1. STR 581 STRATEGIC MANAGEMENT Week 4

2. Strategic Planning and Implementation

3. Hierarchical Structure of a Strategic Plan
MISSION STATEMENT
VISION STATEMENT
STATEMENT OF VALUES
SWOT ANALYSIS
STRATEGIES
GOALS AND OBJECTIVES
INITIATIVES, PROJECTS, AND TASKS
OUTCOMES AND PERFORMANCE MEASUREMENTS

4. Strategic Planning and Implementation
According to your authors,
The External Environment is impacted very little by the Strategic Planning Process.
Is this true or false?
Each step in the process has a major impact on the next step, but not visa versa.

5. Long-Term Objectives and Strategies
Chapter 7

6. Corporate Strategy
For many, “Corporate Strategy” is synonymous to “Long-Term Objectives”.
Takes a long time (more than one year) to accomplish or see results.
Can focus on these areas:
Long Term Profitability
Productivity (Efficiencies) (Output) (Waste)
Competitive Position (Market Share)
Employees (Grown and Development) (Morale)
Innovation (Leadership in Technology)
Public or Social Responsibility
What is the best use of corporate profits?
Return on investment to shareholders or owners
Re-invest back into the corporation.
How?
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7. Qualities of Corporate Strategies and Long-Term Objectives
Criteria that should be used in preparing long-term strategies and objectives:
Flexible
Measurable
Motivating to the organization
Suitable, applicable, and realistic
Understandable
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8. The Best Value Disciplines
Operational Excellence This strategy attempts to lead the industry in price and convenience by pursuing a focus on lean and efficient operations Customer Intimacy Customer intimacy means continually tailoring and shaping products and services to fit an increasingly refined definition of the customer
Product Leadership Companies that pursue the discipline of product leadership strive to produce a continuous state of state-of-the-art products and services
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9. Generic Strategies
A core idea about how a firm can best compete in the market place.
Generic strategies service as a basis for Grand Strategies.
Strategies that all companies or organization can adopt.
3 Generic Strategies:
Striving for overall low-cost leadership in the industry.
Striving to create and market unique products for varied customer groups through differentiation.
Focusing on the needs of a particular market segment.
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10. Low-Cost Leadership
Low-cost strategists usually excel at cost reductions and efficiencies .
They maximize economies of scale, implement cost-cutting technologies, stress reductions in overhead and in administrative expenses, and use volume sales techniques.
A low-cost leader is able to use its cost advantage to charge lower prices or to enjoy higher profit margins
If your company were able to cut its costs, would a) you pass these savings on to the customer (reduce the price) in the hopes of increasing your market share, or b) keep the price the same and increase your profit margin, knowing you won’t increase your market share.
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11. Low Cost Leadership Example
OPTION ONE:  Cut Costs  Cut Prices
 Reduce Profit Margin Per Unit Sold
Increase Total Units Sold (Increase Market Share)
OPTION TWO:  Cut Costs  Keep Prices The Same
Increase Profit Margin Per Unit Sold
Quantities Sold (Market Share) Remains The Same

12. Differentiation
Easily answers the question: “What makes my product different that my competitors don’t offer”?
Strategies dependent on differentiation are designed to appeal to customers with a special sensitivity for a particular product attribute
By stressing the attribute above other product qualities, the firm attempts to build customer loyalty
Often such loyalty translates into a firm’s ability to charge a premium price for its product
The product attribute also can be the marketing channels through which it is delivered, its image for excellence, the features it includes, and its service network
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13. Market Focus
A strategy that attempts to attend to the needs of a particular market segment
A company pursuing a market focus strategy is willing to service isolated geographic areas; to satisfy the needs of customers with special financing, inventory, or servicing problems; or to tailor the product to the somewhat unique demands of the small- to medium-sized customer
The company has to consider the potentially lost sales and profits from ignored or unserved customer segments
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14. Grand Strategies
Grand strategies, often called master or business strategies, become more specific and provide basic direction for major company actions.
Strategies that will require the company to develop specialization or intimate knowledge in a particular area.
15 Grand Strategies
Big Hairy Audacious Goals (BHAGs)—Jim Collins
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15. Grand Strategies Concentrated Growth
A company directs investment and resources to the profitable growth of a dominant line of products in a very specific industry.
The least costly and least risky strategy.
Lowes/Home Depot
Conditions That Favor Concentrated Growth
Low technology
Markets are not saturated
Distinct products
Stable inputs and suppliers
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16. Grand Strategies Market Development
Adopting an aggressive marketing or promotional campaign on a product or product line. (Insurance, Cell Providers)
Marketing present products, often with only cosmetic modifications, to customers in related market areas by adding channels of distribution or by changing the content of advertising or promotion.
Frequently, changes in media selection, promotional appeals, and distribution are used to initiate this approach
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17. Grand Strategies Product Development
Attempts to develop substantial modifications to existing products that appeal to customers
Can also attempt to develop the creation of new but related products that can be marketed to current customers through established channels (automotive industry)
Requires some investment in Research and Development
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18. Grand Strategies Innovation
Requires a substantial investment in Research and Development
Developing products or services not currently offered by competitors
The underlying rationale of the grand strategy of innovation is to create a new product life cycle and thereby make similar existing products obsolete
Successful innovation is complemented by a strong marketing strategy
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19. Horizontal Integration
When a company’s long-term strategy is based on growth through the acquisition of one or more similar companies operating at the same stage of the production-marketing chain, its grand strategy is called horizontal integration
BUYING OUT YOUR COMPETITION
Such acquisitions eliminate competitors and provide the acquiring firm with access to new markets
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20. Grand Strategies Vertical Integration
When a firm’s grand strategy is to acquire firms that supply it with inputs (such as raw materials) or are customers for its outputs (such as warehouses for finished products), vertical integration is involved
BUYING OUT YOUR SUPPLIERS AND DISTRIBUTORS
The main reason for backward integration is the desire to increase the dependability of the supply or quality of the raw materials used as production inputs
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21. Ex. 7.7 Vertical and Horizontal Integrations
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22. Grand Strategies Concentric Diversification
Concentric diversification involves the acquisition of businesses that are related to the acquiring firm in terms of technology, markets, or products (Boeing)
BUYING COMPANIES IN A CLOSELY RELATED INDUSTRY.
The ideal concentric diversification occurs when the combined company profits increase the strengths and opportunities and decrease the weaknesses and exposure to risk
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23. Grand Strategies Conglomerate Diversification
Acquiring companies that are not in your industry.
Acquire a company because it’s a good investment, not because it complements or enhances your existing product line
Unlike concentric diversification, conglomerate diversification gives little concern to creating product-market synergy with existing businesses
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24. Grand Strategies Turnaround
Adopted when a company is experiencing difficulties, such as declining profits, production inefficiencies, low employee morale, etc.
Strategic managers often believe the firm can survive and eventually recover if a concerted effort is made to fix the problem(s).
If a turnaround strategy is effective, the company can become more aggressive in the market place
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25. Grand Strategies Divestiture
A divestiture strategy involves the sale of a company or a major component of a firm
Adopted when a turnaround strategy fails
The company continues to operate
Liquidation
The company sells off part of its assets.
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26. Grand Strategies Bankruptcy Adopted when a turnaround strategy fails
Two notable types of bankruptcy
Chapter 7—Liquidation bankruptcy
Chapter 11—Reorganization bankruptcy
Liquidation bankruptcy—agreeing to a complete distribution of a company’s assets to creditors, most of whom receive a small fraction of the amount they are owed.
Reorganization bankruptcy—the managers believe the firm can remain viable through reorganization
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27. Generic Strategies Joint Ventures
Occasionally two or more capable companies lack a necessary component for success in a particular competitive environment
The solution is a set of joint ventures, which are commercial companies (children) created and operated for the benefit of the co-owners (parents)
The joint venture extends the supplier-consumer relationship and has strategic advantages for both partners
Owners of each company take an equity ownership in the other company
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28. Generic Strategies Strategic Alliances
Strategic alliances are distinguished from joint ventures because the companies involved do not take an equity position in one another
In some instances, strategic alliances are synonymous with licensing agreements
Consortia
Large interlocking relationships between businesses of an industry
In Japan such consortia are known as keiretsus, in South Korea as chaebols
Their cooperative nature is growing in evidence as is their market success
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29. Guides To Developing Strategy: SWOT Analysis Guide 1
Go Into Trouble-Shooting Mode
Pro-Change Environment
“Go For The Kill”
Fend-Off Your Competitors
“Don’t Put All Your Eggs In One Basket”
Spread Your Risk
Consider an Exit Strategy
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30. The Balanced Scorecard
The Balanced Scorecard is a set of measures that are directly linked to the company’s strategy (Pierce)
The Balanced Scorecard is a performance management system that aligns goals and performance outcomes with an organization’s strategic priorities. (Pacheco)
Developed by Robert S. Kaplan and David P. Norton, it directs a company to link its own long-term strategy with tangible goals and actions.
The scorecard allows managers to evaluate the company from four perspectives:
1. Financial Performance 2. Customer Knowledge
3. Internal Business Processes 4. Learning and Growth
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31. Ex. 7.1 The Balanced Scorecard
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32. Week Five Assignment
Implementation, Strategic Controls, and Contingency Plans
Strategic Objectives
Functional tactics
Action items
Milestones and timelines
Tasks and task ownership
Resource allocation
Change Management strategies you believe your organization should adopt in order to enhance successful strategy implementation.
Key success factors and performance metrics.
Budgets and financials forecasts.
 Risk management plan, including contingency plans for identified risks
USE THE BALANCED SCORECARD TABLE PROVIDED BY THE PROFESSOR TO COMPLETE WEEK FIVE’S ASSIGNMENT

33. Balanced Scorecard Table

34. STR Questions