Strategic Management Concepts PDF

Strategic Management Concepts: A Competitive Advantage Approach, Concepts and Cases Seventeenth Edition Chapter 5 Strategies in Action Copyright © 2020, 2017, 2015 Pearson Education, In...

Strategic Management Concepts: A Competitive Advantage Approach, Concepts and Cases Seventeenth Edition Chapter 5 Strategies in Action Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objectives (1 of 2) 5.1 Identify and discuss five characteristics and ten benefits of clear objectives. 5.2 Define and give an example of eleven types of strategies. 5.3 Identify and discuss the three types of “Integration Strategies.” 5.4 Give specific guidelines when market penetration, market development, and product development are especially effective strategies. kepelbagaian - 5.5 Explain when diversification is an effective business strategy. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objectives (2 of 2) 5.6 List guidelines for when retrenchment, divestiture, and liquidation are especially effective strategies. 5.7 Identify and discuss Porter’s five generic strategies. 5.8 Compare (a) cooperation among competitors, (b) joint venture and partnering, and (c) merger/acquisition as key means for achieving strategies. 5.9 Discuss tactics to facilitate strategies, such as (a) being a first mover, (b) outsourcing, and (c) reshoring. 5.10 Explain how strategic planning differs in for-profit, not- for-profit, and small firms. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 5.1 A Comprehensive Strategic-Management Model Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 1 (February 1989): 91. See also Anik Ratnaningsih, Nadjadji Anwar, Patdono Suwignjo, and Putu Artama Wiguna, “Balance Scorecard of David’s Strategic Modeling at Industrial Business for National Construction Contractor of Indonesia,” Journal of Mathematics and Technology, no. 4 (October 2010): 20. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  formulations alm process - Long-Term Objectives The results expected from pursuing certain strategies 2-to-5 year timeframe with short-term come up then only can longterm Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  in 5. will achieve years what company The Nature of Long-Term Objectives Objectives – provide direction – allow synergy – assist in evaluation – establish priorities – reduce uncertainty – minimize conflicts – stimulate exertion – aid in both the allocation of resources and the design of jobs Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 5.1 Five Characteristics of Objectives -numbera sage 1. Quantitative: measurable & simple Y capai direct 2. Understandable: clear to > - easier everyone when understand clearly everyone work harder same thinking pencourage so 3. Challenging: achievable Compatible: consistent 4. vertically and horizontally in a chain of command 5. Obtainable: realistic Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Financial Versus Strategic Objectives Financial objectives include growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow, and so on. Strategic objectives include a larger market share, quicker on-time delivery than rivals, shorter design-to- market times than rivals, lower costs than rivals, higher product quality than rivals, wider geographic coverage than rivals, achieving technological leadership, consistently getting new or improved products to market ahead of rivals, and so on. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Not Managing by Objectives nak dicapai objective yg ↑ Managing by Crisis benda yg pasti Managing by Hope ↑ or prediction estimation Managing by Extrapolation Managing by Mystery Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  preferably implement one strategy only ! ↑ Types of Strategies Most organizations simultaneously pursue a combination of two or more strategies, but a combination strategy can be exceptionally risky if carried too far. tak" focus No organization can afford to pursue all the strategies that might benefit the firm. Difficult decisions must be made and priorities must be established. but achievable. simple example live of food for baby t > - introduce new Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 5.3 Alternative Strategies Defined and Exemplified (1 of 2) Strategy Definition Example Gaining ownership or increased Amazon began rapid delivery Forward Integration control over distributors or retailers services in some U.S. cities. Backward Seeking ownership or increased Starbucks purchased a coffee Integration control of a firm’s suppliers farm. Horizontal Seeking ownership or increased &T acquired Susquehanna Integration control over competitors Bancshares. Seeking increased market share for Under Armour signed tennis present products or services in champion Andy Murray to a 4- Market Penetration present markets through greater year, $23 million marketing deal. marketing efforts Introducing present products or Gap opened its first five stores in Market Development new customes, ~ services into new geographic area China. less competitive Seeking increased sales by Amazon just began offering its Product improving present products or own line of baby diapers and Development services or developing new ones wipes. + introduce product letale nama. Alternative Strategies Defined and Recent Examples Given Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 5.3 Alternative Strategies Defined and Exemplified (2 of 2) ex : home technology( Strategy Definition ↑ with home new Example technoloji Adding new but related products Facebook acquired the text- Related or services messaging firm WhatsApp for Diversification mempelbagaikan product $19 billion. Adding new, unrelated products or Kroger and Whole Foods Unrelated ↓ services existing product'sJualan meningkat Market are cooking meals, Diversification > car - as seller well. for rental becoming restaurants. car go Regrouping through cost and Staples closed 250 stores and Retrenchment asset reduction to reverse reduced by 50% the size of declining sales and profit other stores. Selling a division or part of an Sears Holdings divested its Divestiture organization Lands’ End division to Sears’ shareholders. Selling all of a company’s assets, The Trump Taj Mahal in Atlantic Liquidation in parts, for their City, New Jersey, faces tangible worth liquidation. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Exercise 1. Based on your company selected, identify and justify relevant strategies related. 2. If you are the CEO, what alternative strategy will you do? (20 minutes) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 5.2 Levels of Strategies with Persons Most Responsible Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 5.4 Varying Performance Measures by Organizational Level Organizational Basis for Annual Bonus or Merit Level Pay Corporate 75% based on long-term objectives 25% based on annual objectives Division 50% based on long-term objectives 50% based on annual objectives Function 25% based on long-term objectives 75% based on annual objectives Operational 25% based on long-term objectives 75% based on annual objectives Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Integration Strategies Forward Integration – involves gaining ownership or increased control over distributors or retailers Backward Integration – strategy of seeking ownership or increased control of a firm's suppliers Horizontal Integration – a strategy of seeking ownership of or increased control over a firm's competitors Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Forward Integration Guidelines When an organization’s present distributors are especially expensive When the availability of quality distributors is so limited as to offer a competitive advantage When an organization competes in an industry that is growing When an organization has both capital and human resources to manage distributing their own products When the advantages of stable production are particularly high When present distributors or retailers have high profit margins Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Backward Integration Guidelines When an organization’s present suppliers are especially expensive or unreliable When the number of suppliers is small and the number of competitors is large When the organization competes in a growing industry When an organization has both capital and human resources When the advantages of stable prices are particularly important When present suppliers have high profit margins When an organization needs to quickly acquire a needed resource Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Horizontal Integration Guidelines When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government When an organization competes in a growing industry When increased economies of scale provide major competitive advantages When an organization has both the capital and human talent needed When competitors are faltering due to a lack of managerial expertise Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  kedua" Category Intensive Strategies D Market Penetration Strategy – seeks to increase market share for present products or services in present markets through greater marketing efforts 2) Market Development – involves introducing present products or services into new geographic areas 3) Product Development Strategy – seeks increased sales by improving or modifying present products or services Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Market Penetration Guidelines less competitors. number of came products still burang , so When current markets are not saturated with a particular product or service When the usage rate of present customers could be increased significantly When the market shares of major competitors have been declining while total industry sales have been increasing When the correlation between dollar sales and dollar marketing expenditures historically has been high When increased economies of scale provide major competitive advantages Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Market Development Guidelines When new channels of distribution are available that are reliable, inexpensive, and of good quality When an organization is very successful at what it does When new untapped or unsaturated markets exist When an organization has the needed capital and human resources to manage expanded operations When an organization has excess production capacity When an organization’s basic industry is rapidly becoming global in scope Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  better if competitors bahaya Product Development Guidelines When an organization has successful products that are in the maturity stage of the product life cycle When an organization competes in an industry characterized by rapid technological developments When major competitors offer better-quality products at comparable prices When an organization competes in a high-growth industry When an organization has strong research and ↓ development capabilities Supaya membahayakan x customers. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Diversification Strategies Related Diversification – value chains possess competitively valuable cross- business strategic fits Unrelated Diversification – value chains are so dissimilar that no competitively valuable cross-business relationships exist Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Synergies of Related Diversification Introduce new related products : Transferring competitively valuable expertise, technological know-how, or other capabilities from one business to another Combining the related activities of separate businesses into a single operation to achieve lower costs Exploiting common use of a known brand name Using cross-business collaboration to create strengths Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Related Diversification Guidelines When an organization competes in a no-growth or a slow- growth industry When adding new, but related, products would significantly enhance the sales of current products When new, but related, products could be offered at highly competitive prices When new, but related, products have seasonal sales levels that counterbalance an organization’s existing peaks and valleys When an organization’s products are currently in the declining stage of the product’s life cycle When an organization has a strong management team Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Unrelated Diversification Guidelines (1 of 2) When revenues derived from an organization’s current products would increase significantly by adding the new, unrelated products When an organization competes in a highly competitive or a no- growth industry, as indicated by low industry profit margins and returns When an organization’s present channels of distribution can be used to market the new products to current customers When the new products have countercyclical sales patterns compared to present products When an organization’s basic industry is experiencing declining annual sales and profits Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  into > bam dpt full mark. contoud - bunt > dia you tambah : yg apa yg - Invi apa Unrelated Diversification Guidelines (2 of 2) When an organization has the capital and managerial talent needed to compete successfully in a new industry When an organization has the opportunity to purchase an unrelated business that is an attractive investment opportunity When there exists financial synergy When existing markets for an organization’s present products are saturated When antitrust action could be charged against an organization that historically has concentrated on a single industry Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Defensive Strategies (1 of 3) Retrenchment – Regroups through cost and asset reduction to reverse declining sales and profits Divestiture – Selling a division or part of an organization – Often used to raise capital for further strategic acquisitions or investments Liquidation – Selling all of a company’s assets, in parts, for their tangible worth Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Defensive Strategies (2 of 3) Retrenchment – occurs when an organization regroups through cost and asset reduction to reverse declining sales and profits – also called a turnaround or reorganizational strategy – designed to fortify an organization’s basic distinctive competence Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Retrenchment Guidelines When an organization has a distinctive competence but has failed consistently to meet its goals When an organization is one of the weaker competitors in a given industry When an organization is plagued by inefficiency, low profitability, and poor employee morale When an organization fails to capitalize on external opportunities and minimize external threats When an organization has grown so large so quickly that major internal reorganization is needed Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Divestiture Guidelines When an organization has pursued a retrenchment strategy and failed to accomplish improvements When a division needs more resources to be competitive than the company can provide When a division is responsible for an organization's overall poor performance When a division is a misfit with the rest of an organization When a large amount of cash is needed quickly When government antitrust action threatens a firm Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Defensive Strategies (3 of 3) Liquidation – selling all of a company’s assets, in parts, for their tangible worth – can be an emotionally difficult strategy Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Liquidation Guidelines When an organization has pursued both a retrenchment strategy and a divestiture strategy, and neither has been successful When an organization’s only alternative is bankruptcy When the stockholders of a firm can minimize their losses by selling the organization’s assets Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Value Chain Analysis and Benchmarking be customer ! Setiap activity involved dani raw material hingga delivery Value chain analysis – The process whereby a firm determines the value (price minus cost) of each and all activities that went into producing and marketing a product, from purchasing raw materials to manufacturing, distributing, and marketing those products. Benchmarking – Entails examination of value chain activities across an industry to determine “best practices” among competing firms; firms engage in benchmarking for the purpose of duplicating or improving on those best practices. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 5.3 A Value Chain Illustrated Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 5.4 An Example Value Chain for a Typical Manufacturing Company (1 of 2) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 5.4 An Example Value Chain for a Typical Manufacturing Company (2 of 2) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 5.5 Transforming Value Chain Activities into Sustained Competitive Advantages Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  Michael Porter’s Two Generic Strategies (1 of 3) monopolised in terms lost of : can control or D Cost Leadership emphasizes producing standardized products at a very low per-unit cost for consumers who are price-sensitive - >term ugat of tertekan in price. Type 1 – low-cost strategy that offers products or services to a wide range of customers at the lowest price available on the market (Walmart, Amazon) Type 2 – Narrow or focused low-cost strategy that offers products or services to a small range of customers at one of the lowest prices in the market (Spirit Airlines, MY Airlines) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Michael Porter’s Two Generic Strategies (2 of 3) ② Differentiation – is a strategy aimed at producing products and services considered unique industry-wide and directed at consumers who are relatively price-insensitive Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Michael Porter’s Two Generic Strategies (3 of 3) Two types of differentiation Type 3 – Wide target market (Apple, BMW) Type 4 – Narrow target market (LV, RR, Rolex, Maserati) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Means for Achieving Strategies BUILD from within to grow – organic growth BORROW from others to grow – joint venture BUY others to grow- merger or acquisition E celcom & digi Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 5.6 Six Reasons Why Many Mergers and ~ - Acquisitions Fail name all & get new COMPANY - combine into One the company y ! acquire Integration difficulties up and down the two value 1. chains Taking on too much new debt the target firm owes or to 2. buy the target - Hafy2 lama 3. Inability to achieve synergy 4. Too much diversification 5. Difficult to integrate different organizational cultures Reduced employee morale due to layoffs and 6. relocations Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 5.7 12 Potential Benefits of Merging capital & resources. good With or Acquiring Another Firm ada Kena Company To provide improved capacity utilization To make better use of the existing sales force To reduce managerial staff To gain economies of scale To smooth out seasonal trends in sales To gain access to new suppliers, distributors, customers, products, and creditors To gain new technology To gain market share To enter global markets To gain pricing power To reduce tax obligations To eliminate competitors Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 5.8 Six Benefits of a Firm Being the First Mover Secure access and commitments to rare resources. Gain new knowledge of critical success factors and issues. Gain market share and position in the best locations. Establish and secure long-term relationships with customers, suppliers, distributors, and investors. Gain customer loyalty and commitments. Gain patent protection early. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Strategic Management in Nonprofit and Small Firms Two differences between nonprofit and for-profit organizations: – Nonprofits do not pay taxes – Nonprofits do not have shareholders to provide capital Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 5.6 How to Gain and Sustain Competitive Advantages Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Copyright Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved