CHAPTER 6

Strategy Formulation: Situation

Analysis & Business Strategy

THOMAS L. WHEELEN

J. DAVID HUNGER

6-1

Situational Analysis

Strategy formulation -Strategic planning or long-range planning

Develops mission, objectives, strategies, policies

6-2

Situational Analysis

--process of finding a strategic fit

between external opportunities and

internal strengths while working around
external threats and internal
weaknesses

6-3

IFAS Maytag as Example

6-4

EFAS Maytag as Example

6-5

SFAS Matrix

6-6

Situational Analysis

Niche -Need in the marketplace that is currently

unsatisfied

6-7

Situational Analysis

Corporate Goal -Find propitious niche

Strategic window

6-8

Situational Analysis

SWOT -Internal
Strengths/Weaknesses

External
Opportunities/Threats

6-9

TOWS Matrix

6-10

Business Strategy

Focuses on improving competitive

position of companys products or
services within the specific industry or
market segment

6-11

Porters Competitive Strategies

Generic Competitive Strategies -Lower Cost strategy

Greater efficiencies than competitors

Differentiation strategy
Unique/superior value, quality, features, service

6-12

Porters Competitive Strategies

Competitive Advantage -Determined by Competitive Scope

Breadth of the target market

6-13

Porters Competitive Strategies

6-14

Porters Competitive Strategies

Cost Leadership -Low-cost competitive strategy

Broad mass market
Efficient-scale facilities
Cost reductions
Cost minimization
6-15

Porters Competitive Strategies

Differentiation
Broad mass market
Unique product/service
Premiums charged
Less price sensitivity

6-16

Porters Competitive Strategies

Cost Focus
Low-cost competitive strategy
Focus on market segment
Niche focused
Cost advantage in market segment

6-17

Porters Competitive Strategies

Differentiation Focus
Specific group or geographic market focus
Differentiation in target market
Special needs of narrow target market

6-18

Porters Competitive Strategies

Stuck in the middle

No competitive advantage
Below-average performance

6-19

Competitive Strategies

Best Cost Provider

A company has an ability to incorporate attractive
or upscale attributes at a lower cost than rivals.

6-20

Competitive Tactics

Timing Tactics -First mover

Late movers

6-21

Competitive Tactics

Market Location Tactics -Frontal Assault

Flanking Maneuver
Bypass Attack
Encirclement
Guerrilla Warfare
6-22

Competitive Tactics

Defensive Tactics -Raise structural barriers

Increase expected retaliation
Lower the inducement for attack

6-23

Cooperative Strategies

Collusion
Strategic Alliances
Mutual service consortia
Joint ventures
Licensing arrangements
Value-chain partnerships

6-24