Ch07 Strategic Management Planning for Long Term Success
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Transcript of Ch07 Strategic Management Planning for Long Term Success
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Chapter 7
Strategic Management:
Planning for Long-Term
Success
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Chapter Outline
Strategic Management = Strategic
Planning + Implementation + Control
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Chapter Outline(continued)
Thinking Strategically
Synergy
Porter’s Generic Competitive Strategies
Business Ecosystems: A New Strategic
Perspective Strategy.com
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Chapter Outline(continued)
The Strategic Management Process
Formulation of a Grand Strategy
Formulation of Strategic Plans
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Chapter Outline(continued)
Strategic Implementation and Control
Implementation of Strategic Plans
Strategic Control
Corrective Action Based on Evaluation and
Feedback
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Chapter Outline(continued)
Forecasting
Types of Forecasts
Forecasting Techniques
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DIFFERENT STRATEGY-MAKING
MODESTable 7.2
Traditional Modes:
Command (Commanders and Soldiers)
Symbolic (Coaches and Players)
Rational (Bosses and Subordinates)
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DIFFERENT STRATEGY-MAKING
MODES(continued)
Modern Modes: Transactive (Facilitators and Participants)
Generative (Sponsors and Entrepreneurs)
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STRATEGIC MANAGEMENT = STRATEGIC
PLANNING + IMPLEMENTATION + CONTROL
Strategic management: the ongoing process of
ensuring a competitively superior fit between an
organization and its changing environment.
Strategy: “the pattern of decisions a firm makes.”
“The strategic management perspective is the
product of a historical evolution and is nowunderstood to include budget control, long-range
planning, and strategic planning.”
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SYNERGY
(Thinking Strategically)
Synergy: occurs when two or more variables
(for example, chemicals, drugs, people,organizations) interact to produce an effect
greater than the sum of the effects of the
variables acting independently.
The 1 + 1 = 3 effect
The whole is greater than the sum of its
parts
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SYNERGY
(Thinking Strategically)(continued)
Four Kinds of Synergy:
Market synergy
Cost synergy
Technological synergy
Management synergy
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SYNERGY
(Thinking Strategically)(continued)
Individual Exercise: What kinds of synergy
have you achieved in your personal affairs?
Team Exercise: How many examples of
synergy in the business world can you identifyin five minutes?
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Source: Reprinted with permission of The Free Press, a Division of Simon & Schuster, Inc. from The Competitive
Advantage of Nations by Michael E. Porter. Copyright © 1990, 1998 by Michael E. Porter.
Figure 7.1 Porter’s Generic
Competitive Strategies
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PORTER’S GENERIC COMPETITIVE
STRATEGIES(Thinking Strategically)
(continued)
Cost Leadership Strategy Competitive scope: Broad target
Competitive advantage: Lower cost
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PORTER’S GENERIC COMPETITIVE
STRATEGIES(Thinking Strategically)
(continued)
Differentiation Strategy
Competitive scope: Broad target
Competitive advantage: Differentiation
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PORTER’S GENERIC COMPETITIVE
STRATEGIES(Thinking Strategically)
(continued)
Cost Focus Strategy Competitive scope: Narrow target
Competitive advantage: Lower cost
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PORTER’S GENERIC COMPETITIVE
STRATEGIES(Thinking Strategically)
(continued)
Focused Differentiation Strategy
Competitive scope: Narrow target
Competitive advantage: Differentiation
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BUSINESS ECOSYSTEMS
(Thinking Strategically)
Business ecosystem: an economic community
of organizations and all their stakeholders,including suppliers and customers.
Key theme: “Organizations need to be as good at
cooperating as they are at competing if they are tosucceed.”
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BUSINESS ECOSYSTEMS
(Thinking Strategically)(continued)
James F. Moore: “the major factor today
limiting the spread of realized innovation isnot a lack of good ideas, technology, or
capital. It is the inability to command
cooperation across broad, diverse
communities of players who must becomeintimate parts of a far-reaching process of
coevolution.”
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BUSINESS ECOSYSTEMS
(Thinking Strategically)(continued)
Individual or Team Exercise: Pick awell-known organization and identify
members of its ecosystem. What
organization is dominant in thatecosystem?
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STRATEGY.COM
(Thinking Strategically)
E-Commerce Strategy Lessons:
Different types and combinations of revenue
sources will require different business models. Loyal customers still expect a personal touch
and some “hand holding” when they have
questions, problems, or suggestions.
Identify core competencies to decide which
bricks-and-mortar facilities earn their keep.
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STRATEGY.COM
(Thinking Strategically)(continued)
E-Commerce Strategy Lessons:
E-commerce sometimes requires a quick
revolution, rather than slow evolution. (Start witha blank sheet of paper. Cannibalism may pay.)
E-commerce customers increasingly want high
ethical standards throughout the supply chain.
“Only the paranoid survive.” (Everyone is a
potential competitor in e-commerce.
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Figure 7.2 The Strategic Management
Process
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CONDUCTING A SWOT ANALYSIS
(A Team Exercise)(continued)
Organization:_____________________
Organization
Strengths Weaknesses
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CONDUCTING A SWOT ANALYSIS
(A Team Exercise)
(continued)
Environment
Opportunities Threats
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Figure 7.3 Determining Strategic
Direction Through Situational (SWOT)
Analysis
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FORECASTING
Forecasts: predictions, projections, or
estimates of future events or conditionsin the environment in which the
organization operates.
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FORECASTING(continued)
Types of Forecasts
Event outcome forecasts: used when
strategists want to predict the outcome of highly probable future events.
Event timing forecasts: predict when, if
ever, given events will occur.
Time series forecasts: seek to estimate
future values in a sequence of periodically
recorded statistics.
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FORECASTING(continued)
Forecasting Techniques
Informed judgment
Scenario analysis (Longitudinal and
cross-sectional scenarios)
Surveys
Trend analysis