Transcript Managing in Turbulent Times

MANAGEMENT
RICHARD L. DAFT
Strategy Formulation and
Implementation
CHAPTER 7
chapter7
Learning Outcomes
• Define the components of strategic management and discuss the levels of
strategy.
• Describe the strategic management process and SWOT Analysis.
• Define corporate-level strategies and explain the portfolio and
diversification approaches.
• Describe Porter’s competitive forces and strategies.
• Discuss new trends in strategy, including innovation from within and
partnership strategies.
• Discuss the organizational dimensions used for strategy execution.
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chapter7
What’s Your Strategy
Strength?
• How do you handle challenges and
issues?
• How did Best Buy overtake Circuit
City as the player to beat in consumer
electronics retailing?
• The strategies managers choose are
important.
• Strategies must be implemented
effectively to work.
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chapter7
Strategy Basics
• Why has Apple been so successful with
the iPod, iTouch, iPhone?
• Why has McDonald’s healthier menu been
effective?
• Finding ways to respond to competitors,
and cope with change is strategy.
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chapter7
Thinking Strategically
• The long-term view
• Seeing the big picture
– The organization
– Competition
How do
these fit
together?
• Strategy are your competitive actions in
the market
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What is Strategic
Management?
chapter7
• Plans and actions that lead to superior
competitive standing
Who are our competitors and what are their
strengths and weaknesses?
Who are our customers?
What products or services should we offer?
What does the future hold for our industry?
How can we change the rules of the game?
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chapter7
Purpose of Strategy
• Strategy:
– Plan of action
– Resource allocation
– Activities for dealing with the environment
– Achieving competitive advantage
• Strategy should:
– Exploit Core Competence
– Build Synergy
– Deliver Value
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chapter7
Three Levels of Strategy in
Organizations
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chapter7
Levels of Strategy
What business are
we in?
Corporate-level strategy
How do we
compete?
Business-level strategy
How do we support
the business-level
strategy?
Functional-level strategy
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chapter7
Strategy Formulation
Versus Execution
• Strategy Formulation
– Assess environment and internal problems
– Planning
– Decision making
– Establishment of goals
• Strategy Execution
– Directing resources
– Accomplishing results
– Changes in structure
– Use managerial and organizational tools
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chapter7
The Strategic
Management Process
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chapter7
SWOT Analysis
Assessment of internal and external factors
• Organizational
strengths, weaknesses,
opportunities, and
threats
–
–
–
–
Reports
Budgets
Financial ratios
Employee Surveys
• External information
about opportunities
and threats
–
–
–
–
–
–
Customers
Government reports
Professional journals
Bankers
Consultants
Association meetings
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chapter7
Analyzing Organizational
Strengths and Weaknesses
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Formulating CorporateLevel Strategy
chapter7
• Portfolio Strategy
– A diverse mix of business units
– Strategic Business Units (SBU) have different
products, mission, markets and competitors
• The BCG Matrix
– Organizes businesses along two dimensions—growth
and market share
• Diversification Strategy
– Movement into new lines of business
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The BCG Matrix
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Formulating Business-Level
Strategy
• Porter’s Five Forces – analyzing a
company’s position in the industry
Potential New Entrants
Bargaining Power of Buyers
Bargaining Power of Suppliers
Threat of Substitute Products
Rivalry Among Competitors
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Porter’s Five Forces
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Porter’s Competitive
Strategies
• Porter suggests that a company can adopt one
of three strategies after analyzing the forces
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New Trends in Strategy
• Mergers and acquisitions
• Enhancing organizational capacity
• Innovation from within
• Strategic partnerships
• Companies are focusing on internal
innovation as well as innovation
through strategic partnerships
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Global Strategy
• Finding strategies in the world marketplace
• Synergy among world operations
• Organizations differ in their global strategies
– Globalization
– Export
– Transnational
– Multidomestic
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Global Corporate Strategies
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Strategy Execution
• How will the strategy be implemented—put
into action?
• The organization must be congruent with
the strategy
• Execution involves several tools:
– Leadership
– Structural Design
– Human Resources
– Information and Control Systems
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chapter7
Tools for Putting Strategy
into Action
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