Post on 22-Apr-2020
Page 1
Strategic Management
Topics and Readings
Page 2
Live Web Links
QuickMBA Web Page
Page 3
Page 4
●●
…
Page 5
…
Page 6
…
…
Page 7
…
…
…
Page 8
Page 9
Strategic Management…Action that Creates Value
Alpha
MythosBeer
MythosBeer
Page 10
MythosCompetitive
Actions
AlphaCompetitive
ActionsRivalry
CompetitiveOutcomes
IndustryCharacteristics
OrganizationalCharacteristics
Page 11
Profit = (Price – Cost) x Qty.
… i.e., action that creates value
Page 12
Strategy in “Other Markets” and Non-Profits
Regulated Utilities
Educational Institutions,Departments & Programs
GovernmentInstitutions
PhilanthropicOrganizations
CreativeArts
Organizations
ReligiousOrganizations
Political & Social
Organizations
EnvironmentalOrganizations
Resources Legitimacy Human Capital“Market Share” Position Reputation Survival Effectiveness Attention
Page 13
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
Page 14
Be strategy-savvy…
Top Management
Don’t let this be you.
?
Page 15
Levels of Strategy
• Corporate Strategy• Business Strategy• Functional Strategy
Value can be created an any or all levels
Page 16
Corporate Strategy
• Decide scope/reach of the firm
In which businesses or industries do we compete?
GENERAL ELECTRIC
AircraftEngines
LightBulbs
Appliances PowerGeneration
Page 17
Corporate Strategy
PROCTER & GAMBLE
Soaps Food Beverages PaperProducts
Page 18
Corporate Strategy
PEPSI
CarbonatedBeverages
Juices,Water,Sportsdrinks
SnackFoods
Fast Food
Page 19
COCA-COLA
CarbonatedBeverages
Juices,Water,Sportsdrinks
Corporate Strategy
Page 20
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
Page 21
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?
Page 22
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… Five Stages
Page 23
What else…..?
External Stuff•Globalization•Technological change•Diverse and increasingly vocal and influential stakeholders
•Wall Street•The Natural Environment
Internal Stuff•Building functional capabilities•Organizational culture•Leadership•Strategic HRM•Board of Directors•Efficiency
Page 24
1. Articulate Mission / Intent
• Sense of purpose, direction…• In which industries does firm compete?• How does firm compete?• Who are customers?• Who are competitors?
Strategic Management Process
Page 25
2. Set Objectives & Performance Targets
•Financial– Achieve 10% ROE and $1.55 EPS by 2011– Increase stock price by $ 4.00-5.00/share by 2011
• Strategic– Become low price leader in industry by 2012– Enter five new country markets by 2015
Page 26
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
Page 27
4. Implement Strategy• Develop action plan at functional level
– Establish European distribution center• Buy warehouse facility near airport in Germany• Re-tool with robotic material handling system
– Create new ad campaign for 2011 Formula 1 racing season• Get endorsement contract with famous soccer players• Develop TV ad with European MTV
– 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%
Page 28
5. Evaluation and Adjustment
•Assess results relative to goals– Established price leadership in 2012– Achieved only 4% ROI in 2011
•Identify new opportunities / constraints– New technologies are coming– Rivals are merging
•Change strategy / implementation plan (as needed)
Page 29
DroppedStrategicActions
IntendedStrategy
StrategyCarried Out
EmergentStrategicActions
Strategic Planning vs. Strategizing
Page 30
Break…
Page 31
Competitive Strategy
Product Attributes
Page 32
Strategic Space -- Razors
Disposable
Num
ber
of B
lade
s
Keeper
New Way to Sell…
Page 34
Page 35
Competitive Strategy
We’re in the _____ industry. How do we compete?
Profit = (Price – Cost) x Qty.
•Cost or size advantage•Differentiation or uniqueness advantage•Marketing advantage•Innovation advantage•Bridge converging industries
Page 36
Breadth of Competitive
Scope
Source of Competitive Advantage
BroadTargetMarket
NarrowTargetMarket
Cost
LowCost
Generic Strategies
Uniqueness
Page 37
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inbo
und
Logi
stic
s
Ope
rati
ons
Ou
tbou
ndLo
gist
ics
Mar
keti
ng
& S
ales
Serv
ice
MARGIN
MARGIN
Value Chain and Low Cost Strategy
Page 38
Low-Cost Strategy - Operational Advantage
“Dell finds it hilarious that HP and Sony fund researchers to come up with new ideas.”
“Steamrollered by Dell” Newsweek, February 21, 2005
Page 39
Breadth of Competitive
Scope
Source of Competitive Advantage
BroadTargetMarket
NarrowTargetMarket
Cost
Generic Strategies
Uniqueness
CostLeadership Differentiation
Page 40
SOUTHWEST
Differentiation Strategy – Uniqueness Advantage
Page 41
Strategic Innovation
Page 42
Starbuck’s Perspective of Coffee Market
Page 43
Red vs. Blue Oceans
Red Ocean Strategy Blue Ocean Strategy
Compete in existing market space Create uncontested market space
Beat the competition Make the competition irrelevant
Exploit existing demand Create and capture new demand
Align organization towards strategic choice between low cost or differentiation
Align organization towards pursuit of low cost and differentiation
Old-is-New…
Page 44
VW Beetle
Page 45
Unique Combinations and Features
Value from Logistics
Page 46
Organizational Advantage
• The Un-Matrix– Oracle - Vienna
Page 47
Problems
Specialists
Generalists Guenther Goeschl (CFO) and his “troll”