Strategic Management Dr. Don Neubaum [e-mail]

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Strategic ManagementDr. Don Neubaumdon.neubaum_at_b
us.oregonstate.edu

• 541-737-6036
• 400E Bexell

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Class Sessions

• Tuesday Thursday - 800am
• Tuesday Thursday - 1000am
• Both in 415 Bexell

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WIC

• Writing Intensive Curriculum
• Writing as a critical aspect of the learning
  process
• Significant portion of your grade over 30
• Reflecting writing with typical business content

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Grading

• Individual Grades - 80
• Midterm/Final 20 each (40 total)
• Industry analysis 20
• Case write ups 2 _at_ 5 (10 total)
• Strategic issue summary 10
• Group Grades 20
• In-class case exam 10
• Strategic plan presentation 10

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Grades

• If you NEED a specific grade in this class, other
  than to simply pass, then you MUST email me and
  come see me by the end of next week.

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Midterm and Final

• Multiple Choice and Short Answer
• Midterm 2/5
• Chapters 1-4
• Final 3/20
• Chapters 5-13, non-cumulative
• Both exams will focus on lecture material and
  text terms.

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Typical Questions

• What four generic strategies exist? Why does
  Porter call them generic?
• According to Porter, when should firms diversify?
  What rules does he forward to judge the merits of
  diversification?
• What is the goal of executive compensation? Why
  is it so difficult to design an effective
  compensation package?
• What are the axis on the BCG and the GE Nine-Cell
  Matrix? Which model is superior and why?

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Industry Analysis

• Within teams, you will select one of the
  following industries
• Personal Computer
• Soft Drink
• Cruise Line
• Airlines
• Gaming (Casinos and Gaming Resorts)
• Due 2/14
• Highest team average will receive 5 extra points

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Case Write Ups

• Analyzing two cases
• Due 1/22 and 2/29
• 3 pages, double spaced
• Specific questions and guidelines will be
  provided for each case
• Re-write each based on feedback you get from
  classmates. Rewrite as many times as you wish.

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Strategic Issues

• Start most class sessions with 2-3 of these
• Articles from WSJ, Forbes, Fortune, etc.
  highlighting an aspect of strategy
• 2 page summary and a short (3 - 5 slides) 5
  minute presentation
• Written feedback allowing you to re-write the
  paper and redo your slides
• Sign up sheet will be distributed
• Graded equally on paper and presentation

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Group In class Case Exam

• Group Exam 2/12
• Case handed out a week ahead of time
• Questions posted on the morning of the 12th
• Answers due by the next morning
• Work in your group using laptop/PC and email
  your answers to me

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Group Strategic Plan and Presentation

• Groups of four or five
• Last week of the quarter 3/11 and 3/13
• Company of your choice, with my approval
• PowerPoint presentation of 20 minutes no paper
  necessary
• Can not analyze a company in the Personal
  Computer, Gaming, Cruise Line, Airlines or Soft
  Drink industries
• Sign up sheet for time slots will be distributed

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Peer Evaluations

• Your group members will evaluate your
  contribution throughout the quarter
• Your group grades can be adjusted up and down,
  based upon their assessment of your contribution
  and effort.

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One Minute Papers

• Write a short, ungraded essay at the end of most
  classes
• 1) something you learned
• 2) giving an example
• 3) asking a question or clarification
• 4) making a comment
• 5) anything else
• Paper notebook with name and section marked on
  the cover

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Participation

• While not specifically graded, I will be
  assessing your attendance, participation and
  one-minute papers.
• Final grades might be adjusted up and down, based
  upon my assessment.
• Students attending every class period will
  receive 5 points on the final

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Golden Rule

• No Tolerance policy for cheating
• Guilty parties receive an F and will be dropped
  from the class
• Disciplinary actions may be taken

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Standing-O

• Earn 5 bonus points on midterm
• Announce to us a recent accomplishment or
  achievement
• While you may do as many Standing-Os you want,
  you can only earn the 5 points once

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Team Specials

• Teams can earn points from Team Specials tasks
  and assignments
• These points are tabulated over the quarter
• Students may also request team special points,
  subject to instructor approval
• Awards
• Gold exempt from Final
• Silver 15 points added to midterm
• Bronze opt out of one essay on final

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In lieu of a case.

• Attend
• 3 page write up detailing the take-aways from
  the presentation

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Chapter One

• What is Strategy and Why is it Important?

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Why do we need strategy?

• The reasons why firms succeed and fail is perhaps
  the central question in strategy
• Answers the fundamental question of the firm
• Where we are now?
• Where we going?
• How are we going to get there?

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Strategic Management Defined

• decisions and actions that determine long-term
  performance
• formulation and implementation of plans designed
  to achieve objectives
• an action managers take to achieve one or more of
  an organizations goals
• unifying theme that gives coherence and direction
  to organizational/individual decisions
• game plan management has for positioning the
  company in its chosen market, competing
  successfully, satisfying customers, and achieving
  good business performance
• managements action plan for running the business
  and conducting operations commitment to pursue a
  particular set of actions in growing the
  business, attracting customers, competing
  successfully, conducting operations, and
  improving financial and market performance

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What is Strategy?

• Strategy is not doing similar activities better
  than your rivals thats operational
  effectiveness
• continual improvement not a sustainable advantage
• industry-wide cost reductions do not lead to
  increased profitability
• examples PCs, automobiles, airlines

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What is Strategy?

• Strategy is performing different activities or
  performing similar activities in a different way
• As suggested by the book 4 of the most
  dependable approaches are 1) low cost, 2)
  differentiating features, 3) fulfilling
  specialized needs, and 4) build unassailable set
  of capabilities.

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What is Strategy?

• 1) Strategy is performing different activities or
  performing similar activities in a different way
• Strategy is about positioning
• a) Variety-based positioning
• offering a unique choice of goods/services
• b) Needs-based positioning
• serving most/all of a particular group of
  customers needs -
• c) Access-based positioning
• serving a set of customers that require unique
  access

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What is Strategy?

• 2) Strategy is about choosing a position which
  requires tradeoffs, choosing what not to do
• without tradeoffs, all firms would imitate
• Tradeoffs arise from
• inconsistent image/reputation
• different activities, products, equipment,
  employees, skills, systems, machines
• priorities, internal coordination, and control

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What is Strategy?

• 3) Strategy is about combining activities as
  advantages come from fit and reinforcing

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Secondary Airports
No meals
Short hauls
No seats
No baggage transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares
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Secondary Airports
No meals
Short hauls
No seats
No baggage transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares
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Secondary Airports
No meals
Short hauls
No seats
No baggage transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares
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Secondary Airports
No meals
Short hauls
No seats
No baggage transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares
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Secondary Airports
No meals
Short hauls
No seats
No baggage transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares
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Secondary Airports
Secondary Airports
No meals
No meals
Short hauls
No seats
No baggage transfers
No baggage transfers
No baggage transfers
Quick Turns
Quick Turns
Standard Fleet
Lean ground crews
Low Fares
Low Fares
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What is Strategy?

• 3) Strategy is about combining activities as
  advantages come from fit and reinforcing
• Operational effectiveness is about excellence in
  individual activities
• Fit/integration increases sustainability by
  reducing imitability

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What is Strategy?

• 4) The desire to grow is most threatening to an
  effective strategy
• Blurs uniqueness
• Creates compromises
• Reduces fit
• Erodes original advantages

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Fig. 1.2 A Companys Strategy Is Partly
Proactive and Partly Reactive
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Fig. 1.2 A Companys Strategy Is Partly
Proactive and Partly Reactive
Emergent strategy elements
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What do Good Strategies Have in Common?
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Chapter Two

• Managerial Process of Crafting and Executing
  Strategy

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Fig. 2.1 The Strategy-Making,
Strategy-Executing Process
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Developing a Strategic Vision
A strategic vision describes the route a company
intends to take in developing and strengthening
its business. It lays out the companys
strategic course in preparing for the future.
A strategic vision exists only as words and has
no organizational impact unless and until it wins
the commitment of company personnel and energizes
them to act in ways that move the company along
the intended strategic path!
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Elements of a Strategic Vision

• Delineates managements aspirations for the
  business
• Provides a panoramic view of where we are going
  by charting a strategic path
• Is distinctive and specific
• Avoids use of generic, dull boring language
  that could apply to most any company
• Captures employees emotions steers them in a
  common direction
• Is challenging and a bit beyond a companys
  immediate reach

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Strategic Vision vs. Mission

• A strategic vision concerns wherewe are going
• Markets to be pursued
• Future product/ market/customer/ technology
  focus
• Kind of company management is trying to create

• The mission statement focuses on its who we are
  and what we do
• Current product and service offerings
• Customer needs being served
• Technologicaland businesscapabilities

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Mission Statements
A well-conceived mission statement distinguishes
a companys business makeup from that of other
profit-seeking enterprises in language specific
enough to give the company its own identify!

• Boundaries of the current business
• Fundamental purpose that sets it apart from other
  firms of its type
• Conveys
• Who we are,
• What we do, and
• Why we are here

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Fig. 2.1 The Strategy-Making,
Strategy-Executing Process
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Objectives

• Turns mission into performance outcomes
• Organizations produce what is measured
• Long and Short term
• Strategic Intents
• All levels of the organization
• Top-down, not Bottom-up

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Types of Objectives Required
Strategic Objectives
Financial Objectives

• Outcomes focusedon improving financial
  performance

• Outcomes focused on improving competitive
  vitality and future business position

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6 Characteristics of a Good Objective

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Importance of Stretch Objectives
Theres no better way to avoid ho-hum results
thanby setting stretch objectives and using
compensation incentives to motivate organization
members toachieve the stretch performance
targets!
BHAG Big Hairy Audacious Goals!
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Leading versus Lagging Indicators

• Current financial results are lagging
  indicators reflecting results of past decisions
  and actionsgood profitability now does not
  translate into stronger capability for delivering
  better financial results later
• However, meeting or beating strategic performance
  targets signals growing competitiveness
  strength in the marketplace, thus developing the
  capability for better financial performance in
  the years ahead
• Good strategic performance is thus a leading
  indicator of a companys capability to deliver
  improved future financial performance

Unless a company sets and achieves stretch
strategic objectives, it is not developing the
competitive muscle to deliver even better
financial results in the years ahead!
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On Balanced Scorecard

• A balanced scorecard for measuringcompany
  performance is optimal it entails
• Setting financial and strategic objectives
• Placing balanced emphasis on achieving both
  types of objectives
• Just tracking financial performance overlooks
  the importance of measuring whether a company is
  strengthening its competitiveness and market
  position.

The surest path to sustained future profitability
year afteryear is to relentlessly pursue
strategic outcomesthat strengthen a companys
business position andgive it a growing
competitive advantage over rivals!
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A Second Balanced Scorecard

• Comprehensive view of the firm from the customer,
  internal, financial and innovation/learning
  perspectives
• 1) How do customers see us?
• Time, quality, service performance, costs
• 2) What must we excel at?
• 3) How do we look to shareholders?
• 4) Can we continue to improve and create value?

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A Third Balanced Scorecard

• Triple Bottom-line
• Economic, social and environmental performance

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Fig. 2.1 The Strategy-Making,
Strategy-Executing Process
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Fig. 2.1 A Companys Strategy-Making Hierarchy
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Levels of Strategic Management
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Levels of Strategic Management
Answers the question Where?
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Levels of Strategic Management
Answers the question
How?
How?
How?
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HPs Corporate Strategy
Enterprise Storage Servers
HP Services
Software
Personal Systems
Imagining and Printing
Financial Services
Where are we going to compete? What businesses
are we in?
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HPs Business Strategy
Enterprise Storage Servers
HP Services
Software
Personal Systems
Imagining and Printing
Financial Services
How are we going to compete against Dell?
How are we going to compete against Sun
Microsystems?
Xerox? Cannon?
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HPs Business Strategy
Enterprise Storage Servers
HP Services
Software
Personal Systems
Imagining and Printing
Financial Services
Profits are won and lost at the business level!!
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So.how can firms be profitable?

• Choose an attractive industry in which to compete
  -
• 2) Attain a competitive advantage within an
  industry -

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Two Models of Profitability

• I/O Model (Industrial/Organizational Economics
  Model)
• Resource Based View of the Firm

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I/O Model
Strategy Performance
General Environment Industry Environment Competiti
ve Environment
General Environment Industry Environment Competiti
ve Environment
3 Assumptions 1) 2) 3)
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Resource Based View
Strategy Performance
The Firms Resources Capabilities
3 assumptions 1) 2) 3)
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• Team Name
• Write a team mission
• Write 3 objectives for your team
• Send them to angrybeaverz_at_yahoo.com by 8PM Tuesday