8/18/2019 Fundamental of Management Chap 8

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PowerPoint Presentation

 to Accompany

Management, 10/eJohn R. Schermerhorn, Jr .

Prepared by: Jim LoPresti 

 University of Colorado, Boulder 

Published by: John Wiley & Sons, In!

Chapter 8:The Strategic Management Process

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Management 10/e - Chapter 8 2

Planning Ahead — Chapter 8 Study

Questions

What is strategic management? What are the foundations of

strategic ana!sis? What are corporate strategies andho" are the! formuated?

What are #usiness strategies and

ho" are the! formuated? What are current issues in strateg!

impementation?

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Management 10/e - Chapter 8 $

Study Question 1 !hat is strategic

management"

%asic concepts of strateg!:

Competiti&e ad&antage ' operating "ith

an attri#ute or set of attri#utes that ao"san organi(ation to outperform its ri&as)

Sustaina#e competiti&e ad&antage ' one

that is difficut for competitors to imitate)

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Management 10/e - Chapter 8 *

Study Question 1 !hat is strategic

management"

%asic concepts of strateg!

Strateg! ' a comprehensi&e action

pan that identifies ong-term direction

for an organi(ation and guides resource

utii(ation to accompish organi(ationa

goas "ith sustaina#e competiti&e

ad&antage)Strategic intent ' focusing a

organi(ationa energies on a unif!ing

and compeing goa)

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Management 10/e - Chapter 8 +

Study Question 1 !hat is strategic

management"

Strategic Management Process:

Strategic management ' the process of

formuating and impementing strategies to

accompish ong-term goas and sustain competiti&e

ad&antage)

Strategic ana!sis , process of ana!(ing the

organi(ation the en&ironment its competiti&e

position and current strategies

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Management 10/e - Chapter 8 .

#igure 8.1 Strategy $ormulation and implementation in

the strategic management process.

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Management 10/e - Chapter 8

Study Question 1 !hat is strategic

management"

Strategic Management Process:

Strateg! formuation , the process of

crafting strategies to guide aocation of

resources

Strateg! impementation , putting

strategies into action

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Management 10/e - Chapter 8 8

Study Question 1 !hat is strategic

management"

oa of strategic management is to

create a#o&e-a&erage returns for

in&estors)

eturns eceeding those for aternati&e

opportunities at e3ui&aent ris4)

5arning a#o&e-a&erage returns depends inpart on the organi(ation6s competiti&e

en&ironment)

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Management 10/e - Chapter 8 7

Study Question % !hat are the $oundations

o$ strategic analysis"

Strateg! formuation

The process of creating strateg!)

n&o&es assessing eisting strategies

organi(ation and en&ironment to

de&eop ne" strategies and strategic

pans capa#e of dei&ering future

competiti&e ad&antage)

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Management 10/e - Chapter 8 10

#igure 8.1 &hree le'els o$ strategy in organi(ations)

corporate, *usiness, $unctional strategies.

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Management 10/e - Chapter 8 11

Study Question % !hat are the $oundations

o$ strategic analysis"

9ruc4er6s strategic 3uestions for

strateg! formuation:

What is our #usiness mission?

Who are our customers?

What do our customers consider &aue?

What ha&e #een our resuts?

What is our pan?

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Management 10/e - Chapter 8 12

Study Question % !hat are the $oundations

o$ strategic analysis"

Strateg! impementation

The process of aocating resources and

putting strategies into action)

organi(ationa and management

s!stems must #e mo#ii(ed to support

and reinforce the accompishment of

strategies)

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Management 10/e - Chapter 8 1$

Study Question % !hat are the $oundations

o$ strategic analysis"

na!sis of mission: The reason for an organi(ation6s

eistence)

ood mission statements identif!: Customers Products and/or ser&ices ;ocation

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Management 10/e - Chapter 8 1*

#igure 8.% +ow eternal sta-eholders can *e 'alued

as strategic constituencies o$ organi(ations.

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Management 10/e - Chapter 8 1+

Study Question % !hat are the $oundations

o$ strategic analysis"

na!sis of &aues:

=aues are #road #eiefs a#out "hat is

or is not appropriate)

>rgani(ationa cuture refects the

dominant &aue s!stem of the

organi(ation as a "hoe)

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Management 10/e - Chapter 8 1.

Study Question % !hat are the $oundations

o$ strategic analysis"

>rgani(ationa cuture  Shapes the &aues of managers and other

organi(ation mem#ers)

Points peope in common directions) eps #uid institutiona identit!)

i&es character to the organi(ation in the e!es ofempo!ees and eterna sta4ehoders)

%ac4s up the mission statement)

uides the #eha&ior of organi(ationa mem#ers inmeaningfu and consistent "a!s)

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Management 10/e - Chapter 8 1

Study Question % !hat are the $oundations

o$ strategic analysis"

na!sis of o#@ecti&es: >perating o#@ecti&es direct acti&ities to"ard 4e!

and specific performance resuts) T!pica operating o#@ecti&es:

Profita#iit! Mar4et share uman taent Ainancia heath

Cost efficienc! Product 3uait! nno&ation Socia responsi#iit!

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Management 10/e - Chapter 8 18

Study Question % !hat are the $oundations

o$ strategic analysis"

What are ourStrengths? Manufacturing

efficienc!? S4ied "or4force?

ood mar4etshare?

Strong financing?

Superiorreputation?

What are ourWea4nesses >utdated faciities?

nade3uateresearch andde&eopment?

>#soetetechnoogies?

Wea4management? Past panning

faiures?

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Management 10/e - Chapter 8 17

Study Question % !hat are the $oundations

o$ strategic analysis"

What are ourOpportunities? Possi#e ne"

mar4ets? Strong econom!?

Wea4 mar4etri&as?

5mergingtechnoogies?

ro"th of eisting

mar4et?

What are ourThreats? Be" competitors?

Shortage ofresources?

Changing mar4ettastes?

Be" reguations?

Su#stituteproducts?

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Management 10/e - Chapter 8 20

Study Question % !hat is the strategic

management process"

na!sis of organi(ationa resourcesand capa#iities: Core competenc! is a specia strength that

gi&es an organi(ation competiti&e ad&antage mportant goa of assessing core

competencies)

Potentia core competencies:

Specia 4no"edge or epertise)

Superior technoog!)

5fficient manufacturing approaches)

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Management 10/e - Chapter 8 21

#igure 8. S!/& analysis o$ strengths,wea-nesses, opportunities,and threats.

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Management 10/e - Chapter 8 22

Study Question !hat are corporate strategies and

how are they $ormulated"

Porter6s Mode of Ai&e StrategicAorces ffecting Competition: ndustr! competition

The intensit! of ri&ar! among firms and theircompetiti&e #eha&ior

Be" entrants the threat of ne" competitors entering the

mar4et Su#stitute products or ser&ices

the threat of su#stitute products or ser&ices

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Management 10/e - Chapter 8 2$

Study Question !hat are corporate strategies and

how are they $ormulated"

Porter6s Mode of Ai&e Strategic Aorcesffecting Competition:

%argaining po"er of suppiers the a#iit! of resource suppiers to infuence

the cost of products or ser&ices

%argaining po"er of customers

the a#iit! of customers to infuence the

price the! "i pa! for products or ser&ices

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#igure 8.0 Porters model o$ $i'e strategic $orcesa$$ecting industry competition.

Source: Developed from Michael E. Porter, Competitive Strategy (New York: Free Press, 19!".

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Management 10/e - Chapter 8 2+

Study Question !hat are corporate strategies and

how are they $ormulated"

;e&es of strategies:Corporate strateg!

sets ong-term direction for the tota

enterprise%usiness strateg!

identifies ho" a di&ision or strategic#usiness unit "i compete in products orser&ices

Aunctiona strateg! guides acti&ities "ithin one specific area

of operations

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Management 10/e - Chapter 8 2.

Study Question !hat are corporate strategies and

how are they $ormulated"

uestions addressed #! differentstrategic e&e: Corporate strateg!

n "hat industries and mar4ets shoud "ecompete?

%usiness strateg! o" are "e going to compete for customers in

this industr! and mar4et?

Aunctiona strateg! o" can "e #est utii(e resources to

impement our #usiness strateg!?

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Management 10/e - Chapter 8 2

#igure 8.2 &hree le'els o$ strategy in organi(ations —corporate, *usiness, and $unctional strategies.

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Management 10/e - Chapter 8 28

Study Question !hat are corporate strategies and

how are they $ormulated"

ro"th and di&ersificationstrategies:ro"th strategies

See4 an increase in si(e and the epansionof current operations)

T!pes of gro"th strategies: Concentration strategies

9i&ersification strategies eated di&ersification

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Management 10/e - Chapter 8 27

Study Question !hat are corporate strategies and

how are they $ormulated"

rand or master strategies:ro"th strategies

See4 an increase in si(e and the

epansion of current operations) Sta#iit! strateg!:

maintains current operations "ithoutsu#stantia changes

etrenchment strateg! in&o&es reducing the si(e of orsu#stantia! rearranging currentoperations

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Management 10/e - Chapter 8 $0

Study Question !hat are corporate strategies and

how are they $ormulated"

rand or master strategies: ro"th strategies:

See4 an increase in si(e and the epansion ofcurrent operations)

Sta#iit! strateg!: maintains current operations "ithout su#stantia

changes etrenchment strateg!:

in&o&es reducing the si(e of or su#stantia!

rearranging current operations Com#ination strateg!:

pursues gro"th sta#iit! or retrenchment in some

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Management 10/e - Chapter 8 $1

Study Question !hat are corporate strategies and

how are they $ormulated"

estructuring and di&estiturestrategies:ead@usting operations "hen an

organi(ation is in trou#e)etrenchment

Correcting "ea4nesses #! ma4ingchanges to current operations)

;i3uidationestructuring

9o"nsi(ing and rightsi(ing

estructuring through di&estiture

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Study Question !hat are corporate strategies and

how are they $ormulated"

o#a strategies:

o#ai(ation strateg!) Word is one arge mar4etD standardi(e

products and ad&ertising as much as possi#e) 5thnocentric &ie")

Mutidomestic strateg!) Customi(e products and ad&ertising to oca

mar4ets as much as possi#e)

Po!centric &ie") Transnationa strateg!) %aance efficiencies in go#a operations and

responsi&eness to oca mar4ets) eocentric &ie")

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Study Question !hat are corporate strategies and

how are they $ormulated"

Cooperati&e strategies

Strategic aiances ' t"o or more

organi(ations partner to pursue an area

of mutua interest)

T!pes of strategic aiances:

>utsourcing aiances

Suppier aiances 9istri#ution aiances

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Study Question !hat are corporate strategies and

how are they $ormulated"

5-#usiness strategies

The strategic use of the nternet to

gain competiti&e ad&antage)

Popuar e-#usiness strategies

%usiness-to-#usiness E%2%F strategies

%usiness-to-customer E%2CF strategies

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Management 10/e - Chapter 8 $+

Study Question !hat are corporate strategies and

how are they $ormulated"

We#-#ased #usiness modes:

%ro4erage mode

d&ertising modeMerchant mode

Su#scription mode

nfomediar! mode

Communit! mode

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Study Question !hat are corporate strategies and

how are they $ormulated"

Strategic portfoio panning:

Portfoio panning see4s the #est mi of

in&estments among aternati&e

#usiness opportunities)

%C Matri ana!(es #usiness

opportunities according to mar4et gro"th

rate and mar4et share

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Study Question !hat are corporate strategies and

how are they $ormulated"

%C matri

Ties strateg! formuation to ana!sis of

#usiness opportunities according to G ndustr! or mar4et gro"th rate

;o" &ersus high

Mar4et share

;o" &ersus high

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#igure 8.3 &he 4C5 matri approach to corporatestrategy $ormulation.

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Study Question !hat are corporate strategies and

how are they $ormulated"

%C matri ' #usiness conditionsand reated strategies:Stars

igh share/high gro"th #usinesses)

Preferred strateg! ' gro"th)

Cash co"s

igh share/o" gro"th #usinesses) Preferred strateg! ' sta#iit! or modest

gro"th)

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Study Question !hat are corporate strategies and

how are they $ormulated"

%C matri'#usiness conditionsand reated strategies Econt)F:uestion mar4s

;o" share/high gro"th #usinesses) Preferred strateg! ' gro"th for promising

3uestion mar4s and restructuring ordi&estiture for others)

9ogs ;o" share/o" gro"th #usinesses) Preferred strateg! ' retrenchment #!

di&estiture)

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Management 10/e - Chapter 8 *1

Study Question 0 !hat are *usiness strategies and

how are they $ormulated"

>pportunities for achie&ing

sustaina#e competiti&e ad&antage:

Cost and 3uait!

Hno"edge and speed

%arriers to entr!

Ainancia resources

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Management 10/e - Chapter 8 *2

Study Question 0 !hat are *usiness strategies and

how are they $ormulated"

Porter6s generic strategies mode

%usiness-e&e strategic decisions are

dri&en #!: Mar4et scope

Source of competiti&e ad&antage

Mar4et scope and source of competiti&e

ad&antage com#ine to generate four

generic strategies)

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Management 10/e - Chapter 8 *$

#igure 8.6 Porters generic strategies $ramewor-so$t)drin- industry eamples.

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Management 10/e - Chapter 8 **

Study Question 0 !hat are *usiness strategies and

how are they $ormulated"

Porter6s generic strategies for

gaining competiti&e ad&antage:

9ifferentiation strateg!Cost eadership strateg!

Aocused differentiation strateg!

Aocused cost eadership strateg!

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Management 10/e - Chapter 8 *+

Study Question 0 !hat are *usiness strategies and

how are they $ormulated"

Portfoio panning approach

9esigned to hep managers decide on

in&esting scarce organi(ationa

resources among competing #usiness

opportunities)

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Management 10/e - Chapter 8 *.

Study Question 2 !hat are current issues in

strategy implementation"

Strategic panning faiures thathinder strateg! impementation: Aaiures of su#stance

nade3uate attention to ma@or strategicpanning eements

Aaiures of process Poor handing of strateg! impementation

;ac4 of participation error

oa dispacement error

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Study Question 2 !hat are current issues in

strategy implementation"

Corporate go&ernance: S!stem of contro and performance

monitoring of top management)

9one #! #oards of directors and otherma@or sta4ehoder representati&es)

Contro&ersies regarding roes of insidedirectors and outside directors)

ncreasing emphasis on corporatego&ernance in contemporar! #usinesses)

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Management 10/e - Chapter 8 *8

Study Question 2 !hat are current issues in

strategy implementation"

Strategic eadership 

The capa#iit! to inspire peope to

successfu! engage in a process of

continuous change performance

enhancement and impementation of

organi(ationa strategies)

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Study Question 2 !hat are current issues in

strategy implementation"

Critica tas4s of strategic eadership

%e a guardian of trade-offs)

Create a sense of urgenc!) 5nsure that e&er!one understands the

strateg!)

%e a teacher) %e a great communicator)

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