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Management 11e John Schermerhorn

Management 11e John Schermerhorn . Chapter 9 Strategy and Strategic Management. Planning Ahead — Chapter 9 Study Questions. What is strategic management? What are the essentials of strategic analysis? What are corporate-level strategies, and how are they formulated?

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Management 11e John Schermerhorn

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  1. Management11e John Schermerhorn Chapter 9 Strategy and Strategic Management

  2. Planning Ahead — Chapter 9 Study Questions • What is strategic management? • What are the essentials of strategic analysis? • What are corporate-level strategies, and how are they formulated? • What are business-level strategies and how are they formulated? • What are the foundations for strategy implementation? Management 11e Chapter 9

  3. Study Question 1: What is strategic management? • Basic concepts of strategy: • Competitive advantage — operating with an attribute or set of attributes that allows an organization to outperform its rivals • Sustainable competitive advantage — one that is difficult for competitors to imitate Management 11e Chapter 9

  4. Study Question 1: What is strategic management? • Types of competitive advantage • Cost and quality • Knowledge and speed • Barriers to entry • Financial resources Management 11e Chapter 9

  5. Study Question 1: What is strategic management? • Basic concepts of strategy • Strategy • a comprehensive action plan that identifies long-term direction for an organization and guides resource utilization to accomplish organizational goals with sustainable competitive advantage • Strategic intent • focusing all organizational energies on a unifying and compelling goal Management 11e Chapter 9

  6. Study Question 1: What is strategic management? • Levels of strategies • Corporate • Sets long-term direction for the total enterprise • Business • How a division or strategic business unit will compete in its product or service domain • Functional • Guides activities within one specific area of operations Management 11e Chapter 9

  7. Figure 9.1 Three levels of strategy in organizations- corporate, business, functional strategies Management 11e Chapter 9

  8. Study Question 1: What is strategic management? • Strategic Management Process: • Strategic management • the process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage • Strategic analysis • process of analyzing the organization, the environment, its competitive position and current strategies Management 11e Chapter 9

  9. Figure 9.2 Strategy formulation and implementation in the strategic management process Management 11e Chapter 9

  10. Study Question 1: What is strategic management? • Strategic Management Process: • Strategy formulation • the process of crafting strategies to guide allocation of resources • Strategy implementation • putting strategies into action Management 11e Chapter 9

  11. Study Question 1: What is strategic management? • Strategy formulation • The process of creating strategy • Involves assessing existing strategies, organization, and environment to develop new strategies and strategic plans capable of delivering future competitive advantage Management 11e Chapter 9

  12. Study Question 1: What is strategic management? • Strategy implementation • The process of allocating resources and putting strategies into action • All organizational and management systems must be mobilized to support and reinforce the accomplishment of strategies Management 11e Chapter 9

  13. Study Question 2: What are the essentials of strategic analysis? Management 11e Chapter 9

  14. Study Question 2: What are the essentials of strategic analysis? • Analysis of mission: • The reason for an organization’s existence • Good mission statements identify: • Customers • Products and/or services • Location • Underlying philosophy • An important test of the mission is how well it serves the organization’s stakeholders Management 11e Chapter 9

  15. Study Question 2: What are the essentials of strategic analysis? • Stakeholders • Individuals and groups directly affected by the organization and its strategic accomplishments • An important test of the mission is how well it serves the organization’s stakeholders Management 11e Chapter 9

  16. Figure 9.3 How external stakeholders can be valued as strategic constituencies of organizations Management 11e Chapter 9

  17. Study Question 2: What are the essentials of strategic analysis? • Analysis of Core values: • Broad beliefs about what is or is not appropriate • Organizational culture reflects the dominant value system of the organization as a whole Management 11e Chapter 9

  18. Study Question 2: What are the essentials of strategic analysis? • Analysis of objectives: • Operating objectives direct activities toward key and specific performance results Management 11e Chapter 9

  19. Study Question 2: What are the essentials of strategic analysis? Management 11e Chapter 9

  20. Study Question 2: What is the strategic management process? • Analysis of organizational resources and capabilities: • Core competency is a special strength that gives an organization competitive advantage • Important goal of assessing core competencies Management 11e Chapter 9

  21. Study Question 2: What is the strategic management process? Management 11e Chapter 9

  22. Study Question 2: What is the strategic management process? • SWOT Analysis • Examination of an organization’s current position by looking at • Internal strengths and weaknesses • Environmental opportunities and threats Management 11e Chapter 9

  23. Figure 9.4 SWOT analysis of strengths, weaknesses, opportunities, and threats Management 11e Chapter 9

  24. Study Question 2: What is the strategic management process? • Porter’s Model of Five Strategic Forces Affecting Competition: Management 11e Chapter 9

  25. Figure 9.5 Porter’s model of five strategic forces affecting industry competition Source: Developed from Michael E. Porter, Competitive Strategy (New York: Free Press, 1980). Management 11e Chapter 9

  26. Study Question 3: What are corporate-level strategies and how are they formulated? • Corporate-level strategy formulation • Strategic portfolio planning: • Portfolio planning seeks the best mix of investments among alternative business opportunities • BCG Matrix analyzes business opportunities according to market growth rate and market share Management 11e Chapter 9

  27. Study Question 3: What are corporate-level strategies and how are they formulated? • BCG matrix • Ties strategy formulation to analysis of business opportunities according to … • Industry or market growth rate • Low versus high • Market share • Low versus high Management 11e Chapter 9

  28. Figure 9.6 The BCG matrix approach to corporate strategy formulation Management 11e Chapter 9

  29. Study Question 3: What are corporate-level strategies and how are they formulated? • BCG matrix — business conditions and related strategies: • Stars • High share/high growth businesses • Preferred strategy — growth • Cash cows • High share/low growth businesses • Preferred strategy — stability or modest growth Management 11e Chapter 9

  30. Study Question 3: What are corporate-level strategies and how are they formulated? • BCG matrix—business conditions and related strategies (cont.): • Question marks • Low share/high growth businesses • Preferred strategy — growth for promising question marks and restructuring or divestiture for others • Dogs • Low share/low growth businesses • Preferred strategy — retrenchment by divestiture Management 11e Chapter 9

  31. Study Question 3: What are corporate-level strategies and how are they formulated? • Growth strategies • Seek an increase in size and the expansion of current operations • Types of growth strategies: • Concentration strategies • Grow within the same business area Management 11e Chapter 9

  32. Study Question 3: What are corporate-level strategies and how are they formulated? • Types of growth strategies continued • Diversification strategies • Grow by acquiring or investing in new and different business areas • Related diversification • Unrelated diversification • Vertical integration Management 11e Chapter 9

  33. Study Question 3: What are corporate-level strategies and how are they formulated? • Retrenchment and restructuring strategies: • Readjusting operations when an organization is in trouble • Chapter 11 bankruptcy • Protects a firm from creditors while management re-organizes to restore solvency Management 11e Chapter 9

  34. Study Question 3: What are corporate-level strategies and how are they formulated? • Types of retrenchment and restructuring strategies • Liquidation • Business closes and sells assets to pay creditors • Downsizing • Decreases size of operations Management 11e Chapter 9

  35. Study Question 3: What are corporate-level strategies and how are they formulated? • Types of retrenchment and restructuring strategies • Divestiture • Sells off parts of the organization to refocus attention on core business areas • Turnaround Strategy • Tries to fix specific performance problems Management 11e Chapter 9

  36. Study Question 3: What are corporate-level strategies and how are they formulated? • Global strategies: Management 11e Chapter 9

  37. Study Question 3: What are corporate-level strategies and how are they formulated? • Cooperative strategies • Strategic alliances — two or more organizations partner to pursue an area of mutual interest • Types of strategic alliances: • Outsourcing alliances • Supplier alliances • Distribution alliances Management 11e Chapter 9

  38. Study Question 3: What are corporate-level strategies and how are they formulated? • Co-opetition – working with rivals on projects of mutual benefit Management 11e Chapter 9

  39. Study Question 4: What are business-level strategies and how are they formulated? • Business-level strategy formulation • Good strategies help achieve above average returns • Key question is “How can we best compete for customers in our market and with our products or services?” Management 11e Chapter 9

  40. Study Question 4: What are business-level strategies and how are they formulated? • Porter’s competitive strategies model • Business-level strategic decisions are driven by: • Market scope • Source of competitive advantage • Market scope and source of competitive advantage combine to generate four generic strategies Management 11e Chapter 9

  41. Figure 9.7 Porter’s competitive strategies framework: soft-drink industry examples Management 11e Chapter 9

  42. Study Question 4: What are business-level strategies and how are they formulated? • Porter’s generic strategies for gaining competitive advantage: • Differentiation strategy • Cost leadership strategy • Focused differentiation strategy • Focused cost leadership strategy Management 11e Chapter 9

  43. Study Question 5: What are the foundations for strategy implementation? • Strategy implementation • Must be supported in every aspect of management • Planning • Controlling • Organizing • Leading Management 11e Chapter 9

  44. Study Question 5: What are the foundations for strategy implementation? • Strategic planning failures that hinder strategy implementation: • Failures of substance • Inadequate attention to major strategic planning elements • Failures of process • Poor handling of strategy implementation • Lack of participation error • Goal displacement error Management 11e Chapter 9

  45. Study Question 5: What are the foundations for strategy implementation? • Corporate governance: • System of control and performance monitoring of top management • Done by boards of directors and other major stakeholder representatives • Controversies regarding roles of inside directors and outside directors • Increasing emphasis on corporate governance in contemporary businesses Management 11e Chapter 9

  46. Study Question 5: What are the foundations for strategy implementation? • Strategic control • Makes sure strategies are well implemented and that poor strategies are scrapped or modified Management 11e Chapter 9

  47. Study Question 5: What are the foundations for strategy implementation? • Strategic leadership • Inspires people to continually change, refine, and improve strategies and their implementation Management 11e Chapter 9

  48. Study Question 5: What are the foundations for strategy implementation? • Critical tasks of strategic leadership • Be a guardian of trade-offs • Create a sense of urgency • Ensure that everyone understands the strategy • Be a teacher • Be a great communicator Management 11e Chapter 9

  49. Chapter 9 Case • Dunkin’ Donuts: Betting dollars on donuts

  50. For activities and assessments, please visit… • www.wiley.com/college/schermerhorn

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