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University of Cagliari, Faculty of Economics, a.a. 2012-13

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University of Cagliari, Faculty of Economics, a.a. 2012-13 Business Strategy and Policy A course within the II level degree on Managerial Economics – PowerPoint PPT presentation

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Title: University of Cagliari, Faculty of Economics, a.a. 2012-13


1
University of Cagliari, Faculty of Economics,
a.a. 2012-13
  • Business Strategy and Policy
  • A course within the II level degree on
  • Managerial Economics
  • year II, semester I, 6 credits
  • Lecturer
  • Dr Alberto Asquer
  • aasquer_at_unica.it
  • Phone 070 6753399

2
Business Strategy and Policy
  • Lecture 1
  • Strategy and strategic management

3
Plan of this lecture
  • 0. Course outline
  • - - - - - - - - - - - - - - - - - - - -
  • 1. What is strategy? And why does it matter?
  • 2. The process of strategic management
  • 3. How does a good strategy look like?
  • - - - - - - - - - - - - -
  • 4. Summary

4
0. Course outline
  • Objectives (What shall we achieve out of this
    course?)
  • We will be able to analyze and solve complex
    problems of strategic management.
  • We will learn the main schools of thought on
    business strategy.
  • We will learn to identify and decompose business
    strategy issues, and to search, assess, and
    select business strategies and policies.
  • Prerequisites (What do we need to know for
    attending this course?)
  • A good understanding of business administration,
    planning and control, and managerial economics.
  • A good knowledge of microeconomics and industrial
    economics would be an advantage.

5
0. Course outline
  • Teaching Method (How shall we learn?)
  • Lectures (8) and case studies (10).
  • Time and place of lessons (When and where?)
  • Lessons are scheduled
  • Wednesday from 1500 to 1700, Classroom 7
  • Thursdays from 1500 to 1700, Classroom 7
  • Office hours (Where can we meet you?)
  • Office hours are scheduled Wednesdays and
    Thursdays, 17-1800, in office No. 3, Viale Fra
    Ignazio, 84 (Economics Library)
  • Or by appointment by email (aasquer_at_unica.it).

6
0. Course outline
  • Contents (What is the course about?)
  • What is strategy
  • How do firms position themselves strategically
    within industries
  • How do firms develop resources, competences,
    capabilities
  • How do firms strategically interact with each
    other
  • What is strategic entrepreneurship
  • Why do firms diversify, and how do they do it
  • How do firms compete in international markets
  • Why do firms make partnerships, strategic
    alliances, mergers and acquisitions.

7
0. Course outline
  • Contents (What is the course about?)
  • What is strategy
  • How do firms position themselves strategically
    within industries
  • How do firms develop resources, competences,
    capabilities
  • How do firms strategically interact with each
    other
  • What is strategic entrepreneurship
  • Why do firms diversify, and how do they do it
  • How do firms compete in international markets
  • Why do firms make partnerships, strategic
    alliances, mergers and acquisitions.

10 case studies!
8
0. Course outline
  • Readings (Where shall we study?)
  • A. Thompson A., A. J. Strickland, and J. E.
    Gamble (2010), Crafting and Executing Strategy
    The Quest for Competitive Advantage. McGraw-Hill
    (International Edition).
  • Or, in the Italian version
  • A. Thompson A., A. J. Strickland, and J. E.
    Gamble (2009), Strategia Aziendale Formulazione
    ed Esecuzione. McGraw-Hill.
  • Handouts and other materials.
  • Check the web site of the course!
  • http//www.econoca.it/did_docenti_materia_dett.asp
    ?mat49id1

9
0. Course outline
  • Course evaluation (How is the exam conducted?)
  • Assessment is made on the basis of a written exam
    on any topic covered in the course, including
    case studies.
  • For students who attend the course, part of the
    evaluation is based on participation to lectures
    in particular, by presenting a case study on
    business strategy.
  • The presentation of the case study is assigned on
    a voluntary basis, within the first two weeks of
    the course.
  • The presentation of the case study will account
    for 30 of the final marks. Therefore, if the
    student attends the course and presents the case
    study, the written exam will account for 70 of
    the final marks.

10
0. Course outline
  • General advice (How shall we study in this
    course?)
  • First, pay attention to the theories and methods
    of analysis.
  • Key concepts should be clearly understood
  • Argumentation should follow a clear logic and
    be coherent
  • Second, pay attention to the case studies.
  • Case studies are representations of business
    episodes
  • They may look unstructured and complex
    indeed, they call for efforts to develop the
    capacity to look into complexity, frame problems,
    and identify solutions

11
0. Course outline
  • Examples of exam questions (May we have any?)
  • Examples of exam questions are posted on the
    course web site soon.
  • Exam timetable (When are the exams?)
  • Exam dates will be posted on the course web site
    soon.

12
Business strategy and policy
1. What is strategy? And why does it matter? 2.
The process of strategic management 3. How does
a good strategy look like? - - - - - - - - - - -
- - 4. Summary
13
1. What is strategy? And does it matter?
Strategy Broadly stated, it is an action plan
that managers follow for running the business and
conducting operations. As a coherent set of
actions, strategy is oriented to achieving
objectives such as growing the business,
attracting and pleasing customers, competing
successfully, conducting operations, and
improving the company's financial and market
performance. Strategy is followed in order to
attain long-term super-normal profit.
14
1. What is strategy? And does it matter?
Example Starbucks The management of
Starbucks followed a plan They expanded the
number of stores domestically by targeting
metropolitan areas first, then the city
perimeter They made it a global brand by
opening stores abroad They conceived the
store and store ambience as an advertising
device They gradually broadened in-store
product offerings
15
1. What is strategy? And does it matter?
In part, strategy matters because it relates to
designing a successful business model A
business model is the rationale for why the
company's approach to business and strategy will
be a moneymaker. A business model is a set
of assumed circumstances of the environment
and behaviour of clients, suppliers, competitors,
and regulators, that accounts for the growth
of revenues and the profitability of a
business initiative.
16
1. What is strategy? And does it matter?
Example the business model of Gillette Assum
ption about the environment many people will
likely keep appreciating shaved men Assumption
about behaviour of clients many clients will
likely keep taking care of others' consideration
and self-image and keep spending part of their
income on routinely shaving The business model
is sell the razor at an attractively low
price, and then make money on repeat purchase
of razor blades.
17
1. What is strategy? And does it matter?
Note that many competitors may follow the same
business model
Gillette launches the 3-blades razor in 1998
Wilkinson Sword launches the 4-blades razor in
2003
Gillette launches the 5-blades razor in 2006
18
1. What is strategy? And does it matter?
Strategy matters especially because it relates to
outperforming competitors Firms aim to achieve
a sustainable competitive advantage, i.e., an
enduring capacity to attract buyers with respect
to competitors How do firms do it? By
providing goods or services at lower price than
competitors By providing better goods or
services more quality, better technology,
more additional services, more stylish design,
faster delivery, etc. By focusing on serving
the special needs and tastes of buyers in a
market niche By developing expertise and
resources that provide capabilities that
rivals cannot easily match, copy, or surpass.
19
1. What is strategy? And does it matter?
Example Wal-Mart in the US
1996
1985
The diffusion of Wal-Mart stores in the US
(1975-1996)
1975
20
1. What is strategy? And does it matter?
Example Wal-Mart in the US
Compare the network of 'large stores' of Wal-Mart
vs. Kmart in the US, in 1996
21
2. The process of strategic management
Strategic management is a process
Implement and execute the strategy
Set the objectives
Craft the strategy
Develop a strategic vision
Monitor, evaluate, and make corrective adjustment
s
Strategy review
22
2. The process of strategic management
Strategic management is a process
Strategy formulation
Strategy implementation
Implement and execute the strategy
Set the objectives
Craft the strategy
Develop a strategic vision
Monitor, evaluate, and make corrective adjustment
s
Strategy review
23
2. The process of strategic management
Strategic management is a process
Often tacit
Generally explicit
Implement and execute the strategy
Set the objectives
Craft the strategy
Develop a strategic vision
Monitor, evaluate, and make corrective adjustment
s
Strategy review
24
2. The process of strategic management
Strategic management is a process
Driven by creativity
Implement and execute the strategy
Set the objectives
Craft the strategy
Develop a strategic vision
Monitor, evaluate, and make corrective adjustment
s
Driven by review and analysis
Strategy review
25
3. How does a good strategy look like?
  • The kernel (essence) of a successful strategy
  • It should contain
  • (1) a diagnosis that defines or explains the
    nature of the challenge,
  • (2) a guiding-policy for dealing with the
    challenge, and
  • (3) a set of coherent actions that are designed
    to carry out the guiding policy.

26
4. Summary
Strategy is management's action plan for running
the business and conducting operations (but note
that there are many definitions of what
strategy is). Strategy is important because it
relates to the design of the business model and
to outperforming competitors, i.e., attaining a
sustained competitive advantage. Strategic
management is a process made of different
stages. A good strategy contains a diagnosis of
the challenge, a guiding policy, and a set of
coherent actions.
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