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STRATEGIC MANAGEMENTSESSIONS & SEMINARS
November 29 – December 13, 2012
Internal scanning – organizational analysis
• Internal strategic factors- critical strengths & weaknesses- determine to what extent a company is able to take advantage of opportunities and avoid threats
• TESCO strengths:- $ background and stability – Income statement, Balance sheet, St. of cash flows, St. of changes in owners’ equity- qualified workers in middle management (HR), know-how- economies of scale (operations, processes)
• TESCO weaknesses:- complex company structure – span of control, chain of command …- high-employee turnover (HR) at operational level
Internal scanning – organizational analysis
• Key resources - TESCO:
- VRIO Framework
-> Value – Does it yield a competitive advantage?-> moderate – same service yet in large scale
-> Rareness – Do other competitors have it?-> Yes => not rare
-> Imitability – Can others imitate the concept? At what cost?
-> They can -> at high cost
-> Organization – Is the company organized to exploit the respective resource?
-> yes/no
Basic organizational structures
Basic corporate structure - Divisional
Corporate culture of TESCO
• Beliefs – highly organized work leads to successful outcomes - experience and skills shall be transmitted from one generation to another
• Expectations – orders shall be fulfilled literally (micro-management)• Values – personal integrity, honesty, customer orientation
Þ Sense of identity of employees -> moderateÞ Employee commitment -> moderateÞ Appropriate behavioral patterns -> sustainableÞ Organization’s stability -> high! Why? What else have we missed?
IFAS – Internal Factor Analysis Summary
SFAS – Strategic Factor Analysis Summary
SWOT
• Opportunities and Threats
- w.r.t. external environment-> societal environment - PESTLE-> task environment – industry analysis
• Strengths and Weaknesses
- w.r.t. internal environment of the company-> key resources
Business Strategies
Business Strategies - TESCO• To improve the competitive position of the whole company or its
business units w/in:- industry - ?- market segment - ?
Porter’s Generic Competitive Strategies
Porter’s Generic Competitive Strategies• Cost leadership:
- low-cost competitive strategy- aimed at broad mass markets- cost minimization/reduction- aggressive development of efficient-scale facilities
• Cost focus:- low-cost competitive strategy- focused on a particular niche/buyer group or market- seeking cost advantage in target market
• Differentiation:- unique product; broad mass markets; lower price sensitivity of customers
• Focused differentiation:- focusing on particular group/market/market segment
Generic Competitive Strategies – TESCO in Uzbekistan, PEPSI in Tahiti, low-cost/traditional airlines in Russia, Mc Donald’s in North Korea
Competitive strategies• Cost leadership• Cost focus• Differentiation• Focused differentiation
Competitive tactics• Timing – Mc Donalds to be the 1st mover (not late mover) => high
revenues (profits)? What about reputation, quality standards, risks, costs?
• Market location tactics – offensive (bypass attack, encirclement) vs. - defensive (raise structural barriers, increase expected retaliation)
When do Porter’s Generic Competitive Strategies fail?
Cooperative Strategies• Collusion
- firms which cooperate with one another to reduce output and raise prices (tacit, explicit)
• Strategic Alliance- partnerships among corporations -> aiming at long-term objectives
-> to gain access to technology, markets, $; gain competitive adv.-> reduce political risks
-> TESCO in Uzbekistan-> low-cost airlines in Russia-> Mc Donalds in North Korea
Functional Strategies
Marketing strategy• Market-development strategy
- capture a large share of an existing market- create new markets for current products
• Product-development strategy- develop new products for new/existing markets
• Advertising/promotion strategy- push-promotional str. – establish direct contact w/customer
- taking product directly to customer- invest $ in advertising to build brand awareness
- TESCO, airlines, car manufacturer, Mc Donalds, PEPSI ?
Functional Strategies
• $ strategy- examines $ implications of various strategic alternatives
• R&D strategy- technological leader vs. follower?
• HRM strategies (low/high pay, high turnover, training, self-managing teams)
• Legal strategies• IT/IS management str. (controlling ops)• Operations str. (how and where is something produced)• Purchasing str. (multiple/sole/parallel sourcing)• Logistics str. (centralization, outsourcing)
• TESCO, airlines, car manufacturer, Mc Donalds, PEPSI ?