Copyright 2005 Prentice Hall1 BUS 411 DAY 1. Copyright 2005 Prentice Hall Ch 1 -2 Agenda Class roll...

Copyright 2005 Prentice Hall 1

BUS 411

DAY 1

Copyright 2005 Prentice Hall Ch 1 -2

Agenda

Class roll call Instructor Introduction Syllabus review Instructor’s Educational Philosophy Web Resources General Information about class WebCT accounts A quick look at the Strategic Management Process

Model


Instructor

Tony Gauvin Assistant Professor of E-Commerce 216 Nadeau Hall (207) 834-7519 or Extension 7519 [email protected] WebCT


Instructional Philosophy

Out-Come based education Would rather discuss than lecture

Requires student preparation Hate grading assignments

Especially LATE assignments Use class interaction, assignments, quizzes

and Case Study Reports to determine if outcomes are met.


Web Resources

WebCT http://webct.umfk.maine.edu

Strategic Management Club Online http://www.strategyclub.com

Prentice Hallhttp://wps.prenhall.com/bp_david_sm_10

Instructor’s Web Sitehttp://perleybrook.umfk.maine.edu

Strategic Management Society (SMS)http://www.smsweb.org/

Strategic Management At Wharton http://knowledge.wharton.upenn.edu/index.cfm?fa=viewCat&CID=7


BUS 411 Survival Primer

Read Material BEFORE the class discussion Conclusion & Key Terms at EOC Issues for Review at EOC Experiential Exercises

Check WebCT Often Use the additional resources identified in syllabus ASK questions about what you didn’t understand in readings DON’T do homework at last minute. REVEIW lectures and notes Seek HELP if you are having difficulties OFFER feedback and suggestions to the instructor in a constructive

manner Student Study Groups are STONGLY Encouraged


What is Strategy?

http://www.google.com/search?hl=en&lr=&rls=GGLG,GGLG:2005-42,GGLG:en&oi=defmore&defl=en&q=define:strategy

How is this applied to business?? What do you need to know to be able to think

strategically? What is tactical?


Differences?

Executive Administrator Manager Supervisor Foreman Employee Who is responsible for Strategic Planning? Who has greater rewards/risk?


Strategic Management Process Model

Develop Mission and Vision Statements

Chap 2

Measure and Evaluate

PerformanceChap 9

Implement StrategiesManagement Issues

Chap 7

Generate, Evaluate and Select Strageies

Chap 6

Implement StrategiesMarketing, Finance, accounting, R&D,

MIS issuesChap 8

Perfrom External Audit

Chap 3

Establish Long-termObjectives

Chap 5

Perform Internal Audit

Chap 4


Thoughts

If we know where we are and something about how we got there, we might see where we are tending – and if the outcomes which lie naturally in our course are unacceptable, to make timely changes

- Abraham Lincoln

Without a strategy, an organization is like a ship without a rubber, going around in circles. It’s like a tramp it has no place to go.

- Joel Ross and Michael Kami


For Next Class

Get familiar with all the resources Textbook WebCT WebSites

Read Chapter One and Krispy Kreme Case study

Copyright 2005 Prentice Hall 12

BUS 411

DAY 2


Agenda

Review of last Class Questions?

Discuss the Nature of Strategic Management Describe the strategic-management process. Explain the need for integrating analysis and intuition in strategic

management. Define and give examples of key terms in strategic management. Discuss the nature of strategy formulation, implementation, and evaluation

activities. Describe the benefits of good strategic management. Explain why good ethics is good business in strategic management. Explain the advantages and disadvantages of entering global markets. Discuss how a firm may achieve sustained competitive advantage. Explain ISO 9000, 14000, and 14001 Discuss the relevance of Sun Tzu’s The Art of War to strategic management.

Assignment #1


Chapter 1 The Nature of Strategic Management

Strategic Management: Concepts & Cases

11th Edition

Fred David


Themes in the Text

•Global Considerations – impact virtually all strategic decisions

•E-commerce – vital strategic management tool

•Natural environment – important strategic issue


Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives

Strategic Management – Defined


Art & Science

Implementation

Evaluation

Formulation


Strategic Management

In essence, the strategic plan is a company’s game plan


Strategic Management achieves a firm’s success through integration ––

Management

MIS

Production/OperationsFinance/Accounting

Marketing

Research & Development


Vision & Mission

Strategy Formulation

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection


Issues in Strategy Formulation

New business opportunitiesBusinesses to abandonAllocation of resourcesExpansion or diversificationInternational marketsMergers or joint venturesAvoidance of hostile takeover

New business opportunitiesBusinesses to abandonAllocation of resourcesExpansion or diversificationInternational marketsMergers or joint venturesAvoidance of hostile takeover


Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation


Strategy Implementation

Action Stage of Strategic Management –

Most difficult stageMobilization of employees & managersInterpersonal skills criticalConsensus on goal pursuit

Action Stage of Strategic Management –

Most difficult stageMobilization of employees & managersInterpersonal skills criticalConsensus on goal pursuit


Strategy Evaluation

Internal Review

External Review

Performance Metrics

Corrective Actions


Strategy Evaluation

Final Stage of Strategic Management

Subject to future modificationToday’s success no guarantee of future successNew & different problemsComplacency leads to demise

Final Stage of Strategic Management

Subject to future modificationToday’s success no guarantee of future successNew & different problemsComplacency leads to demise


Peter Drucker: -- Think through the overall mission of a business. Ask the key question: “What is our Business?”

Prime Task of Strategic Management


The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty

Integrating Intuition and Analysis


Intuition is based on: Past experiences Judgment Feelings

Integrating Intuition and Analysis

Intuition is useful for decision making in: Conditions of great uncertainty Conditions with little precedent


Involve Management at all levels

Intuition & Judgment

Influence all Analyses

Integrating Intuition & Analysis


Analytical Thinking

Integrating Intuition & Analysis

Intuitive Thinking


Advice from Gen. Colin PowellPart I: "Use the formula P=40 to 70, in which

P stands for the probability of success and the numbers indicate the percentage of information acquired.“

Part II: "Once the information is in the 40 to 70 range, go with your gut."

---Colin Powell (former US Sectary of State) http://www.blaisdell.com/powell/


Organizations must monitor events On-going process Internal and external events Timely changes

Adapting to Change


“Anything that a firm does especially well compared to rival firms”

Strategic Management is Gaining and Maintaining Competitive Advantage


1. Adapting to change in external trends, internal capabilities and resources

Achieving Sustained Competitive Advantage

2. Effectively formulating, implementing & evaluating strategies


Rate & magnitude of change increasing dramatically

Adapting to Change

E-commerce

Demographics

Technology


Effective Adaptation

Adapting to Change

Requires long-term focus


What kind of business should we become?

Are we in the right fields Are there new competitors? What strategies should we

pursue? How are our customers

changing?

Adapting to Change – Key Strategic Management Questions


It's Not the Big That Eat the Small ... It's the Fast That Eat the Slow”

http://www.amazon.com/Its-That-Small-Its-Fast-Slow/dp/0066620546


Key Terms

Various Job Titles:

•Chief Executive Officer (CEO)•Chief Strategy Officer (CSO)•President•Owner•Board Chair•Executive Director

Strategists – Firm’s success/failure


Vision Statement –What do we want to become?

Mission Statement –What is our business?

Key Terms


Largely beyond the control of a single organization

Key Terms

Opportunities and Threats (External)


Opportunities & Threats (External)

Key Terms

Analysis of Trends:

• Economic

• Social

• Cultural

• Demographic/Environmental

• Political, Legal, Governmental

• Technological

• Competitors


Process of conducting research and gathering and assimilating external information

Key Terms Opportunities & Threats

Environmental Scanning (Industry Analysis)


Basic Tenet of Strategic Management

Key Terms Opportunities & Threats

Strategy Formulation

Take advantage of External Opportunities

Take advantage of External Opportunities

Avoid/minimize impact ofExternal Threats

Avoid/minimize impact ofExternal Threats


Controllable activities performed especially well or poorly

Key Terms

Strengths & Weaknesses (Internal)


Strengths & Weaknesses (Internal)

Key Terms

Typically located in functional areas of the firm

• Management

• Marketing

• Finance/Accounting

• Production/Operations

• Research & Development

• Computer Information Systems


Assessing the Internal Environment

Key Terms Strengths & Weaknesses

Internal Factors

Performance Metrics

Financial Ratios

Industry Averages

Survey Data


SWOT Analysis

More Information http://www.quickmba.com/strategy/swot/

Source: http://www.gslis.utexas.edu/~l3871sio/handout/swot.gif


Mission-driven pursuit of specified results more than one year out

Key Terms

Long-term Objectives


Long-term Objectives

Key Terms

Essential for ensuring the firm’s success

• Provide direction

• Aid in evaluation

• Create synergy

• Focus coordination

• Basis for planning, motivating, and controlling


Means by which long-term objectives are achieved

Key Terms

Strategies


Strategies

Key Terms

Some Examples

• Geographic expansion

• Diversification

• Acquisition

• Market penetration

• Retrenchment

• Liquidation

• Joint venture


Short-term milestones that firms must achieve to attain long-term objectives

Key Terms

Annual Objectives


Means by which annual objectives will be achieved

Key Terms

Policies


Example Strategies in Action in 2005


Dynamic & Continuous More formal in larger organizations

Strategic Management Model

Strategic Management Process


ExternalAudit

Chapter 3

InternalAudit

Chapter 4

Long-TermObjectives

Chapter 5

Generate,Evaluate,

SelectStrategies

Chapter 6

ImplementStrategies:

Mgmt Issues

Chapter 7

ImplementStrategies:Marketing,Fin/Acct,R&D, CISChapter 8

Measure &Evaluate

Performance

Chapter 9

Vision &

Mission

Chapter 2

Comprehensive strategic management model


1. Identify Existing --


• Vision

• Mission

• Objectives

• Strategies


2. Audit external environment3. Audit internal environment4. Establish long-term objectives5. Generate, evaluate & select

strategies6. Implement selected strategies7. Measure & evaluate performance



Benefits of Strategic Management

• Proactive in shaping firm’s future

• Initiate and influence firm’s activities

• Formulate better strategies

•Systematic, logical, rational



Financial Benefits

• Improvement in sales

• Improvement in profitability

• Productivity improvement



Non-Financial Benefits

• Improved understanding of competitors strategies

• Enhanced awareness of threats

• Reduced resistance to change

• Enhanced problem-prevention capabilities


Benefits of Strategic Management (Greenley)

1. Identification of Opportunities

2. Objective view of management problems

3. Improved coordination & control

4. Minimizes adverse conditions & changes

5. Decisions that better support objectives


Benefits of Strategic Management (Greenley – cont’d)

6. Effective allocation of time & resources

7. Internal communication among personnel

8. Integration of individual behaviors

9. Clarify individual responsibilities

10. Encourage forward thinking


Benefits of Strategic Management (Greenley – cont’d)

11. Encourages favorable attitude toward change

12. Provides discipline and formality to the management of the business


Why Some Firms Do No Strategic Planning

Poor reward structures

Fire-fighting

Waste of time

Too expensive

Laziness

Content with success


Why Some Firms Do No Strategic Planning

Fear of failure

Overconfidence

Prior bad experience

Self-interest

Fear of the unknown

Suspicion


Principles of conduct within organizations that guide decision making and behavior

Business Ethics & Strategic Management

Business Ethics defined –


Prerequisite for good strategic management


Good business ethics –


Provides basis on which policies can be devised to guide daily behavior and decisions in the workplace


Code of business ethics –


Misleading advertising Misleading labeling Harm to the environment Insider trading Dumping flawed products on foreign markets Poor product or service safety Padding expense accounts


Business practices always considered unethical –


ISO 9000 focuses on quality control > 1.5 million companies incorporate ISO

Natural Environment Perspective

ISO used to gain strategic advantage


Voluntary standards ISO 14001 standard for Environmental

Management System Firms minimize harmful effects on

environment

Natural Environment Perspective

ISO 14000 standards


Parent company Host country

The Nature of Global Competition

International/multinational corporations


Cultural differences Norms Values Work ethic

The Nature of Global Competition

Strategy implementation may be difficult


Advantages of International Operations

Absorb excess capacity

Reduce unit costs

Spread risk over wider markets

Low-cost production facilities


Advantages of International Operations (cont’d)

Less intense competition

Lower taxes

Economies of scale


Sun Tzu and the Art of Business The Six Principles from

Sun Tzu and the Art of Business: Six Principles for Managers Mark McNeilly (Oxford Press University - 1996)

Capture your market without destroying it "Generally in war, the best policy is to take a state intact; to ruin it is inferior to this....For to win one

hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill."

Avoid your competitor's strength, and attack their weakness "Now an army may be likened to water, for just as flowing water avoids the heights and hastens to

the lowlands, so an army avoids strength and strikes weakness." Use foreknowledge and deception to maximize the power of business intelligence.

"Know the enemy and know yourself; in a hundred battles you will never be in peril." Use speed and preparation to swiftly overcome the competition.

"To rely on rustics and not prepare is the greatest of crimes; to be prepared beforehand for any contingency is the greatest of virtues."

Use alliances and strategic control points in the industry to "shape" your opponents and make them conform to your will. "Therefore, those skilled in war bring the enemy to the field of battle and are not brought there by

him." Develop your character as a leader to maximize the potential of your employees.

"When one treats people with benevolence, justice and righteousness, and reposes confidence in them, the army will be united in mind and all will be happy to serve their leaders."


Assignment #1 Prepare a two to three page paper (not less than 500 and not

more than 1000 words) that covers the listed requirements. Turn in a well formatted typed document. You may also e-mail the document to me. Prepare Mission and Vision statements for yourself (25 %) Carefully articulate your career objectives (25 %) Perform a SWOT analysis of your current situation as it relates to

you desired career objectives (25 %) Develop a strategic plan (less than a page!) that takes you from

your current situation to your desired career objectives (25 %) This assignment is due Friday 26, January at 9:30 AM Resources

http://humanresources.about.com/cs/strategicplanning1/a/strategicplan.htm http://change.monster.com/articles/swot/ http://www.mindtools.com/pages/article/newTMC_05_1.htm http://www.work911.com/planningmaster/

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