STRATEGIC

MANAGEMENT
 Knowledge Review

■ List and explain at least three variables in natural environment used in external
environmental scanning
■ Explain what PESTLE analysis is and how is it used in business
■ Explain Porter’s five force model: what are the components and what types of bargaining
power each brings.
■ Describe and explain Milton Friedman’s Doctrine and Caroll’s Corporate Social Responsibility
(CSR) pyramid
 Today’s Agenda
■ Organize environmental and organizational
information using SWOT analysis and a
SFAS matrix
■ Generate strategic options by using the
TOWS matrix
■ Understand the competitive and
cooperative strategies available to
corporations
■ List the competitive tactics that would
accompany competitive strategies
■ Identify the basic types of strategic
alliances
 Case of Midamar

Midamar is successful because its chief executive formulated a strategy designed to give it
an advantage in a very competitive industry - to provide a differentiated product or service.
SWOT analysis used
by 82.7% of the
corporations,
the second most
frequently used
technique after
competitor analysis
SA = O/(S – W)
(Strategic Alternative equals Opportunity
divided by Strengths minus Weaknesses).

Q: Should we invest more in

our strengths to make them
even stronger (a distinctive
competence) or should we
invest in our weaknesses to
at least make them
competitive?
Criticism of SWOT tool

■ It generates lengthy lists.

■ It uses no weights to reflect priorities.
■ The same factor can be placed in two categories (e.g., a strength may also be a
weakness).
■ There is no obligation to verify opinions with data or analysis.
■ It requires only a single level of analysis.
■ There is no logical link to strategy implementation
 SFAS EFAS

Strategic Factors
Analysis
Summary
Includes about 10 Strategic
IFAS
Factors
IFAS
EFAS
SFAS
Strategic Sweet Spot

Propitious Niche
CASE OF SAB (South African Breweries)

Sustainable Competitive Advantage Entry Barrier #2:

Entry Barrier #1:
Sustainable Strategic Sweet Spot Every year for the SAB Entry Barrier #3:
past two decades SAB Selling beer to
SAB has long experience
Sustainable Propitious Niche in transporting Sheebens indirectly
has reduced its crates to remote wholesalers
prices. villages
Alternative Strategies past Mission/Objectives
■ A company’s objectives can also be inappropriately stated
■ They can either focus too much on short-term operational
goals or be so general that they provide little real guidance.
Mission
■ There may be a gap between planned and achieved
Objectives objectives.
Strategies
Policies

Case of Boeing
Largest vs. most profitable
https://hbr.org/2021/06/what-corporate-boards-can-learn-from-boeings-mistakes
Alternative Strategies through TOWS
Opportunities and Threats
matched with Strengths and
Weaknesses

Allows developing new growth

or retrenchment strategies
TOWS Matrix
 Group Work

Review SWOT
Highlight Factors for SFAS
Build TOWS
 Strategies

Competitive or Cooperative

Case of Ooredoo
Generic Competitive Strategies
Small
business

Lower cost strategy Corporation

Differentiation Strategy
Non-profits
Tiers in Generic Competitive Strategies
 Entry barriers for rivals and entrants

Higher bargaining power relative to suppliers

“Aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from

experience, tight cost and overhead control, avoidance of marginal customer accounts, and cost
minimization in areas like R&D, service, sales force, advertising, etc
■ Wal-Mart
■ McDonald’s
■ Dell (computers)
■ Alamo (rental cars),
■ Aldi (grocery stores),
■ Southwest Airlines
■ Timex (watches)
 Entry barrier due to customer loyalty and low
sensitivity to price
Higher bargaining power relative to new

Broad Target
entrants

Sustainability and CSR as foundation for

Differentiation (Patagonia)

Unique Product – Broad Market

This specialty can be associated with design or brand image, technology, features, a dealer
network, or customer service
■ Walt Disney Productions
■ BMW
■ Nike
■ Apple Computer
■ Pacar (trucks)
Focuses on a particular buyer group or To serve the special needs of a narrow
geographic market and attempts to strategic target more effectively than
serve only this niche, to the exclusion of can its competition.
others.
Risks of Competitive Strategies
Competitive Strategy and Industry type
Role of Venture Capitalists – Strategic Rollup
acquisitions in three ways:
(1) involve large numbers of firms
(2) the acquired firms are typically owner operated,
Fragmented Industry (3) The objective is not to gain incremental advantage, but to
reinvent an entire industry.
Consolidates Industry
Tactics
Competitive Tactics
Commonly required skills, resources and organizational
requirements for each type of strategy
Time Tactics
First mover – sets standard, cost leader, locks in customers
Late movers – imitates advanced technologies, lowers risks
(usually large companies: Netscape – Internet Explorer)
Market Location Tactics
Offensive tactics
Frontal Assault - holistic/Huggies to Pampers
Flanking Maneuver – weak segment of market
By pass attack – substitute products, e.g. ipod
Encirclement – variety, e.g. Steinway vs. Yamaha
Guerilla Warfare – “hit and run”, e.g. microbreweries
Defensive tactics – making attack unattractive
Raising Structural Barriers – full line of products,
exclusive agreements with distributors, warranties, added services,
lobby government to raise barrierds
Cooperative Strategies
Within an industry to reduce output and raise
prices in order to get around the normal
economic law of supply and demand.
Collusion may be explicit or tacit!
Explicit collusion is illegal in most countries and in a
number of regional trade associations, such as
the European Union.

A long-term cooperative arrangement

between two or more independent
firms or business units that engage in
business activities for mutual economic gain
To obtain or learn new capabilities
To obtain access to specific markets
To reduce financial risk
To reduce political risk
Continuum of Strategic Alliances