1. Strategic Analysis The Commercial Airline Industry zAttractive or unattractive industry to be in? 1. Environmental Factors - both external to the industry and within the industry 2. Compare and contrast a successful vs unsuccessful firm in this industry and explain the reasons behind their success or lack of

2. What is strategic management? zDefined: As a set of managerial decisions and actions that determine the long run performance of the firm... Or, that assures a beneficial fit of the organization with its environment.

3. Why is strategic management important? 1. Not the sole domain of top mgmt 2. Managing strategically affects performance 3. Change is a fact of life in business 4. Org’s composed of diverse divisions, functions and work activities that must be coordinated and focused on org’l goals

4. Misconceptions About Strategic Management zStrategy & planning are dead zStrategy is strictly for top management zStrategy is about planning zStrategy is stable & constant zStrategic management outlines the ultimate destination and route

5. Strategic Management Model External Environmental Opportunities & Threats Macroenvironment Industry Environment Strategy Formulation Corporate Level Business Unit Level Functional Unit Level The Internal Environment Firm Resources, Organizational Mission & Goals Strategy Implementation Organizational StructureLeadership/Power/Organizational Culture Strategic Control Strategic Control & Performance

6. Influences on strategic management zDecisions/actions used by military org’s zDarwin’s theory of evolutionary change z1960’s 1. Chandler - structure followed strategy 2. Ansoff - strategy common thread 3. Learned, et al. - SWOT

7. Influences on strategic management zIndustrial-Organization View zChamberlin’s Economic Theories zContingency Theory zResource Based theory zGuerrilla View

8. Industrial-Organization View zDeterministic theory w/ external focus zEmphasizes choosing the “right” industries & maintaining most advantageous position zWhat are critical forces & what’s happening w/them

9. Contingency Theory zOrg’l performance viewed as the joint outcome of environmental forces & strategic actions zHigher financial returns associated w/those firms developing a beneficial fit w/their environment

10. Resource Based Theory zPredicated on managerial choice & action zFocuses on individual firms not competitive environments zFirm’s resources more important than industry structure in remaining competitive zResources that are valuable, rare & subject to imperfect imitation and have no substitutes offer sustainable competitive advantage

11. Resource Based Theory zValuable: exploit environmental opportunities or negate its threats zRare: no other competitors possess it zInimitable: can’t be duplicated or substituted zThe org’n must be able to exploit these resources in order to achieve a sustainable competitive advantage

12. Guerrilla View of Strategy zOrg’s competitive advantage is at best temporary zWhy, b/c environments are constantly changing zSuccessful org’s disrupt the status quo, change the rules & surprise competitors w/strategic actions that keep them off balance

13. Uncertainty in the Environment zEnvironments are uncertain 1. Uncertain on how or why the elements change 2. Uncertain about the cause/effect relationships concerning environmental events 3. Lacking the knowledge of what to do Milliken (1987)

14. Uncertainty in the Environment zEnvironments may be: 1. Munificent - rich in resources 2. Dynamic - degree to which changes occur rapidly and are difficult to predict 3. Complex - heterogeneity or range of organizational activities Dess & Beard (1984)

15. Realities of the Business Environment zContinual turbulence & Change zReduced need for physical assets zVanishing Distances zCompressed Time

16. So... What must firms do to succeed? zEmbrace and thrive on change zInstill creativity and innovation within the organization zBecome a world class organization

17. A World Class Organization World Class Org’n Flexible Organizational Structure Egalitarian Climate Significant Technical Support Creative HR Management Strong Customer Focus Continual Learning & Improvement