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STRATEGY

STRATEGY. MBA BOOK REVIEW MICASA HOTEL 19th October 2002. Zuwailiah Jamaludin October 2002. STRATEGY TOPICS. The Seven S Models The Value Chain Integration and Expansion Strategies Industry Analysis Competitive Strategies Signaling Portfolio Strategies Globalization

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STRATEGY

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  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. 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 > 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 STRATEGIC ADVANTAGE Uniqueness Low cost position OVERALL COST LEADERSHIP DIFFERENTIATION Industry wide STRATEGIC TARGET FOCUS Particular segment

  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 DOG + or - cash flow CASH COW Large + cash flow Low High Low Relative Market Share (cash generation)

  12. PORTFOLIO STRATEGIES 2 The McKinsey Company Position / Industry Attractiveness Screen I S I HIGH Business position H I S MEDIUM H H S LOW HIGH MEDIUM LOW 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. 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 Y R G 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

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