May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Chapter 8 Strategy Formulation and Execution... May not be scanned, copied or du
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Chapter 8
Strategy Formulation and Execution
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Strategy
Every company is concerned with strategy
It determines which organizations succeed and which ones struggle
Strategic blunders can hurt a company
Strategic management is a specific type of planning
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Thinking Strategically
The long-term view of the organization and competition
Thinking strategically impacts performance and financial success
Today’s environment requires everyone to think strategically
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Strategic Management
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Decisions and actions used to formulate and execute strategies that will
provide competitively superior fit between the organization and its
environment to achieve organizational goals
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Purpose of Strategy
Explicit strategy is the plan of action
Competitive advantage is the organization’s distinctive edge for
meeting customer needs
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8.1 The Elements of Competitive Advantage
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8.2 Three Levels of Strategy in Organizations
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8.3 The Strategic Management Process
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Strategy Formulation
versus Execution
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Formulation:
Assessing the external
environment and internal
problems to create goals and
strategy
Execution:
the use of managerial and organizational
tools to direct resources toward accomplishing
strategic results
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SWOT Analysis
Formulating strategy often begins with an audit of internal and external
factors
Internal Strengths and Weaknesses
External Opportunities and Threats
Information is acquired from reports, surveys, discussions, and meetings
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8.4 Audit Checklist for Analyzing Organizational Strengths and
Weaknesses
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Formulating Corporate-Level Strategy: Portfolio
Strategy
Strategic Business Units (SBUs) have a unique mission, products, and
competitors
Portfolio strategy pertains to the mix of SBUs and product lines to
provide synergy and competitive advantage
Organizations should not become too dependent on one business
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Formulating Corporate-Level Strategy: The BCG
Matrix
Organizes business along two dimensions
Business growth rate
Market share
Four categories for corporate portfolio
The combination of high/low market share and high/low business growth
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8.5 The BCG Matrix
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Formulating Corporate-Level Strategy:
Diversification Strategy
Related diversification: expansion into new business related to
existing business activities
Unrelated diversification: expansion into new lines of business
Vertical integration: expansion into businesses that supply to the
business or are distributors
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Formulating Business-Level Strategy
Strategy within the business units: How do we compete?
Business-level strategies are developed by Porter’s Five Forces
Web technology is impacting all industries in positive and negative
ways
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8.5 Porter’s Five Forces
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Porter’s Competitive Strategies
Concentration on a specific region or buyer
Either differentiation or cost leadership approach
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8.7 Characteristics of Porter’s Competitive
Strategies
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Formulating Functional-Level Strategy
Action plans used by major departments
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8.8 Global Corporate Strategies
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Strategy Execution
The final step!
“Strategy is easy, but execution is hard”
Most important but most difficult part
Strategy must be skillfully executed
Alignment requires all aspects of the organization to focus on strategy
goals
Everyone is moving in the same direction
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8.9 Factors that Contribute to the Failure of
Strategy Execution
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8.10 Tools for Putting
Strategy into Action
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