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PowerPoint Slides
Anthony F. Chelte
Western New England College
Strategy formulation:
– Strategic planning or long-range
planning
• Develops mission, objectives, strategies
and policies
Situational Analysis:
– Process of finding a strategic fit
between external opportunities and
internal strengths while working around
external threats and internal
weaknesses.
INTERMEDIATE
(Select the most important
opportunities/threats from EFAS, Table 3.4
Weighted
SHORT
and the most important strengths and
LONG
weaknesses from IFAS, Table 4.2) Weight Rating Score Comments
Total Score
INTERMEDIATE
(Select the most important
opportunities/threats from EFAS, Table 3.4
Weighted
SHORT
and the most important strengths and
LONG
weaknesses from IFAS, Table 4.2) Weight Rating Score Comments
S1 Quality Maytag culture (S) .10 5 .50 X Quality key to success
S3 Hoover’s international orientation (S) .10 3 .30 X Name recognition
W3 Financial position (W) .10 2 .20 X High debt
W4 Global positioning (W) .15 2 .30 Only in N.A., U.K., and Australia
O1 Economic integration of
European Community (O) .10 4 .40 X Acquisition of Hoover
O2 Demographics favor quality (O) .10 5 .50 X X Maytag quality
O5 Trend to super stores (O + T) .10 2 .20 X Weak in this channel
T3 Whirlpool and Electrolux (T) .15 3 .45 X Dominate industry
T5 Japanese appliance companies (T) .10 2 .20 X Asian presence
1.00 3.05
Total Score
SWOT analysis:
– Internal
• Strengths
• Weaknesses
– External
• Opportunities
• Threats
Resource:
Business Strategy:
Focuses on improving the competitive
position of a company’s or business
unit’s products or services within the
specific industry or market segment
that the firm serves.
Competitive Strategy:
– Low cost?
– Differentiation?
– Compete head to head in large
market?
– Focus on niche?
Competitive Advantage:
– Determined by Competitive Scope
• Breadth of the company’s target market
Cost Leadership:
– Low-cost competitive strategy
– Aimed at broad mass market
– Aggressive construction of efficient-
scale facilities
– Cost reductions
– Cost minimization
Differentiation:
– Broad mass market
– Unique product or service
– Charge premiums
– Lower customer sensitivity to price
Cost focus:
– Low cost competitive strategy
– Focus on particular buyer group or
market
– Niche focused
– Seek cost advantage in target market
Differentiation focus:
– Focus on particular group or
geographic market
– Seek differentiation in targeted market
segment
– Serve special needs of narrow target
market
Industry Structure:
– Fragmented Industry
• Many small and medium-sized local
companies compete for small shares of total
market
– Focus strategies predominate
Industry Structure:
– Consolidated industry
• Mature industry dominated by a few large
companies
– Cost Leadership or Differentiation predominate
Dimensions • Performance
• Features
• Reliability
Quality • Conformance
• Durability
• Serviceability
• Aesthetics
• Perceived Quality
Strategic rollup:
– Differ from Conventional M&A’s
• Large number of firms
• Owner-operated firms
• Goal to reinvent entire industry
Tactic:
– Specific operating plan detailing how a
strategy is to be implemented in terms
of when and where it is to be put into
action.
• Timing tactics
• Market location tactics
Cooperative Strategies:
– Collusion
• Active cooperation of firms to reduce
output and raise prices
– Explicit
– Tacit
Cooperative Strategies:
– Strategic Alliance:
– Partnership of two or more corporations or
business units to achieve strategically
significant objectives that are mutually
beneficial.
Access to markets
Strategic
Alliance Reduce financial risk
Achieve competitive
advantage
Source: Suggested by R. M. Kanter, “Collaborative Advantage: The Art of Alliances,” Harvard Business Review
(July-August 1994), pp. 96–108.