STRATEGIC MANAGEMENT
For Post Graduate Diploma
Goal
To
develop
leaders
capable
of
creating
a
positive
impact
on
business
results
on
their
organizations
in
a
growing
and
changing
global
marketplace
By excelling Strategic
management
1
8/17/16
Road
Map
Sessions
Chapter/readings
Day
Topic assigned
for
this
class
Introduction
to
Understanding
Session
1
&
Session
2:
overview
on
the
1
1 Strategic
Management. elements
&
examples
Understanding
the
Business
Session 1
External
Environment 4-‐5
2 Environment. Session 2
Internal
environment
Strategy
Formulation-‐part-‐1 Session 1
moving
from
situational
analysis
6-‐7
to
strategy
formulation
3
Session 2
Competitive
Strategy/
Corporate
Strategy
Strategy
Formulation-‐part-‐2 Session 1:
Corporate
strategy/
Functional
6,7,8,
strategy
4
Session 2:
Functional
strategy/
Moving
into
actions
Implementation
Challenges
&
Session 1
Organizing
9-‐10
5
Managing
Change. Session 2
Staffing
&
Directing
Monitoring
and
Evaluating
Session 1:
Monitoring
and
Evaluating
11
Strategies
&
case
study Strategies.
6
Session 2
:
Distribution
&
discussion
of
the
case
study
Written
Exam
& Session 1:
exam
7
Case
study
presentation
Session
2:
presentations
2
8/17/16
Objectives
By the end of this session, participants will be able to:
strategy
Formulation
•It
is
developing
the
long-‐term
plans
that
the
organization
will
follow
in
the
next
years
to
gain
a
competitive
advantage
3
8/17/16
4
8/17/16
•Situation
analysis
• the
process
of
finding
a
strategic
fit
between
external
opportunities
and
internal
strengths
while
working
around
external
threats
and
internal
weaknesses
•S = O/(S -‐W)
5
8/17/16
6
8/17/16
7
8/17/16
Strategy
Formulation
•Strategy
•is a long term plan of action (methods /
approaches) designed to state
how
the
corporation
will
achieve
its
mission
and
objectives
8
8/17/16
Exhibit
9-‐3
Types
of
Organizational
Strategies
9
8/17/16
Business
Strategies
• Focuses
on
improving
the
competitive
position
of
a
company’s
or
business
unit’s
product
or
services
within
the
specific
industry
or
market
segment
that
the
company
serves
10
8/17/16
Business strategy
Competitive
Cooperative
(compete
head
to
head)
• Should we compete on the basis of used to gain a
lower cost , or should we competitive
differentiate our products or
services?
advantage within an
industry by working
• Should we compete head to head with other firms
with our major competitors for the
biggest share of the market,
or should we focus on a niche ?
11
8/17/16
12
8/17/16
Cost focus
Differentiation focus
Copyright © 2015 Pearson Education, Inc. 6-25
• Differentiation
focus
• concentrates
on
a
particular
buyer
group,
product
line
segment
or
geographic
market
to
serve
the
needs
of
a
narrow
strategic
market
more
effectively
than
its
competitors
Copyright © 2015 Pearson Education, Inc. 6-26
13
8/17/16
14
8/17/16
Avoid
!!!!!
•Stuck
in
the
middle
•when
a
company
has
no
competitive
advantage
and
is
doomed
to
below-‐
average
performance
15
8/17/16
•Fragmented
industry
• many
small-‐ and
medium-‐size
companies
compete
for
relatively
small
shares
of
the
total
market
•Products
are
typically
in
early
stages
of
product
life
cycle
•Focus
strategies
are
used
Copyright © 2015 Pearson Education, Inc. 6-32
16
8/17/16
Cooperative
strategies
• Working
with
other
firms
to
gain
competitive
advantage
can
be
through
Collusion
Alliance
17
8/17/16
Cooperative Strategies
•Collusion
•the
active
cooperation
of
firms
within
an
industry
to
reduce
output
and
raise
prices
to
avoid
economic
law
of
supply
and
demand
Collusion
strategy
•GE
wanted
to
ease
price
competition
in
the
steam
turbine
industry
18
8/17/16
Collusion
strategy
•Prices
and
profit
remained
stable
in
this
industry
for
10
years
Cooperative
Strategies
•Strategic
alliances
• a
long-‐term
cooperative
arrangement
between
two
or
more
independent
firms
or
business
units
that
engage
in
business
activities
for
mutual
economic
gain
Figure 6-2
19
8/17/16
20
8/17/16
•Licensing
arrangement
•agreement
in
which
the
licensing
firm
grants
rights
to
another
firm
(licensee)
in
another
country
or
market
to
produce
and/or
sell
a
product
21
8/17/16
22
8/17/16
Objectives
By the end of this session, participants will be able to:
Corporate strategy
23
8/17/16
Corporate
strategy
• In
large
multiple
business
company,
corporate
strategy
is
concerned
with
managing
various
product
lines
or
business
unit
“children”
to
obtain
synergy
among
them,
so
the
corporation
as
a
whole
succeeds
as
a
“family”
Multidivisional corporation
Departments
Corporate
strategy
• Senior
managers
need
to
consider
the
following
strategic
issues:
• If
we
want
to
grow
and
expand,
should
it
be
nationally
and/or
globally?
Should
we
do
so
through
internal development
or
external acquisition,
mergers
or
alliances?
24
8/17/16
Figure 7-1
Copyright © 2015 Pearson Education, Inc.
7-49
Growth
Strategies
Firms can grow either internally by development of new
products & services OR it can grow externally through
mergers and acquisition
•Merger
• a
transaction
involving
two
or
more
equal
corporations
in
which
stock
is
exchanged
but
in
which
only
one
corporation
survives
•Acquisition
• 100%
purchase
of
another
company
Copyright © 2015 Pearson Education, Inc.
7-50
25
8/17/16
Concentration
Strategies
• Vertical
growth
• achieved
by
taking
over
a
function
previously
provided
by
a
supplier
or
distributor
either
internally
or
externally
Vertical Integration
•Backward
•Forward
integration integration
• assuming
a
function
•assuming
a
previously
provided
function
previously
by
a
supplier provided
by
a
distributor
26
8/17/16
Vertical Integration
• Full
integration
• a
firm
internally
makes
100%
of
its
key
supplies
and
completely
controls
its
distributors
• Taper
integration
• a
firm
internally
produces
less
than
half
of
its
own
requirements
and
buys
the
rest
from
outside
suppliers
27
8/17/16
Vertical
Integration
• Quasi-‐integration
• a
company
does
not
make
any
of
its
key
supplies
but
purchases
most
of
its
requirements
from
outside
suppliers
that
are
under
its
partial
control
• Long-‐term
contracts
• agreements
between
two
firms
to
provide
agreed-‐upon
goods
and
services
to
each
other
exclusively for
a
specific
period
of
time
Concentration
Strategies
• Horizontal
growth
• expansion
of
operations
into
other
geographic
locations
and/or
increasing
the
range
of
products
and
services
offered
to
current
markets
28
8/17/16
Diversification Strategies
Diversification
Strategies
• Conglomerate
(Unrelated)
diversification
• diversifying
into
an
industry
unrelated
to
its
current
one.
A
cash
rich
firm
with
few
opportunities
for
growth
in
its
industry
29
8/17/16
Stability
Strategies
• Although
it
viewed
as
a
lack
of
strategy,
the
stability
can
be
appropriate
for
a
successful
corporation
operating
in
a
reasonably
predictable
environment
7-59
Stability
Strategies
• Pause/Proceed
with
caution
strategy
• an
opportunity
to
rest
before
continuing
a
growth
or
retrenchment
strategy
• No-‐change
strategy
• decision
to
do
nothing
new—a
choice
to
continue
current
operations
and
policies
for
the
foreseeable
future
• Profit
strategies
• decision
to
do
nothing
new
in
a
worsening
situation
but
instead
to
act
as
though
the
company’s
problems
are
only
temporary.
7-60
30
8/17/16
Retrenchment
Strategies
• Retrenchment
strategies
• used
when
the
firm
has
a
weak
competitive
position
in
some
or
all
of
its
product
lines
resulting
in
poor
performance
Retrenchment
Strategies
•Turnaround
strategy
• emphasizes
the
improvement
of
operational
efficiency
when
the
corporation’s
problems
are
pervasive
but
not
critical
31
8/17/16
Retrenchment
Strategies
•Turnaround
strategy
It
has
two
basic
phases:
•Contraction
effort
to
quickly
“stop
the
bleeding”
cutback
in
size
and
costs
=
downsizing
•Consolidation
stabilization
of
the
new
leaner
corporation
to
be
stronger
and
improve
its
competitive
position
Retrenchment
Strategies
• Captive
company
strategy
• company
gives
up
independence
in
exchange
for
security
by
integration
with
long
term
contracts
with
stronger
firm
• Sell-‐out
strategy
• management
can
still
obtain
a
good
price
for
its
shareholders
and
the
employees
can
keep
their
jobs
by
selling
the
company
to
another
firm
• Divestment
• sale
of
a
division
with
low
growth
potential
32
8/17/16
Retrenchment Strategies
• Bankruptcy
• company
gives
up
management
of
the
firm
to
the
courts
in
return
for
some
settlement
of
the
corporation’s
obligations
• Liquidation
• management
terminates
the
firm
Portfolio
management
• How
to
manage
theses
various
product
lines
and
business
units
to
boost
overall
corporate
performance
33
8/17/16
Portfolio management
34
8/17/16
BCG
Matrix
• Question
marks
• new
products
with
the
potential
for
success
but
need
a
lot
of
cash
for
development
35
8/17/16
BCG
Matrix
• Stars
• market
leaders
that
are
typically
at
or
nearing
the
peak
of
their
product
life
cycle
and
are
able
to
generate
enough
cash
to
maintain
their
high
share
of
the
market
and
usually
contribute
to
the
company’s
profits
BCG
Matrix
• Cash
cows
• products
that
bring
in
far
more
money
than
is
needed
to
maintain
their
market
share
• These
products
are
milked
for
cash
that
will
be
invested
in
new
question
marks
or
in
stars
36
8/17/16
BCG
Matrix
• Dogs
• products
with
low
market
share and
do
not
have
the
potential
to
bring
in
much
cash
• Dogs
should
be
either
sold
off
OR
managed
carefully
for
the
small
generated
cash
2. Coordinating activities
37
8/17/16
Functional Strategy
•Functional
strategy
• the
approach
a
functional
area
takes
to
achieve
corporate
and
business
unit
strategies
38
8/17/16
Exhibit
9-‐3
Types
of
Organizational
Strategies
39
8/17/16
Marketing
strategies
Many
Functional
marketing
strategies
may
be
selected:
40
8/17/16
Marketing
strategies
Many
Functional
marketing
strategies
may
be
selected:
Financial Strategy
41
8/17/16
• Technological
leader
• pioneering
an
innovation
• Technological
follower
• imitating
the
products
of
competitors
• Open
innovation
• firm
uses
alliances
and
connections
with
corporate,
government,
academic
labs
and
consumers
to
develop
new
products
and
processes
42
8/17/16
Operational Strategy
Purchasing Strategy
•Purchasing
Strategy
• deals
with
obtaining
raw
materials,
parts
and
supplies
needed
to
perform
the
operations
function
43
8/17/16
Logistics
Strategy
•Logistics
Strategy
• deals
with
the
flow
of
products
into
and
out
of
the
manufacturing
process
•Trends
include:
• Centralization
• Outsourcing
• Internet
Information
Technology
•Follow-‐the-‐sun
management
• project
team
members
living
in
one
country
can
pass
their
work
to
team
members
in
another
country
in
which
the
work
day
is
just
beginning.
44
8/17/16
Do
Losing
hand
everything
• Strategic
choice
• the
evaluation
of
alternative
strategies
and
selection
of
the
best
alternative
45
8/17/16
• Devil’s
advocate
• assigned
to
identify
potential
pitfalls
and
problems
with
a
proposed
alternative
strategy
in
a
formal
presentation
• may
be
an
individual
or
a
group
• Dialectical
inquiry
• requires
that
two
proposals
using
different
assumptions
be
generated
for
each
alternative
strategy
under
consideration
Policy
92
46
8/17/16
47