Chapter # 5
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REFERENCE

CHAPTER 5 : Engineering Management by Fraidoon
Mazda
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Owners/
Stockholders
World of Manager
Suppliers
Managers
Customers
Employees
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Strategy
is a common vision
that unites an organization, provides
consistency in decisions, and keeps
the organization moving in the right
direction
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Strategy
•
•
•
•
Action plan to achieve mission
Shows how mission will be achieved
Company has a business strategy
Functional areas have strategies
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Strategy
 Concept
of strategy - different
meanings to different people.
 “A strategy is a pattern or plan that
integrates an organization’s major
goals, policies, & action sequences
into a cohesive whole”
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How It Works
Company
Mission
Business
Strategy
Functional Area
Strategies
Marketing
Operations
Fin./Acct.
Decisions
Decisions
Decisions
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Strategy Formulation
Managers analyze current situation to
develop strategies achieving mission.
 SWOT analysis: a planning to identify:


Organizational Strengths and Weaknesses.
○
○

Environmental Opportunities and Threats.
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Strengths: manufacturing ability, marketing
skills.
Weaknesses: high labor turnover, weak
financials.
Opportunities: new markets.
Threats: economic recession, competitors
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Planning & Strategy Formulation
Corporate-level strategy
develop a plan of action
maximizing long-run value
SWOT analysis
identifies strengths &
weaknesses inside the
firm and opportunities
& threats in the
environment.
Business-level strategy
a plan of action to take
advantage of opportunities
and minimize threats
Functional-level strategy
a plan of action improving
department’s ability to
create value
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Strategy Formulation

Define the primary task

Assess core competencies

Determine order winners & order
qualifiers

Position the firm
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Activities that Lead to Core Competencies
Shared problem solving
Importing
knowledge
Core
competencies
Rapid Integration
of new technologies
& methodologies
Experimentation
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Activities that Reinforce Core Rigidities
Limited problem solving
Screened
knowledge
Core
rigidities
Inability
to innovate
Biased experimentation
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What’s the most difficult part
about strategy?
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
Focuses employees on common goals &
priorities

Translates strategy into measurable
objectives

Aligns day-to-day decisions with the
strategic plan
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Organization Life Cycle
Reflects changes take place in industry over
time.
 Birth stage: firms seek to develop a winning
technology.


VHS vs. Betamax in video, or 8-track vs. cassette
in audio.
Expansion stage: Product gains customer
acceptance & grows rapidly.
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New firms enter industry, production improves,
distributors emerge.
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
Diversification stage:
 Competitor rivalry increases, prices fall.


Grow in other related areas
Decline and Renewal stage: falling
demand for product.
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Prices fall, weaker firms leave industry.
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Assignment #
Write down the lessons from Beer Game
 Length of assignment should be no
more than 3 pages
 Submission Date: 22 Dec. 2014

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