Downloaded 20 times
Strategy formulation and implementation
- 1. Strategy Formulation and Implementation Preparedby Mahmut AFARA Presented in Turkey, Istanbul EffectivePlanningSkills
- 2. 2 Strategic Planning Strategicplanning has taken on new importance in today’s world of globalization, deregulation, advancing technology, and changing demographics, and lifestyles
- 3. 3 Strategy Formulation and Implementation Strategic Management – Definition – Components – Model of Strategic Management Process – Models of Strategy Formation Managerial Tools to Implement Strategic Plans
- 4. 4 Strategic Management Setof decisions and actions used to implement strategies that will provide a competitively best fit between the organization and its environment so as to achieve organizational goals.
- 5. 5 Strategic Management Managers asksuch questions as... What changes and trends are occurring? Who are our customers? What products or services should we offer? How can we offer these products or services most efficiently?
- 6. 6 Grand Strategy Generalplan of major action to achieve long-term goals Falls into three general categories 1. Growth 2. Stability 3. Retrenchment A separate grand strategy can be defined for global operations
- 7. 7 Grand Strategy: Growth Growth can be promoted internally by investing in expansion or externally by acquiring additional business divisions - Internal growth = can include development of new or changed products - External growth = typically involves diversification – businesses related to current product lines or into new areas
- 8. 8 Grand Strategy: Stability Stability, sometimes called a pause strategy, means that the organization wants – to remain the same size or – to grow slowly and in a controlled fashion
- 9. 9 Grand Strategy: Retrenchment Retrenchment = the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses Liquidation = selling off a business unit for the cash value of the assets, thus terminating its existence Divestiture = involves selling off of businesses that no longer seem central to the corporation
- 10. 10 Global Corporate Strategies Needfor National Responsiveness High Low Low High Transnational Strategy • Seeks to balance global efficiencies and local responsiveness • Combines standardization and customization for product/advertising strategies Globalization Strategy • Treats world as a single global market • Standardizes global products/advertising strategies Multi-domestic Strategy • Handles markets independently for each country • Adapts product/advertising to local tastes and needs NeedforGlobalIntegration Export Strategy •Domestically focused •Exports a few domestically produced products to selected countries
- 11. 11 Global Strategy Globalization= product design and advertising strategies are standardized around the world Multi-domestic = adapt product and promotion for each country Transnational = combine global coordination with flexibility to meet specific needs in various countries
- 12. 12 Purpose of Strategy The plan of action that describes resource allocation and other activities for dealing with the environment, achieving a competitive advantage, that help the organization attain its goals Strategies focus on: ● Core competencies ● Developing cooperation ● Creating value for customers
- 13. 13 Three Levels ofStrategy in Organizations Corporate-Level Strategy: What business are we in? Corporation Business-Level Strategy: How do we compete? Textiles Unit Chemicals Unit Auto Parts Unit Functional-Level Strategy: How do we support the business-level strategy? Finance R&D Manufacturing Marketing
- 14. 14 Strategic Management Process Implement Strategyvia Changes in: Leadership culture, Structure, HR, Information & control systems SWOT Formulate Strategy – Corporate, Business, Functional Define new Mission Goals, Grand Strategy Identify Strategic Factors – Strengths, Weaknesses Identify Strategic Factors – Opportunities, Threats Scan Internal Environment – Core Competence, Synergy, Value Creation Evaluate Current Mission, Goals, Strategies Scan External Environment – National, Global
- 15. 15 Strategy Formulation vs. Implementation Strategy Formulation = stage of strategic management that involves planning and decision making that lead to the establishment of the organization’s goals and of a specific strategic plan Strategy Implementation = stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes
- 16. 16 Checklist for Analyzing OrganizationalStrengths and Weaknesses Management and Organization Management quality Staff quality Degree of centralization Organization charts Planning, information, control systems Finance Profit margin Debt-equity ratio Inventory ratio Return on investment Credit rating Marketing Distribution channels Market share Advertising efficiency Customer satisfaction Product quality Service reputation Sales force turnover Production Plant location Machinery obsolescence Purchasing system Quality control Productivity/efficiency Human Resources Employee experience, education Union status Turnover, absenteeism Work satisfaction Grievances Research and Development Basic applied research Laboratory capabilities Research programs New-product innovations Technology innovations
- 17. 17 Portfolio Strategy Mixof business units and product lines that fit together in a logical way to provide synergy and competitive advantage BCG Matrix
- 18. 18 Five Forces AffectingIndustry Competition •Internet reduces barriers to entry •Internet expands market size, but creates new substitution threats •Internet tends to increase the bargaining power of suppliers •Internet shifts greater power to end consumers Internet blurs differences among competitors in an industry Bargaining Power of Buyers Bargaining Power of Suppliers Threat of Substitute Products Potential New Entrants Rivalry among Competitors
- 19. 19 Competitive Edge Through CompetitiveStrategies Differentiation = attempt to distinguish products or services from that of competitors Cost leadership = aggressively seeks efficient facilities, tracking cost reductions, and uses tight cost controls to produce products more efficiently than competitors Focus = concentrates on a specific regional market or buyer group
- 20. 20 Continuum of PartnershipStrategies Organizational Combination Strategic Alliances Preferred Supplier Arrangements Strategic Business Partnering Mergers Acquisitions Low High Joint Ventures Degree of Collaboration
- 21. 21 Implementing Strategy Tools Leadership Structural design Information and control systems Human resources
- 22. 22 Tools for Putting Strategyinto Action Environment Organization Strategy Performance Leadership Persuasion Motivation Culture/values Structural Design Organization Chart Teams Centralization Decentralization, Facilities, task design Human Resources Recruitment/selection Transfers/promotions Training Layoffs Information and Control Systems Pay, reward system Budget allocations Information systems Rules/procedures