Presentation on theme: "Module 7 – Strategic Planning Chapter 4. Learning Objectives LO1 LO1 Summarize the basic steps in any planning process LO2 LO2 Describe how strategic."— Presentation transcript:
Learning Objectives LO1 LO1 Summarize the basic steps in any planning process LO2 LO2 Describe how strategic planning should be integrated with tactical and operational planning LO3 LO3 Describe how strategy is base on analysis of the external environment and the firm’s strengths and weaknesses. LO4 LO4 Discuss how companies can achieve competitive advantage through business strategy 4-2
Learning Objectives (cont.) LO5 LO5 Describe the keys to effective strategy implementation LO6 LO6 Explain how to make effective decisions as a manager. LO7 LO7 Summarize principles for group decision making. 4-3
Basic definitions Strategy – “pattern of actions and resource allocations to achieve the goals of the organization”
Basic Definitions " Strategy is the direction and scope of an organization over the long-term, and which enables the organization to achieve advantage through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations.”
Basic definitions (Stakeholders) – A person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies. – Employees, govt., owners, the community…..
Industry competitors Rivalry among existing firms Potential entrants Threat of new entrants Suppliers Bargaining power of suppliers Buyers Bargaining power of buyers Substitute products Threat of substitutes PORTER’s 5 FORCES MODEL
Intensity of competitor rivalry Very high strategic stakes Large number of firms Diversity of rivals Slow market growth High fixed cost Short shelf-life Low switching costs
Strategies for Gaining Sustainable Competitive Advantage Cost leadership – Requires efficiency throughout – Same price, higher margins – Lower price, greater mkt share – All wages low? – Threat?
Strategies for Gaining Sustainable Competitive Advantage Differentiation – TREAD SOFTLY – Customer service, technological superiority – Changing the rules – Increased costs means must have higher price
Strategies for Gaining Sustainable Competitive Advantage Focus – Unique market niche – Premium price/differentiation – Great customer loyalty (why?) – Ex: Bad-credit finance companies, big & tall men’s shops, petite dress shops
Does it work???? Criticism #1 – Assumes the world will "hold still while a plan is being developed and then stay on the predicted course while that plan is being implemented." Criticism #2 – Manage by objective measures of hard data, Criticism #3 – Inflexibility – Focus on goals set, not goals that should be set Criticism #4 – Monkey see, monkey do…. – Bellbottoms and pet rocks