Strategic Management

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Strategic Management
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Strategic Management

• The larger vision that guides the activities of
  managers and other employees in an organization
• The set of decisions and actions used to
  formulate and implement strategies that will
  provide a competitively superior fit between the
  organization and its environment so as to achieve
  organizational goals
• The process of establishing and sustaining
  competitive advantage

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Competitive Advantage

• What is it?
• An edge over your rivals
• Traditional sources
• Product and process technology
• Protected and regulated markets
• Access to financial resources
• Economies of scale
• New source
• People !!!

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Levels of Strategy

• Grand strategy
• Where are we going?
• Corporate
• What business are we in?
• Business-level
• How do we compete?

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The Strategic Management Process
Implement strategies
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SWOT Analysis
Strength
Opportunity
Where are we going?
Weakness
Threat
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Grand Strategies

• Growth
• Stability
• Retrenchment

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WalMartGrowth (Number of Stores)
6,141
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Paths to Growth WalMart

• Direction of growth
• New stores in existing markets
• Enter new markets
• New product lines
• Means of growth
• Greenfield
• Acquisition

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WalMartInternational Expansion and Acquisitions
Bailed out Not profitable
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General Electric Overall Stability
Earnings Before Taxes (M)
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Kmart -- Decline
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Global Strategy Four Choices
Note that text combines global and home
replication strategies
Transnational Strategy
Global Strategy
High Cost and efficiency pressures
Low
Multi domestic Strategy
Home Replication Strategy
Low
High
Pressures for local responsiveness
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Corporate Level Strategy

• Strategic business units
• Diversification
• Single business
• Diversified
• Vertical Integration
• Conglomerate
• BCG Matrix

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Dell Products

• PowerEdge servers
• PowerVault and Dell EMC storage products
• Services
•  PowerConnect switches
• OptiPlex desktops
• Latitude notebooks

• Dell Precision workstations
• Inspiron notebooks
• Dimension desktops
• Dell monitors
• Dell printers
• Axim handhelds
• Software and Peripherals

Single Product
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ThyssenKrupp
Diversified
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• Alcoa at a Glance
• Alcoa is the worlds leading producer of primary
  aluminum, fabricated aluminum, and alumina and is
  active in all major aspects of the industry.
• Alcoa serves the aerospace, automotive,
  packaging, building and construction, commercial
  transportation, and industrial markets, bringing
  design, engineering, production, and other
  capabilities of Alcoas businesses as a single
  solution to customers.
• In addition to aluminum products and components,
  Alcoa also markets consumer brands including
  Reynolds Wrap aluminum foil, Alcoa wheels, and
  Baco household wraps. Among its other businesses
  are vinyl siding, closures, precision castings,
  and electrical distribution systems for cars and
  trucks.

Vertical Integration
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Sara Lee
Conglomerate
Headquarters
Household Products
Food and Beverage
Intimates and Underwear
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Another Conglomerate
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BCG Matrix
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What Business Are We In?

• What are our core competencies?
• Who are our customers?
• Economies of scale
• Economies of scope

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Business-Level Strategy

• Porters Five Forces
• Generic strategies
• Value chain

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Porters Five Forces

• Bargaining power of suppliers
• Bargaining power of buyers
• Threat of substitutes
• Potential new entrants to the market
• Rivalry among current competitors

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Porters Five Generic Strategies

• Low-cost leadership
• Broad differentiation
• Best-cost provider
• Focused or market niche / cost
• Focused or market niche / differentiation

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Value Chain Analysis

• How are we creating value for customers?
• Where can costs be reduced?

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The Value Chain
Raw Materials
Operations
Distribution
Sales and Marketing
Customer Service
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Strategy Implementation

• Leadership
• Structure and design
• Information and control systems
• Human resources