Title: Introduction to Management 11e John Schermerhorn
1Introduction to Management 11e John Schermerhorn
- Chapter 9
- The Strategic Management Process
2Study Question 1 What is strategic management?
- Basic concepts of strategy
- Competitive advantage operating with an
attribute or set of attributes that allows an
organization to outperform its rivals - Sustainable competitive advantage one that is
difficult for competitors to imitate
3Study Question 1 What is strategic management?
- Types of competitive advantage
- Cost and quality
- Knowledge and speed
- Barriers to entry
- Financial resources
4Study Question 1 What is strategic management?
- Basic concepts of strategy
- Strategy
- a comprehensive action plan that identifies
long-term direction for an organization and
guides resource utilization to accomplish
organizational goals with sustainable competitive
advantage - Strategic intent
- focusing all organizational energies on a
unifying and compelling goal
5Study Question 1 What is strategic management?
- Levels of strategies
- Corporate
- Sets long-term direction for the total enterprise
- Business
- How a division or strategic business unit will
compete in its product or service domain - Functional
- Guides activities within one specific area of
operations
6Figure 9.1 Three levels of strategy in
organizations- corporate, business, functional
strategies
7Study Question 1 What is strategic management?
- Strategic Management Process
- Strategic management
- the process of formulating and implementing
strategies to accomplish long-term goals and
sustain competitive advantage - Strategic analysis
- process of analyzing the organization, the
environment, its competitive position and current
strategies
8Figure 9.2 Strategy formulation and
implementation in the strategic management
process
9Study Question 1 What is strategic management?
- Strategic Management Process
- Strategy formulation
- the process of crafting strategies to guide
allocation of resources - Strategy implementation
- putting strategies into action
10Study Question 1 What is strategic management?
- Strategy formulation
- The process of creating strategy
- Involves assessing existing strategies,
organization, and environment to develop new
strategies and strategic plans capable of
delivering future competitive advantage
11Study Question 1 What is strategic management?
- Strategy implementation
- The process of allocating resources and putting
strategies into action - All organizational and management systems must be
mobilized to support and reinforce the
accomplishment of strategies
12Study Question 2 What are the essentials of
strategic analysis?
13Study Question 2 What are the essentials of
strategic analysis?
- Analysis of mission
- The reason for an organizations existence
- Good mission statements identify
- Customers
- Products and/or services
- Location
- Underlying philosophy
- An important test of the mission is how well it
serves the organizations stakeholders
14Study Question 2 What are the essentials of
strategic analysis?
- Stakeholders
- Individuals and groups directly affected by the
organization and its strategic accomplishments - An important test of the mission is how well it
serves the organizations stakeholders
15Figure 9.3 How external stakeholders can be
valued as strategic constituencies of
organizations
16Study Question 2 What are the essentials of
strategic analysis?
- Analysis of Core values
- Broad beliefs about what is or is not appropriate
- Organizational culture reflects the dominant
value system of the organization as a whole
17Study Question 2 What are the essentials of
strategic analysis?
- Analysis of objectives
- Operating objectives direct activities toward key
and specific performance results
18Study Question 2 What are the essentials of
strategic analysis?
19Study Question 2 What is the strategic
management process?
- Analysis of organizational resources and
capabilities - Core competency is a special strength that gives
an organization competitive advantage - Important goal of assessing core competencies
20Study Question 2 What is the strategic
management process?
21Study Question 2 What is the strategic
management process?
- SWOT Analysis
- Examination of an organizations current position
by looking at - Internal strengths and weaknesses
- Environmental opportunities and threats
22Figure 9.4 SWOT analysis of strengths,
weaknesses, opportunities, and threats
23Study Question 2 What is the strategic
management process?
- Porters Model of Five Strategic Forces Affecting
Competition
24Figure 9.5 Porters model of five strategic
forces affecting industry competition
Source Developed from Michael E. Porter,
Competitive Strategy (New York Free Press, 1980).
25Study Question 3 What are corporate-level
strategies and how are they formulated?
- Corporate-level strategy formulation
- Strategic portfolio planning
- Portfolio planning seeks the best mix of
investments among alternative business
opportunities - BCG Matrix analyzes business opportunities
according to market growth rate and market share
26Study Question 3 What are corporate-level
strategies and how are they formulated?
- BCG matrix
- Ties strategy formulation to analysis of business
opportunities according to - Industry or market growth rate
- Low versus high
- Market share
- Low versus high
27Figure 9.6 The BCG matrix approach to corporate
strategy formulation
28Study Question 3 What are corporate-level
strategies and how are they formulated?
- BCG matrix business conditions and related
strategies - Stars
- High share/high growth businesses
- Preferred strategy growth
- Cash cows
- High share/low growth businesses
- Preferred strategy stability or modest growth
29Study Question 3 What are corporate-level
strategies and how are they formulated?
- BCG matrixbusiness conditions and related
strategies (cont.) - Question marks
- Low share/high growth businesses
- Preferred strategy growth for promising
question marks and restructuring or divestiture
for others - Dogs
- Low share/low growth businesses
- Preferred strategy retrenchment by divestiture
30Study Question 3 What are corporate-level
strategies and how are they formulated?
- Growth strategies
- Seek an increase in size and the expansion of
current operations - Types of growth strategies
- Concentration strategies
- Grow within the same business area
31Study Question 3 What are corporate-level
strategies and how are they formulated?
- Types of growth strategies continued
- Diversification strategies
- Grow by acquiring or investing in new and
different business areas - Related diversification
- Unrelated diversification
- Vertical integration
32Study Question 3 What are corporate-level
strategies and how are they formulated?
- Retrenchment and restructuring strategies
- Readjusting operations when an organization is in
trouble - Chapter 11 bankruptcy
- Protects a firm from creditors while management
re-organizes to restore solvency
33Study Question 3 What are corporate-level
strategies and how are they formulated?
- Types of retrenchment and restructuring
strategies - Liquidation
- Business closes and sells assets to pay creditors
- Downsizing
- Decreases size of operations
34Study Question 3 What are corporate-level
strategies and how are they formulated?
- Types of retrenchment and restructuring
strategies - Divestiture
- Sells off parts of the organization to refocus
attention on core business areas - Turnaround Strategy
- Tries to fix specific performance problems
35Study Question 3 What are corporate-level
strategies and how are they formulated?
36Study Question 3 What are corporate-level
strategies and how are they formulated?
- Cooperative strategies
- Strategic alliances two or more organizations
partner to pursue an area of mutual interest - Types of strategic alliances
- Outsourcing alliances
- Supplier alliances
- Distribution alliances
37Study Question 3 What are corporate-level
strategies and how are they formulated?
- Co-opetition working with rivals on projects of
mutual benefit
38Study Question 4 What are business-level
strategies and how are they formulated?
- Business-level strategy formulation
- Good strategies help achieve above average
returns - Key question is How can we best compete for
customers in our market and with our products or
services?
39Study Question 4 What are business-level
strategies and how are they formulated?
- Porters competitive strategies model
- Business-level strategic decisions are driven by
- Market scope
- Source of competitive advantage
- Market scope and source of competitive advantage
combine to generate four generic strategies
40Figure 9.7 Porters competitive strategies
framework soft-drink industry examples
41Study Question 4 What are business-level
strategies and how are they formulated?
- Porters generic strategies for gaining
competitive advantage - Differentiation strategy
- Cost leadership strategy
- Focused differentiation strategy
- Focused cost leadership strategy
42Study Question 5 What are the foundations for
strategy implementation?
- Strategy implementation
- Must be supported in every aspect of management
- Planning
- Controlling
- Organizing
- Leading
43Study Question 5 What are the foundations for
strategy implementation?
- Strategic planning failures that hinder strategy
implementation - Failures of substance
- Inadequate attention to major strategic planning
elements - Failures of process
- Poor handling of strategy implementation
- Lack of participation error
- Goal displacement error
44Study Question 5 What are the foundations for
strategy implementation?
- Corporate governance
- System of control and performance monitoring of
top management - Done by boards of directors and other major
stakeholder representatives - Controversies regarding roles of inside directors
and outside directors - Increasing emphasis on corporate governance in
contemporary businesses
45Study Question 5 What are the foundations for
strategy implementation?
- Strategic control
- Makes sure strategies are well implemented and
that poor strategies are scrapped or modified
46Study Question 5 What are the foundations for
strategy implementation?
- Strategic leadership
- Inspires people to continually change, refine,
and improve strategies and their implementation
47Study Question 5 What are the foundations for
strategy implementation?
- Critical tasks of strategic leadership
- Be a guardian of trade-offs
- Create a sense of urgency
- Ensure that everyone understands the strategy
- Be a teacher
- Be a great communicator