Knowledge Objectives
1. Define the term strategic management and
explain components of strategy formulation and
implementation
2. Understand synergy and identify examples
3. Describe generic competitive strategies.
4. Explain the nature and purpose of SWOT
analysis.
1
Understanding Strategic
Management
• Strategic view helps frame decision making
for other managers
• Employees who think in strategic terms
understand top management rationales
• Trend is toward greater teamwork and
cooperation throughout the planning cycle
2
Strategic Management = Strategic
Planning + Implementation + Control
• Strategic Management
– Creating a fit between the organization and its
changing environment.
• Includes budget control, long-range planning, and
strategic planning.
• Merges strategic planning, implementation, and
control to create a dynamic process.
3
Strategic Management = Strategic
Planning + Implementation + Control
(cont’d)
• Strategy
– An integrated externally-oriented perception of
how to achieve the organization’s mission.
• Strategic Planning
– The process of determining how to pursue the
organization’s long-term goals with resources
expected to be available.
4
Thinking Strategically
• Synergy
– The whole is greater than the sum of the parts
• Types of synergy
– Market: extending products to new markets.
– Cost: savings from combinations of commonbase operations, resources, and facilities (scope
economies).
– Technological: the transfer and application of
technologies to new markets.
5
The Strategic
Management Process
• Steps in the Strategic Management Process
1.
2.
3.
4.
Formulate overall strategy
Formulate supporting strategic objectives
Make implementation decisions
Establish control systems
6
Porter’s Generic
Competitive Strategies
• Model’s Competitive Variables
– 1. How to compete (cost vs. being unique)
– 2. How broad is the target market
• Cost Leadership Strategy
– Lowest cost structure position - provides
advantages in pricing, supplier negotiation
• Differentiation Strategy
– Unique/superior value position - provides brand
loyalty.
7
Porter’s Generic
Competitive Strategies (cont’d)
• Focus Strategies
– Variations on cost/differentiation but with a
focus on narrow or regional market segment
8
Forecasting Techniques
• Scenario analysis
– Preparing written descriptions of alternative but
equally likely future situations.
• Longitudinal scenarios: describing how the future
situations will evolve from the present.
• Cross-sectional scenarios: describing future
situations at a given point in time.
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Thinking Strategically
• The “Internet” World
– There are still a lot of ways to make money on
the Internet.
– Customer loyalty is built with reliable brand
names and “sticky” web sites.
– Next Big Thing - Broadband/WiFi
10
Formulation
• Which customers to serve?.
• Identify Current & Future Competitive
(dis)advantages
– Find “fit” potential with SWOT (Strengths,
Weaknesses, Opportunities, and Threats)
• Assess likely competitive response(s)
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Formulation
• Identify, then perform competitive
comparison of key capabilities, e.g.
–
–
–
–
–
Quick response to market trends.
Rapid product development.
Rapid production and delivery.
Continuous cost reduction.
Continuous improvement of processes, human
resources, and products.
– Greater flexibility of operations.
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Formulation
• Select option(s)
• Formulate key objectives (Results-oriented,
measurable objectives )
–
–
–
–
–
Identify required activities
Assign responsibilities
Estimate time and sequencing of activities
Determine required resources
Lead, communicate, and coordinate the elements
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Strategic Implementation
• Implementation of Strategic Plans
– Cascading the plan - shift to implementation
& build middle-manager commitment
1.
2.
3.
4.
new organizational structure(s)
(reorient or replace) people.
Culture (new?).
Control systems.
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