Weihrich and Koontz

8th Edition

2010

An International Perspective

Chapter Objectives
After studying this chapter, you should be able to:
1. Explain the nature and purpose of strategies and policies 2. Describe the strategic planning process 3. Understand the TOWS Matrix and the business portfolio matrix 4. Describe some major kinds of strategies & policies, and the hierarchy of strategies

5. Identify Porter's generic strategies

6. Discuss the nature of premises and forecasts

Definition of Strategy and Policies

Strategy is the determination of the mission (or the fundamental purpose) and the basic long-term objectives of an enterprise, and the adoption of courses of action and allocation of resources necessary to achieve these aims. Policies are general statements or understandings that guide managers' thinking in decision making.

The Strategic Planning Process

THE STRATEGIC PLANNING PROCESS

1. 2. 3. 4. 5. Inputs to the organization Industry Analysis Enterprise Profile Orientation, Values, and Vision Mission (Purpose), Major Objectives, and Strategic Intent 6. Present and Future External Environment 7. Internal Environment

THE STRATEGIC PLANNING PROCESS

8. Development of Alternative Strategies 9. Evaluation and Choice of Strategies 10.Medium- and Short-Range Planning, Implementation through Reengineering the Organization Structure, Leadership, and Control 11.Consistency Testing and Contingency Planning

TOWS MATRIX
The TOWS Matrix is a conceptual framework for a systematic analysis that facilitates matching the external threats and opportunities with the internal weaknesses and strengths of the organization.

TOWS Matrix

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TOWS Matrix: 4 Alternative Strategies

WT strategy: WO strategy: ST strategy: SO strategy: Mini Mini Mini Maxi Maxi Mini Maxi Maxi

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Time Dimension and the Tows Matrix

Because of the dynamics in the environment, the strategy designer must prepare several TOWS Matrices at different points in time Thus one may start with a TOWS analysis of the past, continue with an analysis of the present, and perhaps most important, focus on different time periods

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BLUE OCEAN STRATEGY

This strategy focuses on the uncontested market by offering a product or service that is unique in a market space where there is no competitor thus making competition irrelevant.

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BUSINESS PORTFOLIO MATRIX

It shows the linkages between the growth rate of the business and the relative competitive position of the firm, identified by the market share.

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Business Portfolio Matrix

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Business Portfolio Matrix

Two dimensions
Relative competitive position (market share) Business growth rate Question marks Stars Cash cows Dogs

Four positions

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MAJOR KINDS OF STRATEGIES AND POLICIES

Products or Services
What are some of the key questions to ask?

Marketing
What are some of the key questions to ask?

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HIERARCHY OF COMPANY STRATEGIES

The corporate-level strategyExecutives craft the overall strategy for a diversified company Business strategies- developed usually by the general manager of a business unit

Functional strategies- The aim is to support the business and corporate strategies

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PORTERS INDUSTRY ANALYSIS AND GENERIC COMPETITIVE STRATEGIES

Industry Analysis Overall Cost Leadership Strategy Differentiation Strategy Focused Strategy (low cost or differentiation) The Fifth Generic Strategy: Best Value or Best Cost Producer

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PREMISING AND FORECASTING

Planning premises are the anticipated environments in which plans are expected to operate Environmental Forecasting
Values and areas of forecasting Forecasting with the Delphi technique

What are the typical steps of the technique?