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Introduction to Management LECTURE 18: Introduction to Management MGT 101 1 Introduction to Management In lecture 17 we discussed Topics from Chapter 8: • What is Strategic Management • Strategic Management Process • Types of Organizational Strategies • Corporate Strategy- Growth Strategies 2 Introduction to Management Today in Chapter 8 we will discuss • Corporate Strategies • Competitive Strategies • Strategic Management Today 3 Introduction to Management (Chapter 8) Chapter 8: Strategic Management 4 Introduction to Management (Chapter 8) Types of Organizational Strategies 5 Introduction to Management (Chapter 8) Corporate Strategies Stability Strategy A strategy that seeks to maintain the status quo to deal with the uncertainty of a dynamic environment, when the industry is experiencing slow- or no-growth conditions, or if the owners of the firm elect not to grow for personal reasons. 6 Introduction to Management (Chapter 8) Corporate Strategies Renewal Strategies Developing strategies to counter organization weaknesses that are leading to performance declines. 7 Introduction to Management (Chapter 8) Corporate Strategies Renewal Strategies Retrenchment: focusing of eliminating non-critical weaknesses and restoring strengths to overcome current performance problems. Turnaround: addressing critical longterm performance problems through the use of strong cost elimination measures and large-scale organizational restructuring solutions. 8 Introduction to Management (Chapter 8) Corporate Portfolio Analysis Managers manage portfolio (or collection) of businesses using a corporate portfolio matrix such as the BCG Matrix. 9 Introduction to Management (Chapter 8) Corporate Portfolio Analysis BCG Matrix Developed by the Boston Consulting Group Considers market share and industry growth rate 10 Introduction to Management (Chapter 8) Corporate Portfolio Analysis BCG Matrix Classifies firms as: Cash cows: low growth rate, high market share Stars: high growth rate, high market share Question marks: high growth rate, low market share Dogs: low growth rate, low market share 11 Introduction to Management (Chapter 8) 12 Introduction to Management (Chapter 8) Competitive Strategies 13 Introduction to Management (Chapter 8) Competitive Strategies A strategy focused on how an organization will compete in each of its SBUs (strategic business units). 14 Introduction to Management (Chapter 8) Competitive Strategies The Role of Competitive Advantage Competitive Advantage An organization’s distinctive competitive edge. 15 Introduction to Management (Chapter 8) The Role of Competitive Advantage Quality as a Competitive Advantage Differentiates the firm from its competitors. Can create a sustainable competitive advantage. Represents the company’s focus on quality management to achieve continuous improvement and meet customers’ demand for quality. 16 Introduction to Management (Chapter 8) Porter Five Forces Model 17 Introduction to Management (Chapter 8) Threat of New Entrants The ease or difficulty with which new competitors can enter an industry. 18 Introduction to Management (Chapter 8) Threat of Substitutes The extent to which switching costs and brand loyalty affect the likelihood of customers adopting substitutes products and services. 19 Introduction to Management (Chapter 8) Bargaining Power of Buyers The degree to which buyers have the market strength to hold sway over and influence competitors in an industry. 20 Introduction to Management (Chapter 8) Bargaining Power of Suppliers The relative number of buyers to suppliers and threats from substitutes and new entrants affect the buyersupplier relationship. 21 Introduction to Management (Chapter 8) Current Rivalry Intensity among rivals increases when industry growth rates slow, demand falls, and product prices descend. 22 Introduction to Management (Chapter 8) Types of Competitive Strategies Cost Leadership Strategy Seeking to attain the lowest total overall costs relative to other industry competitors. 23 Introduction to Management (Chapter 8) Types of Competitive Strategies Differentiation Strategy Attempting to create a unique and distinctive product or service for which customers will pay a premium. 24 Introduction to Management (Chapter 8) Types of Competitive Strategies Focus Strategy Using a cost or differentiation advantage to exploit a particular market segment rather a larger market. 25 Introduction to Management (Chapter 8) Strategic Management Today 26 Introduction to Management (Chapter 8) Strategic Flexibility New Directions in Organizational Strategies e-business customer service innovation 27 Introduction to Management (Chapter 8) Creating Strategic Flexibility • Know what’s happening with strategies currently being used by monitoring and measuring results. • Encourage employees to be open about disclosing and sharing negative information. • Get new ideas and perspectives from outside the organization. • Have multiple alternatives when making strategic decisions. • Learn from mistakes. 28 Introduction to Management (Chapter 8) Strategies for Applying e-Business Techniques Cost Leadership On-line activities: bidding, order processing, inventory control, recruitment and hiring 29 Introduction to Management (Chapter 8) Strategies for Applying e-Business Techniques Differentiation Internet-based knowledge systems, online ordering and customer support 30 Introduction to Management (Chapter 8) Strategies for Applying e-Business Techniques Focus Chat rooms and discussion boards, targeted Web sites 31 Introduction to Management (Chapter 8) Customer Service Strategies Giving the customers what they want. Communicating effectively with them. Providing employees with customer service training. 32 Introduction to Management (Chapter 8) Innovation Strategies Possible Events Radical breakthroughs in products. Application of existing technology to new uses. Strategic Decisions about Innovation Basic research Product development Process innovation 33 Introduction to Management (Chapter 8) Innovation Strategies First Mover An organization that brings a product innovation to market or use a new process innovations 34