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MGMT 690 Business Po..

  1. 1. NEW YORK INSTITUTE OF TECHNOLOGY SCHOOL OF MANAGEMENT MBA PROGRAM at the ISRAELI MISSION I. COURSE NUMBER AND TITLE: MGMT 690 – Business Policy Seminar II. FACULTY Dr. Abram Poczter Mailing Address: New York Institute of Technology School of Management 107 French Chateau Old Westbury, NY 11568 Telecomm: Tel: (516) 686-7708 (Voice-mail Box, O.W.) (212) 261-1595 (Office, Metro) Fax: (516) 484-8328 Internet E-mail: Office hours: Tuesday/ Wednesday 5:00pm---5:45pm – 808 Manhattan Campus and by appointment. III. COURSE DESCRIPTION: The material presented in this course will add to your knowledge of business enterprises and improve your understanding of the entrepreneurial and strategic thinking that drives these enterprises in dynamic competitive regional, national and global economies. You will learn to apply entrepreneurial and strategic management practices to organizations in various types of technological, competitive, economic environments. The core concepts of value driven management and value theory are applied throughout the course. The course is designed to integrate the knowledge and competence developed in the functional areas of your business studies, i.e., a) marketing, b) organizational processes, structure and development, c) accounting and finance. Accordingly, the emphasis will be placed on the analysis, design and implementation of corporate/business strategies. 1
  2. 2. IV. COURSE OBJECTIVES:  To contribute to the student’s inventory of strategic planning and problem solving skills through cross-functional team based on case analyses.  To conduct industry and competitor analyses in light of the internal and external stakeholders’ beliefs and values, and to demonstrate how stakeholder beliefs and values influence the activities of the enterprise.  To provide the student with an integrative framework for optimization of the functional business strategies and policies. Upon successful completion of this course the student should have a an increased capacity to: 1. Analyze and evaluate overall corporate strategies 2. Delineate and analyze the threat/opportunity nature of the environmental trends 3. Plan a symbiotic relationship between the organization and the uncontrollable environment 4. Understand the interdependence between strategy and tactics in each of the functional areas of business. 5. Develop and plan for the implementation of corporate/business strategy using various theoretical approaches and models. V. COURSE ACTIVITIES: A. Class reparation and Participation Activities: 1. Required readings and Case Analysis must be performed prior to the session they are assigned for, to facilitate class discussion. The lectures are based on the instructor's own research and practice readings assigned and to a lesser degree, on the assigned readings. Thus, students are expected to attend all sessions. 2. Class participation is strongly encouraged. In addition to the assigned material, students should identify, analyze any relevant outside material and bring it to the attention of us all. A write up of the material could possibly result in an award of extra credit. B. Writing Activities: 1. Case Analysis Analysis of cases is a major vehicle for achieving the objective in this course. It is recommended that students do the casework in self-selected groups of three to five individuals. Learning from each other is an important part of graduate work. 2
  3. 3. Students are required to submit two (2) written case analysis. The format for the case analysis is attached to this syllabus. Further clarifications will be given during the first meeting. 2. Comprehensive Final In-class Examination The final exam will tests the student's ability to: a. analyze a business case, according to the format and content of the course, i.e., you will be asked to analyze a short business case. b. synthesize class discussion and readings, i.e. you will be asked to write a series of essays OR answer a multiple-choice exam, on the topics discussed in class. EXTRA CREDIT REPORTS. During the course, there will be ample opportunities for finding relevance of the course material to the events in the business world, things you observe and/or read about in the business press. Extra credit report is a short (1 to 3 typewritten pages) description of such a happening and an interpretation, using the vernacular developed in the course.  Each extra credit report will have a Heading, including: student’s name, ID (or social security) number. Number and name of the course, course sections, and the number of the report.  The body of an extra credit report must contain sub-heads: Summary and Analysis Heading Summary Here, you are to summarize the article, happening, event, etc Analysis Here, you are providing the interpretation using concepts discussed in class.  Underline the key concepts discussed in class and used in the interpretation/analysis.  Submit a copy of the original article, if any, on which the extra credit report was based. (Not necessary, when e-mailing the report)  The extra credit reports could be submitted in person, and e-mail Subsequent extra credit reports can not rely on concepts discussed in the previous ones.  There is no limit as to how many reports a students submits, as long as different concepts are used in the analysis. 3
  4. 4. Suggested sources for Extra Credit reports. • Business Week (by far the most popular source) • Forbes • Journal of Business Strategy • Long Range Planning • Wall Street Journal • Etc. The extra credit work will be graded between 0% and 3% (Max), and added to the Final Exam score, if submitted before or on the day of the Final Exam. . No extra-credit report will be accepted after the date of the Final Exam. Again, it is advisable to submit a specimen of the extra credit work as soon as possible. It will be graded and returned to you. All graded and un-graded extra credit reports must be submitted with the exam papers. VI. GRADING CRITERIA: Class Participation . . .. 10% Written Case Analysis. 50% Final Examination . . . . 40% VII. TEXTBOOKS AND OTHER MATERIALS: A. Required Text: Pearce, John A. and Robinson, Richard B. Jr. (2000). Strategic Management, 7th Edition. Burr Ridge IL: Irwin/McGraw Hill Companies. ISBN# 0-07-229075-7 B. Recommended texts: Ansoff, Igor, Implanting Strategic Management, Prentice-Hall International, 1984 Besanko, David,, The Economics of Strategy. Wiley, 1996 Grant, Robert, Contemporary Strategy Analysis. Blackwell, 1996 Hoffer, Charles, H. and D. Schendel, Strategy Formulation: Analytical Concepts. West Publishing Company, 1978 Linneman, R.E. Shirt-Sleeve Approach to Long-Range Planning for the Smaller, Growing Corporation, Prentice Hall, 1980 4
  5. 5. Porter, Michael, Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press, 1980 C. Suggested readings: Mintzberg, Henry (1994). The Rise and Fall of Strategic Planning. Free Press. Pohlman, Randolph A., Ph.D. (1997). Value-Driven Management™ VDM™ Working Copy. (provided with GMP 5012) Porter, M.E. (1996). What is Strategy? Harvard Business Review. November-December 1996. pp 61-78. Timmons, New Venture Creation for the 21st Century (4th Edition). Homewood, IL: Richard D. Irwin ISB# 0-256-19348-7. Sexton, Donald L. Seale and Forrest I. (1997). Leading Practices of Fast Growth Entrepreneurs - Pathways for High Performance. The National Center for Entrepreneurship Research. ANNOTATED READINDS (See Appendix B) VIII. COURSE OUTLINE AND ASSIGNMENTS: Each seminar, being a fairly unstructured proposition, develops its own pace. I plan to review the theoretical material, essential for case analysis, during the first two- days meeting. The second and third two-day meetings will be devoted to case presentations and lectures/discussions. The fourth two-day meeting is typically devoted to lecture, discussions and a brief review of the course material in a FAQ format. The specific case assignments are stated in the syllabus below, and will become apparent when groups receive their designated number. One group will be randomly selected to present the due case in class. Each group of students will submit three (3) written case studies by the end of the semester, regardless of whether the case is presented/discussed in class. DATES TOPICS/ASSIGNMENTS Weeks I Concept and Definitions of Corporate/Business and II Strategy. Framework for strategy analysis and development. 5
  6. 6. Sound bites: • Strategy as a long term plan…, What is “long term”? • Strategy as an allocation of resources to acquire skills (learning • Corporation), Functional Strategies– in brief. • Hierarchy of Plans, Effectiveness Vs Efficiency or Strategy Vs Tactics • Strategy as development of a competitive position…, What is dominance? Dr. Porter’s ROI – Size model and strategies for Growth. • Concept of Sustainable Growth (a brief visit with PAL) • Strategy as a proposed symbiosis… • Role and analysis of the external environment. • Cultural, Social, Demographic, Legal/Political, Natural Resources/Technological, Competitive trends, • Note on Globalization of Markets • Environmental Scenario. • Ansoff/Poczter framework for strategy analysis, • Format for Case Studies. Assignment: Text: Chpts: 1,2,3,4,7 Weeks III Functional Strategies – A Closer Look. and IV Case Presentations. • Components of a Environmental forecasting System • Economic Trend Analysis: secular trend, cyclical, seasonal and random movements. • Product Life Cycle Model and its extensions: • Product Class, Category, Form, and Brand, International and Global Strategies. • Surviving Competitive Turbulence: Experience Curve, Strategy of Overall Cost Leadership (Value Chain, Penetration Pricing), Strategy of Differentiation (Quality, Skimming Pricing), Best- Value Strategy. • Concept of Elasticity of Demand • Strategies for Maturity and Decline: Economies of Scale, Operating, Financial and Combined Leverage. Assignment: Text: Chpts; 5,6,8,10 Case due: (Text - Case 48) 6
  7. 7. Weeks V Models of Corporate Strategy I. and VI Case Presentations. • Marketing Strategy over the Product Life Cycle • Organizational Strategy over the Product Life Cycle • Financial Strategy over the Product Life Cycle • Boston Consulting Group: Share/Growth Matrix • General Electric Screen • PIMS (Profit Impact of Market Strategies) Assignment: Text: Chpts; 9, 10 (re-read), Case Due: R. David Thomas, Entrepreneur: The Wendy’s Story (Text - Case 45) Weeks VII Models of Corporate Strategy II. and VIII Case presentations. Final Examination. • PIMS (continuation) • Course Overview. Assignment: Case Due: Southwest Airlines (Case 50-51) IX. NOTES ON CASE ANALYSIS Each group will submit two (2) written case studies regardless of whether a particular case is discussed in class. FORMAT AND CONTENT OF CASE STUDIES I. EXECUTIVE SUMMARY (Separate page) Put yourselves in a position of a consulting team. Tell your client (typically a board of directors) the results of your investigation, basically, the strategic and tactical problems and/or accomplishments, threats/opportunities diagnosed, and your recommendations as to how to address the problems caused by past tactical and strategic mistakes, as well as your recommendations for capitalizing on the opportunities arising from the external environment. Do not justify your recommendations. However, spell-out the major assumption made in the analysis. II. ANALYSIS OF PAST CORPORATE STRATEGIES (Start a new page) 7
  8. 8. Remember, you are presenting your findings to people who do know the basic facts so do not summarize or reproduce verbatim the text of the case. Transform the data contained in the case into information. Use the framework for strategy analysis developed by Ansoff and consisting of: 1. Missions, Goals and Objectives 2. Product/Market Scope and Functional Strategies (Marketing, Organizational and Financial) 3. Growth Vector 4. Competitive Competence (Advantage) 5. Synergy 1. Seldom will there be a mission, goals and objectives stated explicitly. Your task is to extract them from the description of company's past decisions and activities. When it is impossible to do, mention it as a criticism and DEVELOP one from scratch! MISSION. I see it as a statement of corporate purpose and the business philosophy, which will allow the company to serve the purpose. The Purpose is best described by the generic need of the customers which the company sets up to provide for. For example: a. Clairol is providing women with a hope of being attractive, desirable, and glamorous. b. IBM provides business “solution for the small planet” As you see, the purpose is clearly stated in their advertising. In addition to the customers, the purpose of the company as far as other stake holders (employees, owners, suppliers, financial community, society, etc), are concerned is included. The Philosophy is the set of beliefs, values a company holds as to how the purpose of the enterprise will be achieved. It is the belief as to what constitutes value for the customers, and the other stakeholder groups, which leads to the statement of the firm’s vallue proposition. a. In the case of Clairol is the drive to understand what women want in order to satisfy the generic need for hope. Thus, there is emphasis on understanding cultural and social trends. b. In the case of IBM the emphasis is on the technological developments and service in terms of systems integration. They believe that an important part of how they are going to accomplish the purpose is by talking to the customer and training of their personnel GOALS. Are open-ended attributes the company wants to be known for. A major aspect of the Goals is, again, the value proposition. Goals are not accomplished. It is simply the 8
  9. 9. direction in which company wants to move. Understanding that each company typically will have a set of goals, let’s continue with our simplified example: a. Clairol wants be known as a brand used by the most glamorous women in the world b. IBM wants to be known as a company which is a single source solution provided for computer/internet related “problems”, best company to do business with. Other examples of Goals: known as a growth company (AOL), best company to work for (Microsoft), innovating company (Intel). OBJECTIVES. The are measurable milestones on the road pointed out by the goals. (who said business strategy can not be poetic?) The objectives could be long-term (strategic) and short term (tactical, operational, annual). They allow to connect the long run (strategy) to annual plans. In other words, a five-year objective of achieving 30% market share may be split into the next year objective of increasing the market share to 12%. Back to our examples: a. Clairol may want to have, by year 2002 a 60% of women, living in US, aged 18 to 24 associate their product with glamour, in a comparative survey of the top cosmetic brands. b. IBM wants to achieve, by year 2002, 90% share of their “customer pocket” i.e. 90% of purchases of computer product and services by their customers. 2. Product-Market Scope is not a list of products and markets. It is an attempt to define the nature of business or businesses the firm is in, via uncovering the idiosyncrasies in interaction of firm's products and markets. Factors such as: cyclicality, seasonality, input intensity, nature of market segments, etc. should be discussed 3. Growth Vector – Describes the changes made (or planned) in the Product/Market Scope of a firm, presumably, a path taken in the pursuit of growth. GROWTH VECTOR PRODUCT:⇒ MARKET: Existing or New, Related New, Unrelated ⇓ Improved Technology Technology Existing Market Penetration Assortment Market Manipulation Specialization New, but Related Market Extension Market Horizontal Differentiation Diversification New and Unrelated Market Concentric Conglomerate Development Diversification Diversification Inputs/Markets INTE GRAT ION 9
  10. 10. 4. Competitive Advantage -- refers to the requirements for success in a given Product/Market Scope. If such a requirement is uniquely associated with a firm, than it is said to have a competitive advantage. If it is shared with other firms -- it is a case of Competitive Competence, rather than advantage. In case the requirement of success is not possessed by a firm, than it is a sorry case of competitive disadvantage. 6. Synergy is a measure of joint effects of two or more business factors. It is the concept of an end effect being greater than the sum of the parts. (2+2>4). It may arise in R&D, Marketing, Production or across functional lines. It is the key reason for mergers and acquisitions. Your task is to determine whether there was any CONSISTANT pattern of synergistic effects in the management of the company. Do remember to look for synergy when evaluating the alternative courses of action The above framework will be discussed in great detail in class, prior to the due data of the first case. Remark: For some reason, this framework is less popular than SWOT, which many of you are already familiar with. In my opinion (which better be your opinion, until after the final exam), Ansoff/Poczter framework is more broadly based and incorporates SWOT, in the following way: S(trenghs) are discussed in the Competitive Advantage/Competence area W(eaknesses) are discussed as Competitive Disadvantages O(pportunities) are discussed in conjunction with the trends in the external environment T(hreats) are discussed in conjunction with the trends in the external environment. Thus, you may use SWOT but only as a subset of the framework provided. III. THREATS and OPPORTUNITIES ANALYSIS (New Page) a. Major Problems and Opportunities: Discuss the trends in Uncontrollable Environment: 1. Cultural/Social/Demographic 2. Resources/Technology 3. Competitive 4. Legal/Political 5. Economic, 10
  11. 11. and the effects of the above on corporate strategy. As a result you should come up with a list of strategic problems/opportunities b. Other Problems Under this heading discuss tactical problems you have detected NOTE: Avoid classifying symptoms as root-causes of problems. Keep in mind the cause-effect chain IV. MISSION, GOALS AND OBJECTIVES (New Page) V. ALTERNATIVE COURSES OF ACTION (New Page) Must generate a set of more than one, reasonably feasible alternatives addressing ALL of the problems/opportunities uncovered. Each of the alternatives must be evaluated. Indicate the alternatives being recommended. It is possible for an alternative course of action to call for changes in Missions, Goals and Objectives. VI. IMPLEMENTATION (New Page) Do not get carried away by the grand design - the longest march starts with a single step. Develop a logical sequence of steps to be taken, in order to implement the recommended courses of action. Finally: You are allowed to make any assumptions, which deem reasonable. If you do make assumptions, state them as clearly as possible. Written case assignments must be typed double space, 2" right margin, headings and sub-heads (which you'll try to have as many as possible) underlined. The length of a case study should not exceed 10 pages, excluding appendices. Appendix B Annotated Readings. 1. Drucker, Peter F. Entrepreneurial Strategies. California Management Review; Berkeley; Winter 1985. Abstract of this article can be found on-line in ABI/Inform through ProQuest Direct at the Electronic Library. Students are not required to obtain full text for this article. When entering a new market or industry, the entrepreneur aims at leadership, if not dominance. The objective is to create something truly new and different. This 11
  12. 12. can be highly rewarding if successful, but it is very risky. It requires the entrepreneur to have a strategy to retain its leadership position. The alternative entrepreneurial strategy of "hitting them where they ain't" takes 2 forms: 1. "creative imitation," and 2. "entrepreneurial judo." Creative imitation uses something which someone else has already done, but looks at it from the customer's point of view. It is creative because the entrepreneur better understand the innovation's application than does its creator. It requires a rapidly growing market, and is best suited to major products, services, or processes. "Entrepreneurial judo" is the least risky strategy. It involves repeated moves into established market where market leaders are not aware of or concern about competition. 2. Prahalad, C.K. and Hamel, Gary. The Core Competence of the Corporation. Harvard Business Review; Boston; May/Jun 1990. Abstract of this article can be found on-line in ABI/Inform through ProQuest Direct at the Electronic Library. Students are not required to obtain full text for this article. In the 1990s, top executives will be judged by their ability to identify, cultivate, and exploit core competencies that make growth possible. They will have to rethink the concept of the corporation itself. The critical task for management is to create an organization capable of infusing products with irresistible functionality or creating products that customers need but have not yet imagined. Core competencies are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies. A core competency has 3 identifying elements: 1. It provides potential access to a wide variety of markets. 2. It makes a significant contribution to the perceived benefits of the end products. 3. It is difficult for competitors to imitate. Senior management should spend a significant amount of time developing a corporatewide strategic architecture that establishes objectives for competence building. The location, number, and quality of the people who embody competence should be identified. 3. Mintzberg, Henry. The Pitfalls of Strategic Planning. California Management Review; Berkeley; Fall 1993. Full text of this article can be found on-line in ABI/Inform through ProQuest Direct at the NSU Electronic Library. Students are not required to obtain full text of this article. Perhaps the clearest theme in the planning literature is its obsession with control. This obsession can lead to some curious behaviors, none more so than planning's attitude toward so-called turbulence in the environment. The argument about 12
  13. 13. escalating or endemic turbulence is as silly as are all the claims about today's turbulence. The fact is that environments vary, across sectors and over time. There are ways to create strategy other than by formal planning. The visionary approach to strategy is dependent on a single creative strategist, while the learning approach is dependent on a variety of actors capable of experimenting and then integrating. Some organizations use planning as a tool, not because anyone necessarily believes in the process but because influential outsiders do. But to find out why strategic planning in particular really has gone wrong, and why reasonable people have devoted so much effort to a process that never produced the desired results, people must look beyond the pitfalls and beyond the symptoms. 4. Mintzberg, Henry. The Fall and Rise of Strategic Planning. Harvard Business Review; Boston; Jan/Feb 1994. Abstract of this article can be found on-line in ABI/Inform through ProQuest Direct at the Electronic Library. Students are not required to obtain full text for this article. Although strategic planning has fallen from the pedestal it occupied when it came on the scene in the mid-1960s, few managers understand why it failed. Strategic planning failed because it is not the same as strategic thinking. Planning is about analysis and thinking is about synthesis. The outcome of strategic thinking is an integrated perspective, a not too precisely articulated vision of direction that must be free to appear at any time and at any place in the organization. Strategic planning has not only never amounted to strategic thinking, it has often prevented it. The failure of strategic planning is the failure of systems to do better than or as well as people. Organizations disenchanted with strategic planning should transform the planning job. Planners should make their contribution around the strategy-making process rather than inside it. They should supply the formal analyses that strategic thinking requires. They should supply the formal analyses that strategic thinking requires. They should also support strategy making by helping managers think strategically. 5. Porter, Michael E. What is Strategy? Harvard Business Review; Boston; Nov- Dec 1996. Full text of this article can be found on-line in ABI/Inform through ProQuest Direct at the NSU Electronic Library. Students are required to obtain full text of this article. Under pressure to improve productivity, quality, and speed, managers have embraced tools such as TQM, benchmarking, and reengineering. Dramatic operational improvements have resulted, but rarely have these gains translated into sustainable profitability. And gradually, the tools have taken the place of strategy. How that shift has led to the rise of mutually destructive competitive battles that damage the profitability of many companies is explored. As managers push to improve on all fronts, they move further away from viable competitive positions. It is argued that operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to systems 13
  14. 14. of activities that are much more difficult to match. The economic basis of competitive advantage is thus traced down to the level of the specific activities a company performs. 6. Hamel, Gary. Turning your Business Upside Down. Fortune; Chicago; Jun 23, 1997. Full text of this article can be found on-line in ABI/Inform through ProQuest Direct at the NSU Electronic Library. Students are required to obtain full text of this article. In a interview, Anheuser-Bush CEO August Busch III and Enron CEO Ken Lay tell what it's like to launch a new strategy in the real world. 14