1. Schermerhorn - Chapter 6
Chapter 6 1st part of chapter is on Strategic Management 2nd part of chapter is on entrepreneurship
Planning Ahead
What is strategic management?
How are strategies formulated?
How are strategies implemented?
What is entrepreneurship?
Schermerhorn - Chapter 6

2. Strategy and Competitive Advantage
links an organization to its environment
Is a comprehensive plan that sets, directs, and guides our allocation of resources to achieve long term objectives
We would like our strategy to give us a competitive advantage.
Schermerhorn - Chapter 6

3. Schermerhorn - Chapter 6
The Strategic Management Process
the process of collecting information (environmental analysis), and then formulating, implementing and controlling strategies to advance an organization’s mission and objectives and secure competitive advantage
Schermerhorn - Chapter 6

4. Schermerhorn - Chapter 6
The Strategic Management Process
Strategy formulation ( Peter Drucker)
What is our business mission?
What have been our results expected? (Objectives)
What is our new strategic plan?
Who are our customers?
What do our customers value?
Schermerhorn - Chapter 6

5. Strategy and Competitive Advantage
Mission, Values, and Objectives
Mission statement
domain
customers
products and/or services
Location
Stance on employees
Stakeholders
philosophy
To analyze how well we are doing we would like to find out
how well our company serves constituencies.
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6. Our Mission should express our values and guide our culture
Our Mission, Values
Core values
broad beliefs about what is/is not appropriate—help us tell what is appropriate
Corporate Culture
predominant values for organization as a whole
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7. After our Mission we set our Objectives
Set Company 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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8. Schermerhorn - Chapter 6
After Objectives are set , we igure out what Strategies will give us a Competitive Advantage- We can come up with strategies through SWOT and TOWS Analysis.
SWOT analysis
Assessing organizational Strengths and Weaknesses within SWOT analysis
Identifying core competencies
Technology
Human resources
Manufacturing approaches
Management talent
Financial Strength
Schermerhorn - Chapter 6

9. We try to find a 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 (also called specific, competitive environment
Unattractive industry
Attractive industry
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10. 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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11. 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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12. 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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13. Levels and Types of Strategies
Stability strategies
Maintain the present course of action without major cha
Pause and proceed with Caution
Short-run Profit
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14. 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 IGA and Associated Groceries
Distribution alliances Sunkist and Idaho Potatoes
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15. 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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16. Schermerhorn - Chapter 6
Strategy Formulation
Opportunities for Competitive Advantage
Cost and quality
Knowledge and timing
Barriers to entry
Financial resources
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17. Schermerhorn - Chapter 6
Strategy Formulation
Portfolio Planning
investing scarce organizational resources among competing business opportunities
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18. 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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19. Relative Market Share Position in the Industry
The BCG Matrix
Relative Market Share Position in the Industry
High Medium Low
High
Medium 0
Low
Stars (II)
Question Marks (I)
Industry Sales Growth Rate (Percent) ?
Cash Cows (III)
Dogs (IV)

20. General Electric Business Screen
General Electric’s Business Screen -- Position on Graph’s can help you determine strategy. – See next slide.
General Electric Business Screen A
Winners B C
Question
Marks D F
Average
Businesses E
Losers G H
Profit
Producers
Strong
Weak
Low
Medium
High
Business Strength/Competitive Position
Industry Attractiveness
Source: Adapted from Strategic Management in GE, Corporate Planning and Development, General Electric Corporation. Used by permission of General Electric Company.
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21. 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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22. 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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23. 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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24. 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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25. 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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26. Strategy and Competitive Advantage
The Strategic Management Process
Strategy implementation
putting plans into action
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27. 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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28. 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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29. Strategy and Entrepreneurship
Who are the Entrepreneurs?
Risk-taking individuals who pursue opportunities that others do not see
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30. 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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31. 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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32. 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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33. 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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