Presentation on theme: "STRATEGIC MANAGEMENT AND SOCIAL RESPONSIBILITY"— Presentation transcript:
1 STRATEGIC MANAGEMENT AND SOCIAL RESPONSIBILITY POWER POINT SET 4: MISCELLANEOUS
2 ROLE OF THE CEO Strategist Mentor Visionary Guru Futurist Champion Leader
3 AGENDA OF RESPONSIBILITIES Individuals (IT)Pre-Course - Bio & PictureIntro to Strategic AuditMINI CASE(s) As Assigned (S, S√, S√√)MIDI CASE - MID Term Exam (Letter Grade)TemplateFeedback Team Member RatingConstructive Comments [Peer Eval] - Maxi CaseOptional: Strategic Plan -- Career Plan
4 AGENDA OF RESPONSIBILITIES (Cont’d) PARTICIPATIONTEAM (IT)Form Teams – RolesWeekly - Chapter QuestionsWith key issues/answers to Lead Discussion(Per Schedule)Maxi Case – Choice of company (approval)Prepare Report – Strategic Plan TemplatePresent Strategic PlanMISC – Team Assignment – Micro Cases
5 MIDI Case: One (1), five (5) page (approximately), individually written case analysis (business plan) that must include:Your mission for the future of the organization.Your future objectives for the organization.Your analysis and quantitative forecast of industry and company.Your strategic decisions, i.e., actions, with results, to accomplish objectives.A three (3) year pro forma income statement.Your participation in class discussion and case debrief.
6 TEAM STRATEGIC PLANMAXI: A STRATEGIC PLAN that incorporates two efforts:Effort 1: A 25 Page Written Report (Approximately)Effort 2: Team Discussion/Presentation
7 Effort 1: A 25 Page Written Report The following must be included in the strategic plan report:Future mission and objectives decided by you.Analysis and forecast of social, technical, economic, and political forces with attention to global aspects.Analysis of industry history and quantitative industry forecast on a global and domestic basis.Illustration and source of a share analysis.Evaluation of alternative strategies.Decision on strategic course showing basis and actions, with results, required to achieve indicated performance goals on each major strategic actionOrganizational process changes with schedules and budgetsPro-forma financial statements, I.e., cash flows balance sheets, and income statements to show impact of decision in the short-term, intermediate-term and long-term for a minimum of 5 years.Sufficient research, quantitative analysis, style, and organization to meet business planning standards.Typed, doubled spaced, table of contents, number pages, exhibits, and indicate sources.
8 Effort 2: Team Discussion/Presentation Each team must run a one (1) hour maximum discussion or presentation of the case.The presenting team also indicates its role and audience role, both f which must be internal to the organization.For intelligent participation in the team case discussions and to help in the selection of the third individual case, each team must provide one copy of each of the following materials to every class member and the instructor:
9 Strategic Audit and Decision Making: A Structure Context - Environmental/IndustrySLEPT (Social, Legal, Economic, Political, Technological) Forecast(s)CompanyIndustryHistory - Now/FutureMission - All StakeholdersInternal, Transactional, Influencers, Vision, Core Values, etc.Objectives (Qualitative, Quantitative)Drucker Model (8) (E) - Below
10 Market Human Resources STRUCTURE, CONT’DPERFORMANCE - Design/AuditSystem ViewADAPTIVE - 3 QuestionsWhat is Business?What will business be? [as is]What should business be?(E) EFFECTIVENESS (Drucker 8)Market Human ResourcesInnovation Financial ResourcesProfit Material ResourcesSocietal Productivity(e) EfficiencyCost (versus) Scope/QuantityQualityTime
11 SYSTEM VIEW (CONT’D)Global Dimensions (MACROECONOMICS - Global; Clusters/Culture; Comparative Advantages, etc)SWOTInternal S - StrengthsW - Weakness[Core Competence]External O - OpportunityT - Threat
12 PORTER’S ANALYSIS (Link to O.T.) National / GlobalBarriers to EntryGovernment ActionRivalry Among CompetitorsBarriers to ExitPower of SuppliersPower of BuyersAvailability of SubstitutesCONCLUSION: Attractive?
13 STRATEGY FORMULATION 13 Strategic Options - Clusters Strategy Implementation and Control MIS System Corporate Leadership/Culture RE: Ongoing Process9. Concentric Diversification10. Conglomerate11. Cooperative (Joint Venture) Strategic Alliance12. Defensive - Retrenchment- Divestiture- Liquidation13. Do NothingMarket PenetrationMarket DevelopmentProduct DevelopmentBackward IntegrationForward IntegrationHorizontal IntegrationHorizontal DiversificationVertical Diversification
14 MGMT 450 STRATEGIC AUDIT FORMAT General EconomyYouCONTEXTHistoryNowFutureAll StakeholdersPrioritiesMISSIONFormulation(A)e/EQUALQuant(SUCCESS)OBJECTIVES(Personal|Professional)3Q’sACTION(S) IMPLEMENTATIONAPPRAISAL EvaluationControlTOOLSTECHNIQUESB\CRELEVANTETCBEPOINTISSUESSWOTPORTEREVALUATIONCONTROLRECOMMENDATIONSPRIORITIESREFORMULATION(REVISIT Model)
15 DELPHI FORCASTINGQ1. Estimate rate of inflation in the United States during next 12 months.________%Q2. Estimate rate of unemployment in the United States during next 12 months.Q3. Estimate prime rate for corporations in the United States during next 12 months.Q4. Consumer confidence index in the United States during next 12 months.Use scale 1 to 10, with 10 highest
16 Strategic Management Information Knowledge vs. System OrganizationLevelStrategicTacticalOperationalTechPerf.10% %PlanningExternalInformation40% %It = Ik Is90% %ControlInternalInformation
17 Strategic Management Organ. Vs Information/Skills LevelStrategicTacticalOperationalTechPerf.SkillsConceptualBehavioralTechnicalIt = Ik Is
18 Strategic Management Forecasting Types of Forecasting Models:Judgmental ModelsQualitative Methods, eg AnalogyTime Series ModelsQuantitative Methods, eg Straight LineCausal Models - Cause & EffectRegression - Correlation, etc
19 Forecasting Models Judgmental Models (Expert Opinion) Survey(s), sales force, customersHistorical analogy, eg. multiple outletsMarket ResearchSurveys, tests, observationsSimple, sophisticatedDelphi methods - panels of ‘experts’Time Series ModelsTrends vs. Turning PointsCausal ModelsLinear, multiple regressionSophisticated - data needed
20 Global Models Corporate Governance Firm Executive ManagementIssues:Plan – ControlAuthorityResponsibility(s)Information FlowStakeholders:ShareholdersFinancial Institutions: Banks, Insurance Co., etc.GovernmentCommunityUnions – EmployeesCustomersSuppliersetc.Board of Directors:KeiretsuEuro-Interlocking DirectorsGovernment – MercantilismSocialist – State Capitalism
21 Joe Smith and Outsourcing Joe Smith started the day early having set his alarm clock (MADE IN JAPAN) for 6 a.m. While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG). He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA). After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today. After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) and continued his search for a good paying AMERICAN JOB. At the end of yet another discouraging and fruitless day, Joe decided to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN INDONESIA), and then wondered why he can’t find a good paying job in……AMERICA…..
22 Management Strategy Responsibilities Philanthropic Be a good Corporate citizenContribute resources to the Community; improve quality of lifeThe Pyramid of Corporate Social ResponsibilityEthicalBe ethicalObligation to do what is right, just and fairavoid harmLegalObey the LawLaw is society’s codification of right and wrongPlay by the rules of the game.EconomicBe profitableThe foundation upon which all others rest
24 Porter’s Five Competitive Forces Supplier Power- Supplier concentrationImportance of volume to supplierDifferentiation of inputsImpact of inputs on cost or differentiationSwitching costs of firms in the industryPresence of substitute inputsThreat of forward integrationCost relative to total purchases in industryBarriers to EntryAbsolute cost advantageProprietary learning curveAccess to inputsGovernment policyEconomies of scaleCapital requirementsBrand identitySwitching costsAccess to distributionExpected retaliationProprietary productsThreat of SubstitutesSwitching costsBuyer propensity to substituteRelative price performance of substitutesRivalryDegree of RivalryExit barriersIndustry concentration ratioFixed costs/Value addedIndustry growthIntermittent overcapacityProduct differencesSwitching costsBrand identityDiversity of rivalsCorporate stakesBuyer PowerBargaining leverageBuyer volumeBuyer informationBrand identityPrice sensitivityThreat of backward integrationProduct differentiationBuyer concentration vs industrySubstitutes availableBuyers’ incentives
25 MGMT 450 Strategy and Business Policy Internal Assessment of Firms Four Characteristics: Resources – CapabilitiesImportant in Sustaining Competitive AdvantageDURABILITY – Rate at which firms underlying resources and capabilities depreciate or become obsoleteTRANSPARENCY – Speed with which other firms can understand the relationship of resources and capabilities supporting a successful firm’s strategy. Capability that requires a complex pattern of various resources and is more difficult to comprehend than a capability based on a single key resource.TRANSFERABILITY – Ability of competitors to gather the resources necessary to support a competitive challenge. (e.g. Duplicating the primary source of Rocky Mountain spring water may be difficult. Also brand names may be impossible to transfer with out purchase or a license.)REPLICABILITY – Ability of competitors to use resources and capabilities to duplicate a firm’s success. (e.g. brand manager from P&G competitor may fail to identify least visible coordination mechanisms or fail to note behaviors of another company’s brand manager may conflict with company’s culture.)
26 Alternative Strategies Defined and Exemplified STRATEGYDEFINITIONEXAMPLEForward IntegrationBackward IntegrationHorizontal IntegrationMarket PenetrationMarket DevelopmentGaining ownership or increased control over distributors or retailersSeeking ownership or increased control of a firm’s suppliers.Seeking ownership or increased control over competitorsSeeking increased market share for present products or services in present markets through greater marketing effortsIntroducing present product or services into new geographic areaTandy Corporation opens new Radio Shack stores.K-Mart requires suppliers to sell its goods on consignment.Merck, the world largest drug company, acquires Medco Containment Services, the nation’s largest marketer of discount prescription drugsWalt Disney pays Nancy Kerrigan $1 million for appearances.Corning Inc. becomes one of Russia’s first major suppliers of optical fiber.
27 Alternative Strategies Defined and Exemplified STRATEGYDEFINITIONEXAMPLEProduct DevelopmentConcentric DiversificationConglomerate DiversificationHorizontal DiversificationSeeking increased sales by improving present products or services or developing new ones.Adding new, but related, products or servicesAdding new, unrelated products or services.Adding new, unrelated products or services for present customers.Rayovac develops an alkaline battery recharger.Sonoco Products Company, a maker of industrial packages, acquires Engraph Inc., a maker of consumer packages.Seagram acquires 13.1 percent of Time Warner.Stratus Computer, a maker of fault tolerant computers, acquires Shared Financial Systems, a software maker.
28 Alternative Strategies Defined and Exemplified STRATEGYDEFINITIONEXAMPLEJoint VentureRetrenchmentDivestitureLiquidationTwo or more sponsoring firms forming a separate organization for cooperative purposes.Regrouping through cost and asset reduction to reverse declining sales and profits.Selling a division or part of an organizationSelling all of a company’s assets, in parts, for their tangible worth.Home Shopping Network and Sumitomo offer television shopping in Japan.U.S. Surgical declares bankruptcy.Ryder System, a truck-leasing company divests its aviation business.The Bank of Credit and Commerce International (BCCI) liquidates.
29 Location Analysis COST FACTORS Power Labor Material Taxes Water InsuranceTransportationTotal Composite Site CostQUANTITATIVE FACTORS IN LOCATION ANALYSISLabor SupplyUnion ActivityLabor Skills AvailableCommunity Attitudes Towards Company ActivitiesLocal Transportation FacilitiesRecreationCommunity Growth PotentialUniversities, Colleges and Research CentersCommunity Tax Status
30 Point Rating Scale of Noncost Factors (Sample) Research Climate (Sufficient Educational Facilities and Research organizations to attract Personnel)PointsNo schools or laboratories existA few low-quality facilities exist50Good industrial laboratories exist, but no educational facilities100Good educational laboratories exist, but no industrial facilities150Good educational and industrial facilities exist200Excellent facilities and future possibilities250Production Labor Pool (Availability of Semi-Skilled Production Workers)UnavailableAvailable in limited numbers at premium wages20Available in sufficient numbers for the present but not for the future40Available in sufficient numbers for the present and the future60An abundance of extremely skilled labor80Community Attitudes (Desire for and acceptance of the company’s actitivities)Violently opposed to company’s activitiesWill accept grudgingly25CooperativeCooperative and helpful to a high degree75
31 Developing Enterprise Strategy Industry Structure and Environmental Opportunities* Fragmented IndustryConsolidation:Discovery of new economies of scaleAltering ownership structureEmerging IndustryFirst Mover Advantages:Technological leadershipPreemption of strategically valuable assetsCreation of customer-switching costsMature IndustryProduct Refinement:Investment in service qualityProcess InnovationDeclining IndustryLeadership StrategyNiche StrategyDivestment Strategy
32 Developing Enterprise Strategy Industry Structure and Environmental Opportunities* International IndustryMultinational OpportunitiesGlobal OpportunitiesTransnational opportunitiesNetwork IndustryFirst-mover advantages“Winner-takes-all” StrategiesHyper competitive IndustryFlexibilityProactive disruptionEmpty core industryCollusionGovernment regulationSignificant product differentiationDemand management* Gaining and Sustaining Competitive Advantage by Jay B Barney
33 Executive Management Triangle Strategy – Technology - Organization FORMULATION/IMPLEMENTATIONInvestment PortfolioStrategic AlternativeRisk vs. ReturnResource AllocationPERFORMANCE EVALUATIONORGANIZATION ALTERNATIVE STRUCTURESBusiness Unit/ProductGeography/PlaceCustomerFunctionSpan21 CENTURY DYNAMICSGlobal/Multi-Govt’al SocietalCore CompetenceStaffing-CultureValue ChainALTERNATIVESOutsourceJoint VentureStrategic AlliancesLicensingEtc.TECHNOLOGY CHANGEPROCESS – Inbound Logistics OperationsPRODUCT – Admin. OperationsR&DOutbound LogisticsMarketing, SalesDistribution Service
35 Management – Union Relations Phases/Processes PHASE I – LEGISLATIVE(THE LAW OF THE LAND)COLLECTIVEBARGAININGDispute ResolutionWarfareCooling – OffFact FindingConciliationMediationArbitrationMANAGEMENTUNIONCONTRACT5 Major SectionsPHASE III – JUDICIAL (PROTEST & APPEAL)PHASE II – EXECUTIVE(ADMINISTRATIVE INITIATIVE)Dispute ResolutionGrievance ProcedureArbitrationWarfare
36 Strategic Alliance Model Figure 1a. The Impact of Strategic Alliance on the Creation of Low Cost Distinct Competencies.Lower R & D CostTechnology LicensingLower Distribution Cost-Lower Cost of Operations-Higher Quality Products-Lower Prices-Economies of Scale-Broader MarketsMarketing LicensingLow CostDistinctCompetenciesAccess to Distribution ChannelsQualified LicensingHigher Barriers to EntryCross-LicensingLow Cost Access to TechnologyJoint-SourcingLower Cost of supplyOperating Efficiency
37 Strategic Alliance Model - 2 Figure 1b. The Impact of Strategic Alliance on the Creation of Differentiation Distinct Competencies.Access to New TechnologyTechnology Joint VentureAccess to Marketing Expertise-Quality Product-Brand Name Recognition-Broader MarketsDifferentiationDistinct CompetenciesHigher Barriers to EntryMarketing Joint VentureIncreased KnowledgePatent PoolControl Entries to the MarketsAccess to R & D
38 Table 1: The Proposed Strategic Alliances - Alternatives StrategyDefinitionTechnology/Product LicensingAgreement to use technology and/r productsMarketing LicensingAgreement to use marketingQualified LicensingLicense to use a particular product and/r technology in a particular marketCross-ContractingEstablishing a new entity by two or more parent firms in order to achieve a special objective, such as development campaigns for new productsTechnology Joint VentureMarketing Joint VenturesEstablishing a new entity by two or more parent firms in order to achieve a special objective, such as development of new technologiesPatent PoolSharing key patents for technology and/or productsJoint SourcingOrdering the necessary supply material collectively
39 E Information Hub Model Financial InstitutionsManufacturersDistributorsSubcontractManufacturersInformationHubConsumerRetailersSuppliersLogisticsProviders
40 Supply Chain Integration Dimensions ElementsBenefitsInformation IntegrationInformation Sharing & TransparencyDirect & Real Time AccessibilityReduced Bullwhip EffectEarly Problem DetectionFaster ResponseTrust BuildingSynchronized PlanningCollaborative Planning, Forecasting & ReplenishmentJoint DesignLower CostOptimized Capacity UtilizationImproved ServiceWorkflow CoordinationCoordinated Production, Planning & Operations, Procurement, Order Processing, Engineering Change & Design.Integrated, Automated Business ProcessesEfficiency & Accuracy GainsFast ResponseEarlier Time to MarketExpanded NetworkNew Business ModelsVirtual ResourcesLogistics RestructuringMass CustomizationNew ServicesClick-and-Mortar ModelsBetter Asset UtilizationHigher EfficiencyPenetrative New MarketCreate New Products
41 Information Distortion and The Bullwhip Effect Increasing Order Variability Up the Supply Chain?CustomersRetailersWholesalersManufacturersSuppliers
42 Business Life Cycle - Starbucks SalesTimeStart-upGrowthMaturityDecline
43 Corporate Culture Cool Green Hot Red True Blue Dull Gray Respects autonomy & integrity of others and requires the same from othersStrong and ambitiousMutually supportive, friendly interpersonal relationshipsConcerned with proceduresLack of controlsDictatorshipInterpersonal ProcessBureaucraticEmployees can be trusted to do what they should without oversight2 Standards: what they achieve; how well orders are followedDecisions should be made by groups, not individualsJust follow the book and you won’t be firedPeople like to do their own thing without depending on othersEmployee’s task is to listen to the boss an obey thoroughlyConcerned with group’s assessment re: quality of interpersonal processOrganization run on the basis of rulesCharacterized by creative activityAssertive and DirectivePeople OrientedPrecision and ContinuityDetermine personal goals and action plansBoss sets the goalsPromotions based on ‘getting along’ and understanding ‘our way’ of doing thingsSeniority, compliance with procedures, budget managementEntrepreneurialMarket drivenSecure MarketplaceEstablished, TraditionalIndependenceOpportunityConsiderationSecure
44 Country Clusters U.S. Far East 1) Individualism High Low 2) Power DistanceNear LowNear High3) Uncertainty Avoidance4) Masculinity5) Long Term OrientationAmericans focus on working as individuals where as the Far East cultures place a high importance on collectivism and stress teamwork.The U.S. is not as willing as the Far East to accept hierarchical or uneven distribution of power. Americans expect closer relationships between superiors and subordinates than the Eastern cultures.Both Clusters have little emphasis on structure and security. The cultures’ tendency to let time ‘have its way’ is a willingness to accept risk.The high Masculinity dimension reflects a stress on independence and masculine traits and less on interdependence and gender equality.Americans live more for today (short-term), and find less respect for age and place more emphasis on formal written contracts. The Far East emphasizes long-term values; persistence and respect for age & tradition.