Strategic Management The Strategy Process Prof. Dr. E.Vatchkova

Contents Understanding strategy development Understanding strategy development Instruments for strategic analysis Instruments for strategic analysis An overall strategic model An overall strategic model Types of strategies Types of strategies

Understanding strategy development (1)

Understanding strategy development (2) THREE STRATEGY LENSES 1. Strategy as design 2. Strategy as experience 3. Strategy as ideas How strategy development can be seen

Understanding strategy development (3) Strategic planning systems Strategic leadership Organizational politics Logical incrementalism The learning organization Imposed strategy How strategy development process can be understood

Understanding strategy development (4) Intended and realized strategy Strategic drift Strategic management in uncertainty and complexity Implications for strategy development

SWOT ANALYSIS DIAGRAM Numerous Environmental Opportunities Major Environmental Treats Critical Internal Weaknesses Substantial Internal Strengths QUADRANT ||QUADRANT | QUADRANT |VQUADRANT |||

Forces Affecting Industry Competition Suppliers Bargaining Power of Suppliers Buyers Bargaining Power of Buyers Substitutes Treat of Substitute Products or Services Potential Entrants Treat of New Entrants Industry Competitors Rivalry among Existing Firms

Portfolio Matrix StarsQuestionMarks CashCowsDogs High Low High Relative Market Share Market Growth RateMarket Growth Rate

Strategic alternative matrix Numerous Environmental Opportunities Major Environmental Treats Critical Internal Weaknesses Substantial Internal Strengths QUADRANT || Vertical Integration Conglomerate Diversification QUADRANT | Concentration Market Development Product Development Innovation QUADRANT |V Horizontal Integration Concentric Diversification Joint Venture QUADRANT ||| Turnaround Divestiture Liquidation

Strategies of Portfolio Types Stars Cash Cows Question Marks Dogs STRATEGY Invest for rapid growth, convert to cash cow Channel revenues to stars and question marks Evaluate for future potential as star, divest reminder Divest or liquidate PORTFOLIO TYPES

Survival Strategies and Environmental Conditions Specialists will outperform generalists. Generalists are more likely to fail. Generalists will outperform specialists. Specialists are more likely to fail. Stable Unstable HeterogeneityHomogeneity Market Complexity Market Stability

Types of strategies (1) Concentration – single product in a single market Concentration – single product in a single market Market development – selling present products in new markets Market development – selling present products in new markets Product development – modification of existing product or creation of a similar one Product development – modification of existing product or creation of a similar one

Types of strategies (2) Innovation – creation of a new product based on the technology of a current product Innovation – creation of a new product based on the technology of a current product Horizontal integration – acquisition of another organization in the same industry Horizontal integration – acquisition of another organization in the same industry Vertical integration – acquire or create organizations that distribute its product, supply materials for its product, or both Vertical integration – acquire or create organizations that distribute its product, supply materials for its product, or both

Types of strategies (3) Joint venture – two or more organizations increase their capabilities Joint venture – two or more organizations increase their capabilities Concentric Diversification – creating or acquiring organizations that manufactures or distribute related products Concentric Diversification – creating or acquiring organizations that manufactures or distribute related products Conglomerate Diversification – creating or acquiring another organization that manufactures or distributes unrelated products Conglomerate Diversification – creating or acquiring another organization that manufactures or distributes unrelated products

Types of strategies (4) Defender strategy – seeks or creates an environment, that is stable, protecting the market share Defender strategy – seeks or creates an environment, that is stable, protecting the market share Prospector strategy - seeks or creates an unstable environment in the form of rapid change and high growth in the market Prospector strategy - seeks or creates an unstable environment in the form of rapid change and high growth in the market Analyzer strategy – involves adapting solutions from both – the defender and prospector to the three problems – entrepreneurial, engineering and administrative Analyzer strategy – involves adapting solutions from both – the defender and prospector to the three problems – entrepreneurial, engineering and administrative

Types of strategies (5) Turnaround – correct existing problems by invoking techniques for improving operational efficiency Turnaround – correct existing problems by invoking techniques for improving operational efficiency Divestiture – sell parts of the organization Divestiture – sell parts of the organization Liquidation – acquire cash from the sale of parts of the company which can then be transferred to owner-stockholders Liquidation – acquire cash from the sale of parts of the company which can then be transferred to owner-stockholders

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