Competitve and Functional Strategies for Strategic Management

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.

5. Levels of Strategy

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

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11. Competitive and
Functional Strategies

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.