Fuctional and competitive strategies
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This document discusses strategic planning and crafting strategies. It defines strategic management as formulating, implementing, and evaluating cross-functional decisions to achieve organizational objectives and gain competitive advantage. There are three levels of strategy: corporate, business, and functional. Competitive strategies aim to attain a competitive advantage and include Porter's cost leadership, differentiation, and focus strategies. Functional strategies involve product development, human resources, and information/financial systems to support organizational goals.
Fuctional and competitive strategies
- 1. STRATEGIC PLANNING: ! CRAFTING STRATEGIES Presented By: ! KarolAnne Marie Go Sy ! Agatha Kristie Evangelista! Aiza Fabi! MBA
- 2. Strategic Management • "the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives"! • an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage"! • includes understanding the srategic position of an organization, making strategic choices for the future and managing strategy in action! • defined as the process by which managers of the firm analyze the internal and external environments for the purpose of formulating strategies and allocating resources to develop a competitive advantage in an industry that allows for the successful achievement of goals.
- 3. Strategic Management Answers the following 3 questions: ! • Where is the organization at the moment? ! • Where does it want to go? ! • How will it get there?! !
- 4. Importance of Strategic Management Requirement for sustained competitive advantage ! Views things from broader perspective! Facilities collaboration- collaboration between top management and middle management ! ! Strategic planning is used to achieve the competitive advantage and to integrate all the functional areas of the company by facilitating the communication between the managers of all levels.
- 6. Types of Strategy https://leadingstrategicinitiatives.files.wordpress.com/2011/07/3typesstrategy1.png
- 8. CRAFTING STRATEGIES Corporate Strategies ! Competitive and Functional Strategies ! International Strategies
- 9. Competitive Strategy • a long term plan of action that a company devises towards achieving a competitive advantage over its competitors after examining its strengths and weaknesses of the latter and comparing them to its own! ! • incorporates actions to withstand the market's competitive pressures, attract customers and assist in the company's market position
- 12. What is Competitive ! Advantage? • key concept of strategic management ! • sets an organization apart (competitive edge) ! • organization does something that others can't do or does it better than others do (distinctive capability) ! • an organization has something that competitors don't (unique resource)
- 13. What is "competition"? • when organizations battle or vie for some desired object or outcome ! customers! market share! survey ranking ! needed resources
- 14. Who are Competitors? • Industry Perspective! • making or selling the same or very similar goods or services! • describes industry according to the number of sellers and the degree of differentiation! ! • Market Perspective! • satisfy the same customer need! • intensity of competition depends on: ! • How well the customer's need is understood! • How well the different organizations are able to meet that need
- 15. Who are Competitors? • Strategic Groups Perspective ! • group of firms competing in an industry that have similar strategies, resources and customers! • Level of intensity of competition depends on: ! • How effectively each competitor has developed its competitive advantage! • The competitive strategies used by each competitor in that group
- 16. Competitive Strategies • Miles and Snow's Adaptive Strategies (1978) ! • strategies used to adapt to uncertain competitive environments ! ! PROSPECTOR - continually innovates by finding and exploiting new product and market opportunities! DEFENDER- characterized by the search for market stability and producing only limited product line directed at a narrow segment of the potential market
- 17. Competitive Strategies • Miles and Snow's Adaptive Strategies (1978) ! ANALYZER - one of analysis and imitation! REACTOR- the lack of coherent strategic plan or apparent means of competing
- 19. Competitive Strategies • Porter's Generic Competitive Strategies (1980) ! based on organization's competitive advantage ! competitive advantage can come from only one of the 2 sources: ! having the lowest costs in the industry ! possessing significant and desirable differences from competitors! considers the scope of the product-market in which the organization wishes to compete
- 20. Competitive! Strategies • Cost-leadership Strategy (Low-Cost Strategy) ! • organization strives to have the lowest cost in its industry and produces for a broad customer base! • no frills, products are aimed at average customer ! • uses cost-effective technology, efficiency in all areas of operation is the main objective! • Ex: Payless Shoe Source, Walmart
- 21. Competitive Strategies • Differentiation Strategy ! • organization competes by providing unique products with features that: ! • customers value! • perceived as different! • customers are willing to pay a premium price for ! • premium price provides the profit incentive to compete on the basis of differentiation
- 22. Competitive Strategies • Characteristics of Successful Differentiator! • all capabilities are aimed at isolating and understanding specific market segments and developing specific product features for that specific market ! • has broad and wide product lines! • establish brand loayalty ! • Ex: Gap, Old Navy, Pottery Barn
- 23. Competitive Strategies • Focus Strategy ! • pursues either a cost or differentiation advantage but in a limited customer group or segment (niche) ! • geographical niche! • type of customer niche - specific group of consumers! • product line niche! • competes by having lower costs that the overall industry cost leader in specific niches!
- 24. Competitive Strategies • Focus Strategy ! • Can focus on: ! • product features, product innovations, product quality, customer responsiveness! • specializes on 1 or few segments instead of all market segments
- 25. Competitive Strategies • Stuck in the Middle! • happens when : ! • costs are too high to compete with the low-cost leader! • products and services aren't differentiated enough to compete with the differentiator! • not the ideal strategy ! • can be unstuck by deciding which competitive advantage to pursue, then aligning resources, distinctive capabilities adn core competencies
- 26. unc.edu/~nielsen/soci410/nm2/nm2.htm ENERIC ORGANIZATIONAL STRATEGIES gy refers to the techniques used by an organization to reach its goals. udies have described generic strategies used by organizations. chael Porter's Competitive Strategies el Porter distinguishes three main strategies. He argues that each strategy implies a specific pattern of organizational characteristics. Michael Porter's Competitive Strategies (cf. Daft E2.5 p. 62) Strategy Organizational Design Emphasis Low-cost Leadership Increase market share by emphasizing low cost compared to competitors. EX: Walmart. Other examples? efficiency with strong centralizaiton, tight cost control standard operating procedures efficient procurement & distribution close supervision, routinization of tasks, limited empowerment of employees Differentiation Attempt to distinguish organization's product or service from others in the industry. EX: Godiva Chocolates. Other examples? organizational learning research customer intimacy innovation & risk-taking Focus Concentrate on specific market (region or group of customers). EX: Other examples? Note: Porter distinguishes further between focused low-cost & focused differentation strategies. See Daft. od Lion's old slogan "When we save, you save!" exemplifies which of Michael Porter's 3 competitive strategies? ymond Miles & Charles Snow's Framework
- 28. Functional Strategies • short-term, goal directed decisions and actions of the various functional units , to achieve objectives and to maximize resource productivity! • area of operational management based on a specific department or discipline such as HR, Finance or Marketing! • 3 basic functions of organizations in creating and delivering goods and services: ! • Product Strategies (design, production-operations, marketing) ! • People Strategies (human resources) ! • Support Process Strategies (information and financial accounting systems
- 30. Objectives of Functional Strategies
- 31. Types of Functional Strategies • Product Strategy ! • R & D - product design ! • production-operation strategies - allocation of resources to support infrastructure and production ! • Marketing strategy - ! • An organization's strategy that combines all of its marketing goals into one comprehensive plan. A good marketing strategy should be drawn from market research and focus on the right product mix in order to achieve the maximum profit potential and sustain the business. The marketing strategy is the foundation of a marketing plan.! !
- 32. Types of Functional Strategies • The People! • Human Resources! • High performance work practices leads to high individual and organizational performance ! • Examples of HR Strategies: ! • Improve knowledge, skills and abilities of organization's current and potential employees ! • Increase employees' motivation ! • Reduce loafing on the job ! • Help retain quality employees ! • Encourage non-performers to leave the organization!
- 33. Types of Functional Strategies • The People! • Strategic Choices: ! • getting people into the organization ! • making sure they have the knowledge and skills assess! • helping them do their job better (orientation and training) ! • assessing how well they do their jobs (performance appraisal and disciplinary actions)! • other HR issues (employee relations, job design , diversity efforts, workplace health and safety, workplace misbehavior) ! • must be closely aligned with other strategies to ensure that the organization's workforce is being used effetctively and efficiently ! !
- 34. Types of Functional Strategies • The Support Process! • 2 main support process: ! • Information Systems ! • choice of system technology to be used and choice of types of information systems needed ! ! • Financial-Accounting Systems ! • provide information about the organization's financial transactions, accounts and standing! !
- 35. STRATEGY IMPLEMENTATION • utilizes resources, distinctive capabilities and core competencies ! • challenge is to create and exploit a sustainable advantage! • works hand in hand with functional strategies! • What strategy is most appropriate? ! • Functional strategy could support the quest for operational efficiency
- 36. STRATEGY IMPLEMENTATION • OFFENSIVE! • exploits and strengthens competitive position through attacks on competitor's position! • frontal assault! • DEFENSIVE! • protects competitive advantage and turf by making competitive advantage more sustainable ! • not giving competitors any area to attack
- 37. STRATEGY EVALUATION • What are the results of various strategies? ! • Are they having the intended effect? ! • Is competitive advantage being successfully exploited? ! • Why or why not? ! • What if results aren't as high as expected? What if they are better than expected? ! • Has the market changed and the organization hasn't? ! • Are the organization's resources used effectively and efficiently so that cruicial competitive advantage is developed and exploited? ! • Which ones are and which ones aren't?
- 38. Thank You.