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THOMAS L. WHEELEN J. DAVID HUNGER

CHAPTER 6Strategy Formulation: Situation Analysis & Business Strategy

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Situational Analysis

Strategy formulation --

–Strategic planning or long-range planning

•Develops mission, objectives, strategies, policies

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Situational Analysis

--process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses

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IFAS – Maytag as Example

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EFAS – Maytag as Example

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SFAS Matrix

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Situational Analysis

Niche --

–Need in the marketplace that is currently unsatisfied

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Situational Analysis

Corporate Goal --

–Find propitious niche

–Strategic window

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Situational Analysis

SWOT --

–Internal

•Strengths/Weaknesses

–External

•Opportunities/Threats

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TOWS Matrix

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Business Strategy

Focuses on improving competitive position of company’s products or services within the specific industry or market segment

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Porter’s Competitive Strategies

Generic Competitive Strategies --

–Lower Cost strategy

•Greater efficiencies than competitors

–Differentiation strategy

•Unique/superior value, quality, features, service

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Porter’s Competitive Strategies

Competitive Advantage --

–Determined by Competitive Scope

•Breadth of the target market

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Porter’s Competitive Strategies

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Porter’s Competitive Strategies

Cost Leadership --

–Low-cost competitive strategy

–Broad mass market

–Efficient-scale facilities

–Cost reductions

–Cost minimization

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Porter’s Competitive Strategies

Differentiation –

–Broad mass market

–Unique product/service

–Premiums charged

–Less price sensitivity

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Porter’s Competitive Strategies

Cost Focus –

–Low-cost competitive strategy

–Focus on market segment

–Niche focused

–Cost advantage in market segment

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Porter’s Competitive Strategies

Differentiation Focus –

–Specific group or geographic market focus

–Differentiation in target market

–Special needs of narrow target market

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Porter’s Competitive Strategies

Stuck in the middle –

–No competitive advantage

–Below-average performance

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Competitive Strategies

Best Cost Provider –A company has an ability to incorporate attractive or upscale attributes at a lower cost than rivals.

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Competitive Tactics

Timing Tactics --

–First mover

–Late movers

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Competitive Tactics

Market Location Tactics --

–Frontal Assault

–Flanking Maneuver

–Bypass Attack

–Encirclement

–Guerrilla Warfare

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Competitive Tactics

Defensive Tactics --

–Raise structural barriers

–Increase expected retaliation

–Lower the inducement for attack

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Cooperative Strategies

•Collusion

•Strategic Alliances

•Mutual service consortia

•Joint ventures

•Licensing arrangements

•Value-chain partnerships