Strategy Formulation

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CHAPTER OUTLINE
Thinking Strategically

Strategy Formulation and Implementation
LEARNING OBJECTIVES
After studying this chapter, you should be able to

What Is Strategic Management? Grand Strategy Global Strategy Purpose of Strategy Levels of Strategy The Strategic Management Process

Strategy Formulation Versus Implementation Situation Analysis Formulating Corporate-Level Strategy

Portfolio Strategy The BCG Matrix
Formulating Business-Level Strategy

Porter’s Competitive Forces and Strategies Partnership Strategies Formulating Functional-Level Strategy Strategy Implementation and Control

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Define the components of strategic management.

Describe the strategic planning process and SWOT analysis. Understand Grand Strategies for domestic and international operations Define corporate-level strategies and explain the portfolio approach. Describe business-level strategies, including Porter’s competitive forces and strategies and partnership strategies. Explain the major considerations in formulating functional strategies. Enumerate the organizational dimensions used for implementing strategy.

Leadership Structural Design Information and Control Systems Human Resources Implementing Global Strategies

Management Challenge
Coke might be the world’s most powerful brand, but that has not helped much lately. When Douglas Daft took over as CEO of the Coca-Cola Company, he inherited a host of troubles. Soda sales had slumped in the important U.S. market and to a lesser extent around the world, and Coke had failed to match rival Pepsi’s aggressive moves into nonsoda businesses. A high-profile racial discrimination suit in the United States and a soda-contamination scare overseas had damaged the company’s reputation and its relationships with customers, governments, and bottlers. Under the previous CEO, M. Douglas Ivester, there was no real sense of crisis at Coke’s headquarters, where managers pretty much continued business as usual. The Australian-born Daft knew that needed to change if Coca-Cola was to remain one of the world’s most admired and If you were the CEO of Coca-Cola, what strategies might you adopt to regain the competitive edge? How would you go about formulating and implementing a new strategic plan? respected companies. During his first year on the job, Daft began dismantling the stale old regime at headquarters and brought in new top managers willing to make the tough changes to turn the company around. He also spent much of his time repairing relationships with government regulators in Europe and handling the backlash from financially strapped bottlers who charged that Coke had been trying to eke out profits at the bottlers’ expense. Despite these early moves, Coke’s sales and profits have stayed flat and the stock has continued to decline. The CEO knows he needs to come up with a powerful strategic plan to reignite the company in a hurry.1

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CHAPTER 8

Strategy Formulation and Implementation

The story of Coca-Cola illustrates the importance of strategic planning. Coke had been stumbling along for years, ever since the departure of beloved Chairman and CEO Roberto Goizueta. The late Goizueta had been a master at providing vision and strategic direction for the company, but his hand-picked successor, Douglas Ivester, proved incapable of keeping Coke on the path of success. Now, employees, board members, and investors are hoping Douglas Daft can formulate and implement strategies that can ignite growth and revive the troubled company. Every company is concerned with strategy. Japan’s Fuji Photo Film Company developed a strategy of being a low-cost provider to compete with Kodak. Fuji’s relentless internal cost-cutting enabled the company to offer customers lower prices and gradually gain market share over the giant U.S. firm.2 Hershey devised a new strategy of being a fierce product innovator to compete with Mars in the candy wars.3 Hershey scored...
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