Robin Hood Does Robin Hood have a mission? What INTERNAL issues/problems is he facing? What EXTERNAL...

Robin Hood

Does Robin Hood have a mission?What INTERNAL issues/problems is he

facing?What EXTERNAL issues problems is

he facing?What alternatives might be consider?What should he do?

Strategic ManagementDr. Don [email protected]

541-737-6036400E Bexell

mailto:[email protected]

Class Sessions

• Monday & Wednesday - 8:00am • Monday & Wednesday - 10:00am

• Both in 415 Bexell

• Monday & Wednesday – 2:00PM• 207 Bexell

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

• Individual Grades - 80%• Midterm/Final – 20% each (40% total)• Industry analysis – 20%• Case write ups – 2 @ 5% (10% total)• Strategic issue summary – 10%

• Group Grades – 20%• In-class case exam – 10%• Strategic plan presentation – 10%

Grading

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.

Midterm and Final

• Multiple Choice and Short Answer• Midterm – 10/22

• Chapters 1-4

• Final – 12/5• Chapters 5-13, non-cumulative

• Both exams will focus on lecture material and text terms.

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?

Industry Analysis

• Within teams, you will select one of the following industries• Pharmaceutical• Supermarket/Grocery Store• Wireless Communication (service providers)• Casual Dining (Applebee’s)• DIY Retailing

• Due 10/31• Highest team average will receive 5

extra points

Case Write Ups

• Analyzing two cases• Napster - Due 10/8• Nike – Due 11/14• 3 pages, double spaced

• Specific questions and guidelines will be provided for each case

• Re-write each based on feedback you get from classmates.

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

Group In class Case Exam

• Group Exam – 10/29• Case handed out a week ahead of

time• Questions emailed to you the

morning of the 29th• Answers due by the end of the day• Work in your group using laptop/PC

and email your answers to me in the evening

Group Strategic Plan and Presentation

• Groups of four or five• Last week of the quarter – 10/26 and

10/28• Company of your choice, with my

approval• PowerPoint presentation of 20 minutes –

no paper necessary• Can not analyze a company in

Pharmaceutical, supermarket, wireless communication, casual dining, or DIY retailing industries

• Sign up sheet for time slots will be distributed

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.

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

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

Golden Rule

• “No Tolerance” policy for cheating• Guilty parties receive an F and will

be dropped from the class• Disciplinary actions may be taken

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

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

• Be thinking about who you might want in your group – we will be forming them early in class today

Chapter One

Basic Concepts of Strategic Management

Return on Assets

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JackITB

MickeyD

Sonic

SteakShake

Wendy's

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 firmWhere we are now?Where we going?How are we going to get there?

Hi Dr. Neubaum:

I followed up with our chairmen andCEO today, and found that our boardof directors determined developmentof a strategic plan is premature atthis time.

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 organization’s 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

• management’s 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

The “how” of Strategy

• How will we grow, build clientele, boost performance, etc.• Improve performance? Lower cost? Superior

products? Outstanding service? Target high or low end? Narrow or board product line? Focus on one part of the vertical chain or be fully integrated? Local or global competitor? Single or multiple industry? Manufacture or outsource? Offensive or defensive? Incremental or radical change? Conservative or bold?

Fig. 1.2: A Company’s Strategy Is Partly Proactive and Partly Reactive

Fig. 1.2: A Company’s Strategy Is Partly Proactive and Partly Reactive

Emergent strategy elements

So….how can firm’s be profitable?

1) Choose an attractive industry in which to compete - Where we compete?

Corporate level strategy

2) Attain a competitive advantage within an industry - How we compete?

Business level strategy

Levels of Strategic Management


Answers the question “Where?”


Answers the question

“How?” “How?”“How?”

HP’s 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?

HP’s Business Strategy


HP Services



Financial Services

How are we going to compete against Dell?

How are we going to compete against Sun Microsystems?

Xerox?Cannon?

HP’s Business Strategy


HP Services



Financial Services

Profits are won and lost at the business level!!

Two Models of Profitability

I/O Model (Industrial/Organizational Economics Model)

Resource Based View of the Firm

I/O Model

General EnvironmentIndustry EnvironmentCompetitive Environment

Strategy&

Performance

3 Assumptions1) external environment imposes pressures/constraints2) firms within an industry possess similar resources3) resources are highly mobile

Therefore, firms must identify attractive segments withinan industry and acquire skills/resources to achievesuperior profitability

It’s about finding the right “place” to compete.

General EnvironmentIndustry EnvironmentCompetitive Environment

Resource Based View

The Firm’s Resources &Capabilities

Strategy&

Performance

3 assumptions1) internal environment critical to strategic action2) firms are bundles of unique resources3) resources may not be mobile across firms

Therefore, firms must develop the skill and resources to take advantage of opportunities in their industries

It’s about finding the right “way” to compete.

Generic Strategies

Broadly speaking, only 2 “ways” to compete• Differentiation• Low Cost

Generic Strategies

Broadly speaking, only 2 “ways” to compete• Differentiation• Low Cost

If you aren’t different, what are you?If you don’t have low costs, what are you?

What is Strategy?

Strategy is not doing similar activities better than your rivals – that’s operational effectiveness• continual improvement not a

sustainable advantage• industry-wide cost reductions do not

lead to increased profitability• examples: PCs, automobiles, airlines

What is Strategy?

1) Strategy is performing different activities or performing similar activities in a different way

• Who sells the most toilet paper in the U.S?• 1 billion rolls

• Who is the country’s largest retailer of wine?

• Who is the country’s third largest grocer?• Where can you buy Dom Perignon for $90,

$11,000 crystal vases, 42-plasma screen TVs for $3,000, and live Maine lobsters?

What is Strategy?

1) Strategy is performing different activities or performing similar activities in a different way

Strategy is about positioninga) Variety-based positioning

• offering a unique choice of goods/services - Chic-fil-a, GameStop

b) Needs-based positioning• serving most/all of a particular group of

customers’ needs - Babies R Usc) Access-based positioning

• serving a set of customers that require unique access – Kinkos, Movie Gallery, Superette

What is Strategy?

2) Strategy is about choosing a position which requires tradeoffs, choosing what not to do• without tradeoffs, all firms would imitate

vs.

vs. vs. vs.

http://images.google.com/imgres?imgurl=http://www.beactivebefit.com/exec/beactive_slc/images/partners/PAPA%2520MURPHYS.JPG&imgrefurl=http://www.beactivebefit.com/exec/beactive_slc/ptr_papaMurphys.cfm%3FpublicationID%3D175&h=88&w=288&sz=13&tbnid=9rsBGADyly8J:&tbnh=33&tbnw=110&hl=en&start=21&prev=/images%3Fq%3Dpapa%2Bmurphys%26start%3D20%26svnum%3D10%26hl%3Den%26lr%3D%26rls%3DGGLG,GGLG:2005-37,GGLG:en%26sa%3DN

Time Magazine

• So why haven't American, United, US Airways and the three other full-service carriers, which lost $11 billion last year and stand to lose an additional $5 billion this year, followed the lead of the profitable discounters by cutting costs and fares? Because that's not the way their business works. They have made, and lost, their money by providing the frequent departures, quick connections, spacious seats and other amenities that have been demanded by business flyers and charging them dearly for that service — more than five times the cost of a discount fare.

• HARD TO STRADDLE AND REPOSITION!

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

What is Strategy?

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

Quick Turns

No meals

Short hauls

Standard Fleet

No baggagetransfers

Low Fares

No seats

Lean ground crews

Secondary Airports

Quick Turns

No meals

Short hauls

Standard Fleet

No baggagetransfers

Low Fares

No seats

Lean ground crews

Secondary Airports

No baggagetransfers

Low Fares

Secondary Airports

Quick Turns

No meals

No baggagetransfers

Quick Turns

No meals

Short hauls

Standard Fleet

No baggagetransfers

Low Fares

No seats

Lean ground crews

Secondary Airports

No baggagetransfers

Low Fares

Secondary Airports

Quick Turns

No meals

No baggagetransfers

How can Delta copy that?What about Jet Blue?

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

What is Strategy?

4) The desire to grow is most threatening to an effective strategy

What is Strategy?

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

Growth needs to be deeper, not broader

What do Good Strategies Have in Common?

Consistent, long-termgoals and objectives



Reflects and understandingof the environment




Takes resources into consideration





Effectivelyimplemented





Effectivelyimplemented

StrategicEffectiveness

(fit)

Mission & Vision

• Today vs. tomorrow • fundamental purpose which sets the firm apart

from other firms of its type• Based on several fundamental beliefs

• product, service, customer, market, geographic domain

• customer need• growth, profitability - outcome, not a goal• management philosophy, self-concept

and values

Don’t offer me thingsDon’t offer me shoes Offer me comfort for my feet & the pleasure of walkingDon’t offer me clothes Offer me fashion, style, or an certain imageDon’t offer me books Offer me hours of escape & the benefit of

knowledgeDon’t offer me furniture Offer me comfort and a peaceful place to loungeDon’t offer me things Offer me ideas, emotions, ambience, feelings,

benefits

• (Our) vision is to dominate the global foodservice business industry. Global dominance means setting the performance standards for customer satisfaction while increasing market share and profitability through our Convenience, Value and Execution Strategies.

• (Our) vision is to dominate the global toothpick industry. Global dominance means setting the performance standards for customer satisfaction while increasing market share and profitability through our Convenience, Value and Execution Strategies.

• Our mission is to provide a customer a means of moving people and things up, down, sideways over short distances with higher reliability than any similar enterprise in the world.

• One vision drives everything we do: A computer on every desk and in every home using great software as an empowering tool

• Our business is renting cars. Our mission is total customer satisfaction.

• Our business is leasing camels. Our mission is to totally alienate all of our customers.

• To be the premier organization in nurturing and enriching the bond between people and animals

http://www.petsmart.com/ps/main.jsp?ASSORTMENT%3C%3East_id=2534374302023687&bmUID=1127416264197

• We supply the computing industry with chips, boards, systems, and software. Our products are used as “building blocks” to create advanced computing systems for PC users. Our mission is to be the preeminent building block supplier to the new computing industry worldwide.

• To be the leading supplier of PCs and PC servers in all customer segments.

Objectives

• Turns mission into performance outcomes• Organizations produce what is measured• Strategic or financial, long or short term• Keep in mind

what will the industry/competition allowwhat will it take to succeeddoes this objective support what we are trying to do

6 Characteristics of a Good Objective


2) Measurable


• U SMART• Understandable• Stretching• Measurable• Agreeable• Realistic• Timebound

Objectives

• To be one of the top three banking companies in terms of market share in all significant markets we serve.

• To provide shareholders a secure investment with a superior return.

• To be the low-cost producer of aluminum and to outperform the average ROE of the Standard and Poor’s industrial stock index.

• To achieve 100% total customer satisfaction… everyday…in every restaurant…for every customer

• To be the industry's innovative leader• 30% of the company’ annual sales must come from

products fewer than four years old

Objectives

• Increase sales growth 6% to 8% and accelerate core earning growth from 13% to 15% per share in each of the next five years

• Capitalize on e-commerce• Develop a smart card strategy that will help us

play a key role in shaping on-line payments• Reduce greenhouse gasses by 10% by 2010• We want to operate 6,000 stores by 2010• Cut corporate overhead costs by $30 million per

year

So, strategy is sort of like

playing chess

… except youcan’t see the whole board

..and you are playing against

an unknownnumber

of competitors

Robin Hood Does Robin Hood have a mission? What INTERNAL issues/problems is he facing? What EXTERNAL...

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