DHV '04

DHV 2004

Corporate Strategy

Professor Larry Matteson

DHV '04

This Morning

• Course overview

• Course agenda

• Strategic alignment

• Formulating strategy

• Strategy and the organization

DHV '04

Objectives of the Course

• Introduce a framework for creating and analyzing strategy

• Apply leading contemporary thought on strategy analysis and formation in class discussion and case studies

• Practice in synthesis of developing strategic alternatives

DHV '04

Course Overview

Frameworkfor

analysis

Competitive Strategy Corporate Strategy

Functional Strategy

Implementation

Organization

DHV '04

Date MorningLecture & Discussion Topic

AfternoonLecture & Discussion Topic

Assignment

Mon 4/19/04

IntroCorporate organization, values and strategyStrategic alignmentFormulating a strategy

Frameworks for Strategic Analysis Porter’s Competitive ForcesMarket Focused viewResource based view

Prepare for class discussion of the case

Tues 4/20/04

Class discussion Marketing Strategy Operations strategyCompetitive advantage

Organizational learning Experience effects Change management Class discussion

DHV applications prepare for class presentations

Wed 4/21/04

Strategic implementationAchieving results DHV applications break out sessions Team presentations

SOCIAL EVENT

Thru 4/22/04

Organizational transformation and strategy implementation

DHV structure for the future

Strategic collaborationAlliances and acquisitionsCourse Summary DHV wrap-up

CLOSING EVENT

Agenda For The Week

DHV '04

Deliberate Emergent

Pluralistic

Profit-Maximizing

PROCESSES

OUTCOMES

Generic Perspectives On Strategy

DHV '04

Getting Off The Treadmill

• Create And Dominate Emerging Opportunities• Quest For Competitiveness

– Restructuring-smaller– Reengineering -Better– Reinventing-different

• Organizational Transformation Required

DHV '04

Strategy

Capabilities& ResourcesLandscape

Internal consistencyFit among strategicchoices and policies

External consistencyFit between the strategyand the outside world

Dynamic consistencyFit between the strategy and thefirm’s capabilities and resources

Three Interplays, Three Tests

DHV '04

HOW DO WE MAKE MONEY?

HOW SHOULD WE COMPETE?

WHAT CAPABILITIES ARE REQUIRED?

CORPORATE

STRATEGY

BUSINESS UNIT STRATEGY

FUNCTIONAL STRATEGY

Strategic Alignment

DHV '04

• Objectives Which Are Long Term

• Simple and Agreed to

• Reflect a Profound Understanding ofThe Competitive Environment

• Objective Appraisal of Resources

Characteristics of Strategy

DHV '04

Strategy:(The ship is going generally west)

Current resources

Requiredresources

The Strategic Plan:adjusting the resource map to meet future requirements

DHV '04

Strategy Formulation Process

• Environmental Scanning

• Internal Assessment

• Strategic Alternatives

• Valuation and Choice

• Implementation

DHV '04

GOVERNMENT COMPETITORSTECHNOLOGY CUSTOMERS

VALUES AND BELIEFS

VISION

STRATEGY

POLICY

STRUCTURE AND PROCEDURES

Role Of Top Management

DHV '04

• SUPPLIERS

• COMPETITORS

• CUSTOMERS

ECONOMY

TECHNOLOGY

GOVERNMENT SOCIAL

STRUCTURE

DEMOGRAPHICS

Environmental Scanning

DHV '04

Business Units and Product- Markets

Core Competencies

Strategic Architecture

Strategic IntentBasic Values and Beliefs

Governance Structure

Organizational Capabilities

Administrative Processes and Formal Structure

Operations Strategy and Implementation

Organizational Alignment

DHV '04

Stakeholders of the Firm

• Customers

• Employees

• Suppliers

• Lenders

• Communities

• Shareholders

DHV '04

• If the price mechanism is an efficient means of allocating resources why do firms exist? Why aren’t all transactions arms length market transactions?

• If organizing within a hierarchy of a firm reduce market costs why aren’t all transactions done within the hierarchy? Why isn’t there just one large firm?

• Is there an optimal size of a firm? What are the controlling factors?

DHV '04

Cost

Minimum Efficient Scale Size

Long RunAverage Cost

Economies of Scale

DHV '04

Cost

Size

Technology economies of scale

Cost of congruentgoals

Total cost

Firm Size

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Four Basic Strategic Choices

Value of Local Responsiveness

Val

ue o

f C

onso

lida

tion

International

Global Transnational

Multidomestic

DHV '04

Characteristics of Four strategies

Multi-domestic Global International Transnational Configuration of assets and capabilities

Decentralized and nationally self-sufficient

Centralized and globally scaled

Sources of core competencies centralized, others decentralized

Dispersed, interdependent, and specialized

Role of overseas operations

Sensing and exploiting local opportunities

Implementing parent company strategies

Adapting and leveraging parent company’s core competencies

Differentiated contributions by national units to integrated worldwide operations

Development and diffusion of knowledge

Knowledge developed and retained within each unit

Knowledge developed and retained at the center

Knowledge developed at the center and transferred to overseas units

Knowledge development jointly and shared worldwide

DHV '04

Sustaining Competitive Advantage

Consumer Surplus

Value Chain Surplus

Firm’s portion of surplus

Factor cost for the value chain

Firm’s Profitability

Industry long term profitability

Time

Profitability

DHV '04

Takeaway

• The course will analyze and develop strategies in a variety of contemporary business situations. – Strategies built on resources, markets and organization – Impact of technology and globalization will be covered– Mature and declining firms will be considered

• Frameworks and models will be introduced and used in analysis and synthesis of strategy

• Corporate strategic analysis will include– Competitive strategic analysis– Impact of government policy on corporate strategy– Impact of corporate governance on strategy