Professional Documents
Culture Documents
Formulation of Strategy
Formulation of Strategy
Formulation of Strategy
Implementation
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Strategic Planning
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Strategy Formulation and
Implementation
• Strategic Management
– Definition
– Components
– Model of Strategic Management Process
– Models of Strategy Formation
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Strategic Management
• Set of decisions and actions used to
implement strategies that will provide a
competitively superior fit between the
organization and its environment so as to
achieve organizational goals
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Strategic Management
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Grand Strategy
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Grand Strategy: Growth
• Growth can be promoted internally by
investing in expansion or externally by
acquiring additional business divisions
- Internal growth = can include development of new
or changed products
- External growth = typically involves diversification
– businesses related to current product lines or
into new areas
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Grand Strategy: Stability
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Grand Strategy: Retrenchment
• Retrenchment = the organization goes through a period of
forced decline by either shrinking current business units or
selling off or liquidating entire businesses
• Liquidation = selling off a business nit for the cash value of the
assets, thus terminating its existence
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Global Corporate Strategies
High Transnational
Globalization Strategy
Strategy • Seeks to balance global
• Treats world as a efficiencies and local
single global market
responsiveness
• Standardizes global
• Combines standardization
products/advertising
and customization for
Need for Global Integration
strategies
product/advertising
strategies
Export
Strategy Multi-domestic Strategy
•Domestically focused • Handles markets
independently for each
•Exports a few country
domestically produced
products to selected • Adapts product/advertising
countries to local tastes and needs
Low
Low Need for National Responsiveness High
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Global Strategy
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Purpose of Strategy
The plan of action that prescribes
resource allocation and other
activities for dealing with the
environment, achieving a
competitive advantage, that help the
organization attain its goals
Strategies focus on:
● Core competencies
● Developing synergy
● Creating value for customers
12
Three Levels of Strategy in Organizations
Corporate-Level Strategy:
What business are we in?
Corporation
Business-Level Strategy:
How do we compete?
Functional-Level Strategy:
How do we support the business-level
strategy?
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Strategic Management Process
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Strategy Formulation vs. Implementation
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Checklist for Analyzing
Organizational Strengths and Weaknesses
Management and Organization Marketing Human Resources
Management quality Distribution channels Employee experience,
Staff quality Market share education
Degree of centralization Advertising efficiency Union status
Organization charts Customer satisfaction Turnover, absenteeism
Planning, information, Product quality Work satisfaction
control systems Service reputation
Grievances
Sales force turnover
Finance Production Research and Development
Profit margin Plant location Basic applied research
Debt-equity ratio Machinery obsolescence Laboratory capabilities
Inventory ratio Purchasing system Research programs
Return on investment Quality control New-product innovations
Credit rating Productivity/efficiency Technology innovations
Sources: Based on Howard H. Stevenson, “ Defining Corporate Strengths and Weaknesses,” Sloan Management Review 17 (spring 1976), 51-68; and M.L.Kastens,
Long-Range Planning for Your Business (New York: American Management Association, 1976).
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Portfolio Strategy
BCG Matrix
Mix of business units
and product lines
that fit together in a
logical way to provide
synergy and
competitive
advantage
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Five Forces Affecting Industry Competition
Source: Based on Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980).
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Competitive Edge Through
Competitive Strategies
Mergers
Joint Ventures
Strategic
Alliances
Strategic Business Partnering
Low High
Degree of Collaboration
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Implementing Strategy Tools
• Leadership
• Structural design
• Information and control systems
• Human resources
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Tools for Putting Strategy
Environment into Action
Organization
Leadership
Persuasion
Motivation
Culture/values
Structural Design
Organization Chart Human Resources
Teams Recruitment/selection
Strategy Transfers/promotions Performance
Centralization
Decentralization, Training
Facilities, task design Layoffs/recalls
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