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1. Business Strategic
Planning
Understand Strategy and
how it differs from plans, and
tactics
Look at models of strategy
development
Understand the process of
strategy development
Product Life Cycle and
Generic Strategies

2. Functions of Planning
1) Identifying future opportunities
2) Identifying and avoiding future
problems
3) Developing courses of action
4) Understanding the risks and
uncertainties associated with
various options

3. Strategy
 The major courses of action that
an organization should take to
achieve its goals
 Plans-deal more with actions that
should be taken
 Tactics-specific moves

4. Intended and Realized
Strategies
 Intended-Plans that managers
develop
 Realized-What actions actually
occur
 Unrealized-Plans that never occur
 Emergent Strategy-Unplanned
actions that occur

5. Realized
Strategy
Intended
Strategy
Emergent
Strategy
Unrealized
Strategy

6. SWOT Analysis
 Internal
 Strengths and Weaknesses
 External
 Opportunities and Threats in the
business environment

7. Core Competencies
 Strengths that make an
organization distinctive from
competitors
 Groups of sustainable competitive
advantages

8. External-O’s and T’s
 Porter’s Five Forces Model-P94
 Threat of New Entrants
 Supplier Bargaining Power
 Customer Bargaining Power
 Substitute Goods or Services
 Rivalry of Existing Firms

9. Product Life Cycle
 Market phases that products
usually go through during their
lifetimes
 Introduction
 Growth
 Maturity
 Decline
 Termination

10. Basic Product Life Cycle
Model
Adapted from Figure 7.4
Introduction Growth Maturity Decline Termination
Biogenetics
Electric cars
Cellular
phones
PCs
Software
Autos
Airlines
Breakfast
cereals
Black
and white
TV
Cigarettes
Slide rule
Drive-ins
High
Low
Sales
Volume
Time
7.10

11. Diversification
 The variety of goods or services
provided by the firm
 Focused Strategy
 Dominant Business
 Related Diversification
 Unrelated Diversification

12. The Risks and Opportunities of
Diversification
 Identifying the Risks and Opportunities of Diversification
 What can we do better than any of our competitors if we enter a
new market?
 What strategic assets are needed to succeed in the new market?
 Are there synergies to be realized?
 Will we be simply a player
in the new market or will
we emerge a winner?
 What can we learn by diversifying, and are we sufficiently
organized to learn it?

13. Level of Diversification and
Planning
Scopeofstrategicplanning
Dick Clark
Productions
Southwest Airlines
Cemex
GE
Dominant-
business
firm
Single-
business
firm
Related-
business
firm
Unrelated-
businesses
firm
Broad
Narrow
HighLow
Level of
diversification
ABB

14. Single-Business
Strategy
 Serves one segment of a particular
market with the intent of being the
BEST
 Examples
 Southwest Airlines
 Intel

15. Dominant Business
 Serves various segments of a
single market
 Examples
 GM
 Trucks, Cars, Semi’s

16. Related Diversification
 A variety of similar goods or
services
 Concentric Growth Strategy
 Synergies are realized
 Examples
 GM
 Microsoft
 Honda

17. Unrelated Diversification
 Provide diverse products to
different markets
 Conglomerate Growth Strategy
 Examples
 GE
 ABB
 Mitsubuishi

18. Corporate Level
Strategy
 Guides the overall direction of the
firm deciding what SBU’s to keep,
develop, purchase, or sell

19. Strategic Business Unit
 SBU-a division or subsidiary of a
firm that operates relatively
independently
 Examples
 pizza hut, taco bell, kfc
 IBM computers, mainframes,
financial
 other examples??

20. Growth Strategies
 Think of facing the ultimate
customer
 Forward Integration-when a firm
buys its customers
 Backward Integration-when a firm
buys its suppliers
 Horizontal Integration-when a firm
buys its competitors

21. Growth Strategies (cont)
 Market Penetration-development of
current markets with current
products
 Market Development-seeking new
markets for current products
 Product Development-new or
improved products for the current
market

22. Business Level
Strategies
 Strategies of SBU’s
 What is the market
 What are the customer needs to be
filled
 How will they be satisfied

23. Generic Strategies
 Henry Mintzberg-P245
 3 basic business strategies
 Differentiation
 Low-cost
 Focus/Niche
 Question-
 Can the 3 basic strategies be
combined?

24. Generic Strategies
Model
Low Cost (price)
Broad
Narrow
Uniqueness
Source of Advantage
Strategic
Target
Differentiation
strategy
Cost leadership
strategy
Focus strategy
Source: Adapted with
permission of The Free
Press, a Division of
Simon & Schuster, Inc.
from Competitive
Strategy: Techniques
for Analyzing
Industries and
Competitors (p. 39) by
Michael E. Porter,
Copyright © 1980 by
The Free Press.

25. Application of the Generic Strategies
Model
Feature
Company ExamplesBusiness-Level
Strategy
Differentiation Premium Quality
Brand image
Technological
leadership
Customer service
Lexus - autos
Compaq - PCs
Gillette - razors
Maytag - appliances
Nike - shoes

26. Application of the Generic Strategies Model
(contd.)
Feature Company Examples
Business-Level
Strategy
Cost leadership Tight cost controls
Efficient scale of
facilities
Efficient service,
sales force, and
advertising
Competitive pricing
Feature
Discount Tires - tire
replacement
Motel 6 - travel
accommodations
Wal-Mart - retailing
UPS - package delivery

27. Feature Company Examples
Business-Level
Strategy
Focus Careful identification
of target market (niche)
Cost leadership
emphasis or
differentiation emphasis
Constant review of
customer demand in
niche
Nieman Marcus - elite
retailing
Dick Clark Productions
Polo - clothing
Rolex - watches
Application of the Generic Strategies Model
(contd.)