BUS 189 STRATEGIC MANAGEMENT

HILL & JONES CHAPTER 1, 10TH EDITION DR. MARK FRUIN JAN. 29 & 30, 2013

WHY DO SOME FIRMS SUCCEED WHILE OTHERS FAIL?

STRATEGIES HAVE MAJOR IMPACTS ON PERFORMANCE (THE HYPOTHESIS; WHAT IS THIS?) STRATEGY IS A SET OF RELATED ACTIONS THAT MANAGERS TAKE TO INCREASE THEIR COMPANYS PERFORMANCE (p. 3)
STRATEGIC LEADERSHIP (p. 3) INCLUDES
STRATEGY FORMULATION STRATEGY IMPLEMENTATION STRATEGY ASSESSMENT (not on p. 3) STRATEGY RE-FORMULATION & IMPLEMENTATION (not p.3)

IF A FIRMS STRATEGIES RESULT IN SUPERIOR PERFORMANCE, IT IS SAID TO HAVE A COMPETITIVE ADVANTAGE

TERMS
STRATEGIC LEADERSHIP STRATEGY-MAKING PROCESS STRATEGY FORMULATION STRATEGY IMPLEMENTATION STRATEGY MEASURING, MONITORING & MANAGEMENT

MEASURING PERFORMANCE
MAXIMIZING SHAREHOLDER VALUE
FIRST, SHAREHOLDERS PROVIDE RISK CAPITAL; MANAGERS PURSUE STRATEGIES SECOND, SHAREHOLDERS ARE OWNERS

MEASURING PROFITABILITY
RETURN ON INVESTED CAPITAL SHORT-TERM OR LONG-TERM?

PROFIT GROWTH
INCREASE IN NET PROFITS OVER TIME

PROFITABILITY
PROFITABILITY IS THE MOST COMMON MEASURE OF STRATEGIC SUCCESS PROFITABILITY MEASURES RETURNS ON INVESTED CAPITAL PROFIT USUALLY MEANS BEFORE-TAX PROFITS CAPITAL = STOCKHOLDERS EQUITY + DEBT (LIABILITIES)

 SUSTAINABLE COMPETITIVE ADVANTAGE

VRIND MODEL
VALUABLE RARE HARD TO IMITATE/INIMITABLE DURABLE

MORE TERMS

STRATEGY = HOW TO ENABLE A BUS MODEL

HOW TO CREATE AN ORGANIZATION ABLE TO DO THINGS WELL, REPEATEDLY AND OFTEN?

BUSINESS MODEL
HOW DO WE MAKE MONEY?
SELECT CUSTOMERS PRODUCT OFFERINGS CREATE VALUE ORGANIZE ACTIVITIES CONFIGURE RESOURCES

CHOICE OF INDUSTRY
IN ADDITION TO BUSINESS MODEL AND ASSOCIATED STRATEGIES, CHOICE OF INDUSTRY IS HUGE
INDUSTRIES VARY WIDELY IN TERMS OF GROWTH RATES & AVERAGE PROFITS A FIRMS SUCCESS DEPENDS ON
IN WHICH INDUSTRY/IES DOES IT COMPETE? WHICH STRATEGIES IT PURSUES

 FUNCTIONAL LEVEL BUSINESS LEVEL

STRATEGY STACK = LEVEL OF STRATEGIC MANAGEMENT

BUSINESS FUNCTIONS COMPANYWIDE DIVISIONAL MANAGEMENT IN MULTIDIVISIONAL FIRM BUS. STRATEGY = INDUSTRY, PRODUCT & PLATFORM STRATEGY

CORPORATE LEVEL
CEO, BOARDS, AND CORPORATE STAFF MANAGING DIFFERENT BUSINESSES WITHIN SAME FIRM; SHARING RESOURCES

STRATEGY-MAKING PROCESS
FORMAL PROCESS HAS 5 STEPS
SELECT FIRM MISSION & GOALS ANALYZE EXTERNAL ENVIRONMENT ANALYZE INTERNAL ENVRIRONMENT SELECT STRATEGIES BASED ON ANALYSES IMPLEMENT STRATEGIES SIMILAR BUT NOT IDENTICAL TO SWOT (COMING UP IN A FEW SLIDES)

VISION, MISSION & GOALS

VISION IS LONG-TERM MISSION IS MID-TERM GOALS ARE SHORT-TERM RECOGNIZE THAT THESE (VISION, MISSION & GOALS) ARE INFLUENCED BY
EXTERNAL ENVIRONMENT (NATIONAL CULTURE & INSTITUTIONS) CORPORATE GOVERNANCE MODELS INTERNAL ENVIRONMENT (ORG. CULTURE)

GOALS
PRECISE & MEASURABLE ADDRESS KEY/CRITICAL ISSUES CHALLENGING BUT REALISTIC SPECIFY TIME PERIODS WITHIN WHICH GOALS ARE REALIZED OR, AT LEAST, MEASURED STRETCH GOALS AS OPPOSED TO GOALS EASILY REALIZED W/O MUCH EFFORT

SWOT ANALYSIS
STRENGTHS WEAKNESSES OPPORTUNITIES STRENGTHS GIVES DIRECTION TO SELECTION & IMPLEMENTATION OF STRATEGIES

STRATEGY AS EMERGENT PROCESS

STRATEGIC PLANNING & IMPLEMENTATION ARE ONGOING, NEVER ENDING UNCERTAINTY MEANS FLEXIBILITY & ADAPTABILITY ARE KEY LOWER LEVEL ORGANIZATIONAL MEMBERS, MORE NUMEROUS THAN ANY, ARE THE KEY TO STRATEGIC SUCCESS
AUTONOMOUS ACTIONS UNPLANNED RESPONSES TO UNFORESEEN CIRCUMSTANCES HONDA & FORTUITOUS CIRCUMSTANCES (LUCK), 24-25

TO COPE WITH UNCERTAINTY

STRATEGY AS SCENARIO PLANNING STRATEGY AND DECENTRALIZATION
CHAN KIM & RENEE MAUBORGNES PROCEDURAL JUSTICE (DISTRIBUTIVE JUSTICE)

STRATEGIC INTENT
PRAHALAD AND HAMELS NOTION AMBITIOUS GOALS HELD BY THE ORGANIZATIONAL MAJORITY

STRATEGIC DECISION MAKING

COGNITIVE BIASES
PRIOR HYPOTHESIS BIAS ESCALATING COMMITMENT REASONING BY ANALOGY REPRESENTATIVENESS ILLUSION OF CONTROL (HUBRIS)

GROUPTHINK
DEVILS ADVOCACY DIALECTIC INQUIRY ANALOGOUS PAST INITIATIVES

STRATEGIC LEADERSHIP
VISION, ELOQUENCE & CONSISTENCY ARTICULATION OF BUSINESS MODEL COMMITMENT BEING WELL INFORMED WILLINGNESS TO DELEGATE/EMPOWER ASTUTE USE OF POWER (OVER RESOURCES) EMOTIONAL INTELLIGENCE SELF-AWARE, SELF-REGULATE, EMPATHY, SOCIAL SKILLS, MOTIVATION BEYOND MONEY