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
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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
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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
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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
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6. 8.1 Levels of Strategy
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7. Levels of Stratey
Corporate Level Strategy-relating to orgz as a whole & combination of business units and product lines that make up the company –What Buss. Are We in?
Business Level Strategy-strategic decisions involving each business unit – How Do We Compete?
Functional Level Strategy-functional dpmt within business unit-How do We Support Buss Level Strategy?
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8. 8.2 The Strategic Management Process
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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
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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
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11. 8.3 SWOT: Audit Checklist
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12. Formulating Corporate-Level Strategy: Portfolio Strategy
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
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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
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14. 8.4 The BCG Matrix
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15. 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
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16. Formulating Business-Level Strategy
Strategy within the business units: How do we compete?
Business-level strategies are developed by Porter’s Five Forces
But, web technology is impacting all industries in positive and negative ways
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17. 8.5 Porter’s Five Forces
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18. Porters Five Forces
Potential new entrants-capital requirements, economics of scale
Buyers Bargaining power –information
Suppliers Bargaining Power-availability of substitute suppliers
Threat of Substitute products- changes in trends
Competitors Rivalry-influenced by all four &cost & differentiation e.g. Nintendo vs Sony, Coke vs Pepsi etc?
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19. Porters Competitive Strategies
Differentiation- distinguish firms product/services e.g product features, advertising, service examples?
Cost Leadership-seeks efficient facilities, cost reductions, tight cost controls examples?
Focus-concentrate on specific market/buyer. Will use diff or cost leadership
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20. 8.6 Porter’s Competitive Strategies
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21. Formulating Functional-Level Strategy
Action plans used by major departments
Marketing
Production
Finance
Human Resources
Research and Development
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22. New Trends in Strategy
Strategic Flexibility – managers must be prepared to change and adjust strategy quickly
Strategic Partnerships – collaboration with other organizations is important
Global Strategy – organizations pursue a distinctive focus for global business
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23. 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
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