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Strategic Management
• Set of decisions and actions used to implement
strategies
• Questions to ask:
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
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Thinking Strategically
• Answers to the following define an overall direction for the
organization's grand strategy
 Where is the organization now?
 Where does the organization want to be?
 What changes are among competitors?
 What courses of action will help us achieve our goals?
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Grand Strategy
• General plan of major action to achieve longterm goals.
• Fall in to three general categories:
1. Growth
2. Stability
3. Retrenchment
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Global Corporate Strategies
High
Need for Global Integration
Globalization
Strategy
• Treats world as a single
global market
• Standardizes global
products/advertising
strategies
Transnational
Strategy
• Seeks to balance global
efficiencies and local
responsiveness
• Combines standardization
and customization for
product/advertising
strategies
Multi-domestic Strategy
• Handles markets
independently for each
country
• Adapts product/advertising
to local tastes and needs
Low
Low
Need for National Responsiveness
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High
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Global Strategy
• Globalization: product design and advertising
strategies are standardized around the world
• Multi-domestic: adapt product and promotion for
each country
• Transnational: combine global coordination with
flexibility to meet specific needs in various
countries
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Purpose of Strategy
• The plan of action that prescribes
resource allocation and other
activities that help the organization
attain its goals
Strategies focus on:
Core competencies
Develop synergy
Create value for customers
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Three Levels of Strategy
in Organizations
Corporate-Level Strategy: What business are we in?
Corporation
Business-Level Strategy: How do we compete?
Textiles Unit
Chemicals Unit
Auto Parts Unit
Functional-Level Strategy:
How do we support the business-level strategy?
Finance
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R&D
Manufacturing
Marketing
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Checklist for Analyzing
Organizational Strengths and Weaknesses
Management and Organization
Management quality
Degree of centralization
Organization charts
Planning, information,
control systems
Finance
Profit margin
Debt-equity ratio
Inventory ratio
Return on investment
Credit rating
Marketing
Distribution channels
Market share
Advertising efficiency
Customer satisfaction
Product quality
Service reputation
Sales force turnover
Production
Plant location
Machinery obsolescence
Purchasing system
Quality control
Productivity/efficiency
Human Resources
Employee experience,
education
Union status
Turnover, absenteeism
Work satisfaction
Grievances
Research and Development
Basic applied research
Laboratory capabilities
Research programs
New-product innovations
Technology innovations
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).
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Portfolio Strategy
BGG Matrix
• Mix of business units
and product lines that
fit together in a logical
way to provide synergy
and competitive
advantage
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The Five Forces Affecting Industry Competition
•Internet reduces
barriers to entry
Threats of new entrants
•Internet expands market
size, but creates new
substitution threats
Threat of substitute products
Internet blurs
differences
among
competitors in
an industry
•Internet shifts
greater power to
end consumers
Bargaining power of buyers
Bargaining power of suppliers
•Internet tends to increase the
bargaining power of suppliers
Source: Based on Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980).
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Competitive Edge Through
Competitive Strategies
• Differentiation…involves an attempt to distinguish a
firms products or services.
• Cost leadership…aggressively seeks efficient
facilities, pursues cost reductions, and uses tight cost
controls in an attempt to be more efficient than
competitors.
• Focus…concentrates on a specific regional market or
buyer.
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Continuum of Partnership Strategies
Organizational Combination
Acquisitions
Mergers
Joint Ventures
Strategic
Alliances
Strategic Business Partnering
Preferred Supplier Arrangements
Low
Degree of Collaboration
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High
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Implementing Strategy Tools
•
•
•
•
Leadership
Structural design
Information and control systems
Human resources
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Tools for Putting Strategy into Action
Environment
Organization
Leadership
 Persuasion
 Motivation
 Culture/values
Strategy
Structural Design
 Organization Chart
 Teams
 Centralization/decentralization
 Facilities, task design
Performance
Human Resources
 Recruitment/selection
 Transfers/promotions/training
 Layoffs/recalls
Information and Control Systems
 Pay, reward system
 Budget allocations
 Information systems
 Rules/procedures
Source: Adapted from Jay R. Galbraith and Robert K. Kazanjian, strategy Implementation: Structure, Systems and Process, 2d ed. (St. Paul, Minn.: West, 1986), 115,
Used with permission.
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