1. Strategy Formulation and Implementation
Chapter 8
Strategy Formulation and Implementation

2. Strategy 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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

3. Thinking Strategically
The long-term view of the organization and competition
Thinking strategically impacts performance and financial success
Today’s environment requires everyone to think strategically
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

4. Strategic Management
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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

5. Purpose of Strategy 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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

6. 8.1 Levels of Strategy
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

7. 8.2 The Strategic Management Process
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

8. Strategy Formulation versus Execution
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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

9. SWOT Analysis
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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

10. 8.3 SWOT: Audit Checklist
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

11. Formulating Corporate-Level Strategy: Portfolio Strategy
Combination of buss. that makes the company
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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

12. Formulating Corporate-Level Strategy: Diversification Strategy
Moving into new lines of business
Expand into new valuable products and services
Related Diversification
Expand into new business related to existing buss.
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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

13. Formulating Business-Level Strategy
Strategy within the business units: How do we compete?
Amount of advertising, R&D, launch new product etc
Business-level strategies are developed by Porter’s Five Forces
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

14. 8.6 Porter’s Competitive Strategies
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

15. Formulating Functional-Level Strategy
Action plans used by major departments
Marketing
Production
Finance
Human Resources
Research and Development
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.