Strategic Management

MME40001
• Why strategic management?’
• Mission
• Strategies for competitive advantage
• Strategic management tools
• International operations strategies
• Individual part of organisation have
different goals
• Vision for future – avoiding short-
sightedness
• Local to international market and
manufacturing
 Boeing Suppliers (787)
Firm Country Component
Dassault France Design and
PLM software
Messier-Bugatti France Landing gear
Thales France Electrical power
conversion system
and integrated
standby flight display
Diehl Germany Interior lighting
FR-HiTemp UK Fuel pumps
and valves
Smiths Aerospace UK Central computer
system
 Boeing Suppliers (787)
Firm Country Component
BAE SYSTEMS UK Electronics
Alenia Aeronautics Italy Upper center
fuselage &
horizontal stabilizer
Toray Industries Japan Carbon fiber for
wing and tail units
Fuji Heavy Japan Center wing box
Industries
Kawasaki Heavy Japan Forward fuselage,
Industries fixed section of wing,
landing gear well
 Boeing Suppliers (787)
Firm Country Component
Teijin Seiki Japan Hydraulic actuators
Mitsubishi Heavy Japan Wing box
Industries
Chengdu Aircraft China Rudder
Group
Hafei Aviation China Parts
Reasons to Globalize

Reasons to Globalize
Tangible  Reduce costs (labor, taxes, tariffs, etc.)
Reasons  Improve supply chain
 Provide better goods and services
 Understand markets
Intangible  Learn to improve operations
Reasons  Attract and retain global talent

Figure 2.1
Mission

 Mission - where are

you going?
 Organization’s
purpose for being
 Answers ‘What do we
provide society?’
 Provides boundaries
and focus
The mission of Swinburne
TAFE Division is:
• To provide quality vocational
education and training for industry
and the wider community, capitalising
on its advantage as part of a dual
sector university of technology.
Strategies for Competitive
Advantage
 Differentiation – better, or at least different
 Cost leadership – cheaper
 Quick response – more responsive
Competing on Differentiation
Uniqueness can go beyond both the physical
characteristics and service attributes to
encompass everything that impacts customer’s
perception of value

 Safeskin gloves – leading edge products

 Walt Disney Magic Kingdom –
experience differentiation
 Hard Rock Cafe – theme experience
Competing on Cost
Provide the maximum value as perceived by
customer. Does not imply low quality.

 Southwest Airlines – secondary

airports, no frills service, efficient
utilization of equipment
 Wal-Mart – small overheads, shrinkage,
distribution costs
 Franz Colruyt – no bags, low light, no
music, doors on freezers
Product Life Cycle
Introduction Growth Maturity Decline
Best period to Practical to change Poor time to Cost control
Company Strategy/Issues

increase market price or quality change image, critical

share image price, or quality

R&D engineering is Strengthen niche Competitive costs

critical become critical
Defend market
position
CD-ROM Fax machines

Internet Drive-through
restaurants
Color printers
Sales
3 1/2”
Floppy
Flat-screen disks
monitors DVD

Figure 2.5
Product Life Cycle
Introduction Growth Maturity Decline
Product design Forecasting Standardization Little product
and critical Less rapid differentiation
development Product and product changes Cost
OM Strategy/Issues

critical process – more minor minimization

Frequent reliability changes Overcapacity
product and Competitive Optimum in the
process design product capacity industry
changes improvements Increasing Prune line to
Short production and options stability of eliminate
runs Increase capacity process items not
High production Shift toward Long production returning
costs product focus runs good margin
Limited models Enhance Product Reduce
Attention to distribution improvement capacity
quality and cost cutting

Figure 2.5
SWOT Analysis

Mission

Internal External
Strengths Opportunities
Analysis

Internal External
Weaknesses Threats
Strategy
Porter’s Competitive forces
 Value Chain Model
from Michael E. Porter’s Competitive Advantage

SUPPORT Firm Infrastructure (General Management)

ACTIVITIES
Human Resource Management

Technology Development

Procurement

Inbound Ops. Outbound Sales & Service and

Logistics Logistics Marketing Support

PRIMARY ACTIVITIES
Reduce Costs

 Foreign locations with lower wage rates can lower direct

and indirect costs
 Maquiladoras
 World Trade Organization (WTC)
 North American Free Trade Agreement (NAFTA)
 APEC, SEATO, MERCOSUR
 European Union (EU)
 Four International Operations
Strategies International
High
Strategy
 Import/export or
Cost Reduction Considerations

license existing
product
Examples
U.S. Steel
Harley Davidson

Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation)
 Four International Operations
Strategies
High
Cost Reduction Considerations

International Strategy
 Import/export or
license existing
product

Examples
U.S. Steel
Harley Davidson

Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation)
 Four International Operations
Strategies Global
High Strategy
 Standardized
Cost Reduction Considerations

product
 Economies of scale
 Cross-cultural
learning
Examples
International Strategy
 Import/export or
Texas Instruments
license existing
product

Examples Caterpillar
Otis Elevator
U.S. Steel
Harley Davidson

Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation)
 Four International Operations
Strategies
High
Global Strategy
 Standardized product
Cost Reduction Considerations

 Economies of scale
 Cross-cultural learning

Examples
Texas Instruments
Caterpillar
Otis Elevator

International Strategy
 Import/export or
license existing
product

Examples
U.S. Steel
Harley Davidson

Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation)
 Four International Operations
Strategies Strategy
Multidomestic
High
 Use existing
Global Strategy
 Standardizeddomestic model
Cost Reduction Considerations

product
 Economies of scale
globally
 Cross-cultural learning

Texas 
Examples
Franchise, joint
Instruments
Caterpillar
Otis Elevatorventures,

subsidiaries
International Strategy
Examples
 Import/export or
license existing
product Heinz
Examples McDonald’s
U.S. Steel
The Body Shop
Harley Davidson

Low Hard Rock Cafe

Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation)
 Four International Operations
Strategies
High
Global Strategy
 Standardized product
Cost Reduction Considerations

 Economies of scale
 Cross-cultural learning

Examples
Texas Instruments
Caterpillar
Otis Elevator

International Strategy Multidomestic Strategy

 Use existing
 Import/export or domestic model globally
license existing  Franchise, joint ventures,
product subsidiaries
Examples Examples
U.S. Steel Heinz The Body Shop
Harley Davidson McDonald’s Hard Rock Cafe

Low
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation)
 Four International Operations
Strategies Transnational
High Strategy
 Move material,
Global Strategy
 Standardized product
Cost Reduction Considerations

people, ideas
 Economies of scale
 Cross-cultural learning

Examples across national

Texas Instruments
Caterpillar boundaries
Otis Elevator
 Economies of scale
 Cross-cultural
International Strategy Multidomestic Strategy
learning
 Import/export or
 Use existing
domestic model globally
license existing  Franchise, joint ventures,
product subsidiaries
Examples
Examples Examples
Coca-Cola
U.S. Steel
Harley Davidson
Heinz The Body Shop
McDonald’s Hard Rock Cafe

Low Nestlé
Low High
Local Responsiveness Considerations
(Quick Response and/or Differentiation)
• Thank you