1. STRATEGIC CHANGE: IMPLEMENTING STRATEGIES TO BUILD AND DEVELOP A COMPANY to Build and Develop a Company

2. Strategic Change
The movement of a company away from its present state toward some desired future state to increase its competitive advantage and profitability

3. The Change Process Distinct steps of the change process:
Determining the need for change
Determining the obstacles to change
Managing and evaluating change

4. Figure 8.1: Stages in the Change Process

5. Another Illustration of the Change Process

6. Portfolio of Core Competencies
A core competence is a core skill of a company
Identifying these central value-creating capabilities tells a company which business opportunity to pursue

7. Figure 8.2: Establishing a Competency Agenda

8. Strategy Implementation
Strategies implemented through:
Internal new ventures
Acquisitions
Strategic alliances

9. “Successful organizations understand the importance of implementation, not just strategy, and, moreover, recognize the crucial role of their people in the process.”
- Jeffrey Pfeffer
© RoyaltyFree/ Stockdisc/ Getty Images

10. Strategic Change: Implementing Strategies to Build and Develop a Company
Risk

11. Internal New Ventures
Involve creating the value-chain functions necessary to start a new business from scratch
Typically used to leverage or recombine valuable competencies to enter a new business area
Generally science-based companies tend to favor internal new ventures as a strategy implementation

12. Internal New Ventures (cont’d)
Although these can be profitable, the reported failure rate is very high
Three reasons for failure:
Market entry occurs on too small a scale
Poor commercialization of the new product
Poor corporate management of the venture

13. Internal New Ventures (cont’d)
Ways to limit risk:
Adopt a structured approach to managing the venture
Foster close links between R&D and marketing
Set up project teams
Choose ventures with greatest probability of commercial success
Monitor projects closely

14. Figure 8.3: Scale of Entry and Profitability

15. Acquisitions Involve one company purchasing another company
Usually done by a company that:
wants to move fast
is in a well established industry and has barriers of entry
Used in two ways:
To strengthen competitive positioning by purchasing a competitor
To enter a new business or industry

16. Acquisitions (cont’d)
Advantages
Faster than building a new business
Less risk than internal new ventures
Ability to circumvent most entry barriers
Disadvantages
Often end up dissipating value
Often fail to realize anticipated benefits
Tend to be expensive
Difficult to integrate various corporate cultures

17. Acquisitions (cont’d)
Ways to limit risk:
Target identification and pre-acquisition screening
Bidding strategy (this works best when the stock market undervalues a company)
Integration

19. Figure 8.4: Structuring Alliances to Reduce Opportunism

20. Strategic Alliances
Cooperative agreements between companies to work together and share resources to achieve a common goal
Can be informal or short-term agreements
Can be joint ventures- a formal type of strategic alliance where two companies create a new separate company

21. Strategic Alliances (cont’d)
Advantages
Facilitate entry into a market
Share the fixed costs and risks that arise
Bring together complementary skills and assets
Disadvantages
May provide competitors with access to valuable knowledge

22. Strategic Alliances (cont’d)
Ways to limit risk:
Careful partner selection
Alliance structure
Alliance management