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 ...
LEARNING OBJECTIVES
(continued)
• You should be able to (continued):
– Explain what competitive advantage is
and why it’s ...
THE IMPORTANCE OF
STRATEGIC MANAGEMENT
• What Is Strategic Management?
– A set of managerial decisions and actions that de...
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
– Mi...
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 STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 4: Analyzing the Organization’s Resources
and Capabilities
– examine t...
THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 5: Identifying Strengths and Weaknesses
– Strengths - activities the o...
IDENTIFYING THE
ORGANIZATION’S
OPPORTUNITIES (Exhibit 8.3)
Organization’s
Organization’s
Resources/Abilities Opportunities...
THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 6: Formulating Strategies
– Require strategies at the corporate, busin...
TYPES OF ORGANIZATIONAL
STRATEGIES
• Corporate-Level Strategy
– Determines
•

•
•

what businesses a company should be in ...
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
•
•
•

...
TYPES OF ORGANIZATIONAL
STRATEGIES (continued)
• Corporate-level Strategy (continued)
– Grand Strategy - Growth
• seeks to...
Critical
Weaknesses

Firm Status

Valuable
Strengths

SWOT ANALYSIS AND GRAND
STRATEGIES (Exhibit 8.5)

Abundant
Environme...
TYPES OF ORGANIZATIONAL
STRATEGIES (continued)
• Corporate-Level Strategy (continued)
– Corporate Portfolio Analysis - use...
THE BCG MATRIX (Exhibit 8.6)
Market Share
Low

High

High

Stars

Question
Marks

Cash
Cows

Dogs

Low

Anticipated
Growth...
TYPES OF ORGANIZATIONAL
STRATEGIES (continued)
• Corporate-Level Strategy (continued)
– BCG matrix (continued)
• strategic...
TYPES OF ORGANIZATIONAL
STRATEGIES (continued)
• Business-Level Strategy
– Determines how an organization should compete i...
TYPES OF ORGANIZATIONAL
STRATEGIES (continued)
• Business-Level Strategy (continued)
– Competitive Strategies
• industry a...
TYPES OF ORGANIZATIONAL
STRATEGIES (continued)
• Business-Level Strategy (continued)
– Competitive Strategies (continued)
...
FORCES IN THE INDUSTRY
ANALYSIS (Exhibit 8.7)
Bargaining
Power or
Suppliers

New
Entrants

Suppliers

Threat of
New Entran...
TYPES OF ORGANIZATIONAL
STRATEGIES (continued)
• Business-Level Strategy (continued)
– Competitive strategies (continued)
...
REQUIREMENTS FOR SUCCESSFULLY
PURSUING PORTER’S COMPETITIVE
STRATEGIES (Exhibit 8.8)

© 2003 Pearson Education Canada Inc....
TYPES OF ORGANIZATIONAL
STRATEGIES (continued)
• Functional-Level Strategy
– used to support the business-level
strategy
–...
Upcoming SlideShare
Loading in …5
×

Chapter8 strategicmanagement-090411130004-phpapp02

768 views

Published on

Published in: Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
768
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
26
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Chapter8 strategicmanagement-090411130004-phpapp02

  1. 1. Chapter 8 STRATEGIC MANAGEMENT © 2003 Pearson Education Canada Inc. 8.1
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. THE STRATEGIC MANAGEMENT PROCESS (Exhibit 8.1) © 2003 Pearson Education Canada Inc. 8.5
  6. 6. 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
  7. 7. COMPONENTS OF A MISSION STATEMENT (Exhibit 8.2) © 2003 Pearson Education Canada Inc. 8.7
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. LEVELS OF ORGANIZATIONAL STRATEGY (Exhibit 8.4) © 2003 Pearson Education Canada Inc. 8.14
  15. 15. 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
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. 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
  22. 22. 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
  23. 23. 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
  24. 24. 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
  25. 25. 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
  26. 26. REQUIREMENTS FOR SUCCESSFULLY PURSUING PORTER’S COMPETITIVE STRATEGIES (Exhibit 8.8) © 2003 Pearson Education Canada Inc. 8.26
  27. 27. 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

×