Strategic PlanningUnderstand Strategy and how it differs from plans, and tacticsLook at models of strategy developmentUnderstand the process of strategy developmentProduct Life Cycle and Generic Strategies

Functions of Planning1) Identifying future opportunities

2) Identifying and avoiding future problems

3) Developing courses of action

4) Understanding the risks and uncertainties associated withvarious options

7.2

Strategy The major courses of action that

an organization should take to achieve its goals

Plans-deal more with actions that should be taken

Tactics-specific moves

Intended and Realized Strategies Intended-Plans that managers

develop Realized-What actions actually

occur Unrealized-Plans that never occur Emergent Strategy-Unplanned

actions that occur

Realized Strategy

Intended Strategy

Emergent Strategy

Unrealized Strategy

Outside

Forces

SWOT Analysis Internal

Strengths and Weaknesses External

Opportunities and Threats in the business environment

Core Competencies Strengths that make an

organization distinctive from competitors

Groups of sustainable competitive advantages

External-O’s and T’s Porter’s Five Forces Model-P94

Threat of New Entrants Supplier Bargaining Power Customer Bargaining Power Substitute Goods or Services Rivalry of Existing Firms

Product Life Cycle Market phases that products

usually go through during their lifetimes

Introduction Growth Maturity Decline Termination

Basic Product Life Cycle Model

Adapted from Figure 7.4

Introduction Growth Maturity Decline Termination

Biogenetics

Electric cars

Cellular phones

PCs

Software

Autos

Airlines

Breakfast cereals

Black and white TV

Cigarettes

Slide rule

Drive-ins

High

Low

SalesSalesVolumeVolume

TimeTime

7.10

Diversification The variety of goods or services

provided by the firm Focused Strategy Dominant Business Related Diversification Unrelated Diversification

The Risks and Opportunities of Diversification

Identifying the Risks and Opportunities of Diversification What can we do better than any of our competitors if we enter a

new market? What strategic assets are needed to succeed in the new market? Are there synergies to be realized? Will we be simply a player

in the new market or will we emerge a winner?

What can we learn by diversifying, and are we sufficiently organized to learn it?

7.4

Level of Diversification and Planning

Scop

e of

str

ateg

ic p

lann

ing

Scop

e of

str

ateg

ic p

lann

ing

Dick ClarkProductions

Southwest Airlines

Cemex

GE

Dominant-business

firm

Single-business

firm

Related-business

firm

Unrelated-businesses

firm

Broad

NarrowHighLow

Level of Level of diversificationdiversification Adapted from Figure 7.1

7.5

ABB

Single-Business Strategy Serves one segment of a particular

market with the intent of being the BEST

Examples Southwest Airlines Intel

Dominant Business Serves various segments of a

single market Examples

GM Trucks, Cars, Semi’s

Related Diversification A variety of similar goods or

services Concentric Growth Strategy Synergies are realized Examples

GM Microsoft Honda

Unrelated Diversification Provide diverse products to

different markets Conglomerate Growth Strategy Examples

GE ABB Mitsubuishi

Corporate Level Strategy

Guides the overall direction of the firm deciding what SBU’s to keep, develop, purchase, or sell

Strategic Business Unit SBU-a division or subsidiary of a

firm that operates relatively independently

Examples pizza hut, taco bell, kfc IBM computers, mainframes,

financial other examples??

Growth Strategies Think of facing the ultimate

customer Forward Integration-when a firm

buys its customers Backward Integration-when a firm

buys its suppliers Horizontal Integration-when a firm

buys its competitors

Growth Strategies (cont) Market Penetration-development of

current markets with current products

Market Development-seeking new markets for current products

Product Development-new or improved products for the current market

Business Level Strategies

Strategies of SBU’s What is the market What are the customer needs to be

filled How will they be satisfied

Generic Strategies Henry Mintzberg-P245 3 basic business strategies

Differentiation Low-cost Focus/Niche

Question- Can the 3 basic strategies be

combined?

Generic Strategies Model

Low Cost (price)

Broad

NarrowUniqueness

Source of AdvantageSource of Advantage

StrategicStrategicTargetTarget

DifferentiationDifferentiationstrategystrategy

Cost leadershipCost leadershipstrategystrategy

Focus strategyFocus strategy

Source: Adapted with permission of The Free Press, a Division of Simon & Schuster, Inc. from Competitive Strategy: Techniques for Analyzing Industries and Competitors (p. 39) by Michael E. Porter, Copyright © 1980 by The Free Press.

Adapted from Figure 7.6

7.12

Application of the Generic Strategies Model

FeatureFeature Company ExamplesCompany ExamplesBusiness-Level Business-Level StrategyStrategy

Differentiation

Adapted from Table 7.4

Premium Quality

Brand image

Technologicalleadership

Customer service

Lexus - autos

Compaq - PCs

Gillette - razors

Maytag - appliancesNike - shoes

7.13

Application of the Generic Strategies Model (contd.)

FeatureFeature Company ExamplesCompany ExamplesBusiness-Level Business-Level StrategyStrategy

Cost leadership

Adapted from Table 7.4

Tight cost controls

Efficient scale offacilities

Efficient service,sales force, andadvertising

Competitive pricing

FeatureFeature

Discount Tires - tire replacement

Motel 6 - travel accommodations

Wal-Mart - retailing

UPS - package delivery

7.14

FeatureFeature Company ExamplesCompany ExamplesBusiness-Level Business-Level StrategyStrategy

Focus

Adapted from Table 7.4

Careful identificationof target market (niche)

Cost leadershipemphasis ordifferentiation emphasis

Constant review ofcustomer demand inniche

Nieman Marcus - elite retailing

Dick Clark Productions

Polo - clothingRolex - watches

Application of the Generic Strategies Model (contd.)

7.15

Where to from here???? We have touched on the areas of:

Organizational Behavior Human Resource Management Strategic Management

What careers are there in each area? What classes can I take in the areas?

MGT410,MGT499,MGT320,MGT340,MGT491