Professional Documents
Culture Documents
Chapter
Strategic
9 Management
Strategies
• The decisions and actions that determine the long-run performance
of an organization.
Source: Based on F. David, Strategic Management, 11 ed. (Upper Saddle River, NJ: Prentice Hall, 2007), p.70.
© 2007 Prentice Hall, Inc. All rights reserved. 8–14
Strategic Management Process (cont’d)
• Step 3: Doing an internal analysis
Assessing organizational resources, capabilities, and activities:
Strengths create value for the customer and strengthen the
competitive position of the firm.
Weaknesses can place the firm at a competitive disadvantage.
Sources: “America’s Most Admired Companies,” Fortune, February 22, 2006, p. 65; “The 100 Best Companies
to Work For,” Fortune, January 11, 2006, p. 89; R. Alsop, “Ranking Corporate Reputations,” Wall Street
Journal, December 6, 2005, p. B1; and “The 100 Top Brands,” BusinessWeek, August 1, 2005, p. 90.
© 2007 Prentice Hall, Inc. All rights reserved. 8–16
Strategic Management Process (cont’d)
• Step 4: Formulating strategies
Develop and evaluate strategic alternatives
Select appropriate strategies for all levels in the
organization that provide relative advantage over
competitors
Match organizational strengths to environmental
opportunities
Correct weaknesses and guard against threats
• Vertical Integration
Backward vertical integration: attempting to gain
control of inputs (become a self-supplier).
Forward vertical integration: attempting to gain control
of output through control of the distribution channel or
provide customer service activities (eliminating
intermediaries).
Source: Based on K. Shimizu and M. A. Hitt, “Strategic Flexibility: Organizational Preparedness to Reverse
Ineffective Strategic Decisions,” Academy of Management Executive, November 2004, pp. 44–59.
© 2007 Prentice Hall, Inc. All rights reserved. 8–47
How the Internet Has Changed Business
• The Internet allows businesses to:
Create knowledge bases that employees can tap into
anytime, anywhere.
Turn customers into collaborative partners who help
design, test, and launch new products.
Become virtually paperless in specific tasks such as
purchasing and filing expense reports.
Manage logistics in real time
Change the nature of work tasks throughout the
organization.
• Advantages • Disadvantages
Reputation for being Uncertainty over exact
innovative and industry direction technology and
leader market will go
Cost and learning benefits Risk of competitors imitating
Control over scarce innovations
resources and keeping Financial and strategic risks
competitors from having High development costs
access to them
Opportunity to begin
building customer
relationships and customer
loyalty