Strategy Formulation and Implementation 1224176081693703 9

7/30/2019 Strategy Formulation and Implementation 1224176081693703 9

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Thinking Strategicallyu To help managers answer questions such

as:

* Where is the organization now?

* Where does the organization want to be?

* What changes are among competi tors?

* What courses of action wil l help us achieveour goals?

u Answers define an overall direction for

the organization's grand strategy.


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Grand Strategy

General plan of action to achieve long-

term objectives

1. Growth

2. Stability

3. Retrenchment.


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Stability

Remain same size or grow steadily and

in a controlled fashion.


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Retrenchment

Forced decline by either shrinking

current business units or selling off or

liquidating entire businesses.


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Global Strategy

u Globalization: product design and

advertising strategies are standardized

around the world

u Multidomestic: adapt product and

promotion for each country

u Transnational: combine globalcoordination with flexibility to meet

specific needs in various countries.


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Purpose of Strategy

u CORE COMPETENCE: something the

organization does especially well in

comparison to its competitors* Superior research and development

* Mastery of a technology

* Superior customer service.


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Purpose of Strategy

SYNERGY: when organizational parts

interact to produce a joint effect that is

greater than the sum of its parts actingalone.


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Purpose of Strategy

Value Creation = use core competence

and synergy to provide increased

benefits received with lower costs paid.


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Levels of Strategy

u Corporate

u Business

u Functional.


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Corporate-Level Strategy

("What business are we in?")u Acquisition of new businesses

u Additions or divestment of business units,

plants, or product lines

u Joint ventures with other companies in

new areas.


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Business-Level Strategy

("How do we compete?")u Advertising

u Direction and extent of R&D

u Product changes

u New product development

u

Equipment and facilitiesu Expansion or contraction of product

lines.


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Function-Level Strategy

("How do we support

business-level strategy?")

u Production

u Distribution

u Finance.


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Strategy Formulation

u Development of the firm's goals and a

specific strategic plan

u Assessing the external environment and

the internal problems

u Integrating the results into goals and

strategy.


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Strategy Implementation

The accomplishment of the strategic plan.


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The Strategic Management

Process


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Evaluate

Current:Mission

Goals

Strategies

Scan External

Environment

Identify

Strategic

Factors:

OpportunitiesThreats

Identify

Strategic

Factors:

Strengths

Weaknesses

Scan Internal

Environment


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Situation Analysis: SWOT

u Strengths (Internal)

u Weaknesses (Internal)

u Opportunities (External)

u Threats (External)


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Evaluate

Current:Mission

Goals

Strategies

Scan External

Environment

Define New:Mission

Goals

Identify

Strategic

Factors:


Identify

Strategic

Factors:

Strengths

Weaknesses

Scan Internal

Environment

FormulateStrategy:

Corporate


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Formulating Corporate-Level Strategy


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Portfolio Strategy

The organizational mix of SBUs and

product lines to provide synergy and a

competitive advantage.


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The BCG matrix evaluates

SBUs along two

dimensions:

u Business growth rate how rapidly the

entire industry is growingu Market share defines if an SBU has a

larger or smaller market share than

competitorsu Provides four categories to judge SBUs.


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Star

Cash

Cow Dog

Problem

Child

High

High

Low

Low

Business

Growth

Rate

Market Share


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Evaluate

Current:Mission

Goals

Strategies

Scan External

Environment

Define New:Mission

Goals

Identify

Strategic

Factors:


Identify

Strategic

Factors:

Strengths

Weaknesses

Scan Internal

Environment

Formulate

Strategy:Corporate

Business


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Formulating Business-Level

Strategy

Porter ' s Competi tive Forces

Potential New


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Potential New

Entrants

Threat of

new

entrants

Potential New


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Potential New

Entrants

BuyersBargaining

power of

buyers

Threat of

new

entrants

Potential New


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29Suppliers

Potential New

Entrants

Buyers

Bargainingpower of

suppliers

Bargaining

power of

buyers

Threat of

new

entrants

Potential New


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Substitute

Products

from OtherIndustries

Suppliers

Potential New

Entrants

BuyersThreat ofsubstitute

products

Bargainingpower of

suppliers

Bargaining

power of

buyers

Threat of

new

entrants

Potential New


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Substitute

Products

from OtherIndustries

Suppliers

Potential New

Entrants

Buyers

The Firms

Rivalry versus

Industry

Competition

Threat ofsubstitute

products

Bargainingpower of

suppliers

Bargaining

power of

buyers

Threat of

new

entrants


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Porter's Competitive

Strategiesu Differentiation

u Cost Leadership

u Focus.


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Product Life Cycle

1. Introduction

2. Growth

3. Maturity

4. Decline.


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Evaluate

Current:Mission

Goals

Strategies

Scan External

Environment

Define New:Mission

Goals

Identify

Strategic

Factors:


Identify

Strategic

Factors:

Strengths

Weaknesses

Scan Internal

Environment

Formulate

Strategy:Corporate

Business

Functional


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Formulating Functional-

Level StrategyAction plans adopted by major

departments to support thebusiness-level strategy to achieve

the organization's strategic goals.


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Putting Strategy Into Action


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Evaluate

Current:Mission

Goals

Strategies

Scan External

Environment

Define New:Mission

Goals

Identify

Strategic

Factors:


Identify

Strategic

Factors:

Strengths

Weaknesses

Scan Internal

Environment

Formulate

Strategy:Corporate

Business

Functional

Implement

Strategy via

Changes in:Leadership

Culture


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Leadership

The ability to influence employees to

support strategy implementation.


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Structural Design

u Managers' responsibilities and authority

u Consolidation of facilities, departments,

and divisions

u Task design

u Production technology.


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Evaluate

Current:Mission

Goals

Strategies

Scan External

Environment

Define New:Mission

Goals

Identify

Strategic

Factors:


Identify

Strategic

Factors:

Strengths

Weaknesses

Scan Internal

Environment

Formulate

Strategy:Corporate

Business

Functional

Implement

Strategy via

Changes in:

LeadershipCulture

Human

Resources


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Human Resources

u Recruitment

u Selection

u Training

u Transfers

u Promotions

u Layoff or separation.


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Evaluate

Current:Mission

Goals

Strategies

Scan External

Environment

Define New:Mission

Goals

Identify

Strategic

Factors:


Identify

Strategic

Factors:

Strengths

Weaknesses

Scan Internal

Environment

Formulate

Strategy:Corporate

Business

Functional

ImplementStrategy via

Changes in:

Leadership

CultureHuman

Resources

Information

and Control

Systems


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Information and Control

Systemsu Reward systems

u Pay incentives

u Budgets

u Information systems

u Rules, policies, and procedures.

if


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Evaluate

Current:Mission

Goals

Strategies

Scan External

Environment

Define New:Mission

Goals

Identify

Strategic

Factors:


Identify

Strategic

Factors:

Strengths

Weaknesses

Scan Internal

Environment

Formulate

Strategy:Corporate

Business

Functional

ImplementStrategy via

Changes in:

Leadership

CultureHuman

Resources

Information

and Control

Systems


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Implementing Global

Strategiesu Flexibility and communication are

mandatory skills in the international

arenau Structural design must merge with

foreign cultures and link operations

u Information and control systems must fitthe needs and incentives within local

cultures


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Implementing Global

Strategiesu Human resource management face

problems not confronted in North

America such as:u Labor laws

u Guaranteed jobs

u Cultural traditions of keeping

unproductive on the job.

Strategy Formulation and Implementation 1224176081693703 9

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