Chapter 5 Strategizing Learning Objectives v See how

Chapter 5: Strategizing Learning Objectives v See how strategy fits in the P-O-L-C framework v Discuss the concept known as SWOT v Understand how strategies emerge v Understand strategy as trade-offs, discipline and focus v Conduct internal analysis to develop strategy v Conduct external analysis to develop strategy v Be able to formulate organizational strategy with the strategy diamond

Understand How Strategy Fits in the P-O-L-C Framework

Where Strategy Fits in “Planning”

Strategic Management Process The process by which a firm manages the formulation and implementation of its strategy The coordinated means by which an organization achieves its goals and objectives

Strategizing in P-O-L-C

Corporate & Business Strategy

SWOT Analysis An audit of the company's internal workings and an examination of external opportunities and threats Strengths Threats SWOT Opportunities Weaknesses

Effective strategies • take advantage of strengths • minimize the disadvantages posed by any weaknesses Sustainable competitive advantage • An organization’s strengths cannot be easily duplicated or imitated by other firms

External Internal Analysis Tools Value chain PESTEL VRIO Industry analysis

Intended, Deliberate, Realized, and Emergent Strategies

Mintzberg’s Conclusion

What is Strategic Focus? Strategic focus is seen when an organization is very clear about its mission and vision, and has a coherent, well-articulated strategy for achieving them strategy as discipline strategy as trade-offs

Porter’s Generic Strategies

What are Value Disciplines? Operational excellence Product leadership Customer intimacy Only One Discipline

The Value Chain

Building Blocks (VRIO) of Building and Maintaining Competitive Advantage Value Rarity Inimitability Organization

DEVELOPING STRATEGY THROUGH EXTERNAL ANALYSIS An external analysis tells the strategist what is outside the organization. Continue toward the focal industry Begin with the general environment

An external analysis helps answer the question, “what opportunities can we exploit? ”

Six General Environmental Segments PESTEL Analysis legal political environmental technical economic social

AN ORGANIZATION’S MICRO-ENVIRONMENT Industry Upstream Markets Downstream Markets • A group of firms producing products that are close substitutes • industries that provide the raw material or inputs for the focal industry • industries (sometimes consumer segments) that consume the industry outputs

Porter’s Five Forces

Porter’s Attractiveness and Profitability Analysis Likely to Profit ü Is the industry difficult to enter? ü Is there limited rivalry? ü Are buyers relatively weak? ü Are suppliers relatively weak? ü Are there few substitutes? Challenges to Profit ü Is the industry easy to enter? ü Is there a high degree of rivalry between firms within the industry? ü Are buyers strong? ü Are suppliers strong? ü Is it easy to switch to alternatives?

The Strategy Diamond