mgt 499 strategic management walter j. ferrier, ph.d
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MGT 499 Strategic ManagementWalter J. Ferrier, Ph.D.
Page 2
The Paper Fight
• Two stacks of paper• Anything goes…
…Go!
Page 3
The Paper Fight
• What happened?
Page 4
The Paper Fight
• What happened?• Another round…?
Page 5
What is strategic management?
Page 6
Strategic Management…Action that Creates Value
Pazzo’s
Lynagh’sPub
Lynagh’sPub
Page 7
Coke’sStrategicActions
Pepsi’sStrategicActions
Rivalry
CompetitiveOutcomes
IndustryCharacteristics
OrganizationalCharacteristics
Page 8
Strategic Management – Developing a set of coordinated and integrated capabilities, decisions, and actions required to achieve competitive advantage…
Page 9
Profit = (Price – Cost) x Qty.
…action that creates value
Page 10
Strategic Management in the News
• Low price leader…Price cutting
• Differentiated player…Unique product or marketing
• M&A…Restructuring…Turnaround
• Alliance…Joint venture
• New international market…Off-shore manufacturing
• New plants & equipment…Efficient manufacturing
• Market pioneer…Innovator….New products
Your News Reports
• What is the industry?
• Which company is the news about?
• What is the key point?
• What is so interesting, curious, surprising,
disappointing, or confusing about your news
story?
Page 12
Strategy in “Other Markets” and Non-Profits
Regulated Utilities
Educational Institutions,Departments & Programs
GovernmentInstitutions
PhilanthropicOrganizations
CreativeArts
Organizations
ReligiousOrganizations
Political & Social
Organizations
EnvironmentalOrganizations
Resources Legitimacy Human Capital“Market Share” Position Reputation Survival Effectiveness Attention
Page 13
Where Does Strategy Occur?
CEO & Board of Directors Top Management
Functional Management• Marketing• Production• R&D• Logistics• Acct./Fin. Everyone else
Strategy is everyone’s job
Page 14
Be strategy-savvy…
Top Management
Don’t let this be youyou.
?
Page 15
Start-ups, small business, autonomous business units
YOU will be a top officer, strategist, decision-maker:
–Pazzo’s vs. Joe Bologna’s vs. Domino’s
–Lexington Brewing Co. vs. Anheuser-Busch
–John’s Running Shop vs. Footlocker
–Pannell’s Swim Shop vs. Dick’s Sporting Goods
Page 16
What do strategists do/think about?
•Strive for competitive advantage / above-average returns
•Assess external factors causing change•Develop internal factors that create advantage•Navigate stakeholder landscape•Strategic management process
Page 17
What else…..?
External Stuff•Globalization•Technological change•Diverse and increasingly vocal and influential stakeholders
•Wall Street•The Natural Environment
Internal Stuff•Building functional capabilities
•Organizational culture•Leadership•Strategic HRM•Board of Directors•Efficiency
Page 18
Levels of Strategy
• Corporate Strategy• Business Strategy• Functional Strategy
Value can be created an any or all levels
Page 19
Corporate Strategy
• Decide scope/reach of the firm
In which businesses or industries do we compete?
GENERAL ELECTRIC
AircraftEngines
LightBulbs
Appliances PowerGeneration
Page 20
Corporate Strategy
PROCTER & GAMBLE
Soaps Food Beverages PaperProducts
Page 21
Corporate Strategy
PEPSI
CarbonatedBeverages
Juices,Water,Sportsdrinks
SnackFoods
Fast Food
Page 22
COCA-COLA
CarbonatedBeverages
Juices,Water,Sportsdrinks
Corporate Strategy
Page 23
Business Strategy
• Since we’re in the XYZ industry, how do we compete?
Profit = (Price – Cost) x Qty.
• Cost advantage• Size advantage• Differentiation advantage• Positional advantage…New market space
• Bridge converging industries
Page 24
Functional Strategy
•Given our choice of corporate- and/or business-level strategy…
– Marketing– Production– R&D– Human resource management– Finance
• How do we coordinate and integrate business functions to carry out the strategy?
• What functional changes or innovations are required to improve the strategy?
Page 25
1. Articulate Mission / Intent
• Sense of purpose, direction…• In which industries does firm compete?• How does firm compete?• Who are customers?• Who are competitors?
Strategic Management Process
Page 26
2. Set Objectives & Performance Targets
•Financial– Achieve 10% ROI and $1.55 EPS by YE 2010
– Increase stock price by $4.00-5.00/share in Q1 2010
• Strategic– Become low price leader in industry by YE 2011
– Enter five new country markets by YE 2012
Page 27
3. Develop a Strategy
• Strategic themes/thrusts …How to compete:– International expansion– Increase brand name and reputation– Innovate by introducing new products– Aggressive behavior against rivals in old products
Page 28
4. Implement Strategy•DEVELOP ACTION PLAN AT FUNCTIONAL LEVEL
– Establish European distribution center•Buy warehouse facility near airport in Germany•Re-tool ware house with robotic material handling
system
– Create new ad campaign for 2010 Winter Olympics•Get endorsement contracts with Kristi Yamaguchi,
Apollo Anton Ono, Lindsey Vonn, Bode Miller, Bonnie Blair
•Develop TV ad with Spike Lee
– Launch new version of product•Create multifunctional design team•License Oracle’s newest technology• Increase R&D budget by 30%
– Cut prices on older version of product by 33%
Page 29
5. Evaluation and Adjustment
•Assess results relative to goals– Established price leadership in 2011– Achieved only 4% ROI in 2010
•Identify new opportunities / constraints– New technologies are coming– Rivals are merging
•Change strategy / implementation plan (as needed)
Page 30
DroppedStrategicActions
IntendedStrategy
StrategyCarried Out
EmergentStrategicActions
Strategic Planning vs. Strategizing
Page 31
Questions…?
Page 32
About this course…
Schedule, Topics, Tasks, Materials
Page 33
DATE TOPIC READINGS/ASSIGNMENTS
11 MAYTuesday
What is strategic
management?
Framing questions: What are the key processes, tools and perspectives that organizational leaders use to create, implement, and evaluate cross-functional decisions that will enable the organization to achieve its long-term objectives? How do organizational leaders use strategy to navigate complex, dynamic and uncertain contexts (i.e., globalization, technological change, geopolitics, calls for social justice, economic crisis, etc.)?Web: Hierarchical Levels of Strategy Web: Strategic Management Process Task: Discuss news articlesPPoint: What is strategy?
12 MAYWednesday
Situation Analysis
Framing questions: Which analytical frameworks and tools enable organizational leaders to better assess the current and likely future states of the organization’s context or situation it faces? …to better assess its own strengths/weakness in current and future capabilities relative to rivals?Web: PEST Analysis Web: Porter’s Five Forces Analysis Web: SWOT Analysis Task: Analysis of the Coffee Industry (presentations/discussion) PPoint: Situation Analysis
Assignments and Projects
• Business Planning and Strategy Implementation
Simulation (May 17-18)– Develop a business plan for a new restaurant– Design restaurant’s menu and signature dish – Present business plan
Page 34
Assignments and Projects
• Business Planning and Strategy Implementation Simulation (May 17-18)
– Develop a business plan for a new restaurant– Design restaurant’s menu and signature dish – Present business plan
• Intriguing Option…– Signature dish: Shop, Cook, Serve, Present Business Plan– @ Ferrier house later that week– Drop “New Product Strategy Audit” in return
Page 35
Assignments and Projects
• New Product Strategy Audit– Analyze strategic space, company’s competitive strategy, how the new product will support the company’s strategy
•Identify strengths and weaknesses•Identify opportunities and strengths
– Will new product be successful?– Make recommendation as to how new product should be introduced into the market … What you would do differently
Page 36
Assignments and Projects
• Global New Products Launch Simulation– Design international strategy (companies)– Design trade and investment policies (governments)
– Negotiate joint venture agreements– Engage in simulation with Greek MBA students
Page 37
Assignments and Projects
• Global Post-Acquisition Integration Simulation– Develop plan to integrate Finnish and Malaysian companies
– Develop support/commitment for integration plan among:
• Different departments• Different parent companies• Different stakeholders
Page 38
QuickMBA Web Page
Page 39
Graded Assignments
Page 40
Assignment Weight
Business Planning and Strategic Implementation Presentation 15%
New Product Strategy Audit Presentation 15%
Global New Product Launch Simulation Memo(s) 15%
Post-Acquisition Simulation Memo(s) 15%
In-Class Participation/Discussion/Presentations 10%
Final Project – Strategy Recommendation Report 30%
TOTAL 100%
Strategic Management
…Questions?
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