TWELFTH EDITION

MANAGEMENT
Ricky W. Griffin

Chapter Eight: Managing

Strategy and Strategic Planning

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Strategic Management

A comprehensive and ongoing management

process aimed at formulating and implementing
effective strategies.

Strategy: A comprehensive plan for

accomplishing an organization’s goals

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The Components of Strategy
• Scope:
It specifies the range of markets the company competes in.
• Resource Deployment:
How organizations distributes its resources across the
areas in which it competes.
• Distinctive Competence:
Something organizations does exceptionally well. OR
strength of an organization possessed by very few
competitors.

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The Strategic Management Process

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SWOT Analysis

S Things the company does well. Only yours vs. Common

among all firms. STRTENGTHS

W Things the company does not do well.

WEAKNESSES

O Conditions in the external environment that favor strengths.

OPPORTUNITIES

Conditions in the external environment that do not relate to

T existing strengths or favor areas of current weakness.
THREATS
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 Examples: SWOT
STRENGTHS
• Your specialist marketing expertise
• A new, innovative product or service
• Location of your business
• Quality processes and procedures
OPPORTUNITIES
• A developing market such as the
Internet.
• Moving into new market segments
that offer improved profits
• A market vacated by an ineffective
competitor
WEAKNESSES
• Lack of marketing expertise
• Undifferentiated products or services
• Poor quality goods or services
• Damaged reputation
THREATS
• A new competitor in your home
market.
• Price wars with competitors.
• A competitor has a new,
innovative product or service.
• Competitors have superior access
to channels of distribution
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Competitive Advantage

• Distinctive Competencies -> Competitive

Advantage
• Imitation of Distinctive Competencies
• Strategic Imitation

• Sustained Competitive Advantage

• That exist after all attempts at strategic imitation
have ceased.

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Porters
Five
Forces

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Types of Strategic Alternatives

• Corporate Level Strategy

• The set of strategic alternatives from which an
organization chooses as it manages its operations
simultaneously across several industries and several
markets.

• Business Level Strategy

• The set of strategic alternatives from which an
organization chooses as it conducts business in a
particular industry or market.
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Levels of Organizational Strategy

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Formulating Business Level Strategies

• Porter Competitive Strategies

• The Miles and Snow Typology

• Strategies Based on the Product Life

Cycle

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Porter’s Competitive Strategies

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The Miles and Snow Typology
Strategy
Strategy Type
Type Definition
Definition && Example
Example

Capitalize
Capitalize on
on Emerging
Emerging Opportunities.
Opportunities. Innovative
Innovative &&
Prospector
Prospector growth
growth oriented.
oriented. Encourage
Encourage risk
risk taking.
taking. Look
Look for
for new
new
markets
markets && growth
growth opportunities
opportunities

Reduce
Reduce Operating
Operating Costs.
Costs. Protects
Protects current
current markets,
markets,
Defender
Defender maintain
maintain stable
stable growth,
growth, serves
serves current
current customers.
customers.

Maintains
Maintains current
current markets
markets && current
current customers
customers
Analyzer
Analyzer satisfaction
satisfaction with
with moderate
moderate emphasis
emphasis onon innovation.
innovation.

No
No clear
clear strategy,
strategy, reacts
reacts toto change
change in
in the
the
Reactor
Reactor environment,
environment, drifts
drifts with
with events.
events.
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Product Life Cycle

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Corporate-Level Strategies

• Single Product Strategy

• Related Diversification

• Unrelated Diversification

Diversification:
The number of different businesses that an organization is
engaged in and the extent to which these businesses are related
to one another.

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Single-Product Strategy

A strategy in which an organization

manufactures just one product or service and
sells it in a single geographic market.

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Related Diversification

A strategy in which an organization operates in

different businesses that are somehow linked
with one another.

On the Bases of:

• Similar technology
• Common distribution and marketing skills
• Common brand name and reputation
• Common customers
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Unrelated Diversification

A strategy in which an organization operates

multiple businesses that are not logically
associated with one another. e.g.
Conglomerates

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Becoming a Diversified Firm

• Development of new products

• Replacement of suppliers and customers

• Backward vertical integration
• Forward vertical integration

• Mergers and Acquisitions

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