Documenti di Didattica
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Strategic Management
External Forces
Plan Strategies
Policies
Evaluate
Vision
What do you want to become? Should be brief (few words) and to the point Should define core values (innovators, creativity, social responsibility) and core purpose Vision may be as vague as a dream or as precise as a goal For example
Pure and hygienic milk for everyone Providing medical services with excellence We make the worlds fastest computers
Mission Statement
What is our business? Should not be more than 200 words Provides general direction Not designed to express concrete ends Allows consideration of feasible alternatives Should be broad to reconcile the differences of stakeholders
Once an aim is cast in concrete, it creates a rigidity in an organization and resists change. Vagueness leaves room for other manager to fill in the details, perhaps even to modify general patterns. Vagueness permits more flexibility in adapting to changing environments and internal operations. It facilitates flexibility in implementation.
Evaluation committee
-International Cotton Scenario -Govt. Policies EU USA Far East Asia China
Agriculture Sector
India WAC
FTAs GSPs WTO Political and Govt. Reg Forces Social & Cultural Practices Countries Economic Condition
Local
Imports Exports
Raw Material
Local Market
Textile Sector
Govt. Regulations Agriculture Sector and its performance Ongoing Natural Calamities World Cotton Production World Cotton Consumption World wide consumer preferences (manmade or Natural fiber in demand) International Trade Policies (WTO) Individual country Policies (Competing countries) Technology Trends
Competitive Forces
Rivalry among Competing Firms
When customers can switch brands To cover the high fixed costs When the product is perishable When Barriers to leave high
Competitive Forces
Potential Entry of New Competitors
Economies of Scale Technology Strong Customer Loyalty Brand Preferences Large Capital Requirement Lack of Access to raw material
Competitive Forces
Substitute Products Bargaining Power of Suppliers
Large No. of Suppliers Few substitute raw material Switching raw material costly
Competitive Forces
Bargaining Power of Consumers
Customers concentrated Buying in volume Standard or undifferentiated products
Opportunities
Population is growing 8% annually University is expanding 6% annually Major competitors across town recently ceased operations Demand for going to cinema growing 10% annually Two new neighborhoods being developed within 3 miles Disposable income among citizens grew 5% in prior year Unemployment rate in county declined to 3.1% .05 .08 .08 .07 .09 .06 .03 3.00 4.00 3.00 2.00 1.00 3.00 2.00 0 .15 0.32 0.24 0.14 0.09 0.18 0.06
Threats
Trend towards healthy eroding concession sales Demand for online movies and DVDs growing 19% annully Commercial property adjacent to cinema for sale University installing on campus movie theatre County and city taxes increasing by 25% this year Local religious groups object to movies being shown Movies rented from local Blockbuster store up 12% Movies rented last quarter from Time Warner up 15% Totals 1.00 2.58 .12 .06 .06 .04 .08 .04 .08 .06 4.00 2.00 3.00 3.00 2.00 3.00 2.00 1.00 0.48 0.12 0.18 0.12 0.16 0.12 0.16 .06
Gives opportunity for integration and interaction of different depts. Creates better understanding of an organization (& its functional areas)
Task Force Equipped with staff and finances List Down all Key Factors Short list them to 10-15 10Prioritize them
Management Marketing Finance & Accounting Production & Operation Research & Development Management Information System
Management
Is there proper Planning Activity in the organizational level at different Managerial Levels Are Job Descriptions and Job Specifications Clear How Authority is delegated by the Managers What is ratio of Employee Turnover and Absenteeism What is compensation system Are there any Control Mechanisms Is the Organizations Structure appropriate Are Companies Objectives Measurable and well communicated
Marketing
What is Current market share and how is it growing What are present Channels of distribution and are they reliable and Cost Effective Does the firm conduct Market Research Are the products/services priced properly Do the firm Marketing Managers have Adequate experience Is there any regular training programs
Finance
Where the firm is strong or weak Can firm raise the need capital Is Budgeting Procedure effective Are Financial Managers experienced and Trained
Production/Operations
Are suppliers of raw material reliable Status of machinery and equipment What is current Inventory Control System What is current Quality Control System What is strategic relation of Facilities, Resources and Markets What current technology do we have
Competencies and capabilities gradually emerge in certain competitively important value chain activites
Company Proficiency in performing one or two value chain activities rised to the level of core competence
Company proficiency in performing a core competence continues to build and evolve into distinctive competence
Strength
Several New Senior Executives with world class skills and leadership experience Continuos decline in operating costs and cost of goods sold Well known brand name Consumer Reports (September 2002) recommended Gateway 500X as # 1 As a direct seller, Gateway holds high brand recognition Gateway diversifying into non-PC products Good relationship with its suppliers Economies of scale, the 6th largest PC maker in the world Gateway retail stores excellent 0.050 0.050 0.050 0.100 0.050 0.100 0.050 0.050 0.050 4 3 3 4 3 3 4 4 3 0.20 0.15 0.15 0.40 0.15 0.30 0.20 0.20 0.15
Weaknesses
High operating expense (22% of revenue vs. 10% of Dell) Almost no budget for R & D vs. Dell's 18% of revenue Low return on assets ratio No niche market Shortage of cash due to successive losses Limited number Gateway stores Weak performance in overseas market Total 1.00 2.65 0.050 0.100 0.025 0.025 0.100 0.050 0.100 1 1 2 2 2 2 2 0.05 0.10 0.05 0.05 0.20 0.10 0.20
Financial Objectives Growth in Revenues Higher Dividend Bigger Profit Margin Bigger Cash Flows Rising Stock Price
Strategic Objectives Bigger Market Share Higher Product Quality than rivals Broader Product Line Superior on time delivery Superior Customer Service
MCDONALD S
To Achieve 100 % total customer satisfaction everyday for every customer in every restaurant
MOTROLLA
Self funding revenue growth of 15% annually An average return of assets of 13 -15 % A Strong Balance Sheet
Success Comes with Luck Success Comes with hard work Success Comes with Hard work and clear Direction
Types of Strategies
Integration Strategies Intensive Strategies Diversification Strategies Defensive Strategies Michael Porter s Generic Strategies
Integration Strategies
Forward Integration Backward Integration Horizontal Integration
Forward Integration
When distributor s expensive, unreliable or incapable Growing industry Has capital and human resource When present distributors and retailers have higher margin
Backward Integration
When present supplier expensive, unreliable or incapable When suppliers small and competitors large Organization has both capital and HR When present suppliers have high profit margin
Horizontal Integration
Merger s, Acquisitions and Takeovers
When organization can gain monopolistic characteristics When organization competes in growing industry When increased economies of scale needed When organization has capital and HR
Intensive Strategies
Market Penetration Market Development Product Development
Market Penetration
Increasing salesperson, advertising expenditure, sales promotion and publicity
When current markets not saturated When customer usage rate can be increased When correlation between dollar sales and dollar marketing high
Market Development
Introducing present products or services to new geographic areas
New untapped unsaturated markets exist Has needed capital and resources Has excess production capacity When organization is successful at what it does
Product Development
Strategy that seeks increased sales by improving or modifying present products or services
When successful products at maturity stage When rapid technological developments taking place Strong R&D
Diversification Strategies
Related
Adding new but related products or services
Unrelated
Adding new unrelated products or services for present customers
Defensive Strategies
Retrenchment
Regroups through cost and asset reduction to reverse declining sales and profits e.g selling of land, building layoffs etc.
Divestiture
Selling a division or part of an organzation
Liquidation
Selling all of companies assets in part
Retrenchment strategy
When organization has competence but has failed to meet its objectives When an organization has grown so large so quickly & reorganization needed When organization is weakest competitor in a given industry
Divestiture Strategy
When retrenchment strategy has failed When division needs more resources than the company can provide When a division is responsible for company s overall poor performance When a division is misfit with the rest of the organization When a large amount of cash is needed immediately
Liquidation
When both the previous strategies have failed When only alternative is bankruptcy
Product Uniqueness
Cost Leadership Differentiation Strategy Strategy Focus Strategy (Low Cost) Focus Strategy (Differentiation)
Narrow
(Market Segment)
Differentiation Strategy
Carries Special feature which may be
Superior service Spare parts availability Engineering design Product performance Useful life Gas mileage Ease of use
Focus Strategies
Niche markets
Geographical areas Particular group of customers
Generic Strategies
Cost Leadership
Ability to cut price in retaliation deters potential entrants Ability to offer lower price to powerful buyers Better insulated from powerful suppliers
Differentiation
Customer loyalty can discourage potential entrant Large buyers have less power to negotiate because of few close alternatives Better able to pass on supplier price increases to customer
Focus
Focusing develops core competencies that can act as an entry barrier Large buyers have less power to negotiate because of few alternatives Suppliers have powers because of low volumes, but a differentiationdifferentiationfocused firm is better able to pass on supplier price increases Specialized products & Core competency protect against substitutes Rivals cannot meet DifferentiationDifferentiation-focused Customer Needs
Customers get attached to differentiating attributes, reducing threat of substitutes Brand loyalty to keep customers from rivals
Partnership
The working on long term basis
Acquisition
When a large organization purchases a smaller firm or vice versa
Takeover/hostile takeover
Strategy Formulation
Input Stage
External Factors Evaluation Internal Factor Evaluation
Matching Stage
TOWS Matrix etc
Decision Stage
TOWS Matrix
Four Types of Strategies
SO Strategies WO Strategies ST Strategies WT Strategies
STRENGHTSSTRENGHTS-S 1 2 List Strengths 3 SO STRATEGIES Use strengths to take advantage of opportunities ST STATEGIES Use strengths to avoid threats
WEAKNESSESWEAKNESSES- S 1 2 List Weaknesses 3 WO STRATEGIES Overcome weaknesses by taking advantage of opportunities WT STRATEGIES Minimize weaknesses and avoid threats
WO STRATAGIES 1. Begin serving Japan and Pacific Islands (W3, O2, O3, O4) 2. Use weather forecastin to alert customers of potential storm during their vacations (W1, O4)
THREATS-T 1. Decrease in travel since 9/11 2. Terrorism 3. Competition within industry 4. Competition among other type of vacations 5. Economic recession 6. Chance of natural disaster
ST STRATAGIES 1. Advertise Carnivals ship variety, brand recognition and safety policies (S3, S7, T1, T2, T5)
Decision Stage
Input Analysis Decision
List all the possible strategies Rate these strategies on a 1 to 4 scale Other method may be QSPM (stage 3 of strategy formulation analytical Framework)
Compute the total attractiveness score Compute the Sum Total Attractiveness Score
QSPM
STRATEGIC ALTERNATIVES Key Factors Key External Factors Economy Political/legal/Governmental Social/Cultural/Demographic/Environmental Technological Competitive Weight Strategy 1 Strategy 2 Strategy 3
Key Internal Factors Management Marketing Finance/Accounting Production/operation Research & Development Management and Information
Strategy Implementation
Strategic thoughts into strategic actions Requires shift in responsibility from strategist to divisional and functional managers
Strategy Implementation
Strategy Formulation Positioning forces before actions Focuses on effectiveness An Intellectual Process Good intuitive and analytical skill Coordination among few individuals Strategy Implementation Managing forces during action Focuses on efficiency An Operational Process Motivation and leadership skills Coordination among many individuals
Annual Objectives
Establishing annual objectives is a decentralized activity Serve as a guideline for actions Directs and channels efforts and activities of organization members Serve as standard of performance Serve as an important source of employee motivation and identification Represents the basis for resource allocation Major instrument for monitoring progress toward achieving longlongterm objectives Establish organizational, divisional and departmental priorities.
Long term company objective Double company revenues in two yrs By market development and Market Penetrations
R&D
Produciton
Marketing
Finance
Policies
- Specific guidelines, methods, procedures, rules,
forms and administrative priatices established to support and encourage work toward stated goals Policies are instruments for strategy implementation -Policies are needed to make strategy work.
Management Policies
To promote on the basis of merit or on the basis of seniority To use one or more suppliers To operate one, two or more shifts To stress quality control greatly or not To allow much, some or no overtime work
Resource allocation
- Is a central management activity that
allows for strategy execution - May be strategy based, politically based or Personally based
Types of Resources
Financial Resources Physical Resources Human Resources Technological Resources
Managing Conflict
Disagreement between two or more parties on one or more issues
Managing Conflict
Avoidance Defusion Confrontation
Divisional Structure
Decentralized Organized in four ways
By geographic areas By product or service By Customer By process
Restructuring
Also called downsizing, rightsizing or delayering Concerned with Shareholders well being Reducing the size of the firm in terms of:
No. of employees No. of divisions No. of hierarchical levels
Reengineering
Concerned with employee and customers well being Also called Process management, Process innovation or Process redesign Involves reconfiguring or redesigning work jobs and processes for the purpose of improving cost, quality and service.
Strategy Evaluation
The best-formulated and bestbestbestimplemented strategies become obsolete as a firm s internal and external environment changes
Activity One: Review Underlying Basis of Strategy Prepare revised Internal Factor Evaluation Matrix Compare revised to existing IFE Prepare revised External factor Evaluation Compare revised to existing EFE
Yes
Activity Two: Measure Organizational Performance Compare Planned to actual progress toward meeting stated objectives
Yes
No