CHAPTER 8

Strategy Formulation and

Execution
 THINKING STRATEGICALLY

Strategic thinking means to take the long-term view and to

see the big picture, including the organization and the
competitive environment, and consider how they fit
together. Strategic thinking is important for both
businesses and nonprofit organizations.
 WHAT IS STRATEGIC MANAGEMENT?
1. Purpose Of Strategy

Target
Customers

Exploit Competitive Achieve

Core Advantage Synergy
Competence

Create Value
2. Levels Of Strategy
THE STRATEGIC MANAGEMENT PROCESS
1. Strategy Formulation Versus Execution
Strategy formulation is the stage of strategic management that
includes the planning and decision making that lead to the
establishment of the organizations goals and a spesific strategic
plan.
Strategy execution is the stage of strategic management that
involves the use of managerial and organizational tools to direct
recources toward achieving strategic outcomes.
2. SWOT Analysis
SWOT analysis (in which “SWOT” stands for “strengths, weaknesses,
opportunities, and threats”) includes a careful assessment of the
strenghts, weaknesses, opportunities, and threats that effect
organizational performance.
- Internal Strengths and Weaknesses
- External Opportunities and Threats
 FORMULATING CORPORATE-LEVEL
STRATEGY

1. Portfolio Strategy
Portfolio strategy pertains to the mix of business units and product
lines that fit together in a logical way to provide synergy and
competitive advantage for the corporation.
A strategic business unit (SBU) is a division of the organization that
has a unique business, mission, product or service line, competitors,
and markets relative to other units of the same organization.
2. The BCG Matrix
The BCG matrix is a concept developed by the Boston Consulting Group that
evaluates SBUs with respect to two dimensions-business growth rate and
market share-and classifies them as cash cows, stars, question marks, or dogs.
3. Diversification Strategy
The strategy of moving into new lines of business is called diversification.
Related diversification means moving into a nes business that is related to the
corporations exusting business activities.
Unralated diversification refers to expanding into totally new lines of business.
 FORMULATING BUSINESS-LEVEL
STRATEGY
1. Porters Five Competitive Forces
2. Porters Competitive Strategies
1 Differentiation
• Acts in a flexible, loosely knit way;
strong coordination among
departments
•
Strong capability in basic research
• Creative flair, thinks “out of the box”
• Strong marketing abilities
• Rewards employee innovation
• Corporate reputation for quality or
technological leadership
2 Cost Leadership
• Strong central authority; tight
cost controls
• Maintains standard operating
procedurs
• Easy-to-use manufacturing
technologies
• Highly efficient procurement
and distribution systems