Strategic Management Strategic management requires an understanding of: Strategic management process...
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Transcript of Strategic Management Strategic management requires an understanding of: Strategic management process...
![Page 1: Strategic Management Strategic management requires an understanding of: Strategic management process How to develop an overall strategy Intended targets.](https://reader036.fdocuments.us/reader036/viewer/2022082819/56649dff5503460f94ae78dd/html5/thumbnails/1.jpg)
Strategic Management
Strategic management requires an understanding of:
• Strategic management process
• How to develop an overall strategy
• Intended targets of the strategy
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Competitive Advantage
Competitive advantage
• The ability of a firm to win consistently over the long term in a competitive situation
• Competitive advantage is created through the achievement of four qualities
Superior ValueSuperior Value
RarityRarity
Difficult to ImitateDifficult to Imitate
Non-substitutabilityNon-substitutability
• A competitive advantage should generate above-average returns: profits that are greater than the average for a comparable set of firms
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Strategic Management Process: Setting Direction
Strategic management process is a planning process in which managers:
1. Set the organization's general direction and objectives
2. Formulate a specific strategy
3. Plan and carry out the strategy’s implementation
4. Monitor results and make necessary adjustments
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Strategic Management Process
Determine strategic visionDetermine strategic vision
Establish objectivesEstablish objectives
Formulate strategyFormulate strategy
Implement strategy• Action plans
• Implement plans• Monitor outcomes
Implement strategy• Action plans
• Implement plans• Monitor outcomes
Analyze internal resourcesAnalyze internal resourcesAnalyze external environmentAnalyze external environment
Adapted from Exhibit 5.1
Define organizational missionDefine organizational mission
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Determining the Strategic Vision
Strategic vision: provides a view of the firm over the long term and what it should achieve in the future.
• Strategic vision:– Provides general identity, direction, and level
of aspirations – Is the heart of the strategy and strategic plan– Is short and compelling
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Mission Statement
Mission statement articulates fundamental purpose of the organization• Company philosophy• Company identity, or self-concept• Principal products or services• Customers and markets• Geographic focus• Obligations to shareholders• Commitment to employees
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External Environmental Analysis
Managers must conduct an analysis of the firm’s general environment:
• Social/cultural
• Technological
• Economic
• Political/legal
• Global
TheFirm
Social/Cultural
Environment
Techno-logicalEnvironment
Political/Legal
Environment
GlobalEnvironment
EconomicEnvironment
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Industry and Competitive Environment
SuppliersSuppliers CustomersCustomers
New EntrantsNew Entrants
Industrycompetitors
Rivalry amongexisting firms
SubstitutesSubstitutes
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Profits and Industry Forces
• Few competitors• Quality-based
competition• High entry barriers• Few new entrants• Many customers• Fragmented
customers• Many suppliers
• Many competitors• Price-based
competition• Low entry barriers• Many new entrants• Many substitutes• Few customers• United customers• Few suppliers
• Many competitors• Price-based
competition• Low entry barriers• Many new entrants• Many substitutes• Few customers• United customers• Few suppliers
Hig
her
Pro
fits
Lo
wer
Pro
fits
Adapted from Exhibit 5.4
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The Value Chain
Primary Activities
Su
pp
ort
Act
ivit
ies
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Integrating Internal and External Analyses
Internal environment• Strengths• Weaknesses• Tools
– Core competencies framework
– Resource analysis framework
– Value chain framework
Internal Environment
SWOTSWOT
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Integrating Internal and External Analyses
External environment
• Opportunities
• Threats
• Tools– Product life cycle analysis– Portfolio analysis– Five forces framework External Environment
SWOTSWOT
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Strategic Objectives
Strategic objectives translate the strategic intent and mission into concrete and measurable goals
• Facilitates a firm's ability to
– Allocate resources appropriately
– Reach a shared understanding of priorities
– Delegate responsibilities
– Hold people accountable for results
Strategic objectives translate the strategic intent and mission into concrete and measurable goals
• Facilitates a firm's ability to
– Allocate resources appropriately
– Reach a shared understanding of priorities
– Delegate responsibilities
– Hold people accountable for results
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Formulating a Strategy
Competitive strategy: determining how the company is going to compete and achieve its strategic objectives, mission, and ultimate strategic intent
• Generic strategies
• Techniques and tools
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Formulating a Strategy
Generic competitive strategies
• Cost leadership
• Differentiation
• Focus
Other generic competitive strategies
• Integrated Differentiation-Cost Leadership
• Multipoint Competition
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Generic Strategies and Scope
General player whose productor service features commandindustry average prices but
whose costs are significantlybelow the industry average
Example: Wal-Mart
General player whose productor service features commandindustry average prices but
whose costs are significantlybelow the industry average
Example: Wal-Mart
Niche player with average Prices and below-average costs
That focuses on a segment ofcustomers or a specific
geography
Example: Columbia Sports
Niche player with average Prices and below-average costs
That focuses on a segment ofcustomers or a specific
geography
Example: Columbia Sports
General player whose productor service features commandpremium prices and whose
costs are at the industryaverage
Example: Sony
General player whose productor service features commandpremium prices and whose
costs are at the industryaverage
Example: Sony
Niche player with average costsbut commanding premium
prices that focuses on the highend and customers in a general
or specific geography
Example: Morgan Motors
Niche player with average costsbut commanding premium
prices that focuses on the highend and customers in a general
or specific geography
Example: Morgan Motors
ScopeScope
GeneralGeneral FocusedFocused
Dif
fere
nti
atio
nD
iffe
ren
tiat
ion
Co
st le
ader
ship
Co
st le
ader
ship
Str
ateg
yS
trat
egy
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Strategy Implementation
StrategyStrategy
StructureStructure
SystemsSystems
SharedValuesSharedValues
SkillsSkills
StaffStaff
StyleStyle