1. Chapter 8 – Strategic Management
Importance of strategic management
Strategic management process
Components of a mission statement
Levels of strategy
Corporate level strategies
Growth strategies
Renewal strategies
Corporate portfolio matrix
Competitive advantage
Business level strategy (cost, differentiation, etc.)
Rule of Three

2. Strategic Management
The set of managerial decisions and actions that determines the long-run performance of an organization.

3. Why Strategic Management Is Important
It results in higher organizational performance.
It requires that managers examine and adapt to business environment changes.
It coordinates diverse organizational units, helping them focus on organizational goals.
It is very much involved in the managerial decision-making process.

4. The Strategic Management Process

5. Step 1: ID Current Mission, Goals, & Strategies
You know what goals and strategies look like from Ch. 7 – what do missions look like?
A mission is the firm’s reason for being, and usually includes some of the following items…

6. Components of a Mission Statement
Customers: Who are the organization’s customers?
Products or services: What are the organization’s major products or services?
Markets: Where does the organization compete geographically?
Technology: How technologically current is the organization?
Concern for survival growth, and profitability: Is the organization committed to growth and financial stability?
Philosophy: What are the organization’s basic beliefs, values, aspirations, and ethical priorities?
Self-concept: What is the organization’s major competitive advantage and core competencies?
Concern for public image: How responsive is the organization to societal and environmental concerns?
Concern for employees: Does the organization consider employees a valuable asset?
Exhibit 8.2
Source: Based on F. David, Strategic Management, 8th ed. (Upper Saddle River, NJ: Prentice Hall, 2001), pp. 65–66.

7. Steps 2 and 3: SWOT ANALYSIS
Strengths
(internal)
What does well?
What is it’s “competitive advantage” (core strength)?
What resources possess?
Opportunities
(external)
(positive trends)
Weaknesses
(internal)
What does poorly?
What resources don’t have?
Threats
(external)
(negative trends)

8. CSUN SWOT Strengths Low cost Focus on teaching Opportunities
Growing demographics
Web-based technology
Weaknesses
Inadequate resources
Too long to graduate
Can’t get classes
Threats
Tough economy
Emerging competitors (UOP)
Strategy: Offer on-line courses which are inexpensive, can enroll masses of students, and will help students get classes they need

9. Your Personal SWOT – Managing Your Career
Strengths
Talents, skills, abilities?
What activities do you enjoy?
What are you good at?
Opportunities*
What positive trends are affecting this industry? (job openings, new technologies, etc.)
Weaknesses
What aren’t you so good at?
What do you dislike doing?
Threats*
What negative trends are affecting this industry? (e.g., layoffs, outsourcing, cut-throat competition, etc.)
*Pick 2-3 industries you are interested in, and evaluate for each

10. Identifying the Organization’s Opportunities
Exhibit 8.3

11. Steps 4, 5, 6
Step 4: Formulate strategy (develop strategic alternatives and pick best one)
Step 5: Implement strategy
Step 6: Evaluate strategy (how effective were they? What adjustments are needed?

12. “The Golf Network” Questions
How did the company start?
What were its strengths (internal)
What were its weaknesses (internal)
What were the opportunities (external)
What were the threats (external)
What strategy is it using to succeed?
Do you think it will succeed?

13. Levels of Organizational Strategy
Exhibit 8.4

14. Levels of Organizational Strategies
Corporate: what businesses should we be in?
Business: How should we compete in each of our businesses?
Functional-Level Strategies: How can we support the business-level strategy?

15. Types of Corporate Strategies
Growth
Stability
Renewal

16. Types of Growth Strategies
Concentration
Vertical integration
Forward, backward
Horizontal integration
Diversification
Related, unrelated

17. Stability Strategy Seeks to maintain the status quo possibly to:
Deal with the uncertainty of a dynamic environment
Cope with industry slow- or no-growth
Owners of firm don’t want to grow for personal reasons

18. Renewal Strategies
Strategies to counter organization weaknesses that are leading to performance declines.
Retrenchment: eliminate non-critical weaknesses and restoring strengths
Turnaround: strong cost elimination measures and large-scale organizational restructuring solutions

19. The BCG Matrix
Exhibit 8.5

20. Forces in the Industry Analysis
Source: Based on M.E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: The Free Press, 1980).
Exhibit 8.6

21. Five Competitive Forces
Threat of New Entrants
The ease or difficulty with which new competitors can enter an industry.
Threat of Substitutes
The extent to which switching costs and brand loyalty affect the likelihood of customers adopting substitutes products and services.
Bargaining Power of Buyers
The degree to which buyers have the market strength to hold sway over and influence competitors in an industry.
Bargaining Power of Suppliers
The relative number of buyers to suppliers and threats from substitutes and new entrants affect the buyer-supplier relationship.
Current Rivalry
Intensity among rivals increases when industry growth rates slow, demand falls, and product prices descend.

22. Competitive Basic Strategies
Cost Leadership Strategy
Seeking to attain the lowest total overall costs relative to other industry competitors.
Differentiation Strategy
Attempting to create a unique and distinctive product or service for which customers will pay a premium.
Focus Strategy
Using a cost or differentiation advantage to exploit a particular market segment rather a larger market.

23. The Rule of Three
The competitive forces in an industry, if unfettered, will inevitably create a situation where three companies (full-line generalists) will dominate any given market
Some firms in the same market become super niche players and while others end up as “stuck-in-the-ditch” bottom dwellers.

24. First-Mover Advantages–Disadvantages
Reputation for being innovative and industry leader
Cost and learning benefits
Control over scarce resources and keeping competitors from having access to them
Opportunity to begin building customer relationships and customer loyalty
Disadvantages
Uncertainty over exact direction technology and market will go
Risk of competitors imitating innovations
Financial and strategic risks
High development costs
Exhibit 8.8