prentice hall, inc. © 20108-1 strategic management & business policy 11 th edition thomas l....
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Prentice Hall, Inc. © 2010 8-1
STRATEGIC MANAGEMENT & BUSINESS POLICY11TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
CHAPTER 8 Strategy Formulation: Functional Strategy & Strategic Choice
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Functional Strategy
The approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity
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Functional Strategy
Marketing Strategy –•Pricing
–Selling–Distribution
•Product development–Line extension
•Advertising and promotion–Push strategy–Pull strategy
•Pricing–Skim pricing–Penetration pricing–Dynamic pricing
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Functional Strategy
Financial Strategy –
–Leveraged buyout–Reversed stock split–Tracking stock
R&D Strategy –
–Technological leader–Technological follower–Open innovation
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Functional Strategy
Operations Strategy –
–Job shop–Connected line batch flow–Flexible manufacturing systems–Dedicated transfer lines–Mass production–Continuous improvement system–Modular manufacturing
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Functional Strategy
Purchasing Strategy –
–Multiple sourcing–Sole sourcing–Just-in-time (JIT)–Parallel sourcing
Logistics Strategy –
–Centralization–Outsourcing–Internet
HRM Strategy –
–360 degree appraisal
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Functional Strategy
Maybe Not: Outsourcing errors –
–Activities that should not be outsourced–Wrong vendor selection–Writing poor contract–Overlooking personnel issues–Hidden costs of outsourcing–Failing to plan exit strategy
Should a company outsource a function?
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Functional Strategy
Strategies to Avoid –
–Follow the leader–Hit another home run–Arms race–Do everything–Losing hand
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Corporate Strategy
Growth Strategies --
–External mechanisms
•Mergers
•Acquisitions
•Strategic alliances
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Functional Strategy
Subjective Factors Affecting Decisions --
–Management’s attitude toward risk–Pressures from stakeholders–Pressures from corporate culture–Needs and desires of key managers
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Strategic Choice
Avoiding the Consensus Trap --
–Devil’s Advocate
–Dialectical Inquiry