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
 Emergent

Ou rce
Strategy
Fo
tsi s
de

Intended Realized
Strategy 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

Basic Product Life Cycle

High
Model
Autos

Sales Airlines
Black
Volume Breakfast and white
cereals TV

Biogenetics Cellular Cigarettes

phones
Electric cars
PCs Slide rule
Software Drive-ins
Low
Introduction 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
Single- Dominant- Related- Unrelated-
business business business businesses
firm firm firm firm
Level of
Adapted from Figure 7.1
diversification
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

Generic Strategies
Broad
Model
Differentiation Cost leadership
strategy strategy

Strategic
Target
Source: Adapted with
permission of The Free
Press, a Division of
Simon & Schuster, Inc.
Focus strategy from Competitive
Strategy: Techniques
for Analyzing
Industries and
Competitors (p. 39) by
Michael E. Porter,
Narrow Copyright 1980 by
The Free Press.
Uniqueness Low Cost (price)
Source of Advantage
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 Gillette - razors
leadership

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 Motel 6 - travel
facilities accommodations
Efficient service, Wal-Mart - retailing
sales force, and
advertising

Competitive pricing UPS - package delivery

Adapted from Table 7.4

 7.15

Application of the Generic Strategies Model

(contd.)
Business-Level
Strategy Feature Company Examples

Focus Careful identification Nieman Marcus - elite

of target market (niche) retailing
Cost leadership Dick Clark Productions
emphasis or
differentiation emphasis
Constant review of Polo - clothing
Rolex - watches
customer demand in
niche

Adapted from Table 7.4