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Learning Objectives

Define the components of strategic

management.

Describe the strategic planning process and

SWOT analysis.

Understand grand strategies

Define corporate-level strategies

External environment vs Internal

environment
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Define Strategy

Determination of basic long term goals

Adoption of course of action to achieve this

goals

Allocation of resources
Chandler(1962)

The core of general management is strategy

which is elaborated as developing and
communicating the company's unique
position, making trade-offs, and forging fit
among activities- Porter 1996
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Strategic Management

Set of decisions and actions used to

implement strategies that will provide a
competitively superior fit between the
organization and its environment so as
to achieve organizational goals

Responsibility = top managers and

chief executive
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Strategic Management

Managers ask such questions as...

  What changes and trends are
occurring?
  Who are our customers?
  What products or services should
we offer?
  How can we offer these products or
services most efficiently?
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årand Strategy

åeneral plan of major action to achieve

long-term goals

Falls into three general categories

1. årowth
2. Stability
A separate grand
3. Retrenchment strategy can be
defined for global
operations
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årand Strategy: årowth

årowth can be promoted internally by

investing in expansion or externally by
acquiring additional business divisions
- Internal growth = can include development
of new or changed products
- External growth = typically involves
diversification ± businesses related to
current product lines or into new areas
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årand Strategy: Stability

Stability, sometimes called a pause

strategy, means that the organization
wants

o to remain the same size or

o to grow slowly and in a controlled fashion

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årand Strategy: Retrenchment

Retrenchment = the organization goes through a
period of forced decline by either shrinking current
business units or selling off or liquidating entire
businesses

Liquidation = selling off a business nit for the cash
value of the assets, thus terminating its existence

Divestiture = involves selling off of businesses that
no longer seem central to the corporation
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Purpose of Strategy

The plan of action that prescribes resource

allocation and other activities for dealing with
the environment, achieving a competitive
advantage, that help the organization attain
its goals

|
   
† Core competencies
† Developing synergy
† Creating value for customers
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Three Levels of Strategy in Organizations

Three Levels of Strategy in Organizations

Exhibit 8.2
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Strategic Management Process

Exhibit 8.3

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Checklist for Analyzing Organizational Strengths
and Weaknesses
Exhibit 8.4
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Portfolio Strategy

Mix of business
units and product !
(
Exhibit 8.5

lines that fit together

in a logical way to
provide synergy and
competitive
advantage
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Competitive Edge Through
Competitive Strategies

Differentiation ‰attempt to distinguish products or services

from that of competitors

Cost leadership = aggressively seeks efficient facilities,

pursues cost reductions, and uses tight cost controls to
produce products more efficiently than competitors

Focus = concentrates on a specific regional market or buyer

group
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Implementing Strategy Tools

Leadership

Structural design

Information and control systems

Human resources
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Organizational Environments

Exhibit 3.1