MCO 101

Unit 5: organizational strategy

MANAGEMENT

Managing Expectations

TOPIC DETAILS:
After going through UNIT 5, you should be able to:
1. indicate the components of sustainable competitive
advantage and explain why it is important.
2. describe the steps involved in the strategy-making
process.
3. explain the different kinds of corporate-level strategies.

MCO 101
Issue :2016

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Basics of Organisational
Strategy
Resources

MCO 101
Issue :2016

The assets, capabilities, processes,

information, and knowledge that the
organization controls

Competitive
Advantage

Providing greater value for customers

than competitors can

Sustainable
Competitive
Advantage

A competitive advantage that other

companies have tried unsuccessfully
to duplicate
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Requirements for
Sustainable Competitive
Advantage
Valuable
Resources

Rare
Resources
Sustainable
Competitive
Advantage

Imperfectly
Imitable
Resources
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Issue :2016

NonSubstitutable
Resources
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Strategy-Making Process

Assess need
for
strategic change

MCO 101
Issue :2016

Conduct a
Situational
Analysis

MANAGEMENT

Choose
Strategic
Alternatives

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Assessing the Need for

Strategic Change
Assess need for
strategic change
Avoid Competitive Inertia
unwillingness to change strategies or competitive
practices that have been successful in the past
Look for Strategic Dissonance
is a conflict between upper managements prepared
strategy and the strategy actually implemented by the
lower levels of management.

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Issue :2016

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Situational Analysis

SS

Strengths
Strengths
Internal

W
W

Weaknesses
Weaknesses

O
O

Opportunities
Opportunities
External

TT
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Issue :2016

Threats
Threats
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Situational Analysis
Conduct a
Situational Analysis

I
N
T
E
R
N
A
L

MCO 101
Issue :2016

Strengths
Distinctive
(special)
Competence
Core
Capability

Weaknesses

Opportunities
E
X
T
E
R
N
A
L

MANAGEMENT

Environmental
Scanning
Strategic
Groups

Threats

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Choosing Strategic
Alternatives
Choose Strategic
Alternatives
Risk-Avoiding Strategy: protect an
existing competitive advantage
Risk-Seeking Strategy: extend or create a
sustainable competitive advantage
Strategic Reference Points: targets used
by managers to determine if the firm has
developed the core competencies it
needs to achieve a sustainable
competitive advantage

MCO 101
Issue :2016

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Strategic Reference
Points
Choose Strategic
Alternatives

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Issue :2016

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Corporate-Level
Strategies
Corporate-Level
Strategy

The overall organizational strategy that

addresses the question What
business(es) are we in or should we be
in?

PORTFOLIO STRATEGY
Acquisitions, unrelated
diversification, related
diversification, single
businesses

GRAND STRATEGIES

Growth
Stability

BCG Matrix
Stars
Question marks
Cash cows
Dogs
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Issue :2016

Retrenchment/
recovery

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Corporate-Level
Strategies
Market Growth

BGC Matrix

High

Low

Question Marks

Stars

companies with a small share

of a fast-growing market

companies with a large share

of a fast-growing market

Dogs

Cash Cows

companies with a small share

of a slow-growing market

companies with a large share

of a slow-growing market

Small

Large

Relative Market Share

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Issue :2016

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Corporate-Level
Strategies
Diversification & Risk
Relationship

Risk

High

Between
Diversification and Risk

Low
Single
Business

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Issue :2016

Related
Diversification

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Unrelated
Diversification

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Corporate-Level
Strategies
Portfolio Strategy
Problems with Portfolio Strategy
Unrelated diversification does not reduce risk.
Present performance is used to predict future
performance.
Cash cows fail to aggressively pursue opportunities and
defend themselves from threats.
Companies often overpay to acquire stars.
Acquiring firms often treat stars as conquered foes.

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Issue :2016

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Corporate-Level
Strategies Grand Strategies

MCO 101
Issue :2016

Growth
Strategy

focuses on increasing profits,

revenues, market share, or number
of places to do business

Stability
Strategy

focuses on improving the way in which

the company sells the same products
or services to the same customers

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