Strategic Management  Firms consider strategic management to be an ongoing process characterized by periodic progress evaluations and major plan analysis on a yearly basis  Such updates allow a firm to continually reconfigure its internal process and capabilities to create a better fit with the demands of the competitive situation

Strategic Management in Action -Mary Coulter Take away points  Internal Analysis  External Analysis  Competitive Strategies  Operational Strategies

Functional Strategies  Functional strategies are developed taking into account the organization’s vision, mission, corporate and competitive strategies  Coordination of all functional areas is key

The Internal Analysis  Evaluate yourself and your company from the inside out  What can or can’t we do well  What assets do/don’t have  What’s good/lacking or deficient

Importance  Resources: Financial, Physical, Human, Intangible, Structural/Cultural  Organizational Capabilities ====== Core Competencies ====== Distinctive Organizational Capabilities (Routines and Processes)

Goals  Reveals Strengths and Weaknesses  Helps companies know where they stand on the value chain  Allows testing of Strengths and Weaknesses against criterion  Competitive Advantages  Helps make Good Strategic Decisions

External Analysis  “The process of scanning and evaluating an organization’s external environment.”  Includes: Opportunities and Threats General, Specific and Organization environmental factors

External Analysis  Porter’s Five Forces:

External Analysis  Coca-Cola’s External Analysis: Threats  Red Ocean Competition Constant soft-drink competition  Consumer worries Obesity levels are a huge consumer concern

Competitive Advantage and How It Is Gained Competitive Advantage  Is what sets an organization apart - a competitive edge.  When you control or have something others do not have  When you do something better than other organizations  When you do something other organizations cannot do  Example: An example of control is Coca-Cola’s trade secret formula and their patent on the Coca Cola bottle shape.  Competitive strategies are designed to use an organization’s competitive advantage. This means just as you are doing this, other competitors are trying to do the same to attract customers.

Understanding the Competitive Environment Who are your competitors?  Industry perspective  Competitors are firms that are making the same products or providing the same service  Marketing perspective  Competitors are firms that satisfy the same customer needs  Strategic Group Perspective  Competitors are firms that follow similar strategies  Strategic group is a set of firms competing within an industry that have similar strategies & resources

Competitive Strategy What is competitive strategy?  Consists of business approaches to:  Attract customers by satisfying their expectations  Overcoming competitive pressures  Strengthening your market position  Utilizes competitive advantage by:  Finding ways to use resources & capabilities to set your firm apart from your competitors

Implementing Competitive Strategy  Without implementation, a strategy is nothing more than a strategic idea or plan.  Have a dual role in determining:  What competitive strategy is most appropriate?  How is the strategy implemented?  Competitive advantage comes from one of two sources:  Having the lowest cost in the industry  Possessing a product or offering a service that is perceived as unique in the industry  Another important factor is the scope of the product-market (broad or narrow)  Mix of these factors provide basis for choosing an approach:  Cost leadership strategy (low-cost strategy)  Differentiation strategy  Focus strategy

How to Do a Comprehensive Case Analysis (Appendix 1)  A case analysis tells a story about a company and the strategic issues its decision makers are facing, generally from the perspective of a strategic decision maker. FIN 4385 Example  In Short, to complete a case analysis you analyze the given case information, conduct a SWOT Analysis, and identify the major strategic issues facing the company and possible alternatives.

Executive Summary  An executive summary is comprised of a company’s vision/mission statements, company goals and company policies/values which outline the company’s purpose and aspirations. Coca-Cola’s mission is to “refresh the world, to inspire moments of optimism and happiness, and to create value and make a difference. Coca-Cola’s vision statement has 6 components: ○ People: Be a great place to work where people are inspired to be the best they can be. Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. Productivity: Be a highly effective, lean and fast-moving organization.

Executive Summary Continued  Coca-Cola’s Goals and Values: These include focusing on the market, working smart, living our values, act like owners and be the brand.

Six Parts of a Case Analysis 1. External Analysis- includes a description of the opportunities and threats found in the specific and general external environmental sectors and an explanation of why these areas were seen as opportunities and threats. 2. Internal Analysis- includes a description of the strengths and weaknesses found in the organization’s internal functional areas and an explanation of why these were seen as strengths and weaknesses. Financial Analysis- representation of past and current strategies of the company. Conduct the Financial Analysis using liquidity, leverage, activity and profitability ratios, along with charts of financial measures and comparisons to the industry averages, a list of the company’s financial strengths and weaknesses and a statement supporting the overall financial condition of the company.

Six Parts of a Case Analysis Continued 3. Strategic Issues- identifying the critical strategic issues facing the company and explain why seen as an issue. These include critical weaknesses, opportunities the company can take advantage of with their strengths, distinctive competencies, and any threats to protect themselves against. 4. Strategic Alternatives- are developed to address the strategic issues and can include the functional, competitive, and corporate strategies. 5. Recommendations- the recommendation describes the chosen alternative to resolve the issue, why it was chosen, and why the other alternatives were rejected as solutions to the company’s strategic issues. It covers the what, how, who, when and where. 6. Implementation- provides a description of what changes need to occur to implement the chosen strategy.

Corporate Strategy  Is a strategy that’s concerned with the choices of what business to be in and what to do with those businesses.  Establishes the overall direction the organization hopes to go  Three corporate strategic directions include:  Growth strategy  Stability strategy  Renewal strategy

How corporate strategy is evaluated and changed  Four main techniques include:  Corporate goals  Measuring efficiency, effectiveness, and productivity  Benchmarking  Portfolio analysis BCG matrix, the McKinsey-GE stoplight matrix, the product-market evolution matrix If the evaluation shows that the corporate strategy is not working, then strategic managers might first change the functional and competitive strategies or they might take more drastic action and change the corporate direction.

Conclusion  Strategic Management ?  Internal Analysis  What can or can’t we do well  External Analysis  Opportunities and Threats  Competitive Advantage  Who are your competitors?