AAST Comprehensive Exam Guide

1. Strategic planning &management
By
Dr. Raafat Youssef Shehata

2. Table of contents
• Vision
• Environmental scanning
• Strategy formulation
• Strategy implementation
• Strategy evaluation

3. Chapter 1
Introduction about strategic management

4. Strategic Management Model
Performance
Actual
Results
Evaluation
&
Control
Programs
Budget
Procedures
Activities
needed
to
accomplish
a plan
Cost of the
programs
Sequences
of steps
needed to
do the job
Objectives
Strategies
What
results to
accomplish
when
Plan to
achieve
mission &
objectives
Broad
guidelines
for
decision
making
Mission
Reasons
for
existence
Environmental
Scanning
Policies
Country
Analysis:
PEST Forces
Industry
Analysis:
Porter 5 Forces
Internal
Company
Analysis:
Value Chain
External
Strategy Formulation Strategy Implementation
Feedback Learning
VISON
4

5. Business plan versus marketing plan

6. Ch 1 -6
Art & science of formulating, implementing,
and evaluating, cross-functional decisions that
enable an organization to achieve its objectives
Strategic Management –Defined

7. Planning horizons
• Short
• Medium
• Long

9. Strategic Management Model
Performance
Actual
Results
Evaluation
&
Control
Programs
Budget
Procedures
Activities
needed
to
accomplish
a plan
Cost of the
programs
Sequences
of steps
needed to
do the job
Objectives
Strategies
What
results to
accomplish
when
Plan to
achieve
mission &
objectives
Broad
guidelines
for
decision
making
Mission
Reasons
for
existence
Environmental
Scanning
Policies
Country
Analysis:
PEST Forces
Industry
Analysis:
Porter 5 Forces
Internal
Company
Analysis:
Value Chain
External
Strategy Formulation Strategy Implementation
Feedback Learning
VISON
9

10. Data
• Secondary x primary
• Free , freemium , premium

11. Ideal data
• Up to date
• Timely
• Accurate
• Documented
• Relevant
• Cost effective
• Complete

12. Sources of data
Secondary …….. Primary data
Free freemium premium
1. Cia.gov
2. Worldbank.org
3. IMF
4. Capmas
5. Cbe
6. Statista
7. GCI
8. Doing business
9. Google trends
10. Google alert
11. Feedly
12. Euromointor
13. Bmi fitch
14. Primary research

13. Data analysis
• Quantitative……… SPSS
• Qualitative ……… n vivo

14. Models
Internal
• SW
• Porter value chain
• BCG
• VRIO
• Mackinsey 7S
• IFAS
• SFAS
External
• OT
• Porter 5 force
• PESTEL
• EFAS
• Issue priority matrix
• SFAS

15. Strategic Management Model
Performance
Actual
Results
Evaluation
&
Control
Programs
Budget
Procedures
Activities
needed
to
accomplish
a plan
Cost of the
programs
Sequences
of steps
needed to
do the job
Objectives
Strategies
What
results to
accomplish
when
Plan to
achieve
mission &
objectives
Broad
guidelines
for
decision
making
Mission
Reasons
for
existence
Environmental
Scanning
Policies
Country
Analysis:
PEST Forces
Industry
Analysis:
Porter 5 Forces
Internal
Company
Analysis:
Value Chain
External
Strategy Formulation Strategy Implementation
Feedback Learning
VISON
15

16. 1-16
Strategies- form a comprehensive master plan that states how
the corporation will achieve its mission and objectives
– Corporate
– Business
– Functional
Policies- the broad guidelines for decision making that links the
formulation of a strategy with its implementation
Basic Elements of Strategic Management

18. Corporate governance: the relationship among the board of
directors, top management and shareholders in determining
the direction and performance of the corporation
Responsibilities of the Board of Directors

19. • Sets corporate strategy, overall direction, mission, or vision
• Hires and fires the CEO and top management
• Controls, monitors, or supervises top management
• Reviews and approves the use of resources
• Cares for shareholders’ interests
• Assures that the corporation is managed in accordance with
state laws, security regulations and conflict of interest
situations
Responsibilities of the Board of Directors

20. 2-20
Affiliated directors- not employed by the corporation, handle
legal or insurance work
Retired executive directors- used to work for the
corporation, partly responsible for past decisions affecting
current strategy
Family directors- descendants of the founder and own
significant blocks of stock
Members of a Board of Directors

21. Chapter 2
Internal scanning

22. Monitoring, evaluation, and disseminating information
from external and internal environments –to key people
in the firm
I-Environmental Scanning

23. Analysis phase
Environmental Scanning

24. Internal scanning

25. How you capitalize on them
How you avoid them
How maximize them
How minimize their effects
Strengths
Weaknesses
Opportunities
Threats
Internal
External
SWOT Analysis

26. Opportunity / threats
• Competitors
• Customers
• Market size
• Political environment
• Economic environment
• Governmental regulations
• Others

28. Strengths
S1
S2
S3

29. SW OT (TOWS)
• SO
• ST
• WO
• WT

30. SO
• S1… rich R&D unit ….Strong Pipeline
• O3 ..Tender / ministry of health/ economic products
• S1O3 strategy ……..new product development

31. ST
• S1… company x has wide product portfolio including 100
products with at least 30 products priced below 20 LE
• T3 ..inflation in 2022 is 20%
• S1O3 strategy ……..mass production

32. WO
• W1 high priced products …higher than close competitors
by almost 25%
• O2 competitor X has product shortage in 2022
• WO strategy promotional tools …advertising / sales
promotion

33. WT
• W1 ….expensive/ prestigious/ products
• T2 …inflation / decreased customer purchasing power
• WT strategy ..sales promotion ….non price accessory
second brand (Gillette / Nacet )

34. TOWS analysis

36. Strengths
1. Availability of Time
2. Good Reputation of
Researcher
3. Links with Ministry
Weakness
1. No links in other parts
of the Government.
2. Small Skill base
3. Little alternative in
case of absentees.
Opportunities
1. Working on topical
issue.
2. Government support
to NGO.
3. NGO support.
Maxi Max S1O2 Mini Max
Threats
1. Reaction to Report.
2. Chances of
Nullification of
Findings by
Government
Departments
Maxi Min Mini Min

37. IFAS

38. 39
Internal Factor Analysis Summary (IFAS)
Internal Factors Weight Rating
Weighted
Score Comments
1 2 3 4 5
1.00
Strengths
Well trained employees
Advanced technology machines
Weaknesses
80% of employees are above 50 Y
Limited number of SKUs (10SKUs)
Total Weighted Score

39. Copyright © 2011 Pearson
Education
Ch 4 -40
Internal Factor Evaluation (IFE) Matrix
1. List key internal factors
2. Assign a weight ranging from 0.0 to 1.0
3. Assign a 1 to 4 rating to each factor
4. Multiply the weight times the rating
5. Sum the weighted scores

40. 41
Internal Factor Analysis Summary (IFAS):
Maytag as Example
Internal Factors
Weight Rating
Weighted
Score Comments
1 2 3 4 5
1.00
Strengths
• Quality Maytag culture
• Experienced top management
• Vertical integration
• Employee relations
• Hoover’s international orientation
Weaknesses
• Process-oriented R&D
• Distribution channels
• Financial position
• Global positioning
• Manufacturing facilities
Total Weighted Score
Quality key to success
Know appliances
Dedicated factories
Good, but deteriorating
Hoover name in cleaners
Slow on new products
Superstores replacing
small dealers
High debt load
Hoover weak outside the
United Kingdom and
Australia
Investing now
3.05
.15
.05
.10
.05
.15
.05
.05
.15
.20
.05
4
4
4
3
3
2
2
2
2
4
.6
.20
.40
.15
.45
.10
.10
.30
.40
.20

41. IFAS (Internal Factor Analysis Summary) Table for Apple

43. Value discipline triad

44. Value chain- a linked set of value creating activities that
begin with basic raw materials coming from suppliers,
moving on to a series of value-added activities
involved in producing and marking a product or
service, and ending with distributors getting the final
goods into the hands of the ultimate consumer
Value Chain Analysis

45. Value Chain Analysis
Value Chain:
Set of value-added activities begins with basic raw material
sourcing and ending with handling the product to the consumer
Center of Gravity:
The part of the value chain where the company has its greatest
expertise and capabilities.

46. Firm Infrastructure
(general management, accounting, finance, strategic planning)
Human Resource Management
(recruiting, training, development)
Technology Development
(R&D, product and process improvement)
Procurement
(purchasing of raw material, machines and supplies)
Inbound
Logistics
(raw material
Handling and
Warehousing)
Operations
(machining,
Assembling,
Testing)
Outbound
Logistics
(warehousing,
distribution
Of finished
goods)
Marketing
And Sales
(Ads,
promotion
Pricing,
Channel )
Services
(insulation,
Repair,
Parts)
Company - Value Chain Analysis
Profit
Margin
Support
Activities
Primary Activities

47. 5-48
Competency- a cross-functional integration and coordination of
capabilities
Core competency- a collection of competencies that cross
divisional boundaries, is wide-spread throughout the
corporation and is something the corporation does
exceedingly well
Distinctive competency- core competencies that are superior
to those of the competition
Core and Distinctive Competencies

54. Organization
Imitable
Rareness
Value
Activity
√
√
√
√
Product knowhow
Permanent Competitive Advantage

55. Starbucks

56. BCG Matrix

57. Ch 6 -58

58. BCG Matrix
Relative Market Share Position
Ratio of a division’s own market share in an industry
to the market share held by the largest rival firm in
that industry

59. BCG Matrix
Question Marks
Low relative market share, competes in high-growth
industry
Cash needs are high
Case generation is low
Decision to strengthen (intensive strategies) or
divest

60. BCG Matrix
Stars
High relative market share and high growth rate
Best long-run opportunities for growth & profitability
Substantial investment to maintain or strengthen
dominant position
Integration strategies, intensive strategies, joint ventures

61. BCG Matrix
Cash Cows
High relative market share, competes in low-growth
industry
Generate cash in excess of their needs
Milked for other purposes
Maintain strong position as long as possible
Product development, concentric diversification
If weakens – retrenchment or divestiture

62. BCG Matrix
Dogs
Low relative market share, competes in slow or no
market growth
Weak internal & external position
Liquidation, divestiture, retrenchment

63. Boston Consulting Group Exercise
Growth RMS Product
15 80 1
10 40 2
1 10 3
-
20 60 4
-
10 5 5

71. Mackinsey 7S model

72. Systems
• ERP
• CRM
• RFID

73. Analysis Plan
• Strengths and weaknesses
• Opportunities and threats
• IFAS and EFAS
• VRIO…… distinctive competitive advantages
• SFAS
• TWOS …….strategic directions

74. Linking strategies with strategic
objectives
• Market penetration and market share
• Market development and globalization

75. Financial analysis

76. Financial documents
• Income statements P&L
• Balance sheet financial position
• Cash flow statement

77. Sales
COGS
-----------------
Gross Profit
Expenses
-----------------
EBIT
Interest
----------------
EBT
Taxes
--------------
Net Profit
Preferred share
--------------------------------
Net Distributable Profit ‫للتوزيع‬ ‫القابل‬ ‫الربح‬ ‫صافى‬
Dividends
-----------------------------
Retained Earning
-
-
-
-
-
-
Income Statement
P&L

81. Firm’s ability to meet its
short-term obligations
Ratios
Current ratio
Quick (or acid test) ratio
Basic Financial Ratios
Liquidity Ratios

82. Extent of debt financing
Ratios
Debt-to-total assets
Debt-to-equity
Long-term debt-to-equity
Times-interest-earned
Basic Financial Ratios
Leverage Ratios

83. Effective use of firm’s
resources
Ratios
Inventory turnover
Fixed assets turnover
Total assets turnover
Accounts receivable turnover
Average collection period
Basic Financial Ratios
Activity Ratios

84. Effectiveness shown by
returns on sales and
investment
Ratios
Gross profit margin
Operating profit margin
Net profit margin
Return on total assets (ROA)
Basic Financial Ratios
Profitability Ratios

85. Effectiveness shown by
returns on sales &
investment
Ratios
Return on stockholders’
equity (ROE)
Earnings per share
Price-earnings ratio
Basic Financial Ratios
Profitability Ratios
(cont’d)

86. Firm’s ability to
maintain economic
position
Ratios
Sales
Net Income
Earnings per share
Dividends per share
Basic Financial Ratios
Growth Ratios

87. Chapter 3
External scanning

88. 89
External Factor Analysis Summary (EFAS)
External
Factors Weight Rating
Weighted
Score Comments
1 2 3 4 5
1.00
Opportunities
Threats
Total Weighted Score

89. Copyright © 2011 Pearson
Education
Ch 3 -90
EFE Matrix Steps
1. List key external factors
2. Weight from 0 to 1
3. Rate effectiveness of current strategies
4. Multiply weight * rating
5. Sum weighted scores

90. Copyright © 2011 Pearson
Education
Ch 3 -91

91. Copyright © 2011 Pearson
Education
Ch 3 -92

92. 93
External Factor Analysis Summary (EFAS)
Maytag Example
External Factors Weight Rating
Weighted
Score Comments
1.00
Opportunities
• Economic integration of
European Community
• Demographics favor quality
appliances
• Economic development of Asia
• Opening of Eastern Europe
• Trend to “Super Stores”
Threats
• Increasing government regulations
• Strong U.S. competition
• Whirlpool and Electrolux strong
globally
• New product advances
• Japanese appliance companies
Total Scores
.20
.10
.05
.05
.10
.10
.10
.15
.05
.10
4
4
1
2
2
4
4
3
1
2
.80
.40
.05
.10
.20
.40
.40
.45
.05
.20
Acquisition of
Hoover
Maytag quality
Low Maytag presence
Will take time
Maytag weak in this
channel
Well positioned
Well positioned
Hoover weak globally
Questionable
Only Asian presence is
Australia
3.05
1 2 3 4 5

93. Competitive Profile Matrix

94. 6-95
Generating a Strategic Factors Analysis
Summary (SFAS) Matrix
SFAS summarizes an organization’s strategic factors by
combining the external factors from the EFAS Table
with the internal factors from the IFAS Table

96. PESTEL analysis

97. Country Analysis – PESTEL
Economic
Forces
•GDP / GNP
•Interest Rates
•Money Supply
•Inflation rate
•Unemployment Level
•Wages
•Price control
•Devaluation
•Reevaluation
•Energy costs and
availability
•Disposal income
Technological
Forces
•Government Spending
on R&D
•Industry Spending
on R&D
•Patent protection
•Telecom infrastructure
•Internet availability
•Availability of certain
Technology need to
improve productivity
Political-Legal
Forces
•Anti-trust regulations
•Tax laws
•Attitude toward
foreign companies
•Employment laws
•Stability of government
•Foreign trade laws
•Customs regulations
Socio-Cultural
Forces
•Life Style changes
•Population growth rate
•Age distribution
•Life expectancies
•Birth rate
•Mortality rate
•Religious orientation

98. Legal
• Contract law
• Customer protection law
• Competition law
• Patency
• Environmental protection law
• Labor law

99. Contract law 5 items
• Offer
• Acceptance
• Legality
• Consideration
• Capacity

100. 4-101
Issues priority matrix- used to identify and analyze
developments in the external environment
External strategic factors- key environmental trends
that are judged to have both a medium to high
probability of occurrence and a medium to high
probability of impact on the corporation
Identifying External Strategic Factors

101. Prentice Hall, Inc.
©2009
4-102

102. Industry Analysis
Porter’s 5-Forces
Rivalry among
Competition
Bargaining Power
of Suppliers
New entrant
Bargaining Power
of Buyers
Threat of
Substitute

103. 4-104

104. Cartel
• OPEC
• IATA
• Debeers

105. Porter 5 force model problems
• Warehousing ….. JIT
• Raw materials ….. Backward integration
• Machines ….. Toll manufacturing

106. Internal and external environmental
analysis

107. Strategic Position and
Action Evaluation Matrix
(SPACE)

108. Ch 6 -109
SPACE Matrix
Strategic Position & Action Evaluation Matrix
Aggressive
Conservative
Defensive
Competitive

109. SPACE Matrix
Two Internal Dimensions
Financial Strength (FS)
Competitive Advantage (CA)

110. SPACE Matrix
Two External Dimensions
Environmental Stability (ES)
Industry Strength (IS)

111. SPACE Factors
Environmental Stability (ES)
Technological changes
Rate of inflation
Demand variability
Price range of competing products
Barriers to entry
Competitive pressure
Price elasticity of demand
Ease of exit from market
Risk involved in business
Financial Strength (FS)
Return on investment
Liquidity
Working capital
Cash flow
Inventory turnover
Earnings per share
Price earnings ratio
External Strategic Position
Internal Strategic Position

112. SPACE Factors
Industry Strength (IS)
Growth potential
Profit potential
Financial stability
Technological know-how
Resource utilization
Ease of entry into market
Productivity, capacity utilization
Competitive Advantage (CA)
Market share
Product quality
Product life cycle
Customer loyalty
Competition’s capacity utilization
Technological know-how
Control over suppliers & distributors
External Strategic Position
Internal Strategic Position

113. Steps to Developing a SPACE Matrix
1. Select a set of variables to define FS, CA, ES,
and IS.
2. Assign a numerical value:
1. From +1 to +6 to each FS & IS dimension
2. From -1 to -6 to each ES & CA dimension
3. Compute an average score for each FS, CA,
ES, and IS.

114. Steps to Developing a SPACE Matrix
4. Plot the average score on the appropriate
axis.
5. Add the two scores on the x-axis and plot the
point. Add the two scores on the y-axis and
plot the point. Plot the intersection of the
new xy point.
6. Draw a directional vector from the origin
through the new intersection point.

117. Chapter 4
Mission , vision & objectives

118. Strategy Formulation

119. Strategic Management Model
Performance
Actual
Results
Evaluation
&
Control
Programs
Budget
Procedures
Activities
needed
to
accomplish
a plan
Cost of the
programs
Sequences
of steps
needed to
do the job
Objectives
Strategies
What
results to
accomplish
when
Plan to
achieve
mission &
objectives
Broad
guidelines
for
decision
making
Mission
Reasons
for
existence
Environmental
Scanning
Policies
Country
Analysis:
PEST Forces
Industry
Analysis:
Porter 5 Forces
Internal
Company
Analysis:
Value Chain
External
Strategy Formulation Strategy Implementation
Feedback Learning
VISON
120

120. Vision , mission & objectives
• Vision how the company foresees itself in the future
• Mission basic function of the organization
• Objectives future goals
• Values

121. “What do we want to become?”
Vision

122. Vision/ Saudi German hospital
To be the Regional Healthcare leader through the
largest network of hospitals delivering excellence
in quality of care to patients, and creating value
for all stakeholders.

124. Vision statement …3Cs
• Clear
• Concise
• Common understanding

125. • Answers the question:
– “What is our business?”
Mission Statement

126. AUC
• To provide high quality postgraduate business
trainings for both In Egypt and middle East
through a well qualified staff of doctors and
admin using the latest technologies in
education with the objective of both satisfying
our customers and at the same time
maximizing our profit

127. AUC
To provide high quality managerial trainings for
both Egyptians and non Egyptians using the
highest technologies in modern education
through a well trained staff of employees and
professors with the objective of satisfying both
internal and external stakeholders

128. Mission/ Saudi German hospital
• Saudi German Hospital is committed to provide
state of the art quality healthcare through centers
of excellence in all tertiary care specialties and
sub-specialties with highest level of ethical
standards and personalized care to achieve
superior medical outcome and patient satisfaction

129. CIA Mission:
We are the eyes and ears of the nation and at times
its hidden hand. We accomplish this by collecting
intelligence that matters, providing relevant, timely,
and objective all-source analysis, and conducting
covert action at the direction of the president to
avoid threats or achieve United states policy
objectives.
Mission Statement Examples

130. 57357 Hospital
The Foundation of Children's Cancer Hospital
plan is to provide effective administrative,
financial, and meaningful aids to ensure and
guarantee the survival of children's cancer
hospital in a leadership position for the
provision of health care for children of
cancer patients in Egypt and the Middle East
and Africa.
Mission Statement Examples

131. Mission
Components
Customers
Markets
Employees
Public
Image
Self-Concept Philosophy
Survival,
Growth,
Profits
Products or
Services
Technology

132. Core values
• Which core values to select?
• How to publish the core values inside the
organization?

133. Core values
1. Respect
2. Integrity and honesty FCPA
3. Loyalty
4. Creativity and innovation
5. Team spirit
6. Assertiveness
7. Perfection / ISO…. Six sigma / Deming PDCA
8. Commitment / time orientation
9. Transparency
10. Environmental protection
11. Customer focus
12. Efficiency

134. How to enforce corporate values
1. Training
2. Meetings
3. Role models
4. Rewards versus punishments
5. Taskforce
6. Change agents
7. Visualization

135. Midterm
Select an established company of your choice and conduct the
followings:
• Review vision and mission statements and mention the
proposed ones
• Conduct internal analysis using IFAS, BCG and VRIO models
• Conduct external analysis using PESTEL , Porter 5,issue
priority matrix, forces and EFAS
• Conduct SFAS model
• Conclusion
Format is PowerPoint

136. Objectives and strategies

138. Types of functional objectives
• Marketing objectives
• Financial objectives
• Operational objectives

139. Marketing objectives
• Revenue
• Market share
• Relative market share
• Number of new customers
• Customer satisfaction
• Awareness

141. Financial objectives
• Profitability
• Cost reduction
• EPS
• ROI
• Growth….organic or inorganic

142. Objectives should be SMART
• Specific
• Measurable
• Achievable
• Realistic
• Timed

143. Objective / example
To increase the profit margin of company X from
25% to 30% by the end of 2020

145. Organic versus inorganic growth

146. Organic growth is the process of business expansion by
increased output, customer base expansion, or new product
development, as opposed to mergers and acquisitions, which is
inorganic growth.
Organic versus inorganic growth

147. Business plan / 3 years
• 1st year objectives
• Second year objectives
• Third year objectives

148. Chapter 5
Strategy

149. Miles and Snow’s Organizational
Strategies

151. Strategic Types
 Prospectors
 Aggressively pursuing new market opportunities
 Willing to take risks
 Develop new product and market opportunities

152. Strategic Types
 Defenders
 protection oriented
 Seeking stability by maintaining current market positions
 focus on improving the efficiency

153. Strategic Types
 Analyzers
 Between prospectors and defender
 Balancing the opportunity
 Maintain their position in the marketplace

154. Strategic Types
 Reactors
 Reactors do not have a distinct strategy
 Merely react to environmental changes
 Reactor strategy is not considered a viable one

155. Prospector
• When an organization falls into the category of Prospector, they are expected to
consistently be on the forefront of innovation and development.
• Rather than sitting still with products that have been previously developed and
taken to market, prospecting organizations are always seeking to create the ‘next
big thing’.
• Apple is a commonly cited example of what would be considered a company with a
Prospector strategy, with launches such as the iPhone and Apple Watch.

156. Defender
• As the name would indicate, this is an organization that is satisfied with their
current place in the market – and they are going to work hard to defend it as the
years go by. Instead of investing time and money into trying to develop new
products to take to the market, this kind of an organization is going to sit back and
reap the rewards of what they have already created.
• BIC Corporation used defender strategies despite its history as an innovative

157. Analyzer
• These tend to be some of the biggest companies around, as they have the
capacity to both develop new technologies and products as well as defend
the market for those they have already created.

158. Reactor
• They really have no one specific approach to their business.
• They are simply trying to catch up with the market as things change
over time.
•

159. Exercise
In the field of home appliances kindly mention 2
examples regarding prospectors, analyzers and
defenders

161. Comprehensive Strategy-Formulation
Framework
• Stage 1 - Input Stage
– EFE Matrix
– IFE matrix
– CPM
• Stage 2 - Matching Stage
– SWOT
– SPACE matrix
– BCG matrix
– IE Matrix
– Grand strategy matrix
• Stage 3 - Decision Stage
– QSPM

162. Strategies
• Corporate ……. Grand strategies
• Business ……… competitive strategies
• Functional

163. Strategies
• Grand strategies
• Competitive strategies
• Blue ocean strategy
• Entry strategies
• FMA strategy

164. Entry strategies
• Exportation
• Franchise
• FDI

165. Grand strategies

166. Grand strategies 4x3
1. Integration
2. Intensive
3. Diversification
4. Defensive

168. Types of Strategies
Vertical
Integration
Strategies
Forward
Integration
Backward
Integration
Horizontal
Integration

169. Integration strategies
• Vertical : forward or backward
• Horizontal : merge or acquisition / Joint venture

170. Supplier
Manufacturer
Distributor
1
2
3
4
Supplier (OEM)
Manufacturer
Distributor

171. BOT model
• Under a build-operate-transfer (BOT) contract, an entity—
usually a government—grants a concession to a private
company to finance, build and operate a project for a period
of 20-30 years, hoping to earn a profit.
• After that period, the project is returned to the public entity
that originally granted the concession.

172. Types of Strategies
Intensive
Strategies
Market
Penetration
Market
Development
Product
Development

173. Types of Strategies
Diversification
Strategies
Concentric
Diversification
Conglomerate
Diversification
Horizontal
Diversification

174. Types of Strategies
Defensive
Strategies
Retrenchment
Divestiture
Liquidation

175. Other strategies

176. Michael Porter’s Generic Strategies
Cost Leadership Strategies
(Low-Cost & Best-Value)
Differentiation Strategies
Focus Strategies
(Low-Cost Focus &
Best-Value Focus)

177. Focus strategy
Cost focus
• Very small segment
• Price sensitive customers
Differentiation focus
• Very small segment
• Price insensitive customers

178. Red versus blue ocean strategies

180. Value innovation
Value innovation = value creation + innovation

181. The Profit and Growth Consequences
of Blue Oceans
39%
62%
86%
61%
38%
14%
Profit Impact
revenue impact
Business Launch
Launches With Red Oceans
Launches With Blue Oceans

182. low
high
Industry Variables
Strategy Canvas

183. Four Actions:
Eliminate/Reduce/Raise/Create
• Which of the factors that the industry takes for
granted should be eliminated?
• Which should be reduced?
• Which should be raised well above standard?
• Which factors should be created that have not
existed before?

184. Four Actions Framework: Key to Value Curve
Reduce
What factors should
be reduced well
below the industry
standard?
Raise
What factors should
be raised well above
the industry
standard?
The key to discovering a
new value curve lies in
answering four basic
questions
Creating
new markets:
A new value
curve
Eliminate
What factors that the
industry has taken for
granted should be
eliminated?
Create/Add
What factors that the
industry has never
offered should be
created or added?
Cirque du Soleil example

185. Functional strategies

186. 8-188
Functional strategy- the approach a functional area takes to
achieve corporate and business unit objectives and
strategies by maximizing resource productivity

187. 8-189
Marketing strategy deals with pricing, selling and distributing
a product
Marketing strategy

188. Market development strategy- provides the ability to:
• Capture a larger market share
– Market saturation
– Market penetration
• Develop new uses and/or markets for current products

189. 8-191
Product development strategy- provides the ability to:
• Develop new products for existing markets
• Develop new products for new markets

190. 8-192
• Line extension- using a successful brand name to
market other products
• Push strategy- promotions to gain or hold shelf space
in retail outlets
• Pull strategy- advertising to “pull” products through the
distribution channels

191. 8-193
• Skim pricing- offers the opportunity to “skim the
cream” from the top of the demand curve with a high
price while the product is novel and competitors are
few
• Penetration pricing- attempts to hasten market
development and offers the pioneer the opportunity to
use the experience curve to gain market share with low
price and then dominate the industry

192. 8-194
Financial Strategy- examines the financial implications of
corporate and business-level strategic options and
identifies the best financial course of action
Financial strategy includes the management of:
• Dividends
• Stock price
• Sales of company patents

193. 8-195
Research and Development Strategy- deals with
product and process innovation and improvement
• Technological leader- pioneers innovation
• Technological follower- imitates the products of
competitors
• Open innovation- use of alliances and connections with
corporate, government, academic labs and consumers
to develop new products and processes

194. Research and Development Strategy
• Kodak engineer Steve Sasson actually
invented the digital camera in the company’s
R&D labs in the 1970s
• The reactionary antibodies within Kodak’s
leadership rejected the digital camera,
fearing it would cannibalise existing business

195. 8-197
Operations Strategy- determines how and where a
product or service is to be manufactured, the level of
vertical integration in the production process, the
deployment of physical resources and relationships with
suppliers
Manufacturing Types include
• Job shops
• Connected line batch flow
• Flexible manufacturing systems
• Dedicated transfer lines
•Mass production systems
•Continuous improvement
•Modular manufacturing
•Mass customization

196. Mass production .. Mass customization….. Customization

197. 8-199
Purchasing Strategy- deals with obtaining raw materials,
parts and supplies needed to perform the operations
function
Options include:
• Sole suppliers (Deming)
• Just-in-time
• Parallel sourcing

198. 8-200
Logistics Strategy- deals with the flow of products into
and out of the manufacturing process
Trends include:
• Centralization
• Outsourcing
• Internet

199. 8-201
Human Resource Strategy
Trends include:
• Self-managed teams
• 360-degree appraisal
• Diverse workforce

200. 8-202
Trends include:
• Follow the sun management
• Internet
• Extranet
• Intranet
Information Technology Strategy

201. What is the follow the sun model?
• The follow the sun model is a service and
support method that is designed to address
and satisfy customer needs without regard to
geographic location or current time.
Companies large and small are able to
provide 24-hour service without putting the
burden on one site and requiring employees
to work late shifts or overtime.

202. 8-204
Outsourcing- purchasing from someone else a product or
service that had been previously provided internally
• Avoid outsourcing distinctive competencies
Offshoring- the outsourcing of an activity or a function to
a wholly-owned company or an independent provider in
another country

203. QSPM
Technique designed to determine the relative
attractiveness of feasible alternative actions
Quantitative Strategic Planning Matrix

204. QSPM
Key Internal Factors
Management
Marketing
Finance/Accounting
Production/Operations
Research and Development
Computer Information Systems
Strategy 3
Strategy 2
Strategy 1
Weight
Key External Factors
Economy
Political/Legal/Governmental
Social/Cultural/Demographic/En
vironmental
Technological
Competitive
Strategic Alternatives

205. Steps to Develop a QSPM
1. Make a list of the firm’s key external
opportunities/threats and internal
strengths/weaknesses in the left column.
2. Assign weights to each key external and
internal factor.
3. Examine the Stage 2 (matching) matrices,
and identify alternative strategies that the
organization should consider implementing.

206. Steps to Develop a QSPM
4. Determine the Attractiveness Scores.
5. Compare the Total Attractiveness Scores.
6. Compute the Sum Total Attractiveness Score.

207. QSPM
Requires intuitive judgments & educated
assumptions
Limitations

208. QSPM
Sets of strategies considered simultaneously or
sequentially
Integration of pertinent external & internal factors
in the decision-making process
Advantages

209. Strategy implementation

210. • Shift in responsibility
Nature of Strategy Implementation
Management Perspectives
Divisional or
Functional
Managers
Strategists

211. – Strategy implementation means change
The Nature of Strategy
Implementation

212. – Less than 10% of strategies formulated are
successfully implemented!
The Nature of Strategy
Implementation

213. • Market goods & services well
• Raise needed working capital
• Produce technologically sound goods
• Sound information systems
The Nature of Strategy
Implementation
Successful Strategy Implementation

214. Management Issues
Management
Issues
Resources
Organizational Structure
Restructuring
Rewards/Incentives
Annual Objectives
Policies

215. Management Issues (cont’d)
Management
Issues
Supportive Culture
Production/Operations
Human Resources
Resistance to Change
Natural Environment

216. Management Issues
Purpose of Annual Objectives –
Basis for resource allocation
Mechanism for management evaluation
Metric for gauging progress on long-term objectives
Establish priorities (organizational, divisional, and
departmental)

217. Management Issues
1. Financial resources
2. Physical resources
3. Human resources
4. Technological resources
Four Types of Resources

218. Management Issues
 Conflict not always “bad”
 No conflict may signal apathy
 Can energize opposing groups to action
 May help managers identify problems
Managing Conflict

220. Management Issues
Restructuring
Downsizing
Rightsizing
Delayering

221. Delayering
• Delayering involves removing a layer of
management. Within hierarchical structures a
method that can be used to reduce costs is to
remove a layer of management, while expecting
staff to produce the same level of output.
• This can: save the company money on managerial
wages.

222. Rightsizing
• Rightsizing is the process of restructuring a company so it
can make a profit more efficiently and meet updated
business objectives.
• Organizations will usually rightsize their business by reducing
their workforce, reorganizing upper management, cutting
costs, and changing job roles.

223. Management Issues
Reengineering
Process management
Process innovation
Process redesign

224. Creating a Strategy-Supportive Culture

225. VRIO
valuable rare inimitable organization
• Creative concept yes no no yes
• Well trained employees yes yes no yes Temporary
• FMA yes yes yes yes disctinctive competitive
advantage

228. WBS

230. Tactics(action plan)
No. Action Date Budget Responsible Accountable Consulted Informed Status Outcome KPIs Notes
Status Planned
On progress
Completed
Pending
Cancelled
Postponed

231. Conducting a training for 20 sales
persons comm 2 days
• Lead and lag
• Quantitative and qualitative
conducting a meeting for 50 VIP customers

232. • Recruitment 5 sales supervisors
• Training 15 sales reps communication
• Meeting 200 vip customers Hilton Heliopolis

234. Strategy evaluation and control

235. Strategic Management Model
Performance
Actual
Results
Evaluation
&
Control
Programs
Budget
Procedures
Activities
needed
to
accomplish
a plan
Cost of the
programs
Sequences
of steps
needed to
do the job
Objectives
Strategies
What
results to
accomplish
when
Plan to
achieve
mission &
objectives
Broad
guidelines
for
decision
making
Mission
Reasons
for
existence
Environmental
Scanning
Policies
Country
Analysis:
PEST Forces
Industry
Analysis:
Porter 5 Forces
Internal
Company
Analysis:
Value Chain
External
Strategy Formulation Strategy Implementation
Feedback Learning
VISON
237

236. 11-238

237. 11-239
Primary Measures of Corporate Performance
• Return on Investment (ROI)
• Earnings per share (EPS)
• Return on equity (ROE)
• Operating cash flow
– Free cash flow

238. The Management Cycle
Needs
Assessment
Operating plans
and budgets
Project
management
Performance
Measurement

239. 241
EXAMPLES OF “KEY RESULT” AREAS
• Customer
• Product/service
• Public/society/natural environment
• Marketing
• Human Resources
• Production
• Maintenance
• Operations
• Finance
• Good measurement systems don’t just measure things
done according to the organizational chart. Good systems
measure things done to satisfy stakeholders.

240. Definition of an Indicator
Specific information that provides evidence
about the achievement of planned
impacts, results and activities
Ideally indicators should be reported
quantitatively but this will not always be
possible - don’t limit M&E to
only what can be measured

241. What is a Key Performance Indicator
• Gives a good indication of performance
• Commonly used in business
• Metrics to define and measure business goals
• Examples:
– GNP (Gross National Product)
– ARPU (Average Revenue Per User)
– Dow Jones Index

242. Types of indicators
• Indicators are either qualitative or quantitative
criteria used to check whether planned changes have
taken place as intended.
• They (indicators) are designed to provide a standard
against which to measure or assess or even show the
success or progress of a programme against stated
targets

243. Types of indicators
• Quantitative indicators
– Should be reported in terms of a specific number
(number, mean, or median) or percentage.
– Assessing the significance of an outcome requires data
on both number and percent.
• Qualitative indicators
– Qualitative statements
– Measure perceptions
– Measure attitude, behavior

244. Quantitative indicators
Examples
• Number of
• Proportion of
• Percentage of
• Amount of
• The ratio of
• Length of distance
• Weight of
• Size of
• Areas of/spread of
• Value of
• etc.

245. Qualitative Indicators
Examples
• Level of
• Presence of
• Evidence of
• Availability of
• Quality of
• Accessibility of
• Existence of
• Sustainability of
• Improvement of
• Ability to (e.g. skills)
• Potential of
• etc.

246. Balanced scorecard

251. Resources / financial
• Top down
• Bottom up
• Iterative

252. Thank You