STRATEGIC MANAGEMENTSESSIONS & SEMINARS

November 29 – December 13, 2012

Internal scanning – organizational analysis

• Internal strategic factors- critical strengths & weaknesses- determine to what extent a company is able to take advantage of opportunities and avoid threats

• TESCO strengths:- $ background and stability – Income statement, Balance sheet, St. of cash flows, St. of changes in owners’ equity- qualified workers in middle management (HR), know-how- economies of scale (operations, processes)

• TESCO weaknesses:- complex company structure – span of control, chain of command …- high-employee turnover (HR) at operational level

Internal scanning – organizational analysis

• Key resources - TESCO:

- VRIO Framework

-> Value – Does it yield a competitive advantage?-> moderate – same service yet in large scale

-> Rareness – Do other competitors have it?-> Yes => not rare

-> Imitability – Can others imitate the concept? At what cost?

-> They can -> at high cost

-> Organization – Is the company organized to exploit the respective resource?

-> yes/no

Basic organizational structures

Basic corporate structure - Divisional

Corporate culture of TESCO

• Beliefs – highly organized work leads to successful outcomes - experience and skills shall be transmitted from one generation to another

• Expectations – orders shall be fulfilled literally (micro-management)• Values – personal integrity, honesty, customer orientation

Þ Sense of identity of employees -> moderateÞ Employee commitment -> moderateÞ Appropriate behavioral patterns -> sustainableÞ Organization’s stability -> high! Why? What else have we missed?

IFAS – Internal Factor Analysis Summary

SFAS – Strategic Factor Analysis Summary

SWOT

• Opportunities and Threats

- w.r.t. external environment-> societal environment - PESTLE-> task environment – industry analysis

• Strengths and Weaknesses

- w.r.t. internal environment of the company-> key resources

Business Strategies

Business Strategies - TESCO• To improve the competitive position of the whole company or its

business units w/in:- industry - ?- market segment - ?

Porter’s Generic Competitive Strategies

Porter’s Generic Competitive Strategies• Cost leadership:

- low-cost competitive strategy- aimed at broad mass markets- cost minimization/reduction- aggressive development of efficient-scale facilities

• Cost focus:- low-cost competitive strategy- focused on a particular niche/buyer group or market- seeking cost advantage in target market

• Differentiation:- unique product; broad mass markets; lower price sensitivity of customers

• Focused differentiation:- focusing on particular group/market/market segment

Generic Competitive Strategies – TESCO in Uzbekistan, PEPSI in Tahiti, low-cost/traditional airlines in Russia, Mc Donald’s in North Korea

Competitive strategies• Cost leadership• Cost focus• Differentiation• Focused differentiation

Competitive tactics• Timing – Mc Donalds to be the 1st mover (not late mover) => high

revenues (profits)? What about reputation, quality standards, risks, costs?

• Market location tactics – offensive (bypass attack, encirclement) vs. - defensive (raise structural barriers, increase expected retaliation)

When do Porter’s Generic Competitive Strategies fail?

Cooperative Strategies• Collusion

- firms which cooperate with one another to reduce output and raise prices (tacit, explicit)

• Strategic Alliance- partnerships among corporations -> aiming at long-term objectives

-> to gain access to technology, markets, $; gain competitive adv.-> reduce political risks

-> TESCO in Uzbekistan-> low-cost airlines in Russia-> Mc Donalds in North Korea

Functional Strategies

Marketing strategy• Market-development strategy

- capture a large share of an existing market- create new markets for current products

• Product-development strategy- develop new products for new/existing markets

• Advertising/promotion strategy- push-promotional str. – establish direct contact w/customer

- taking product directly to customer- invest $ in advertising to build brand awareness

- TESCO, airlines, car manufacturer, Mc Donalds, PEPSI ?

Functional Strategies

• $ strategy- examines $ implications of various strategic alternatives

• R&D strategy- technological leader vs. follower?

• HRM strategies (low/high pay, high turnover, training, self-managing teams)

• Legal strategies• IT/IS management str. (controlling ops)• Operations str. (how and where is something produced)• Purchasing str. (multiple/sole/parallel sourcing)• Logistics str. (centralization, outsourcing)

• TESCO, airlines, car manufacturer, Mc Donalds, PEPSI ?