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STRATEGIC MANAGEMENT & BUSINESS POLICY 11 TH EDITION

CHAPTER 6 Strategy Formulation: Situation Analysis & Business Strategy. STRATEGIC MANAGEMENT & BUSINESS POLICY 11 TH EDITION. THOMAS L. WHEELEN J. DAVID HUNGER. Situational Analysis. Strategy formulation -- Strategic planning or long-range planning

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STRATEGIC MANAGEMENT & BUSINESS POLICY 11 TH EDITION

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  1. CHAPTER 6Strategy Formulation: Situation Analysis & Business Strategy STRATEGIC MANAGEMENT & BUSINESS POLICY11TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER

  2. Situational Analysis • Strategy formulation -- • Strategic planning or long-range planning • Develops mission, objectives, strategies, policies --process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses

  3. IFAS – Maytag as Example

  4. EFAS – Maytag as Example

  5. SFAS Matrix

  6. Situational Analysis • Niche -- • Need in the marketplace that is currently unsatisfied • Corporate Goal -- • Find propitious niche • Strategic window

  7. Situational Analysis • SWOT -- • Internal • Strengths/Weaknesses • External • Opportunities/Threats

  8. TOWS Matrix

  9. Business Strategy Focuses on improving competitive position of company’s products or services within the specific industry or market segment

  10. Porter’s Competitive Strategies • Competitive Strategy -- • Low cost • Differentiation • Direct competition • Focus on niche

  11. Porter’s Competitive Strategies • Generic Competitive Strategies -- • Lower Cost strategy • Greater efficiencies than competitors • Differentiation strategy • Unique/superior value, quality, features, service

  12. Porter’s Competitive Strategies • Competitive Advantage -- • Determined by Competitive Scope • Breadth of the target market`

  13. Porter’s Competitive Strategies • Cost Leadership -- • Low-cost competitive strategy • Broad mass market • Efficient-scale facilities • Cost reductions • Cost minimization

  14. Porter’s Competitive Strategies • Differentiation – • Broad mass market • Unique product/service • Premiums charged • Less price sensitivity

  15. Porter’s Competitive Strategies • Cost-Focus – • Low-cost competitive strategy • Focus on market segment • Niche focused • Cost advantage in market segment

  16. Porter’s Competitive Strategies • Differentiation Focus – • Specific group or geographic market focus • Differentiation in target market • Special needs of narrow target market

  17. Porter’s Competitive Strategies • Stuck in the middle – • No competitive advantage • Below-average performance

  18. Risks of Generic Strategies Risks of Cost Leadership Cost leadership is not sustained: • Competitors imitate. • Technology changes. • Other bases for cost leadership erode. Proximity in differentiation is lost. Cost focusers achieve even lower cost in segments. Risks of Differentiation Differentiation is not sustained: • Competitors imitate. • Bases for differentiation become less important to buyers. Cost proximity is lost. Differentiation focusers achieve even greater differentiation in segments. Risks of Focus The focus strategy is imitated: The target segment becomes structurally unattractive: • Structure erodes. • Demand disappears. Broadly targeted competitors overwhelm the segment: • The segment’s differences from other segments narrow. • The advantages of a broad line increase. New focusers subsegment the industry. Risks of Cost Leadership Cost leadership is not sustained: • Competitors imitate. • Technology changes. • Other bases for cost leadership erode. Proximity in differentiation is lost. Cost focusers achieve even lower cost in segments. Risks of Differentiation Differentiation is not sustained: • Competitors imitate. • Bases for differentiation become less important to buyers. Cost proximity is lost. Differentiation focusers achieve even greater differentiation in segments. Risks of Focus The focus strategy is imitated: The target segment becomes structurally unattractive: • Structure erodes. • Demand disappears. Broadly targeted competitors overwhelm the segment: • The segment’s differences from other segments narrow. • The advantages of a broad line increase. New focusers subsegment the industry.

  19. 8 Dimensions of Quality

  20. Competitive Strategy • Industry Structure -- • Fragmented Industry • Consolidated Industry

  21. Competitive Tactics • Timing Tactics -- • First mover • Late movers • Market Location Tactics -- • Frontal Assault • Flanking Maneuver • Bypass Attack • Encirclement • Guerrilla Warfare • Defensive Tactics -- • Raise structural barriers • Increase expected retaliation • Lower the inducement for attack

  22. Cooperative Strategies • Collusion • Strategic Alliances • Mutual service consortia • Joint ventures • Licensing arrangements • Value-chain partnerships

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