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STRATEGIC MANAGEMENT AND SOCIAL RESPONSIBILITY

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Title: STRATEGIC MANAGEMENT AND SOCIAL RESPONSIBILITY


1
STRATEGIC MANAGEMENT AND SOCIAL RESPONSIBILITY
  • POWER POINT SET 4 MISCELLANEOUS

2
ROLE OF THE CEO
  • Strategist
  • Mentor
  • Visionary
  • Guru
  • Futurist
  • Champion
  • Leader

3
AGENDA OF RESPONSIBILITIES
Individuals (IT) Pre-Course - Bio Picture Intro
to Strategic Audit MINI CASE(s) As Assigned (S,
Sv, Svv) MIDI CASE - MID Term Exam (Letter
Grade) Template Feedback Team Member
Rating Constructive Comments Peer Eval - Maxi
Case Optional Strategic Plan -- Career Plan
4
AGENDA OF RESPONSIBILITIES (Contd)
PARTICIPATION TEAM (IT) Form Teams Roles
Weekly - Chapter Questions With
key issues/answers email to Lead Discussion
(Per Schedule) Maxi Case Choice of company
(approval) Prepare Report
Strategic Plan Template
Present Strategic Plan MISC Team Assignment
Micro Cases
5
  • MIDI Case One (1), five (5) page
    (approximately), individually written case
    analysis (business plan) that must include
  • Your mission for the future of the organization.
  • Your future objectives for the organization.
  • Your analysis and quantitative forecast of
    industry and company.
  • Your strategic decisions, i.e., actions, with
    results, to accomplish objectives.
  • A three (3) year pro forma income statement.
  • Your participation in class discussion and case
    debrief.

6
TEAM STRATEGIC PLAN
  • MAXI A STRATEGIC PLAN that incorporates two
    efforts
  • Effort 1 A 25 Page Written Report
    (Approximately)
  • Effort 2 Team Discussion/Presentation

7
  • Effort 1 A 25 Page Written Report
  • The following must be included in the strategic
    plan report
  • Future mission and objectives decided by you.
  • Analysis and forecast of social, technical,
    economic, and political forces with attention to
    global aspects.
  • Analysis of industry history and quantitative
    industry forecast on a global and domestic basis.
  • Illustration and source of a share analysis.
  • Evaluation of alternative strategies.
  • Decision on strategic course showing basis and
    actions, with results, required to achieve
    indicated performance goals on each major
    strategic action
  • Organizational process changes with schedules and
    budgets
  • Pro-forma financial statements, I.e., cash flows
    balance sheets, and income statements to show
    impact of decision in the short-term,
    intermediate-term and long-term for a minimum of
    5 years.
  • Sufficient research, quantitative analysis,
    style, and organization to meet business planning
    standards.
  • Typed, doubled spaced, table of contents, number
    pages, exhibits, and indicate sources.

8
  • Effort 2 Team Discussion/Presentation
  • Each team must run a one (1) hour maximum
    discussion or presentation of the case.
  • The presenting team also indicates its role and
    audience role, both f which must be internal to
    the organization.
  • For intelligent participation in the team case
    discussions and to help in the selection of the
    third individual case, each team must provide one
    copy of each of the following materials to every
    class member and the instructor

9
Strategic Audit and Decision Making A Structure
  • Context - Environmental/Industry
  • SLEPT (Social, Legal, Economic, Political,
    Technological) Forecast(s)
  • Company
  • Industry
  • History - Now/Future
  • Mission - All Stakeholders
  • Internal, Transactional, Influencers, Vision,
    Core Values, etc.
  • Objectives (Qualitative, Quantitative)
  • Drucker Model (8) (E) - Below

10
STRUCTURE, CONTD
  • PERFORMANCE - Design/Audit
  • System View
  • ADAPTIVE - 3 Questions
  • What is Business?
  • What will business be? as is
  • What should business be?
  • (E) EFFECTIVENESS (Drucker 8)
  • Market Human Resources
  • Innovation Financial Resources
  • Profit Material Resources
  • Societal Productivity
  • (e) Efficiency
  • Cost (versus) Scope/Quantity
  • Quality
  • Time

11
SYSTEM VIEW (CONTD)
  • Global Dimensions (MACROECONOMICS - Global
    Clusters/Culture Comparative Advantages, etc)
  • SWOT
  • Internal S - Strengths
  • W - Weakness
  • Core Competence
  • External O - Opportunity
  • T - Threat

12
  • PORTERS ANALYSIS (Link to O.T.)
  • National / Global
  • Barriers to Entry
  • Government Action
  • Rivalry Among Competitors
  • Barriers to Exit
  • Power of Suppliers
  • Power of Buyers
  • Availability of Substitutes
  • CONCLUSION Attractive?

13
STRATEGY FORMULATION13 Strategic Options -
ClustersStrategy Implementation and
ControlMIS System Corporate Leadership/CultureR
E Ongoing Process
  • 9. Concentric Diversification
  • 10. Conglomerate
  • 11. Cooperative (Joint Venture) Strategic
    Alliance
  • 12. Defensive - Retrenchment
  • - Divestiture
  • - Liquidation
  • 13. Do Nothing
  1. Market Penetration
  2. Market Development
  3. Product Development
  4. Backward Integration
  5. Forward Integration
  6. Horizontal Integration
  7. Horizontal Diversification
  8. Vertical Diversification

14
MGMT 450STRATEGIC AUDIT FORMAT
General Economy You
CONTEXT
History
Now
Future
All Stakeholders Priorities
MISSION
Formulation
(A) e/E
QUAL Quant (SUCCESS)
OBJECTIVES (PersonalProfessional)
3Qs
ACTION(S) IMPLEMENTATION APPRAISAL
Evaluation Control
TOOLS TECHNIQUES B\C RELEVANT ETC BEPOINT
ISSUES
S W O T
PORTER
EVALUATION CONTROL
RECOMMENDATIONS PRIORITIES
REFORMULATION (REVISIT Model)
15
DELPHI FORCASTING
  • Q1. Estimate rate of inflation in the United
    States during next 12 months.
  • ________
  • Q2. Estimate rate of unemployment in the United
    States during next 12 months.
  • ________
  • Q3. Estimate prime rate for corporations in the
    United States during next 12 months.
  • ________
  • Q4. Consumer confidence index in the United
    States during next 12 months.
  • Use scale 1 to 10, with 10 highest
  • ________

16
Strategic ManagementInformation Knowledge vs.
System
Organization Level Strategic Tactical Operation
al Tech Perf.
10 90
Planning External Information
40 60
It Ik Is
90 10
Control Internal Information
17
Strategic ManagementOrgan. Vs Information/Skills
Organ. Level Strategic Tactical Operational Te
ch Perf.
Skills
Conceptual Behavioral Technical
  • 65 30 5
  • 40 30
  • 5 30 65

It Ik Is
18
Strategic ManagementForecasting
  • Types of Forecasting Models
  • Judgmental Models
  • Qualitative Methods, eg Analogy
  • Time Series Models
  • Quantitative Methods, eg Straight Line
  • Causal Models - Cause Effect
  • Regression - Correlation, etc

19
Forecasting Models
  • Judgmental Models (Expert Opinion)
  • Survey(s), sales force, customers
  • Historical analogy, eg. multiple outlets
  • Market Research
  • Surveys, tests, observations
  • Simple, sophisticated
  • Delphi methods - panels of experts
  • Time Series Models
  • Trends vs. Turning Points
  • Causal Models
  • Linear, multiple regression
  • Sophisticated - data needed

20
Global ModelsCorporate Governance
Firm Executive Management
Issues Plan Control Authority Responsibility(s)
Information Flow
Stakeholders Shareholders Financial
Institutions Banks, Insurance Co.,
etc. Government Community Unions
Employees Customers Suppliers etc.
Board of Directors Keiretsu Euro-Interlocking
Directors Government Mercantilism Socialist
State Capitalism
21
Joe Smith and Outsourcing
  • Joe Smith started the day early having set his
    alarm clock (MADE IN JAPAN) for 6 a.m. While his
    coffeepot (MADE IN CHINA) was perking, he shaved
    with his electric razor (MADE IN HONG KONG). He
    put on a dress shirt (MADE IN SRI LANKA),
    designer jeans (MADE IN SINGAPORE) and tennis
    shoes (MADE IN KOREA). After cooking his
    breakfast in his new electric skillet (MADE IN
    INDIA) he sat down with his calculator (MADE IN
    MEXICO) to see how much he could spend today.
    After setting his watch (MADE IN TAIWAN) to the
    radio (MADE IN INDIA) he got in his car (MADE IN
    GERMANY) and continued his search for a good
    paying AMERICAN JOB. At the end of yet another
    discouraging and fruitless day, Joe decided to
    relax for a while. He put on his sandals (MADE IN
    BRAZIL) poured himself a glass of wine (MADE IN
    FRANCE) and turned on his TV (MADE IN INDONESIA),
    and then wondered why he cant find a good paying
    job inAMERICA..

22
Management Strategy
Responsibilities
Philanthropic Be a good Corporate
citizen Contribute resources to the Community
improve quality of life
The Pyramid of Corporate Social Responsibility
Ethical Be ethical Obligation to do what is
right, just and fair avoid harm
Legal Obey the Law Law is societys codification
of right and wrong Play by the rules of the game.
Economic Be profitable The foundation upon which
all others rest
23
Triad Leadership _at_ Drexel
  • CQ (Conceptual Quotient)
  • TQ (Technical Quotient)
  • EQ (Emotional Quotient)

Peer Relations (Team-building)
Politics (Power-management)
Personal Insight (Self-awareness)
EQ
Connectivity (IT/Internet use)
Puzzle
TQ
CQ
Security
Performance
Persona
Opportunity (company- and/ Industry-specific)
24
Porters Five Competitive Forces
  • Supplier Power
  • - Supplier concentration
  • Importance of volume to supplier
  • Differentiation of inputs
  • Impact of inputs on cost or differentiation
  • Switching costs of firms in the industry
  • Presence of substitute inputs
  • Threat of forward integration
  • Cost relative to total purchases in industry
  • Barriers to Entry
  • Absolute cost advantage
  • Proprietary learning curve
  • Access to inputs
  • Government policy
  • Economies of scale
  • Capital requirements
  • Brand identity
  • Switching costs
  • Access to distribution
  • Expected retaliation
  • Proprietary products
  • Threat of Substitutes
  • Switching costs
  • Buyer propensity to substitute
  • Relative price performance of substitutes

Rivalry
  • Degree of Rivalry
  • Exit barriers
  • Industry concentration ratio
  • Fixed costs/Value added
  • Industry growth
  • Intermittent overcapacity
  • Product differences
  • Switching costs
  • Brand identity
  • Diversity of rivals
  • Corporate stakes
  • Buyer Power
  • Bargaining leverage
  • Buyer volume
  • Buyer information
  • Brand identity
  • Price sensitivity
  • Threat of backward integration
  • Product differentiation
  • Buyer concentration vs industry
  • Substitutes available
  • Buyers incentives

25
MGMT 450 Strategy and Business PolicyInternal
Assessment of Firms
  • Four Characteristics Resources Capabilities
  • Important in Sustaining Competitive Advantage
  • DURABILITY Rate at which firms underlying
    resources and capabilities depreciate or become
    obsolete
  • TRANSPARENCY Speed with which other firms can
    understand the relationship of resources and
    capabilities supporting a successful firms
    strategy. Capability that requires a complex
    pattern of various resources and is more
    difficult to comprehend than a capability based
    on a single key resource.
  • TRANSFERABILITY Ability of competitors to
    gather the resources necessary to support a
    competitive challenge. (e.g. Duplicating the
    primary source of Rocky Mountain spring water may
    be difficult. Also brand names may be impossible
    to transfer with out purchase or a license.)
  • REPLICABILITY Ability of competitors to use
    resources and capabilities to duplicate a firms
    success. (e.g. brand manager from PG competitor
    may fail to identify least visible coordination
    mechanisms or fail to note behaviors of another
    companys brand manager may conflict with
    companys culture.)

26
Alternative Strategies Defined and Exemplified
STRATEGY DEFINITION EXAMPLE
Forward Integration Backward Integration Horizontal Integration Market Penetration Market Development Gaining ownership or increased control over distributors or retailers Seeking ownership or increased control of a firms suppliers. Seeking ownership or increased control over competitors Seeking increased market share for present products or services in present markets through greater marketing efforts Introducing present product or services into new geographic area Tandy Corporation opens new Radio Shack stores. K-Mart requires suppliers to sell its goods on consignment. Merck, the world largest drug company, acquires Medco Containment Services, the nations largest marketer of discount prescription drugs Walt Disney pays Nancy Kerrigan 1 million for appearances. Corning Inc. becomes one of Russias first major suppliers of optical fiber.

27
Alternative Strategies Defined and Exemplified

STRATEGY DEFINITION EXAMPLE
Product Development Concentric Diversification Conglomerate Diversification Horizontal Diversification Seeking increased sales by improving present products or services or developing new ones. Adding new, but related, products or services Adding new, unrelated products or services. Adding new, unrelated products or services for present customers. Rayovac develops an alkaline battery recharger. Sonoco Products Company, a maker of industrial packages, acquires Engraph Inc., a maker of consumer packages. Seagram acquires 13.1 percent of Time Warner. Stratus Computer, a maker of fault tolerant computers, acquires Shared Financial Systems, a software maker.
28
Alternative Strategies Defined and Exemplified

STRATEGY DEFINITION EXAMPLE
Joint Venture Retrenchment Divestiture Liquidation Two or more sponsoring firms forming a separate organization for cooperative purposes. Regrouping through cost and asset reduction to reverse declining sales and profits. Selling a division or part of an organization Selling all of a companys assets, in parts, for their tangible worth. Home Shopping Network and Sumitomo offer television shopping in Japan. U.S. Surgical declares bankruptcy. Ryder System, a truck-leasing company divests its aviation business. The Bank of Credit and Commerce International (BCCI) liquidates.
29
Location Analysis
  • COST FACTORS
  • Power
  • Labor
  • Material
  • Taxes
  • Water
  • Insurance
  • Transportation
  • Total Composite Site Cost
  • QUANTITATIVE FACTORS IN LOCATION ANALYSIS
  • Labor Supply
  • Union Activity
  • Labor Skills Available
  • Community Attitudes Towards Company Activities
  • Local Transportation Facilities
  • Recreation
  • Community Growth Potential

30
Point Rating Scale of Noncost Factors (Sample)
Research Climate (Sufficient Educational Facilities and Research organizations to attract Personnel) Points
No schools or laboratories exist 0
A few low-quality facilities exist 50
Good industrial laboratories exist, but no educational facilities 100
Good educational laboratories exist, but no industrial facilities 150
Good educational and industrial facilities exist 200
Excellent facilities and future possibilities 250

Production Labor Pool (Availability of Semi-Skilled Production Workers)
Unavailable 0
Available in limited numbers at premium wages 20
Available in sufficient numbers for the present but not for the future 40
Available in sufficient numbers for the present and the future 60
An abundance of extremely skilled labor 80

Community Attitudes (Desire for and acceptance of the companys actitivities)
Violently opposed to companys activities 0
Will accept grudgingly 25
Cooperative 50
Cooperative and helpful to a high degree 75

31
Developing Enterprise StrategyIndustry Structure
and Environmental Opportunities
Industry Structure Opportunities
Fragmented Industry Consolidation Discovery of new economies of scale Altering ownership structure
Emerging Industry First Mover Advantages Technological leadership Preemption of strategically valuable assets Creation of customer-switching costs
Mature Industry Product Refinement Investment in service quality Process Innovation
Declining Industry Leadership Strategy Niche Strategy Divestment Strategy
32
Developing Enterprise StrategyIndustry Structure
and Environmental Opportunities
Industry Structure Opportunities
International Industry Multinational Opportunities Global Opportunities Transnational opportunities
Network Industry First-mover advantages Winner-takes-all Strategies
Hyper competitive Industry Flexibility Proactive disruption
Empty core industry Collusion Government regulation Significant product differentiation Demand management
Gaining and Sustaining Competitive Advantage by
Jay B Barney - 2004
33
Executive Management TriangleStrategy
Technology - Organization
STRATEGY FORMULATION/IMPLEMENTATION Investment
Portfolio Strategic Alternative Risk vs.
Return Resource Allocation PERFORMANCE EVALUATION
ORGANIZATION ALTERNATIVE STRUCTURES Business
Unit/Product Geography/Place Customer Function Spa
n 21 CENTURY DYNAMICS Global/Multi-Govtal
Societal Core Competence Staffing-Culture
Value Chain ALTERNATIVES
Outsource Joint Venture Strategic
Alliances Licensing Etc.
TECHNOLOGY CHANGE PROCESS Inbound Logistics
Operations PRODUCT Admin. Operations RD Outb
ound Logistics Marketing, Sales Distribution
Service
34
Organization DesignStrategic Alternatives
Executive Strategic Level
Primary
Product Place
Business Unit Customer
Function
Tactical Level
Secondary
(Matrix)
Technical Performance Level
Tertiary
Span of Management
35
Management Union RelationsPhases/Processes
PHASE I LEGISLATIVE (THE LAW OF THE
LAND) COLLECTIVE BARGAINING
Dispute Resolution Warfare Cooling Off Fact
Finding Conciliation Mediation Arbitration
MANAGEMENT UNION CONTRACT 5 Major Sections
PHASE III JUDICIAL (PROTEST APPEAL)
PHASE II EXECUTIVE (ADMINISTRATIVE INITIATIVE)
Dispute Resolution Grievance Procedure Arbitration
Warfare
36
Strategic Alliance Model
Figure 1a. The Impact of Strategic Alliance on
the Creation of Low Cost Distinct Competencies.
Lower R D Cost
Technology Licensing
Lower Distribution Cost
-Lower Cost of Operations -Higher Quality
Products -Lower Prices -Economies of
Scale -Broader Markets
Marketing Licensing
Low Cost Distinct Competencies
Access to Distribution Channels
Qualified Licensing
Higher Barriers to Entry
Cross-Licensing
Low Cost Access to Technology
Joint-Sourcing
Lower Cost of supply
Operating Efficiency
37
Strategic Alliance Model - 2
Figure 1b. The Impact of Strategic Alliance on
the Creation of Differentiation Distinct
Competencies.
Access to New Technology
Technology Joint Venture
Access to Marketing Expertise
-Quality Product -Brand Name Recognition -Broader
Markets
Differentiation Distinct Competencies
Higher Barriers to Entry
Marketing Joint Venture
Increased Knowledge
Patent Pool
Control Entries to the Markets
Access to R D
38
Table 1 The Proposed Strategic Alliances -
Alternatives
Strategy Definition
Technology/Product Licensing Agreement to use technology and/r products
Marketing Licensing Agreement to use marketing
Qualified Licensing License to use a particular product and/r technology in a particular market
Cross-Contracting Establishing a new entity by two or more parent firms in order to achieve a special objective, such as development campaigns for new products
Technology Joint Venture Establishing a new entity by two or more parent firms in order to achieve a special objective, such as development campaigns for new products
Marketing Joint Ventures Establishing a new entity by two or more parent firms in order to achieve a special objective, such as development of new technologies
Patent Pool Sharing key patents for technology and/or products
Joint Sourcing Ordering the necessary supply material collectively
39
E Information Hub Model
Financial Institutions
Distributors
Manufacturers
Subcontract Manufacturers
Information Hub
Consumer
Retailers
Suppliers
Logistics Providers
40
Supply Chain Integration Dimensions
Dimension Elements Benefits
Information Integration Information Sharing Transparency Direct Real Time Accessibility Reduced Bullwhip Effect Early Problem Detection Faster Response Trust Building
Synchronized Planning Collaborative Planning, Forecasting Replenishment Joint Design Reduced Bullwhip Effect Lower Cost Optimized Capacity Utilization Improved Service
Workflow Coordination Coordinated Production, Planning Operations, Procurement, Order Processing, Engineering Change Design. Integrated, Automated Business Processes Efficiency Accuracy Gains Fast Response Improved Service Earlier Time to Market Expanded Network
New Business Models Virtual Resources Logistics Restructuring Mass Customization New Services Click-and-Mortar Models Better Asset Utilization Higher Efficiency Penetrative New Market Create New Products
41
Information Distortion and The Bullwhip Effect
Increasing Order Variability Up the Supply Chain
?
Customers
Wholesalers
Manufacturers
Suppliers
Retailers
42
Business Life Cycle - Starbucks
Sales
Time
Start-up
Growth
Decline
Maturity
43
Corporate Culture
Cool Green Hot Red True Blue Dull Gray
Respects autonomy integrity of others and requires the same from others Strong and ambitious Mutually supportive, friendly interpersonal relationships Concerned with procedures
Lack of controls Dictatorship Interpersonal Process Bureaucratic
Employees can be trusted to do what they should without oversight 2 Standards what they achieve how well orders are followed Decisions should be made by groups, not individuals Just follow the book and you wont be fired
People like to do their own thing without depending on others Employees task is to listen to the boss an obey thoroughly Concerned with groups assessment re quality of interpersonal process Organization run on the basis of rules
Characterized by creative activity Assertive and Directive People Oriented Precision and Continuity
Determine personal goals and action plans Boss sets the goals Promotions based on getting along and understanding our way of doing things Seniority, compliance with procedures, budget management
Entrepreneurial Market driven Secure Marketplace Established, Traditional
Independence Opportunity Consideration Secure
44
Country Clusters
U.S. Far East
1) Individualism High Low
2) Power Distance Near Low Near High
3) Uncertainty Avoidance Near Low Low
4) Masculinity Near High High
5) Long Term Orientation Low High
  1. Americans focus on working as individuals where
    as the Far East cultures place a high importance
    on collectivism and stress teamwork.
  2. The U.S. is not as willing as the Far East to
    accept hierarchical or uneven distribution of
    power. Americans expect closer relationships
    between superiors and subordinates than the
    Eastern cultures.
  3. Both Clusters have little emphasis on structure
    and security. The cultures tendency to let time
    have its way is a willingness to accept risk.
  4. The high Masculinity dimension reflects a stress
    on independence and masculine traits and less on
    interdependence and gender equality.
  5. Americans live more for today (short-term), and
    find less respect for age and place more emphasis
    on formal written contracts. The Far East
    emphasizes long-term values persistence and
    respect for age tradition.
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