Chapter 9 Resume

Download as docx, pdf, or txt
Download as docx, pdf, or txt
You are on page 1of 3

CHAPTER 9.

STRATEGY AND STRATEGIC PLANNING

Introduction
This chapter is about the various elements of strategy and strategic planning
1. The Nature of Strategic Planning
a. The Cmponents of Strategy
The scope of strategy specifies the posistion the firm wants to have in relation to its
environment.
Resource deployment indicates how the organization intends strategically to allocate resources.
Distinctive competency is the specification of what advantages the firm holds relative to its
competitors
Synergy is the extend to which various bussiness within a firm can expect to draw from one
another
b. Strategy Formulation and Implementation
Formulation is the set of processes involved in creating of developing strategic plans.
Implementations is the set of processes involved in executing or putting them (strategic plans)
into effect.
c. The Levels of Strategy
- Corporate strategy charts the course for the entire organization and attempts to answer about
what bussiness should the organization be in.
- Bussines strategy is charted for each individuals bussines within a company.
- Functional strategies are developed to correspond to each basic functional areas within the
organization.

2. Environmental Analysis
The starting point in strategic planning.
a. Organizational Position
- Organizational Strength are those aspects of an organization that let it to compete
effectively.
- Organizational weakness are those aspects of an organization that prevent or deter it from
competing effectively.
- Environmenetal opporturnities refer to those aspects of an organization’s that if acted upon
properly, would enable it to achieve higher than planned levels of performance
- Environmental threats refer to those aspects of an organization evironment (present or
future) that if not countered in some way would impede its progress to achieving its goals.
b. Critical Encirronmental Forces
- Threat of New Entrants refers to the ease with which new competitors can enter a market
- The Power of Suppliers refers to the extent to which suppliers can influence the organization
- Competitors. Competitive rivalry among contestants refers to extent to which major
competitors in a market are constantly trying to outmaneuver one another.
- The threats of Subtutite Products is the extent to which a new product might supplant
demand for an existing product.
c. The Organization-Environment Interface
Once managers develop a clear understanding of evant environmental forces, they must come to
grips with how they want to interact with those forces. Environment interface achieved
matching environmental opportunities and threats with organizational strengths and weaknesses.

3. Corporate Strategy
Corporate strategy involves determining in which bussinesses the firm expects to compete.
a. Alternative Generic Strategies
Generic strategy or grand strategy is an overall framework for action developed at the corporate
level. Generally used when the corporation competes in a single market or in a few highly
related markets.
- Growth strategy, adopted when the corporation wants to generate high levels of growth in
one or more areas of its operations.
- Retrenchment strategy, employed when managers want to shrink operations, cut back in
some areas, or eliminate unprofitable operations altogether.
- Stability strategy, used when the the organization wants to maintain its status quo.
b. Portofolio Approaches
A portofolio approach to corporate strategy views the corporation as a collection of different
bussineses.
- Strategic bussines units, is an autonomous division or bussines operating within the context
of another corporation.
- The portofolio matrix is a guiding framework to be used with caution and judgement
c. Products Life Cycle Approaches
Refers to how sales volume for a product changes during the existence of the product

Each of these approaches (generic, portofolio, and product life cycle) should be used in strategic
planning. One is not better than or an alternative to anoother, they are complementary ways of
visualizing an organization’s position and possibilities.

4. Bussiness Strategy
Bussiness strategy is the strategy managers develop for a single bussiness.
a. The Adaptation Model
Managers should focus on solving three basic managerial problems by adopting one of three
forms of strategy.
Problems of management:
- Entrepreneurial problem, involves determining which bussiness opporturnities to undertake,
which to ignore, and so forth.
- Engineering problem, involves the production and distribution of goods and services
- Administrative problem, involves structuring the organization

Strategic bussiness alternatives:


- Defending, is the most concervative approach to bussiness strategy. Defenders attempt to
carve out defined market niche for themsselves and then work hard to protect that niche
from the competitors.
- Prospecting, is the exact opposite. Prospectors attempt to discover and explore new market
opporturnities including possible acquisitions.
- Analyzing. Analyzers attempt to move into new market areas but at a deliberate and
carefully planned pace.
b. Competitve Strategies
- Differentiation, is the process of setting the firm’s products apart from those of other
companies.
- Overall cost leadership, involves trying to keep costs as low as possible so that the firm is
able to either charge low prices and thus increase sales volume and/or market share or
change competitives prices and earn greater profits.
- Targetting, occurs when a firm attempts to identify and focus on a clearly defined and often
highly specialized market.

5. Functional Strategies
a. Marketing Strategy
Marketing strategy is the functional strategy that relates to the promotion, pricing, and
distribution of products and services by the organization.
b. Financial Strategy
Companies need to decide whether to pay out most of their profits to stockholders and dividends,
retain most of the earnings for growth, or take some position between these extreems.
c. Production Strategy
In many ways, production strategy follows from marketing strategy. For example, if a company
emphasizes quality, production costs may be of secondary importance. To emphasize price, on
the other hand low-cost production techniques may become critical.
d. Research and Development Strategy
Research and development strategy relates to the invention and development of new products
and services as well as the esploration of new and better ways to produce and distribute existing
ones.
e. Human Resource Strategy
This may deal with issues such as whether the firms plans to pay premium wages to get better-
qualified workers, wheter it will welcome unions, how it will attempt to develop executives
more effectively, and how it will comply with federal regulations, such as the equal employment
opporturnity guidelines.
f. Organization Design Strategy
This strategy concerned with how to arrange the various position and divisions within the
organization.

6. Strategy Implementation and Control


This is the final part of the strategic planning, the implemetation and control by the managers of
the orgaization. Firstly, it must follow logically from strategy formulation, managers must think
strategically by first formulating and then systematically implementing strategies.
Strategic Control refers to the process whereby management assures that the strategic planning
process itself is effective. Such control involves evaluating the organization’s progress with its
strategy, its flexibility in meeting changing environmental conditions, and the resources actually
consumed by the strategic planning process

You might also like