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STRATEGIC MANAGEMENT & BUSINESS POLICY11TH EDITION

THOMAS L. WHEELEN J. DAVID HUNGER

CHAPTER 8 Strategy Formulation: Functional Strategy & Strategic Choice

CHAPTER 8 Strategy Formulation: Functional Strategy & Strategic Choice

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Functional Strategy

The approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity

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Functional Strategy

Marketing Strategy –

–Pricing

–Selling

–Distribution

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Functional Strategy

Marketing Strategy –

–Product development

•Line extension

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Functional Strategy

Marketing Strategy –

–Advertising and promotion

•Push strategy

•Pull strategy

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Functional Strategy

Marketing Strategy –

–Pricing

•Skim pricing

•Penetration pricing

•Dynamic pricing

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Functional Strategy

Financial Strategy –

–Leveraged buyout

–Reversed stock split

–Tracking stock

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Functional Strategy

R&D Strategy –

–Technological leader

–Technological follower

–Open innovation

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Functional Strategy

Operations Strategy –

–Job shop

–Connected line batch flow

–Flexible manufacturing systems

–Dedicated transfer lines

–Mass production

–Continuous improvement system

–Modular manufacturing

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Functional Strategy

Purchasing Strategy –

–Multiple sourcing

–Sole sourcing

–Just-in-time (JIT)

–Parallel sourcing

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Functional Strategy

Logistics Strategy –

–Centralization

–Outsourcing

–Internet

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Functional Strategy

HRM Strategy –

–360 degree appraisal

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Proposed Outsourcing Matrix

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Functional Strategy

Strategies to Avoid –

– Follow the leader

–Hit another home run

–Arms race

–Do everything

–Losing hand

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Constructing Corporate Scenarios

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Functional Strategy

Subjective Factors Affecting Decisions --

–Management’s attitude toward risk–Pressures from stakeholders–Pressures from corporate culture–Needs and desires of key managers

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Stakeholder Priority Matrix

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Strategic Choice

Avoiding the Consensus Trap --

–Devil’s Advocate

–Dialectical Inquiry