COURSE DESCRIPTION

A specialized course in Business Administration.

STRATEGIC To provide learners with knowledge of strategy

and strategic management: analysis of the
MANAGEMENT business environment, strategic formulation,
strategy implementation, strategy evaluation and
TRAN NGOC THIEN THY control.

When finishing the course, learners should be

able to undertake strategic management in
different types of business organizations.

COURSE OBJECTIVES TEXTBOOK

To identify, analyse and evaluate the core insights of

Wheelen, Thomas L., J. David Hunger, Alan Nathan
the strategic management process.
Hoffman, and Charles E. Bamford (2018). Strategic
To identify and implement activities throughout the
Management and Business Policy: Globalization,
strategic management process.
To develop, implement and evaluate business Innovation and Sustainability, Pearson, 15th Edition.
strategy. Michael A. Hitt, R. Duane Ireland, Robert E.
To innovate and modify differences in order to
Hoskisson, Jeffrey S. Harrison (2023), Strategic
implement new business strategies.
Management: Concepts and Cases:
To evaluate the business strategy and identify the
Competitiveness and Globalization, 14th Edition.
causes of the success and failure of the strategy.
 ASSESSMENT DETAILS COURSE OUTLINE

Assessment Type Category Weighting

Chapter 1: Introduction of Strategic Management

Class participation 10% Chapter 2: Business Environment Analysis

Formative assessment
Assignment 20% Chapter 3: Strategy Formulation

Presentation 20% Chapter 4: Strategy Selection

Chapter 5: Strategy Implementation

Summative assessment Individual exam 50%
Chapter 6: Strategic Evaluation And Control

Total 100%

LEARNING OBJECTIVES

Understand the benefits of strategic management

Chapter 1
Understand the basic model of strategic management and
its components
INTRODUCTION OF
Identify some common triggering events that act as stimuli
STRATEGIC MANAGEMENT for strategic change
Understand strategic decision-making modes
Use the strategic audit as a method of analyzing corporate
functions and activities
 MANAGEMENT STRATEGY

Strategy

Strategy is a set of goal-directed actions a firm

takes to gain and sustain superior performance
relative to competitors.

COMPETITIVE ADVANTAGE

Competitive advantage

Superior performance relative to other

competitors in the same industry or the industry
average.
 STRATEGY STRATEGIC MANAGEMENT

Good Strategy Strategic Management

A diagnosis of the environment. a set of managerial decisions and actions that

An overarching approach/guiding policy. determines the long-run performance of a

corporation.
A set of coherent actions.

A correction action.

BASIC MODEL OF
STRATEGIC MANAGEMENT BASIC ELEMENTS OF
THE STRATEGIC MANAGEMENT PROCESS
Strategic management consists of 4 basic elements:
Environmental scanning
Strategy formulation
Strategy implementation
Evaluation and control
Strategic Management includes:
Planning
Organizing and Leading
Controlling
 BASIC MODEL OF BASIC MODEL OF
STRATEGIC MANAGEMENT STRATEGIC MANAGEMENT

Strategy formulation
Environmental scanning
process of investigation, analysis and decision
the monitoring, evaluating and disseminating of
making that provides the company with the
information from the external and internal
criteria for attaining a competitive advantage
environments to key people within the
includes defining the competitive advantages
organization
of the business (Strategy), crafting the
SWOT analysis
corporate mission, specifying achievable
objectives and setting policy guidelines.

BASIC MODEL OF BASIC MODEL OF

STRATEGIC MANAGEMENT STRATEGIC MANAGEMENT

Strategy Strategy implementation: a process by which

forms a comprehensive master approach that strategies and policies are put into action through
states how the corporation will achieve its the development of programs, budgets and
mission and objectives procedures
maximizes competitive advantage and
minimizes competitive disadvantage
corporate, business, functional level
 BASIC MODEL OF BASIC MODEL OF
STRATEGIC MANAGEMENT STRATEGIC MANAGEMENT

Evaluation and control: a process in which Performance

corporate activities and performance results are the end result of organizational activities
monitored so that actual performance can be includes the actual outcomes of the strategic
compared with desired performance management process
Feedback/Learning process: revise or correct
decisions based on performance

INITIATION OF STRATEGY:
TRIGGERING EVENTS

Triggering event: something that acts as a stimulus Chapter 2

for a change in strategy and can include:
New CEO BUSINESS ENVIRONMENTAL
External intervention
ANALYSIS
Threat of change of ownership
Performance gap
Strategic inflection point
 LEARNING OBJECTIVES

Conduct an industry analysis to understand the

competitive forces
Identify key success factors and develop an industry matrix
Be able to construct an EFAS Table that summarizes BUSINESS ENVIRONMENT
external environmental factors
Apply the resource-based view of the firm to determine
core and distinctive competencies
Use the VRIO framework and the value chain to assess an

sustained
Construct an IFAS Table that summarizes internal factors

BUSINESS ENVIRONMENT EXTERNAL ENVIRONMENT

Business environment is the sum/total of all An external environment analysis focuses on

external and internal environmental factors that identifying and evaluating trends and events
influence a business. beyond the control of a single firm.
Importantly, external factors and internal factors These factors can be grouped into opportunities
can influence each other and work together to
and threats of an organization.
affect a business.
Before strategy formulation, we must deeply
understand the context of the environment in
which our organization competes
 ENVIRONMENTAL SCANNING
INTERNAL ENVIRONMENT

Internal environment factors refer to anything Environmental scanning

within the company and under the control of the the monitoring, evaluation, and dissemination of

company no matter whether they are tangible information relevant to the organizational

or intangible. development of strategy

These factors can be grouped into the strengths

and weaknesses of the company

ENVIRONMENT

Must involve as many managers and employees

as possible.
Various sources of information. EXTERNAL SCANNING
Periodic and Special reports.
A prioritized list of factors.
MACRO ENVIRONMENT
MICRO ENVIRONMENT
INDUSTRY STRUCTURE

KEY QUESTIONS ABOUT

COMPETITORS
 THREAT OF NEW ENTRANTS

Threat of new entrants: new entrants to an industry

bring new capacity, a desire to gain market share
and substantial resources
Entry barrier: an obstruction that makes it difficult
for a company to enter an industry

BARRIERS TO ENTRY
RIVALRY AMONG EXISTING FIRMS

In most industries, corporations are mutually

Economies of scale
dependent.
Product differentiation
A competitive move by one firm can be
Capital requirements
expected to have a noticeable effect on its
Switching costs
competitors and thus may cause retaliation.
Access to distribution channels
Cost disadvantages due to size
Government policies
 THREAT OF
RIVALRY AMONG EXISTING FIRMS SUBSTITUTE PRODUCTS OR SERVICES

Substitute product:
Rate of Product or
Number of a product that appears to be different but
industry service
competitors characteristics
growth can satisfy the same need as another
product
Amount of Height of exit
Capacity The identification of possible substitute
fixed costs barriers
products means searching for products that
Diversity of can perform the same function, even though
rivals they have a different appearance.

THE BARGAINING THE BARGAINING

POWER OF BUYERS POWER OF SUPPLIERS
Bargaining power of buyers
ability of buyers to force prices down, bargain Buyers affect an industry through their ability to

for higher quality and play competitors against force down prices, bargain for higher quality or

each other more services and play competitors against each

Large purchases, backward integration, other.

alternative suppliers, low cost to change

suppliers, product represents a high

profits, product is unimportant to buyer

 THE BARGAINING RELATIVE POWER OF
POWER OF SUPPLIERS OTHER STAKEHOLDERS

A buyer or a group of buyers is powerful if some of Government

the following factors hold true: Local communities
Industry is dominated by a few companies Creditors
Unique product or service Trade associations
Substitutes are not readily available Special interest groups
Ability to forward integrate Unions
Unimportance of product or service to the industry Shareholders

EXTERNAL FACTOR
ANALYSIS SUMMARY- EFAS
 INDUSTRY EVOLUTION INDUSTRY MATRIX

Fragmented industry: no firm has a large market

Industry matrix: summarizes the key success
share and each firm only serves a small piece of
factors within a particular industry
the total market in competition with other firms
Consolidated industry: domination by a few large
firms, each struggles to differentiate products from
its competition

USEFUL FORECASTING TECHNIQUES

Expert
Extrapolation Brainstorming
opinion

INTERNAL SCANNING
Delphi Statistical Prediction
technique modeling markets

Cross impact
analysis
 CORE AND DISTINCTIVE
ORGANIZATIONAL ANALYSIS COMPETENCIES
Resources
Organizational analysis
building blocks of the organization
concerned with identifying and
tangible, intangible
Capabilities
and competencies
resources
consist of business processes and routines that
manage the interaction among resources to
turn inputs into outputs

CORE AND DISTINCTIVE

COMPETENCIES

Core competency: a collection of competencies

that cross divisional boundaries, is wide-spread
throughout the corporation and is something the
corporation does exceedingly well
Distinctive competency: core competencies that
are superior to those of the competition
 VRIO FRAMEWORK OF ANALYSIS

1. Value: Does it provide customer value and

competitive advantage?
2. Rareness: Do no other competitors possess it?
3. Imitability: Is it costly for others to imitate?
4. Organization: Is the firm organized to exploit the
resource?

USING RESOURCES VALUE-CHAIN ANALYSIS

TO GAIN COMPETITIVE ADVANTAGE
Value chain: a linked set of value-creating
1. Identify and classify resources in terms of activities that begin with basic raw materials
strengths and weaknesses
2. coming from suppliers, moving on to a series of
capabilities and core competencies value-added activities involved in producing and
3. Appraise profit potential Are there any
distinctive competencies? marketing a product or service and ending with
4. Select the strategy that best exploits distributors getting the final goods into the hands
capabilities and competencies relative to
external opportunities of the ultimate consumer
5. Identify resource gaps and invest in upgrading
weaknesses
 INDUSTRY VALUE CHAIN ANALYSIS CORPORATE VALUE CHAIN ANALYSIS

Value chain segments include:

Primary activities Support activities
Upstream
Downstream Inbound logistics Procurement

Center of gravity: the part of the chain that is most Operations Technology
important to the company and the point where its Outbound logistics development
core competencies lie Human resource
management

Firm infrastructure

INTERNAL FACTOR
ANALYSIS SUMMARY- - IFAS
 CRITICISMS OF SWOT ANALYSIS
GENERATING A STRATEGIC FACTORS
ANALYSIS SUMMARY (SFAS) MATRIX
It is simply the opinions of those filling out the
boxes.
Virtually everything that is a strength is also a SFAS (Strategic Factors Analysis Summary) Matrix
weakness.
Virtually everything that is an opportunity is also a
threat. combining the external factors from the EFAS
Adding layers of effort does not improve the
validity of the list. Table with the internal factors from the IFAS Table
It uses a single point in time approach.
There is no tie to the view from the customer.
There is no validated evaluation approach.
 STRATEGIC FACTOR
ANALYSIS SUMMARY (SFAS) MATRIX

Chapter 3

STRATEGY FORMULATION

MISSION,
CORPORATE DIRECTION VISION, VALUES
 MISSION MISSION

Google:
A mission statement it universally accessible and useful

present business and purpose Hilton Hotel: To fill the earth with light and the warmth of
hospitality
The New York Times: To enhance society by creating,
collecting and distributing high-quality news and
information
Tesla:
transport by providing affordable zero-emission mass-
market cars that are the best in class.

STRATEGIC VISION
DEVELOPING A COMPANY
MISSION STATEMENT

The Mission Statement: A strategic vision

Uses specific language to give the firm its own aspirations for the future and delineates the
unique identity.
-term
purpose direction.

earning a profit is an
objective not a mission.
 VISION VISION

Nike: NIKE, Inc. fosters a culture of invention. We

A vision statement create products, services and experiences for
aspirations for its future
generation.

British Broadcasting Company (BBC): To be the

most creative organization in the world

Avon: To be the company that best understands

and satisfies the product, service and self-fulfilment
needs of women globally

VISION VISION

The distinction between a strategic vision and a

Developing a Strategic Vision: mission statement is fairly clear-cut:

A strategic vision
the firm to its stakeholders.
Provides direction
A describes its purpose and its
Sets out the compelling rationale

Uses distinctive and specific language to set

the firm apart from its rivals.
 CORE VALUES CORE VALUES

core values are the beliefs, traits, and Core Values are a set of values to guide the

behavioral actions and behaviour of company personnel in

are expected to display in conducting the

pursuing its strategic vision and mission.

and mission.

CORE VALUES VINGROUP

Levi Strauss found that one of its contractors was Mission: To Create a Better Life For People
employing children under 15 in a factory in Bangladesh.
The easy solution would be to replace those workers, Vision: Vingroup aims to develop into a leading
Technology Industry Services group in the
supported an entire family. And if they lost their jobs, region. We will continuously innovate, create
they may have had to resort to begging on the streets.
sustainable ecosystems of quality products and
Levi Strauss came up with a different solution, one that
supported its values of empathy, originality, integrity, services, to improve the lives of the Vietnamese
and courage: it paid the children to go to school. Levi people, and elevate the position of Vietnamese
Strauss continued to pay salaries and benefits to the brands globally.
children and paid for tuition, books, and supplies.
 VINGROUP

Core Values:

Credibility Integrity Creativity Speed Quality

Humanity

TÂM TRÍ T C TINH OBJECTIVES

OBJECTIVES OBJECTIVES

Objectives Objectives vs Goals

targets the specific results management wants Areas of objectives
to achieve.
Characteristics of wells-stated objectives
Stretch objectives set performance targets high Prioritized objectives
enough to stretch an organization to perform at
its full potential and deliver the best possible
results.
 OBJECTIVES BALANCED SCORECARD

The Balanced Scorecard is a widely used method

The Purposes of Setting Objectives:
for combining the use of both strategic and
To convert the vision and mission into specific,
measurable, timely performance targets. financial objectives, tracking their achievement,
To focus efforts and align actions throughout the and giving management a more complete and
organization.
balanced view of how well an organization is
performing.
performance and progress.
To provide motivation and inspire
employees to greater levels of effort.

OBJECTIVES

STRATEGY
 CRAFTING A STRATEGY STRATEGY MAKING
INVOLVES MANAGERS AT ALL
Strategy Making: ORGANIZATIONAL LEVELS
Chief Executive Officer (CEO): Has ultimate
responsibility for leading the strategy-making
process as strategic visionary and as chief
Requires choosing among strategic alternatives. architect of strategy.
Promotes actions to do things differently from Senior Executives: Fashion the major strategy
components involving their areas of responsibility.
competitors rather than running with the herd.
Managers of subsidiaries, divisions, geographic
Is a collaborative team effort that involves regions, plants, and other operating units (and
key employees with specialized expertise): Utilize
managers in various positions at all on-the-scene familiarity with their business units to
organizational levels. orchestrate their specific pieces of the strategy.

CORPORATE STRATEGY
 CORPORATE STRATEGY CORPORATE STRATEGY

Corporate strategy:
the choice of direction of the firm as a 1. Directional strategy towards growth

whole and the management of its business 2. Portfolio analysis

or product portfolio and concerns 3. Parenting strategy

CORPORATE
DIRECTIONAL STRATEGY

CORPORATE
DIRECTIONAL STRATEGY
 STABILITY STRATEGIES
WHY FIRMS NEED TO GROW

Pause/Proceed with caution strategy

Increasing profits
Lowering costs No-change strategy
Increasing market power
Reducing risk Profit strategies
Managerial motives

GROWTH CONCENTRATION STRATEGIES

Vertical growth Vertical growth: achieved by taking over a

function previously provided by a supplier or
Backward integration distributor
Forward integration
Horizontal growth Vertical integration: the degree to which a firm
operates vertically in multiple locations on an

to manufacturing to retailing
 VERTICAL INTEGRATION CONCENTRATION STRATEGIES

Backward integration: assuming a function Horizontal growth: expansion of operations into

previously provided by a supplier other geographic locations and/or increasing the
range of products and services offered to current
Forward integration: assuming a function markets
previously provided by a distributor

Horizontal integration: the degree to which a firm

operates in multiple geographic locations at the

DIVERSIFICATION STRATEGIES RETRENCHMENT STRATEGIES

Concentric (Related) diversification Turnaround strategy

Contraction
Consolidation
Conglomerate (Unrelated) diversification Rebirth
Captive company strategy
Sell-out strategy/Divestment
Bankruptcy/Liquidation
 CONTROVERSIES IN
DIRECTIONAL STRATEGIES

Is vertical growth better than horizontal growth? CORPORATE

Is concentration better than diversification?
PORTFOLIO ANALYSIS
Is concentric diversification better than
conglomerate diversification?

PORTFOLIO ANALYSIS

Portfolio analysis: management views its product

lines and business units as a series of investments
from which it expects a profitable return
 BCG MATRIX - LIMITATION ADVANTAGES AND LIMITATIONS
OF PORTFOLIO ANALYSIS
Use of highs and lows to form categories is too
Advantages
simplistic.
Link between market share and profitability is Encourages top management to evaluate each
questionable.
Growth rate is only one aspect of industry set objectives and allocate resources for each
attractiveness. Stimulates the use of externally oriented data to
Product lines or business units are considered only
supplement
in relation to one competitor.
Raises the issue of cash flow availability to use in
Market share is only one aspect of overall
expansion and growth
competitive position.

ADVANTAGES AND LIMITATIONS

TASKS NECESSARY FOR MANAGING
OF PORTFOLIO ANALYSIS
A STRATEGIC ALLIANCE PORTFOLIO
Limitations 1. Developing and implementing a portfolio
Defining product/market segments is difficult strategy for each business unit and a corporate
policy for managing all the alliances of the
Suggest the use of standard strategies that can entire company
miss opportunities or be impractical 2. Monitoring the alliance portfolio in terms of

Value-laden terms such as cash cow and dog corporate strategy and policies
can lead to self-fulfilling prophecies 3. Coordinating the portfolio to obtain synergies
and avoid conflicts among alliances
Lack of clarity on what makes an industry 4. Establishing an alliance management system to
attractive or where a product is in its life cycle support other tasks of multi-alliance
management
 CORPORATE PARENTING

Corporate parenting
CORPORATE views a corporation in terms of resources and
PARENTING capabilities that can be used to build business
unit value as well as generate synergies across
business units
Generates corporate strategy by focusing on the
core competencies of the parent corporation
and the value created from the relationship
between the parent and its businesses

DEVELOPING A
CORPORATE PARENTING STRATEGY

1. Examine each business unit in terms of its

strategic factors

2. Examine each business unit in terms of areas in

which performance can be improved BUSINESS STRATEGY
3. Analyze how well the parent corporation fits with
the business unit
 BUSINESS STRATEGIES

Business strategy
focuses on improving the competitive
COMPETITIVE STRATEGY
products or services within the specific
industry or market segment that the
company or business unit serves
competitive, cooperative

BUSINESS STRATEGIES

Business strategy
focuses on improving the competitive

products or services within the specific

industry or market segment that the
company or business unit serves
competitive, cooperative
 Value Innovation Accomplished through Simultaneously
Pursuing Differentiation (V ) and Low Cost (C ) BLUE OCEAN

Blue oceans represent untapped market space,

the creation of additional demand, and the
resulting opportunities for highly profitable growth.

Red oceans are the known market space of existing

industries.

Cost Drivers: The Keys to Driving Down Company Costs

Source: This is an expanded version of a three-strategy classification discussed in Michael E. Porter, Competitive Strategy (New York: Free Press, 1980). Source: Adapted from Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York: Free Press, 1985).
 Value Drivers: The Keys to Creating a Differentiation Advantage

Source: Adapted from Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York: Free Press, 1985).

Cost leadership: ability of a company or a

business unit to design, produce and market a
comparable product more efficiently than its advantage in an industry is determined by its
competitors
competitive scope that is, the breadth of the
Differentiation: ability of a company to provide
unique and superior value to the buyer in terms of
product quality, special features or after-sale
service
Focus: ability of a company to provide unique
and superior value to a particular buyer group,
segment of the market line or geographic market
Cost leadership Differentiation
lower-cost competitive strategy that aims at involves the creation of a product or service
the broad mass market and requires that is perceived throughout the industry as
-scale unique.
facilities, vigorous pursuit of cost reductions can be associated with design, brand image,
from experience, tight cost and overhead technology, features, dealer network or
control, avoidance of marginal customer customer service
Lowers customers sensitivity to price
Provides a defense against rivals Increases buyer loyalty
Provides a barrier to entry Can generate higher profits
Generates increased market share

RISKS IN COMPETITIVE STRATEGIES

Cost focus: low-cost competitive strategy that

Stuck in the middle: when a company has no
focuses on a particular buyer group or
competitive advantage and is doomed to below-
geographic market and attempts to serve only this
average performance
niche to the exclusion of others

Differentiation focus: concentrates on a particular

buyer group, product line segment or geographic
market to serve the needs of a narrow strategic
market more effectively than its competitors
 INDUSTRY STRUCTURE INDUSTRY STRUCTURE
AND COMPETITIVE STRATEGY AND COMPETITIVE STRATEGY

Fragmented industry
Consolidated industry
many small- and medium-size companies
domination by a few large companies
compete for relatively small shares of the total
market
leadership.
Products are typically in early stages of
product life cycle
Focus strategies are used

COOPERATIVE STRATEGIES

Cooperative strategies
used to gain a competitive advantage within
COOPERATIVE STRATEGY an industry by working with other firms
collusion, strategic alliances
 COOPERATIVE STRATEGIES COOPERATIVE STRATEGIES

Collusion Strategic alliances: a long-term cooperative

the active cooperation of firms within an industry arrangement between two or more independent
to reduce output and raise prices to avoid firms or business units that engage in business
economic law of supply and demand. activities for mutual economic gain

BUILD, BORROW,
OR BUY FRAMEWORK REASONS TO FORM AN ALLIANCE
Short-term contract
Long term contract
Licensing
Obtain or learn new capabilities
Franchising
Equity alliance
Obtain access to specific markets
Joint venture
M&A Reduce financial risk
Merger
Acquisition Reduce political risk
Hostile takeover
 STRATEGIC ALLIANCE SUCCESS FACTORS

FUNCTIONAL STRATEGY

FUNCTIONAL STRATEGY MARKETING STRATEGY

Functional strategy Marketing strategy: deals with pricing, selling and

the approach a functional area takes to distributing a product
achieve corporate and business unit objectives
and strategies by maximizing resource
productivity
 MARKETING STRATEGY MARKETING STRATEGY

Market development strategy: a company or Brand extension: using a successful brand name to
business unit can (1) capture a larger share of an market other products
existing market for current products through
market saturation and market penetration or (2) Push strategy: trade promotions to gain or hold
develop new uses and/or markets for current
shelf space in retail outlets
products.
Product development strategy: a company or unit
Pull strategy:
can (1) develop new products for existing markets
the distribution channels
or (2) develop new products for new markets.

MARKETING STRATEGY FINANCIAL STRATEGY

Skim pricing: Financial Strategy: examines the financial

implications of corporate- and business-level
high price while the product is novel and strategic options and identifies the best financial
competitors are few course of action
Penetration pricing: attempts to hasten market
development and offers the pioneer the
The management of dividends and stock price is
opportunity to use the experience curve to gain
market share with low price and then dominate
strategy.
the industry
 RESEARCH AND
FINANCIAL STRATEGY
DEVELOPMENT STRATEGY
Leveraged buyout: company is acquired in a Research and Development Strategy
transaction financed largely by debt usually deals with product and process innovation
obtained from a third party and improvement
also deals with the appropriate mix of different
Reverse stock split: types of R&D and question of how new
for the same total amount of money technology should be accessed

RESEARCH AND
OPERATIONS STRATEGY
DEVELOPMENT STRATEGY
Technological leader: pioneering an innovation
Operations Strategy
Technological follower: imitating the products of
competitors determines how and where a product or service

Open innovation: firm uses alliances and is to be manufactured, the level of vertical

connections with corporate, government, integration in the production process, the

academic labs and consumers to develop new deployment of physical resources and

products and processes relationships with suppliers

 PURCHASING STRATEGY PURCHASING STRATEGY

Purchasing Strategy Multiple sourcing: the purchasing company orders

deals with obtaining raw materials, parts and a particular part from several vendors
supplies needed to perform the operations Sole sourcing: relies on only one supplier for a
function particular part
multiple, sole and parallel sourcing Parallel sourcing: two suppliers are the sole
suppliers of two different parts, but they are also

LOGISTICS STRATEGY HRM STRATEGY

Logistics Strategy: deals with the flow of products HRM strategy: addresses the issue of whether a
into and out of the manufacturing process company or business unit should hire a large
Trends include: number of low-skilled employees who receive low
Centralization pay, perform repetitive jobs and will most likely
Outsourcing quit after a short time (the fast-food restaurant
Internet strategy) or hire skilled employees who receive
relatively high pay and are cross-trained to
participate in self-managing work teams
 INFORMATION TECHNOLOGY

Follow-the-sun management: project team

Chapter 4
members living in one country can pass their work
to team members in another country in which the
work day is just beginning.
STRATEGY SELECTION

LEARNING OBJECTIVES
THE STRATEGY-FORMULATION
ANALYTICAL FRAMEWORK
Diagram and explain the three-stage strategy-formulation analytical
framework.
Diagram and explain the Strengths-Weaknesses-Opportunities-Threats
(SWOT) Matrix.
Diagram and explain the Strategic Position and Action Evaluation (SPACE)
Matrix.
Diagram and explain the Boston Consulting Group (BCG) Matrix.
Diagram and explain the Internal-External (IE) Matrix.
Diagram and explain the Grand Strategy Matrix.
Diagram and explain the Quantitative Strategic Planning Matrix (QSPM).
Diagram and explain The Porter Matrix
Diagram and explain the McKinsey Matrix
 EXTERNAL FACTOR
ANALYSIS SUMMARY- EFAS

INTERNAL FACTOR
ANALYSIS SUMMARY- - IFAS
 STRATEGIC FACTOR
ANALYSIS SUMMARY (SFAS) MATRIX

The SWOT Matrix

The Strategic Position & Action Evaluation (SPACE) Matrix The Strategic Position & Action Evaluation (SPACE) Matrix

The Strategic Position & Action Evaluation (SPACE) Matrix The Strategic Position & Action Evaluation (SPACE) Matrix
The Boston Consulting Group (BCG) Matrix The Boston Consulting Group (BCG) Matrix

The GE McKinsey Matrix The Internal-External (IE) Matrix

The Internal-External (IE) Matrix The Internal-External (IE) Matrix

The Grand Strategy Matrix (GSM) The Quantitative Strategic Planning Matrix (QSPM)
The Quantitative Strategic Planning Matrix (QSPM) The Quantitative Strategic Planning Matrix (QSPM)

LEARNING OBJECTIVES

Develop programs, budgets and procedures to implement

Chapter 5 strategic change
Understand the importance of achieving synergy during
strategy implementation
STRATEGY List the stages of corporate development and the structure that
characterizes each stage
Identify the blocks to changing from one stage to another
IMPLEMENTATION Construct matrix and network structures to support flexible
and nimble organizational strategies
Decide when and if programs such as reengineering, Six Sigma
and job redesign are appropriate methods of strategy
implementation
Understand the centralization versus decentralization issue in
multinational corporations
 STRATEGY IMPLEMENTATION
WHO IMPLEMENTS STRATEGY?
Strategy implementation
the sum total of all activities and choices
From large, multi-industry corporations to small
required for the execution of a strategic plan
entrepreneurial ventures, the reality is that the
Who are the people to carry out the strategic
plan? implementers of strategy are everyone in the
What must be done to align company
organization.
operations in the intended direction?
How is everyone going to work together to do
what is needed?

COMMON STRATEGY
IMPLEMENTATION PROBLEMS WHAT MUST BE DONE?

1. Took more time than planned The managers of divisions and functional
2. Unanticipated major problems
areas work with their fellow managers to
3. Ineffective coordination
4. Competing activities and crises created develop programs, budgets, and procedures
distractions
5. Employees with insufficient capabilities for the implementation of strategy.
6. Lower-level employees were inadequately trained They also work to achieve synergy among
7. Uncontrollable external environmental factors
8. Poor departmental leadership and direction the divisions and functional areas in order to
9. Inadequately defined implementation tasks and establish and maintain a
activities
10. Inefficient information system to monitor activities distinctive competence.
 DEVELOPING PROGRAMS, DEVELOPING PROGRAMS,
BUDGETS AND PROCEDURES BUDGETS AND PROCEDURES
Program
a collection of tactics where a tactic is the Planning a budget is the last real check a

individual action taken by the organization as corporation has on the feasibility of its selected

an element of the effort to accomplish a plan strategy.

The purpose of a program or a tactic is to make

a strategy action-oriented Procedures
detail the various activities that must be carried

Standard operating procedures

STRUCTURE FOLLOWS STRATEGY

Structure Follows Strategy: changes in corporate

ORGANIZING FOR ACTION strategy lead to changes in organizational

structure
1. New strategy is created
2. New administrative problems emerge
3. Economic performance declines
4. New appropriate structure is invented
5. Profit returns to its previous level
 ORGANIZATIONAL STRUCTURE

Specialization
Departmentalization SPECIALIZATION
Hierarchy and Span of control
Chain of command
Centralization vs Decentralization
Formalization

SPECIALIZATION DESIGNING JOBS TO

IMPLEMENT STRATEGY
Specialization Job design
An organizational element that describes the Job enlargement
degree to which a task is divided into separate jobs Job rotation
(i.e., the division of labor). Job characteristics
Job enrichment
 Typical Simple Structure

DEPARTMENTALIZATION

Typical Functional Structure Typical Multidivisional (M-Form) Structure

 Product structure Customer structure

Geographic structure Typical Matrix Structure with Geographic and SBU Divisions
 Matrix structure

ADVANCED TYPES OF ADVANCED TYPES OF

ORGANIZATIONAL STRUCTURES ORGANIZATIONAL STRUCTURES

Phases of matrix structure development : Network structure: virtual elimination of in-house

Temporary cross-functional task forces business functions
Product/brand management
Mature matrix Virtual organization: composed of a series of
project groups or collaborations linked by
constantly changing nonhierarchical, cobweb-
like electronic networks
 CELLULAR/MODULAR ORGANIZATION:
A NEW TYPE OF STRUCTURE?
Cellular/Modular structure: composed of cells
(self-managing teams, autonomous business
units, etc.) which can operate alone but which
can interact with other cells to produce a more
potent and competent business mechanism
Beginning to appear in firms that are focused on
rapid product and service innovation

HIERARCHY
AND SPAN OF CONTROL

Hierarchy

HIERARCHY An organizational element that determines the

formal, position-based reporting lines and thus
AND stipulates who reports to whom.
SPAN OF CONTROL Span of control
The number of employees who directly report to a
manager.
 Tall organizational structure Flat organizational structure
(Pyramid organizational structure) (Horizontal organizational structure)

SPAN OF CONTROL

There are 2 enterprises with the same number of

employees, 4096 employees. Span of control of A is
4, Span of control of B is 8. The average salary of
the managers of the two enterprises is 30,000
USD/person/year.
How many managers does company A/B have and
how many levels?
How much money will company B save per year by
expanding its span of control?
 CENTRALIZATION - DECENTRALIZATION
Centralization
the degree to which decision-making is
CENTRALIZATION
concentrated at the top of the organization.
VS slow response time and reduced customer
satisfaction.
DECENTRALIZATION
Decentralization
employees are empowered to make decisions
action can be taken quickly to solve problems,
and employee input is considered.

CHAIN OF COMMAND
 FORMALIZATION

Formalization
An organizational element that captures the
extent to which employee behavior is steered by
FORMALIZATION explicit and codified rules and procedures.
Rules and procedures emerge to guide disparate
departments

MECHANISTIC ORGANIZATIONS
VERSUS
ORGANIC ORGANIZATIONS
 ORGANIZATIONAL LIFE CYCLE

Organizational life cycle: describes how

organizations grow, develop and decline

LEADING

Implementation: involves leading and coaching

people to use their abilities and skills most
LEADING effectively and efficiently to achieve
organizational objectives

Without direction, people tend to do their work

according to their personal view of what tasks
should be done, how and in what order.
 LEADERSHIP STYLE HERSEY & BLANCHARD

Coaching Leadership Style

Visionary Leadership Style
Servant Leadership Style
Autocratic Leadership Style
Laissez faire Leadership style
Democratic Leadership style
Pacesetter Leadership Style
Transformational Leadership Style
Transactional Leadership Style
Bureaucratic leadership style
Situational leadership and Performance Readiness (2015), Leadership Studies, Inc.
 STAFFING
A STRATEGY-SUPPORTIVE CULTURE
To be a successful integration manager, a person All organizations have a unique culture.
Strategists should strive to preserve, emphasize, and
should have:
build on aspects of an existing culture that support
Deep knowledge of the acquiring company
proposed new strategies.
Flexible management style
Aspects of an existing culture that are antagonistic to
Ability to work in cross-functional teams a proposed strategy should be identified and
Willingness to work independently changed.
Sufficient emotional and cultural intelligence to
work in a diverse environment usually more effective than changing a strategy to fit
an existing culture.

A STRATEGY-SUPPORTIVE CULTURE MANAGING CORPORATE CULTURE

1. Formal statements of organizational philosophy, charters,
creeds, materials used for recruitment and selection, and Strong cultures are resistant to change.
socialization
Optimal culture supports mission and strategies.
2. Designing of physical spaces, facades, and buildings
3. Deliberate role modeling, teaching, and coaching by leaders Management must evaluate what a particular
4. Explicit reward and status system and promotion criteria
change in strategy means to the corporate
5. Stories, legends, myths, and parables about key people and
events
culture, assess whether a change in culture is
6. What leaders pay attention to, measure, and control
7. Leader reactions to critical incidents and organizational crises needed and decide whether an attempt to
8. How the organization is designed and structured change the culture is worth the likely costs.
9. Organizational systems and procedures
10. Criteria used for recruitment, selection, promotion, leveling off,
retirement, and of people.
 ASSESSING STRATEGY
CULTURE COMPATIBILITY
1. Is the proposed strategy compatible with the
current culture?
2. Can the culture be easily modified to make it
more compatible with the new strategy?
3. Is management willing and able to make major
organizational changes and accept probable
delays and a likely increase in costs?
4. Is management still committed to implementing
the strategy?

MANAGING CULTURAL
MANAGEMENT BY OBJECTIVES
CHANGE THROUGH COMMUNICATION
Companies in which major cultural changes have Management by Objectives (MBO): encourages
successfully taken place had the following participative decision making through shared
characteristics in common: goal setting and performance assessment based
The CEO and other top managers had a strategic on achieving stated objectives
vision of what the company could become and
communicated that vision to employees at all
levels.
The vision was translated into the key elements
necessary to accomplish that vision.
 MANAGEMENT BY OBJECTIVES TOTAL QUALITY MANAGEMENT
The MBO process involves: Total Quality Management (TQM)
1. Establishing and communicating organizational an operational philosophy committed to
objectives customer satisfaction and continuous
2. Setting individual objectives improvement
3. Developing an action plan to achieve committed to quality/excellence and to being
objectives the best in all functions
4. Periodically (at least quarterly) reviewing
performance

TOTAL QUALITY MANAGEMENT

TQM
Chapter 6
1. Intense focus on customer satisfaction
2. Internal as well as external customers
STRATEGY
3. Accurate measurement of every critical variable
EVALUATION AND CONTROL
4. Continuous improvement of products and
services
5. New work relationships based on trust and
teamwork
 LEARNING OBJECTIVES
CONTROL 254

Understand the basic control process Strategic control refers to determining the extent
Choose among traditional measures, such as ROI, and
shareholder value measures, such as economic value successful in attaining its goals and objectives.
added, to properly assess performance It is during the strategic control process that gaps
Use the balanced scorecard approach to develop key between the intended and realized strategies
performance measures (i.e., what was planned and what really
happened) are identified and addressed.
Apply the benchmarking process to a function or an
The control function ensures that everything is
activity moving in the right direction.
Develop appropriate control systems to support specific Strategic managers can steer the organization by
strategies including performance measurement instituting minor modifications or resort to more
drastic changes, such as altering the strategic
direction altogether.

TYPES OF CONTROLS TYPES OF CONTROLS

Output controls: specify what is to be Preliminary/Preventive/Feed-forward/Proactive

accomplished by focusing on the end result controls
through the use of objectives Concurrent controls
Behavior controls: specify how something is done Feedback controls
through policies, rules, standard operating
procedures and orders from supervisors
Input controls: emphasize resources
 STRATEGIC MEASUREMENT
CONTROL PROCESS
METHODS
Qualitative measurements
1. Is organisational strategy internally consistent?
2.
environment?
3. Is organisational strategy appropriate, given
organisational resources?
4. Is the time horizon of the strategy appropriate?

Financial Ratio Analysis Financial Ratio Analysis

 Financial Ratio Analysis

Financial Ratio Analysis

-VALUE
BANKRUPTCY FORMULA

-Value Bankruptcy Formula is used to

 INDEX OF SUSTAINABLE GROWTH SHAREHOLDER VALUE

Index of sustainable growth Shareholder value: the present value of the

indicates how much of the growth rate of anticipated future streams of cash flows from the
sales can be sustained by internally
generated funds business plus the value of the company if
liquidated
Economic value added (EVA):
measures the difference between the pre-
strategy and post-strategy values for the
business
after-tax operating income minus the total
annual cost of capital

SHAREHOLDER VALUE
Market value added (MVA): measures the
difference between the market value of a
corporation and the capital contributed by
shareholders and lenders

net
present value
capital investment projects
 BALANCED SCORE CARD BALANCED SCORE CARD

Balanced scorecard: combines financial In the balanced scorecard, management develops

measures that tell the results of actions already goals or objectives in each of four areas:
Financial: How do we appear to shareholders?
taken with operational measures on customer
Customer: How do customers view us?
satisfaction, internal processes and the
Internal business perspective: What must we excel
at?
activities the drivers of future financial Innovation and learning: Can we continue to
performance improve and create value?
Key performance measures: measures that are
essential for achieving a desired strategic option

BENCHMARKING BENCHMARKING

Benchmarking: the continual process of measuring 1. Identify the area or process to be examined
2. Find behavioral and output measures
products, services and practices against the 3. Select an accessible set of competitors of best
toughest competitors or those companies practices
4. Calculate the differences among the
recognized as industry leaders
those of the competitors and determine why the
differences exist
5. Develop tactical programs for closing
performance gaps
6. Implement the programs and compare the
results
 GUIDELINES FOR
PROPER CONTROL
1. Controls should involve only the minimum
amount of information needed to give a reliable
picture of events.

THE END
2. Controls should monitor only meaningful
activities and results, regardless of measurement
difficulty.
3. Controls should be timely so that corrective
action can be taken before it is too late.
4. Long-term and short-term goals should be used.
5. Controls should aim at pinpointing exceptions.
6. Emphasize the reward of meeting or exceeding
standards rather than punishment for failing to
meet standards.