Title: Managing Strategy and Strategic Planning
1Managing Strategy and Strategic Planning
Peshawar City Institute Of Modern Sciences
2The Nature of Strategic Management
Peshawar City Institute Of Modern Sciences
- Strategy
- A way of approaching business opportunities and
challenges. - Strategic Management
- A comprehensive and ongoing management process
aimed at formulating and implementing effective
strategies a way of approaching business
opportunities and challenges. - Effective Strategy
- A strategy that promotes a superior alignment
between the organization and its environment and
the achievement of strategic goals.
3The Nature of Strategic Management
Peshawar City Institute Of Modern Sciences
- The Components of Strategy
- Distinctive Competence
- An organizational strength possessed by only a
small number of competing firms. - Scope
- When applied to strategy, it specifies the range
of markets in which an organization will compete. - Recourse Deployment
- How an organization distributes its resources
across the areas in which it competes.
4The Nature of Strategic Management
Peshawar City Institute Of Modern Sciences
- Types of Strategic Alternatives
- Business-Level Strategies
- The set of strategic alternatives from which an
organization chooses as it conducts business in a
particular industry or market. - Corporate-Level Strategies
- The set of strategic alternatives from which an
organization chooses as it managers its
operations simultaneously across several
industries and several markets.
5The Nature of Strategic Management
Peshawar City Institute Of Modern Sciences
- Strategy Formulation and Implementation
- Strategy Formulation
- The set of processes involved in creating or
determining the strategies of the organization
it focuses on the content of strategies. - Strategy Implementation
- The methods by which strategies are
operationalized or executed within the
organization it focuses on the processes through
which strategies are achieved.
6The Nature of Strategic Management
Peshawar City Institute Of Modern Sciences
- Strategy Formulation and Implementation
- Deliberate Strategy
- A plan of action that an organization chooses
and implements to support specific goals. - Emergent Strategy
- A pattern of action that develops over time in
an organization in the absence of mission and
goals or despite mission and goals.
7Using SWOT Analysis to Formulate Strategy
Peshawar City Institute Of Modern Sciences
- Strengths
- Weaknesses
- Opportunities
- Threats
Internal Analysis
External Analysis
8Using SWOT Analysis to Formulate Strategy
Peshawar City Institute Of Modern Sciences
- Evaluating an Organizations Strengths
- Organizational Strength A skill or capability
that enables an organization to conceive of and
implement its strategies. - Strategic Imitation The practice of duplicating
another organizations distinctive competence and
thereby implementing a valuable strategy. - Sustained Competitive Advantage A competitive
advantage is a competitive advantage that exists
after all attempts at strategic imitation have
ceased.
9Using SWOT Analysis to Formulate Strategy
Peshawar City Institute Of Modern Sciences
- Evaluating an Organizations Weaknesses
- Organizational Weakness A skill and capability
that does not enable an organization to choose
and implement strategies that support its
mission. - Competitive Disadvantage A situation in which an
organization is not implementing valuable
strategies that are being implemented by
competing organizations.
10Using SWOT Analysis to Formulate Strategy
Peshawar City Institute Of Modern Sciences
- Evaluating an Organizations Opportunities and
Threats - Organizational Opportunities An area in the
environment that, if exploited, may generate high
performance. - Organizational Threats An area in the
environment that increases the difficulty of
organization's achieving high performance
11Peshawar City Institute Of Modern Sciences
Mission An organizations fundamental purpose
SWOT Analysis To formulate strategies that
support the strategies
Internal Analysis
External Analysis
Strengths
Opportunities
Threats
Weaknesses
Good Strategies
- Those that support the mission and
- Exploit opportunities and strengths
- Neutralize threats
- Avoid weaknesses
SWOT Analysis
12Formulating Business-Level Strategies
Peshawar City Institute Of Modern Sciences
- Three Important Classification of Business Level
Strategies - Porters Generic Strategies
- Miles and Snow Typology
- Strategies Based on Product Life Cycle (PLC)
13Formulating Business-Level Strategies
Peshawar City Institute Of Modern Sciences
- Porters Generic Strategies
- Differentiation Strategy
- A strategy in which an organization seeks to
distinguish itself from competitors through the
quality of its products or services. - Overall Cost Leadership Strategy
- A strategy in which an organization attempts to
gain competitive advantage by reducing its costs
below the costs of competing firms. - Focus
- A strategy in which an organization concentrates
on a specific regional market, product line, or
group of buyers.
14Formulating Business-Level Strategies
Peshawar City Institute Of Modern Sciences
- The Miles and Snow Typology
- Prospector Strategy
- A strategy in which the firm encourages
creativity and flexibility and is often
decentralized. - Defender Strategy
- A strategy in which a firm focuses on lowering
costs and improving the performance of current
products. - Analyzer Strategy
- A strategy in which the firm attempts to
maintain its current business and to be somewhat
innovative in new businesses. - Reactor Strategy
- A strategy in which a firm has no consistent
approach to strategy.
15Formulating Business-Level Strategies
Peshawar City Institute Of Modern Sciences
Reactor Little consideration of environment
drift with little concern for strategy
Analyzer Stress maintenance of status quo with
moderate innovation and growth
Prospector Stress innovation and growth seek new
opportunities
Defender Stress stability, conservatism, and
maintenance of status quo
Dynamic, growing environment characterized by
high uncertainty and risk
Moderately stable environment with some
uncertainty and risk
Very stable environment with little
uncertainty and risk
16Formulating Business-Level Strategies
Peshawar City Institute Of Modern Sciences
- Strategies Based on Product Life Cycle (PLC)
- Product Life Cycle
- A model that portrays how sales volume for
products changes over the life of products.
17Formulating Business-Level Strategies
Peshawar City Institute Of Modern Sciences
18Implementing Business-Level Strategies
Peshawar City Institute Of Modern Sciences
- Implementing Porters Generic Strategies
- Differentiation Strategy
- Marketing should focus on high quality and
high-value image of the organization. - Accounting and finance should focus on control on
funds without discouraging creativity. - Organization culture should focus on creativity,
innovation and response to customer needs in
every function of the organization..
19Implementing Business-Level Strategies
Peshawar City Institute Of Modern Sciences
- Implementing Porters Generic Strategies
- Overall Cost Leadership Strategy
- Marketing should focus on simple product
attributes and should reduce the cost for
achieving economies of scale. - Accounting and finance should focus on tight
accounting and financial control. - Manufacturing should focus on buying raw material
at cheaper prices, minimize manufacturing waste
and achieving economies of scale. - Organization culture should focus on improving
efficiency in every function of the organization.
20Implementing Business-Level Strategies
Peshawar City Institute Of Modern Sciences
- Implementing Miles and Snow Strategies
- Prospector Strategy
- Prospector strategy can be achieved through
innovation, seek new market opportunities, and
take numerous risks. - Defender Strategy
- Defender strategy can be achieved through
protecting the market from new competitors. Low
prices and improved performance of the product
can be an effective strategy. - Analyzer Strategy
- Analyzer strategy can be used to maintain current
business and innovate new ones. Effective
marketing, tight accounting systems and strong
culture should be maintained while search for new
markets should be a focus too.
21Formulating Corporate-Level Strategies
Peshawar City Institute Of Modern Sciences
- Most large organizations are engaged in several
businesses, industries, and markets. Each
business or set of business within such an
origination is frequently referred to as a
Strategic Business Unit (SBU). - Diversification
- The number of different businesses that an
organization is engaged in and the extent to
which these businesses are related to one another.
22Formulating Corporate-Level Strategies
Peshawar City Institute Of Modern Sciences
- Single-Product Strategy
- A strategy in which organization manufactures
just one product or service and sells in in a
single geographic market.
23Formulating Corporate-Level Strategies
Peshawar City Institute Of Modern Sciences
- Related Diversification
- A strategy in which an organization operates
several businesses that are linked to one another.
- Bases of Relatedness
- Similar technology
- Common distribution and marketing skills
- Common brand name and reputation
- Common customers
- Advantages
- Reduce organizations dependencies
- Reduce overhead cost
- Exploitation of strengths and capabilities in
more then one business
24Formulating Corporate-Level Strategies
Peshawar City Institute Of Modern Sciences
- Unrelated Diversification
- A strategy in which an organization operates
several businesses that are not associated. - Advantages
- If one business is in the decline stage the other
business may enjoy growth stage. So resources can
be used in the business where they have the high
potential - Using different unrelated business may create
greater synergy.
25Implementing Corporate-Level Strategies
Peshawar City Institute Of Modern Sciences
- Becoming a Diversified Firm
- Development of New Products
- Replacement of Suppliers and Customers
- Backward Vertical Integration An organization's
beginning the business activities formally
conducted by its suppliers. - Forward Vertical Integration An organization's
beginning the business activities formally
conducted by its customers. - Mergers and Acquisitions
- Merger The purchase of one form by another firm
of approximately the same size. - Acquisition The purchase of a firm by a firm
considerably larger.
26Implementing Corporate-Level Strategies
Peshawar City Institute Of Modern Sciences
- Managing Diversification
- Portfolio Management Technique
- A method that diversified organizations use to
determine which business to engage in and how to
manage these businesses to maximize corporate
performance. - Two important portfolio management techniques
are - BCG Matrix
- GE Business Screen
27Implementing Corporate-Level Strategies
Peshawar City Institute Of Modern Sciences
Managing Diversification
Stars
Question Marks
High
Relative Market Growth
Dogs
Cash Cows
Low
High
Low
Relative Market Share
The Boston Consulting Group (BCG) Matrix
28Implementing Corporate-Level Strategies Managing
Diversification
Peshawar City Institute Of Modern Sciences
Winner
Winner
Question Mark
High
Winner
Average Business
Loser
Industry Attractiveness
Medium
Profit Producer
Loser
Loser
Low
Good
Medium
Poor
Competitive Position
The General Electric (GE) Business Screen
Competitive Position
Industry Attractiveness
1.
Market share
1.
Market growth
2.
Technological know-how
2.
Market size
3.
Product quality
3.
Capital requirements
4.
Service network
4.
Competitive intensity
5.
Price competitiveness
6.
Operating costs