Management ch 08 strategy formulation and implementation

Strategy Formulation and... Thinking Strategically Answers to the following define an overall direction for the organization's grand strategy  Where is the organization now?. Strategic

Strategy Formulation and

Strategic Planning

in today’s world of globalization, deregulation, advancing technology, and changing

demographics, and lifestyles

Strategy Formulation and

Implementation

– Definition

– Components

– Model of Strategic Management Process

– Models of Strategy Formation

Topics:

Chapter 8

Thinking Strategically

 Answers to the following define an overall direction for the organization's grand strategy

 Where is the organization now?

 Where does the organization want to be?

 What changes are among competitors?

 What courses of action will help us achieve our goals?

Strategic Management

strategies that will provide a competitively superior fit between the organization and its environment so as

to achieve organizational goals

 Responsibility = top managers &

chief executive

Strategic Management

Managers ask such questions as

efficiently?

Grand Strategy: Growth

 Growth can be promoted internally by investing in

expansion or externally by acquiring additional business divisions

- Internal growth = can include development of new

or changed products

- External growth = typically involves diversification – businesses related to current product lines or into new areas

Grand Strategy: Stability

 Stability , sometimes called a pause strategy , means that the organization wants

– to remain the same size or

– to grow slowly and in a controlled fashion

Grand Strategy: Retrenchment

 Retrenchment = the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire

businesses

 Liquidation = selling off a business nit for the cash value of the assets, thus terminating its existence

 Divestiture = involves selling off of businesses that

no longer seem central to the corporation

Global Corporate Strategies

• Combines standardization and customization for product/advertising strategies

Globalization Strategy

• Treats world as a single global market

• Standardizes global products/advertising strategies

Multi-domestic Strategy

• Handles markets independently for each country

•Domestically focused

•Exports a few domestically produced products to selected countries

Strategies focus on:

● Core competencies

● Developing synergy

● Creating value for customers

Three Levels of Strategy in Organizations

Strategic Management Process

Implement Strategy via Changes in: Leadership culture, Structure, HR, Information & control

systems

SWOT

Formulate Strategy – Corporate, Business, Functional

Define new Mission Goals, Grand Strategy

Identify Strategic Factors –

Strengths, Weaknesses

Identify Strategic Factors –

Opportunities, Threats

Scan Internal Environment – Core Competence,

Synergy, Value Creation

Evaluate Current Mission, Goals, Strategies

Scan External Environment – National,

Global

Strategy Formulation vs

Implementation

 Strategy Formulation = stage of strategic

management that involves planning and decision making that lead to the establishment of the

organization’s goals and of a specific strategic plan

 Strategy Implementation = stage of strategic

management that involves the use of managerial and organizational tools to direct resources toward

achieving strategic outcomes

Checklist for Analyzing Organizational Strengths and Weaknesses Management and Organization

Advertising efficiency Customer satisfaction Product quality

Service reputation Sales force turnover

Production

Plant location Machinery obsolescence Purchasing system

Quality control Productivity/efficiency

Human Resources

Employee experience, education

Union status Turnover, absenteeism Work satisfaction

Grievances

Research and Development

Basic applied research Laboratory capabilities Research programs New-product innovations Technology innovations

Portfolio Strategy

and product lines that fit together in a logical way to

provide synergy and competitive

advantage

BCG Matrix

Five Forces Affecting Industry Competition

•Internet reduces barriers to entry

•Internet expands market size, but

creates new substitution threats

•Internet tends to increase the

bargaining power of suppliers

•Internet shifts greater power

to end consumers

Internet blurs differences among competitors in an industry

Bargaining Power of Buyers

Bargaining Power of Suppliers

Threat of Substitute

Products

Potential New Entrants

Rivalry among Competitors

Competitive Edge Through

Competitive Strategies

 Differentiation = attempt to distinguish products or

services from that of competitors

 Cost leadership = aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors

 Focus = concentrates on a specific regional market or buyer group

Continuum of Partnership Strategies

Organizational Combination

Strategic Alliances

Preferred Supplier Arrangements

Strategic Business Partnering

Implementing Strategy Tools

Tools for Putting Strategy into Action Environment

Organization

Leadership

 Persuasion 

Motivation

 Culture/values

Structural Design

 Organization Chart

 Teams



Centralization  Decentralization,  Facilities, task design Human Resources



Recruitment/selection



Transfers/promotions  Training  Layoffs/recalls Information and Control Systems

 Pay, reward system

 Budget allocations

