1. CHAPTER 8 Strategy Formulation: Functional Strategy & Strategic Choice
STRATEGIC MANAGEMENT & BUSINESS POLICY 11TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
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2. Functional Strategy
The approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity
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3. Advertising and promotion
Functional Strategy
Marketing Strategy –
Pricing
Selling
Distribution
Product development
Line extension
Advertising and promotion
Push strategy
Pull strategy
Skim pricing
Penetration pricing
Dynamic pricing
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4. Financial Strategy – R&D Strategy – Leveraged buyout
Functional Strategy
Financial Strategy –
Leveraged buyout
Reversed stock split
Tracking stock
R&D Strategy –
Technological leader
Technological follower
Open innovation
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5. Operations Strategy – Job shop Connected line batch flow
Functional Strategy
Operations Strategy –
Job shop
Connected line batch flow
Flexible manufacturing systems
Dedicated transfer lines
Mass production
Continuous improvement system
Modular manufacturing
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6. Purchasing Strategy – Logistics Strategy – HRM Strategy –
Functional Strategy
Purchasing Strategy –
Multiple sourcing
Sole sourcing
Just-in-time (JIT)
Parallel sourcing
Logistics Strategy –
Centralization
Outsourcing
Internet
HRM Strategy –
360 degree appraisal
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7. Should a company outsource a function?
Proposed Outsourcing Matrix
Should a company outsource a function?
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8. Should a company outsource a function?
Functional Strategy
Should a company outsource a function?
Maybe Not: Outsourcing errors –
Activities that should not be outsourced
Wrong vendor selection
Writing poor contract
Overlooking personnel issues
Hidden costs of outsourcing
Failing to plan exit strategy
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9. Strategies to Avoid – Follow the leader Hit another home run Arms race
Functional Strategy
Strategies to Avoid –
Follow the leader
Hit another home run
Arms race
Do everything
Losing hand
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10. Growth Strategies -- External mechanisms Mergers Acquisitions
Corporate Strategy
Growth Strategies --
External mechanisms
Mergers
Acquisitions
Strategic alliances
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11. Subjective Factors Affecting Decisions --
Functional Strategy
Subjective Factors Affecting Decisions --
Management’s attitude toward risk
Pressures from stakeholders
Pressures from corporate culture
Needs and desires of key managers
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12. Avoiding the Consensus Trap --
Strategic Choice
Avoiding the Consensus Trap --
Devil’s Advocate
Dialectical Inquiry
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13. Evaluation of Strategic Alternatives --
Strategic Choice
Evaluation of Strategic Alternatives --
Mutual exclusivity
Success
Completeness
Internal consistency
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