Strategy Prof Karen Hanen Mgt 360

Strategic Management Strategy a comprehensive plan guiding resource allocation to achieve long-term organization goals Strategic Intent focusing all organizational energies on a unifying and compelling goal – all resources, policies/practices, org structure and culture are in service to achieving Strategic Intent (Simon Senek Video) Copyright ©2015 John Wiley & Sons, Inc.

Strategic Management Basic concepts of strategy: Competitive advantage — ability to do something so well that one outperforms competitors Sustainable competitive advantage — one that is difficult or costly for competitors to imitate Copyright ©2015 John Wiley & Sons, Inc.

Strategic Management Sources of competitive advantage Technology Cost and quality Knowledge and speed Barriers to entry Financial resources Copyright ©2015 John Wiley & Sons, Inc.

Figure 10.1 Three levels of strategy in organizations- corporate, business, functional strategies Copyright ©2015 John Wiley & Sons, Inc.

Figure 10.2 Strategy formulation and implementation in the strategic management process Copyright ©2015 John Wiley & Sons, Inc.

Essentials of Strategic Analysis What is our business mission? Who are our customers? What do our customers value? What have been our results? What is our plan? Strategic Questions Copyright ©2015 John Wiley & Sons, Inc.

Figure 10.3 How external stakeholders can be valued as strategic constituencies in an organization’s mission statement Copyright ©2015 John Wiley & Sons, Inc.

Essentials of Strategic Analysis Profitability Sustainability Social responsibility Financial health Cost efficiency Product quality Market share Human talent Innovation Typical operating objectives of a business include: Copyright ©2015 John Wiley & Sons, Inc.

Essentials of Strategic Analysis Special knowledge or expertise Superior technology Efficient supply chains Unique product distribution systems Potential core competencies: Copyright ©2015 John Wiley & Sons, Inc.

Figure 10.4 SWOT analysis of strengths, weaknesses, opportunities, and threats Copyright ©2015 John Wiley & Sons, Inc.

Figure 10.5 Porter’s model of five strategic forces affecting industry competition Copyright ©2015 John Wiley & Sons, Inc.

Essentials of Strategic Analysis Porter’s Model of Five Strategic Forces Affecting Competition: Industry competition Intensity of rivalry among firms and their competitive behavior New entrants Threat of new competitors entering the market Substitute products or services Threat of substitute products or services Bargaining power of suppliers Ability of resource suppliers to influence the cost of products or services Bargaining power of customers Ability of customers to influence the price they will pay for products or services Copyright ©2015 John Wiley & Sons, Inc.

Figure 10.6 The BCG matrix approach to corporate strategy formulation Copyright ©2015 John Wiley & Sons, Inc.

Corporate-Level Strategy Formulation Global strategies: Globalization strategy World is one large market; standardize products and advertising as much as possible Multidomestic strategy Customize products and advertising to local markets as much as possible Transnational strategy Balance efficiencies in global operations and responsiveness to local markets Copyright ©2015 John Wiley & Sons, Inc.

Business-Level Strategy Formulation Good strategies help achieve above average returns Key question is “How can we best compete for customers in our market and with our products or services?” Porter’s competitive strategies model Business-level strategic decisions are driven by: Market scope Source of competitive advantage Market scope and source of competitive advantage combine to generate three generic strategies Copyright ©2015 John Wiley & Sons, Inc.

Business-Level Strategy Formulation Porter’s generic strategies for gaining competitive advantage: Differentiation strategy Cost leadership strategy Focus strategy: Focused cost leadership Focused differentiation Copyright ©2015 John Wiley & Sons, Inc.

Figure 10.7 Porter’s competitive strategies framework: soft-drink industry examples Copyright ©2015 John Wiley & Sons, Inc.

Strategy Implementation Strategic control Makes sure strategies are well implemented and that poor strategies are scrapped or modified Corporate governance Control and monitoring of top management Copyright ©2015 John Wiley & Sons, Inc.

Strategy Implementation Implementation must be supported in every aspect of management Planning Controlling Organizing Leading Copyright ©2015 John Wiley & Sons, Inc.

Strategy Implementation Strategic planning failures that hinder strategy implementation: Failures of substance Inadequate attention to major strategic planning elements Failures of process Poor handling of strategy implementation Lack of participation error Goal displacement error Copyright ©2015 John Wiley & Sons, Inc.

Strategy Implementation Critical tasks of strategic leadership Maintain strategic control Be the guardian of trade-offs Create a sense of urgency Ensure that everyone understands the strategy Be a teacher Copyright ©2015 John Wiley & Sons, Inc.

Next Class – Mid-term #2, May 9th Congratulations you are done with all your online activities (OA’s) and online quizzes (OQ’s), as well as paper. For Mid-term #2, Bring a scantron form 882-E, #2 pencil, and photo ID – you cannot submit your test without a photo ID (CSUN Student ID or Driver’s Lic)