Schermerhorn - Chapter 61 Chapter 6 1 st part of chapter is on Strategic Management 2 nd part of...

Schermerhorn - Chapter 6 1

Chapter 61st part of chapter is on Strategic Management

2nd part of chapter is on entrepreneurship Planning Ahead

– What is strategic management?– How are strategies formulated?– How are strategies implemented?– What is entrepreneurship?


Strategy and Competitive Advantage Strategy

– links an organization to its environment

– Is a comprehensive plan that sets, directs, and guides our allocation of resources to achieve long term objectives

– We would like our strategy to give us a competitive advantage.


The Strategic Management Process– the process of collecting information

(environmental analysis), and then formulating, implementing and controlling strategies to advance an organization’s mission and objectives and secure competitive advantage


The Strategic Management Process– Strategy formulation ( Peter Drucker)

• What is our business mission?

• What have been our results expected? (Objectives)

• What is our new strategic plan?

• Who are our customers?

• What do our customers value?


Strategy and Competitive Advantage Mission, Values, and Objectives

– Mission statement• domain

– customers

– products and/or services

– Location

– Stance on employees

– Stakeholders

• philosophy

To analyze how well we are doing we would like to find out

how well our company serves constituencies.


Our Mission should express our values and guide our culture Our Mission, Values

– Core values• broad beliefs about what is/is not appropriate—help

us tell what is appropriate

– Corporate Culture• predominant values for organization as a whole


After our Mission we set our Objectives

– Set Company Objectives • direct activities toward key and specific results

• examples include– profitability

– market share

– human talent

– financial health

– cost efficiency

– product quality

– innovation

– social responsibility


After Objectives are set , we igure out what Strategies will give us a Competitive Advantage- We can come up with strategies through SWOT and TOWS Analysis. SWOT analysis

– Assessing organizational Strengths and Weaknesses within SWOT analysis

– Identifying core competencies• Technology• Human resources• Manufacturing approaches• Management talent• Financial Strength


We try to find a Competitive Advantage Analysis of industry and environment

– Assessing Opportunities and Threats within SWOT analysis

– Assessment of actual and future environmental conditions

• Macro environment• Industry environment (also called specific,

competitive environment– Unattractive industry– Attractive industry


Levels and Types of Strategies

Levels of Strategy– Corporate strategy—directs the organization as a whole

toward sustainable competitive advantage.

– Business strategy—sets the strategic direction for a single business unit or product line.

– Functional strategy—guides the use of resources to implement business strategy, focusing on activities within a specific area of operations.



Growth and diversification strategies– Growth strategies—seek an increase in size and

the expansion of current operations.– Concentration strategies—growth occurs

through expansion in the same business area.– Diversification strategies—growth occurs

through acquisition of or investment in new and/or different business areas.



Retrenchment strategies– Reduce the scale of operations in order to gain

efficiency and improve performance• Turnaround – “downsizing” to reduce costs and

“restructuring” to improve efficiency

• Divestiture – selling parts of the organization to improve efficiency.

• Liquidation – closing operations through complete sale of assets or declaration of bankruptcy.



Stability strategies– Maintain the present course of action without

major cha– Pause and proceed with Caution

– Short-run Profit



Cooperative strategies– Strategic alliances—two or more organizations

partner to pursue an area of mutual interest.– Types of strategic alliances:

• Outsourcing alliances

• Supplier alliances IGA and Associated Groceries

• Distribution alliances Sunkist and Idaho Potatoes



E-business strategies– The strategic use of the Internet to gain

competitive advantage– Popular e-business strategies

• Business-to-business (B2B) strategies

• Business-to-customer (B2C) strategies


Strategy Formulation

Opportunities for Competitive Advantage– Cost and quality– Knowledge and timing– Barriers to entry– Financial resources



Portfolio Planning– investing scarce

organizational resources among competing business opportunities



Boston Consulting Group (BCG) Matrix– ties strategy formulation to analysis of business

opportunities according to market growth rate and market share

• stars

• cash cows

• question marks

• dogs


The BCG MatrixThe BCG Matrix

Relative Market Share Position in the Industry

Industry Sales Growth Rate (Percent)

High +20

Medium 0

Low -20

High Medium Low

1.0 .50 0.0

Question Marks (I)

Dogs (IV)

Stars (II)

Cash Cows (III)

?


General Electric Business ScreenGeneral Electric’s Business Screen -- Position on Graph’s can help you determine strategy. – See next slide.

AWinners Winners

B

C

Question Marks

D

F

Average Businesses

EWinners

Losers

GLosers H

LosersProfit

Producers

Strong Average Weak

Low

Medium

High

Business Strength/Competitive Position

Indu

stry

Att

ract

ive

ness

Source: Adapted from Strategic Management in GE, Corporate Planning and Development, General Electric Corporation. Used by permission of General Electric Company.



Porter’s Competitive Strategies Model– new competitors– bargaining power of suppliers– bargaining power of customers– threats of substitute products and services– competition between existing companies



Porter’s Competitive Strategies Model– Strategies to Gain Competitive Advantage

• Differentiation strategy

• Cost leadership strategy

• Focused differentiation strategy

• Focused cost leadership strategy



Product Life Cycles– A series of stages that a product or service goes

through during the life of its marketability– Stages of the life cycle:

• Introduction

• Growth

• Maturity

• Decline



Product life cycle– Introduction and growth stages

• Use differentiation and prospector strategies

– Maturity stage• Use focus and/or cost leadership strategies

– Decline stage• Use defender or analyzer strategies



Emergent Strategies– develop progressively over time

Logical incrementalism– strategies that develop as modest adjustments to

past patterns


Strategy and Competitive Advantage The Strategic Management Process

– Strategy implementation• putting plans into action


Strategy Implementation

Management Practices and Systems– Strategic management failures

• inadequate attention to major strategic planning elements

• poor handling of strategy implementation


Strategy Implementation

Leadership and Top Management Teams– effective strategy implementation depends on

all managers

Corporate Governance– boards of directors

• inside

• outside


Strategy and Entrepreneurship

Who are the Entrepreneurs?– Risk-taking

individuals who pursue opportunities that others do not see



Typical Characteristics of Entrepreneurs

• internal focus of control• high energy level• high need for achievement• tolerance for ambiguity• self-confidence• action oriented



Entrepreneurship and Small Business– Small business

• fewer than 500 employees• most common type of business in the U.S.• high failure rate



Small Business Development– Small Business Administration (SBA)

• Small Business Development Centers– offer guidance on how to run a business

successfully



Entrepreneurship and Large Enterprises– intrapreneurship

• entrepreneurial behavior within large organizations

– skunk works• groups of employees work in a creative

setting

Date post:	21-Dec-2015
Category:	Documents
Upload:	cynthia-summers
View:	221 times
Download:	0 times

Schermerhorn - Chapter 61 Chapter 6 1 st part of chapter is on Strategic Management 2 nd part of...

Documents