Strategic Planning

Understand Strategy and how it

differs from plans, and tactics
Look at models of strategy
development
Understand the process of
strategy development
Product Life Cycle and Generic
Strategies

7.2

Functions of Planning

1) Identifying future opportunities

2) Identifying and avoiding future
problems
3) Developing courses of action
4) Understanding the risks and
uncertainties associated with
various options

Strategy

The major courses of action that

an organization should take to
achieve its goals
Plans-deal more with actions that
should be taken
Tactics-specific moves

Intended and Realized

Strategies

Intended-Plans that managers

develop
Realized-What actions actually
occur
Unrealized-Plans that never occur
Emergent Strategy-Unplanned
actions that occur

de
tsi s
Ou rce
Fo

Intended
Strategy

Emergent
Strategy

Realized
Strategy

Unrealized
Strategy

SWOT Analysis

Internal

Strengths and Weaknesses

External

Opportunities and Threats in the

business environment

Core Competencies

Strengths that make an

organization distinctive from
competitors
Groups of sustainable competitive
advantages

External-Os and Ts

Porters Five Forces Model-P94

Threat of New Entrants
Supplier Bargaining Power
Customer Bargaining Power
Substitute Goods or Services
Rivalry of Existing Firms

Product Life Cycle

Market phases that products

usually go through during their
lifetimes
Introduction
Growth
Maturity
Decline
Termination

7.10

High

Basic Product Life Cycle

Model
Autos

Sales
Volume

Airlines
Breakfast
cereals
Biogenetics
Electric cars

Low
Introduction

Black
and white
TV
Cigarettes

Cellular
phones
PCs

Slide rule

Software

Drive-ins

Growth

Maturity

Decline

Termination

Time
Adapted from Figure 7.4

Diversification

The variety of goods or services

provided by the firm
Focused Strategy
Dominant Business
Related Diversification
Unrelated Diversification

7.4

The Risks and Opportunities of

Diversification
Identifying the Risks and Opportunities of Diversification

What can we do better than any of our competitors if we enter a

new market?

What strategic assets are needed to succeed in the new market?

Are there synergies to be realized?

Will we be simply a player

in the new market or will
we emerge a winner?

What can we learn by diversifying, and are we sufficiently

organized to learn it?

7.5

Level of Diversification and

Planning
Broad

GE

Scope of strategic planning

ABB

Dick Clark
Productions
Cemex

Southwest Airlines

Narrow
Low

High
Singlebusiness
firm

Dominant- Relatedbusiness business

firm
firm

Level of
diversification

Unrelatedbusinesses
firm
Adapted from Figure 7.1

Single-Business
Strategy
Serves one segment of a particular

market with the intent of being the

BEST
Examples
Southwest Airlines
Intel

Dominant Business

Serves various segments of a

single market
Examples

GM

Trucks, Cars, Semis

Related Diversification

A variety of similar goods or

services
Concentric Growth Strategy
Synergies are realized
Examples
GM
Microsoft
Honda

Unrelated Diversification

Provide diverse products to

different markets
Conglomerate Growth Strategy
Examples
GE
ABB
Mitsubuishi

Corporate Level
Strategy

Guides the overall direction of the

firm deciding what SBUs to keep,
develop, purchase, or sell

Strategic Business Unit

SBU-a division or subsidiary of a

firm that operates relatively
independently
Examples
pizza hut, taco bell, kfc
IBM computers, mainframes,
financial
other examples??

Growth Strategies

Think of facing the ultimate

customer
Forward Integration-when a firm
buys its customers
Backward Integration-when a firm
buys its suppliers
Horizontal Integration-when a firm
buys its competitors

Growth Strategies (cont)

Market Penetration-development of
current markets with current
products
Market Development-seeking new
markets for current products
Product Development-new or
improved products for the current
market

Business Level
Strategies

Strategies of SBUs
What is the market
What are the customer needs to be
filled
How will they be satisfied

Generic Strategies

Henry Mintzberg-P245
3 basic business strategies
Differentiation
Low-cost
Focus/Niche

Question

Can the 3 basic strategies be

combined?

7.12

Broad

Generic Strategies
Model
Differentiation
strategy

Cost leadership
strategy

Strategic
Target
Focus strategy
Narrow
Uniqueness

Low Cost (price)

Source of Advantage

Source: Adapted with

permission of The Free
Press, a Division of
Simon & Schuster, Inc.
from Competitive
Strategy: Techniques
for Analyzing
Industries and
Competitors (p. 39) by
Michael E. Porter,
Copyright 1980 by
The Free Press.

Adapted from Figure 7.6

7.13

Application of the Generic Strategies

Model
Business-Level

Company Examples

Strategy

Feature

Differentiation

Premium Quality

Lexus - autos

Brand image

Compaq - PCs

Technological
leadership

Gillette - razors

Customer service

Maytag - appliances
Nike - shoes

Adapted from Table 7.4

7.14

Application of the Generic Strategies Model

(contd.)

Business-Level
Strategy

Feature

Company Examples

Cost leadership

Tight cost controls

Discount Tires - tire

replacement

Efficient scale of
facilities

Motel 6 - travel
accommodations

Efficient service,
sales force, and
advertising

Wal-Mart - retailing

Competitive pricing

UPS - package delivery

Adapted from Table 7.4

7.15

Application of the Generic Strategies Model

(contd.)

Business-Level
Strategy

Focus

Feature

Company Examples

Careful identification
of target market (niche)

Nieman Marcus - elite

retailing

Cost leadership
emphasis or
differentiation emphasis

Dick Clark Productions

Constant review of
customer demand in
niche

Polo - clothing
Rolex - watches

Adapted from Table 7.4

Where to from here????

We have touched on the areas of:

Organizational Behavior
Human Resource Management
Strategic Management

What careers are there in each area?

What classes can I take in the areas?

MGT410,MGT499,MGT320,MGT340,MGT491