Corporate Strategy Formulation and Implementation for a large enterprise

Strategic Planning

Strategic planning has taken on new importance in todays world of globalization, deregulation, advancing technology, and changing demographics, and lifestyles
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Strategy Formulation and ImplementationManagement Strategic

Definition Components Model of Strategic Management Process Models of Strategy Formation

Managerial Tools to Implement Strategic Plans

Thinking Strategically

Answers to the following define an overall direction for the organization's grand strategy Where is the organization now? Where does the organization want to be? What changes are among competitors? What courses of action will help us achieve our goals?

Strategic Management

Set of decisions and actions used to implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals Responsibility = top managers & chief executive

Strategic Management
Managers ask such questions as... What changes and trends are occurring? Who are our customers? What products or services should we offer? How can we offer these products or services most efficiently?
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Grand Strategy
General plan of major action to achieve long-term goals Falls into three general categories A separate grand 1. Growth strategy can be 2. Stability defined for global 3. Retrenchment operations

Grand Strategy: Growth

Growth can be promoted internally by investing in expansion or externally by acquiring additional business divisions
- Internal growth = can include development of new or changed products - External growth = typically involves diversification businesses related to current product lines or into new areas

Grand Strategy: Stability

Stability, sometimes called a pause strategy, means that the organization wants
to remain the same size or to grow slowly and in a controlled fashion

Grand Strategy: Retrenchment

Retrenchment = the organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses Liquidation = selling off a business nit for the cash value of the assets, thus terminating its existence Divestiture = involves selling off of businesses that no longer seem central to the corporation

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Global Corporate Strategies

High
Globalization Strategy
Treats world as a single global market Standardizes global products/advertising strategies

Transnational Strategy
Seeks to balance global efficiencies and local responsiveness Combines standardization and customization for product/advertising strategies

Need for Global Integration

Export Strategy
Domestically focused Exports a few domestically produced products to selected countries

Multi-domestic Strategy Handles markets independently for each country Adapts product/advertising to local tastes and needs

Low

Low

Need for National Responsiveness

High
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Global Strategy

Globalization = product design and advertising strategies are standardized around the world Multi-domestic = adapt product and promotion for each country Transnational = combine global coordination with flexibility to meet specific needs in various countries

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Purpose of Strategy
The plan of action that prescribes resource allocation and other activities for dealing with the environment, achieving a competitive advantage, that help the organization attain its goals Strategies focus on: Core competencies Developing synergy Creating value for customers

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Three Levels of Strategy in Organizations

Corporate-Level Strategy: What business are we in?
Corporation

Business-Level Strategy: How do we compete?

Textiles Unit Chemicals Unit

Auto Parts Unit

Functional-Level Strategy: How do we support the business-level strategy?

Finance

R&D

Manufacturing

Marketing

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Strategic Management Process

Scan External Environment National, Global Evaluate Current Mission, Goals, Strategies Scan Internal Environment Core Competence, Synergy, Value Creation Identify Strategic Factors Opportunities, Threats Formulate Strategy Corporate, Business, Functional

SWOT

Define new Mission Goals, Grand Strategy

Identify Strategic Factors Strengths, Weaknesses

Implement Strategy via Changes in: Leadership culture, Structure, HR, Information & control systems

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Strategy Formulation vs. Implementation

Strategy Formulation = stage of strategic management that involves planning and decision making that lead to the establishment of the organizations goals and of a specific strategic plan Strategy Implementation = stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes

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Checklist for Analyzing Organizational Strengths and Weaknesses

Management and Organization Management quality Staff quality Degree of centralization Organization charts Planning, information, control systems Finance Marketing Human Resources

Distribution channels Market share

Advertising efficiency Customer satisfaction Product quality Service reputation Sales force turnover Production

Employee experience, education

Union status Turnover, absenteeism Work satisfaction Grievances Research and Development Basic applied research

Profit margin
Debt-equity ratio Inventory ratio Return on investment Credit rating

Plant location Machinery obsolescence Laboratory capabilities Research programs Purchasing system New-product innovations Quality control
Productivity/efficiency Technology innovations

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Portfolio Strategy
BCG Matrix

Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage

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Five Forces Affecting Industry Competition

Internet reduces barriers to entry

Potential New Entrants

Internet blurs differences among competitors in an industry

Threat of Substitute Products

Internet expands market size, but creates new substitution threats

Rivalry among Competitors

Bargaining Power of Buyers

Internet shifts greater power to end consumers

Internet tends to increase the bargaining power of suppliers

Bargaining Power of Suppliers

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Competitive Edge Through

Competitive Strategies

Differentiation = attempt to distinguish products or services from that of competitors Cost leadership = aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors Focus = concentrates on a specific regional market or buyer group

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Continuum of Partnership Strategies

Organizational Combination
Acquisitions

Mergers

Strategic Alliances

Joint Ventures

Strategic Business Partnering

Preferred Supplier Arrangements Low

Degree of Collaboration

High

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Implementing Strategy Tools

Leadership Structural design Information and control systems Human resources

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Environment
Organization

Tools for Putting Strategy into Action

Leadership Persuasion Motivation Culture/values

Strategy

Structural Design Organization Chart Teams Centralization Decentralization, Facilities, task design

Human Resources Recruitment/selection Transfers/promotions Training Layoffs/recalls

Performance

Information and Control Systems Pay, reward system Budget allocations Information systems Rules/procedures

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THANKU!!
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