BA 469 Strategic Management and Business Policy

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BA 469Strategic Management and Business Policy
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Introductions

• Name
• Major
• What do you want/hope/wish to be doing 5 years
  from now and where?

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Focus General Management of an organization

• An organization is a system of consciously
  coordinated activities or forces of two or more
  persons.

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General management perspective

• Strategic decisions strategy comes from
  strategos, used in ancient times to refer to
  administrator of conquered reqions, therefore
  whole enterprise
• Beyond functional areas for example, a companys
  policy on what type of customers to go after
  affects marketing, production, finance, etc.
• Long-term implications

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Learning Outcomes

• Knowledge of strategic management tools and
  concepts
• Diagnose strategic situations (as described in
  cases) using these tools and concepts
• Manage a business in a simulated computer
  environment.
• Contribute to class and small group discussions

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To Measure Achievement of Learning Outcomes

• Quizzes - 400 points
• Will be based on concepts covered in chapter
  assigned for the week and readings, but may refer
  to previously assigned cases, etc.
• 7-8 quizzes, short essay questions
• Case briefs (4) 300 points
• Simulation game 225 points
• Participation 75 points

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Simulation Game

• Beaver Republic Game
• Two reports 200 points
• Proposal to Invest (PIN) 100 points
• Post Audit Report (PAR) 100 points
• Just playing the game 25 points
• If the game is suspended, a case report will be
  substituted for PAR. You keep the 25 points for
  just trying to play.

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Requirements

• Case briefs and reports are due beginning of
  class (see schedule)
• Chapter outlines will be posted, and will be used
  as background to lecture and discussion.
• Deliverables for Simulation Game
• PIN
• PAR
• Decisions

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Requirements

• Read Chapters and Cases before coming to class
• Read assigned articles (if this becomes
  necessary)
• BECOME AN ACTIVE MEMBER OF THE CLASS
• House rules
• Informal, but remember why we are in class
• Keep distractions to a minimum
• Speak up (clarification, disagreement, etc.)

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The Strategic Management Process

• Chapter 1

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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

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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.

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Why do some organizations succeed while others
fail?

• Depends on 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

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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

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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

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Industry Structure and Profitability

• Return on Invested Capital in Selected
  Industries, 1997-2001

Data Source Value Line Investment Survey
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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

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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,

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Levels of Strategic Management
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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?

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Reality CheckWhat 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

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Reality CheckCan 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

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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)

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Cognitive Biases

• Prior hypothesis - - rules of thumb, deeply held
  beliefs
• Escalating commitments
• Reasoning by analogy
• Representativeness

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Strategic Management Process

• Not an exact science
• Dealing with
• Uncertainty
• Scope
• Personal judgment
• Focus on process

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ExercisesStrategy 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.