Transcript Strategic Management and Entrepreneurship • Strategy A comprehensive plan of action that sets critical direction for an organization and guides the allocation of its resources. •

Strategic Management and
Entrepreneurship
• Strategy
A comprehensive plan of action that sets
critical direction for an organization and
guides the allocation of its resources.
• Strategic Management
The process of formulating and
implementing strategies.
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Five Strategic Management
Tasks
• Identify organizational mission and objectives.
What are we….what do we want to be……
• Assess current performance vis-à-vis mission
and objectives.
How are we doing…...
• Create strategic plans to accomplish purpose
and objectives.
How can we get where we want to be…..
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Five Strategic Management
Tasks
• Implement the strategic plans.
Has everything been done that needs to be done….
• Evaluate results; change strategic plans and/or
implementation processes as necessary.
Are things working out as planned, and what can
be improved upon…...
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The Strategic Management
Process
• Strategy Formulation
–Analysis of the Mission (Purpose)
–Analysis of Values (Corp Culture)
–Analysis of the Organization
(S&W)
–Analysis of the Environment
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Analysis of the Mission
• Usually expressed in the form of
a Mission Statement in which it
identifies the organization’s
official objectives, and it defines
the Domain in which the
organization intends to operate
such as:
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Analysis of the Mission
–the Customer it intends to serve.
–the Products and/or Services to
be provided.
–the Location in which it intends
to operate.
–the Philosophy that will guide
the employees.
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Analysis of the Mission
• Strategic Constituencies
Analysis
What is the organization’s
commitment to it’s stakeholders:
Employees, Stockholders,
Suppliers, Creditors,
Communities
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Analysis of Core Values
• Values
The broad based beliefs about
what is or is not appropriate.
• Corporate Culture
The predominate value system for
the organization.
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Analysis of Core Values
• Through corporate cultures, the
values of managers and other
individuals are shaped and
pointed in common directions.
• It defines the character of an
organization to both itself and its
external stakeholders.
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Analysis of Objectives
• Operating Objectives
–Direct activities toward key and
specific results.
–Shorter term targets against
which actual performance
results can be measured as
indicators of progress and
continuous improvement.
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Analysis of Objectives
Operating Objectives
– Profitability
– Market
Standing
– Social
Responsibility
– Cost Efficiency
– Human
Resources
– Financial
Resources
– Quality
– Innovation
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Analysis of the Organization
(SWOT)
Internal Assessment of the Organization
Strengths?
Weaknesses?
• Mfg’ing Efficiency
• Outdated Facilities
• Skilled Workforce
• Inadequate R&D
• Good Market
Share
• Obsolete Tech
• Strong Financing
• Past Planning Failures
• Superior
• Weak Management
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Analysis of the Organization
(SWOT)
External Assessment of the Environment
Opportunities?
Threats?
• New Markets
• New Competition
• Strong Economy
• Weak Rivals
• Shortage of
Resources
• Emerging Tech.
• Changing Mkt Taste
• Growth of Market
• New Regulations
• Substitute Products13
Levels Of Strategy
• Corporate
Sets the overall strategic direction.
• Business
Sets the strategic direction for a single
division or strategic business unit (SBU).
• Functional
Sets functional directions for supporting
business and corporate strategies. A
strategy that guides activities within specific
functional areas.
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Types of Strategies
• Growth Strategy
–Seeking greater size and the expansion
of current operations.
This objective can be pursued in a
number of different ways through two
basic strategies:
Concentration and Diversification
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Types of Strategies
• Retrenchment
– Sometimes called defensive strategies,
involves decisions to reduce operations
and cut back in order to gain
efficiencies and improve performance.
There are three basic approaches:
Turnaround - Divestiture Liquidation
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Types of Strategies
• Stability
– Maintains the present course of action
without commitment to any major
operating changes.
– Typically pursued when an
organization is doing well in a
receptive environment, when low risk
is important ….. and/or when time is
needed to consolidate strengths …….
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Types of Strategies
• Combination Strategies
– Simultaneously employs more than one
of the other strategies.
– This often reflects different strategic
approaches among subsystems.
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Strategy Formulation Models
• Portfolio Planning
– Seeks the best mix of investments
among alternative business
opportunities.
– It is most useful for addressing
corporate-level strategy in
multibusiness or multiproduct
situations.
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Strategy Formulation Models
• The BCG Matrix
– A Portfolio planning approach offered
by the Boston Consulting Group.
– It ties strategy formulation to an
analysis of business opportunities
according to Market Growth Rate and
Market Share.
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Strategy Formulation Models
• The BCG Matrix
– It ties strategy formulation to four
possible business states:
– Stars - High share/high growth
– Cash Cows - High share/low growth
– Question Marks - Low share/high
growth
– Dogs - Low share/low growth
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Strategy Formulation Models
• Porter's Competitive Strategies
– This approach begins with an analysis
of an organization's competitive
environment.
– He identifies five strategic forces
affecting industry competition:
Customers - Suppliers - New Entrants
Substitute Products - Industry Competitors
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Strategy Formulation Models
• Porter's Competitive Strategies
– Next Porter identifies three generic strategies
that organizations may pursue to gain
strategic advantage:
Product Differentiation
Cost Leadership
Focus
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Strategy Formulation Models
• The Adaptive Model
Organizations should pursue
product/market strategies that are
congruent with the nature of their external
environments.
– Prospector Strategies - Taking risk, seeking
opportunities, innovation, and growth.
– Defender Strategy - Avoiding change,
seeking stability and perhaps retrenchment.
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Strategy Formulation Models
– Analyzer Strategy - Maintaining
stability, while exploring limited
innovation.
– Reactor Strategy - Responding to
events, but without a guiding
strategy.
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Strategy Formulation Models
• Product Life Cycles
A series of stages a product or service goes
through in the life of it marketability.
– Introduction
– Growth
– Maturity
– Decline
Suggests that different business
strategies should be used to support
products in different stages of their
life.
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Strategy Implementation
The Incremental-Emergent View
•
Not all strategies are clearly formulated at
one point in time and then implemented
step-by-step.
•
They take shape, change, and develop over
time as modest adjustments to past
patterns.
•
It is called Logical Incrementalism in which
incremental changes in strategy occur as
managers learn from experience.
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Strategy Implementation
•
Strategic Planning Pitfalls
•
Failures of Substance
Reflects a lack of attention to the major strategic
planning elements.
•
Failure of Process
Reflects poor handling of the ways in which the
various aspects of strategic planning were
accomplished.
•Insufficient Participation Error
•Goal Displacement
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The Nature of
Entrepreneurship
A term used to describe risktaking behavior that results in
the creation of new
opportunities for individuals
and/or organizations.
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Typical Characteristics of
Entrepreneurs
•
•
•
•
•
Internal Locus of Control
High Need for Achievement
Tolerance for Ambiguity
Self-Confidence
Action-Oriented
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Entrepreneurs
• Businesses depend on entrepreneurial
managers willing to assume risk and
encourage the creativity and innovation
so important to continued success.
– Intrapreneurship
– Skunk works
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