CHAPTER 6 Strategy Formulation: Situation Analysis & Business Strategy STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER Prentice Hall, Inc. © 2006 Prentice Hall 2006

Strategy formulation -- Situational Analysis Strategy formulation -- Strategic planning or long-range planning Develops mission, objectives, strategies, policies Prentice Hall, Inc. © 2006 Prentice Hall 2006

Situational Analysis --process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses Prentice Hall, Inc. © 2006 Prentice Hall 2006

IFAS – Maytag as Example Prentice Hall, Inc. © 2006 Prentice Hall 2006

EFAS – Maytag as Example Prentice Hall, Inc. © 2006 Prentice Hall 2006

SFAS Matrix Prentice Hall, Inc. © 2006 Prentice Hall 2006

Niche -- Need in the marketplace that is currently unsatisfied Situational Analysis Niche -- Need in the marketplace that is currently unsatisfied Prentice Hall, Inc. © 2006 Prentice Hall 2006

Corporate Goal -- Find propitious niche Strategic window Situational Analysis Corporate Goal -- Find propitious niche Strategic window Prentice Hall, Inc. © 2006 Prentice Hall 2006

SWOT -- Internal External Strengths/Weaknesses Opportunities/Threats Situational Analysis SWOT -- Internal Strengths/Weaknesses External Opportunities/Threats Prentice Hall, Inc. © 2006 Prentice Hall 2006

TOWS Matrix Prentice Hall, Inc. © 2006 Prentice Hall 2006

Business Strategy Focuses on improving competitive position of company’s products or services within the specific industry or market segment Prentice Hall, Inc. © 2006 Prentice Hall 2006

Competitive Strategy -- Porter’s Competitive Strategies Competitive Strategy -- Low cost Differentiation Direct competition Focus on niche Prentice Hall, Inc. © 2006 Prentice Hall 2006