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MNO1001 Management & Organization Planning and Strategy [Ch2 pp.44-60 & Ch4] By Dr. Ruolian Fang 1-1

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MNO1001 Management & Organization

Planning and Strategy[Ch2 pp.44-60 & Ch4]

By Dr. Ruolian Fang1-1

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Key PointsStrategic planning and strategic management processMission versus visionSWOT analysis: Analysis of external opportunities and threats, and Analysis of internal strengthens and weaknessesCorporate strategy and strategic maneuvering Business strategy

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In-class Question

Can company be successful by luck? Why or why not? 2-3

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In-class Question

GEs former CEO Jack Welch said: Manage your destiny, or somebody else will. What does this mean for strategic management? What does it mean when Welch adds, or somebody else will?2-4

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Strategic PlanningStrategic planningA set of procedures for making decisions on the organizations long-term goals and strategies

Strategic goals Major targets or end results that relate to the long-term survival, value, and growth of the organization

StrategyA pattern of actions and resource allocations designed to achieve the organizations goals

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Strategic PlanningAn effective strategy provides a basis for answering five broad question about how an organization will meet its objectives: Where will we be active? How will we get there?How will we win in the marketplace? How fast will we move and in what sequence will we make changes? How will we obtain financial returns?4-6

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The Strategic Management Process4-7

Strategic management is a process that involves managers from all parts of the organization in the formulation and implementation of strategic goals and strategies. It integrates strategic planning and management into a single process.

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Mission and VisionMission Statement An organizations basic purpose and scope of operationsGuide the actions of the organization, spell out its overall goal, provide a sense of direction, and guide decision-makingVision Statement Take into account the current status of an organization and serves to point the direction of where the organization wishes to go 4-8

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Vision vs. Mission Vision StatementMission StatementAbout Outlines WHERE you want to be. Communicates both the purpose and values of your businessTalks about HOW you will get to where you want to be. Defines the purpose and primary objectives related to your customer needs and team valuesAnswerWhere do we aim to be?What do we do? What makes us different?Develop a statementWhere do we want to be going forward? When do we want to reach that stage? How do we want to do it?What do we do today? For whom do we do it? What is the benefit? In other words, Why we do what we do? What, For Whom and Why?

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Vision vs. Mission 12-10

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Wal-Mart StoresVision: To become the worldwide leader in retailing

Mission: To help people save money so that they can live better 2-11

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Carrefour Vision: The Carrefour group has one single ambition: making Carrefour the preferred retailer wherever it operates.Mission:Over the past 40 years, the Carrefour has grown to become one of the worlds leading distribution groups. The worlds second-largest retailer and the largest in Europe, the group currently operates four major grocery store formats: hypermarkets, supermarkets, hard discount and convenience stores2-12

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In-class Question

Peter Drucker said that The essence of a business is outside itself. What do you think this statement means? Do you agree?2-13

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External Opportunities and Threats- External Environment 2-14

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The Macroenvironment2-15

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Google2-16

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Google 2-17

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Google2-18

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Google2-19

The economic environment dramatically affects managers ability to function effectively and influences their strategic choices

For example, interest and inflation rates affect the availability and cost of capital, growth opportunities, prices, costs, and consumer demand for products

An important economic influence is the stock market. When investors bid up stock prices, they are paying more to own shares in companies, which means that companies have more capital to fuel their strategic decisions

For Google,

Top management trio: (top management control over 80% shareholder vote, the lack of clear hierarchy)

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Google2-20

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Google2-21

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Google2-22

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GoogleExternal Environment D Like Demographics

Diversity at Google http://www.youtube.com/user/DiversityatGoogle

2-23Google is famous for its workplace diversity and inclusion

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Google2-24

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The Competitive Environment2-25

Conclusion: In an attractive industry, there is low supplier bargaining power, low buyer bargaining power, high barriers of entry, few substitute products, and few rivalry.

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Environmental AnalysisIndustry and Market AnalysisIndustry profile: major product lines and significant market segments in the industryIndustry growth: growth rates for the entire industry, growth rates for key market segments, projected changes in patterns of growth, and the determinants of growth Industry forces: threat of new industry entrants, threat of substitutes, economic power of buyers, economic power of suppliers, and internal industry rivalry Competitor Analysis Competitor profile: major competitors and their market sharesCompetitor analysis: goals, strategies, strengths, and weaknesses of each major competitorCompetitor advantages: the degree to which industry competitors have differentiated their products or services or achieved cost leadership Political and Regulatory AnalysisLegislation and regulatory activities and their effects on the industryPolitical activity: the level of political activity that organizations and associations within the industry undertake

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Environmental AnalysisSocial AnalysisSocial issues: current and potential social issues and their effects on the industrySocial interest groups: consumer, environmental, and similar activist groups that attempt to influence the industryHuman Resources Analysis Labor issues: key labor needs, shortages, opportunities, and problems confronting the industryMacroeconomic AnalysisMacroeconomic conditions: economic factors that affect supply, demand, growth, competition, and profitability within the industry

Technological AnalysisTechnological factors: scientific or technical methods that affect the industry, particularly recent and potential innovations

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Internal Strengths and Weaknesses- Internal Environment 2-28

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Internal Strengths and Weaknesses- Internal Environment ResourcesInputs to a system that can enhance performanceTangible: real estate, production facilities, raw materials etc. Intangible: reputation, culture, accumulated learning and experiences2-29

Resources and Core Competence

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Core Competence: VRIO Framework

2-30Core capacity: A unique skill and/or knowledge an organization possesses that gives it an edge over competitors

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ExampleWhat are their core competences?

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SWOT Analysis4-32

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Facebook SWOT Analysis 2013Company Background

2-33NameFacebook, INCCurrent CEOMark ZuckerbergRevenue $5.08 billion (2012)Proftt$53 million (2012)Employees4619 (2012)Competitors Google+, Twitter, MySpace, LinkedIn, and IGLOO

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Facebook SWOT Analysis 2013StrengthsIntegration with websites and applicationsMore than a billion active monthly usersExcellent users experienceUnderstanding of users needs and behaviorWeaknessesSocial network lacks of some featuresOne source of revenues advertisement on FacebookAttitude towards users privacy Lack of website customization Weak protection of users information Opportunities Increasing number of people using Facebook through mobile devices Expansion to ChinaDiversity sources of revenueOpen Facebook marketplace ThreatsIncreasing number of mobile internet usersUsers using ad-block extensionsSlow growth rate of online advertisingIdentity theftsWeak business model

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Corporate Strategies4-35

Corporate strategy: The set of businesses, markets, or industries in which an organization competes and the distribution of resources among those entities

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Corporate StrategiesConcentration A strategy employed for an organization that operates a single business and competes in a single industryVertical Integration The acquisition or development of new businesses that produce parts or components of the organizations productConcentric Diversification A strategy used to add new businesses that produce related products or are involved in related markets and activitiesConglomerate Diversification A strategy used to add new businesses that produce unrelated products or are involved in unrelated markets and activities

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BCG Matrix4-37

Portfolio the diversified businesses of an organization.

BCG matrix is one of the most popular techniques for analyzing a corporates strategy for managing its portfolio.

It helps a company to weigh the relative merits of many business units and product lines.

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Strategic Maneuvering Strategic maneuveringAn organizations conscious efforts to change the boundaries of its task environment

Domain selectionDiversificationMerger or AcquisitionDivesture2-38

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Business Strategy Business Strategy The major actions by which a business competes in a particular industry or market 2-39Low-cost strategyA strategy an organization uses to build competitive advantage by being efficient and offering a standard, no-frills productExample: Wal-Mart and Southwest AirlinesDifferentiation strategyA strategy an organization uses to build competitive advantage by being unique in its industry or market segment along one or more dimensionsExample: Apple

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Case: Meli Marine2-40

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