Presentation is loading. Please wait.

Presentation is loading. Please wait.

© The University of Texas at Austin 2013 Strategic Management Prof Steve Courter 1.

Similar presentations


Presentation on theme: "© The University of Texas at Austin 2013 Strategic Management Prof Steve Courter 1."— Presentation transcript:

1 © The University of Texas at Austin 2013 Strategic Management Prof Steve Courter 1

2 © The University of Texas at Austin The Classics Strategy Planning Process  Modern firms engage in Strategic Planning to remain competitive  Define objectives  Assess environment  Internal  External  Formulate Strategy  Implement Strategy  Evaluate progress  Adjust Environmental Scanning Strategy Formulation Strategy Implementation Evaluation and Control Mission & Objectives

3 © The University of Texas at Austin 2013 How Strategy has evolved  Macro level shifts in the Global and US economies  Agriculture –to-  Manufacturing –to-  Technologies and Services  Short life-cycles  Short development cycles  Minimal capital investments  Lower barriers to entry  Resulting in more dynamic and intricate transactions

4 © The University of Texas at Austin 2013  Creating a unique and valuable position  That the core of a Strategy is never imitating anyone  Strategic positioning comes from three distinct sources  Serving the few needs of many customers (Jiffy Lube)  Serving the broad needs of a few customers (J.P. Morgan’s Private Bank)  Serving the broad needs of many customers in a narrow market (Ikea) Michael Porter’s Definition of Strategy

5 © The University of Texas at Austin 2013 Strategy is…  You must make trade-offs in competing and chose what not to do  You cannot be all things to all customers and create a unique, sustainable, competitive position  You must create a fit among all of your firm’s activities  Being disciplined and making clear choices  Being different versus being efficient

6 © The University of Texas at Austin 2013 Strategy is not…  Operational efficiency  An aspiration  To be #1 or #2 a la Jack Welch of GE  This is a goal.  How you accomplish that goal is a strategy  A vision  To reach $60 billion in revenue in 2014 is a goal  Whose market share you take to get there is a strategy

7 © The University of Texas at Austin 2013 Strategy is not …  Innovation  The Internet  Any form of technology  Experimentation  Flexibility  Nimbleness  Agility  Change  Re-engineering  Execution

8 © The University of Texas at Austin 2013 Who uses Strategic Management?  Board  Investors  Analysts  Employees  Consultants  Legal Support  Competition  Governments  Vendors/Suppliers  Auditors!!

9 © The University of Texas at Austin 2013 International Expansion Motivation Market and Resource Seeking l Secure raw materials l Exploit factor cost differences l Protect exports l Provide growth Market and Resource Seeking l Secure raw materials l Exploit factor cost differences l Protect exports l Provide growth Competitive Positioning l Match competitors l Capture global scale l Preempt markets l Play “Global Chess” Competitive Positioning l Match competitors l Capture global scale l Preempt markets l Play “Global Chess” Global Scanning/ Learning l Global intelligence scan l Access scarce knowledge l Recruit skills, expertise Global Scanning/ Learning l Global intelligence scan l Access scarce knowledge l Recruit skills, expertise Pre s/80s 90s/00s

10 © The University of Texas at Austin 2013 Strategic Management Tools  SWOTFinancial Ratios (limited)  Value ChainWaterfall Charts  Porters Five ForcesCompetitive Advantages  BCG Portfolio MatrixGeneral Electric Business Screen  Core CompetenciesEnvironmental Scanning  Goal MatrixProduct Life Cycle  Stakeholder AnalysisGlobal Competitive Diamond  RBVGlobalization Drivers  Restructuring (Chap 11)Contemporary Control Measures  Christensen DilemmaPEST Analysis

11 © The University of Texas at Austin 2013 Strategic Management Tools  SWOTFinancial Ratios (limited)  Value ChainWaterfall Charts  Porters Five ForcesCompetitive Advantages  BCG Portfolio MatrixGeneral Electric Business Screen  Core CompetenciesEnvironmental Scanning  Goal MatrixProduct Life Cycle  Stakeholder AnalysisGlobal Competitive Diamond  RBVGlobalization Drivers  Restructuring (Chap 11)Contemporary Control Measures  Christensen DilemmaPEST Analysis

12 © The University of Texas at Austin 2013 SWOT Analysis  SWOT analysis  A framework for analyzing a company’s internal and external environment and that stands for strengths, weaknesses, opportunities, and threats. 2-12

13 © The University of Texas at Austin 2013 Example: Harley-Davidson  Strengths  Strong & adaptable brand image  Weaknesses  Limited ability to develop new non-traditional products  Opportunities  Growing leisure interest in motorcycles worldwide  Response??  Threats  Differing foreign policies governing motorcycles 2-13

14 © The University of Texas at Austin 2013 The General Environment  Demographic  Sociocultural  Legal/Political  Technological  Economic  Global 2-14 Factors external to an industry, usually beyond a firm’s control

15 © The University of Texas at Austin 2013 Porter’s Five Forces Model of Industry Competition 2-15 Exhibit 2.7

16 © The University of Texas at Austin 2013 The Bargaining Power of Buyers  A buyer group is powerful when  It is concentrated or purchases large volumes relative to seller sales  The products it purchases from the industry are standard or undifferentiated  The buyer faces few switching costs  It earns low profits  The buyers pose a credible threat of backward integration  The industry’s product is unimportant to the quality of the buyer’s products or services 2-16

17 © The University of Texas at Austin 2013 The Bargaining Power of Suppliers  A supplier group will be powerful when  The supplier group is dominated by a few companies and is more concentrated than the industry it sells to  The supplier group is not obliged to contend with substitute products for sale to the industry  The industry is not an important customer of the supplier group 2-17

18 © The University of Texas at Austin The Bargaining Power of Suppliers  A supplier group will be powerful when  The supplier’s product is an important input to the buyer’s business  The supplier group’s products are differentiated or it has built up switching costs for the buyer  The supplier group poses a credible threat of forward integration

19 © The University of Texas at Austin 2013 The Value Net 2-19 Exhibit 2.10

20 © The University of Texas at Austin 2013 The Value Chain 3-20 Exhibit 3.1

21 © The University of Texas at Austin Firm infrastructure Human resource management Technology development Procurement Inbound logistics OperationsOutbound logistics Marketing and sales Service NFL recruits top talent after generating hype Vivid uses exclusivity contract to secure “beautiful star” SAS low turnover rate through great benefits C.F. Martin leverages flexible construction methods Toyota Production System Limmer handcrafted boots “Ace, the helpful place” Delta Airlines additional tier on loyalty program eBay’s innovations on the website for search and evaluation of sellers IKEA’s flat pack furniture allows customers to transport in car Ozarka water home delivery Encore Wire central warehouse HiltonToHom e.com increases brand aweareness MyMacys program helps stores adapt to local tastes De Beers trying to drive demand UPS using technology for cost-cutting efficiency Dyson’s cyclone, digital motor, and ball pivot Costco ‘s dual inventory warehouse/re tail store Zara Distribution Starbucks acquiring inputs from ethical sources Value Chain Examples

22 © The University of Texas at Austin 2013 Three Generic Strategies 5-22 Exhibit 5.1

23 © The University of Texas at Austin 2013 Competitive Advantage and Business Performance 5-23 Exhibit 5.2

24 © The University of Texas at Austin 2013 Potential Pitfalls of Differentiation Strategies  Uniqueness that is not valuable  Too much differentiation  Too high a price premium  Differentiation that is easily imitated  Diffusion of brand identification through product-line extensions  Perceptions of differentiation may vary between buyers and sellers 5-24

25 © The University of Texas at Austin International Growth Tactics` International Growth Tactics`  Exporting  Licensing  Franchising  Joint Venture  Greenfield Venture  Exporting  Licensing  Franchising  Joint Venture  Greenfield Venture

26 © The University of Texas at Austin 2013 Vertical Integration 6-26 Exhibit 6.3

27 © The University of Texas at Austin 2013 Vertical Integration Benefits  A secure source of raw materials or distribution channels.  Protection of and control over valuable assets.  Access to new business opportunities.  Simplified procurement and administrative procedures.  Learn Supplier business 6-27

28 © The University of Texas at Austin 2013 GE Business Screen High D A: Home Office B: Entertainment Software E C: Appliances D: Services A E: Consumer Electronics B C Low StrongWeak Competitive Position Industry Attractiveness

29 © The University of Texas at Austin Mergers and Acquisitions Most research indicates that mergers and acquisitions perform poorly: High premiums Increased interest costs High advisory fees Poison pills High turnover Managerial distraction Less innovation Lack of fit Increased risk

30 © The University of Texas at Austin MMergers and Acquisitions that WorkerWorM  Strong relatedness  Friendly negotiations  Low-to-moderate debt  Continued focus on core strengths of firm  Careful selection of and negotiations with target firm  Strong cash or debt position  Similar firm cultures and management styles  Sharing resources across companies  Beating the oddsBeating the odds

31 © The University of Texas at Austin 2013 Strategic Alliances and Joint Ventures  Introduce successful product or service into a new market  Lacks requisite marketing expertise  Join other firms to reduce manufacturing (or other) costs in the value chain  Pool capital, value-creating activities, facilities  Develop or diffuse new technologies  Use expertise of two or more companies  Develop products technologically beyond the capability of the companies acting independently 6-31

32 © The University of Texas at Austin 2013 Unmet Expectations: Strategic Alliances and Joint Ventures  Improper partner  Each partner must bring desired complementary strengths to partnership  Strengths contributed by each should be unique  Partners must be compatible  Partners must trust one another  Sound Familiar?? 6-32

33 © The University of Texas at Austin 2013 Co-OperationConflict Strategic Operational Goal Matrix

34 © The University of Texas at Austin 2013 Facilitates Global Expansion Strong competition against Lufthansa KLM/ Air France Companies have worked together Immediate Market Share Improvement Service offering differences, business class (BA) versus low cost (IB) Iberia’s financial performance Individual branding maintained Employee issues..unions/culture Expansion of Plant routes/runways/planes Improved Pricing Power Economies of Scale/cost synergies Develop Madrid as a gateway Perceived BA Dominance Current Alliances may be an issue Diverse expansion goals Iberia Shareholder concerns Co-Operation Conflict Strategic Operational Goal Matrix BA-Iberia

35 © The University of Texas at Austin 2013 Improved Competitive Position Global Expansion for brands Strong business focus Shareholders benefit Union issues and contract expiration Trademark Dispute will grow Management styles/Cultural Issues Production priorities and facilities be an issue Marketing philosophy may be an issue Cost reductions using Busch’s cost cutting plans as outline Improved wholesale distributor Bud goes Global Anheuser already the exclusive U.S. importer of InBev products -Shared Technology Possible cannibalization of brands Globalization will curtail AB product introductions outside US InBev’s Cuban presence Strategic conflicts with current Partners/distributors-Modelo Co-Operation Conflict Strategic Operational Goal Matrix Anheuser Busch In Bev

36 © The University of Texas at Austin 2013 Godfather Advice Previous  60% more appropriateListen to your lawyer!  How much is Tattaglia really getting?Money better spent in casinos  Narcotics not “victimless”No brainer..diversification=stability  Sabotage Solozzo after learning biz!Morally bankrupt business  Is it cheaper to do it in US vs SicilyShare profits with rehab centers  Too good to pass upGo through ST process  Is Solozzo reliable?Find a new supplier in Columbia  Good short term….bad long termKill him after establishing market  Get 50% Kill Turk in an accidentDo a pro forma impact  Communicate new vision to teamWarn Solozzo to stay out of biz!  Band with other 5 familiesDo it..but later  Sounds good!High margins!  30% not enoughDemand double the return  Take over in 2 yearsWait Strategy  Solozzo is like you s okLook at unintended consequences  Set up your own shopYes..and No  Too dangerous..do a bridge loanNever accept first offer..get more 1-36


Download ppt "© The University of Texas at Austin 2013 Strategic Management Prof Steve Courter 1."

Similar presentations


Ads by Google