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Introduction to Management 11e John Schermerhorn

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Title: Introduction to Management 11e John Schermerhorn


1
Introduction to Management 11e John Schermerhorn
  • Chapter 9
  • The Strategic Management Process

2
Study 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

3
Study Question 1 What is strategic management?
  • Types of competitive advantage
  • Cost and quality
  • Knowledge and speed
  • Barriers to entry
  • Financial resources

4
Study 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

5
Study 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

6
Figure 9.1 Three levels of strategy in
organizations- corporate, business, functional
strategies
7
Study 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

8
Figure 9.2 Strategy formulation and
implementation in the strategic management
process
9
Study 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

10
Study 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

11
Study 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

12
Study Question 2 What are the essentials of
strategic analysis?
13
Study 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

14
Study 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

15
Figure 9.3 How external stakeholders can be
valued as strategic constituencies of
organizations
16
Study 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

17
Study Question 2 What are the essentials of
strategic analysis?
  • Analysis of objectives
  • Operating objectives direct activities toward key
    and specific performance results

18
Study Question 2 What are the essentials of
strategic analysis?
19
Study 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

20
Study Question 2 What is the strategic
management process?
21
Study 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

22
Figure 9.4 SWOT analysis of strengths,
weaknesses, opportunities, and threats
23
Study Question 2 What is the strategic
management process?
  • Porters Model of Five Strategic Forces Affecting
    Competition

24
Figure 9.5 Porters model of five strategic
forces affecting industry competition
Source Developed from Michael E. Porter,
Competitive Strategy (New York Free Press, 1980).
25
Study 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

26
Study 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

27
Figure 9.6 The BCG matrix approach to corporate
strategy formulation
28
Study 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

29
Study 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

30
Study 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

31
Study 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

32
Study 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

33
Study 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

34
Study 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

35
Study Question 3 What are corporate-level
strategies and how are they formulated?
  • Global strategies

36
Study 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

37
Study Question 3 What are corporate-level
strategies and how are they formulated?
  • Co-opetition working with rivals on projects of
    mutual benefit

38
Study 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?

39
Study 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

40
Figure 9.7 Porters competitive strategies
framework soft-drink industry examples
41
Study 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

42
Study Question 5 What are the foundations for
strategy implementation?
  • Strategy implementation
  • Must be supported in every aspect of management
  • Planning
  • Controlling
  • Organizing
  • Leading

43
Study 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

44
Study 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

45
Study 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

46
Study Question 5 What are the foundations for
strategy implementation?
  • Strategic leadership
  • Inspires people to continually change, refine,
    and improve strategies and their implementation

47
Study 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
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