STRATEGY MANAGEMENT IN

ACTION:CHAPTER 5

Brandon, Gerald, Ryan, Courtney, Brett, William, Kara, Scott

Toyota Started out terribly in the automotive

market Began to use lean manufacturing like just

in time production Jikoda- automation with a human touch Educational schools that specifically

teach Toyota maintenance Successful modern achievements- first

commercial hybrid, custom cars in 5 days

Strategic Management in Action: Process Overall corporate direction and goals set

by organization’s top managers Functional strategies are developed by

taking into account the company’s vision, mission, and strategies

At an organization’s founding overall strategy, goals, and functional strategies must be established

All this helps complete the “puzzle”

What Happens After SWOT? After the SWOT analysis you now have

Information on positive and negative aspects of internal and external environments

Company will be on the right track if Organization´s strengths in functional units can be exploited as

competitive advantages, with regards to external opportunities. Changes in funtional strategies might need to be changed if

Swot analysis points to threats in external environment or weaknesses in internal areas.

Important reasons to analyze functional strategies Strategists base their decisions on the resources, capabilities,

and core competencies found in the functional areas.

Functional Strategies Sets up the framework for which

companies efficiently and effectively use their resources in conducting business.

Three Functional Concerns

Product People Support Processes

PRODUCT Product Design and Development Strategies

Focused on Functions in R&D: ○ when?? (first-mover) or follow and mimic

innovations of other companies

○ Who will design and innovate this new product?

○ How? How will we generate ideas? How much research will be needed? Testing? Prototype use?

PRODUCT Production Operation Strategies

How will we create and provide our product or service? How will they be produced? And Where will we produce them?

There are many strategies, but all have same goal make sure products are available when, where, and how needed by customers or clients

Areas include strategy in capacity, layout, location, and supply-chain, quality, inventory, planning, scheduling, maintenance, etc.

PRODUCT Marketing Strategies

Manage Customers and Competitors, by strategic management of segmenting, target-markets, differentiation, positioning and marketing mix.

4 P’s – Product, Pricing, Promotion, and PlaceOther potential strategies include connecting

with customers, information gathering, building strong brands.

Efficiently and Effectively managing marketing function.

Functional Strategies- The PeopleAn organization’s people and their HR

strategies can help it establish a sustainable competitive advantage.

High performance work practices- Self-directed work teams- Job rotation - Problem-solving groups- Attitude surveys

These practices can… Improve the

knowledge, skills, and abilities of current and potential employees

Increase motivation Help retain quality

employees Encourage non-

performers to leave

Maintain balance between valuing employees and controlling costs

The most common form of controlling costs-Restricting company travel -Hiring freezes -Downgrading holiday parties -Layoffs

To Layoff or Not to Layoff Layoffs

Payroll is one of 1st place a company uses to cut expenses50 companies cut over 200,000 jobsEmployee moral and productivity often decline

“No layoff” policies4 day work-weeks -Unpaid vacationWage freezes -No bonuses paid

HR Strategies reflect the commitment to and treatment of employees Ensuring that the right people with the right

skills are in the right place at the right time Getting people into the organization through

planning and recruiting Training employees so that they posses the

right skills to perform the job Assessing performance through reviews Motivating employees to possess a high level

of effort through compensation and benefits

Functional Strategies-Support Process Companies need information about the

activities taking place in order to acquire and transform resources into products.

Information is collected through the company’s two main support processes: Information Systems Financial-accounting Systems

Like other functional areas, these support processes are a link to creating a sustainable competitive advantage.

Information Systems Information system – a system for

collecting, processing, storing, and disseminating any and all information that managers need to operate a business.

Two strategic decisions most associated with the organizations information systems are: Choice of system technology Choice of types of information systems needed

Decision will depend on how important information is to the organization.

Harrah’s Entertainment Harrah’s researched customer satisfaction in

regards to the service the company provided.

1) Customers who were satisfied with the service they received increased their

gaming expenditures by 10 percent.

2) Customers who were extremely satisfied with the service they received increased their gaming expenditures by 24 percent .

Harrah’s was able to discover this information because of its incredibly sophisticated information system.

All employees were made aware of this information, so they understood their valuable role in providing excellent customer service.

Financial-Accounting Systems Financial accounting systems provide strategic

decision makers with information about the organization’s financial transactions, accounts, and standing.

In designing the financial-accounting systems, a company must make sure they have: The information they need, when they need it, and in the

form needed. Strategic decisions in this functional area would

include: Evaluating financial performance Financial forecasting and budgeting Determining the optimal financing mix

Learning Outcome 5.3Discuss How Functional Strategies Are Implemented and Evaluated

1) Implementing the Various Functional Strategies

2) Evaluating Strategies and Making Changes

3) Coordinating with Other Organizational Strategies

Implementing the Various Functional Strategies

3 Steps:1) Decide what work process and

work activities will need to be done.

2) Make sure these processes and activities have the right resources.

3) DO IT! Key resources and

capabilities might not be exploited.

Strategies can impact each other in a negative way.

*Each functional area has its own specific responsibilities in contributing to the overall organizational goals. BUT, they must coordinate with each other! OR…

Evaluating Strategies The actual performance is evaluated in

comparison to the strategic goals

Strategic goals are implemented within each area of the organization

Strategy evaluation looks at what was supposed to be done versus what was done

Making Changes Change is necessary when the strategy

is vital to accomplishing the goals of the company

If change is necessary we go back to the first steps: Analyze the situationForm appropriate strategies Implement strategies Reevaluate and change again if necessary

Coordinating with Other Organizational Strategies Coordination is crucial to the

development of sustainable competitive advantages

Strategic decisions influence and are influenced by strategies that are put into practice within the company

An organization is a system with interdependent elements, which is evident in strategic coordination

SUMMARY OF FUNCTIONAL STRATEGIES

How Functional Strategies are part of the Strategic Management Process

The functional strategies an organization needsHow functional strategies are implemented and

evaluated

How Functional Strategies are part of the Strategic Management Process

What happens after the SWOT analysis?

○ Positive and negative aspects○ Points to strategic issues

The functional strategies an organization needs

Functional Strategies--The Product

Different Strategies-Product Design and Development Strategies Production-Operations StrategiesMarketing Strategies

How functional strategies are implemented and evaluated

Implementing the Various Functional Strategies

Evaluating Strategies and Making Changes

Coordinating with Other Organizational Strategies