Chapter 8 - Chapter 8 Strategy Formulation and...

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Chapter 8 – Strategy Formulation and Implementation Thinking Strategically o Strategic Management One specific type of planning For-Profit companies Pertains to competitive actions in the marketplace Non-Profit companies Pertains to events in the external environment Take long-term to view to see the big picture Including organization and competitive environment and how they fit together Set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals o Grand Strategy General plan of major action by which a firm intends to achieve its long-term goals 3 General Categories Growth o Promoted internally by investing in expansion Ex: Toyota making hybrid, Motorola designing new phone o Promoted externally by acquiring different business divisions Involves diversification The acquisition of businesses that are related to current product lines or that take the corporation into new areas Stability (or pause strategy) o Organization wants to remain the same size or grow slowly and in a controlled fashion o After a period of rapid growth Executives focus on stability to ensure organization’s working properly 1
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Retrenchment (or downsizing) o Organization goes through a period of forced decline by either shrinking current business units or selling or liquidating entire businesses May have experienced large drop in demand = Layoffs Liquidation Selling off a business unit for cash value of the assets Divestiture Selling off of business that no longer seem central to the corporation 33-50% of all acquisitions are later divested o Global Strategy Separate grand strategy used for global business Growth is major motivation for businesses going international 4 Global Strategies Picture page 241 Globalization o Product design and advertising strategies are standardized around the world o Saves money b/c marketing department saves millions Multidomestic Strategy o Competition in each country handled independently of industry competition in other countries o Multinational company 2
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Present in many countries, but encourages everything to be modified for different countries Transnational Strategy o Seeks to achieve both global integration and national responsiveness
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Chapter 8 - Chapter 8 Strategy Formulation and...

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