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Analysis
AN OVERVIEW
OF TRATEGIC PLANNING
AND MANAGEMENT
Corporate Strategy
26
It is found in the middle of the decision
making hierarchy and composed mainly of
business & corporate managers.
Clear Business
Vision
Comprehensive
Mission Statement
Technology
Mission
Employees
Elements
Survival
Growth
Profit
Public
Image
Self-Concept Philosophy
m@hi 51
External Assessment
m@hi 52
External Strategic Management Audit
– Environmental Scanning
– Industry Analysis
Identify & evaluate factors beyond the control of
a single firm
– Political factors Purpose of an External
– Economic factors Audit
– Social factors – Develop a finite list of
• opportunities that could
– Technology benefit a firm
– Legal issues • threats that should be
avoided
m@hi 53
Competitive Forces
Collection & evaluation of data on competitors is
essential for successful strategy formulation
Identify Rival Firms’
•Strengths
Competition in
•Weaknesses virtually all
•Capabilities industries can
be described
• Objectives
as intense
•Strategies
m@hi 54
m@hi 55
Rivalry among competing firms
◦ Most powerful of the five forces
◦ Focus on competitive advantage
of strategies over other firms
m@hi 56
High number of competing firms
Similar size of firms competing
Similar capability of firms
competing
Falling demand for the industry’s
products
Falling product/service prices in the
industry
m@hi 57
Consumers can switch brands easily
Barriers to leaving the market are
high
Barriers to entering the market are
low
Fixed costs are high among firms
competing
The product is perishable
m@hi 58
Potential
Entry of New
Competitors
◦ Barriers to entry are important
◦ Quality, pricing, and marketing
can overcome barriers
m@hi 59
Potential development of
substitute products
◦ Pressure increases when:
Prices of substitutes decrease
Consumers’ switching costs
decrease
m@hi 60
Bargaining Power of Suppliers is increased
when there are:
◦ Large numbers of suppliers
◦ Few substitutes
◦ Costs of switching raw materials is high
Way-out
Backward integration is gaining control or
ownership of suppliers
m@hi 61
Bargaining power of consumers
Customers being concentrated or
buying in volume affects intensity
of competition
Consumer power is higher where
products are standard or
undifferentiated
m@hi 62
The Internal Environment:
Resources, Capabilities and
Core Competencies
External Environment
What the Firm Might Do
Sustainable
Competitive
Advantage
Internal Environment
What the Firm Can Do
Discovering Core
Competencies
Resources
* Tangible
* Intangible
Resources What a firm Has...
Capabilities
Teams of
Resources
Resources
* Tangible
* Intangible
Capabilities What a firm Does...
Capabilities represent:
the firm’s capacity or ability to integrate
individual firm resources to achieve a
desired objective.
Discovering Core
Competencies
Discovering
Core
Competencies
Core
Competencies
Sources of
Competitive
Advantage
Capabilities
Teams of
Resources
Resources
* Tangible
* Intangible
Discovering Core
Competencies
Discovering
Core
Competencies
Core
Competencies
Sources of
Competitive
Advantage
Capabilities Criteria of
Teams of Sustainable
Resources Advantages
Resources
* Valuable
* Tangible
* Intangible * Rare
* Costly to Imitate
* Nonsubstitutable * Outsource
Core Competencies What a firm Does...
that is Strategically
For a strategic capability to
Valuable
be a Core Competency, it
must be:
Valuable
Rare
Costly to Imitate
Nonsubstitutable
Core Competencies
Capability
• A nonstrategic team
of resources
The central purpose of the SWOT analysis is to
identify strategies that align, fit or match an
organization's resources and capabilities to the
demands of the environment in which the
organization competes.
Matt H. Evans,
matt@exinfm.com
• “If you fail to plan, then you plan to fail – be
proactive about the future”
It is about establishing priorities on what
you will accomplish in the future
•Strategic planning improves performance
•Communicate to everyone what is most
important
Matt H. Evans,
matt@exinfm.com
Phase one: Determining core
purpose and envisioning the
future
Matt H. Evans,
matt@exinfm.com
Copyright 2007 Prentice Hall Ch 7-94
The Nature of Strategy
Implementation
Rumelt’s Consonance
4 Criteria
Feasibility
Advantage
Financial Ratios
◦ Compare performance over different periods
◦ Compare performance to competitors’
◦ Compare performance to industry averages
Economical
Meaningful
Generates useful information
Timely information
Provides accurate picture of events