Ch07 Strategic Management Planning for Long Term Success

7/28/2019 Ch07 Strategic Management Planning for Long Term Success

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Copyright © Houghton Mifflin Company. All rights reserved. 7-1

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

Business Ecosystems: A New Strategic

Perspective Strategy.com





The Strategic Management Process

Formulation of a Grand Strategy

Formulation of Strategic Plans





Strategic Implementation and Control

Implementation of Strategic Plans

Strategic Control

Corrective Action Based on Evaluation and

Feedback





Forecasting

Types of Forecasts

Forecasting Techniques




DIFFERENT STRATEGY-MAKING

MODESTable 7.2

Traditional Modes:

Command (Commanders and Soldiers)

Symbolic (Coaches and Players)

Rational (Bosses and Subordinates)




DIFFERENT STRATEGY-MAKING

MODES(continued)

Modern Modes: Transactive (Facilitators and Participants)

Generative (Sponsors and Entrepreneurs)




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 nowunderstood to include budget control, long-range

planning, and strategic planning.”




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




SYNERGY

(Thinking Strategically)(continued)

Four Kinds of Synergy:

Market synergy

Cost synergy

Technological synergy

Management synergy




SYNERGY


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 identifyin five minutes?




Source: Reprinted with permission of The Free Press, a Division of Simon & Schuster, Inc. from The Competitive

Advantage of Nations by Michael E. Porter. Copyright © 1990, 1998 by Michael E. Porter.

Figure 7.1 Porter’s Generic

Competitive Strategies






PORTER’S GENERIC COMPETITIVE

STRATEGIES(Thinking Strategically)

(continued)

Cost Leadership Strategy Competitive scope: Broad target

Competitive advantage: Lower cost






(continued)

Differentiation Strategy

Competitive scope: Broad target

Competitive advantage: Differentiation






(continued)

Cost Focus Strategy Competitive scope: Narrow target

Competitive advantage: Lower cost






(continued)

Focused Differentiation Strategy

Competitive scope: Narrow target

Competitive advantage: Differentiation




BUSINESS ECOSYSTEMS


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 tosucceed.”




BUSINESS ECOSYSTEMS


James F. Moore: “the major factor today

limiting the spread of realized innovation isnot a lack of good ideas, technology, or

capital. It is the inability to command

cooperation across broad, diverse

communities of players who must becomeintimate parts of a far-reaching process of

coevolution.”




BUSINESS ECOSYSTEMS


Individual or Team Exercise: Pick awell-known organization and identify

members of its ecosystem. What

organization is dominant in thatecosystem?




STRATEGY.COM


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.




STRATEGY.COM


E-Commerce Strategy Lessons:

E-commerce sometimes requires a quick

revolution, rather than slow evolution. (Start witha 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.




Figure 7.2 The Strategic Management

Process






CONDUCTING A SWOT ANALYSIS

(A Team Exercise)(continued)

Organization:_____________________

Organization

Strengths Weaknesses




CONDUCTING A SWOT ANALYSIS

(A Team Exercise)

(continued)

Environment

Opportunities Threats




Figure 7.3 Determining Strategic

Direction Through Situational (SWOT)

Analysis




FORECASTING

Forecasts: predictions, projections, or

estimates of future events or conditionsin the environment in which the

organization operates.




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.




FORECASTING(continued)

Forecasting Techniques

Informed judgment

Scenario analysis (Longitudinal and

cross-sectional scenarios)

Surveys

Trend analysis

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