Chapter 6 Strategic Management and Entrepreneurship

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Chapter 6Strategic Management and
Entrepreneurship

• Planning Ahead
• What is strategic management?
• How are strategies formulated?
• How are strategies implemented?
• What is entrepreneurship?

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Strategy and Competitive Advantage

• Strategy
• an action focus that links an organization to its
  environment
• comprehensive plan that sets direction and guides
  allocation of resources to achieve long term
  objectives

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Strategy and Competitive Advantage

• The Strategic Management Process
• the process of formulating and implementing
  strategies to advance an organizations mission
  and objectives and secure competitive advantage

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Strategy and Competitive Advantage

• The Strategic Management Process
• Strategy formulation (Drucker)
• What is our business mission?
• Who are our customers?
• What do our customers consider value?
• What have been our results?
• What is our plan?

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Strategy and Competitive Advantage

• The Strategic Management Process
• Strategy implementation
• putting plans into action

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Strategy and Competitive Advantage

• Values, Purpose, Mission, Values, and Objectives
• Core values
• broad beliefs about what is/is not appropriate
• Corporate Culture
• predominant values for organization as a whole

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Strategy and Competitive Advantage

• Mission statement
• domain
• customers
• products and/or services
• location
• philosophy

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Strategy and Competitive Advantage

• Analysis of Stakeholders
• Strategic constituencies analysis
• assessment of how well the organization serves
  stakeholders

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Strategy and Competitive Advantage

• Operating Objectives
• direct activities toward key and specific results
• examples include
• profitability
• market share
• human talent

• financial health
• cost efficiency
• product quality
• innovation
• social responsibility

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Strategy and Competitive Advantage

• SWOT analysis
• Assessing organizational Strengths and Weaknesses
  within SWOT analysis
• Identifying core competencies
• Technology
• Human resources
• Manufacturing approaches
• Management talent
• Financial Strength

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Strategy and Competitive Advantage

• Analysis of industry and environment
• Assessing Opportunities and Threats within SWOT
  analysis
• Assessment of actual and future environmental
  conditions
• Macro environment
• Industry environment
• Unattractive industry
• Attractive industry

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Levels and Types of Strategies

• Levels of Strategy
• Corporate strategydirects the organization as a
  whole toward sustainable competitive advantage.
• Business strategysets the strategic direction
  for a single business unit or product line.
• Functional strategyguides the use of resources
  to implement business strategy, focusing on
  activities within a specific area of operations.

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Levels and Types of Strategies

• Growth and diversification strategies
• Growth strategiesseek an increase in size and
  the expansion of current operations.
• Concentration strategiesgrowth occurs through
  expansion in the same business area.
• Diversification strategiesgrowth occurs through
  acquisition of or investment in new and/or
  different business areas.

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Levels and Types of Strategies

• Retrenchment strategies
• Reduce the scale of operations in order to gain
  efficiency and improve performance
• Turnaround downsizing to reduce costs and
  restructuring to improve efficiency
• Divestiture selling parts of the organization
  to improve efficiency.
• Liquidation closing operations through complete
  sale of assets or declaration of bankruptcy.

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Levels and Types of Strategies

• Stability strategies
• Maintain the present course of action without
  major changes.

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Levels and Types of Strategies

• Cooperative strategies
• Strategic alliancestwo or more organizations
  partner to pursue an area of mutual interest.
• Types of strategic alliances
• Outsourcing alliances
• Supplier alliances
• Distribution alliances

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Levels and Types of Strategies

• E-business strategies
• The strategic use of the Internet to gain
  competitive advantage
• Popular e-business strategies
• Business-to-business (B2B) strategies
• Business-to-customer (B2C) strategies

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Strategy Formulation

• Opportunities for Competitive Advantage
• Cost and quality
• Knowledge and timing
• Barriers to entry
• Financial resources

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Strategy Formulation

• Portfolio Planning
• investing scarce organizational resources among
  competing business opportunities

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Strategy Formulation

• Boston Consulting Group (BCG) Matrix
• ties strategy formulation to analysis of business
  opportunities according to market growth rate and
  market share
• stars
• cash cows
• question marks
• dogs

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Strategy Formulation

• Porters Competitive Strategies Model
• new competitors
• bargaining power of suppliers
• bargaining power of customers
• threats of substitute products and services
• competition between existing companies

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Strategy Formulation

• Porters Competitive Strategies Model
• Strategies to Gain Competitive Advantage
• Differentiation strategy
• Cost leadership strategy
• Focused differentiation strategy
• Focused cost leadership strategy

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Strategy Formulation

• Product Life Cycles
• A series of stages that a product or service goes
  through during the life of its marketability
• Stages of the life cycle
• Introduction
• Growth
• Maturity
• Decline

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Strategy Formulation

• Product life cycle
• Introduction and growth stages
• Use differentiation and prospector strategies
• Maturity stage
• Use focus and/or cost leadership strategies
• Decline stage
• Use defender or analyzer strategies

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Strategy Formulation

• Emergent Strategies
• develop progressively over time
• Logical incrementalism
• strategies that develop as modest adjustments to
  past patterns

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Strategy Implementation

• Management Practices and Systems
• Strategic management failures
• inadequate attention to major strategic planning
  elements
• poor handling of strategy implementation

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Strategy Implementation

• Leadership and Top Management Teams
• effective strategy implementation depends on all
  managers
• Corporate Governance
• boards of directors
• inside
• outside

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Strategy and Entrepreneurship

• Who are the Entrepreneurs?
• Risk-taking individuals who pursue opportunities
  that others do not see

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Strategy and Entrepreneurship

• Typical Characteristics of Entrepreneurs
• internal focus of control
• high energy level
• high need for achievement
• tolerance for ambiguity
• self-confidence
• action oriented

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Strategy and Entrepreneurship

• Entrepreneurship and Small Business
• Small business
• fewer than 500 employees
• most common type of business in the U.S.
• high failure rate

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Strategy and Entrepreneurship

• Small Business Development
• Small Business Administration (SBA)
• Small Business Development Centers
• offer guidance on how to run a business
  successfully

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Strategy and Entrepreneurship

• Entrepreneurship and Large Enterprises
• intrapreneurship
• entrepreneurial behavior within large
  organizations
• skunk works
• groups of employees work in a creative setting