Chapter Strategy Formulation and Execution © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Strategy  Every company is concerned with strategy  Strategic management is a specific type of planning It determines which organizations succeed and which ones struggle Strategic blunders can hurt a company © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Thinking Strategically  The long-term view of the organization and competition  Thinking strategically impacts performance and financial success  Today’s environment requires everyone to think strategically © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Strategic Management Decisions and actions used to formulate and execute strategies that will provide competitively superior fit between the organization and its environment to achieve organizational goals © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Purpose of Strategy  Explicit strategy is the plan of action  Competitive advantage is the organization’s meeting customer needs distinctive edge for Strategies should: Exploit Core Competencies Achieve Synergy Create Value Target Customers © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.1 The Elements of Competitive Advantage © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.2 Three Levels of Strategy in Organizations © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.3 The Strategic Management Process © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Strategy Formulation versus Execution Formulation: Assessing the external environment and internal problems to create goals and strategy Execution: the use of managerial and organizational tools to direct resources toward accomplishing strategic results © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part SWOT Analysis  Formulating strategy often begins with an audit of internal and external factors Internal Strengths and Weaknesses External Opportunities and Threats  Information is acquired from reports, surveys, discussions, and meetings 10 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.4 Audit Checklist for Analyzing Organizational Strengths and Weaknesses 11 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Formulating Corporate-Level Strategy: Portfolio Strategy  Strategic Business Units (SBUs) have a unique mission, products, and competitors  Portfolio strategy pertains to the mix of SBUs and product lines to provide synergy and competitive advantage  Organizations should not become too dependent on one business 12 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Formulating Corporate-Level Strategy: The BCG Matrix  Organizes business along two dimensions Business growth rate Market share  Four categories for corporate portfolio The combination of high/low market share and high/low business growth 13 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.5 The BCG Matrix 14 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Formulating Corporate-Level Strategy: Diversification Strategy Related diversification: expansion into new business related to existing business activities Unrelated diversification: expansion into new lines of business Vertical integration: expansion into businesses that supply to the business or are distributors 15 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Formulating Business-Level Strategy  Strategy within the business units: How we compete?  Business-level strategies are developed by Porter’s Five Forces  Web technology is impacting all industries in positive and negative ways 16 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.5 Porter’s Five Forces 17 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Porter’s Competitive Strategies  Differentiation Distinguishing products and services  Cost Leadership Cost reductions, cost controls  Focus Strategy Concentration on a specific region or buyer Either differentiation or cost leadership approach 18 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.7 Characteristics of Porter’s Competitive Strategies 19 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Formulating Functional-Level Strategy Action plans used by major departments Marketing Production Finance Human Resources Research and Development 20 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.8 Global Corporate Strategies 21 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Strategy Execution The final step!  “Strategy is easy, but execution is hard” Most important but most difficult part  Strategy must be skillfully executed  Alignment requires all aspects of the organization to focus on strategy goals Everyone is moving in the same direction 22 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.9 Factors that Contribute to the Failure of Strategy Execution 23 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part 8.10 Tools for Putting Strategy into Action 24 © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part  ...Strategy  Every company is concerned with strategy  Strategic management is a specific type of planning It determines which organizations succeed and which ones... copied or duplicated, or posted to a publicly accessible website, in whole or in part Strategic Management Decisions and actions used to formulate and execute strategies that will provide competitively... duplicated, or posted to a publicly accessible website, in whole or in part 8.3 The Strategic Management Process © 2016 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated,