Strategy Formulation & Implementation

MGMT.6910

Week 2 Slides

Recap of Last week

▪ Introduction, class requirements

▪ What is Strategy

▪ The Process and Practices

❑ Strategic Planning to Operational Planning and

Implementation

❑ Vision/Mission Statements, Objectives/Goals and

Strategies

❑ Corporate Governance

▪ Discussion Board post

Discussion Board Post Week 1

Question

Review Align Technology’s (https://www.aligntech.com/) income and balance sheet statements for

the last 5 years (you will get this data from their annual reports) and comment on trends in revenue,

gross margins, R&D, SG&A, cash position and debt (it is suggested that you convert income

statement items to a common size statement, that is, all line items Income Statement as % of

revenue). You may calculate a few management ratios to add to your comments and observations.

Include in your comments what you see as their strategy and how do you think they are doing.

BE SURE TO INCLUDE 5-YEAR DATA AND RATIOS IN YOUR POST. DO NOT ATTACH

ANY DOCUMENT

Comment on at least one classmate’s post

This week …

Evaluating a company's external environment

Macro trends

Industry trends & analysis

Tools/Frameworks

External Strategic Factors

Opportunities & Threats

3.1 From Thinking Strategically about the Company’s Situation to Choosing a Strategy

strategyzer.com

External Drivers

Economic Trends

-GDP trends

-Per capita income

-Interest Rates

-Money Supply

-Monetary policies

-Inflation rates

-Unemployment levels

-Disposable & Discretionary income

-Currency devaluation/reevaluation

-Energy availability & cost

-Wage/price controls

-Trade Agreements

-WTO participation

-Natural resources

Political/Legal

-Taxation laws

-Foreign trade regulations

-Antitrust laws

-Environmental laws

-Special incentives

-Employment laws

-Labor union laws

-Form of Government

-Government stability

-Foreign policies

-Legal systems

-Protectionist attitude

-Political ideology

Socio-cultural

-Custom, values, norms

-Language

-Age distribution

of population

-Population growth rates

-Demographics

-Life expectancies

-Birthrates

-Lifestyle trends

-Family formation

-Consumer activism

-Religious beliefs

-Education

Technological Variables

-Patents & protection

-Commercialization rates

-R&D spend rates (industry, Government)

-Technological/innovation focus

-Productivity tools trends

-Communication infrastructures

-Internet

Read Chapter 3, Notes and class slides – key points

❑PESTEL Analysis

❑Focus on major trends affecting industry/firm

• Industry Analysis

• Size/concentration

• Industry Evolution stage

• Industry Value Chain

• Segments/Strategic Groups

• Competitive Forces

• Industry Attractiveness

• Industry Driving Forces

• Competitive Positioning Matrix

• GE Matrix

❑Global Environment

▪ Institutional Factors

❑Tools and Framework

❑Opportunities and Threats

Industry Life Cycle

https://blog.marketresearch.com/what-is-industry-value-chain-analysis

Industry Value Chain

3.3

The Five-Forces Model

of Competition: A Key

Analytical Tool

The Five Competitive Forces That Shape Strategy

Figure 3.3: The Five Forces Model of Competition

3-36

Business Travelers

Pleasure

Intermediaries

2 suppliers, oil,

maintenance

e.g. Car, Rail, Bike, Walk

Barriers

Investments, Regulations,

Locations

Moderate

Moderate to high

Moderate to high

Moderate to

high

Strong

Airlines

ILLUSTRATION CAPSULE 3.1Comparative Market Positions of Selected Retail Chains:

A Strategic Group Map Example

High

Low

• Gucci, Chanel,

Fendi

Walmart,

Kmart

Few localities Many localities

Geographic Coverage

Assessing Industry Attractiveness

Example: XYZ industry

Industry Factor

Sales growth rate

Weight

25

Rating

0.3

Product

7.5

Market size 20 0.6 12.0

Industry profitability 18 0.8 14.4

Intensity of competition 15 0.7 10.5

Barriers to entry 12 0.9 10.8

Degree regulated 10 1.0 10.0

TOTALS 100 65.2

Competitive Factor Weight Rating Product

Technological innovativeness 22 0.6 13.2

Marketing/distribution 20 0.9 18.0

Caliber of management 18 0.9 16.2

Relative cost position 17 0.6 10.2

Brand reputation 12 1.0 12.0

Financial strength 11 0.7 7.7

TOTALS 100 77.3

Assessing Competitive Strength

Example: Your Company Under Analysis

Global Environment and Analysis

• Competitive

✓Distributive/infrastructure

• Economic

• Socioeconomic

✓Financial/Capital markets

✓Legal

• Physical

✓Political

• Sociocultural

• Labor Markets

• Technological

Global Industry Evolution

Local

Regional

National

International

Global

(markets, operations, capacity)

Past: Slow March

Now: Rapid Global Expansion

Firm

Global Industry and Technology Evolution

• Advances in science and technology – time between

technologies shortened

• Legacy vs New: vertical integration and strategic alliances

• Governmental/Political Influences

• Social Factors

Discussion Board Week 2 Assignment

Read the article " Why Fewer Chips Say ‘Made in the U.S.A.”

(under Supplemental Reading folder in Blackboard) and using

CLASS MATERIAL/DISCUSSION, address these questions.

• In terms of Industry Life Cycle (stages: emerging, growth, maturity and decline), which stage is the semiconductor industry in? (discuss with respect to Global Industry Evolution)

• The semiconductor industry is often considered a “strategic sector.“ What does the term mean? Is it a strategic sector for the US?

• Based on the information contained in the article, should the US government and/or US companies need to commit more resources to the US semiconductor industry?

Your post must be substantive, to the point and use class

material. Where appropriate, do additional research

Also, comment on at least one classmate’s post

Questions/Comments?