Strategic Management models for powerpoint presentations

1. High Joint venture Foreign branch Foreign subsidiary Foreign branch Joint venture PRODUCT DIVERSITY Licensing/ Joint venture Licensing/ Export Low Low High MARKET COMPLEXITY Strategic Management... 100 Slides Powered by www.drawpack.com. All rights reserved.

2. Key Words... Strategic Pyramid – Strategic Vision – Strategy Alternatives – Five Forces Model – Competitive Advantage – Generic Strategies – Growth Strategies – Diversification Strategy – BCG Matrix – GE Business Screen – Cost Strategies – Exit/Entry Barriers – Resource Analysis – Core Competencies – Product-Life-Cycle – Top-Down-Management – Industry Analysis – International Strategies – SWOT Analysis – Portfolio Analysis – McKinsey’s 7-S Framework – Five-Phase Growth Model – Strategy Development – Merger&Acquisitions – Technology Strategies – Value Propositions – Ansoff Matrix – Experience Curve – Strategic Options – Window of Opportunity

3. Task 2 Task 3 Task 4 Task 5 Task 1 Evaluating performance, monitoring new developments, and initiating corrective adjustments Developing a strategic vision and business mission Crafting a strategy to achieve the objectives Implementing and executing the strategy Setting objectives Improve/ change as needed Improve/ change as needed Recycle to tasks 1, 2, 3 or 4 as needed Revise as needed Revise as needed The Five Tasks of Strategic Management

4. COMPANY APPROACHES Reactive/Follower Proactive/Leader Rushing to catch up to keep from being swamped by the waves Aggressively altering strategy to make waves and drive change Rapid Revolutionary Change FUTURE MARKET CONDITIONS Anticipating change and initiating strategic actions to ride the crest of the waves Revising strategy to catch the waves Gradual Evolutionary Change Strategic Approaches to Preparing for FutureMarket Conditions

5. A DIVERSIFIED COMPANY Responsibility of corporate-level managers Corporate Strategy Two-Way Influence Responsibility of business-level general managers Business Strategies Two-Way Influence Responsibility of heads of major functional activities within a business unit or division Functional Strategies (R & D, manufacturing, marketing, finance, human resources, etc.) Two-Way Influence Responsibility of plant managers, geographic unit managers, and lower- level supervisors Operating Strategies (regions and districts, plants, departments within functional areas) The Strategic-Making Pyramid I

6. A SINGLE – BUSINESS COMPANY Responsibility of executive-level managers Business Strategy Two-Way Influence Responsibility of heads of major functional activities within a business Functional Strategies (R & D, manufacturing, marketing, finance, human resources, etc.) Two-Way Influence Responsibility of plant managers, geographic unit managers, and lower- level supervisors Operating Strategies (regions and districts, plants, departments within functional areas) The Strategic-Making Pyramid II

7. Moves to respond and react to changing conditions in the macroenvironment and in industry and competitive conditions Planned, proactive moves to outcompete rivals Scope of geographic coverage Collaborative partnerships and strategic alliances with others BUSINESS STRATEGY Efforts to build competitive advantage Key functional strategies to build competitively valuable recource strengths and capabilities Financial strategy Human resources strategy R & D, technology, engineering strategy Supply chain management strategy Manufacturing strategy Sales, marketing, promotion & distribution strategies Identifying Strategy for a Single Business

8. LEVEL 1 Responsibility of corporate-level managers Overall Corporate Scope and Strategic Vision Corporate-Level Strategy Corporate-Level Objectives Two-Way Influence Two-Way Influence Two-Way Influence LEVEL 2 Responsibility of business-level general managers Business-Level Strategic Vision and Mission Business-Level Objectives Business-Level Strategy Two-Way Influence Two-Way Influence Two-Way Influence LEVEL 3 Responsibility of heads of major functional activities within a business unit or division Functional Area Missions Functional Strategies Functional Objectives Two-Way Influence Two-Way Influence Two-Way Influence LEVEL 4 Responsibility of plant managers, geographic unit managers, and managers of front-line operating units Operating Strategies Operating Unit Objectives Operating Unit Missions The Networking of Strategic Visions, Missions, Objectives, and Strategies

9. STRATEGY-SHAPING FACTORS EXTERNAL TO THE COMPANY Economic social, political, regulatory and community citizenship considerations Company opportunities and threats to the company‘s well-being Competitive conditions and overall industry attractiveness Conclusions concerning how internal & external factors stack up Crafting a strategy that fits the overall situation Identification and evaluation of strategy alternatives The mix of considerations that determines a company‘s strategic situation Company resource strengths, weaknesses, competencies, competitive capabilities Personal ambitions, business philosophies, ethical principles of key executives Shared values and company culture STRATEGY-SHAPING FACTORS INTERNAL TO THE COMPANY Factors Shaping the Choice of Company Strategy

10. MACROENVIRONMENT IMMEDIATE INDUSTRY & COMPETITVE ENVIRONMENT Technology Legislation and regulations Suppliers Substitute COMPANY Rival Firms Buyers Social Values and Lifestyles Population demographics New Entrants The Economy at large A Company‘s Macroenvironment

11. Firms in other industries offering Substitute Products Suppliers of raw materials, parts, components or other resource inputs RIVALRY AMONG COMPETING SELLERS Buyers Potential New Entrants The Five-Forces Model of Competition

12. Competitive Advantage Strategic Assets and Market Achievements Core and Distinctive Competencies Competitive Capabilities Company Resources Mobilizing Company Resources to Produce Competitive Advantage

13. Purchased Supplies and Inbound Logistics Distribution and Outbound Logistics Primary Activities and Costs Profit Margin Sales and Marketing Service Operations Product R & D, Technology and Systems Development Support Activities and Costs Human Resources Management General Administration Representative Company Value Chain

14. Company Value Chain Distribution Related Value Chains Customer Related Value Chains Supplier-Related Value Chains Activities, Costs and Margins of Forward Channel Allies and Strategic Partners Internally Performed Activities, Costs and Margins Activities, Costs, and Margins of Suppliers Buyer/End User Value Chains Representative Value Chain for an Entire Industry

15. TYPE OF COMPETITVE ADVANTAGE BEING PURSUED Lower Cost Differentiation Overall Low-Cost Leadership Strategy A Broad Cross-Section of Buyers Broad Differentiation Strategy Best-Cost Provider Strategy MARKET TARGET A Narrow Buyer-Segment (or Market Niche) Focused Differentiation Strategy Focused Low-Cost Strategy The Five Generic Competitive Strategies

16. Buildup Period Benefit Period Erosion Period Size of Competitive Advantage Size of advantage achieved Strategic moves are successful in producing a competitive advantage Imitation, duplication, and „attacks“ by rivals erode the advantage Time The Building and Eroding of Competitive Advantage

17. RESOURCES AND COMPETITIVE CAPABILITIES Tailored for home Market Transferable to other Countries Dodge Rivals by shifting to a new Business Model or Market Niche Contend on a Global Level High INDUSTRY PRESSURES TO GLOBALIZE Transfer Company Expertise to Cross-Border Markets Defend by using „Home-Field“ Advantages Low Strategy Options for Local Companies in Competing against Global Challengers

18. Strategy Horizon 3 Strategy Horizon 2 Portfolio of Strategy Initiatives „Long-Jump“ initiatives to sow the seeds for growth in in businesses of the future  Minimal revenue gains now and likely losses, but potential for significant contribution to revenues and profits in 5-10 years „Medium-Jump“ initiatives to leverage existing resources and capabilities to pursue growth in new businesses Moderate revenue and profit gains now, but foundation laid for sizable gains over next 2-5 years Strategy Horizon 1 „Short-Jump“ initiative to fortify and extend current businesses Immediate gains in revenues and profits Time The Three Strategy Horizons for Sustaining Rapid Growth

19. Representative Value Chain Activities Support Activities Supply Chain Activities Sales and Marketing Customer Service Distribution Business A Technology Operations Competitively valuable opportunities for technology or skills transfer, cost reduction, common brand name usage, and cross-business collaboration exist at one or more points along the value chains of A and B. Supply Chain Activities Sales and Marketing Customer Service Business B Distribution Technology Operations Support Activities Value Chains for Related Businesses

20. Representative Value Chain Activities Support Activities Supply Chain Activities Sales and Marketing Customer Service Business A Technology Operations Distribution An absence of competitively valuable strategic fits between the value chain for Business A and the value chain for Business B Sales and Marketing Supply Chain Activities Customer Service Technology Operations Business B Distribution Support Activities Value Chains for Unrelated Businesses

21. Divest Some of the Company‘s Existing Business Make New Acquisitions and/or Enter into Additional Strategic Partnerships  To narrow the company‘s business base and scope of operations To eliminate weak-performing businesses from portfolio To eliminate businesses that no longer fit  To build positions in new related/ unrelated industries To strengthen the position of business units in industries where the firm already has a stake Strategy Options for a Diversified Company Become a Multinational, Multi-Industry Enterprise Restructuring the Company‘s Portfolio of Businesses  To succeed in globally competitive core businesses against international rivals To capture strategic fit benefits and win a competitive advantage via multinational diversification  By selling poorly performing or noncore business units By using cash from divestitures plus unused debt capacity to make new acquisitions Strategy Options for a Company that is Already Diversified

22. Whether diversification is based narrowly in a few industries or broadly in many industries Approach to allocating investment capital and resources across business units Whether the businesses the company has diversified into are related, unrelated, or a mixture of both A Diversified Company‘s Strategy Whether the scope of company operations is mostly domestic, increasingly multinational or global Efforts to capture cross-business strategic fits Moves to strengthen positions in existing businesses via new acquisitions Moves to divest weak or unattractive businesses Moves to build positions in new industries via acquisitions, merger, internal start-up, or alliances Identifying a Diversified Company‘s Strategy – What to Look for

23. COMPETITIVE STRENGTHS/BUSINESS POSITION Strong Average Weak High Business F Business A LONG-TERM INDUSTRY ATTRACTIVENESS Medium Business B Business C High priority for investment Low Medium priority for investment Business E Business D Low priority for investment A Representative Nine-Cell Industry Attractiveness-Competitive Strength Matrix

24. Building an organisation with competencies, capabilities, and resource strengths Exercising the strategic leadership needed to drive implementation forward Allocating ample resources to strategy-critical activities The Strategy implementer‘s action agenda  What to do now vs. later  What requires much time and personal attention What can be delegated to others Shaping the work environment and corporate culture to fit the strategy Establishing strategy- supportive policies Tyring rewards and incentives to the achievement of key strategic targets Instituting best practices and pushing for continuous improvement Installing information, communication, and operating systems The Eight Big Managerial Components of Implementing Strategy

25. Staffing the Organization  Putting together a strong management team  Recruiting and retaining talented employees AN ORGANIZATION CAPABLE OF GOOD STRATEGY EXECUTION Building Core Competencies and Competitive Capabilities  Developing a competence/capability portfolio suited to current strategy  Updating and reshaping the portfolio as external conditions and strategy change Structuring the Organization and Work Effort  Organizing business functions and processes, value chain activities, and decision making The Components of Building a Capable Organization

26. 31 100 Value added related to distribution and marketing 31% 6 18 45 Value added related to supply and assembly 69% Purchasing R & D Price to Consumer Sales & Marketing Production Value Chain (as a Percent of Total Price to the Consumer)

27. FINISH START Length of the integration process (86% of companies admitted having inadequate communication channels) Excessive competition for leading positions Focusing on the old organizational chart rather than new business processes Concepts for integration are not detailed enough. The acquired company is supposed to accept the company culture of the purchaser Disregard for the needs of employees (61% of the companies surveyed defined reduction in headcount as the main goal to produce quick success) Conflicting goals among newly merged departments (76% of surveyed companies only focused on cost reductions) Disregard for change in the process of integrating in new partner (only 32% had an active risk management in place) Why do Mergers Fail?

28. Single-Industry Firm Supplier Value Chains Supplier Value Chains Channel Value Chains Buyer Value Chains Diversified Firm Firm Value Chain Business Unit Value Chain Buyer Value Chains Channel Value Chains Supplier Value Chains Business Unit Value Chain Business Unit Value Chain The Value Chain

29. FIRM INFRASTRUCTURE HUMAN RESOURCES MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT MARGIN INBOUND LOGISTICS MARKETING & SALES OUTBOUND LOGISTICS OPERATIONS SERVICE Marketing Management Sales Force Operations Technical Literature Sales Force Administration Advertising Promotion The Generic Value Chain

30. Risks of Cost Leadership Risks of Cost Differentiation Risks of Cost Focus Cost leadership is not sustained  competitors imitate  technology changes  other bases for costs leadership erode Differentiation is not sustained  competitors imitate  bases for differentiation become less important to buyers The focus strategy is imitated The target segment becomes structurally unattractive  structure erodes  demand disappears Proximity in differentiation is lost Cost proximity is lost Broadly targeted competitors overwhelm the segment  the segment‘s differences from other segments narrow  the advantages of a broad line increase Cost focuses achieve even lower cost in segments Differentiation focuses achieve even greater differentiation in segments New focuses subsegment the industry Risks of the Generic Strategies

31. COMPETITIVE ADVANTAGE Lower Cost Differentiation Broad Target 2. Differentiation 1. Cost Leadership COMPETITIVE SCOPE Narrow Target 3B. Differentiation Focus 3A. Cost Focus Three Generic Strategies

32. High Productivity Frontier NONPRICE BUYER VALUE DELIVERED Low Low High RELATIV COST POSITION Operational Effectiveness Versus Strategic Positioning

33. EXTENT OF DIFFERENTIATION/SEGMENTATION Low High Modest share difference needed for stability Good Competitions COMPETITORS Large share difference needed for stability Bad Competitions Competitor Configuration and Industry Stability

34. High Potentially important if cost behavior changes Strategic interrelationships PERCENTAGE OF OPERATING COSTS OR ASSETS REPRESENTED BY THE VALUE ACTIVITY Potentially important if cost structure changes Unimportant interrelationships Low Low High SENSITIVITY TO SCALE, LEARNING, OR UTILIZATION IN THE VALUE ACTIVITY Shared Value Activities and Cost Position

35. GEOGRAPHIC SCOPE Local Regional National Global Segment INDUSTRY SCOPE Industry Related Industries Leader Scope Possible Challenger Scope Alternative Scope of Leader and Challenger Strategies I

36. VERTICAL SCOPE More Extensive Backward Integration More Extensive Forward Integration Average Integration Segment INDUSTRY SCOPE Industry Leader Scope Related Industries Possible Challenger Scope Alternative Scope of Leader and Challenger Strategies II

37. Product Line Target Market Finance and Control Marketing GOALS Objectives for profitability, growth, market share, social responsiveness etc. Definition of how the business is going to compete Sales R & D Distribution Purchasing Labor Manufacturing The Wheel of Competitive Strategy

38. EXIT BARRIERS Low High Low, stable returns Low, risky returns Low ENTRY BARRIERS High, stable returns High, risky returns High Barriers and Profitability

39. Return on Investment Market Share Generic Competitive Strategies

40. Lacks Strengths Relative to Competitors for Remaining Pockets Has Strengths Relative to Competitors for Remaining Pockets Favorable Industry Structure for Decline Leadership or Niche Harvest or Divest Quickly Unfavorable Industry Structure for Decline Niche or Harvest Divest Quickly Firm‘s Strategic Needs to Remain in the Business

41. Criteria • Size • Market Growth, Pricing • Market Diversity • Competitive Structure • Industry Profitability • Technical Role • Social • Environmental • Legal • Human Industry Attractiveness Low High Medium High • Criteria • Size • Growth • Share • Position • Profitability • Margins • Technical Position • Strengths/Weaknesses • Image • Pollution • People Medium Business Unit Position Build Low Hold Harvest Five Forces Determining Segment Structural Attractiveness

42. The Quest for Competitiveness Restructuring the Portfolio and Downsizing Headcount Reengineering Process and Continuous Improvement Reinventing Industries and Regenerating Strategies Different Smaller Better The Quest for Competitiveness

43. Concept of „Served Market“ What customers and needs aren‘t we serving? Could profits be extracted at a different point in the value chain? Revenue and Margin Structure Might customers‘ needs be better served by an alternate configuration of skills and assets? Configuration of Skills and Assets Flexibility and Adaptiveness What is our vulnerability to „new rules of the game?“ Finding the Limits of the Current Economic Engine

44. CUSTOMER TYPES Served Unserved Articulated NEEDS Unexploited Opportunities Unarticulated Beyond „Customer-Led“

45. Accumulation of abundant resources Optimized business system Success confirms strategy Unparalleled track record of success No gap between expectations and performance A view that resources will win out Deeply etched recipes Momentum is mistaken for leadership Contentment with current performance Resources substitute for creativity Vulnerability to new rules Failure to „reinvent leadership“ INABILITY TO INVENT THE FUTURE! INABILITY TO ESCAPE THE PAST! Why do Great Companies Fail?

46. Concentrating Accumulating Conserving Complementing Recovering Categories of Resource Leverage

47. Creating and Managing Coalitions Learning and Experimentation in the Market Investing in Core Competencies Setting Standards and Influencing Regulation Building Global Brand and Distribution Managing Migration Paths

48. MARKET Existing New White spaces What new products or services could we create by creatively redeploying or recombining our current core competencies? Fill in the blanks What is the opportunity to improve our position in existing markets by better leveraging our existing core competencies? Existing CORE COMPETENCIES Premier plus 10 What new core competencies will we need to build to protect and extend our franchise in current markets? Mega-opportunities What new core competencies would we need to build to participate in the most exciting markets of the future? New Establishing the Core Competence Agenda

49. Banner Brand Business Units Core Products (Platforms) Core Competencies An Alternate Conception of the Diversified Firm

50. Coordination Effectiveness Transaction Costs Setup Costs Risk Capital (e.g., equipment, acquisitions) Information collection and processing Possibility for unreasonable price changes Run lengths, inventory levels Systems development Legal Supply or outlet foreclosure Capacity utilization Training Sales and purchasing Delivery performance Insulation from market (e.g., from technical changes, new products) Quality Criteria for Integration Decisions