Strategic Management I RECAP

Vision and Mission Statement What is strategy? Vision and Mission Statement Components of a good Mission statement

A firm’s theory about how to gain competitive advantage Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives

Components of a Good Mission Statement must address: Who are the customers What are the major products & services Market- geography Technology – currency Is it committed to growth and financial soundness? Philosophy – beliefs, values, ethics Self concept – distinctive competence Concern for public image- social community, and environment Employees.

Measures of Performance Financial measures Adjusted measures

Evaluating External Environment STEP Porter’s Five Forces Model

Components of the General Environment Economic Demographic Sociocultural Competitive Environment Industry Environment Political/Legal Global Technological 10

Forces Driving Industry Competition Threat of New Entrants Bargaining Power of Suppliers of Buyers Relative of Unions, Governments, etc. Potential Threat of Substitute Products or Services Industry Competitors Rivalry Among Existing Firms Other Stakeholders Buyers Substitutes Suppliers Prentice Hall, 2000 Chapter 3

Internal Evaluation Resource Based View The Value Chain Competitive advantage is derived from firm’s development of resources and capabilities. Core competence The Value Chain Internal Factor Evaluation

Neither Porter’s model nor the RBV talk of the customer. Delta Model strives to do this. Read : The Delta Model – towards a Unified Framework of Strategy, Hax and Wilde, MIT Working Paper Sep. 2002

Strategy Analysis and Choice SWOT / TWOS Matrix SPACE – Strategic Position & Action Evaluation) BCG Matrix for Portfolio of Products Internal External matrix

Strengths-Opportunities (SO) Weaknesses-Opportunities (WO) Strengths-Threats (ST) Weaknesses-Threats (WT)

Relative Market Share Position Industry Sales Growth Rate BCG Matrix Relative Market Share Position High 1.0 Medium .50 Low 0.0 Dogs IV Cash Cows III Question Marks (Problem child) I Stars II Industry Sales Growth Rate High +20 Medium Low -20

Business level Strategies Vertical Integration Cost Leadership Product Differentiation Flexibility Tacit Collusion

Generic Strategies Cost Leadership Differentiation Focus

Corporate Level Strategies Strategic Alliance Corporate Diversification Mergers & Acquisitions

Soon…in 2nd semester Issues Implementation Evaluation Globalisation Innovation