Strategy Formulation & Implementation
MGMT.6910
Week 2 Slides
Recap of Last week
▪ Introduction, class requirements
▪ What is Strategy
▪ The Process and Practices
❑ Strategic Planning to Operational Planning and
Implementation
❑ Vision/Mission Statements, Objectives/Goals and
Strategies
❑ Corporate Governance
▪ Discussion Board post
Discussion Board Post Week 1
Question
Review Align Technology’s (https://www.aligntech.com/) income and balance sheet statements for
the last 5 years (you will get this data from their annual reports) and comment on trends in revenue,
gross margins, R&D, SG&A, cash position and debt (it is suggested that you convert income
statement items to a common size statement, that is, all line items Income Statement as % of
revenue). You may calculate a few management ratios to add to your comments and observations.
Include in your comments what you see as their strategy and how do you think they are doing.
BE SURE TO INCLUDE 5-YEAR DATA AND RATIOS IN YOUR POST. DO NOT ATTACH
ANY DOCUMENT
Comment on at least one classmate’s post
This week …
Evaluating a company's external environment
Macro trends
Industry trends & analysis
Tools/Frameworks
External Strategic Factors
Opportunities & Threats
3.1 From Thinking Strategically about the Company’s Situation to Choosing a Strategy
strategyzer.com
External Drivers
Economic Trends
-GDP trends
-Per capita income
-Interest Rates
-Money Supply
-Monetary policies
-Inflation rates
-Unemployment levels
-Disposable & Discretionary income
-Currency devaluation/reevaluation
-Energy availability & cost
-Wage/price controls
-Trade Agreements
-WTO participation
-Natural resources
Political/Legal
-Taxation laws
-Foreign trade regulations
-Antitrust laws
-Environmental laws
-Special incentives
-Employment laws
-Labor union laws
-Form of Government
-Government stability
-Foreign policies
-Legal systems
-Protectionist attitude
-Political ideology
Socio-cultural
-Custom, values, norms
-Language
-Age distribution
of population
-Population growth rates
-Demographics
-Life expectancies
-Birthrates
-Lifestyle trends
-Family formation
-Consumer activism
-Religious beliefs
-Education
Technological Variables
-Patents & protection
-Commercialization rates
-R&D spend rates (industry, Government)
-Technological/innovation focus
-Productivity tools trends
-Communication infrastructures
-Internet
Read Chapter 3, Notes and class slides – key points
❑PESTEL Analysis
❑Focus on major trends affecting industry/firm
• Industry Analysis
• Size/concentration
• Industry Evolution stage
• Industry Value Chain
• Segments/Strategic Groups
• Competitive Forces
• Industry Attractiveness
• Industry Driving Forces
• Competitive Positioning Matrix
• GE Matrix
❑Global Environment
▪ Institutional Factors
❑Tools and Framework
❑Opportunities and Threats
Industry Life Cycle
https://blog.marketresearch.com/what-is-industry-value-chain-analysis
Industry Value Chain
3.3
The Five-Forces Model
of Competition: A Key
Analytical Tool
The Five Competitive Forces That Shape Strategy
Figure 3.3: The Five Forces Model of Competition
3-36
Business Travelers
Pleasure
Intermediaries
2 suppliers, oil,
maintenance
e.g. Car, Rail, Bike, Walk
Barriers
Investments, Regulations,
Locations
Moderate
Moderate to high
Moderate to high
Moderate to
high
Strong
Airlines
ILLUSTRATION CAPSULE 3.1Comparative Market Positions of Selected Retail Chains:
A Strategic Group Map Example
High
Low
• Gucci, Chanel,
Fendi
Walmart,
Kmart
Few localities Many localities
Geographic Coverage
Assessing Industry Attractiveness
Example: XYZ industry
Industry Factor
Sales growth rate
Weight
25
Rating
0.3
Product
7.5
Market size 20 0.6 12.0
Industry profitability 18 0.8 14.4
Intensity of competition 15 0.7 10.5
Barriers to entry 12 0.9 10.8
Degree regulated 10 1.0 10.0
TOTALS 100 65.2
Competitive Factor Weight Rating Product
Technological innovativeness 22 0.6 13.2
Marketing/distribution 20 0.9 18.0
Caliber of management 18 0.9 16.2
Relative cost position 17 0.6 10.2
Brand reputation 12 1.0 12.0
Financial strength 11 0.7 7.7
TOTALS 100 77.3
Assessing Competitive Strength
Example: Your Company Under Analysis
Global Environment and Analysis
• Competitive
✓Distributive/infrastructure
• Economic
• Socioeconomic
✓Financial/Capital markets
✓Legal
• Physical
✓Political
• Sociocultural
• Labor Markets
• Technological
Global Industry Evolution
Local
Regional
National
International
Global
(markets, operations, capacity)
Past: Slow March
Now: Rapid Global Expansion
Firm
Global Industry and Technology Evolution
• Advances in science and technology – time between
technologies shortened
• Legacy vs New: vertical integration and strategic alliances
• Governmental/Political Influences
• Social Factors
Discussion Board Week 2 Assignment
Read the article " Why Fewer Chips Say ‘Made in the U.S.A.”
(under Supplemental Reading folder in Blackboard) and using
CLASS MATERIAL/DISCUSSION, address these questions.
• In terms of Industry Life Cycle (stages: emerging, growth, maturity and decline), which stage is the semiconductor industry in? (discuss with respect to Global Industry Evolution)
• The semiconductor industry is often considered a “strategic sector.“ What does the term mean? Is it a strategic sector for the US?
• Based on the information contained in the article, should the US government and/or US companies need to commit more resources to the US semiconductor industry?
Your post must be substantive, to the point and use class
material. Where appropriate, do additional research
Also, comment on at least one classmate’s post
Questions/Comments?