Strategic Management
Spring 2007
Strategic Management
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Strategic Management
• The larger vision that guides the activities of managers
and other employees in an organization
• The set of decisions and actions used to formulate and
implement strategies that will provide a competitively
superior fit between the organization and its environment
so as to achieve organizational goals
• The process of establishing and sustaining competitive
advantage
Spring 2007
Strategic Management
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Competitive Advantage
• What is it?
• An edge over your rivals
• Traditional sources
•
•
•
•
Product and process technology
Protected and regulated markets
Access to financial resources
Economies of scale
• New source
• People !!!
Spring 2007
Strategic Management
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Levels of Strategy
• Grand strategy
• Where are we going?
• Corporate
• What business are we in?
• Business-level
• How do we compete?
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Strategic Management
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The Strategic Management
Process
Analyze
environment
Identify OT
Identify mission
Formulate
and strategies
strategies
Analyze
organization
Identify SW
Implement
strategies
Feedback
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Strategic Management
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SWOT Analysis
Strength
Opportunity
Where
are we
going?
Weakness
Spring 2007
Threat
Strategic Management
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Grand Strategies
• Growth
• Stability
• Retrenchment
Spring 2007
Strategic Management
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WalMart…Growth (Number of Stores)
6,141
7,000
6,000
5,000
4,000
3,000
2,000
24
1,000
0
1968
Spring 2007
1973
1978
1983
Strategic Management
1988
1993
1998
2003
8
Paths to Growth: WalMart
• Direction of growth
• New stores in existing markets
• Enter new markets
• New product lines
• Means of growth
• Greenfield
• Acquisition
Spring 2007
Strategic Management
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WalMart…International Expansion and Acquisitions
Mexico
1991
Puerto Rico
1992
2003 (A)
Supermercados Amigo
Canada
1994 (A)
Woolco
Argentina
1995
Brazil
1995
China
1996
Germany
1997-8 (A)
Wertkauf, Interspar *
Korea
1998 (A)
Makro, Kim’s Club *
U.K.
1999 (A)
Asda
Japan
2002 (A)
Seiyu (37% ownership) **
*Bailed out
** Not profitable
Spring 2007
Strategic Management
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Earnings Before Taxes ($M)
General Electric – Overall Stability
$25,000
$20,000
$15,000
$10,000
$5,000
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
$0
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Strategic Management
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19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
Earnings Before Taxes ($M)
Kmart -- Decline
Spring 2007
$2,000
$0
-$2,000
-$4,000
Strategic Management
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Note that text combines global and
home replication strategies
Global Strategy: Four Choices
High
Cost and
efficiency
pressures
Low
Low
Spring 2007
Global
Strategy
Transnational
Strategy
Home
Replication
Strategy
Multi domestic
Strategy
High
Pressures for local responsiveness
Strategic Management
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Corporate Level Strategy
• Strategic business units
• Diversification
•
•
•
•
Single business
Diversified
Vertical Integration
Conglomerate
• BCG Matrix
Spring 2007
Strategic Management
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Dell Products
• PowerEdge servers
• PowerVault and Dell |
EMC storage
products
• Services
• PowerConnect
switches
• OptiPlex desktops
• Latitude notebooks
Spring 2007
• Dell Precision
workstations
• Inspiron notebooks
• Dimension desktops
• Dell monitors
• Dell printers
• Axim handhelds
• Software and Peripherals
Strategic Management
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ThyssenKrupp
Spring 2007
Strategic Management
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Alcoa at a Glance
• Alcoa is the world’s leading producer of primary aluminum,
fabricated aluminum, and alumina and is active in all major aspects of
the industry.
• Alcoa serves the aerospace, automotive, packaging, building and
construction, commercial transportation, and industrial markets,
bringing design, engineering, production, and other capabilities of
Alcoa’s businesses as a single solution to customers.
• In addition to aluminum products and components, Alcoa also
markets consumer brands including Reynolds Wrap® aluminum
foil, Alcoa® wheels, and Baco® household wraps. Among its other
businesses are vinyl siding, closures, precision castings, and electrical
distribution systems for cars and trucks.
Spring 2007
Strategic Management
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Sara Lee
Headquarters
Food and
Beverage
Spring 2007
Intimates and
Underwear
Strategic Management
Household
Products
18
Another Conglomerate
General Electric
Aircraft Engines
Commercial Finance
Consumer Finance
Consumer Products
Equipment Management
Industrial Systems
Insurance
Medical Systems
NBC
GE Plastics
GE Power Systems
Specialty Materials
Transportation Systems
Spring 2007
Strategic Management
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BCG Matrix
Stars
Market Growth
High
Low
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Problem
Children
Cash
Cows
High
Dogs
Market Share Low
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What Business Are We In?
1.
2.
3.
4.
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What are our core competencies?
Who are our customers?
Economies of scale
Economies of scope
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Business-Level Strategy
• Porter’s Five Forces
• Generic strategies
• Value chain
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Strategic Management
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Porter’s Five Forces
•
•
•
•
•
Spring 2007
Bargaining power of suppliers
Bargaining power of buyers
Threat of substitutes
Potential new entrants to the market
Rivalry among current competitors
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Porter’s Five Generic Strategies
•
•
•
•
•
Spring 2007
Low-cost leadership
Broad differentiation
Best-cost provider
Focused or market niche / cost
Focused or market niche / differentiation
Strategic Management
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Value Chain Analysis
• How are we creating value for
customers?
• Where can costs be reduced?
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Strategic Management
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The Value Chain
Raw
Materials
Operations
Distribution
Sales and
Marketing
Support
Activities
Spring 2007
Customer
Service
Product R &D, Technology, Systems Development
Human Resource Management
General Administration
Strategic Management
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Strategy Implementation
•
•
•
•
Spring 2007
Leadership
Structure and design
Information and control systems
Human resources
Strategic Management
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