Strategic management for drriham adel Lecture 2.pdf

second lecture for the maginificant riham adel

1. Ani @ J,

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Goal 7 Marketing. a y 1 Partner El o
Strategic Management Course

MBA Class, Fall 2023/2024 - Graduate School of Business
Professor: Prof. Dr. Riham Adel

2. Structure of the Course ne Pine
vat Is trategy?
2. Strategic Leadership:

Part 3: Implementation Managing the Strategy
Process

#1. Organizational Design: 7
Structure, Culture, and Control ¢ Part 1: A nalysis

12. Corporate Governance 3. External Analysis: Industry

and Business Ethics Structure, Competitive
Forces, and Strategic

Groups
4. Internal Analysis:
Resources, Capabilities,
and Core Competencies
Gaining & 5. Competitive Advantage,
ini Firm Performance, and
Sr Business Models

Competitive

Advantage
part 2: Formulation “ part 2: Formulation

8. Corporate Strategy: Vertical 6. Business Strategy:

Integration and Diversification Differentiation, Cost Leadership,
9. Corporate Strategy: Strategic Alliances, Formulation: Formulation: and Blue Oceans

Mergers and Acquisitions Corporate Business 7. Business Strategy: Innovation

10. Global Strategy: Competing Strategy Strategy and Entrepreneurship
Around the World

Prepared by: Prof. Riham Adel

3. Strategy is the direction and
in) WHAT IS STRATEGY? scope of an organisation
over the /ong term, which
achieves advantage in a
changing environment

» “Long-Term Direction” of an organization. through Its configuration of
7 a - ain resources and competences
» “Scope” of an organization activities. with the aim of fulfilling
ale 5 ip E stakeholder expectations
» Gaining “Advantage” over competitors. a
> y
» Addressing changes in the “business environment”. a

» Building on resources and competences “Capabilities * À
“Values and Expectations” of stakeholders.
Strategic Decisions are likely
Be made in situations of
Affect decisi

Require an approach
Involve considerable

Prepared By: Dr. Riham Adel

4. Typleal
organisation

Overriding purpose in line with the values
or expectations of stakeholders

Desired future state: the aspiration of the
organisation

General statement of aim or purpose

Objective

Quantification (if possible) or more
precise statement of the goal

Strategic capability

Resources, activities and processes.
Some will be unique and provide
‘competitive advantage”

Strategies

Long-term direction

Business model

How product, service and information
‘flow’ between participating parties

Control

The monitoring of action steps to:

e assess effectiveness of strategies and
actions

e modify as necessary strategies and/or
actions

Global High

Prepared By: Dr. Riham Adel

5. Top Highlevel
management, a =
managers >. Ps.

+ Set objectives neue sesos

+ Scan environment
+ Plan and make decisions.

Midlevel ni,
management uses

towlevel operative

management ages Y

Time perspective

First-line managers
+ Report to middle managers
+ Supervise employees

+ Coordinate activities

+ Are involved in day-to-day operations

Corporate-Level Strategy ovinat business (es): Be in

“How should we compete ina

SEIS Y given business or industry?”

“How should a firm integrate
Functional-Level Strategy subfunctional activities and relate
them to its functional areas?”

6. corporate-level strategy

Headquarters Corporate Strategy:

A plan that indicates in il Direction of

Corporate Strate pin
ls vege ae which industries and national Fomeany. ang Management ?
markets an organization a 2
Business
intends to compete. o +
Competitive and
Cooperative Strategies

business-level strategy Functional

sBU 1 $BU 2 SU 3 A plan that indicates how a CR
Business Strategy Business Strategy DORE division intends to compete Productivity

? ? dot
Howto compete? How to compete? How to compete! aguas te wale SN indus:

Analysis Vision, Mission, and Values
1 © External Analysis
< Internal Analysis

Business Function 4
Functional Strategy
How to implement
business strategy? + Corporate Strategy
+ Business Strategy

+ Functional Strategy

Business Function 3
Functional Strategy

How to implement
business strategy?

Business Function { | Business Function 2
Functional Strategy [Y Functional Strategy

How to implement How to implement
business strategy? business strategy?

functional-level strategy
A plan of action to improve &
the ability of each ofan

organization's functions to
perform its task-specific
activities in ways that add

value to an organization's
goods and services.

to compete.

Imp ort ant cae Implementation

+ Structure, Culture, Control
+ Corporate Govemance de Business Ethics

management process that
concerne the organi ation.
coord

Prepared by: Prof. Riham Adel

7. Why a Company’s Strategy Evolves over Time ,,,,

Abandoned E À
(7 strategy elements E
Deliberate Strategy Elements |

The important point that
Planned new initiatives plus fhe (ak Of CARE a

ongoing strategies continued Siren) is not a ONE
from prior periods Time Event but is always a

work-in-progress. A
company strategy is a
Unplanned reactive responses blend of:

to changing circumstances (1) Proactive Moves
by management (2) Adaptive Reactions

Emergent Strategy Elements
A Companys Strategy Is a Blend of Planned Initiatives and ans
Reactive Adjustments

Prepared by: Prof. Riham Adel

8. External Environmental Analysis

“How well does the strategy fit the company’s situation?”
\ y

BOWEN ch,

strength ‘opportunity.

SWOT

2
_À E
weakness ©

— strategy -
inno’ y =

<

ds

Prepared by: Prof. Riham Adel

9. The External Environment:
Constraints and Challenges

Political environment

Political stability
\ Safety policy
\ Trade policy
\ Economic policy /
\ Social policy /

% ES /inmovativeness \,

%” / Innovation cycles \

% / Service potential \| ES
Research funding

Technological environment

ES \ Privatization / % 5% %
/

e
Prepa

hos
o N?9:

0
red by: Dr. Riham Adel

10. Legal

‘Competition law
Employment law
Health and safety
Product safety

Environmental
© Environmental
protection laws
© Waste disposal
= Energy consumption

Government stabi
Taxation policy

Foreign trade regulations
Social welfare policies

Technological
Government spending on
research

Government and industry
focus on technological effort

New discoveries/developments
Speed of technology transfer
Rates of obsolescence

© What environmental factors are affecting the organisation?
© Which of these are the most important at the present time? In the next few years?

Economic factors

Business cycles
GNP trends
Interest rates
Money supply
Inflation
Unemployment
Disposable Income

Sociocultural factors

Population demographics
Income distribution

Social mobility

Lifestyle changes

Attitudes to work and leisure
Consumerism

Levels of education

Prepared by: Prof. Riham Adel

11. Assessing the Company's Industry
and Competitive Environment

Thinking strategically about a company’s industry and competitive environ-
ment entails using some well-validated concepts and analytical tools to get
clear answers to seven questions:

1. Do the dominant economic characteristics of the industry offer sellers
opportunities for growth and attractive profits?

2. What kinds of competitive forces are industry members facing, and how
strong is each force?

3. What forces are driving industry change, and what impact will these
changes have on competitive intensity and industry profitability?

4. What market positions do industry
tioned and who is not?

ivals occupy—who is strongly posi-

What strategic moves are rivals likely to make next?
What are the key factors of competitive success?

Does the industry outlook offer good prospects for profitability?

2. Threat from superior y 4. Threat from
‘or lower-cost new
Pet ——> Pre tent a New competition

”

N

Number of competing firms.
Homogeneity of products
Cost of entry and exit

y

Strategies firms pursue to gain
‘competitive advantage.

há

Firm level: competitive disadvantage, parity,
temporary or sustained competitive advantage
Society: productive and allocative efficiency,
level of employment, progress

Macro Environment

Economic

Prepared by: Prof. Riham Adel

12. Determinants of Entry Determinants of Rivalry

Porter's Five Forces

New
Entrants

Threat of
New Entrants.

Economies of scale
Proprietary product differences
Brand identity
Switching costs
Capital requirements
Access to distribution
Absolute cost advantages
Proprietary curve
Access to necessary inputs
Proprietary low-cost product design
Government policy
Expected retaliation Industry
Competitors

Industry growth
Fixed (or storage) costs/value added
Intermittent overcapacity

Product differences

Brand identity

Switching costs

Concentration and balance
Informational complexity

Diversity of competitors

Corporate stakes

Exit barriers

Bargaining Power
of Suppliers

Bargaining Power
of Buyers

Determinants of Supplier Power Intensity of Rivalry Determinants of Buyer Power

Differentiation of inputs Bargaining Leverage Price Sensitivity

Threat of

Presence of substitute inputs Bore Hu concentration Grose aterences
inbortence ofvolume’ Substities Buyer switching costs Impacton quality/
Importance of volume to supplier ye ning pact on quality
Coat Islam to total purchases in Determiinante.of anna costs Buyer Brote

the industry mir
Impact of inputs on cost or differentiation Substioution Threat Buyer information Decision makers
Threat of forward integration relative to Relative price ty to backwar

integrate
Substitute products
Pull-through

threat of backward integration by firms performance
in the industry of substitutes:
Switching costs
Buyer propensity
10 substitute

Prepared by: Prof. Riham Adel