chapter5-strategy-formulation.ppt

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1、 Chapter5 Strategy Formulation:Situation Analysis and Business StrategySWOT analysislSWOT Analysis is a strategic planning method used to evaluate the Strengths,Weaknesses,Opportunities,and Threats involved in a project or in a business venture.SWOT analysislInternal factors The strengths and weakne

2、sses internal to the organization.-Use a PRIMO-F analysis to help identify factors lExternal factors The opportunities and threats presented by the external environment to the organization.-Use a PEST analysis to help identify factors SWOT analysislThe PRIMO-F ModelPeople in terms of their experienc

3、e,their leadership and the controls in place in the organization.ResourcesInnovation&IdeasMarketingOperationsFinanceSWOT analysisTOWS matrixlTOWS matrix:how the external opportunities and threats facing a particular corporation can be matched with that companys internal strengths and weaknesses to r

4、esult in four set of possible strategic alternatives.SO strategies:use its strengths to take advantage of opportunities.ST strategies:use its strengths to avoid threats.WO strategies:use opportunities to overcome weaknessesWT strategies:defensive and act to minimize weaknesses and avoid threats.Busi

5、ness strategylBusiness strategyCompetitive strategyCooperative strategylGeneric competitive strategyCost leadership:ability of a company or a business unit to design,produce,and market a comparable product more efficiently than its competitors.Differentiation:the ability to provide unique and superi

6、or value to buyer in terms of product quality,special features or after-sale service.Focus:Features important to customers&distinct from competitors that allow premium pricingCompetitive strategyCost leadershiplThe cost leader does not try to be the industry innovator.lThe overriding goal of the cos

7、t leader is to increase efficiency and lower its costs relative to industry rivals.lSource of cost leadershipEfficient scale facilitiesExperience curveTight cost and overhead controlAvoidance of marginal customer accountsCost minimization of R&D,service,advertising and so onCost leadershipRivalryEnt

8、ryBuyersSuppliersSubstitutes increases capitalrequirementsfor entrants competitors rationallyavoid price competition limits attractivenessof substitutes increasesimportance of thefocal firm to thesupplier lowers incentivesfor buyers toverticallyintegrate Cost leadershiplDisadvantages of cost leaders

9、hipCost leadership can be imitated by competitor.Competitors may lower their cost structures.Cost reductions may affect demand.Differentiation lDifferentiation charge a premium for its product.lSource of differentiationDesign or brand imageTechnologyFeaturesDealer networkCustomer serviceDifferentiat

10、ionlAdvantages of differentiationPowerful suppliers are not a problem because the company is geared more toward the price it can charge than its costs.Differentiators can pass price increases on to customers.Powerful buyers are not a problem because the product is distinct.Differentiation and brand

11、loyalty are barriers to entry.The threat of substitute products depends on competitors ability to meet customer needs.DifferentiationlDifficulty maintaining long-term distinctiveness in customers eyes.Agile competitors can quickly imitate.Patents and first-mover advantage are limited.lDifficulty mai

12、ntaining premium price.Focus strategylThe focuser selects a specific market niche that may be based on Geography Type of customer Segment of product linelFocused company positions itself as either Low-Cost or cost focus Differentiator differentiation focusFocus strategylAdvantages of focus strategyT

13、he focuser is protected from rivals to the extent it can provide a product or service they cannot.The focuser has power over buyers because they cannot get the same thing from anyone else.The threat of new entrants is limited by customer loyalty to the focuser.Customer loyalty lessens the threat fro

14、m substitutes.The focuser stays close to its customers and their changing needs.lDisadvantages of focus strategyLose broadly targeted competitorStuck in the MiddleTiming tacticslFirst mover advantage:the first to develop and pioneer revolutionary new products that can lead to an enduring competitive

15、 advantage.First mover advantagelsources of first-mover advantagesExploit network effects Locking customers into its technologyEstablish significant brand loyaltyExpensive for later entrants to break downEnable economies of scale and learning effectsSo first-mover has cost advantage and can respond

16、to new entrants by cutting price to maintain market shareCreate switching costs for customersMaking it difficult for rivals to take customers awayAccumulate valuable knowledgeRegarding customers,distribution,and technology that late entrants will find difficult or expensive to matchFirst mover disad

17、vantagelPioneering costsTo develop technology and distribution channels and to educate the customers.Later entrants free-ride on first-movers investments.lMore prone to make mistakesBecause of the uncertainties in a new marketLater entrants learn from the mistakes of first-movers.lRisk of building t

18、he wrong resources and capabilitiesMass-market may differ from the needs of early adopterslMay invest in inferior or obsolete technologyIf the underlying technology is advancing rapidlyLate entrants may be able to leap frog the technology.Late mover advantagelBe able to imitate first movers technolo

19、gical advances,thus keep R&D low.lMinimize risk by waiting until a new market is establishedlTake advantage of the natural inclination of the first mover to ignore market segment.Cooperative strategylCooperative strategy:used to gain competitive advantage within and industry by working with rather t

20、han against other firms.lStrategic alliance:partnership of two or more corporation or business unit formed to achieve strategically significant objectives that are mutually beneficial.Cooperative strategylMutual service consortium:partnership of similar companies in similar industries who pool their

21、 resource to gain a benefit that is too expensive to develop alone,such as access to advanced technology.lJoint venture:for strategic purpose,that create an independent entity and allocate ownership,operational responsibility,and financial risks and rewards to each member,while preserving their sepa

22、rate identity and autonomy.Cooperative strategylLicensing arrangement:licensing firm grants rights to another firm,and the licensee pays compensation to the licensing firm in return for technical expertise.lValue-chain partnership:strong and close alliance in which one company or unit forms a long-term arrangement with a key supplier or distributor for mutual advantage.Cooperative strategylAlliance are an expedient way to crack new markets,to gain skills,technology,or products,and to share fixed costs and resources.