STRATEGIC MANAGEMENT SESSIONS & 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  Sense of identity of employees -> moderate  Employee commitment -> moderate  Appropriate behavioral patterns -> sustainable  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

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 1 st 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 ?