Planning and Strategic Management

1
Principles of Management
Week 5 Strategic Management

2
What Is Strategic Management?

• A set of managerial decisions and actions that
  determines the long-run performance of an
  organization
• A formula of success

3
Strategic Management Process
4
The Strategic Management Process

• 1. Identifying the Organizations Current
  Mission, Objectives, and Strategies
• mission - statement of the purpose of an
  organization
• important in profit and not-for-profit
  organizations

5
Components of a Mission Statement
6
SWOT

• Strength, Weakness, Opportunities, and Threats
• Strength Competitive advantages Core
  competencies

7
Identifying the Organizations Opportunities
Organizations Opportunities
Organizations Resources/Abilities
Opportunities in the Environment
8
Levels of Org. Strategy
9
Corporate Level Strategy

• What businesses should the company be in?
• PepsiCo soft drinks
• IBM computers
• SKII cosmetic products
• 3 major corporate level strategy
• Growth, Stability, and Renewal

10
Growth, Stability, Renewal

• Growth
• The strategy is to expanding the number of
  products offered
• Can be achieved through
• Concentration
• Backward vertical integration
• Forward vertical integration
• Horizontal integration
• Related diversification
• Unrelated diversification

11
Growth, Stability, Renewal

• Stability
• The strategy is to make no significant
  changes!!!!
• Renewal
• The strategy is to address weaknesses that lead
  to performance declines
• Retrenchment
• Cut cost, hang in there
• Turnaround
• Cut cost, hang in there, more dramatic changes

12
The BCG Matrix
Stars Add resources, Build business
Question Marks Growth or retrench
Cash Cows Modest growth
Dogs Retrenchment, liquidate
13
Business Level Strategy

• How an organization compete in each of its
  businesses (SBU)?
• Strategic business units (SBU)
• Independent units of an organization that have
  their own strategies
• Within an industry, there are 5 competing forces
  (M. Porter)

14
M. Porters 5-Force Model

• Bargaining power of suppliers
• Bargaining power of buyers
• Threats of substitutes
• Threats of new entrants
• Current rivalry

15
Porters typology of business-level strategies

• Cost leadership strategy
• Differentiation strategy
• Stuck in the middle
• Focus strategy

16
Functional Level Strategy

• used to support the business-level strategy and
  culture
• creates an appropriate supporting role for each
  functional area of the organization
• e.g., manufacturing, marketing, human resources

17
Southwest Airlines Activity System