CHAPTER 6 Strategy Formulation Situation Analysis Business Strategy

CHAPTER 6 Strategy Formulation: Situation Analysis & Business Strategy THOMAS L. WHEELEN J. DAVID HUNGER 1

Situational Analysis Strategy formulation -–Strategic planning or long-range planning • Develops mission, objectives, strategies, policies 2

Situational Analysis --process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses 3

IFAS – Maytag as Example 4

EFAS – Maytag as Example 5

SFAS Matrix 6

Situational Analysis Niche -–Need in the marketplace that is currently unsatisfied 7

Situational Analysis Corporate Goal -–Find propitious niche –Strategic window 8

Situational Analysis SWOT -–Internal • Strengths/Weaknesses –External • Opportunities/Threats 9

TOWS Matrix 10

Business Strategy Focuses on improving competitive position of company’s products or services within the specific industry or market segment 11

Porter’s Competitive Strategies Generic Competitive Strategies -–Lower Cost strategy • Greater efficiencies than competitors –Differentiation strategy • Unique/superior value, quality, features, service 12

Porter’s Competitive Strategies Competitive Advantage -–Determined by Competitive Scope • Breadth of the target market 13

Porter’s Competitive Strategies 14

Porter’s Competitive Strategies Cost Leadership -–Low-cost competitive strategy –Broad mass market –Efficient-scale facilities –Cost reductions –Cost minimization 15

Porter’s Competitive Strategies Differentiation – –Broad mass market –Unique product/service –Premiums charged –Less price sensitivity 16

Porter’s Competitive Strategies Cost Focus – –Low-cost competitive strategy –Focus on market segment –Niche focused –Cost advantage in market segment 17

Porter’s Competitive Strategies Differentiation Focus – –Specific group or geographic market focus –Differentiation in target market –Special needs of narrow target market 18

Porter’s Competitive Strategies Stuck in the middle – –No competitive advantage –Below-average performance 19

Competitive Strategies Best Cost Provider – A company has an ability to incorporate attractive or upscale attributes at a lower cost than rivals. 20

Competitive Tactics Timing Tactics -–First mover –Late movers 21

Competitive Tactics Market Location Tactics -–Frontal Assault –Flanking Maneuver –Bypass Attack –Encirclement –Guerrilla Warfare 22

Competitive Tactics Defensive Tactics -–Raise structural barriers –Increase expected retaliation –Lower the inducement for attack 23

Cooperative Strategies • Collusion • Strategic Alliances • Mutual service consortia • Joint ventures • Licensing arrangements • Value-chain partnerships 24