Strategic Management

If you don’t have a map, any route you take will get you where you are going. Peter Drucker If a man take no thought about what is distant, he will soon find sorrow near at hand. He who will not worry about what is far off will soon find something worse than worry. Confucius

Strategic Planning What is the strategic management process? External environment analysis Internal environment and strategic direction SWOT analysis Formulation, Implementation and Control

Strategic Management Process External and Internal Environmental Analysis Strategic Direction Strategy Formulation Strategy Implementation and Control Strategic Restructuring

Strategy and Strategic Management Strategy and Competitive Advantage Strategy is an action focus that links an organization to its environment

Strategy and Strategic Management The Strategic Management Process the process of formulating and implementing strategies to advance an organization’s mission and objectives and secure competitive advantage

Strategy and Strategic Management The Strategic Management Process Strategy formulation (Drucker) What is our business mission? Who are our customers? What do our customers consider value? What have been our results? What is our plan?

Strategy and Strategic Management The Strategic Management Process Strategy implementation putting plans into action

Strategy and Strategic Management Analysis of Mission, Values, and Objectives Mission statement domain customers products and/or services location philosophy

Strategy and Strategic Management Analysis of Mission, Values, and Objectives Strategic constituencies analysis assessment of how well the organization serves stakeholders

Strategy and Strategic Management Analysis of Mission, Values, and Objectives Core values broad beliefs about what is/is not appropriate Objectives direct activities toward key and specific results

SWOT Opportunities Weaknesses Strengths Threats

Strategy and Strategic Management Analysis of Organizational Resources and Capabilities SWOT analysis Organizational Strengths Weaknesses Environmental Opportunities Threats

Situation Analysis (SWOT) Strengths What resources and capabilities do you possess that can lead to a competitive advantage for position and market share in the industry?

Situation Analysis (SWOT) Weaknesses What resources and capabilities do you not possess, but are necessary to compete for position and market share in the industry?

Situation Analysis (SWOT) Opportunities Conditions in the external environment that that allow you to take advantage of your strengths, overcome your weaknesses or neutralize threats.

Situation Analysis (SWOT) Threats Conditions in the external environment that may stand in the way of achieving corporate goals and objectives.

Strategies Used by Organizations Levels of Strategy corporate business functional

Strategies Used by Organizations Types of Strategies growth concentration diversification

Strategies Used by Organizations Types of Strategies retrenchment (defensive) turnaround divestiture liquidation

Strategies Used by Organizations Types of Strategies stability combination used by large and complex organizations

Strategy Formulation Opportunities for Competitive Advantage Cost and quality Knowledge and timing Barriers to entry Financial resources

Strategy Formulation Boston Consulting Group (BCG) Matrix ties strategy formulation to analysis of business opportunities according to market growth rate and market share stars cash cows question marks dogs

Strategy Formulation Portfolio Planning investing scarce organizational resources among competing business opportunities

Porter’s Five Competitive Forces New Entries Industry Environment Direct Competition Buyers Suppliers Substitutes

Competition The healthcare industry: Complex Highly competitive High tempo of change External Environment Highly demanding consumers, Government regulation New entries Group practice, Ambulatory centers

Competition (con’t) Buyers Suppliers Substitutes Employers Health plans Suppliers Physicians Substitutes Generic Rx Alternative health care

Strategy Formulation Porter’s Competitive Strategies Model new competitors bargaining power of suppliers bargaining power of customers threats of substitute products and services competition between existing companies

Strategy Formulation Porter’s Competitive Strategies Model Strategies to Gain Competitive Advantage differentiation cost leadership focus

Business Strategy (Domain and Navigation) Low-Cost leadership (volume discounts) Differentiation (set apart from other competitors) Focused (a niche market combining differentiation and low-cost leadership)

Strategy Formulation Corporate Strategy (Domain) Specialization/niche Vertical integration (forward and backward) Horizontal integration Diversification Retrenchment or divestiture Strategic alliances (joint ventures, mergers and consolidations)

Strategy Formulation Product Life Cycles Stages introduction growth maturity decline

Strategy Formulation Emergent Strategies Logical incrementalism develop progressively over time Logical incrementalism strategies that develop as modest adjustments to past patterns

Strategy Implementation Strategic Management Failures Substance inadequate attention to major strategic planning elements Process poor handling of strategy implementation

Strategy Implementation Leadership and Top Management Teams effective strategy implementation depends on all managers Corporate Governance boards of directors inside outside

Strategy and Entrepreneurship Who are the Entrepreneurs? Risk-taking individuals who pursue opportunities that others do not see

Strategy and Entrepreneurship Typical Characteristics of Entrepreneurs internal locus of control high energy level high need for achievement tolerance for ambiguity self-confidence action oriented

Strategy and Entrepreneurship Entrepreneurship and Small Business Small business fewer than 500 employees most common type of business in the U.S. high failure rate

Strategy and Entrepreneurship Small Business Development Small Business Administration (SBA) Small Business Development Centers offer guidance on how to run a business successfully

Strategy and Entrepreneurship Entrepreneurship and Large Enterprises intrapreneurship entrepreneurial behavior within large organizations skunk works groups of employees work in a creative setting