CEM 503
Strategic Management
John D. Macomber
Lecture Notes: Introduction
Concepts and Calendar

Strategic Management CEM503
Course Introduction
• Welcome and Introductions
• About John Macomber
• Why Strategy?
• About You
• Overview of Topics and Calendar
• Introduction of Concepts
• Expectations
MIT / MUST Strategic Management Intro John Macomber 2

Why Strategy?
• It’s about how businesses compete.
• How to earn above average returns.
• Selection of industries
• Selection of segments
• Choice of tactics
• How to IMPLEMENT!
MIT / MUST Strategic Management Intro John Macomber 3

Sample Analytical Framework -
Technology Strategies
Scope of IT Initiative:
Change
Industry
Structure
Compete in Same
Arenas
MIT / MUST Strategic Management Intro
External
Advantage
John Macomber 4
Internal
Processes

Why You?
• You will be principals in firms
• You will have to decide what to do:
– What markets?
– What services?
– Where to dedicate your time?
– What kinds of people?
• You probably will be part of a team.
MIT / MUST Strategic Management Intro John Macomber 5

Why these tools?
• Linear conversation
• Lots of information
• Organize thinking
• Lay out assumptions
• Plan ACTION!
MIT / MUST Strategic Management Intro John Macomber 6

Indicators of Segment Profitability:
“Five Forces” Model - M. Porter
Supplier
Bargaining
Power
Barriers to
Entry
Barriers to
Exit
Existing
Rivalry
Buyer
Bargaining
Power
Availability of
Substitutes
MIT / MUST Strategic Management Intro
Attractiveness of an Industry or of a Segment is a function of these forces.
Use them in selection of segments - and in defense of segments.
John Macomber 7

John Macomber Background
• Construction CEO
–
George B. H. Macomber Co., $250 mm GC
• Cisco, MIT Media Lab, Children’s Hospital
• Real Estate Partner
–
2,000,000 SF
•
Academic Thought Leader
– MIT: Strategic Management in the Design and Construction Value
System
–
Harvard: E-Commerce and the Internet in Real Estate and
Construction
• Dot.com Entrepreneur
– Collaborative Structures, Inc. (sold to e-Builder)
• Consultant, Director, and Angel Investor
– BuildingVision - Pursuing industry transformation
MIT / MUST Strategic Management Intro John Macomber 8

Who are You? - Self
Introductions
• Name
• From
• Undergraduate Studies
• Work experience, if any
• What are you interested in?
• What do you hope to gain from this course?
MIT / MUST Strategic Management Intro John Macomber 9

About the Course
• Part 1: Strategic Planning
– Strategic Management in the Design and Construction Value System
• Part 2: E-Business Strategies
– E-Commerce and the Internet in Real
Estate and Construction
MIT / MUST Strategic Management Intro John Macomber 10

The AEC/EPC Value System:
Consultant
Engineer
Labor
Material
Designer
Permanent
Finance
Sponsor
Constructor
Building
Product
Manufacturer
Labor
Material
Distributor
Subcontractor
Project
Finance
MIT / MUST Strategic Management Intro
Land and
Permissions
John Macomber 11
Owner/
Operator
End
User

Strategic Planning: Key
Concepts
Steps in Planning
Market Segmentation
1-8
Attractiveness: 5 Forces
Generic Strategies
The Firm Value Chain
MIT / MUST Strategic Management Intro John Macomber 12

Calendar and Topics, Part 1

The Industry Value System
Steps in planning
The Industry Value System
Case: Poland’s A2 Motorway

Market Segmentation
Case: Del Webb

Segment Attractiveness &
Generic Strategies
Case: Del Webb (second day)

Cost Advantage
Case: Arborite

Differentiation
Case: KONE: The Monospace
Launch in Germany

Vertical Integration
Case: Savannah West

Strategy in Fragmented
Industries
Case: George B. H. Macomber
Company

Implementation and Review:
Case: Wood Structures, Inc.

E-Business Key Concepts
• How Information Gives You Competitive
Advantage
• Knowing a Winning Business Idea
• Marketplaces & Auctions
• Supply Chain Management
• 3D Modeling
• Knowledge Management
• Aligning Incentives
MIT / MUST Strategic Management Intro John Macomber 22

Calendar and Topics: Part 2

How Information Gives You
Competitive Advantage
Case: Otisline

Knowing a Winning Business
Idea When You See One
Case: E-Bricks

Marketplaces and
Disintermediation
Case: Quicken Insurance: The
Race to Click & Close

Auctions, Consulting, and
Services
Case: Freemarkets.com

Supply Chain Management
Case: World Co. Inc.

3D Modeling
Case: BMW

Knowledge Management:
Fragmented Industries
Case: Buckman Chemical

Knowledge Management:
Economies of Scale
Case: Knowledge Management at Andersen Consulting

Aligning Economic
Incentives
Case: Blockbuster Video
(Turn Your Revenue Chain into a
Profit Chain)

Aligning Incentives
Case: Regency Plaza

Consortia and Federations
Case: Colliers and the
Technology Solution

About the Case Method
• “Case Study” = a business story
• Actual situation (could be fiction)
• Messy!
• Lots of information
• Often no right answer
• Like real life
MIT / MUST Strategic Management Intro John Macomber 35

The Case Method and You:
Preparation
• Skim first for key issues
• Read carefully for relevant detail
• What is going on?
• How can you describe the choices?
• Can you use ideas from the other readings?
MIT / MUST Strategic Management Intro John Macomber 36

Case Method:
Class Discussions
• Usually the instructor will have a structure to guide the discussion
• Talk about the issues and choices
• Discuss (argue) with your classmates
• Sometimes there is a consensus
• Sometimes you can find out what happened
• Sometimes not!
• The learning is in the struggle.
MIT / MUST Strategic Management Intro John Macomber 37

• Study many real business situations
• Practice the core planning tools
• Struggle with figuring out what to do
• Be prepared to participate in planning for your own firms
• Be prepared to do the work to earn above average returns.
MIT / MUST Strategic Management Intro John Macomber 38

CEM 503
Strategic Management
John D. Macomber
Lecture Notes: Introduction
-- end --