capstone outline chapter 6

capstone outline chapter 6 - Chapter 6 Strategy formulation...

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Chapter 6 Strategy formulation- strategic planning or long range planning, concerned with developing a corporations mission objectives strategies and policies -begins with situational analysis: the process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses. -SWOT analysis should not only result in the identification of a corporation’s distinctive competencies, but also in the identification of opportunities that the firm is not currently able to take advantage of due to lack of appropriate resources. SWOT- most enduring analytical technique used in strategic management -2007 Mckinsey and co global survey of 2700 executives, 82% stated that the most relevant activities for strategy formulation were evaluating the strengths and weaknesses of the organization and identifying ti environmental trends affecting business unit performance over the next 3-5 years. -2005 survey of competitive intelligence professionals found that SWOT analysis was used by 82.7% of the respondents, the 2 nd most frequently used technique, trailing competitor analysis. -the essence of strategy is opportunity divided by capacity. -SA=O/(S-W) (strategic alternative equals opportunity divided by strengths minus weaknesses) -An important issue strategic managers face is: Should we invest more in our strengths to make them stronger or should we invest in our weakness to at least make them competitive? Criticisms of SWOT are: -generates lengthy lists -uses no weights to reflect priorities -uses ambiguous words and phrases -the same factor can be placed in two categories (strength can also be a weakness) -no obligation to verify opinions with data or analysis -requires only a single level of analysis -no logical link to strategy implementation Generating a strategic factors analysis summary (SFAS) Matrix EFAS ad IFAS tables plus the SFAS Matrix were developed to deal with the criticisms of SWOT analysis. The Strategic FActos Analysis Summary Matrix summarizes an
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organization’s strategic factors by combining the external factors from the EFAS Table with the internal factors from IFAS. The SFAS reduces the list of factors to a manageable number, puts weights on each factos, and allows one factor to be listed as both a strength and weakness or an opportunity or threat. Finding a Propitious Niche Niche- need in a marketplace that is currently unsatisfied. Propitious niche-extremely favorable niche, that is so well suited to the firm’s internal and external environment that other corps are not likely to challenge it. This niche is just large enough for one firm to satisfy its demand and it is not worth competitor to go after it also called a strategic sweet spot. Strategic window- unique market opportunity that is available only for a particular time
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This note was uploaded on 04/08/2011 for the course MANAGEMENT mgt 3353 taught by Professor Dr.chiodo during the Spring '11 term at Texas State.

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capstone outline chapter 6 - Chapter 6 Strategy formulation...

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