Z01940010120174033robbins - Mgmt13e - Inppt - 09asli

MANAGING
STRATEGY
Copyright ©
Copyright © 2014 Pearson Education,
2016 Pearson Education, Ltd
Ltd. 9-1
LEARNING OBJECTIVES
1. Define strategic management and explain why it’s
important.
2. Explain what managers do during the six steps of the
strategic management process.
• Know how to identify your own personal strengths and
weaknesses and deal with them.
• Develop your skill at strategic planning.
3. Describe the three types of corporate strategies.
4. Describe competitive advantage and the competitive
strategies organizations use to get it.
5. Discuss current strategic management issues.
Copyright ©
Ltd. 9-2
WHAT IS STRATEGIC MANAGEMENT?
 Strategic management – what managers do

to develop the organization’s strategies.
• Strategies – the plans for how the
organization will do what it’s in business to
do, how it will compete successfully, and how
it will attract and satisfy its customers in order
to achieve its goals.
• Business model – how a company is going
to make money.
Copyright ©
Ltd. 9-3
WHY IS STRATEGIC MANAGEMENT
IMPORTANT?
1. It results in higher organizational
performance.
2. It requires that managers examine and
adapt to business environment
changes.
3. It coordinates diverse organizational
units, helping them focus on
organizational goals.
Copyright ©
Ltd. 9-4
THE STRATEGIC MANAGEMENT
PROCESS
 Strategic management process – a six-
step process that encompasses strategic
planning, implementation, and evaluation.
Copyright ©
Ltd. 9-5
EXHIBIT 9-1
STRATEGIC MANAGEMENT PROCESS
Copyright ©
Ltd. 9-6
PROCESS (CONT.)
 Step 1: Identifying the organization’s
current mission, goals, and strategies:
– Mission: a statement of the purpose of an
organization.
• The scope of its products and services
– Goals: the foundation for further planning.
• Measurable performance targets
Copyright ©
Ltd. 9-7
EXHIBIT 9-2:
COMPONENTS OF A MISSION STATEMENT
Copyright ©
Ltd. 9-8
PROCESS (CONT.)
 Step 2 : Doing an external analysis
– The environmental scanning of specific and
general environments.
• Focuses on identifying opportunities and threats
Copyright ©
Ltd. 9-9
PROCESS (CONT.)
 Step 3: Doing an internal analysis
– Assessing organizational resources, capabilities, and
activities:
• Strengths create value for the customer and
strengthen the competitive position of the firm.
• Weaknesses can place the firm at a competitive
disadvantage.
– Steps 2 and 3 combined are called a SWOT analysis.
(Strengths, Weaknesses, Opportunities, and Threats)
Copyright ©
Ltd. 9-10
SWOT ANALYSIS
 SWOT analysis – an analysis of the

organization’s strengths, weaknesses,
opportunities, and threats.
• Resources – an organization’s assets that
are used to develop, manufacture, and deliver
a product to its customers.
• Capabilities – an organization’s skills and
abilities in doing the work activities needed in
its business.
Copyright ©
Ltd. 9-11
STRENGTHS AND WEAKNESSES
 Strengths- any activities the organization

does well or any unique resources that it has.
• Weaknesses – activities the organization
does not execute well or needed resources
it does not possess.
• Core competencies – the organization’s
major value-creating capabilities that
determine its competitive weapons.
Copyright ©
Ltd. 9-12
PROCESS (CONT.)
 Step 4: Formulating strategies
– Develop and evaluate strategic alternatives.
– Select appropriate strategies for all levels in the
organization that provide relative advantage
over competitors.
– Match organizational strengths to environmental
opportunities.
– Correct weaknesses and guard against threats.
Copyright ©
Ltd. 9-13
PROCESS (CONT.)
 Step 5: Implementing strategies
– Implementation – effectively fitting organizational structure and
activities to the environment.
– The environment dictates the chosen strategy; effective strategy
implementation requires an organizational structure matched to
its requirements.
 Step 6: Evaluating results

– How effective have strategies been?
– What adjustments, if any, are necessary?
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Ltd. 9-14
WHAT IS CORPORATE STRATEGY?
 Corporate strategy – an organizational
strategy that determines what businesses a
company is in or wants to be in, and what it
wants to do with those businesses.
 Strategic Business Unit (SBU) – the single
independent businesses of an organization
that formulate their own competitive
strategies.
Copyright ©
Ltd. 9-15
TYPES OF CORPORATE STRATEGIES
 Growth – expansion into new products and

markets.
 Stability – maintenance of the status quo.
 Renewal – examination of organizational

weaknesses that are leading to performance
declines.
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Ltd. 9-16
EXHIBIT 9-3
TYPES OF ORGANIZATIONAL STRATEGIES
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Ltd. 9-17
GROWTH STRATEGIES
 Growth Strategy – a corporate strategy that’s
used when an organization wants to expand
the number of markets served or products
offered, through either its current business(es)
or new business(es).
Copyright ©
Ltd. 9-18
TYPES OF GROWTH STRATEGIES
 Concentration – focuses on its primary line of
business and increases the number of products
offered or markets served in this primary business.
 Vertical integration
– Backward vertical integration – the organization
becomes its own supplier.
– Forward vertical integration – the organization
becomes its own distributor.
Copyright ©
Ltd. 9-19
TYPES OF GROWTH STRATEGIES (CONT.)
 Horizontal integration – a company grows by
combining with competitors.
 Diversification
– Related diversification – when a company
combines with other companies in different, but
related industries.
– Unrelated diversification – when a company
combines with firms in different and unrelated
industries.
Copyright ©
Ltd. 9-20
CORPORATE STRATEGIES (CONT.)
 Stability Strategy – a corporate strategy

in which an organization continues to do
what it is currently doing.
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Ltd. 9-21
CORPORATE STRATEGIES (CONT.)
 Renewal Strategy – a corporate strategy

designed to address declining
performance.
– Retrenchment strategy – a short-run
renewal strategy used for minor
performance problems.
– Turnaround strategy – when an
organization’s problems are more serious,
more drastic action is needed.
Copyright ©
Ltd. 9-22
HOW ARE CORPORATE
STRATEGIES MANAGED?
 BCG matrix – a strategy tool that guides
resource allocation decisions on the basis of
market share and growth rate of SBUs.
 Four Categories
– Stars
– Cash Cows
– Question Marks
– Dogs
Copyright ©
Ltd. 9-23
COMPETITIVE STRATEGIES
 Competitive strategy – an organizational
strategy for how an organization will compete
in its business(es).
 Competitive advantage – what sets an
organization apart; its distinctive edge.
– Quality as a Competitive Advantage
– Design Thinking as a Competitive Advantage
– Sustaining Competitive Advantage
Copyright ©
Ltd. 9-24
FIVE FORCES MODEL
Five forces determine industry attractiveness
and profitability:
1. Threat of new entrants. How likely is it that
new competitors will come into the industry?
2. Threat of substitutes. How likely is it that
other industries’ products can be substituted
for our industry’s products?
Copyright ©
Ltd. 9-25
FIVE FORCES MODEL (CONT.)
3. Bargaining power of buyers. How much

bargaining power do buyers (customers)
have?
4. Bargaining power of suppliers. How much
bargaining power do suppliers have?
5. Current rivalry. How intense is the rivalry
among current industry competitors?
Copyright ©
Ltd. 9-26
CHOOSING A COMPETITIVE
STRATEGY
 Cost leadership strategy – when an
organization competes on the basis of having
the lowest costs (costs or expenses, not
prices) in its industry.
 Differentiation strategy – a company that
competes by offering unique products that are
widely valued by customers.
Copyright ©
Ltd. 9-27
CHOOSING A COMPETITIVE
STRATEGY (CONT.)
 Focus strategy – involves a cost advantage
(cost focus) or a differentiation advantage
(differentiation focus) in a narrow segment or
niche.
 Stuck in the middle – when costs are too high
to compete with the low-cost leader or when
its products and services aren’t differentiated
enough to compete with the differentiator.
Copyright ©
Ltd. 9-28
FUNCTIONAL STRATEGY
Functional strategy – the strategies used

by an organization’s various functional
departments to support the competitive
strategy.
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Ltd. 9-29
CURRENT STRATEGIC MANAGEMENT
ISSUES
 Strategic leadership – the ability to
anticipate, envision, maintain flexibility, think
strategically, and work with others in the
organization to initiate changes that will
create a viable and valuable future for the
organization.
Copyright ©
Ltd. 9-30
EXHIBIT 9-4
EFFECTIVE STRATEGIC LEADERSHIP
Copyright ©
Ltd. 9-31
CURRENT STRATEGIC MANAGEMENT
ISSUES (CONT.)
 Strategic flexibility – the ability to
recognize major external changes, to
quickly commit resources, and to
recognize when a strategic decision was a
mistake.
Copyright ©
Ltd. 9-32
EXHIBIT 9-5
DEVELOPING STRATEGIC FLEXIBILITY
Copyright ©
Ltd. 9-33
IMPORTANT ORGANIZATIONAL
STRATEGIES FOR TODAY’S ENVIRONMENT
 e-Business strategies
– Cost Leadership – online activities: bidding, order
processing, inventory control, recruitment and
hiring.
– Differentiation – Internet-based knowledge
systems, online ordering and customer support.
– Focus – chat rooms and discussion boards,
targeted Web sites.
Copyright ©
Ltd. 9-34
IMPORTANT ORGANIZATIONAL STRATEGIES
FOR TODAY’S ENVIRONMENT (CONT.)
 Customer Service Strategies – companies

emphasizing excellent customer service
need strategies that cultivate that
atmosphere from top to bottom.
 Innovation Strategies
 First Mover – an organization that brings a
product innovation to the market or uses new
process innovations.
Copyright ©
Ltd. 9-35
EXHIBIT 9-6
FIRST-MOVER ADVANTAGES AND DISADVANTAGES
Copyright ©
Ltd. 9-36

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MANAGING

 Strategic management – what managers do

 SWOT analysis – an analysis of the

 Strengths- any activities the organization

 Step 6: Evaluating results

– What adjustments, if any, are necessary?

 Growth – expansion into new products and

 Renewal – examination of organizational

 Stability Strategy – a corporate strategy

 Renewal Strategy – a corporate strategy

3. Bargaining power of buyers. How much

Functional strategy – the strategies used

 Customer Service Strategies – companies

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