Prentice Hall, nc.

2006 6-1
8TRATEC|6 HANACEHENT & U8|NE88 P0L|6Y
10
TH
ED!T!ON
THOMAS L. WHEELEN J. DAVID HUNGER
CHAPTER 6
Strategy FormuIation:
Situation AnaIysis &
Business Strategy
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SituationaI AnaIysis
Strategy formuIation --
Strategic planning or long-range planning
WDeveIops mission, objectives, strategies, poIicies
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SituationaI AnaIysis
--process of finding a strategic fit
between external opportunities and
internal strengths while working around
external threats and internal weaknesses
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IFAS - Maytag as ExampIe
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EFAS - Maytag as ExampIe
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SFAS Matrix
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SituationaI AnaIysis
Niche --
eed in the marketplace that is currently
unsatisfied
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SituationaI AnaIysis
Corporate GoaI --
ind propitious niche
Strategic window
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SituationaI AnaIysis
SWOT --
InternaI
WStrengths/Weaknesses
ExternaI
WOpportunities/Threats
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TOWS Matrix
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Business Strategy
ocuses on improving competitive
position of company's products or
services within the specific industry or
market segment
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Porter's Competitive Strategies
Competitive Strategy --
ow cost
Differentiation
Direct competition
Focus on niche
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Porter's Competitive Strategies
Generic Competitive Strategies --
ower Cost strategy
WGreater efficiencies than competitors
Differentiation strategy
WUnique/superior value, quality, features, service
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Porter's Competitive Strategies
Competitive Advantage --
Determined by Competitive Scope
Wreadth of the target market
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Porter's Competitive Strategies
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Porter's Competitive Strategies
Cost Leadership --
ow-cost competitive strategy
Broad mass market
Efficient-scale facilities
Cost reductions
Cost minimization
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Porter's Competitive Strategies
Differentiation -
Broad mass market
Unique product/service
Premiums charged
ess price sensitivity
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Porter's Competitive Strategies
Cost-Focus -
ow-cost competitive strategy
Focus on market segment
iche focused
Cost advantage in market segment
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Porter's Competitive Strategies
Differentiation Focus -
Specific group or geographic market focus
Differentiation in target market
Special needs of narrow target market
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Porter's Competitive Strategies
Stuck in the middIe -
o competitive advantage
Below-average performance
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Risks of Generic Strategies
Risks of Cost Leadership
Cost leadership is not
sustained:
W Competitors imitate.
W Technology changes.
W Other bases for cost
leadership erode.
Proximity in differentiation is
lost.
Cost focusers achieve even
lower cost in segments.
Risks of Differentiation
Differentiation is not
sustained:
W Competitors imitate.
W ases for differentiation
become less important to
buyers.
Cost proximity is lost.
Differentiation focusers
achieve even greater
differentiation in segments.
Risks of Focus
The focus strategy is
imitated:
The target segment becomes
structurally unattractive:
W Structure erodes.
W Demand disappears.
roadly targeted competitors
overwhelm the segment:
W The segment's
differences from other
segments narrow.
W The advantages of a
broad line increase.
New focusers subsegment
the industry.
Risks of Cost Leadership
Cost leadership is not
sustained:
W Competitors imitate.
W Technology changes.
W Other bases for cost
leadership erode.
Proximity in differentiation is
lost.
Cost focusers achieve even
lower cost in segments.
Risks of Differentiation
Differentiation is not
sustained:
W Competitors imitate.
W ases for differentiation
become less important to
buyers.
Cost proximity is lost.
Differentiation focusers
achieve even greater
differentiation in segments.
Risks of Focus
The focus strategy is
imitated:
The target segment becomes
structurally unattractive:
W Structure erodes.
W Demand disappears.
roadly targeted competitors
overwhelm the segment:
W The segment's
differences from other
segments narrow.
W The advantages of a
broad line increase.
New focusers subsegment
the industry.
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Dimensions of QuaIity
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Competitive Strategy
ndustry Structure --
Fragmented Industry
ConsoIidated Industry
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Competitive Tactics
Timing Tactics --
First mover
Late movers
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Competitive Tactics
Market Location Tactics --
FrontaI AssauIt
FIanking Maneuver
Bypass Attack
EncircIement
GuerriIIa Warfare
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Competitive Tactics
Defensive Tactics --
Raise structuraI barriers
Increase expected retaIiation
Lower the inducement for attack
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Cooperative Strategies
WCoIIusion
WStrategic AIIiances
WMutuaI service consortia
WJoint ventures
WLicensing arrangements
WVaIue-chain partnerships