Management chapter 6 example #31391

- single most important strategist working today

- attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company - performing similar activities in different ways - performing similar activities in different ways

1. strategy is the creation of a unique and valuable position 2. strategy requires trade-offs in competing 3. strategy involves creating a fit among activities

- strategic positioning - emerges from three sources 1. few needs many customers 2. broad needs, few customers 3. broad needs, many customers

-strategic positioning - some strategies are incompatible - choose what strategy to follow and what strategy not to follow

- strategic positioning - fit has to do with the ways a companies activities interact and reinforce one another

- can benefit but if the small improvement in performance is not worth the effort involved in strategic planning unless a firm is in a very competitive industry where small differences in performance may affect survival potential

1. establish the mission, vision, and value statements 2. assess the current reality 3. formulate the grand strategy 4. implement the strategy 5. maintain strategic control, the feedback loop

-step 1 strategic management process - mission statement: purpose/reason for being - vision statement: what the organization wants to become/ where wants to go -values statement: what it stands for, core priorities, employee values, contributions

-step 2 strategic management process -perform a current reality assessment or organizational assessment -- look at where the organization stands and see what is working and what could be different so as to maximize efficiency and effectiveness in achieving the organizations mission - use SWOT analysis, forecasting, benchmarking, porters model for industry analysis

- step 3 strategic management process - translate broad mission and value statements into a grand strategy - after assessment of current reality, explain how the organizations mission is to be accomplished

- process of choosing among different strategies and altering them to best fit the organizations needs -must be translated into specific strategic plans- determine what the organizations long term goals should be for the next 1-5 years

- step 4 strategic management process - putting strategic plans into effect - top managers need to check on possible roadblocks within the organizations structure and culture and see if the right people and control systems are available to execute the plans

- consists of monitoring the execution of strategy and making adjustments, if necessary - need control systems to monitor progress and take corrective action, when things go awry. - corrective action constitutes a feedback loop in which a problem requires that managers return to an earlier step to rethink policies, redo budgets, or revise personnel arrangements

- mission- organizations purpose or reason for being, expressed in the mission statement

- vision = long term goal of what it wants to become, expressed in a vision statement, describes long term direction and strategic intent - should be positive, stretch the organization and its employees to achieve a desired future state that appears beyond its reach

- should describe what the organization stands for, its core priorities, values the employees embody, what its products contribute to the world - shouldn't be hollow - challenge and inspire people in the organization and help align their energies in a common direction - help distinguish what is truely important from what is merely interesting - foundation on which tough company decisions are made

- competitive intelligence - SWOT - forecasting - benchmarking - Porters model for industry analysis

- gaining information about ones competitors activities so that you can anticipate their moves and react appropriately

- public prints and advertising - investor information - informal sources, industry gossip, salespeople

- next point in establishing grand strategy after competitive intelligence - careful monitoring of an organizations internal or external environments to detect early signs of opportunities and threats that may influence the firms plans - swot analysis

- also called situational analysis - Strengths, Weaknesses, Opportunities, and Threats affecting the organizations - should provide a realistic understanding of your organization - divided into 2 parts, inside matters and outside matters

-SWOT - internal organizational strengths and weaknesses

- skills and capabilities that give the organization special competencies and competitive advantages in executing strategies in pursuit of its vision

- drawbacks that hinder an organization in executing strategies in pursuit of its vision

- external organizational opportunities and threats

- environmental factors that can be exploited for competitive advantage

- environmental factors that hinder an organizations achieving a competitive advantage

- after SWOT analysis - vision or projection of the future - the farther into the future, the more difficult it is to be accurate

1. trend analysis 2. contingency planning

- hypothetical extension of a past series of events into the future - assumed that picture of present can be projected into the future - data needs to be reliable - time series forecast= use historical data to predict long term trends, cyclic patterns, seasonal variations

- or scenario analysis is the creation of alternative hypothetical but equally likely future conditions - alternative combinations of different factors, economic pictures, competitor strategies, budgets, so on - 5 or so years into the future - equips organization to prepare for emergencies and uncertainty - gets managers thinking strategically

- process by which a company compares its performance with that of higher-performing organizations - continuous process of measuring products, services, and practices against the toughest competitors

- business level strategies originate in 5 primary competitive forces in the firms environment 1. threats of new entrants 2. bargaining power of suppliers 3. bargaining power of buyers 4. threats of substitute products or services 5. rivalry amongst competitors

- Porters model - can take away customers from existing organizations

- porters model - some are readily able to switch

- porters model - customers who buy a lot have more bargaining power than those who don't - power to force down asking price

- porters model - internet places organization in a better position to switch to other products or services when circumstances threaten their usual channels

- porters model - influenced by the other 4 factors - internet has intensified rivalries - SWOT analysis

- turn to strategy formulation

- porters 4 competitive strategies - diversification - blue ocean strategy - BCG matrix

1. growth 2. stability 3. defensive

- grand strategy - involves expansion as in sales revenue, market share, number of employees, number of customers - often takes the form of an innovation strategy - improve existing product/service -increase promotion/marketing - expand operations - add new products/services - acquire other businesses - mergers

- growing market share or profits by innovating improvements in products or services

- grand strategy - involves little or no significant change - authenticity

- grand strategy - also called retrenchment strategy - involves reduction in the organizations efforts - reduce costs - sell off assets - phase out products - bankruptcy

1. cost leadership 2. differentiation 3. cost focus 4. focused differentiation first two focus on wide markets last two focus on narrow markets

- Porters 4 competitive strategies - keep costs, and hence prices, below those of competitors and to target a wide market

- porters 4 competitive strategies - offer products or services that are of unique and superior value compared with those of competitors but to target a wide market

- porters 4 competitive strategies - keep the costs, and hence prices, below those of a competitor and to target a narrow market - low end products

- porters 4 competitive strategies - offer products that are of unique and superior value compared to competitors and to target a narrow market

- makes and sells only one product within its market - allows you to focus manufacturing and marketing efforts - increased vulnerability

- operating several businesses in order to spread risk - vertical integration

- a firm expands into businesses that provide the supplies it needs to make its products or that distribute and sell its products

- W. Chan Kim - Renee Mauborgne - refers to a company creating a new uncontested market space that makes competitors irrelevant, creates new consumer value, decreases costs - create a completely new industry or create a blue ocean within a red ocean red ocean= industry boundaries are defined and accepted

- boston consulting group - means of evaluating strategic business units on the basis of: 1. business growth rates 2. market share - an organization will do better in fast growing markets in which it has a high market share rather than in slow growing markets in which it has a low market share

- putting strategic plans into effect - dealing with roadblocks within a systems culture, overcoming resistance

- monitoring the execution of strategy and taking corrective action if needed - to keep a strategic plan on track you need to: 1. engage people 2. keep it simple 3. stay focused 4. keep moving

- Bossidy, Charan - consists of using questioning, analysis, and follow through to mesh strategy with reality, align people with goals, achieve promised results

1. people 2. strategy 3. operations 1 is most important

- 1st core process - consider which individuals can handle the jobs of the future - link people to strategic milestones, develop leaders, deal w nonperformers, human resources

-2nd core process - consider how success will be accomplished - take realistic and critical view of capabilities - finance, sales, manufacturing

- 3rd core process - need to consider what path will be followed - whose going to get it done? - should address all major activities - define short term objectives - provide targets to aim at

- system of shared beliefs and values that guides behavior of members - effective execution requires supportive culture