Opening Incident
Managing Strategy and
Strategic Planning Chapter 7
Wendy’s acquisition of Tim Hortons reflects
the critical functions that managers perform –
Strategy & Strategic Planning
Wendy’s International/www.wendys.com
Components of Strategy
Distinctive
Competence
Scope
Resource
Deployment
Strategy Defined
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Strategic management establishes an
organization’s mission and objectives,
analyzes the environment and resource
capabilities in order to formulate a
strategy
Strategy is a unified, plan that applies
the resources of the firm to the
challenges of the environment
Strategic Management
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Strategic management is the process that an
organization goes through to formulate,
implement, and evaluate what the
organization is and wants to be
Strategic management involves not only
aspects of long-term and strategic planning
but also strategy implementation
Nature of Strategic Decisions
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Multiple objectives
Long time horizons
Difficulty of
identifying good
options
Intangibles
Multiple
stakeholders
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Risk and uncertainty
Consequences of many
functions on businesses
Value trade offs
Allocation of large
amounts of resources
Sequential nature of
strategic decisions
Levels of Strategic
Management
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Corporate Level
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Business/Divisional Level
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Strategic Management by Corporate Entity or
Division
Business Unit Level
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Comprehensive Strategic Management
Strategic Management in the Smallest Operating
Unit
Functional Level
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Strategic Management within Business Functions
Corporate Level Strategy
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Strategic management process is
involved in establishing the strategy for
the whole organization
Strategy is established by board of
directors and management
Coordinating the activities of many
divisions and units, often include
managing a portfolio of businesses
Business/Divisional Level Strategy
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Strategic directions established at the
corporate level are translated into
concrete objectives and strategies at
the divisional level
Focus on their particular business or
division and must coordinate with the
corporate strategy
Business Unit Level Strategy
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Strategic Business Unit is the smallest
operating division of an enterprise that is
given authority to make its own strategic
decisions within corporate guidelines
Allows for a high degree of decentralization
and encourages entrepreneurship within
larger business enterprises
Functional Level Strategy

Focuses on the efficiency and
effectiveness of operational areas such
as purchasing, maintenance etc.. The
results are usually quantifiable
Organizational Values
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Organizations are also influenced by
values or preferences, and they often
publicly state the values they hold
Corporate Culture is the complex set
of values, beliefs, assumptions, and
symbols that define the way in which an
organization conducts its business
Influence of Stakeholders
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Stakeholder is an individual or group
who can influence, or is influenced by
the operations or activities of an
organization
Stakeholders have control over the
resources the organization needs
The Components of Strategic
Management
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Establishment of a Mission
Assessment of the Environment
Assessment of Organizational Resources and
Capabilities
Establishment of Objectives
Identification of Strategic Options
Selection of a Strategy
Strategy Implementation
Monitoring and Review
Establishment of a Mission
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Mission statement specifies in broad terms
the organization’s “reason for being” and
what distinguishes it from similar
organizations
Methodologies for Developing Mission
Statements
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Stakeholder Analysis
Values Audit
Visioning
Assessment of the
Environment
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Forces and trends influencing an organization
can arise from external factors
Opportunities and Threats are identified
Environment Assessment Methodologies
 Environmental threat and opportunity
profile
 Environmental spanning techniques
 Forecasting techniques
 Industry/competitive analysis
 Strategic groups
Assessment of Resources and
Capabilities
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Organization must assess internal resources
Strengths and Weaknesses must be identified
Resource and Capability Assessment
Methodologies
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Resource Audit
Experience Curve
Portfolio Analysis
Value Chain
Identification of Strategic Options
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Generic Strategic Options
Internal Growth Strategic Options
Integration Strategic Options
Diversification of Strategic Options
Cooperative Strategic Options
Retrenchment and Rejuvenation
Combined Strategic Options
“Do Nothing” Strategic Option
Selection of a Strategy
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The strategist must evaluate each option to
ascertain which is the most appropriate
Once an option has been selected, organizations
prepare a formal statement of strategy
Strategic Option Selection Methodologies
 Critical Success Factors
 Strategic Issues
 Gap Analysis
 Scenario
 Decision Trees
 Break-Even Analysis
 Sensitivity Analysis
 Cost/Benefit Analysis
Strategy Implementation
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Five steps for effective strategy
implementation:
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Input from a wide range of sources is required
Obstacles to implementation should be assessed
Strategists should use implementation levers or
management tasks to initiate this component of
the strategic management process
Sell the implementation
The process remains ongoing
Monitoring and Review
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Any planning process needs to be monitored
and reviewed to see whether or not it is
accomplishing what was intended
Monitoring and Review Methodologies
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Vulnerability Analysis
Strategic Report Cards
Strategic Audit
Barriers to Effective Strategic
Management
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Lack of commitment
Conflict between
short/long term
planning
Lack of management
time
Conflict
Lack of quality data
Environmental
uncertainties
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Lack of understanding
Too much paper....(no
librarians)
Lack of commitment by
middle management
Difficult in achieving
implementation
SWOT Analysis
Strengths
Opportunities
Weaknesses
Threats
Mission
SWOT
Analysis
An organization’s fundamental purpose
SWOT Analysis
To formulate strategies that support the mission
Internal Analysis
External Analysis
Strengths
distinctive
competence
Opportunities
Weaknesses
Threats
Good strategies  exploit opportunities and strengths
 neutralize threats  avoid weaknesses
Miles & Snow Typology
Reactor
Defender
Little consideration of
environment; drift with
little concern for
strategy
Stress stability,
conservatism, and
maintenance of
status quo
Prospector
Analyzer
Stress growth
risk taking
Stress maintenance
of status quo with
innovation and
moderate innovation
new opportunities
and growth
Strategy Based on Product Life Cycle
Time
Sales volume
High
Low
Introduction Growth
Maturity
Stages
Decline
Implementing Corporate Level
Strategies
Internal
Development
Single
Undiversified
Firm
Forward & Backward
Integration
Mergers &
Acquisition
Replace Supplier
& Customer