1. Prentice Hall, Inc. © 20068-1 STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER CHAPTER 8 Strategy Formulation: Functional Strategy & Strategic Choice

2. Prentice Hall, Inc. © 20068-2 Functional Strategy The approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity

3. Prentice Hall, Inc. © 20068-3 Functional Strategy Marketing Strategy – –Pricing –Selling –Distribution

4. Prentice Hall, Inc. © 20068-4 Functional Strategy Marketing Strategy – –Product development Line extension

5. Prentice Hall, Inc. © 20068-5 Functional Strategy Marketing Strategy – –Advertising and promotion Push strategy Pull strategy

6. Prentice Hall, Inc. © 20068-6 Functional Strategy Marketing Strategy – –Pricing Skim pricing Penetration pricing Dynamic pricing

7. Prentice Hall, Inc. © 20068-7 Functional Strategy Financial Strategy – –Leveraged buyout –Reversed stock split –Tracking stock

8. Prentice Hall, Inc. © 20068-8 Functional Strategy R&D Strategy – –Technological leader –Technological follower –Open innovation

9. Prentice Hall, Inc. © 20068-9 Functional Strategy Operations Strategy – –Job shop –Connected line batch flow –Flexible manufacturing systems –Dedicated transfer lines –Mass production –Continuous improvement system –Modular manufacturing

10. Prentice Hall, Inc. © 20068-10 Functional Strategy Purchasing Strategy – –Multiple sourcing –Sole sourcing –Just-in-time (JIT) –Parallel sourcing

11. Prentice Hall, Inc. © 20068-11 Functional Strategy Logistics Strategy – –Centralization –Outsourcing –Internet

12. Prentice Hall, Inc. © 20068-12 Functional Strategy HRM Strategy – –360 degree appraisal

13. Prentice Hall, Inc. © 20068-13 Functional Strategy Outsourcing errors – –Activities that should not be outsourced –Wrong vendor selection –Writing poor contract –Overlooking personnel issues –Hidden costs of outsourcing –Failing to plan exit strategy

14. Prentice Hall, Inc. © 20068-14 Proposed Outsourcing Matrix

15. Prentice Hall, Inc. © 20068-15 Functional Strategy Strategies to Avoid – –3 Follow the leader –Hit another home run –Arms race –Do everything –Losing hand

16. Prentice Hall, Inc. © 20068-16 Corporate Strategy Growth Strategies -- –External mechanisms Mergers Acquisitions Strategic alliances

17. Prentice Hall, Inc. © 20068-17 Constructing Corporate Scenarios

18. Prentice Hall, Inc. © 20068-18 Functional Strategy Subjective Factors Affecting Decisions -- –Management’s attitude toward risk –Pressures from stakeholders –Pressures from corporate culture –Needs and desires of key managers

19. Prentice Hall, Inc. © 20068-19 Stakeholder Priority Matrix

20. Prentice Hall, Inc. © 20068-20 Strategic Choice Avoiding the Consensus Trap -- –Devil’s Advocate –Dialectical Inquiry

21. Prentice Hall, Inc. © 20068-21 Strategic Choice Evaluation of Strategic Alternatives -- –Mutual exclusivity –Success –Completeness –Internal consistency