BA 469 Strategic Management and Business Policy
Focus: General Management of an organization
An organization is a system of consciously coordinated activities or forces of two or more persons.
Learning Outcomes
Knowledge of strategic management tools and concepts Diagnose strategic situations (as described in cases) using these tools and concepts Contribute to class and small group discussions of these tools, concepts, and the strategic situations
To Measure Achievement of Learning Outcomes
Quizzes 40% of total grade
Usually when chapters are assigned Total of 8: 2 required, 5 of other 6 counted
Case reports (2) and case briefs (4) - 50% of total grade Participation in class discussions 10% of total grade
Requirements
Read Chapters and Cases (when no report is due) before coming to class Read assigned articles (will be posted in public folder) BECOME AN ACTIVE MEMBER OF THE CLASS
Requirements
Case briefs and reports are due beginning of class (see schedule) Chapter outlines will be posted, but may be used as background to lecture. Reading material will be added to create awareness of external issues affecting business.
Case Reports
State the major problem or issue Justification based on
Case facts As interpreted through an appropriate application of tools and concepts
Recommendations that
Address the problem or issue Are based on realities faced by organization
Justification for recommendation Note: do not summarize or merely restate case information.
The Strategic Management Process
Chapter 1
The Strategic Management Process
Corporate mission and goal Analyze external environment - - identify opportunities and threats Analyze internal environment - - identify strengths and weaknesses Formulate strategy Implement strategy
Strategic Management and You
Where do you intend to be 5 years from now?
At least most of you had some idea
Product of an internal assessment what are my strengths, preferences,etc. Most students, non-students for that matter usually do not assess external environment Strategy university degree (some will talk about a masters degree), funding, etc.
Why do some organizations succeed while others fail?
Depends of strategy or set of
Actions managers take to achieve one or more of an organizations goals
Strategic management process
The process by which managers choose a set of strategies that will allow a company to achieve superior performance
Superior Performance and Competitive Advantage
Profitability
A measure of a companys return on its invested capital
Superior performance
One companys profitability relative to that of other companies in the same or similar business or industry
Firm-Specific Performance and Profitability
Competitive advantage
A firms profitability is greater than the average profitability for all firms in its industry
Sustained competitive advantage
A firm maintains competitive advantage for a number of years
Business model
Managements model of how strategy will allow the company to gain competitive advantage and achieve superior profitability
Industry Structure and Profitability
Return on Invested Capital in Selected Industries, 1997-2001
Data Source: Value Line Investment Survey
Performance in Nonprofit Enterprises
Government agencies, universities, charities
Are not in business to make a profit Should use their resources efficiently and effectively Set performance goals unique to the organization Set strategies to achieve goals and compete with other nonprofits for scarce resources
Strategic Managers
General managers
Responsible for overall company performance or divisional performance
Functional managers
Responsible for supervising a particular task or operation Example head of accounting or marketing, chief financial officer,
Levels of Strategic Management
Key Question for Each Level
Corporate Strategy what business(es) should the organization be in? Business Strategy how should the organization compete? Functional Strategy how should the organizations resources be best employed to support business strategy?
Mission
What is our business? Who are we as an organization in relation to . . . (Fig 1.4, p.12)
Customer Needs met How satisfied
Values
What should guide how we conduct our business? Go about our work? Broad, all encompassing rules, for example
Integrity Service Empowering
Goals (and Objectives)
Precise and measurable
not always easy to achieve
Address crucial issue(s)
may be targeted at a particular priority
Challenging but realistic - - stretch factor Specify a time period - ok to set targets for a distant past, but need immediate targets to measure progress
External Analysis
Industry National International and Global Interaction between industry and the national and global environment
Internal Analysis
Resources
tangible intangible
Capabilities
Strategy Formulation
Addresses outcome of external and internal analysis Intent, a plan as to what our organization will be Defines functional areas within the organization to focus on
Implementation
How do we go about pursuing our intent? Who - - people How - - who does what, structure, etc. With what - - resources required
Reality Check: What do managers do?
Phone calls, meetings, run around from place to place . . Minor decisions -- Mr. so and so gets to use the office in the basement Major decisions - - lets launch, abort All in a days work - - focus
Reality Check: Can managers predict the future?
National economy - - Where will interest rates be next month? Will economic growth be 2.5% or 2.75%? Does it matter? Industry performance Actions of competition Actual capabilities and performance of internal resources, i.e. your people
Budget Variances:
Provides idea of how targets can be off Revenues volume and price per unit variance
Volume - - predict actual units sold Price - - anticipate price in the next year
Cost volume and cost per unit variance
estimate unit cost of production
labor, raw materials, machine time, etc.
administration or overhead component
Emergent vis Intended Strategy
Honda story is a classic; also consider Toys R Us Scenario planning to cover possibilities, find, if possible, unknown unknowns Listen to field people Balance commitment to goal and realities of a changing situation Serendipity (unintended, accidental, sometimes wonderful discoveries)
Cognitive Biases
Prior hypothesis - - rules of thumb, deeply held beliefs Escalating commitments Reasoning by analogy Representativeness
Strategic Management Process
Not an exact science Dealing with
Uncertainty Scope
Personal judgment Focus on process
Exercises Strategy in Action
1.1 and 1.2: Microsoft we can assume that some sort of planning went into Microsofts original Internet strategy prior to 1994. How could they miss the Internet then? 1.4: Duke Energy explain Dukes planning process using Scenarios.
