Strategy

Formulation

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 Strategic Management

• Strategic Management: the process of

determining an organization’s basic
mission and long-term objectives, then
implementing a plan of action for
pursuing the mission and attaining
objectives

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 Strategic Management

• Growing need for strategic

management related to increasingly
diversified operations in
continuously changing international
environment

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 Benefits of strategic management

• Establish the mission • Establish procedures

• Formulate philosophy • Provide facilities
• Establish policies • Provide capital
• Setting objectives • Set standards
• Developing strategy • Establish programs and
• Plan the organizational plans
structure • Control information
• Provide personnel • Activate people

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 STRATEGIC MANAGEMENT

Types Of Strategies

• Strategy
– a comprehensive plan guiding resource allocation
to achieve long-term organization goals.
• Strategic Intent
– focuses organizational energies on achieving a
compelling goal.
• Competitive Advantage
– operating in successful ways that are difficult to
duplicate

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 TYPES OF STRATEGIES

Corporate Strategies

• Corporate Strategy
– Sets long-term direction for the total enterprise
• Business Strategy
– Identifies how a strategic business unit or division
will compete in its product or service domain
• Functional Strategy
– Guides activities within one specific area of
operations

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 TYPES OF STRATEGIES

Corporate Strategies

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 TYPES OF STRATEGIES

Growth And Diversification Strategies

• Growth Strategy
– Expansion through current operations
• Concentration
– Expansion within an existing business area
• Diversification
– Expansion occurs by entering new business areas
• Vertical Integration
– Expansion by acquiring existing suppliers or
distributors

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 TYPES OF STRATEGIES

Restructuring and Retrenchment Strategies

• Retrenchment
– Changes operations to correct weaknesses
– Liquidation
• An extreme form of retrenchment wherein the business
closes and sells off its assets
• Restructuring
– Reduces the scale or mix of operations
• Downsizing
– Decreases the size of operations
• Divestiture
– Sells off part of the organization to focus on core
businesses

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 Steps to strategic management

• Environmental analysis
• Establish organizational direction
• Strategy formulation
• Strategy implementation
• Strategic control

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 Strategy formulation

• What are the purpose(s) and

objective(s) of the organization?
• Where is the organization presently
going?
• What critical environmental factors
does the organization currently face?
• What can be done to achieve
organizational objectives more
effectively in the future?
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 Formulating business strategies

• Structural analysis of competitive forces

– Threat of new entrants
– Bargaining power of suppliers
– Bargaining power of buyers
– Threat of substitute products
– Rivalry among existing competitors
– Strategic alternatives

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Formulating functional strategies

• Operations strategy

• Financial strategy

• Marketing strategy

• Human resource strategy

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 Strategy implementation

• Commander approach
• Organizational change approach
• Collaborative approach
• Cultural approach

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 Commander approach

• Manager determines “best” strategy

• Manager uses power to see strategy
implemented
• Three conditions must be met
– Manager must have power
– Accurate and timely information is available
– No personal biases should be present

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 Commander approach

• Limitations
– Can reduce employee motivation and
innovation
• Advantages
– Managers focus on strategy formulation
– Works well for younger managers
– Focuses on objective rather than subjective

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 Organizational change approach

• Focuses on the organization

• Behavioral tools are used
• Includes focusing on the organization’s
staffing and structure
• Often more effective than Commander
• Used to implement difficult strategies

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 Organizational change approach

• Limitations
– Managers don’t stay informed of changes
occuring within the environment
– Doesn’t take politics and personal agendas
into account
– Imposes strategies in a “top-down” format
– Can backfire in rapidly changing industries

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 Collaborative approach

• Enlarges the Organizational Change

Approach
• Manager is a coordinator
• Management team members provide
input
• Group wisdom is the goal

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 Collaborative approach

• Advantages
– Increased quality and timeliness of
information
– Improved chances of effective
implementation
• Limitations
– Contributing managers have different
points of view and goals
– Management retains control over the
process
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 Cultural approach

• Includes lower levels of the company

• Breaks down barriers between manage-
ment and workers
• Everyone has input into the formulation
and implementation of strategies
• Works best in high resource firms

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 Cultural approach

• Advantage
– More enthusiastic implementation
• Limitations
– Workers should be informed, intelligent
– Consumes large amounts of time
– Strong company identity becomes handicap
– Can discourage change and innovation

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 TYPES OF STRATEGIES

Global Strategies

• Globalization Strategy
– Adopts standardized products and
advertising for use worldwide
• Multidomestic Strategy
– Customizes advertising and products to
best fit local needs
• Transnational Strategy
– Seeks efficiencies of global operations with
attention to local markets

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 TYPES OF STRATEGIES

E-Business Strategies

• E-Business Strategies
– Focus on Using the Internet for Business
Transactions
• B2B Business Strategies
– use IT and Web portals to vertically link
organizations with members of their supply chains.
• B2C Business Strategies
– use IT and Web portals to vertically link
organizations with members of their customers.

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 STRATEGIC MANAGEMENT

Strategic Management
MODULE GUIDE 12.2

• Strategy formulation begins with the organization’s

mission and objectives.
• SWOT analysis identifies strengths, weaknesses,
opportunities, and threats.
• Porter’s five forces model examines industry
attractiveness.
• Porter’s competitive strategies model examines business
or product strategies.
• Portfolio planning examines strategies across multiple
businesses or products.
• Strategic leadership activates organizations for strategy
implementation.
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 STRATEGIC MANAGEMENT

Strategic Management

• Strategic management
– the process of formulating and
implementing strategies.
• Strategy Formulation
– the process of creating strategies
• Strategy Implementation
– the process of putting strategies into action.

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 STRATEGY FORMULATION

Porter’s Five Forces

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 STRATEGY FORMULATION

Porter’s Five Forces

• Porter’s Competitive Strategies

– Differentiation Strategy
• Offers products and services that are uniquely different
from the competition
– Focused Differentiation Strategy
• offers a unique product to a special market segment.
– Cost Leadership Strategy
• Seeks to operate at lower costs than competitors
– Focused Cost Leadership Strategy
• uses cost leadership and target needs of a special market.

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 STRATEGIC MANAGEMENT

Strategy Implementation

• Strategic Leadership
– the capability to inspire people to
successfully engage in a process of
continuous change, performance
enhancement, and implementation of
organizational strategies.

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 STRATEGIC MANAGEMENT

Strategy Implementation

• ACTION PLAN (Tactics)

– Provides details on how the organization will
make each strategy happen. Organizations
should create fairly detailed action plans
that include timelines for achievement.

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 STRATEGIC MANAGEMENT

Strategy Implementation

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VISION “A world where everyone can benefit from the power of automobiles”.

To create affordable automobiles at a global scale in an ethical way”.

MISSION

1. “To sell 30,000 automobiles within India over the 20XX calendar year.”
OBJECTIVES

2. ----------------------------

1. “Creating a franchise dealer network in urban India” and “Launching a community sharing and
finance scheme in rural India”.
STRATEGIES

2. ------------------------
3. -------------------------
4. -------------------------

1.“Hire strategic leader, structure franchisee legal

terms and market opportunity”
2.------------------------------
TACTICS

3.------------------------------
4.------------------------------
5. -----------------------------
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VISION
MISSION

1. Be recognized by the industry as the leading innovator in the space of on-

OBJECTIVES

bike health tracking technology.“

1. “Differentiation:
We will succeed by creating bikes with an innovative key component that our competitors can't
STRATEGIES

immediately replicate, which will allow us to charge a price premium to customers.

1.“Tactic 1: Launch a new Bluetooth-enabled module that attaches to the bike's spokes and sends
performance data to a linked smartphone app.
TACTICS

Tactic 2: Send out free bikes to popular tech blogs and invite them to write gear reviews.

Tactic 3: Devise a digital marketing strategy that utilizes TikTok and Instagram to expand market share
and drive engagement among Gen Zers. 8-35
 STRATEGIC MANAGEMENT

Strategy Implementation

THANK YOU AND

GOD BLESS

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