Bus 411 DAY 10

Agenda Assignment #3 not corrected  Still waiting for submissions Assignment #4 assigned this class Templates available in WebCT Discussion on Mid-term will be after Spring Break  Chapters 1-9  Take home  Intense Finish Discussion on Strategy Analysis and choice

Strategy-Formulation Analytical Framework SWOT Matrix SPACE Matrix BCG Matrix IE Matrix Grand Strategy Matrix Stage 2: The Matching Stage

IE Matrix The IE Matrix positions an organization’s various divisions in a nine-cell display illustrated in Figure The IE Matrix is similar to the BCG Matrix in that both tools involve plotting organization divisions in a schematic diagram; this is why they are called portfolio matrices. Differences between the IE Matrix and the BCG Matrix  Axis are different.  IE Matrix requires more information about divisions than BCG.  Strategic implications of each matrix are different.

IE Matrix IIIIII IVVVI VIIVIIIIX IFE Scores StrongAverageWeak High 3-4 Medium Low EFE Scores

Strategy-Formulation Analytical Framework SWOT Matrix SPACE Matrix BCG Matrix Grand Strategy Matrix Stage 2: The Matching Stage IE Matrix

Grand Strategy Matrix  Tool for formulating alternative strategies  Based on two dimensions  Competitive position  Market growth

Ch 6 -8 Quadrant IV 1. Concentric diversification 2. Horizontal diversification 3. Conglomerate diversification 4. Joint ventures Quadrant III 1. Retrenchment 2. Concentric diversification 3. Horizontal diversification 4. Conglomerate diversification 5. Liquidation Quadrant I 1. Market development 2. Market penetration 3. Product development 4. Forward integration 5. Backward integration 6. Horizontal integration 7. Concentric diversification Quadrant II 1. Market development 2. Market penetration 3. Product development 4. Horizontal integration 5. Divestiture 6. Liquidation RAPID MARKET GROWTH SLOW MARKET GROWTH WEAK COMPETITIVE POSITION STRONG COMPETITIVE POSITION

Grand Strategy Matrix  Excellent strategic position  Concentration on current markets/products  Take risks aggressively when necessary Quadrant I

Grand Strategy Matrix  Evaluate present approach  How to improve competitiveness  Rapid market growth requires intensive strategy Quadrant II

Grand Strategy Matrix  Compete in slow-growth industries  Weak competitive position  Drastic changes quickly  Cost & asset reduction (retrenchment) Quadrant III

Grand Strategy Matrix  Strong competitive position  Slow-growth industry  Diversification to more promising growth areas Quadrant IV

Strategy-Formulation Analytical Framework Stage 3: The Decision Stage Quantitative Strategic Planning Matrix (QSPM)

QSPM  Technique designed to determine the relative attractiveness of feasible alternative actions Quantitative Strategic Planning Matrix

Six steps to developing a QSPM: 1. Make a list of the firm’s key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM. 2. Assign weights to each key external and internal factor. 1. Weights for each category should add up to one 3. Examine the Stage 2 matrices and identify alternative strategies that the organization should consider implementing. 4. Determine the Attractiveness Scores (AS). 5. Compute the total AS. 1. Weight * AS 6. Compute the sum Total AS.

Ch QSPM Key Internal Factors Management Marketing Finance/Accounting Production/Operations Research and Development Computer Information Systems Strategy 3Strategy 2Strategy 1WeightKey External Factors Economy Political/Legal/Governmental Social/Cultural/Demographic/ Environmental Technological Competitive Strategic Alternatives

QSPM  Requires intuitive judgments & educated assumptions  Only as good as the prerequisite inputs Limitations

QSPM  Sets of strategies considered simultaneously or sequentially  Integration of pertinent external & internal factors in the decision making process Advantages

Cultural Aspects of Strategy Choice  Successful strategies depend on the degree of consistency with the firm’s culture Organization Culture

Politics of Strategy Choice  Management hierarchy  Career aspirations  Allocation of scarce resources Politics in Organizations

Successful Strategists : Were found to let weakly supported ideas and proposals die through inaction and to establish additional hurdles or tests for strongly supported ideas considered unacceptable but not openly opposed.

Politics of Strategy Choice  Equifinality  Same outcomes by different means  Satisfying  Good results with acceptable strategy is better than excellent results with an unpopular strategy  Generalization  Less detail  Higher-order issues  Take cars of the big stuff first  Political access on important issues  Agency and political avenues for redress Political tactics for strategists

Governance Issues  Control & oversight over management  Adherence to legal prescriptions  Consideration of stakeholder interests  Advancement of stockholder rights Board of Directors Roles & Responsibilities

Corporate Governance Issues 1.No more than 2 directors current or former company executives 2.No directors do business with the company 3.Audit, compensation, and nominating committees made up of outside directors 4.Each director attends at lest 75% of all meetings 5.Audit committee meets at least four times a year 6.CEO is not also the Chairperson of the Board 7.Shareholders have considerable power and information to choose & replace directors 8.Stock options are considered a corporate expense 9.No interlocking directorships Business Week’s “principles of good governance”

Chapter 7 Implementing Strategies: Management & Operations Issues Strategic Management: Concepts & Cases 10 th Edition Fred David PowerPoint Slides by Anthony F. Chelte Western New England College

Chapter Outline The Nature of Strategy Implementation Annual Objectives Policies

Chapter Outline ( cont’d ) Resource Allocation Managing Conflict Matching Structure with Strategy

Chapter Outline ( cont’d ) Restructuring, Reengineering & E-Engineering Linking Performance & Pay to Strategies Managing Resistance to Change

Chapter Outline ( cont’d ) Managing the Natural Environment Creating a Strategy-Supportive Culture Production/Operations Concerns When Implementing Strategies

Chapter Outline ( cont’d ) Human Resource Concerns When Implementing Strategies

Pretend that every single person you meet has a sign around his or her neck that says, “Make me feel important” – Mary Kay Ash, CEO of Mary Kay, Inc. Implementing Strategies

-- Successful strategy formulation does not guarantee successful strategy implementation The Nature of Strategy Implementation

Formulation positions forces before the action Implementation manages forces during the action Nature of Strategy Implementation Formulation vs. Implementation

Formulation focuses on effectiveness Implementation focuses on efficiency Nature of Strategy Implementation Formulation vs. Implementation

Formulation primarily an intellectual process Implementation primarily an operational process Nature of Strategy Implementation Formulation vs. Implementation

Formulation requires good intuitive & analytical skills Implementation requires special motivational & leadership skills Nature of Strategy Implementation Formulation vs. Implementation

Formulation requires coordination among a few individuals Implementation requires coordination among many individuals Nature of Strategy Implementation Formulation vs. Implementation

Varies among different types & sizes of organizations Nature of Strategy Implementation Strategy Implementation

Assignment Four Use templates provided in assignment and in WebCT Due Before Spring Break  In my possession prior to 3:30PM Friday, February 25  20 points off for each day late and I will not be checking during break so if I get it after break, it will be a zero.