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Bus 411

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  1. Bus 411 DAY 10

  2. Agenda • Assignment #3 not corrected • Still waiting for submissions • Assignment #4 assigned this class • Templates available in WebCT • Discussion on Mid-term will be after Spring Break • Chapters 1-9 • Take home • Intense • Finish Discussion on Strategy Analysis and choice

  3. Strategy-Formulation Analytical Framework SWOT Matrix SPACE Matrix Stage 2:The Matching Stage BCG Matrix IE Matrix Grand Strategy Matrix

  4. IE Matrix • The IE Matrix positions an organization’s various divisions in a nine-cell display illustrated in Figure 6-10. • The IE Matrix is similar to the BCG Matrix in that both tools involve plotting organization divisions in a schematic diagram; this is why they are called portfolio matrices. • Differences between the IE Matrix and the BCG Matrix • Axis are different. • IE Matrix requires more information about divisions than BCG. • Strategic implications of each matrix are different.

  5. IE Matrix IFE Scores Strong Average Weak 3-4 2-2.99 1-1.99 High 3-4 Medium 2-2.99 Low 1-1.99 EFE Scores

  6. Strategy-Formulation Analytical Framework SWOT Matrix SPACE Matrix Stage 2:The Matching Stage BCG Matrix IE Matrix Grand Strategy Matrix

  7. Grand Strategy Matrix • Tool for formulating alternative strategies • Based on two dimensions • Competitive position • Market growth

  8. RAPID MARKET GROWTH • Quadrant II • Market development • Market penetration • Product development • Horizontal integration • Divestiture • Liquidation • Quadrant I • Market development • Market penetration • Product development • Forward integration • Backward integration • Horizontal integration • Concentric diversification WEAK COMPETITIVE POSITION STRONG COMPETITIVE POSITION • Quadrant III • Retrenchment • Concentric diversification • Horizontal diversification • Conglomerate diversification • Liquidation • Quadrant IV • Concentric diversification • Horizontal diversification • Conglomerate diversification • Joint ventures SLOW MARKET GROWTH

  9. Grand Strategy Matrix Quadrant I • Excellent strategic position • Concentration on current markets/products • Take risks aggressively when necessary

  10. Grand Strategy Matrix Quadrant II • Evaluate present approach • How to improve competitiveness • Rapid market growth requires intensive strategy

  11. Grand Strategy Matrix Quadrant III • Compete in slow-growth industries • Weak competitive position • Drastic changes quickly • Cost & asset reduction (retrenchment)

  12. Grand Strategy Matrix Quadrant IV • Strong competitive position • Slow-growth industry • Diversification to more promising growth areas

  13. Strategy-Formulation Analytical Framework Quantitative StrategicPlanning Matrix(QSPM) Stage 3:The Decision Stage

  14. QSPM Quantitative Strategic Planning Matrix • Technique designed to determine the relative attractiveness of feasible alternative actions

  15. Six steps to developing a QSPM: • Make a list of the firm’s key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM. • Assign weights to each key external and internal factor. • Weights for each category should add up to one • Examine the Stage 2 matrices and identify alternative strategies that the organization should consider implementing. • Determine the Attractiveness Scores (AS). • Compute the total AS. • Weight * AS • Compute the sum Total AS.

  16. 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/Operations Research and Development Computer Information Systems Strategic Alternatives QSPM

  17. QSPM Limitations • Requires intuitive judgments & educated assumptions • Only as good as the prerequisite inputs

  18. QSPM Advantages • Sets of strategies considered simultaneously or sequentially • Integration of pertinent external & internal factors in the decision making process

  19. Cultural Aspects of Strategy Choice Organization Culture • Successful strategies depend on the degree of consistency with the firm’s culture

  20. Politics of Strategy Choice Politics in Organizations • Management hierarchy • Career aspirations • Allocation of scarce resources

  21. Successful Strategists : • Were found to let weakly supported ideas and proposals die through inaction and to establish additional hurdles or tests for strongly supported ideas considered unacceptable but not openly opposed.

  22. Politics of Strategy Choice Political tactics for strategists • Equifinality • Same outcomes by different means • Satisfying • Good results with acceptable strategy is better than excellent results with an unpopular strategy • Generalization • Less detail • Higher-order issues • Take cars of the big stuff first • Political access on important issues • Agency and political avenues for redress

  23. Governance Issues Board of Directors Roles & Responsibilities • Control & oversight over management • Adherence to legal prescriptions • Consideration of stakeholder interests • Advancement of stockholder rights

  24. Corporate Governance Issues Business Week’s “principles of good governance” • No more than 2 directors current or former company executives • No directors do business with the company • Audit, compensation, and nominating committees made up of outside directors • Each director attends at lest 75% of all meetings • Audit committee meets at least four times a year • CEO is not also the Chairperson of the Board • Shareholders have considerable power and information to choose & replace directors • Stock options are considered a corporate expense • No interlocking directorships

  25. Chapter 7Implementing Strategies: Management & Operations Issues Strategic Management: Concepts & Cases 10th Edition Fred DavidPowerPoint Slides by Anthony F. Chelte Western New England College

  26. Chapter Outline The Nature of Strategy Implementation Annual Objectives Policies

  27. Chapter Outline (cont’d) Resource Allocation Managing Conflict Matching Structure with Strategy

  28. Chapter Outline (cont’d) Restructuring, Reengineering & E-Engineering Linking Performance & Pay to Strategies Managing Resistance to Change

  29. Chapter Outline (cont’d) Managing the Natural Environment Creating a Strategy-Supportive Culture Production/Operations Concerns When Implementing Strategies

  30. Chapter Outline (cont’d) Human Resource Concerns When Implementing Strategies

  31. Implementing Strategies Pretend that every single person you meet has a sign around his or her neck that says, “Make me feel important” – Mary Kay Ash, CEO of Mary Kay, Inc.

  32. The Nature of Strategy Implementation --Successful strategy formulation does not guarantee successful strategy implementation

  33. Nature of Strategy Implementation • Formulation positions forces before the action • Implementation manages forces during the action Formulation vs. Implementation

  34. Nature of Strategy Implementation • Formulation focuses on effectiveness • Implementation focuses on efficiency Formulation vs. Implementation

  35. Nature of Strategy Implementation • Formulation primarily an intellectual process • Implementation primarily an operational process Formulation vs. Implementation

  36. Nature of Strategy Implementation • Formulation requires good intuitive & analytical skills • Implementation requires special motivational & leadership skills Formulation vs. Implementation

  37. Nature of Strategy Implementation • Formulation requires coordination among a few individuals • Implementation requires coordination among many individuals Formulation vs. Implementation

  38. Nature of Strategy Implementation • Varies among different types & sizes of organizations Strategy Implementation

  39. Assignment Four • Use templates provided in assignment and in WebCT • Due Before Spring Break • In my possession prior to 3:30PM Friday, February 25 • 20 points off for each day late and I will not be checking during break so if I get it after break, it will be a zero.