Top Banner
Chapter 6 Organizational Strategy Management Principles Craig W. Fontaine, Ph.D.
15

Chapter 6 Organizational Strategy

Feb 23, 2016

Download

Documents

Mark Bowald

Management Principles. Chapter 6 Organizational Strategy. Craig W. Fontaine, Ph.D. Organizational/Business Strategy. The approach a company takes to create a: Competitive Advantage. Competitive Advantage. - PowerPoint PPT Presentation
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: Chapter 6 Organizational Strategy

Chapter 6Organizational Strategy

Management Principles

Craig W. Fontaine, Ph.D.

Page 2: Chapter 6 Organizational Strategy

Organizational/Business Strategy

The approach a company takes to create

a:

Competitive Advantage

Page 3: Chapter 6 Organizational Strategy

Competitive Advantage

The reason why a customer would choose your product or service over the competition:

• Price• Superior customer services• Innovative technology• etc….

A sustainable competitive advantage is when other companies cannot duplicate the value

your company is providing to customers

Page 4: Chapter 6 Organizational Strategy

Strategic Moves of Direct Competition

• Attack– a competitive move designed to reduce a rival’s market

share or profits

• Response– a countermove, prompted by a rival’s attack, designed

to defend or improve a company’s market share or profit

Before you can decide….

Page 5: Chapter 6 Organizational Strategy

Managers must be aware….

In order to create and/or maintain a sustainable advantage companies must ….

1. Assess need for strategic change (Don’t allow competitive inertia)2. Conduct assessment(s) 3. Choose an alternative strategy – if needed

There are systematic processes for this…

Page 6: Chapter 6 Organizational Strategy

Situational (SWOT) Analysis

• Strengths

• Weaknesses

• Opportunities

• ThreatsImplied/related are.....

Page 7: Chapter 6 Organizational Strategy

Internal Analysis

• Distinctive competence– something that a company can make,

do, or perform better than competitors

• Core capabilities– less visible, internal decision-making

routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs

Page 8: Chapter 6 Organizational Strategy

External Analysis• Environmental scanning • Approaches

– Strategic groups• group of companies within an industry that top

managers choose to compare, evaluate, and benchmark strategic threats and opportunities

– Core firms• companies of particular interest strategic group

– Secondary firms• firms that use strategies related to but somewhat

different from those of core firms

Page 9: Chapter 6 Organizational Strategy

Choosing Strategic Alternatives

There are two distinct alternatives:

• Risk-avoiding strategy– Safer, but less potential

• Risk-seeking strategy– Less safe, but greater potential

Page 10: Chapter 6 Organizational Strategy

Grand Strategies

A corporate-level strategy that minimizes risk by diversifying investment among various

businesses or product lines.

Page 11: Chapter 6 Organizational Strategy

Grand StrategiesBroad strategic plans used to help

an organization achieve its strategic goals

– Stability strategy– Retrenchment strategy– Growth strategy

Page 12: Chapter 6 Organizational Strategy

• A strategy where the organization maintains its current size and current level of business operations

• When is stability an appropriate strategy?– Industry is in a period of rapid upheaval with several key industry &

external forces drastically changing, making future highly uncertain– Industry is facing slow or no growth opportunities– Many small business owners follow stability strategy indefinitely

Stability Strategy

Page 13: Chapter 6 Organizational Strategy

Corporate Level Restructuring Corporate restructuring is the process of

redesigning one or more aspects of a company. The process of reorganizing a company may be implemented due to a number of different factors, such as positioning the company to be more competitive, survive a currently adverse economic climate, or poise the organization to move in an entirely new direction

Page 14: Chapter 6 Organizational Strategy

Retrenchment strategies

• Turnaround: Eliminating unprofitable outputs, reducing size of work force, rethinking firm’s products lines and customer groups.

• Divestment: sell one of business units• Liquidation: last resort strategy

Page 15: Chapter 6 Organizational Strategy

Growth strategiesGrowth strategies:• Internal growth: Increase internal capacity of

organization without acquiring other firms.• Conglomerate Diversification: Acquiring unrelated

business. • Merger: Two roughly similar size firms combine

into one. To benefit of synergy.• Strategic alliance: Temporary partnerships