1. STRATEGY FORMULATION and IMPLEMENTATION
MANAGEMENT 6th Ed.
By: Richard Daft
Prepared by:
GREGAR DONAVEN E. VALDEHUEZA, MBA
Lourdes College Instructor

2. Learning Objectives Define the components of strategic management
Describe the strategic planning process and SWOT analysis
Understand Grand Strategies for domestic and international operations
Define corporate-level strategies and explain the portfolio approach
Describe business-level strategies, including Porter’s competitive forces and strategies and partnership strategies
Explain the major considerations in formulating functional strategies
Enumerate the organizational dimensions used for implementing strategy

3. What is Strategic Management?
The set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals.

4. Grand Strategy
The general plan of major action by which an organization intends to achieve its long-term goals.
Three general categories:
Growth – can be promoted internally by investing in expansion or externally by acquiring additional business divisions.
Stability (pause strategy) – that the organization wants to remain the same size or grow slowly and in a controlled fashion.
Retrenchment – that the organization goes through period of forced decline by either shrinking current business units or selling off or liquidating entire business.

5. Global Strategy
a separate grand strategy as the focus of global business.
Three global strategies:
Globalization – the standardization of product design and advertising strategies throughout the world.
Multidomestic strategy – the modification of product design and advertising strategies to suit the specific needs of individual countries.
Transnational strategy – a strategy that combines global coordination to attain efficiency with flexibility to meet specific needs in various countries.

6. Purpose of Strategy Choosing how the organization will be different.
The plan of action that prescribes resource allocation and other activities for dealing with the environment and helping the organization attain its goals.

7. To remain competitive, companies develop strategies that focus on:
Core competence
A business activity that an organization does particularly well in comparison to competitors.
Synergy
The condition that exists when the organization’s parts interact to produce a joint effect that is greater than the sum of the parts acting alone.
Value Creation
The heart of strategy.
Value can be defined as the combination of benefits received and costs paid by the customers.

8. Levels of Strategy Corporate-Level Strategy Business-Level Strategy
The level of strategy concerned with the question, “What business are we in?”. Pertains to the organization as a whole and the combination of business units and product lines that make it up.
Business-Level Strategy
The level of strategy concerned with the question, “How do we compete?”. Pertains to each business unit or product line within the organization.
Functional-Level Strategy
The level of strategy concerned with the question, “How do we support the business-level strategy?”. Pertains to all of the organization’s major departments.

9. Three Levels of Strategy in Organization
Corporation
Textile Units
Chemicals Unit
Auto Parts Unit
Finance
R & D
Manufacturing
Marketing
Corporate-Level Strategy:
What business are we in?
Business-Level Strategy:
How do we compete?
Functional-Level Strategy:
How do we support the business-level strategy?

10. Corporation Textile Units Finance R & D Manufacturing Marketing
Corporate-Level Strategy:
What business are we in?
Business-Level Strategy:
How do we compete?
Functional-Level Strategy:
How do we support the business-level strategy?

11. Strategy Formulation Versus Implementation
The stage of strategic management that involves the planning and decision making that lead to the establishment of the organization’s goals and of a specific strategic plan.
Strategy Implementation
The stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes.

12. The Strategic Management Process
Scan External Environment:
National
Global
Identify Strategic Factors:
Opportunities
Threat
Scan Internal Environment:
Core Competence
Synergy
Value Creation
Strengths
Weaknesses
Define New:
Mission
Goals
Grand Strategy
Formulate Strategy:
Corporate
Business
Functional
Evaluate Current:
Strategies
SWOT
Implement Strategy via Changes in:
Leadership / Culture
Structure
Human Resources
Information and Control System

13. Situation Analysis
Analysis of the strengths, weaknesses, opportunities, and threats (SWOT) that affect organizational performance.
Strengths
Positive internal characteristics that the organization can exploit to achieve its strategic performance goals.
Weaknesses
Internal characteristics that might inhibit or restrict the organization’s performance.
Opportunities
Characteristics of the external environment that have the potential to help the organization achieve or exceed its strategic goals.
Threats
Characteristics of the external environment that may prevent the organization from achieving its strategic goals.

14. Formulating Corporate-Level Strategy
Portfolio Strategy
A type of corporate-level strategy that pertains to the organization’s mix of SBUs and product lines that fit together in such a way as to provide the corporation with synergy and competitive advantage.
Strategic Business Unit (SBU)
A division of the organization that has a unique business mission, product line, competitors, and markets relative to other SBUs in the same corporation.

15. The BCG Matrix
A concept developed by the Boston Consulting Group that evaluates SBUs with respect to the dimension of business growth rate and market share.

16. Four Alternative Positions:
Question Marks
The business unit has low market share compared to competitors, however it is doing business in high-growth market.
Stars
The business has high market share compared to competitors and it is doing business in high-growth market.
Cash Cows
The market is not very attractive – low market growth rate, however the business has high market share compared to competitors.
Dogs
This business has low market share and operates in low-growth market.

18. Formulating Business-Level Strategy
it is a strategy formulation within the strategic business unit in which the concern is how to compete.
the same three generic strategies (growth, stability, and retrenchment) apply at the business level, but they are accomplished through competitive actions rather than the acquisition or divestment of business divisions.

19. Porter’s Five Competitive Forces
Rivalry among Competitors
Threat of Substitute Products
Potential New Entrants
Bargaining Power of Buyers
Bargaining Power of Suppliers
Internet tends to increase bargaining power of suppliers
Internet reduces barriers to entry
Internet blurs differences among competitors
Internet creates new substitution threats
Internet shifts greater power to end consumers

20. Competitive Strategies
Differentiation
a type of competitive strategy with which the organization seeks to distinguish its products or services from competitors.
Cost Leadership
A type of competitive strategy with which the organization aggressively seeks efficient facilities, cuts costs, and employs tight cost controls to be more efficient than competitors.
Focus
A type of competitive strategy that emphasizes concentration on a specific regional market or buyer group.

21. Partnership Strategies
Organizational Combination
Strategic Alliances
Acquisitions
Mergers
Joint Ventures
Strategic Business Partnering
Preferred Supplier Arrangements
High D E G R O F C L A B T I N
Low

22. Formulating Functional-Level Strategy
the action plans adopted by major departments to support the execution of business-level strategy.
major organizational functions include marketing, production, finance, human resources, and research & development.

23. Strategy Implementation and Control
Implementation is the final step in the strategic management process and it is how strategy put into action.
Some people argue that strategy implementation is the most difficult and important part of strategic management.

24. Tools for Putting Strategy into Action
STRUCTURAL DESIGN
Design organization chart
Create teams
Determine centralization
Arrange facilities, task design
LEADERSHIP
Use persuasion
Motivate employees
Shape culture/values
HUMAN RESOURCES
Recruit/select employees
Manage transfers/promotions/training
Direct layoffs/recalls
INFORMATION AND CONTROL SYSTEMS
Revise pay, reward system
Change budget allocations
Implement information systems
Apply rules and procedures
Organization
Environment
Strategy
Performance

25. Implementing Global Strategies
In the international arena, flexibility and superb communication emerge as mandatory leadership skills.
Structural design must merge successfully with foreign cultures as well as link foreign operations to the home country.
Information and control systems must fit the needs and incentives within local cultures.
Recruitment, training, transfer, promotion, and layoff of international human resources create array of problems not confronted from other countries such as labor laws, guaranteed jobs, and cultural traditions of keeping unproductive employees on the job.

26. THE END
Any clarification?
HAVE A NICE DAY!!! 