Management Fourteenth Edition Chapter 9 PDF

9-1 Management Fourteenth Edition Chapter 9 Managing Strategy Copyright © 2018 Pearson Education, Inc.  9-2 Learning Objectives 9...

9-1 Management Fourteenth Edition Chapter 9 Managing Strategy Copyright © 2018 Pearson Education, Inc.  9-2 Learning Objectives 9.1 Define strategic management and explain why it’s important. 9.2 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. 9.3 Describe the three types of corporate strategies. 9.4 Describe competitive advantage and the competitive strategies organizations use to get it. 9.5 Discuss current strategic management issues. Copyright © 2018 Pearson Education, Inc.  9-3 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 © 2018 Pearson Education, Inc.  9-4 Why is Strategic Management Important? Has a positive impact on performance Helps managers decide how to act in face of change and uncertainty Helps complex and diverse organizations work together Copyright © 2018 Pearson Education, Inc.  9-5 Exhibit 9-1 Strategic Management Process Exhibit 9-1 illustrates the six-step process of strategic management, which encompasses strategy planning, implementation, and evaluation. Copyright © 2018 Pearson Education, Inc.  9-6 Step 1: Identifying the Organization’s Current Mission, Goals, and Strategies Mission: the purpose of an organization Copyright © 2018 Pearson Education, Inc.  9-7 Exhibit 9-2 Components of a Mission Statement Component Question Customers Who are the firm’s customers? Market Where does the firm compete geographically? Concern for Survival, Is the firm committed to growth and financial Growth, and Profitability stability? Philosophy What are the firm’s basic beliefs, values, and ethical priorities? Concern for Public Image How responsive is the firm to societal and environmental concerns? Products or Services What are the firm’s major products or services? Technology Is the firm technologically current? Self-Concept What are the firm’s major competitive advantage and core competencies? Concern for Employees Are employees a valuable asset of the firm? Copyright © 2018 Pearson Education, Inc.  9-8 Step 2: Doing an External Analysis Opportunities: positive trends in the external environment Threats: negative trends in the external environment Copyright © 2018 Pearson Education, Inc.  9-9 Step 3: Doing an Internal Analysis Resources: an organization’s assets that are used to develop, manufacture, and deliver products to its customers Capabilities: an organization’s skills and abilities in doing the work activities needed in its business Core competencies: the organization’s major value- creating capabilities that determine its competitive weapons Copyright © 2018 Pearson Education, Inc.  9-10 SWOT Analysis Strengths: any activities the organization does well or its unique resources Weaknesses: activities the organization does not do well or resources it needs but does not possess SWOT analysis: an analysis of the organization’s strengths, weaknesses, opportunities, and threats Copyright © 2018 Pearson Education, Inc.  9-11 Step 4: Formulating Strategies Three main types of strategies managers will formulate: – Corporate – Competitive – Functional Copyright © 2018 Pearson Education, Inc.  9-12 Step 5: Implementing Strategies No matter how effectively an organization has planned its strategies, performance will suffer if the strategies aren’t implemented properly. Copyright © 2018 Pearson Education, Inc.  9-13 Step 6: Evaluating Results How effective have strategies been at helping the organization achieve its goals What adjustments are necessary? Copyright © 2018 Pearson Education, Inc.  9-14 Exhibit 9-3 Types of Organizational Strategies Exhibit 9-3 shows the three types of strategies organizations use: corporate, competitive, and functional. Copyright © 2018 Pearson Education, Inc.  9-15 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 Copyright © 2018 Pearson Education, Inc.  9-16 What Are the Types of Corporate Strategy? Growth strategy: a corporate strategy that’s used when an organization wants to expand the number of markets served or products offered, either through its current business(es) or through new business(es) – Concentration – Vertical integration – Horizontal integration – Diversification Copyright © 2018 Pearson Education, Inc.  9-17 Stability and Renewal Strategies Stability strategy: a corporate strategy in which an organization continues to do what it is currently doing Renewal strategy: a corporate strategy designed to address declining performance Copyright © 2018 Pearson Education, Inc.  9-18 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 – Stars – Cash cows – Question marks – Dogs Copyright © 2018 Pearson Education, Inc.  9-19 Competitive Strategies Competitive strategy: an organizational strategy for how an organization will compete in its business(es) Strategic business unit(SBU): the single independent businesses of an organization that formulate their own competitive strategies Copyright © 2018 Pearson Education, Inc.  9-20 The Role of Competitive Advantage Competitive advantage: What sets an organization apart; its distinctive edge Copyright © 2018 Pearson Education, Inc.  9-21 Types of Competitive Advantage Quality Design thinking Social media Copyright © 2018 Pearson Education, Inc.  9-22 Sustaining Competitive Advantage Porter’s Five Forces Model: – Threat of new entrants – Threat of substitutes – Bargaining power of buyers – Bargaining power of suppliers – Current rivalry Copyright © 2018 Pearson Education, Inc.  9-23 Choosing a Competitive Strategy Cost leadership strategy Differentiation strategy Focus strategy Stuck in the middle Copyright © 2018 Pearson Education, Inc.  9-24 Functional Strategies Functional strategies: a strategy used by an organization’s various functional departments to support the competitive strategy Copyright © 2018 Pearson Education, Inc.  9-25 The Need for Strategic Leadership 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 © 2018 Pearson Education, Inc.  9-26 Exhibit 9-4 Effective Strategic Leadership Exhibit 9-4 shows the eight key dimensions of strategic leadership. Copyright © 2018 Pearson Education, Inc.  9-27 The Need for Strategic Flexibility Strategic flexibility: the ability to recognize major external changes, to quickly commit resources, and to recognize when a strategic decision was a mistake Copyright © 2018 Pearson Education, Inc. Exhibit 9-5 9-28 Developing Strategic Flexibility Technique Encourage leadership unity by making sure everyone is on the same page. Keep resources fluid and move them as circumstances warrant. Have the right mindset to explore and understand issues and challenges. Know what’s happening with strategies currently being used by monitoring and measuring results. Encourage employees to be open about disclosing and sharing negative information. Get new ideas and perspectives from outside the organization. Have multiple alternatives when making strategic decisions. Learn from mistakes. Copyright © 2018 Pearson Education, Inc.  9-29 Important Organizational Strategies for Today’s Environment E-Business strategies Customer service strategies Innovation strategies – First mover: an organization that’s first to bring a product innovation to the market or to use a new process innovation Copyright © 2018 Pearson Education, Inc. Exhibit 9-6 9-30 First Mover Advantages and Disadvantages Exhibit 9-6 shows the strategic advantages and disadvantages of being a first mover. Copyright © 2018 Pearson Education, Inc.  9-31 Review Learning Objective 9.1 Define strategic management and explain why it’s important. – Strategic management is what managers do to develop the organization's strategies – A business model is how a company is going to make money. Copyright © 2018 Pearson Education, Inc.  9-32 Review Learning Objective 9.2 Explain what managers do during the six steps of the strategic management process. – 1. Identify the current mission, goals, and strategies – 2. Do an external analysis – 3. Do an internal analysis – 4. Formulate strategies – 5. Implement strategies – 6. Evaluate strategies Copyright © 2018 Pearson Education, Inc.  9-33 Review Learning Objective 9.3 Describe the three types of corporate strategies. – Growth strategies: concentration, vertical integration, horizontal integration, and diversification – Stability strategies – Renewal strategies: retrenchment and turnaround – BCG matrix Copyright © 2018 Pearson Education, Inc.  9-34 Review Learning Objective 9.4 Describe competitive advantage and the competitive strategies organizations use to get it. – Competitive advantage – Porter’s five forces model – Porter’s three competitive strategies:  Cost leadership  Differentiation  Focus Copyright © 2018 Pearson Education, Inc.  9-35 Review Learning Objective 9.5 Discuss current strategic management issues. – Strategic leadership – Strategic flexibility – E-Business strategies Copyright © 2018 Pearson Education, Inc.  9-36 Copyright © 2018 Pearson Education, Inc.