fundamental of management chap 8
TRANSCRIPT
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PowerPoint Presentation
to Accompany
Management, 10/eJohn R. Schermerhorn, Jr .
Prepared by: Jim LoPresti
University of Colorado, Boulder
Published by: John Wiley & Sons, In!
Chapter 8:The Strategic Management Process
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Management 10/e - Chapter 8 2
Planning Ahead — Chapter 8 Study
Questions
What is strategic management? What are the foundations of
strategic ana!sis? What are corporate strategies andho" are the! formuated?
What are #usiness strategies and
ho" are the! formuated? What are current issues in strateg!
impementation?
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Management 10/e - Chapter 8 $
Study Question 1 !hat is strategic
management"
%asic concepts of strateg!:
Competiti&e ad&antage ' operating "ith
an attri#ute or set of attri#utes that ao"san organi(ation to outperform its ri&as)
Sustaina#e competiti&e ad&antage ' one
that is difficut for competitors to imitate)
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Management 10/e - Chapter 8 *
Study Question 1 !hat is strategic
management"
%asic concepts of strateg!
Strateg! ' a comprehensi&e action
pan that identifies ong-term direction
for an organi(ation and guides resource
utii(ation to accompish organi(ationa
goas "ith sustaina#e competiti&e
ad&antage)Strategic intent ' focusing a
organi(ationa energies on a unif!ing
and compeing goa)
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Management 10/e - Chapter 8 +
Study Question 1 !hat is strategic
management"
Strategic Management Process:
Strategic management ' the process of
formuating and impementing strategies to
accompish ong-term goas and sustain competiti&e
ad&antage)
Strategic ana!sis , process of ana!(ing the
organi(ation the en&ironment its competiti&e
position and current strategies
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Management 10/e - Chapter 8 .
#igure 8.1 Strategy $ormulation and implementation in
the strategic management process.
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Management 10/e - Chapter 8
Study Question 1 !hat is strategic
management"
Strategic Management Process:
Strateg! formuation , the process of
crafting strategies to guide aocation of
resources
Strateg! impementation , putting
strategies into action
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Management 10/e - Chapter 8 8
Study Question 1 !hat is strategic
management"
oa of strategic management is to
create a#o&e-a&erage returns for
in&estors)
eturns eceeding those for aternati&e
opportunities at e3ui&aent ris4)
5arning a#o&e-a&erage returns depends inpart on the organi(ation6s competiti&e
en&ironment)
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Management 10/e - Chapter 8 7
Study Question % !hat are the $oundations
o$ strategic analysis"
Strateg! formuation
The process of creating strateg!)
n&o&es assessing eisting strategies
organi(ation and en&ironment to
de&eop ne" strategies and strategic
pans capa#e of dei&ering future
competiti&e ad&antage)
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Management 10/e - Chapter 8 10
#igure 8.1 &hree le'els o$ strategy in organi(ations)
corporate, *usiness, $unctional strategies.
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Management 10/e - Chapter 8 11
Study Question % !hat are the $oundations
o$ strategic analysis"
9ruc4er6s strategic 3uestions for
strateg! formuation:
What is our #usiness mission?
Who are our customers?
What do our customers consider &aue?
What ha&e #een our resuts?
What is our pan?
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Management 10/e - Chapter 8 12
Study Question % !hat are the $oundations
o$ strategic analysis"
Strateg! impementation
The process of aocating resources and
putting strategies into action)
organi(ationa and management
s!stems must #e mo#ii(ed to support
and reinforce the accompishment of
strategies)
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Management 10/e - Chapter 8 1$
Study Question % !hat are the $oundations
o$ strategic analysis"
na!sis of mission: The reason for an organi(ation6s
eistence)
ood mission statements identif!: Customers Products and/or ser&ices ;ocation
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Management 10/e - Chapter 8 1*
#igure 8.% +ow eternal sta-eholders can *e 'alued
as strategic constituencies o$ organi(ations.
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Management 10/e - Chapter 8 1+
Study Question % !hat are the $oundations
o$ strategic analysis"
na!sis of &aues:
=aues are #road #eiefs a#out "hat is
or is not appropriate)
>rgani(ationa cuture refects the
dominant &aue s!stem of the
organi(ation as a "hoe)
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Management 10/e - Chapter 8 1.
Study Question % !hat are the $oundations
o$ strategic analysis"
>rgani(ationa cuture Shapes the &aues of managers and other
organi(ation mem#ers)
Points peope in common directions) eps #uid institutiona identit!)
i&es character to the organi(ation in the e!es ofempo!ees and eterna sta4ehoders)
%ac4s up the mission statement)
uides the #eha&ior of organi(ationa mem#ers inmeaningfu and consistent "a!s)
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Management 10/e - Chapter 8 1
Study Question % !hat are the $oundations
o$ strategic analysis"
na!sis of o#@ecti&es: >perating o#@ecti&es direct acti&ities to"ard 4e!
and specific performance resuts) T!pica operating o#@ecti&es:
Profita#iit! Mar4et share uman taent Ainancia heath
Cost efficienc! Product 3uait! nno&ation Socia responsi#iit!
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Management 10/e - Chapter 8 18
Study Question % !hat are the $oundations
o$ strategic analysis"
What are ourStrengths? Manufacturing
efficienc!? S4ied "or4force?
ood mar4etshare?
Strong financing?
Superiorreputation?
What are ourWea4nesses >utdated faciities?
nade3uateresearch andde&eopment?
>#soetetechnoogies?
Wea4management? Past panning
faiures?
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Management 10/e - Chapter 8 17
Study Question % !hat are the $oundations
o$ strategic analysis"
What are ourOpportunities? Possi#e ne"
mar4ets? Strong econom!?
Wea4 mar4etri&as?
5mergingtechnoogies?
ro"th of eisting
mar4et?
What are ourThreats? Be" competitors?
Shortage ofresources?
Changing mar4ettastes?
Be" reguations?
Su#stituteproducts?
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Management 10/e - Chapter 8 20
Study Question % !hat is the strategic
management process"
na!sis of organi(ationa resourcesand capa#iities: Core competenc! is a specia strength that
gi&es an organi(ation competiti&e ad&antage mportant goa of assessing core
competencies)
Potentia core competencies:
Specia 4no"edge or epertise)
Superior technoog!)
5fficient manufacturing approaches)
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Management 10/e - Chapter 8 21
#igure 8. S!/& analysis o$ strengths,wea-nesses, opportunities,and threats.
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Management 10/e - Chapter 8 22
Study Question !hat are corporate strategies and
how are they $ormulated"
Porter6s Mode of Ai&e StrategicAorces ffecting Competition: ndustr! competition
The intensit! of ri&ar! among firms and theircompetiti&e #eha&ior
Be" entrants the threat of ne" competitors entering the
mar4et Su#stitute products or ser&ices
the threat of su#stitute products or ser&ices
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Management 10/e - Chapter 8 2$
Study Question !hat are corporate strategies and
how are they $ormulated"
Porter6s Mode of Ai&e Strategic Aorcesffecting Competition:
%argaining po"er of suppiers the a#iit! of resource suppiers to infuence
the cost of products or ser&ices
%argaining po"er of customers
the a#iit! of customers to infuence the
price the! "i pa! for products or ser&ices
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Management 10/e - Chapter 8 2*
#igure 8.0 Porters model o$ $i'e strategic $orcesa$$ecting industry competition.
Source: Developed from Michael E. Porter, Competitive Strategy (New York: Free Press, 19!".
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Management 10/e - Chapter 8 2+
Study Question !hat are corporate strategies and
how are they $ormulated"
;e&es of strategies:Corporate strateg!
sets ong-term direction for the tota
enterprise%usiness strateg!
identifies ho" a di&ision or strategic#usiness unit "i compete in products orser&ices
Aunctiona strateg! guides acti&ities "ithin one specific area
of operations
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Management 10/e - Chapter 8 2.
Study Question !hat are corporate strategies and
how are they $ormulated"
uestions addressed #! differentstrategic e&e: Corporate strateg!
n "hat industries and mar4ets shoud "ecompete?
%usiness strateg! o" are "e going to compete for customers in
this industr! and mar4et?
Aunctiona strateg! o" can "e #est utii(e resources to
impement our #usiness strateg!?
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Management 10/e - Chapter 8 2
#igure 8.2 &hree le'els o$ strategy in organi(ations —corporate, *usiness, and $unctional strategies.
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Management 10/e - Chapter 8 28
Study Question !hat are corporate strategies and
how are they $ormulated"
ro"th and di&ersificationstrategies:ro"th strategies
See4 an increase in si(e and the epansionof current operations)
T!pes of gro"th strategies: Concentration strategies
9i&ersification strategies eated di&ersification
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Management 10/e - Chapter 8 27
Study Question !hat are corporate strategies and
how are they $ormulated"
rand or master strategies:ro"th strategies
See4 an increase in si(e and the
epansion of current operations) Sta#iit! strateg!:
maintains current operations "ithoutsu#stantia changes
etrenchment strateg! in&o&es reducing the si(e of orsu#stantia! rearranging currentoperations
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Study Question !hat are corporate strategies and
how are they $ormulated"
rand or master strategies: ro"th strategies:
See4 an increase in si(e and the epansion ofcurrent operations)
Sta#iit! strateg!: maintains current operations "ithout su#stantia
changes etrenchment strateg!:
in&o&es reducing the si(e of or su#stantia!
rearranging current operations Com#ination strateg!:
pursues gro"th sta#iit! or retrenchment in some
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Study Question !hat are corporate strategies and
how are they $ormulated"
estructuring and di&estiturestrategies:ead@usting operations "hen an
organi(ation is in trou#e)etrenchment
Correcting "ea4nesses #! ma4ingchanges to current operations)
;i3uidationestructuring
9o"nsi(ing and rightsi(ing
estructuring through di&estiture
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Study Question !hat are corporate strategies and
how are they $ormulated"
o#a strategies:
o#ai(ation strateg!) Word is one arge mar4etD standardi(e
products and ad&ertising as much as possi#e) 5thnocentric &ie")
Mutidomestic strateg!) Customi(e products and ad&ertising to oca
mar4ets as much as possi#e)
Po!centric &ie") Transnationa strateg!) %aance efficiencies in go#a operations and
responsi&eness to oca mar4ets) eocentric &ie")
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Study Question !hat are corporate strategies and
how are they $ormulated"
Cooperati&e strategies
Strategic aiances ' t"o or more
organi(ations partner to pursue an area
of mutua interest)
T!pes of strategic aiances:
>utsourcing aiances
Suppier aiances 9istri#ution aiances
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Study Question !hat are corporate strategies and
how are they $ormulated"
5-#usiness strategies
The strategic use of the nternet to
gain competiti&e ad&antage)
Popuar e-#usiness strategies
%usiness-to-#usiness E%2%F strategies
%usiness-to-customer E%2CF strategies
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Management 10/e - Chapter 8 $+
Study Question !hat are corporate strategies and
how are they $ormulated"
We#-#ased #usiness modes:
%ro4erage mode
d&ertising modeMerchant mode
Su#scription mode
nfomediar! mode
Communit! mode
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Study Question !hat are corporate strategies and
how are they $ormulated"
Strategic portfoio panning:
Portfoio panning see4s the #est mi of
in&estments among aternati&e
#usiness opportunities)
%C Matri ana!(es #usiness
opportunities according to mar4et gro"th
rate and mar4et share
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Study Question !hat are corporate strategies and
how are they $ormulated"
%C matri
Ties strateg! formuation to ana!sis of
#usiness opportunities according to G ndustr! or mar4et gro"th rate
;o" &ersus high
Mar4et share
;o" &ersus high
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#igure 8.3 &he 4C5 matri approach to corporatestrategy $ormulation.
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Study Question !hat are corporate strategies and
how are they $ormulated"
%C matri ' #usiness conditionsand reated strategies:Stars
igh share/high gro"th #usinesses)
Preferred strateg! ' gro"th)
Cash co"s
igh share/o" gro"th #usinesses) Preferred strateg! ' sta#iit! or modest
gro"th)
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Study Question !hat are corporate strategies and
how are they $ormulated"
%C matri'#usiness conditionsand reated strategies Econt)F:uestion mar4s
;o" share/high gro"th #usinesses) Preferred strateg! ' gro"th for promising
3uestion mar4s and restructuring ordi&estiture for others)
9ogs ;o" share/o" gro"th #usinesses) Preferred strateg! ' retrenchment #!
di&estiture)
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Management 10/e - Chapter 8 *1
Study Question 0 !hat are *usiness strategies and
how are they $ormulated"
>pportunities for achie&ing
sustaina#e competiti&e ad&antage:
Cost and 3uait!
Hno"edge and speed
%arriers to entr!
Ainancia resources
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Management 10/e - Chapter 8 *2
Study Question 0 !hat are *usiness strategies and
how are they $ormulated"
Porter6s generic strategies mode
%usiness-e&e strategic decisions are
dri&en #!: Mar4et scope
Source of competiti&e ad&antage
Mar4et scope and source of competiti&e
ad&antage com#ine to generate four
generic strategies)
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#igure 8.6 Porters generic strategies $ramewor-so$t)drin- industry eamples.
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Management 10/e - Chapter 8 **
Study Question 0 !hat are *usiness strategies and
how are they $ormulated"
Porter6s generic strategies for
gaining competiti&e ad&antage:
9ifferentiation strateg!Cost eadership strateg!
Aocused differentiation strateg!
Aocused cost eadership strateg!
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Study Question 0 !hat are *usiness strategies and
how are they $ormulated"
Portfoio panning approach
9esigned to hep managers decide on
in&esting scarce organi(ationa
resources among competing #usiness
opportunities)
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Study Question 2 !hat are current issues in
strategy implementation"
Strategic panning faiures thathinder strateg! impementation: Aaiures of su#stance
nade3uate attention to ma@or strategicpanning eements
Aaiures of process Poor handing of strateg! impementation
;ac4 of participation error
oa dispacement error
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Study Question 2 !hat are current issues in
strategy implementation"
Corporate go&ernance: S!stem of contro and performance
monitoring of top management)
9one #! #oards of directors and otherma@or sta4ehoder representati&es)
Contro&ersies regarding roes of insidedirectors and outside directors)
ncreasing emphasis on corporatego&ernance in contemporar! #usinesses)
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Study Question 2 !hat are current issues in
strategy implementation"
Strategic eadership
The capa#iit! to inspire peope to
successfu! engage in a process of
continuous change performance
enhancement and impementation of
organi(ationa strategies)
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Study Question 2 !hat are current issues in
strategy implementation"
Critica tas4s of strategic eadership
%e a guardian of trade-offs)
Create a sense of urgenc!) 5nsure that e&er!one understands the
strateg!)
%e a teacher) %e a great communicator)
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