MBA 614
Strategic Innovation
and Competitive Rivalry
Walter J. Ferrier, Ph.D.
The Paper Fight
• Two stacks of paper
• Anything goes…
Go!
…
Page 2
The Paper Fight
• What happened?
Page 3
The Paper Fight
• What happened?
• Another round…?
Page 4
The Paper Fight
• What happened?
• Another round…?
• What was different this time…?
Page 5
Electives
Mergers &
Acquisitions
Supply Chain
Management
New Product
Development
Business Fundamentals
RIM
The Big Picture
Project Connect
Page 6
The Big Picture
Electives
Mergers &
Acquisitions
Supply Chain
Management
New Product
Development
Business Fundamentals
RIM
Top-line Revenue:
• Opportunity-seeking
• Innovation advantage
• Uniqueness advantage
Project Connect
Page 7
The Big Picture
Electives
Mergers &
Acquisitions
Supply Chain
Management
New Product
Development
Business Fundamentals
RIM
Operational Efficiency:
• Cost advantage
• Timing advantage
• Quality advantage
Project Connect
Page 8
The Big Picture
Electives
Mergers &
Acquisitions
Supply Chain
Management
New Product
Development
Business Fundamentals
RIM
Growth and Synergy:
• Diversification
• Scale advantages
• Corporate Venturing
Project Connect
Page 9
The Big Picture
New Product
Development
Strategy, Competitive Rivalry
NPD Processes
Marketing
Management Processes
Finance
Accounting
Page 10
Schedule
Oct 11
Morning
Cohort
8:00-10:00
Afternoon
Cohort
1:00-3:00
Oct 12
10:00-12:00
Oct 13
Oct 14
8:00-10:00
Oct 15
9:00-12:00
Combined a.m. and
p.m. cohorts
@ Awesome Inc.
1:00-4:00
@ Awesome Inc.
3:00-5:00
4:00-5:30
Morning
Cohort
Afternoon
Cohort
Oct 18
8:00-10:00
1:00-3:00
Oct 19
10:00-12:00
3:00-5:00
Oct 20
8:00-10:00
1:00-3:00
Oct 21
Oct 22
10:00-12:00
3:00-5:00
Page 11
Topics and Readings
Tuesday, OCT 12: Situation Analysis and Generic Strategy
Framing questions: Which analytical frameworks and tools enable organizational leaders to better assess
the current and likely future states of the organization’s context or situation it faces? …to better assess its
own strengths/weakness in current and future capabilities relative to rivals? What are the fundamental
strategic alternatives that organizations adopt in an effort to both leverage its capabilities and seize new
opportunities in the marketplace?
Web:
Web:
Web:
Web:
Web:
PPoint:
PPoint:
PEST Analysis
Porter’s Five Forces Analysis
SWOT Analysis
Value Chain Analysis
Competitive Advantage
Situation Analysis
Resources and Capabilities
Web:
Web:
Task:
PPoint:
Porter’s Generic Strategies
Steamrollered by Dell (Newsweek @ MSNBC.com)
Razor Trials
Competitive Strategy
Live
Web
Links
Page 12
Graded Assignments
Genetically-Modified Food Debate Memo
10%
Wargaming Simulation Memo
10%
New Product Strategy Audit Oral Presentation
60%
Peer Evaluation
10%
In-Class Participation/Discussion
10%
Page 13
What is strategic management?
Page 14
Strategic Management…Action that Creates Value
Pazzo’s
Lynagh’s
Pub
Lynagh’s
Pub
Page 15
Competitive
Outcomes
Coke’s
Strategic
Actions
Organizational
Characteristics
Rivalry
Pepsi’s
Strategic
Actions
Industry
Characteristics
Page 16
Strategic Management – Developing a set of coordinated and
integrated capabilities, decisions, and actions required to achieve
competitive advantage…
Page 17
… i.e., action that creates value
Profit = (Price – Cost) x Qty.
Page 18
Strategic Management in the News
• Low price leader…Price cutting
• Differentiated player…Unique product or marketing
• M&A…Restructuring…Turnaround
• Alliance…Joint venture
• New international market…Off-shore manufacturing
• New plants & equipment…Efficient manufacturing
• Market pioneer…Innovator….New products
Page 19
Strategy in “Other Markets” and Non-Profits
Educational Institutions,
Departments & Programs
Regulated
Utilities
Political
& Social
Organizations
Creative
Arts
Organizations
Resources
“Market Share”
Survival
Philanthropic
Organizations
Government
Institutions
Environmental
Organizations
Religious
Organizations
Legitimacy
Position
Effectiveness
Human Capital
Reputation
Attention
Page 20
Where Does Strategy Occur?
CEO & Board of Directors
Top Management
Functional
Management
•
•
•
•
•
Marketing
Production
R&D
Logistics
Acct./Fin.
Everyone else
Strategy is everyone’s job
Page 21
Be strategy-savvy…
Top Management
Don’t let
this be you.
?
Page 22
Start-ups, small business, autonomous business units
YOU will be a top officer, strategist, decisionmaker:
–Pazzo’s vs. Joe Bologna’s vs. Domino’s
–Lexington Brewing Co. vs. Anheuser-Busch
–John’s Running Shop vs. Footlocker
–Pannell’s Swim Shop vs. Dick’s Sporting Goods
Page 23
What do strategists do/think about?
• Strive for competitive advantage / above-average
returns
• Assess external factors causing change
• Develop internal factors that create advantage
• Navigate stakeholder landscape
• Strategic management process… Five Stages
Page 24
What else…..?
External Stuff
Internal Stuff
• Globalization
• Technological change
• Diverse and increasingly
vocal and influential
stakeholders
• Wall Street
• The Natural Environment
• Building functional capabilities
• Organizational culture
• Leadership
• Strategic HRM
• Board of Directors
• Efficiency
Page 25
Levels of Strategy
• Corporate Strategy
• Business Strategy
• Functional Strategy
Value can be created an any or all levels
Page 26
Corporate Strategy
• Decide scope/reach of the firm
In which businesses or industries do we compete?
GENERAL ELECTRIC
Aircraft
Engines
Light
Bulbs
Appliances
Power
Generation
Page 27
Corporate Strategy
PROCTER & GAMBLE
Soaps
Food
Beverages
Paper
Products
Page 28
Corporate Strategy
PEPSI
Carbonated
Beverages
Juices,
Water,
Sports
drinks
Snack
Foods
Fast Food
Page 29
Corporate Strategy
COCA-COLA
Carbonated
Beverages
Juices,
Water,
Sports
drinks
Page 30
Business Strategy
• Since we’re in the XYZ industry, how do we compete?
Profit = (Price – Cost) x Qty.
•
•
•
•
•
Cost advantage
Size advantage
Differentiation advantage
Positional advantage…New market space
Bridge converging industries
Page 31
Functional Strategy
• Given our choice of corporate- and/or business-level
strategy…
–
–
–
–
–
Marketing
Production
R&D
Human resource management
Finance
• How do we coordinate and integrate business functions to carry
out the strategy?
• What functional changes or innovations are required to improve
the strategy?
Page 32
Strategic Planning Process
1. Articulate Mission / Intent
• Sense of purpose, direction…
•
•
•
•
In which industries does firm compete?
How does firm compete?
Who are customers?
Who are competitors?
Page 33
2. Set Objectives & Performance Targets
• Financial
– Achieve 10% ROE and $1.55 EPS by YE2011
– Increase stock price by $4.00-5.00/share
• Strategic
– Become low price leader in industry by YE2012
– Enter five new country markets by YE2014
Page 34
3. Develop a Strategy
• Strategic themes/thrusts …How to compete:
– International expansion
– Increase brand name and reputation
– Innovate by introducing new products
– Aggressive behavior against rivals in old
products
Page 35
4. Implement Strategy
• Develop action plan at functional level
– Establish European distribution center
• Buy warehouse facility near airport in Germany
• Re-tool with robotic material handling system
– Create new ad campaign for 2012 Olympics
• Get endorsement contract with Lance Armstrong, Marylou
Retton, Mia Hamm, and Michael Johnson
• Develop TV ad with Spike Lee
– Launch new version of product
• Create multifunctional design team
• License Oracle’s newest technology
• Increase R&D budget by 30%
– Cut prices on older version of product by 33%
Page 36
5. Evaluation and Adjustment
• Assess results relative to goals
– Established price leadership in 2012
– Achieved only 4% ROI in 2011
• Identify new opportunities / constraints
– New technologies are coming
– Rivals are merging
• Change strategy / implementation plan (as needed)
Page 37
Strategic Planning vs. Strategizing
Intended
Strategy
Strategy
Carried Out
Dropped
Strategic
Actions
Emergent
Strategic
Actions
Page 38
Strategic Planning is “Dead”
•
•
•
•
•
•
•
•
•
•
Flexibility, Quick Decisions
Adaptive Agility
Opportunism
White space opportunity
New voices and perspective
Experimentation
Innovation
Dynamic Maneuvering
Break the rules
Thrive in chaos
Page 39
Strategic Management
…Questions?