1. Core Concepts of Management Schermerhorn
Prepared by
Cheryl Wyrick
California State Polytechnic University Pomona
John Wiley & Sons, Inc
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2. Schermerhorn - Chapter 6
COPYRIGHT
Copyright 2003 © John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the 1976 United States Copyright Act without the express written consent of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her owner use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, cause by the use of these programs or from the use of the information contained herein.
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3. Chapter 6 Strategic Management and Entrepreneurship
Planning Ahead
What is strategic management?
How are strategies formulated?
How are strategies implemented?
What is entrepreneurship?
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4. Strategy and Competitive Advantage
an action focus that links an organization to its environment
comprehensive plan that sets direction and guides allocation of resources to achieve long term objectives
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5. Strategy and Competitive Advantage
The Strategic Management Process
the process of formulating and implementing strategies to advance an organization’s mission and objectives and secure competitive advantage
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6. Strategy and Competitive Advantage
The Strategic Management Process
Strategy formulation (Drucker)
What is our business mission?
Who are our customers?
What do our customers consider value?
What have been our results?
What is our plan?
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7. Strategy and Competitive Advantage
The Strategic Management Process
Strategy implementation
putting plans into action
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8. Strategy and Competitive Advantage
Mission, Values, and Objectives
Mission statement
domain
customers
products and/or services
location
philosophy
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9. Strategy and Competitive Advantage
Analysis of Mission, Values, and Objectives
Strategic constituencies analysis
assessment of how well the organization serves stakeholders
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10. Strategy and Competitive Advantage
Analysis of Mission, Values, and Objectives
Core values
broad beliefs about what is/is not appropriate
Corporate Culture
predominant values for organization as a whole
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11. Strategy and Competitive Advantage
Operating Objectives
direct activities toward key and specific results
examples include
profitability
market share
human talent
financial health
cost efficiency
product quality
innovation
social responsibility
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12. Strategy and Competitive Advantage
SWOT analysis
Assessing organizational Strengths and Weaknesses within SWOT analysis
Identifying core competencies
Technology
Human resources
Manufacturing approaches
Management talent
Financial Strength
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13. Strategy and Competitive Advantage
Analysis of industry and environment
Assessing Opportunities and Threats within SWOT analysis
Assessment of actual and future environmental conditions
Macro environment
Industry environment
Unattractive industry
Attractive industry
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14. Levels and Types of Strategies
Levels of Strategy
Corporate strategy—directs the organization as a whole toward sustainable competitive advantage.
Business strategy—sets the strategic direction for a single business unit or product line.
Functional strategy—guides the use of resources to implement business strategy, focusing on activities within a specific area of operations.
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15. Levels and Types of Strategies
Growth and diversification strategies
Growth strategies—seek an increase in size and the expansion of current operations.
Concentration strategies—growth occurs through expansion in the same business area.
Diversification strategies—growth occurs through acquisition of or investment in new and/or different business areas.
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16. Levels and Types of Strategies
Retrenchment strategies
Reduce the scale of operations in order to gain efficiency and improve performance
Turnaround – “downsizing” to reduce costs and “restructuring” to improve efficiency
Divestiture – selling parts of the organization to improve efficiency.
Liquidation – closing operations through complete sale of assets or declaration of bankruptcy.
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17. Levels and Types of Strategies
Stability strategies
Maintain the present course of action without major changes.
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18. Levels and Types of Strategies
Cooperative strategies
Strategic alliances—two or more organizations partner to pursue an area of mutual interest.
Types of strategic alliances:
Outsourcing alliances
Supplier alliances
Distribution alliances
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19. Levels and Types of Strategies
E-business strategies
The strategic use of the Internet to gain competitive advantage
Popular e-business strategies
Business-to-business (B2B) strategies
Business-to-customer (B2C) strategies
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20. Schermerhorn - Chapter 6
Strategy Formulation
Opportunities for Competitive Advantage
Cost and quality
Knowledge and timing
Barriers to entry
Financial resources
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21. Schermerhorn - Chapter 6
Strategy Formulation
Portfolio Planning
investing scarce organizational resources among competing business opportunities
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22. Schermerhorn - Chapter 6
Strategy Formulation
Boston Consulting Group (BCG) Matrix
ties strategy formulation to analysis of business opportunities according to market growth rate and market share
stars
cash cows
question marks
dogs
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23. Schermerhorn - Chapter 6
Strategy Formulation
Porter’s Competitive Strategies Model
new competitors
bargaining power of suppliers
bargaining power of customers
threats of substitute products and services
competition between existing companies
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24. Schermerhorn - Chapter 6
Strategy Formulation
Porter’s Competitive Strategies Model
Strategies to Gain Competitive Advantage
Differentiation strategy
Cost leadership strategy
Focused differentiation strategy
Focused cost leadership strategy
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25. Schermerhorn - Chapter 6
Strategy Formulation
Product Life Cycles
A series of stages that a product or service goes through during the life of its marketability
Stages of the life cycle:
Introduction
Growth
Maturity
Decline
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26. Schermerhorn - Chapter 6
Strategy Formulation
Product life cycle
Introduction and growth stages
Use differentiation and prospector strategies
Maturity stage
Use focus and/or cost leadership strategies
Decline stage
Use defender or analyzer strategies
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27. Schermerhorn - Chapter 6
Strategy Formulation
Emergent Strategies
develop progressively over time
Logical incrementalism
strategies that develop as modest adjustments to past patterns
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28. Strategy Implementation
Management Practices and Systems
Strategic management failures
inadequate attention to major strategic planning elements
poor handling of strategy implementation
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29. Strategy Implementation
Leadership and Top Management Teams
effective strategy implementation depends on all managers
Corporate Governance
boards of directors
inside
outside
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30. Strategy and Entrepreneurship
Who are the Entrepreneurs?
Risk-taking individuals who pursue opportunities that others do not see
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31. Strategy and Entrepreneurship
Typical Characteristics of Entrepreneurs
internal focus of control
high energy level
high need for achievement
tolerance for ambiguity
self-confidence
action oriented
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32. Strategy and Entrepreneurship
Entrepreneurship and Small Business
Small business
fewer than 500 employees
most common type of business in the U.S.
high failure rate
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33. Strategy and Entrepreneurship
Small Business Development
Small Business Administration (SBA)
Small Business Development Centers
offer guidance on how to run a business successfully
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34. Strategy and Entrepreneurship
Entrepreneurship and Large Enterprises
intrapreneurship
entrepreneurial behavior within large organizations
skunk works
groups of employees work in a creative setting
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