Strategic Planning
and Strategic Management
MultiMedia by Stephen M. Peters
© 2002 South-Western
Strategic Management
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Top management’s responsibility.
Defines the firm’s position.
Formulates strategies.
Guides the execution of long-term organizational
functions.
• Helps position the organization to achieve a superior
competitive fit.
MultiMedia by Stephen M. Peters
© 2002 South-Western
Strategic Planning Questions
What is the organization’s
position in the marketplace?
What does the organization want
its position to be?
What trends and changes are
occurring in the marketplace?
What are the best alternatives to
help the organization achieve its
goals?
MultiMedia by Stephen M. Peters
© 2002 South-Western
Four Elements of
Strategy Development
1. Scope
3. Distinctive
Competitive
Advantage
MultiMedia by Stephen M. Peters
2. Resource
Deployment
4. Synergy
© 2002 South-Western
Scope of a Strategy Specifies
• The position or size the firm wants to achieve.
• The geographical markets it wants to compete in.
• The products and services it will sell.
MultiMedia by Stephen M. Peters
© 2002 South-Western
Distinctive Competitive Advantage
—Four Points —
1. Unique position in relationship to its competition
2. A firm’s core competencies
3. What the firm knows best
4. What the firm does best
MultiMedia by Stephen M. Peters
© 2002 South-Western
Characteristics of
Successful Strategic Managers
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Well informed
Skill at focusing their time and energy
Good at building consensus
Good at creating contingency plans
Accomplished at simplifying the process
MultiMedia by Stephen M. Peters
© 2002 South-Western
Strategy Formulation
Planning and decision making that goes into developing
the company’s strategic goals.
Includes:
– Assessing the environments.
– Analyzing core competencies.
– Creating goals and plans.
MultiMedia by Stephen M. Peters
© 2002 South-Western
Strategy Implementation:
Executing the Strategic Plan Includes
Creating Teams
Adapting New Technologies
Focusing on Processes
Rather than Functions
Facilitating Communications
Offering Incentives
Making Structural Changes
MultiMedia by Stephen M. Peters
© 2002 South-Western
The Purpose of Corporate-Level
Strategy to Answer
1. What business are we in?
2. What business should we be in?
MultiMedia by Stephen M. Peters
© 2002 South-Western
Business-Level Strategy Questions
1. How do we compete?
2. How much will be spent on activities
such as advertising and R & D?
3. What equipment and facilities will
be needed?
4. Should we expand or contract
existing product lines?
MultiMedia by Stephen M. Peters
© 2002 South-Western
Functional-Level Strategy
Major Activities
Human Resource Management
Research and Development
Marketing
Finance
Production
MultiMedia by Stephen M. Peters
© 2002 South-Western
Strategic Planners Should Consider
The Following
 Management Factors
 Marketing Factors
 Production Factors
 Research Factors
 Human Resource Factors
 Financial Factors
MultiMedia by Stephen M. Peters
© 2002 South-Western
SWOT Analysis Chart
MultiMedia by Stephen M. Peters
© 2002 South-Western
SWOT Analysis Chart
MultiMedia by Stephen M. Peters
© 2002 South-Western
External Threats and
Opportunities Factors
The threat or opportunity:
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of new competitors entering the marketplace.
of substitute products.
resulting from entering new marketplaces.
created by strategy changes of major competitors.
resulting from the potential actions and profitability of customers.
created by the actions of suppliers.
resulting from new (or abandoned) government regulations.
created by new technology.
from changes in the state of the economy.
MultiMedia by Stephen M. Peters
© 2002 South-Western
Craig Weatherup’s
Three Leadership Criteria
• Idea leadership “the ability to find, create, borrow,
steal, or reshape ideas, especially big ideas.”
• People leaders “to mobilize the troops and energize
the organization.”
• Capability leadership refers to “a manager’s ability
to build and institutionalize the capabilities of
people.”
MultiMedia by Stephen M. Peters
© 2002 South-Western
Five Basic Grand Strategies
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2.
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Growth Strategy – is adopted when the organization wants to
create high levels of growth in one or more of its areas of
operations.
Integration Strategy – is adopted with the business sees a need
• to subsidize its supply lines or reduce costs.
• to consolidate competition.
Diversification Strategy – the company wants to move into new
products or markets.
Retrenchment Strategy – used to reduce the size or scope of a
firm’s activities by cutting back or eliminating entire businesses.
Stability Strategy – the organization wants to remain the same.
MultiMedia by Stephen M. Peters
© 2002 South-Western
Integration Strategies
• Vertical Integration
– Gaining ownership of resources, suppliers, or
distribution systems that relate to a company’s
business.
• Horizontal Integration
– A strategy to consolidate competition by
acquiring similar products or services.
MultiMedia by Stephen M. Peters
© 2002 South-Western
Portfolio Strategy
Determines the mix of business units and product lines.
Begins by identifying strategic business units (SBUs).
MultiMedia by Stephen M. Peters
© 2002 South-Western
SBUs
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Autonomous businesses with their own identities.
Operate within the framework of the organization.
Originated at General Electric in the 1970s.
Have their own product lines, markets, and
competitors.
MultiMedia by Stephen M. Peters
© 2002 South-Western
A BCG Matrix
MultiMedia by Stephen M. Peters
© 2002 South-Western
Business-Level Strategy
 Strategy managers formulate for each SBU.
 Strategies that can be grouped as either adaptive
strategies or competitive strategies.
MultiMedia by Stephen M. Peters
© 2002 South-Western
The Four Adaptive Strategies
MultiMedia by Stephen M. Peters
1.
Prospector
2.
Defender
3.
Analyzer
4.
Reactor
© 2002 South-Western
Marketing Strategy Involves
Pricing
Promotion
Distribution
Product or service mix of the
organization
MultiMedia by Stephen M. Peters
© 2002 South-Western