lec chap 4 b

lec chap 4 b - I2/21/2012 Strategic Management Process...

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Unformatted text preview: I2/21/2012 Strategic Management Process (cont.) Step 4: SWOT analysis and strategy formulation (p 143) I comparison of internal strengths and weaknesses with external opportunities and threats that help executives formulate strategy I potential internal strengths l a distinctive competence? proprietary technology? proven management? product innovation abilities? I potential internal weaknesses I obsolete facilities? weak market image? lack of managerial depth and talent? too narrow product line? I potential external opportunities I faster market growth? serve additional customer groups? complacency among rival firms? I potential external threats I slower market growth? adverse demographic changes? adverse government policies? _T__ [300 on at Lit/>413 Left/Matt Strategic Management Process (cont) 3 M , l ‘ _ S 1 2 C 2 \ S SWOT analysis (cont) \> I V W S I develop strategies based on SWOT profile i LS IS-Ostrategy ( 2: ('4 S I pursue opportunities that fit company’s strengths IW-Ostrotegy E v g lovercome weakness to pursue opportunity IS-Tstrategy B G a ‘ ’7 ’2 14 havfl Umg‘n Iuse strength to overcome a threat IW-Tstrategy ‘ ‘ —3 ’l’ MW (Mold 1 Idefensive plan to prevent a weakness from making 0 W “L In , e“ k company vulnerable to external threat "" . ( 1; p Remus ~ I: Picky/v3 Mid (bf ': 1 a» t +0 Phil/Mr a» ’3 read in boo KW Hmateg {ch Corporate Strategies — Figure 4.6 (p. 145) Set of businesses, markets, or industries in which an organization competes and the distribution of resources among those entities IfOCus: “What businesses are we in?” Icuts across organizational activities Primary industry Unrelated industry Growth Strategies ban 1% Mvjm \ [ lot/SngQ O‘CCIUQYiflCj j_~v-€)(p61VJ/1 M3 Corporate Strategy (p. 144) Concentration strategy I focuses on a single business competing in a single industry I goal is to increase market share I grow the business by reaching new markets horizontal integration — purchase one or more businesses that are similar Iadvantages Idirectional clarity of purpose Ibuild competitive advantages based on experience Idisadvantages I all of your eggs in one basket I vulnerability to change I antitrust implications Corporate Strategy (cont.) Diversification I merger with or acquisition of businesses in areas that are distinct ‘ from the core business ' I concentric diversification v I add new businesses that produce related products or are involved in related markets and activities I fit among several lines of business management fit 74: technology fit Imarketfit, [olu +Vi+amih wfi‘f'W' I conglomeratediversification 5’“ “W’qu i u Portfolio analysis I organization’s mix of strategic business units and product lines that fit together in such a way as to provide the corporation with synergy and competitive advantage I synergy - the value created by business units working together exceeds the value those same units create working independently Boston Consulting Group (BCG) Matrix (p. 146) Ievaluates SBUs with respect to: market growth Irgljijyggmfinyeposition — provides two competitive advantages _ \ t) Ieconomiesofscale ~03 prodoth (In 1 Iexperience curve effect - manufacturing costs decline by some characteristic amount each time the accumulated output is doubled \L ~ " . t 5 WW VOL/(trodu‘w,mwv(¢qov VPWOl LoSi Sat/W107 ieCVIm/‘qth «a Lo.%o+w{ll Nl‘pqot/W blot/V bug‘n‘eg-g : Vfidt’flfl/ FWD/‘4 wnmec divmrfi‘m 80m ' h HOV). 30W J vivw~ \J our ‘4ng Mid hem c ind" _ 0L 7 becomimuo WM in all [Cindi (91‘: tit/Sim“ q E El 5 2, Z'SF-J) 3!“: “kg! I2/21/201 a )l but“: 4 bu vi WWW/l orpagcw'bctfl r dyiva +1) woylc 0» SC heal “WW, mm, abW-i’ WoWiWw I2/21/2012 BCG Matrix — Figure 4.7 (p. 146) Relative Competitive Position Cash Cow Corporate Strategy (cont) BCG Matrix (cont) I portfolio implications of each cell I roblem child (question mark) - either aggressively grow an uild OR divest (spinofi) I stars - may be cash hogs I cash cows - milk I dogs — liquidate or divest Iadvantages of BCG matrix Ihighlights financial interactions Irationalize grow-and-build strategy or divestiture strategy Iconcerns about BCG matrix _ I . Itoo simplistic n walj “(w “W? duds: bhg Isilent on relative investmen Idoesn’t account for many strategic decisions IH-P’s proposed spinoff of computer business Ii gnores “average” business 0M Eat/5365 57W“ 3 ‘3’ \I +‘I‘A/veolluLS.}l Vivian/96K Business Strategy (p. 148) Major actions by which a business competes in a particular industry or market I defines the major actions used to build and strengthen competitive position for each business unit or product line I focus: “How do we compete?" I identifies the role of functional areas in building competitive advantages I responsibility of head of StIategic Business Unit (SBU) aux—t" I2/21/2012 Business Strategy (cont.) Porter’s three generic strategies I used to create a strategic advantage without which the company is likely to earn below-average profits compared to competitors that have adopted one of the generic strategies I differentiation — strategy used to build competitive advantage by \/ Mo ymfi—YDWELS (Wm [W +' 7"? q Val [IM ‘4’ C. S being unique in its industry or market segment along one or more I in 1 1 E g i g #0: I”; [ % dimensfm“ . . . e MUM .mé’lwv‘?‘ H l ! .1 9 I basrs for differentiation may be sty e, uali , semce W7 1 I I successful differentiation strategy based on: . I access to leading scientific research B l ‘ La ( I ‘ I highly skilled and creative product development team ‘ ' i ‘ I l M I strong marketing and sales team that communicates _ ‘ perceived strengths ofthe product i Eng 1 2 Va I Z ! 0L I corporate reputation for quality and innovation V Business Strategy (cont.) , a Porter’s three generic strategies (cont) I low-cost -— organization builds competitive advantage by being efficienth offering a standard, nodi-ills product I successful cost leadership strategy based on: ‘ ’ I economiesofscale E) {C Mg ] 091(054’ ’ ’1’ I economies of scope — cost savings resulting from transferring some capabilities developed in one business to another business I technology I providing products (services) of acceptable quality I focus — emphasizes concentration on a specific regional market or buyer group that has similar preferences or place similar value on product features Iused by smaller firms to target a niche market . W“— alum’l fervent SID/e {2,szst does mafia pwéocl p, Functional Strategy (p. 149) 14) a Strategy implemented by each functional area of the organization to ‘ ' f U W V “d!- assist with the implementation of the organization’s business . 4 strategy I l M (/C Ifocus: “How do we support business-level strategy?” . 9 . s a s . . s ' f Iplans for pnncrpal subordinate activmes Within abusrness . U 9 //>‘ M I p] N J a I 5 {it Ifunctional area managers responsible for development I Iplans subject to the approval of the busmess s top manager \ p: E V f) L t. O ‘n I, 2 2 r V y W \mmL+a 7 ‘ 6%, W97), Iwci ...
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lec chap 4 b - I2/21/2012 Strategic Management Process...

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