copyright © 2004 pearson education canada, inc. all rights reserved.7–1 introduction to...

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved. 7–1

Introduction to ManagementBob Fast

Chapter 7

Week 4B October 4

I M 471.11

Fall 2011

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved. Copyright © 2004 Pearson Education Canada, Inc. All rights reserved. PowerPoint Presentation by Clive Cook and Dale DilamarterPowerPoint Presentation by Clive Cook and Dale Dilamarter

Gary Dessler

Frederick A. Starke

Gary Dessler

Frederick A. Starke

Principles and Practices for Tomorrow’s Leaders

Second Canadian Edition

Principles and Practices for Tomorrow’s Leaders

Second Canadian Edition

Management

Strategic ManagementStrategic ManagementStrategic ManagementStrategic Management77CHAPTERCHAPTER


Chapter ObjectivesAfter studying this chapter and the case exercises at the end, you should be able to:

1. Develop a workable strategic plan for an organization using SWOT analysis.

2. Identify a company’s current corporate strategies and list its strategic options.

3. Develop a vision and mission statement for a company.

4. Accurately identify a company’s “core competencies.”

5. Explain each of the strategic planning tools you think the CEO should use, and why.


Strategy and Planning

• StrategyA comprehensive and integrated plan that states how

the organization will use its resources in the pursuit of its mission and objectives.

• Strategic PlanningA process that involves defining the mission of the

business and laying out the broad strategies or courses of action the firm will use to achieve that mission.


The Strategic Management Process

1. Define the business and its mission.

2. Perform external and internal audits

3. Translate the mission into strategic goals

4. Formulate a strategy to achieve the strategic goals

5. Implement the strategy

6. Evaluate performance


A Comprehensive Strategic-Management Model

FIGURE 7–1Source: Adapted from Fred David, Strategic Management (Upper Saddle River, NJ: Prentice-Hall, 2001), p. 77.


FIGURE 7–2

Strategies in Brief

Source: Arit Gadiesh and James Gilbert, “Frontline Action,” Harvard Business Review, May 2001, p. 74.

COMPANY STRATEGIC PRINCIPLE

America Online Consumer connectivity first—anytime, anywhere

Dell Be direct

eBay Focus on trading communities

General Electric Be number one or number two in everyindustry in which we compete, or get out

Southwest Airlines Meet customers’ short-haul travel needs at fares competitive with the cost of automobile travel

Vanguard Unmatchable value for the investor-owner

Wal-Mart Low prices, every day

COMPANY STRATEGIC PRINCIPLE

America Online Consumer connectivity first—anytime, anywhere

Dell Be direct

eBay Focus on trading communities

General Electric Be number one or number two in everyindustry in which we compete, or get out

Southwest Airlines Meet customers’ short-haul travel needs at fares competitive with the cost of automobile travel

Vanguard Unmatchable value for the investor-owner

Wal-Mart Low prices, every day


Types of Strategies

• Corporate-level strategy Identifies the portfolio of businesses that compose the

corporation and the ways in which these businesses fit together

• Competitive strategy Identifies how to build and strengthen the business’s

long-term competitive position in the marketplace

• Functional strategies Identify the basic courses of action that each

department will pursue to contribute to the attainment of its goals


FIGURE 7–3

Relationships Among Strategies inMultiple-Business Firms


Checklist 7.1How to Test the Quality of Your Strategy

Does your strategy fit with what’s going on in the environment?

Does your strategy exploit your key resources?

Will competitors have difficulty keeping up with you?

Are the elements of your strategy internally consistent?

Do you have enough resources to pursue this strategy?

Can your strategy be implemented?


Generic Corporate Strategies

• Concentration• Market penetration• Geographic expansion• Product development• Horizontal integration• Vertical integration

• Diversification• Status quo• Retrenchment• Strategic alliances

and Joint ventures• Virtual corporation


FIGURE 7–5

How the Internet Influences Industry Structure

Source: Adapted from Michael Porter, “Strategy and the Internet,” Harvard Business Review, March 2001, p. 67.


Generic Competitive Strategies

• Low-cost leader• Differentiator• Focuser


Formulating Specific Competitive Strategy

• Requires understanding the competitive forces that determine how intense the competitive rivalries are and how best to compete


FIGURE 7–4

Forces Driving Industry Competition

Source: Source: Reprinted with the permission of The Free Press, a division of Simon & Schuster from Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael E. Porter. Copyright © 1980 by The Free Press.


Strategic Planning Methods

• Strengths, Weaknesses, Opportunities, Threats (SWOT)

• Environmental scanning• Benchmarking• TOWS matrix• Portfolio analysis


FIGURE 7–6

Examples of a Company’s Strengths, Weaknesses, Opportunities, and Threats

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved. 7–19 FIGURE 7–7

Worksheet for Environmental Scanning


Checklist 7.2How to Benchmark Focus on a specific problem and define it

carefully Use employees who will actually implement

changes to identify the best-practices companies and to conduct on-site studies.

Be willing to share information with others. Avoid sensitive issues such as pricing, and

don’t look for new product information. Keep information you receive confidential.


FIGURE 7–8

Cineplex Odeon TOWS Matrix

Source: Fred David, Strategic Management (Upper Saddle River, NJ: Prentice-Hall, 2001), p. 207.


FIGURE 7–9

BCG Matrix


Scenario Planning

• Used in an attempt to deal with unpredictable future events

• Tries to answer two kinds of questionsHow might some hypothetical situation come aboutWhat alternatives exist for preventing (or facilitating)

the process


Scenario Planning Principles

Scenarios have value only to the extent that they inform decision makers and influence decision making.

Scenarios add value to decision making only when managers and others use them to systematically shape questions about the present and the future, and to guide how to go about answering them.



In developing scenarios, the emphasis must be on identifying, challenging, and refining the substance of managers’ mindsets and knowledge.

Alternative projections about a given future must challenge managers’ current mental models by creating tension among ideas, hypotheses, perspectives, and assumptions.



The dialogue and discussion triggered by the consideration of alternative futures should directly affect managers’ knowledge.

Scenarios should include enough indicators so that managers can track how the future is actually evolving. In this way, the learning and adaptations stimulated by the scenarios are continual.


Implementing Strategy

• Achieving strategic fit• Leveraging core competencies • Effectively leading the change process


Case Study 7 - 1

More Upheaval in the Airline Industry

Review Case Discuss Questions on page 225


Next Class – October 11

• Quiz #2: Chap 5, 6, 7 & 8

• Review (in class): Reading Assignment #1

• Read: Chap 9 – Designing Organizational Structures

• Reading Assessment #2 Assigned

• Guest Presenter: Don Streuber, President of Bison Transport

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