Strategic Management - mba.teipir.grmba.teipir.gr/files/Business Policy and Strategy... ·...

Strategic Management

Topics and Readings

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Strategic Management…Action that Creates Value

Alpha

MythosBeer

MythosBeer

MythosCompetitive

Actions

AlphaCompetitive

ActionsRivalry

CompetitiveOutcomes

IndustryCharacteristics

OrganizationalCharacteristics

Profit = (Price – Cost) x Qty.

… i.e., action that creates value

Strategy in “Other Markets” and Non-Profits

Regulated Utilities

Educational Institutions,Departments & Programs

GovernmentInstitutions

PhilanthropicOrganizations

CreativeArts

Organizations

ReligiousOrganizations

Political & Social

Organizations

EnvironmentalOrganizations

Resources Legitimacy Human Capital“Market Share” Position Reputation Survival Effectiveness Attention

Where Does Strategy Occur?

CEO & Board of Directors Top Management

Functional Management• Marketing• Production• R&D• Logistics• Acct./Fin. Everyone else

Strategy is everyone’s job

Be strategy-savvy…

Top Management

Don’t let this be you.

?

Levels of Strategy

• Corporate Strategy• Business Strategy• Functional Strategy

Value can be created an any or all levels

Corporate Strategy

• Decide scope/reach of the firm

In which businesses or industries do we compete?

GENERAL ELECTRIC

AircraftEngines

LightBulbs

Appliances PowerGeneration

Corporate Strategy

PROCTER & GAMBLE

Soaps Food Beverages PaperProducts

Corporate Strategy

PEPSI

CarbonatedBeverages

Juices,Water,Sportsdrinks

SnackFoods

Fast Food

COCA-COLA

CarbonatedBeverages

Juices,Water,Sportsdrinks

Corporate Strategy

Business Strategy

• Since we’re in the XYZ industry, how do we compete?


• Cost advantage• Size advantage• Differentiation advantage• Positional advantage…New market space• Bridge converging industries

Functional Strategy

•Given our choice of corporate- and/or business-level strategy…– Marketing– Production– R&D– Human resource management– Finance

• How do we coordinate and integrate business functions to carry out the strategy?

• What functional changes or innovations are required to improve the strategy?

What do strategists do/think about?

•Strive for competitive advantage / above-average returns

•Assess external factors causing change•Develop internal factors that create advantage•Navigate stakeholder landscape•Strategic management process… Five Stages

What else…..?

External Stuff•Globalization•Technological change•Diverse and increasingly vocal and influential stakeholders

•Wall Street•The Natural Environment

Internal Stuff•Building functional capabilities•Organizational culture•Leadership•Strategic HRM•Board of Directors•Efficiency

1. Articulate Mission / Intent

• Sense of purpose, direction…• In which industries does firm compete?• How does firm compete?• Who are customers?• Who are competitors?

Strategic Management Process

2. Set Objectives & Performance Targets

•Financial– Achieve 10% ROE and $1.55 EPS by 2011– Increase stock price by $ 4.00-5.00/share by 2011

• Strategic– Become low price leader in industry by 2012– Enter five new country markets by 2015

3. Develop a Strategy

• Strategic themes/thrusts …How to compete:– International expansion– Increase brand name and reputation– Innovate by introducing new products– Aggressive behavior against rivals in old

products

4. Implement Strategy• Develop action plan at functional level

– Establish European distribution center• Buy warehouse facility near airport in Germany• Re-tool with robotic material handling system

– Create new ad campaign for 2011 Formula 1 racing season• Get endorsement contract with famous soccer players• Develop TV ad with European MTV

– Launch new version of product• Create multifunctional design team• License Oracle’s newest technology• Increase R&D budget by 30%

– Cut prices on older version of product by 33%

5. Evaluation and Adjustment

•Assess results relative to goals– Established price leadership in 2012– Achieved only 4% ROI in 2011

•Identify new opportunities / constraints– New technologies are coming– Rivals are merging

•Change strategy / implementation plan (as needed)

DroppedStrategicActions

IntendedStrategy

StrategyCarried Out

EmergentStrategicActions

Strategic Planning vs. Strategizing

Break…

Competitive Strategy

Product Attributes

Strategic Space -- Razors

Disposable

Num

ber

of B

lade

s

Keeper

New Way to Sell…

Competitive Strategy

We’re in the _____ industry. How do we compete?


•Cost or size advantage•Differentiation or uniqueness advantage•Marketing advantage•Innovation advantage•Bridge converging industries

Breadth of Competitive

Scope

Source of Competitive Advantage

BroadTargetMarket

NarrowTargetMarket

Cost

LowCost

Generic Strategies

Uniqueness

Technological Development

Human Resource Management

Firm Infrastructure

Procurement

Inbo

und

Logi

stic

s

Ope

rati

ons

Ou

tbou

ndLo

gist

ics

Mar

keti

ng

& S

ales

Serv

ice

MARGIN

MARGIN

Value Chain and Low Cost Strategy

Low-Cost Strategy - Operational Advantage

“Dell finds it hilarious that HP and Sony fund researchers to come up with new ideas.”

“Steamrollered by Dell” Newsweek, February 21, 2005

Breadth of Competitive

Scope

Source of Competitive Advantage

BroadTargetMarket

NarrowTargetMarket

Cost

Generic Strategies

Uniqueness

CostLeadership Differentiation

SOUTHWEST

Differentiation Strategy – Uniqueness Advantage

Strategic Innovation

Starbuck’s Perspective of Coffee Market

Red vs. Blue Oceans

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space Create uncontested market space

Beat the competition Make the competition irrelevant

Exploit existing demand Create and capture new demand

Align organization towards strategic choice between low cost or differentiation

Align organization towards pursuit of low cost and differentiation

Old-is-New…

VW Beetle

Unique Combinations and Features

Value from Logistics

Organizational Advantage

• The Un-Matrix– Oracle - Vienna

Problems

Specialists

Generalists Guenther Goeschl (CFO) and his “troll”

Strategic Management - mba.teipir.grmba.teipir.gr/files/Business Policy and Strategy... ·...

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