StrategyStrategy

PlanningPlanning

- strategic- strategic

- emergent- emergent

- contingency plans- contingency plans

Objectives: LT, STObjectives: LT, ST

Mission statementMission statement

Environmental analysis (SWOT)Environmental analysis (SWOT)

Competitive analysis (Porter’s 5 forces)Competitive analysis (Porter’s 5 forces)

Portfolio analysisPortfolio analysis

Identifying Mission Statement Components:

A compilation of Excerpts from Actual Corporate Mission Statements

1. Customer-1. Customer-marketmarket

We believe our first responsibility is to the doctors, nurses, and We believe our first responsibility is to the doctors, nurses, and patients, to mothers and all others who use our products and patients, to mothers and all others who use our products and services. (Johnson & Johnson)services. (Johnson & Johnson)

To anticipate and meet market needs of farmers, ranchers, and To anticipate and meet market needs of farmers, ranchers, and rural communities within North America. (CENEX)rural communities within North America. (CENEX)

2. Product-2. Product-serviceservice

AMAX’s principal products are molybdenum, coal, iron, ore, AMAX’s principal products are molybdenum, coal, iron, ore, copper, lead, zinc, petroleum and natural gas, potash, copper, lead, zinc, petroleum and natural gas, potash, phosphates, nickel, tungsten, silver, gold, and magnesium. phosphates, nickel, tungsten, silver, gold, and magnesium. (AMAX)(AMAX)

3. Geographic 3. Geographic domaindomain

We are dedicated to the total success of Corning Glass Works as We are dedicated to the total success of Corning Glass Works as a worldwide competitor. (Corning Glass)a worldwide competitor. (Corning Glass)

Identifying Mission Statement Components:

A compilation of Excerpts from Actual Corporate Mission Statements (cont’d)

4. Technology4. Technology Control Data is the business of applying microelectronics and Control Data is the business of applying microelectronics and computer technology in two general areas: computer-related computer technology in two general areas: computer-related hardware and computing-enhancing services, which include hardware and computing-enhancing services, which include computation, information, education, and finance. (Control Data)computation, information, education, and finance. (Control Data)

The common technology in these areas relates to discrete The common technology in these areas relates to discrete particle coatings. (NASHUA)particle coatings. (NASHUA)

5. Concern for 5. Concern for SurvivalSurvival

In this respect, the company will conduct its operation prudently, In this respect, the company will conduct its operation prudently, and will provide the profits and growth which will assure Hoover’s and will provide the profits and growth which will assure Hoover’s ultimate success. (Hoover Universal)ultimate success. (Hoover Universal)

6. Philosophy6. Philosophy We are committed to improve health care throughout the world. We are committed to improve health care throughout the world. (Baxter Travenol)(Baxter Travenol)

We believe human development to be the worthies of the goals We believe human development to be the worthies of the goals of civilization and independence to be the superior condition for of civilization and independence to be the superior condition for nurturing growth in the capabilities of people. (Sun Company)nurturing growth in the capabilities of people. (Sun Company)

Identifying Mission Statement Components:

A compilation of Excerpts from Actual Corporate Mission Statements (cont’d)

7. Self-concept7. Self-concept Hoover Universal is a diversified, multi-industry corporation with Hoover Universal is a diversified, multi-industry corporation with strong manufacturing capabilities, entrepreneurial policies, and strong manufacturing capabilities, entrepreneurial policies, and individual business unit autonomy. (Hoover Universal)individual business unit autonomy. (Hoover Universal)

8. Concern for 8. Concern for public imagepublic image

We are responsible to the communities in which we live and work We are responsible to the communities in which we live and work and to the world community as well. (Johnson & Johnson)and to the world community as well. (Johnson & Johnson)

Also, we must be responsive to the broader concerns of the Also, we must be responsive to the broader concerns of the public, including especially the general desire for improvement in public, including especially the general desire for improvement in the quality of life, equal opportunity for all, and the constructive the quality of life, equal opportunity for all, and the constructive use of natural resources. (Sun Company)use of natural resources. (Sun Company)

This exercise should help you think about This exercise should help you think about 1) your long-term personal goals, and 2) 1) your long-term personal goals, and 2) companies you might want to work forcompanies you might want to work for1. What do you want inscribed on your 1. What do you want inscribed on your gravestone?gravestone?What would be your primary goal if you What would be your primary goal if you were told you had 18 months to live?were told you had 18 months to live?If you had a child, what is the most If you had a child, what is the most important lesson that you would like him or important lesson that you would like him or her to know?her to know?Book says, “…every organization has a Book says, “…every organization has a mission statementmission statement that defines its that defines its purpose and answers the question ‘what purpose and answers the question ‘what business are we in?’business are we in?’

Use the answers to the above questions to write Use the answers to the above questions to write a personal mission statement/paragraph that a personal mission statement/paragraph that should specify your life’s goal!should specify your life’s goal!

Consider:Consider:Values: what’s important to you, e.g. Values: what’s important to you, e.g.

health, health, friendsfriendsPrinciples: guidelines to follow, e.g. Principles: guidelines to follow, e.g.

fairness, fairness, quality, servicequality, serviceStrengths: your qualities, e.g. adaptable, Strengths: your qualities, e.g. adaptable, confidentconfidentBlockers: what’s stopping you? e.g. Blockers: what’s stopping you? e.g.

shyness, shyness, lazinesslaziness

Next write a paragraph describing the Next write a paragraph describing the mission of a company you would want to mission of a company you would want to work for. work for.

SWOT analysisSWOT analysis

Environmental Scan – Both internal and external factors Environmental Scan – Both internal and external factors need to be considered:need to be considered:

1. Internal factors – characteristics in the firm 1. Internal factors – characteristics in the firm (management, mission, resources, systems process, (management, mission, resources, systems process, and structure) that can be considered strengths or and structure) that can be considered strengths or strong points and weaknesses or weak points.strong points and weaknesses or weak points.

2. External factors - characteristics in the 2. External factors - characteristics in the environment that are “outside” the firm (customers, environment that are “outside” the firm (customers, competitors, suppliers, labor force, shareholders, competitors, suppliers, labor force, shareholders, society, technology, the economy, and society, technology, the economy, and governments) governments) that represent opportunities to tap or that represent opportunities to tap or threats to flank.threats to flank.

Starbuck’s Starbuck’s Five-Force Five-Force Competitive Competitive

AnalysisAnalysis

Exhibit –5

Portfolio Analysis: BCG MatrixPortfolio Analysis: BCG Matrix

Exhibit 5–11

IND

US

TR

Y A

TT

RA

CT

IVE

NE

SS

BUSINESS STRENGTH

Organizational Strategies occur on 3 levels: Organizational Strategies occur on 3 levels: Grand, Business, and FunctionalGrand, Business, and Functional

A. Grand level strategies: A. Grand level strategies:

- 1. Growth (a. concentration; b. - 1. Growth (a. concentration; b. diversification)diversification)

- 2. Retrenchment- 2. Retrenchment

- 3. Stability (status quo)- 3. Stability (status quo)

- 4. Combination (multiple strategies)- 4. Combination (multiple strategies)

1a. Growth through concentration – 1a. Growth through concentration – concentrating on your existing specializationconcentrating on your existing specialization

i. market penetration – aggressively targeting i. market penetration – aggressively targeting current markets with existing product specialtiescurrent markets with existing product specialties

ii. market development/geographic expansion – ii. market development/geographic expansion – expanding into new marketsexpanding into new markets

iii. market segmentation – dividing existingiii. market segmentation – dividing existing

marketsmarkets

iv. product development – modify existingiv. product development – modify existing

products, or develop new but relatedproducts, or develop new but related

productsproducts

1b. Growth through diversification – branching 1b. Growth through diversification – branching out into new areas out into new areas

i. horizontal integration – expanding across the i. horizontal integration – expanding across the general industry (e.g. Coke acquires Minutemaid).general industry (e.g. Coke acquires Minutemaid).

ii. vertical integration – expanding into industries ii. vertical integration – expanding into industries populated by suppliers/buyers (e.g. Ford buys populated by suppliers/buyers (e.g. Ford buys

steel steel plant).plant).

iii. conglomerate diversification – expanding iii. conglomerate diversification – expanding into into unrelated industries (e.g. GM buys Hershey’s unrelated industries (e.g. GM buys Hershey’s candy).candy).

iv. joint venture – expanding together with iv. joint venture – expanding together with another another company in order to diversity efficiently.company in order to diversity efficiently.

2. Retrenchment2. Retrenchment

i. Turnaround – downsizing existing i. Turnaround – downsizing existing company/divisionscompany/divisions

ii. Divestiture – selling off existing ii. Divestiture – selling off existing divisions/subdivisionsdivisions/subdivisions

iii. Liquidation – Chapter 11 bankruptcyiii. Liquidation – Chapter 11 bankruptcy

3. Stability - maintain status quo (e.g. 3. Stability - maintain status quo (e.g. continuous improvement)continuous improvement)

4. Combination – multiple use of 4. Combination – multiple use of strategiesstrategies

B. Business level strategiesB. Business level strategies

1. Michael Porter’s Competitive Strategies:1. Michael Porter’s Competitive Strategies:

i. low cost (e.g. Wal-Mart)i. low cost (e.g. Wal-Mart)

ii. differentiation (Volvo/Mercedes)ii. differentiation (Volvo/Mercedes)

iii. focus (Penny’s/Pea in a Pod)iii. focus (Penny’s/Pea in a Pod)

2. Adaptive business level strategies:2. Adaptive business level strategies:

a. prospectinga. prospecting

b. defendingb. defending

c. analyzingc. analyzing

B. Business level strategies (cont’d)B. Business level strategies (cont’d)

3.3. Product life cycleProduct life cycle

i. introduction stagei. introduction stage

ii. growth stageii. growth stage

iii. maturity stageiii. maturity stage

iv. decline stageiv. decline stage

Product Life Cycle: StarbucksProduct Life Cycle: Starbucks

C. Functional level strategiesC. Functional level strategies

i. Marketingi. Marketing

ii. Manufacturingii. Manufacturing

iii. Human resourcesiii. Human resources

iv. Etc. iv. Etc.

Strategy Formulation is followed by Strategy Formulation is followed by ImplementationImplementation

SKILLS

STAFF

SHARED

VALUES

STRATEGY

STRUCTURE

STYLE

SYSTEMS

Seven S Model of ImplementationSeven S Model of Implementation

Seven S ModelSeven S Model1.1. StrategyStrategy – Plan or course of action leading to the allocation of firm’s – Plan or course of action leading to the allocation of firm’s

resources to reach identified goals.resources to reach identified goals.2.2. StructureStructure – The ways people and tasks relate to each other. The basic – The ways people and tasks relate to each other. The basic

grouping of reporting relationships and activities. The way separate grouping of reporting relationships and activities. The way separate entities of an organization are linked.entities of an organization are linked.

3.3. Shared ValuesShared Values – The significant meanings or guiding concepts that – The significant meanings or guiding concepts that give purpose and meaning to the organization.give purpose and meaning to the organization.

4.4. SystemsSystems – Formal processes and procedures, including management – Formal processes and procedures, including management control systems, performance measurement and reward systems, and control systems, performance measurement and reward systems, and planning and budgeting systems, and the ways people relate to them.planning and budgeting systems, and the ways people relate to them.

5.5. SkillsSkills – Organizational competencies, including the abilities of – Organizational competencies, including the abilities of individuals as well as management practices, technological abilities, individuals as well as management practices, technological abilities, and other capabilities that reside in the organization.and other capabilities that reside in the organization.

6.6. StyleStyle – The leadership style of management and the overall operating – The leadership style of management and the overall operating style of the organization. A reflection of the norms people act upon and style of the organization. A reflection of the norms people act upon and how they work and interact with each other, vendors, and customers.how they work and interact with each other, vendors, and customers.

7.7. StaffStaff – Recruitment, selection, development, socialization, and – Recruitment, selection, development, socialization, and advancement of people in the organization.advancement of people in the organization.

Figure 4. Contingency

–Constrained Coefficients.