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Chapter 8
Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.
Strategic Planning
l Strategic
importance in todays world of globalization, deregulation, advancing technology, and changing demographics, and lifestyles
Managers Challenge: Nintendo
Topics: Chapter 8
Management
l Managerial
Plans
Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.
3
Thinking Strategically
Answers to the following define an overall direction for the organization's grand strategy F Where is the organization now? F Where does the organization want to be? F What changes are among competitors? F What courses of action will help us achieve our goals?
l
Strategic Management
l 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 = top managers & chief executive
l l Responsibility
Strategic Management
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?
Grand Strategy
General plan of major action to achieve long-term goals l Falls into three general categories 1. Growth A separate grand strategy can be 2. Stability defined for global 3. Retrenchment operations
l
Ethical Dilemma: A Great Deal for Whom?
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
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
l l l
Globalization Strategy
Seeks to balance global efficiencies and local responsiveness Combines standardization and customization for product/advertising strategies
Transnational Strategy
Export Strategy
Domestically focused Exports a few domestically produced products to selected countries
Multi-domestic Strategy Handles markets independently for each country Adapts product/advertising to local tastes and needs
Low
High
Global Strategy
l Globalization
= product design and advertising strategies are standardized around the world l Multi-domestic = adapt product and promotion for each country l Transnational = combine global coordination with flexibility to meet specific needs in various countries
Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.
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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 Strategies focus on: Core competencies Developing synergy Creating value for customers
l
Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.
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Corporation
SWOT
Implement Strategy via Changes in: Leadership culture, Structure, HR, Information & control systems
Strategy Formulation = stage of strategic management that involves planning and decision making that lead to the establishment of the organizations goals and of a specific strategic plan Strategy Implementation = stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes
Experiential Exercise: Developing Strategy for a Small Business
Sources: Based on Howard H. Stevenson, Defining Corporate Strengths and Weaknesses, Sloan Management Review 17 (spring 1976), 51-68; and M.L.Kastens, Long-Range Planning for Your Business (New York: American Management Association, 1976). Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.
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Portfolio Strategy
BCG Matrix
l Mix
of business units and product lines that fit together in a logical way to provide synergy and competitive advantage
Source: Based on Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980). Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.
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= attempt to distinguish products or services from that of competitors l Cost leadership= aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors l Focus = concentrates on a specific regional market or buyer group
Degree of Collaboration
Strategic Alliances
Joint Ventures
Degree of Collaboration
High
Environment Organization
Strategy
Leadership Persuasion Motivation Culture/values Structural Design Human Resources Organization Chart Teams Recruitment/selection Centralization Transfers/promotions nDecentralization, Training nFacilities, task design Layoffs/recalls Information and Control Systems
Performance
Source: Used with permission. Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.
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Pay, reward system Budget allocations Information systems Adapted from Jay R. Galbraith and Robert K. Kazanjian, Rules/procedures strategy Implementation: Structure, Systems and Process, 2d ed. (St. Paul, Minn.: West, 1986), 115,