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CHAPTER 1                Basic Concepts                of Strategic                ManagementSTRATEGIC MANAGEMENT & BUSINE...
Basic Concepts of Strategic ManagementGlobalization  Internationalization of markets and corporations     Global (worldwid...
Basic Concepts of Strategic ManagementElectronic Commerce -- Trends•   Forcing company transformation•   Market access & b...
Basic Concepts of Strategic ManagementElectronic Commerce -- Trends•   Pace of business increasing•   Internet purchasing ...
Strategic Management DefinedSet of managerial decisions and actionsthat determines the long-run performanceof a firm.     ...
Basic Concepts of Strategic Management4 Phases of Strategic Management1.   Basic financial planning2.   Forecast-based pla...
Basic Concepts of Strategic ManagementHighly Rated Benefits•   Clearer sense of strategic vision•   Sharper focus on strat...
Basic Concepts of Strategic ManagementNot Always a Formal Process•   Where is the organization now? (not    where do we ho...
Basic Concepts of Strategic ManagementBasic Elements of the Strategic    Management Process                              1-9
Environmental Scanning DefinedMonitoring, evaluation, and disseminatinginformation from external and internalenvironments ...
Basic Concepts of Strategic Management            Environmental                 Variables                   1-11
Environmental ScanningSWOT Analysis•   Strengths – Weaknesses•   Opportunities - Threats                                  ...
Strategy FormulationDevelopment of long-range plans for  effective management of opportunities  and threats in light of co...
Strategy FormulationMission Statement•   Purpose/reason for organization•   Promotes shared expectations•   Communicates p...
Organizational AdaptationOrganization “fit” with environment•   Theory of population ecology•   Institution theory•   Stra...
Organizational AdaptationStrategic flexibility•   Demands long-term commitment to    development of critical resources•   ...
Learning OrganizationsAn organization skilled at creating,   acquiring, and transferring   knowledge and at modifying its ...
Learning Organizations4 Chief Activities•   Systematic problem solving•   New approach experimentation•   Learning from ex...
Basic Concepts of Strategic Management             Hierarchy of                 Strategy                   1-19
Goals & ObjectivesCorporate Goals/Objectives  –Profitability (net profit)  –Growth  –Resource utilization (ROE, ROI)  –Mar...
Basic Concepts of Strategic Management3 Types of Strategy  –Corporate strategy  –Business strategy  –Functional strategy  ...
Basic Concepts of Strategic ManagementCorporate Strategy  –Stability  –Growth  –Retrenchment                              ...
Basic Concepts of Strategic ManagementBusiness Strategy  –Competitive strategies  –Cooperative strategies                 ...
Basic Concepts of Strategic ManagementFunctional Strategy  –Technological leadership  –Technological followership         ...
Basic Concepts of Strategic Management                         Strategic                  Decision-Making                 ...
Strategic Decision MakingStrategic Decisions  –Rare  –Consequential  –Directive                           1-26
Strategic Decision MakingMintzberg’s Modes  –Entrepreneurial mode  –Adaptive mode  –Planning mode  –Logical incrementalism...
Hambrick and Fredrickson – Good Strategy5 Elements of Good Strategy  1.   Arenas  2.   Vehicles  3.   Differentiators  4. ...
CHAPTER 2Corporate Governance                 1-29
CHAPTER 2                Corporate                GovernanceSTRATEGIC MANAGEMENT & BUSINESS POLICY                        ...
Corporate Governance  1-31
Corporate GovernanceThe relationship among the board ofdirectors, top management, andshareholders – determining the direct...
Corporate GovernanceRole of Board  –Monitor  –Evaluate and influence  –Initiate and determine                            1...
Board of Directors Continuum         1-34
Board of DirectorsMembers --  –Inside directors     •“management directors”     •Officers or execs employed by the firm  –...
Agency TheoryAgency Problem –  –Objectives of owners & agents in conflict  –Difficult for owners to verify agent performan...
Stewardship TheoryExecutives more motivated to act in bestinterest of the corporation than their ownself-interests. Theory...
Board of DirectorsWhen Outsiders can be considered Insiders  –Affiliated Directors  –Retired Directors  –Family Directors ...
Board of DirectorsCodetermination  –The inclusion of a corporation’s employees on its  board of directors                 ...
Board of DirectorsInterlocking Directorates  –Direct Interlocking  –Indirect Interlocking                            1-40
Board of DirectorsNominations & Elections  –Traditional Approach     •CEO invitation to membership     •Shareholders appro...
Board of DirectorsNominations & Elections  –Staggered Board Approach     •Staggered terms of service/election             ...
Board of DirectorsSarbanes-Oxley  –Code of Ethics  –Audit, Nominating, and Compensation  Committees all outside directors ...
Board of DirectorsOrganization of the Board  –Size     •Charter & Bylaws Determination                                    ...
Board of DirectorsCorporate Governance  –Review & shaping of strategy  –Pressure for corporate performance  –Demand for ex...
Board of DirectorsTransformational leaders  –Change agents through vision for change                                      ...
Board of DirectorsSuccessful CEO’s  –Strategic vision  –Passion for the company  –Strong communication  –charisma         ...
Board of DirectorsExecutive Leadership  –Strategic vision  –Role model                       1-48
Board of DirectorsExecutive Leadership  –Communication of performance standards  –Demonstrates confidence in abilities of ...
Strategic Management ProcessStrategic Planning Staff  –Supports top management & business units in  the strategic planning...
Strategic Management ProcessStrategic Planning Staff  –Identify & analyze company-wide strategic issues  –Generate strateg...
Strategic Management ProcessStrategic Planning Staff  –Facilitate business units in coordinating activities  related to st...
CHAPTER 3Ethics & SocialResponsibility       1-53
CHAPTER 3                Ethics & Social                ResponsibilitySTRATEGIC MANAGEMENT & BUSINESS POLICY              ...
Ethics & Social Responsibility          1-55
Corporate GovernanceBroader responsibility --Private corporations have responsibility tosociety that extend beyond making ...
Social ResponsibilityMilton FriedmanThere is one and only one social responsibility ofbusiness—to use its resources and en...
Corporate GovernanceCarroll’s 4 Responsibilities  –Economic  –Legal  –Ethical  –Discretionary                             ...
Carroll’s 4 Responsibilities       1-59
Corporate StakeholdersAffect or are affected by theachievement of the corporation’sobjectives                             ...
Corporate StakeholdersStakeholder Analysis –  –Primary stakeholder     •Sufficient bargaining power to affect outcomes  –S...
Ethical Behavior“business ethics”  –Argument that there is no such thing … it is an  oxymoron                             ...
Ethical Decision MakingCorporate practices --  –Massive write-downs and restatements of profit  –Misclassification of expe...
Ethical Decision MakingRecent Survey Results --  –70% distrust business executives  –Enron  –WorldCom                     ...
Reasons for Unethical BehaviorProvocative Question --  –Why are businesspeople perceived to be  acting unethically?       ...
Reasons for Unethical BehaviorPerceptions caused by --  –Not aware of impropriety  –Cultural norms and values vary  –Gover...
Reasons for Unethical BehaviorAllport-Vernon-Lindzey Study of Values --  –Aesthetic  –Economic  –Political  –Religious  –S...
Reasons for Unethical BehaviorMost common reasons for bending rules --  –Organizational performance required it  –Ambiguou...
Moral RelativismMorality is relative to some personal, social,or cultural standard and there is no methodfor deciding whet...
Kohlberg’s Levels of Moral Development1. Preconventional level  –Characterized by a concern for self     •Personal interes...
Kohlberg’s Levels of Moral Development2. Conventional level  –Characterized consideration of society’s values     •Externa...
Kohlberg’s Levels of Moral Development3. Principled level  –Characterized by adherence to internal moral  code     •Univer...
Encouraging Ethical BehaviorCodes of Ethics  –Specifies how an organization expects its  employees to behave on the job.  ...
Encouraging Ethical BehaviorGuidelines for Ethical Behavior  –Ethics  –Morality  –Law                                     ...
Encouraging Ethical BehaviorApproaches to Ethical Behavior  –Utilitarian     •Judged by consequences  –Individual Rights  ...
Encouraging Ethical BehaviorApproaches to Ethical Behavior  –Categorical imperative     •“golden rule”     •Means - Ends  ...
Strategy Bits192 U.S. companies surveyed --  –92% monitored employees use of e-mail/Internet  –26% monitored employees ele...
CHAPTER 4EnvironmentalScanning andIndustry Analysis       1-78
CHAPTER 4                Environmental                Scanning and                Industry AnalysisSTRATEGIC MANAGEMENT & ...
Environmental ScanningSocietal environment --  –Economic forces  –Technological forces  –Political-legal forces  –Sociocul...
Societal EnvironmentEconomic Forces --  –Regulate exchange of materials, money,  energy and information                   ...
Societal EnvironmentTechnological Forces --  –Generate problem-solving inventions                                         ...
Societal EnvironmentPolitical-legal Forces --  –Allocate power; provide laws and regulations                              ...
Societal EnvironmentSociocultural Forces --  –Regulate values, mores, and customs of  society                             ...
Task EnvironmentTask environment --  –Elements or groups that directly affect a  corporation and are affected by it       ...
Task EnvironmentIndustry Analysis --  –In-depth examination of key factors within a  corporation’s task environment       ...
Variables in Societal Environment           1-87
Demographic Trends1-88
Transformational Sociocultural Trends8 Current Trends –  –Increasing environmental awareness  –Growing health consciousnes...
International Societal Environments               1-90
Scanning the Task Environment        1-91
Ethical Behavior“business ethics”  –Argument that there is no such thing … it is an  oxymoron                             ...
Ethical Decision MakingCorporate practices --  –Massive write-downs and restatements of profit  –Misclassification of expe...
External Strategic FactorsStrategic myopia --  –Willingness to reject unfamiliar as well as  negative information         ...
Issues Priority Matrix1-95
Analyzing the Task Environment         1-96
Porter’s Approach to Industry AnalysisThreat of New Entrants –  –Economies of scale  –Product differentiation  –Capital re...
Porter’s Approach to Industry AnalysisRivalry Among Existing Firms –  –Number of competitors  –Rate of industry growth  –P...
Porter’s Approach to Industry Analysis•Threat of Substitute Products or Services•Bargaining Power of Buyers•Bargaining Pow...
Industry EvolutionFragmented Industry –  –No dominant industry                          1-100
Industry EvolutionConsolidated Industry –  –Dominated by a few large firms                                    1-101
International Risk AssessmentContinuum of International Industries                                 1-102
Strategic Groups1-103
Strategic Types General Types –•Defenders•Prospectors•Analyzers•Reactors                   1-104
Competitive IntelligenceCalled business intelligenceGathering information on a company’scompetitors                       ...
ForecastingForecasting Techniques --  –Extrapolation  –Brainstorming  –Expert opinion  –Delphi technique  –Statistical mod...
Synthesis of External Factors -- EFAS               1-107
CHAPTER 5InternalScanning:OrganizationalAnalysis       1-108
CHAPTER 5                Internal                Scanning:                Organizational                AnalysisSTRATEGIC ...
Resource-Based Approach to Organizational AnalysisInternal strategic factors --  –Critical strengths and weaknesses that a...
Resource-Based Approach to Organizational Analysis•Resources•Capabilities•Competency•Core competency•Distinctive competenc...
Core and Distinctive CompetenciesVRIO Framework --  –Value  –Rareness  –Imitability  –Organization                        ...
Resource-Based Approach to Organizational Analysis5-Step Approach Strategy Analysis --  1.   Identify and classify resourc...
Continuum of Sustainability     1-114
Sustainability of AdvantageDurability --   –Rate at which a firm’s underlying resources   and capabilities depreciate or b...
Sustainability of AdvantageImitability --   –Rate at which a firm’s underlying resources   and capabilities can be duplica...
Sustainability of AdvantageCore Competency can be imitated --  –Transparency  –Transferability  –Replicability            ...
Business ModelsCompany’s method for making money inthe current business environment.                               1-118
Business ModelsTypes of Models --  –Customer Solutions Model  –Profit Pyramid Model  –Multi-Component System/Installed Bas...
Business ModelsTypes of Models --  –Time Model  –Efficiency Model  –Blockbuster Model  –Profit Multiplier Model  –Entrepre...
Value-Chain AnalysisLinked set of value-creating activitiesbeginning with basic raw material andending with distributors g...
Value-Chain AnalysisTypical Value Chain fora Manufactured Product                          1-122
Corporate Value-Chain Analysis•Primary activities•Support activities                               1-123
Corporation’s Value Chain      1-124
Scanning Functional Resources & CapabilitiesBasic Organizational Structures --  –Simple structure  –Functional structure  ...
Basic Organizational Structures         1-126
Corporate CultureCollection of beliefs, expectations, andvalues learned and shared by acorporation’s members andtransmitte...
Strategic Marketing Issues–Market Position & Segmentation–Marketing Mix–Product Life Cycle–Brand & Corporate Reputation   ...
Product Life Cycle1-129
Strategic Financial Issues–Financial leverage–Capital budgeting                         1-130
Strategic Research & Development Issues–R&D Intensity–Technological Competence–Technology Transfer                        ...
Technological Discontinuity     1-132
Strategic Human Resource Management IssuesHRM –  –Increasing use of teams  –Union relations  –Temporary workers  –Quality ...
Internal Factor Analysis Summary Table                1-134
CHAPTER 6Strategy Formulation:Situation Analysis &Business Strategy               1-135
CHAPTER 6      Strategy Formulation:      Situation Analysis &      Business StrategySTRATEGIC MANAGEMENT & BUSINESS POLIC...
Situational AnalysisStrategy formulation --  –Strategic planning or long-range planning     •Develops mission, objectives,...
Situational Analysis--process of finding a strategic fitbetween external opportunities andinternal strengths while working...
IFAS – Maytag as Example   1-139
EFAS – Maytag as Example    1-140
SFAS Matrix1-141
Situational AnalysisNiche --  –Need in the marketplace that is currently  unsatisfied                                     ...
Situational AnalysisCorporate Goal --  –Find propitious niche  –Strategic window                           1-143
Situational AnalysisSWOT --  –Internal     •Strengths/Weaknesses  –External     •Opportunities/Threats                    ...
TOWS Matrix1-145
Business StrategyFocuses on improving competitiveposition of company’s products orservices within the specific industry or...
Porter’s Competitive StrategiesCompetitive Strategy --  –Low cost  –Differentiation  –Direct competition  –Focus on niche ...
Porter’s Competitive StrategiesGeneric Competitive Strategies --  –Lower Cost strategy     •Greater efficiencies than comp...
Porter’s Competitive StrategiesCompetitive Advantage --  –Determined by Competitive Scope    •Breadth of the target market...
Porter’s Competitive Strategies        1-150
Porter’s Competitive StrategiesCost Leadership --  –Low-cost competitive strategy  –Broad mass market  –Efficient-scale fa...
Porter’s Competitive StrategiesDifferentiation –  –Broad mass market  –Unique product/service  –Premiums charged  –Less pr...
Porter’s Competitive StrategiesCost-Focus –  –Low-cost competitive strategy  –Focus on market segment  –Niche focused  –Co...
Porter’s Competitive StrategiesDifferentiation Focus –  –Specific group or geographic market focus  –Differentiation in ta...
Porter’s Competitive StrategiesStuck in the middle –  –No competitive advantage  –Below-average performance               ...
Risks of Generic StrategiesRisks of Cost Leadership            Risks of Differentiation          Risks of Focus  Risks of ...
8 Dimensions of Quality 1-157
Competitive StrategyIndustry Structure --  –Fragmented Industry  –Consolidated Industry                           1-158
Competitive TacticsTiming Tactics --  –First mover  –Late movers                    1-159
Competitive TacticsMarket Location Tactics --  –Frontal Assault  –Flanking Maneuver  –Bypass Attack  –Encirclement  –Guerr...
Competitive TacticsDefensive Tactics --  –Raise structural barriers  –Increase expected retaliation  –Lower the inducement...
Cooperative Strategies•Collusion•Strategic Alliances•Mutual service consortia•Joint ventures•Licensing arrangements•Value-...
CHAPTER 7 StrategyFormulation: CorporateStrategy               1-163
CHAPTER 7 Strategy      Formulation: Corporate      StrategySTRATEGIC MANAGEMENT & BUSINESS POLICY                        ...
Corporate Strategy3 Key Issues –  –Firm’s directional strategy  –Firm’s portfolio strategy  –Firm’s parenting strategy    ...
Corporate Directional Strategies         1-166
Corporate StrategyDirectional Strategy –  –Orientation toward growth     •Expansion, contraction, status quo     •Concentr...
Corporate StrategyDirectional Strategy –  –3 Grand Strategies     •Growth strategies     •Stability strategies     •Retren...
Corporate StrategyGrowth Strategies --  –External mechanisms     •Mergers     •Acquisitions     •Strategic alliances      ...
Corporate StrategyGrowth Strategies --  –2 Basic forms     •Concentration     •Diversification                        1-170
Corporate StrategyBasic Concentration Strategies --  –Vertical growth  –Horizontal growth                                 ...
Corporate StrategyVertical Growth --  –Vertical integration     •Full integration     •Taper integration     •Quasi-integr...
Corporate StrategyVertical Growth --  –Backward integration  –Forward integration                          1-173
Corporate StrategyConcentration --  –Horizontal Growth     •Horizontal integration                               1-174
Corporate StrategyBasic Diversification Strategies --  –Concentric Diversification  –Conglomerate Diversification         ...
Corporate StrategyConcentric Diversification --  –Growth into related industry  –Search for synergies                     ...
Corporate StrategyConglomerate diversification --  –Growth into unrelated industry  –Concern with financial considerations...
Corporate StrategyInternational Entry Options --  –Exporting  –Licensing  –Franchising  –Joint Ventures  –Acquisitions  –G...
Corporate StrategyInternational Entry Options --  –Production Sharing  –Turnkey Operation  –BOT Concept (Build, Operate, T...
Corporate StrategyStability Strategies --  –Pause/proceed with caution  –No change  –Profit strategies                    ...
Corporate StrategyRetrenchment Strategies --  –Turnaround  –Captive Company Strategy  –Selling out  –Bankruptcy  –Liquidat...
Corporate StrategyPortfolio Analysis --  –Resource commitment on best products to  ensure continued success  –Resource com...
BCG Matrix (Portfolio Analysis)        1-183
GE Business Screen (Portfolio Analysis)                                                                     C             ...
Corporate StrategyCorporate Parenting Strategy --  –Strategic factors  –performance improvement  –Analyze fit             ...
CHAPTER 8 StrategyFormulation: FunctionalStrategy & StrategicChoice               1-186
CHAPTER 8 Strategy      Formulation: Functional      Strategy & Strategic      ChoiceSTRATEGIC MANAGEMENT & BUSINESS POLIC...
Functional StrategyThe approach a functional area takes toachieve corporate and business unitobjectives and strategies by ...
Functional StrategyMarketing Strategy –  –Pricing  –Selling  –Distribution                       1-189
Functional StrategyMarketing Strategy –  –Product development     •Line extension                         1-190
Functional StrategyMarketing Strategy –  –Advertising and promotion    •Push strategy    •Pull strategy                   ...
Functional StrategyMarketing Strategy –  –Pricing     •Skim pricing     •Penetration pricing     •Dynamic pricing         ...
Functional StrategyFinancial Strategy –  –Leveraged buyout  –Reversed stock split  –Tracking stock                        ...
Functional StrategyR&D Strategy –  –Technological leader  –Technological follower  –Open innovation                       ...
Functional StrategyOperations Strategy –  –Job shop  –Connected line batch flow  –Flexible manufacturing systems  –Dedicat...
Functional StrategyPurchasing Strategy –  –Multiple sourcing  –Sole sourcing  –Just-in-time (JIT)  –Parallel sourcing     ...
Functional StrategyLogistics Strategy –  –Centralization  –Outsourcing  –Internet                       1-197
Functional StrategyHRM Strategy –  –360 degree appraisal                          1-198
Functional StrategyOutsourcing errors –  –Activities that should not be outsourced  –Wrong vendor selection  –Writing poor...
Proposed Outsourcing Matrix      1-200
Functional StrategyStrategies to Avoid –  –3 Follow the leader  –Hit another home run  –Arms race  –Do everything  –Losing...
Corporate StrategyGrowth Strategies --  –External mechanisms     •Mergers     •Acquisitions     •Strategic alliances      ...
Constructing Corporate Scenarios           1-203
Functional StrategySubjective Factors Affecting Decisions --  –Management’s attitude toward risk  –Pressures from stakehol...
Stakeholder Priority Matrix    1-205
Strategic ChoiceAvoiding the Consensus Trap --  –Devil’s Advocate  –Dialectical Inquiry                                 1-...
Strategic ChoiceEvaluation of Strategic Alternatives --  –Mutual exclusivity  –Success  –Completeness  –Internal consisten...
CHAPTER 9 StrategyImplementation:Organizing for Action               1-208
CHAPTER 9 Strategy      Implementation:      Organizing for ActionSTRATEGIC MANAGEMENT & BUSINESS POLICY                  ...
Strategy Implementation--Sum total of activities & choicesrequired for strategic plan execution--Strategy implementation t...
Strategy ImplementationKey Implementation Questions –  –Who carries out strategic plan?  –What needs doing for alignment w...
Strategy ImplementationPrograms –  –Action oriented  –Matrix of change    •Feasibility    •Sequence of execution    •Locat...
The Matrix of Change1-213
Strategy ImplementationAchieving Synergy –  –Shared know-how  –Coordinated strategies  –Shared tangible resources         ...
Strategy ImplementationAchieving Synergy –  –Economies of scale or scope  –Pooled negotiating power  –New business creatio...
Strategy ImplementationStructure follows strategy –  –New strategy is created  –New administrative problems emerge  –Econo...
Strategy ImplementationStages of Corporate Development –  –Stage I: Simple structure  –Stage II: Functional structure  –St...
Strategy ImplementationBlocks to Changing Stages –  –Loyalty to comrades  –Task oriented  –Single-mindedness  –Working in ...
Organizational Life Cycle  1-219
Changing Structural Characteristics of Modern Organizations                                     1-220
Strategy ImplementationAdvanced Types of OrganizationalStructures –  –Matrix     •Temporary cross-functional task forces  ...
Strategy ImplementationAdvanced Types of OrganizationalStructures –  –Network structure (virtual organization)  –Cellular ...
Network Structure1-223
Strategy ImplementationSix Sigma –  –Define  –Measure  –Analyze  –Improve  –Establish                 1-224
Strategy ImplementationJob design to implement strategy –  –Job enlargement  –Job rotation  –Job enrichment  –Job characte...
Strategy ImplementationInternational Issues –  –MNC’s  –International Strategic Alliances                                 ...
Strategy ImplementationInternational Development Stages–  –Domestic company  –Domestic company w/export division  –Domesti...
Strategy ImplementationCentralization vs. Decentralization–  –Product-group structure  –Geographic-area structure         ...
Geographic Area Structure    1-229
1-230
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Strategic mgmt & bus policy by thomas l. wheelen (10th edition)

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  1. 1. CHAPTER 1 Basic Concepts of Strategic ManagementSTRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1-1
  2. 2. Basic Concepts of Strategic ManagementGlobalization Internationalization of markets and corporations Global (worldwide) markets rather than national marketsElectronic Commerce Use of the Internet to conduct business transactions Basis for competition on a more strategic level rather than traditional focus on product features and costs 1-2
  3. 3. Basic Concepts of Strategic ManagementElectronic Commerce -- Trends• Forcing company transformation• Market access & branding changing – disintermediation of traditional distribution channels• Balance of power shift to consumer• Competition changing 1-3
  4. 4. Basic Concepts of Strategic ManagementElectronic Commerce -- Trends• Pace of business increasing• Internet purchasing beyond traditional boundaries• Knowledge key asset – source of competitive advantage 1-4
  5. 5. Strategic Management DefinedSet of managerial decisions and actionsthat determines the long-run performanceof a firm. 1-5
  6. 6. Basic Concepts of Strategic Management4 Phases of Strategic Management1. Basic financial planning2. Forecast-based planning3. Externally-oriented planning4. Strategic management 1-6
  7. 7. Basic Concepts of Strategic ManagementHighly Rated Benefits• Clearer sense of strategic vision• Sharper focus on strategic importance• Improved understanding of changing environment 1-7
  8. 8. Basic Concepts of Strategic ManagementNot Always a Formal Process• Where is the organization now? (not where do we hope it is)• If no changes are made, where will the organization be in 1,2,5 or 10 years?• What specific actions should management undertake?• What are the risks and payoffs? 1-8
  9. 9. Basic Concepts of Strategic ManagementBasic Elements of the Strategic Management Process 1-9
  10. 10. Environmental Scanning DefinedMonitoring, evaluation, and disseminatinginformation from external and internalenvironments –to key people in the firm 1-10
  11. 11. Basic Concepts of Strategic Management Environmental Variables 1-11
  12. 12. Environmental ScanningSWOT Analysis• Strengths – Weaknesses• Opportunities - Threats 1-12
  13. 13. Strategy FormulationDevelopment of long-range plans for effective management of opportunities and threats in light of corporate strengths and weaknesses 1-13
  14. 14. Strategy FormulationMission Statement• Purpose/reason for organization• Promotes shared expectations• Communicates public image• Who we are; what we do; what we aspire to 1-14
  15. 15. Organizational AdaptationOrganization “fit” with environment• Theory of population ecology• Institution theory• Strategic choice perspective• Organizational learning theory 1-15
  16. 16. Organizational AdaptationStrategic flexibility• Demands long-term commitment to development of critical resources• Demands firm become a learning organization 1-16
  17. 17. Learning OrganizationsAn organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights 1-17
  18. 18. Learning Organizations4 Chief Activities• Systematic problem solving• New approach experimentation• Learning from experiences• Intra-organization knowledge transfer 1-18
  19. 19. Basic Concepts of Strategic Management Hierarchy of Strategy 1-19
  20. 20. Goals & ObjectivesCorporate Goals/Objectives –Profitability (net profit) –Growth –Resource utilization (ROE, ROI) –Market leadership 1-20
  21. 21. Basic Concepts of Strategic Management3 Types of Strategy –Corporate strategy –Business strategy –Functional strategy 1-21
  22. 22. Basic Concepts of Strategic ManagementCorporate Strategy –Stability –Growth –Retrenchment 1-22
  23. 23. Basic Concepts of Strategic ManagementBusiness Strategy –Competitive strategies –Cooperative strategies 1-23
  24. 24. Basic Concepts of Strategic ManagementFunctional Strategy –Technological leadership –Technological followership 1-24
  25. 25. Basic Concepts of Strategic Management Strategic Decision-Making Process 1-25
  26. 26. Strategic Decision MakingStrategic Decisions –Rare –Consequential –Directive 1-26
  27. 27. Strategic Decision MakingMintzberg’s Modes –Entrepreneurial mode –Adaptive mode –Planning mode –Logical incrementalism 1-27
  28. 28. Hambrick and Fredrickson – Good Strategy5 Elements of Good Strategy 1. Arenas 2. Vehicles 3. Differentiators 4. Staging 5. Economic logic 1-28
  29. 29. CHAPTER 2Corporate Governance 1-29
  30. 30. CHAPTER 2 Corporate GovernanceSTRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1-30
  31. 31. Corporate Governance 1-31
  32. 32. Corporate GovernanceThe relationship among the board ofdirectors, top management, andshareholders – determining the directionand performance of the corporation 1-32
  33. 33. Corporate GovernanceRole of Board –Monitor –Evaluate and influence –Initiate and determine 1-33
  34. 34. Board of Directors Continuum 1-34
  35. 35. Board of DirectorsMembers -- –Inside directors •“management directors” •Officers or execs employed by the firm –Outside directors •“non-management directors” •Execs of other firms not employed by the board’s corporation 1-35
  36. 36. Agency TheoryAgency Problem – –Objectives of owners & agents in conflict –Difficult for owners to verify agent performanceRisk Sharing Problem – –Owners & agents risk assessment in conflict 1-36
  37. 37. Stewardship TheoryExecutives more motivated to act in bestinterest of the corporation than their ownself-interests. Theory that over time, seniorexecutives tend to view corporation asextension of selves. 1-37
  38. 38. Board of DirectorsWhen Outsiders can be considered Insiders –Affiliated Directors –Retired Directors –Family Directors 1-38
  39. 39. Board of DirectorsCodetermination –The inclusion of a corporation’s employees on its board of directors 1-39
  40. 40. Board of DirectorsInterlocking Directorates –Direct Interlocking –Indirect Interlocking 1-40
  41. 41. Board of DirectorsNominations & Elections –Traditional Approach •CEO invitation to membership •Shareholders approval in annual proxy statement •All nominees usually elected 1-41
  42. 42. Board of DirectorsNominations & Elections –Staggered Board Approach •Staggered terms of service/election 1-42
  43. 43. Board of DirectorsSarbanes-Oxley –Code of Ethics –Audit, Nominating, and Compensation Committees all outside directors 1-43
  44. 44. Board of DirectorsOrganization of the Board –Size •Charter & Bylaws Determination 1-44
  45. 45. Board of DirectorsCorporate Governance –Review & shaping of strategy –Pressure for corporate performance –Demand for executive stock ownership –Outside directors increasing –Impact of Sarbanes-Oxley 1-45
  46. 46. Board of DirectorsTransformational leaders –Change agents through vision for change 1-46
  47. 47. Board of DirectorsSuccessful CEO’s –Strategic vision –Passion for the company –Strong communication –charisma 1-47
  48. 48. Board of DirectorsExecutive Leadership –Strategic vision –Role model 1-48
  49. 49. Board of DirectorsExecutive Leadership –Communication of performance standards –Demonstrates confidence in abilities of followers 1-49
  50. 50. Strategic Management ProcessStrategic Planning Staff –Supports top management & business units in the strategic planning process 1-50
  51. 51. Strategic Management ProcessStrategic Planning Staff –Identify & analyze company-wide strategic issues –Generate strategic alternatives 1-51
  52. 52. Strategic Management ProcessStrategic Planning Staff –Facilitate business units in coordinating activities related to strategic planning process 1-52
  53. 53. CHAPTER 3Ethics & SocialResponsibility 1-53
  54. 54. CHAPTER 3 Ethics & Social ResponsibilitySTRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1-54
  55. 55. Ethics & Social Responsibility 1-55
  56. 56. Corporate GovernanceBroader responsibility --Private corporations have responsibility tosociety that extend beyond making a profit 1-56
  57. 57. Social ResponsibilityMilton FriedmanThere is one and only one social responsibility ofbusiness—to use its resources and engage inactivities designed to increase its profits so longas it stays within the rules of the game, which isto say, engages in open and free competitionwithout deception or fraud. 1-57
  58. 58. Corporate GovernanceCarroll’s 4 Responsibilities –Economic –Legal –Ethical –Discretionary 1-58
  59. 59. Carroll’s 4 Responsibilities 1-59
  60. 60. Corporate StakeholdersAffect or are affected by theachievement of the corporation’sobjectives 1-60
  61. 61. Corporate StakeholdersStakeholder Analysis – –Primary stakeholder •Sufficient bargaining power to affect outcomes –Secondary stakeholder •Indirect stake but are affected by corporation’s actions –Stakeholder Input •Determine whether input is necessary 1-61
  62. 62. Ethical Behavior“business ethics” –Argument that there is no such thing … it is an oxymoron 1-62
  63. 63. Ethical Decision MakingCorporate practices -- –Massive write-downs and restatements of profit –Misclassification of expenses as capital expenditures –Pirating corporate assets for personal gain 1-63
  64. 64. Ethical Decision MakingRecent Survey Results -- –70% distrust business executives –Enron –WorldCom 1-64
  65. 65. Reasons for Unethical BehaviorProvocative Question -- –Why are businesspeople perceived to be acting unethically? 1-65
  66. 66. Reasons for Unethical BehaviorPerceptions caused by -- –Not aware of impropriety –Cultural norms and values vary –Governance systems based on rule or relationships –Differences in values between businesspeople and key stakeholders 1-66
  67. 67. Reasons for Unethical BehaviorAllport-Vernon-Lindzey Study of Values -- –Aesthetic –Economic –Political –Religious –Social –Theoretical 1-67
  68. 68. Reasons for Unethical BehaviorMost common reasons for bending rules -- –Organizational performance required it –Ambiguous or out of date rules –Pressure from others – everyone else does it 1-68
  69. 69. Moral RelativismMorality is relative to some personal, social,or cultural standard and there is no methodfor deciding whether one decision is betterthan another. 1-69
  70. 70. Kohlberg’s Levels of Moral Development1. Preconventional level –Characterized by a concern for self •Personal interest •Avoidance of punishment 1-70
  71. 71. Kohlberg’s Levels of Moral Development2. Conventional level –Characterized consideration of society’s values •External code of conduct 1-71
  72. 72. Kohlberg’s Levels of Moral Development3. Principled level –Characterized by adherence to internal moral code •Universal values or principles 1-72
  73. 73. Encouraging Ethical BehaviorCodes of Ethics –Specifies how an organization expects its employees to behave on the job. 1-73
  74. 74. Encouraging Ethical BehaviorGuidelines for Ethical Behavior –Ethics –Morality –Law 1-74
  75. 75. Encouraging Ethical BehaviorApproaches to Ethical Behavior –Utilitarian •Judged by consequences –Individual Rights •Fundamental rights in all decisions –Justice •Distribution in equitable fashion 1-75
  76. 76. Encouraging Ethical BehaviorApproaches to Ethical Behavior –Categorical imperative •“golden rule” •Means - Ends 1-76
  77. 77. Strategy Bits192 U.S. companies surveyed -- –92% monitored employees use of e-mail/Internet –26% monitored employees electronic activities all the time –Almost none had checks in place to protect employees privacy 1-77
  78. 78. CHAPTER 4EnvironmentalScanning andIndustry Analysis 1-78
  79. 79. CHAPTER 4 Environmental Scanning and Industry AnalysisSTRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1-79
  80. 80. Environmental ScanningSocietal environment -- –Economic forces –Technological forces –Political-legal forces –Sociocultural forces 1-80
  81. 81. Societal EnvironmentEconomic Forces -- –Regulate exchange of materials, money, energy and information 1-81
  82. 82. Societal EnvironmentTechnological Forces -- –Generate problem-solving inventions 1-82
  83. 83. Societal EnvironmentPolitical-legal Forces -- –Allocate power; provide laws and regulations 1-83
  84. 84. Societal EnvironmentSociocultural Forces -- –Regulate values, mores, and customs of society 1-84
  85. 85. Task EnvironmentTask environment -- –Elements or groups that directly affect a corporation and are affected by it 1-85
  86. 86. Task EnvironmentIndustry Analysis -- –In-depth examination of key factors within a corporation’s task environment 1-86
  87. 87. Variables in Societal Environment 1-87
  88. 88. Demographic Trends1-88
  89. 89. Transformational Sociocultural Trends8 Current Trends – –Increasing environmental awareness –Growing health consciousness –Expanding seniors market –Impact of the Generation Y boomlet –Declining mass market –Changing pace and location of life –Changing household composition –Increasing diversity of workforce & market 1-89
  90. 90. International Societal Environments 1-90
  91. 91. Scanning the Task Environment 1-91
  92. 92. Ethical Behavior“business ethics” –Argument that there is no such thing … it is an oxymoron 1-92
  93. 93. Ethical Decision MakingCorporate practices -- –Massive write-downs and restatements of profit –Misclassification of expenses as capital expenditures –Pirating corporate assets for personal gain 1-93
  94. 94. External Strategic FactorsStrategic myopia -- –Willingness to reject unfamiliar as well as negative information 1-94
  95. 95. Issues Priority Matrix1-95
  96. 96. Analyzing the Task Environment 1-96
  97. 97. Porter’s Approach to Industry AnalysisThreat of New Entrants – –Economies of scale –Product differentiation –Capital requirements –Switching costs –Access to distribution channels –Cost disadvantages –Government policy 1-97
  98. 98. Porter’s Approach to Industry AnalysisRivalry Among Existing Firms – –Number of competitors –Rate of industry growth –Product or service characteristics –Amount of fixed costs –Capacity –Height of exit barriers –Diversity of rivals 1-98
  99. 99. Porter’s Approach to Industry Analysis•Threat of Substitute Products or Services•Bargaining Power of Buyers•Bargaining Power of Suppliers•Relative Power of Other Stakeholders 1-99
  100. 100. Industry EvolutionFragmented Industry – –No dominant industry 1-100
  101. 101. Industry EvolutionConsolidated Industry – –Dominated by a few large firms 1-101
  102. 102. International Risk AssessmentContinuum of International Industries 1-102
  103. 103. Strategic Groups1-103
  104. 104. Strategic Types General Types –•Defenders•Prospectors•Analyzers•Reactors 1-104
  105. 105. Competitive IntelligenceCalled business intelligenceGathering information on a company’scompetitors 1-105
  106. 106. ForecastingForecasting Techniques -- –Extrapolation –Brainstorming –Expert opinion –Delphi technique –Statistical modeling –Scenario writing 1-106
  107. 107. Synthesis of External Factors -- EFAS 1-107
  108. 108. CHAPTER 5InternalScanning:OrganizationalAnalysis 1-108
  109. 109. CHAPTER 5 Internal Scanning: Organizational AnalysisSTRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1-109
  110. 110. Resource-Based Approach to Organizational AnalysisInternal strategic factors -- –Critical strengths and weaknesses that are likely to determine if the firm will be able to take advantage of opportunities while avoiding threats 1-110
  111. 111. Resource-Based Approach to Organizational Analysis•Resources•Capabilities•Competency•Core competency•Distinctive competency 1-111
  112. 112. Core and Distinctive CompetenciesVRIO Framework -- –Value –Rareness –Imitability –Organization 1-112
  113. 113. Resource-Based Approach to Organizational Analysis5-Step Approach Strategy Analysis -- 1. Identify and classify resources 2. Combine strengths into capabilities 3. Appraise profit potential of capabilities 4. Select strategy that best exploits 5. Identify resource gaps invest in weaknesses 1-113
  114. 114. Continuum of Sustainability 1-114
  115. 115. Sustainability of AdvantageDurability -- –Rate at which a firm’s underlying resources and capabilities depreciate or become obsolete 1-115
  116. 116. Sustainability of AdvantageImitability -- –Rate at which a firm’s underlying resources and capabilities can be duplicated by others 1-116
  117. 117. Sustainability of AdvantageCore Competency can be imitated -- –Transparency –Transferability –Replicability 1-117
  118. 118. Business ModelsCompany’s method for making money inthe current business environment. 1-118
  119. 119. Business ModelsTypes of Models -- –Customer Solutions Model –Profit Pyramid Model –Multi-Component System/Installed Base Model –Advertising Model –Switchboard Model 1-119
  120. 120. Business ModelsTypes of Models -- –Time Model –Efficiency Model –Blockbuster Model –Profit Multiplier Model –Entrepreneurial Model –De Facto Standard Model 1-120
  121. 121. Value-Chain AnalysisLinked set of value-creating activitiesbeginning with basic raw material andending with distributors getting finalgoods into hands of customers 1-121
  122. 122. Value-Chain AnalysisTypical Value Chain fora Manufactured Product 1-122
  123. 123. Corporate Value-Chain Analysis•Primary activities•Support activities 1-123
  124. 124. Corporation’s Value Chain 1-124
  125. 125. Scanning Functional Resources & CapabilitiesBasic Organizational Structures -- –Simple structure –Functional structure –Divisional structure –Strategic business units (SBU’s) –Conglomerate structure 1-125
  126. 126. Basic Organizational Structures 1-126
  127. 127. Corporate CultureCollection of beliefs, expectations, andvalues learned and shared by acorporation’s members andtransmitted from one generation ofemployees to another 1-127
  128. 128. Strategic Marketing Issues–Market Position & Segmentation–Marketing Mix–Product Life Cycle–Brand & Corporate Reputation 1-128
  129. 129. Product Life Cycle1-129
  130. 130. Strategic Financial Issues–Financial leverage–Capital budgeting 1-130
  131. 131. Strategic Research & Development Issues–R&D Intensity–Technological Competence–Technology Transfer 1-131
  132. 132. Technological Discontinuity 1-132
  133. 133. Strategic Human Resource Management IssuesHRM – –Increasing use of teams –Union relations –Temporary workers –Quality of work life –Human diversity 1-133
  134. 134. Internal Factor Analysis Summary Table 1-134
  135. 135. CHAPTER 6Strategy Formulation:Situation Analysis &Business Strategy 1-135
  136. 136. CHAPTER 6 Strategy Formulation: Situation Analysis & Business StrategySTRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1-136
  137. 137. Situational AnalysisStrategy formulation -- –Strategic planning or long-range planning •Develops mission, objectives, strategies, policies 1-137
  138. 138. Situational Analysis--process of finding a strategic fitbetween external opportunities andinternal strengths while working aroundexternal threats and internal weaknesses 1-138
  139. 139. IFAS – Maytag as Example 1-139
  140. 140. EFAS – Maytag as Example 1-140
  141. 141. SFAS Matrix1-141
  142. 142. Situational AnalysisNiche -- –Need in the marketplace that is currently unsatisfied 1-142
  143. 143. Situational AnalysisCorporate Goal -- –Find propitious niche –Strategic window 1-143
  144. 144. Situational AnalysisSWOT -- –Internal •Strengths/Weaknesses –External •Opportunities/Threats 1-144
  145. 145. TOWS Matrix1-145
  146. 146. Business StrategyFocuses on improving competitiveposition of company’s products orservices within the specific industry ormarket segment 1-146
  147. 147. Porter’s Competitive StrategiesCompetitive Strategy -- –Low cost –Differentiation –Direct competition –Focus on niche 1-147
  148. 148. Porter’s Competitive StrategiesGeneric Competitive Strategies -- –Lower Cost strategy •Greater efficiencies than competitors –Differentiation strategy •Unique/superior value, quality, features, service 1-148
  149. 149. Porter’s Competitive StrategiesCompetitive Advantage -- –Determined by Competitive Scope •Breadth of the target market 1-149
  150. 150. Porter’s Competitive Strategies 1-150
  151. 151. Porter’s Competitive StrategiesCost Leadership -- –Low-cost competitive strategy –Broad mass market –Efficient-scale facilities –Cost reductions –Cost minimization 1-151
  152. 152. Porter’s Competitive StrategiesDifferentiation – –Broad mass market –Unique product/service –Premiums charged –Less price sensitivity 1-152
  153. 153. Porter’s Competitive StrategiesCost-Focus – –Low-cost competitive strategy –Focus on market segment –Niche focused –Cost advantage in market segment 1-153
  154. 154. Porter’s Competitive StrategiesDifferentiation Focus – –Specific group or geographic market focus –Differentiation in target market –Special needs of narrow target market 1-154
  155. 155. Porter’s Competitive StrategiesStuck in the middle – –No competitive advantage –Below-average performance 1-155
  156. 156. Risks of Generic StrategiesRisks of Cost Leadership Risks of Differentiation Risks of Focus Risks of Cost LeadershipCost leadership is not Risks of Differentiation Differentiation is not Risks of Focus The focus strategy is Cost leadership is notsustained: Differentiation is not sustained: The focus strategy is imitated:• sustained: imitate. Competitors • sustained: imitate. Competitors imitated: The target segment becomes • Competitors imitate.• Technology changes. • Competitors imitate. • Bases for differentiation The target segment becomes structurally unattractive:• • Technology changes. Other bases for cost • Bases less important to become for differentiation • structurally unattractive: Structure erodes. • Other bases for cost leadership erode. buyers. less important to become • Structure erodes. • Demand disappears. leadership erode.Proximity in differentiation is buyers. Cost proximity is lost. • Demand disappears. Broadly targeted competitors Proximity in differentiation islost. Cost proximity is lost. Differentiation focusers Broadly targeted competitors overwhelm the segment: lost.Cost focusers achieve even Differentiation focusers achieve even greater • overwhelm the segment: The segment’slower cost in segments. even Cost focusers achieve differentiation ingreater achieve even segments. • The segment’sother differences from lower cost in segments. differentiation in segments. segments narrow. other differences from segments narrow. • The advantages of a •broad advantages of a The line increase. Newbroad linesubsegment focusers increase. New focusers subsegment the industry. the industry. 1-156
  157. 157. 8 Dimensions of Quality 1-157
  158. 158. Competitive StrategyIndustry Structure -- –Fragmented Industry –Consolidated Industry 1-158
  159. 159. Competitive TacticsTiming Tactics -- –First mover –Late movers 1-159
  160. 160. Competitive TacticsMarket Location Tactics -- –Frontal Assault –Flanking Maneuver –Bypass Attack –Encirclement –Guerrilla Warfare 1-160
  161. 161. Competitive TacticsDefensive Tactics -- –Raise structural barriers –Increase expected retaliation –Lower the inducement for attack 1-161
  162. 162. Cooperative Strategies•Collusion•Strategic Alliances•Mutual service consortia•Joint ventures•Licensing arrangements•Value-chain partnerships 1-162
  163. 163. CHAPTER 7 StrategyFormulation: CorporateStrategy 1-163
  164. 164. CHAPTER 7 Strategy Formulation: Corporate StrategySTRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1-164
  165. 165. Corporate Strategy3 Key Issues – –Firm’s directional strategy –Firm’s portfolio strategy –Firm’s parenting strategy 1-165
  166. 166. Corporate Directional Strategies 1-166
  167. 167. Corporate StrategyDirectional Strategy – –Orientation toward growth •Expansion, contraction, status quo •Concentration or diversification •Internal development or acquisitions, mergers, or alliances 1-167
  168. 168. Corporate StrategyDirectional Strategy – –3 Grand Strategies •Growth strategies •Stability strategies •Retrenchment strategies 1-168
  169. 169. Corporate StrategyGrowth Strategies -- –External mechanisms •Mergers •Acquisitions •Strategic alliances 1-169
  170. 170. Corporate StrategyGrowth Strategies -- –2 Basic forms •Concentration •Diversification 1-170
  171. 171. Corporate StrategyBasic Concentration Strategies -- –Vertical growth –Horizontal growth 1-171
  172. 172. Corporate StrategyVertical Growth -- –Vertical integration •Full integration •Taper integration •Quasi-integration •Long-term contract 1-172
  173. 173. Corporate StrategyVertical Growth -- –Backward integration –Forward integration 1-173
  174. 174. Corporate StrategyConcentration -- –Horizontal Growth •Horizontal integration 1-174
  175. 175. Corporate StrategyBasic Diversification Strategies -- –Concentric Diversification –Conglomerate Diversification 1-175
  176. 176. Corporate StrategyConcentric Diversification -- –Growth into related industry –Search for synergies 1-176
  177. 177. Corporate StrategyConglomerate diversification -- –Growth into unrelated industry –Concern with financial considerations 1-177
  178. 178. Corporate StrategyInternational Entry Options -- –Exporting –Licensing –Franchising –Joint Ventures –Acquisitions –Green-Field Development 1-178
  179. 179. Corporate StrategyInternational Entry Options -- –Production Sharing –Turnkey Operation –BOT Concept (Build, Operate, Transfer) –Management Contracts 1-179
  180. 180. Corporate StrategyStability Strategies -- –Pause/proceed with caution –No change –Profit strategies 1-180
  181. 181. Corporate StrategyRetrenchment Strategies -- –Turnaround –Captive Company Strategy –Selling out –Bankruptcy –Liquidation 1-181
  182. 182. Corporate StrategyPortfolio Analysis -- –Resource commitment on best products to ensure continued success –Resource commitment on new costly products high risk 1-182
  183. 183. BCG Matrix (Portfolio Analysis) 1-183
  184. 184. GE Business Screen (Portfolio Analysis) C Winners Winners A Question High B Marks DIndustry Attractiveness Winners E Average Businesses Medium F Losers H Losers G Low Profit Producers Losers Strong Average Weak Business Strength/Competitive Position 1-184
  185. 185. Corporate StrategyCorporate Parenting Strategy -- –Strategic factors –performance improvement –Analyze fit 1-185
  186. 186. CHAPTER 8 StrategyFormulation: FunctionalStrategy & StrategicChoice 1-186
  187. 187. CHAPTER 8 Strategy Formulation: Functional Strategy & Strategic ChoiceSTRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1-187
  188. 188. Functional StrategyThe approach a functional area takes toachieve corporate and business unitobjectives and strategies by maximizingresource productivity 1-188
  189. 189. Functional StrategyMarketing Strategy – –Pricing –Selling –Distribution 1-189
  190. 190. Functional StrategyMarketing Strategy – –Product development •Line extension 1-190
  191. 191. Functional StrategyMarketing Strategy – –Advertising and promotion •Push strategy •Pull strategy 1-191
  192. 192. Functional StrategyMarketing Strategy – –Pricing •Skim pricing •Penetration pricing •Dynamic pricing 1-192
  193. 193. Functional StrategyFinancial Strategy – –Leveraged buyout –Reversed stock split –Tracking stock 1-193
  194. 194. Functional StrategyR&D Strategy – –Technological leader –Technological follower –Open innovation 1-194
  195. 195. Functional StrategyOperations Strategy – –Job shop –Connected line batch flow –Flexible manufacturing systems –Dedicated transfer lines –Mass production –Continuous improvement system –Modular manufacturing 1-195
  196. 196. Functional StrategyPurchasing Strategy – –Multiple sourcing –Sole sourcing –Just-in-time (JIT) –Parallel sourcing 1-196
  197. 197. Functional StrategyLogistics Strategy – –Centralization –Outsourcing –Internet 1-197
  198. 198. Functional StrategyHRM Strategy – –360 degree appraisal 1-198
  199. 199. Functional StrategyOutsourcing errors – –Activities that should not be outsourced –Wrong vendor selection –Writing poor contract –Overlooking personnel issues –Hidden costs of outsourcing –Failing to plan exit strategy 1-199
  200. 200. Proposed Outsourcing Matrix 1-200
  201. 201. Functional StrategyStrategies to Avoid – –3 Follow the leader –Hit another home run –Arms race –Do everything –Losing hand 1-201
  202. 202. Corporate StrategyGrowth Strategies -- –External mechanisms •Mergers •Acquisitions •Strategic alliances 1-202
  203. 203. Constructing Corporate Scenarios 1-203
  204. 204. Functional StrategySubjective Factors Affecting Decisions -- –Management’s attitude toward risk –Pressures from stakeholders –Pressures from corporate culture –Needs and desires of key managers 1-204
  205. 205. Stakeholder Priority Matrix 1-205
  206. 206. Strategic ChoiceAvoiding the Consensus Trap -- –Devil’s Advocate –Dialectical Inquiry 1-206
  207. 207. Strategic ChoiceEvaluation of Strategic Alternatives -- –Mutual exclusivity –Success –Completeness –Internal consistency 1-207
  208. 208. CHAPTER 9 StrategyImplementation:Organizing for Action 1-208
  209. 209. CHAPTER 9 Strategy Implementation: Organizing for ActionSTRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1-209
  210. 210. Strategy Implementation--Sum total of activities & choicesrequired for strategic plan execution--Strategy implementation throughprograms, budgets, and procedures 1-210
  211. 211. Strategy ImplementationKey Implementation Questions – –Who carries out strategic plan? –What needs doing for alignment w/ strategy? –How is work coordinated? 1-211
  212. 212. Strategy ImplementationPrograms – –Action oriented –Matrix of change •Feasibility •Sequence of execution •Location •Pace & nature of change •Stakeholder evaluations 1-212
  213. 213. The Matrix of Change1-213
  214. 214. Strategy ImplementationAchieving Synergy – –Shared know-how –Coordinated strategies –Shared tangible resources 1-214
  215. 215. Strategy ImplementationAchieving Synergy – –Economies of scale or scope –Pooled negotiating power –New business creation 1-215
  216. 216. Strategy ImplementationStructure follows strategy – –New strategy is created –New administrative problems emerge –Economic performance declines –New appropriate structure is invented –Profit returns to previous level 1-216
  217. 217. Strategy ImplementationStages of Corporate Development – –Stage I: Simple structure –Stage II: Functional structure –Stage III: Divisional structure –Stage IV: Beyond SBU’s 1-217
  218. 218. Strategy ImplementationBlocks to Changing Stages – –Loyalty to comrades –Task oriented –Single-mindedness –Working in isolation 1-218
  219. 219. Organizational Life Cycle 1-219
  220. 220. Changing Structural Characteristics of Modern Organizations 1-220
  221. 221. Strategy ImplementationAdvanced Types of OrganizationalStructures – –Matrix •Temporary cross-functional task forces •Product/brand management •Mature matrix 1-221
  222. 222. Strategy ImplementationAdvanced Types of OrganizationalStructures – –Network structure (virtual organization) –Cellular organization 1-222
  223. 223. Network Structure1-223
  224. 224. Strategy ImplementationSix Sigma – –Define –Measure –Analyze –Improve –Establish 1-224
  225. 225. Strategy ImplementationJob design to implement strategy – –Job enlargement –Job rotation –Job enrichment –Job characteristics model 1-225
  226. 226. Strategy ImplementationInternational Issues – –MNC’s –International Strategic Alliances 1-226
  227. 227. Strategy ImplementationInternational Development Stages– –Domestic company –Domestic company w/export division –Domestic company w/int’l division –MNC w/multidomestic emphasis –MNC w/global emphasis 1-227
  228. 228. Strategy ImplementationCentralization vs. Decentralization– –Product-group structure –Geographic-area structure 1-228
  229. 229. Geographic Area Structure 1-229
  230. 230. 1-230
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