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Strategic Management

Index
Introduction ................................................................................................................. 3
Main resources of Magmt ................................................................................................. 3
Circle of knowledge ........................................................................................................ 3
Shared Vision ............................................................................................................... 3
Team Work .................................................................................................................. 5
Leadership ................................................................................................................... 5
Summarize................................................................................................................... 6
Strategic planning vs operational planning ................................................................... 7
Strategic thinking ........................................................................................................... 8
Summarize................................................................................................................... 8
Leader’s types ............................................................................................................... 9
Strategic Management................................................................................................ 10
What is Management? .................................................................................................... 10
Difference between management and leadership ...................................................................... 10
What is Strategy? .......................................................................................................... 11
What is Strategic Management? ......................................................................................... 11
Common characteristics of Organization ............................................................................... 12
Strategic Planning ...................................................................................................... 13
Anatomy of strategic planning ........................................................................................... 13
Vision ........................................................................................................................ 14
Left and right brain ........................................................................................................ 14
Creativity vs innovation .................................................................................................. 15
Disruptive innovation ..................................................................................................... 16
Leaders & Vision .......................................................................................................... 17
Summarize.................................................................................................................. 18
Mission ...................................................................................................................... 19
Mission accountability .................................................................................................... 19
Components of mission statement ....................................................................................... 19
Awareness of mission ..................................................................................................... 20
Orientation.................................................................................................................. 20
How to assess a mission statement ...................................................................................... 21
Static vs Dynamic ......................................................................................................... 21
Situation Analysis and Appropriate Strategies ............................................................ 22
SWOT ....................................................................................................................... 22
Resource-based view (RBV) ............................................................................................. 26
Space Matrix ............................................................................................................... 27
BCG ......................................................................................................................... 29
Grand Strategies ........................................................................................................ 30
Integration strategies ...................................................................................................... 30
Intensive strategies ........................................................................................................ 31
Defensive strategies ....................................................................................................... 33
Diversification strategies ................................................................................................. 34
Generic Strategies ...................................................................................................... 35
Leadership in cost reduction ............................................................................................. 35
Differentiation ............................................................................................................. 35
Focus ........................................................................................................................ 35
GOALS ...................................................................................................................... 36
Objectives .................................................................................................................. 36
SMART ..................................................................................................................... 36

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Introduction

Main resources of Magmt


Time, Information, Man power, Technology, Machines, infrastructure, money

How Bill gets succeed


 Time Management
 Grow or Die (G Or D) – Nokia case
 Keep his eyes on Competitors
 ‫ – اكره رفع الشعارات‬go for achievement

Circle of knowledge
 Must know (Structure)
 Should now (how to Assess the main issue) Must
 Would like to know (preferred to know) Should
 Nice to know (not that important)
Like
 What we shouldn’t know (things that is not
important to know, will waste resources) Nice
We could replace “know” by “do” in time planning Shouln't

Shared Vision

Eisenhower quote
Plans are nothing, planning is every thing
(The plan is the document result of planning process)

Shared Vision lead to


 Participation
Participation Ownership Loyality
 Ownership (of all team work)
 Loyalty

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Multiple heads Syndrome
We Could have a skilled (competent) and well behaved managers (without corruption) but with
no synchronizing between each other (shared vision) which could lead to Multiple Heads
Syndrome, if this syndrome exist each department will have a separated objective rather the
main firm goal.

Financial
Goals

R&D MIS
Goals Goals

Syndrome
Admin Operation
Goals Goals

Legal
HR Goals
Goals

If all the departments have a shared vision


toward the organization objective (achieved via
strategic plan), this could remove the effect of
multiple heads syndrome Financial

R&D MIS

Shared
Admin Vision Operation

HR Legal

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Team Work

Yousef Edress Quote


One Japanese is normal and Egyptian is genius
Two Japanese is achievement and two Egyptian is problem
Three Japanese is Miracle and three Egyptian is disaster

NB: Innovation is a main important value for business this days

Leadership

‫الحمامة المطوقة‬

‫ وبع ذلك أقبل على عقدي؛‬،‫ ابدأ بقطع عقد سائر الحمام‬:‫ فقالت له المطوقة‬.‫ثم إن الجرذ أخذ في قرض العقد الذي فيه المطوقة‬
‫لقد كررت القول علي كأنك ليس لك في‬: ‫ قال لها‬،‫ فلما أكثرت عليه القول وكررت‬،‫ وهو ال يلتفت إلى قولها‬،ً‫وأعادت ذلك عليه مرارا‬
‫ إن أنت بدأت بقطع عقدي أن تمل وتكسل عن قطع ما بقي؛‬،‫ إني أخاف‬:‫قالت‬. ً ‫ وال ترعين لها حقا‬،‫ وال لك عليها شفقة‬،‫نفسك حاجة‬
.‫ وكنت أنا األخيرة لم ترض وإن أدركك الفتور أن أبقى في الشرك‬،‫وعرفت أنك إن بدأت بهن قبلي‬

This is typically leadership, as Leadership equal to accountability

Leadership = Responsibility = Accountability


The top of the Decision maker the one how is accountable
Hierarchy for mistakes

Also innovation is clear in that example, and it is really important for leadership.

The three could be separated or integrated in one person, Leaders should be the three
Like the example of Omar Ibn Alkhatab, he as a leader are count himself as a leader
responsible and accountable even for a sheep.

”‫سئل عنها عمر ِل َم لَ ْم تمهد لها الطريق؟‬


ُ ‫ لو أن بغلة تعثرت في العراق ل‬،‫"ويلك يا عمر‬

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Visionary skills
The minister of defense of German, Nederland and France are ladies, they don’t have a technical
skills in defense, but they did join this position for their visionary skills.

AAST example
Skills wanted for managers levels is different
Top
 Top Managers (President ) Visionary skills managment
 Middle Managers (Dean) Coordination skills Middle
 First Line Managers (Heads of Department) Visionary skills Managers

 Non-managers Employees (Professors)


First-line Managers

NB: the CEO of Fizer is an X-Macdonald, even the field is different but the main issue here is the
vision

Summarize
From the previous we could summarize that leaders should have
 Innovation
 Accountability
 Decision making
 Visionary skills

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Strategic planning vs operational planning
Item Strategic planning Operational planning remarks
Time frame 5-7-10 y 1 y or less
Mgmt. Scope Macro Micro Operation scope is in Micro level
related with operation details and
vision, and vice versa
Responsibility Top level Middle\ 1st line
Details Low High Because the time frame affect the
level of details
Uncertainty High Low Also because of time frame and
level of details
Main Question What How What to do, and how to do it, like
the example of the decision of
starting a university in Morocco
Sequence 1st 2nd The sequence is important, some
corporates start operation only
which lead to miss arrangement of
priorities, like the presentation
that the leg of man are fast than
his upper body part (the brain)
Setting obj End Start Didn’t explain
Main Environment External Internal The main difference between both
environments is the level of
control, if beyond my control its
external, its not related by
location or other issues its control
only.
Titanic case show that the captain
was focus in Internal environment
in the ship itself rather than focus
on the external environment (the
iceberg)

The main differentiate between both plan is the “Time Frame”, and then the “what and how” is
the second important difference.

Leaders should have strategic plans, rather than operation plan for managers (like answering
the question, what shall I do for leaders and how to do it for managers), but Some leaders could
have strategic and operational strategic thinking, but they are rare.

Prophet Yousef case study


He give a strategic plan for 15 years, 7 years planting and eat few, then 7 years eat from
what stored, than 1 years luxury

‫يوسف أيها الصديق أفتنا في سبع بقرات سمان يأكلهن سبع عجاف وسبع سنبالت خضر وأخر يابسات لعلي أرجع إلى‬
‫ ) ثم يأتي‬47 ( ‫ ) قال تزرعون سبع سنين دأبا فما حصدتم فذروه في سنبله إال قليال مما تأكلون‬46 ( ‫الناس لعلهم يعلمون‬
‫ ) ثم يأتي من بعد ذلك عام فيه يغاث الناس وفيه‬48 ( ‫من بعد ذلك سبع شداد يأكلن ما قدمتم لهن إال قليال مما تحصنون‬
(49 ( ‫يعصرون‬

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Three planning management lesson learned from this story
 Lean management, best quality with low cost, (waste close to zero)
 Risk management, crises mgmt. is reactive but risk mgmt. is proactive
 Strategic mgmt. for 15 years

NB: data base is now an alternative for forecasting.

Strategic thinking
Is a way to strategic think but it is not a strategic planning, the main difference is the time
frame for strategic thinking.

Mouta ‫ سرية مؤتة‬case study


What khaled inn Alwalid the leader change the location of the army to give the enemy
sign that they are more than their real number (the ratio was 1:100), and withdraw in
safety position.
(Prophet mohamed named them ‫ الكرار‬safe withdrawer)
This case is a strategic thinking from Khaled ibn Alwaled

The Crows birds case study


Birds adapt to metropolitan life, in this clip you can see how crows in Japan have
integrated city life into their behavior, and with typical strategic thinking they manage to
break the nuts shell.

NASA pens case study


Nasa spent 12 $M to develop the fisher pen which could write in zero gravity and freezing
temperature, while Russians used pencil, and this demonstrate the strategic thinking. As
strategic thinking is thinking out of the box

Summarize
Strategic thinking is thinking out of the box and differ from strategic planning that is different
short time frame

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Leader’s types

 Director like
control somewhat
aggressive, likes to
get straight to the
point
 Thinker very
analytical and they
consider every
single detail
 Relater love
togetherness and
are non-
confrontational
 Socializers create
relaxing
atmosphere and
always inspire

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Strategic Management

What is Management?
 It is an Art
 It is a Science
 It is Decision Making
 It is getting things done

Difference between management and leadership


Mangers
Achieving objectives through others – Getting things done – Managers
are not doers.

NB: Getting things done is not fair, because two managers could have
the same qualification and same challenges but one succeed and the
other not, because we neglect here the external environment.

Leadership
Achieving objectives with others - where teamwork is so
important

Like what happened in Gazwet Alkhanak and prophet


Mohamed choose the most difficult task ‫جمع الحطب‬

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What is Strategy?
The origin of the word strategy is “STRATEGOS” a Greek word mean “Leader of an army, which
make sense because strategies done by top managers (leaders), and the science of
management start from army

 It is the Science of Maneuvering forces into the most advantageous position prior to actual
engagement with the enemy

Which could be interpreted to strategic management to the following:

 It is the Art\Science of allocating resources using the most competitive advantage (what I
have an others don’t) prior to actual engagement with the competitors\Partners

What is Strategic Management?


“It is the art and science of formulating, implementing and evaluation cross fuctional decisions
that enable an organization to achieve its long-term objectives” Fred R. David

It is the analysis, decisions and actions that an organization undertakes in order to create and
sustain competitive advantages.

 We are the blind people and the strategy formation is the Elephant

Strategic management phases


Strategic management consist of three main phases
 Strategic Panning (planning is one phase of management)
 Implementation
 Evaluation

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Common characteristics of Organization Goals
It should be the goal, people and structure are there to achieve
goals Structure

People

Organizational goals
Growth
The first goal of any organization is Survival and then make profit
than go for growth (expansion), NGO profit is achieve Profit
development

Survival

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Strategic Planning

Anatomy of strategic planning

Dream • Vision

Role • Mission Top down never


button up

Situation Analysis • SWOT

Long term Obj. • Goals


Direction \
Competitive edge • Strategies
Strategic Planning
Short term goals. • Objectives
Operational Planning

The same objectives that we achieved at the end of the strategic planning should be the one we
do in the operation planning

 Vision = Dream = we will be (to be) = Future = ‫الرؤية‬


 Mission = Role = we are = Present = ‫المهمة‬
 SWOT = situation analysis = where are we = ‫التحليل الرباعى‬
 The main difference between goals and objectives is the time frame (1 year = objective,
more than 5 years = goals)
 Goals ‫الغايات‬
 Objectives ‫االهداف‬
 Strategies = Direction = having a competitive edge and sustain it = ‫االستراتيجيات‬
NB: something I have and others (competitors) don’t

Four managerial questions


 Where we are
SWOT analysis
 Where should we go
Setting goals and objectives
 How to go there
Strategy and operational planning
 How to know that we have arrived
Evaluation and control

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Vision
The vision is a compass that communicates true north to the entire organization, vision is the
responsibility of leader.

 Right hemisphere of the brain


 May be unrealistic
 No available resources
 No time frame
 No commitment to achieve it
 Precedes the mission statement
 Can’t buy it, borrow or rent
Each corporate have its own dream

NB: the difference between vision and illusion, is that illusion have no consistency with the
reality at all (like having a media production corporate and your vision is to be the number one
university in the world)

Left and right brain


Leaders have much more in
common with artists than they
do with managers

NB: The dominant brain for


managers is the left side one

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Creativity vs innovation
Creativity is thinking up new things, while
innovation is doing new things, another big
difference between the two is, that
innovation has to be relevant, whereas
creativity doesn’t

 You can brainstorm hundreds of


irrelevant ideas but still be creative.
 But if you want to be innovative, you
have to solve a problem in a creative
manner.

Innovation needs creativity, creativity


drives innovation

Innovation stems from creativity, you can be innovative only if you’re creative, but if you only
have creative thoughts, and don’t implement them, then why would somebody even care?

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Disruptive innovation
A disruptive innovation is an innovation that
creates a new market and value network and
eventually disrupts an existing market,
displacing established market leading firms,
products and alliances. The term was defined
and phenomenon analyzed by Clayton M.
Christensen beginning in 1995.

Vision vs analysis
The scientist Albert Einstein said “Imagination is more important than knowledge, because
knowledge is limited whereas imagination embraces the entire world”

Environment
The surround environment help people for innovation, like google workspace

Case study
TUV (ISO)
 BMW – we will be the standards – vision
While
 Mercedes – we are the standards – mission

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Leaders & Vision
Qualities of leaders
 Very visionary
 Courage to declare it
 Communication skills

Dr Sameh Elnmaki (management professor) said “If you don’t have a vision don’t look for it”

As you cannot buy a vision statement, so it is not something you can look for, it
something you have.

Thomas Jefferson (president of USA) said “One man with courage is a majority “

Jack Welch said “Vision is an essential element of the leader’s job. But no vision is worth the
paper its printed on unless it is communicated constantly and reinforced with reward

NB: Entrepreneur is individual who accept the risks an opportunities involved in creating and
operating a new business venture ‫مغامرة‬

What leaders do
It is a book by John Kotter, its main chapters is
 Setting direction
 Aligning people
 Motivating people
 Create a culture of leadership (create leaders)

Why vs Why not


George Bernard show said “Some me see things as they are, and say WHY, I DREAM things that
never were, and say WHY NOT”

Reasonable vs unreasonable
George Bernard show said “The reasonable man adapt himself to the world, the unreasonable
one persists in trying to adapt the world to himself, therefore, all progress depends on the
unreasonable man”

Like when singer think different and chose the hole to be at the start of the sewing pin.

Action
Mark Hurd (HP’s CEO0 said “without execution, vision is just another word for hallucination”

Paulo cello said “you need to wake up if you want to dream”

“Vision without action is a daydream, action without vision is a nightmare”

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Persist
Lincoln (president of USA) said “In order to double your chance of success you have to treble
your failure rate”

Paulo Cello said “My dreams are not negotiable”

Summarize
Creativity is important for leaders to have a vision, and need actions to be innovations not only
imagination. Leaders differ because they are persist (but not stubborn) and because they saw
what others don’t, also they should have courage and communication skills to deliver it to
others to share with him\her the same vision, while surround environment help people to be
more visionary.

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Mission
Mission is the ID (in one word = our role) of the organization, it is the statement of purpose that
distinguish our business from other similar business

Mission accountability
Jack Welch said “The mission is top management’s responsibility, a mission cannot, and must
not be delegated to any except the people ultimately held accountable for it.

The case study of ford prove that, when Henry Ford put quality as the mission and get Adward Deming to
raise the quality, as Henry Ford was accountable for his mission , but when Jack Nasar put options as the
mission and he couldn’t sustain the success so he had been fired, because he is accountable for the mission
he announced.

Components of mission statement


 Customers (Target group – segmentation)
 Products, Industry
 Markets (which market we cover)
 Technology (we mention only it is a competitive advantage)
 Beliefs and values (confidently like in the plastic surgery, and religious for religious NGOs)
 Competitive edge
 Public image (what the image we need to be known about us)
 Suppliers (we mention only it is a competitive advantage – like intel inside)
 Concern for employees
 Environment (green, lead free) it focused in the value added

Values
Could be part of the components of the mission statement or under a separate title, to emphasise on it
 Fact based
 Integrity
 Productivity
 Fairness
 Transparency
 Team work

Corporate social responsibility


CSR mentioned in the mission statement only if it is a competitive edge

There is a big differences between the marketing activities and CSR, as the case study of
Brandeis university show it clear how the university was responsible to the society and give all
the students A’s to avoid their students being drafted to the American Army in Vietnam.

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While in the other side Ebay was acting irresponsible by profiting from the sale of items related
with murders (personal belongings, letters and others)

Organizational life cycle


Life cycle mentioned in the mission statement only if it is a competitive edge, like the case of
Coca cola still in the Maturity phase from 117 years.

Quantity Quality Development Cost reduction

The period of each phase depend on several factors and couldn’t be stated as constant period
for all corporates (like the case of coca cola more than 117 years in maturity and dot com firm
for less than one year)

Awareness of mission
Jack Welch said “Somehow, employees haven’t heard the mission, maybe because it wasn’t shouted in their
direction, loud enough or often enough, or maybe their rewards weren’t aligned.

Orientation
Product (offer things related to the product itself) vs customer oriented (offer ideas, feelings,
emotions and benefits)
Product oriented Customer oriented
We offer quality We offer attractive look

We offer handmade shoes We offer comfort


We offer the best seller We offer hours of pleasures of reading and
knowledge

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Pfizer
Pfizer Inc is a research-based, global health care company. Our principal mission is to
apply scientific knowledge to help people around the world enjoy longer, heathier and
more productive lives, The Company has four business segments: health care, consumer
health care, food science and animal health, we manufacture in 39 countries, and our
products are available worldwide.

 Orientation: Customer & Products


 Industry: Health care
 Market: world wide

MERCK
Provide society with superior products and services – innovations and solutions that
improve the quality of life and satisfy customer needs – to provide employees with
meaningful work and advancement opportunities and investors with a superior rate of
return.

 Orientation: Product
 Industry: improve the quality of life
 Concern for Employees

NB: The main difference between mission and vision, is that corporate are accountable for their
mission while they are not for the vision

How to assess a mission statement


 Consistency: with the vision statement
 Credibility: saying really what we are doing
 Clarity: Self explained (No Jargon – technical terminologies)
 Life cycle: if it is compatible
 Orientation: Customer / service
 Length: not too long = boring OR too short = Vague
 Components: customer, market, industry and etc (some corporate are neglecting in
purpose, like the environment for a company polluting the environment)

Static vs Dynamic
 The mission statement should be sensitive to any dramatic changes
 Internal: change of the company CEO
 External: like 9/11
 Regular reviews (6 months or yearly) the strategy plan including the mission statement

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Situation Analysis and Appropriate Strategies
Situation analysis tools is not an objective in itself, it is a tool to identify the appropriate
strategy (the coming step in strategic management)

First of all there is no good or bad strategy there is an appropriate and not appropriate strategy
for the firm and the situation.

You may use different tool to make be more confidence with the result, because if different
tools get the same strategy orientation, than this give the result more weight and confidence in
using it.

SWOT
A tool for analyzing where are we, simple but deep even it
doesn’t need experts to run it.

The main difference between strength and weakness vs


opportunities and threats is internal or external; under
our control or beyond our control, Contro
l
And weither this have positive or negative impact on our
company determine either it is strength\opportunities if
positive impact or weakness\threats if negative impact.

Its main defect that it doesn’t show the trend of how the Impact
future position will be, only a snap shot of the current situation.

External environment
Mega and task both are external
environment and beyond our control
Mega
(Opportunities and threats) Environment

Main difference between them is that the


Mega environment affect all that in the Task
country include me, while the task Environment
environment affect me in particular.

Mega is near to the PESTLE and task to the Government


5 force of Porter Agencies

Labor
Supply

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 Competitors weither the direct (Rivalry) or potential competitors (new entrance)
 Substitutes (Like water to pepsi)
 Suppliers (Like Intel inside)
 Buy power = Customers
 Labour supply

Internal environment
The functions of the organization is the internal environment, and that we should analyze each
of them to find our strength and weakness, and even we should go deep for each function and
how it is functioning.

(Finance – Marketing – HRM – R&D – Administration – Operation – Logistics)

Case study
The case study of people express airlines, declare that
loosing focus on external environment, especially the
mega threats, may lead to lose your corporate, which lot
of corporates ignore.

The USA government issued a regulation that regulate


airlines prices, which lead to losing their price sensitive
competitive advantage.

Recommended table

External
Internal
Mega Task
Strength Weakness Opportunities Threats Opportunities Threats

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Appropriate strategy
And we should take care about the inputs that we get to analyze well and choose the real
appropriate strategy

GIGO
Garbage in, Garbage out, if the analysis is Garbage the chosen strategy will be garbage,
and the analysis garbage may be for fear or love of top management.

NB: the case of Mohamed Aly the boxer when he was strong and have his speed
competitive edge, and there were an opportunities, he used an aggressive attack
strategy, but when he was sick and weak and have threats from the young boxer who
challenge him, he used a defensive strategy; covering his face.

TOWS analysis

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Resource-based view (RBV)
It analyze only on the internal environmental, especially the resources

It focus in three basic resources


 Tangible assets
Whatever stated in balance sheet, like production facilities, raw materials, financial
resources and computers
 Intangible assets
Like know how and brand
 Organizational capabilities
Not an assets (tangible or intangible) it is the skills, ways, people or process that a give
the company its capability, Like Michel dell for his company

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Space Matrix
Strategic Position and ACtion Evaluation, not
that easy like SWOT and need experts to run it.

External
 Industry Attractiveness
 Environmental Stability

Internal
 Competitive Advantage
 Financial Strength

SPACE Analysis Factors For Financial Strength


 Working Capital Intensity
 Cash Flow
 Ease of exit the markeet
 Return on Sales
 Return on Assets

SPACE Analysis Factors For Competitive Advantage


 Market Share
 Quality
 Product life cycle
 Customer Loyalty
 Control over suppliers
 Control over distribution

SPACE Analysis Factors For Industry strength


 Growth Potential
 Profit potential
 Ease of entry into market
 Substitutes

SPACE Analysis Factors For Environmental Stability


 Political Uncertainty
 Interest Rates
 Technological change
 Inflation rate
 Barriers to entry into market
 Environmental Issues

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Appropriate strategy

1) According to the grade draw vector from


the origin to the new intersection point,
and the quarter lied in the result, chose the
appropriate strategy.

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BCG
the products, projects or SBUs could be
stated by the diameter of the circle,
determining certain variable; revenue,
man power or others.

BCG and life cycle

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Grand Strategies

Integration strategies
Backward integration
To overcome supplier power like the Suppliers
case of MacDonald’s and the Army.
Backward
integration
Could lead to loosing focus
Vertical Company Competit
integration
Forward integration Horizontal
ors
Forward integration
The best strategy in it is franchising, integration
like the case of MacDonald’s and new
branch every 15 min. Outlets

Separation between management and


ownership.

Vertical integration
Doing both forward and backword integration, like MacDonald’s

Horizontal integration
Acquisition, takeover (A+B=A or B)

Hostile takeover, mean a takeover that is very generous to the limit the seller couldn’t refuse,
but he do that while he isn’t happy, like selling Colombia stocks to Sony

Anti-integration
Let others do what we – under normal circumstances – should do (Outsourcing)

It crack the link between responsibility and accountability, which is very good for CEOs, but its
main disadvantage is low loyalty.

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Intensive strategies
Aggressive strategies, preferred to do them while you are strong internal (strength) and have
and external opportunity.

Market penetration
Increase market share; increase percentage of market sales, it is the most aggressive strategy
because while a company increase its share another competitor should loose part of its share.

Increase the market share for a present product in a present market, launching a mass media
campaign using celebrities.

In some cases main competitors make deal to stop any market penetration campaign in certain
season, and spend this money in developing the firm instead, as no market share increase for
those main competitors via such campaign, and the one who get benefit is the celebrities and
the adverting agencies.

When to use it
 When your market is not saturated with your product ot services (face book have a 1B
users and the internet users is 2B users)
 When the usage rate of present customers could be significantly increased (washing the
teeth frequency could be increase)
 When the market shares of major competitors have been declining while total industry
sales have been increasing.
 When increased economics of scale provide major competitive advantage.

Market Development
Introducing present product or service into new geographic areas, it is going to be hard to
maintain a competitive edge by staying close to home.

When to use it
 When new channels of distribution are available that reliable and of good quality
 When new unsaturated markets exist
 When an organization has excess production capacity
 When an organization’s basic industry is rapidly becoming global in scope

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Product development
By adding new or extra features to an existing product, it seeks sales by improving or modifying
present products/services

When to use it
 When an organization has successful products that are in the maturity stage of the
product life cycle
 When an organization compete in a high-growth industry
 When an organization has especially strong research and development capabilities
 When major competitors offer better quality products at comparable prices

The case study if non Alcoholic beer, it start with product development by developing the beer
to be without alcohol than they enter the middle east market via market development strategy
and increase their voice of share through market penetration in the cold drink market.

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Defensive strategies
Is used when your firm is week internal (weakness) and have an external threats, the first three
should be in sequence

Retrenchment
When there is a financial problem they slow down by this retrenchment. By reducing of
expenditure, sometimes called turnaround

Divestiture
Any unit that that are not profitable is liquefied, partial liquidation

Liquidation
Selling all the company assets, it is very painful decision, but legally should be taken for saving
the rights of shareholders

Joint venture
A popular strategy that occurs when two or more companies form a temporary partnership or
consortium for the purpose of capitalizing on some opportunity

A + B = A + B + C (Joint venture)

Like Sony Erickson mobile, where the product start and end as a separate brand and when
ended both corporates remain the same

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Diversification strategies
A form of corporate strategy, preferred to be used in
Diversification
case of company have internal strength and external
threats.
It seeks to increase profitability through greater Related Un-related
sales volume obtained from new products and new
markets, to allow the company to enter lines of
Concentric Horizonal
business that are different from current operations.

Conglamorate

Concentric diversification
Adding a new but related products or services

Like Dunlop Tires (motor industry) from rubber and Dunlop racket balls (sports industry) from
rubber also, so it is considered concentric (related) because from the same material

The company seeks new products that have technological synergies with the existing product
lines

Horizontal diversification
Adding a new unrelated product or services but for the same customer

Like Dunlop racket balls (rubber industry) add squash and tennis rackets (metal industry) to its
line of products, but the same customer; Athlete

The company might search for new products that could appeal to its current customers even
though the new products are technologically unrelated to its current product line

Conglomerate diversification
Adding a new unrelated product or service and unrelated to any customer

Like Philp Morris (Tobacco industry) bought Kraft Company (food industry) with hostile
takeover to avoid the antismoking campaign

The company might seek new business that have no relationship to the company current
technology, product & market

Debate of using diversification


Michael porter said “Management (top managers) founds they could not manage the beast
(Diversification)

Because it lead to losing the focus

Mark Twain said “Put all your eggs in one basket AND WATCH THE BASKET”

There is no right and wrong, but as we said before appropriate for each separate cooperate case

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Generic Strategies
Michael porter considered all of the grand strategies as a tools for the coming three main
strategies

Leadership in cost reduction


To have leadership and unique capabilities to achieve and maintain low cost position

Differentiation
It designed to appeal to customers with special sensitivity for a particular product attribute, like
signing with two pen one is Pic and the other is Parker, the signature is the same, but the
differentiation sense is different

Also it require strong coordination among functions in R&D, product development and
marketing

Where the main difference between research and development, the research you aren’t sure
with the result (like medicine researches) while development you are sure of the result that you
are developing (adding feature to mobile phone), and companies should protect their research
from robbery.

Focus
Attempting to attend the needs of a particular market segment, like mint chocolate (after eight
brand) focusing only on certain product.

Likely segments, are those that are ignored by marketing appeals to easily accessible markets.

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GOALS
Albert Einstein said “Perfection of means (tools) on confusion of goals seem – in my opinion – to
characterize our age)

Goals should have a strategic objectives, with a long term time frame

Like USA president said “Before the end of this decade we will send a man to the moon and
return him back safely to the earth”

Goals are dreams with Deadlines.

Objectives
Objectives should be short term and SMART

Should be taken in consideration


 Some is not a number
 Soon is not a time
 “May be” is not an answer

SMART
 Specific
Clear – up to the point – Direct - no ambiguity (like the big problem happened with the
written objective for defining the occupied land between Israel and the Arab world)
 Measurable
Numbered
 Attainable
Achievable and also should be Challengeable (‫)الشجاعة وسط بين الجبن والتهور‬

 Relevant
Related to the mission
 Time Bound
Have a certain date

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