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Overview of the Chapter

In an uncertain competitive environment, managers must engage in thorough planning to find strategies that will help their organization to compete effectively. This chapter explores the manager’s role as both planner and as strategist. It discusses various elements of the planning process, different kinds of plans, strategy formulation, and the challenge of strategy implementation. This chapter also contains a detailed explanation of SWOT analysis and Michael Porter’s business level strategies.

Learning Objectives

1. Identify the three main steps of the planning process and the relationship between planning and strategy. (LO1)

2. Describe the different levels and types of planning and how they lead to competitive advantage. (LO2)

3. Differentiate between the main types of business-level strategy and explain how they lead to competitive advantage. (LO3)

4. Differentiate between the main types of corporate-level strategies and explain how they are used to strengthen a company’s business-level strategy and competitive advantage. (LO4)

MANAGERMENT SNAPSHOT: Different Ways to Compete in the Soft Drink Business

To compete in the soft drink industry, both Pepsi and Coke decided to build global brands by manufacturing soft-drink concentrate and selling it in a syrup form to bottlers throughout the world. Pepsi and Coke charge a premium price for the syrup and invest part of the proceeds into advertising to build and maintain brand awareness. The bottlers, who are responsible for producing and distributing the cola, must sign an exclusive agreement that prohibits them from distributing competing brands.

Gerald Pencer, CEO of Cott Corporation, used a different strategy to achieve success in this intensely competitive market. His company manufactured and bottled a low cost cola and sold it directly to major retail establishments as a private-label “house-brand”. He initiated his strategy in Canada and quickly...