1. Lecture 01: Introduction Niels-Erik Wergin Strategic Management

2. Strategic Management © Niels Wergin 20092 Tutors  Niels Wergin course leader, lecturer, tutor  Richard Jump lecturer, tutor  Peter Reid tutor  Contact Details / Office Hour in handbook

3. Strategic Management © Niels Wergin 20093 Timetable - changes  Tutorial 7: Mon, 14:00-15:00, QA020, NOT QM020 (as listed in timetable)  Tutorial 5: moved to Mon, 14:00-15:00, QA020, NOT 11:00-12:00 (as listed in timetable)

4. Strategic Management © Niels Wergin 20094 Assignments  Group Presentation (not marked)  Individual Report (30%)  Case Analysis (70%)  All based on one of four cases: Horizontal integration Vertical integration Alliances Restructuring

5. Strategic Management © Niels Wergin 20095 What We Expect From You  Attend regularly  Contribute to tutorials and group activities  Buy the textbook  Read the set chapters in advance  Participate in / contribute to group presentation  Prepare coursework (report, case analysis)  Get familiar with library resources for SM

6. Strategic Management © Niels Wergin 20096 Core Textbook Barney and Hesterly (2008): Strategic Management and Competitive Advantage – Concepts and Cases (2 nd ed.) Pearson Education ISBN-10: 0131355023 Price: £47.49

7. Strategic Management © Niels Wergin 20097 Additional Textbook Johnson, Scholes, and Whittington (2007): Exploring Corporate Strategy (8 th ed.) FT Prentice Hall ISBN-10: 1405887338 Price: £44.99

8. Strategic Management © Niels Wergin 20098 1984 Profits: $242 Million 1984 Market Cap: $2bn Theme Park Operations: 77 percent of profits Consumer Products: 22 percent of profits Filmed Entertainment: 1 percent of profits Walt Disney Company

9. Strategic Management © Niels Wergin 20099 Hired Michael Eisner - 1984 1.Increased admission prices at theme parks 1984 - $186 m 1989 - $787 m 2.Focused on movie studios (character development) 1984 - $2.42 m 1994 - $845 m 3.Diversified into television (ABC), hotels, retail stores, sport team, cruise line, publishing, consumer products, licensing, etc. Market Cap: 1984 = $2 billion 1994 = $28 billion Walt Disney Company (2)

10. Strategic Management © Niels Wergin 200910 Strategy: A firm’s theory about how to gain competitive advantage Strategic planning is planning for the long term Eisner’s approach: People will pay a premium price for extraordinary entertainment. We have the necessary resources to create extraordinary entertainment. Therefore, let’s redeploy our resources in a different way and offer something extraordinary to people. Strategy – a Definition

11. Strategic Management © Niels Wergin 200911 MissionObjectives External Analysis Internal Analysis Strategic Choice Strategy Implementation Competitive Advantage The Strategic Management Process

12. Strategic Management © Niels Wergin 200912 Objectives External Analysis Internal Analysis Strategic Choice Strategy Implementation Competitive Advantage Mission The Strategic Management Process

13. Strategic Management © Niels Wergin 200913 specific, measurable targets the things a firm needs to ‘do’ to achieve its mission should influence other elements in the strategic management process Objectives

14. Strategic Management © Niels Wergin 200914 External Analysis Systematic Examination of the Environment Internal Analysis interest rates demographics social trends technology human resources (knowledge) manufacturing abilities technology External and Internal Analysis

15. Strategic Management © Niels Wergin 200915 External Analysis Internal Analysis Strategic Choice Business Level Corporate Level positioning a business which businesses? Strategic Choice

16. Strategic Management © Niels Wergin 200916 how strategies are carried out who will do what organizational structure and control who reports to whom how does the firm hire, promote, pay, etc. Strategy Implementation

17. Strategic Management © Niels Wergin 200917 A Strategy Is Only As Good As Its Implementation! every strategic choice has strategy implementation implications strategy implementation is just as important as strategy formulation Strategy Implementation (2)

18. Strategic Management © Niels Wergin 200918 Definition: the ability to create more economic value than competitors All elements of the strategic management process are aimed at achieving competitive advantage MissionObjectives External Analysis Internal Analysis Strategic Choice Strategy Implementation Competitive Advantage Competitive Advantage

19. Strategic Management © Niels Wergin 200919 The Ability to Create More Economic Value Than Competitors there must be something different about a firm’s offering compared to competitors’ offerings if all firms’ strategies were the same, no firm would have a competitive advantage competitive advantage is the result of doing something different and/or better than competitors Competitive Advantage

20. Strategic Management © Niels Wergin 200920 1)Advantage based on quality: 2)Advantage based on cost: people choose the firm’s products or services because they are better than what competitors offer people are willing to pay a premium lower costs of production/distribution Example: Waitrose, Mercedes, British Airways Example: Lidl, Tata, Easy Jet Two Types of Competitive Advantage people choose the firm’s products or services because they are cheaper than what competitors offer

21. Strategic Management © Niels Wergin 200921 Tata vs. Mercedes-Benz  Tata Nano  No airbag, radio, AC, electric window lifts, central locking etc.  Price (new): £1390  Mercedes S600  Very high build quality  All extras imaginable  Price (new): ca. £150k

22. Strategic Management © Niels Wergin 200922 success and failure, between mediocrity and excellence  e.g. Rover vs. Toyota Strategy is often the difference between: a great manager and average managers  e.g. Steven Jobs stumbling through life and moving ahead with purpose  e.g. General Motors Strategy Matters