Page 25 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 2: Strategy Formulation and Defining Vision

Marketing strategy deals with product/service choices and features, pricing strategy, Notes
markets to be targeted, distribution, and promotion considerations. Financial strategies
include decisions about capital acquisition, capital allocation, dividend policy, and
investment and working capital management. The production or operations functional
strategies address choices about how and where the products or services will be
manufactured or delivered, technology to be used, management of resources, plus
purchasing and relationships with suppliers. For firms in high-tech industries, R&D strategy
may be so central that many of the decisions will be made at the business or even corporate
level, for example the role of technology in the company's competitive strategy, including
choices between being a technology leader or follower. However, there will remain more
specific decisions that are part of R&D functional strategy, such as the relative emphasis
between product and process R&D, how new technology will be obtained (internal
development vs. external through purchasing, acquisition, licensing, alliances, etc.), and
degree of centralization for R&D activities. Human resources functional strategy includes
many topics, typically recommended by the human resources department, but many
requiring top management approval.

Example: Job categories and descriptions
Pay and benefits
Recruiting

Selection and orientation
Career development and training
Evaluation and incentive systems
Policies and discipline

Management/executive selection processes

Task Find out the competitive strategies followed by Pizza Hut.

Case Study Formulating a Strategy: Following Apple Turnaround

he firm's most important resources and capabilities are those which are durable,
difficult to identify and understand, imperfect transferable, not easily replicated,
Tand in which the firm possesses clear ownership. These are the company's 'most
important assets' and need to be protected; and they play a pivotal role in the competitive
strategy which the company pursues. The essence of strategy formulation, then, is to
design a strategy that makes the most effective use of these core resources and capabilities.

Consider, for example, the remarkable turnaround of Apple, the computer company behind
the Macintosh computers, between 2000 to date. Fundamental was Steve Job's recognition
that the company's sole durable, non-transferable, irreplicable asset was Apple image and
the loyalty that accompanied that image. In virtually every other area of competitive
Contd...

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