1. STRATEGY MBA BOOK REVIEW MICASA HOTEL 19th October 2002
Zuwailiah Jamaludin
October 2002

2. STRATEGY TOPICS The Seven S Models The Value Chain
Integration and Expansion Strategies
Industry Analysis
Competitive Strategies
Signaling
Portfolio Strategies
Globalization
Synergy
Incrementalism

3. FORMATION IMPLEMENTATION
STAGES OF STRATEGIC PLANNING
FORMATION
IMPLEMENTATION

4. SEVEN S MODEL Strategy is interwoven within organisation fabric
Structure
Strategy
Systems
Superordinate
goals
Style
Skills
Staff

5. THE VALUE CHAIN INTERGRATION
After determining the business of the company, next ? is….
VALUE CHAIN
Assess the value company adds to its products at each link
in the chain
INTEGRATION
Forward and backward integration
forward - towards consumer
backwards - towards raw materials
Vertical and horizontal integration
vertical - can describe both forward or backward
horizontal - acquire competitor

6. LEVELS OF STRATEGY Three levels of strategy FUNCTIONAL STRATEGY :
operational methods and “value adding” activities that
management chooses
BUSINESS STRATEGY :
battle plans and tactics to fight competition
CORPORATE STRATEGY :
what business should company be in

7. EXPANSION STRATEGY The Ansoff Matrix
> co must have enough money and mngt time to expand effectively
The Ansoff Matrix
NEW
OLD
Expansion
(Product
development)
OLD
Market
Penetration
MARKET
Related
Diversification
(Market
development)
Unrelated
Diversification
NEW
PRODUCT

8. INDUSTRY ANALYSIS Forces that drive industry competition
PORTER’S 5 FORCES THEORY OF INDUSTRY STRUCTURE
Potential
entrants
Threat
Bargaining power
Bargaining power
Industry
competition
Rivalry
Suppliers
Buyers
Threat
Substitutes

9. GENERIC STRATEGIES Three Generic Strategies OVERALL COST
STRATEGIC ADVANTAGE
Uniqueness
Low cost position
OVERALL COST
LEADERSHIP
DIFFERENTIATION
Industry wide
STRATEGIC TARGET
Particular segment
FOCUS

10. COMPETITIVE TACTICS : SIGNALING
Signaling a key strategic tool
Six types of legal signals ;
Price movements
Prior announcements
Media discussions
Counterattack
Announce results
Litigation

11. PORTFOLIO STRATEGIES Corporate level strategic planning
Three major portfolio models 1
The BCG Business Portfolio Chart
QUESTION MARK
Large -
cash flow
STAR
+ or -
cash flow
High
Industry
growth
(cash use)
Optimum
cash flow
CASH COW
Large +
cash flow
DOG
+ or -
cash flow
Low
High
Low
Relative Market Share
(cash generation)

12. I = Invest/Grow S = Selectivity / earnings H = Harvest / Divest
PORTFOLIO STRATEGIES 2
The McKinsey Company Position / Industry
Attractiveness Screen S I I
HIGH
Business
position H I S
MEDIUM H H S
LOW
HIGH
LOW
MEDIUM
Industry attractiveness
I = Invest/Grow S = Selectivity / earnings H = Harvest / Divest

13. PORTFOLIO STRATEGIES 3 ADL - a system that revolves around SBU
Has four steps ;
1. Classify all businesses into SBUs
2. Place SBUs into matrix
3. Evaluate condition each SBU operate in
4. Make a decision

14. Green > high market share / in attractive markets
Traffic light marker ;
Green > high market share / in attractive markets
Yellow > caught in the middle
Red > poor prospects or mature markets
ADL Strategic Business Unit Model G G G G
Leading G G G Y
Strong G G Y R
Favourable
Competitive
Position G
Tenable Y R R Y R R R
STRATEGY ;
BUILD
MAINTAIN
LIQUIDATE
Weak R R R R
Nonviable
Embryonic
Growth
Maturity
Aging
Industry maturity

15. GLOBALISATION AND STRATEGY
Forces encouraging Globalization ;
Improved Communication and Transportation
Fewer Trade Restrictions
Convergence of Consumers
Technological Complexities and Change
MNC rivalries
Forces hindering Globalization ;
Cost of Coordination
Geographic Restraints
National Differences
Protectionism

16. SYNERGY AND STRATEGY Benefit derived from combining > 1 businesses
Mergers
Consider Linkages and Interrelationships ;
MARKET LINKAGES
Customer base
Distribution channel
Brand identification
TECHNOLOGICAL LINKAGES
Operations technologies
New Product technologies
Information technologies
PRODUCT LINKAGES
Product line extension
Excess production
Materials procurement
Staff functions
INTANGIBLE LINKAGES
Shared material know-how
Same experience
Similar configuration of value chain
Similar generic strategies

17. THANK YOU