Strategy Formulation and

Implementation
Asst. Prof. Meral DÜLGER TAŞKIN
Spring 2024
What do you think the companies you
admire do to achieve their success?
TECHNOLOGY BRAND MARKET
LEADERSHIP BUILDING DISRUPTION
LEVERAGING DATA ORIGINAL
TECHNOLOGY ANALYTICS CONTENT
 Basics of Strategy
Where do we
Vision
Industry and Where are we want to be?
Company now? Mission
Analysis
Strategy Objectives

PLACE DIRECTION
Are we doing the How do we get
activities we need to there?
What changes are do?
happening among Competition and
competitors as well as Are we conducting Organizational
customers? these activities Activities
efficiently, effectively
and profitably? ROAD
 Strategy is…

Activities for Achieving

Resource
Plan of action dealing with the competitive
allocation
environment advantage!
Thinking Strategically

Seeing the big

picture How do
The long-term view these fit
• The organization
• Competition together?

Strategy is composed
of a company’s
competitive actions
in the market
 Strategic Management

Set of
decisions and Planning (Decision)
actions used
to implement +
strategies Execution (Action)
 Strategy Formulation Strategy Execution
(Planning) (Action)
• Assess environment • Directing resources
and internal problems • Accomplishing
• Planning results
• Decision making • Changes in structure
• Establishment of goals • Use managerial and
• Setting a time frame organizational tools
Strategy
Formulation
vs.
Strategy
Execution
 Effective Strategy is made up of…

CORE COMPETENCE SYNERGY VALUE

 What a company does best!
What customers actually pay for!
Difficult for competitors to imitate!
Netflix –
Original Nike – Product
Apple – Design
content development
delivery

Core Competence
 Synergy

Cooperating to produce a
combined effect that is
much greater than the sum
of separate effects

1 1 11 ☺
Value

Utility/benefit
to the Profits
customer
 Strategy and Competitive Advantage

Any activity Strategies are At the heart of A company can

that a firm does based on competitive maintain its
better in gaining a superiority lies competitive
private competitive " benefit advantage for a
compared to its advantage over creation” certain time!
competitors other players in Competitive advantage = more
profits!! * Sustainability
the industry
 Strategic Management

Plans and actions that lead to superior competitive advantage

so as to achieve organizational goals

* Responsibility = top managers and CEO

Strategic Management Involves …

Answering the following questions:

• Who are our competitors and what are their

strengths and weaknesses?
• Who are our customers?
• What products or services should we offer?
• What does the future hold for our industry?
• How can we offer these products or services most
efficiently
• How can we change the rules of the game?
The Strategic Management Process
SWOT Analysis
SWOT Analysis Are largely beyond the
Environmental Scan/
control of a single
Corporate Appraisal
organization—thus the
word external

Internal External
Analysis Analysis

An organization’s
controllable activities
that are performed Strengths Weaknesses Opportunities Threats
especially well or
poorly.
Factors such as economic, social, cultural,
Functions of the business: demographic, environmental, political, legal,
Listed in the next slide! governmental, technological, competitive +
EXTERNAL STAKEHOLDERS
Remember The Environment & Corporate
culture notes!
.
Analyzing Organizational Strengths and Weaknesses
Information sources for SWOT Analysis

Organizational External information about

strengths and opportunities and threats
weaknesses • Customers
• Reports • Government reports
• Professional journals
• Budgets
• Bankers
• Financial ratios • Consultants
• Employee Surveys • Association meetings
 SWOT analysis is a powerful tool to size up a firm’s

*Internal *External
Internal External threats:
strengths: opportunities:
weaknesses: AVOID OR REDUCE
TAKE
BUILD ON THEM! ELIMINATE! IMPACT!
ADVANTAGE!

Deficient Strategic
Basis for strategy Strategic defenses
capabilities objectives
 «Grand» Strategy

General plan of major action to achieve Falls into three general categories
long-term goals
Growth
Stability
Retrenchment

* *A separate grand strategy can be defined for global operations!

 Growth
Development of new or
changed products
Internally
Growth can be
promoted

Going international

Acquisitions

Externally
Diversification – businesses
related to current product Examples coming ☺
lines or into new areas
Stability, sometimes called a
pause strategy, means that
the organization wants to

Remain the same

size OR

Grow slowly and

in a controlled
fashion

Stability
Retrenchment
Organization goes through a period of forced decline by either:

Liquidation Divestiture
Selling off a business unit for the cash Involves selling off of businesses that no
value of the assets, thus terminating its longer seem central to the corporation
existence Getting rid of unnecessary business
Close the business down! components
Sell! Shrink!
Levels of Strategy in Organizations

+ Which direction should we go?

✓ Partnership?
✓ Go global?
✓ Innovate?

Options:
✓ Low-cost
✓ Differentiation
✓ Low-Cost Focus
✓ Differentiation Focus
Corporate-Level Strategy
Should add Determines
value to the which types of
business business- and
• More profits, more functional-level
customers, more strategies
market share, new managers will
industries, new
markets choose to
maximize long-
run profitability
 Corporate-Level Strategies: Diversification

Walt Disney –
Animated movies + Theme parks
Unrelated (multi)
industry
Zippo –
Lighters + Clothing
Diversification Movement into new
Strategy lines of business
Tesla –
Battery Business
Related industry
Scuderia Ferrari –
F1 Racing
Corporate-Level Strategies: Portfolio Strategy

A diverse mix of business

units

Strategic Business Units (SBU) have different products, mission,

Portfolio Strategy
markets and competitors

Organizes businesses along two dimensions—

The BCG Matrix
growth and market share
The BCG (Boston Consultancy Group) Matrix
 Pfizer Nestlé

Global
Corporate
Strategies
McDonald’s
Finding Synergy
strategies in among
the world world Beko
marketplace operations
Business-Level
strategies

Efficiency and
Process of creating To charge
Low cost reliability to reduce
a competitive competitive price
costs
advantage by
designing Differentiate a
goods/services to product by
satisfy customer innovation, To charge premium
needs Uniqueness
excellent quality, or price
responsiveness to
customers
Steps for Formulating Business-Level Strategies

• Conduct Porter’s Five

2nd step
Forces Analysis
• Choose from
• To see a company’s
Porter’s competitive
competitive position
strategies
in the industry

1st step
 If others can easily enter an
industry, it will drive down prices
and profits
STEP 1:
If there’s fierce
competition, the
attractiveness of that
Conduct
industry decreases
Porter’s Five
Forces Analysis

Determines the cost of

These forces are either:

production LOW
*If suppliers are If they are powerful, the business
powerful, the costs will has to meet the expectations of MODERATE
rise the customers. Otherwise, sales
and prices will decrease HIGH
The greater the options
available for the customers, or COMBINATION
the lower the profits will be
 OVERALL ANALYSIS: MODERATE/HIGH COMPETITION

5 Forces Analysis for

High
• Many auto manufacturers are preparing
• Google, Apple
• European companies developing their own
tech

Low High
Low
• • High entry barrier
Tesla produces battery, engine, • Demand very high
chasis and transmission in-house • Major brands are now in
• Not enough supply
• For components, uses many • Porche, Audi, BMW, Renault…
• No other comparable
different manufacturers
technology

High
• Competitor brands’ Evs
• Hybrids
 STEP 2:
Choose from Porter’s Competitive Strategies

Differentiation Cost leadership Focus

Distinguishing products or Seeking efficient facilities Concentrating on a specific
services from that of competitors Pursuing cost reductions regional market or buyer group
for
Using tight cost controls to
produce products more Differentiation Focus
efficiently than competitors OR
Cost Leadership Focus
 Porter’s Competitive Strategies

Koçtaş,
Walmart,
Pegasus,
Şok

Tesla,
Under
Amour,
Netflix
Local hardware
store; local rent-a-
car company
Ferrari; Ritz-Carlton focuses on
the top 5% of corporate and
leisure travelers
 Corporate Level

• Acquiring WhatsApp

Levels of Business Level

Strategy • Website and marketing improvements at
Example: Meta Meta to increase more users

(Facebook) Functional Level

• Meta engineers increasing processing

capacity
 Strategy Execution

Execution involves several tools:

The organization’s • Leadership
How will the strategy
structure must be • Structural Design
be implemented—put
congruent with the • Human Resources
into action?
strategy • Information and Control Systems
 Tools for Putting
Strategy into Action