WK78 Strategy Formulation
- 1. WK7 AgendaNews: Safari World Cup, World Expo, Chinese Enterprise and ROI, LebronASEAN MNEsCCTV: Chinese EnterpriseWii discoveryTows matrix discoveryHomework Update, mind map1MIB, BBA 2010
- 2. Wii DiscoveryWii game, meet all teams.Do your team have a competitive advantage?Resources+capability+competencycompetitive advantageSWOT of your team? Strategy use?MIB, BBA 20102
- 3. Alternative StrategiesFind news, video clip, article or reality role play of these alternatives. Ask your friends what strategy that your team use as well as the probability of success.MIB, BBA 20103
- 4. Homework & Mind MapMind map, check understandingIs Oishi an MNE?MIB, BBA 20104
- 5. WK7.2 AgendaHot topics: World ExpoAHA, our discovery momentMind mapSWOT homework and evaluationMIB, BBA 20105
- 6. SWOT EvaluationRate team work of SWOT homework (1-5). Give necessary comment.
- 7. WK7.3 AgendaHot topics: Lao Timber, Telecom Industry growth, real estate bubble in China, labor work situation in Thailand, Cambodia day of anger?SWOT homework continueLectureMIB, BBA 20107
- 8. Strategy Formulation Situational Analysis: SWOT analysisStrategy=opportunity/capacity (only strength and opportunity)Strategic alternative=O/(S-W), what’s the minimum number that we’ll be happy?Should we invest more in our strength to create a distinctive competence?Should we invest more in our weakness to at least make them competitive?SWOT criticism: lengthy list, no weight to reflect priorities, ambiguous words, same factor in two categoriesMIB, BBA 20108
- 9. Strategy FormulationFind a niche using Strategic Factors Analysis Summary (SFAS) matrix.List the most important items for each factor (SWOT) and recreate the matrix.The SFAS matrix is the firm’s strategic factors.Generate alternative strategies using a TOWS matrixMIB, BBA 20109
- 10. Strategy FormulationMIB, BBA 201010
- 11. I.Business StrategiesFocuses on improving competitive position of a company or business unit’s products or services within the specific industry or market segment.MIB, BBA 201011
- 12. Competitive StrategiesPorter’s Generic Competitive StrategiesLower Cost strategy
- 13. Greater efficiencies than competitors
- 15. Unique/superior value, quality, features, serviceCompetitive AdvantageDetermined by Competitive Scope
- 16. Breadth of the target marketResources+capability+competencycompetitive advantageMIB, BBA 201012Can we use both cost leadership and differentiation strategy?Benz, BMW,Apple, BallyWal-Mart, Dell, SouthwestWhat is stuck in the middle?No competitive advantage,Below average performanceSansabai Buffet, NunyangVilla SupermarketBulavi Natural TreatmentSport Club
- 17. Risks of Generic StrategiesMIB, BBA 201013
- 18. Requirements for Generic StrategiesMIB, BBA 201014
- 20. Cooperative StrategiesCollusion: reduce output and raise price: OPEC
- 21. Strategic Alliances: advantages include: obtain technology, access to specific market, reduce financial and political risks, learn new capabilities
- 22. Mutual service consortia: partnership with similar companies to share resource(too expensive to develop alone): IBM&Toshiba, Ford&Mazda
- 23. Joint ventures: most popular, but the disadvantages include: the loss of control, lower profit, conflict potential, possible technology transfer
- 25. Value-chain partnerships: alliance with key suppliers or distributorsMIB, BBA 201016Value chain partnershipMutual ServiceJV, LicensingStrong&CloseWeak&Distant
- 26. II. Corporate StrategyMIB, BBA 201017BCG Growth Share Matrix
- 27. GE Business ScreenDirectional StrategyModel of Corporate StrategiesMIB, BBA 201018
- 28. Growth StrategyConcentrationVertical growth(forward, backward integration)Integration or outsource?Horizontal growthExisting Product New MarketExisting Market New Product Range KLM&NWA, UBU, S KhonKaenDiversificationConcentric DiversificationGrow into related industrySearch for synergiesThai-DanishTropicana JVConglomerate DiversificationGrow into unrelated industryConcern with financial considerationsRedbullPiyawetKaonaSuneeProbability of success?MIB, BBA 201019FullIntegrationBP, ShellTaper<50% Self-made Quasi(partial control)Buy stock of the supplierLong term Contract
- 29. WK8.2 AgendaRevised homework on Friday 23, 2010.Inflated presentation pointsUse the slides diagramUse the strategic audit sheet.News, article, corporate website, competitor websites information search.Bring all your information. Need better understanding of your business and industry.Threat~highratinghandle well Weakness~high rating???LectureMind map and Simulation Game/Start downloadMIB, BBA 201020
- 30. Stability StrategyMIB, BBA 201021
- 31. Retrenchment StrategyMIB, BBA 201022
- 32. Portfolio Analysis : BCGBCG Matrix use growth rate and relative competitive position.Relative Competitive position =market share/mk share of the largest competitorThe cut off position is at 1.5X. More than 1 means? Question marks: new product with potential for success, but need lots of cash for developmentStars: market leader, peak of the product life cycle, generate lots of cashCash cows: decline stage of the product life cycle, generate cash to invest for question markDogs: low market share and do not have market potential due to unattractive industry. MIB, BBA 201023
- 33. Portfolio Analysis : BCGWhat should we do if we have a dog? Dog farm…sell outLimitations include:Too simple(use high and low)Market share does not always link to profitableGrowth rate is only one aspect of the industry attractiveness.Market share is only one aspect of the overall competitive position.Only consider the largest competitor (the divisor) ignore other firms.MIB, BBA 201024
- 34. Portfolio Analysis: GE Business ScreenMIB, BBA 201025CWinnersWinnersAQuestionBHighMarksDWinnersEAverageBusinessesFIndustry AttractivenessMediumLosersHLosersGLowProfitProducersLosersStrongAverageWeakBusiness Strength/Competitive PositionIndustry Attractiveness: Market growth rate, comparable market share, industry profitability, size, and pricing practices Competitive position: market share, technological position, profitability, and sizeA-H are the product lines.Size of the circle represent the industry.The highlighted area is the market share.Limitations include:Complicated and cumbersomeSubjective judgment ratingNot effective for depicting new product positions
- 35. Parenting StrategyDeveloping a corporate parenting strategyExamine the business unit strategic factors
- 36. Examine the business unit to improve performance
- 37. Analyze the characteristic fit between parent corporation and the business unitMIB, BBA 201026
- 38. III. Functional StrategyThe approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity.MIB, BBA 201027
- 39. Marketing StrategyMIB, BBA 201028
- 40. Financial StrategyLeverage buyout: acquire the company with the borrowed money from the third party organizations.Reverse stock splits: each share is worth only half as much to raise the stock priceTracking stock: Common stock issued by a parent company that tracks the performance of a particular division without having claim on the assets of the division or the parent company. The objective is to separate a high-growth division from a larger parent company. MIB, BBA 201029
- 41. R&D StrategyMIB, BBA 201030
- 42. Operation StrategyJob shop: skilled laborConnected line batch flow: components are standardizedFlexible manufacturing systems: parts are grouped into manufacturing families to produce a wide variety of mass-produced itemsDedicated transfer lines: highly automated assembly lines, use little human laborMass production: produce a large number of low cost, standard goods and servicesContinuous improvement system: improve production process, manager is a coachModular manufacturing: JIT to a company’s assembly lineMass productionmass customization: DellSix sigmaMIB, BBA 201031
- 43. Purchasing StrategyMIB, BBA 201032
- 44. Logistics StrategyMIB, BBA 201033
- 45. HRM StrategyMIB, BBA 201034
- 46. Information StrategyKey driver of a business.Must align to the company vision and satisfy the business need.Support better business decision.Balance cost, convenience and security.CRM, EDI,ERP, SAP, SAS, E-commerce etc.MIB, BBA 201035
- 47. Strategy to AvoidBlindly follow the leader: Fujitsu follow IBM in maturing mainframe business
- 48. Hit another home run: Polaroid instant movie camera
- 49. Arms race: market share fight but the result is offset by the increase in advertising, promotion, R&D, and manufacturing cost. Chang and Singh
- 50. Do everything: Jump into all opportunities. Disney company increasing sales but decreasing net income.
- 51. Losing hand: Unwilling to accept its failure. Throw good money after bad. Pan American AirlinesMIB, BBA 201036
- 52. Strategic ChoiceCreate three scenarios(Optimistic, Pessimistic, and Most Likely) and cost estimation.Select the alternative that use the least resource and fewest negative side effects as well as minimize cost and risk.MIB, BBA 201037
- 53. Subjective Factor Affecting DecisionsManagement’s attitude toward riskPressures from stakeholdersPressures from corporate cultureNeeds and desires of key managersAvoiding the consensus trapDevil’s Advocate
- 54. Dialectical Inquiry: debate two proposals using different assumptionsMIB, BBA 201038
- 55. Evaluation of Strategic AlternativesMutual exclusivitySuccess: doable, high probability of successCompleteness: include all key strategic issuesInternal consistency: make sense, not contradict key goals, policies, and current strategiesMIB, BBA 201039
- 56. Mind Map &SimulationPrepare the mind map of this lecture.In 4 groups, download Industry Player. http://www.industryplayer.com/download.phpStart playing level 1.What did you learn from this simulation?MIB, BBA 201040
- 57. Redo SWOT HomeworkUse the slides diagramUse the strategic audit sheet.News and article information search.Bring all your information.Need better understanding of your business and industry.MIB, BBA 201041
- 58. WK8.3 AgendaMind mapGroup workMIB, BBA 201042