Types Of Strategies

MODULE 12 STRATEGIC MANAGEMENT STRATEGIC MANAGEMENT Types Of Strategies MODULE GUIDE 12.1 z Strategy is a comprehensive plan for achieving competitive advantage. z Organizations use strategy at the corporate, business and functional levels. z Growth and diversification strategies focus on expansion. z Restructuring and divestiture strategies focus on consolidation. z Global strategies focus on international business initiatives. z E-business strategies focus on using the Internet for business transactions. “Insights and hard work deliver results” • What types of strategies are used by organizations? • How are strategies formulated and implemented in strategic management? 1 STRATEGIC MANAGEMENT 2 TYPES OF STRATEGIES Corporate Strategies Types Of Strategies z Strategy z Corporate Strategy z a comprehensive plan guiding resource allocation to achieve long-term organization goals. z Sets long-term direction for the total enterprise z Business Strategy z Strategic Intent z Identifies how a strategic business unit or division will compete in its product or service domain z focuses organizational energies on achieving a compelling goal. z Functional Strategy z Competitive Advantage z Guides activities within one specific area of operations z operating in successful ways that are difficult to duplicate 3 4 1 TYPES OF STRATEGIES TYPES OF STRATEGIES Corporate Strategies Growth And Diversification Strategies z Growth Strategy z Expansion through current operations z Concentration z Expansion within an existing business area z Diversification z Expansion occurs by entering new business areas z Vertical Integration z Expansion by acquiring existing suppliers or distributors 5 6 TYPES OF STRATEGIES TYPES OF STRATEGIES Global Strategies Restructuring and Retrenchment Strategies zGlobalization Strategy z Retrenchment zAdopts standardized products and advertising for use worldwide z Changes operations to correct weaknesses z Liquidation z An extreme form of retrenchment wherein the business closes and sells off its assets zMultidomestic Strategy z Restructuring zCustomizes advertising and products to best fit local needs z Reduces the scale or mix of operations z Downsizing zTransnational Strategy z Decreases the size of operations zSeeks efficiencies of global operations with attention to local markets z Divestiture z Sells off part of the organization to focus on core businesses 7 8 2 STRATEGIC MANAGEMENT TYPES OF STRATEGIES Strategic Management E-Business Strategies MODULE GUIDE 12.2 z E-Business Strategies z Strategy formulation begins with the organization’s mission and objectives. z SWOT analysis identifies strengths, weaknesses, opportunities, and threats. z Porter’s five forces model examines industry attractiveness. z Porter’s competitive strategies model examines business or product strategies. z Portfolio planning examines strategies across multiple businesses or products. z Strategic leadership activates organizations for strategy implementation. z Focus on Using the Internet for Business Transactions z B2B Business Strategies z use IT and Web portals to vertically link organizations with members of their supply chains. z B2C Business Strategies z use IT and Web portals to vertically link organizations with members of their customers. 9 10 STRATEGIC MANAGEMENT STRATEGIC MANAGEMENT Strategic Management Strategic Management zStrategic management zthe process of formulating and implementing strategies. zStrategy Formulation zthe process of creating strategies zStrategy Implementation zthe process of putting strategies into action. 11 12 3 STRATEGIC MANAGEMENT STRATEGY FORMULATION Strategy Formulation SWOT z Mission Statement z SWOT Analysis z Identifies Organization’s Strengths, Weaknesses, Opportunities, and Threats z The reason for the organizations existence in society z Core Competency z A special strength that gives an organization a competitive advantage z Operating Objectives z Specific results that organizations attempt to achieve Common Operating Objectives of Organizations •Profitability •Market share •High-quality workforce •Cost efficiency •Product and service quality •Innovativeness •Social responsibility 13 14 STRATEGY FORMULATION STRATEGY FORMULATION Porter’s Five Forces Porter’s Five Forces z Porter’s Competitive Strategies z Differentiation Strategy z Offers products and services that are uniquely different from the competition z Focused Differentiation Strategy z offers a unique product to a special market segment. z Cost Leadership Strategy z Seeks to operate at lower costs than competitors z Focused Cost Leadership Strategy z uses cost leadership and target needs of a special market. 15 16 4 STRATEGY FORMULATION STRATEGY FORMULATION Porter’s Five Forces Boston Consulting Group (BCG) COMPETITIVE ANALYSIS z BCG Matrix z Analyzes business opportunities according to growth rate and market share 17 18 STRATEGIC MANAGEMENT Strategy Implementation zStrategic Leadership zthe capability to inspire people to successfully engage in a process of continuous change, performance enhancement, and implementation of organizational strategies. 19 5