Management, 6e
Schermerhorn
Prepared by
Cheryl Wyrick
California State Polytechnic University Pomona
John Wiley & Sons, Inc
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Chapter 8
Strategic Management and Entrepreneurship
 Planning Ahead
–
–
–
–
What is strategic management?
What types of strategies are used by organizations?
How are strategies formulated?
What are the issues in strategy implementation and
control?
– What is entrepreneurship?
Schermerhorn - Chapter 8
3
Strategy and Strategic
Management
 Strategy and Competitive Advantage
– Strategy is an action focus that links an
organization to its environment
Schermerhorn - Chapter 8
4
Strategy and Strategic
Management
 Strategy and Competitive Advantage
– Types of Organizational Environments
• monopoly
• oligopoly
• hypercompetition
Schermerhorn - Chapter 8
5
Strategy and Strategic
Management
 The Strategic Management Process
– the process of formulating and implementing
strategies to advance an organization’s mission
and objectives and secure competitive
advantage
Schermerhorn - Chapter 8
6
Strategy and Strategic
Management
 The Strategic Management Process
– Strategy formulation (Drucker)
•
•
•
•
•
What is our business mission?
Who are our customers?
What do our customers consider value?
What have been our results?
What is our plan?
Schermerhorn - Chapter 8
7
Strategy and Strategic
Management
 The Strategic Management Process
– Strategy implementation
• putting plans into action
Schermerhorn - Chapter 8
8
Strategy and Strategic
Management
 Analysis of Mission, Values, and Objectives
– Mission statement
• domain
– customers
– products and/or services
– location
• philosophy
Schermerhorn - Chapter 8
9
•Strategy and Strategic
Management
 Analysis of Mission, Values, and Objectives
– Strategic constituencies analysis
• assessment of how well the organization serves
stakeholders
Schermerhorn - Chapter 8
10
•Strategy and Strategic
Management
 Analysis of Mission, Values, and Objectives
– Core values
• broad beliefs about what is/is not appropriate
– Objectives
• direct activities toward key and specific results
Schermerhorn - Chapter 8
11
•Strategy and Strategic
Management
 Analysis of Organizational Resources and
Capabilities
– SWOT analysis
• Organizational
– Strengths
– Weaknesses
• Environmental
– Opportunities
– Threats
Schermerhorn - Chapter 8
12
•Strategy and Strategic
Management
 Analysis of Industry and Environment
– Assessment of actual and future environmental
conditions
• macro environment
• industry environment
Schermerhorn - Chapter 8
13
Strategies Used by Organizations
 Levels of Strategy
– corporate
– business
– functional
Schermerhorn - Chapter 8
14
Strategies Used by Organizations
 Types of Strategies
– growth
• concentration
• diversification
Schermerhorn - Chapter 8
15
Strategies Used by Organizations
 Types of Strategies
– retrenchment (defensive)
• turnaround
• divestiture
• liquidation
Schermerhorn - Chapter 8
16
Strategies Used by Organizations
 Types of Strategies
– stability
– combination
• used by large and complex organizations
Schermerhorn - Chapter 8
17
Strategy Formulation
 Opportunities for Competitive Advantage
– Cost and quality
– Knowledge and timing
– Barriers to entry
– Financial resources
Schermerhorn - Chapter 8
18
Strategy Formulation
 Portfolio Planning
– investing scarce
organizational resources
among competing
business opportunities
Schermerhorn - Chapter 8
19
Strategy Formulation
 Boston Consulting Group (BCG) Matrix
– ties strategy formulation to analysis of business
opportunities according to market growth rate
and market share
•
•
•
•
stars
cash cows
question marks
dogs
Schermerhorn - Chapter 8
20
Strategy Formulation
 Porter’s Competitive Strategies Model
– new competitors
– bargaining power of suppliers
– bargaining power of customers
– threats of substitute products and services
– competition between existing companies
Schermerhorn - Chapter 8
21
Strategy Formulation
 Porter’s Competitive Strategies Model
– Strategies to Gain Competitive Advantage
• differientiation
• cost leadership
• focus
Schermerhorn - Chapter 8
22
Strategy Formulation
 Adaptive Strategies
– Choose strategy consistent with external
environment
•
•
•
•
prospector
defender
analyzer
reactor
Schermerhorn - Chapter 8
23
Strategy Formulation
 Product Life Cycles
– Stages
•
•
•
•
introduction
growth
maturity
decline
Schermerhorn - Chapter 8
24
Strategy Formulation
 Emergent Strategies
– develop progressively over time
 Logical incrementalism
– strategies that develop as modest adjustments to
past patterns
Schermerhorn - Chapter 8
25
Strategy Implementation
 Strategic Management Failures
– Substance
• inadequate attention to major strategic planning
elements
– Process
• poor handling of strategy implementation
Schermerhorn - Chapter 8
26
Strategy Implementation
 Leadership and Top Management Teams
– effective strategy implementation depends on
all managers
 Corporate Governance
– boards of directors
• inside
• outside
Schermerhorn - Chapter 8
27
Strategy and Entrepreneurship
 Who are the
Entrepreneurs?
– Risk-taking
individuals who
pursue
opportunities that
others do not see
Schermerhorn - Chapter 8
28
Strategy and Entrepreneurship
Typical Characteristics of
Entrepreneurs
• internal locus of control
• high energy level
• high need for achievement
• tolerance for ambiguity
• self-confidence
• action oriented
Schermerhorn - Chapter 8
29
Strategy and Entrepreneurship
Entrepreneurship and Small Business
– Small business
• fewer than 500 employees
• most common type of business in the U.S.
• high failure rate
Schermerhorn - Chapter 8
30
Strategy and Entrepreneurship
Small Business Development
– Small Business Administration (SBA)
• Small Business Development Centers
– offer guidance on how to run a business
successfully
Schermerhorn - Chapter 8
31
Strategy and Entrepreneurship
Entrepreneurship and Large
Enterprises
– intrapreneurship
• entrepreneurial behavior within large
organizations
– skunk works
• groups of employees who work in a creative
setting
Schermerhorn - Chapter 8
32