Your SlideShare is downloading. ×
Chapter 6 Organizationing Stragery
Upcoming SlideShare
Loading in...5

Thanks for flagging this SlideShare!

Oops! An error has occurred.


Introducing the official SlideShare app

Stunning, full-screen experience for iPhone and Android

Text the download link to your phone

Standard text messaging rates apply

Chapter 6 Organizationing Stragery


Published on

Management 4th Edition written by Chuck Williams

Management 4th Edition written by Chuck Williams

Published in: Business

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide


  • 1. Chapter 6 Prepared by Deborah Baker Texas Christian University Organizational Strategy Management 4th Edition Chuck Williams
  • 2. What Would You Do?
    • TiVo Headquarters, Alviso, CA
    • TiVo, the first digital video recorder service, has become a popular concept
    • However, five years after its startup, TiVo still is not profitable and is facing heavy competition from other DVR services
    • TiVo must find a niche that allows it to survive, differentiate its products and services, and must consider a counterattack against its competitors
    • If you were TiVo’s new CEO, what would you do?
  • 3. Basics of Organizational Strategy After reading these sections, you should be able to:
    • indicate the components of sustainable competitive advantage and explain why it is important.
    • describe the steps involved in the strategy-making process.
  • 4. Sustainable Competitive Advantage 1 Resources The assets, capabilities, processes, information, and knowledge that the organization controls Competitive Advantage Providing greater value for customers than competitors can Sustainable Competitive Advantage A competitive advantage that other companies have tried unsuccessfully to duplicate
  • 5. Requirements for Sustainable Competitive Advantage Adapted from Exhibit 6.1 1 Sustainable Competitive Advantage Valuable Resources Non- Substitutable Resources Imperfectly Imitable Resources Rare Resources
  • 6. Strategy-Making Process Assess need for strategic change Conduct a Situational Analysis Choose Strategic Alternatives 2
  • 7. Assessing the Need for Strategic Change
    • Avoid Competitive Inertia
      • a reluctance to change strategies or competitive practices that have been successful in the past
    • Look for Strategic Dissonance
      • a discrepancy between a company’s intended strategy and the strategic actions managers take when implementing that strategy
    2.1 Step 1 Assess need for strategic change
  • 8. Doing the Right Thing 2.1
    • Is Ethics an Overlooked Source of Competitive Advantage?
    • Volvo’s reputation for safe cars has been a source of competitive advantage
    • Johnson & Johnson is admired for its response to the Tylenol cyanide contamination incidence
    • Should ethics be the first source of competitive advantage? Probably not…
    • Start with low costs, good service, or unique product capabilities. Use ethics as a way to differentiate your company from the competition.
  • 9. What Really Works Strategic Planning & Growth for Big Companies 2.1 Strategic Planning & Profits for Big Companies 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 72 % Strategy Making for Big Firms 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 75 %
  • 10. What Really Works Strategic Planning & Profits for Small Companies 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 61 % Strategy Making for Small Firms 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Strategic Planning & Growth for Big Companies probability of success 62 % 2.1
  • 11. What Really Works 2.1 Strategic Planning & External Growth Through Acquisitions 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% probability of success 45 % External Growth Through Acquisitions
  • 12. Situational Analysis 2.2 S W O T Strengths Weaknesses Opportunities Threats Internal External
  • 13. Situational Analysis Adapted from Exhibit 6.4 2.2 Strengths Weaknesses
    • Distinctive Competence
    • Core Capability
    INTERNAL Opportunities Threats
    • Environmental Scanning
    • Strategic Groups
    • Shadow-Strategy Task Force
  • 14. Strategic Groups
    • Core Firms
      • central companies in a strategic group
    • Secondary Firms
      • firms that follow related, but somewhat different, strategies than do core firms
    • Transient Firms
      • companies whose strategies change from one strategic position to another
    • Shadow-strategy task force
      • seeks out its own company’s weaknesses and determine how other companies could exploit them
  • 15. Strategic Groups Exhibit 6.5 2.2
  • 16. Choosing Strategic Alternatives
    • Risk-Avoiding Strategy
      • protect an existing competitive advantage
    • Risk-Seeking Strategy
      • extend or create a sustainable competitive advantage
    • Strategic Reference Points
      • targets used by managers to determine if the firm has developed the core competencies it needs to achieve a sustainable competitive advantage
  • 17. Menard’s : Risk Seeking
  • 18. Strategic Reference Points Adapted from Exhibit 6.6 2.3
  • 19. Corporate, Industry, and Firm-Level Strategies After reading these sections, you should be able to:
    • explain the different kinds of corporate-level strategies.
    • describe the different kinds of industry-level strategies.
    • explain the components and kinds of firm-level strategies.
  • 20. Corporate-Level Strategies 3 Corporate-Level Strategy The overall organizational strategy that addresses the question “What business(es) are we in or should we be in?”
  • 21. Corporate-Level Strategies 3 Adapted from Exhibit 6.7
    • Acquisitions, unrelated diversification, related diversification, single businesses
    • BCG Matrix
      • Stars
      • Question marks
      • Cash cows
      • Dogs
    • Growth
    • Stability
    • Retrenchment/ recovery
  • 22. BCG Matrix Relative Market Share Market Growth Small Large Low High Question Marks Stars Dogs Cash Cows 3.1
  • 23. BCG Matrix 3.1 companies with a small share of a fast-growing market Question Marks companies with a large share of a fast-growing market Stars companies with a small share of a slow-growing market Dogs companies with a large share of a slow-growing market Cash Cows
  • 24. BCG Matrix Relative Market Share Market Growth Small Large Low High  Adapted from Exhibit 6.8 3.1 Question Marks Company A Company B Stars Company C Company D Dogs Company H Company G Cash Cows Company F Company E    
  • 25. Diversification and Risk Risk Low High Single Business Related Diversification Unrelated Diversification Adapted from Exhibit 6.9 3.1 Relationship Between Diversification and Risk
  • 26. Problems with Portfolio Strategy
    • Unrelated diversification does not reduce risk.
    • Present performance is used to predict future performance.
    • Cash cows fail to aggressively pursue opportunities and defense themselves from threats.
    • Being labeled a “cash cow” can hurt employee morale.
    • Companies often overpay to acquire stars.
    • Acquiring firms often treat stars as “conquered foes.”
  • 27. Grand Strategies 3.2 Growth Strategy focuses on increasing profits, revenues, market share, or number of places to do business Stability Strategy focuses on improving the way in which the company sells the same products or services to the same customers Retrenchment Strategy focuses on turning around very poor company performance by shrinking the size or scope of the business
  • 28. Industry-Level Strategies Five Industry Forces Positioning Strategies Adaptive Strategies 4
  • 29. Porter’s Five Industry Forces Adapted from Exhibit 6.12 4.1 Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitutes Threats of New Entrants Character of Rivalry
  • 30. Positioning Strategies Cost Leadership Differentiation Focus Strategy 4.2
  • 31. Differentiation
  • 32. Adaptive Strategies
    • Defenders
    • seek moderate growth
    • retain customers
    • Prospectors
    • seek fast growth
    • emphasize risk taking innovation
    • Analyzers
    • blend of defender & prospector strategies
    • imitate other’s successes
    • Reactors
    • use an inconsistent strategy
    • respond to changes
  • 33. Firm-Level Strategies Basics of Direct Competition Strategic Moves in Direct Competition Entrepreneurship and Intrapreneurship 5
  • 34. Firm-Level Strategies 5 DIRECT COMPETITION Market commonality Resource similarity STRATEGIC MOVES OF DIRECT COMP. ENTREPRENEURIAL INTRAPRENEURIAL ORIENTATION Attack Autonomy Response Innovativeness Risk taking Proactiveness Competitive Aggressiveness
  • 35. Firm-Level Strategies Adapted from Exhibit 6.13 5 Market Commonality Resource Similarity Entering market is most forceful attack. Exiting market is clear defensive signal of retreat. Entrepreneurship is strategy of entering established markets or developing new market. Firm A Firm B Attack Response
  • 36. Direct Competition Adapted from Exhibit 6.14 5.1 Resource Similarity Low High High Low Market Commonality I II III IV McDonald’s McDonald’s McDonald’s McDonald’s Burger King Wendy’s Luby’s Cafeteria Subway
  • 37. Strategic Moves of Direct Competition 5.2 Attack A competitive move designed to reduce a rival’s market share or profits. Response A competitive countermove, prompted by a rival’s attack, to defend or improve a company’s market share or profit.
  • 38. Strategic Moves of Direct Competition 5.2 Types of Responses 1. Match or mirror your competitor’s move. 2. Respond along a different dimension from your competitor’s move or attack.
  • 39. Strategic Moves of Direct Competition Adapted from Exhibit 6.15 5.2 Competitor Analysis Interfirm Rivalry: Action & Response Strong Market Commonality Less Likelihood of an Attack Weak Market Commonality Greater Likelihood of an Attack Strong Resource Commonality Less Likelihood of a Response Low Resource Commonality Greater Likelihood of a Response
  • 40. Entrepreneurship and Intrapreneurship
    • Entrepreneurship
      • the process of entering new or established markets with new goods or services
    • Intrapreneurship
      • entrepreneurship within an existing organization
    • Entrepreneurial orientation
      • the set of processes, practices, and decision-making activities that lead to new entry
  • 41. Key Dimensions of Entrepreneurial Orientation 5.3 Risk Taking Autonomy Innovativeness Proactiveness Competitive Aggressiveness
  • 42. Entrepreneurship