STRATEGY

FORMULATION
AND
EXECUTION
Presented by:

EVA LORA- GUDMALING

MILDRED COMPENDIO- BREGILDO
 Objectives:

We should be able to:

1. Define the components of strategic management and

discuss the levels of strategy.

2. Describe the strategic management process and SWOT

analysis.

3. Define corporate- level strategies and explain the BCG

matrix, portfolio, and diversification approaches.

4. Describe Porter’s competitive forces and strategies.

5. Discuss new trends in strategy, including innovation from

within and strategic partnerships.

6. Discuss the organizational dimensions used for strategy

execution.
 In a very competitive world of
business success would be very hard
for any firm. Applying the management
functions cannot make a firm
successful. A field of study that can
help the management functions makes
a firm successful is what we call
STRATEGIC MANAGEMENT.
 What Is Strategic Management?

The set of decisions and actions used to

formulate and implement strategies that will
provide a competitively superior fit between the
organization and its environment so as to achieve
organizational goals.
 Importance of Strategic
Management
It largely determines which organizations succeed
and which ones struggle. Strategic management is
important to find ways to respond to competitor,
cope with difficult environmental changes, meet
changing customer needs and effectively use
available resources. Strategic management has
taken on greater importance in todays environment
because managers are responsible for positioning
their organizations for success in a world that is
constantly changing.
 Purpose Of

 Choosing how the organization will be

different.
 To remain competitive, companies develop strategies that
focus on :

CORE COMPETENCE

. A business activity that an

organization does particularly
well in comparison to
competitors.
SYNERGY
. The condition that exists when the organization’s parts
interact to produce a joint effect that is greater than the sum of
the parts acting alone.
VALUE CREATION

. The heart of strategy

. Value can be defined as the combination of benefits and costs paid by the
customers

Example:

Globe Promo Bundle (Landline and Internet)

Watson’s Product Bundle
 LEVELS OF STRATEGY
 CORPORATE- LEVEL STRATEGY
* The level of strategy concerned with the question, “ What business are we in?”.
Pertains to the organization as a whole and the combination of business units and
product line that make it up.

 BUSINESS- LEVEL STRATEGY

* The level of strategy concerned with the question, “ How do we compete?”. Pertains
to each business unit or product line within the organization.

 FUNCTIONAL- LEVEL STRATEGY

* The level of strategy concerned with the question, “ How do we support the business-
level strategy?”. Pertains to all of the organization’s major departments.
 Three Levels of Strategy in Organizations
Corporate- Level Strategy: What business are we in?

Corporation

Business- Level Strategy: How do we compete?

Consumer Biotechnology
Media Unit
Products Unit Unit

Functional-Level Strategy: How do we support the

business- level strategy?

Finance R&D Manufacturing Marketing

Continuation…..

FORMULATING BUSINESS-LEVEL STRATEGY

Capital Requirements Porter’s Five Competitive Forces Rivalry among competitors is influenced
by the preceding four forces, as well as
and economies of
by cost and product differentiation.
scale are examples
With leveling force of internet and
of two potential
information technology, it has more
barriers to entry that
difficult for may companies to find ways
can keep out new
to distinguish themselves form their
competitors.
competitors , which intensifies rivalry

The power of
alternatives and Informed customers become
substitutes for a empowered customers
company’s product
may be affected by
changes in cost or in
trends such as The concentration of suppliers and the
increased health availability of substitute suppliers are
consciousness that significant factors in determining
will deflect buyer supplier power
loyalty
Figure illustrates the competitive forces that exist in a company’s environment and indicates some ways Internet
Technology is affecting each area. This forces help determine a company’s position vis-à-vis competitors in the
industry
BUSINESS-LEVEL COMPETITIVE STRATEGIES
DIFFERENTIATION. With
differentiation Strategy, involves an
attempt to distinguish the firm’s
products or services from others in the
industry
A differentiation strategy can reduce
rivalry with competitors if buyers are
loyal to a company’s brand.
 COMPETITIVE STRATEGY
COST LEADERSHIP. With Cost
Leadership Strategy, the
organization aggressively
seeks efficient facilities,
pursues cost reductions and
uses tight cost controls to
produce products more
efficiently than competitors
FOCUS. With Focus Strategy,
the organization concentrates on
a specific regional market or
buyer group. The company will
use either a differentiation or
cost leadership approach, but
only for a narrow target market.
  NEW TRENDS IN STRATEGY

• New approaches to strategic

thought emphasize innovation
from within and strategic
partnerships rather than
acquiring skills and
capabilities through mergers
and acquisitions
 Innovation from Within

The idea is that getting

growth out of existing
businesses is cheaper and
more effective than trying
to buy it from outside
  Innovation from Within
Learning, reallocation
of existing assets, and
internal innovation
are the route to
addressing new
challenges in the
competitive
environment and
meeting new
customers’ need
 Strategic Partnership
The Internet is both driving and
supporting the move toward partnership
thinking

Collaboration with other organizations

with other organizations, sometimes
even with competitors, is an important
part of how today’s successful
companies enter new areas of business.
 Strategic Partnership

Consider Procter & Gamble (P&G) and Clorox. The

companies are fierce rivals in cleaning products and water
purification, but both profited by collaborating on a new
plastic wrap. P&G researchers invented a wrap category.
Managers negotiated a strategic partnership with Clorox to
market the wrap under the well established Glad brand
name, and Glad Press & Seal became one of the company’s
most popular products
  GLOBAL STRATEGY
Many organizations operate globally
and pursue a distinct strategy as the
focus of global business. Senior
executives try to formulate coherent
strategies to provide synergy among
worldwide operations for the purpose of
fulfilling common goals
The various global strategies are
shown in this exhibit.
Organizations that pursue
further international expansion
must decide whether they want
each global affiliate to act
autonomously or whether
activities should be standardized
and centralized across countries
 Globalization Strategy
• Globalization means that product design
and advertising strategies are
standardized throughout the world.
• This approach is based on the assumption
that a single global market exists for
many consumer and industrial products
• The theory is that people everywhere want
to buy the same products and live the
same way
 Transnational Strategy

• A strategy that combines global

coordination to attain efficiency with
flexibility to meet specific needs in
various countries.
• A true transnational strategy is
difficult to achieve, because one goal
requires close global coordination while
the other goal requires local flexibility
 Multidomestic Strategy

The modification of product design

and advertising strategies to suit the
specific needs of individual countries

Many company reject the idea of a

single global market
Example:

• 7-Eleven convenience store chain uses a multi-domestic

strategy because the product mix, advertising approach
and payment methods needs to be tailored to the
preferences, values, and government regulations in
different parts of the world.
• Preferences such:
• French do not drink juice for breakfast Laundry detergent is
used to wash dishes in part of Mexico,
• People in the middle east prefer toothpaste that taste spicy
 Export Strategy

Managers have little need to pay

attention to issues of either local
responsiveness or global integration
 STRATEGY EXECUTION

This is the final step in Strategic Management Process.

It emphasized how strategy is implemented or put into
action. It requires that all aspects of the organization be
in congruence with the strategy and that every
individual ‘s effort be coordinated toward accomplishing
strategic goals
 STRATEGY EXECUTION
 Tips for Effective Strategy Execution

oBuild commitment to Strategy

oDevise a clear execution plan
oPay attention to culture
oTake advantage of employees’ knowledge and
skills
oCommunicate, communicate, Communicate