Strategic Managment

STRATEGIC MANAGEMENT
1 Bộ môn Quản trị chiến lược 8/30/22

OBJECTIVES OF SUBJECT
q General objectives
q Provides the principle of modern business management for all types of businesses.
q Creates strategic thinking in a relationship, that is compatible with the frequent change of the
business environment
q Learning outcom
q Be able to understand the concepts, terms, and basic content of strategic management
q Be able to analyze the process of planning, implementing and evaluating strategies and can be
apply in specific scenario.
q Be able to identify and solve strategic problems in different situations
q Foster good business ethics, and positive working attitude; maintain a high level of
inquisitiveness and a strong sense of cooperation; be able to work productively, independently,
proactively and responsibly

COURSE PROGRAM
Chapter 1: Strategic management overview 3
Chapter 2: Vision, mission and strategic goals 3
Chapter 3: External Environment 7
Chapter 4. Internal Environment Analysis 5
Chapter 5. Types of business strategies 9
Chapter 6. Implementing Strategies 6
Chapter 7. Strategic Evaluation & Control 3
Dicusssion 9

References
q Required
q Johnson, G., Whittington, R., Scholes, K. (2011), Exploring Strategy: Text & Cases , Prentice
Hall
q Encouraged
qM. E Porter (1980), Competitive strategy, New Young: The Free Press
qFred R. David (2006), Concepts of Strategic Management , Statistical Publishing
House
qHitt, M., Ireland, R. and Hoskisson, R. (2008), Strategic Management: An integrated
approach, 8th Edition, Houghton Mifflin.
qHill, Charles W. L., and Gareth Jones (2008), Strategic Management: An integrated
approach, NXB Boston Houghton Mifflin, USA.
qNguyen Hoang Long, Nguyen Hoang Viet (2015), Strategic Management, Statistical
Publishing House
Evaluation
Particular point Weight
Attendance 0.1
üNon - attendance 0-10% Maximum 10 points
üNon - attendance >40% 0 point
Practice point 0.3
ü Mid- term Exam
ü Presentation
Final Exam 0.6

CHAPTER 1
STRATEGIC MANAGEMENT OVERVIEW

OUTLINE
1.1. Definition and the roles of strategic management
1.2. Key terms in strategic management
1.3. Strategic thinking development progess
1.4. Comprehensive framework and stages of strategic management
1.5. Research methodology

1.1.1. Definition and constituent elements of strategic
q Strategy
An integrated and coordinated set of commitments and actions designed to
exploit core competencies and gain competitive advantages
q Strategy includes:
q The direction of the business in the long term
q Market and the size of the enterprise
q Competitive advantage of the enterprise
q The resources needed to compete
q Environmental factors that affect on the competitiveness of the
enterprise
q Values and expectations of the stakeholders

1.1.2. Definition and the role of strategic management
q Strategic management definition

The Art & science of formulating, implementing, and evaluating cross-
functional decisions that enable an organization to achieve its objectives

1.1.2. Definition and the role of strategic management
• Proactive in shaping firm’s future
• Initiate and influence firm’s activities

• Formulate better strategies
•Systematic, logical, rational
Ch 1 -10 Copyright 2007 Prentice Hall

OUTLINE

Strategists – Firm’s success/failure - the individuals who are most responsible for the
success or failure of an organization
Various Job Titles:
•Chief Executive Officer (CEO)

•Chief Strategy Officer (CSO)
•President
•Owner
•Board Chair
•Executive Director

Vision
What do we want to become?
Is often considered as the first step in strategic planning
Mission
What is our business?
q Enduring statements of purpose that distinguish one business from the others
q Identifying the scope of a firm’s operations in product and market terms

Opportunities & Threats (External): Largely beyond the

control of a single organization
Analysis of Trends:
• Economic
• Social
• Cultural
• Demographic/Environmental
• Political, Legal, Governmental
• Technological
• Industry Analysis
Strengths & Weaknesses (Internal): Controllable activities of an

organization that are performed especially well or poorly
Typically located in functional areas of the firm
• Management
• Marketing
• Finance/Accounting
• Production/Operations
• Research & Development
• Computer Information Systems

Long-term Objectives
qMission-driven pursuit of specified results more than one year out

Essential to ensure the firm’s success
• Provide direction
• Aid in evaluation
• Create synergy
• Focus coordination
• Basis for planning, motivating, and
controlling

Annual Objectives
q Annual objectives
q Short-term milestones that organizations must achieve to reach long-term objectives
q Should be measurable, quantitative, challenging, realistic, consistent, and prioritized
q Should be established at the corporate, divisional, and functional levels in a large
organization

Policies
q The means by which annual objectives will be achieved

q include guidelines, rules, and procedures established to support efforts to achieve
stated objectives
q guides to the decision-making and address repetitive or recurring situations

Levels of strategy Corporate

strategy
Business Strategy
Functional Strategy

Figure 1. Three levels of strategy in organizations—corporate, business, and functional strategies.

Three levels of the strategy Content of strategic level
At this level the fundamental task is to develop a balanced portfolio of

The corporate level businesses which will achieve the goals of the corporation and satisfy its
stakeholders.
At this level the business, or set of activities is given and the major task
The Business level for strategic planner at this level is for business to succeed against
competitors and also meet corporate success criteria.
At this level the major task is to provide an appropriate functional

The functional level strategies ( finance and accounting, marketing, R+D, production,
personnel) for SBU or corporate level strategy.
A strategic business unit (SBU) is a part of an organization for which
there is a distinct external market for goods or services that is different
from another SBU
The SBUs are the natural ‘grouping’ of parts of a corporation.

q The SBU has a range of related products/services which has similar technologies and
production processes.
q The products/services are sold in similar or related market segments.
q The production/services are sold against a well-defined set of competitors.
q An SBU is managed by an SBU manager, largely as an independent unit.
q The SBU has its own set of goals and strategies.
q Each SBU in a particular organization should be able to operate independently from any
other SBU.
Criterions to identify SBU
Criteria Samples
1. Different technology Beverage: SBU : Cola; SBU : Lemon
2. Different use Pharmacy:

SBU : tablet for hypertension
SBU : tablet for flu
3. Stages in value chain Shoes
SBU : Shoes manufacturers
SBU : Shoes retailers
4. Different brands Cigarette :
SBU : Brand A; SBU : Brand B
5. Different customers SBU : The last customer

SBU : Whole - salers, retailer
6. Different market segmentation Automobile

SBU: Vios
SBU: Lexus
OUTLINE

Strategic
management
Outward
planning
Planning on
the basis of
Basic prediction
financial
planning

OUTLINE

1.4.1. A comprehensive strategic management framework
Strategy Strategy Strategy

formulation implementation evaluation
1.4.2. Stages of strategic management progress
Strategy Formulation
Vision & Mission
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection
Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
Strategy Evaluation
Internal Review
External Review
Performance Metrics
Corrective Actions
OUTLINE

Systemic and historical logic approach
Solving problem approach
New economic mindset - maximum of

efficiency

Do you have any questions?

CHAPTER 2
VISION, MISSION, STRATEGIC GOALS
34 Strategic Management Department 8/30/22

OUTLINE
q 2.1. Business vision
q 2.2. Building business mission
q 2.3. Setting strategic goals

2.1.1. Definition and the role of vision
q Definition: A vision statement is defined as a direction
for the future, an ambition of the founders for what an
organization wants to become
q Roles:
q To create the foundation value for sustainable development of an
organization
q To guide and orient the development of an organization in the
future
Wh
q To inspire staffs in an organization we at do
wan
beo tt
me o
?

2.1.2. Core value of vision
q Value for customers

Vision
q Value for employees
q Value for customers
q Value for stakeholders
Shareholders
Customers
Core Value
Stakeholders Employees

2.1.3. Requirement of vision
q Simple, clear and easy to understand

q The time should be long enough to achieve significant changes
and short enough to create the commitment and consolidate of the
whole organization
q Ability to allocate the resources of the organization regards to its
size and the time.
q Regularly connected by the management board.

Content
q 2.1. Creating vision

2.2.1. Definition and roles of business mission
q Definition: Business mission refers to the purpose, the reason
and the meaning of an enterprise, it also shows the corporate
social responsibility.
q Roles: A business mission allows an enterprise:

2.2.2. Feature of business mission
A business mission:
q Is a statement about the attitude and the prospect of an
enterprise.
q Resolves the disagreements in an enterprise.
q Is customer-oriented.
q Declare corporation social responsibility (CSR)

2.2.3. Elements of business mission

2.2.3. Business mission statement characteristics
q Customers: who are the customers?
q Product/service: what are the main products/services?

q Market: where are the main markets?
q Technology: Is technology the biggest concern of the business?
q Concern for survival growth and profitability: Do business have to bind to

financial goals?
q Business philosophy: What are the beliefs, values and priorities of the business?
q Self-evaluation: What are the special competencies or competitive advantages of
the business?
q Concern for business’s public image: Is public image a top concern of the
business?
q Personnel: Business’s attitude toward its employees?

Building business mission
ü Defining business industry

ü Identifying the main goals of the company
ü Creating a business philosophy
3C Principle
Company itself Competitors
Customers

Building business mission (cont)
Abell’s Three-dimensional framework
The business of a company should

include these three dimension:
- Customer groups,
- Customer needs,
- Technology utilized

Building business mission (cont)
Identifying the main goals of the Creating a business philosophy

company
Hamronise the main objectives of the The company’s core philosophy
three targeted-groups:
reflects the beliefs, values,
q Company: maximizing profit;
fundamental aspirations and key
q Customers: satisfy consumer’s
needs; ideas that strategists pursue
q Society: public welfare

OUTLINE
q 2.1. Creating vision

2.3.1. Definition and classification of strategic goals
q Definition: Strategic goals are the status, the milestones, the

specific criteria that the company wants to achieve in a certain
period of time.
The strategic goals are to transfer strategic vision
and business mission into the specific and measurable goals.

q Classification of strategic goals:

q Long-term goals (3-5 years): are the results that the company
have to achieve in the long run. Long-term goals are needed
for the strategic formulation.
q Short-term goals (yearly): are intermediate milestones that
enterprises must achieve annually to reach the long-term goals.
The annual goals are needed for strategic implementation.

q Other classifications
- Profit
- Competitive position
- Business performance
- Human resources development
- Relationship with staffs
- Technology and innovation dominance
- Social responsibility

2.3.2. Requirement of long-term strategic goals
q Possibility
Awards
q Challenge (Material + Spirit)
q Flexibility
q Measurability
q Motivation
q Rationality
q Intelligibility Possibility > < Challenge


CHAPTER 3
EXTERNAL ANALYSIS

“To assure victory, always
carefully survey the field
before battle.”
- Sun Tzu
OUTLINE
3.1. Identifying the external environment of the business
3.2. Analyzing the macro environment
3.3. Analyzing the industry environment
3.4. External Factor Analysis Summary (EFAS)

3.1.1 Definition and the structure of external environment
q Definition: External environment is defined as a complex and

continuous set of factors, forces and constraints that have a decisive
influence on the existence, operation and effectiveness of a business in
its market.
q External environment structure:
§ Macro environment: includes macro forces that influence the
strategic decisions in the long-term of businesses. For example:
economic forces, political forces, social forces, etc.
§ Industry environment (micro environment): is the environment in which
includes a set of factors that directly affect the business and is also influenced by
the business. For example: suppliers, competitors; customers, etc.

3.1.2 External environment structure
POLITICAL,
GOVERNMENTAL, ECONOMIC
LEGAL FORCES FACTORS
Distributors Financial organization

Suppliers
Union
Customers
Người
ENTERPRISE General
cung ứng public
Stake-holders
Competitors Special interest goups
SOCIO-
CULTURAL TECHNOLOGICAL
FACTORS FACTORS

OUTLINE

Ø Economic forces
Macro Ø Political and legal forces

environment Ø Socio-cultural forces
Ø Technological forces

3.2.1. Economic forces
q Balance of trade
q Foreign investment
q Market orientation
q Monetary system
q Income distribution and purchasing power
q Inflation/Interest rate
q Economic development
q Infrastructure and natural resources
q…
3.2.2. Political and legal forces
q Political stability
q Role and attitude of the Government toward international
business
q The law system
q The court system

3.2.3. Socio-cultural factors
q Number of special interest groups

q Standards and value
q Language and religion
q Population and childbearing rates
q Aging population
q Number of births and deaths
q Number of marriages and divorces
q Speed of urbanization
q Business practice and behavior

3.2.4. Technological forces
q Spending on science and technology

q Technological efforts
q Patent protection
q Technology transfer
q Automation
q Decisions and policies of applying new &
innovative technologies.

OUTLINE

3.3.1. Definition and classification of “Industry”
q Definition
q Industry is a group of companies offering the similar or
substitutable products that can satisfy customer’s needs.
q Sector is a group of industries that closely related to each other.
q Market segments:
q Are the groups of customers that are different from the others
in the same market.
q Their difference can come from the specific attribute and
demand of customers in each group.
Industry analysis begins with focusing on an overall industry before

looking at the issues at the business level or segmentations.

3.3.1. Definition and classification of “Industry”
q Classification of “Industry”
q Number of sellers and degree of differentiation:
ü Monopoly
ü Oligopoly
ü Monopolistic competition
ü Perfect competition
q Entry-Exit barriers and mobility
q Cost structure
q Vertical integration level
q Globalization level
3.3.2 M.Porter’s Five Forces and Industry Analysis
Industry analysis
v Competitive intensity analysis
v Industry’s life cycle analysis
v Strategic groups analysis
v Transfer barriers
v Types of strategy analysis
• The perfect competition model: the rate of profit adjustment according

to the risk level is equivalent between enterprises and industries
• However, a majority of research has confirmed that: different industries can

maintain different levels of profitability
• Reason: Different industries have different structures.

a. Competitive rivalry in the industry
q Is the major determinant on how competitive and profitable an
industry is
q In competitive industry, firms have to compete aggressively for
a market share à low profits
q Rivalry among competitors is intense when:
ü There are many competitors
ü Exit barriers are high
ü Industry growth is slow or negative
ü Products are not differentiated and can be easily substituted
ü Competitors are of equal size
ü Low customer loyalty
b. Bargaining power of suppliers
q Strong bargaining power of suppliers à Sell higher priced/

low quality raw materials à directly affect the buying firm’s
profits (have to more for the materials)
q Suppliers have strong bargaining power when:
q There are few suppliers but many buyers
q Suppliers are large and threaten to forward integration
q Few substitutions
q Suppliers hold scare resources
q Considerably high cost of switching

Bargaining power of suppliers
The percentage of Diamond

diamond suppliers in the market retailers
Other suppliers 50
The more bargaining
power the suppliers
have, the more profit
they get
DeBeers 50
72
c. Bargaining power of buyers
q Customers have strong bargaining power à buy at lower
price/ higher product quality à lower revenue for the
producers (sell at lower price/ production cost increase)
q Buyers have strong bargaining power when:
q Buying in large quantities or control many access points to the
final customer
q Few existing customers
q Low switching costs to other supplier
q They threaten to backward integrate
q There are many substitutions
q Customers are price sensitive

d. Threat of new entrants
q Determine how easy (or not) to enter a particular industry
q More profitable and fewer barriers to entry à easier and
quicker to enter à reduce market share and profit à
essential to create barriers to enter (to prevent new entrants)
q Threat of new entrants is high when:
q Low amount of capital is required to enter the market
q Existing companies can do little to retaliate
q Existing firms have no patents, trademarks or established brand reputation
q There is no government regulation
q Customer loyalty is low
q Products are nearly identical
q Economies of scale can be easily achieved

e. Threat of substitutes
q Subtitute products have lower price/ better quality + easy for
buyers to find + low switching costs à high threat.
q Determining factors:
q If the customer’s switching cost is low
q If the substitutes are cheaper
q If the substitutes product has higher quality
q If the functions, attributes, or performance of the substitute
product are as good or better

OUTLINE

3.4.1. Process of forming EFAS
Step 1 : Make a list of identified critical success factors (from 10
to 20 factors)
Step 2 : Assign a weight to each factor. The sum of all weights

must equal 1.0
Step 3 : Assign a 1-4 rating to each critical factor to indicate how

effectively the firm’s currents strategies respond to the factor.
4 – superior 3 – above average
2 – average 1 - poor
Step 4 : Multiply each factor by its rating to determine a weighted

score.
Step 5 : Sum the weighted scores for each variable to determine

the total score for the organization
3.4.2. Building the EFAS framework


CHAPTER 4
INTERNAL ANALYSIS

OUTLINE
q 4.1. Analyzing resource, competence and core competence
q 4.2. Building competitive advantage of the business
q 4.3. Evaluating the overall competitiveness of the enterprise
q 4.4. Internal factor analysis summary (IFAS)

4.1.1 Analyzing resources
q Resource: The inputs that firms use to create goods and services
(Porter, 1985; Fred David, 2011)
q Resources are what you have
q Capabilities/competences are what you can do
4.1.1 Analyzing resources
q Tangible
q Financial, Organizational, Physical, and Technological
q Assets that can be seen, touched and quantified
q Examples: equipment, facilities, distribution centers, formal reporting structures
q Intangible
q Human, Innovation and Reputational Resources
q Assets rooted deeply in the firm’s history, accumulated over time
q Usually can’t be seen or touched
q Examples: knowledge, trusts, organizational routines, capabilities, innovation, brand
name, reputation
83
4.1.2 Analyzing competencies
Competence/Capability is central to a corporation’s main business operations and allows

it to generate new products and services.
Competences are the skills and abilities by which resources are deployed effectively
through an organization’s activities and processes
84
4.1.3 Analyzing core competence
Ackermann et al. (2007, p. 704) stated that “a core competency is one that is crucial
to the success of the organization... It is core because of its location in the linkages of
competencies to aspirations”
Core competences are the skills and abilities by which resources are deployed
through an organization’s activities and processes such as to achieve competitive
advantage in ways that others cannot imitate or obtain (Gary Hamel and C.K.
Prahalad, 1990)
85
4.1.3 Analyzing core competence
q Essential to the firm’s competitiveness
q Rewarded in market place
q Combination of skills & knowledge, not products or functions
q Flexible, long term platforms
q Embedded in the organization’s systems
q Distinctive competencies are those the firm performs better than rivals
q All core competencies have the potential to become core rigidities
Examples of Core Competencies
q IKEA
qSuperior in designing modern functional home furnishings at low cost
q Beats Electronics
qSuperior marketing: perception of coolness
q Facebook
qSuperior algorithms to offer targeted online ads
q General Electric
qSuperior expertise in industrial engineering, designing and implementing
efficient management processes, and developing and training leaders

Resources: Capabilities: Core competence
human, financial, Industry-specific Distinctive and superior
physical, skills, relationships, skills, technology Perceived
technological, + organizational = relationships, customer
legal, informational knowledge knowledge and benefits/value
Intangible reputation of the firm added
Tangible and and invisible Unique, and
visible assets assets difficult to copy
Inputs to Integration of
the firm’s resources into
processes value-adding
activities
Not all capabilities are core Denotes feedback
competences – only those loop
that add greater value than denotes core competence
those of competitors development
Figure1. The relationships between resources, capabilities and core competence

OUTLINE

4.2.1 Definition of competitive advantage and sustainable
competitive advantage
§ Competitive advantage: are special capabilities that help businesses achieve the
same benefits as the competitors but at a lower cost (cost advantage) or achieve
benefits far beyond the products. competition (differential advantage). It allows
businesses to provide higher value to customers, while generating greater profits
for the company itself (Porter, 2016).
4-90
4.2.1 Definition of competitive advantage and sustainable
competitive advantage
§ Sustainable competitive advantage: According to Coyne Kevin (1986):

Sustainable competitive advantage is related to enterprises' efforts to establish and
maintain advantages over a long period of time. Sustainable competitive
advantage is influenced by three factors: size of the target market; greater access
to resources and customers; limitations on the powers of the CCPs. Often an
enterprise can create a sustainable competitive advantage based on characteristics
that cannot be easily copied.
4-91
4.2.2 Constituent elements of competitive advantage
§ Four factors help a company build and sustain a competitive advantage.

1) Superior efficiency
2) Superior quality
3) Innovation
4) Superior customer responsiveness
4-92
THE BUILDING BLOCKS OF COMPETITIVE ADVANTAGE
4-93
Superior Efficiency
§ The more efficient a company is, the fewer inputs are required to produce a
particular output.
§ The most common measure of efficiency for many companies is employee
efficiency.
§ Employee productivity refers to the output produced per employee.
§ Employee productivity helps a company attain a competitive advantage through a
lower cost structure.
3-94
Superior Quality
§ A product is said to have superior quality when customers perceive that its
attributes provide them with higher utility than the attributes of products sold by
rivals.
§ When customers evaluate the quality of a product, they commonly measure two
attributes.
ü Quality as excellence: Product design and styling, aesthetic appeal, features, and so on.
ü Quality as reliability: The product consistently performs, its function well, and rarely, if
ever, breaks down.
3-95
Innovation
§ Innovation refers to the act of creating new products or processes. There are
two main types of innovation:
ü Product innovation is the development of products that are new to the world or have
superior attribute to existing products (Apple developed the iPod, iPhone, and iPad in
the 2000s).
ü Process innovation is the development of a new process for producing products and
delivering them to customers (Toyota’s lean production system helped to boost
employee productivity).
3-96
Superior Customer Responsiveness
§ To achieve superior customer responsiveness, a company must be able to do a

better job at identifying and satisfying its customers’ needs.
§ A company needs to customize goods and services to the unique demands of
individual customers or customer groups.
§ Customer response time is the time it takes for the goods to be delivered or a
service to be performed.
3-97
Links between Competitive Advantage and Superior Firm Performance

4.2.3 Criteria for assessing sustainable competitive advantage (VRINE)
Test Competitive implication Performance implication
Valuable? Does the resource or capability allow the firm If so, it satisfies the value requirement. Valuable resources and capabilities convey the
to meet a market demand or protect the firm Valuable resources are needed just to compete potential to achieve “normal profits” (i.e., profits
from market uncertainties? in the industry, but value by itself does not which cover the cost of all inputs including the
convey an advantage. cost of capital).
Rare? Assuming the resource or capability is valuable, Valuable resources which are also rare convey a A temporary competitive advantage conveys the
is it scarce relative to demand? Or, is it widely competitive advantage, but its relative potential to achieve above normal profits, at
possessed by most competitors? permanence is not assured. least until the competitive advantage is nullified
The advantage is likely only temporary. by other firms.
Inimitable Assuming a valuable and rare resource, how Valuable resources and capabilities which are A sustained competitive advantage conveys the
and non- difficult is it for competitors to either imitate the difficult to imitate or substitute provide the potential to achieve above normal profits for
substitut- resource or capability or substitute for it with potential for sustained competitive advantage. extended periods of time (until competitors
able? other resources and capabilities that accomplish eventually find ways to imitate or substitute or
similar benefits? the environment changes in ways that nullify the
value of the resources).
Exploit- For each step of the preceding steps of the Resources and capabilities that satisfy the other Firms which control unexploited VRINE
able? VRINE test, can the firm actually exploit the VRINE requirements but which the firm is resources and capabilities generally suffer from
resources and capabilities that it owns or unable to exploit actually result in significant lower levels of financial performance and
controls? opportunity costs (other firms would likely pay depressed market valuations relative to what
large sums to purchase the VRINE resources they would otherwise enjoy (though not as
and capabilities). depressed as firms lacking resources and
Alternatively, exploitability unlocks the capabilities which do satisfy VRINE).
potential competitive and performance
implications of the resource or capability.
99
The VRIO Decision Tree

CONTENT

4.3. Evaluating the overall competitiveness of the enterprise
q 4.3.1. Definition and classification of competitiveness

q 4.3.2. Framework for assessing overall competitiveness

4.3.1 Definition and classification of competitiveness
q Definition: Competitive capabilities are those capabilities that enterprises perform especially better than competitive
competitors. Those are the strengths that the competitors cannot easily adapt or copy
q Classification of competitiveness of enterprises:
Non-Marketing Competitiveness Marketing competitiveness

• Financial position • Marketing Organization
• Management and leadership competencies • Marketing Information System
• Human Resources • Planning Marketing Strategy
• R&D capacity • Mixed Marketing Programs
• Operational production capacity • Marketing Test
• Marketing performance

4.3.2. Framework for assessing overall competitiveness
q Absolute competitiveness of enterprises
D - Overall competitiveness assessment score of enterprises

Pi - The mean score of parameter i of the evaluation sample set Ki - The coefficient of
significant k of parameter i
q Relative competitiveness of the enterprise
RCI – Relative competitiveness index of enterprises

CBT – The competitiveness of a benchmark enterprise (direct competitor with a leading or
challenging position in the same target market of the enterprise; or a competitor that is
assessed to have strong competitiveness and effective integration in the overall market).

CONTENT

4.4.1 Process of forming IFAS
q List key internal factors as identified in the internal-audit process. Use a total of from 10 to 20 internal factors, including
both strengths and weaknesses. List strengths first and then weaknesses. Be as specific as possible, using percentages,
ratios, and comparative numbers. Recall that Edward Deming said, “In God we trust. Everyone else bring data.”
q Assign a weight that ranges from 0.0 (not important) to 1.0 (all-important) to each factor. The weight assigned to a given
factor indicates the relative importance of the factor to being successful in the firm’s industry. Regardless of whether a
key factor is an internal strength or weakness, factors considered to have the greatest effect on organizational
performance should be assigned the highest weights. The sum of all weights must equal 1.0.
q Assign a 1-to-4 rating to each factor to indicate whether that factor represents a major weakness (rating = 1), a minor
weakness (rating = 2), a minor strength (rating = 3), or a major strength (rating = 4). Note that strengths must receive a 3
or 4 rating and weaknesses must receive a 1 or 2 rating. Ratings are thus company-based, whereas the weights in step 2
are industry-based.
q Multiply each factor’s weight by its rating to determine a weighted score for each variable.
q Sum the weighted scores for each variable to determine the total weighted score for the organization.

4.4.2 Building the IFAS framework
Internal factors Importance Level Classification Total importance Note
(1) (2) (3) score
(4)
Strengts:
Weakness:
Tổng 1.0 1.0-4.0 (5)


CHAPTER 5
TYPES OF STRATEGIES

OUTLINE
q 5.1. Corporate level Strategies
q 5.2. Business level strategies
q 5.3. Choosing and making decision of strategies

5.1.1. Diversification Strategies
Related Unrelated
Diversification Diversification
• Value chains possess • Value chains have no

competitively similarity that no
valuable cross- competitively
business strategic valuable cross-
business relationships
exist

SYNERGIES OF RELATED DIVERSIFICATION
q Transferring competitively valuable expertise, technological know-how, or

other capabilities from one business to another
q Combining the related activities of separate businesses into a single
operation to achieve lower costs
q Exploiting common use of a well-known brand name

Related Diversification Guidelines
q When an organization competes in a no-growth or a slow-growth industry
q When adding new, but related, products would significantly enhance the sales of
current products
q When new, but related, products could be offered at highly competitive prices
q When an organization has a strong management team

Unrelated Diversification Guidelines
q When revenues derived from an organization’s current products would increase
significantly by adding the new, unrelated products
q When an organization’s present channels of distribution can be used to market the new
products to current customers
q When an organization’s basic industry is experiencing declining annual sales and
profits.

Unrelated Diversification Guidelines (cont.)
q When an organization has the opportunity to purchase an unrelated business which is an

attractive investment opportunity
q When existing markets for an organization’s present products are saturated
q When antitrust action could be charged against an organization that historically has
concentrated on a single industry

5.1.2. Integration Strategies
q Forward integration
involves gaining ownership or increased control over Forward
distributors or retailers
q Backward integration
strategy of seeking ownership or increased control of a
firm’s suppliers Backward
Integration
q Horizontal integration Strategies
a strategy of seeking ownership of or increased control
over a firm’s competitors
Horizontal

Forward integration guidelines
q When an organization’s present distributors are especially expensive

q When the availability of quality distributors is so limited as to offer a competitive
advantage
q When an organization competes in an industry that is growing
q When present distributors or retailers have high profit margins

Backward Integration Guidelines
q When an organization’s present suppliers are overpriced or unreliable
q When the number of suppliers is small and the number of competitors is large
q When the advantages of stable prices are particularly important
q When an organization needs to quickly acquire a needed resource

Horizontal Integration Guidelines
q When an organization can gain monopolistic characteristics in a particular area or

region without being challenged by the federal government
q When an organization competes in a growing industry
q When increased economies of scale provide major competitive advantages
q When competitors are faltering due to a lack of managerial expertise

5.1.3 Intensive Strategies
q Market penetration strategy

seeks to increase market share for present Market
products or services in present markets Penetration
through greater marketing efforts
q Market development
Market
involves introducing present products or Intensive
Development
services into new geographic areas Strategy
q Product development strategy
seeks increased sales by improving or Product
modifying present products or services Development

Market Penetration Guidelines
q When current markets are not saturated with a particular product or service
q When the usage rate of present customers could be increased significantly
q When the market shares of major competitors have been declining while total industry
sales have been increasing
q When increased economies of scale provide major competitive advantages

Market Development Guidelines
q When new channels of distribution are available that are reliable, inexpensive, and of
good quality
q When an organization is very successful at what it does
q When new untapped or unsaturated markets exist
q When an organization has excess production capacity

Product Development Guidelines
q When an organization has successful products that are in the maturity stage of the product
life cycle
q When an organization competes in an industry that is characterized by rapid technological
developments
q When major competitors offer better-quality products at comparable prices
q When an organization competes in a high-growth industry

5.1.4. Defensive Strategies
Retrenchment: when an organization regroups

through cost and asset reduction to reverse
declining sales and profits.
Retrenchment can entail selling off land and
buildings to raise needed cash, pruning product
lines, closing marginal businesses, closing
obsolete factories, automating processes,
reducing the number of employees, and
instituting expense control systems.

q Divestiture: Selling a division or part of an

organization.
Divestiture often is used to raise capital for further
strategic acquisitions or investments. Divestiture has
also become a popular strategy for firms to focus on
their core businesses and become less diversified.

q Liquidation: Selling all of a company’s assets,

in parts, for their tangible worth.
Liquidation is a recognition of defeat and
consequently can be an emotionally difficult
strategy. However, it may be better to cease
operating than to continue losing large sums of
money.

OUTLINE

Definition of Business Level Strategies
q Business level strategies reflect the basic

ways in which an enterprise competes in its
markets based on two basic characteristics:
low cost and differentiation.
q Combine with the scope of activities of the
business, create three strategies of general
competition:
ü Lowest cost strategy
ü Differentiation strategy
ü Centralization strategy

5.2.1 Cost Leadership Strategies
q To employ the cost leadership strategy successfully, a firm must
ensure that its total cost across its overall value chain are lower than
competitors’ total cost
There are two ways:
1.Perform value chain activities more efficiently than rivals and control
the factors that affect the cost of value chain activities
2.Revamp the firm’s overall value chain to eliminate or bypass some
cost-producing activities

5.2.1 Cost Leadership Guidelines
q When price competition among rival sellers is especially vigorous

q When there are few ways to achieve product differentiation that have value to buyers
q When most buyers use the product in the same ways
q When buyers incur low cost in switching their purchases from one seller to another

5.2.2 Differentiation Strategies
q Differentiation strategy should be pursued only after a careful study of buyers’ needs and
preferences to determine the feasibility of incorporating one or more differentiating
features into a unique product that features the desired attributes

5.2.2 Differentiation Strategies
q When there are many ways to differentiate the product

q When buyer’s needs and uses are diverse
q When few rival firms are following a similar differentiation approach
q When technological change is fast paced

5.2.3 Focus Strategies
q Successful focus strategy depends on an industry segment that has sufficient size, good
growth potential, and is not crucial to the success of other major competitors
q Most effective when consumers have distinctive preferences

Focus Strategy Guidelines
q When the target market niche is large, profitable, and growing
q When industry leaders do not consider the niche to be crucial to their own
success
q When the industry has many different niches and segments
q When few, if any, other rivals are attempting to specialize in the same target
segment

OUTLINE

5.3.1. Boston Consultant Group Matrix (BCG)
Doing product portfolio

analysis?
Use BCG Matrix!
How

q BCG matrix developed by Boston Consulting Group is an analytical tool used to access
company’s product lines. It aims at helping the company to make the best possible
allocation of its resources.
q BCG matrix is also known as the growth-share or Boston matrix.

q According to this technique, businesses or products are classified as low or high

performers depending upon their market growth rate and relative market share.
q To understand the Boston Matrix you need to understand how market share and market
growth interrelate.

• Market share is the percentage of the total market that is being serviced by your
company, measured either in revenue terms or unit volume terms.
• RELATIVE MARKET SHARE

• RMS = Business unit sales this year
Leading rival sales this year
• The higher your market share, the higher proportion of the market you control.

q Market growth is used as a measure of a market’s attractiveness.
q MGR = Individual sales - individual sales

this year last year
Individual sales last year
q Markets experiencing high growth are ones where the total market share
available is expanding, and there’s plenty of opportunity for everyone to make
money.

MAIN STEPS OF BCG MATRIX
q Identifying and dividing a company into SBU.

q Assessing and comparing the prospects of each SBU according to two criteria :
1. SBU’s relative market share.
2. Growth rate of SBU’S industry.
q Classifying the SBU’S on the basis of BCG matrix.
q Developing strategic objectives for each SBU.
5.3.2. TOWS Matrix
Objective: Helping managers develop four types of strategies: SO Strategies, WO Strategies, ST Strategies,
and WT Strategies by matching key external and internal factors.
There are eight steps involved in constructing a SWOT Matrix:
1. List the firm’s key external opportunities.
2. List the firm’s key external threats.
3. List the firm’s key internal strengths.
4. List the firm’s key internal weaknesses.
5. Match internal strengths with external opportunities, and record the resultant SO Strategies in the
appropriate cell.
6. Match internal weaknesses with external opportunities, and record the resultant WO Strategies.
7. Match internal strengths with external threats, and record the resultant ST Strategies.
8. Match internal weaknesses with external threats, and record the resultant WT Strategies.

5.3.3 QSPM Matrix
q Designed to determine the relative attractiveness of feasible alternative strategies.
q The QSPM uses input from EFE Matrix, IFE Matrix analyses and matching results from
TOWS Matrix analyses to decide objectively among alternative strategies.
q The QSPM is a tool that allows strategists to evaluate alternative strategies objectively,
based on previously identified external and internal critical success factors.

6 steps required to develop a QSPM are discussed:
q Step 1. Make a list of the firm’s key external opportunities/threats and internal strengths/weaknesses
q Step 2 Assign weights to each key external and internal factor. These weights are identical to those in the
EFE Matrix and the IFE Matrix.
q Step 3 Examine the Stage 2 (matching) matrices, and identify alternative strategies that the organization
should consider implementing.
q Step 4 Determine the Attractiveness Scores (AS) defined as numerical values that indicate the relative
attractiveness of each strategy in a given set of alternatives.
q The range for Attractiveness Scores is 1 = not attractive, 2 = somewhat attractive, 3 = reasonably
attractive, and 4 = highly attractive.
q Step 5 Compute the Total Attractiveness Scores. Total Attractiveness Scores (TAS) are defined as the
product of multiplying the weights (Step 2) by the Attractiveness Scores (Step 4) in each row.
q Step 6 Compute the Sum Total Attractiveness Score.


CHAPTER 6
STRATEYGY IMPLEMENTATION

OUTLINE
6.1 Definition, the nature and content of strategic implementation
6.2 Establishing annual objectives and policies in strategic implementation
6.3 Planning resources to implement the strategies
6.4 Organizational structure in strategic implementation
6.5 Developing corporate culture in strategic implementation
6.6 Strategic leadership

6.1.1 Definition and content of strategic implementation
- “It is always more difficult to do something than to say you are going to do it”
(David, 2011).
- Involves the use of organizational design, the process of deciding how a company
should create, use, and combine organizational structure, control systems, and culture
to pursue a business model successfully.

6.1.1 Definition and content of strategic implementation (cont.)
Nature of strategic implementation:

- Managing forces during the action
- Focusing on efficiency
- Being primarily an intellectual process
- Requiring special motivation and leadership skills
- Requiring coordination among many individuals

6.1.1 Definition and content of strategic implementation (cont.)
Some management issues central to strategic implementation:

- Establish annual objectives
- Devise policies
- Allocate resources
- Alter an existing organizational structure
- Develop organizational culture and strategic leadership

6.1.2 Factors affecting strategic implementation

OUTLINE

6.2.1 Definition and requirements of annual objectives
- Annual objectives serve as guidelines for action, directing and channeling

efforts and activities of organization members.
- Necessity of establishing annual objectives:

- Represent the basis for allocating resources
- Be a primary mechanism for evaluating managers
- Be the major instrument for monitoring progress toward achieving long-
term objectives
- Establish organizational, divisional, and departmental priorities

6.2.1 Definition and requirements of annual objectives (cont.)
- Requirements of annual objectives:

- Measurable
- Consistent
- Reasonable
- Challenging
- Clear
- Communicated throughout the organization
- Characterized by an appropriate time dimension
- Accompanied by commensurate rewards and sanctions

6.2.2 Administering policies to implement the strategies
- Policy refers to “specific guidelines, methods, procedures, rules, forms,

and administrative practices established to support and encourage work
toward stated goals” (David, 2011).
- Are instruments for strategy implementation.
- Policies set boundaries, constraints, and limits on the kinds of

administrative actions that can be taken to reward and sanction behavior;
they clarify what can and cannot be done in pursuit of an organization’s
objectives
6.2.2 Administering policies to implement the strategies (cont.)
Some issues that may require a management policy (David, 2011)
- To offer extensive or limited management development workshops and seminars

- To centralize or decentralize employee-training activities
- To recruit through employment agencies, college campuses, and/or newspapers
- To promote from within or to hire from the outside
- To promote on the basis of merit or on the basis of seniority
- To tie executive compensation to long-term and/or annual objectives
- To offer numerous or few employee benefits
- To negotiate directly or indirectly with labor unions

6.2.2 Administering policies to implement the strategies (cont.)
Some issues that may require a management policy (cont.)

- To delegate authority for large expenditures or to centrally retain this authority
- To allow much, some, or no overtime work
- To establish a high- or low-safety stock of inventory
- To use one or more suppliers
- To buy, lease, or rent new production equipment
- To greatly or somewhat stress quality control
- To establish many or only a few production standards
- To operate one, two, or three shifts
- To discourage using insider information for personal gain, sexual harassment,
smoking at work, and insider trading

OUTLINE

6.3.1 Principles of resource planning (Resource Allocation)
- Is a central management activity that allows for strategy execution

- There are at least four types of resources that can be used to achieve desired
objectives:
- Financial resources
- Physical resources
- Human resources
- Technological resources

6.3.2 Resource planning implementation (Resource Allocation) (cont.)
Some factors may influence negative the effectiveness of resource allocation:

- Overprotection of resources
- Too great an emphasis on short-run financial criteria
- Organizational politics
- Vague strategy targets
- A Reluctance to take risks
- A lack of sufficient knowledge.

OUTLINE

6.4.1 Definition and basic characteristics of organizational structure
q Definition
“Organizational structure assigns employees to specific value creation tasks and
roles and specifies how these tasks and roles are to work together in a way that increases
efficiency, quality, innovation, and responsiveness to customers—the distinctive
competencies that build competitive advantage” (Hill & Jones, 2008).
q Basic characteristic
q Specialization
q Coordination
q Integration

6.4.2 The role of organizational structure in strategic implementation

6.4.3 Types of organizational structures to implement strategy
q The functional structure

q The divisional structure
q The strategic business unit (SBU) structure
q The matrix structure

The functional structure The divisional structure

(centralized structure) (decentralized structure)
q Most widely used structure q Second most common
q Groups tasks and activities used structure
by business function q Can be organized in one
of four ways:
q By geographic area
q By product/service
q By customer
q By process
The SBU structure The matrix structure
q Groups similar divisions into
q The most complex since
SBU and delegate authority
depending upon both
and responsibility for each
vertical and horizontal
unit to a senior executive
flows of authority and
q Improves coordination
communication
between similar divisions and
q Widely used in many
channeling accountability to
industries: construction,
distinct business units.
health care, research, and
defense
173 Bộ môn Quản trị chiến lư 8/30/22
OUTLINE

6.5.1 Definition and role of corporate culture in strategic implementation
(organizational culture)
q Definitions: “Organizational culture is the specific collection of values, norms,

beliefs, and attitudes that are shared by people and groups in an organization
and that control the way they interact with each other and with stakeholders
outside the organization” (Hill and Jones, 2008)

6.5.1 Definition and role of corporate culture in strategic implementation
(organizational culture) (cont.)
Roles:
q Organizational culture describes the characteristic ways—“this is the way we
do it around here”—in which members of an organization get the job done.
q Organizational culture are the means by which an organization motivates and
coordinates its members to work toward achieving the competitive advantage

6.5.2 Developing corporate culture adapting to the requirements of strategic
implementation (Altering an Organizational culture)
q Formal statements of organizational philosophy, charters, creeds, materials used for
recruitment and selection, and socialization
q Designing of physical spaces, facades, buildings
q Deliberate role modeling, teaching, and coaching by leaders
q Explicit reward and status system, promotion criteria
q Stories, legends, myths, and parables about key people and events
q What leaders pay attention to, measure, and control
q Leader reactions to critical incidents and organizational crises
q How the organization is designed and structured
q Organizational systems and procedures
q Criteria used for recruitment, selection, promotion, leveling off, retirement, and
“excommunication” of people
OUTLINE

6.6.1 Definition and role and the nature of strategic leadership
Definition:
“Leadership is the process of influencing an organization (or group within an
organization) in its efforts towards achieving an aim of goal” (Johnson and Whittington, 2011)
Roles:
q Envisioning future strategy
q Aligning the organization to deliver that strategy
q Embodying change

6.6.2 Developing leadership resources to implement strategy
Leaders are expected to be:

q “Sense making” of strategy
q Reinterpretation and adjustment
q Advisers

6.6.3 Operational aspects and psychology of strategic leadership
q “Successful strategic leaders are able to adjust their style of leadership to the context they
face” (Johnson and Whittington, 2011)
q Styles of leadership (Johnson and Whittington, 2011)

q Education
q Collaboration
q Participation
q Direction
q Coercion
q Remember to adopt different styles in different circumstances (Time and scope, Capability
and readiness for change)
Strategic Management Department
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CHAPTER 7: STRATEGIC
EVALUATION AND CONTROL
183 Dept of strategic management 8/30/22

Organizations are most vulnerable when they are at the
peak of their success
-- R.T. Lenz --

OUTLINE
7.1 Definition, the nature and process of strategic evaluation
7.2 Strategic evaluation framework
7.3 Establishing rules to guide strategic control

7.1 Definition, the nature and process of Strategic Evaluation
q Definition:
“Strategic evaluation allow firms to monitor and evaluate whether, their

strategy and structure are working as intended, how they could be improved,
and how they should be changed if they are not working” (Hill and Jones,
2008)

Nature of strategy evaluation
(1) Monitoring how well an organization and its members are currently
performing
(2) How well the firm is using its existing resources
(3) How to create he incentives to keep employees motivated and focused on
the important work together and find solutions that
(4) Find solutions that can help an organization perform better over time

7.1.2 Strategic evaluate process

7.1.3 Strategic evaluation criteria

Criteria for strategic evaluation
Consistency Strategy should not present inconsistent
goals & policies
Consonance Need for strategies to examine sets of trends
Feasibility Either overtax resources or create

unsolvable sub-problems
Advantage Creation or maintenance of competitive

advantages

OUTLINE

7.2 Strategy evaluation framework

Strategy evaluation framework
Determine what to Top-level and operational managers need to identify the implementation
measure processes and results that will be monitored and evaluated
Establish of standards Strategists must establish performance targets, standards and tolerant limits
for organizational objectives, strategy and implementation plans. Standards
can pertain to quality, cost and time
Measure performance Measuring actual performance may involve measurements in qualitative and
quantitative terms and in terms of time and cost. Managers may accordingly
ask for performance reports from their employees.
Performance deviations Actual performance must be objectively compared against predetermined

standards. Deviations, if any, must be identified.
If the actual performance is within the desired tolerance range, the
evaluation is stopped.
Take corrective actions If an organization’s actual performance falls outside the desired tolerance
range, corrective action must be taken to correct deviations. This may
require resetting of goals or objectives or revision of plans, policies and
standards. Corrective steps must be taken at the right time to achieve
organizational objectives.

Example : MTR Foods
1 Determine what to measure: Sales of MTR products in India
Establish standards: Target to generate sales worth Rs. 1000 crores in 2015
2
Measure performance: Sales in 2015 were RS. 700 crores

3

Example : MTR Foods
Performance deviations: Difference of Rs. 300 crore
4
Unfavorable economic environment, inflation in food prices, lowers than expected new
consumer acquisitions, lack of presence other than offline
5 Take corrective actions:

- To remain relevant and be consumer’s preferred choice, MTR is launching innovations
and rebranding its products.
- Considering the dynamic industry environment and changing consumer behavior, MTR
has introduced 44 innovations in three years, with plans to introduce more in line with its
ongoing strategies.
- Further, many products have become commoditized in the last two years. To distinguish
itself, MTR plans to expand product lines to appeal to different ethnic groups.
- Marketing: MTR currently runs multiple consumer-related programs in line with its
belief that it is important for consumers to taste products in the food business.
- MTR has a reach of 200,000 outlines and is witnessing a 30% increase in sales from
rural areas annually, with 10%-15% of its sales coming from rural areas.
- MTR’s new sales target is Rs 2000 crore by 2020

OUTLINE

q Personal control:
q To shape and influence the behavior of a person in a face-to-face interaction in the
pursuit of a company’s goals
q Supervise directly from a manager farther up in the hierarchy.
q Output control:
q Estimate or forecast appropriate performance goals for each division, department, and
employee, and then measure actual performance relative to these goals.
q Provide an incentive structure for motivating employees at all levels in the organization.
q Behavior control:
q Establish a comprehensive system of rules and procedures to direct the actions or
behavior of divisions, functions, and individuals.
q Operate budgets, standardization, and rules and procedures.

Strategic Management Department
198 8/30/22

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STRATEGIC MANAGEMENT

1 Bộ môn Quản trị chiến lược 8/30/22

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Final Exam 0.6

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1.1. Definition and the roles of strategic management

1.2. Key terms in strategic management

1.3. Strategic thinking development progess

1.4. Comprehensive framework and stages of strategic management

1.5. Research methodology

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q Strategic management definition

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• Proactive in shaping firm’s future

• Initiate and influence firm’s activities

Ch 1 -10 Copyright 2007 Prentice Hall

1.1. Definition and the roles of strategic management

1.2. Key terms in strategic management

1.3. Strategic thinking development progess

1.4. Comprehensive framework and stages of strategic management

1.5. Research methodology

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Various Job Titles:

•Chief Executive Officer (CEO)

Ch 1 -12 Copyright 2007 Prentice Hall

Ch 1 -13 Copyright 2007 Prentice Hall

Opportunities & Threats (External): Largely beyond the

Strengths & Weaknesses (Internal): Controllable activities of an

Ch 1 -15 Copyright 2007 Prentice Hall

qMission-driven pursuit of specified results more than one year out

Ch 1 -16 Copyright 2007 Prentice Hall

Ch 1 -17 Copyright 2007 Prentice Hall

q The means by which annual objectives will be achieved

Ch 1 -18 Copyright 2007 Prentice Hall

Levels of strategy Corporate

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At this level the fundamental task is to develop a balanced portfolio of

At this level the major task is to provide an appropriate functional

The SBUs are the natural ‘grouping’ of parts of a corporation.

2. Different use Pharmacy:

5. Different customers SBU : The last customer

6. Different market segmentation Automobile

1.1. Definition and the roles of strategic management

1.2. Key terms in strategic management

1.3. Strategic thinking development progess

1.4. Comprehensive framework and stages of strategic management

1.5. Research methodology

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Ch 1 -25 Copyright 2007 Prentice Hall

1.1. Definition and the roles of strategic management

1.2. Key terms in strategic management

1.3. Strategic thinking development progess

1.4. Comprehensive framework and stages of strategic management

1.5. Research methodology

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Strategy Strategy Strategy

Vision & Mission

External Opportunities & Threats

Internal Strengths & Weaknesses