Why Strategy?
Business Management 499
Strategic Management
© 2004 Mark H. Hansen
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What is Strategy?
Walt Disney Company
1984 Profits: $242 Million
Theme Park Operations:
77 percent of profits
Consumer Products:
22 percent of profits
Filmed Entertainment:
1 percent of profits
© 2004 Mark H. Hansen
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What is Strategy?
Walt Disney Company
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.
1984 - market cap. $2 billion 1994 - market cap. $28 billion
(Huey, 1995)
© 2004 Mark H. Hansen
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What is Strategy?
Strategy is the active management of firm resources
in the pursuit of economic rents.
Thus, our study here is concerned with achieving competitive
advantage, not merely survival. Advantage implies that few, if any,
other firms can or do hold the same position in the market.
Therefore, our focus will not be on managing the average firm.
Our focus will be on managing a firm to rise above the average.
© 2004 Mark H. Hansen
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Why Strategy?
The Call from Industry
The ability to handle intangible and/or subjective strategy-type
concepts is what sets apart individuals in this business (investment
banking). -- Alan Folkman, Marriott School NAC.
The functional disciplines are necessary just to get in the door,
recruiters take excellent accounting, finance, and marketing skills
as a given.
Graduates are expected to be expert in a functional area and able to
to appreciate the strategic implications of managerial action
© 2004 Mark H. Hansen
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What is Strategy?
Academic History
Management was usually taught by retired executives who imparted
the wisdom of experience and the rules of thumb well into the 1960’s
Business disciplines evolved principally from either economics (finance)
or psychology (OB & marketing)
Strategic management is a young discipline (first Ph.D.’s were granted
in the late 1980’s)
The Business Policy and Strategy Division is now the largest division
of the Academy of Management
© 2004 Mark H. Hansen
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Why Strategy?
Differences Between Accounting, Finance, Marketing,
Operations, Organizational Behavior--and Strategy?
Functional Discipline vs. Enterprise Management
Answering Questions Right vs. Answering (Asking) the Right Questions
An Objective Answer vs. Possibility of Multiple “Right Answers””
Responding Based on Rules vs. Responding Based on Principles & Concepts
Managers must be able to deal with ambiguity
© 2004 Mark H. Hansen
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What will this class do for you?
• Inform decisions in all areas of your life
- Personal, family, church, & civic relationships
• Make you a better analyst, accountant, salesperson, etc.
• Prepare you to make the jump from analyst, staff level,
sales, etc. to manager
© 2004 Mark H. Hansen
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