D: Chapter 8

Strategy Formulation and Implementation

Chapter Outline• Thinking strategically

– What is strategic management?– Grand strategies– Global strategies– Levels of strategy

• Type ofbusiness

• Competitive position• Resource development

BUSINESS STRATEGIES

• How to compete in a particular market

• How to achieve competitive advantage

FUNCTIONAL STRATEGIES• Action plans for each functional area

CORPORATE STRATEGIES

ORGANIZATIONAL LEVELS OF STRATEGIES

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998

TM 7-3

Chapter Outline• The strategic management process

– SWOT analysis

assessenvironmental

factors

assessorganizational

factors

IdentifyCurrent Mission

and Strategic

Goals

ConductCompetitive

Analysis:* Strengths

* Weaknesses* Opportunities

* Threats

DevelopSpecific

Strategies:* Corporate* Business

* Functional

CarryOut

StrategicPlans

Maintain Strategic Control

STRATEGYIMPLEMENTATION

STRATEGYFORMULATION

TM 7-2

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998

Strengths

Weaknesses

Opportunities

Threats

COMPETITIVEADVANTAGE

SWOT ANALYSIS

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998

TM 7-4

Chapter Outline• The strategic management process

– SWOT analysis

• Formulating corporate level strategy– Portfolio strategy

STARSQUESTION

MARKS

CASHCOWS DOGS

BCG GROWTH - SHARE MATRIX

Mar

ket

Gro

wth

Rat

e

LowHigh

High

Low

Relative Competitive Position(market share)

Rem

ain

der

div

este

d

Har

vest

ed, d

ives

ted

,or

liq

uid

ated

(net suppliersof resources)

(net usersof resources)

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998

TM 7-8

Chapter Outline• The strategic management process

– SWOT analysis

• Formulating corporate level strategy– Portfolio strategy

• Formulating business level strategy– Five competitive forces– Competitive strategy

Rivalry

Customer BargainingPower

Threat ofNew Entrants

Threat ofSubstitutes

CustomerCompany

Supplier BargainingPower

SupplierCompany

PORTERS FIVE COMPETITIVEFORCES MODEL

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998

TM 7-5

Porter’s Competitive Strategies

•Cost leadership•Differentiation•Focus

Chapter Outline• The strategic management process

– SWOT analysis• Formulating corporate level strategy

– Portfolio strategy• Formulating business level strategy

– Five competitive forces– Competitive strategy

• Formulating functional level strategy• Putting strategy into action

Putting Strategy into Action

• Leadership• Structural design• Information and control• Human resources