CHAPTER 1

Basic Concepts
of Strategic
Management
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN

J. DAVID HUNGER

1-1

Basic Concepts of Strategic Management

Globalization
Internationalization of markets and corporations
Global (worldwide) markets rather than national
markets

Electronic Commerce
Use of the Internet to conduct business
transactions
Basis for competition on a more strategic level rather
than traditional focus on product features and costs

1-2

Basic Concepts of Strategic Management

Electronic Commerce -- Trends

Forcing company transformation

Market access & branding changing
disintermediation of traditional
distribution channels
Balance of power shift to consumer
Competition changing

1-3

Basic Concepts of Strategic Management

Electronic Commerce -- Trends

Pace of business increasing

Internet purchasing beyond traditional
boundaries
Knowledge key asset source of
competitive advantage

1-4

Strategic Management Defined

Set of managerial decisions and actions

that determines the long-run performance
of a firm.

1-5

Basic Concepts of Strategic Management

4 Phases of Strategic Management

1.
2.
3.
4.

Basic financial planning

Forecast-based planning
Externally-oriented planning
Strategic management

1-6

Basic Concepts of Strategic Management

Highly Rated Benefits

Clearer sense of strategic vision

Sharper focus on strategic importance
Improved understanding of changing
environment

1-7

Basic Concepts of Strategic Management

Not Always a Formal Process

Where is the organization now? (not

where do we hope it is)
If no changes are made, where will the
organization be in 1,2,5 or 10 years?
What specific actions should
management undertake?
What are the risks and payoffs?
1-8

Basic Concepts of Strategic Management

Basic Elements of the Strategic

Management Process

1-9

Environmental Scanning Defined

Monitoring, evaluation, and disseminating

information from external and internal
environments to key people in the firm

1-10

Basic Concepts of Strategic Management

Environmental
Variables

1-11

Environmental Scanning

SWOT Analysis

Strengths Weaknesses

Opportunities - Threats

1-12

Strategy Formulation

Development of long-range plans for

effective management of opportunities
and threats in light of corporate
strengths and weaknesses

1-13

Strategy Formulation

Mission Statement

Purpose/reason for organization

Promotes shared expectations
Communicates public image
Who we are; what we do; what we
aspire to

1-14

Organizational Adaptation

Organization fit with environment

Theory of population ecology

Institution theory
Strategic choice perspective
Organizational learning theory

1-15

Organizational Adaptation

Strategic flexibility

Demands long-term commitment to

development of critical resources

Demands firm become a learning

organization

1-16

Learning Organizations

An organization skilled at creating,

acquiring, and transferring
knowledge and at modifying its
behavior to reflect new knowledge
and insights

1-17

Learning Organizations

4 Chief Activities

Systematic problem solving

New approach experimentation
Learning from experiences
Intra-organization knowledge transfer

1-18

Basic Concepts of Strategic Management

Hierarchy of
Strategy

1-19

Goals & Objectives

Corporate Goals/Objectives
Profitability (net profit)
Growth
Resource utilization (ROE, ROI)
Market leadership

1-20

Basic Concepts of Strategic Management

3 Types of Strategy
Corporate strategy
Business strategy
Functional strategy

1-21

Basic Concepts of Strategic Management

Corporate Strategy
Stability
Growth
Retrenchment

1-22

Basic Concepts of Strategic Management

Business Strategy
Competitive strategies
Cooperative strategies

1-23

Basic Concepts of Strategic Management

Functional Strategy
Technological leadership
Technological followership

1-24

Basic Concepts of Strategic Management

Strategic
Decision-Making
Process

1-25

Strategic Decision Making

Strategic Decisions
Rare
Consequential
Directive

1-26

Strategic Decision Making

Mintzbergs Modes
Entrepreneurial mode
Adaptive mode
Planning mode
Logical incrementalism

1-27

Hambrick and Fredrickson Good Strategy

5 Elements of Good Strategy

1.
2.
3.
4.
5.

Arenas
Vehicles
Differentiators
Staging
Economic logic

1-28

CHAPTER 2
Corporate Governance

1-29

CHAPTER 2
Corporate
Governance

STRATEGIC MANAGEMENT & BUSINESS POLICY

10TH EDITION
THOMAS L. WHEELEN

J. DAVID HUNGER

1-30

Corporate Governance

1-31

Corporate Governance

The relationship among the board of

directors, top management, and
shareholders determining the direction
and performance of the corporation

1-32

Corporate Governance

Role of Board
Monitor
Evaluate and influence
Initiate and determine

1-33

Board of Directors Continuum

1-34

Board of Directors

Members -Inside directors

management directors
Officers or execs employed by the firm

Outside directors
non-management directors
Execs of other firms not employed by the
boards corporation

1-35

Agency Theory

Agency Problem
Objectives of owners & agents in conflict
Difficult for owners to verify agent performance

Risk Sharing Problem

Owners & agents risk assessment in conflict

1-36

Stewardship Theory

Executives more motivated to act in best

interest of the corporation than their own
self-interests. Theory that over time, senior
executives tend to view corporation as
extension of selves.

1-37

Board of Directors

When Outsiders can be considered Insiders

Affiliated Directors
Retired Directors
Family Directors

1-38

Board of Directors

Codetermination
The inclusion of a corporations employees on its
board of directors

1-39

Board of Directors

Interlocking Directorates
Direct Interlocking
Indirect Interlocking

1-40

Board of Directors

Nominations & Elections

Traditional Approach
CEO invitation to membership
Shareholders approval in annual proxy statement
All nominees usually elected

1-41

Board of Directors

Nominations & Elections

Staggered Board Approach
Staggered terms of service/election

1-42

Board of Directors

Sarbanes-Oxley
Code of Ethics
Audit, Nominating, and Compensation
Committees all outside directors

1-43

Board of Directors

Organization of the Board

Size
Charter & Bylaws Determination

1-44

Board of Directors

Corporate Governance
Review & shaping of strategy
Pressure for corporate performance
Demand for executive stock ownership
Outside directors increasing
Impact of Sarbanes-Oxley

1-45

Board of Directors

Transformational leaders
Change agents through vision for change

1-46

Board of Directors

Successful CEOs
Strategic vision
Passion for the company
Strong communication
charisma

1-47

Board of Directors

Executive Leadership
Strategic vision
Role model

1-48

Board of Directors

Executive Leadership
Communication of performance standards
Demonstrates confidence in abilities of followers

1-49

Strategic Management Process

Strategic Planning Staff

Supports top management & business units in
the strategic planning process

1-50

Strategic Management Process

Strategic Planning Staff

Identify & analyze company-wide strategic issues
Generate strategic alternatives

1-51

Strategic Management Process

Strategic Planning Staff

Facilitate business units in coordinating activities
related to strategic planning process

1-52

CHAPTER 3
Ethics & Social
Responsibility

1-53

CHAPTER 3
Ethics & Social
Responsibility

STRATEGIC MANAGEMENT & BUSINESS POLICY

10TH EDITION
THOMAS L. WHEELEN

J. DAVID HUNGER

1-54

Ethics & Social Responsibility

1-55

Corporate Governance

Broader responsibility -Private corporations have responsibility to

society that extend beyond making a profit

1-56

Social Responsibility

Milton Friedman
There is one and only one social
responsibility of businessto use its
resources and engage in activities designed
to increase its profits so long as it stays
within the rules of the game, which is to say,
engages in open and free competition
without deception or fraud.

1-57

Corporate Governance

Carrolls 4 Responsibilities
Economic
Legal
Ethical
Discretionary

1-58

Carrolls 4 Responsibilities

1-59

Corporate Stakeholders

Affect or are affected by the

achievement of the corporations
objectives

1-60

Corporate Stakeholders

Stakeholder Analysis
Primary stakeholder
Sufficient bargaining power to affect outcomes

Secondary stakeholder
Indirect stake but are affected by corporations actions

Stakeholder Input
Determine whether input is necessary

1-61

Ethical Behavior

business ethics
Argument that there is no such thing it is an
oxymoron

1-62

Ethical Decision Making

Corporate practices -Massive write-downs and restatements of profit

Misclassification of expenses as capital
expenditures
Pirating corporate assets for personal gain

1-63

Ethical Decision Making

Recent Survey Results -70% distrust business executives

Enron
WorldCom

1-64

Reasons for Unethical Behavior

Provocative Question -Why are businesspeople perceived to be

acting unethically?

1-65

Reasons for Unethical Behavior

Perceptions caused by -Not aware of impropriety

Cultural norms and values vary
Governance systems based on rule or
relationships
Differences in values between
businesspeople and key stakeholders

1-66

Reasons for Unethical Behavior

Allport-Vernon-Lindzey Study of Values -Aesthetic

Economic
Political
Religious
Social
Theoretical

1-67

Reasons for Unethical Behavior

Most common reasons for bending rules -Organizational performance required it

Ambiguous or out of date rules
Pressure from others everyone else does it

1-68

Moral Relativism

Morality is relative to some personal, social,

or cultural standard and there is no method
for deciding whether one decision is better
than another.

1-69

Kohlbergs Levels of Moral Development

1. Preconventional level
Characterized by a concern for self
Personal interest
Avoidance of punishment

1-70

Kohlbergs Levels of Moral Development

2. Conventional level
Characterized consideration of societys values
External code of conduct

1-71

Kohlbergs Levels of Moral Development

3. Principled level
Characterized by adherence to internal moral
code
Universal values or principles

1-72

Encouraging Ethical Behavior

Codes of Ethics
Specifies how an organization expects its
employees to behave on the job.

1-73

Encouraging Ethical Behavior

Guidelines for Ethical Behavior

Ethics
Morality
Law

1-74

Encouraging Ethical Behavior

Approaches to Ethical Behavior

Utilitarian
Judged by consequences

Individual Rights
Fundamental rights in all decisions

Justice
Distribution in equitable fashion

1-75

Encouraging Ethical Behavior

Approaches to Ethical Behavior

Categorical imperative
golden rule
Means - Ends

1-76

Strategy Bits

192 U.S. companies surveyed -92% monitored employees use of e-mail/Internet

26% monitored employees electronic activities all
the time
Almost none had checks in place to protect
employees privacy

1-77

CHAPTER 4
Environmental
Scanning and
Industry Analysis

1-78

CHAPTER 4
Environmental
Scanning and
Industry Analysis
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN

J. DAVID HUNGER

1-79

Environmental Scanning

Societal environment -Economic forces

Technological forces
Political-legal forces
Sociocultural forces

1-80

Societal Environment

Economic Forces -Regulate exchange of materials, money,

energy and information

1-81

Societal Environment

Technological Forces -Generate problem-solving inventions

1-82

Societal Environment

Political-legal Forces -Allocate power; provide laws and regulations

1-83

Societal Environment

Sociocultural Forces -Regulate values, mores, and customs of

society

1-84

Task Environment

Task environment -Elements or groups that directly affect a

corporation and are affected by it

1-85

Task Environment

Industry Analysis -In-depth examination of key factors within a

corporations task environment

1-86

Variables in Societal Environment

1-87

Demographic Trends

1-88

Transformational Sociocultural Trends

8 Current Trends
Increasing environmental awareness
Growing health consciousness
Expanding seniors market
Impact of the Generation Y boomlet
Declining mass market
Changing pace and location of life
Changing household composition
Increasing diversity of workforce & market

1-89

International Societal Environments

1-90

Scanning the Task Environment

1-91

Ethical Behavior

business ethics
Argument that there is no such thing it is an
oxymoron

1-92

Ethical Decision Making

Corporate practices -Massive write-downs and restatements of profit

Misclassification of expenses as capital
expenditures
Pirating corporate assets for personal gain

1-93

External Strategic Factors

Strategic myopia -Willingness to reject unfamiliar as well as

negative information

1-94

Issues Priority Matrix

1-95

Analyzing the Task Environment

1-96

Porters Approach to Industry Analysis

Threat of New Entrants

Economies of scale
Product differentiation
Capital requirements
Switching costs
Access to distribution channels
Cost disadvantages
Government policy

1-97

Porters Approach to Industry Analysis

Rivalry Among Existing Firms

Number of competitors
Rate of industry growth
Product or service characteristics
Amount of fixed costs
Capacity
Height of exit barriers
Diversity of rivals

1-98

Porters Approach to Industry Analysis

Threat of Substitute Products or Services

Bargaining Power of Buyers
Bargaining Power of Suppliers
Relative Power of Other Stakeholders

1-99

Industry Evolution

Fragmented Industry
No dominant industry

1-100

Industry Evolution

Consolidated Industry
Dominated by a few large firms

1-101

International Risk Assessment

Continuum of International Industries

1-102

Strategic Groups

1-103

Strategic Types

General Types
Defenders
Prospectors
Analyzers
Reactors

1-104

Competitive Intelligence

Called business intelligence

Gathering information on a companys

competitors

1-105

Forecasting

Forecasting Techniques -Extrapolation

Brainstorming
Expert opinion
Delphi technique
Statistical modeling
Scenario writing

1-106

Synthesis of External Factors -- EFAS

1-107

CHAPTER 5
Internal
Scanning:
Organizational
Analysis

1-108

1-109

CHAPTER 5
Internal
Scanning:
Organizational
Analysis
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN

J. DAVID HUNGER

1-110

Resource-Based Approach to Organizational Analysis

Internal strategic factors -Critical strengths and weaknesses that are

likely to determine if the firm will be able to take
advantage of opportunities while avoiding
threats

1-111

Resource-Based Approach to Organizational Analysis

Resources
Capabilities
Competency
Core competency
Distinctive competency
1-112

Core and Distinctive Competencies

VRIO Framework -Value

Rareness
Imitability
Organization

1-113

Resource-Based Approach to Organizational Analysis

5-Step Approach Strategy Analysis -1.

2.
3.
4.
5.

Identify and classify resources

Combine strengths into capabilities
Appraise profit potential of capabilities
Select strategy that best exploits
Identify resource gaps invest in weaknesses

1-114

Continuum of Sustainability

1-115

Sustainability of Advantage

Durability -Rate at which a firms underlying resources

and capabilities depreciate or become obsolete

1-116

Sustainability of Advantage

Imitability -Rate at which a firms underlying resources

and capabilities can be duplicated by others

1-117

Sustainability of Advantage

Core Competency can be imitated -Transparency

Transferability
Replicability

1-118

Business Models

Companys method for making money in

the current business environment.

1-119

Business Models

Types of Models -Customer Solutions Model

Profit Pyramid Model
Multi-Component System/Installed Base Model
Advertising Model
Switchboard Model

1-120

Business Models

Types of Models -Time Model

Efficiency Model
Blockbuster Model
Profit Multiplier Model
Entrepreneurial Model
De Facto Standard Model

1-121

Value-Chain Analysis

Linked set of value-creating activities

beginning with basic raw material and
ending with distributors getting final
goods into hands of customers

1-122

Value-Chain Analysis

Typical Value Chain for

a Manufactured Product

1-123

Corporate Value-Chain Analysis

Primary activities
Support activities

1-124

Corporations Value Chain

1-125

Scanning Functional Resources & Capabilities

Basic Organizational Structures -Simple structure

Functional structure
Divisional structure
Strategic business units (SBUs)
Conglomerate structure

1-126

Basic Organizational Structures

1-127

Corporate Culture

Collection of beliefs, expectations, and

values learned and shared by a
corporations members and
transmitted from one generation of
employees to another

1-128

Strategic Marketing Issues

Market Position & Segmentation

Marketing Mix
Product Life Cycle
Brand & Corporate Reputation

1-129

Product Life Cycle

1-130

Strategic Financial Issues

Financial leverage
Capital budgeting

1-131

Strategic Research & Development Issues

R&D Intensity
Technological Competence
Technology Transfer

1-132

Technological Discontinuity

1-133

Strategic Human Resource Management Issues

HRM
Increasing use of teams
Union relations
Temporary workers
Quality of work life
Human diversity

1-134

Internal Factor Analysis Summary Table

1-135

CHAPTER 6
Strategy Formulation:
Situation Analysis &
Business Strategy

1-136

CHAPTER 6
Strategy Formulation:
Situation Analysis &
Business Strategy
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN

J. DAVID HUNGER

1-137

Situational Analysis

Strategy formulation -Strategic planning or long-range planning

Develops mission, objectives, strategies, policies

1-138

Situational Analysis

--process of finding a strategic fit

between external opportunities and

internal strengths while working around
external threats and internal weaknesses

1-139

IFAS Maytag as Example

1-140

EFAS Maytag as Example

1-141

SFAS Matrix

1-142

Situational Analysis

Niche -Need in the marketplace that is currently

unsatisfied

1-143

Situational Analysis

Corporate Goal -Find propitious niche

Strategic window

1-144

Situational Analysis

SWOT -Internal
Strengths/Weaknesses

External
Opportunities/Threats

1-145

TOWS Matrix

1-146

Business Strategy

Focuses on improving competitive

position of companys products or
services within the specific industry or
market segment

1-147

Porters Competitive Strategies

Competitive Strategy -Low cost

Differentiation
Direct competition
Focus on niche

1-148

Porters Competitive Strategies

Generic Competitive Strategies -Lower Cost strategy

Greater efficiencies than competitors

Differentiation strategy
Unique/superior value, quality, features, service

1-149

Porters Competitive Strategies

Competitive Advantage -Determined by Competitive Scope

Breadth of the target market

1-150

Porters Competitive Strategies

1-151

Porters Competitive Strategies

Cost Leadership -Low-cost competitive strategy

Broad mass market
Efficient-scale facilities
Cost reductions
Cost minimization

1-152

Porters Competitive Strategies

Differentiation
Broad mass market
Unique product/service
Premiums charged
Less price sensitivity

1-153

Porters Competitive Strategies

Cost-Focus
Low-cost competitive strategy
Focus on market segment
Niche focused
Cost advantage in market segment

1-154

Porters Competitive Strategies

Differentiation Focus
Specific group or geographic market focus
Differentiation in target market
Special needs of narrow target market

1-155

Porters Competitive Strategies

Stuck in the middle

No competitive advantage
Below-average performance

1-156

Risks of Generic Strategies

Risks of Cost Leadership

Risks
of CostisLeadership
Cost
leadership
not
Cost
leadership
is
not
sustained:
sustained:
Competitors imitate.

Competitors
imitate.
Technology
changes.
Technology
changes.
Other
bases for
cost
leadership
Other bases
for
erode. cost
leadership
erode.
Proximity
in differentiation
is
Proximity
in
differentiation
is
lost.
lost.focusers achieve even
Cost
Costcost
focusers
achieve even
lower
in segments.
lower cost in segments.

Risks of Differentiation
Risks of Differentiation
Differentiation
is not
Differentiation
is not
sustained:
sustained:
Competitors imitate.

Competitors
imitate.
Bases
for differentiation
become
Bases less
for differentiation
important to
become
less
important to
buyers.
Costbuyers.
proximity is lost.
Cost
proximity
is lost.
Differentiation
focusers
Differentiation
focusers
achieve
even greater
achieve eveningreater
differentiation
segments.
differentiation in segments.

Risks of Focus
Risks
ofstrategy
Focus is
The
focus
The focus strategy is
imitated:
imitated:
The
target segment becomes
The
targetunattractive:
segment becomes
structurally
unattractive:
structurally
Structure erodes.
Structure
erodes.
Demand
disappears.
Demand
disappears.
Broadly
targeted
competitors
Broadly
targeted
competitors
overwhelm the segment:
the segment:
overwhelm
The segments
differences
The segments
from other
differences
from other
segments narrow.
segments
narrow.
The
advantages
of a
broad
The advantages
of a
line increase.
linesubsegment
increase.
Newbroad
focusers
New
focusers subsegment
the
industry.
the industry.

1-157

8 Dimensions of Quality

1-158

Competitive Strategy

Industry Structure -Fragmented Industry

Consolidated Industry

1-159

Competitive Tactics

Timing Tactics -First mover

Late movers

1-160

Competitive Tactics

Market Location Tactics -Frontal Assault

Flanking Maneuver
Bypass Attack
Encirclement
Guerrilla Warfare

1-161

Competitive Tactics

Defensive Tactics -Raise structural barriers

Increase expected retaliation
Lower the inducement for attack

1-162

Cooperative Strategies

Collusion
Strategic Alliances
Mutual service consortia
Joint ventures
Licensing arrangements
Value-chain partnerships

1-163

CHAPTER 7 Strategy
Formulation: Corporate
Strategy

1-164

CHAPTER 7 Strategy
Formulation: Corporate
Strategy

STRATEGIC MANAGEMENT & BUSINESS POLICY

10TH EDITION
THOMAS L. WHEELEN

J. DAVID HUNGER

1-165

Corporate Strategy

3 Key Issues
Firms directional strategy
Firms portfolio strategy
Firms parenting strategy

1-166

Corporate Directional Strategies

1-167

Corporate Strategy

Directional Strategy
Orientation toward growth
Expansion, contraction, status quo
Concentration or diversification
Internal development or acquisitions, mergers, or
alliances

1-168

Corporate Strategy

Directional Strategy
3 Grand Strategies
Growth strategies
Stability strategies
Retrenchment strategies

1-169

Corporate Strategy

Growth Strategies -External mechanisms

Mergers
Acquisitions
Strategic alliances

1-170

Corporate Strategy

Growth Strategies -2 Basic forms

Concentration
Diversification

1-171

Corporate Strategy

Basic Concentration Strategies -Vertical growth

Horizontal growth

1-172

Corporate Strategy

Vertical Growth -Vertical integration

Full integration
Taper integration
Quasi-integration
Long-term contract

1-173

Corporate Strategy

Vertical Growth -Backward integration

Forward integration

1-174

Corporate Strategy

Concentration -Horizontal Growth

Horizontal integration

1-175

Corporate Strategy

Basic Diversification Strategies -Concentric Diversification

Conglomerate Diversification

1-176

Corporate Strategy

Concentric Diversification -Growth into related industry

Search for synergies

1-177

Corporate Strategy

Conglomerate diversification -Growth into unrelated industry

Concern with financial considerations

1-178

Corporate Strategy

International Entry Options -Exporting

Licensing
Franchising
Joint Ventures
Acquisitions
Green-Field Development

1-179

Corporate Strategy

International Entry Options -Production Sharing

Turnkey Operation
BOT Concept (Build, Operate, Transfer)
Management Contracts

1-180

Corporate Strategy

Stability Strategies -Pause/proceed with caution

No change
Profit strategies

1-181

Corporate Strategy

Retrenchment Strategies -Turnaround

Captive Company Strategy
Selling out
Bankruptcy
Liquidation

1-182

Corporate Strategy

Portfolio Analysis -Resource commitment on best products to

ensure continued success
Resource commitment on new costly products
high risk

1-183

BCG Matrix (Portfolio Analysis)

1-184

GE Business Screen (Portfolio Analysis)

High

Winners
A

Winners
B

C
Question
Marks

Industry Attractiveness

D
Winners
E
Medium

Average
Businesses
F
Losers

Losers
G
Low

Profit
Producers
Strong

Losers
Average

Weak

Business Strength/Competitive Position

1-185

Corporate Strategy

Corporate Parenting Strategy -Strategic factors

performance improvement
Analyze fit

1-186

CHAPTER 8 Strategy
Formulation: Functional
Strategy & Strategic
Choice

1-187

CHAPTER 8 Strategy
Formulation: Functional
Strategy & Strategic
Choice
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN

J. DAVID HUNGER

1-188

Functional Strategy

The approach a functional area takes to

achieve corporate and business unit
objectives and strategies by maximizing
resource productivity

1-189

Functional Strategy

Marketing Strategy
Pricing
Selling
Distribution

1-190

Functional Strategy

Marketing Strategy
Product development
Line extension

1-191

Functional Strategy

Marketing Strategy
Advertising and promotion
Push strategy
Pull strategy

1-192

Functional Strategy

Marketing Strategy
Pricing
Skim pricing
Penetration pricing
Dynamic pricing

1-193

Functional Strategy

Financial Strategy
Leveraged buyout
Reversed stock split
Tracking stock

1-194

Functional Strategy

R&D Strategy
Technological leader
Technological follower
Open innovation

1-195

Functional Strategy

Operations Strategy
Job shop
Connected line batch flow
Flexible manufacturing systems
Dedicated transfer lines
Mass production
Continuous improvement system
Modular manufacturing

1-196

Functional Strategy

Purchasing Strategy
Multiple sourcing
Sole sourcing
Just-in-time (JIT)
Parallel sourcing

1-197

Functional Strategy

Logistics Strategy
Centralization
Outsourcing
Internet

1-198

Functional Strategy

HRM Strategy
360 degree appraisal

1-199

Functional Strategy

Outsourcing errors
Activities that should not be outsourced
Wrong vendor selection
Writing poor contract
Overlooking personnel issues
Hidden costs of outsourcing
Failing to plan exit strategy

1-200

Proposed Outsourcing Matrix

1-201

Functional Strategy

Strategies to Avoid
3 Follow the leader
Hit another home run
Arms race
Do everything
Losing hand

1-202

Corporate Strategy

Growth Strategies -External mechanisms

Mergers
Acquisitions
Strategic alliances

1-203

Constructing Corporate Scenarios

1-204

Functional Strategy

Subjective Factors Affecting Decisions -Managements attitude toward risk

Pressures from stakeholders
Pressures from corporate culture
Needs and desires of key managers

1-205

Stakeholder Priority Matrix

1-206

Strategic Choice

Avoiding the Consensus Trap -Devils Advocate

Dialectical Inquiry

1-207

Strategic Choice

Evaluation of Strategic Alternatives -Mutual exclusivity

Success
Completeness
Internal consistency

1-208

CHAPTER 9 Strategy
Implementation:
Organizing for Action

1-209

CHAPTER 9 Strategy
Implementation:
Organizing for Action

STRATEGIC MANAGEMENT & BUSINESS POLICY

10TH EDITION
THOMAS L. WHEELEN

J. DAVID HUNGER

1-210

Strategy Implementation

--Sum total of activities & choices

required for strategic plan execution
--Strategy implementation through
programs, budgets, and procedures

1-211

Strategy Implementation

Key Implementation Questions

Who carries out strategic plan?
What needs doing for alignment w/ strategy?
How is work coordinated?

1-212

Strategy Implementation

Programs
Action oriented
Matrix of change
Feasibility
Sequence of execution
Location
Pace & nature of change
Stakeholder evaluations

1-213

The Matrix of Change

1-214

Strategy Implementation

Achieving Synergy
Shared know-how
Coordinated strategies
Shared tangible resources

1-215

Strategy Implementation

Achieving Synergy
Economies of scale or scope
Pooled negotiating power
New business creation

1-216

Strategy Implementation

Structure follows strategy

New strategy is created
New administrative problems emerge
Economic performance declines
New appropriate structure is invented
Profit returns to previous level

1-217

Strategy Implementation

Stages of Corporate Development

Stage I: Simple structure
Stage II: Functional structure
Stage III: Divisional structure
Stage IV: Beyond SBUs

1-218

Strategy Implementation

Blocks to Changing Stages

Loyalty to comrades
Task oriented
Single-mindedness
Working in isolation

1-219

Organizational Life Cycle

1-220

Changing Structural Characteristics of Modern Organizations

1-221

Strategy Implementation

Advanced Types of Organizational

Structures
Matrix
Temporary cross-functional task forces
Product/brand management
Mature matrix

1-222

Strategy Implementation

Advanced Types of Organizational

Structures
Network structure (virtual organization)
Cellular organization

1-223

Network Structure

1-224

Strategy Implementation

Six Sigma
Define
Measure
Analyze
Improve
Establish

1-225

Strategy Implementation

Job design to implement strategy

Job enlargement
Job rotation
Job enrichment
Job characteristics model

1-226

Strategy Implementation

International Issues
MNCs
International Strategic Alliances

1-227

Strategy Implementation

International Development Stages

Domestic company
Domestic company w/export division
Domestic company w/intl division
MNC w/multidomestic emphasis
MNC w/global emphasis

1-228

Strategy Implementation

Centralization vs. Decentralization

Product-group structure
Geographic-area structure

1-229

Geographic Area Structure

1-230

1-231