Transcript BA 469 lecture ch1.ppt

BA 469
Strategic Management and
Business Policy
Introductions
• Name
• Major
• What do you think you want to be doing 5
years from now and where?
Focus: General Management
of an organization
An organization is “a system of
consciously coordinated activities
or forces of two or more persons.”
General management perspective
• Strategic decisions: strategy comes from
“strategos,” used in ancient times to refer
to administrator of conquered regions,
therefore the whole “enterprise”
• Beyond functional areas: for example, a
company’s policy on what type of
customers to go after affects marketing,
production, finance, etc.
• Long-term implications
Learning Outcomes
• Knowledge of strategic management tools
and concepts
• Diagnose strategic situations (as
described in cases) using these tools and
concepts
• Contribute to class and small group
discussions
To Measure Achievement of
Learning Outcomes
• Quizzes - 400 points
– At least 7 quizzes, short essay questions.
– Will be based on concepts covered in chapter
assigned for the week and readings, but may
refer to previously assigned cases, etc.
• Case briefs (4) – 200 points
• Strategic Management reports (2) – 300
points
• Participation – 100 points
Requirements
• Case briefs and reports are due beginning
of class (see schedule)
• Chapter outlines will be posted, and will be
used as background to lecture and
discussion.
Requirements
• Read Chapters and Cases before coming
to class
• Read assigned articles (if any)
• BECOME AN ACTIVE MEMBER OF THE
CLASS
• House rules:
– Informal, but remember why we are in class
– Speak up (clarification, disagreement, etc.)
– Keep distractions to a minimum
Minimize Distractions
• Shut off cell phones or place them in silent mode
(a vibrating cell phone is distracting)
• Come to class on time; if you do arrive late,
enter rear door
• Tolerate differences of opinion and manner of
participating
• If you have strong opinions, voice it and be
heard, listen to responses, engage in a dialogue,
and then allow the class to move on
• Other suggestions?
The Strategic Management
Process
Chapter 1
The Strategic Management
Process
• Corporate mission and goal
• Analyze external environment - - identify
opportunities and threats
• Analyze internal environment - - identify
strengths and weaknesses
• Formulate strategy
• Implement strategy
Strategic Management and You
• Where do you want to be 5 years from now?
– At least most of you had some idea
• Product of an internal assessment – what are
my strengths, preferences,etc.
• Most students, non-students for that matter
usually do not assess external environment
• Strategy – university degree (some will talk
about a masters degree), funding, etc.
Why do some organizations
succeed while others fail?
• Depends on strategy or set of
– Actions managers take to achieve one or
more of an organization’s goals
• Strategic management process
– The process by which managers choose a set
of strategies that will allow a company to
achieve superior performance
Superior Performance and
Competitive Advantage
• Profitability
– A measure of a company’s return on its
invested capital
• Superior performance
– One company’s profitability relative to that of
other companies in the same or similar
business or industry
Firm-Specific Performance and
Profitability
• Competitive advantage
– A firm’s profitability is greater than the
average profitability for all firms in its industry
• Sustained competitive advantage
– A firm maintains competitive advantage for a
number of years
• Business model
– Management’s model of how strategy will
allow the company to gain competitive
advantage and achieve superior profitability
Industry Structure and
Profitability
Return on Invested
Capital in Selected
Industries,
1997-2001
Data Source: Value Line Investment Survey
Performance in Nonprofit
Enterprises
• Government agencies, universities,
charities
– Are not in business “to make a profit”
– Should use their resources efficiently and
effectively
– Set performance goals unique to the
organization
– Set strategies to achieve goals and compete
with other nonprofits for scarce resources
Strategic Managers
• General managers
– Responsible for overall company performance
or divisional performance
• Functional managers
– Responsible for supervising a particular task
or operation
– Example – head of accounting or marketing,
chief financial officer,
Levels of Strategic Management
Key Question for Each Level
• Corporate Strategy – what business(es)
should the organization be in?
• Business Strategy – how should the
organization compete?
• Functional Strategy – how should the
organization’s resources be best
employed to support business strategy?
Reality Check:
What do managers do?
• Phone calls, meetings, run around from
place to place . .
• Minor decisions -- Mr. so and so gets to
use the office in the basement
• Major decisions - - lets launch, abort
• All in a day’s work - - focus
Reality Check:
Can managers predict the future?
• National economy - - Where will interest
rates be next month? Will economic
growth be 2.5% or 2.75%? Does it matter?
• Industry performance
• Actions of competition
• Actual capabilities and performance of
internal resources, i.e. your people
Emergent vis Intended Strategy
• Honda story is a classic; also consider
Toys ‘R’ Us
• Scenario planning to cover possibilities,
find, if possible, unknown unknowns
• Listen to field people
• Balance commitment to goal and realities
of a changing situation
• Serendipity (unintended, accidental,
sometimes wonderful discoveries)
Cognitive Biases
• Prior hypothesis - - rules of thumb, deeply
held beliefs
• Escalating commitments
• Reasoning by analogy
• Representativeness
Exercises
Strategy in Action
• 1.1 and 1.2: Microsoft – we can assume
that some sort of planning went into
Microsoft’s original Internet strategy prior
to 1994. How could they miss the Internet
then?
• 1.4: Duke Energy – explain Duke’s
planning process using Scenarios.
Strategic Management Process
• Not an exact science
• Dealing with
– Uncertainty
– Scope
• Personal judgment
• Focus on process