Notes from Strategic Management - A Competitive Advantage Approach (17th Edition)

Chapter 5: Strategies in Action

Types of Strategies

• Integration Strategies:

  • Forward Integration:
  • Control over distributors/retailers.
  • Ensures product availability and reduces distribution costs.
  • Backward Integration:
  • Acquisition of suppliers.
  • Secures supply chain and reduces dependency.
  • Horizontal Integration:
  • Merging/acquiring competitors.
  • Increases market share and reduces competition.

• Intensive Strategies:

  • Market Penetration:
  • Increase sales of existing products in current markets
  • Achieved through marketing efforts.
  • Market Development:
  • Expand into new geographic markets using current products.
  • Product Development:
  • Create new/improved products to meet evolving customer demands.

• Diversification Strategies:

  • Related Diversification:
  • Expanding into industries related to existing business for synergy.
  • Unrelated Diversification:
  • Venturing into unrelated industries to spread risk.

• Defensive Strategies:

  • Retrenchment:
  • Reduce operations to cut losses and stabilize finances.
  • Divestiture:
  • Selling off divisions to refocus on core operations.
  • Liquidation:
  • Closing operations and selling assets when alternatives fail.

Michael Porter’s Five Generic Strategies

• Cost Leadership:
  • Achieve cost advantages through economies of scale.
• Differentiation:
  • Offer unique products/services that deliver customer value.
• Focus:
  • Target specific market segments with either cost or differentiation advantage.

Means for Achieving Strategies

• Joint Ventures and Partnerships:
  • Collaborations to enter new markets or develop products.
• Mergers and Acquisitions:
  • Combining/purchasing companies to gain market advantage.
• First Mover Advantages:
  • Gaining market leadership by being the first in a market.

Strategic Management in Non-Profit and Government Organizations

• Develop missions based on service rather than profit.
• Manage stakeholder relationships and ensure funding sustainability.

Chapter 6: Strategy Analysis and Choice

The Strategy-Formulation Analytical Framework

• Input Stage:

  • EFE Matrix: Analyze external opportunities/threats.
  • IFE Matrix: Assess internal strengths/weaknesses.
  • CPM: Evaluates competitors’ strengths/weaknesses.

• Matching Stage:

  • SWOT Analysis: Identifies strengths, weaknesses, opportunities, threats.
  • SPACE Matrix: Evaluates strategic positioning (financial strength, industry strength, competitive advantage).
  • BCG Matrix: Classifies business units as Stars, Cash Cows, Question Marks, or Dogs.
  • IE Matrix: Assesses business performance using IFE and EFE scores.
  • Grand Strategy Matrix: Select suitable strategies based on market growth and competitive position.

• Decision Stage:

  • QSPM: Prioritizes strategies using quantitative analysis.

Cultural Aspects of Strategy Choice

• Understand how company culture influences decision-making/implementation.

Governance Issues in Strategy Choice

• Consider the role of boards, shareholders, and leadership in decision-making.

Chapter 7: Implementing Strategies - Management and Operations Issues

Management Issues in Strategy Implementation

• Establish clear objectives aligned with strategic goals.
• Formulate policies for decision-making/resource allocation.
• Efficiently allocate resources to support initiatives.
• Manage conflicts through negotiation/collaboration.
• Address resistance to change using effective change management.

Operations Management in Strategy Implementation

• Value Chain Analysis: Assess primary and support activities for efficiency.
• Benchmarking: Compare performance metrics with industry best practices.
• Reengineering: Redesign processes for improved performance.
• Total Quality Management (TQM): Ensure continuous improvement in products and services.

Linking Performance and Pay to Strategies

• Develop incentive programs connected to strategic goals.
• Implement performance management systems to monitor/reward progress.

Chapter 8: Implementing Strategies - Marketing, Finance, Accounting, R&D, and MIS Issues

Marketing Issues

• Market Segmentation: Divide market into distinct groups.
• Product Positioning: Establish unique brand image.
• Pricing Strategies: Set competitive prices based on cost/value.
• Promotion Strategies: Use advertising/sales promotions for communication.
• Distribution Strategies: Ensure product availability through suitable channels.

Finance and Accounting Issues

• Evaluate financial ratios for liquidity and profitability.
• Manage working capital for operational efficiency.
• Create projected financial statements for future performance forecasting.
• Conduct break-even analysis to identify profitability thresholds.

R&D Issues

• Invest in R&D to innovate and maintain competitiveness.
• Improve existing products with enhancements.
• Weigh benefits of innovation against imitation.

Management Information System (MIS) Issues

• Collect/analyze data for decision-making support.
• Implement Decision Support Systems (DSS) for insights.
• Use monitoring and evaluation tools to track performance and identify improvement areas.