Tuesday, September 28, 1999

1
Tuesday, September 28, 1999

• Term project
• Cases/teams
• Strategic Management
• Web sites
• FaxSav, audible
• Case Dell

2
Levels of Strategy

• Corporate planning Business selection and
  resource allocation
• Business planning Development of a sustainable
  competitive advantage in a business unit
• Product planning Development of a marketing plan
  for a product or service

3
Stakeholders

• Groups and individuals who can affect, or are
  affected by, the achievement of an organizations
  goals, e.g.,
• Customers
• Employees
• Unions
• Interest groups
• stockholders

4
Corporate Strategic Planning

• Define the mission
• Establish strategic business units (SBUs)
• Assign resources to SBUs
• Plan new businesses

5
Mission

• Vision for the company - Defines its future
  direction
• Shaped by
• History
• Owner/management preferences
• Market environment
• Resources
• Distinctive competencies

6
Strategic Business Units

• A strategically effective competitor
• Can group by customer groups, customer needs,
  technology
• GE criteria
• Single business/set of related businesses
• Own set of competitors
• Manager responsible for planning and performance

7
Portfolio Planning

• Boston Consulting Group (BCG) matrix
• Cash flow is a measure of business success
• Cash generation is a function of market share
• Cash use is a function of market growth rate

8
BCG Matrix
Relative Market Share
High
Low
High
Star
Problem Child
Mkt Growth Rate
Cash Cow
Dog
Low
9
Considerations

• Balance among market opportunities and cash flow
• Do you have the business strength to deal with
  question marks?
• Can dogs represent cash flow opportunities?

10
Strategies

• Build
• Hold
• Harvest
• Divest

11
GE Matrix

• Nine cells
• Industry attractiveness
• Business strength
• 3 zones
• Green
• Yellow
• Red

12
Benefits of Portfolio Planning

• Potential to facilitate broad business definition
• Clarifies expectations
• Manageable portfolios
• Legitimizes different expectations for different
  businesses
• Legitimizes divestiture

13
Potential Problems

• May fall into simplistic decision making
• Difficult to generate enthusiasm in SBUs not
  targeted for growth
• May not control expenses in stars and question
  marks
• Mobility of classification

14
Business Strategy

• Situation Analysis
• Internal
• Strengths
• Weaknesses
• External
• Opportunities
• Threats

15
Industry Analysis (Porter)
Threat of Entry
Power of Suppliers
Power of Customers
Intensity of Rivalry
Threat of Substitution
16
Generic Strategies
Lower Cost
Differentiation
Broad Target Market
Differentiation
Cost Leadership
Differentiation Focus
Narrow Target Market
Cost Focus