C1

MGT 682MGT 682

Ray Van NessRay Van Ness

Welcome to Strategic Management

Outline for January 19, 2011Outline for January 19, 2011

(1) Introductions

(2) Overview of YourYour course & Brief Lecture – Critical Thinking and Thoughts about Strategy

(3) Course purposes and objectives

(4) Formation of “6” Teams, election of a Team leaders, Team Exercise (formation of team constitution)

(5) Team Assignments: (& distribution of Syllabus)

> Strategic Concepts

> Case Studies

(6) Movie: “Strategy Should Continuously Evolve” 4-minutes

(7) Closing Remarks by Professor

(8) Brief meeting with Team 6 and Team 1

(1) Introductions

(2) Overview of YourYour course & Brief Lecture – Critical Thinking and Thoughts about Strategy

(3) Course purposes and objectives

(4) Formation of “6” Teams, election of a Team leaders, Team Exercise (formation of team constitution)

(5) Team Assignments: (& distribution of Syllabus)

> Strategic Concepts

> Case Studies

(6) Movie: “Strategy Should Continuously Evolve” 4-minutes

(7) Closing Remarks by Professor

(8) Brief meeting with Team 6 and Team 1

20+ years20+ years in business followed by 27+ years27+ years of teaching: • began as general accountant then…

• Traveling Internal Auditor for International shoe manufacturing Corp.

• Cost Accountant

• Controller then entered finance and became …

• Vice President of Finance, elected to board of directors, later elected as Executive VP, then President & CEO, then

• Branched into business acquisitions (entrepreneurship)

• Later, retired, smiled, and decided to carve a new career as a professor.

… the prism

(1) My background…(1) My background…

• Experiential – Opinions – Discussions – Creative Tension

• Strategic Concepts presented by you

• Case Studies of Companies presented by you

• Strategic Debates by you – Peer to Peer learning

This course will be conducted as a This course will be conducted as a Professional Development WorkshopProfessional Development Workshop

(2) Overview:(2) Overview:

www.albany.edu/faculty/vanness

(3) Course Purposes and Objectives(3) Course Purposes and Objectives

• Create a business-like think tankthink tank to identify problems and opportunities

• To provide an opportunity to imagine creative solutionsimagine creative solutions for solving problems and/or capitalizing on opportunities

• To provide an opportunity to experience an environment of differences of opinion and observe how tensions from this environment can be healthy and creative (Creative TensionCreative Tension)

• To introduce various concepts and analytical frameworks to add toadd to the portfolio of business knowledge, skills, and abilitiesportfolio of business knowledge, skills, and abilities

• To support and encourage peer to peer learning

• To encourage and support the sharing and then clarifying (after feedback) personal opinions, thoughts, concerns, and ideas (Enhanced thinking and effective expression - Enhanced thinking and effective expression - debatingdebating)

(4) Formation of 6 Teams(4) Formation of 6 Teams

The Professor will divide the class into 6 distinct Teams

Teams will elect (3) leaders for their team (President, VP, & Secretary)

(Team leaders earn extra credit)

(5) Team Assignments (see syllabus)(5) Team Assignments (see syllabus)

Class Date 1st segment of Class Session Teams Ref 2nd segment of Class Session Team Ref

1 1/19

[a] Introductions, [b] Course Overview, [c] Assignments, & [d] Strategic Theory Everyone Discussion

2 1/26

Crafting & Executing Strategy Team 6 Ch 2 Case Study -- Whole Foods Market Team 1 Case 1, pg C-2

3 2/2 External Environment Team 5 Ch 3 Case Study -- Nucor vs Low-Cost Imports Team 2 Case 10, pg C-193

4 2/9 Resources & Competitive Position Team 4 Ch 4 Case Study -- Netflix vs Blockbuster Team 3 Case 5, pg C-98

5 2/16 Generic Competitive Strategies Team 3 Ch 5 Case Study -- Rogers' Chocolates Team 6 Case 9, pg C-177

6 3/2 Strategies & Synergistic choices Team 2 Ch 6 Case Study -- Corona Beer / & QUIZ 1 Team 5 Case 13, pg C-248

7 3/9 Competing in Foreign Markets Team 1 Ch 7 Diversification Strategies Teams 2 & 5 Ch 8

8 3/16 Strategy, Ethics, & Social Responsibility Teams 3 & 6 Ch 9 Case Study -- Gallo Winery Team 4 Case 25, pg C-462

9 3/23 Meet in Individual teams Prepare for Debate Meet in Library

10 3/30 Strategy Debate #1: Teams 1 vs 6; 3 vs 5; and 2 vs 4 All Teams

11 4/6 Strategic Execution Teams 1 & 4 Ch 10 Case Study -- Loblaw Companies Ltd. 1, 3, & 5 Case 16, p C-300

12 4/13 Guest Lecturer: My Accounting Life Ch 12 Case Study -- Southwest Airlines & QUIZ 2 2, 4, & 6 Case 23, p C-401

13 4/27 Strategy Debate #2:

Teams

1 vs 5; 3 vs 2; and 6 vs 4 All Teams Course Finale

(6) Critical Thinking(6) Critical Thinking

Revealing words: Revealing words: • cannot vs. will notcannot vs. will not• need vs. wantneed vs. want• impossible vs. impossible vs. difficultdifficult• problem vs. problem vs. symptomsymptom

… is a prerequisite to thinking strategically.

Thinking Strategically:The Three Big Strategic Questions

1. What’s the company’s present situation?

2. Where does the company need to go from here?

3. How should it get there?

A company’s answer to “How it will we get there?” is

its strategystrategy

Strategy…Strategy…

Consists of Management’s competitive movescompetitive moves and business approachesbusiness approaches

Combines planning, decision-makingplanning, decision-making,, and actionsactions

Strategies can be:

OFFENSIVEOFFENSIVE (primary goal: grow market share; pressure competitors)

CONSERVATIVECONSERVATIVE (primary goal: avoid risks; minimize confrontations with strong competitors)

Strategy is reflected in “actions rather than words”

The Hows ThatThe Hows That

Define a Firm's StrategyDefine a Firm's Strategy • How to grow the business

• How to please customers

• How to outcompete rivals

• How to manage each functionalpiece of the business (R&D, production, marketing, HR, finance, and so on)

• How to respond to changing market conditions

• How to achieve targeted levels of performance

Strategy is HOW

to . . .

Copying competitive moves of other Copying competitive moves of other

successful companies rarely works!successful companies rarely works!

An Effective Strategy leads to SustainableSustainable Competitive Advantage.

Four Strategic Approaches toBuilding Sustainable Competitive Advantage

Successful firms develop bases for competitive Successful firms develop bases for competitive advantageadvantage

1. Cost leadership (Advantage: Known for low prices)(Wal-Mart)

2. Differentiation (Advantage: Distinctive, desirable features to product or service)

(Harley-Davidson)

3. Narrow market niche (Advantage: able to satisfy the need and desires of customers within a micro market)

(Antique Car parts companies)

4. Developing superior expertise and resources (Advantage: able to make it difficult for competitors to replicate products or services)

(Microsoft)

Evolution of strategies is powered by:

Changes may be necessary to react to

– Shifting market conditions

– Technological breakthroughs

– Fresh moves of competitors

– Evolving customer preferences

– Emerging market opportunities

– New ideas to improve strategy

– Crisis situations

Strategies are always works in progress…Strategies are always works in progress…

A Company’s strategy is partly Proactive and Partly Reactive

Strategies are dynamic and planners perpetually ask: Strategies are dynamic and planners perpetually ask:

> Is our current path ineffective?> Is our current path ineffective?> Should we become more aggressive and/or innovative (proactive)?> Should we become more aggressive and/or innovative (proactive)?> Should we become more flexible and adaptive to changing market and/or > Should we become more flexible and adaptive to changing market and/or competitive realities? competitive realities?

RememberRemember

No two companies are exactly alikeNo two companies are exactly alike

No two companies are totally No two companies are totally differentdifferent

Financial Common sizingFinancial Common sizing enables enables the the comparison of performance comparison of performance levels of levels of companies of various sizes – companies of various sizes – large large companies can be compared companies can be compared to small to small companiescompanies Strategic common sizingStrategic common sizing enables enables the the assessment of strategic choices. assessment of strategic choices.

Companies with different generic Companies with different generic strategies can be compared to strategies can be compared to

each each other on the basis of other on the basis of strategic choicestrategic choice

Common sizingCommon sizing

Financial Common sizing Financial Common sizing is a process of is a process of converting balance sheets, income converting balance sheets, income

statements, and other financial statements, and other financial statements statements to percentages. to percentages.

Strategic common sizing Strategic common sizing is a process of is a process of comparing common key financial comparing common key financial

indicators indicators of companies with different of companies with different generic generic strategies. strategies. This addresses the This addresses the question of question of how various strategies can how various strategies can affect a firm’s affect a firm’s financial performance. financial performance.

A business chooses the industry(ies) in which to continue competing and this is part of their ongoing macro-strategy.

Different industries have varying influence on corporate financial performance… Some industries offer more growth opportunities than others.

Therefore, comparing performance of firms in different industries can provide valuable information about key dimensions of a firm’s macro-strategy. If financial performance is unsatisfactory to stakeholders, the firm should revisit its macro-strategy.

(7) Out of Class assignment(7) Out of Class assignmentTeam 6:Team 6: You will be presenting Chapter 2: Crafting & Executing Strategy. Power Points are on the course website to help you with your planning. Select a MAXIMUM of 20 slides for your presentation.

Team 1:Team 1: You will be presenting Case 1: Whole Foods Market. You will provide an overview of the case and then answer the following questions:

(a) What are the chief elements of the strategy that Whole Foods Market is pursuing?

(b) Do you think John Mackey has a good strategic vision for Whole Foods?

(c) How well is Whole Foods Market performing financially?

(d) Do you approve of the decision to acquire Wild Oats Market? What are the pros and cons?

(e) Were John Mackey’s Internet postings unethical or in any way inappropriate?

Teams 2, 3, 4, & 5:Teams 2, 3, 4, & 5: Read Chapter 2 in the text AND read Case 1 on page C-2 of the text

(8) Team Activity – Case 8(8) Team Activity – Case 8

(1)Brief Movie (2) Team Assignments & Team Exercise