Introduction to Strategic Management MGT 101 - Principles of Management and Business Introduction to Strategic Management Week 7

Objectives To explain what managers do in the strategic management process To explain different types of strategies To have a look at benchmarking

Companies’ Strategies McDonald’s: 40 stores in India Starbucks: A new line of healthier and made-from-scratch baked goods Tata: Acquisition of Jaguar and Land Rover

Strategic Management Definition What managers do to develop an organization’s strategies

Strategy Definition Plans for how the organization will do what it’s in business to do, how it will compete successfully, and how it will attract its customers in order to achieve its goals

Strategic Management Process External Analysis Opportunities Threats Identify the organization’s current mission, goals, and strategies Formulate Strategies Implement Strategies Evaluate Results Internal Analysis Strengths Weaknesses Strategic Management Process A six-step process that encompasses strategy planning, implementation, and evaluation

Strategic Management Process Step 1: Identifying the organization’s current mission, goals, and strategies Mission: a statement of its purpose Step 2: Doing an external analysis Opportunities: positive trends in the external environment Threats: negative trends in the external environment

Strategic Management Process Step 4: Doing an internal analysis Resources: an organization’s assets that it uses to develop, manufacture, and deliver products of its customers Capabilities: an organization’s skills and abilities in doing the work activities needed in its business Core Competencies: the major value-creating capabilities of an organization Strengths: any activities the organization does well or any unique resources that it has Weaknesses: activities the organization doesn’t do well or resources it needs but doesn’t possess

Strategic Management Process SWOT Analysis: the combined external and internal analysis Step 4: Formulating strategies Types of Strategies: corporate, competitive, and functional Step 5: Implementing strategies Step 6: Evaluating strategies Questions: How effective have the strategies been at helping the organization reach its goals? What adjustments are necessary?

Types of Strategies Corporate Strategy An organizational strategy that specifies what businesses a company is in or wants to be in and what it wants to do with those businesses Competitive Strategy An organizational strategy for how an organization will compete in its business(es) Functional Strategy The strategies used in an organization’s various functional departments to support the competitive strategy

Corporate Strategies Growth Strategy A corporate strategy in which an organization expands the number of markets served or products offered either through its current business(es) or through new business(es) Stability Strategy A corporate strategy in which an organization continues to do what it is currently doing Renewal Strategy A corporate strategy that addresses declining organizational performance

Competitive Strategies Competitive Advantage: what sets an organization apart; its distinctive edge Cost Leadership Strategy When an organization competes on the basis of having the lowest costs in its industry Differentiation Strategy When an organization competes on the basis of having unique products that are widely valued by customers Focus Strategy When an organization competes in a narrow segment or niche with either a cost focus or a differentiation focus

Benchmarking Definition The search for the best practices among competitors or non competitors that lead to the superior performance

Learning Outcomes Strategic management is important for the organization’s continuity, survival, and success Strategic management process consist of 6 steps that managers follow There three different types of strategies: corporate, competitive, and functional Benchmarking can be used to find better ways in having things done for the corporation