Strategic Management and Entrepreneurship

1. Strategic Management and Entrepreneurship • Strategy A comprehensive plan of action that sets critical direction for an organization and guides the allocation of its resources. • Strategic Management The process of formulating and implementing strategies.

2. Five Strategic Management Tasks • Identify organizational mission and objectives. What are we….what do we want to be…… • Assess current performance vis-à-vis mission and objectives. How are we doing…... • Create strategic plans to accomplish purpose and objectives. How can we get where we want to be…..

3. Five Strategic Management Tasks • Implement the strategic plans. Has everything been done that needs to be done…. • Evaluate results; change strategic plans and/or implementation processes as necessary. Are things working out as planned, and what can be improved upon…...

4. The Strategic Management Process • Strategy Formulation • Analysis of theMission (Purpose) • Analysis of Values(Corp Culture) • Analysis of the Organization(S&W) • Analysis of the Environment(O&T)

5. Analysis of the Mission • Usually expressed in the form of a Mission Statement in which it identifies the organization’s official objectives, and it defines the Domain in which the organization intends to operate such as:

6. Analysis of the Mission • the Customerit intends to serve. • the Products and/or Services to be provided. • the Location in which it intends to operate. • the Philosophy that will guide the employees.

7. Analysis of the Mission • Strategic Constituencies Analysis What is the organization’s commitment to it’s stakeholders: Employees, Stockholders, Suppliers, Creditors, Communities

8. Analysis of Core Values • Values The broad based beliefs about what is or is not appropriate. • Corporate Culture The predominate value system for the organization.

9. Analysis of Core Values • Through corporate cultures, the values of managers and other individuals are shaped and pointed in common directions. • It defines the character of an organization to both itself and its external stakeholders.

10. Analysis of Objectives • Operating Objectives • Direct activities toward key and specific results. • Shorter term targets against which actual performance results can be measured as indicators of progress and continuous improvement.

11. Profitability Market Standing Human Resources Quality Social Responsibility Cost Efficiency Financial Resources Innovation Analysis of Objectives Operating Objectives

12. Strengths? Mfg’ing Efficiency Skilled Workforce Good Market Share Strong Financing Superior Reputation Weaknesses? Outdated Facilities Inadequate R&D Obsolete Tech Weak Management Past Planning Failures Analysis of the Organization(SWOT) Internal Assessment of the Organization

13. Opportunities? New Markets Strong Economy Weak Rivals Emerging Tech. Growth of Market Threats? New Competition Shortage of Resources Changing Mkt Taste New Regulations Substitute Products Analysis of the Organization(SWOT) External Assessment of the Environment

14. Levels Of Strategy • Corporate Sets the overall strategic direction. • Business Sets the strategic direction for a single division or strategic business unit (SBU). • Functional Sets functional directions for supporting business and corporate strategies. A strategy that guidesactivities within specific functional areas.

15. Types of Strategies • Growth Strategy • Seeking greater size and the expansion of current operations. This objective can be pursued in a number of different ways through two basic strategies: Concentration and Diversification

16. Types of Strategies • Retrenchment • Sometimes called defensive strategies, involves decisions to reduce operations and cut back in order to gain efficiencies and improve performance. There are three basic approaches: Turnaround - Divestiture Liquidation

17. Types of Strategies • Stability • Maintains the present course of action without commitment to any major operating changes. • Typically pursued when an organization is doing well in a receptive environment, when low risk is important ….. and/or when time is needed to consolidate strengths …….

18. Types of Strategies • Combination Strategies • Simultaneously employs more than one of the other strategies. • This often reflects different strategic approaches among subsystems.

19. Strategy Formulation Models • Portfolio Planning • Seeks the best mix of investments among alternative business opportunities. • It is most useful for addressing corporate-level strategy in multibusiness or multiproduct situations.

20. Strategy Formulation Models • The BCG Matrix • A Portfolio planning approach offered by the Boston Consulting Group. • It ties strategy formulation to an analysis of business opportunities according to Market Growth Rate and Market Share.

21. Strategy Formulation Models • The BCG Matrix • It ties strategy formulation to four possible business states: • Stars - High share/high growth • Cash Cows-High share/low growth • Question Marks - Low share/high growth • Dogs - Low share/low growth

22. Strategy Formulation Models • Porter's Competitive Strategies • This approach begins with an analysis of an organization's competitive environment. • He identifies five strategic forces affecting industry competition: Customers - Suppliers - New Entrants Substitute Products - Industry Competitors

23. Strategy Formulation Models • Porter's Competitive Strategies • Next Porter identifies three generic strategies that organizations may pursue to gain strategic advantage: Product Differentiation Cost Leadership Focus

24. Strategy Formulation Models • The Adaptive Model Organizations should pursue product/market strategies that are congruent with the nature of their external environments. • Prospector Strategies - Taking risk, seeking opportunities, innovation, and growth. • Defender Strategy - Avoiding change, seeking stability and perhaps retrenchment.

25. Strategy Formulation Models • Analyzer Strategy - Maintaining stability, while exploring limited innovation. • Reactor Strategy - Responding to events, but without a guiding strategy.

26. Strategy Formulation Models • Product Life Cycles A series of stages a product or service goes through in the life of it marketability. • Introduction • Growth • Maturity • Decline • Suggests that different business strategies should be used to support products in different stages of their life.

27. Strategy Implementation The Incremental-Emergent View • Not all strategies are clearly formulated at one point in time and then implemented step-by-step. • They take shape, change, and develop over time as modest adjustments to past patterns. • It is called Logical Incrementalism in which incremental changes in strategy occur as managers learn from experience.

28. Strategy Implementation • Strategic Planning Pitfalls • Failures of Substance • Reflects a lack of attention to the major strategic • planning elements. • Failure of Process • Reflects poor handling of the ways in which the • various aspects of strategic planning were • accomplished. • Insufficient Participation Error • Goal Displacement

29. The Nature of Entrepreneurship A term used to describe risk-taking behavior that results in the creation of new opportunities for individuals and/or organizations.

30. Typical Characteristics of Entrepreneurs • Internal Locus of Control • High Need for Achievement • Tolerance for Ambiguity • Self-Confidence • Action-Oriented

31. Entrepreneurs • Businesses depend on entrepreneurial managers willing to assume risk and encourage the creativity and innovation so important to continued success. • Intrapreneurship • Skunk works