1. Strategy formulation --
Chapter 6 – Strategy Formulation: Situational Analysis & Business Strategy
Strategy formulation --
Strategic planning or long-range planning
Develops mission, objectives, strategies, policies
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2. Situational Analysis
- Process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses
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3. SFAS (Strategic Factors Analysis Summary) Matrix
The SFAS (Strategic Factors Analysis Summary) Matrix summarizes an organization’s strategic factors by combining the external factors from the EFAS Table with the internal factors from the IFAS Table. The SFAS Matrix requires the strategic decision maker to condense these strengths, weaknesses, opportunities, and threats into fewer than ten strategic factors. This is done by reviewing and revising the weight given each factor. The revised weights reflect the priority of each factor as a determinant of the company’s future success. The highest weighted EFAS and IFAS factors should appear in the SFAS Matrix.
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4. Niche -- Need in the marketplace that is currently unsatisfied
Situational Analysis
Niche --
Need in the marketplace that is currently unsatisfied
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5. Corporate Goal -- Find favorable niche Strategic window
Situational Analysis
Corporate Goal --
Find favorable niche
Strategic window
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6. SWOT -- Internal External Strengths/Weaknesses Opportunities/Threats
Situational Analysis
SWOT --
Internal
Strengths/Weaknesses
External
Opportunities/Threats
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7. TOWS (Threats, Opportunities, Weaknesses, and Strengths) Matrix
The TOWS Matrix is a relatively simple tool for generating strategic options. By using it, you can look intelligently at how you can best take advantage of the opportunities open to you, at the same time that you minimize the impact of weaknesses and protect yourself against threats.
Used after detailed analysis of your threats, opportunities, strength and weaknesses, it helps you consider how to use the external environment to your strategic advantage, and so identify some of the strategic options available to you.
At a practical level, the only difference between TOWS and SWOT is that TOWS emphasizes the external environment whilst SWOT emphasizes the internal environment.
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8. Business Strategy
Focuses on improving competitive position of company’s products or services within the specific industry or market segment
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9. Competitive Strategy --
Porter’s Competitive Strategies
Competitive Strategy --
Low cost
Differentiation
Direct competition
Focus on niche
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10. Generic Competitive Strategies --
Porter’s Competitive Strategies
Generic Competitive Strategies --
Lower Cost strategy
Greater efficiencies than competitors
Differentiation strategy
Unique/superior value, quality, features, service
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11. Competitive Advantage --
Porter’s Competitive Strategies
Competitive Advantage --
Determined by Competitive Scope
Breadth (wide range and scope) of the target market
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12. Porter’s Competitive Strategies
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13. Cost Leadership -- Low-cost competitive strategy Broad mass market
Porter’s Competitive Strategies
Cost Leadership --
Low-cost competitive strategy
Broad mass market
Efficient-scale facilities
Cost reductions
Cost minimization
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14. Differentiation – Broad mass market Unique product/service
Porter’s Competitive Strategies
Differentiation –
Broad mass market
Unique product/service
Premiums charged
Less price sensitivity
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15. Cost-Focus – Low-cost competitive strategy Focus on market segment
Porter’s Competitive Strategies
Cost-Focus –
Low-cost competitive strategy
Focus on market segment
Niche focused
Cost advantage in market segment
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16. Differentiation Focus –
Porter’s Competitive Strategies
Differentiation Focus –
Specific group or geographic market focus
Differentiation in target market
Special needs of narrow target market
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17. Stuck in the middle – No competitive advantage
Porter’s Competitive Strategies
Stuck in the middle –
No competitive advantage
Below-average performance
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18. Risks of Generic Strategies
Risks of Cost Leadership
Cost leadership is not sustained:
• Competitors imitate.
• Technology changes.
• Other bases for cost leadership erode.
Proximity in differentiation is lost.
Cost focusers achieve even lower cost in segments.
Risks of Differentiation
Differentiation is not sustained:
• Competitors imitate.
• Bases for differentiation become less important to buyers.
Cost proximity is lost.
Differentiation focusers achieve even greater differentiation in segments.
Risks of Focus
The focus strategy is imitated:
The target segment becomes structurally unattractive:
• Structure erodes.
• Demand disappears.
Broadly targeted competitors overwhelm the segment:
• The segment’s differences from other segments narrow.
• The advantages of a broad line increase.
New focusers subsegment the industry.
Risks of Cost Leadership
Cost leadership is not sustained:
• Competitors imitate.
• Technology changes.
• Other bases for cost leadership erode.
Proximity in differentiation is lost.
Risks of Differentiation
Differentiation is not sustained:
• Competitors imitate.
• Bases for differentiation become less important to buyers.
Cost proximity is lost.
Risks of Focus
The focus strategy is imitated:
The target segment becomes structurally unattractive:
• Structure erodes.
• Demand disappears.
Broadly targeted competitors overwhelm the segment:
• The segment’s differences from other segments narrow.
• The advantages of a broad line increase.
New focusers subsegment the industry.
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19. 8 Dimensions of Quality
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20. Timing Tactics -- First mover Late movers Competitive Tactics
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