MultiMedia by Stephen M. Peters © 2002 South-Western

Strategic Planningand Strategic Management

MultiMedia by Stephen M. Peters © 2002 South-Western

Strategic Management

• Top management’s responsibility.• Defines the firm’s position.• Formulates strategies.• Guides the execution of long-term organizational

functions.• Helps position the organization to achieve a superior

competitive fit.

• Top management’s responsibility.• Defines the firm’s position.• Formulates strategies.• Guides the execution of long-term organizational

functions.• Helps position the organization to achieve a superior

competitive fit.

MultiMedia by Stephen M. Peters © 2002 South-Western

Strategic Planning Questions

What is the organization’s position in the marketplace?

What does the organization want its position to be?

What trends and changes are occurring in the marketplace?

What are the best alternatives to help the organization achieve its goals?

MultiMedia by Stephen M. Peters © 2002 South-Western

2. ResourceDeployment2. ResourceDeployment1. Scope1. Scope

3. DistinctiveCompetitiveAdvantage

3. DistinctiveCompetitiveAdvantage

4. Synergy4. Synergy

Four Elements ofStrategy Development

MultiMedia by Stephen M. Peters © 2002 South-Western

Scope of a Strategy Specifies

• The position or size the firm wants to achieve.• The geographical markets it wants to compete in.• The products and services it will sell.

MultiMedia by Stephen M. Peters © 2002 South-Western

Distinctive Competitive Advantage—Four Points —

1. Unique position in relationship to its competition

2. A firm’s core competencies

3. What the firm knows best

4. What the firm does best

MultiMedia by Stephen M. Peters © 2002 South-Western

Characteristics ofSuccessful Strategic Managers

• Well informed • Skill at focusing their time and energy • Good at building consensus • Good at creating contingency plans • Accomplished at simplifying the process

MultiMedia by Stephen M. Peters © 2002 South-Western

Strategy Formulation

Planning and decision making that goes into developing the company’s strategic goals.

Includes:

– Assessing the environments.

– Analyzing core competencies.

– Creating goals and plans.

MultiMedia by Stephen M. Peters © 2002 South-Western

Strategy Implementation: Executing the Strategic Plan Includes

Creating Teams

Focusing on ProcessesRather than Functions

Offering Incentives

Adapting New Technologies

Facilitating Communications

Making Structural Changes

MultiMedia by Stephen M. Peters © 2002 South-Western

The Purpose of Corporate-Level Strategy to Answer

1. What business are we in?

2. What business should we be in?

MultiMedia by Stephen M. Peters © 2002 South-Western

Business-Level Strategy Questions

1. How do we compete?

2. How much will be spent on activities such as advertising and R & D?

3. What equipment and facilities will be needed?

4. Should we expand or contract existing product lines?

MultiMedia by Stephen M. Peters © 2002 South-Western

Functional-Level StrategyMajor Activities

Human Resource Management

Research and Development

Marketing

Finance

Production

MultiMedia by Stephen M. Peters © 2002 South-Western

Strategic Planners Should Consider The Following

Management Factors

Marketing Factors

Production Factors

Research Factors

Human Resource Factors

Financial Factors

Management Factors

Marketing Factors

Production Factors

Research Factors

Human Resource Factors

Financial Factors

MultiMedia by Stephen M. Peters © 2002 South-Western

SWOT Analysis Chart

MultiMedia by Stephen M. Peters © 2002 South-Western

SWOT Analysis Chart

MultiMedia by Stephen M. Peters © 2002 South-Western

External Threats andOpportunities Factors

• of new competitors entering the marketplace.

• of substitute products.

• resulting from entering new marketplaces.

• created by strategy changes of major competitors.

• resulting from the potential actions and profitability of customers.

• created by the actions of suppliers.

• resulting from new (or abandoned) government regulations.

• created by new technology.

• from changes in the state of the economy.

The threat or opportunity:

MultiMedia by Stephen M. Peters © 2002 South-Western

Craig Weatherup’sThree Leadership Criteria

• Idea leadership “the ability to find, create, borrow, steal, or reshape ideas, especially big ideas.”

• People leaders “to mobilize the troops and energize the organization.”

• Capability leadership refers to “a manager’s ability to build and institutionalize the capabilities of people.”

MultiMedia by Stephen M. Peters © 2002 South-Western

Five Basic Grand Strategies

1. Growth Strategy – is adopted when the organization wants to create high levels of growth in one or more of its areas of operations.

2. Integration Strategy – is adopted with the business sees a need• to subsidize its supply lines or reduce costs.• to consolidate competition.

3. Diversification Strategy – the company wants to move into new products or markets.

4. Retrenchment Strategy – used to reduce the size or scope of a firm’s activities by cutting back or eliminating entire businesses.

5. Stability Strategy – the organization wants to remain the same.

1. Growth Strategy – is adopted when the organization wants to create high levels of growth in one or more of its areas of operations.

2. Integration Strategy – is adopted with the business sees a need• to subsidize its supply lines or reduce costs.• to consolidate competition.

3. Diversification Strategy – the company wants to move into new products or markets.

4. Retrenchment Strategy – used to reduce the size or scope of a firm’s activities by cutting back or eliminating entire businesses.

5. Stability Strategy – the organization wants to remain the same.

MultiMedia by Stephen M. Peters © 2002 South-Western

Integration Strategies

• Vertical Integration – Gaining ownership of resources, suppliers, or

distribution systems that relate to a company’s business.

• Horizontal Integration– A strategy to consolidate competition by

acquiring similar products or services.

MultiMedia by Stephen M. Peters © 2002 South-Western

Portfolio Strategy

Determines the mix of business units and product lines.Begins by identifying strategic business units (SBUs).

MultiMedia by Stephen M. Peters © 2002 South-Western

SBUs

Autonomous businesses with their own identities. Operate within the framework of the organization. Originated at General Electric in the 1970s. Have their own product lines, markets, and

competitors.

MultiMedia by Stephen M. Peters © 2002 South-Western

A BCG Matrix

MultiMedia by Stephen M. Peters © 2002 South-Western

Business-Level Strategy

Strategy managers formulate for each SBU.

Strategies that can be grouped as either adaptive strategies or competitive strategies.

MultiMedia by Stephen M. Peters © 2002 South-Western

The Four Adaptive Strategies

Prospector

Defender

Analyzer

1.

Reactor

2.

3.

4.

MultiMedia by Stephen M. Peters © 2002 South-Western

Marketing Strategy Involves

Pricing

Promotion

Distribution

Product or service mix of the organization