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Strategic Management
Set of decisions and actions used to implement strategies Questions to ask: What changes and trends are occurring Who are our customers What products or services should we offer How can we offer these products or services most efficiently
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Thinking Strategically
Answers to the following define an overall direction for the organization's grand strategy Where is the organization now? Where does the organization want to be? What changes are among competitors? What courses of action will help us achieve our goals?

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Grand Strategy
General plan of major action to achieve longterm goals. Fall in to three general categories: 1. Growth 2. Stability 3. Retrenchment

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Global Corporate Strategies

High Need for Global Integration
Globalization Strategy
Treats world as a single global market Standardizes global products/advertising strategies

Transnational Strategy
Seeks to balance global efficiencies and local responsiveness Combines standardization and customization for product/advertising strategies

Multi-domestic Strategy Handles markets independently for each country Adapts product/advertising to local tastes and needs

Low

Low

Need for National Responsiveness

High

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Global Strategy
Globalization: product design and advertising strategies are standardized around the world Multi-domestic: adapt product and promotion for each country Transnational: combine global coordination with flexibility to meet specific needs in various countries

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Purpose of Strategy
The plan of action that prescribes resource allocation and other activities that help the organization attain its goals Strategies focus on: Core competencies Develop synergy Create value for customers
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Three Levels of Strategy in Organizations

Corporate-Level Strategy: What business are we in?
Corporation

Business-Level Strategy: How do we compete?

Textiles Unit

Chemicals Unit

Auto Parts Unit

Functional-Level Strategy: How do we support the business-level strategy?

Finance
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R&D

Manufacturing

Marketing

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Checklist for Analyzing Organizational Strengths and Weaknesses

Management and Organization Management quality Degree of centralization Organization charts Planning, information, control systems Marketing Distribution channels Market share Advertising efficiency Customer satisfaction Product quality Service reputation Sales force turnover Production Plant location Machinery obsolescence Purchasing system Quality control Productivity/efficiency Human Resources Employee experience, education Union status Turnover, absenteeism Work satisfaction Grievances Research and Development Basic applied research Laboratory capabilities Research programs New-product innovations Technology innovations

Finance
Profit margin Debt-equity ratio Inventory ratio Return on investment Credit rating
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Sources: Based on Howard H. Stevenson, Defining Corporate Strengths and Weaknesses, Sloan Management Review 17 (spring 1976), 51 -68; and M.L.Kastens, Long-Range Planning for Your Business (New York: American Management Association, 1976).
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Portfolio Strategy
BGG Matrix

Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage

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The Five Forces Affecting Industry Competition

Internet reduces barriers to entry Threats of new entrants Internet blurs differences among competitors in an industry

Internet expands market size, but creates new substitution threats Threat of substitute products

Internet shifts greater power to end consumers Bargaining power of buyers

Bargaining power of suppliers Internet tends to increase the bargaining power of suppliers
Source: Based on Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980). Developed by Cool Pictures & MultiMedia Presentations Copyright 2003 by South-Western, a division of Thomson Learning. All rights reserved.

Competitive Edge Through

Competitive Strategies
Differentiationinvolves an attempt to distinguish a firms products or services. Cost leadershipaggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls in an attempt to be more efficient than competitors. Focusconcentrates on a specific regional market or buyer.

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Continuum of Partnership Strategies

Organizational Combination
Acquisitions

Mergers

Strategic Alliances

Joint Ventures

Strategic Business Partnering

Preferred Supplier Arrangements Low

Degree of Collaboration
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High

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Implementing Strategy Tools

Leadership Structural design Information and control systems Human resources

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Tools for Putting Strategy into Action

Environment Organization
Leadership Persuasion Motivation Culture/values Structural Design Organization Chart Teams Centralization/decentralization Facilities, task design

Strategy

Performance Human Resources Recruitment/selection Transfers/promotions/training Layoffs/recalls

Information and Control Systems Pay, reward system Budget allocations Information systems Rules/procedures
Source: Adapted from Jay R. Galbraith and Robert K. Kazanjian, strategy Implementation: Structure, Systems and Process, 2d ed. (St. Paul, Minn.: West, 1986), 115, Used with permission. Developed by Cool Pictures & MultiMedia Presentations Copyright 2003 by South-Western, a division of Thomson Learning. All rights reserved.