STRATEGIC MANAGEMENT

The Dynamics of Strategic Planning Strategy Strategy –large-scale action plan that sets the direction for an organization Strategic management Strategic management –process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals

What Is an Effective Strategy? Strategic positioning Strategic positioning Sustainable competitive advantage by preserving what is distinctive about a company Sustainable competitive advantage by preserving what is distinctive about a company –Being responsive to customers –Innovation –Quality –Effectiveness The creation of a unique, valuable, inimitable position The creation of a unique, valuable, inimitable position

LEVELS OF STRATEGY Corporate Corporate –What set of businesses should be in? Business Business –How should we compete in business? Functional Functional –What should our strategy be in each functional area?

CORPORATE STRATEGY: BASIC QUESTIONS Grand Strategy Grand Strategy –Stability –Growth –Retrenchment Single Product vs. Diversification Single Product vs. Diversification

Single-Product versus Diversification Single-product strategy Single-product strategy –company makes and sells only one product within its market –Benefit? –Risk?

Single-Product versus Diversification Diversification Diversification –operating several businesses under one ownership that are not related to one another –Related, unrelated –Benefits?

CORPORATE STRATEGY: TOOLS Portfolio Matrix Portfolio Matrix BCG Matrix BCG Matrix

The Product Life Cycle

BCG MATRIX Growth LOW HIGH Market Share HIGH LOW

BUSINESS-LEVEL STRATEGY 5 forces 5 forces SWOT SWOT Generic Strategies Generic Strategies

Industry Competitors Intensity of Rivalry Suppliers Buyers Substitutes New Entrants Entry Barriers Economies of Scale Brand Identity Capital Requirements Determinants of Supplier Power Switching Costs Supplier Volume Impact Forward Integration Determinants of Substitution Threat Relative Price Performance Switching Costs Determinants of Buyer Power Buyer Concentration Buyer Volume Backward Integration Rivalry Determinants Industry Growth Fixed Costs Product Differences Brand Identity Exit Barriers

S.W.O.T. ANALYSIS S W O T represents the first letter in S W O T represents the first letter in – S trengths – W eaknesses – O pportunities – T hreats Strategy-making must be well-matched to both Strategy-making must be well-matched to both – A firm’s resource strengths and weaknesses – A firm’s best market opportunities and external threats to its well-being SW OT

4 GENERIC STRATEGIES 4 GENERIC STRATEGIES Scope Broad Target Narrow Target Lower CostDifferentiation

The Strategic Management Process

The Three Core Processes of Business People People Strategy Strategy Operations Operations