1. Managers must develop corporate, business, and functional strategies to allow an organization to achieve its mission and goals. This includes analyzing strengths, weaknesses, opportunities, and threats through a SWOT analysis. 2. There are four main types of corporate-level strategies: concentrating in a single industry, vertical integration, diversification, and international expansion. Business-level strategies differ between business units, while functional strategies indicate how departments support corporate goals. 3. Effective strategy formulation involves identifying opportunities for competitive advantage, allocating implementation responsibilities, drafting action plans, and holding groups accountable for goals.

1. Manager as Planner and Strategist
(Part 2)
Week 8 – Chapter 8

2. Learning Objectives
• Describe and apply SWOT analysis
• Differentiate between the main types of corporate-level strategies
and explain how they are used to provide competitive advantage
• Describe the role of functional-level strategies

3. Formulating Strategy
Managers must develop the set of strategies
(corporate, business, and functional) that will allow an
organization to accomplish its mission and achieve its
major goals. Review question: What is a strategy?

4. The Five Forces – Michael Porter
Competitive Forces
Level of Rivalry Increased competition results in lower
profits.
Potential for Entry Easy entry leads to lower prices and profits.
Power of Suppliers If there are only a few suppliers of important
items, supply costs rise.
Power of Customers If there are only a few large buyers, they can
bargain down prices.
Substitutes More available substitutes tend to drive
down prices and profits.
https://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy
https://www.youtube.com/watch?v=mYF2_FBCvXw

5. SWOT Analysis
• A planning exercise in which managers identify:
- Organizational strengths and weaknesses
Strengths (e.g., superior marketing skills)
Weaknesses (e.g., outdated production facilities)
- External opportunities and threats
Opportunities (e.g., entry into new related
markets)
Threats (e.g. increased competition)

6. Questions for SWOT analysis

7. Final Project
• Research a Global fortune 500 organization
• Conduct a SWOT analysis of the organization
• strengths, weaknesses, opportunities, and threats
• Suggest two or more ways to create a competitive advantage
• quality, efficiency, innovation, and responsiveness to
customers

8. Planning and Strategy Formulation

9. Corporate-Level Strategies
1. Concentration on a single industry
2. Vertical integration
3. Diversification
4. International expansion

10. 1. Concentration on a single industry
• Organization uses its functional skills to develop new
kinds of products or expand its locations
• Appropriate when managers see the need to reduce
the size of the organization to increase performance

11. 2. Vertical integration
A strategy that involves a company expanding its
business operations either backward into a new
industry that produces inputs (backward vertical
integration) or forward into a new industry that uses,
distributes, or sells the company’s products (forward
vertical integration)

12. Vertical Integration (continued)

13. 3. Diversification
• Related Diversification: Strategy of entering a new industry and
establishing a new business division that is linked to a company’s
existing divisions because they share resources that will improve
the competitive position
• Unrelated Diversification: Firms establish divisions or buy
companies in new industries that are not linked to their current
business or industry
• Portfolio strategy: Apportioning resources among divisions to
increase returns or spread risks

14. 4. International expansion
• Global strategy
• Undertaking very little customization to suit the specific needs of
customers in different countries.
• Standardization provides for lower production cost.
• Ignores national differences that local competitors can address to
their advantage
• Multi-domestic Strategy
• Customizing products and marketing strategies to specific national
conditions.
• Helps gain local market share.
• Raises production costs.

15. • Opportunities
opening new markets, reaching more customers, and
gaining access to new sources of raw materials and to low-
cost suppliers
• Threat
encountering new competitors, and responding to new
political, economic, and cultural conditions
4. International expansion (continued)

16. - Exporting: making products at home and selling them abroad
- Importing: selling at home products that are made abroad
- Licensing: allowing a foreign organization to take charge of manufacturing and
distributing a product in its country in return for a negotiated fee
- Franchising: selling to a foreign organization the rights to use a brand name
and operating know-how in return for a lump-sum payment and a share of the
profits
- Strategic alliance: managers pool resources with those of a foreign company,
Organizations agree to share risk and reward
- Joint venture: strategic alliance among companies that agree to jointly
establish and share the ownership of a new business
4. International expansion (continued)

17. Business-Level Strategies
• Many corporations have multiple business units
(e.g., General Electric has light bulbs, medical
equipment, jet engines, etc.)
• These business units often have different strategies.

18. Functional-level Strategies
• A functional-level strategy indicates how each
department (e.g., production, marketing, finance, etc.)
intends to achieve its goals.
• Functional strategies must fit with and support the
corporate-level and business level strategies.

19. Planning and Implementing Strategy
• Allocate implementation responsibility to the
appropriate individuals or groups
• Draft detailed action plans and timelines
• Allocate appropriate resources
• Hold specific groups and individuals responsible for
implementing the action plans, and attaining the
corporate, division, and function goals