Strategic Management Chapter 4 ppt
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Transcript of Strategic Management Chapter 4 ppt
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Chapter 4Chapter 4Internal Scanning: Internal Scanning:
Organizational AnalysisOrganizational Analysis
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Internal strategic factors:Internal strategic factors:
Critical strengths and weaknesses that Critical strengths and weaknesses that are likely to determine if the firm will be are likely to determine if the firm will be able to take advantage of opportunities able to take advantage of opportunities while avoiding threats.while avoiding threats.
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Resource-Based ApproachResource-Based Approach
Resource:Resource:
An asset, competency, process, skill, An asset, competency, process, skill, or knowledge controlled by the or knowledge controlled by the corporation.corporation.
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Evaluating Key ResourcesEvaluating Key Resources VRIO FrameworkVRIO Framework
Value: Value: Does it provide competitive Does it provide competitive advantageadvantage??
Rareness: Rareness: Do other competitors possess it?Do other competitors possess it?
Imitability: Imitability: Is it costly for others to imitate?Is it costly for others to imitate?
Organization: Organization: Is the firm organized to Is the firm organized to exploit the resource?exploit the resource?
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Resource-Based ApproachResource-Based Approach
5-Step approach to strategy analysis:5-Step approach to strategy analysis:
Identify & classify firm’s resourcesIdentify & classify firm’s resources Strengths & weaknessesStrengths & weaknesses
Combine firm’s strengths into capabilitiesCombine firm’s strengths into capabilities Core competenciesCore competencies Distinctive competenciesDistinctive competencies
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Resource-Based ApproachResource-Based Approach
5-Step approach to strategy analysis:
Profit potential of resources Sustainable competitive advantage
Select strategy Exploits firm’s resources relative to external
opportunities
Identify resource gaps Invest in upgrading weaknesses
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Sustainability of an Sustainability of an AdvantageAdvantage
Durability:Durability:
Rate at which a firm’s underlying resources and Rate at which a firm’s underlying resources and capabilities (core competencies) depreciate or become capabilities (core competencies) depreciate or become obsoleteobsolete..
Imitability:Imitability:
Rate at which a firm’s underlying resources and Rate at which a firm’s underlying resources and capabilities (core competencies) can be duplicated by capabilities (core competencies) can be duplicated by others.others.
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Core CompetenciesCore Competencies
Imitability of core competencies determined by:Imitability of core competencies determined by:
Transparency: how easy it is to understand the Transparency: how easy it is to understand the competencies of otherscompetencies of others
Transferability: how easy it is to bring the Transferability: how easy it is to bring the competency to your organizationcompetency to your organization
ReplicabilityReplicability : overall how easy it is to copy: overall how easy it is to copy
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Core CompetenciesCore Competencies
Explicit Knowledge: Knowledge that can be easily articulated and
communicated.
Tacit Knowledge: Knowledge that is not easily communicated because
it is deeply rooted in employee experience or in a corporation’s culture .
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Resource SustainabilityResource Sustainability
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Corporate Value ChainCorporate Value Chain
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Corporate Value Chain Corporate Value Chain AnalysisAnalysis
Examine each product line’s value chain Core competencies & core deficiencies
Examine the “linkages” within each product line’s value chain
Connections between the way one value activity is performed and the cost of performance of another activity
Examine the synergies among the value chains of different product lines or business units
Economies of scope
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Basic Organizational Structures: Simple and Functional
I. Simple Structure
II. Functional Structure
Owner-Manager
Workers
Top Management
Manufacturing Sales Finance Personnel
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Basic Structures of Corporations: Divisional
III. Divisional Structure*
Manufacturing Finance Manufacturing Finance
Top Management
Product Division A Product Division B
*Conglomerate structure is a variant of the division structure.
Sales Personnel Sales Personnel
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Corporate CultureCorporate Culture
Defined:Collection of beliefs, expectations, and values learned and shared by a corporation’s members and transmitted from one generation of employees to another.
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Corporate CultureCorporate Culture
Distinct Attributes
1. Cultural intensity Degree to which members of a unit accept the norms,
values, or other culture content associated with the unit. Strong vs. Weak
2. Cultural integration Extent to which units throughout an organization share a
common culture.
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Corporate CultureCorporate Culture
Important FunctionsImportant Functions
Sense of identity for employeesSense of identity for employees Generate employee commitmentGenerate employee commitment Stability of organizationStability of organization Guide for appropriate behaviorGuide for appropriate behavior
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Strategic Marketing IssuesStrategic Marketing Issues
Market Position:Market Position: ““Who are our customers?”Who are our customers?”
Market Segmentation:Market Segmentation: Niches, new product developmentNiches, new product development
Marketing Mix:Marketing Mix: Combination of key variables under the Combination of key variables under the
corporation’s control used to affect demand and corporation’s control used to affect demand and gain competitive advantage.gain competitive advantage.
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Marketing Mix Variables
Product Place Promotion Price
Quality Channels Advertising List price
Features Coverage Personal selling Discounts
Options Locations Sales promotion Allowances
Style Inventory Publicity Payment periods
Brand name Transport Credit terms
Packaging
Sizes
Services
Warranties
Returns
Source: Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1980), p. 89. Copyright © 1980. Reprinted by permission of Prentice-Hall, Inc.
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The Product Life Cycle
Introduction Growth* Maturity Decline
Time
Sal
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*The right end of the Growth stage is often called Competitive Turbulence because of price and distribution competition that shakes out the weaker competitors. For further information, see C. R. Wasson, Dynamic Competitive Strategy and Product Life Cycles, 3rd ed. (Austin, Tex.: Austin Press, 1978).
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Strategic Financial IssuesStrategic Financial Issues
Financial Leverage:Financial Leverage: Ratio of total debt to total assets.Ratio of total debt to total assets.
Capital Budgeting:Capital Budgeting: Analyzing and ranking possible investments Analyzing and ranking possible investments
in fixed assets.in fixed assets.
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Strategic R&D IssuesStrategic R&D Issues
R&D Intensity:R&D Intensity: Spending on R&D as a percentage of sales Spending on R&D as a percentage of sales
revenue.revenue.
Technological Competence:Technological Competence: Development and use of innovative technology.Development and use of innovative technology.
Technology Transfer:Technology Transfer: Process of taking new technology from the lab Process of taking new technology from the lab
to the marketplace.to the marketplace.
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Technological Discontinuity
What the S-Curves Reveal
Research Effort/Expenditure
In the corporate planning process, it is generally assumed that incremental progress in technology will occur. But past developments in a given technology cannot be extrapolated into the future, because every technology has its limits. The key to competitiveness is to determine when to shift re-sources to a technology with more potential.
Mature Technology
New Technology
Source: P. Pascarella, “Are You Investing in the Wrong Technology?” Industry Week (July 25, 1983), p. 38. Copyright © 1983 Penton/IPC. All rights reserved. Reprinted by permission.
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Strategic Operations IssuesStrategic Operations Issues
Intermittent systems: Manufacturing systems where items are
normally processed sequentially but the work and sequence of the process vary.
Continuous systems: Laid out as lines where products are
continuously assembled or processed.
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Strategic HRM IssuesStrategic HRM Issues
TeamsTeams Autonomous (self-managing)Autonomous (self-managing) Cross-functionalCross-functional Concurrent engineeringConcurrent engineering
UnionizationUnionization 13.9% of labor force overall13.9% of labor force overall 12% of private labor force12% of private labor force
Temporary WorkersTemporary Workers Increase flexibility; avoid layoffsIncrease flexibility; avoid layoffs
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Strategic HRM IssuesStrategic HRM Issues
Quality of Work lifeQuality of Work life Participative problem solvingParticipative problem solving Restructuring workRestructuring work Innovative reward systemsInnovative reward systems Improvements in work environmentImprovements in work environment
Human DiversityHuman Diversity Different races, cultures and Different races, cultures and
backgrounds in the workplace.backgrounds in the workplace.
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Strategic Information Systems Strategic Information Systems IssuesIssues
Automate back-office processesAutomate back-office processes Automate individual tasksAutomate individual tasks Enhance key business functionsEnhance key business functions Develop competitive advantagesDevelop competitive advantages
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Strategic Information Systems Strategic Information Systems IssuesIssues
Intranet:Intranet: Information network within an Information network within an
organization that also has access to the organization that also has access to the external worldwide Internet.external worldwide Internet.
Extranet:Extranet: Information network within an Information network within an
organization available to key suppliers organization available to key suppliers and customers.and customers.
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Internal Factor Analysis Summary (IFAS)
Internal Factors Weight RatingWeighted Score Comments
1 2 3 4 5
1.00
Strengths
Weaknesses
Total Weighted Score
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Internal Factor Analysis Summary (IFAS):Maytag as Example
Internal Factors Weight Rating
Weighted Score Comments
1 2 3 4 5
1.00
Strengths• Quality Maytag culture
• Experienced top management
• Vertical integration
• Employee relations
• Hoover’s international orientation
Weaknesses• Process-oriented R&D
• Distribution channels
• Financial position
• Global positioning
• Manufacturing facilities
Total Weighted Score
Quality key to success
Know appliances
Dedicated factories
Good, but deteriorating
Hoover name in cleaners
Slow on new products
Superstores replacing small dealers
High debt load
Hoover weak outside the United Kingdom and Australia
Investing now
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Impact of the InternetImpact of the Internet
Virtual Teams:Virtual Teams: Groups of geographically and/or Groups of geographically and/or
organizationally dispersed coworkers that organizationally dispersed coworkers that are assembled using a combination of are assembled using a combination of telecommunications and information telecommunications and information technologies to accomplish an technologies to accomplish an organizational task.organizational task.
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Impact of the InternetImpact of the Internet
Virtual TeamsVirtual Teams• Flatter organizational structuresFlatter organizational structures• Turbulent environmentsTurbulent environments• Employee autonomy Employee autonomy • Higher knowledge requirementsHigher knowledge requirements• Globalization of tradeGlobalization of trade