Strategy Mgmt and Entrepeneurship

Schermerhorn - Chapter 8 1

Strategic Management

Chapter Eight

Dr. Burton

If you don’t have a map, any route you take will get you where you are going. Peter Drucker

If a man take no thought about what is distant, he will soon find sorrow near at hand. He who will not worry about what is far off will soon find something worse than worry.

Confucius


Strategic Planning

What is the strategic management process? External environment analysis Internal environment and strategic

direction SWOT analysis Formulation, Implementation and Control


Strategic Management ProcessStrategic Management Process

External and Internal Environmental Analysis

Strategic Direction Strategy Formulation Strategy Implementation and Control Strategic Restructuring


Strategy and Strategic Management Strategy and Competitive Advantage

– Strategy is an action focus that links an organization to its environment


Strategy and Strategic Management The Strategic Management Process

– the process of formulating and implementing strategies to advance an organization’s mission and objectives and secure competitive advantage



– Strategy formulation (Drucker)• What is our business mission?

• Who are our customers?

• What do our customers consider value?

• What have been our results?

• What is our plan?



– Strategy implementation• putting plans into action


Strategy and Strategic Management Analysis of Mission, Values, and

Objectives– Mission statement

• domain– customers

– products and/or services

– location

• philosophy


•Strategy and Strategic Management Analysis of Mission, Values, and

Objectives– Strategic constituencies analysis

• assessment of how well the organization serves stakeholders


•Strategy and Strategic Management Analysis of Mission, Values, and

Objectives– Core values

• broad beliefs about what is/is not appropriate

– Objectives• direct activities toward key and specific results

SWOTSWOT

StrengthsStrengthsWeaknessesWeaknesses

OpportunitiesOpportunities

ThreatsThreats


•Strategy and Strategic Management Analysis of Organizational Resources and

Capabilities– SWOT analysis

• Organizational – Strengths

– Weaknesses

• Environmental – Opportunities

– Threats


Situation Analysis(SWOT)

Strengths– What resources and capabilities do you

possess that can lead to a competitive advantage for position and market share in the industry?


Situation Analysis(SWOT) Weaknesses What resources and capabilities do you

not possess, but are necessary to compete for position and market share in the industry?


Situation Analysis(SWOT) Opportunities Conditions in the external environment that

that allow you to take advantage of your strengths, overcome your weaknesses or neutralize threats.


Situation Analysis(SWOT) Threats Conditions in the external environment that

may stand in the way of achieving corporate goals and objectives.


Strategies Used by Organizations

Levels of Strategy– corporate– business– functional



Types of Strategies– growth

• concentration

• diversification



Types of Strategies– retrenchment (defensive)

• turnaround

• divestiture

• liquidation



Types of Strategies– stability– combination

• used by large and complex organizations


Strategy Formulation

Opportunities for Competitive Advantage– Cost and quality– Knowledge and timing– Barriers to entry– Financial resources



Boston Consulting Group (BCG) Matrix– ties strategy formulation to analysis of business

opportunities according to market growth rate and market share

• stars

• cash cows

• question marks

• dogs



Portfolio Planning– investing scarce

organizational resources among competing business opportunities

Porter’s Five Competitive Forces

New Entries

Industry Environment

Direct Competition

Substitutes

Suppliers Buyers


Competition

The healthcare industry: Complex Highly competitive High tempo of change External Environment Highly demanding consumers, Government

regulation New entries

– Group practice, Ambulatory centers


Competition (con’t)

Buyers – Employers– Health plans

Suppliers– Physicians– Health plans

Substitutes– Generic Rx– Alternative health care



Porter’s Competitive Strategies Model– new competitors– bargaining power of suppliers– bargaining power of customers– threats of substitute products and services– competition between existing companies



Porter’s Competitive Strategies Model– Strategies to Gain Competitive Advantage

• differentiation

• cost leadership

• focus


Business Strategy (Domain and Navigation)

Low-Cost leadership (volume discounts) Differentiation (set apart from other

competitors) Focused (a niche market combining

differentiation and low-cost leadership)



Corporate Strategy (Domain)– Specialization/niche

– Vertical integration (forward and backward)

– Horizontal integration

– Diversification

– Retrenchment or divestiture

– Strategic alliances (joint ventures, mergers and consolidations)



Product Life Cycles– Stages

• introduction

• growth

• maturity

• decline



Emergent Strategies– develop progressively over time

Logical incrementalism– strategies that develop as modest adjustments to

past patterns


Strategy Implementation

Strategic Management Failures– Substance

• inadequate attention to major strategic planning elements

– Process• poor handling of strategy implementation


Strategy Implementation

Leadership and Top Management Teams– effective strategy implementation depends on

all managers

Corporate Governance– boards of directors

• inside

• outside


Strategy and Entrepreneurship

Who are the Entrepreneurs?– Risk-taking

individuals who pursue opportunities that others do not see



Typical Characteristics of Entrepreneurs

• internal locus of control• high energy level• high need for achievement• tolerance for ambiguity• self-confidence• action oriented



Entrepreneurship and Small Business– Small business

• fewer than 500 employees• most common type of business in the U.S.• high failure rate



Small Business Development– Small Business Administration (SBA)

• Small Business Development Centers– offer guidance on how to run a business

successfully



Entrepreneurship and Large Enterprises– intrapreneurship

• entrepreneurial behavior within large organizations

– skunk works• groups of employees work in a creative

setting

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Strategy Mgmt and Entrepeneurship