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Chapter 7

Chapter 7. Strategic Management: Planning for Long-Term Success. Chapter Outline. Strategic Management = Strategic Planning + Implementation + Control. Chapter Outline (continued). Thinking Strategically Synergy Porter’s Generic Competitive Strategies

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Chapter 7

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  1. Chapter 7 Strategic Management: Planning for Long-Term Success

  2. Chapter Outline Strategic Management = Strategic Planning + Implementation + Control

  3. Chapter Outline(continued) Thinking Strategically • Synergy • Porter’s Generic Competitive Strategies • Business Ecosystems: A New Strategic Perspective • Strategy.com

  4. Chapter Outline (continued) The Strategic Management Process • Formulation of a Grand Strategy • Formulation of Strategic Plans

  5. Chapter Outline(continued) Strategic Implementation and Control • Implementation of Strategic Plans • Strategic Control • Corrective Action Based on Evaluation and Feedback

  6. Chapter Outline(continued) Forecasting • Types of Forecasts • Forecasting Techniques

  7. DIFFERENT STRATEGY-MAKING MODESTable 7.2 Traditional Modes: • Command (Commanders and Soldiers) • Symbolic (Coaches and Players) • Rational (Bosses and Subordinates)

  8. DIFFERENT STRATEGY-MAKING MODES(continued) Modern Modes: • Transactive (Facilitators and Participants) • Generative (Sponsors and Entrepreneurs)

  9. STRATEGIC MANAGEMENT = STRATEGIC PLANNING + IMPLEMENTATION + CONTROL Strategic management: the ongoing process of ensuring a competitively superior fit between an organization and its changing environment. Strategy: “the pattern of decisions a firm makes.” “The strategic management perspective is the product of a historical evolution and is now understood to include budget control, long-range planning, and strategic planning.”

  10. SYNERGY(Thinking Strategically) Synergy: occurs when two or more variables (for example, chemicals, drugs, people, organizations) interact to produce an effect greater than the sum of the effects of the variables acting independently. • The 1 + 1 = 3 effect • The whole is greater than the sum of its parts

  11. SYNERGY(Thinking Strategically)(continued) Four Kinds of Synergy: • Market synergy • Cost synergy • Technological synergy • Management synergy

  12. SYNERGY(Thinking Strategically)(continued) Individual Exercise: What kinds of synergy have you achieved in your personal affairs? Team Exercise: How many examples of synergy in the business world can you identify in five minutes?

  13. PORTER’S GENERIC COMPETITIVE STRATEGIES(Thinking Strategically) Differentiation: “the ability to provide unique and superior value to the buyer in terms of product quality, special features, or after-sale service.”

  14. PORTER’S GENERIC COMPETITIVE STRATEGIES(Thinking Strategically)(continued) Cost Leadership Strategy • Competitive scope: Broad target • Competitive advantage: Lower cost

  15. PORTER’S GENERIC COMPETITIVE STRATEGIES(Thinking Strategically)(continued) Differentiation Strategy • Competitive scope: Broad target • Competitive advantage: Differentiation

  16. PORTER’S GENERIC COMPETITIVE STRATEGIES(Thinking Strategically)(continued) Cost Focus Strategy • Competitive scope: Narrow target • Competitive advantage: Lower cost

  17. PORTER’S GENERIC COMPETITIVE STRATEGIES(Thinking Strategically)(continued) Focused Differentiation Strategy • Competitive scope: Narrow target • Competitive advantage: Differentiation

  18. BUSINESS ECOSYSTEMS(Thinking Strategically) Business ecosystem: an economic community of organizations and all their stakeholders, including suppliers and customers. Key theme:“Organizations need to be as good at cooperating as they are at competing if they are to succeed.”

  19. BUSINESS ECOSYSTEMS(Thinking Strategically)(continued) James F. Moore:“the major factor today limiting the spread of realized innovation is not a lack of good ideas, technology, or capital. It is the inability to command cooperation across broad, diverse communities of players who must become intimate parts of a far-reaching process of coevolution.”

  20. BUSINESS ECOSYSTEMS(Thinking Strategically)(continued) Individual or Team Exercise: Pick a well-known organization and identify members of its ecosystem. What organization is dominant in that ecosystem?

  21. STRATEGY.COM (Thinking Strategically) E-Commerce Strategy Lessons: • Different types and combinations of revenue sources will require different business models. • Loyal customers still expect a personal touch and some “hand holding” when they have questions, problems, or suggestions. • Identify core competencies to decide which bricks-and-mortar facilities earn their keep.

  22. STRATEGY.COM (Thinking Strategically)(continued) E-Commerce Strategy Lessons: • E-commerce sometimes requires a quick revolution, rather than slow evolution. (Start with a blank sheet of paper. Cannibalism may pay.) • E-commerce customers increasingly want high ethical standards throughout the supply chain. • “Only the paranoid survive.” (Everyone is a potential competitor in e-commerce.

  23. THE STRATEGIC MANAGEMENT PROCESS 1. Formulation of a grand strategy • Grand strategy: a general explanation of how the organization’s mission is to be accomplished. • Situational analysis: a technique for matching organizational strengths and weaknesses with environmental opportunities and threats to determine the organization’s right niche. (SWOT analysis)

  24. THE STRATEGIC MANAGEMENT PROCESS(continued) 2. Formulation of strategic plans 3. Implementation of strategic plans 4. Strategic control

  25. CONDUCTING A SWOT ANALYSIS(A Team Exercise) Instructions:Select a well-known organization and complete the following SWOT analysis. (Tip: Work on one variable at a time.) Next, outline a strategic direction for the organization, based on your SWOT analysis.

  26. CONDUCTING A SWOT ANALYSIS(A Team Exercise) (continued) Organization:_____________________ Organization Strengths Weaknesses

  27. CONDUCTING A SWOT ANALYSIS(A Team Exercise) (continued) Environment Opportunities Threats

  28. FORECASTING Forecasts: predictions, projections, or estimates of future events or conditions in the environment in which the organization operates.

  29. FORECASTING(continued) Types of Forecasts • Event outcome forecasts: used when strategists want to predict the outcome of highly probable future events. • Event timing forecasts: predict when, if ever, given events will occur. • Time series forecasts: seek to estimate future values in a sequence of periodically recorded statistics.

  30. FORECASTING(continued) Forecasting Techniques • Informed judgment • Scenario analysis (Longitudinal and cross-sectional scenarios) • Surveys • Trend analysis

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