ninth edition
STEPHEN P. ROBBINS MARY COULTER
Chapter
Strategic
Management
PowerPoint Presentation by Charlie Cook
The University of West Alabama
LEARNING OUTLINE
Follow this Learning Outline as you read and study this chapter.
The Importance of Strategic Management
• Define strategic management, strategy, and business
model.
• Explain why strategic management is important.
The Strategic Management Process
• List the six steps in the strategic management process.
• Describe what managers do during external and internal
analyses.
• Explain the role of resources, capabilities, and core
competencies.
• Define strengths, weaknesses, opportunities, and threats.
L E A R N I N G O U T L I N E (cont’d)
Follow this Learning Outline as you read and study this chapter.
Types of Organizational Strategies
• Describe the three major types of corporate strategies.
• Discuss the BCG matrix and how it’s used.
• Describe the role of competitive advantage in business-
level strategies.
• Explain Porter’s five forces model.
• Describe Porter’s three generic competitive strategies and
the rule of three.
L E A R N I N G O U T L I N E (cont’d)
Follow this Learning Outline as you read and study this chapter.
Strategic Management in Today’s Environment
• Explain why strategic flexibility is important.
• Describe strategies applying e-business techniques.
• Explain what strategies organizations might use to
become more customer oriented and to be more
innovative.
Strategic Management
• What managers do to develop the organization’s strategies.
Strategies
• The decisions and actions that determine the long-run
performance of an organization.
Strategic Management (cont’d)
• Business Model
– Is a strategic design for how a company
intends to profit from its strategies, work
processes, and work activities.
– Focuses on two things:
• Whether customers will value what the company
is providing.
• Whether the company can make any money
doing that.
Why is Strategic Management Important
1. It results in higher organizational
performance.
2. It requires that managers examine and
adapt to business environment changes.
3. It coordinates diverse organizational units,
helping them focus on organizational
goals.
4. It is very much involved in the managerial
decision-making process.
Exhibit 8–1 The Strategic Management Process
Strategic Management
Process
• Step 1: Identifying the organization’s current
mission, goals, and strategies
– Mission: the firm’s reason for being
• The scope of its products and services
– Goals: the foundation for further planning
• Measurable performance targets
• Step 2: Doing an external analysis
– The environmental scanning of specific and general
environments
• Focuses on identifying opportunities and threats
Exhibit 8–2 Components of a Mission Statement
Source: Based on F. David, Strategic Management, 11 ed. (Upper Saddle River, NJ: Prentice Hall, 2007), p.70.
Strategic Management
Process (cont’d)
• Step 3: Doing an internal analysis
– Assessing organizational resources, capabilities, and
activities:
• Strengths create value for the customer and strengthen the
competitive position of the firm.
• Weaknesses can place the firm at a competitive disadvantage.
– Analyzing financial and physical assets is fairly easy, but
assessing intangible assets (employee’s skills, culture,
corporate reputation, and so forth) isn’t as easy.
• Steps 2 and 3 combined are called a SWOT analysis.
(Strengths, Weaknesses, Opportunities, and Threats)
Strategic Management
Process (cont’d)
• Step 4: Formulating strategies
– Develop and evaluate strategic alternatives
– Select appropriate strategies for all levels in
the organization that provide relative
advantage over competitors
– Match organizational strengths to
environmental opportunities
– Correct weaknesses and guard against threats
Strategic Management
Process (cont’d)
• Step 5: Implementing strategies
– Implementation: effectively fitting organizational structure
and activities to the environment.
– The environment dictates the chosen strategy; effective
strategy implementation requires an organizational structure
matched to its requirements.
• Step 6: Evaluating results
– How effective have strategies been?
– What adjustments, if any, are necessary?
Types of Organizational
Strategies
• Corporate Strategies
– Top management’s overall plan for the entire
organization and its strategic business units
• Types of Corporate Strategies
– Growth: expansion into new products and markets
– Stability: maintenance of the status quo
– Renewal: redirection of the firm into new markets
Exhibit 8–4 Levels of Organizational Strategy
Corporate Strategies
• Growth Strategy
– Seeking to increase the organization’s business by
expansion into new products and markets.
• Types of Growth Strategies
– Concentration
– Vertical integration
– Horizontal integration
– Diversification
Growth Strategies
• Concentration
– Focusing on a primary line of business and increasing
the number of products offered or markets served.
• Vertical Integration
– Backward vertical integration: attempting to gain control
of inputs (become a self-supplier).
– Forward vertical integration: attempting to gain control
of output through control of the distribution channel or
provide customer service activities (eliminating
intermediaries).
Growth Strategies (cont’d)
• Horizontal Integration
– Combining operations with another competitor in the
same industry to increase competitive strengths and
lower competition among industry rivals.
• Related Diversification
– Expanding by combining with firms in different, but
related industries that are “strategic fits.”
• Unrelated Diversification
– Growing by combining with firms in unrelated
industries where higher financial returns are possible.
Growth Strategies (cont’d)
• Stability Strategy
– A strategy that seeks to maintain the status
quo to deal with the uncertainty of a
dynamic environment, when the industry is
experiencing slow- or no-growth conditions,
or if the owners of the firm elect not to grow
for personal reasons.
Growth Strategies (cont’d)
• Renewal Strategies
– Developing strategies to counter organization
weaknesses that are leading to performance
declines.
• Retrenchment: focusing of eliminating non-critical
weaknesses and restoring strengths to overcome current
performance problems.
• Turnaround: addressing critical long-term performance
problems through the use of strong cost elimination
measures and large-scale organizational restructuring
solutions.
Business or Competitive
Strategy
• Business (or Competitive) Strategy
– A strategy focused on how an organization
should compete in each of its SBUs
(strategic business units).
The Role of Competitive
Advantage
• Competitive Advantage
– An organization’s distinctive competitive edge.
• Quality as a Competitive Advantage
– Differentiates the firm from its competitors.
– Can create a sustainable competitive advantage.
– Represents the company’s focus on quality
management to achieve continuous improvement
and meet customers’ demand for quality.
The Role of Competitive
Advantage (cont’d)
• Sustainable Competitive Advantage
– Continuing over time to effectively exploit
resources and develop core competencies
that enable an organization to keep its edge
over its industry competitors.
Five Competitive Forces
• Threat of New Entrants
– The ease or difficulty with which new competitors
can enter an industry.
• Threat of Substitutes
– The extent to which switching costs and brand
loyalty affect the likelihood of customers adopting
substitutes products and services.
• Bargaining Power of Buyers
– The degree to which buyers have the market
strength to hold sway over and influence
competitors in an industry.
Five Competitive Forces
• Bargaining Power of Suppliers
– The relative number of buyers to suppliers
and threats from substitutes and new
entrants affect the buyer-supplier
relationship.
• Current Rivalry
– Intensity among rivals increases when
industry growth rates slow, demand falls,
and product prices descend.
Exhibit 8–6 Forces in the Industry Analysis
Source: Based on M.E. Porter, Competitive Strategy: Techniques for
Analyzing Industries and Competitors (New York: The Free Press, 1980).
Types of Competitive Strategies
• Cost Leadership Strategy
– Seeking to attain the lowest total overall costs
relative to other industry competitors.
• Differentiation Strategy
– Attempting to create a unique and distinctive product
or service for which customers will pay a premium.
• Focus Strategy
– Using a cost or differentiation advantage to exploit a
particular market segment rather a larger market.
Strategic Management Today
• Strategic Flexibility
• New Directions in Organizational
Strategies
– e-business
– customer service
– innovation
Strategies for Applying e-Business
Techniques
• Cost Leadership
– On-line activities: bidding, order processing,
inventory control, recruitment and hiring
• Differentiation
– Internet-based knowledge systems, on-line
ordering and customer support
• Focus
– Chat rooms and discussion boards, targeted
web sites
Customer Service Strategies
• Giving the customers what they want.
• Communicating effectively with them.
• Providing employees with customer
service training.
Innovation Strategies
• Possible Events
– Radical breakthroughs in products.
– Application of existing technology to new uses.
• Strategic Decisions about Innovation
– Basic research
– Product development
– Process innovation
• First Mover
– An organization that brings a product innovation to
market or use a new process innovations
