1. CHAPTER 1
Basic Concepts
of Strategic
Management
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
1-1

2. Basic Concepts of Strategic Management
Globalization
Internationalization of markets and corporations
Global (worldwide) markets rather than national
markets
Electronic Commerce
Use of the Internet to conduct business
transactions
Basis for competition on a more strategic level rather
than traditional focus on product features and costs
1-2

3. Basic Concepts of Strategic Management
Electronic Commerce -- Trends
• Forcing company transformation
• Market access & branding changing –
disintermediation of traditional
distribution channels
• Balance of power shift to consumer
• Competition changing
1-3

4. Basic Concepts of Strategic Management
Electronic Commerce -- Trends
• Pace of business increasing
• Internet purchasing beyond traditional
boundaries
• Knowledge key asset – source of
competitive advantage
1-4

5. Strategic Management Defined
Set of managerial decisions and actions
that determines the long-run performance
of a firm.
1-5

6. Basic Concepts of Strategic Management
4 Phases of Strategic Management
1. Basic financial planning
2. Forecast-based planning
3. Externally-oriented planning
4. Strategic management
1-6

7. Basic Concepts of Strategic Management
Highly Rated Benefits
• Clearer sense of strategic vision
• Sharper focus on strategic importance
• Improved understanding of changing
environment
1-7

8. Basic Concepts of Strategic Management
Not Always a Formal Process
• Where is the organization now? (not
where do we hope it is)
• If no changes are made, where will the
organization be in 1,2,5 or 10 years?
• What specific actions should
management undertake?
• What are the risks and payoffs?
1-8

9. Basic Concepts of Strategic Management
Basic Elements of the Strategic
Management Process
1-9

10. Environmental Scanning Defined
Monitoring, evaluation, and disseminating
information from external and internal
environments –to key people in the firm
1-10

11. Basic Concepts of Strategic Management
Environmental
Variables
1-11

12. Environmental Scanning
SWOT Analysis
• Strengths – Weaknesses
• Opportunities - Threats
1-12

13. Strategy Formulation
Development of long-range plans for
effective management of opportunities
and threats in light of corporate
strengths and weaknesses
1-13

14. Strategy Formulation
Mission Statement
• Purpose/reason for organization
• Promotes shared expectations
• Communicates public image
• Who we are; what we do; what we
aspire to
1-14

15. Organizational Adaptation
Organization “fit” with environment
• Theory of population ecology
• Institution theory
• Strategic choice perspective
• Organizational learning theory
1-15

16. Organizational Adaptation
Strategic flexibility
• Demands long-term commitment to
development of critical resources
• Demands firm become a learning
organization
1-16

17. Learning Organizations
An organization skilled at creating,
acquiring, and transferring
knowledge and at modifying its
behavior to reflect new knowledge
and insights
1-17

18. Learning Organizations
4 Chief Activities
• Systematic problem solving
• New approach experimentation
• Learning from experiences
• Intra-organization knowledge transfer
1-18

19. Basic Concepts of Strategic Management
Hierarchy of
Strategy
1-19

20. Goals & Objectives
Corporate Goals/Objectives
–Profitability (net profit)
–Growth
–Resource utilization (ROE, ROI)
–Market leadership
1-20

21. Basic Concepts of Strategic Management
3 Types of Strategy
–Corporate strategy
–Business strategy
–Functional strategy
1-21

22. Basic Concepts of Strategic Management
Corporate Strategy
–Stability
–Growth
–Retrenchment
1-22

23. Basic Concepts of Strategic Management
Business Strategy
–Competitive strategies
–Cooperative strategies
1-23

24. Basic Concepts of Strategic Management
Functional Strategy
–Technological leadership
–Technological followership
1-24

25. Basic Concepts of Strategic Management
Strategic
Decision-Making
Process
1-25

26. Strategic Decision Making
Strategic Decisions
–Rare
–Consequential
–Directive
1-26

27. Strategic Decision Making
Mintzberg’s Modes
–Entrepreneurial mode
–Adaptive mode
–Planning mode
–Logical incrementalism
1-27

28. Hambrick and Fredrickson – Good Strategy
5 Elements of Good Strategy
1. Arenas
2. Vehicles
3. Differentiators
4. Staging
5. Economic logic
1-28

29. CHAPTER 2
Corporate Governance
1-29

30. CHAPTER 2
Corporate
Governance
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
1-30

31. Corporate Governance
1-31

32. Corporate Governance
The relationship among the board of
directors, top management, and
shareholders – determining the direction
and performance of the corporation
1-32

33. Corporate Governance
Role of Board
–Monitor
–Evaluate and influence
–Initiate and determine
1-33

34. Board of Directors Continuum
1-34

35. Board of Directors
Members --
–Inside directors
•“management directors”
•Officers or execs employed by the firm
–Outside directors
•“non-management directors”
•Execs of other firms not employed by the
board’s corporation
1-35

36. Agency Theory
Agency Problem –
–Objectives of owners & agents in conflict
–Difficult for owners to verify agent performance
Risk Sharing Problem –
–Owners & agents risk assessment in conflict
1-36

37. Stewardship Theory
Executives more motivated to act in best
interest of the corporation than their own
self-interests. Theory that over time, senior
executives tend to view corporation as
extension of selves.
1-37

38. Board of Directors
When Outsiders can be considered Insiders
–Affiliated Directors
–Retired Directors
–Family Directors
1-38

39. Board of Directors
Codetermination
–The inclusion of a corporation’s employees on its
board of directors
1-39

40. Board of Directors
Interlocking Directorates
–Direct Interlocking
–Indirect Interlocking
1-40

41. Board of Directors
Nominations & Elections
–Traditional Approach
•CEO invitation to membership
•Shareholders approval in annual proxy statement
•All nominees usually elected
1-41

42. Board of Directors
Nominations & Elections
–Staggered Board Approach
•Staggered terms of service/election
1-42

43. Board of Directors
Sarbanes-Oxley
–Code of Ethics
–Audit, Nominating, and Compensation
Committees all outside directors
1-43

44. Board of Directors
Organization of the Board
–Size
•Charter & Bylaws Determination
1-44

45. Board of Directors
Corporate Governance
–Review & shaping of strategy
–Pressure for corporate performance
–Demand for executive stock ownership
–Outside directors increasing
–Impact of Sarbanes-Oxley
1-45

46. Board of Directors
Transformational leaders
–Change agents through vision for change
1-46

47. Board of Directors
Successful CEO’s
–Strategic vision
–Passion for the company
–Strong communication
–charisma
1-47

48. Board of Directors
Executive Leadership
–Strategic vision
–Role model
1-48

49. Board of Directors
Executive Leadership
–Communication of performance standards
–Demonstrates confidence in abilities of followers
1-49

50. Strategic Management Process
Strategic Planning Staff
–Supports top management & business units in
the strategic planning process
1-50

51. Strategic Management Process
Strategic Planning Staff
–Identify & analyze company-wide strategic issues
–Generate strategic alternatives
1-51

52. Strategic Management Process
Strategic Planning Staff
–Facilitate business units in coordinating activities
related to strategic planning process
1-52

53. CHAPTER 3
Ethics & Social
Responsibility
1-53

54. CHAPTER 3
Ethics & Social
Responsibility
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
1-54

55. Ethics & Social Responsibility
1-55

56. Corporate Governance
Broader responsibility --
Private corporations have responsibility to
society that extend beyond making a profit
1-56

57. Social Responsibility
Milton Friedman
There is one and only one social responsibility of
business—to use its resources and engage in
activities designed to increase its profits so long
as it stays within the rules of the game, which is
to say, engages in open and free competition
without deception or fraud.
1-57

58. Corporate Governance
Carroll’s 4 Responsibilities
–Economic
–Legal
–Ethical
–Discretionary
1-58

59. Carroll’s 4 Responsibilities
1-59

60. Corporate Stakeholders
Affect or are affected by the
achievement of the corporation’s
objectives
1-60

61. Corporate Stakeholders
Stakeholder Analysis –
–Primary stakeholder
•Sufficient bargaining power to affect outcomes
–Secondary stakeholder
•Indirect stake but are affected by corporation’s actions
–Stakeholder Input
•Determine whether input is necessary
1-61

62. Ethical Behavior
“business ethics”
–Argument that there is no such thing … it is an
oxymoron
1-62

63. Ethical Decision Making
Corporate practices --
–Massive write-downs and restatements of profit
–Misclassification of expenses as capital
expenditures
–Pirating corporate assets for personal gain
1-63

64. Ethical Decision Making
Recent Survey Results --
–70% distrust business executives
–Enron
–WorldCom
1-64

65. Reasons for Unethical Behavior
Provocative Question --
–Why are businesspeople perceived to be
acting unethically?
1-65

66. Reasons for Unethical Behavior
Perceptions caused by --
–Not aware of impropriety
–Cultural norms and values vary
–Governance systems based on rule or
relationships
–Differences in values between
businesspeople and key stakeholders
1-66

67. Reasons for Unethical Behavior
Allport-Vernon-Lindzey Study of Values --
–Aesthetic
–Economic
–Political
–Religious
–Social
–Theoretical
1-67

68. Reasons for Unethical Behavior
Most common reasons for bending rules --
–Organizational performance required it
–Ambiguous or out of date rules
–Pressure from others – everyone else does it
1-68

69. Moral Relativism
Morality is relative to some personal, social,
or cultural standard and there is no method
for deciding whether one decision is better
than another.
1-69

70. Kohlberg’s Levels of Moral Development
1. Preconventional level
–Characterized by a concern for self
•Personal interest
•Avoidance of punishment
1-70

71. Kohlberg’s Levels of Moral Development
2. Conventional level
–Characterized consideration of society’s values
•External code of conduct
1-71

72. Kohlberg’s Levels of Moral Development
3. Principled level
–Characterized by adherence to internal moral
code
•Universal values or principles
1-72

73. Encouraging Ethical Behavior
Codes of Ethics
–Specifies how an organization expects its
employees to behave on the job.
1-73

74. Encouraging Ethical Behavior
Guidelines for Ethical Behavior
–Ethics
–Morality
–Law
1-74

75. Encouraging Ethical Behavior
Approaches to Ethical Behavior
–Utilitarian
•Judged by consequences
–Individual Rights
•Fundamental rights in all decisions
–Justice
•Distribution in equitable fashion
1-75

76. Encouraging Ethical Behavior
Approaches to Ethical Behavior
–Categorical imperative
•“golden rule”
•Means - Ends
1-76

77. Strategy Bits
192 U.S. companies surveyed --
–92% monitored employees use of e-mail/Internet
–26% monitored employees electronic activities all
the time
–Almost none had checks in place to protect
employees privacy
1-77

78. CHAPTER 4
Environmental
Scanning and
Industry Analysis
1-78

79. CHAPTER 4
Environmental
Scanning and
Industry Analysis
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
1-79

80. Environmental Scanning
Societal environment --
–Economic forces
–Technological forces
–Political-legal forces
–Sociocultural forces
1-80

81. Societal Environment
Economic Forces --
–Regulate exchange of materials, money,
energy and information
1-81

82. Societal Environment
Technological Forces --
–Generate problem-solving inventions
1-82

83. Societal Environment
Political-legal Forces --
–Allocate power; provide laws and regulations
1-83

84. Societal Environment
Sociocultural Forces --
–Regulate values, mores, and customs of
society
1-84

85. Task Environment
Task environment --
–Elements or groups that directly affect a
corporation and are affected by it
1-85

86. Task Environment
Industry Analysis --
–In-depth examination of key factors within a
corporation’s task environment
1-86

87. Variables in Societal Environment
1-87

88. Demographic Trends
1-88

89. Transformational Sociocultural Trends
8 Current Trends –
–Increasing environmental awareness
–Growing health consciousness
–Expanding seniors market
–Impact of the Generation Y boomlet
–Declining mass market
–Changing pace and location of life
–Changing household composition
–Increasing diversity of workforce & market
1-89

90. International Societal Environments
1-90

91. Scanning the Task Environment
1-91

92. Ethical Behavior
“business ethics”
–Argument that there is no such thing … it is an
oxymoron
1-92

93. Ethical Decision Making
Corporate practices --
–Massive write-downs and restatements of profit
–Misclassification of expenses as capital
expenditures
–Pirating corporate assets for personal gain
1-93

94. External Strategic Factors
Strategic myopia --
–Willingness to reject unfamiliar as well as
negative information
1-94

95. Issues Priority Matrix
1-95

96. Analyzing the Task Environment
1-96

97. Porter’s Approach to Industry Analysis
Threat of New Entrants –
–Economies of scale
–Product differentiation
–Capital requirements
–Switching costs
–Access to distribution channels
–Cost disadvantages
–Government policy
1-97

98. Porter’s Approach to Industry Analysis
Rivalry Among Existing Firms –
–Number of competitors
–Rate of industry growth
–Product or service characteristics
–Amount of fixed costs
–Capacity
–Height of exit barriers
–Diversity of rivals
1-98

99. Porter’s Approach to Industry Analysis
•Threat of Substitute Products or Services
•Bargaining Power of Buyers
•Bargaining Power of Suppliers
•Relative Power of Other Stakeholders
1-99

100. Industry Evolution
Fragmented Industry –
–No dominant industry
1-100

101. Industry Evolution
Consolidated Industry –
–Dominated by a few large firms
1-101

102. International Risk Assessment
Continuum of International Industries
1-102

103. Strategic Groups
1-103

104. Strategic Types
General Types –
•Defenders
•Prospectors
•Analyzers
•Reactors
1-104

105. Competitive Intelligence
Called business intelligence
Gathering information on a company’s
competitors
1-105

106. Forecasting
Forecasting Techniques --
–Extrapolation
–Brainstorming
–Expert opinion
–Delphi technique
–Statistical modeling
–Scenario writing
1-106

107. Synthesis of External Factors -- EFAS
1-107

108. CHAPTER 5
Internal
Scanning:
Organizational
Analysis
1-108

109. CHAPTER 5
Internal
Scanning:
Organizational
Analysis
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
1-109

110. Resource-Based Approach to Organizational Analysis
Internal strategic factors --
–Critical strengths and weaknesses that are
likely to determine if the firm will be able to take
advantage of opportunities while avoiding
threats
1-110

111. Resource-Based Approach to Organizational Analysis
•Resources
•Capabilities
•Competency
•Core competency
•Distinctive competency
1-111

112. Core and Distinctive Competencies
VRIO Framework --
–Value
–Rareness
–Imitability
–Organization
1-112

113. Resource-Based Approach to Organizational Analysis
5-Step Approach Strategy Analysis --
1. Identify and classify resources
2. Combine strengths into capabilities
3. Appraise profit potential of capabilities
4. Select strategy that best exploits
5. Identify resource gaps invest in weaknesses
1-113

114. Continuum of Sustainability
1-114

115. Sustainability of Advantage
Durability --
–Rate at which a firm’s underlying resources
and capabilities depreciate or become obsolete
1-115

116. Sustainability of Advantage
Imitability --
–Rate at which a firm’s underlying resources
and capabilities can be duplicated by others
1-116

117. Sustainability of Advantage
Core Competency can be imitated --
–Transparency
–Transferability
–Replicability
1-117

118. Business Models
Company’s method for making money in
the current business environment.
1-118

119. Business Models
Types of Models --
–Customer Solutions Model
–Profit Pyramid Model
–Multi-Component System/Installed Base Model
–Advertising Model
–Switchboard Model
1-119

120. Business Models
Types of Models --
–Time Model
–Efficiency Model
–Blockbuster Model
–Profit Multiplier Model
–Entrepreneurial Model
–De Facto Standard Model
1-120

121. Value-Chain Analysis
Linked set of value-creating activities
beginning with basic raw material and
ending with distributors getting final
goods into hands of customers
1-121

122. Value-Chain Analysis
Typical Value Chain for
a Manufactured Product
1-122

123. Corporate Value-Chain Analysis
•Primary activities
•Support activities
1-123

124. Corporation’s Value Chain
1-124

125. Scanning Functional Resources & Capabilities
Basic Organizational Structures --
–Simple structure
–Functional structure
–Divisional structure
–Strategic business units (SBU’s)
–Conglomerate structure
1-125

126. Basic Organizational Structures
1-126

127. Corporate Culture
Collection of beliefs, expectations, and
values learned and shared by a
corporation’s members and
transmitted from one generation of
employees to another
1-127

128. Strategic Marketing Issues
–Market Position & Segmentation
–Marketing Mix
–Product Life Cycle
–Brand & Corporate Reputation
1-128

129. Product Life Cycle
1-129

130. Strategic Financial Issues
–Financial leverage
–Capital budgeting
1-130

131. Strategic Research & Development Issues
–R&D Intensity
–Technological Competence
–Technology Transfer
1-131

132. Technological Discontinuity
1-132

133. Strategic Human Resource Management Issues
HRM –
–Increasing use of teams
–Union relations
–Temporary workers
–Quality of work life
–Human diversity
1-133

134. Internal Factor Analysis Summary Table
1-134

135. CHAPTER 6
Strategy Formulation:
Situation Analysis &
Business Strategy
1-135

136. CHAPTER 6
Strategy Formulation:
Situation Analysis &
Business Strategy
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
1-136

137. Situational Analysis
Strategy formulation --
–Strategic planning or long-range planning
•Develops mission, objectives, strategies, policies
1-137

138. Situational Analysis
--process of finding a strategic fit
between external opportunities and
internal strengths while working around
external threats and internal weaknesses
1-138

139. IFAS – Maytag as Example
1-139

140. EFAS – Maytag as Example
1-140

141. SFAS Matrix
1-141

142. Situational Analysis
Niche --
–Need in the marketplace that is currently
unsatisfied
1-142

143. Situational Analysis
Corporate Goal --
–Find propitious niche
–Strategic window
1-143

144. Situational Analysis
SWOT --
–Internal
•Strengths/Weaknesses
–External
•Opportunities/Threats
1-144

145. TOWS Matrix
1-145

146. Business Strategy
Focuses on improving competitive
position of company’s products or
services within the specific industry or
market segment
1-146

147. Porter’s Competitive Strategies
Competitive Strategy --
–Low cost
–Differentiation
–Direct competition
–Focus on niche
1-147

148. Porter’s Competitive Strategies
Generic Competitive Strategies --
–Lower Cost strategy
•Greater efficiencies than competitors
–Differentiation strategy
•Unique/superior value, quality, features, service
1-148

149. Porter’s Competitive Strategies
Competitive Advantage --
–Determined by Competitive Scope
•Breadth of the target market
1-149

150. Porter’s Competitive Strategies
1-150

151. Porter’s Competitive Strategies
Cost Leadership --
–Low-cost competitive strategy
–Broad mass market
–Efficient-scale facilities
–Cost reductions
–Cost minimization
1-151

152. Porter’s Competitive Strategies
Differentiation –
–Broad mass market
–Unique product/service
–Premiums charged
–Less price sensitivity
1-152

153. Porter’s Competitive Strategies
Cost-Focus –
–Low-cost competitive strategy
–Focus on market segment
–Niche focused
–Cost advantage in market segment
1-153

154. Porter’s Competitive Strategies
Differentiation Focus –
–Specific group or geographic market focus
–Differentiation in target market
–Special needs of narrow target market
1-154

155. Porter’s Competitive Strategies
Stuck in the middle –
–No competitive advantage
–Below-average performance
1-155

156. Risks of Generic Strategies
Risks of Cost Leadership Risks of Differentiation Risks of Focus
Risks of Cost Leadership
Cost leadership is not Risks of Differentiation
Differentiation is not Risks of Focus
The focus strategy is
Cost leadership is not
sustained: Differentiation is not
sustained: The focus strategy is
imitated:
• sustained: imitate.
Competitors • sustained: imitate.
Competitors imitated:
The target segment becomes
• Competitors imitate.
• Technology changes. • Competitors imitate.
• Bases for differentiation The target segment becomes
structurally unattractive:
• • Technology changes.
Other bases for cost • Bases less important to
become for differentiation • structurally unattractive:
Structure erodes.
• Other bases for cost
leadership erode. buyers. less important to
become • Structure erodes.
• Demand disappears.
leadership erode.
Proximity in differentiation is buyers.
Cost proximity is lost. • Demand disappears.
Broadly targeted competitors
Proximity in differentiation is
lost. Cost proximity is lost.
Differentiation focusers Broadly targeted competitors
overwhelm the segment:
lost.
Cost focusers achieve even Differentiation focusers
achieve even greater • overwhelm the segment:
The segment’s
lower cost in segments. even
Cost focusers achieve differentiation ingreater
achieve even segments. • The segment’sother
differences from
lower cost in segments. differentiation in segments. segments narrow. other
differences from
segments narrow.
• The advantages of a
•broad advantages of a
The line increase.
Newbroad linesubsegment
focusers increase.
New focusers subsegment
the industry.
the industry.
1-156

157. 8 Dimensions of Quality
1-157

158. Competitive Strategy
Industry Structure --
–Fragmented Industry
–Consolidated Industry
1-158

159. Competitive Tactics
Timing Tactics --
–First mover
–Late movers
1-159

160. Competitive Tactics
Market Location Tactics --
–Frontal Assault
–Flanking Maneuver
–Bypass Attack
–Encirclement
–Guerrilla Warfare
1-160

161. Competitive Tactics
Defensive Tactics --
–Raise structural barriers
–Increase expected retaliation
–Lower the inducement for attack
1-161

162. Cooperative Strategies
•Collusion
•Strategic Alliances
•Mutual service consortia
•Joint ventures
•Licensing arrangements
•Value-chain partnerships
1-162

163. CHAPTER 7 Strategy
Formulation: Corporate
Strategy
1-163

164. CHAPTER 7 Strategy
Formulation: Corporate
Strategy
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
1-164

165. Corporate Strategy
3 Key Issues –
–Firm’s directional strategy
–Firm’s portfolio strategy
–Firm’s parenting strategy
1-165

166. Corporate Directional Strategies
1-166

167. Corporate Strategy
Directional Strategy –
–Orientation toward growth
•Expansion, contraction, status quo
•Concentration or diversification
•Internal development or acquisitions, mergers, or
alliances
1-167

168. Corporate Strategy
Directional Strategy –
–3 Grand Strategies
•Growth strategies
•Stability strategies
•Retrenchment strategies
1-168

169. Corporate Strategy
Growth Strategies --
–External mechanisms
•Mergers
•Acquisitions
•Strategic alliances
1-169

170. Corporate Strategy
Growth Strategies --
–2 Basic forms
•Concentration
•Diversification
1-170

171. Corporate Strategy
Basic Concentration Strategies --
–Vertical growth
–Horizontal growth
1-171

172. Corporate Strategy
Vertical Growth --
–Vertical integration
•Full integration
•Taper integration
•Quasi-integration
•Long-term contract
1-172

173. Corporate Strategy
Vertical Growth --
–Backward integration
–Forward integration
1-173

174. Corporate Strategy
Concentration --
–Horizontal Growth
•Horizontal integration
1-174

175. Corporate Strategy
Basic Diversification Strategies --
–Concentric Diversification
–Conglomerate Diversification
1-175

176. Corporate Strategy
Concentric Diversification --
–Growth into related industry
–Search for synergies
1-176

177. Corporate Strategy
Conglomerate diversification --
–Growth into unrelated industry
–Concern with financial considerations
1-177

178. Corporate Strategy
International Entry Options --
–Exporting
–Licensing
–Franchising
–Joint Ventures
–Acquisitions
–Green-Field Development
1-178

179. Corporate Strategy
International Entry Options --
–Production Sharing
–Turnkey Operation
–BOT Concept (Build, Operate, Transfer)
–Management Contracts
1-179

180. Corporate Strategy
Stability Strategies --
–Pause/proceed with caution
–No change
–Profit strategies
1-180

181. Corporate Strategy
Retrenchment Strategies --
–Turnaround
–Captive Company Strategy
–Selling out
–Bankruptcy
–Liquidation
1-181

182. Corporate Strategy
Portfolio Analysis --
–Resource commitment on best products to
ensure continued success
–Resource commitment on new costly products
high risk
1-182

183. BCG Matrix (Portfolio Analysis)
1-183

184. GE Business Screen (Portfolio Analysis)
C
Winners Winners
A Question
High B Marks
D
Industry Attractiveness
Winners
E Average
Businesses
Medium F
Losers
H
Losers
G
Low
Profit
Producers Losers
Strong Average Weak
Business Strength/Competitive Position
1-184

185. Corporate Strategy
Corporate Parenting Strategy --
–Strategic factors
–performance improvement
–Analyze fit
1-185

186. CHAPTER 8 Strategy
Formulation: Functional
Strategy & Strategic
Choice
1-186

187. CHAPTER 8 Strategy
Formulation: Functional
Strategy & Strategic
Choice
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
1-187

188. Functional Strategy
The approach a functional area takes to
achieve corporate and business unit
objectives and strategies by maximizing
resource productivity
1-188

189. Functional Strategy
Marketing Strategy –
–Pricing
–Selling
–Distribution
1-189

190. Functional Strategy
Marketing Strategy –
–Product development
•Line extension
1-190

191. Functional Strategy
Marketing Strategy –
–Advertising and promotion
•Push strategy
•Pull strategy
1-191

192. Functional Strategy
Marketing Strategy –
–Pricing
•Skim pricing
•Penetration pricing
•Dynamic pricing
1-192

193. Functional Strategy
Financial Strategy –
–Leveraged buyout
–Reversed stock split
–Tracking stock
1-193

194. Functional Strategy
R&D Strategy –
–Technological leader
–Technological follower
–Open innovation
1-194

195. Functional Strategy
Operations Strategy –
–Job shop
–Connected line batch flow
–Flexible manufacturing systems
–Dedicated transfer lines
–Mass production
–Continuous improvement system
–Modular manufacturing
1-195

196. Functional Strategy
Purchasing Strategy –
–Multiple sourcing
–Sole sourcing
–Just-in-time (JIT)
–Parallel sourcing
1-196

197. Functional Strategy
Logistics Strategy –
–Centralization
–Outsourcing
–Internet
1-197

198. Functional Strategy
HRM Strategy –
–360 degree appraisal
1-198

199. Functional Strategy
Outsourcing errors –
–Activities that should not be outsourced
–Wrong vendor selection
–Writing poor contract
–Overlooking personnel issues
–Hidden costs of outsourcing
–Failing to plan exit strategy
1-199

200. Proposed Outsourcing Matrix
1-200

201. Functional Strategy
Strategies to Avoid –
–3 Follow the leader
–Hit another home run
–Arms race
–Do everything
–Losing hand
1-201

202. Corporate Strategy
Growth Strategies --
–External mechanisms
•Mergers
•Acquisitions
•Strategic alliances
1-202

203. Constructing Corporate Scenarios
1-203

204. Functional Strategy
Subjective Factors Affecting Decisions --
–Management’s attitude toward risk
–Pressures from stakeholders
–Pressures from corporate culture
–Needs and desires of key managers
1-204

205. Stakeholder Priority Matrix
1-205

206. Strategic Choice
Avoiding the Consensus Trap --
–Devil’s Advocate
–Dialectical Inquiry
1-206

207. Strategic Choice
Evaluation of Strategic Alternatives --
–Mutual exclusivity
–Success
–Completeness
–Internal consistency
1-207

208. CHAPTER 9 Strategy
Implementation:
Organizing for Action
1-208

209. CHAPTER 9 Strategy
Implementation:
Organizing for Action
STRATEGIC MANAGEMENT & BUSINESS POLICY
10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
1-209

210. Strategy Implementation
--Sum total of activities & choices
required for strategic plan execution
--Strategy implementation through
programs, budgets, and procedures
1-210

211. Strategy Implementation
Key Implementation Questions –
–Who carries out strategic plan?
–What needs doing for alignment w/ strategy?
–How is work coordinated?
1-211

212. Strategy Implementation
Programs –
–Action oriented
–Matrix of change
•Feasibility
•Sequence of execution
•Location
•Pace & nature of change
•Stakeholder evaluations
1-212

213. The Matrix of Change
1-213

214. Strategy Implementation
Achieving Synergy –
–Shared know-how
–Coordinated strategies
–Shared tangible resources
1-214

215. Strategy Implementation
Achieving Synergy –
–Economies of scale or scope
–Pooled negotiating power
–New business creation
1-215

216. Strategy Implementation
Structure follows strategy –
–New strategy is created
–New administrative problems emerge
–Economic performance declines
–New appropriate structure is invented
–Profit returns to previous level
1-216

217. Strategy Implementation
Stages of Corporate Development –
–Stage I: Simple structure
–Stage II: Functional structure
–Stage III: Divisional structure
–Stage IV: Beyond SBU’s
1-217

218. Strategy Implementation
Blocks to Changing Stages –
–Loyalty to comrades
–Task oriented
–Single-mindedness
–Working in isolation
1-218

219. Organizational Life Cycle
1-219

220. Changing Structural Characteristics of Modern Organizations
1-220

221. Strategy Implementation
Advanced Types of Organizational
Structures –
–Matrix
•Temporary cross-functional task forces
•Product/brand management
•Mature matrix
1-221

222. Strategy Implementation
Advanced Types of Organizational
Structures –
–Network structure (virtual organization)
–Cellular organization
1-222

223. Network Structure
1-223

224. Strategy Implementation
Six Sigma –
–Define
–Measure
–Analyze
–Improve
–Establish
1-224

225. Strategy Implementation
Job design to implement strategy –
–Job enlargement
–Job rotation
–Job enrichment
–Job characteristics model
1-225

226. Strategy Implementation
International Issues –
–MNC’s
–International Strategic Alliances
1-226

227. Strategy Implementation
International Development Stages–
–Domestic company
–Domestic company w/export division
–Domestic company w/int’l division
–MNC w/multidomestic emphasis
–MNC w/global emphasis
1-227

228. Strategy Implementation
Centralization vs. Decentralization–
–Product-group structure
–Geographic-area structure
1-228

229. Geographic Area Structure
1-229

230. 1-230