Strategic Management Process PDF - AREC 323 Course Slides

Strategic Management Process AREC 323: Introduction to Management for Agri-Food, Environmental, and Forestry Businesses. Douglas Mugabe [email protected] Outline Recap: Business Plan Strategic Management SWOT Analysis Perform a strengths, weakne...

Strategic Management Process AREC 323: Introduction to Management for Agri-Food, Environmental, and Forestry Businesses. Douglas Mugabe [email protected] Outline Recap: Business Plan Strategic Management SWOT Analysis Perform a strengths, weakness, opportunities, and threats (SWOT) analysis for an agri-food, enviro/resource, forestry or fashion business Porter’s Five Forces Framework Value Chain and Supply Chain Analysis Strategic Management Strategic management = formulating, performing and evaluating strategies that result in a competitive advantage and better performance of an organization. Strategic Management Is about making decisions that have lasting consequences for a business: Set business trajectory; Are costly to reverse; Impact the whole organization; Directly linked to business performance, profitability, sustainability long term process and implemented by owner-operator or senior management (e.g. CEO) Discuss strategies of any company of your choice. Strategic Management Process 1. Develop Vision and Mission Statement: Identify The Organization’s Mission, Objectives, and Strategies 2. Environmental Analysis (Internal & External Environmental Analysis): Perform Environmental analysis which results in understanding the competitive advantage 3. Strategy Formulation: Formulate strategies based on competitive advantage determined in 2 4. Strategy Implementation: Perform the strategy determined in 3 5. Strategy/Perfomance Evaluation: Evaluate the results of the strategy in 4 What Is the Environment? External conditions and forces that have the potential to influence the organization Resources Opportunities and General Environment Threats Environment Influence strategic Industry Environment decisions Strategic Management Tools & Techniques SWOT Analysis What are Strengths, Weaknesses, Opportunities), and Threats? - Internal Analysis - Strengths and weaknesses on management, - Human, Physical and Financial resources - Other Resources (design, patented product, etc) - External Analysis - Externally generated opportunities and threats - Market trends; Government policy; Customers; Competition & Other factors Strengths and Weaknesses - Internal Human resources Financial resources What experience, training / education Overall, liquidity, solvency, profitability and do they have (or lack)? financial efficiency Is profit highly dependent on the sales of only Are there enough people to do the job? one product? Physical Resources E.g UGrain (grain marketing app) doesn’t Quality & availability of resources? need significant initial investment. Lack of nutrients in land Other Resources E.g Product design and patent are the critical Do they produce the best products? strength of FenderXtender Capacity limits and storage Opportunities and Threats - External Market trends and Events, Customers New products; closing down of existing Changing tastes and preferences e.g increased products; renewed emphasis on existing understanding of health benefits. products More demand for gluten free products Government policy/regulation Competition You need to address Porter’s 5 forces of changes competition E.g camelina meal was approved for chicken feed; Other factors e.g weather can influence supply levels Does emphasizing on climate change mitigation imply an opportunity for our and therefore input prices for food graduates? processors SWOT Analysis for On-Farm Biodiesel Production Internal Strengths Weaknesses Physical Resources Good location, High Tech Automated system may cause equipment, Large storage trouble if there is a problem capacity Human Resources Limited labor Lack of Training Financial Resources Low capital investment, Less High cost of inputs than cost of physical resources because of cash flows Opportunities Threats High cost of diesel, green movement, High competition from diesel use, potential growth in the livestock larger biodiesel producers, new industry for meal market technology Class Activity: SWOT Analysis SWOT Analysis for Starbucks Discuss the strengths, weaknesses, opportunities and threats for COCACOLA Strengths Weaknesses Strong brand identity Aggressive competition with Customer loyalty Pepsi Extended global reach Low product diversification Robust distribution network … Dominant market share … Opportunities Threats Introduce new products and Health concerns diversify its segments Water usage controversy Packaged drinking water Packaging controversy Supply chain improvement …  Class Discussion 1. Explain SWOT analysis and how can it be used for business excellence initiatives. 2. How do you use a SWOT analysis to grow your named business. 3. When should you perform a SWOT analysis? 4. What do you think are the strengths, weaknesses, opportunities and threats of the Canadian Superstore grocery chain? 5. What market/environmental trends do you think will create opportunities/threats for the automakers in the next few decades? How would these trends influence agriculture? Porter’s 5 forces of competition The intensity of competition in an industry depends on five basic competitive forces Industry Rivalry Industry rivalry is the competition for market share among the firms in the industry ○ Price competition erodes the price-cost margin and profitability ○ Non price competition: advertising battles, increased customer service or warranties Price competition heats up when: ○ There are many sellers (market structure) ○ Some firms have cost advantage over others ○ There is excess capacity in the industry ○ Products are undifferentiated and switching costs are low ○ Prices and sale terms are not easily observable Class Activity Using Burger King as an example discuss the Porter’s Five Forces ○ Industry Rivals ○ Threat of new entrants ○ Bargaining power of suppliers ○ Bargaining power of buyers ○ Threats of substitutes Value Chain and Supply Chain  Any Questions Next: Marketing Strategy