Strategy

1. Strategy

2. Planning - strategic - emergent - contingency plans Objectives: LT, ST

3. Mission statement • Environmental analysis (SWOT) • Competitive analysis (Porter’s 5 forces) • Portfolio analysis

4. Identifying Mission Statement Components: A compilation of Excerpts from Actual Corporate Mission Statements

5. Identifying Mission Statement Components: A compilation of Excerpts from Actual Corporate Mission Statements (cont’d)

6. Identifying Mission Statement Components: A compilation of Excerpts from Actual Corporate Mission Statements (cont’d)

7. This exercise should help you think about 1) your long-term personal goals, and 2) companies you might want to work for • 1. What do you want inscribed on your gravestone? • What would be your primary goal if you were told you had 18 months to live? • If you had a child, what is the most important lesson that you would like him or her to know? • Book says, “…every organization has a mission statement that defines its purpose and answers the question ‘what business are we in?’

8. Use the answers to the above questions to write a personal mission statement/paragraph that should specify your life’s goal! • Consider: Values: what’s important to you, e.g. health, friends Principles: guidelines to follow, e.g. fairness, quality, service Strengths: your qualities, e.g. adaptable, confident Blockers: what’s stopping you? e.g. shyness, laziness Next write a paragraph describing the mission of a company you would want to work for.

9. SWOT analysis • Environmental Scan – Both internal and external factors need to be considered: 1. Internal factors – characteristics in the firm (management, mission, resources, systems process, and structure) that can be considered strengths or strong points and weaknesses or weak points. 2. External factors - characteristics in the environment that are “outside” the firm (customers, competitors, suppliers, labor force, shareholders, society, technology, the economy, and governments) that represent opportunities to tap or threats to flank.

10. Starbuck’s Five-Force Competitive Analysis Exhibit –5

11. Portfolio Analysis: BCG Matrix Exhibit 5–11

12. BUSINESS STRENGTH INDUSTRY ATTRACTIVENESS

13. Organizational Strategies occur on 3 levels: Grand, Business, and Functional • A. Grand level strategies: - 1. Growth (a. concentration; b. diversification) - 2. Retrenchment - 3. Stability (status quo) - 4. Combination (multiple strategies)

14. 1a. Growth through concentration – concentrating on your existing specialization i. market penetration – aggressively targeting current markets with existing product specialties ii. market development/geographic expansion – expanding into new markets iii. market segmentation – dividing existing markets iv. product development – modify existing products, or develop new but related products

15. 1b. Growth through diversification – branching out into new areas i. horizontal integration – expanding across the general industry (e.g. Coke acquires Minutemaid). ii. vertical integration – expanding into industries populated by suppliers/buyers (e.g. Ford buys steel plant). iii. conglomerate diversification – expanding into unrelated industries (e.g. GM buys Hershey’s candy). iv. joint venture – expanding together with another company in order to diversity efficiently.

16. 2. Retrenchment i. Turnaround – downsizing existing company/divisions ii. Divestiture – selling off existing divisions/subdivisions iii. Liquidation – Chapter 11 bankruptcy

17. 3. Stability - maintain status quo (e.g. continuous improvement) 4. Combination – multiple use of strategies

18. B. Business level strategies 1. Michael Porter’s Competitive Strategies: i. low cost (e.g. Wal-Mart) ii. differentiation (Volvo/Mercedes) iii. focus (Penny’s/Pea in a Pod) 2. Adaptive business level strategies: a. prospecting b. defending c. analyzing

19. B. Business level strategies (cont’d) 3.Product life cycle i. introduction stage ii. growth stage iii. maturity stage iv. decline stage

20. Product Life Cycle: Starbucks

21. C. Functional level strategies i. Marketing ii. Manufacturing iii. Human resources iv. Etc.

22. Strategy Formulation is followed by Implementation

23. Seven S Model of Implementation STRATEGY SKILLS STRUCTURE SHARED VALUES SYSTEMS STAFF STYLE

24. Seven S Model • Strategy – Plan or course of action leading to the allocation of firm’s resources to reach identified goals. • Structure – The ways people and tasks relate to each other. The basic grouping of reporting relationships and activities. The way separate entities of an organization are linked. • Shared Values – The significant meanings or guiding concepts that give purpose and meaning to the organization. • Systems – Formal processes and procedures, including management control systems, performance measurement and reward systems, and planning and budgeting systems, and the ways people relate to them. • Skills – Organizational competencies, including the abilities of individuals as well as management practices, technological abilities, and other capabilities that reside in the organization. • Style – The leadership style of management and the overall operating style of the organization. A reflection of the norms people act upon and how they work and interact with each other, vendors, and customers. • Staff – Recruitment, selection, development, socialization, and advancement of people in the organization.

25. Figure 4. Contingency –Constrained Coefficients.