Management, 7e Schermerhorn Chapter 8

1. Management, 7eSchermerhornChapter 8 Prepared by Michael K. McCuddy Valparaiso University John Wiley & Sons, Inc

2. Chapter 8Strategic Management • Planning ahead—study questions • What are the foundations of strategic competitiveness? • What is the strategic management process? • What types of strategies are used by organizations? • How are strategies formulated? • What are current issues in strategy implementation? Schermerhorn - Chapter 8

3. What are the foundations of strategic competitiveness? • Basic concepts of strategy: • Competitive advantage—operating in a successful way that is difficult for competitors to imitate. • Sustainable competitive advantage—consistently dealing with market and environmental forces better than competitors. Schermerhorn - Chapter 8

4. What are the foundations of strategic competitiveness? • Basic concepts of strategy: • Strategy—a comprehensive action plan providing long-term direction and guiding resource utilization to accomplish organizational goals with sustainable competitive advantage. • Strategic intent—focusing all organizational energies on a unifying and compelling goal. Schermerhorn - Chapter 8

5. What are the foundations of strategic competitiveness? • Basic concepts of strategy: • Strategic management—the process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage. Schermerhorn - Chapter 8

6. What are the foundations of strategic competitiveness? • Strategic management goals • Formulate and implement strategies that yield long-term, sustainable competitive advantage. • Create above-average returns for investors. • Earning above-average returns depends in part on the organization’s environment. Schermerhorn - Chapter 8

7. What is the strategic management process? • Strategy implementation • The process of allocating resources and putting strategies into action. • All organizational and management systems must be mobilized to support the accomplishment of strategies. Schermerhorn - Chapter 8

8. What is the strategic management process? • Analysis of values • Values are broad beliefs about what is or is not appropriate. • Organizational culture reflects the dominant value system of the organization as a whole. Schermerhorn - Chapter 8

9. What is the strategic management process? • Analysis of objectives • Operating objectives direct activities toward key and specific performance results. • Typical operating objectives: • Profitability • Market share • Human talent • Financial health • Cost efficiency • Product quality • Innovation • Social responsibility Schermerhorn - Chapter 8

10. What is the strategic management process? • Analysis of organizational resources and capabilities • Assessing organizational Strengths and Weaknesses within SWOT analysis • Identifying core competencies • Technology • Human resources • Manufacturing approaches • Management talent • Financial strength Schermerhorn - Chapter 8

11. What is the strategic management process? • Analysis of industry and environment • Assessing Opportunities and Threats within SWOT analysis • Assessment of actual and future environmental conditions • Macro environment • Industry environment • Unattractive industry • Attractive industry Schermerhorn - Chapter 8

12. What types of strategies are used by organizations? • Levels of strategy • Corporate strategy—directs the organization as a whole toward sustainable competitive advantage. • Business strategy—sets the strategic direction for a single business unit or product line. • Functional strategy—guides the use of resources to implement business strategy, focusing on activities within a specific area of operations. Schermerhorn - Chapter 8

13. What types of strategies are used by organizations? • 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 Schermerhorn - Chapter 8

14. How are strategies formulated? • Opportunities for achieving sustainable competitive advantage: • Cost and quality • Knowledge and speed • Barriers to entry • Financial resources Schermerhorn - Chapter 8

15. How are strategies formulated? • Business-level strategy formulation • Focus on finding ways to do a better job of attracting customers within a given business or industry. • Helpful planning tools in formulating business-level strategies: • Porter’s generic strategies • Product life cycle Schermerhorn - Chapter 8

16. How are strategies formulated? • Porter’s generic strategies model • Business-level strategic decisions are driven by: • Competitive scope • Source of competitive advantage • Competitive scope and source of competitive advantage combine to generate four generic strategies. Schermerhorn - Chapter 8

17. How are strategies formulated? • Porter’s generic strategies model • Generic strategies for gaining competitive advantage: • Differentiation strategy • Cost leadership strategy • Focused differentiation strategy • Focused cost leadership strategy Schermerhorn - Chapter 8

18. How are strategies formulated? • Product life cycle • A series of stages that a product or service goes through during the life of its marketability. • Stages of the life cycle: • Introduction • Growth • Maturity • Decline Schermerhorn - Chapter 8

19. How are strategies formulated? • Product life cycle • Introduction and growth stages • Use differentiation and prospector strategies • Maturity stage • Use focus and/or cost leadership strategies • Decline stage • Use defender or analyzer strategies Schermerhorn - Chapter 8

20. How are strategies formulated? • Corporate-level strategy formulation • Key issue is the selection and refinement of the organization’s mix of businesses. • Approaches to formulating business-level strategies: • Portfolio planning • Adaptive strategies Schermerhorn - Chapter 8

21. How are strategies formulated? • Portfolio planning approach • Designed to help managers decide on investing scarce organizational resources among competing business opportunities. • Useful for multibusiness or multiproduct situations. Schermerhorn - Chapter 8