Strategic Management and

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Chapter 9

• Strategic Management and
• Strategic Competitiveness

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Foundations of strategic competitiveness

• Basic concepts of strategy
• Competitive advantageoperating in a successful
  way that is difficult for competitors to imitate.
• Sustainable competitive advantageconsistently
  dealing with market and environmental forces
  better than competitors.

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Definitions

• Strategya comprehensive action plan providing
  long-term direction and guiding resource
  utilization to accomplish organizational goals
  with sustainable competitive advantage.
• Strategic intentfocusing all organizational
  energies on a unifying and compelling goal.

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Basic concepts of strategy

• Strategic managementthe process of formulating
  and implementing strategies to accomplish
  long-term goals and sustain competitive advantage.

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Strategic management goals

• Formulate and implement strategies that yield
  long-term, sustainable competitive advantage.
• Create above-average returns for investors.
• Earning above-average returns depends in part on
  the organizations environment.

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What is the strategic management process?

• Strategy formulation
• The process of creating strategy.
• Involves assessing existing strategies,
  organization, and environment to develop new
  strategies and strategic plans capable of
  delivering future competitive advantage.

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The strategy formulation process (Drucker)

• Ask these questions
• What is our business mission?
• Who are our customers?
• What do our customers consider value?
• What have been our results?
• What is our plan?

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Analysis of mission

• The reason for an organizations existence.
• Good mission statements identify
• Customers
• Products and/or services
• Location
• Underlying philosophy
• An important test of the mission is how well it
  serves the organizations stakeholders

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Here is a sample mission statement from Vanguard

• To provide a broad range of superior-performing
  mutual funds and related financial services that
  meets the needs of individual and institutional
  investors, with unmatchable excellence and at the
  lowest reasonable cost, through the efforts,
  experiences, talents, and dedication of a diverse
  crew.

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Analysis of core values

• Values are broad beliefs about what is or is not
  appropriate.
• Organizational culture reflects the dominant
  value system of the organization as a whole.

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Analysis of objectives

• Typical operating objectives
• Profitability
• Market share
• Human talent
• Financial health
• Cost efficiency
• Product quality
• Innovation
• Social responsibility

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Analysis of organizational resources and
capabilities

• Assessing organizational Strengths and Weaknesses
  within SWOT analysis
• Identifying core competencies
• Technology
• Human resources
• Manufacturing approaches
• Management talent
• Financial strength

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Analysis of industry and environment

• Assessing Opportunities and Threats within SWOT
  analysis
• Michael Porters 5 competitive forces
• Competitive rivalry
• Threat of new entrants
• Power of suppliers
• Power of buyers
• Substitute products

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Levels of strategy

• Corporate strategydirects the organization
  toward sustainable competitive advantage.
• Business strategysets direction for a single
  business unit or product line.
• Functional strategyguides the use of resources,
  focusing on activities within a specific area of
  operations.

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What types of strategies are used by
organizations?

• Growth and diversification strategies
• Growth strategiesseek an increase in size and
  the expansion of current operations.
• Concentration strategiesgrowth occurs through
  expansion in the same business area.
• Diversification strategiesgrowth occurs through
  acquisition of or investment in new and/or
  different business areas.

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Types of strategies

• Restructuring and divestiture strategies
• Liquidation
• Restructuring
• Divestiture
• Cooperative strategies strategic alliances
• two or more organizations partner to pursue an
  area of mutual interest.
• E-business strategies

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Porters model

• Generic strategies for gaining competitive
  advantage
• Differentiation strategy
• Cost leadership strategy
• Focused differentiation strategy
• Focused cost leadership strategy

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Product life cyclestrategy

• Introduction and growth stages
• Use differentiation and prospector strategies
• Maturity stage
• Use focus and/or cost leadership strategies
• Decline stage
• Use defender or analyzer strategies

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How are strategies formulated?

• Corporate-level strategy formulation
• Key issue is the selection and refinement of the
  organizations mix of businesses.
• Approaches to formulating business-level
  strategies
• Portfolio planning
• Adaptive strategies

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How are strategies formulated?

• Types of adaptive strategies
• Prospector strategy
• Appropriate in dynamic, high-potential
  environments
• Defender strategy
• Appropriate in stable or declining environments
• Analyzer strategy
• Following leading competitors in high-potential
  environments
• Reactor strategy
• Following competitors as a last resort regardless
  of environment

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How are strategies formulated?

• Incrementalism
• Modest and incremental changes in strategy occur
  as managers learn from experience.
• Emergent strategies
• Develop progressively over time in the streams of
  decisions that managers make.

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What are current issues in strategy
implementation?

• Strategic leadership
• Strategic management is a leadership
  responsibility.
• The capability to get people to successfully
  engage in the continuous change, refinement, and
  implementation of strategies.

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What are current issues in strategy
implementation?

• Critical tasks of strategic leadership
• Be a guardian of trade-offs.
• Create a sense of urgency.
• Ensure that everyone understands the strategy.
• Be a teacher.
• Be a great communicator.

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Questions?

• For next class, please read chapter 10