? ? ? Ch. 9 Strategic Management ????

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? ? ?Ch. 9 Strategic Management ????
Whats your unique value? - Michael
Porter Were not in the hamburger business
were in show business.
Ray Kroc, founder of McDonalds
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• CQS (Cost, Quality, Speed), FBC (Faster, Better,
  Cheaper) ?? NB, Cost down, ????, ????
• vs. Apple, Innovation, ????
• ????????????? (????),
• ?????????????
• ????????????????,
• ??????????

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• Andrew Grove ?????
• ???,???(??)
• ??????,???????,?????
• 
  (???)
• ????????(?????),
• ????(?????) ?????

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• Value integrator Visa, iPhone as platform,
  ????(??)
• Total solution provider IBM
• ???????,????????
• FedEx, ????,Starbucks, Swatch
• 7-ELEVEN, Giant, 85?C
• Frequent Flyer Program (FFP) ???? (Star
  Alliance), SkyTeam, oneworld.
• ??????????, Happy Go

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• Vision vs. Action
• Can you Say What Your Strategy Is?
• Most executives cannot articulate the objective,
  scope, and advantage of their business in a
  simple statement.
• If they cant, neither can anyone else.
• CEO, thinker or doer?

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• Michael Porter
• 1980, Competitive Strategy, ????,??????
• 1985, Competitive Advantage, ???
• 1990, The Competitive Advantage of Nations, ????

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??

• 1. What and Why ????
• 2. ??????
• 3. ????
• 4. ?????????
• 5. ??????????????

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1. What is SM

• What managers do to develop the organizations
  strategies.
• Strategies
• the plans for how the organization will do what
  its in business to do, how it will compete
  successfully, and how it will attract and satisfy
  its customers in order to achieve its goals.
• Business Model
• how a company is going to make money.

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Why is SM Important

1. It results in higher organizational performance.
2. It requires that managers examine and adapt to
   business environment changes.
3. It coordinates diverse organizational units,
   helping them focus on organizational goals.

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2. Strategic Management Process(14 Strategic
planning, 5 implementation, 6 evaluation.
feedback)
External Analysis ? opportunities ? threats
Identify the organizations current mission,
goals, and strategies
SWOT Analysis
Formulate strategies
Implement Strategies
Evaluate Results
Internal Analysis ? strengths ? weaknesses
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Step 1 Identifying the organizations current
mission, goals, and strategies

• Mission statement a statement of the purpose of
  an organization
• The scope of its products and services, e.g. ??,
  Shell, Hollywood, McDonald
• Typical components customers, markets,
  (exhibit 9-2)
• Goals
• Measurable performance targets

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SWOT (TOWS) analysis (Strengths, Weaknesses,
Opportunities Threats)

• Step 2 Doing an external analysis
• environmental scanning, focuses on identifying
  opportunities and threats.
• Step 3 Doing an internal analysis
• Assessing organizational resources, capabilities,
  and activities
• Strengths, Weaknesses
• Core Competence major value-creating skills and
  capabilities. ????,????,?????

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Identifying the Organizations Opportunities
Organizations Opportunities
Organizations Resources/Abilities
Opportunities in the Environment
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Step 4 Formulating strategies

• Develop and evaluate strategic alternatives
• Select appropriate strategies for all levels in
  the organization that provide relative advantage
  over competitors
• Match organizational strengths to environmental
  opportunities
• Correct weaknesses and guard against threats

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Step 5 Implementing strategies

• effectively fitting organizational structure and
  activities to the environment.
• ?????

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Step 6 Evaluating results

• How effective have strategies been?
• What adjustments, if any, are necessary?
• feedback

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??????

• 1. ??????,??,??
• 2. ????????? ??
• 3. ?????????
• 4. ????
• 5. ????
• 6. ????

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????
1. ???????????????????,????????????????? vs.
?? 2. A set of hypotheses about cause and effect.
?? vs. ????,what to do? what not to do?
??,??? 3. Kim Mauborgne, Blue Ocean Strategy
How to create uncontested market space and make
the competition irrelevant, ??,??,??,???????????,S
watch, QB House. 4. ???,?????,???,85?C,??,???,Uni
on Bank, Shouldice.
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???????

• 1. ???? (corporate)
• 2. ???? (business)SBU
• 3. ???? (functional)
• ??network level

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Levels of Organizational Strategy
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3. ??????

1. ?????,??,??
2. ?????? (?BCG) ????,??,??,?

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Corporate Strategies

• an organizational strategy that determines what
  businesses a company is in or wants to be in, and
  what it wants to do with those businesses.
• Types of Corporate Strategies
• Growth expansion into new products and markets
• Stability maintenance of the status quo
• Renewal redirection of the firm into new markets

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Grand Strategies
Corporate Growth Strategies
Corporate Stability Strategies
Corporate Stability Strategies
Corporate Retrenchment Strategies
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Growth Strategies Merger, Acquisition

• 1. ConcentrationDirect expansion (e.g.7-11)
• Focusing on a primary line of business and
  increasing the number of products offered or
  markets served.
• 2. Integration
• Vertical Integration
• Backward vertical integration attempting to gain
  control of inputs (become a self-supplier). e.g.
  eBay.
• Forward attempting to gain control of output
  through control of the distribution channel
  (eliminating intermediaries). e.g. Apple, Dell.

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Growth Strategies (contd)

• Horizontal Integration (L'Oreal, The Body
  Shop)
• Combining operations with another competitor in
  the same industry to increase competitive
  strengths and lower competition among industry
  rivals.
• 3. Diversification
• Related Diversification (American Standard
  Cos)
• Expanding by combining with firms in different,
  but related industries that are strategic fits.
• Unrelated Diversification (Samsung)
• Growing by combining with firms in unrelated
  industries where higher financial returns are
  possible.

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Stability Strategy

• A strategy that seeks to maintain the status quo
  to deal with the uncertainty of a dynamic
  environment, when the industry is experiencing
  slow- or no-growth conditions, or if the owners
  of the firm elect not to grow for personal
  reasons. e.g. Kelloggs.

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Renewal Strategies

• Developing strategies to counter organization
  weaknesses that are leading to performance
  declines.
• Retrenchment focusing of eliminating
  non-critical weaknesses and restoring strengths
  to overcome current performance problems.
• Turnaround addressing critical long-term
  performance problems through the use of strong
  cost elimination measures and large-scale
  organizational restructuring solutions.

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Corporate Portfolio Analysis (BCG Matrix)

• Developed by the Boston Consulting Group
• Considers market share and industry growth rate
• Classifies firms as
• Cash cows low growth rate, high market share
• Stars high growth rate, high market share
• Question marks high growth rate, low market
  share
• Dogs low growth rate, low market share

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The BCG Matrix
Stars
Question Marks
Cash Cows
Dogs
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22 ??, ??, ??????!e.g. Apple
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4. ????????

• 1. ??????????
• 2. ??????????
• ?????????
• ????????,???,??

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Business (Competitive) Strategy

• A strategy focused on how an organization should
  compete in each of its SBUs (strategic business
  units).
• Functional strategy - the strategies used by an
  organizations various functional departments to
  support the competitive strategy.

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Competitive Advantage

• what sets an organization apart its distinctive
  edge.
• Quality as a Competitive Advantage
• Differentiates the firm from its competitors.
• Can create a sustainable competitive advantage.
• Represents the companys focus on quality
  management to achieve continuous improvement and
  meet customers demand for quality.

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• 1. ???? ?????? - ????
• 2. ??????????
• ??,??,??,????
• ??Intel ??????????

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• Overhaul
• Performance
• Minimum

• ????
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• 1. ????
• ????,??,????,??,??
• 2. ????
• ????,????,?????

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Sustainable Competitive Advantage

• Continuing over time to effectively exploit
  resources and develop core competencies that
  enable an organization to keep its edge over its
  industry competitors.
• Create and sustain a Competitive Advantage will
  give a company above-average profitability.

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Five Competitive Forces

• Threat of New Entrants
• The ease or difficulty with which new competitors
  can enter an industry.
• Threat of Substitutes
• The extent to which switching costs and brand
  loyalty affect the likelihood of customers
  adopting substitutes products and services.
• Bargaining Power of Buyers
• The degree to which buyers have the market
  strength to hold sway over and influence
  competitors in an industry.

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Five Competitive Forces

• Bargaining Power of Suppliers
• The relative number of buyers to suppliers and
  threats from substitutes and new entrants affect
  the buyer-supplier relationship.
• Current Rivalry
• Intensity among rivals increases when industry
  growth rates slow, demand falls, and product
  prices descend.

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Forces In The Industry Analysis
New Entrants
Threat of New Entrants
Bargaining Power of Suppliers
Industry Competitors
Suppliers
Buyers
Current Rivalry
Bargaining Power of Buyers
Threat of Substitutes
Substitutes
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Three Generic Competitive Strategies

• Cost Leadership Strategy
• Seeking to attain the lowest total overall costs
  relative to other industry competitors.
• Differentiation Strategy
• Attempting to create a unique and distinctive
  product or service for which customers will pay a
  premium.
• Focus Strategy
• Using a cost or differentiation advantage to
  exploit a particular market segment rather a
  larger market.
• ?????????,stuck in the middle

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• 1. ???Merck, Pfizer, Eli Lilly
  ?????,?????????????
• 2. ???Philip Morris (prospector), Reynolds
  (analyzer), American (defender), Liggett
  (reactor)
• 3. ???American, United, Delta (D), America
  West (CL), Southwest (F), TWA, NWA, USAir,
  Continental (S)
• ????????,Toyotas lean production system, mass
  customization

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Accor Formula Hotel
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5. Strategic Management Today

• Need for Strategic Leadership
• Need for Strategic Flexibility
• New Directions in Organizational Strategies
• e-business, customer service, innovation

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The Need for Strategic

• Strategic leadership - the ability to anticipate,
  envision, maintain flexibility, think
  strategically, and work with others in the
  organization to initiate changes that will create
  a viable and valuable future for the
  organization.
• Strategic Flexibility - the ability to recognize
  major external changes, to quickly commit
  resources, and to recognize when a strategic
  decision was a mistake.

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Exhibit 9-6 Effective Strategic Leadership
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Exhibit 9-7 Developing Strategic Flexibility
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Strategies for Applying e-Business Techniques

• Cost Leadership
• On-line activities bidding, order processing,
  inventory control, recruitment and hiring
• Differentiation
• Internet-based knowledge systems, on-line
  ordering and customer support
• Focus
• Chat rooms and discussion boards, targeted web
  sites

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Customer Service Strategies

• Giving the customers what they want.
• Communicating effectively with them.
• Providing employees with customer service
  training.

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Innovation Strategies

• Possible Events
• Radical breakthroughs in products.
• Application of existing technology to new uses.
• Strategic Decisions about Innovation
• Basic research
• Product development
• Process innovation
• First Mover
• An organization that brings a product innovation
  to market or use a new process innovations

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First-Mover AdvantagesDisadvantages

• Advantages
• Reputation for being innovative and industry
  leader
• Cost and learning benefits
• Control over scarce resources
• Opportunity to begin building customer
  relationships and customer loyalty

• Disadvantages
• Uncertainty over exact direction technology and
  market will go
• Risk of competitors imitating innovations
• Financial and strategic risks
• High development costs

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• ? 1. Case study a managers dilemma (p. 252)
• (1) Identify and articulate business problems
• (2) Gather and analyze information applicable
• (3) Identify and apply an appropriate tool for
  solving problems.
• ?2. Thinking critically about ethics (p. 270)
• (1) Identifies Dilemma.
• (2) Considers Stakeholders
• (3) Analyzes Alternatives and Consequences

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• 3. Developing your business planning skill (p.
  271)
• 4. Team exercise (p. 271)
• 5. Internet-based exercise (p. 271)
• key in Most admired companies, identify
  their mission, goals, strategies.

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??

• 1. SWOT analysis
• 2. ?? competitive strategy, advantage
• VS. Benchmarking

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Terms to Know

• core competencies
• SWOT analysis
• corporate strategy
• growth strategy
• diversification
• stability strategy
• renewal strategy
• retrenchment strategy
• turnaround strategy

• BCG matrix
• business or competitive strategy
• competitive advantage
• cost leadership strategy
• differentiation strategy
• focus strategy
• stuck in the middle
• first mover