Arab Academy for Science, Technology and Maritime Transport

International Transport & Logistics Institute

Contemporary Management
CM ninth edition

STEPHEN P. ROBBINS MARY COULTER

Competitive Strategic Management

Chapter The Capacity to grow is a Gift,

3 The Ability to grow is a Skill,

The Willingness to grow is a Choice
PowerPoint Presentation by Charlie Cook
BRIAN HERBERRTThe University of West Alabama
2

ILO’s

1 History

2 Planning, strategic planning, forecasting, & foresight

3 Business Model & Strategic Management

4 Strategic Management Process

5 Strategic Management Analysis Tools

6 Types of Organization Strategies

7 Business Ethics as a part of Culture

Strategic Management (cont.’d)
Strategy: The word “strategy” is derived from the Greek word
“stratçgos”; stratus (meaning army) and “ago” (meaning leading or
moving).

Strategy
The organization’s long-term vs short-term plan for how it will
operate its internal strengths and weaknesses with its external
opportunities and threats to maintain a competitive \ comparative
advantage.
Well done is better than well said

Old Approach \ Strategic Reactive:

a. Goal Keeper
b. Consistent
New Approach \ Agile Proactive:
a.Goal Scorer
b.Resilience
 Strategy Components

Mission
Vision

Strategy
Organization
Culture Components

Long Term
Strategic
Objectives
Short Term
Strategic
Goals
Strategic Management (cont.’d)
Are we looking to the future to predict it & adapt this
prediction?

Or
Are we looking to the future to shape it?

Planning

Strategic Planning

Forecasting

Foresight
Strategic Management (cont.’d)
Planning:
predicting future trends affecting the company, i.e. taking prior decisions before
actually needing them with the participation of decision-makers for a period of
time not exceeding one year.
Strategic planning:
Predicting the ideal position of the company in the future, with the participation of
decision makers and experts for a period of time ranging from 2, 5, 7 years.
Forecasting:
It is based on a basic assumption that there is a desired alternative that can be
implemented in the future based on historical data that explains the present with
the participation of experts only for a period of time not less than ten years.
Future Image VS Future History
Foresight:
It based on the assumption that there are several future alternatives that can be
achieved under certain environmental variables with the participation of all
stakeholders who involved for a period of time ranging from 10 to 30 years.
Strategic Management (cont.’d)
Generation X
- Includes people born between 1965 to 1976
- Family comes first
- Research products before considering a purchase
(Generation Y – Millennials - Echo Boomers)
- Include those born between 1977 to 2000
- Comfortable with technology
(Generation Z)
- Include those born between 2000 to 2009
- Driving the technology
(Generation Alpha)
- Include those born between 2010 and above
- Driving the future - foresight
Strategic Management (cont.’d)
Strategic Management (cont.’d)
Strategic Management:
The art and science of designing, implementing, and evaluating
cross-functional decisions that enable the organization to achieve
its objectives & goals.

Thus, strategic management focuses on integration between

Management functions of & Organization functions
to achieve the success of the organization.
 Strategic Management (cont.’d)
Wrong aspects about strategic planning:

It is not about forecasting:

Try to visualize the shape of the company in the future and achieve
this perception.

It is not quantitative approach only:

Try to analyze and search for ideas and innovation.

It is not just long-term decisions:

But short and medium term decisions as well.

It is not an end to risk:

But it helps to assess this risk in order to reach the calculated risk.
 Strategic Management (cont.’d)
Therefore, strategic management deals with issues with a future
impact, which have three characteristics:

Scarcity
Unusual decisions (every 3 years to 7 years).

Multiple outcomes and impacts

The effects of these decisions extend to all administrative levels.

First priority
It comes primarily for other types of decisions.
The Strategic Management Process

Applied
Feedback

Strategic Planning

Strategic Management
Strategic Management Process
Step 1: Identifying the organization’s current
mission and vision statement
Ø Mission: the firm’s reason for being
v The scope of its products and services
Ø Vision: the foundation for further planning
v Measurable performance targets

Step 2: Doing an external analysis

Ø The environmental scanning of specific, general and
natural environment
v Focuses on identifying opportunities and threats
Strategic Management Process (cont’d)

Step 3: Doing an internal analysis

Ø Assessing organizational resources, capabilities, and activities:
v Strengths create value for the customer and strengthen the
competitive position of the firm.
v Weaknesses can place the firm at a competitive disadvantage.

Ø Analyzing financial and physical assets is fairly easy, but

assessing intangible assets (employee ’ s skills, culture,
corporate reputation, and so forth) isn’t as easy- ROK.
Steps 2 and 3 combined are called a SWOT analysis.
(Strengths, Weaknesses, Opportunities, and Threats)
Strategic Management Process (cont’d)

Step 4: Formulating strategies

Ø Develop and evaluate strategic alternatives

Ø Select appropriate strategies for all levels in the
organization that provide relative advantage over
competitors

Main Strategic Directions:

Growth, Stability, & Rightsizing
Strategic Management Process (cont’d)
Step 5: Implementing strategies
Ø Implementation:
- Fitting organizational structure.
- Organization activities to the environment.
- Organization strategy requirements (5 components)

Step 6: Evaluating results

Ø How effective have strategies been?
Ø What adjustments, if any, are necessary?
Applied Feedback is required
Main Corporate Portfolio Analysis Tools
Managers manage portfolio (or collection) of businesses
using a corporate portfolio matrix such as the BCG Matrix.

1- The BCG Matrix:

Ø Developed by the Boston Consulting Group
Ø Considers market share and industry growth rate
Ø Classifies firms as:
v Cash cows: low growth rate, high market share
v Stars: high growth rate, high market share
v Question marks: high growth rate, low market share
v Dogs: low growth rate, low market share
Main Corporate Portfolio Analysis Tools
1- The BCG Matrix
Main Corporate Portfolio Analysis Tools
1- BCG Matrix Examples:
Main Corporate Portfolio Analysis Tools
2- Five Borter Competitive Forces:
Threat of New Entrants
Ø The ease or difficulty with which new competitors can
enter an industry. (Iron & Steel Industry)

Threat of Substitutes
Ø The extent to which switching costs and brand loyalty
affect the likelihood of customers adopting substitutes
goods and services. (Mercedes Benz)

Bargaining Power of Buyers

Ø The degree to which buyers have the market strength
to hold sway over and influence competitors in an
industry. (Very Luxuries Products)
Main Corporate Portfolio Analysis Tools
2- Five Borter Competitive Forces:

Bargaining Power of Suppliers

Ø The relative number of buyers to suppliers and
threats from substitutes and new entrants affect the
buyer-supplier relationship. (Basic Products)

Current competition states

Ø Current competition increases when industry growth
rates slow, demand falls, and product prices decline.
Main Corporate Portfolio Analysis Tools
3- PEST Analysis:
Main Corporate Portfolio Analysis Tools
3- PESTEL Analysis:
Main Corporate Portfolio Analysis Tools
4- Business Model
Is a strategic design of how an organization intends to profit
from its strategies, work processes, and work activities.

Focuses on two things:

v Introduce add value for Stakeholders.
v Introduce add value for Organization.

The Main Business Model 9’s Canvas:

It is a strategic management tool used to develop
new business, new SBU’s or new production lines. It offers a
visual chart describing the organization to align their activities
by illustrating potential trade-offs.
Main Corporate Portfolio Analysis Tools
4- The Main Business Model 9’s Canvas:
The 9 "building blocks" of the business model design tool that came to be
called the Business Model Canvas were initially proposed in 2005
by Alexander Osterwalder.
Main Corporate Portfolio Analysis Tools
5- SWOT Analysis:
Main Corporate Portfolio Analysis Tools
Apple SWOT Analysis
Weaknesses Strengths
- High prices VS competitors. - The power trademark.
- Compatibility problems. - Creativity and Innovation.
- The death of Steve Jobs. - Unique Marketing Mechanism.
- Strong Financial Position.
Threats Opportunities
- The appearance of new strong - High demand on SCP.
competitors. - iCloud becomes more reliable
- Android system advantages. - More innovated products that
- The strategic alignment between market need.
Microsoft and Nokia. - Customer loyalty.

Limitations of SWOT analysis:

- This analysis doesn't introduce any strategies that push the organization to achieve its
strategic direction.
- This analysis doesn’t introduce an relative action plan to impalement the mentioned
strategies.
- This analysis doesn't act an risk assessment related to the action plans.
- The nature of the dynamic environment that required continuous analysis.
Main Corporate Portfolio Analysis Tools
6- TOWS Analysis:

Match organizational strengths to environmental opportunities

Correct organizational weaknesses and guard against threats
Main Corporate Portfolio Analysis Tools
Apple TOWS Analysis
ST SO
- Using the company's ability to - Increase number and variety of
innovate and develop the company's products to benefit from opportunities
products to increase market share of increasing demand for SCP.
compared to competitors. - Focus on developing iCloud to benefit
- Focus on developing the IOS system from increased reliability on digital
to overcome the android system. computing technology.

WT WO
- Focus on offering more discounted - Focus on increasing sales by using the
products to increase sales and increased demand for SCP in order to
increase the profitability of the company's
overcome increasing market share for
shares.
competitors. - Attract more minds to develop more creative
products and maintain the organization
founder culture to overcome the death of
Steve Jobs.

Limitations of TOWS analysis:

- This analysis doesn’t introduce an relative action plan to impalement the
mentioned strategies.
- This analysis doesn't act an risk assessment related to the action plans.
 Levels of Organizational Strategy

Corporate \
Generic Strategies

Competitive \
Business Strategies

Functional \
Operational
Strategies
Types of Organizational Strategies
1- Corporate \ Generic Strategies:
Ø Top management overall plan for the entire
organization and its strategic business units

Types of Strategic Directions:

Ø Growth: expansion into new products and\or markets
Ø Stability: maintain current status
Ø Rightsizing: redirection of the firm into new phase
Smart organizations could implement one of these strategic
directions through many corporate strategies, as
First Mover Strategy
Types of Organizational Strategies
First Mover as an example for corporate strategy:
An organization that brings a product innovation to
market or use a new process innovations.
Advantages Disadvantages
Ø Reputation for being Ø Uncertainty over exact
innovative and industry direction technology and
leader market will go
Ø Cost and learning benefits Ø Risk of competitors imitating
Ø Control over scarce innovations
resources and keeping Ø Financial and strategic risks
competitors from having
Ø High development costs
access to them
Ø Opportunity to begin
building customer
relationships and customer
loyalty
Types of Organizational Strategies
2- Middle Management
Business or Competitive Strategies:

Business \ Competitive Strategy

Ø A strategy focused on how an organization should

compete in each of its SBUs (strategic business
units).
Types of Organizational Strategies
2- Middle Management
Business \ Competitive Strategies:
The Role of Competitive Advantage
Competitive \ Comparative Advantage
Ø An organization’s distinctive competitive edge, means that
the organization have certain capabilities vs competitors in
certain markets or even products.

Quality or Price as a Competitive or Comparative edge supports:

Ø Differentiates the organization from its competitors.
Ø Can create a sustainable comparative advantage.
Ø Represents the company’s focus on certain level of quality
management to achieve continuous improvement and
meet customers’ needs.
Types of Organizational Strategies
2- types of Middle Management (Business \ Competitive Strategies):
Types of Organizational Strategies
2- Business \ Competitive Strategies Examples:
Organization Culture – Codes Approach:
Business Ethics:

www.ethisphere.com
Organization Culture – Codes Approach:
Business Ethics:
 Terms to Know
• strategic management • corporate strategy
• strategies • growth strategy
• business model • related diversification
• strategic management process • unrelated diversification
• mission • stability strategy
• opportunities • renewal strategy
• threats • retrenchment strategy
• resources • turnaround strategy
• capabilities • BCG matrix
• core competencies • business or competitive
• strengths strategy
• weaknesses • strategic business units
• SWOT analysis • competitive advantage
 Chapter Assignment
Managing a highly-motivated team is a real pleasure.
You can feel the energy of the workplace,
And the impact on strategic plan
Can be incredible.
Mention:
-Do your company have a strategic plan?
-If the answer is yes, can you recognize it’s components
easily?
-Mention the codes that your organization have?