Strategic ManagementStrategic Management

The Strategy ProcessThe Strategy Process

Prof. Dr. E.VatchkovaProf. Dr. E.Vatchkova

ContentsContents

Understanding strategy Understanding strategy developmentdevelopmentInstruments for strategic analysisInstruments for strategic analysisAn overall strategic modelAn overall strategic modelTypes of strategiesTypes of strategies

UnderstandingUnderstanding strategy strategy developmentdevelopment (1) (1)

How strategy development can be seen

How strategy development process can be understood

Implications for strategy development

Understanding strategy Understanding strategy development (2)development (2)

THREE STRATEGY LENSES

1. Strategy as design2. Strategy as experience3. Strategy as ideas

How strategy development can be seen

Understanding strategy Understanding strategy development (3)development (3)

Strategic planning systemsStrategic leadership

Organizational politicsLogical incrementalism

The learning organizationImposed strategy

How strategy development process can be understood

Understanding strategy Understanding strategy development (4)development (4)

Intended and realized strategy

Strategic drift

Strategic management in uncertainty and complexity

Implications for strategy development

SWOT ANALYSIS DIAGRAMSWOT ANALYSIS DIAGRAMNumerous Environmental

Opportunities

Major Environmental

Treats

Critical

Internal

Weaknesses

Substantial

Internal

Strengths

QUADRANT || QUADRANT |

QUADRANT |VQUADRANT |||

Forces Affecting Industry CompetitionForces Affecting Industry Competition

Suppliers

Bargaining Power of Suppliers

Buyers

Bargaining Power of Buyers

Substitutes

Treat of Substitute

Products or Services

Potential Entrants

Treat of New Entrants

Industry Competitors

Rivalry among Existing Firms

Portfolio MatrixPortfolio Matrix

StarsStars QuestionQuestion

MarksMarks

Cash Cash

CowsCows

DogsDogs

High

Low

LowHigh

Relative Market Share

Market

Growth

Rate

Strategic alternative matrixStrategic alternative matrixNumerous Environmental

Opportunities

Major Environmental

Treats

Critical

Internal

Weaknesses

Substantial

Internal

Strengths

QUADRANT ||

Vertical Integration

Conglomerate Diversification

QUADRANT |

Concentration

Market Development

Product Development

Innovation

QUADRANT |V

Horizontal Integration

Concentric Diversification

Joint Venture

QUADRANT |||

Turnaround

Divestiture

Liquidation

Strategies of Portfolio TypesStrategies of Portfolio Types

StarsStars Cash Cash CowsCows

Question Question MarksMarks

DogsDogs

STRATEGYSTRATEGY Invest for Invest for rapid rapid growth, growth, convert convert to cash to cash cowcow

Channel Channel revenues revenues to stars to stars and and question question marksmarks

Evaluate Evaluate for future for future potential potential as star, as star, divest divest reminder reminder

Divest or Divest or liquidateliquidate

PORTFOLIO TYPES

Survival Strategies and Environmental Survival Strategies and Environmental ConditionsConditions

Specialists will Specialists will outperform outperform generalists. generalists. Generalists are Generalists are more likely to fail.more likely to fail.

Generalists will Generalists will outperform outperform specialists. specialists. Specialists are Specialists are more likely to fail.more likely to fail.

Stable

Unstable

HeterogeneityHomogeneity

Market Complexity

Market Stability

TypesTypes of strategies (1) of strategies (1)

Concentration – Concentration – single product in a single single product in a single market market

Market development – Market development – selling present selling present products in new marketsproducts in new markets

Product development – Product development – modification of modification of existing product or creation of a similar oneexisting product or creation of a similar one

Types of strategies (2)Types of strategies (2)

Innovation – Innovation – creation of a new product creation of a new product based on the technology of a current productbased on the technology of a current product

Horizontal integration – Horizontal integration – acquisition of acquisition of another organization in the same industry another organization in the same industry

Vertical integration – Vertical integration – acquire or create acquire or create organizations that distribute its product, organizations that distribute its product, supply materials for its product, or both supply materials for its product, or both

Types of strategies (3)Types of strategies (3)

JointJoint ventureventure – – two or more organizations two or more organizations increase their capabilitiesincrease their capabilities

Concentric DiversificationConcentric Diversification – creating or – creating or acquiring organizations that manufactures or acquiring organizations that manufactures or distribute related productsdistribute related products

Conglomerate DiversificationConglomerate Diversification – creating or – creating or acquiring another organization that acquiring another organization that manufactures or distributes unrelated manufactures or distributes unrelated productsproducts

Types of strategies (4)Types of strategies (4) Defender strategyDefender strategy – seeks or creates an – seeks or creates an

environment, that is stable, protecting the market environment, that is stable, protecting the market shareshare

Prospector strategyProspector strategy - seeks or creates an unstable - seeks or creates an unstable environment in the form of rapid change and high environment in the form of rapid change and high growth in the marketgrowth in the market

Analyzer strategyAnalyzer strategy – involves adapting solutions from – involves adapting solutions from both – the defender and prospector to the three both – the defender and prospector to the three problems – entrepreneurial, engineering and problems – entrepreneurial, engineering and administrativeadministrative

Types of strategies (5)Types of strategies (5)

Turnaround Turnaround – correct existing problems by – correct existing problems by invoking techniques for improving operational invoking techniques for improving operational efficiencyefficiency

DivestitureDivestiture – sell parts of the organization – sell parts of the organization

Liquidation Liquidation – acquire cash from the sale of – acquire cash from the sale of parts of the company which can then be parts of the company which can then be transferred to owner-stockholderstransferred to owner-stockholders

Thank you !Thank you !