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Transcript of Planning
Strategic Planning
Understand Strategy and how it differs from plans, and tacticsLook at models of strategy developmentUnderstand the process of strategy developmentProduct Life Cycle and Generic Strategies
Functions of Planning1) Identifying future opportunities
2) Identifying and avoiding future problems
3) Developing courses of action
4) Understanding the risks and uncertainties associated withvarious options
7.2
Strategy The major courses of action that
an organization should take to achieve its goals
Plans-deal more with actions that should be taken
Tactics-specific moves
Intended and Realized Strategies Intended-Plans that managers
develop Realized-What actions actually
occur Unrealized-Plans that never occur Emergent Strategy-Unplanned
actions that occur
Realized Strategy
Intended Strategy
Emergent Strategy
Unrealized Strategy
Outside
Forces
SWOT Analysis
Internal Strengths and Weaknesses
External Opportunities and Threats in the
business environment
Core Competencies
Strengths that make an organization distinctive from competitors
Groups of sustainable competitive advantages
External-O’s and T’s
Porter’s Five Forces Model-P94 Threat of New Entrants Supplier Bargaining Power Customer Bargaining Power Substitute Goods or Services Rivalry of Existing Firms
Product Life Cycle
Market phases that products usually go through during their lifetimes
Introduction Growth Maturity Decline Termination
Basic Product Life Cycle Model
Adapted from Figure 7.4
Introduction Growth Maturity Decline Termination
Biogenetics
Electric cars
Cellular phones
PCs
Software
Autos
Airlines
Breakfast cereals
Black and white TV
Cigarettes
Slide rule
Drive-ins
High
Low
SalesSalesVolumeVolume
TimeTime
7.10
Diversification The variety of goods or services
provided by the firm Focused Strategy Dominant Business Related Diversification Unrelated Diversification
The Risks and Opportunities of Diversification
Identifying the Risks and Opportunities of Diversification What can we do better than any of our competitors if we enter a
new market?
What strategic assets are needed to succeed in the new market?
Are there synergies to be realized?
Will we be simply a player
in the new market or will
we emerge a winner?
What can we learn by diversifying, and are we sufficiently
organized to learn it?
7.4
Level of Diversification and Planning
Sco
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of
stra
teg
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lan
nin
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cop
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f st
rate
gic
pla
nn
ing
Dick ClarkProductions
Southwest Airlines
Cemex
GE
Dominant-business
firm
Single-business
firm
Related-business
firm
Unrelated-businesses
firm
Broad
Narrow
HighLow
Level of Level of diversificationdiversification Adapted from Figure 7.1
7.5
ABB
Single-Business Strategy Serves one segment of a particular
market with the intent of being the BEST
Examples Southwest Airlines Intel
Dominant Business Serves various segments of a
single market Examples
GM Trucks, Cars, Semi’s
Related Diversification A variety of similar goods or
services Concentric Growth Strategy Synergies are realized Examples
GM Microsoft Honda
Unrelated Diversification Provide diverse products to
different markets Conglomerate Growth Strategy Examples
GE ABB Mitsubuishi
Corporate Level Strategy
Guides the overall direction of the firm deciding what SBU’s to keep, develop, purchase, or sell
Strategic Business Unit
SBU-a division or subsidiary of a firm that operates relatively independently
Examples pizza hut, taco bell, kfc IBM computers, mainframes,
financial other examples??
Growth Strategies
Think of facing the ultimate customer
Forward Integration-when a firm buys its customers
Backward Integration-when a firm buys its suppliers
Horizontal Integration-when a firm buys its competitors
Growth Strategies (cont)
Market Penetration-development of current markets with current products
Market Development-seeking new markets for current products
Product Development-new or improved products for the current market
Business Level Strategies
Strategies of SBU’s What is the market What are the customer needs to be
filled How will they be satisfied
Generic Strategies
Henry Mintzberg-P245 3 basic business strategies
Differentiation Low-cost Focus/Niche
Question- Can the 3 basic strategies be
combined?
Generic Strategies Model
Low Cost (price)
Broad
NarrowUniqueness
Source of AdvantageSource of Advantage
StrategicStrategicTargetTarget
DifferentiationDifferentiationstrategystrategy
Cost leadershipCost leadershipstrategystrategy
Focus strategyFocus strategy
Source: Adapted with permission of The Free Press, a Division of Simon & Schuster, Inc. from Competitive Strategy: Techniques for Analyzing Industries and Competitors (p. 39) by Michael E. Porter, Copyright © 1980 by The Free Press.
Adapted from Figure 7.6
7.12
Application of the Generic Strategies Model
FeatureFeature Company ExamplesCompany ExamplesBusiness-Level Business-Level StrategyStrategy
Differentiation
Adapted from Table 7.4
Premium Quality
Brand image
Technologicalleadership
Customer service
Lexus - autos
Compaq - PCs
Gillette - razors
Maytag - appliancesNike - shoes
7.13
Application of the Generic Strategies Model (contd.)
FeatureFeature Company ExamplesCompany ExamplesBusiness-Level Business-Level StrategyStrategy
Cost leadership
Adapted from Table 7.4
Tight cost controls
Efficient scale offacilities
Efficient service,sales force, andadvertising
Competitive pricing
FeatureFeature
Discount Tires - tire replacement
Motel 6 - travel accommodations
Wal-Mart - retailing
UPS - package delivery
7.14
FeatureFeature Company ExamplesCompany ExamplesBusiness-Level Business-Level StrategyStrategy
Focus
Adapted from Table 7.4
Careful identificationof target market (niche)
Cost leadershipemphasis ordifferentiation emphasis
Constant review ofcustomer demand inniche
Nieman Marcus - elite retailing
Dick Clark Productions
Polo - clothingRolex - watches
Application of the Generic Strategies Model (contd.)
7.15
Where to from here????
We have touched on the areas of: Organizational Behavior Human Resource Management Strategic Management
What careers are there in each area? What classes can I take in the areas?
MGT410,MGT499,MGT320,MGT340,MGT491