14 MBA Strategic Study Guide

g r a d u at e c o l l e g e o f m a n a g e m e n t

Strategic ManagementMNG00716revised by: Ben faranda

Study GuideSixth edition

2010 Southern Cross University Southern Cross University Military Road East Lismore NSW 2480 No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. Copyright material indicated in this work has been copied under Part VB of the Copyright Act 1968.

Sixth edition 2010

ContentsWelcome ........................................................................................................................................ 1 Using.the.Study.Guide.................................................................................................... 1 Topic 1 Introduction to strategic management.............................................................. 3 Introduction..................................................................................................................... 3 Understanding.and.formulating.strategy......................................................................... 5 Difference.between.strategy.and.tactics.......................................................................... 6 Evolution.of.strategic.management................................................................................. 7 Ethics,.business.models.and.strategic.success.............................................................. 10 Summary....................................................................................................................... 11 Feedback.to.selected.activities...................................................................................... 12 Topic 2 The five phases of strategic management................................................... 13 Introduction................................................................................................................... 13 Developing.a.strategic.vision........................................................................................ 14 Setting.objectives.......................................................................................................... 16 Crafting.a.strategy......................................................................................................... 19 Implementing.and.executing.the.strategy..................................................................... 20 . Evaluating.and.initiating.corrective.adjustments.......................................................... 20 Corporate.governance................................................................................................... 21 Summary....................................................................................................................... 21 Feedback.to.selected.activities...................................................................................... 22 Topic 3 External analysis: Industry and competitive analysis............................... 23 . Introduction................................................................................................................... 23 The.strategically.relevant.components.of.a.companys.external.environment............. 24 Thinking.strategically.about.a.companys.industry.and.competitive.environment. ..... 25 . Summary....................................................................................................................... 33 Topic 4 Analysing a companys resources and competitive position............... 35 Introduction................................................................................................................... 35 The.resource-based.view.of.the.firm............................................................................. 36 Question.1:.How.well.is.the.present.strategy.working?................................................ 40 SWOT.analysis.............................................................................................................. 40 Question.2:.Are.the.companys.prices.and.costs.competitive?..................................... 41 Question.3:.How.strong.is.the.companys.competitive.position?................................. 45 Question.4:.What.strategic.issues.merit.attention?....................................................... 45 Summary....................................................................................................................... 47i

ii

MNG00716 Strategic Management

Topic 5 The five generic competitive strategies......................................................... 49 . Introduction................................................................................................................... 49 Strategy.and.competitive.advantage. ............................................................................ 51 . The.five.generic.competitive.strategies......................................................................... 52 Summary....................................................................................................................... 56 Topic 6 Beyond competitive strategy.............................................................................. 57 Introduction................................................................................................................... 57 Strategic.alliances.and.collaborative.partnerships........................................................ 58 The.source.of.competitive.advantage:.Merger.and.acquisition.strategies.................... 59 . Vertical.integration.strategies........................................................................................ 60 Unbundling.and.outsourcing.strategies......................................................................... 60 Business.strategy.choices.for.specific.market.situations,.including.offensive.and.defensive. strategies........................................................................................................................ 61 Blue.Ocean.Strategies................................................................................................. 64 Defensive.strategy......................................................................................................... 64 First-mover.advantages................................................................................................. 65 Summary....................................................................................................................... 66 Feedback.to.selected.activities...................................................................................... 67 Topic 7 Competing in foreign markets............................................................................. 69 Introduction................................................................................................................... 69 Why.companies.expand.into.foreign.markets............................................................... 71 Cross-country.differences.in.cultural,.demographic.and.market.conditions................. 71 The.concepts.of.multi-country.competition.and.global.competition............................ 72 Strategy.options.for.entering.and.competing.in.foreign.markets.................................. 72 The.quest.for.competitive.advantage.in.foreign.markets.............................................. 73 Strategic.alliances.and.joint.ventures.with.foreign.partners......................................... 73 Competing.in.emerging.foreign.markets....................................................................... 74 Summary....................................................................................................................... 76 Feedback.to.selected.activities...................................................................................... 77 Topic 8 Diversification.............................................................................................................. 79 Introduction................................................................................................................... 79 When.to.diversify.......................................................................................................... 81 Strategies.for.entering.new.businesses.......................................................................... 81 Choosing.the.diversification.path:.Related.versus.unrelated.businesses...................... 82 . Summary....................................................................................................................... 86 Feedback.to.selected.activities...................................................................................... 87 Unit evaluation by students. ................................................................................................. 89 .

MNG00716 Contents

iii

Topic 9 Strategy, ethics and environmental sustainability...................................... 93 Introduction................................................................................................................... 93 Corporate.Social.Responsibility.(CSR).and.competitive.advantage. ........................... 94 . Types.of.strategic.options:.What.do.we.mean.by.business.ethics?............................... 94 Strategy.and.social.responsibility. ................................................................................ 98 . Summary..................................................................................................................... 101 Feedback.to.selected.activities.................................................................................... 102 Topic 10 Building an organisation capable of good strategy execution......... 103 Introduction...............................................................