Chinese name
strategic decision
Foreign name
strategic decision
Strategic decision model
SWOT model, GE matrix, etc
Three elements
Strategic background, strategic content and strategic process
meaning
The key to the success or failure of enterprise management
quick
navigate by water/air
Three elements
step
model
Comparison of typical thoughts
Professional research
brief introduction
Strategic decision-making is an extremely important link in strategic management and plays a pivotal role in connecting the past with the future. Strategic decision-making is based on the decision-making information provided in the strategic analysis stage, including industry opportunities, competition pattern, enterprise capabilities, etc. Strategic decision-making should integrate all kinds of information to determine the enterprise strategy and related programs. Strategic implementation is to realize the intention and goal of strategic decision-making, and to decompose and deploy various strategic arrangements in a more detailed way.
strategic decision
The strategic decision-making stage can be divided into three steps: strategic positioning decision, strategic index decision and business strategic decision.
Strategic decision thinking refers to the starting point for enterprises to make strategic decisions, which is closely related to strategic analysis. There are many types of strategic decision thinking.
Traditional strategic decision-making models mainly include: SWOT model. Besides SWOT model, there are other models that can be used for strategic analysis and decision-making, such as Boston matrix and GE matrix. [2]
Three elements
The three elements of strategic decision-making refer to three factors that affect strategic decision-making, namely, strategic background, strategic content and strategic process.
Strategic background refers to the environment in which the strategy is implemented and developed;
Strategic content refers to the main activities contained in strategic decision-making;
Strategic process refers to how the activities are related when the strategy faces a changing environment;
Strategic background, strategic content and strategic process all determine a strategic decision. [2]
step
Strategic positioning decision
In the stage of strategic decision-making, the first task is strategic positioning, which is equivalent to formulating a "what to do" company strategy, focusing on the S positioning of market scope and the P positioning of product categories, which are closely linked and combined to form a certain SP strategic unit. Strategic positioning is based on the changing law of industry profitability, competition pattern and enterprise's own ability of different SP strategic units analyzed in the strategic analysis stage. [2]
Strategic index decision
After the strategic positioning decision, the enterprise needs to determine the strategic target value of each SP strategic unit, which mainly includes net profit target, enterprise capital return rate target, capital investment target, market share target, capital output target and so on.
Enterprises should comprehensively analyze the relevant index values of different SP strategic units, including the proportion of net profit, the proportion of capital and the comparison of the relative competitiveness of different strategic units, so as to optimize and adjust the strategic objectives of each strategic unit and promote the overall operation optimization.
Enterprises are often constrained by their own resources when making strategic index decisions. They should comprehensively weigh the opportunities and resources input of different strategic units, consider the channels for obtaining resources and the strategies for input, and analyze the market types. For example, for large investments, they should also consider the impact of their own decisions on the whole industry.
Business strategic decision
On the basis of strategic positioning decision and strategic target decision, enterprises need to formulate relevant business strategies to ensure the realization of targets. The key points include business strategies to improve the return on capital of enterprises, such as cost leading strategy and quality leading strategy; Business strategies to increase the amount of investable capital, such as financing strategy and merger and acquisition strategy; Business strategies to increase market share, such as low price strategy and channel strategy; Business strategies to improve capital output, such as lean production strategy, process reengineering strategy, information strategy, etc. The goal of increasing net profit depends on the formulation and implementation of the above business strategy.
Business strategic decision-making needs professional analysis in business functional areas. The analysis here is different from the strategic analysis in the strategic management cycle, and its analysis content should be extensive and flexible. The decision-making of business strategy should have its own goals and action plans, and the specific safeguard measures for the implementation of business strategy can be regarded as the content of strategy implementation stage rather than the content of business strategy decision-making.
model
SWOT model (also known as TOWS analysis method and DOWS matrix), namely situational analysis method, was put forward by Warwick, a professor of management at the University of San Francisco in the early 1980s, and is often used in enterprise strategy formulation, competitor analysis and other occasions. In the current strategic planning report, SWOT analysis should be regarded as a well-known tool. The SWOT analysis of McKinsey & Company includes strengths, weaknesses, opportunities and threats. Therefore, SWOT analysis is actually a method to synthesize and summarize all aspects of internal and external conditions of enterprises, and then analyze the strengths and weaknesses, opportunities and threats faced by organizations. Through SWOT analysis, enterprises can focus their resources and actions on their own advantages and opportunities. Besides SWOT model, there are other models that can be used for strategic analysis and decision-making, such as Boston matrix and GE matrix.
BCG matrix is also called market growth rate-relative market share matrix, Boston Consulting Group method, four-quadrant analysis method, product series structure management method and so on. BCG matrix is one of the most popular methods to formulate company-level strategy. This method was developed by Boston Consulting Group (BCG) in the early 1970s. BCG matrix marks every strategic organization (sbu) on the two-dimensional matrix diagram, thus showing which sbu provides high potential benefits and which sbu is the funnel of organizational resources. Bruce, the inventor of BCG matrix and the founder of Boston Company, believes that "if a company wants to succeed, it must have a product portfolio with different growth rates and market share. The composition of the portfolio depends on the balance of cash flow. " From this point of view, the essence of BCG is to realize the cash flow balance of enterprises through the optimal combination of business.
Boston Matrix distinguishes four business combinations.
Problem enterprise
(question mark, meaning high growth and low market share)
There are some risky speculative products in this field. These products may have a high profit margin, but they occupy a small market share. This is often a new business of a company. In order to develop the problem business, the company must set up factories and increase equipment and personnel in order to keep up with the rapidly developing market and surpass its competitors, which means a lot of capital investment. The "question" describes the company's attitude towards this kind of business very aptly, because at this time, the company must carefully answer "whether to continue to invest and develop this business?" This question. Only those businesses that meet the long-term development goals of enterprises, have resource advantages and can enhance the core competitiveness of enterprises can get a positive answer. The problem-based business that gets a positive answer is suitable to adopt the growth strategy mentioned in the strategic framework, with the purpose of expanding SBUs' market share, even at the expense of recent income to achieve this goal, because if the problem-based business is to develop into a star-based business, its market share must increase substantially. The problem-based business with negative answer is suitable for contraction strategy. How to choose problem-based business is the key and difficult point of making strategy with BCG matrix, which is related to the future development of enterprises. BCG also provides a simple method to determine the priority of various business growth schemes in the growth strategy. Weigh the following figure and choose a scheme with relatively high return on investment and small width of input resources.
Star enterprise
(Stars mean high growth and high market share)
Products in this field are in a fast-growing market and occupy a dominant market share, but they may or may not generate positive cash flow, depending on the investment requirements of new factories, equipment and product development. Star business is developed through continuous investment in problem-based business, which can be regarded as a leader in the fast-growing market and will become the company's future cash cow business. However, this does not mean that the star business will certainly bring a steady stream of cash flow to enterprises, because the market is still growing at a high speed, and enterprises must continue to invest to keep up with the pace of market growth and repel competitors. If there is no star business, enterprises will lose hope, but the flicker of stars may also flash across the eyes of senior managers of enterprises, leading to wrong decisions. At this time, it is necessary to have the ability to identify planets and stars, and put the limited resources of enterprises into stars that can develop into cash cows. Similarly, it is suitable to adopt the growth strategy to develop the star business into a cash cow business.
Cash cow business
(Cash cow means low growth and high market share)
Products in this field generate a lot of cash, but the future growth prospects are limited. This is a leader in a mature market and a source of cash for enterprises. Because the market is mature, enterprises don't need a lot of investment to expand the market scale. At the same time, as a market leader, this business enjoys the advantages of economies of scale and high marginal profits, thus bringing a lot of cash flow to enterprises. Enterprises often use cash cow business to pay accounts and support three other businesses that need a lot of cash. The stability strategy mentioned in the strategic framework is applicable to the cash cow business to maintain the market share of SBUs.
Skinny dog business
(Dogs mean low growth and low market share)
Products in this remaining field can neither generate a lot of cash nor need to invest a lot of cash, and these products have no hope of improving their performance. Under normal circumstances, this kind of business is often meager profit or even loss. The reason why the thin dog business exists is more because of emotional factors. Although it has been operating at a low profit, it is like a dog that people have kept for many years. In fact, the thin dog business usually takes up a lot of resources, such as funds and management time. And in many cases, it is not worth the loss. The thin dog business is suitable for the contraction strategy mentioned in the strategic framework, with the purpose of selling or liquidating the business in order to transfer resources to more favorable areas.
Why choose BCG matrix? The essence of BCG matrix lies in the close combination of strategic planning and capital budget, which divides a complex enterprise behavior into four types with two important measurement indicators and deals with complex strategic problems with four relatively simple analyses. This matrix helps diversified companies to determine which products are suitable for investment, which products are suitable for manipulation to gain profits, and which products are suitable for removal from the business portfolio, so as to achieve the best business results.
GE matrix (GE Matrix/ McKinsey matrix) GE matrix method is also called general electric company method, McKinsey matrix, nine-box matrix method and industry attraction matrix. When it comes to GE matrix, we must compare and discuss it with BCG matrix, because GE matrix can be said to be developed to overcome the shortcomings of BCG matrix. Because the basic assumptions and many restrictions are the same as BCG matrix, the biggest improvement is to measure the two dimensions with more indicators. In view of the problems existing in Boston Matrix, General Electric Company (GE) developed a new portfolio analysis method-GE Matrix in 1970s. I believe many people have heard the story of GE diversification. If the non-"one of the best" sbu has to leave GE's aircraft carrier, GE will use this matrix. Compared with BCG matrix, GE matrix also provides a similar comparison of industrial attractiveness and business strength, but it is only a single indicator, which is different from BCG matrix in measuring attractiveness with market growth rate and measuring strength with relative market share. GE Matrix uses more factors to measure these two variables. The vertical axis reflects the industrial attractiveness with multiple indicators, and the horizontal axis reflects the competitive position of enterprises with multiple indicators, while increasing the middle level. Because GE matrix uses many factors, it can easily adapt to the specific intention of managers or the special requirements of an industry by adding or subtracting some factors or changing its focus.
Comparison of typical thoughts
Resource-oriented
There are various types of enterprise resources, and the idea of resource-oriented decision-making is to look at what resources the enterprise has first, and then analyze the opportunities for resources to invest in the industry, so as to make decisions. If enterprises have a lot of idle land, they will often seek the development and utilization of land resources. If real estate opportunities are good, they will choose to enter the real estate industry. Enterprises have customer resources, and often provide customers with other types of products or services to gain more opportunities to make money.
The advantage of resource-oriented decision-making thinking is that it is good at using enterprise resources, but the disadvantage is that enterprises are prone to be bloated and obese, which will lead to unclear main business and unfavorable competition on all fronts, and even lead to premature death of enterprises. Resource-oriented decision-making needs to really recognize the resources of the enterprise, otherwise if you overestimate your own resources and capabilities, the decisions you make will often appear uncontrollable. At present, people are very concerned about TCL's internationalization strategy, and there are often many unfavorable reasons for its internationalization. Overestimation and inadequate preparation of TCL's international operation capability are the important reasons why TCL is passive at present.
Opportunity orientation
The idea of opportunity-oriented decision-making is to look at external opportunities first, and then organize resources to seize opportunities. The basis of its success lies in the accurate judgment of opportunities. In the early days of network economy, network venture capital was very popular and became the most opportunity-oriented decision-making industry, and a few successful elites were born among many losers. Opportunity-oriented thinking has made a group of ordinary people.
The disadvantage of opportunity orientation is often to make decisions when resources are scarce. Sometimes you may lose the first time, but you can't afford to lose the second time. Opportunistic enterprises want to seize every opportunity, and the result is often that they don't firmly grasp anything, even. Sometimes I'm not sure about the opportunity and I'm afraid of missing it. As a result, enterprise resources are too scattered to form a strong main business, and the competitive fields are all supporting roles. It seems that the opportunity-oriented type should grasp the degree of goodness, not ignore the opportunity, and not dabble in all industries.
keep abreast with the times
The idea of keeping up with the trend exists in a large number of enterprises in China, and it also exists in a large number of state-owned enterprises and private enterprises at present. Other companies in the same industry make money by diversifying products, and they follow the trend speculatively without careful analysis according to the situation in the new period, and the result is often counterproductive. For example, a few years ago, home appliance enterprises set off a car-making movement, and some private enterprises made the urge to make steel. As a result, many enterprises paid a painful price for this decision.
In the past, some enterprises were influenced by the outside world or peers. For example, other enterprises engage in internationalization and diversification, and they are afraid of being considered outdated if they don't follow the trend. Therefore, they chose internationalization and diversification according to their own reality. As a result, others can succeed, but they can't succeed, which makes enterprises fall into a passive position of internationalization or diversification.
The key to following suit is that you are not good at analyzing and grasping opportunities. If you can really see the opportunity, it is also great wisdom to be one step slower than others. Other enterprises may be martyrs, and their own enterprises become heroes. For example, when analyzing and grasping some emerging technological opportunities, Wan Yan of VCD is called pioneer, while other followers become rising stars.
Forced helpless type
Forced helplessness is often caused by many reasons. Some enterprises don't care about external changes, just bow their heads and pull carts without knowing how to raise their heads. As a result, enterprises are forced to find a way out when the industry declines. Sometimes, companies are forced to make a decision to break their wrists because of various situations, such as high exit costs, and companies have to choose to wait for a turnaround.
Sometimes we can't say for sure about external opportunities, so enterprises have to gamble on their own destiny. If you don't gamble, you have no choice but to transform and chase. For example, four or five years ago, the traditional CRT color TV outlets and flat-panel color TVs in the color TV industry were the trend, but it was difficult for enterprises to say clearly how long they would become the protagonists. Changhong, a well-known color TV company, believes that this transition period will take about ten years. Therefore, flat-panel TV will grow rapidly in three years, and rear projection products will be brilliant for a while but decline rapidly. Enterprises are forced to adjust their direction and turn their resources to flat-panel TVs. In contrast, Hisense recognized the prospect of flat-panel TV earlier. Although it tried rear projection and gave up it earlier for some reasons, it devoted itself to flat-panel color TV. As a result, the opportunity of the flat panel industry came as scheduled, and Hisense became the big winner of color TV upgrade.
Among the four typical ideas of strategic decision-making, resource orientation and opportunity orientation have their own advantages and disadvantages, and enterprises should use them flexibly in combination with themselves. Keeping up with the joneses and following the trend, and being forced to be helpless, are all things that enterprises should reflect and improve.
Professional research
Course case
In today's world, high-tech is developing rapidly, the pace of economic globalization is accelerating, and political economy at home and abroad presents a new development trend. In the face of the current financial crisis and changes in the stock market and property market, how should enterprises respond? The growth of managers must be ahead of the development of society; Managers' thinking must be ahead of social cognition. How to face the market competition calmly and how to deal with enterprise management easily? The objective situation requires the elites in the industry to constantly change their thinking and enrich their thinking in order to adapt to unprecedented challenges.
Main contents:
1. How to deeply understand enterprise strategic management
Strategy-making overall decisions in a relatively long period of time.
The strategy has the characteristics of guidance, overall situation, long-term, competitiveness, systematicness and risk.
2. Research on managers' mental model
Managers' mental model affects different types of strategic decisions that determine company performance.
Thought-Action-Habit-Character-Destiny
3. Competitive advantage and core competitiveness
Competitive advantage is a series of factors or abilities that make a company always superior to its competitors.
Core competitiveness is valuable, scarce, irreplaceable and difficult to imitate.
4. How to carry out strategic planning under the current situation?
Facing today's changeable economic environment, we use a variety of analytical tools to solve the strategic planning problem of enterprises.
5. The choice of enterprise competitive strategy at this stage
Learn from the successful and failed strategic cases of Chinese and foreign enterprises, clarify the strategic significance, and choose a strategic management model that adapts to the development of enterprises.
expert
Lai Weimin, a famous economist, is the director and professor of the research center of Peking University Enterprise Business School, the leader of the enterprise strategy research group in Peking University, a distinguished expert in china enterprise confederation and a visiting professor in Tsinghua University. In recent years, he has been devoted to the research and practice in the field of economic management, and has presided over and participated in many provincial, ministerial and national projects such as GSP system development, dynamic economic model research and pharmaceutical ERP development research. Recently published articles such as What's going on at Pudong Airport, When will the crisis bottom out, How do we lay out, Opportunities and Strategic Choices in the Post-crisis Era have a great influence on domestic economic circles.
Professor Lai has served as an executive in many well-known enterprises and has rich practical experience in enterprise management. Visited and investigated thousands of enterprises and established a large number of research models. And served as a management consultant for many enterprises, actually dealing with the strategic planning, marketing planning and system construction of enterprises. Over the years, Professor Lai Weimin has served as the keynote professor of the President's Class in Peking University and the President's Class in Tsinghua University, the keynote expert of the National Finance Director, Human Resources Director, Marketing Director and Professional Managers' Professional Qualification Certification Training Course, and has served as the keynote speaker of the National Galaxy Training Project, the National 653 Training Project and various large-scale forums and seminars for many times. Professor Lai has given thousands of lectures all over the country, with profound knowledge and rich practical experience. More than ten thousand students from all over the country accepted Professor Lai's idea on the spot. By attending Professor Lai's courses, a large number of entrepreneurs helped enterprises get out of the predicament and doubled their wealth. Professor Lai is good at combining innovative theoretical thinking with practical application, and completing the transformation process of management thinking from abstract to concrete and from theory to practice with everyone.