Functional Strategy

Functional Strategy Functional Strategy: • The approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity. Chapter 7 Wheelen/Hunger

Functional Strategy Sourcing Decision: Outsourcing – • Purchasing from someone else a product or service that had been previously provided internally. Chapter 7 Wheelen/Hunger

Proposed Outsourcing Matrix Chapter 7 Wheelen/Hunger

Marketing Strategy Marketing strategy – Involved with pricing, selling, and distributing a product. Chapter 7 Wheelen/Hunger

Marketing Strategy Market development strategy – • Capture a larger share of existing market through market saturation and market penetration • Develop new markets for current products Chapter 7 Wheelen/Hunger

Marketing Strategy Product development strategy – • Develop new products for existing markets • Develop new products for new markets Chapter 7 Wheelen/Hunger

Marketing Strategy Advertising or Promotion strategy – • Push marketing strategy • Investing in trade promotion to gain or hold share • Pull marketing strategy • Investing in consumer advertising to build brand awareness Chapter 7 Wheelen/Hunger

Financial Strategy Financial strategy – • Examines the financial implications of corporate and business-level strategic options and identifies the best financial course of action. • Maximizes financial value of the firm Chapter 7 Wheelen/Hunger

R&D Strategy R&D Strategy – Deals with product and process innovation and improvement Choice: • Technological leader • Technological follower Chapter 7 Wheelen/Hunger

Research and Development Strategy and Competitive Advantage Technological Leadership Technological Followership Cost Advantage Differentiation Pioneer the lowest cost product design. Be the first firm down the learning curve. Create low-cost ways of performing value activities. Pioneer a unique product that increases buyer value. Innovate in other activities to increase buyer value. Lower the cost of the product or value activities by learning from the leader’s experience. Avoid R&D costs through imitation. Adapt the product or delivery system more closely to buyer needs by learning from the leader’s experience. Chapter 7 Wheelen/Hunger

Operations Strategy Operations strategy – • Determines: • How and where product is manufactured • Level of vertical integration in process • Deployment of physical resources • Relationships with suppliers Chapter 7 Wheelen/Hunger

Operations Strategy Manufacturing strategy – • Affected by product life cycle • Job shop • Connected line batch flow • Flexible manufacturing system • Dedicated transfer lines Chapter 7 Wheelen/Hunger

Operations Strategy Manufacturing strategy – • Movement from mass production to: • Continuous improvement • Modular manufacturing • Mass customization Chapter 7 Wheelen/Hunger

Purchasing Strategy Purchasing strategy – • Obtaining raw materials, parts and supplies • Basic Purchasing Choices: • Multiple sourcing • Sole sourcing • Parallel sourcing Chapter 7 Wheelen/Hunger

Logistics Strategy Logistics strategy – • Flow of products into and out of the process • Three current trends: • Centralization • Outsourcing • Use of the Internet Chapter 7 Wheelen/Hunger

HRM Strategy HRM strategy – • Addresses issues of: • Low-skilled employees • Low pay • Repetitive tasks • High turnover • Skilled employees • High pay • Cross trained • Self-managing teams Chapter 7 Wheelen/Hunger

Information Systems Strategy Information systems strategy – • Technology to provide business units with competitive advantage Chapter 7 Wheelen/Hunger

Functional Strategy