1. CHAPTER 6 Strategy Formulation: Situation Analysis & Business Strategy
STRATEGIC MANAGEMENT & BUSINESS POLICY 12TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
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2. Strategy formulation --
Situational Analysis
Strategy formulation --
Strategic planning or long-range planning
Develops mission, objectives, strategies, policies
--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. IFAS – Maytag as Example
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4. EFAS – Maytag as Example
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5. SFAS Matrix
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6. Niche -- Corporate Goal --
Situational Analysis
Niche --
Need in the marketplace that is currently unsatisfied
Corporate Goal --
Find propitious niche
Strategic window
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7. SWOT -- Internal External Strengths/Weaknesses Opportunities/Threats
Situational Analysis
SWOT --
Internal
Strengths/Weaknesses
External
Opportunities/Threats
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8. TOWS Matrix
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9. Business Strategy
Focuses on improving competitive position of company’s products or services within the specific industry or market segment
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10. Competitive Strategy --
Porter’s Competitive Strategies
Competitive Strategy --
Low cost
Differentiation
Direct competition
Focus on niche
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11. 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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12. Competitive Advantage --
Porter’s Competitive Strategies
Determined by Competitive Scope
Breadth of the target market`
Competitive Advantage --
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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.
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.
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19. 8 Dimensions of Quality
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20. Industry Structure -- Fragmented Industry Consolidated Industry
Competitive Strategy
Industry Structure --
Fragmented Industry
Consolidated Industry
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21. Market Location Tactics --
Competitive Tactics
Timing Tactics --
First mover
Late movers
Market Location Tactics --
Frontal Assault
Flanking Maneuver
Bypass Attack
Encirclement
Guerrilla Warfare
Defensive Tactics --
Raise structural barriers
Increase expected retaliation
Lower the inducement for attack
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22. Mutual service consortia Joint ventures Licensing arrangements
Cooperative Strategies
Collusion
Strategic Alliances
Mutual service consortia
Joint ventures
Licensing arrangements
Value-chain partnerships
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