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STRATEGIC MANAGEMENT
Lecture 1
Dr. John Kraft
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Opening Case
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3. Company’s Business Model
Management’s model of how strategy will allow the company to gain competitive advantage and achieve superior profitability
A business model encompasses how the company will:
Select its customers
Define and differentiate its product offerings
Create value for its customers
Acquire and keep customers
Produce goods or services
Deliver those goods and services to the market
Organize activities within the company
Configure its resources
Achieve and sustain a high level of profitability
Grow the business over time
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Mission Statement
A description or declaration of why a company is in operation
Provides the framework or context within which strategies are formulated
Has 3 main components:
Mission or vision
Values or guiding standards that drive and shape the actions and behavior of employees
Major goals or objectives
Source: Publisher’s PowerPoint, Ch1-Slide 11
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5. External and Internal Analysis
External analysis
Identify strategic opportunities and threats
Industry environment
National environment
Socioeconomic or macroenvironment
Internal analysis
Identify organizational strengths and weaknesses
Sources of competitive advantage: superior efficiency, quality, innovation, and responsiveness to customers
Source: Publisher’s PowerPoint, Ch1-Slide 19
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6. Abell’s Framework-Defining the Business
Source: D. F. Abell, Defining the Business: The Starting Point of Strategic Planning (Englewood Cliffs, Prentice Hall, 1980), p. 7.
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Film – Dell and FedEx
Click for Video FedEx & Dell
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8. The Five Steps of the Strategy Making Process
Select the corporate vision, mission, and values and the major corporate goals and objectives.
Analyze the external competitive environment to identify opportunities and threats.
Analyze the organization’s internal environment to identify its strengths and weaknesses.
Select strategies that:
Build on the organization’s strengths and correct its weaknesses – in order to take advantage of external opportunities and counter external threats
Are consistent with organization’s vision, mission, and values and major goals and objectives
Are congruent and constitute a viable business model
Implement the strategies.
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Strategy in Action
Time Inc.
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10. Emergent and Deliberate Strategies
Source: Adapted from H. Mintzberg and A. McGugh, Administrative Science Quarterly, Vol. 30. No. 2, June 1985.
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Strategy in Action
Starbucks Music
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Strategy in Action
Strategic Shift at Charles Schwab
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13. Major Goals and Objectives
Goal: A desired future state or objective
Four main characteristics of well-constructed goals:
Precise and measurable
Address crucial issues
Challenging but realistic
Specify a time period
Source: Publisher’s PowerPoint, Ch1-Slide 17
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Strategic Leadership
Vision, eloquence, and consistency
Commitment
Being well informed
Willingness to delegate and empower
The astute use of power
Emotional intelligence
Source: Publisher’s PowerPoint, Ch1-Slide 26
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15. Emotional Intelligence
Self-awareness
Self-regulation
Motivation
Empathy
Social skills
Source: Publisher’s PowerPoint, Ch1-Slide 27
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Course Pack Item
Larry Bossidy, CEO
Allied Signal
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17. Strategy Implementation
After choosing strategies, managers must put them into action.
The feedback loop—strategy is ongoing. Managers must monitor and reevaluate for the next round of strategy formulation and implementation.
Source: Publisher’s PowerPoint, Ch1-Slide 21
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18. Challenges to Strategic Decision Making
Cognitive biases
Prior hypothesis bias
Escalating commitment
Reasoning by analogy
Representativeness
Illusion of Control
Hubris hypothesis
Groupthink
Source: Publisher’s PowerPoint, Ch1-Slide 28
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Intelligence in Iraq
Group Think
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Course Pack Item
Group Think at Imperial Tobacco
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Closing Case
Planning for Chevy Volt
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Course Pack Item
Jill Barad’s Strategy for Mattel
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Real World:
“How Traits that Helped Executive Climb the Ladder Came to Be Fatal Flaws”
“How CEO’s Traits Helped, Hurt”
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Course Pack Item
“He Really Got Harley Roaring”
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Real World:
“Two Radically Different Business Models: Microsoft and Redhat Linux”
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End of Lecture 1
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