ch 4. strategic management.pptx

8/14/2019 Ch 4. Strategic Management.pptx

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Principle of Management

Dr. Somkiat Mansumitrchai

Ch.4 Strategic Management


Copyright: Dr. Somkiat Mans umitrchai

What is a Competitive Advantage?

The objective of strategic management is to

determine, create, and maintain

competitive advantage.

The concept of competitive advantage is a

firms ability to provide value to customers

that exceed what competitors can provide.


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Copyright: Dr. Somkiat Mansumitrchai


A competitive advantage is created byhaving and managing resources to provide

goods and services that meet the following

criteria:



1. They provide superior value.

2. They are rare-competitors do not provide

similar products and services in quality

and quantity.

3. They are difficult to imitate.

4. They are non-substitutable.


CompetitiveAdvantage

Difficultto imitate

RarityRarity

SuperiorValue

SuperiorValue

Non-

substitutable

Non-

substitutable


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Ex. HP, Wal-Mart, FedEx, Coke, Apple,Microsoft, Gillet


CompetitiveAdvantage

Difficultto imitate

Rarity

SuperiorValue

SuperiorValue

Non-

substitutable

Non-

substitutable

Profit


The Strategic Management Process:

Strategic management process is a type of

planning process in which managers

1. establish the companys general direction

and objectives

2. formulate a specific strategy


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The Strategic Management Process:

3. plan and carry out the strategysimplementation

4. Monitor results and make necessary

adjustments

Establish Objectives

Formulate Strategy

Implement Strategy

Action plans

Implement plans

Monitor outcomes

Analyze External

Environment

Define Organizational

Mission

Determine Strategic Vision


Analyze Internal

Environment


Determining the Firms Strategic Vision

The strategic vision provides a view of the

firm over the long term and what it should

achieve in the future.

Ex. Xerox: The Worlds Document Company

Kellogg: To have Kelloggs Products in

Every Table in the World


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Formulating the Firms Mission Statement

A mission statement articulates thefundamental purpose of the organization and

often contains several components.

Company philosophy

Company identity or self-concept

Principle products or services


Customers and markets

Geographic focus

Obligation to shareholders

Commitment to employees


IRS Mission Statement

The IRS mission is to provide Americas

taxpayers top quality service by helping them

understand and meet their tax responsibilities

and by applying the tax law with integrity and

fairness to all.


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Human Resources

Business ResultsBusiness Processes

Customer Focus

Performance

Employee Satisfaction, Training

Productivity, Quality, Cost, Environment

Loyalty, Market Leadership

Return on Assets, Sales Growth


Formulate Strategy

Implement Strategy

Action plans

Implement plans

Monitor outcomes

Analyze External

Environment


Mission



Analyze Internal

Environment


Conducting an External EnvironmentalAnalysis

1. The General Environment

2. Internal Analysis


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External Analysis(The General Environment)


E


GeneralEnvironment

Politic

EconomicEconomic

SociocutureSociocuture

TechnologyTechnology

Technological Factors The rate of technological development has

increased over the last decades. Product life

cycle are becoming shorter

Dr. Som kiat Mansumitrchai


8/17

PLC

TIMEIntroduction Maturity DeclineGrowth

Product Development

Sales

64 GB

2 GB

1 GB

256 GB


The Firms Industry and Competitor

Environment (Porters Five Forces)

Industry Structure

Five Forces ModelMichael Porter


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RIVALRY

AMONG

COMPETING

SELLERS

POTENTIAL

NEW

ENTRANTS

SUPPLIERS

OF RAW MATERIALS,

PARTS,

COMPONENTS

BUYERS

FIRMS IN OTHER

INDUSTRIES

FOFFERING

SUBSTITUTE

PRODUCTS


Few competitors

Quality-based

competition

High Entry Barrier

Few new entrances

Few Substututes

Many Customers

Fragmented

customers

Many Suppliers

HigherProfits


Many competitors

Price-based

competition

Low entry barriers

Many new entrants

Many substitutes

Few customers

United customers

Few suppliers

Lower

Profits


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Internal Analysis(Strengths and Weakness)


A list of potential strengths and weaknesses

(Ferrell 1999)

Potential

Internal Strengths

abundant financial resources

any distinctive competence

well-know as the market leader

economies of scale

advance technology

lower costs

good market image

superior management talent

better marketing skills

outstanding product quality

good distribution skills

committed employees

(Ferrell, 1999)


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Potential

Internal Weaknesses

lack of the strategic direction

weak spending on R&D

very narrow product line

limited distribution

higher costs

out-of-date products

internal operating problems

weak market image

poor marketing skills

limited management skills

undertrained employees

(Ferrell, 1999)

External & Internal

Analysis(SWOT Analysis)

Internalenvironment

(strength& weakness)

analysis

SWOT Analysis

Kotler, 2000

Externalenvironment(opportunity

& threat)analysis


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The SWOT Matrix

Strengths Opportunities

Ferrell 1999

The SWOT Matrix

Strengths Opportunities

Ferrell 1999

ThreatsWeaknesses

ConvertConvert

Minimize, Avoid Minimize, Avoid

Copyright: Dr.Somkiat Mansumirtchai

Generic Strategies

for Obtaining a

Competitive Advantage


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E


Generic

Strategies

Differentiation

Strategy

Differentiation

Strategy

Cost

Leadership

Cost

Leadership

Broad-Based Strategy Options

1. Cost-Based Strategy

A plan of action that requires a firm to be the

lowest-cost producer within its market.

2. Differentitation-Based Strategy

A plan of action designed to provide a product or

service with unique attributes that are valued by

consumers.


Differentiation Strategy

Vs

Low Cost Strategy



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Differentiation

Price

High

High Low

Low


Value of

Differentiation

Price

High

High Low

Low

Product

Differentiation

Strategy

Target on the segment

demanding a specialized

productfor which it will pay

a premium price.


Vaue of

Differentiation

Price

High

High Low

Low

Cost

Leadership

Strategy

Target on the segment

demanding undifferentiated

productfor a low price



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Focus Strategies

Focus Strategies

A plan of action that isolates an enterprise

from competitors and other market forces by

targeting a restricted market segment.


One product for one market

(Taste, preferences, needs

are the same)

Undifferentiated Strategy (homogeneous market)

One size fits all (no segment)



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Multiple Segments (Differentiated Strategies)


Focus Strategy (Concentrate on a specific niche segment)

Small but beautiful.



Formulate Strategy

Implement Strategy

Action plans

Implement plans

Monitor outcomes

Analyze External

Environment


Mission



Analyze Internal

Environment


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THE END

ch 4. strategic management.pptx

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