Strategic Management and Entrepreneurship

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Strategic Management and Entrepreneurship

• Strategy
• A comprehensive plan of action that sets
  critical direction for an organization and guides
  the allocation of its resources.
• Strategic Management
• The process of formulating and implementing
  strategies.

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Five Strategic Management Tasks

• Identify organizational mission and objectives.
• What are we.what do we want to be
• Assess current performance vis-à-vis mission and
  objectives.
• How are we doing...
• Create strategic plans to accomplish purpose and
  objectives.
• How can we get where we want to be..

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Five Strategic Management Tasks

• Implement the strategic plans.
• Has everything been done that needs to be done.
• Evaluate results change strategic plans and/or
  implementation processes as necessary.
• Are things working out as planned, and what can
  be improved upon...

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The Strategic Management Process

• Strategy Formulation
• Analysis of the Mission (Purpose)
• Analysis of Values (Corp Culture)
• Analysis of the Organization (SW)
• Analysis of the Environment (OT)

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Analysis of the Mission

• Usually expressed in the form of a Mission
  Statement in which it identifies the
  organizations official objectives, and it
  defines the Domain in which the organization
  intends to operate such as

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Analysis of the Mission

• the Customer it intends to serve.
• the Products and/or Services to be provided.
• the Location in which it intends to operate.
• the Philosophy that will guide the employees.

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Analysis of the Mission

• Strategic Constituencies Analysis
• What is the organizations commitment to its
  stakeholders
• Employees, Stockholders, Suppliers, Creditors,
  Communities

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Analysis of Core Values

• Values
• The broad based beliefs about what is or is not
  appropriate.
• Corporate Culture
• The predominate value system for the
  organization.

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Analysis of Core Values

• Through corporate cultures, the values of
  managers and other individuals are shaped and
  pointed in common directions.
• It defines the character of an organization to
  both itself and its external stakeholders.

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Analysis of Objectives

• Operating Objectives
• Direct activities toward key and specific
  results.
• Shorter term targets against which actual
  performance results can be measured as indicators
  of progress and continuous improvement.

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Analysis of Objectives
Operating Objectives

• Profitability
• Market Standing
• Human Resources
• Quality

• Social Responsibility
• Cost Efficiency
• Financial Resources
• Innovation

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Analysis of the Organization(SWOT)
Internal Assessment of the Organization

• Strengths?
• Mfging Efficiency
• Skilled Workforce
• Good Market Share
• Strong Financing
• Superior Reputation

• Weaknesses?
• Outdated Facilities
• Inadequate RD
• Obsolete Tech
• Weak Management
• Past Planning Failures

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Analysis of the Organization(SWOT)
External Assessment of the Environment

• Opportunities?
• New Markets
• Strong Economy
• Weak Rivals
• Emerging Tech.
• Growth of Market

• Threats?
• New Competition
• Shortage of Resources
• Changing Mkt Taste
• New Regulations
• Substitute Products

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Levels Of Strategy

• Corporate
• Sets the overall strategic direction.
• Business
• Sets the strategic direction for a single
  division or strategic business unit (SBU).
• Functional
• Sets functional directions for supporting
  business and corporate strategies. A strategy
  that guides activities within specific functional
  areas.

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Types of Strategies

• Growth Strategy
• Seeking greater size and the expansion of current
  operations.
• This objective can be pursued in a number of
  different ways through two basic strategies
• Concentration and Diversification

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Types of Strategies

• Retrenchment
• Sometimes called defensive strategies, involves
  decisions to reduce operations and cut back in
  order to gain efficiencies and improve
  performance.
• There are three basic approaches
• Turnaround - Divestiture Liquidation

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Types of Strategies

• Stability
• Maintains the present course of action without
  commitment to any major operating changes.
• Typically pursued when an organization is doing
  well in a receptive environment, when low risk is
  important .. and/or when time is needed to
  consolidate strengths .

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Types of Strategies

• Combination Strategies
• Simultaneously employs more than one of the other
  strategies.
• This often reflects different strategic
  approaches among subsystems.

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Strategy Formulation Models

• Portfolio Planning
• Seeks the best mix of investments among
  alternative business opportunities.
• It is most useful for addressing corporate-level
  strategy in multibusiness or multiproduct
  situations.

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Strategy Formulation Models

• The BCG Matrix
• A Portfolio planning approach offered by the
  Boston Consulting Group.
• It ties strategy formulation to an analysis of
  business opportunities according to Market Growth
  Rate and Market Share.

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Strategy Formulation Models

• The BCG Matrix
• It ties strategy formulation to four possible
  business states
• Stars - High share/high growth
• Cash Cows - High share/low growth
• Question Marks - Low share/high growth
• Dogs - Low share/low growth

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Strategy Formulation Models

• Porter's Competitive Strategies
• This approach begins with an analysis of an
  organization's competitive environment.
• He identifies five strategic forces affecting
  industry competition
• Customers - Suppliers - New Entrants
• Substitute Products - Industry Competitors

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Strategy Formulation Models

• Porter's Competitive Strategies
• Next Porter identifies three generic strategies
  that organizations may pursue to gain strategic
  advantage
• Product Differentiation
• Cost Leadership
• Focus

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Strategy Formulation Models

• The Adaptive Model
• Organizations should pursue product/market
  strategies that are congruent with the nature of
  their external environments.
• Prospector Strategies - Taking risk, seeking
  opportunities, innovation, and growth.
• Defender Strategy - Avoiding change, seeking
  stability and perhaps retrenchment.

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Strategy Formulation Models

• Analyzer Strategy - Maintaining stability,
  while exploring limited innovation.
• Reactor Strategy - Responding to events, but
  without a guiding strategy.

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Strategy Formulation Models

• Product Life Cycles
• A series of stages a product or service goes
  through in the life of it marketability.
• Introduction
• Growth
• Maturity
• Decline
• Suggests that different business strategies
  should be used to support products in different
  stages of their life.

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Strategy Implementation

• The Incremental-Emergent View
• Not all strategies are clearly formulated
  at one point in time and then implemented
  step-by-step.
• They take shape, change, and develop over
  time as modest adjustments to past patterns.
• It is called Logical Incrementalism in
  which incremental changes in strategy occur as
  managers learn from experience.

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Strategy Implementation

• Strategic Planning Pitfalls
• Failures of Substance
• Reflects a lack of attention to the major
  strategic
• planning elements.
• Failure of Process
• Reflects poor handling of the ways in which
  the
• various aspects of strategic planning were
• accomplished.
• Insufficient Participation Error
• Goal Displacement

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The Nature of Entrepreneurship

• A term used to describe risk-taking behavior that
  results in the creation of new opportunities for
  individuals and/or organizations.

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Typical Characteristics of Entrepreneurs

• Internal Locus of Control
• High Need for Achievement
• Tolerance for Ambiguity
• Self-Confidence
• Action-Oriented

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Entrepreneurs

• Businesses depend on entrepreneurial managers
  willing to assume risk and encourage the
  creativity and innovation so important to
  continued success.
• Intrapreneurship
• Skunk works