CHAPTER 8 Strategy Formulation Functional Strategy Strategic Choice

CHAPTER 8 Strategy Formulation: Functional Strategy & Strategic Choice STRATEGIC MANAGEMENT & BUSINESS POLICY 11 TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1

Functional Strategy The approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity 2

Functional Strategy Marketing Strategy – –Pricing –Selling –Distribution 3

Functional Strategy Marketing Strategy – –Product development • Line extension 4

Functional Strategy Marketing Strategy – –Advertising and promotion • Push strategy • Pull strategy 5

Functional Strategy Marketing Strategy – –Pricing • Skim pricing • Penetration pricing • Dynamic pricing 6

Functional Strategy Financial Strategy – –Leveraged buyout –Reversed stock split –Tracking stock 7

Functional Strategy R&D Strategy – –Technological leader –Technological follower –Open innovation 8

Functional Strategy Operations Strategy – –Job shop –Connected line batch flow –Flexible manufacturing systems –Dedicated transfer lines –Mass production –Continuous improvement system –Modular manufacturing 9

Functional Strategy Purchasing Strategy – –Multiple sourcing –Sole sourcing –Just-in-time (JIT) –Parallel sourcing 10

Functional Strategy Logistics Strategy – –Centralization –Outsourcing –Internet 11

Functional Strategy HRM Strategy – – 360 degree appraisal 12

Proposed Outsourcing Matrix 13

Functional Strategy Strategies to Avoid – – Follow the leader –Hit another home run –Arms race –Do everything –Losing hand 14

Constructing Corporate Scenarios 15

Functional Strategy Subjective Factors Affecting Decisions -–Management’s attitude toward risk –Pressures from stakeholders –Pressures from corporate culture –Needs and desires of key managers 16

Stakeholder Priority Matrix 17

Strategic Choice Avoiding the Consensus Trap -–Devil’s Advocate –Dialectical Inquiry 18