STRATEGIC MANAGEMENT
The Dynamics of Strategic Planning

Strategy
– large-scale action plan that sets the direction for
an organization

Strategic management
– process that involves managers from all parts of
the organization in the formulation and the
implementation of strategies and strategic goals
What Is an Effective Strategy?
Strategic positioning
 Sustainable competitive advantage by
preserving what is distinctive about a
company
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–
–
–

Being responsive to customers
Innovation
Quality
Effectiveness
The creation of a unique, valuable,
inimitable position
LEVELS OF STRATEGY

Corporate
– What set of businesses should be in?

Business
– How should we compete in business?
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Functional
– What should our strategy be in each functional area?
CORPORATE STRATEGY:
BASIC QUESTIONS

Grand Strategy
– Stability
– Growth
– Retrenchment
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Single Product vs. Diversification
Single-Product versus
Diversification
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Single-product strategy
– company makes and sells only one product
within its market
– Benefit?
– Risk?
Single-Product versus
Diversification

Diversification
– operating several businesses under one
ownership that are not related to one another
– Related, unrelated
– Benefits?
CORPORATE STRATEGY:
TOOLS
Portfolio Matrix
 BCG Matrix

The Product Life Cycle
BCG MATRIX
Market Share
HIGH
HIGH
STARS
LOW
QUESTION
MARKS
??
Growth
LOW
CASH COWS
DOGS
BUSINESS-LEVEL STRATEGY
5 forces
 SWOT
 Generic Strategies
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Entry Barriers
Economies of Scale
Brand Identity
Capital Requirements
Determinants of Supplier Power
Switching Costs
Supplier Volume
Impact
Forward Integration
New
Entrants
Industry
Competitors
Suppliers
Buyers
Intensity
of Rivalry
Determinants of
Substitution Threat
Relative Price
Performance
Switching Costs
Rivalry Determinants
Industry Growth
Fixed Costs
Product Differences
Brand Identity
Exit Barriers
Substitutes
Determinants of Buyer Power
Buyer Concentration
Buyer Volume
Backward Integration
S.W.O.T. ANALYSIS
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S W O T represents the first letter in
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–
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S trengths
W eaknesses
O pportunities
T hreats
S
O
W
T
Strategy-making must be well-matched to both
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A firm’s resource strengths and weaknesses
A firm’s best market opportunities and external threats to its
well-being
4 GENERIC STRATEGIES
Broad
Target
Lower Cost
Differentiation
Cost Leadership
Differentiation
Cost Focus
Differentiation
Focus
Scope
Narrow
Target
The Strategic Management
Process
The Three Core Processes of
Business
People
 Strategy
 Operations
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