Notes for EM416 & EA302

Establishing The Grand Strategy

What are the three kinds of strategic –
planning tools and techniques

• Competitive Intelligence- gaining information about one’s

competitors’ activities so that you can anticipate their moves and
react appropriately
• SWOT Analysis- environmental scanning, careful monitoring of an
organization’s internal and external environments to detect early
signs of opportunities and threats that may influence the firm’s plans
• Forecasting- trend analysis and contingency planning, predicting the
future
Name three avenues for gaining competitive
intelligence?
• The public prints and advertising including press releases.

• Investor information- about new products and services filed with the
securities commission

• Informal sources through trade shows and from marketing and sales
people
What are the two types of forecasting?
• Trend Analysis- hypothetical extension of past series of events into
the future.

• Contingency Planning; Predicting Alternative Futures, also known as

Scenarion Planning and Scenario Analysis
Several Concepts To Formulate Strategy
• Porter’s five competitive Forces

• Four Competitive Strategies

• Diversification and synergy

• BCG Matrix
Porter’s 5 competitive forces
• Threats of New Entrants- new competitors can affect an industry
almost overnight taking away customers from existing organizations
• Bargaining power of suppliers- some companies are readily able to
switch suppliers but others are not
• Bargaining power of buyers- customers who buy a lot of products
from an organization have more bargaining power than those who
don’t
• Threats of substitutes- in a better position to switch to new products
when existing channels are under threat
• Rivalry among competitors
Four Competitive Strategies
• Cost leadership- keep costs and prices of products below those of
competitors
• Differentiation Strategy- offering unique and superior value for a wide
market
• Cost-focus strategy- keeping costs and prices low for a narrow market

• Focused differentiation strategy- for a narrow market

BCG Matrix
• Evaluate strategic business units on the basis of business growth and
share of the market.

• Cash cows- low growth but high market share

• Stars- high growth and high market share
• Dogs- low growth and low market share
• Question marks- low market share but high growth