WCOB

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WCOB

  1. 1. WCOB 3016: BUSINESS STRATEGY AND PLANNING – THEORY AND PRACTICE (6 HOURS) Integrative study of the managerial decisions that ensure the long-term effectiveness of the organization; introduces students to an understanding of strategic competitiveness and the way in which business strategy in large and small decisions is formulated and implemented; uses the perspective of top managers to outline the issues to be addressed by strategic decision-makers; uses a combination of theoretical and experiential approaches to designing business plans for key decisions, implementing these decisions, and monitoring their short-term and long-term effects; experiential components of the course (using about half of the course) may concern, for example, developing a business plan, starting and running a business, running a business simulation, or solving a business problem. CATALOG DESCRIPTION WCOB 3016 Business Strategy and Planning Integrative study of the managerial decisions; introduces students to an understanding of strategic competitiveness and the way in which business strategy is formulated and implemented; uses a combination of theoretical and experiential approaches to designing business plans for key decisions, implementing these decisions, and monitoring their effects. DESIGN GUIDELINES • The materials will be arranged keeping in mind the nature and content of decisions that ensure the long-term effectiveness of organizations. This six-hour course will introduce organizational actions and issues from the perspective of upper level managers, and will be taught in the Fall and Spring semesters of the Junior Year. About half the six-hour course is theoretically oriented, and the other half consists primarily of experiential content that provides practical experience about the topics covered in the theoretical part. • The theory and practicum parts are described separately in the following pages for ease of presentation, but the expectation is that they will be covered in an integrated form throughout the six-hour course. • This outline is based on the premise that the Business Strategy and Planning course needs to include instruction on (among others) developing and evaluating business plans for a variety of situations commonly encountered in the business world. Towards this end, the course focuses on: o Integrating knowledge pertaining to different functional domains o Adopting a holistic perspective on an organization through the use of case studies and experiential exercises o Highlighting the dynamic nature of business competition
  2. 2. o Outlining the interrelationship between a firm’s strategy and its structure and control systems • This course will use business plans as a primary teaching and learning tool. • Issues relating to International Strategy and Business Ethics will be integrated throughout the course. • This course will draw on understanding and analyzing balance sheets, income statements, and cash flow statements from a strategic perspective. • This course will also actively integrate knowledge about the real business world – the key decisions facing organizations today and the manner in which they are responding to those issues. Business plans will be used as major tools in this process. PREREQUISITES A business student must complete the pre-business requirements before enrolling for this course. Markets and Consumers, Human Resources, Financial Resources, and Production and Delivery of Goods and Services must each be completed with a grade of “C” or better. This course is restricted to Walton College students. TOPICAL OUTLINE - THEORETICAL AND CONCEPTUAL CONTENT I. Introduction to Strategy, Strategists, and Stakeholders This topic introduces students to an understanding of strategic competitiveness and the process by which strategy is formulated. It introduces students to the key concepts that are relevant in strategic management: strategic competitiveness, above average returns, stakeholders, etc. This section introduces students to key terms that are essential in order to understand the topics introduced subsequently. It also exposes them to key trends that characterize today’s business environments: globalization, the advent of information technology, high velocity competition, deregulation, etc. Students should, at the very minimum, be exposed to the Resource-Based and the Industrial Organizational Models. a. Strategy and strategic objectives b. Understanding the processes of strategy formulation and the role of different organizational levels in formulating strategy c. Stakeholders d. Key trends in current business environments e. Vision and mission statements f. Basic strategy models
  3. 3. Learning objectives: • Strategy and strategic objectives – Identify what is strategy, competitive advantage and above normal returns. • Strategy process and locus. Identify where strategy is formulated in the organization, the processes by which organizations create and implement strategies, and the role of different hierarchical and functional levels in strategy formulation. • Identify key trends in current business environments – the effect of factors such as globalization, technological advancement, deregulation, etc., on organizational performance. • Stakeholders – List the different types of stakeholders, the pressures they exert on strategists, and the ethical issues faced by strategy makers. II. Analyzing External and Industry Environment This section explores the first of the two widely accepted models of strategy formulation – the Industrial Organizational Mode – in detail. It defines the notion of a firm’s industry and its environment, and explains the manner in which the environment is scanned for potential threats and opportunities. It introduces students to the internal environment of an industry and the manner in which it is studied. a. Definition/dynamic nature of a firm’s industry b. Components of external environment c. Industry analysis d. Strategic groups Learning Objectives • Definition/dynamic nature of a firm’s industry – Describe what an industry is and why industry boundaries are constantly changing. • Components of external environment – List the different segments of an industry’s environment and how strategist should scan the segments. • Industry analysis – Describe and apply Porter’s 5 Forces Model of Industry Analysis. • Strategic groups – Describe strategic groups and why are they are important and relevant to strategy makers. • Contrast the strengths and weaknesses of the IO Model. III. Analyzing Internal Environment and Developing Organizational Capabilities This section introduces students to the second model of strategy formulation – The Resource Based Model of Strategy Formulation. This model is presented as an alternative to the IO model and the relative strengths and weaknesses of the two models are explored. This is one of the most important sections of the course as several strategic actions that are taught subsequently in the course draw on key aspects of the Resource Based Model. a. Resource Based View – Resources b. Capabilities, core competencies and competitive advantage c. Temporal nature of core competencies d. Strategy formulation using the RB model e. Value chain analysis
  4. 4. Learning Objectives • Resource Based View. Resources. Capabilities. Core Competencies – Define resources; identify type of resources; importance of resources, and the relationship between resources and capabilities. • Capabilities, Core Competencies and Competitive Advantage – List the criteria of rare, valuable, inimitable and non-substitutable resources; identify the relationship between core competencies and competitive advantage. • Temporal Nature of Core Competencies –Identify the reasons why core competencies lose value over time • Strategy Formulation using the RB Model – Enumerate the key steps in strategy formulation using the RB Model, and contrast the IO and RB Model • Value Chain Analysis – Define value chain, its construction, its value in aiding strategy makers, and the relationship of value-chain analysis to outsourcing IV. Types of Strategies This topic introduces students to the different kinds of strategies that can yield competitive advantage. The primary focus is on strategies derived based on organizational scope and source of competitive advantage. More traditional types such as Miles and Snow’s strategies may also be introduced. While the types of strategies described in this section are rarely adopted in an idealized form, this section provides students with a wide range of strategic responses to issues facing organizations. a. Content of generic strategies b. Implementing generic strategies Learning Objectives • Identify types of generic strategies; describe the importance, strengths and weaknesses of generic strategies • Identify the effects of following different generic strategies on the practices that organizations adopt V. Understanding the Dynamics of Organizational Competition This section moves students away from the content of strategy to the uncertainties encountered during strategy implementation. It introduces a variety of themes related to the dynamics of organizational competition and alerts them to how the outcome of an organization’s strategy depends on the actions of its competitors and its allies. The section draws on several theoretical approaches: it draws on traditional research that looks at first, second, and late mover firms. It draws on the theory of Hypercompetition to describe the typical sequence of strategic actions and counteractions that are adopted at different stages of an industry’s life cycle. And it looks at the processes of gathering information about competitors and the ethical issues involved in such practices. a. Strategic and tactical moves b. First Mover, Second Mover, Late Mover strategies c. Hypercompetitive sequencing d. Predicting competitor moves and countermoves
  5. 5. Learning Objectives • Strategic and tactical moves – Differentiate between the two kinds of moves and identify the appropriateness of each move. • First Mover, Second Mover, Late Mover Strategies. Identify the importance of strategic timing, and compare the advantages and disadvantages of first mover, second mover, and late mover strategies. • Hypercompetitive sequencing – Identify the sequence in which organizations act and react to each other’s moves when engaged in intense competitive rivalry. • Predicting competitor moves and countermoves – Identify the role and sources of competitive intelligence, and the ethical issues involved in competitive intelligence. VI. Evaluating and Measuring Strategies This section deals with the importance and process of establishing and using short- and long- term performance measures that evaluate the implementation of strategies. It discusses pitfalls associated with interpreting ambiguous performance data. It also introduces students to the Balanced Scorecard approach to evaluating organizational performance a. Strategic objectives b. Balanced scorecard approach c. Mid-course evaluations of strategies d. Non-rational escalation of commitment in strategies Learning Objectives • Strategic objectives – Identify the importance of objectives, types of objectives (tangible vs. intangible, financial vs. behavioral, etc.). • Balanced scorecard approach – Define the need for using multiple objectives that evaluate performance on multiple fronts • Non-rational escalation of commitment in strategies – Identify the relevance of non- rational escalation in strategy, types of non-rational escalations, define the actions to avoid non-rational escalation. VII. Corporate Strategy While previous sections have been focused on examining how an organization competes in a given industry, this section introduces students to the challenges of managing organizations that operate multiple business lines. It introduces them to organizational diversification and restructuring, and discusses the challenges and benefits of managing diversified firms and the conditions under which such strategies are appropriate. a. Introduction to diversification, divestment, and restructuring b. Pros and cons of diversification c. Types of diversification d. Diversification and firm performance e. Reasons for divestment Learning Objectives • Introduction to diversification, divestment, and restructuring – Define diversification, divestment, and restructuring and their organizational consequences.
  6. 6. • Compare the pros and cons of diversification, and list the reasons that organizations choose to diversify. • Define the types of diversification and the concepts of vertical and horizontal integration. • Diversification and firm performance. Define the organizational/industrial conditions that determine the success of a diversification strategy • Reasons for divestment: Define the conditions under which organizations choose to divest. Compare the short and long term consequences of divestment. VIII. Strategy Implementation This section examines the conditions that facilitate the successful implementation of organizational strategies. It draws on tradition research on organizational structure, and also focuses on mechanisms to motivate and control managers (including top managers) in organizations. It also focuses on more contemporary issues such as shareholder, board and executive relationships, and the agency problem. a. Organizational structure b. Link between organizational structure and strategy c. Corporate governance Learning Objectives • Define organizational structure and the different types of structures • Define the relationship between structure and strategy • Define agency costs and separation of control and ownership in organizations • Define the role of a board and the importance of board composition. • Identify the contemporary issues in corporate governance: interlocking directorates, insiders vs. outsiders, etc. • Identify the methods of monitoring/controlling top executives – compensation design, behavioral controls, etc. IX. Creating Change in Organizations Creating change in organizations is one of the key challenges faced by strategic managers. The change could be with respect to the strategy of the organization, or with respect to the structure or processes of an organization. This section, explains the different change theories that are currently prevalent in organizations and the factors that can facilitate or inhibit a successful change process. It introduces students to a foremost reality of organizations – the notion that strategy implementation often requires changes that affect the way employees think or behave. Whether an organization will succeed in the long term depends on whether employees are motivated and willing to change existing behaviors to support organizational strategies. a. Introduction to various models of organizational change b. The role of identity and culture in organizational change c. Challenges in creating change Learning Objectives
  7. 7. • Identify various models of organizational change, and describe organizational inertia, different change models, challenges faced by individuals during organizational change, and differences between change models. • Describe the role of identity and culture in organizational change and define characteristics of identity and culture, and describe the relationship of identity and culture and with organizational change. • Identify challenges in creating change, including challenges faced by managers and employees. X. Mergers and Alliances This section builds on recent research on mergers and alliances as organizational tools to achieve strategic advantage. It develops an understanding of why organizations choose to favor mergers/alliances over independent growth. It also explains the challenges faced by managers when they adopt such strategies and looks at how various characteristics such as firm size, industry competitiveness, and organizational culture assist/hamper in the success/failure of such strategies. a. Types of cooperative strategies b. Advantages and disadvantages of cooperative strategies c. Strategic issues involved in cooperative strategies d. Characteristics of successful mergers/acquisitions Learning Objectives • Types of cooperative strategies – Identify the different types of mergers/acquisitions that can occur (e.g. leveraged buyouts, hostile takeovers, etc.) and the short and long term consequences of cooperative strategies. • Compare the advantages and disadvantages of cooperative strategies • Strategic issues involved in cooperative strategies – Identify the key challenges faced by strategic managers engaging in cooperative strategies (e.g. departure of talented employees, integration of processes and technologies, etc.). • Identify the characteristics of successful mergers/acquisitions – governance issues, due diligence/prior research, etc. XI. Strategic Leadership This section focuses on the leadership roles that top executives must perform in order to support organizational strategies. It explains the different types of leadership styles and how each style affects the organization. The section draws on existing leadership theories and focuses on their relevance to organizational strategy formulation and implementation. a. Importance of strategic leadership in designing and implementing strategy b. Leadership styles and their impact on organizations c. Ensuring effective succession in organizations Learning Objectives • Identify the importance of strategic leadership in designing and implementing strategy – Good and bad leaders, why leadership is needed • Define leadership styles and their impact on organizations – different types of leadership styles (e.g. autocratic, transactional, transformational, etc.) and the impact of each style on organizational strategy
  8. 8. • Identify issues in ensuring effective succession in organizations – Executive succession and development XIII. Strategic Management of Human and Social Capital This section deals with some of the key challenges faced by organizations in the twenty-first century – issues related to organizational intellectual capital. It draws on current research on organizational knowledge, social networks, and strategic Human Resources. It introduces students to the importance of knowledge for organizational success, informs them of the different types of knowledge, and the manners in which it can be tapped. a. Define human and social capital b. Importance of human and social capital for strategy and innovation c. Strategies for managing human and social capital Learning Objectives • Define human and social capital – definitions and importance of human and social capital for organizational performance. • Identify the importance of human and social capital for strategy and innovation – Importance and types of innovations in organizations, Factors facilitating/inhibiting innovation in organizations. • Identify strategies for managing human and social capital – methods of expanding and harnessing organizational intellectual capital. Downsides of relying on human and/or social capital. EXPERIENTIAL CONTENT The experiential part of the course includes about half of the six-hour course. The experiential exercise allows students to get hands-on experience on issues covered in the theoretical part of the course. The theory and practice will be integrated throughout the course rather than being covered sequentially. The central focus of the experiential part of this course is experience in the hands- on development of a business plan (whether for a new business or for a business problem). Through the development of such a plan students gain the opportunity to apply what they have learned in the theoretical part of the course. It is assumed that this experiential exercise, at the very least, will involve use of most of the topics covered in items I through VI of the theory content described above (see the list of “skills to be included” at the bottom of this outline.) Additional topics that are covered in the exercise will vary with the specific exercise being used. Approaches to Teaching the Practicum Content • Business simulation • Starting and running a business • Addressing an actual business problem
  9. 9. • Developing a business plan • Etc. Format The different formats listed above will be used in different sections of the course. For example, all students in Sections 1 and 2 will use business simulations, all students in Section 3 will start and run a business, and so forth. The precise format used in each of these sections will naturally be determined by the approach to be used in the section. Skills to be Included in All Sections • Business planning • Environmental analysis • Strategy formulation and implementation • Competitor analysis • Strategic management in a dynamic environment • Strategy/performance mapping and evaluation

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