Introduction to Strategy

1
Introduction to Strategy

• part of planning process
• brings internal and external environment together
• various levels

2
Thinking Strategically

• decide where the business is going (direction)
  and how it intends to get there (strategy)
• direction articulated in the Vision statement
• and further refined in the Mission statement

target customers and markets principal products
or services geographic domain core technologies
survival, growth and profitability company
philosophy company self-concept desired public
image
3
Strategic Planning Process
at start-up
External Environment
Stakeholders
SWOT Industry Analysis Core Competencies
Competitive Advantage
Vision and Mission
Internal Environment
X as established org.
Goals / Objectives
Strategy
Action
Review
4
S.W.O.T. Analysis
Opportunities Threats
Economic
Marketing
Vision
Social
EXTERNAL
Political
Mission
INTERNAL
Operations
Finance
Strategy
Human Resources
Technological
Strengths Weaknesses
5
Industry Analysis
Number and power of
Buyers
Potential Entrants

• Profitability
• Growth

Suppliers
Competitors
Substitutes
6
Competencies and Competitive Advantages

• Core Competence
• Distinctive Competence
• Competitive Advantage
• Sustainable Competitive Advantage

7
Resource-Based View of the Firm

• view firm as bundle of capabilities
• actively seek ways to extract value from
  capabilities

8
Levels of Strategies

• 3 levels of strategic planning
• corporate
• business (competitive)
• unit / functional
• Corporate Strategy
• portfolio / master strategies - what
  business(es) should we be in?- SBUs
• concentration
• growth
• integration
• diversification
• investment reduction

9
Corporate-level strategies

• Concentration
• focusing on one product or product line
• Outcome
• Growth
• market penetration
• new product development
• geographic expansion
• export management firm
• licensing
• foreign sales office
• wholly owned subsidiary

10
Corporate-level strategies (contd)

• Integration (Merger or Acquisition within value
  chain)
• vertical integration
• horizontal integration
• Diversification
• branching out into related or unrelated products
  or market segments
• product diversification
• market diversification
• concentric diversification
• conglomerate or portfolio diversification

11
Corporate-level strategies (contd)

• Investment Reduction
• retrenchment
• divestiture (liquidation)
• consolidation

12
Business-level strategies

• how do we compete in the business(es) we are
  in?
• Competitive Position
• market/product/service emphasis
• Michael Porters competitive strategy - the
  specific approach a business chooses to pursue
  for addressing its environment
• generic competitive positions...

• Low-cost Leadership
• Differentiation
• Focus

13

• Low-Cost Leadership
• focus on value and price
• Differentiation
• focus on specific market niche and its needs
• Focus
• selecting a market segment and serving its
  customers better than competitors either from a
  price or product (unique features) perspective

14

• Business-Level Strategies
• Lower Cost Differentiation
• Broad
• Target
• Comp.
• Scope
• Narrow
• Target

Cost Leadership
Differentiation
Focus
Cost Focus
Differentiation Focus