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Sheela Rosalyn
DEFINING STRATEGY
SHEELA ROSALYN
Derived from the Greek word stratgos; stratus (meaning army) and ago (meaning leading/moving). Bundle of Decisions that affect firms performance. Refers to ideas , plans and support that firms employ to compete successfully against their rivals. Primarily to give you a competitive edge.
SHEELA ROSALYN
SHEELA ROSALYN
SHEELA ROSALYN
1. ENVIRONMENTAL SCANNING
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2. STRATEGY FORMULATION
Mission Statement
Setting Objectives & Goals A statement of purpose (strategic intent) committing the organization to ambitious overarching (stretch) objectives. Provides a sense of direction and purpose. Drives strategic decision making and resource allocations. Forces the seeking of significant performance improvements to attain objectives
Customer Orientation and Business Definition Abells Framework for Defining the business Consumer-oriented versus Product-oriented business definition
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2. STRATEGY FORMULATION
Selecting Strategy
Corporate strategy (Stability, Growth, Retrenchment) Business strategy (Competitive, Cooperative) Functional strategy (Technological Leadership, Technological Followership)
Defining Policies
Guidelines for decision making that links formulation to implementation
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3. STRATEGY IMPLEMENTATION
Programs Strategy Implementation
Budgets
Procedures
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SHEELA ROSALYN
Strategic Planning
is the managerial process of developing and maintaining a strategic fit between the organization's objectives and resources and its changing market opportunities.
Org Objectives Strategic Fit
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Resources
Changing Environment
LEVELS OF STRATEGY
Corporate Mission
long-term organizational effectiveness Driven by heritage & environment Mission statements are increasingly being developed at the SBU level as well
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Not quantified and not limited to a time period E.g. increasing the return on shareholders equity
A strategic business unit (SBU) is a part of an organisation for which there is a distinct external market for goods or services that is different from another SBU
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Sheela Rosalyn
Strategic Marketing
Focuses on what the firm do best at the SBU level To secure and maintain a sustainable
Sheela Rosalyn competitive advantage
Competitive advantage is a
Philip Kotler
companys ability to perform in one or more ways that competitors cannot or will not match.
Jack Welch,
Substantiality
Is it substantial enough to make a
Sustainability
Can it be neutralized by competitors
difference?
quickly?
Combines the assessment of business position with market attractiveness evaluation, which emerges from external analysis in general and market analysis, in particular. Includes multiple SBUs in the same analysis and addresses the SBU investment decision - which organizational units should receive resources, which should have resource withheld , and which should be resource generators. Offers baseline recommendations concerning the investment strategies for each SBU based on an assessment of business position and market attractiveness.
Sheela Rosalyn
Sheela Rosalyn
Levels of Planning at GE
CEO Corporate Office
GE Aircraft GE Fin. Ser. GE Lighting GE Motors GE Plastics
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Power of Buyer
Power of Supplier
Substitute Products
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 2000
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7-32
Business-level strategy a plan of action to take advantage of opportunities and minimize threats
Functional-level strategy a plan of action improving departments ability to create value
Irwin/McGraw-Hill
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Corporate-Level Strategies
Concentrate
Diversification:
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7-34
International Strategy
To
what extent do we customize products and marketing for different national conditions?
Global strategy: a single, standard product and marketing approach is used in all countries. Standardization provides for lower cost. Ignore national differences that others can address. Mulitdomestic strategy: products and marketing are customized for each country of operation. Customization provides for higher costs. Embraces national differences and depends on them for success.
Irwin/McGraw-Hill
7-35
Vertical Integration
When
the firm is doing well, managers can add more value by producing its own inputs or distributing its products.
Backward vertical integration: the firm produces its own inputs. McDonalds grows its own potatoes. Can lower the cost of supplies. Backward vertical integration: the firm distributes its outputs or products. McDonalds owns the final restaurant. Firm can lower costs and ensure final quality.
Irwin/McGraw-Hill
End of Module - I