1 Fall 2008 (c) Copyright 2008 Mortensen Consulting Group LLC Session #6 Strategic Management Dr. Mark H. Mortensen Sessions 001 and 270 Thursdays 6:00PM to 9:00PM

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 2 Fall 2008 You Will be Prepared for Today Iff You: Have completed Assignment #3 (IFAS, EFAS, & SWOT for Starbucks) Have read Chapter 5 Read the Toyota Motor Corp HSBP

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 3 Fall 2008 Today 6:00Begin Errata from last two classes Key Points from last week Comment on Assignment #2 papers Discussion on Assignment #3 (Starbucks) 6:45BREAK Lecture/Discussion on Chapter 6 Discussion on Toyota Motor Corp Case 8:50 End

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 4 Fall 2008 Errata from Last Two Weeks “Lotus Effect” – see First power loom in the US - Francis Cabot Lowell travelled to Great Britain in 1810 to study the textile industry there. He paid particular attention to the workings of the power loom, a device for which there was still no equal in North America. On his return trip, he had to memorize the plans for the machine, as the British had banned the export of the new technology. On his return trip to Boston, he put together a group of investors, and sought the assistance of a brilliant master mechanic named Paul Moody. By 1815, Moody had built and perfected the first power loom in the Western Hemisphere at Waltham, Massachusetts. [1] Francis Cabot LowellGreat BritainNorth AmericaBostonPaul MoodyWestern Hemisphere Waltham, Massachusetts[1] Bio-technology – see Biotechnology is technology based on biology, especially when used in agriculture, food science, and medicine. The United Nations Convention on Biological Diversity defines biotechnology as: sciencemedicineUnited NationsConvention on Biological Diversity Any technological application that uses biological systems, living organisms, or derivatives thereof, to make or modify products or processes for specific use.

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 5 Fall 2008 UML Nanotechnology Mission Nanomanufacturing Center of ExcellenceThe University of Massachusetts Lowell Center for Nanomanufacturing will combine the University’s strengths in: Polymer and composites manufacturing at the nanoscale; The identification and evaluation of health, safety and environmental hazards, and the design and implementation of safe and sustainable systems of production; and Strong ties to and experience in working with established and emerging industries and research partners. Our mission is to lead the research effort in high-rate, environmentally-safe manufacturing for: Nanoelectronics and devices Nanomaterials for structural energy and environmental applications Nano-medicine The Center supports: An innovation economy in Massachusetts Global competitiveness Center for High-Rate Nanomanufacturing The Center for High-rate Nanomanufacturing is focused on developing tools and processes that will enable high-rate/high-volume bottom-up, precise, parallel assembly of nanoelements (such as carbon nanotubes, nanoparticles, etc.) and polymer nanostructures. The Center’s nanotemplates are utilized to conduct fast massive directed assembly of nanoscale elements by controlling the forces required to assemble, detach, and transfer nanoelements at high rates and over large areas. The developed nanotemplates and tools will accelerate the creation of highly anticipated commercial products and will enable the creation of an entirely new generation of applications. see

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 6 Fall 2008 Key Points from Last Week Environmental Factors Analysis Summary (EFAS) and Internal Factors Analysis Summary (IFAS) – Tools for thinking thru what belongs on SWOT Strategic Positioning Chart – finding axes that allow different competitors’ (or products) relative positions in the marketplace to be seen easily Several different forecasting techniques (e.g. Analytical, Delphi) General approaches to corporate strategy (Defenders, Prospectors, Analyzers, Reactors) Definition of Business Model

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 7 Fall 2008 Assignment #2 Observations (Dunkin’ Donuts 1979 and 2008) Good compare and contrast between 1979 and 2008 Good qualitative pros and cons of franchise vs. company-owned stores (little quantitative) No one discussed how DD is still mainly in the Northeast and could have expanded more aggressively between 2002 and 2006 during times of extremely cheap capital – perhaps using company-owned store models. Effect of being owned by Private Equity?

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 8 Fall 2008 Assignment #3 Discussion EFAS and IFAS SWOT

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 9 Fall 2008 Toyota Motor Corp Case (1994) Situation & Decision to be made Approach to understanding the strategic options available to Toyota Strategic Options delineation Some scenarios that happened & may happen

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 10 Fall 2008 Toyota – Situation in mid-1990s Japanese penetrated US market with smaller, more fuel-efficient cars. Were more nimble, more automated, lower cost, and higher quality. Were gaining market share in the US. Toyota largest in Japan, but third in US Toyota Production System (TPS) strong Launched Lexus brand at high end of market Okuda became president 1995 – wanted a car for the next century.

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 11 Fall 2008 Toyota – Strategic Options Push ahead with Prius at accelerated rate, with G21 approach Move more cautiously, keeping R&D and production costs lower with standard approach. Push mostly in Japan and European markets, where fuel economy is a bigger issue. Experiment with US market. Attempt to move to later-generation technologies such as all-electric or hydrogen fuel cells, adding 5-10 years to the introduction.

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 12 Fall 2008 Toyota – Some Scenarios Fuel Costs rise dramatically (Americans move to smaller, more fuel-efficient cars) or stabilize (Americans stay with big cars) American car companies find a way to neutralize Toyota hybrid advantages Other Technologies prove in (Diesel, All- Electric, Fuel Cell), marginalizing hybrid technology Toyota is currently the largest automobile manufacturer in the world. Its Prius model is the most sought-after car in the US.

Mortensen Consulting Group (c) Copyright 2008 Mortensen Consulting Group LLC 13 Fall 2008 Reminder for Next Week Read Chapters 6 and 7 I suggest you at least scan Chapter 8 – next week we will go over it as a lecture/discussion. Week after is mid-term. No other assignments.