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Chapter 8 Strategy Formulation and Execution
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Every company is concerned with strategy – It determines which organizations succeed and which ones struggle – Strategic blunders can hurt a company Strategic management is a specific type of planning Strategy 2Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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The long-term view of the organization and competition Thinking strategically impacts performance and financial success Today’s environment requires everyone to think strategically Thinking Strategically 3Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Decisions and actions used to formulate and execute strategies that will provide competitively superior fit between the organization and its environment to achieve organizational goals Strategic Management 4Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Explicit strategy is the plan of action Competitive advantage is the organization’s distinctive edge for meeting customer needs Strategies should: Exploit Core Competencies Build Synergy Deliver Value Purpose of Strategy 5Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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8.1 Three Levels of Strategy in Organizations 6Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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8.2 The Strategic Management Process 7Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Strategy Formulation versus Execution Formulation: Assessing the external environment and internal problems to create goals and strategy Execution: the use of managerial and organizational tools to direct resources toward accomplishing strategic results 8Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Formulating strategy often begins with an audit of internal and external factors – Internal Strengths and Weaknesses – External Opportunities and Threats Information is acquired from reports, surveys, discussions, and meetings SWOT Analysis 9Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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8.3 Audit Checklist for Analyzing Organizational SWOT 10Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Strategic Business Units (SBUs) have a unique mission, products, and competitors Companies manage the mix of SBUs for synergy and competitive advantage Organizations should not become too dependent on one business Formulating Corporate-Level Strategy: Portfolio Strategy 11Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Organizes business along two dimensions – Business growth rate – Market share Four categories for corporate portfolio – The combination of high/low market share and high/low business growth Formulating Corporate-Level Strategy: The BCG Matrix 12Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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8.4 The BCG Matrix 13Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Moving into new lines of business – Expand into new valuable products and services Unrelated diversification is expansion into new lines of business – Can be a difficult strategy – Many companies are giving up on unrelated diversification Vertical integration expands into businesses that supply to the business or are distributors Formulating Corporate-Level Strategy: Diversification Strategy 14Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Strategy within the business units: How do we compete? Business-level strategies are developed by Porter’s Five Forces Web technology is impacting all industries in positive and negative ways Formulating Business-Level Strategy 15Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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8.5 Porter’s Five Forces 16Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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8.6 Porter’s Competitive Strategies 17Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Action plans used by major departments Marketing Production Finance Human Resources Research and Development Formulating Functional-Level Strategy 18Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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Strategic Flexibility – managers must be prepared to change and adjust strategy quickly Strategic Partnerships – collaboration with other organizations is important Global Strategy – organizations pursue a distinctive focus for global business New Trends in Strategy 19Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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8.7 Global Corporate Strategies 20Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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The final step! “Strategy is easy, but execution is hard” – Most important but most difficult part Strategy must be skillfully executed Alignment requires all aspects of the organization to focus on strategy goals – Everyone is moving in the same direction Strategy Execution 21Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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8.8 Six Silent Killers of Strategy 22Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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8.9 Tools for Putting Strategy into Action 23Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.
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