Beyond the Book HP Tops Dell In PC Sales • HP surpassed Dell as the world’s leader in personal computer sales. • HP could not compete with Dell for phone and internet sales. • HP focused on sales through retail stores, where Dell had no presence. Source: Lawton, C. 2007. “How HP Reclaimed Its PC Lead Over Dell.” The Wall Street Journal. June 4, 2007. pg.A1.
Basics of Organizational Strategy Discuss Strategic Management Process Describe the steps involved in the strategy-making process. Discuss Corporate and Business Level Strategies
Strategy-Making Process Assess need forstrategic change Conduct a Situational Analysis ChooseStrategicAlternatives 2
S Strengths Internal W Weaknesses O Opportunities External T Threats Situational Analysis 2.2
Strengths I NTERNAL • Resources • Core Capability • Structure (Ch 9) Opportunities • External Environmental Scanning EXTERNAL Weaknesses Threats Situational Analysis 2.2
Beyond the Book Tim Horton’s Competes with Dunkin’ Donuts on U.S. Soil • Tim Horton’s currently claims 76% of the Canadian coffee and baked-goods market. • Horton’s has met stiff competition from Dunkin’ Donuts as it expands into the U.S. market. • Horton’s is best known for its coffee and offers it cheaper than Dunkin’. Source: Belkin, D. “A Canadian Icon Turns Its Glaze Southward.” The Wall Street Journal. May 14, 2007. pg.B1.
Corporate and Business-Level Strategies explain the different kinds of corporate-level strategies. describe the different kinds of industry-level strategies. explain the components and kinds of firm-level strategies.
Corporate-Level Strategy Corporate-Level Strategy The overall organizational strategythat addresses the question “What business(es) are we in or should we be in?” 3
PORTFOLIO OF BUSINESSES • Diversification: • unrelated diversification • related diversification • How to companies diversify? • Growth • Acquisitions • single businesses • Retrench • Spin off, sell Corporate-Level Strategies 3
Beyond the Book Pepsi Releases New Health Beverages • PepsiCo Inc. plans to release new health and water-based beverages. • Pepsi is working to halt slumping sales of its Gatorade brand and combat increased competition from rival Coca-Cola. • Pepsi is making efforts to offer healthier products. Source: McKay, Betsy. “Pepsi to Pump Up Water Brands.” The Wall Street Journal. July 25, 2007. pg.B2.
Relationship BetweenDiversification and Risk High Risk Low Single Business Related Diversification Unrelated Diversification Diversification and Risk 3.1
Beyond the Book Nestle Cuts Brands • Nestle has a new strategy to cut unproductive brands and simplify its organization. • In 2007, the company was producing 130,000 brand variations, and 30 percent weren’t making money. • Nestle cut 50 of its world-wide subsidiaries. • While Nestle has outpaced competition in sales, the company still lags in profit margins. Source: Ball, Deborah. “After Buying Binge, Nestle Goes on a Diet.” The Wall Street Journal. July 23, 2007. pg.A1.
Business-Level Strategy How do we compete in our industry? Business-Level Strategies
Industry-Level Strategies Five Industry Forces Positioning Strategies 4
Threats ofNew Entrants Character of Rivalry BargainingPower ofSuppliers BargainingPower ofBuyers Threat of Substitutes Porter’s Five Industry Forces 4.1
Business-Level Strategy Positioning Strategies are dependent upon the forces in the industry: Customers, Suppliers, Competitors, Substitutes, and New Entrants
Positioning Strategies: How do I compete? Cost Leadership Differentiation Focus Strategy
Beyond the Book Supermarket Chains Compete through Differentiation • Supermarket chains, such as Kroger and Safeway, have struggled to compete with low prices at Wal-Mart Supercenters. • Supermarkets are working to offer a more convenient shopping experience. • These chains are regaining customers with specialty and difficult to find items. Source: McWilliams, G. 2007. “Not Copying Wal-Mart Pays Off for Grocers.” The Wall Street Journal. June 6, 2007. pg.B1.