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Developed Developed by by Cool Cool Pictures Pictures & & MultiMedia MultiMedia Presentations Presentations Copyright Copyright © © 2002 2003 2003 by by South-Western, South-Western, a division of Thompson Thomson Learning. Learning.All Allrights rightsreserved. reserved. 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 Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. 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? Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. Grand Strategy • General plan of major action to achieve longterm goals. • Fall in to three general categories: 1. Growth 2. Stability 3. Retrenchment Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. 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 Developed by Cool Pictures & MultiMedia Presentations High Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. 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 Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. 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 Developed by Cool Pictures & MultiMedia Presentations Kinko’s Copy Center Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. 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 Developed by Cool Pictures & MultiMedia Presentations R&D Manufacturing Marketing Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. 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). Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. Portfolio Strategy BGG Matrix • Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. 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). Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. 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. Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. Continuum of Partnership Strategies Organizational Combination Acquisitions Mergers Joint Ventures Strategic Alliances Strategic Business Partnering Preferred Supplier Arrangements Low Degree of Collaboration Developed by Cool Pictures & MultiMedia Presentations High Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. Implementing Strategy Tools • • • • Leadership Structural design Information and control systems Human resources Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. All rights reserved. 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. Developed by Cool Pictures & MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning. 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