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  1. 1. Today: The Concept of Strategy <ul><li>Administrative issues: </li></ul><ul><ul><li>Class count: add/drop </li></ul></ul><ul><ul><li>Seating chart </li></ul></ul><ul><li>Current Events </li></ul><ul><li>How to be Successful at Case Write-ups </li></ul><ul><li>Assign Case #1: Wal-mart Stores, Inc. </li></ul><ul><li>WEBSITE: www. sba . pdx . edu /faculty/ stephens / ss .html </li></ul>
  2. 2. <ul><li>Notecards </li></ul><ul><ul><li>Name </li></ul></ul><ul><ul><li>Phone Number </li></ul></ul><ul><ul><li>E-mail Address </li></ul></ul><ul><ul><li>Major & Class Standing </li></ul></ul><ul><ul><li>Career or Personal Interest(s) </li></ul></ul><ul><ul><li>Work Experience (industry, length of time) </li></ul></ul>Business Strategy and Policy
  3. 3. Fundamental Concepts in Strategic Thinking Modeling your Thought
  4. 4. Model of Strategic Management Analysis/Scanning External Analysis (Chapter 3) Internal Analysis (Chapter 4) Strategy Implementatio n Organizing (Chapter 8) Staffing (Chapter 9) Strategy Formulation Business Level (Chapter 5) Corporate Level (Chapter 6) Functional Level (Chapter 7) Evaluation & Control Metrics (Chapter 10)
  5. 5. Strategic Management Process <ul><li>Strategic Inputs: Internal and External Scanning </li></ul><ul><li>Strategic Actions: Formulation and implementation of strategy </li></ul><ul><li>Strategic Outcomes: Above, at or below average returns </li></ul>
  6. 6. Intro to Strategic Management <ul><li>From Organizational Vision to Tactical Steps </li></ul><ul><li>Define the Organization: </li></ul><ul><ul><li>Vision </li></ul></ul><ul><ul><li>Mission Statement </li></ul></ul><ul><li>Understand the Operating Environment </li></ul><ul><ul><li>External Environment (Threats and Opportunities) </li></ul></ul><ul><ul><li>Internal Conditions (Strengths and Weaknesses) </li></ul></ul><ul><li>Determine Strategic Alternatives </li></ul><ul><li>Formulate Strategy (long term) </li></ul><ul><li>Implement Strategy through Tactics (short term) </li></ul>
  7. 7. Role of Strategy Business - Link Between Strategy, Resources, & Organization Position Resources & Capabilities Organization
  8. 8. Strategy: Levels and Dynamics <ul><li>Corporate : general perspective towards growth and management of various business units, product lines, functional areas </li></ul><ul><li>Business : Strategic Business Units (SBUs), focus on improvement of competitive position of products and services </li></ul><ul><li>Functional : focus on marketing, R & D, etc. to achieve SBU and overall corporate objectives. </li></ul>
  9. 9. The Levels of Strategy Corporate Determining the Portfolio Businesses Business Units/Divisions – Positioning within the Industry Functional – Operational and Marketing Strategies, etc.
  10. 10. Path to Realized Strategy Deliberate Strategy Emergent Strategy Realized Strategy Intended Strategy Unrealized Strategy
  11. 11. Phases of Strategy Development <ul><li>Phase 1 – Basic Financial Planning: </li></ul><ul><li>operational control </li></ul><ul><li>Phase 2 – Forecast-based Planning: </li></ul><ul><li>plan for growth </li></ul><ul><li>Phase 3 – External Oriented Planning: </li></ul><ul><li>respond to markets and competitors </li></ul><ul><li>Phase 4 – Strategic Management: </li></ul><ul><li>seek sustainable competitive advantage </li></ul>
  12. 12. Initiation of Strategy Triggering Events Performance Gap Ownership Threat Intervention New CEO
  13. 13. What makes a decision strategic? <ul><li>Rare – Have no precedent </li></ul><ul><li>Consequential – Commitment of resources </li></ul><ul><li>Directive - Cascade of precedents </li></ul>
  14. 14. How Did Strategy Develop? <ul><li>Harvard in the 1960’s </li></ul><ul><ul><li>How do the problems of the general manager differ from those of functional managers? </li></ul></ul><ul><ul><li>How do we look at the business from a holistic perspective? </li></ul></ul><ul><ul><li>How do we look at the relationship between the business and its competitive environment? </li></ul></ul><ul><ul><li>How do managers exercise leadership and manage the process of strategic change? </li></ul></ul>
  15. 15. Our Definition of Strategy <ul><li>Strategy is the set of policies and plans relating the different functional areas of a business to each other and the whole firm to its competitive environment. </li></ul><ul><li>In this context, the objective of strategy is to create a sustainable competitive advantage for the firm. </li></ul>
  16. 16. Strategy Relates A Business To Itself and Its Environment Mktg. Oper. Strategy Finance Acctg. H.R. Competitive Environment Government Regulation Technology Industry Environment National/ Int’l Economies Other Competitors Related Industries
  17. 17. Natural Competition <ul><li>Evolutionary vs. revolutionary </li></ul><ul><ul><li>Natural competition is expedient in interaction but slow to alter species’ behavior </li></ul></ul><ul><ul><li>Strategic competition is deliberate and reasoned but consequences may be radical </li></ul></ul><ul><li>Fundamental inhibitions: </li></ul><ul><ul><li>Failure </li></ul></ul><ul><ul><li>Rivals’ response or anticipation </li></ul></ul>
  18. 18. Modes of Strategic Thinking (Mintzberg and Quinn) <ul><li>Entrepreneurial </li></ul><ul><li>Adaptive </li></ul><ul><li>Planning </li></ul><ul><li>Logical incrementalism </li></ul>
  19. 19. How did you get your textbook? <ul><li>University bookstore </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li>www. </li></ul><ul><li>Question: </li></ul><ul><ul><li>How to describe their business models? </li></ul></ul><ul><ul><li>Target customer; Competitive edge; </li></ul></ul><ul><li>Strategy is always around us !!! </li></ul>
  20. 20. Corporate Governance and Social Responsibility Organization and Roles
  21. 21. Defining the Corporation <ul><li>What is a corporation? </li></ul><ul><li>Relationships within corporate governance </li></ul><ul><li>How does a corporation function? </li></ul>
  22. 22. Corporate Governance <ul><li>In a Corporation: </li></ul><ul><li>Shareholders share in profits without operating responsibilities </li></ul><ul><li>Management operates company without providing the funds </li></ul><ul><li>Board of directors approves decisions that will affect long run performance. </li></ul>Corporate Governance is . . . the relationship between these three parties.
  23. 23. Role of Board of Directors <ul><li>Setting corporate strategy </li></ul><ul><li>Hiring/firing CEO & top management </li></ul><ul><li>Controlling, monitoring and supervising top management </li></ul><ul><li>Reviewing and approving use of resources </li></ul><ul><li>Representing stakeholder interests </li></ul>What is the idea of “due care”?
  24. 24. Corporate Governance <ul><li>Board of Directors </li></ul><ul><li>Inside Directors - employees (or alumni) of firm </li></ul><ul><li>Outside Directors - not employees of firm </li></ul><ul><li>Greater Objectivity(for Outside) vs.Greater Competence (for Inside) </li></ul>
  25. 25. Corporate Governance <ul><li>Interlocking Directorates </li></ul><ul><li>Direct : two firms share a director </li></ul><ul><li>Indirect : two directors from different firms sit on board of third firm </li></ul><ul><li>Benefits : Knowledge about external (competitive, regulatory) trends. </li></ul>
  26. 26. Corporate Governance <ul><li>Responsibilities of Top Management: </li></ul><ul><li>The CEO: </li></ul><ul><li>Articulates the strategic vision </li></ul><ul><li>Acts as a role model </li></ul><ul><li>Communicates performance standards </li></ul>
  27. 27. Friedman’s View of Social Responsibility <ul><li>Fundamentally subversive doctrine </li></ul><ul><li>Corporation’s single goal is to increase profits </li></ul>
  28. 28. Four Responsibilities of Business (Carroll) <ul><li>Economic (must do) </li></ul><ul><li>Legal (have to do) </li></ul><ul><li>Ethical (should do) </li></ul><ul><li>Discretionary (might do) </li></ul>Social responsibilities Can making enough profit to cover future costs be considered a social responsibility of a firm?
  29. 29. Class Discussion <ul><li>From the article by Meyer in Directorship : </li></ul><ul><li>What are the pros and cons to requiring stock ownership by executives? What about setting a minimum ownership level? </li></ul><ul><li>What are the pros and cons to using stock ownership for recruitment purposes? </li></ul>
  30. 30. Next Time: Wal-Mart Case <ul><li>Historically, what has been Wal-Mart’s “strategy”? </li></ul><ul><li>How has that strategy created a competitive advantage for Wal-mart? </li></ul><ul><li>What competitive issues currently face Wal-mart? </li></ul><ul><li>What is the best strategic direction for Wal-mart? Why? </li></ul>
  31. 31. Next Time: Environmental Scanning <ul><li>Current Events </li></ul><ul><li>Read Chapter 3: Environmental Scanning </li></ul><ul><li>Porter’s Five Forces (handout in class) </li></ul><ul><li>Analyze Wal-mart Case </li></ul><ul><li>Teams Chosen </li></ul><ul><li>Assign Case #2: RCA Records </li></ul><ul><li>WEBSITE: www. sba . pdx . edu /faculty/ stephens / ss .html </li></ul>