1. Strategic Planning old Ch. 4 new Ch. 5 Youtube—some history Kodak 1922 Kodachrome Film Test CBS NEWS Sunday Morning, December 26, 2010: The last Kodachrome facility ends processing How do you know you have a successful product? Sales? Imitation? Cultural impact? Kodachrome: Paul Simon

2. Chapter 4: Strategic Planning What is strategy? Corporate, business, and functional levels Environment and SWOT

3. If you do not look at things on a large scale, it will be difficult for you to master strategy. Miyamoto Musashi A Book of Five Rings

4. To win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill. Sun Tzu The Art of War

5. There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Niccolo Machiavelli The Prince

6. In God we trust. All others must use data. W. Edwards Deming

7. In other words… Ya better back up your decisions and opinions with a combination of logic and information.

8. Strategic analysis: central questions What does the firm do and why? (mission) What is the environment? (e.g., 5 Forces) How do internal strengths and weaknesses mesh with external opportunities and threats?(SWOT) Corporate and business-level strategy? Do their structure and strategy fit together? What alternatives exist, how do we evaluate SR and LR pros/cons, how do we implement?

9. Focus on the causes of performance The important questions: 1. How can you stay alive? 2. How can you prosper? Not just whether a company is successful, but why, and how can it stay that way?

10. “Why” questions Imply an underlying theory or strategy, or that performance is an outcome of a predictable process

11. One broad definition of strategy “A specific pattern of decisions and actions that managers take to achieve an organization’s goals” Hill & Jones Strategic Management Level of analysis: the firm

12. Head Office Division ADivision BDivision C Business functions Market AMarket BMarket C Corporate Level (CEO, board of directors, and corporate staff) What businesses to be in? Diversification, integration, alliances Business Level Division managers and staff How to compete? Cost vs. differentiation, lifecycle issues Functional Level Functional managers How to carry it out? Efficiency, quality, innovation, service

13. SWOT analysis Internal External StrengthsOpportunities WeaknessesThreats

14. SWOT Analysis Assess strengths, weaknesses, opportunities, and threats. Example: Strengths Skilled management Positive cash flow Well-known brands Weakness Lack of spare production capacity Absence of reliable suppliers Opportunities New technology Underserved market niche Threats Possibility of competitors entering underserved niche

15. Context for data and analysis In business, there is no one correct strategy, approach, or theory

16. One Theory of a Great Car: Any Others? Size Styling A Great Car Technology Big engine Spacious Innovative More power InputsAttributesOutcomes

17. Remember, STRATEGY = THEORY (A conceptual model of cause-and-effect) Problem—do we agree on: The meaning of the goal? On how we get there? On what’s needed to get there? Too easy to assume common understanding.

18. Some problems in the science and art of strategic decision-making Blunders ??? misinterpreting the data Wishful thinking ignoring the data Shooting blind (Deming’s point) Paralysis by analysis Let’s study it some more

19. Barriers to Good Decisions Time Pressures Social Realities Psychological biases Illusion of control Framing effects Discounting the future

20. Psychological Barriers Illusion of control: belief that one can influence events even when one has no control over what will happen. Framing effects: phrasing or presenting problems or decision alternatives in a way that subjective influences override objective facts. Discounting the future: in evaluating alternative, weighing short-term costs and benefits more heavily than longer-term costs and benefits.

21. Advantages of Group Decision Making 1.More information is available when several people are making the decision. 2.A greater number of perspectives on the issues, or different approaches to solving the problem. 3.Group discussion provides an opportunity for intellectual stimulation. 4.People who participate in a group discussion are more likely to understand why the decision was made. 5.Group discussion typically leads to a higher level of commitment to the decision.

22. Disadvantages of Group Decision Making 1.One group member may dominate the discussion. 2.Satisficing may occur. 3.Groupthink – the pressure to avoid disagreement can lead to a phenomenon. 4.Goal displacement – a condition that occurs when a decision-making group loses sight of its original goal and a new, less important goal emerges.