module 7 – strategic planning chapter 4. learning objectives lo1 lo1 summarize the basic steps in...
TRANSCRIPT
Module 7 – Strategic Planning
Chapter 4
Learning Objectives
LO1 Summarize the basic steps in any planning processLO2 Describe how strategic planning should be
integrated with tactical and operational planningLO3 Describe how strategy is base on analysis of the
external environment and the firm’s strengths and weaknesses.
LO4 Discuss how companies can achieve competitive advantage through business strategy
4-2
Learning Objectives (cont.)
LO5 Describe the keys to effective strategy implementation
LO6 Explain how to make effective decisions as a manager.
LO7 Summarize principles for group decision making.
4-3
Basic definitions
• Strategy– “pattern of actions and resource allocations to
achieve the goals of the organization”
Basic definitions
• Strategic goals• Strategic planning• Strategic management
Basic Definitions
• "Strategy is the direction and scope of an organization over the long-term, and which enables the organization to achieve advantage through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations.”
Basic definitions
• (Stakeholders)– A person, group, or organization that has direct or
indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies.
– Employees, govt., owners, the community…..
Basic definitions
OperationalTacticalStrategic
2 new mkts
MKTG Dept
Adveristing
Logisitics
HR
Selection
Compensation
In a nutshell
• Where are we now?• Where do we want to go?• How will we get there?
Whole bunch of nutshells…..
• Corporate strategy• Business strategies• Functional strategies• Operating strategies
In another nutshell……
Resource
allocations
Your weaknesses
Your strengths
Expected reactionsby
competitors
Expected environ-mental changes
The Strategic Management Process(SWOT)
4-14
S/W
O/T
Sources of sustainable competitive advantage
• Valuable• Rare• Difficult to imitate• Non-substitutable• “organized” (?)
Core competencies
The Strategic Management Process
4-16
Corporate strategies
• Concentration• Vertical integration• Concentric diversification• Conglomerate diversification
Business strategy
• Porter’s 5 Forces
Potentialentrants
Threat ofnew entrants
PORTER’s 5 FORCES MODEL
Barriers to entry
• Access to inputs• Economies of scale• Government policy• Brand identity• Switching costs• Access to distribution• Expected retaliation• Proprietary products
Potentialentrants
Threat ofnew entrants
Buyers
Bargaining powerof buyers
PORTER’s 5 FORCES MODEL
Buyer power
• Buyer volume• Buyer information• Brand identity• Product differentiation• Buyer concentration vs. industry• Price sensitivity
Potentialentrants
Threat ofnew entrants
Buyers
Bargaining powerof buyers
Substituteproducts
Threat ofsubstitutes
PORTER’s 5 FORCES MODEL
Threat of substitutes
• Switching costs• Buyer inclination to substitute• Price-performance trade-off of substitutes
Potentialentrants
Threat ofnew entrants
Suppliers
Bargaining powerof suppliers
Buyers
Bargaining powerof buyers
Substituteproducts
Threat ofsubstitutes
PORTER’s 5 FORCES MODEL
Supplier power
• Supplier concentration• Differentiation of inputs• Cost relative to total purchases• Switching costs
Industry competitors
Rivalry amongexisting firms
Potentialentrants
Threat ofnew entrants
Suppliers
Bargaining powerof suppliers
Buyers
Bargaining powerof buyers
Substituteproducts
Threat ofsubstitutes
PORTER’s 5 FORCES MODEL
Intensity of competitor rivalry• Very high strategic stakes• Large number of firms• Diversity of rivals• Slow market growth• High fixed cost• Short shelf-life• Low switching costs
Target ScopeAdvantage
Low Cost
Product/ServiceUniqueness
Broad(Industry wide)
Cost Leadership Strategy(Sam’s)
Differentiation Strategy(Toyota)
Narrow(Market
segment)
FocusStrategy
(low cost)(Dollar General)
FocusStrategy
(differentiation)(Tiffany’s)
Strategies for Gaining Sustainable Competitive Advantage
• Cost leadership–Requires efficiency throughout–Same price, higher margins–Lower price, greater mkt share–All wages low?– Threat?
Strategies for Gaining Sustainable Competitive Advantage
• Differentiation – TREAD SOFTLY– Customer service, technological superiority– Changing the rules– Increased costs means must have higher price
Strategies for Gaining Sustainable Competitive Advantage
• Focus– Unique market niche– Premium price/differentiation– Great customer loyalty (why?)– Ex: Bad-credit finance companies, big & tall
men’s shops, petite dress shops
Does it work????
• Criticism #1– Assumes the world will "hold still while a plan is being developed
and then stay on the predicted course while that plan is being implemented."
• Criticism #2– Manage by objective measures of hard data,
• Criticism #3– Inflexibility– Focus on goals set, not goals that should be set
• Criticism #4– Monkey see, monkey do….– Bellbottoms and pet rocks