Strategy Business Intent

Strategy

Strategic Management
Farooq Omar

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Planning
- strategic
- emergent
- contingency plans
Objectives: LT, ST

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Mission statement
Environmental analysis (SWOT)
Competitive analysis (Porter’s 5 forces)
Portfolio analysis


Identifying Mission Statement Components:
A compilation of Excerpts from Actual Corporate
Mission Statements
1. Customer- We believe our first responsibility is to the doctors, nurses, and
market patients, to mothers and all others who use our products and
services. (Johnson & Johnson)
To anticipate and meet market needs of farmers, ranchers, and
rural communities within North America. (CENEX)

2. Product- AMAX’s principal products are molybdenum, coal, iron, ore,
service copper, lead, zinc, petroleum and natural gas, potash,
phosphates, nickel, tungsten, silver, gold, and magnesium.
(AMAX)

3. Geographic We are dedicated to the total success of Corning Glass Works as
domain a worldwide competitor. (Corning Glass)


Mission Statements (cont’d)
4. Technology Control Data is the business of applying microelectronics and
computer technology in two general areas: computer-related
hardware and computing-enhancing services, which include
computation, information, education, and finance. (Control Data)
The common technology in these areas relates to discrete
particle coatings. (NASHUA)

5. Concern for In this respect, the company will conduct its operation prudently,
Survival and will provide the profits and growth which will assure Hoover’s
ultimate success. (Hoover Universal)

6. Philosophy We are committed to improve health care throughout the world.
(Baxter Travenol)
We believe human development to be the worthies of the goals
of civilization and independence to be the superior condition for
nurturing growth in the capabilities of people. (Sun Company)

Mission Statements (cont’d)
7. Self-concept Hoover Universal is a diversified, multi-industry corporation with
strong manufacturing capabilities, entrepreneurial policies, and
individual business unit autonomy. (Hoover Universal)

8. Concern for We are responsible to the communities in which we live and work
public image and to the world community as well. (Johnson & Johnson)
Also, we must be responsive to the broader concerns of the
public, including especially the general desire for improvement in
the quality of life, equal opportunity for all, and the constructive
use of natural resources. (Sun Company)


This exercise should help you think about
1) your long-term personal goals, and 2)
companies you might want to work for
1. What do you want inscribed on your
gravestone?
What would be your primary goal if you
were told you had 18 months to live?
If you had a child, what is the most
important lesson that you would like him or
her to know?
Book says, “…every organization has a
mission statement that defines its
purpose and answers the question ‘what
business are we in?’

Use the answers to the above questions to write
a personal mission statement/paragraph that
should specify your life’s goal!
Consider:
Values: what’s important to you, e.g. health,
friends
Principles: guidelines to follow, e.g. fairness,
quality, service
Strengths: your qualities, e.g. adaptable,
confident
Blockers: what’s stopping you? e.g. shyness,
laziness

Next write a paragraph describing the
mission of a company you would want to
work for.

SWOT analysis
Environmental Scan – Both internal and external factors
need to be considered:

1. Internal factors – characteristics in the firm
(management, mission, resources, systems process,
and structure) that can be considered strengths or
strong points and weaknesses or weak points.

2. External factors - characteristics in the
environment that are “outside” the firm (customers,
competitors, suppliers, labor force, shareholders,
society, technology, the economy, and
governments) that represent opportunities to tap or
threats to flank.


Starbuck’s
Five-Force
Competitive
Analysis

Exhibit –5

Portfolio Analysis: BCG Matrix

Exhibit 5–11

BUSINESS STRENGTH

INDUSTRY ATTRACTIVENESS


Organizational Strategies occur on 3 levels:
Grand, Business, and Functional
A. Grand level strategies:
- 1. Growth (a. concentration; b.
diversification)
- 2. Retrenchment
- 3. Stability (status quo)
- 4. Combination (multiple strategies)


1a. Growth through concentration –
concentrating on your existing specialization

i. market penetration – aggressively targeting
current markets with existing product specialties
ii. market development/geographic expansion –
expanding into new markets
iii. market segmentation – dividing existing
markets
iv. product development – modify existing
products, or develop new but related
products


1b. Growth through diversification – branching
out into new areas

i. horizontal integration – expanding across the
general industry (e.g. Coke acquires Minutemaid).

ii. vertical integration – expanding into industries
populated by suppliers/buyers (e.g. Ford buys steel
plant).

iii. conglomerate diversification – expanding into
unrelated industries (e.g. GM buys Hershey’s
candy).

iv. joint venture – expanding together with another
company in order to diversity efficiently.


2. Retrenchment

i. Turnaround – downsizing existing
company/divisions

ii. Divestiture – selling off existing
divisions/subdivisions

iii. Liquidation – Chapter 11 bankruptcy


3. Stability - maintain status quo (e.g.
continuous improvement)

4. Combination – multiple use of strategies


B. Business level strategies

1. Michael Porter’s Competitive Strategies:
i. low cost (e.g. Wal-Mart)
ii. differentiation (Volvo/Mercedes)
iii. focus (Penny’s/Pea in a Pod)

2. Adaptive business level strategies:

a. prospecting
b. defending
c. analyzing


B. Business level strategies (cont’d)

3. Product life cycle

i. introduction stage
ii. growth stage
iii. maturity stage
iv. decline stage


Product Life Cycle: Starbucks


C. Functional level strategies

i. Marketing

ii. Manufacturing

iii. Human resources

iv. Etc.


Strategy Formulation is followed by
Implementation


Seven S Model of Implementation

STRATEGY

SKILLS STRUCTURE

SHARED
VALUES

STAFF SYSTEMS

STYLE


Seven S Model
1. Strategy – Plan or course of action leading to the allocation of firm’s
resources to reach identified goals.
2. Structure – The ways people and tasks relate to each other. The basic
grouping of reporting relationships and activities. The way separate
entities of an organization are linked.
3. Shared Values – The significant meanings or guiding concepts that
give purpose and meaning to the organization.
4. Systems – Formal processes and procedures, including management
control systems, performance measurement and reward systems, and
planning and budgeting systems, and the ways people relate to them.
5. Skills – Organizational competencies, including the abilities of
individuals as well as management practices, technological abilities,
and other capabilities that reside in the organization.
6. Style – The leadership style of management and the overall operating
style of the organization. A reflection of the norms people act upon and
how they work and interact with each other, vendors, and customers.
7. Staff – Recruitment, selection, development, socialization, and
advancement of people in the organization.

Figure 4.
Contingency
–
Constrained
Coefficients.


Strategy Business Intent

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