Professional Documents
Culture Documents
11e
Ricky W. Griffin
CHAPTER 8
Managing Strategy and
Strategic Planning
PART 3
Planning and Decision Making
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8–2
The Nature of Strategic Management
• Strategy
Is a comprehensive plan for accomplishing an
organization’s goals.
• Strategic Management
Involves formulating and implementing strategies to
take advantage of business opportunities and meet
competitive challenges.
• Effective Strategies
Promote superior alignment between an organization,
its environment, and its goals.
8–3
Components of Strategy
Components of Effective Strategies
Abercrombie and fetch Mars has adopted a GE uses its profit from US
speed in moving
electronics industry
Charters 747 to fly Products
• Business-Level Strategy
The set of strategic alternatives that an organization
chooses from as it conducts business in a particular
industry or a particular market.
or
• Corporate-Level Strategy
The set of strategic alternatives that an organization
chooses from as it manages its operations
simultaneously across several industries and several
markets.
8–5
Strategy Formulation and Implementation
• Strategy Formulation
The set of processes involved in creating or
determining the organization’s strategies; it focuses
on the content of strategies.
• Strategy Implementation
The methods by which strategies are operationalized
or executed within the organization; it focuses on the
processes through which strategies are achieved.
8–6
Types of Strategies Formulation & Implementation
• Deliberate Strategy
A plan, chosen and implemented to support specific
goals, that is the result of a rational, systematic, and
planned process of strategy formulation and
implementation.
• Emergent Strategy
A pattern of action that develops over time in the
absence of goals or missions, or despite goals and
missions.
8–7
8.1 SWOT Analysis
8–8
SWOT Analysis and Strategy
8–9
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8–10
SWOT Analysis and Strategy (cont’d)
8–11
SWOT Analysis and Strategy (cont’d)
8–12
SWOT Analysis and Strategy (cont’d)
8–13
Formulating Business-Level Strategies
Porter’s Generic
Strategies
Overall cost
Differentiation Focus
leadership
strategy strategy
strategy
8–14
Formulating Business-Level Strategies
8–15
8.1 Porter’s Generic Strategies
8–16
Implementing Porter’s Generic Strategies
• Differentiation
Marketing and sales emphasize HIGH-QUALITY, high-value
image of the organization’s products or services.
• Overall Cost Leadership
Marketing and sales focus on simple product attributes and how
these product attributes meet customer needs in A LOW-COST
and effective manner.
• Focus
Either differentiation or cost leadership, depending on which
one is the proper basis for competing in or for a specific market
segment, product category, or group buyers.
8–17
8–18
8–19
Miles and Snow’s Strategy Types
8–20
Miles and Snow’s Strategy Types
• Prospector
Encourages creativity to seek out new market opportunities and to take
risks.
Develops the flexibility to meet changing market conditions by
decentralizing its organizational structure.
Example: Amazon.com, 3M
• Defender
Focuses on defending its current markets by lowering its costs and/or
improving the performance of its current products.
Example: ebay.com, BIC
8–21
• Analyzer
Incorporates elements of both the prospector and the defender
strategies to maintain business and to be somewhat innovative.
IBM, DuPont
DuPont was founded in 1802 by Éleuthère Irénée du Pont, using capital raised in
France and gunpowder machinery imported from France
DuPont businesses are organized into the following five categories, known as
marketing "platforms": Electronic and Communication Technologies, Performance
Materials, Coatings and Color Technologies, Safety and Protection, and
Agriculture and Nutrition.
• Reactor
Has no clear strategy, reacts to changes and events.
8–22
8.2 The Miles and Snow Typology
8–23
8.2 The Product Life Cycle
High Stages
Low
Time
8–24
Formulating Corporate-Level Strategies
8–25
Corporate-Level Strategies
Strategic Choices
8–26
Corporate-Level Strategies
• Single-Product Strategy
An organization manufactures one product or service
and sells it in a single geographic market.
• Related Diversification
A strategy in which an organization operates in
several different businesses, industries, or markets
that are somehow linked.
Avoids the disadvantages and risks of a single-
product strategy.
8–27
Advantages of Related Diversification
8–28
Unrelated Diversification
8–29
Becoming a Diversified Firm
Diversification Alternatives
8–30
Becoming a Diversified Firm
8–31
Becoming a Diversified Firm (cont’d)
8–32
Managing Diversification
8–33
Managing Diversification (cont’d)
• BCG Matrix
Evaluates a portfolio of businesses on the growth rate
of their respective markets and each business’s
relative share of its market.
Classifies the types of businesses in a diversified
firm’s portfolio as:
“Dogs” have small market shares and no growth prospects.
“Cash cows” have large shares of mature markets.
“Question marks” have small market shares in quickly
growing markets.
“Stars” have large shares of rapidly growing markets.
8–34
8.3 The BCG Matrix
High
Question
Market Growth Rate
Stars
marks
Low
8–35
•For decades now, Ivory Soap has
advertised that it is 99% pure. Ivory has
refused to add deodorant, facial creams, or
color to its soap. It also packages its soap in
plain paper wrappers- no foil or fancy
printing.
• Is Ivory implementing a product
differentiation, low cost, focus strategy or
some combination? Explain your answer
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 8–36