BNAD 302 10/3/13 Lecture 9 Outline of Last Lecture I. Goals, Action Plans, Operating PlansII. Plans, Policies, Procedures and RulesIII. What is MBO?Outline of Current LectureI. The Dynamics of Strategic PlanningII. What is an effective strategy?III. How companies can implement grand strategiesIV. The Strategic Management ProcessV. SWOT AnalysisVI. Porter’s Five Competitive ForcesCurrent LectureI. The Dynamics of Strategic Planninga. Strategy: large scale action plan that sets the direction for an organizationb. Strategic Management: Process that involves managers from all parts of the organization in the formula and the implementation of strategies and strategic goals.c. Sustainable competitive advantage occurs when an organization can stay ahead in four areas:i. Being responsive to customersii. Innovationiii. Qualityiv. EffectivenessII. What is an effective strategy?a. Strategic Positioningi. Attempts to achieve sustainable competitive advantage by preserving what is distinctive about a companyii. Performing different activities from rivals, or performing similar activities in different ways1. Strategy is the creation of a unique and valuable position2. Strategy requires trade-offs in competing3. Strategy involves creating a “fit” among activitiesThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.b. Common Grand Strategiesi. Growth Strategy1. Involves expansion – as in sales revenues, market share, number of employees, or number of customersii. Stability1. Involves little or no significant changeiii. Defensive1. Involves reduction in the organization’s effort2. RetrenchmentIII. How companies can implement grand strategiesa. Growth Strategyi. It can improve an existing product or service to attract more buyersii. It can increase its promotion and marketingb. Stability Strategyc. Defensive StrategyIV. The Strategic Management Processa. Strategy Formulationi. Process of choosing among different strategies and altering them to best fit the organizations needsb. Strategy Implementationi. Putting strategic plans into effectc. Strategic Controli. Consists of monitoring the execution of strategy and making adjustments,if necessarya. Engage Peopleb. Keep it simplec. Stay focusedd. Keep movingV. SWOT Analysisa. Environmental Scanningi. Careful monitoring of an organization’s internal and external environments to detect early signs of opportunities and threats that may influence the firms plansb. Organizational opportunitiesi. Environmental factors that the organization may exploit for competitive advantagec. Organizational threatsi. Environmental factors that hinder an organizations achieving a competitived. Forecasting: predicting the futurei. Trend analysis1. Hypothetical extension of a past series of events into the futureii. Contingency Planning1. Creation of alternative hypothetical but equally likely future conditions2. Also called scenario planning and scenario analysisVI. Porter’s Five Competitive Forcesa. Threat of New Entrantsb. Bargaining Power of Suppliersc. Bargaining power of buyersd. Threat of substitute products or servicese. Rivalry among competitorsVII. Porter’s Four Competitive Strategiesa. Cost-Leadership (Wide)b. Differentiation (Wide)c. Cost-Focus (Narrow)d. Focused-Differentiation (Narrow)VIII. Single Product vs. Diversificationi. Company makes and sells only one product within its marketii. Benefit-Focusiii. Risk-Vulnerabilityb. Diversificationi. Operating several businesses under one ownership that are not related toone anotherii. Related / Unrelatedc. Advantages of Related Diversificationi. Reduced Risk, because of more than one productii. Management efficiencies: administration spread over several businessesiii. Synergy: the sum is greater than the partsd. The BCG Matrixi. Stars (High Market Share, High Growth Rate)ii. Question Marks (Low Market Share, Low Growth Rate)iii. Cash-Cows (High Market Share, Low Growth Rate)iv. Dogs (Low Market Share, Low Growth Rate)e. The Three Core Processes of Businessesi. People1. Consider who will benefit you in the futureii. Strategy1. Consider how success will be accomplishediii. Operations1. Consider what path will be