strategy formulation process identify core competencies and value-creating activities identify...

Strategy Formulation ProcessStrategy Formulation Process

Identify Core Competencies and Identify Core Competencies and Value-Creating ActivitiesValue-Creating Activities

Identify Company Mission and GoalsIdentify Company Mission and Goals

Formulate StrategiesFormulate Strategies

Production and Organizing Strategies

Define the Define the BusinessBusiness

Define Define MainMain

ObjectivesObjectives

Company Mission

and Goals

Company Mission

and Goals

Core Competencies andValue-Creating Activities

BusinessBusinessEnvironmentsEnvironments

Primary Primary ActivitiesActivities

SupportSupportActivitiesActivities

Unique Unique Abilities Abilities

InternationalStrategies

InternationalStrategies

GlobalStrategies

GlobalStrategies

MultinationalStrategies

MultinationalStrategies

CombinationStabilityStability

Corporate-LevelStrategies

Corporate-LevelStrategies

RetrenchmentRetrenchmentGrowthGrowth

Business-Level StrategiesStrategic Advantage

Str

ate

gic

Ta

rge

t

DifferentiationDifferentiationDifferentiationDifferentiation Overall CostOverall CostLeadershipLeadership

Overall CostOverall CostLeadershipLeadership

FocusFocusFocusFocus

Industrywide

ParticularSegment Only

Uniqueness Perceivedby the Customer Low Cost Position

Support Support

• Research & Development

• Human Resources

• Procurement

• Accounting & Finance

PrimaryPrimary

• Manufacturing

• Marketing and Sales

• Customer Service

• Efficient Logistics

Department-Level Department-Level StrategiesStrategies

Production Considerations

Production Considerations

Capacity PlanningCapacity PlanningFacilities Location Facilities Location

PlanningPlanning

Facilities LayoutFacilities LayoutPlanningPlanningProcess PlanningProcess Planning

Organizational Structure

• CoordinationCoordination

• FlexibilityFlexibility

International Division Structure

HeadquartersHeadquarters

PlanesPlanesDivisionDivision

(domestic)(domestic)

TrainsTrainsDivisionDivision

(domestic)(domestic)

InternationalInternationalDivisionDivision

AutomobilesAutomobilesDivisionDivision

(domestic)(domestic)

PlanesPlanesDivisionDivision(France)(France)

TrainsTrainsDivisionDivision

(United States)(United States)

PlanesPlanesDivisionDivision(Brazil)(Brazil)

International Area Structure

HeadquartersHeadquarters

AsiaAsiaDivisionDivision

AmericasAmericasDivisionDivision

Middle EastMiddle Eastand Africaand AfricaDivisionDivision

EuropeEuropeDivisionDivision

JapanJapan S. KoreaS. KoreaChinaChina

Global Product Structure

HeadquartersHeadquarters

TrainsTrainsDivisionDivision

(domestic)(domestic)

TrainsTrainsDivisionDivision

(Germany)(Germany)

TrainsTrainsDivisionDivision(Mexico)(Mexico)

TrainsTrainsDivisionDivision(India)(India)

PlanesPlanesDivisionDivision(global)(global)

AutomobilesAutomobilesDivisionDivision(global)(global)

TrainsTrainsDivisionDivision(global)(global)

Global Matrix Structure

HeadquartersHeadquarters

AsiaAsiaDivisionDivision

AmericasAmericasDivisionDivision

EuropeEuropeDivisionDivision

PlanesPlanesDivisionDivision

TrainsTrainsDivisionDivision

AutomobilesAutomobilesDivisionDivision

Sourcing of rawmaterials, parts,and components

Manufacture andassembly of

components andfinal products

Sale of productsStage ofproductionand sales

Homecountry

Abroad

Both

Homecountry

Abroad

Both

Homecountry

Abroad

Both

Location ofsourcing,production,and sales

Global Sourcing and Production Strategy

Quality standards—exist at three levels• General standard

– award for quality—Baldridge and Deming awards

– certification standard—accepted worldwide» ISO 9000

» ISO 9001

» ISO 9004-2• Industry-specific standards—typically pertain

to quality of suppliers• Individual companies—set standards for their

suppliers

Quality Control