337 strategic management

7/28/2019 337 Strategic Management

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Spring 2007 Strategic Management 1

Strategic Management


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Strategic Management

The larger vision that guides the activities of managersand other employees in an organization

The set of decisions and actions used to formulate andimplement strategies that will provide a competitivelysuperior fit between the organization and its environmentso as to achieve organizational goals

The process of establishing and sustaining competitive

advantage


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Competitive Advantage

What is it?

An edge over your rivals

Traditional sources

Product and process technology Protected and regulated markets

Access to financial resources

Economies of scale

New source People !!!


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Levels of Strategy

Grand strategy

Where are we going?

Corporate What business are we in?

Business-level

How do we compete?


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The Strategic Management

Process

Implement

strategies

Identify mission

and strategies

Analyze

environment

Analyze

organization

Identify OT

Identify SW

Formulate

strategies

Feedback


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SWOT Analysis

Strength

Weakness

Opportunity

Threat

Whereare wegoing?


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Grand Strategies

Growth

Stability

Retrenchment


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WalMartGrowth (Number of Stores)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1968 1973 1978 1983 1988 1993 1998 2003

24

6,141


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Paths to Growth: WalMart

Direction of growth

New stores in existing markets

Enter new markets

New product lines

Means of growth

Greenfield

Acquisition


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WalMartInternational Expansion and Acquisitions

Mexico 1991

Puerto Rico 1992

2003 (A) Supermercados Amigo

Canada 1994 (A) Woolco

Argentina 1995

Brazil 1995

China 1996

Germany 1997-8 (A) Wertkauf, Interspar *

Korea 1998 (A) Makro, Kims Club *

U.K. 1999 (A) Asda

Japan 2002 (A) Seiyu (37% ownership) **

*Bailed out

** Not profitable


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General Electric Overall Stability

$0

$5,000

$10,000

$15,000

$20,000

$25,000

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

EarningsBeforeTaxes($M)


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Kmart -- Decline

-$4,000

-$2,000

$0

$2,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

E

arningsBeforeT

axes($M)


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Global Strategy: Four Choices

GlobalStrategy

TransnationalStrategy

Multi domesticStrategy

High

Cost andefficiencypressures

Low

Low High

HomeReplicationStrategy

Pressures for local responsiveness

Note that text combines global and

home replication strategies


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Corporate Level Strategy

Strategic business units

Diversification

Single business Diversified

Vertical Integration

Conglomerate

BCG Matrix


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Dell Products

PowerEdge servers

PowerVault and Dell |EMC storage

products Services

PowerConnectswitches

OptiPlex desktops Latitude notebooks

Dell Precision

workstations

Inspiron notebooks

Dimension desktops Dell monitors

Dell printers

Axim handhelds

Software and Peripherals


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ThyssenKrupp


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Alcoa at a Glance

Alcoa is the worlds leading producer of primary aluminum,

fabricated aluminum, and alumina and is active in all major aspects of

the industry.

Alcoa serves the aerospace, automotive, packaging, building andconstruction, commercial transportation, and industrial markets,

bringing design, engineering, production, and other capabilities of

Alcoas businesses as a single solution to customers.

In addition to aluminum products and components, Alcoa also

markets consumer brands including Reynolds Wrap aluminum

foil, Alcoa wheels, and Baco household wraps. Among its other

businesses are vinyl siding, closures, precision castings, and electrical

distribution systems for cars and trucks.


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Sara Lee

Household

Products

Headquarters

Food and

Beverage

Intimates and

Underwear


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Another Conglomerate

Aircraft Engines Commercial Finance

Consumer Finance Consumer Products

Equipment Management Industrial Systems

Insurance Medical Systems

NBC GE Plastics

GE Power Systems Specialty Materials

Transportation Systems

General Electric


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BCG Matrix

Stars

CashCows Dogs

ProblemChildren

MarketGr

owth

Low

High

Market Share LowHigh


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What Business Are We In?

1. What are our core competencies?

2. Who are our customers?

3. Economies of scale4. Economies of scope


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Business-Level Strategy

Porters Five Forces

Generic strategies

Value chain


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Porters Five Forces

Bargaining power of suppliers

Bargaining power of buyers

Threat of substitutes Potential new entrants to the market

Rivalry among current competitors


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Porters Five Generic Strategies

Low-cost leadership

Broad differentiation

Best-cost provider Focused or market niche / cost

Focused or market niche / differentiation


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Value Chain Analysis

How are we creating value for

customers?

Where can costs be reduced?


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The Value Chain

Operations

Sales and

Marketing

Raw

Materials

Distribution

Customer

Service

Product R &D, Technology, Systems Development

Human Resource Management

General Administration

Support

Activities


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Strategy Implementation

Leadership

Structure and design

Information and control systems Human resources

337 strategic management

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