentiation advantage “competitive-

advantage”.

We've to define the scope of the mkt. "competitive scope" the breadth

of the market.


Competitive scope

3. Broad market

4. Narrow market: (Niche) “a group of customers with unsatisfied needs”.

If we put the previous 4 each other we gain the 4 business strategies

that provide the business units with competitive advantage.

Business Strategies: 1. Cost Leadership Strategy:

Providing standardized product / service with the same benefits as

competitors to broad range of customers whose prices are sensitive @ the

lowest possible price.

Competitive advantage gained by making this strategy:

High market share (act as an entry barrier).

Cost advantage.

The grand strategies which help to gain benefits from cost-leadership:

All the grand strategies will help.

2. Differentiation Strategy:

The ability to provide a unique product / service with benefits exceeding

competitors to a broad range of customers whose prices are insensitive with

the best possible value.

One and only one of the grand strategies will help:

The Product Development strategy.

3. Cost - Focus Strategy:


The ability to provide product / service with the same benefits as competitors

to a narrow range of customers whose prices are sensitive with the lowest

possible price.

4. Differentiation focus:

Like Differentiation strategy but for a narrow range of customers.

Providing a unique product / service to narrow range of customers

whose prices are insensitive with the best possible value. “E.g. Rolls Royce /

Bentley”.

3 & 4 called Focus Strategies.

Type of Grand Strategies will help:

All the Intensive strategies:

Market penetration.

Market development.

Product development.

June, 4th - 2012

2. 2 Matching SWOT / TOWS

Space Matrix.

Grand Strategy Matrix. Grand Strategies / Solutions

B.C.G

IE Matrix.

2. 3 Decision “QSPM”.

=====================

SWOT / TOWS


Lecture - 5

IFE EFE

Strengths:

S1: S2: S3:

Weaknesses:

W1: W2: W3:

Opportunities:

O1: O2: O3:

SO StrategiesMaxi - Max

WO StrategiesMini - Max

Threats:

T1: T2: T3:

ST StrategiesMaxi - Mini

WT StrategiesMini - Mini

SO Strategies (Maxi – Max):

Match “strategic fit” between O & S (using internal strengths to take

advantage of all external opportunities).

ST Strategies (Maxi – Mini):

Use all strengths to minimize or avoid threats.

WT Strategies (Mini – Mini):

Improve weaknesses and avoid all external threats.

WO Strategies (Mini – Max):

Use all external opportunities to improve all weaknesses.

Note:

SWOT / TOWS Matrix; is one of the basic matching tools, there’s no doing of

analysis without doing SWOT / TOWS.


====================

SWOT Matrix Application

A SWOT matrix for a retail computer store

Strengths Weaknesses

1. Inventory turnover up 5.8 to 6.7.

2. Average customer purchase up $97 to

$128.

3. Employee morale is excellent.

4. In-store promotions = 20% increase in

sales.

5. Newspaper advertising expenditures

down 10%.

6. Revenues from repair / service in-store

up 16%.

7. In-store technical support persons have

MIS degrees.

8. Store's debt-to-total assets ratio down

34%.

1. Software revenues in store down 12%.

2. Location of store hurt by new Hwy 34.

3. Carpet and paint in store in disrepair.

4. Bathroom in store needs refurbishing.

5. Total store revenues down 8%.

6. Store has no web site.

7. Supplier on-time delivery up to 2.4 days.

8. Customer checkout process too slow.

9. Revenues per employee up 19%.

ST Strategies

1.Hire two more repair persons and market these new services (S6, S7, T1).

2.Purchase land to build new store (S8, T3). “Market Dev. Strategy”

3.Raise out-of-store service calls from $60 to $80 (S6, T5).

WT Strategies

1. Hire 2 new cashiers (W8. T1, T4). “Solution”

2. Install new carpet / paint / bath (W3, W4, T1).


Opportunities

1. Population of city growing 10%.

2. Rival computer store Opening

1kilometer away.

3. Vehicle traffic passing Store up 12%.

4. Vendors average six new Products /

year.

5. Senior citizen use of computers up 8%.

6. Small business growth in area up 10%.

7. Desire for web sites up 18% by Realtors.

8. Desire for web sites up 12% by small

firms.

SO Strategies

1. Add 4 new in –store promotions monthly (S4, O3).

2.Add 2 new repair / service persons (S6, O5).

3.Send flyer to all seniors over age 55 (S5, O5). “Market Dev. Strategy”

WO Strategies

1. Purchase land to build new store (W2, O2).

2. Install new carpet / paint / bath (W3, W4, O1).

3. Up website services by 50% (W6, O7, O8). “Forward Integration Strategy”

4. Launch mail-out to all Realtors in city (W5, O7).

Threats

1. Best Buy opening new store in 1 year nearby.

2. Local university offers Computer repair.

3. New bypass Hwy 34 in 1 year will divert traffic.

4. New mall being built nearby.

5. Gas prices up 14%.

6. Vendors raising prices 8%.

Internal Factors

External Factors

Strengths (S)

S1 Quality Maytag culture.

S2 Experienced top

management.

S3 Vertical integration.

S4 Employee relations.

S5 Hoover's international orientation.

Weaknesses (W)

W1 Process–oriented R&D.

W2 Distribution channels.

W3 Financial position.

W4 Global positioning.

W5 Manufacturing facilities.

Opportunities (O)

O1 Economic integration Of

European Community.

O2 Demographics favor quality.

O3 Economic development Of Asia.

O4 Opening of Eastern Europe.

O5 Trend toward super stores.

SO Strategies

S1+S5+O1: Horizontal integration.

S5+O4: Market development.

S3+O5: Forward integration.

WO Strategies

W2+O4.

W4+O1+O4+O3 solution.

Threats (T)

T1 Increasing government regulation.

T2 Strong U.S competition.

T3 Whirlpool and Electrolux

positioned for Global economy.

T4 New product advances.

T5 Japanese appliance companies.

ST Strategies

S2+S5+T2+T5: market penetration.

S1+S2+S4+T5: Horizontal integration.

WT Strategies

W1+W3+T4: Defensive

strategy “divestiture”.

Improving all weaknesses

by getting acquired by T3

& T5.

Generating TOWS Matrix for Maytag Corporation


Internal Factors Strengths (s) Weakness (W) (IFAS Table 5-2) External Factors (EFAS Table 4-5) Opportunities (O) SO Strategies WO Strategies

Threats ST Strategies WT Strategies

st. divestiture st.


improving all weakness by

getting acquired by T3 & T5.

6

SPACE Matrix

Strategic Position & Action


2

To determine we need:-

1- Analyze the org.

(and according to it, we determin which grand strategies (12 st.) we'll use.

According 4 dimensions

2 internal External

*Comp. position (cp) * Industry position (IP)

* Financial position (FP) * Stability position (SP)

EX

Comparing to Competitors

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X-axis (+ ve) Y-axis (- ve)


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(IFE)

Internal strategic position

Comp. position (CP) Financial position (FP)

* Mkt share -1 * ROI 5

* Product quality -2 * Liquidity 6

* Customer loyalty -3 * Leverage 7

-6 * Cash Flow 8

20

Comparing to whole Industry

X-axis (-ve) Y-axis

(EFE)

External st. Position

Industry Position – IP stability Position (SP)

* Growth Potential. 6 * Demand Elasticity. -2

* Profitability. 4 * Tech. Changes. -1

* Productivity. 5 * Inflation. -4

15

x-axis = -2 + 5 = (x,y) = (3,2.7)

y-axis = 5 + (-2.3) =


AV. = - 2 AV. = 5

AV. =5 AV. =2.3

3

2.7

FP(int) st. position

Directional

* Intensive st. 6- Vector

* Rel. div. 5-*

4-

Action Evaluation

2-

CP (int.) 1- IP(ext.)

-6 -5 -4 -3 -2 -1 1 2 3 4 5 6

-1 Competitive

* Defensive -2 * Integ.

* unrelated Div. -3 * Intensive

-4 * Defensive

-5

-6

SP(ext.)


Conservative Agressive

* Integ.

* Intensive

* Div

Defensive

* Every Quadrant has its st. position name.

Q1 it means that the strategic position of your org. is aggressive. "the best position ever"

It must take advantage of all opportunities and utilize its strength

Q2 Conservative:

The org. Should stick to its basic competencies don't take excessive Risks

Need to stabilize your self.

Q3 Defensive:

The org. must defend its position as much as it can ( improve weakness and avoid threats).

Q4 Competitive:

The org. is competing in changing Env.

==============================================================

Grand st. matrix:-

Mkt growth rate Comp. position

5% annually


What determine which of strategies to use are the values of x, y not the direct vector.

3

Rapid mkt growth

Q2 Q1

* CA intensive st. *excess Res. Integ.

* Integration Mor. Integ. *stress more intensive

On market

Weak comp. *Comitt to a unrel strong comp

position

*CA unrel.dive *unrel. div.

*Defensive *Mor. Integ. by merging or

Acquiring

Slow mkt grouth

It's the weakest matching tool among the

5 matching tools

Q1: un org. with strong comp. position competing in a

Q2: un org. with a weak comp. position competing in a rapid glowing mkt.

Q3: un org. with weak comp. position competing in a slowly growing mkt.

Q4: un org. strong comp. position competing in growing mkt.


االعتماد يمكن الولكن كليا عليها

مع تستخدمSpace matrix

=============================================================

Example Strategy Profiles

Aggressive Profiles

FP FS FS

(+4,+4) (+1,+5)

CA IS ip CA IScp

ES sp ES

AH int. FS Conservative Profiles FS Mkt penetration (-2,+4) mkt develop (-5,+2)

CA IS CA IS

ES ES

FS Competitive Profiles FS

CA IS CA IS (+5,-1) (+1,-4) Get acquired


ES ES defensive

FS Defensive Profiles FS

CA IS CA IS

(-5,-1) Def. (-1,-5) ES unrel.div ES

Source: H. Rowe, R. Mason and K Dicker, Strategic Management and Business Policy : A Methodological Approach (Reading, MA. Addision-wesley Publishing Co.

Inc. c 1982) : 155. Permission of the publisher .


7

BCG

Portfolio Analysis IE

Boston consulting Gap (BCG) :-

Portfolio Analysis .

Resources ال منها ناخذ

Mkt share mkt growth rate

(cash generation) (cach consumption)

Migh mrk share means high cash generation

BCG matrix

Mkt share (cash generation)

high low

Stars QuestionWeak(problem child)

Cash cows

Dogs(Pets)


Mkt Growth rate

(cash consumpition)

Question mark :- if it still as it is it will lose money and will be total loss.

This is a product line or bunnies unit has low mkt share and competing in a

High growing market .

There is a 2 options :

a). heavy amusements and change it to stars by only mkt Penetration st.

b). change it to dogs using the Divest defensive st.

starts :

business theat generations high cash and cause high cash.

This the best long run growth and profitability

Called mkt leader

Type of strategy :

All the integration as mkt leader / stars.

When the mkt reach the maturity it changes to cash cow

( we can't control that ) .

Cash cow :

A business unit

High cash generation vs low cash consumption

The excess cash coming frar cash from cash cow we use it

And push it to Question mark and make an intrusive investment and push it to stars .

But if we lease it as it is, this will be an exhausting of resources.

The strategies used in this :-

Product develop.

Un related dvrrsification.


If a business unit as product line continue in cash low it'll turn automatically to

Dogs :

Low cash generation & low cash consumption which is every weak int.

fext. Position we have no option but Divest Defensive st.

BCG not only (not rely alone) to make strategic decision

* limitations :-

1- the position of business unit on the BCG. (if its in the tassectliue

2- there're other dimensions to judge other than mkt share and mkt growth ,it's competitive position of the unit.

3- we can't make aur strategic decision analy pathetical relationship

(the mkt share cash generation) .

======================================

IE Matrix (internal/ external/matrix) :-

It based an factual data than BCG.

Strong AV. Weak


3-4 2:2.99 1:1.99

1 2 3

4 5 6

7 8 9

* grow & build :- like strain BCG

Type of strategies help in grow fustian integ. & intensive st.

* hold & maintain :-

Strategies intensive (stability st.)

* Harvest or Divest : like dogs in BCG

Strategies Defensive .

We always do BCG & IE matrix

(one only is wrong ) .

We may do IE again after BCG in order to

Avoid or decrease errors.

8

Decision Stage

QSPM: Quantitative St. Planning Matrix analytical tool


It can make comparison between 2 or more strategies but it must be relevant or relative

======================

In the final aim ( Stability, Growth …..) ( the similar st. in the matching tools)

Key Factor

weightMkt

penetration( sales in

present mkt)

Mkt develop. Mit a new

geographic mkt

Related

AS TAS AS TAS AS TASOPP.

Pop 10% annual

ThreatsRival

nearby

Strength.Weakness

.

0.10

-

3

-

0.30

-

2

-

0.20

-

1

-

0.10

-

STAS3.72

STAS4.10

STAS3.97

*AS: All activeness score: 1:4

Indicates to what extent that each factor has an impact on each strategy.

To what extent it attractive

The minimum rate is from 1:4

* if st. are 5 1:5

6 1:6

The highest STAS number

means the most feasible or optimum strategy for implementation.

( the most ready st. for implementation )

STAS 4.10

STAS 3.97 ( plan B ) ( contingency plan ) .

STAS 3.72 ( plan C) .


=========================

Till here we've finished the second stage ( St. formulation ) .

===========================

* St. Implementation ( operation stage )

The role is functional managers.

"It's easy set than done".

St. formulation

Good Bad

Good

St. Imp.

Bad

2 models

Modify the current cultures st. Create new st. for org. culture.

One of this

Triangulation: ( to manage one org. culture) homogeneous cult.

a) Observation.


St. thinking

Good F.Good Imp.

Oct. 1973 war

Bad F.Good Imp.

H1N1

Good F.Bad Imp

b) Self-administered Question.

c) Personal interviews.

In a question merging. (diversified culture ) multi- culture

In order to know it we've to study 2 dimensions

Acquirer US

Acquired French

Preservation of acquired firm

To its own culture Not at all

Very attract

Perception of acquired to acquirer's culture

Very unattract

Intensive and diversification st. are mkting st.

* segmentation:-

Sub divide my mkt into sub sets of customers (pshyco, geographic…ect)

* implementation of mkt st.:

Do it with STP technique

Segmentation Product positioning

STP Find what customer


v. highIntegration

culture

(becoming part of)As simulation

culture

Separationculture

Decultration( lock of integration)

wants and need

and perception and

what comp. doesn't them

(customer with unsatisfied need)

Sony after sale service Acer sony Dell Dell

sony

acer price

reposition the product give in the mkt needs.

9

Environmental Scanning

1- where are we now?

Beyond control O & T

Mega ( PEST analysis) EFE EFAS

Ext (env. Analysis)

Task Poter 5 forces model

(industry analysis) written control

S&W

Int. Org. analysis IFE IFAS

V


Positioning map

1

Ext. T.W.S

Int. T.W.S.

M O S A St. Formulation

2- Where do we wanna go?

Input ( Int. T.w.s & Ext. T.w.s)

Swot/tows

Matching space Similar

Grand Strategies

BCG

IE

Decision QSpm / stas>>> key term that tell me which strategy will be implement

3) How to go there ?

3) st. Implementation

4) Are WR there yet or not ?

4) St. evaluation & control

Test of the implemented st. in terms the objectives

Six sigma: help in efficient implementation

Its outcome is to reach me near perfect result

To reach the six sigma we must have:

3.4 detect/ mv. output.

WR have 2 models of six sigma

analyze

reactive

DMAIC control DMADV proactive

define measure improve


2

difference between them is when you apply the six sigma in your product line.

define or decide measure(CTQ) critical to quality

analyze

DMADV you design the production line based on six sigma

(DFSS)

define for six sigma

design verify

* Evaluating the performance of strategies

do they match the result or not?

Steps:

1- Determine what to measure.

2- Set standards to measure. (Obj from VMOSA)

3- Measure performance (Quantitative and Qualitative terms).

Yes then stop

4- Does performance achieve obj.

No

Then go to

5- Corrective action.

==========================

* Evaluating from strategic perspective:

ACT.1: Revise inputs of st.


Revised EFE Revise IFE

Compare actual EFE

Vs. Revised EFE

Do any significant difference occur? Yes

ACT.2:measure performance

Do any significant difference occur? Yes

no

ACT.3 Corrective action

The criteria which indicate if the strategies implemented are or not.

1- consistency

2- Feasibility: is the strategy implemented within the org. resources planned budget.

3- Consonance: Following trends (using updated st. not outdated strategies)

4- Advantage: does st. provide any C.A or any superiority in skills or resources or position

Cost Value

(mkt leader) (mkt leader)

* Tools to measure performance of strategy:

V

Balanced Scorecard M

O

S Gap

A

Financial Performance: blocked by BSC

How should we appear to share holders?


1

KPIS of per. Financial ratios

Customer knowledge

How should

KPIS Satisfaction, loyalty.

Internal business processes

What business should we use. KPIS process automation, 6 sigma.


2

3

Documents

Strategic Management