9e daft chapter_7_strategy_formulation_and_implementation

Strategy Formulation and
Implementation
CHAPTER 7

chapter7
Copyright ©2010 by South-Western, a division of Cengage
Learning. All rights reserved.
3
• Define the components of strategic management and discuss the levels of
strategy.
• Describe the strategic management process and SWOT Analysis.
• Define corporate-level strategies and explain the portfolio and
diversification approaches.
• Describe Porter’s competitive forces and strategies.
• Discuss new trends in strategy, including innovation from within and
partnership strategies.
• Discuss the organizational dimensions used for strategy execution.
Learning Outcomes

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4
What’s Your Strategy
Strength?
• How do you handle challenges and
issues?
• How did Best Buy overtake Circuit
City as the player to beat in consumer
electronics retailing?
• The strategies managers choose are
important.
• Strategies must be implemented
effectively to work.

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5
Strategy Basics
• Why has Apple been so successful with
the iPod, iTouch, iPhone?
• Why has McDonald’s healthier menu been
effective?
• Finding ways to respond to competitors,
and cope with change is strategy.

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6
Thinking Strategically
• The long-term view
• Seeing the big picture
– The organization
– Competition
• Strategy are your competitive actions in
the market
How do
these fit
together?

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What is Strategic
Management?
• Plans and actions that lead to superior
competitive standing
Who are our competitors and what are their
strengths and weaknesses?
Who are our customers?
What products or services should we offer?
What does the future hold for our industry?
How can we change the rules of the game?

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8
Purpose of Strategy
• Strategy:
– Plan of action
– Resource allocation
– Activities for dealing with the environment
– Achieving competitive advantage
• Strategy should:
– Exploit Core Competence
– Build Synergy
– Deliver Value

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9
Three Levels of Strategy in
Organizations

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10
Levels of Strategy
What business are
we in?
How do we
compete?
How do we support
the business-level
strategy?
Corporate-level strategy
Business-level strategy
Functional-level strategy

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11
Strategy Formulation Versus
Execution
• Strategy Formulation
– Assess environment and internal problems
– Planning
– Decision making
– Establishment of goals
• Strategy Execution
– Directing resources
– Accomplishing results
– Changes in structure
– Use managerial and organizational tools

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12
The Strategic
Management Process

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13
TOWS Analysis
• Organizational
strengths, weaknesses
– Reports
– Budgets
– Financial ratios
– Employee Surveys
• External information
about opportunities
and threats
– Customers
– Government reports
– Professional journals
– Bankers
– Consultants
– Association meetings
Assessment of internal and external factors

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14
Analyzing Organizational
Strengths and Weaknesses

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15
Formulating Corporate-
Level Strategy
• Portfolio Strategy
– A diverse mix of business units
– Strategic Business Units (SBU) have different
products, mission, markets and competitors
• The BCG Matrix
– Organizes businesses along two dimensions—growth
and market share
• Diversification Strategy
– Movement into new lines of business

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16
The BCG Matrix

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17
Formulating Business-Level
Strategy
• Porter’s Five Forces – analyzing a
company’s position in the industry
Potential New Entrants
Bargaining Power of Buyers
Bargaining Power of Suppliers
Threat of Substitute Products
Rivalry Among Competitors

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Porter’s Five Forces

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19
Porter’s Competitive
Strategies
• Porter suggests that a company can adopt one
of three strategies after analyzing the forces

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20
New Trends in Strategy
• Mergers and acquisitions
• Enhancing organizational capacity
• Innovation from within
• Strategic partnerships
• Companies are focusing on internal
innovation as well as innovation
through strategic partnerships

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21
Global Strategy
• Finding strategies in the world marketplace
• Synergy among world operations
• Organizations differ in their global strategies
– Globalization
– Export
– Transnational
– Multidomestic

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Global Corporate Strategies

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23
Strategy Execution
• How will the strategy be implemented—
put into action?
• The organization must be congruent with
the strategy
• Execution involves several tools:
– Leadership
– Structural Design
– Human Resources
– Information and Control Systems

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24
Tools for Putting Strategy
into Action

9e daft chapter_7_strategy_formulation_and_implementation

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