Effective Management, by Williams South-Western College Publishing Copyright © 2002 Chapter 8 Organizational Strategy.

Effective Management, by WilliamsSouth-Western College PublishingCopyright © 2002

Chapter 8Chapter 8

Organizational Strategy

2


What Would What Would YouYou Do? Do? Kodak’s Diversification StrategyKodak’s Diversification Strategy

How can Kodak create a sustainable advantage over its competitors?

What are Kodak’s opportunities and threats?

What should their new strategy be?

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After discussing this section, you should be able to:

Learning ObjectivesLearning ObjectivesBasics of Organizational Basics of Organizational StrategyStrategy

explain the components of sustainable competitive advantage and why it is important.

describe the steps involved in the strategy-making process.

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Sustainable Competitive AdvantageSustainable Competitive Advantage

Resources assets, capabilities, processes,

information, & knowledge Competitive advantage

providing greater customer value than competitors

Sustainable Competitive Advantage when other firms cannot duplicate the

value a firm is providing to customers

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Achieving Sustainable Competitive Achieving Sustainable Competitive Advantage Advantage Resources must be:

Valuable Rare

ImperfectlyImitable

Non-substitutable

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Strategy-Making ProcessStrategy-Making Process

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What Really Works?What Really Works?

Strategy-Making for Firms, Big and Small

Strategic Planning & Profits for Big Companies

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Probability of success 72%


Strategic Planning & Growth for Big Companies

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What Really Works? (cont’d)What Really Works? (cont’d)

Strategy-Making for Firms, Big and Small

Strategic Planning & Growth for Small Companies

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%



Strategic Planning & Return on Investment for Small Companies

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Assessing the Need for Strategic Assessing the Need for Strategic ChangeChange

Competitive Inertia a reluctance to change strategies or

competitive practices that have been successful

Strategic Dissonance discrepancy between top

management’s intended strategy and the actual strategy implemented by lower management

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Situational Analysis - SWOTSituational Analysis - SWOT

Strengths

Weaknesses

•Distinctive Competency

•Core Capability

Opportunities

Threats

•Environmental Scanning

•Strategic Groups•Shadow-Strategy Task Force

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Strategic GroupsStrategic Groups

Core Firms central companies in a strategic group

Secondary Firms firms that follow related, but somewhat

different strategies than do core firms

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Choosing Strategic AlternativesChoosing Strategic Alternatives Risk-Avoiding Strategy

protect a competitive advantage Risk-Seeking Strategy

create a sustainable competitive advantage Strategic Reference Points

targets used by managers to determine if the firm has a sustained competitive advantage

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After discussing this section, you should be able to:

Learning ObjectivesLearning ObjectivesCorporate-, Industry-, & Corporate-, Industry-, & Firm-Level StrategiesFirm-Level Strategies

explain the different kinds of corporate-level strategies.

describe the different kinds of industry-level strategies.

explain the components and strategies of firm-level competition.

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Corporate-Level StrategiesCorporate-Level Strategies

PortfolioStrategy

GrandStrategy

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Portfolio StrategyPortfolio Strategy

Minimize risk by diversification Acquisition

the company purchases another company

Unrelated diversification creating or acquiring companies in

completely unrelated businesses BCG Matrix

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Boston Consulting Group (BCG) Boston Consulting Group (BCG) MatrixMatrix

QuestionMarks

Stars

DogsCashCows

Relative Market Share

Low High

Mar

ket

Gro

wth

Low

High

Adopted from Figure 8.2

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Related DiversificationRelated DiversificationR

isk

Low

High

SingleBusiness

RelatedDiversification

UnrelatedDiversification

Adapted from Figure 8.3

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Grand StrategyGrand Strategy

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Industry-Level StrategyIndustry-Level Strategy

Five Industry Forces

Positioning Strategies

Adapted Strategies

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Porter’s Five Competitive ForcesPorter’s Five Competitive Forces

Character of Rivalry

Threat ofNew Entrants

BargainingPower ofSuppliers

Threat ofSubstitute Products

or Services

BargainingPower ofBuyers

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Positioning StrategiesPositioning Strategies

Cost Leadership

Differentiation

Focus Strategy

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Adaptive StrategiesAdaptive Strategies

Defenders seek moderate

growth retain customers

Prospectors seek fast growth emphasize risk

taking and innovation

Analyzers blend of defender

& prospector strategies

imitate the proven successes of others

Reactors use an inconsistent

strategy respond to changes

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Firm-Level StrategiesFirm-Level Strategies

Basics ofDirect Competition

Strategic Moves Involvedin Direct Competition

Firm-Level Strategyof Entrepreneurship

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Framework of Direct CompetitionFramework of Direct Competition

Resource Similarity

Low High

High

Low

Mar

ket

Com

mod

ity

III

III IV

Adopted from Figure 8.5

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Strategic Moves of Direct CompetitionStrategic Moves of Direct Competition

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

share or profits Response

a countermove designed to protect a company’s

market share or profits

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Likelihood of Attacks & ResponsesLikelihood of Attacks & Responses

Competitor AnalysisInterfirm Rivalry:

Action & ResponseStrong Market Commonality

Less Likelihood of an Attack

Weak Market Commonality

Greater Likelihood of an Attack

Strong Market Commonality

Less Likelihood of an Attack

Weak Market Commonality

Greater Likelihood of an Attack

Adapted from Figure 8.6

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Firm-Level StrategyFirm-Level Strategy

Entrepreneurship the process of entering new or

established markets use new goods or services

Entrepreneurial Orientation set of processes, practices, and

decision-making activities that lead to new entry

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Entrepreneurial OrientationEntrepreneurial Orientation

Autonomy

Innovativeness

Risk-taking

Proactiveness

Competitive Aggressiveness

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What What ReallyReally Happened? Happened? Kodak’s StrategyKodak’s Strategy

Sustainable competitive advantage is not clearly evident

Investing in digital technology Their business is imaging From retrenchment to growth

Effective Management, by Williams South-Western College Publishing Copyright © 2002 Chapter 8 Organizational Strategy.

Documents

effective management

lower management slide

organizational strategy

process slide

strategic change

actual strategy

contd strategy

new strategy