Lecture 5: Strategy
Formulation &
Implementation
COURSE INSTRUCTOR: TATHEER
YAWAR
SEMESTER: SPRING 2019
2
Brainstorming Session
Why has Apple been so much successful with the
iPod and iPhone?
Why has McDonald’s healthier menu been so
effective?
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What will we cover in this
lecture?
1. What is a strategy?
2. Levels of strategy
3. Strategic management
4. Process of strategic management
5. SWOT analysis
6. Corporate level strategy
7. Business level strategy
8. Functional level strategy
9. Global Strategies
10. Strategy execution
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1. Strategy
Strategy is a plan of action that prescribes
resource allocation, and other actions, achieving
competitive advantage and attaining organization
goals.
Competitive Core
Advantage Competency
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Strategy
Exploit core Build
competency Synergy
Deliver Value
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2. Levels of Strategy
Corporate level strategy
What business are we in?
Business level strategy
How do we compete?
Functional level strategy
How do we support business-level strategy?
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Levels of Strategy – P&G
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3. Strategic Management
Set of decisions and actions used to
formulate and execute strategies that will
provide superior competitive fit between
organization and its environment so as to
achieve organization goals.
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4. Strategic Management
Process
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5. SWOT Analysis
Strengths Weaknesses Opportunities Threats
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Internal Strengths
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Internal Weaknesses
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External Opportunities
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External Threats
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6. Corporate-Level
Strategy
Portfolio – diversify in investment
portfolio
Strategic business units – A division of
the organization that has unique business
mission, product line, competitors and
markets relative to other SBUs of same
company
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The BCG Matrix
The BCG Matrix is a business model or portfolio
planning tool that was developed by Bruce
Henderson of the Boston Consulting Group in
the 1970’s.
Also known as GROWTH-SHARE MATRIX
The matrix helps companies to analyze their
strategic business units (SBUs) or product lines
and enable them to allocate resources.
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The BCG Matrix
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The BCG Matrix
Market growth:
Rate at which the entire industry is increasing
Market share:
Whether a business has a larger or smaller share
than its competitors
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The BCG Matrix
Stars are high-growth, high-share businesses or products requiring
heavy investment to finance rapid growth. They will eventually
turn into cash cows.
Cash cows are low-growth, high-share businesses or products that are
established; require less investment to maintain market share in a
stable market.
Question marks are low-share business units in high-growth markets
requiring a lot of cash to hold their share.
Dogs are low-growth, low-share businesses and products that may
generate enough cash to maintain themselves but do not promise
to be large sources of cash. Not worth much investment.
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Diversification Strategy
A strategy of moving into new lines of business
Related diversification Unrelated diversification
Moving into a new Expanding into a
business that is totally new line of
related to business
company’s
existing business
activities
Diversification Strategy - Related 21
Diversification
Diversification Strategy - 22
Unrelated Diversification
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7. Business-Level Strategy –
Porter’s Five Force Model
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Threat of Entry
The more barriers to entry, the less new entrants
will enter the industry
Barriers can include:
High capital requirements
Economies of scale/cost advantages
Specialist knowledge
Technology protection
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Bargaining Power of
Buyers
Number of customers/buyers
Informed/knowledgeable buyers
Switching costs
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Bargaining Power of
Suppliers
Number of suppliers
Uniqueness of service
Availability of substitute suppliers
Switching cost
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Threat of Substitute
Products
Number of substitute products
The performance of substitute products
Knowledgeable customers shifting to healthy
products
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Competitive Strategies
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Competitive Strategies
Strategy Characteristics
Differentiation • Product has distinctive features
• Creative advertising, exceptional service, new
technology
• Thinks ‘out of the box’
• Rewards employee innovation
Cost Leadership • Offer products at lower prices
• Cost reductions, efficient facilities, tight cost
controls
Focus Cost focus - Focuses on lower cost but targets
narrow market
Differentiation focus – focuses on distinct features
but offers products to narrow market
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Cost Leadership
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Differentiation
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Cost Focused
South
Asian
Food at a
low
price!
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Differentiation Focused
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8. Functional Level
Strategy
Action plans used by major departments under
each SBUs
Marketing
Production
Finance
Human Resources
Research and Development
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9. Global Corporate
Strategies
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10. Strategy Execution
This is the FINAL STEP!
Strategy must be skillfully executed
Alignment – ensure that everyone is moving in
same direction
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Strategy Execution
