GMS 200 Lecture Notes - Swot Analysis, Situational Leadership Theory
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Chapter 7: Strategy and Strategic Management
Todays management places a great premium on “competitive advantage” and how it
is achieved, or not, through “strategy” and “strategic management.”
Competitive advantage: the ability to do something o well that one outperforms
i.e. walmart and their ability to cut costs. They match buying trends.
Typical sources of competitive advantage include:
Cost and quality – strategy drives emphasis on operating efficiency and
product or service quality
Knowledge and speed – emphasis on innovation and speed delivery to
market for new ideas.
Barriers to entry – emphasis on creating a market stronghold that are
protected from entry by others.
Financial resources – emphasis on investments or loss absorption that
competitors can’t match.
Strategy and Strategic Intent
Strategy – comprehensive plan guiding resource allocation to achieve long term
Sustainable competitive advantage – the ability to outperform rivals in ways that are
difficult or costly to imitate.
A strategy helps ensure that resources are used with consistent strategic intent –
focuses and applies organizational energies on a unifying an compelling goal.
Levels of Strategy
Corporate Level Strategy - sets the long term direction for the total enterprise
(identifies how the company intends to compete across multiple industries and
markets, ie general electric)
Business Level Strategy – identifies how a division or strategic business unit will
compete in its product or service domain. (strategy for a single business unit or
Functional Strategy – guides activities within one specific area of operations.
(focuses on activities within a specific functional area such as marketing,
manufacturing, finance or HR).
The Strategic Management Process
Strategic Management – the process of formulating and implementing strategies.
Strategic Analysis – the process of analyzing the organization, the environment, and
the orgs competitive position and current strategies.
Strategy Formulation – is the process of crafting strategies to guide the allocation of
Strategy Implementation – is the process of putting strategies into action.
Essentials of Strategic Analysis
- Canada Goose is a good example
Analysis of Mission, Values and Objectives
The strategic management process begins with review and clarification of missions,
values and objectives. This sets the stage for the organizations assessments,
resources and capabilities, as well as competitive opportunities and threats in its
Mission – statement expresses the organizations reason for existence in society.
Stakeholders – individuals and groups directly affected by the organization and its
Strategic Constituencies Analysis – assesses interests of stakeholders and how well the
organization is responding to them.
Core values – are broad beliefs about what is or is not appropriate behavior. (Canada
Goose – Authenticity)
Organizational Cultures - is the predominant value system for the organization as a
whole. (how well they align with and support the organizations mission, strong
values help build organizations identities).
Operating objectives – are specific results that organizations try to accomplish.
Typical Operating Objectives within a Business
- Profitability – operating within a net profit
- Financial Health – acquiring capital, earning positive returns
- Cost Efficiency – using resources well to operating at a low cost
- Customer Service – maintaining their needs and maintaining loyalty
- Product Quality – Producing HQ goods and services
- Market Share – gaining a specific share of possible customers
- Human Talent – recruiting and maintaining a HQ workforce
- Innovation – developing new products and processes
- Social Responsibility – Making a positive contribution to society
SWOT Analysis of Organization and Environment
After assessment of mission, values and objectives, the next step in the strategic
management process is to analyze the orgs and its environment using SWOT.
SWOT Analysis – examines organizational strengths, weaknesses, and environmental
opportunities and threats.
Organizational Strengths and Weaknesses
A major goal in assessing strengths is to identify core competencies – a special
strength that gives and organization a competitive advantage. (something they do
exceptionally well in comparison with their competitors).
Analysis of Rivalry and Industry Attractiveness
Porter’s 5 Forces Model: (Fig 7.5)
1. Industry Competition – the intensity of rivalry among firms in the industry
and the ways they behave competitively toward one another.
2. New Entrants – the threat of new competitors entering the market, based on
the presence or absence of barriers to entry.
3. Substitute Products or Services – the threat, based on the ability of
consumers to find what they wants from other sellers.
4. Bargaining Power Of Suppliers – The ability of resource suppliers to
influence the price that one has to pay for their products or service.
5. Bargaining Power of Customers – The ability of customers to influence the
price that they will pay for the firms products or services.