Strategic Planning Part 2

7/30/2019 Strategic Planning Part 2

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Strategic Management Part 2by Anjan Mohapatro If you dont invest for the long term ,there is no short term


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Examples of Strengths

Reputation/brandimage

Distributionchannels

Researchand

developmentskills

Experiencedmanagement

talent

Experiencedsales force


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SWOT ANALYSIS FORMULATE STRATEGY

Organizational weaknesses are skills and capabilitiesthat prevent an organization to choose and implementstrategies that support its mission.

Weaknesses can be overcome by:making investments to obtain the strengths needed.

modifying the organizations mission so it can be

accomplished with the current Workforce

Competitive disadvantage is a situation in which anorganization fails to implement strategies beingimplemented by competitors

Evaluating

Organisational

Weakness


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Examples of Weaknesses

lack of the previousexperience

High debtLack of

manufacturingcapacity/capability


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Examples of Opportunities

Upturn in Consumer

confidence

Trends in Consumer

needs/wants

Demographic Trends Changes in

Distribution/Consumer

shopping Demographic

Trends


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SWOT ANALYSIS FORMULATE STRATEGY

Organizational opportunities are areas in theorganizations environment that may generatehigh performance.

Organizational threats are areas in theorganizations environment that make it difficult for theorganization to achieve high performance


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Corporatelevel

IT

Finance

Marketing

Sales

R&D

FinancialServices

Construction Manufacturing Shipping

Levels of Strategy

CORPORATE LEVEL STRATEGY

FUNCTIONAL LEVEL STRATEGY

Business

-Level

Strategy:

How do

wecompete?


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Levels of Strategy

The level of strategy

concerned with thequestion, What business

are we in?. Pertains to theorganization as a wholeand the combination of

business units and productlines that make it up.

The level of strategyconcerned with the question,

How do we compete?.Pertains to each business

unit or product line within theorganization

The level of strategyconcerned with the question,How do we support the

business-level strategy?.Pertains to all of theorganizations major

departments

Corporate level Business Level Functional Level


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Formulating Corporate level strategy

A type of corporate-level strategy that pertains to theorganizations mix of SBUs and product lines that fittogether in such a way as to provide the corporationwith synergy and competitive advantage

Strategic Business Unit (SBU)

A division of the organization that has a uniquebusiness mission, product line, competitors, and

markets relative to other SBUs in the samecorporation.


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SBU

Each business or groupof businesses within an

organization engaged inserving the samemarkets, customers, orproducts

DiversificationThe number of businesses anorganization is engaged in and

the extent to which thesebusinesses are related to one

another

Single ProductStrategy

A strategy in whichan organization

manufactures oneproduct or service

and sells it in a singlegeographic market

Formulating Corporate level Strategy


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Strategies to Improve sales

IntensiveGrowth

IntegrativeGrowth

Strategy

Diversification Growth


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Penetrate intoExistingMarkets

(Sony, Dell)

Develop NewMarkets

(Bharati Airtel,Pharma Companies)

IntensiveGrowth

Develop NewProducts

Gramophone toCDS,GoogleChrome, diet

coke)

Increase sales/Profit

Marketing efforts of the company to

offer their existing products in thecurrent market is called market

penetration strategy

Attract Competitors Customer ,tap

potential customer

Develop new market

for new customer to

Increase sales/Profit

Geographical/Demogr

aphical

Pakistan state oil to

Afghanistan

Chinese Products


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BackwardIntegration

ForwardIntegration

IntegrativeGrowth

HorizontalIntegration

If a company operating in music systems takes over

the manufacturing business of its plastic materialsupplier, bakery business buys wheat farm

If a company operating in

music systems takes over the

manufacturing business of itsplastic material supplier

If a company acquires its

intermediaries such as

wholesale and retailers,when a farmer sells his

crop at the local market

instead of distributor


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Concentric

Horizontal

DiversificationGrowth

Conglomerate

Planned with New Products

that have technological or

marketing synergies with

existing business to cater for a

different group of customers

Company may choose new

business that have nothing to do

with the current technology,products or markets

Printing press shift from offset

printing to computer printing.

Developing new products for new

markets when the current market is

saturated

Virgin Media from music totravel/mobile phones

Walt Disney animated movies to

theme parks and vacation

properties

Cannon cameras to Office

equipments


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Ansoffs Product Market Expansion Grid

Market Penetrating Strategy

Product Development

Strategy

Market DevelopmentStrategy

Diversification

Market

New

Present

Present New

Product


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Related Diversification A strategy in which an organization operates in

several different businesses, industries, or marketsthat are somehow linked.

Advantages of Related Diversification

Reduces organizations dependence on any one of its businessactivities and thus reduces economic risk.

Reduces overhead costs associated with managing any one

business through economies of scale and economies of scope.

Allows an organization to exploit its strengths and capabilities

in more than one business.

Synergyexists among a set of businesses when the

businesses value together is greater than their economic value

separately.


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A strategy in which an organization operates

multiple businesses that are not logicallyassociated with one another.

Advantages Stable corporate-level performance over time due to business

cycle differences among the multiple businesses.

Resources can be allocated to areas with the highest return

potentials to maximize corporate performance.

Disadvantages The strategy does not usually lead to high performance due to

the complexity of managing a diversity of businesses.

Firms with unrelated strategies fail to exploit important synergies,

putting them at a competitive disadvantage to firms with related

diversification strategies.

UNRELATED DIVERSIFICATION

Documents

Strategic Planning Part 2