strategic management basic concepts

Guido Siebiera EXMGSC 2007

EXMGSC 2007

Strategic Management

The 20 Basic Concepts of Strategic

Management


20 Concepts

1. Link Firm - Environment 2. Stakeholders 3. Strategy as a Process 4. Mission Statement 5. BS: Boundaries of the Firm 6. BS: Market Segments 7. BS: Competitive Strategies 8. Five Forces 9. Core Competencies 10. Value Equation

11. PEST Analysis 12. Scenarios 13. Competitor Analysis: Costs 14. Competitor Analysis: Benefits 15. R&C Audit 16. Swot Framework 17. Strategic Moves: Directions 18. Strategic Moves: Methods 19. Value Innovation 20. Strategic Feedback Loop


1. Strategy as a link between the firm and its environment

Strategy Goals and Values

Resources and Capabilities

Structure and Systems

Firm

Competitors

Customers

Suppliers

Industry Environment

Grant 2002, pp. 15


2. Stakeholders

Freeman, R.E. 1984, Strategic Management: A stakeholder approach. Boston: Pitman.


3. Strategic Planning as a Process

Objectives / Values

Basic Strategy

Strategic Analysis

Strategic Moves


4. Mission Statement

How do we intend to win in this business?

Welch 2005

Make choices about people, investments and other resources. Balance the possible and the impossible.

1981 1995: The most competitive enterprise in the world by being No. 1 or No. 2 in every market


5. Basic Strategy: Boundaries of the Firm

Product

Raw Material

End Consumer

Step Before

Next Step

Related Product

Related Product


6. Basic Strategy: Market Segments

Market Segment A market segment is composed of a group of buyers who share common characteristics, needs, purchasing behavior, or consumption patterns.

Demographic segmentation: based on variables such as age, sex, family size, income, occupation, or religion

Geographic segmentation: to form different geographic units (residents of the metropolitan area)

Psychographic segmentation: based on social class, lifestyle, or personality characteristics

Behavioral segmentation: based on knowledge, attitude, uses, or response to a service


7. Basic Strategy: Porters Competitive Strategies

Cost Leadership Differentiation

The Company has lower costs than its competitors.

The products of the company have specific characteristics..

Focus

The company is concentrating its efforts on market niches.

Low costs Uniqueness Strategic Advantage

Targe

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Marke

t segm

ent

Entire

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et


8. Porters Five Forces

Suppliers

Threat of Substitute Products or Services

Bargaining Power of Suppliers

Bargaining Power of Customers

Threat of New Entrants

New Entrants

Substitutes

Customers

Competitors

Jockeying for position among current competitors

Porter 1997


9. Core Competencies

provide access to a wide variety of

markets.

should make a significant contribution

to the perceived customer benefits of the end product.

should be difficult for competitors to

imitate.

Hamel, Prahalad 1990


10. Value Equation

Value is the difference between the benefits enjoyed by a firms customers and its cost

of production.

V = B-C A firm in a competitive market can earn profit only if it creates more value than its rivals. Dranove, Marciano 2005


11. PEST Analysis

P olitical / Legal

E conomic

S ocial

T echnological


12. Scenarios

Scenarios are attempts to describe in some detail a hypothetical sequence of events that could lead plausibly to the situation envisaged. Some scenarios may explore and emphasize an element of a larger problem, such as a crisis. Other scenarios can be used to produce, perhaps in impressionistic tones, the future development of the world as a whole, a culture, a nation, or some group or class.


13. Competitor Analysis: Costs

Cost Driver Importance1=high; 5=low

Relative Position1=most preferred; 5=least

preferred

Cost Driver ScoreImportance x Relative Position

Economies of Scale

Economies of Scope

Learning Economies

Capacity Utilization

Wages

Labor Efficiency

Materials Purchasing Costs

Materials Efficiency

Others

Overall Position

Cost Comparison Scorecard

Dranove, Marciano 2005


14. Competitor Analysis: Benefits

Kim, Mauborgne 2002


15. R&C Audit

Dranove, Marciano 2005

Resource/

Capability

Is it

Scarce?

Is it

Scopable?

Is it

Mobile?

The Disney brand Yes Yes No

Skilled animators Partially No Partially

Marketing team No N/A Yes

Actors No N/A Yes

Stories No N/A Yes


16. SWOT Framework


17. Strategic Moves: Directions

Who?

What

How?

Today

Strategic Analysis

Offering/ Boundaries

Market Segments

Competitive Strategy


18. Strategic Moves: Methods

Internal Development

Mergers & Acquisitions

Alliances

Internal development is where strategies are developed by building on and developing an organizations own capabilities.

Acquisition is where strategies are developed by taking over ownership of another organization.

A alliance is where two ore more organizations share resources and activities to pursue a strategy.

Johnson/Scholes 2005


19. Value Innovation

Cost Leadership Differentiation Hybrid Strategy

Outpacing Strategy

Combination Strategy

Lean Differentiators

Strategic Innovation

Breaking Compromises

Blue Ocean Strategy


20. Strategic Feedback Loop

Objectives / Values

Basic Strategy Strategic Analysis

Strategic Moves

Changes

Execution

strategic management basic concepts

Documents

service guido siebiera

strategic planning

market segments market

market niches

environment strategy

link firm environment

value equation value

end product