1. Strategy Formulation and Execution
Chapter 8
Strategy Formulation and Execution

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

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

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

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
Achieve Synergy
Create Value
Target Customers

6. 8.1 The Elements of Competitive Advantage

7. 8.2 Three Levels of Strategy in Organizations

8. 8.3 The Strategic Management Process

9. 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

10. 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

11. 8.4 Audit Checklist for Analyzing Organizational Strengths and Weaknesses

12. Formulating Corporate-Level Strategy: Portfolio Strategy
Strategic Business Units (SBUs) have a unique mission, products, and competitors
Portfolio strategy pertains to the mix of SBUs and product lines to provide synergy and competitive advantage
Organizations should not become too dependent on one business

13. Formulating Corporate-Level Strategy: The BCG Matrix
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

14. 8.5 The BCG Matrix

15. Formulating Corporate-Level Strategy: Diversification Strategy
Related diversification: expansion into new business related to existing business activities
Unrelated diversification: expansion into new lines of business
Vertical integration: expansion into businesses that supply to the business or are distributors

16. Formulating Business-Level Strategy
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

17. 8.5 Porter’s Five Forces

18. Porter’s Competitive Strategies
Differentiation
Distinguishing products and services
Cost Leadership
Cost reductions, cost controls
Focus Strategy
Concentration on a specific region or buyer
Either differentiation or cost leadership approach

19. 8.7 Characteristics of Porter’s Competitive Strategies

20. Formulating Functional-Level Strategy
Action plans used by major departments
Marketing
Production
Finance
Human Resources
Research and Development

21. 8.8 Global Corporate Strategies

22. Strategy Execution 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

23. 8.9 Factors that Contribute to the Failure of Strategy Execution

24. 8.10 Tools for Putting Strategy into Action