Académique Documents
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Strategic Management
Process
Environmental
Scanning
Strategy
Formulation
Strategy
Implementation
Evaluation
&Control
Environmental Analysis
Analyse EXTERNAL Environment Conditions
SOCIETAL ENVIRONMENT
TASK ENVIRONMENT
T
Analyse INTERNAL Company Situation
S
Competencies,
Capabilities,
Resource strengths and weaknesses,
Competitiveness
Identify
Strategic
Options
for the
Company
Select the
Best
Strategy
for the
Company
Environmental Variables
Suppliers
Rival
Firms
Substitutes
COMPANY
Buyers
New
Entrants
IMMEDIATE INDUSTRY
AND COMPETITIVE
ENVIRONMENT
Suppliers
Rival
Firms
Substitutes
COMPANY
Buyers
New
Entrants
IMMEDIATE INDUSTRY
AND COMPETITIVE
ENVIRONMENT
Suppliers
Strat.
Group
1
Strat.
Group
2
Substitutes
Strat.
Group
3
New
Entrants
IMMEDIATE INDUSTRY
AND COMPETITIVE
ENVIRONMENT
Buyers
Strategic Groups
Firms in same strategic group have two or more competitive
characteristics in common
(eg. Nokia, Motorola, Ericsson) (Econet, Telecel, Net*One)
Within
PEST Analysis
A scan of the external macro (societal) environment in which
the firm operates reveals the business opportunities lying
ahead and the threats the organization will have to face in
future.
Developments or trends in a corporation's societal
environment typically do not affect the corporation directly
but indirectly through their impact on one or more
stakeholder groups in the corporation's task environment.
This can be expressed in terms of the following factors:
Political/Legal
Economic
Social
Technological
The acronym PEST (sometimes also labeled as SLEPT") is
used to describe a framework for the analysis of these
macro-environmental factors.
Economic factors
tax policy
economic growth
employment laws
interest rates
environmental regulations
exchange rates
inflation rate
political stability
Social factors
PEST
FACTORS
Technological
factors
R&D activity
automation
technology incentives
rate of technological change
Forecasting Techniques
- Trend Extrapolation Vs Scenario Writing
Forecasting Techniques
- Trend Extrapolation Vs Scenario Writing
SUPPLIER POWER
THREAT OF
NEW ENTRANTS
(BARRIERS
TO ENTRY)
Absolute cost
advantages
Proprietary learning
curve
Access to inputs
Government policy
Economies of scale
Capital requirements
Brand identity
Switching costs
Access to
distribution
Expected retaliation
Proprietary products
Supplier concentration
Importance of volume to supplier
Differentiation of inputs
Impact of inputs on cost or differentiation
Switching costs of firms in the industry
Presence of substitute inputs
Threat of forward integration
Cost relative to total purchases in industry
DEGREE OF RIVALRY
-Exit barriers
-Industry concentration
-Fixed costs/Value added
-Industry growth
-Intermittent overcapacity
BUYER POWER
Bargaining leverage
Buyer volume
Buyer information
Brand identity
Price sensitivity
Threat of backward integration
Product differentiation
THREAT OF
SUBSTITUTES
-Switching
costs
-Buyer
inclination
to substitute
-Priceperformance
trade-off of
substitutes
Environmental Scanning
T
Vision
Mission
Goals
Objectives
STRATEGIES
Corporate
Business
Functional
Policies
Programs
Budgets
Procedures
Evaluation
Internal
Environment
Capabilities
Refer to companys skills at coordinating and exploiting its
COMPETENCIES:
Competencies are firm specific strengths that allow a company to
Types of competency
i) Core competency:
It is an activity central to a firm's profitability and competitiveness that
competitors.
These provide the basis for competitive advantage.
to copy.
Distinctive competence is a unique strength that allows a company to
The goal of these activities is to create value that exceeds the cost of
providing the product or service, thus generating a profit margin
Inbound logistics include the receiving, warehousing, and
inventory control of input materials.
Support Activities
The primary value chain activities described above are facilitated by
support
activities. Porter identified four generic categories of support
activities, the details of which are industry-specific.
Procurement - the function of purchasing the raw materials and
other inputs
used in the value-creating activities.
Technology Development - includes research and development,
process
automation, and other technology development used to support the
value-chain activities.
Human Resource Management - the activities associated with
recruiting,
development, and compensation of employees.
Firm Infrastructure - includes activities such as finance, legal,
quality
management, etc.
Support activities often are viewed as "overhead", but some firms
successfully have used them to develop a competitive advantage,
Organizational Structure
The specific ways in which the value-chain is organized and
managed result in a specific organizational structure. The
basic organizational structures are simple, functional,
divisional, SBU, and conglomerate
Organizational Structures
5-41
Organizational Culture
Corporate culture is the collection of beliefs, expectations, and
values learned and shared by a corporation's members and
transmitted from one generation of employees to another
Corporate culture, a collection of beliefs, expectations, and
values shared by a corporation's members, acts to shape the
behavior of people in a corporation. Since corporate culture has a
powerful influence on the behavior of managers as well as other
employees, it may strongly affect a corporation's ability to shift its
strategic direction.
Acting in a manner similar to structure, to the extent that a
corporation's culture is compatible with present and potential
strategies, it can be viewed as an internal corporate strength. To
the extent that it is not compatible, it may spell disaster for a
strategic change in the implementation stage. A strategy which
contradicts an entrenched culture may find itself being quietly (or
not so quietly) sabotaged by the corporation's most loyal and
competent employees.