MGT 499 Strategic Management Walter 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’s Pub Lynagh’s Pub
Page 7 Coke’s Strategic Actions Pepsi’s Strategic Actions Rivalry Competitive Outcomes Industry Characteristics Organizational Characteristics
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 Government Institutions Philanthropic Organizations Creative Arts Organizations Religious Organizations Political & Social Organizations Environmental Organizations 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 you this be you. ?
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 Aircraft Engines Light Bulbs AppliancesPower Generation
Page 20 Corporate Strategy PROCTER & GAMBLE SoapsFoodBeveragesPaper Products
Page 21 Corporate Strategy PEPSI Carbonated Beverages Juices, Water, Sports drinks Snack Foods Fast Food
Page 22 COCA-COLA Carbonated Beverages Juices, Water, Sports drinks 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 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 Set Objectives & Performance Targets Financial – Achieve 10% ROI and $1.55 EPS by YE 2010 – Increase stock price by $ /share in Q Strategic – Become low price leader in industry by YE 2011 – Enter five new country markets by YE 2012
Page 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 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 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 Dropped Strategic Actions Intended Strategy Carried Out Emergent Strategic Actions Strategic Planning vs. Strategizing
Page 31 Questions…?
Page 32 About this course…
Schedule, Topics, Tasks, Materials Page 33 DATETOPICREADINGS/ASSIGNMENTS 11 MAY Tuesday 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 articles PPoint: What is strategy? 12 MAY Wednesday 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 AssignmentWeight Business Planning and Strategic Implementation Presentation15% New Product Strategy Audit Presentation15% Global New Product Launch Simulation Memo(s)15% Post-Acquisition Simulation Memo(s)15% In-Class Participation/Discussion/Presentations10% Final Project – Strategy Recommendation Report30% TOTAL100%
Strategic Management …Questions?