Strategic Management Process

2 3

SWOT 6 7 8
1

4 5
 Formulating Corporate-Level
Strategy
 Portfolio strategy

 Strategic business units (SBUs)

 BCG matrix
 Portfolio strategy
 A type of corporate – level strategy that
pertains to the organization’s mix of SBUs
and product lines that fit together in such
a way as to provide the corporate with
synergy and competitive advantage.
 Strategic business units (SBUs)

 A division of the organization that has a

unique business mission, product line,
competitors, and markets relative to other
SBUs in the same corporation.
 BCG matrix
 A concept developed by the Boston
Consulting Group that evaluates SBUs with
respect to the dimensions of business
growth rate and market share.
 High Market Share Low

High Question Marks

Stars
Rapid growth and New ventures. Risky – a
Expansion. Few become stars, others
Diverted.

?
Business
Growth
Cash Cows Dogs
Rate No investment. Keep if
Milk to finance question
Marks and stars. Some profit. Consider
Divestment.

Low
 Formulating Business – Level
Strategy
 Porter’s Competitive Forces and Strategies

 Competitive Strategies.

 Cooperative Strategies.
 Formulating Business – Level
Strategy
Five Competitive Forces
1. Potential new entrants.

2. Bargaining power of buyers.

3. Bargaining power of suppliers.

4. Threat of substitute products.

5. Rivalry among competitors.

The Five Forces
Potential New
Affecting Industry Entrants
Competition
Threat of new entrants

Substitute Products The Firm’s Rivalry

From Other Versus Industry
Buyers
industries Threat of Competitors Bargaining
Substitute Power of
products buyers

Bargaining power of suppliers

Suppliers
 Competitive Strategies
 Differentiation.
A type of competitive strategy with which
the organization seeks to distinguish its
products or services from competitors.

 Cost leadership
A type of competitive strategy with which
the organization aggressively seeks
efficient facilities, cuts costs, and employs
tight cost controls to be more efficient than
 Focus
A type of competitive strategy that
emphasizes concentration on a specific
regional market or buyer group.
 Competitive
advantage

Broad
1.Cost leadership 2.Differentiation
target

Competitive
Scope

3a Cost focus 3b Differentiation focus

Narrow
target
 BUSINESS MODEL

A BUSINESS MODEL COMPRISES CHOICES AND

CONSEQUENCES