This document provides an overview of key concepts in strategic management including strategy, strategic positioning, strategic planning tools like SWOT analysis, competitive strategies, diversification strategies, and maintaining strategic control. It discusses Michael Porter's frameworks for strategic positioning and competitive advantage, the five forces model, grand strategies like growth, stability and defensive strategies, and the importance of execution in strategic management.

1. Strategic Management
Chapter 6

2.  Every organization needs to have a “big
picture” about where it is going and how it will
get there.
 Strategy
 Strategic Management
 Strategic Planning

3. Strategic Positioning
(Michael Porter)
 Attempts to achieve sustainable competitive
advantage by preserving what is distinctive
about a company.

4. Strategy is the creation of a
unique and valuable position
 Few needs, many customers
 Broad needs, few customers
 Broad needs, many customers

5. Three key principles underlie
strategic positioning:
 Strategy is the creation of a unique and
valuable position.
 Strategy require payoffs in competing
 Strategy involves creating a “fit” among
activities.
 Company’s activities must interact with and reinforce
one another

6. Five steps in the strategic
management process

7. Competitive Intelligence
 Gaining information about one’s competitors’
activities so that you can anticipate their
moves and react appropriately.

8. Two kinds of strategic
planning tools and techniques
 SWOT
 Forecasting

9. SWOT Analysis
 Environmental scanning
 Careful monitoring of an organization’s
internal and external environments to detect
early signs of opportunities and threats that
may influence the firm’s plans.

10. SWOT Analysis = Situational
Analysis
 A search for
Strengths
Weaknesses
Opportunities
Threats

11. Analysis of Internal Strengths
and Weaknesses
 Organizational Strengths – the skills and
capabilities that give the organization special
competencies and competitive advantages in
executing strategies in pursuit of its mission.
 Organizational Weaknesses – the
drawbacks that hinder an organization in
executing strategies in pursuit of its mission.

12. Analysis of External
Opportunities and Threats
 Organizational Opportunities –
environmental factors that the organization
may exploit for competitive advantage.
 Organizational Threats – environmental
factors that hinder an organization’s
achieving a competitive advantage.

13. Strategy
 A large-scale action plan that sets the
direction for an organization.
 Example: “Find out what the customer want, then
provide it to them as cheaply and quickly as possible.”
Strategy of Wal-Mart

14. Organizational Strengths
 The skills and capabilities that give the
organization special competencies and
competitive advantages in executing
strategies in pursuit of its vision.
 Organizational Weaknesses – the
drawbacks that hinder an organization in
executing strategies in pursuit of its vision.

15. Organizational Opportunities
 Environmental factors that the organization
may exploit for competitive advantage.
 Organizational Threats – environmental
factors that hinder an organization’s
achieving a competitive advantage.

16. Benchmarking
 A process by which a company compares its
performance with that of high-performing
organizations.

17. Porter’s Five Competitive
Forces
 Threats of new entrants
 Bargaining power of suppliers
 Bargaining power of buyers
 Threats of substitute products or services
 Rivalry among competitors

18. Porter’s Four Competitive
Strategies
Cost-leadership Strategy – keeping
costs, and hence prices, or a product or
service below those of competitors and to
target a wide market.
Differentiation Strategy – to offer
products or services that are of unique and
superior value compared to those of
competitors but to target a wide market.

19. Cost-focus Strategy – to keep the
costs, and hence prices, of a product or
service below those of competitors and to
target a narrow market.
Focused-Differentiation Strategy –
to offer products or services that are of
unique and superior value compared to those
of competitors and to target a narrow market.

20. Grand Strategy
 Explains how the organization’s mission is to
be accomplished.
 Three common grand strategies are:
 Growth
 Stability
 Defensive

21. Growth Strategy
 A grand strategy that involves expansion
 Revenue
 Employees
 Number of
customers/clients

22. Stability Strategy
 A grand strategy that involves little or no
significant change.

23. Defensive Strategy
 A grand strategy that involves reduction in
the organization’s efforts.

24. Single-Product Strategy
 A company makes and sells only one product
within its market.
 The benefit – FOCUS
 The risk - VULNERABILITY

25. The Diversification Strategy
 Diversification – operating several
businesses in order to spread the risk.

26. Single-Product Strategy
 A company makes and sells only one product
within its market.
 Flower shop,
security systems
 The benefit: FOCUS
 The risk: VULNERABILITY

27. Diversification Strategy
 Operating several businesses in order to spread the
risk.
Unrelated Diversification – operating several businesses
under one ownership that are not related to one another.
(G.E. – started w/ lighting and then went to plastics,
financial services, broadcasting.
Related Diversification – an organization under one ownership
operates separate businesses that are related to one
another.

28. Synergy
 The economic value of separate, related
businesses under one ownership and
management is greater together than the
businesses are worth separately.

29. The BCG Matrix
 A means of evaluating strategic business
units on the basis of:
 Their business growth rates
 Their share of the market

31. Execution
 Not simply tactics
 It is a central part of any company’s strategy
 It consists of using questioning, analysis, and
follow-through in order to mesh strategy with
reality, align people with goals, and achieve
results promised.

32. Maintaining Strategic Control
 Engage people
 Keep it simple
 Stay focused
 Keep moving

33. Three Core Processes of
Business
 People
 Strategy
 Operations