Strategy Formulation: Situation Analysis and Business Strategy PowerPoint Slides Anthony F. Chelte Western New England

1. 3/20/2012 Carolyn Roper 1 Chapter 5 Strategy Formulation: Situation Analysis and Business Strategy PowerPoint Slides Anthony F. Chelte Western New England College

2. 3/20/2012 Carolyn Roper 2 Situational Analysis Strategy formulation: Strategic planning or long-range planning Develops mission, objectives, strategies and policies Situational Analysis: Process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses.

3. 3/20/2012 Carolyn Roper 3 Situational Analysis Niche: A need in the marketplace that is currently unsatisfied. Goal for the Corporation Find a propitious niche An extremely favorable niche Strategic window Unique market opportunity available for a limited time

4. 3/20/2012 Carolyn Roper 4 Situational Analysis SWOT analysis: Internal Strengths Weaknesses External Opportunities Threats

5. 3/20/2012 Carolyn Roper 5 TOWS Matrix

6. 3/20/2012 Carolyn Roper 6 Resource: An asset, competency, process, skill, or knowledge controlled by the corporation. Business Strategy: Focuses on improving the competitive position of a company’s or business unit’s products or services within the specific industry or market segment that the firm serves.

7. 3/20/2012 Carolyn Roper 7 Porter’s Competitive Strategies Competitive Strategy: Low cost? Differentiation? Compete head to head in large market? Focus on niche? Generic Competitive Strategies: Lower cost strategy Design, produce, market more efficiently than competitors Differentiation strategy Unique and superior value in terms of product quality, features, service Competitive Advantage: Determined by Competitive Scope Breadth of the company’s target market

8. 3/20/2012 Carolyn Roper 8 Porter’s Competitive Strategies Cost Leadership: Low-cost competitive strategy Aimed at broad mass market Aggressive construction of efficient-scale facilities Cost reductions Cost minimization Differentiation: Broad mass market Unique product or service Charge premiums Lower customer sensitivity to price Cost focus: Low cost competitive strategy Focus on particular buyer group or market Niche focused Seek cost advantage in target market

9. 3/20/2012 Carolyn Roper 9 Competitive Strategy Industry Structure: Fragmented Industry Many small and medium-sized local companies compete for small shares of total market Focus strategies predominate Consolidated industry Mature industry dominated by a few large companies Cost Leadership or Differentiation predominate

10. 3/20/2012 Carolyn Roper 10 Dimensions of Quality

11. 3/20/2012 Carolyn Roper 11 Competitive Tactics Tactic: Specific operating plan detailing how a strategy is to be implemented in terms of when and where it is to be put into action. Timing tactics Market location tactics Timing Tactics: First mover (pioneer) Reputation as industry leader High profits Sets standards for subsequent products in the industry Late mover Able to imitate technological advances of others Keeps R&D costs down Keeps risks down

12. 3/20/2012 Carolyn Roper 12 Competitive Tactics Market Location Tactics: Offensive Tactics Frontal assault Flanking maneuver Bypass attack Encirclement Guerrilla warfare Market Location Tactics: Defensive Tactics Raise structural barriers Increase expected retaliation Lower the inducement for attack

13. 3/20/2012 Carolyn Roper 13 Cooperative Strategies Collusion Active cooperation of firms to reduce output and raise prices Explicit Tacit Strategic Alliance: Partnership of two or more corporations or business units to achieve strategically significant objectives that are mutually beneficial.

14. 3/20/2012 Carolyn Roper 14 Cooperative Strategies

15. 3/20/2012 Carolyn Roper 15