ch 9- Strategic Management.ppt

8/20/2019 ch 9- Strategic Management.ppt

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11th edition

Steven P. Robbins

Mary Coulter

Strategic Management


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The set of managerial decisions and actions that determines

the long-run performance of an organization.

Copyright © 2005 Prentice Hall, Inc. All

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1. It results in higher organizationalperformance.

2. It requires that managers examine and

adapt to business environment changes.. It coordinates diverse organizational

units! helping them focus onorganizational goals.

". It is ver# much involved in themanagerial decision-ma$ing process.


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Step 1: Identifying the organization’s

current mission, objectives, and strategies

◦ Mission% the rm’s reason for being

The scope of its products and services◦ &oals% the foundation for further planning

easurable performance targets

Step !: "onducting an e#ternal analysis

◦ The environmental scanning of specic andgeneral environments

$ocuses on identifying opportunities and threats


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Step %: "onducting an internal analysis◦ &ssessing organizational resources, capabilities,

activities, and culture: Strengths 'core competencies( create value for the

customer and strengthen the competitive position ofthe rm)

*ea+nesses 'things done poorly or not at all( canplace the rm at a competitive disadvantage)

Steps 2 and 3 combined are called a SWOTanalysis. (Strengths, Weaknesses,Opportunities, and Threats)


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Step : $ormulating strategies

◦ -evelop and evaluate strategic alternatives

◦ Select appropriate strategies for all levels in the

organization that provide relative advantage overcompetitors

◦ atch organizational strengths to environmentalopportunities

◦ "orrect .ea+nesses and guard against threats


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Step /: Implementing strategies◦ Implementation% e0ectively tting

organizational structure and activities to theenvironment

◦ The environment dictates the chosen strategye0ective strategy implementation re2uires anorganizational structure matched to itsre2uirements)

Step 3: 4valuating 5esults◦ 6o. e0ective have strategies been7

◦ *hat adjustments, if any, are necessary7


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"orporate Strategies◦ Top management’s overall plan for the entire

organization and its strategic business units

Types of "orporate Strategies◦ 8ro.th: e#pansion into ne. products and mar+ets

◦ Stability: maintenance of the status 2uo

◦ 5ene.al: redirection of the rm into ne. mar+ets


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8ro.th Strategy◦ See+ing to increase the organization’s business

by e#pansion into ne. products and mar+ets)

Types of 8ro.th Strategies◦ "oncentration

◦ 9ertical integration

◦ 6orizontal integration

◦ -iversication


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"oncentration◦ $ocusing on a primary line of business and

increasing the number of products o0ered ormar+ets served)

9ertical Integration◦ ac+.ard vertical integration: attempting to gain

control of inputs 'become a self;supplier()

◦ $or.ard vertical integration: attempting to gaincontrol of output through control of thedistribution channel and


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6orizontal Integration◦ "ombining operations .ith another competitor in

the same industry to increase competitivestrengths and lo.er competition among industryrivals)

5elated -iversication◦ 4#panding by merging .ith or ac2uiring rms in

di0erent, but related industries that are =strategicts>)

?nrelated -iversication◦ 8ro.ing by merging .ith or ac2uiring rms in

unrelated industries .here higher nancial returnsare possible)


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Stability Strategy◦ & strategy that see+s to maintain the status 2uo

to deal .ith the uncertainty of a dynamicenvironment, .hen the industry is e#periencing

slo.; or no;gro.th conditions, or if the o.ners ofthe rm elect not to gro. for personal reasons)


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5ene.al Strategies

◦ -eveloping strategies to counter organization.ea+nesses that are leading to performancedeclines)

'etrenchment% focusing of eliminating non;critical.ea+nesses and restoring strengths to overcomecurrent performance problems)

Turnaround% addressing critical long;term

performance problems through the use of strong costelimination measures and large;scale organizationalrestructuring solutions)


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"8 atri#◦ -eveloped by the oston "onsulting 8roup

◦ "onsiders mar+et share and industry gro.th rate

◦ "lassies rms as: (ash co)s% lo. gro.th rate, high mar+et share

Stars% high gro.th rate, high mar+et share

*uestion mar$s% high gro.th rate, lo. mar+etshare

+ogs% lo. gro.th rate, lo. mar+et share


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usiness;@evel Strategy◦ & strategy that see+s to determine ho. an

organization should compete in each of itsbusinesses 'strategic business units()

@o.;cost provider -i0erentiation

$ocus


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"ompetitive &dvantage◦ &n organization’s distinctive competitive edge

that is sourced and sustained in its corecompetencies)

Buality as a "ompetitive &dvantage◦ -i0erentiates the rm from its competitors)

◦ "an create a sustainable competitive advantage)

◦ 5epresents the company’s focus on 2ualitymanagement to achieve continuous improvement

and meet customers’ demand for 2uality)


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Sustainable "ompetitive &dvantage◦ "ontinuing over time to e0ectively e#ploit

resources and develop core competencies that

enable an organization to +eep its edge over itsindustry competitors)


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Threat of Ae. 4ntrants◦ The ease or diCculty .ith .hich ne. competitors

can enter an industry)

Threat of Substitutes◦ The e#tent to .hich s.itching costs and brand

loyalty a0ect the li+elihood of customers adoptingsubstitutes products and services)

argaining Do.er of uyers◦ The degree to .hich buyers have the mar+et

strength to hold s.ay over and inEuencecompetitors in an industry)


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argaining Do.er of Suppliers◦ The relative number of buyers to suppliers and

threats from substitutes and ne. entrants a0ectthe buyer;supplier relationship)

"urrent 5ivalry◦ Intensity among rivals increases .hen industry

gro.th rates slo., demand falls, and product

prices descend)


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"ost @eadership Strategy

◦ See+ing to attain the lo.est total overall costsrelative to other industry competitors)

-i0erentiation Strategy◦ &ttempting to create a uni2ue and distinctive

product or service for .hich customers .ill pay apremium)

$ocus Strategy◦ ?sing a cost or di0erentiation advantage to e#ploit

a particular mar+et segment rather a largermar+et)


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The 5ule of Three

◦ The competitive forces in an industry, ifunfettered, .ill inevitably create a situation .herethree companies 'full;line generalists( .illdominate any given mar+et

◦ Some rms in the same mar+et become superniche players and .hile others end up as stuc+;in;the;ditch d.ellers)


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"ost @eadership◦ Fn;line activities: bidding, order processing,

inventory control, recruitment and hiring

-i0erentiation◦ Internet;based +no.ledge systems, on;line

ordering and customer support

$ocus

◦ "hat rooms and discussion boards, targeted .ebsites


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8iving the customers .hat they .ant) "ommunicating e0ectively .ith them) Droviding employees .ith customer service

training)


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Dossible 4vents◦ 5adical brea+throughs in products)

◦ &pplication of e#isting technology to ne. uses)

Strategic -ecisions about Innovation◦ asic research

◦ Droduct development

◦ Drocess innovation

$irst over◦ &n organization that brings a product innovation

to mar+et or use a ne. process innovations


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ch 9- Strategic Management.ppt

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