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Strategic Management Set of decisions and actions used to implement strategies Questions to ask: What changes and trends are occurring Who are our customers What products or services should we offer How can we offer these products or services most efficiently

Thinking Strategically Answers to the following define an overall direction for the organization's grand strategy Where is the organization now? Where does the organization want to be? What changes are among competitors? What courses of action will help us achieve our goals? 2

Grand Strategy General plan of major action to achieve long-term goals. Fall in to three general categories: 1. Growth 2. Stability 3. Retrenchment 3

Global Corporate Strategies High Transnational Strategy Seeks to balance global efficiencies and local responsiveness Combines standardization and customization for product/advertising strategies Globalization Strategy Treats world as a single global market Standardizes global products/advertising strategies Need for Global Integration Multi-domestic Strategy Handles markets independently for each country Adapts product/advertising to local tastes and needs Low Low Need for National Responsiveness High

Global Strategy Globalization: product design and advertising strategies are standardized around the world Multi-domestic: adapt product and promotion for each country Transnational: combine global coordination with flexibility to meet specific needs in various countries 7

Purpose of Strategy Kinko’s Copy Center The plan of action that prescribes resource allocation and other activities that help the organization attain its goals Strategies focus on: Core competencies Develop synergy Create value for customers 8

Three Levels of Strategy in Organizations Corporate-Level Strategy: What business are we in? Corporation Business-Level Strategy: How do we compete? Textiles Unit Chemicals Unit Auto Parts Unit Functional-Level Strategy: How do we support the business-level strategy? Finance R&D Manufacturing Marketing

Checklist for Analyzing Organizational Strengths and Weaknesses Management and Organization Marketing Human Resources Management quality Distribution channels Market share Advertising efficiency Customer satisfaction Product quality Service reputation Employee experience, education Degree of centralization Organization charts Union status Planning, information, control systems Turnover, absenteeism Work satisfaction Grievances Sales force turnover Finance Production Research and Development Profit margin Plant location Basic applied research Debt-equity ratio Machinery obsolescence Laboratory capabilities Inventory ratio Purchasing system Research programs Return on investment New-product innovations Quality control Technology innovations Credit rating Productivity/efficiency Sources: Based on Howard H. Stevenson, “ Defining Corporate Strengths and Weaknesses,” Sloan Management Review 17 (spring 1976), 51-68; and M.L.Kastens, Long-Range Planning for Your Business (New York: American Management Association, 1976).

Portfolio Strategy BGG Matrix Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage

The Five Forces Affecting Industry Competition Internet reduces barriers to entry Threats of new entrants Internet blurs differences among competitors in an industry Internet expands market size, but creates new substitution threats Internet shifts greater power to end consumers Threat of substitute products Bargaining power of buyers Bargaining power of suppliers Internet tends to increase the bargaining power of suppliers Source: Based on Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980).

Competitive Edge Through Competitive Strategies Differentiation…involves an attempt to distinguish a firms products or services. Cost leadership…aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls in an attempt to be more efficient than competitors. Focus…concentrates on a specific regional market or buyer.

Continuum of Partnership Strategies Organizational Combination Acquisitions Mergers Joint Ventures Strategic Alliances Strategic Business Partnering Preferred Supplier Arrangements Low High Degree of Collaboration

Implementing Strategy Tools Leadership Structural design Information and control systems Human resources

Tools for Putting Strategy into Action Environment Organization Leadership  Persuasion  Motivation  Culture/values Structural Design  Organization Chart  Teams  Centralization/decentralization  Facilities, task design Performance Human Resources  Recruitment/selection  Transfers/promotions/training  Layoffs/recalls Strategy Information and Control Systems  Pay, reward system  Budget allocations  Information systems  Rules/procedures Source: Adapted from Jay R. Galbraith and Robert K. Kazanjian, strategy Implementation: Structure, Systems and Process, 2d ed. (St. Paul, Minn.: West, 1986), 115, Used with permission.