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Alternative Strategies

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Alternative Strategies STRATEGY DEFINITION EXAMPLE Tandy Corporation opens new Radio Shack stores Gaining ownership or increased control over distributors or retailers – PowerPoint PPT presentation

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Title: Alternative Strategies


1
Alternative Strategies
STRATEGY DEFINITION EXAMPLE
2
Alternative Strategies
STRATEGY DEFINITION EXAMPLE
3
Alternative Strategies
STRATEGY DEFINITION EXAMPLE
4
Alternative Strategies
STRATEGY DEFINITION EXAMPLE
5
Strategic AnalysisProducts MarketsMarket/Produ
ct Expansion Grid
P R O D U C T
S
M A R K E T S
6
Market Analysis / Coors
MARKET ATTRACTIVENESS
L O W
R I S K
H I G H
7
Strategic ManagementProductivity Tree
Plant/Office, Facilities, Methods, STDS
T Task Technical
Feedback - Information
MGMT Plan Organize Direct Control
P Efficiency Effectiveness Adaptive
Job Design Staff Leadership
Knowledge, Skills, Ability
P Staff Performance
Communications Motivation
8
Strategic ManagementThe Firm Core Competencies
  • Technology Operating System
  • Management System
  • Knowledge-Base Skills / Abilities
  • Organizational Dynamics, Culture, Climate,
    Motivations

9
Work Sheet Internal Assessment of Firms
  • Four Characteristics
  • Resources-Capabilities Important in Sustaining
    Competitive Advantage
  • Durability
  • Transparency
  • Transferability
  • Replicability

10
Internal Assessment of Firms
  • Durability
  • Rate at which firms underlying resources and
    capabilities depreciate or become obsolete
  • Transparency
  • Speed with which other firms can understand the
    relationship of resources and capabilities
    supporting a successful firms strategy.
    Capability that requires a complex pattern of
    various resources and is more difficult to
    comprehend than a capability based on a single
    key resource.

11
Internal Assessment of Firms
  • Transferability
  • Ability of competitors to gather the resources
    necessary to support a competitive challenge.
    (e.g., Duplicating the primary source of Rocky
    Mountain spring water may be difficult. Also,
    brand names may be impossible to transfer with
    out purchase or a license.)
  • Replicability
  • Ability of competitors to use resources and
    capabilities to duplicate a firms success.
    (e.g., a brand manager from a PG competitor may
    fail to identify least visible coordination
    mechanisms or fail to note behaviors of another
    companys brand manager may conflict with
    companys culture.)

12
Basic Principles of Organizations
  • The organization plan should be developed from
    the point of view of the activities required to
    achieve the objectives of the enterprise.
  • Group the activities according to the natural
    likings of the activities and the usual
    combinations of abilities and interests of the
    team members.
  • Assign persons to natural groupings according to
    their abilities and interests.
  • Personal responsibilities, authorities and
    relationships should be clearly understood and
    completely accepted not only by the individual
    but also by all persons affected.
  • Delegation of authority and the freedom to act
    should be clearly and appropriately defined and
    be adequate for the responsibilities assigned.

13
Basic Principles of Organizations
  • As many as possible of the decisions affecting
    specific operations and requiring approval before
    action should be made only one organization step
    (level) above the person putting the decision
    into effect.
  • No person should report to more than one
    superior. (However, an individual may be
    assigned by his or her superior to serve or
    assist another organization unit and receive
    directions within the assigned sphere of service.
  • (Span of Control) The number of persons reporting
    to a superior should be few enough so that he or
    she can give each person adequate attention and
    still have time for responsibilities other than
    direction and supervision such as investigations,
    planning, etc

14
Basic Principles of Organizations
  • Recognize and make good use of the informal
    organization I.e., the natural groupings of
    persons based on friendships and like interests.
    Watch that cliques or gangs do not handicap the
    official organization.
  • Titles should be appropriate and consistent.
  • Keep the organization plan flexible and sensitive
    to changing conditions.

15
Pure ProjectDedicated Task Force Organization
  • Is a separate project organization with most or
    all personnel needed on the project working under
    the direct control of the project manager?
  • Used for major or special projects I.e., skunk
    works
  • Hybrid matrix a project organization with some
    functions directly controlled and others
    controlled through a matrix

General Manager
Project Manager
Other Operations
Marketing
Engineering
Network
Manufacturing
16
Matrix Project Management
General Manager
Marketing
Network
Engineering
Manufacturing
p e r s o n n e l
p e r s o n n e l
p e r s o n n e l
p e r s o n n e l
Project Manager A
Project Manager B
Within this category are three types of matrix
organizations which primarily differ in the
relative amount of influence/decision-making
power between functional discipline managers and
the project management organization. Matrix
management generally increases conflict as
functional managers and project management often
stress different project aspects and goals.
17
Matrix Project Management Descriptions
  • Strong or Project Matrix
  • Here, a project management orientation
    predominates a full-fledged project office with
    support staff may exist
  • Balanced or Classical Matrix
  • Balanced influence between functional managers
    and project managers characterizes this
    arrangement. The full-time project manager has
    expert power and formal position power. A high
    level of conflict is often evident.
  • Weak or Functional Matrix
  • Functional managers exert a stronger influence
    than the project manager who is really a
    coordinator and can be part or full-time. Team
    members may only be liaisons, linking the project
    to the functional department.

18
Matrix Management and The Team Member
The Problem of Two or More Bosses
Project Manager
Functional Manager
  • Ground Rules for Behavior
  • Keep both bosses informed.
  • As soon as a conflict emerges (or before), get
    the bosses together for a meeting and get
    one to change his or her priorities.
  • Do not make the mistake of telling each boss what
    he or she want to hearYou will get squeezed.
  • Try to work out an agreement in writing that
    spells out your responsibilities and reporting
    relationships.

Team Member
19
Influence Project ManagementWeakest Project
Organization
General Manager
Project Activator
Marketing
Network
Engineering
Manufacturing
p e r s o n n e l
p e r s o n n e l
p e r s o n n e l
p e r s o n n e l
  • Influence project management occurs in a standard
    functional or hierarchical management
    organization.
  • A project activator (often staff member) is
    asked to coordinate a project. This is
    frequently part-time and with no formal
    authority. The activator merely works through
    the influence of the general managers position
    (the division manager asked that I do this for
    him/her.)

20
Matrix Project Management
General Manager
p e r s o n n e l
p e r s o n n e l
p e r s o n n e l
p e r s o n n e l
Project Manager A
Project Manager B
21
Strategic ManagementFirm-Industry Value ChainA
Model
22
Elements of Industry Structure Porters
Five-Forces
New Entrants Threat of New Entrants
S u p p l iers
Buyers
Industry Competitors Intensity of Rivalry
Bargaining Power of Buyers
Bargaining Power of Suppliers
Adapted from Michael E. Porter, Competitive
Advantage, New York, The Free Press, 1985.
Reprinted by Permission.
Threat of Substitutes Substitutes
23
Porters Five-Forces Described
  • Barriers to Entry
  • Economies of Scale Product Differentiation
  • Brand Identification Switching Costs
  • Access to Distribution Channels Capital
    Requirements
  • Access to Latest Technology Experience and
    Learning Effects
  • Government Action
  • Industry Protection Industry Regulation
  • Consistency of Policies Custom Duties
  • Foreign Exchange Foreign Ownership
  • Capital Movements Among Countries
  • Assistance Provided to Competitors

Adapted from Michael E. Porter, Competitive
Advantage, New York, The Free Press, 1985.
Reprinted by Permission.
24
Porters Five-Forces Described
  • Rivalry Among Competitors
  • Concentration and Balance Among Companies
  • Industry Growth Fixed (or Storage) Costs
  • Product Differentiation Switching Costs
  • Intermittent Capacity Increasing
  • Corporate Strategic Stakes
  • Barriers to Exit
  • Asset Specialization
  • One-Time Cost of Exit
  • Strategic Interrelationships with other
    Businesses
  • Emotional Barriers
  • Government and Social Restrictions

Adapted from Michael E. Porter, Competitive
Advantage, New York, The Free Press, 1985.
Reprinted by Permission.
25
Porters Five-Forces Described
  • Power of Suppliers
  • Number of Important Suppliers
  • Availability of Substitutes for the Suppliers
    Products
  • Differentiation or Switching Cost of Suppliers
    Products
  • Suppliers Threat of Forward Integration
  • Suppliers Contribution to Quality or Service of
    the Industry Products
  • Total Industry Cost Contributed by Suppliers
  • Importance of the Industry to Suppliers Profit

Adapted from Michael E. Porter, Competitive
Advantage, New York, The Free Press, 1985.
Reprinted by Permission.
26
Porters Five-Forces Described
  • Power of Buyers
  • Number of Important Buyers
  • Availability of Substitutes for the Industry
    Products
  • Buyers Switching Costs
  • Buyers threat of Backward Integration
  • Industry Threat of Forward Integration
  • Contribution to Quality or Service of Buyers
    Products
  • Total Buyers Cost Contributed by the Industry
  • Buyers Profitability
  • Availability of Substitutes
  • Availability of Close Substitutes
  • Users Switching Costs
  • Substitute Producers Profitability and
    Aggressiveness
  • Substitute Price-Value

Adapted from Michael E. Porter, Competitive
Advantage, New York, The Free Press, 1985.
Reprinted by Permission.
27
Porters Five Forces As Applied to the
Pharmaceutical Industry in the early 1990s
New Entrants Very Attractive
S u p p l iers
Buyers
Industry Competitors Intensity of
Rivalry Attractive
Very Attractive
Mildly Unattractive
Adapted from Michael E. Porter, Competitive
Advantage, New York, The Free Press, 1985.
Reprinted by Permission.
Mildly Unattractive Substitutes
28
Porters Five-Forces The Pharmaceutical
Industry--Applied
  • Barriers to Entry (Very Attractive)
  • Steep RD experience curve effects
  • Large economies of scale bariers in RD and sales
    force
  • Critical mass in RD and marketing require global
    scale
  • Significant RD and marketing costs
  • High risk inherent in the drug development
    process
  • Increasing threat of new entrants coming from
    biotechnology companies
  • Bargaining Power of Suppliers (Very Attractive)
  • Mostly commodities
  • Individual scientists may have some personal
    leverage

29
Porters Five-Forces The Pharmaceutical
Industry--Applied
  • Bargaining Power of Buyers (Mildly Unattractive)
  • Traditional purchasing process highly price
    insensitive the consumer (the patient) did not
    buy and the buyer (the physician) did not pay
  • Large power of buyersplan sponsors and cost
    containment orgsinfluence decisions to prescribe
    less expensive drugs
  • Mail order pharmacies obtain large discounts on
    volume drugs
  • Large aggregate buyershospital suppliers, large
    distributors, govt institutionsprogressively
    replace the role of individual customers
  • Important influence of the government in the
    regulation of the buying process

30
Porters Five-Forces The Pharmaceutical
Industry--Applied
  • Threat of Substitutes (Mildly Unattractive)
  • Generic and me-too drugs weakening branded,
    proprietary drugs
  • More than half of the drug patent is spent in
    product development and approval processes
  • Technological development makes imitation easier
  • Consumer aversion to chemical substances erodes
    appeal for pharmaceutical drugs

31
Porters Five-Forces The Pharmaceutical
Industry--Applied
  • Intensity of Rivalry (Attractive)
  • Global competition concentrated among fifteen
    large companies
  • Most companies focus on certain types of disease
    therapy
  • Competition among incumbents limited by patent
    protection
  • Competition based on price and product
    differentiation
  • Government intervention and growth of me-too
    drugs increase rivalry
  • Strategic alliances establish collaborative
    agreements among industry players
  • Very profitable industry, however with declining
    margins
  • Summary Assessment of Industry Attractiveness

32
Porters Five-Forces The Pharmaceutical
Industry--Applied
  • Attractive

33
Strategic ManagementExternal Factors Diagram
Global Micro
Global Macro
STRATEGIC MANAGEMENT FIRM
Availability of Substitutes
Industry Value Chain
Strategic Alternatives
34
Strategic ManagementExternal Factors
Diagram--Elaboration
  • Global Micro
  • Industry Structure Government action
  • Competition Suppliers
  • Buyers Resources Labor / Unions
  • Global Macro
  • Economic
  • Social / Demographics
  • Political-Legal Taxes / Regulations
  • Technological Product / Process

35
Strategic ManagementExternal Factors
Diagram--Elaboration
  • Strategic Alternatives
  • Cost vs. Product Differentiation Integration
  • Simplification Product / Process Forward,
    Backward, Horizontal
  • Joint Venture / Alliance Retrenchment
  • Divestiture / Liquidation
  • Industry Value Chain
  • Inbound Logistics
  • Operations RD / Technology / Manufacturing
  • Outbound Logistics
  • Marketing Sales / Advertising
  • Service

36
The Drucker ModelAnswer to 3 Key
QuestionsMission Statement
  • 8 Business Objectives (Drucker)
  • Market Human Resources
  • Innovation Financial Resources
  • Profit Material Resources
  • Societal Productivity
  • Strategic Planning is
  • a Continuous Process

37
Product Life Cycle
Phase III Maintenance
Phase IV Discontinuance
Phase II Accelerated Growth
Phase I Innovation Introduction
Cumulative Sales
TIME -- Years
38
Strategic ManagementBusiness Portfolio Matrix
HIGH
Industry Attractiveness Growth Rate
Average Rate of Growth
LOW
Relative Market Share (Firm vs. largest
competitor)
HIGH
LOW
39
Poker Analogy Where to Bet Technology Portfolio
Matrix
HIGH
Industry Technology Importance to Product /
Service
LOW
Relative Technological Position (Firm vs.
largest competitor)
HIGH
LOW
40
Strategic ManagementRD Model
RESEARCH
DEVELOPMENT
Pure Research
Applied Research
Product/Service Configur-ation
Pilot Intro
Full Scale Ops
INNOVATION
RADICAL
INCREMENTAL
41
STRATEGIC MANAGEMENTMODEL PORTFOLIO
MANAGEMENTRESOURCE ALLOCATION
INTERNAL SUPPLY FUND
DEMAND FOR FUNDS
CASE II IRR
CASE I IRR
II FUNDS DEFICIT
I SURPLUS FUNDS
PROGRAMS PROJECTS
INVESTMENTS
42
PRODUCT LIFE CYCLE MODELSALES AND COSTS
SALES
CUMULATIVE COSTS
CUMULATIVE SALES
PHASE II ACCELERATED GROWTH
PHASE I INTRODUCTION
PHASE III MAINTENANCE
INNOVATION
PHASE IV DISCONTINUANCE
BE PRODUCT
RESEARCH DEVELOPMENT
COST
BE ANNUAL
TIME - YEARS
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