Management by Stephen P.

Robbins & Mary Coulter (11th Ed)

▪ Strategic management is what

managers do to develop the
organization’s strategies.
▪ The decisions and actions that
determine the long-run
performance of an organization.

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 Business Model is a strategic design for how a company intends
to profit from its strategies, work processes, and work activities.

Whether customers will

Focuses on
two things
value what the company
is providing

Whether the company

can make any money
doing that

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▪ It results in higher organizational performance.
▪ It requires that managers examine and adapt to business environment
changes.
▪ It coordinates diverse organizational units, helping them focus on
organizational goals.

The strategic management process is a six-step process –

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Step 1: Identifying the Organization’s Current Mission, Goals, and
Strategies

Components of a mission statement

Customers
Markets
Concern for survival, growth,
and profitability
Philosophy

Concern for public image

Products or services
Technology
Self-concept
Concern for employees
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Step 2: Doing an External Analysis

▪ In an external analysis, managers should examine the economic, demographic,

political/legal, sociocultural, technological, and global components to see the
trends and changes.

▪ Managers need to pinpoint opportunities that the

organization can exploit and threats that it must
counteract or buffer against.
▪ Opportunities are positive trends in the external
environment; threats are negative trends.

Step 3: Doing an Internal Analysis

▪ Internal analysis provides important information about an organization’s

specific resources and capabilities.
▪ After completing an internal analysis, managers should be able to identify
organizational strengths and weaknesses.

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A SWOT analysis is an incredibly simple, yet powerful tool to
help you develop your business strategy, whether you’re
building a startup or guiding an existing company.

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✓ Pricing
✓ Long wait time
✓ Brand image
and response time
✓ Location
✓ Limited product
✓ Food varieties
mix
✓ Advertising
✓ Less variation in
techniques
platter item
✓ Decor, ambiance,
✓ Less visibility
& environment

✓ Diversification/ ✓ Easily imitable

product mix business
widening ✓ Healthy lifestyles
✓ Introducing kid’s trend
zone

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 ✓ International ✓ Introducing new
brand image outlets
✓ Food quality & ✓ Promotional offers
unique menu and giveaway
(combos & kiddie contests
meals) ✓ Imported ✓ Competitive
✓ Kid amusement ✓ High price ingredients market
system ✓ Not so out of ✓ Availability &
the box pricing of
policies ingredients
✓ Taste of the ✓ Changing
burger consumer
preferences

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Step 4: Formulating Strategies

Step 5: Implementing Strategies

Step 6: Evaluating Results

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An organizational strategy that determines what businesses a

company is in or wants to be in, and what it wants to do with
those businesses.

▪ It’s based on the mission and goals of the organization and the roles that
each business unit of the organization will play.
▪ The other part of corporate strategy is when top managers decide what to do
with those businesses: grow them, keep them the same, or renew them.

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 “To be the world’s premier consumer products company
focused on convenient foods and beverages.”

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“We will provide branded products and services of superior quality

and value that improve the lives of the world's consumers, now
and for generations to come.”
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 Growth Strategy
A corporate strategy that’s used Stability Strategy
when an organization wants to A corporate strategy in
expand the number of markets which an organization
served or products offered, either continues to do what it is
through its current business(es) or currently doing.
through new business(es).

Renewal Strategy
A corporate strategy designed
to address declining
performance by examining of
organizational weaknesses.
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Growth Strategy
▪ Concentration – Focusing on a primary line of business and increasing the
number of products offered or markets served.

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Growth Strategy
▪ Vertical Integration –
Backward Vertical Integration: attempting to gain control of inputs (become
a self-supplier).

Forward Vertical Integration: attempting to gain control of output through

control of the distribution channel or provide customer service activities
(eliminating intermediaries).

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Backward Vertical Integration Forward Vertical Integration

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Growth Strategy
▪ Horizontal Integration –
Combining operations with another competitor in the same industry to
increase competitive strengths and lower competition among industry
rivals.

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Growth Strategy
▪ Diversification –
Related Diversification: Expanding by combining with firms in different,
but related industries that are “strategic fits.

Unrelated Diversification: Growing by combining with firms in unrelated

industries where higher financial returns are possible.

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 Related Diversification Unrelated Diversification

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Stability Strategy
▪ Offering the same products to the same clients, not introducing new
products, maintaining market share, and more.

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Renewal Strategy
▪ Developing strategies to counter organization weaknesses that are leading
to performance declines.
Retrenchment: A short-run strategy used for minor performance problems.
It helps an organization stabilize operations, revitalize organizational
resources and capabilities, and prepare to compete once again.
Turnaround: Addressing critical long-term performance problems through
the use of strong cost elimination measures and large-scale organizational
restructuring solutions..

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Renewal Strategy

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▪ When an organization’s corporate strategy encompasses a number of
businesses, managers can manage this collection, or portfolio, of businesses
using a tool called a corporate portfolio matrix.

▪ This matrix provides a framework for understanding diverse businesses and

helps managers establish priorities for allocating resources.

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▪ Developed by the Boston Consulting Group (BCG).

▪ Considers market share and industry growth rate
▪ Classifies firms as:

❖ Cash cows: low growth rate, high market share

❖ Stars: high growth rate, high market share
❖ Question marks: high growth rate, low market share
❖ Dogs: low growth rate, low market share

The bigger the market share a product has or the faster the
product’s market grows the better it is for the company.

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Stars
▪ Invest large amounts of cash and should also generate large amounts of cash.

▪ Eventually develop into cash cows as their markets mature and sales growth
slows.

Cash Cows
▪ Profitand cash generation should be high, because of the low growth,
investments should be low.
▪ The cash generated by cash cow is reinvested in stars & question mark.

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Dogs
▪ Avoid & minimize the number of dogs in a company.

▪ Should be sold off or liquidated.

Question marks
▪ Low relative market share & high growth industry business. So business require
large amount of cash to maintain or gain market share.
▪ Question mark therefore may become stars if enough investment is made or they
may become dogs if ignored.

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▪ A strategy focused on how an organization will compete in each of its
SBUs (strategic business units).
▪ When an organization is in several different businesses, those single
businesses that are independent and that have their own competitive
strategies are referred to as Strategic Business Units (SBUs).

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Strategic Business Units (SBUs)

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 What sets an organization apart; its distinctive edge.

Competitive Advantage can come

▪ either from the organization’s core

competencies by doing something that
others cannot do or doing it better than
others can do it.
▪ or from the company’s resources
because the organization has something
that its competitors do not have.

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1. Quality as a Competitive Advantage

▪ Differentiates the firm from its competitors.

▪ Can create a sustainable competitive advantage.

▪ Represents the company’s focus on quality management to achieve

continuous improvement and meet customers’ demand for quality.

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1. Quality as a Competitive Advantage

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2. Sustaining Competitive Advantage

▪ Continuing over time to effectively exploit resources and develop core

competencies that enable an organization to keep its edge over its industry
competitors.
▪ Sustainable competitive advantages are company assets, attributes, or abilities
that are difficult to duplicate or exceed; and provide a superior or favorable
long term position over competitors.

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 New
Threat of Entrants
New
Entrants
Bargaining
Power of
Intensity of Buyers
Rivalry
Suppliers Among Buyers
Current
Bargaining Competitors
Power of
Suppliers
Threat of
Substitutes
Substitutes
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Cost Leadership Differentiation Focus

Strategy Strategy Strategy

Attempting to
Seeking to Using a cost or
create a unique
attain the differentiation
and distinctive
lowest total advantage to
product or
overall costs exploit a
service for
relative to particular market
which
other industry segment rather a
customers will
competitors. larger market.
pay a premium.

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▪ The strategies used by an organization’s various functional

departments to support the competitive strategy.

Marketing Production

Purchase/
Human
procurement
Resources
department

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Strategic Leadership
The ability to anticipate, envision, maintain flexibility, think strategically,
and work with others in the organization to initiate changes that will
create a viable and valuable future for the organization.

Strategic Flexibility
The ability to recognize major
external changes, to quickly
commit resources, and to recognize
when a strategic decision was a
mistake

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▪ Monitor and measure results

▪ Encourage employees

▪ Develop new ideas and perspectives from

outside the organization
▪ Have multiple alternatives when making
strategic decisions
▪ Learn from mistakes.

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e-Business Strategies

Customer Service Strategies

Innovation Strategies

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An organization that’s first to bring a product innovation

to the market or to use a new process innovation

Advantages Disadvantages
Reputation for being innovative Uncertainty over exact direction
and industry leader technology and market will go
Cost and learning benefits Risk of competitors imitating
innovations
Control over scarce resources and Financial and strategic risks
keeping competitors from having
access to them
Opportunity to begin building High development costs
customer relationships and
customer loyalty
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