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s1. Five Tasks of Strategic Planning
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2. Factors Shaping the Choice of Strategy
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3. Three Tests of Best Strategy
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4. Analyzing Industry Environment and Crafting
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5. Strategy Implementation and Execution
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Strategic

Evaluating
performance,
monitoring new
developments ,
and initiating
corrective
adjustments

Implementing
and executing
the chosen
strategy

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Forming a Strategic
Vision

Very early in the strategy-making

process, company managers need to

pose a set of questions:

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headed, what should its future

technology-product-customer focus
be, what kind of enterprise do we
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standing do we want to achieve in
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Setting
Objectives

The purpose of setting objectives is

to convert managerial statements of
strategic vision and business mission
into specific performance targets results and outcomes the
organization wants to achieve.

Setting objectives and then

measuring whether they are

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achieved or not help m a n a ers track

an organization's progress.
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Improve
Cost Efficiency

F inancial

Increase Revenue Growth

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B uild H ig h
Performance Products

Expand
Market Share

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Achieve
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Drive Demand
through Customer
Relation Management

Enhance
BrandImage

Manage Dramatic
Growth through
Innovation

Im plement Good
Environmental
Policy

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Develop Strategic
Competencies

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Crafting Strategy
Crafting a
strategy to
achieve the
desired
outcomes

A company's strategy represents

management's answers to such fundamental
business questions as :
whether to concentrate on a single business or build
a diversified group of businesses
whether to cater to a broad range of customers or
focus on a particular market niche
whether to develop a wide or narrow product line
how to respond to changing buyer preferences

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how big a geographic market to try to cover

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how to react to newly emerging market and

competitive conditions

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how to grow the enterprise over the long

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Crafting a
strategy to
achieve the
desired
outcomes

Company strategies concern how:

how to grow the business

how to satisfy customers

how to outcompete rivals

how to respond to changing market

conditions

how to manage each functional piece of

the business and develop needed
organizational capabilities

how to achieve strategic and financial

objectives
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Strategy Implementation and

Execution

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Strategy implementation concerns the

managerial exercise of putting a freshly
chosen strategy into place

Strategy execution deals with the managerial

exercise of supervising the ongoing pursuit of
strategy , making it work, and
showing
measurable progress in achieving the
targeted results.

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Strategy Evaluation and

Monitoring

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Evaluating
performance,
m onitor in g new
developments,
and in it iating
corrective
adjustments

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It is management's duty to stay on top of

the company's situation, deciding
whether things are going well internally,
and monitoring outside developments
closely.

Marginal performance or too little

progress. as well as important new
external circumstances, will require
corrective actions and adjustments.

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Strategy
Hierarchy

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Corporate
Strategy

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B us iness
Strategies

Functional Strategies (R&D,

Marketing, Manufacturing, HR,
Finance, etc.
Operatin g Strategies (regions ,

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p lants, departments w ithin

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fu nctional areas)

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Strategy Hierarchy
Business
Strategies
Functional Strategies (R&D,
Marketing, Manufacturing, HR,
Finance, etc.
Operating Strategies (regions,
p lants, departments within
functi onal areas)

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Strategy Hierarchy
Corporate
Strategic Vis ion

Corporate
Strategic Objectives

Corporate
Strategic Strategy

Business-Level
Strategic Vis ion

Business-Level
Strategic Objectives

Business-Level
Strategy

Functional
Areas Vis ions

Functional
Areas Objectives

Functional
Areas Strategies

Operating Unit
Objectives

Operating Unit
Strategies

Operating Unit Vis ions

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Conte nt W r ite rs On Deman d

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Factors Shaping
the Choice of
Strategy

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Strategy
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External Factors
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Econom ic,

societal, polit ical,

and government
regulations

Competitive
conditions and
industry
attractiveness

Company
opportunity and
threat

The mix of considerations that determines

a company's strategic situation
Company strengths
and weaknesses,
competencies and
capabilities

Personal ambitions
and business
philosophies of key
executives

Shared values and

company culture

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Factors Shaping the Choice of

Strategy
Economic,
societal, polit ical,
and government
regulations

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What an enterprise can and cannot do

strategywise is always constrained by
what is legal, by what complies with
government policies and regulatory
requirements, by what is considered
ethical, and by what is in accord
with
societal expectations and the standards
of good social and community
citizenship .

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strategy-determi ning factors.
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A company's strategy has to be tailored
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to the nature and mix of competitive

factors in p l a y -price, product quality,
performance features, service, war
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Factors Shaping the Choice of

Strategy

Company
opportunity and

deliberately aimed at capturing its best

threat

growth opportunities, especially the

ones that hold the most promise for

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building sustainable competitive

advantage and enhancing profitability.

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Strategy should also provide a defense

against external threats to

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company's well-being and fu-ture

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A company's strategy needs to be

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Factors Shaping the Choice of

Strategy
Company
strengths and
weaknesses,
competencies and
capabilities

One of the most pivotal strategy-shapi ng

internal considerations is whether a
company has or can acquire the
resources, competencies, and capabilities
needed to execute a strategy proficiently.

The best path to competitive advantage is

found where a firm has competitively

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valuable resources and competencies,

where rivals can't develop comparable
caoabilities exceot at hiah cost or over an
extended period of time.
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Factors Shaping the Choice of

Strategy
Personal
ambitions and
business
philosophies of
key executives

Managers do not dispassionately assess

what strategic course to steer.

Their choices are typically influenced by

their own vision of how to compete and
how to position the enterprise and by what
image and standing they want the
company to have.

22

Factors Shaping the Choice of

Strategy
Shared values
and company
culture

An organization's policies, practices,

traditions , philosophical beliefs, and ways
of doing things combine to create a
distinctive culture.

The stronger a company's culture, the

more that culture is likely to shape the

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company's strategic actions, sometimes

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moves.

even dominating the choice of strategic

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Strategic Analysis and Strategic

Choices
Analyzi ng
strategically
about industry
and competitive

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conditions

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What strategic
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company

What is the best

strategy?

realistically
have?

about a
situation

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structure and business environment to change?

Which companies are in the strongest/weakest
positions?
What strategic moves are rivals likely to make
next?
What are the key factors for competitive success?
Is the industry attractive and what are the
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Strategic Analysis and Strategic

Choices

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How well is the company's present

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Analyzing
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What are the company 's strengths ,

strategically
weaknesses, opportunities , and threats?
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situation

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Three Tests of Best

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A good strategy has to be well matched

to industry and competitive conditions,
market opportunities and threats , and

The
Goodness of
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other aspects of the enterprise's

external environment.

At the same time, it has to be tailored to

the company's resource strengths and
weaknesses , competencies, and
competitive capabilities.

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29

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Three Tests of Best

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The Intensity of
Rivalry
1. A larger number of firms
The intensity of
rivalry is influenced
by the following
industry
characteristics:

2.

Slow market growth

3.

High fixed cost

4.

High storages costs or

5.

highly perishable products

Low switching cost

6.

Low level of product

differentiation

7.

Strategic stakes are high

8.

High exit barriers

9.
diversity
of rivals
10. A
Industry
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Barriers to
Entry
1. Absolute cost advantages
2.

Proprietary learning curve

3. Access to inputs
4.

Government policy

5.

Economies of scale

6.

Capital requirements

7.

Brand identity

8.

Switching costs

9. Access to distribution
10. Expected retaliation
11. Proprietary products

34

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3. Price-performance
trade-off
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Buyer
Power

1.

Bargaining leverage

2.

Buyer volume

3. Buyer information
4. Brand identity
5. Price sensitivity
6. Threat of backward integration
7.

Product differentiation

8. Buyer concentration vs. industry

9. Substitutes available

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Supplier
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Threat of potential entry

Those that are favorably positioned, and why

Those that are unfavorably positioned, and why

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Competitor Analysis
Strategic approaches/predicated moves of key competitors
Whom to watch, and why
Industry Key Success Factors

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Supplier
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Threat of
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Better insulated from powerful Better able to pass on supplier

suppliers.
price increases to customers.

Suppliers have power because

of low volumes , but a
differentiation-focused firm is
better able to pass on supplier
price increases.

Can use low price to defend

against substitutes.

Specialized products & core

competency protect against
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