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MGT 210

Chapter 9: STRATEGIC MANAGEMENT &

PLANNING
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Strategic Management
This is what manager’s do to develop the organization’s
strategies. This involves all the basic management
functions: planning, organizing, leading & controlling.

 Organizational strategies are the plans for:

 how the organization will do whatever its in business to do
 how it will compete successfully
 how it will attract and satisfy its customers in order to achieve
its goals.

 Business model is how a business is going to make

money. It focuses on two things:
 1. whether customers will value what the company is
providing
 2. whether the company can make money doing it
 Importance of Strategic
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Management
There are three reasons

 There is positive relation between planning and

performance.
 Managers can cope with uncertainty by using the
strategic management process to examine the
relevant factors and decide what actions to take.
 Strategic management helps to focus each part of
the organization so that they can work towards
achieving the company’s goals.
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The Strategic Management
The strategic management process is a six-step process
that involves strategy planning, implementation and
evaluation
+Step 1: identifying the organization’s
current mission, goals and strategies
A mission is a statement of purpose. Defining the
mission forces managers to identify what the business
needs to do.
 These statements provide clues to what these
organization’s see as their purpose
 Step 2: Doing an External
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Analysis
Managers should examine the economic, demographic,
political/legal, sociocultural, technological and global
components to see the trend and change
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Step 3: Doing an internal
analysis
 An organization’s resources are its assets: financial,
physical, human and intangible.
 Its capabilities are its skills and abilities in doing the
work activities needed in its businesses - how it does
the work.
 The major value creating capabilities are its core
competencies
 Step 4: Formulating
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Strategies
Managers should consider the realities of the external
environment and their available resources and
capabilities
 Step 5: Implementing
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Strategies
performance will suffer if the strategies aren’t
implemented properly
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Step 6: Evaluating results
How effective have the strategies been at helping the
organization reach its goals? What adjustments are
necessary
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Corporate Strategies

 A strategy that determines what businesses a company

is in or wants to be in, and what it wants to do with
those businesses.
 Its based on the mission and goals of the organization
and the roles that each business unit of the
organization will play
 Three types of corporate strategies:
 Growth
 Stability
 Renewal
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Growth
When an organization expands the number of markets
served or products offered, either through its current or
through new business
 An organization that grows using concentration focuses
on its primary line of business and increases the
number of products offered or markets served in this
primary business
 Vertical integration
 Horizontal integration
 Diversification
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Stability
An organization continues to do what it is currently
doing. The organization doesn’t grow but doesn't fall
behind as well
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Renewal
strategies that address declining performance. The two
types of renewal strategies are retrenchment and
turnaround strategies
 A retrenchment strategy is a short run revival
strategy used for minor performance problems.
 This strategy helps an organization stabilize
operations, revitalize organizational resources and
capabilities and prepare to compete once again.
 When an organization’s problem are more serious,
more drastic actions – the turnaround strategy is
needed.
 Managers do two things for both renewal strategies:
 cut costs
 restructure organizational operations.
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Managing Corporate Strategies
When an organization’s corporate strategy encompasses
a number of business, managers can manage this
collection, or portfolio using a toll called corporate
portfolio matrix.
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BCG Matrix
 The dogs should be sold off or
liquidated as they have low
market share in markets with
low growth potential.
 Mangers should milk cash cows
for as much as they can, limit
any new investment in them and
use the large amount of cash
generated to invest in stars and
question marks with strong
potential to improve market
share.
 The stars will eventually develop
into cash cows as their markets
mature and sales growth slows
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Competitive Strategies
a strategy of how an organization will compete in its
businesses
 When an organization is in several different businesses, those
single businesses that are independent and have their own
competitive strategies are called strategic business units
(SBUs)
 Competitive advantage sets an organization apart – its
distinctive edge.
 This can come from the organization’s core competencies by
doing something that other cannot do or doing it better than
others can do it.
 Competitive advantage can arise from holding a certain kind of
resource
 If a business is able to continuously improve the quality and
reliability of its products, it may have a competitive advantage
that cant be taken away
 Sustaining Competitive
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Advantage
An important part of doing this is an industry
analysis, which is done using the Porter’s five
forces model.
 Choosing a Competitive
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Strategy
An appropriate competitive strategy fits the
competitive strengths of the organization and the
industry in it
 When an organization competes on the basis of having the
lowest costs, it is following a cost-leadership strategy. A
low-cost leader is highly efficient.
 A company that competes by offering unique products that
are widely valued by customers is following a
differentiation strategy..
 A focus strategy involves a cost strategy or
differentiation strategy in a certain part of the market or
niche.

Functional strategies are strategies utilized by an

organization’s various functional departments to support the
competitive advantage.
 Important Organizational
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Strategies
Three strategies are important in today’s
corporate world
 E- business strategies
 Customer service strategies
 Innovation strategies
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E-Business strategy
Managers use e-business strategies to develop a
sustainable competitive advantage.
 A cost leader can use e-business to lower costs in a
variety of ways
 A differentiator needs to offer products or services that
customers perceive and value as unique.

Finally, because the focuser targets a narrow market

segment with customized products, it might provide chat
rooms or discussion boards for customers to interact with
others who have common interests, design niche Web
sites that target specific groups with specific interest
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Customer service strategies

 Such strategies involve giving customers what they

want, communicating effectively with them, and
providing employees with customer service training
 Managers should know what’s going on with
customers. They need to find out what customers liked
and didn’t like about their purchase encounter—from
their interactions with employees to their experience
with the actual product or service
 An organization’s culture is important to providing
excellent customer service. This typically requires that
employees be trained to provide exceptional customer
service
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Innovation Strategies

 Managers must first decide where the emphasis of

their innovation efforts will be
 Basic scientific research requires the most resource
commitment because it involves the nuts-and-bolts
work of scientific research
 A focus on process development. Using this strategy,
an organization looks for ways to improve and enhance
its work processes.