CHAPTER 8 Strategy Formulation Functional Strategy Strategic Choice

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CHAPTER 8 Strategy Formulation: Functional Strategy & Strategic Choice STRATEGIC MANAGEMENT & BUSINESS POLICY

CHAPTER 8 Strategy Formulation: Functional Strategy & Strategic Choice STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1

Functional Strategy The approach a functional area takes to achieve corporate and business unit

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 – –Pricing –Selling –Distribution 3

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

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

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

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

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

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

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

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

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

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

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

Functional Strategy HRM Strategy – – 360 degree appraisal 12

Functional Strategy HRM Strategy – – 360 degree appraisal 12

Functional Strategy Outsourcing errors – –Activities that should not be outsourced –Wrong vendor selection

Functional Strategy Outsourcing errors – –Activities that should not be outsourced –Wrong vendor selection –Writing poor contract –Overlooking personnel issues –Hidden costs of outsourcing –Failing to plan exit strategy 13

Proposed Outsourcing Matrix 14

Proposed Outsourcing Matrix 14

Functional Strategy Strategies to Avoid – – 3 Follow the leader –Hit another home

Functional Strategy Strategies to Avoid – – 3 Follow the leader –Hit another home run –Arms race –Do everything –Losing hand 15

Corporate Strategy Growth Strategies -–External mechanisms • Mergers • Acquisitions • Strategic alliances 16

Corporate Strategy Growth Strategies -–External mechanisms • Mergers • Acquisitions • Strategic alliances 16

Constructing Corporate Scenarios 17

Constructing Corporate Scenarios 17

Functional Strategy Subjective Factors Affecting Decisions -–Management’s attitude toward risk –Pressures from stakeholders –Pressures

Functional Strategy Subjective Factors Affecting Decisions -–Management’s attitude toward risk –Pressures from stakeholders –Pressures from corporate culture –Needs and desires of key managers 18

Stakeholder Priority Matrix 19

Stakeholder Priority Matrix 19

Strategic Choice Avoiding the Consensus Trap -–Devil’s Advocate –Dialectical Inquiry 20

Strategic Choice Avoiding the Consensus Trap -–Devil’s Advocate –Dialectical Inquiry 20

Strategic Choice Evaluation of Strategic Alternatives -–Mutual exclusivity –Success –Completeness –Internal consistency 21

Strategic Choice Evaluation of Strategic Alternatives -–Mutual exclusivity –Success –Completeness –Internal consistency 21