MGT 499 Strategic Management
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
What is strategic management?
Page 5
Strategic Management…Action that Creates Value
Pazzo’s
Lynagh’s
Pub
Lynagh’s
Pub
Page 6
Competitive
Outcomes
Coke’s
Strategic
Actions
Organizational
Characteristics
Rivalry
Pepsi’s
Strategic
Actions
Industry
Characteristics
Page 7
Strategic Management – Developing a set of coordinated and
integrated capabilities, decisions, and actions required to achieve
competitive advantage…
Page 8
…action that creates value
Profit = (Price – Cost) x Qty.
Page 9
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 10
Your News Reports
• What is the industry?
• Which company is the news about?
• What is the key point?
• What is so interesting, curious, surprising,
disappointing, or confusing about your news story?
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
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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
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Be strategy-savvy…
Top Management
Don’t let
this be you.
?
Page 14
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 15
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
Page 16
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 17
Levels of Strategy
• Corporate Strategy
• Business Strategy
• Functional Strategy
Value can be created an any or all levels
Page 18
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
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Corporate Strategy
PROCTER & GAMBLE
Soaps
Food
Beverages
Paper
Products
Page 20
Corporate Strategy
PEPSI
Carbonated
Beverages
Juices,
Water,
Sports
drinks
Snack
Foods
Fast Food
Page 21
Corporate Strategy
COCA-COLA
Carbonated
Beverages
Juices,
Water,
Sports
drinks
Page 22
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
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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?
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Strategic Management 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?
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2. Set Objectives & Performance Targets
• Financial
– Achieve 10% ROI and $1.55 EPS by YE 2010
– Increase stock price by $4.00-5.00/share in Q1
2010
• Strategic
– Become low price leader in industry by YE 2011
– Enter five new country markets by YE 2012
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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
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4. Implement Strategy
• DEVELOP ACTION PLAN AT FUNCTIONAL LEVEL
– Establish European distribution center
• Buy warehouse facility near airport in Germany
• Re-tool ware house with robotic material handling system
– Create new ad campaign for 2010 Winter Olympics
• Get endorsement contracts with Kristi Yamaguchi, Apollo
Anton Ono, Lindsey Vonn, Bode Miller, Bonnie Blair
• 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%
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5. Evaluation and Adjustment
• Assess results relative to goals
– Established price leadership in 2011
– Achieved only 4% ROI in 2010
• Identify new opportunities / constraints
– New technologies are coming
– Rivals are merging
• Change strategy / implementation plan (as needed)
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Strategic Planning vs. Strategizing
Intended
Strategy
Strategy
Carried Out
Dropped
Strategic
Actions
Emergent
Strategic
Actions
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Questions…?
Page 31
About this course…
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Schedule, Topics, Tasks, Materials
DATE
11 MAY
Tuesday
12 MAY
Wednesday
TOPIC
READINGS/ASSIGNMENTS
Framing questions: What are the key processes, tools and perspectives that
organizational leaders use to create, implement, and evaluate cross-functional
decisions that will enable the organization to achieve its long-term objectives?
How do organizational leaders use strategy to navigate complex, dynamic and
What is
uncertain contexts (i.e., globalization, technological change, geopolitics, calls for
strategic
social justice, economic crisis, etc.)?
management?
Web:
Hierarchical Levels of Strategy
Web:
Strategic Management Process
Task:
Discuss news articles
PPoint: What is 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?
Web:
PEST Analysis
Situation
Web:
Porter’s Five Forces Analysis
Analysis
Web:
SWOT Analysis
Task: Analysis of the Coffee Industry (presentations/discussion)
PPoint: Situation Analysis
Page 33
Assignments and Projects
• Business Planning and Strategy Implementation
Simulation (May 17-18)
– Develop a business plan for a new restaurant
– Design restaurant’s menu and signature dish
– Present business plan
Page 34
Assignments and Projects
• Business Planning and Strategy Implementation
Simulation (May 17-18)
– Develop a business plan for a new restaurant
– Design restaurant’s menu and signature dish
– Present business plan
• Intriguing Option…
– Signature dish: Shop, Cook, Serve, Present Business Plan
– @ Ferrier house later that week
– Drop “New Product Strategy Audit” in return
Page 35
Assignments and Projects
• New Product Strategy Audit
– Analyze strategic space, company’s competitive strategy,
how the new product will support the company’s strategy
• Identify strengths and weaknesses
• Identify opportunities and strengths
– Will new product be successful?
– Make recommendation as to how new product should be
introduced into the market … What you would do
differently
Page 36
Assignments and Projects
• Global New Products Launch Simulation
–
–
–
–
Design international strategy (companies)
Design trade and investment policies (governments)
Negotiate joint venture agreements
Engage in simulation with Greek MBA students
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Assignments and Projects
• Global Post-Acquisition Integration Simulation
– Develop plan to integrate Finnish and Malaysian
companies
– Develop support/commitment for integration plan
among:
• Different departments
• Different parent companies
• Different stakeholders
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QuickMBA Web Page
Page 39
Graded Assignments
Assignment
Weight
Business Planning and Strategic Implementation Presentation
15%
New Product Strategy Audit Presentation
15%
Global New Product Launch Simulation Memo(s)
15%
Post-Acquisition Simulation Memo(s)
15%
In-Class Participation/Discussion/Presentations
10%
Final Project – Strategy Recommendation Report
30%
TOTAL
100%
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Strategic Management
…Questions?