Strategic Management Dr. Don Neubaum E Bexell

Class Sessions Tuesday & Thursday - 8:00am Tuesday & Thursday - 10:00am Both in 103 Bexell

WIC Writing Intensive Curriculum Writing as a critical aspect of the learning process Significant portion of your grade – over 30% Reflecting writing with typical business content

Individual Grades - 80% Midterm/Final – 20% each (40% total) Industry analysis – 20% Case write ups – 5% (10% total) Strategic issue summary – 10% Group Grades – 20% In-class case exam – 5% Strategic plan presentation – 15% Grading

Midterm and Final Multiple Choice and Short Answer Midterm – 5/1 Chapters 1-4 Final – TBA Chapters 5-13, non-cumulative Both exams will focus on lecture material and text terms.

Typical Questions What four generic strategies exist? Why does Porter call them generic? List and describe the three international corporate strategies. According to Porter, when should firms diversify? What rules does he forward to judge the merits of diversification? What is the goal of executive compensation? Why is it so difficult to design an effective compensation package? What are the axis on the BCG and the GE Nine-Cell Matrix? Which model is superior and why?

Industry Analysis Within teams, you will select one of the following industries Tobacco Airlines Athletic Footwear Cruise Line Automotive Due May 15th Highest team average will receive 5 extra points

Case Write Ups Analyzing two cases Napster - Due April 17 th Nike – Due May 24 th 3 pages, double spaced Specific questions and guidelines will be provided for each case Re-write each based on feedback you get from classmates.

Strategic Issues Start most class sessions with 2-3 of these Articles from WSJ, Forbes, Fortune, etc. highlighting an aspect of strategy 2 page summary and a short (3 - 5 slides) 5 minute presentation Written feedback – allowing you to re- write the paper and redo your slides Sign up sheet will be distributed Graded equally on paper and presentation

Group In class Case Exam Group Exam – May 8th Case handed out a week ahead of time Questions ed to you the morning of the 8th Answers due by the end of the day Work in your group using laptop/PC and your answers to me in the evening

Group Strategic Plan and Presentation Groups of four or five Last week of the quarter – June 5 th & 7 th Company of your choice, with my approval PowerPoint presentation of 20 minutes – no paper necessary Can not analyze a company in tobacco, airlines, athletic footwear, automotive or cruise line industries Sign up sheet for time slots will be distributed

Peer Evaluations Your group members will evaluate your contribution throughout the quarter Your group grades can be adjusted up and down, based upon their assessment of your contribution and effort.

One Minute Papers Write a short, ungraded essay at the end of most classes: 1) something you learned 2) giving an example 3) asking a question or clarification 4) making a comment 5) anything else Paper notebook with name and section marked on the cover

Participation While not specifically graded, I will be assessing your attendance, participation and one-minute papers. Final grades might be adjusted up and down, based upon my assessment. Students attending every class period will receive 5 points on the final

Golden Rule “No Tolerance” policy for cheating Guilty parties receive an F and will be dropped from the class Disciplinary actions may be taken

Standing-O Earn 5 bonus points on midterm Announce to us a recent accomplishment or achievement While you may do as many Standing-Os you want, you can only earn the 5 points once

Team Specials Teams can earn points from “Team Specials” tasks and assignments These points are tabulated over the quarter Students may also request team special points, subject to instructor approval Awards: Gold – exempt from Final Silver – 15 points added to midterm Bronze – opt out of one essay on final

Chapter One Basic Concepts of Strategic Management

Why do we need strategy? The reasons why firms succeed and fail is perhaps the central question in strategy The fundamental question of who and what we are

Strategic Management Defined decisions and actions that determine long-term performance formulation and implementation of plans designed to achieve objectives an action managers take to achieve one or more of an organization’s goals unifying theme that gives coherence and direction to organizational/individual decisions game plan management has for positioning the company in its chosen market, competing successfully, satisfying customers, and achieving good business performance analysis, decision, and actions an organization undertakes in order to create and sustain a competitive advantage

So….how can firm’s be profitable ? 1)Choose an attractive industry in which to compete 2) Attain a competitive advantage within an industry

Levels of Strategic Management

What is Strategy? Article Strategy is not doing similar activities better than your rivals – that’s operational effectiveness continual improvement not a sustainable advantage industry-wide cost reductions do not lead to increased profitability examples: PCs, automobiles, airlines

What is Strategy? Article 1) Strategy is performing different activities or performing similar activities in a different way Strategy is about positioning a) Variety-based positioning offering a unique choice of goods/services - Chic-fil-a, GameStop b) Needs-based positioning serving most/all of a particular group of customers’ needs - Ritz Carlton, Babies R Us c) Access-based positioning serving a set of customers that require unique access – Kinkos, Movie Gallery, Superette

What is Strategy? Article 2) Strategy is about choosing a position which requires tradeoffs, choosing what not to do without tradeoffs, all firms would imitate Tradeoffs arise from inconsistent image/reputation different activities, products, equipment, employees, skills, systems, machines priorities, internal coordination, and control

What is Strategy? Article 3) Strategy is about combining activities as advantages come from fit and reinforcing Operational effectiveness is about excellence in individual activities Fit/integration increases sustainability by reducing imitability

What is Strategy? Article 4) The desire to grow is most threatening to an effective strategy Blurs uniqueness Creates compromises Reduces fit Erodes original advantages Growth needs to be deeper, not broader

Two Models of Profitability I/O Model (Industrial/Organizational Economics Model) Resource Based View of the Firm

I/O Model General Environment Industry Environment Competitive Environment Strategy 3 Assumptions 1) 2) 3) General Environment Industry Environment Competitive Environment

Resource Based View The Firm’s Resources & Capabilities Strategy 3 assumptions 1) 2) 3)

Putting these two models together…. How should the firm deploy it resources within its environment to accomplish its long-term objectives? Concept of fit

What do Good Strategies Have in Common?

Mission & Vision Today vs. tomorrow fundamental purpose which sets the firm apart from other firms of its type Based on several fundamental beliefs product, service, customer, market, geographic domain customer need growth, profitability - outcome, not a goal management philosophy, self-concept and values

Objectives Turns mission into performance outcomes Organizations produce what is measured Strategic or financial, long or short term Keep in mind what will the industry/competition allow what will it take to succeed does this objective support what we are trying to do

6 Characteristics of a good objective