1. Introduction to Strategic Management
Business Management
Strategic Management

2. On Having a Strategy

3. On Having no Strategy

4. Strategic Management Issues
What is it?
what are the main components of strategic management process?

5. Strategic planning
Is the process of identifying the business of the firm today and in the future
and then identifying the course of action it should purse, given its SWOT.
With whom the firm will compete and how?

6. The strategic mgmt includes
Define the business and its mission
Where are we now? where do we want to go? what are our SWOT?
Then choose strategies or courses of action
Buying competitors, going overseas, opening new branches etc
It is not easy to define (direction) some organizations operates locally, some have different products and distribution channels etc etc.

7. Competitive Advantage
1. What is Strategy?
Firm
Competitive Advantage
Shareholder
Value
Strategy
Profit
Strategy: goal & set of policies designed to achieve competitive advantage
Ex : Ferrari specializes in high performance cars and its competitive adv depends on high speed performance
Ex: Toyota specializes in cost efficient production and strorng dealer network
Competitive Advantage: ability to transform inputs into goods and services at a maximum profit on a sustained basis, better than competitors

8. Warren Bennis and Bert Manus say:
Defining the company’s business (direction) requires a great deal of thought!
Warren Bennis and Bert Manus say:
To choose a direction , a leader must first have developed a mental image of a possible and desirable future state for the organization-vision….the critical point is that a vision articulates a view of a realistic, credible, attractive future for the organization, a condition that is better in some important ways than what now exist !

9. Managers use vision and mission in order to define their Company’s direction!
vision: a general statement of an organization’s intended direction that evokes emotional feelings in its members
Mission Statement: a statement that broadly outlines the enterprise’s purpose and serves to communicate" who the organization is, what it does, and where it is headed”
(see page 114 for more mission examples)

10. Strategic management process cont
Perform external and internal audits
Opportunities and threats (external) &
strengths and weaknesses (internal)

11. Translate the mission into strategic goals
California energy mission: ’’assess and act through pubic/private partnership to improve energy systems?”
What will this company’s managers think in coming 5 years?
How many partnership?
what types of partnership?
with whom and when? etc etc

12. Generate and select strategies to reach strategic goals
Strategy: is a bridge connecting where it is today with where it wants to be tomorrow.
Ex: Wal-Mart years ago decided moving form being a small southern based chain of retail discount stores to becoming the national leader (market share)
To achieve this company chooses several strategies;
Reduced distribution costs and minimize inventory and delivery times through satellite based distribution system

13. Lets watch Kaufman’s video

14. Implement the strategy
Means action and result
Means applying four functions of mgmt :planning, organizing, leading and controlling
Entering into new markets
Hiring or firing new people
Closing down some branches
Eliminating product lines or opening new product lines

15. Employees must feel ownership and buy into a strategy!
So strategy must be brief!
Wall Mart’s strategy boils down to the familiar =low prices everyday!
Dell’s strategy has always been =be direct!
(see page 115 for more strategy in brief example)

16. Evaluating Good Strategy
“So then I says to Borg, ‘You know, as long as we’re under siege, one of us ought to moon these Saxon dogs.’”

17. Evaluate performance Strategic control
=is the process of assessing progress toward its strategic objectives and taking corrective action as needed to ensure optimal implementation

18. Evaluating Good Strategy Marketing Strategy at Delta Airlines
In the mid 1980s Delta’s market researchers found that customers (particularly business customers) were strongly influenced to choose a particular airline by the airline’s frequent flyer program.
Consequently, to motivate customers to choose Delta, they teamed up with American Express (an exclusive arrangement) to offer a special program: customers could receive triple miles if they would fly on Delta and purchase the tickets using the American Express card.
How would you evaluate Delta’s strategy? (Good or bad?)

19. 3. Evaluating Good Strategy
What is the cost of the strategic initiative?
How long will it take for competitors to imitate the strategic initiative?
What are the barriers to imitation?

20. Types of strategies 3 main types of strategies
A.Corporate level strategy (ex: p/117 Disney)
Plan that identifies the portfolio of business that comprise a corporation and how they relate to each other
B.Competitive strategy
Identifies how to build and strengthen the business’s long term competitive position in the marketplace
C.Functional strategy
The overall course of action and basic policies that each department is to follow in helping the business accomplish its strategic goals

21. a. Corporate level strategies
Concentration or One Product Strategy
One product or product line exist ex: McDonald's, KFC, Coca Cola, Mercedes, Gerber
Market penetration: a growth strategy boost sales of present products by more aggressively selling and marketing into the organization’s current market
Geographical expansion: aggressively expanding into new geographic markets
Horizontal integration : acquiring ownership or control of competitors who are competing in the same or similar markets with the same or similar product
Vertical Integration: acquiring ownership or control of competitors who are competing at the different markets.

22. Swot analysis It supplies illustrative generic
opportunities, threats , strengths and weakness
to guide the manager’s analysis
It provides a standardized four quadrant format for compiling the company’s situational information ex:p.26

23. Environmental Scanning
Managers traditionally scan 6 areas see figure 5-8 in p.127
Economic trends
ex: recession, inflation, monetary policies
Competitive trends
ex: competitor’s strategy changes, customer trends, market trends, exit of competitors, new product from competitors
Political trends
Ex: Election results, legislation, regulation, deregulation, special interest results
Technological Trends
Ex: introduction of new products, distribution technologies, rate of product obsolesce, trends in availability of supplies and raw materials
Social Tends
Ex: demographic trends, mobility, education, evolving values
Geographical Trends
Opening/closing new markets, factors affecting curent plant/office facilities, location of decisions

24. How managers scan? BRING ME INFO!
Some have employees search for
publications,
internet,
reports ,
newsletters ex: New York times and wall street journal
Use consultants-environmental scanners
Built up Internet news services

25. Benchmarking
Is a process through which a company learn how to become the best in one or more areas by analyzing and comparing the practices of other companies that excel in those areas.

26. Two strategic planning tool
TOWS =a strategic planning tool that presents possible strategies for addressing the firms SWOT
From your environmental scan, benchmarking and swot analysis you fill in the SWOT

27. PORTFOLIO ANALYSIS
HOW DO YOU DECIDE WHICH BUSINESS YOU KEEP UP IN (OR DROP FROM)A PROTFOLIO?
ASSUMES THE BUSINESS ATTRACTIVENESS DEPEND ON TWO FACTORS
GROWTH RATE OF A BUSINESS AND BUSINESS MARKET SHARE

28. BCG MATRIX
A strategic planning tool that helps a manager asses a business unit”s attractiveness based on growth rate and market share

29. End