Management Policy. Strategy and Critical Thinking. Strategy versus Tactics. Lecture 2. Strategy. Logical or Rational Thinking

Transcription

1 Management Policy Lecture 2 Components of a Strategy Intro to Diamond E Chain and PEST Strategy and Critical Thinking Strategy Meet Goals subject to Constraints Logical or Rational Thinking Unbiased Deductive Identity of person not an issue Strategy versus Tactics Goal: Dominant Firm Strategy: Low Cost Tactics Low Price Bulk discount coupons or 2 for 1 Free delivery 1

2 THE ROLE OF STRATEGY Hub for Analysis Retrospective Prospective Link to Action Goals Core Activities - PMF Business Strategy Components GOALS CORE ACTIVITIES 5 The Wal-Mart Business Strategy Dominate Markets Lowest cost System High Growth Do it the Wal-Mart way GOALS CORE ACTIVITIES 6 2

3 The Wal-Mart Business Strategy GOA:LS CORE ACTIVITIES Everyday low prices Always in stock Courteous Reliable 7 The Wal-Mart Business Strategy GOA:LS CORE ACTIVITIES Integrated Logistics: Supplier to checkout Intensely managed Local Tailoring 8 The Wal-Mart Business Strategy GOA:LS CORE ACTIVITIES Branded general merchandise -oriented customers Develop easier markets first: work from regional hubs 9 3

4 The Wal-Mart Business Strategy Dominate Markets Lowest cost System High Growth Do it the Wal-Mart way GOA:LS CORE ACTIVITIES Everyday low prices Always in stock Courteous Reliable Branded general merchandise -oriented customers Develop easier markets first: work from regional hubs Integrated Logistics: Supplier to checkout Intensely managed Local Tailoring 10 The Diamond E Framework Management Preferences The ability to Analyze this Is Key Organization Strategy Environment Capabilities & Resources Goals Product/Mkt Competitive Premise Business System 11 Diamond E Framework: Tensions Management Preferences Organization Strategy Environment CAN DO Capabilities & Resources 4

5 Diamond E Framework: Tensions Management Preferences WANT TO DO Organization Strategy Environment Capabilities & Resources Diamond E Framework: Tensions Management Preferences Organization Strategy Environment Capabilities & Resources NEED TO DO Diamond E Framework: Tensions Management Preferences WANT TO DO Organization Strategy Environment CAN DO NEED TO DO Capabilities & Resources 5

6 Strategic Tension & The Business Model WANT Goals CAN Core Activities Product/ Market NEED Strategic Tension WANT Management Preferences Individual CAN Org n, Res. & Cap s Firm Strategic Tension NEED Environment Industry Strategic Risks TIME HORIZON Short-Term Long-Term RISKS Enviro Capability Errors in reading the enviro cause failure Strategic demands Exceed the Capacity to execute Enviro changes Make the Strategy obsolete Internal cap y Develop inconsit y With strategy 18 6

7 The Process of Strategic Analysis Step 1: Base Case Analysis Assess the strategic position of the bus and the urgency for action Step 2: Strategy Formulation and Testing Develop and evaluate proposals to address business opp y and challenges 1. Assess past performance 2. Identify and evaluate the current strategy 3. Forecast future performance under current strategy 4. Decide on the need, nature, and speed of change 1. Work from the enviro and capabilities to generate new proposals 2. Use the drill to shape and shortlist proposals 3. Prepare performance forecasts Step 3: Decision and Implementation Commit, implement, and review 1. Decide on Proposals to implement 2. Move to build commitment and develop required capabilities 3. Implement Chain SUPPORT ACTIVITIES FIRM INFRASTRUCTURE (e.g., Finance, Planning) HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT Chain INBOUND OPERATIONS OUTBOUND MARKETING AFTER-SALE LOGISTICS (Manufacturing) LOGISTICS AND SALES SERVICE PRIMARY ACTIVITIES 7

8 Chain SUPPORT ACTIVITIES FIRM INFRASTRUCTURE (e.g., Finance, Planning) HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT INBOUND OPERATIONS OUTBOUND MARKETING AFTER-SALE LOGISTICS (Manufacturing) LOGISTICS AND SALES SERVICE M A R G I N PRIMARY ACTIVITIES Supply Chain for Soft Drink Industry Inputs Concentrate Producer Bottler Distributors The Soft Drink Industry Chain Players: Inputs Packaging Sweeteners CP Bottler Distributors Coke Pepsi Dr. Pepper 7-up RC Company owned Independent - exclusive franchise Foodstores Fountain Vending Machines Convenience Stores added: Operations Secret formula Brand identity Marketing & Sales - Distribution 8

9 Assessing the Environment Macro Forces - PEST Political Economic Social Technological Assessing the Environment Micro Forces - Supply Competition Demand Assessing the Environment Macro Forces - PEST Political Economic Social Technological Micro Forces - Supply Competition Demand 9

10 Strategy and Environment Linkage MANAGEMENT PREFERENCES New Strategy Must Fit ORGANIZATION STRATEGIC CHOICES ENVIRONMENT RESOURCES & CAPABILITIES Strategy and Environment Linkage MANAGEMENT PREFERENCES New Strategy Must Fit ORGANIZATION STRATEGIC CHOICES ENVIRONMENT RESOURCES & CAPABILITIES Strategic Choices Repeatedly Reviewed Strategy and Environment Linkage MANAGEMENT PREFERENCES New Strategy Must Fit ORGANIZATION STRATEGIC CHOICES ENVIRONMENT RESOURCES & CAPABILITIES Need to understand Industry economics and competitive environment 10