CHAPTER 8 Strategy

Formulation: Functional
Strategy & Strategic
Choice
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN

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J. DAVID HUNGER

8-1

Functional Strategy

The approach a functional area takes to

achieve corporate and business unit
objectives and strategies by maximizing
resource productivity

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8-2

Functional Strategy

Marketing Strategy
Pricing
Selling
Distribution

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8-3

Functional Strategy

Marketing Strategy
Product development
Line extension

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8-4

Functional Strategy

Marketing Strategy
Advertising and promotion
Push strategy
Pull strategy

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8-5

Functional Strategy

Marketing Strategy
Pricing
Skim pricing
Penetration pricing
Dynamic pricing

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8-6

Functional Strategy

Financial Strategy
Leveraged buyout
Reversed stock split
Tracking stock

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8-7

Functional Strategy

R&D Strategy
Technological leader
Technological follower
Open innovation

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8-8

Functional Strategy

Operations Strategy
Job shop
Connected line batch flow
Flexible manufacturing systems
Dedicated transfer lines
Mass production
Continuous improvement system
Modular manufacturing

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8-9

Functional Strategy

Purchasing Strategy
Multiple sourcing
Sole sourcing
Just-in-time (JIT)
Parallel sourcing

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8-10

Functional Strategy

Logistics Strategy
Centralization
Outsourcing
Internet

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8-11

Functional Strategy

HRM Strategy
360 degree appraisal

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8-12

Functional Strategy

Outsourcing errors
Activities that should not be outsourced
Wrong vendor selection
Writing poor contract
Overlooking personnel issues
Hidden costs of outsourcing
Failing to plan exit strategy

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8-13

Proposed Outsourcing Matrix

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8-14

Functional Strategy

Strategies to Avoid
3 Follow the leader
Hit another home run
Arms race
Do everything
Losing hand

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8-15

Corporate Strategy

Growth Strategies -External mechanisms

Mergers
Acquisitions
Strategic alliances

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8-16

Constructing Corporate Scenarios

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8-17

Functional Strategy

Subjective Factors Affecting Decisions -Managements attitude toward risk

Pressures from stakeholders
Pressures from corporate culture
Needs and desires of key managers

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8-18

Stakeholder Priority Matrix

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8-19

Strategic Choice

Avoiding the Consensus Trap -Devils Advocate

Dialectical Inquiry

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8-20

Strategic Choice

Evaluation of Strategic Alternatives -Mutual exclusivity

Success
Completeness
Internal consistency

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