Perumusan dan Implementasi Strategi

Every company is concerned with strategy. Strategic blunders can hurt a company. In this
chapter, we will explore strategic management, which is one specific type of planning. First, we
defi ne the components of strategic management and discuss the purposes and levels of strategy.
Then, we examine several models of strategy formulation at the corporate and business levels.
Finally, we discuss the tools managers use to execute their strategic plans.

Thinking Strategically

What does it mean to think strategically? Strategic thinking means to take the longterm
view and to see the big picture, including the organization and the competitive environment, and
consider how they fit together.

What Is Strategic Management?

Strategic management refers to the set of decisions and actions used to formulate and
execute strategies that will provide a competitively superior fit between the organization and its
environment so as to achieve organizational goals. Managers ask questions such as the following:
What changes and trends are occurring in the competitive environment? Who are our competitors
and what are their strengths and weaknesses? Who are our customers? What products or services
should we offer, and how can we offer them most effi ciently? What does the future hold for our
industry, and how can we change the rules of the game? Answers to these questions help managers
make choices about how to position their organizations in the environment with respect to rival
companies.

Purpose of Strategy

The first step in strategic management is to defi ne an explicit strategy, which is the plan
of action that describes resource allocation and activities for dealing with the environment,
achieving a competitive advantage, and attaining the organization’s
goals. Competitive advantage refers to what sets the organization apart from others and provides
it with a distinctive edge for meeting customer or client needs in the marketplace. The essence of
formulating strategy is choosing how the organization will be different.
 Exploit Core Competence A company’s core competence is something the organization
does especially well in comparison to its competitors. A core competence represents a competitive
advantage because the company acquires expertise that competitors do not have. A core
competence may be in the area of superior research and development, expert technological know-
how, process efficiency, or exceptional customerservice.

Build Synergy When organizational parts interact to produce a joint effect that is greater
than the sum of the parts acting alone, synergy occurs. The organization may attain a special
advantage with respect to cost, market power, technology, or management skill. When properly
managed, synergy can create additional value with existing resources, providing a big boost to the
bottom line.

Deliver Value Delivering value to the customer is at the heart of strategy. Value can be defi
ned as the combination of benefi ts received and costs paid. Managers help their companies create
value by devising strategies that exploit core competencies and attain synergy.

Levels of Strategy

What Business Are We In? This is the question managers address when they consider
corporate-level strategy. Corporate-level strategy pertains to the organization as a whole and the
combination of business units and product lines that make up the corporate entity. Strategic actions
at this level usually relate to the acquisition of new businesses; additions or divestments of business
units, plants, or product lines; and joint ventures with other corporations in new areas.

How Do We Compete? Business-level strategy pertains to each business unit or product

line. Strategic decisions at this level concern amount of advertising, direction and extent of
research and development, product changes, new-product development, equipment and facilities,
and expansion or contraction of product and service lines.

How Do We Support the Business-Level Strategy? Functional-level strategy pertains to the major
functional departments within the business unit. Functional strategies involve all of the major
functions, including fi nance, research and development, marketing, and manufacturing.

The Strategic Management Process

Strategy Formulation Versus Execution

Strategy formulation includes the planning and decision making that lead to the
establishment of the firm’s goals and the development of a specific strategic plan. Strategy
formulation may include assessing the external environment and internal problems and integrating
the results into goals and strategy. This process is in contrast to strategy execution, which is the
use of managerial and organizational tools to direct resources toward accomplishing strategic
results. Strategy execution is the administration and implementation of the strategic plan.
Managers may use persuasion, new equipment, changes in organization structure, or a revised
reward system to ensure that employees and resources are used to make formulated strategy a
reality.

SWOT Analysis

SWOT analysis includes a search for strengths, weaknesses, opportunities, and threats that
affect organizational performance. External information about opportunities and threats may be
obtained from a variety of sources, including customers, government reports, professional journals,
suppliers, bankers, friends in other organizations, consultants, or association meetings. Many fi
rms hire special scanning organizations to provide them with newspaper clippings, Internet
research, and analyses of relevant domestic and global trends.

Internal Strengths and Weaknesses Strengths are positive internal characteristics that the
organization can exploit to achieve its strategic performance goals. Weaknesses are internal
characteristics that might inhibit or restrict the organization’s performance.

External Opportunities and Threats Threats are characteristics of the external environment
that may prevent the organization from achieving its strategic goals. Opportunities are
characteristics of the external environment that have the potential to help the organization achieve
or exceed its strategic goals.

The task environment sectors are the most relevant to strategic behavior and include the
behavior of competitors, customers, suppliers, and the labor supply. The general environment
contains those sectors that have an indirect infl uence on the organization but nevertheless must be
understood and incorporated into strategic behavior. The general environment includes
technological developments, the economy, legal-political and international events, natural
resources, and sociocultural changes. Additional areas that might reveal opportunities or threats
include pressure groups, interest groups, creditors, and potentially competitive industries.

Formulating Corporate-Level Strategy

Portfolio Strategy

In much the same way, corporations like to have a balanced mix of business divisions
called strategic business units (SBUs). An SBU has a unique business mission, product line,
competitors, and markets relative to other SBUs in the corporation. Executives in charge of the
entire corporation generally define an overall strategy and then bring together a portfolio of
strategic business units to carry it out. Portfolio strategy pertains to the mix of business units and
product lines that fit together in a logical way to provide synergy and competitive advantage for
the corporation. Managers don’t like to become too dependent on one business.

The BCG Matrix

The BCG matrix organizes businesses along two dimensions—business growth rate and
market share.Business growth rate pertains to how rapidly the entire industry is increasing. Market
share defi nes whether a business unit has a larger or smaller share than competitors. The
combinations of high and low market share and high and low business growth provide four
categories for a corporate portfolio.

The star has a large market share in a rapidly growing industry. The star is important
because it has additional growth potential, and profi ts should be plowed into this business as
investment for future growth and profi ts. The star is visible and attractive and will generate profi
ts and a positive cash fl ow even as the industry matures and market growth slows.

The cash cow exists in a mature, slow-growth industry but is a dominant business in the
industry, with a large market share. Because heavy investments in advertising and plant expansion
are no longer required, the corporation earns a positive cash flow. It can milk the cash cow to
invest in other, riskier businesses.

The question mark exists in a new, rapidly growing industry, but has only a small market
share. The question mark business is risky: It could become a star, or it could fail. The corporation
can invest the cash earned from cash cows in question marks with the goal of nurturing them into
future stars.

The dog is a poor performer. It has only a small share of a slow-growth market. The dog
provides little profi t for the corporation and may be targeted for divestment or liquidation if
turnaround is not possible.

Diversification Strategy

Diversification A strategy of moving into new lines of business. Related

diversification Moving into a new business that is related to the company’s existing business
activities. Unrelated diversification Expanding into a totally newline of businessA firm’s managers
may also pursue diversifi cation opportunities to create valuethrough a strategy of vertical
integration. Vertical integration means the companyexpands into businesses that either produce
the supplies needed to make productsor that distribute and sell those products to customers.

Formulating Business-Level Strategy

Now we turn to strategy formulation within the strategic business unit, in which the concern
is how to compete. A popular and effective model for formulating strategy is Porter’s competitive
forces and strategies. Michael E. Porter studied a number of business organizations and proposed
that business-level strategies are the result of five competitive forces in the company’s
environment.

Porter’s Five Competitive Forces

1. Potential new entrants. Capital requirements and economies of scale are examples of two
potential barriers to entry that can keep out new competitors. It is far more costly to enter
the automobile industry, for instance, than to start a specialized mail-order business.
2. Bargaining power of buyers. Informed customers become empowered customers. The
Internet provides easy access to a wide array of information about products, services, and
competitors, thereby greatly increasing the bargaining power of end consumers.
3. Bargaining power of suppliers. The concentration of suppliers and the availability of
substitute suppliers are significant factors in determining supplier power. The sole supplier
of engines to a manufacturer of small airplanes will have great power.
 4. Threat of substitute products. The power of alternatives and substitutes for a company’s
product may be affected by changes in cost or in trends such as increased health
consciousness that will defl ect buyer loyalty.
5. Rivalry among competitors. Rivalry among competitors is influenced by the preceding four
forces, as well as by cost and product differentiation. With the leveling force of the Internet
and information technology, it has become more diffi cult for many companies to fi nd
ways to distinguish themselves from their competitors, which intensifies rivalry

Competitive Strategies

Differentiation. The differentiation strategy involves an attempt to distinguish the firm’s

products or services from others in the industry. The organization may use creative advertising,
distinctive product features, exceptional service, or new technology to achieve a product perceived
as unique.

Cost leadership. With a cost leadership strategy, the organization aggressively seeks effi
cient facilities, pursues cost reductions, and uses tight cost controls to produce products more effi
ciently than competitors. A low-cost position means that the company can undercut competitors’
prices and still offer comparable quality and earn a reasonable profit.

Focus. With a focus strategy, the organization concentrates on a specifi c regional market
or buyer group. The company will use either a differentiation or cost leadership approach, but only
for a narrow target market. Save-A-Lot, described earlier, uses a focused cost leadership strategy,
putting stores in low-income areas.

New Trends In Strategy

Organizations have been in a merger and acquisition frenzy in recent years. Some
companies still seek to gain or keep a competitive edge by acquiring new capabilities via mergers
and acquisitions. Yet today, a decided shift has occurred toward enhancing the organization’s
existing capabilities as the primary means of growing and innovating. Another current trend is
using strategic partnerships as an alternative to mergers and acquisitions.

Innovation from Within

 The strategic approach referred to as dynamic capabilities means that managers focus on
leveraging and developingmore from the fi rm’s existing assets, capabilities, and corecompetencies
in a way that will provide a sustained competitiveadvantage. Learning, reallocation of
existingassets, and internal innovation are the route to addressing new challenges in the
competitive environment and meeting new customer needs.

Strategic Partnerships

Internal innovation doesn’t mean companies always go it alone, however. Collaboration

with other organizations, sometimes even with competitors, is an important part of how today’s
successful companies enter new areas of business.

Global Strategy

Many organizations operate globally and pursue a distinct strategy as the focus of global
business. Senior executives try to formulate coherent strategies to provide synergy among
worldwide operations for the purpose of fulfi lling common goals. Yet managers face a strategic
dilemma between the need for global integration and national responsiveness.

Globalization

When an organization chooses a strategy of globalization, it means that product design and
advertising strategies are standardized throughout the world. This approach is based on the
assumption that a single global market exists for many consumer and industrial products. The
theory is that people everywhere want to buy the same products and live the same way.

Multidomestic Strategy

When an organization chooses a multidomestic strategy, it means that competition in each

country is handled independently of industry competition in other countries. Thus, a multinational
company is present in many countries, but it encourages marketing, advertising, and product
design to be modifi ed and adapted to the specific needs of each country.

Transnational Strategy

A transnational strategy seeks to achieve both global integration and national

responsiveness. A true transnational strategy is diffi cult to achieve, because one goal requires
close global coordination while the other goal requires local flexibility. However, many industries
are fi ndingthat, although increased competition means they must achieve global effi ciency,
growing pressure to meet local needs demands national responsiveness.

Strategy Execution

The final step in the strategic management process is strategy execution—how strategy is
implemented or put into action. Many people argue that execution is the most important, yet the
most diffi cult, part of strategic management.Indeed, many struggling companies may have fi le
drawers full of winning strategies, but managers can’t effectively execute them.

 Leadership. The primary key to successful strategy execution is leadership. Leadership is

the ability to influence people to adopt the new behaviors needed forputting the strategy
into action. Leaders use persuasion, motivation techniques,and cultural values to support
the new strategy. They might make speeches toemployees, build coalitions of people who
support the new strategic direction,and persuade middle managers to go along with their
vision for the company.
 Structural Design. Structural design pertains to managers’ responsibilities, their degree of
authority, and the consolidation of facilities, departments, and divisions. Structure also
pertains to such matters as centralization versus decentralization and the design of job
tasks. Trying to execute a strategy that confl icts with structural design, particularly in
relation to managers’ authority and responsibility, is a top obstacle to putting strategy into
action effectively.Many new strategies require making changes in organizational structure,
such as adding or changing positions, reorganizing to teams, redesigning jobs, or shifting
managers’ responsibility and accountability.
 Information and Control Systems. Information and control systems include reward
systems, pay incentives, budgets for allocating resources, information technology systems,
and the organization’s rules, policies, and procedures. Changes in these systems represent
major tools for putting strategy into action.
 Human Resources. The organization’s human resources are its employees. The human
resource function recruits, selects, trains, transfers, promotes, and lays off employees to
achieve strategic goals.