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Chapter8 strategicmanagement-090411130004-phpapp02
 

Chapter8 strategicmanagement-090411130004-phpapp02

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    Chapter8 strategicmanagement-090411130004-phpapp02 Chapter8 strategicmanagement-090411130004-phpapp02 Presentation Transcript

    • Chapter 8 STRATEGIC MANAGEMENT © 2003 Pearson Education Canada Inc. 8.1
    • LEARNING OBJECTIVES • You should be able to: – Explain the importance of strategic management – Describe the steps in the strategic management process – Explain SWOT analysis – Differentiate corporate-, business-, and functional-level strategies © 2003 Pearson Education Canada Inc. 8.2
    • LEARNING OBJECTIVES (continued) • You should be able to (continued): – Explain what competitive advantage is and why it’s important to organizations – Describe the five competitive forces – Identify the various competitive strategies © 2003 Pearson Education Canada Inc. 8.3
    • THE IMPORTANCE OF STRATEGIC MANAGEMENT • What Is Strategic Management? – A set of managerial decisions and actions that determines the long-run performance of an organization • Purposes of Strategic Management – Involved in many decisions that managers make – Companies with formal strategic management systems have higher financial returns than companies with no such system Important in profit and not-for-profit organizations © 2003 Pearson Education Canada Inc. 8.4
    • THE STRATEGIC MANAGEMENT PROCESS (Exhibit 8.1) © 2003 Pearson Education Canada Inc. 8.5
    • THE STRATEGIC MANAGEMENT PROCESS • Step 1: Identifying the Organization’s Current Mission, Objectives, and Strategies – Mission • • • statement of the purpose of an organization important in profit and not-for-profit organizations important to identify the goals currently in place and the strategies currently being pursued © 2003 Pearson Education Canada Inc. 8.6
    • COMPONENTS OF A MISSION STATEMENT (Exhibit 8.2) © 2003 Pearson Education Canada Inc. 8.7
    • THE STRATEGIC MANAGEMENT PROCESS (continued) • Step 2: Analyzing the Environment – successful strategies are aligned with the environment – examine both the specific and general environments to determine what trends and changes are occurring • 3. Identifying Opportunities and Threats – opportunities - positive trends in the external environmental – threats - negative trends in the external environment © 2003 Pearson Education Canada Inc. 8.8
    • THE STRATEGIC MANAGEMENT PROCESS (continued) • Step 4: Analyzing the Organization’s Resources and Capabilities – examine the inside of the organization – available resources and capabilities always constrain the organization in some way – core competencies - major value-creating skills, capabilities and resources that determine the organization’s competitive weapons © 2003 Pearson Education Canada Inc. 8.9
    • THE STRATEGIC MANAGEMENT PROCESS (continued) • Step 5: Identifying Strengths and Weaknesses – Strengths - activities the organization does well or any unique resource – Weaknesses - activities the organization does not do well or resources it needs but does not possess – organization’s culture has its strengths and weaknesses – SWOT analysis - analysis of the organization’s strengths, weaknesses, opportunities, and threats © 2003 Pearson Education Canada Inc. 8.10
    • IDENTIFYING THE ORGANIZATION’S OPPORTUNITIES (Exhibit 8.3) Organization’s Organization’s Resources/Abilities Opportunities © 2003 Pearson Education Canada Inc. Opportunities in the Environment 8.11
    • THE STRATEGIC MANAGEMENT PROCESS (continued) • Step 6: Formulating Strategies – Require strategies at the corporate, business, and functional levels of the organization – Strategy formulation follows the decision-making process • Step 7: Implementing Strategies – A strategy is only as good as its implementation • Step 8: Evaluating Results – Control process to determine the effectiveness of a strategy © 2003 Pearson Education Canada Inc. 8.12
    • TYPES OF ORGANIZATIONAL STRATEGIES • Corporate-Level Strategy – Determines • • • what businesses a company should be in or wants to be in the direction that the organization is going the role that each business unit will play © 2003 Pearson Education Canada Inc. 8.13
    • LEVELS OF ORGANIZATIONAL STRATEGY (Exhibit 8.4) © 2003 Pearson Education Canada Inc. 8.14
    • TYPES OF ORGANIZATIONAL STRATEGIES (continued) • Corporate-level Strategy (continued) – Grand Strategy - Stability • • • no significant change is proposed organization’s performance is satisfactory environment appears to be stable and unchanging © 2003 Pearson Education Canada Inc. 8.15
    • TYPES OF ORGANIZATIONAL STRATEGIES (continued) • Corporate-level Strategy (continued) – Grand Strategy - Growth • seeks to increase the level of the organization’s operations • related diversification - grow by merging with or acquiring firms in different but related industries • unrelated diversification - grow by merging with or acquiring firms in different and unrelated industries – Grand Strategy - Retrenchment - designed to address organizational weaknesses that are leading to performance declines © 2003 Pearson Education Canada Inc. 8.16
    • Critical Weaknesses Firm Status Valuable Strengths SWOT ANALYSIS AND GRAND STRATEGIES (Exhibit 8.5) Abundant Environmental Opportunities Corporate Growth Strategies Corporate Stability Strategies Corporate Stability Strategies Corporate Retrenchment Strategies Environmental Status © 2003 Pearson Education Canada Inc. Critical Environmental Threats 8.17
    • TYPES OF ORGANIZATIONAL STRATEGIES (continued) • Corporate-Level Strategy (continued) – Corporate Portfolio Analysis - used when corporate strategy involves a number of business • Boston Consulting Group (BCG) matrix-strategy tool that guides resource allocation decisions on basis of market share and growth rate of SBU © 2003 Pearson Education Canada Inc. 8.18
    • THE BCG MATRIX (Exhibit 8.6) Market Share Low High High Stars Question Marks Cash Cows Dogs Low Anticipated Growth Rate © 2003 Pearson Education Canada Inc. 8.19
    • TYPES OF ORGANIZATIONAL STRATEGIES (continued) • Corporate-Level Strategy (continued) – BCG matrix (continued) • strategic implications of the matrix – cash cows - “milk” – stars - require heavy investment – question marks - attractive but hold a small market share – dogs - sold off or liquidated © 2003 Pearson Education Canada Inc. 8.20
    • TYPES OF ORGANIZATIONAL STRATEGIES (continued) • Business-Level Strategy – Determines how an organization should compete in each of its businesses – Strategic business units - independent businesses that formulate their own strategies – Role of Competitive Advantage • competitive advantage - sets an organization apart by providing a distinct edge – – – comes from the organization’s core competencies not every organization can transform core competencies into a competitive advantage once created, must be able to sustain it © 2003 Pearson Education Canada Inc. 8.21
    • TYPES OF ORGANIZATIONAL STRATEGIES (continued) • Business-Level Strategy (continued) – Competitive Strategies • industry analysis based on five competitive forces – Threat of new entrants - affected by barriers to entry – Threat of substitutes - affected by buyer loyalty and switching costs – Bargaining power of buyers - affected by number of customers, availability of substitute products © 2003 Pearson Education Canada Inc. 8.22
    • TYPES OF ORGANIZATIONAL STRATEGIES (continued) • Business-Level Strategy (continued) – Competitive Strategies (continued) • industry analysis based on five competitive forces – Bargaining power of suppliers - affected by degree of supplier concentration – Existing rivalry - affected by industry growth rate, demand for firm’s product or service, and product differences © 2003 Pearson Education Canada Inc. 8.23
    • FORCES IN THE INDUSTRY ANALYSIS (Exhibit 8.7) Bargaining Power or Suppliers New Entrants Suppliers Threat of New Entrants Industry Competitors Buyers Current Rivalry Threat of Substitutes © 2003 Pearson Education Canada Inc. Bargaining Power or Buyers Substitutes 8.24
    • TYPES OF ORGANIZATIONAL STRATEGIES (continued) • Business-Level Strategy (continued) – Competitive strategies (continued) • Porter’s three generic strategies – cost leadership - goal is to become the lowest-cost producer in the industry – differentiation - offer unique products that are widely valued by customers – focus - aims at a cost advantage or differentiation advantage in a narrow segment © 2003 Pearson Education Canada Inc. 8.25
    • REQUIREMENTS FOR SUCCESSFULLY PURSUING PORTER’S COMPETITIVE STRATEGIES (Exhibit 8.8) © 2003 Pearson Education Canada Inc. 8.26
    • TYPES OF ORGANIZATIONAL STRATEGIES (continued) • Functional-Level Strategy – used to support the business-level strategy – creates an appropriate supporting role for each functional area of the organization © 2003 Pearson Education Canada Inc. 8.27