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1 L O-The Strat. Mgt. Process Define Strategic Management State similarities among strat. mgt. models Reconstruct “class” strat. mgt. model Define parts.

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Presentation on theme: "1 L O-The Strat. Mgt. Process Define Strategic Management State similarities among strat. mgt. models Reconstruct “class” strat. mgt. model Define parts."— Presentation transcript:

1 1 L O-The Strat. Mgt. Process Define Strategic Management State similarities among strat. mgt. models Reconstruct “class” strat. mgt. model Define parts of model Define fit Provide example of fit Define synergy Provide example of synergy Define feedback Provide examples of feedback Know parts of a SWOT anal. and how to perform Know purpose of SWOT analysis

2 2 STRATEGIC MANAGEMENT Definition: The process of forming and implementing a mission, strategies, and objectives to enhance organizational performance.

3 3 Mission External Environment Internal Environment Strategy & Objectives Implementation DESIREDDESIRED POSS IBLE STRATEGIC MANAGEMENT MODEL Feedback

4 4 Parts of the Model Mission- Broad outline of orgs. activity and business make up. Includes product scope, market scope, & technology. External Environment -Conditions outside of the firm. Internal Environment- Conditions within the firm. Strategy- How an organization attempts to achieve its objectives. Objectives- Desired results- What SPECIFICALLY the organization wants to achieve (goals). Implementation- All activities associated with putting the strategy in place.

5 5 Define Fit 1 part of model is logically connected to other parts

6 6 Provide Example of Fit Mention and give example of part of model for a specific company (e.g. Strategy). Mention/give example for another part for company (e.g. Implementation) Explain why the two examples support each other.

7 7 Define synergy Sum of parts of system produce greater total when working together than when working alone. – 1+1=3

8 8 Provide Example Synergy Use real business example Not ridiculous Identify distinct parts How much independently How much together Why more together

9 9 Define Feedback & Give Example Define –Collection of post implementation results to enhance future decision making. Example –State strategy or objective result how affect future decisions

10 10 Parts and Performance of a SWOT Analysis Identify mission (goals) Isolate Opportunities and Threats –External Conditions Isolate Strengths and Weaknesses –Internal Conditions Choose strategies to avoid (or minimize) W&T and utilize (or maximize) S & O. Explain how strategy accomplishes above.

11 11 Purpose of SWOT Analysis Identifying a strategy to achieve your mission (goals) which utilizes your strengths and opportunities and avoids your weaknesses and threats.

12 12 Revising Comp.Strategy 1) Identify Mission 2) Analyze External Environment 3)Analyze Internal Environment 4)List current LT strategy and LT objectives 5) Evaluate Current Strategy 6) Consider new strategies; Type of strategy 7) Evaluate new strategies 8) Re-evaluate long-term objective. 9) Implement new strategy a.Consider remaining draw backs strategy 10) Feedback

13 13 Paper 1. Pick 4 of the items from the list below (One of the items must be item 1 and another item 2). For the each of the items chosen you must find an article from the Internet, newspapers, or magazines about a current business situation. The article must be less than 8 months old. Specifically, the articles (4 in all) should discuss companies or industries that illustrate the items. Write one or two paragraphs that clearly explain how the article illustrates the item. Although the paper should be understandable even if someone has not read the article, you still must include the article with your paper. Attach all the articles at the very end of your paper. You must type your paper and make sure it clearly indicates which item you are answering. Discuss each of the four items independently. Be sure to indicate which of the questions you are answering! I will grade you on writing style and content. Your write-up should clearly show that you understand the concepts you are using, clearly explain how the article illustrates the concept, and clearly be closely tied to points made in the relevant course pack reading or lecture on that concept. Mandatory items: Item 1. From the lecture on five forces or the reading on "How competitive forces shape strategy" explain how one of the underlying factor's we discussed is strengthening a force and how the company has adjusted its strategy to cope with the underlying factor. Item 2. Provide an example of a company's international strategy. Is the strategy multicountry or global? Why? Using points in the course pack (read pages 109, 110, 112, 113), as well as details in the current event business article explain whether it makes more sense to pursue a multi-country strategy or a global strategy in the particular case mentioned in the business article. Pick any two of the items below: Item 3. Explain how a firm is effectively aligning it strategy to avoid threats or weaknesses. Item 4. Explain how a lower or mid-level employee clearly influenced the overall strategic direction of the entire firm. Item 5. On page 6 of the course pack, the second paragraph under long-term objectives, lists how to increase the value of objectives. Find an example of an objective and explain whether or not it meets at least three of criteria in the article (The list of criteria is, motivating, measurable, achievable, and consistent with the other objectives of the firm). Item 6. On page 14 through 22 the reading mentions "tight" fit, "early" fit and the "fragility" of fit. Find an article that illustrates any of these three concepts. Item 7. Explain how a firm has modified its strategy to better fit one of the elements in the remote environment. Item 8. According the reading starting on page 96, explain how a firm is using a strategy that is consistent with its industry environment (i.e., emerging industries, high velocity markets, maturing industries, declining industries, or fragmented industries). Be sure your paragraph clearly shows which of the industry environments the company is in, as well as, explaining how the strategy the firm is using is consistent with that environment.

14 14 L O-Mission Define a mission. Know what a mission includes. Compare and contrast a mission statement and a mission. Know why a mission is needed. Know what to keep in mind when designing a mission. Evaluate a mission. Define “stakeholder.” Know how to reconcile the conflicting needs of stakeholders.

15 15 What is Mission, What Includes What is it. –Purpose –Unique –Values of decision makers Includes –Product scope-Needs satisfied –Market –Technology –Stakeholders Importance Claims

16 16 Compare Contrast: Mission and Mission Statement Mission Needed Communicated in multiple ways What is being supported. Few organizations have. Content same Mission Statement Helpful Written or Oral communication One potential form of support Many organizations have. Content same

17 17 Why Needed Purpose Screening Guide –Resource allocation –Strategy Tone

18 18 Keep in Mind when Designing a Mission Duration Unique Motivating Permeate Organization Realistic Mean it.

19 19 Evaluate a Mission Make sure to: –Include needed parts. –Meet needs. –Keep everything in mind.

20 20 Define Stakeholder Any group that has a justifiable reason for expecting a firm will satisfy their claims in a responsible manner.

21 21 Reconciling the Needs of Stakeholders Decide importance. Understand specific claims. Have mission reflect importance and claims. Be willing to reassess. Try not to antagonize any stakeholder.

22 22 LO: The External Environment Define and distinguish among three levels of environment. Understand the need to assess the external environment. List the five elements within the remote environment. Define key success factors. Know errors regarding KSFs. Define & give example of industry specific ratios. List five forces and know the difference among the forces. Define underlying factors. Know how underlying factors affect the strength of a force. Know how to use information from five force analysis to form strategy. Perform a five force analysis Know the three types of conclusions derived from a five force analysis. Know major point about operating environments.

23 23 Define and Distinguish among the 3 Levels of Environment. Remote Environment Industry Environment Operating Environment - Economic - Social - Ecological - Political - Technological Key Success Factors Industry Specific Ratios Five Force Model Driving Forces Strategic Group Labor Creditor Customers Suppliers The Firm

24 24 Define Levels of Environment & Know Differences Define –Remote Environment: Originates beyond, & irrespective of a firm’s operation. Difficult for 1 firm to influence. –Industry Environment: Collection of firms offering similar products or services, & the entities directly related to those firms (Includes five forces.) –Operating Environment: Those entities that the specific firms deals with. Distinguish –As one moves from remote to operating environment: More control More immediate surroundings There are fewer participants –Lines between is blurred.

25 25 Remote Environment: Five Elements Elements –Economic: Disposable income, inflation, interest rates, etc. –Social: Collective beliefs, values, attitudes, opinions & lifestyles reflected by society. –Political: Taxes, laws, gov. as customer and competitor. –Technological: Computers, faxes etc. –Ecological: Pollution, fewer resources.

26 26 Industry Environment: Key Success Factors Definition –Skills, resources, & activities. –Especially important to survival of almost all participants in a specific industry. –Does not assure success. Relationship to Performance –Missing KSF--- Firm Failure –Threshold Level of KSF -- Possible Survival –High level -- Survival to superior performance. –Sometimes need something more than KSFs for superior performance

27 27 Manager Errors: Key Success Factors Believe having a threshold level on all KSFs is enough for high performance. Below a threshold level on 1 or more. Investing (time, effort, $, etc.) in a KSF beyond point of meaningful return.

28 28 Define/Give Example of Industry Specific Ratio A ratio especially important to a specific industry. Helps determine profitability. Often captures utilization of scarce resource.

29 29 Finding A Prom Date Movies Redwings Students at School Nearby University Tuxes, Dresses Dates

30 30 Industry Environment: Five Forces Competitive Rivalry (Sellers)- Other firms within the industry. Potential Entrants - Companies formerly not in the industry. Substitutes - Firms from other industries that offer products or services fulfilling similar needs. Suppliers - Those companies who supply the industry with products or services. Buyers - Those companies or individuals who purchase the industry’s product or service.

31 31 Define Underlying Factors Underlying factors: Conditions that increase the power of a given force. Each force has its own unique set of conditions or underlying factors.

32 32 UNDERLYING FACTORS THAT MAKE FORCES STRONGER Competitive rivalry (jockeying for position) is a powerful force given the following underlying factors: 1. Many competitors (Compared to other industries) 2. Competitors equal in size and/or very large 3. Slow growth in demand 4. High fixed costs 5. Undifferentiated products 6. High exit barriers Potential entrants are a powerful force given the following underlying factors: (NOTE: If potential entrants are powerful, it is easier for outsiders to enter the industry. This is favorable to those not in the industry, but makes the industry less desirable to those participating in it.) 1. The industry has few economies of scales 2. Easy access to technology and know-how 3. Little product differentiation (no loyalty) 4. Low capital requirements 5. Few cost disadvantages independent of size 6. Easy access to distribution channels 7. Few government rules that deter entry Substitute products are a powerful force given the following underlying factors: 1. The price of substitutes is low compared to your industry 2. The benefits are high compared to your industry 3. There are low switching costs when purchasing substitutes Buyers are a powerful force given the following underlying factors: 1. They purchase in large volume or there are few buyers 2. Your products are undifferentiated 3. Your products represent a significant percentage of a buyer's total costs 4. The buyer is not very profitable 5. Quality of your product is not important to buyer 6. Your product does not save buyer money 7. The buyer can integrate backward Suppliers are a powerful force given the following underlying factors: 1. There are few suppliers -they are more concentrated than your industry 2. The suppliers' product is differentiated 3. Supplier product has few substitutes 4. The supplier can integrate forward

33 33 Using information from five force analysis to form strategy 1.Identify industry (Where in the distribution chain does it fall). Who are the suppliers and buyers? 2.Identify a strong force (Porters 5 Force Model) relative to the industry 3.Clearly identify underlying factor that makes the force strong (If doing as part of paper 1, question 1, provide specific support from the article) 4.Mention the specific firm within the industry (center box, competitive rivalry) 5.State what is being done to contend with the underlying factor. (If doing as part of paper 1, question 1, provide specific support from the article)

34 34 Performing A Five Force Analysis 1. Specify industry 2. List all five forces 3. For each force, indicate important underlying factors 4. Summarize the strength of each force based upon the number and importance of underlying factors.

35 35 Performing A 5 Force Analysis

36 36 3 Types of Conclusion Derived from 5 Force Analysis 1.Determine the strongest forces e.g., Competitive Rivalry & New Entrants 2.Determine which underlying factors are most important by determining the ones that have greatest influence on the strongest forces. e.g., High fixed costs, Undifferentiated products. 3.Determine industry attractiveness & comp. riv. based upon strength of forces combined e.g., Industry not attractive. Rivalry intense.

37 37 Major Point about Operating Environments General conditions in an industry (e.g., power of a force or underlying factors) may differ from the conditions within a specific operating environment within the industry.

38 38 Strategic Group Map Shoe Industry Quality Low High Marketing Expenditure Low High

39 39 Why Conduct Strategic Analysis? Simplifies analysis. Ident. competitors Finds uncovered spaces. Isolates factors that might hurt/help some groups more than others.

40 40 L O-Internal Environment Know parts of value chain and how to conduct a value chain analysis. Know the definition of a core competence. The attributes of a core competence. Know what makes a strength or weakness relevant.

41 41 Parts of Value Chain Conducting Analysis Parts (In book) –Primary activities parallels flow of goods. –Support activities affect each of primary activities –Effectiveness/efficiency in activities affects profit margin. Conducting Analysis –Mention one part of value chain Describe activity as it relates to company (For support activity, describe how affects several primary activities). Specify whether activity differs from others in industry Indicate likely affect on profit margin

42 42 Core Competence: Def. & Attributes Core competence: A company’s skills, capabilities or resources that serve as a basis for building a sustainable competitive advantage. Attributes –Valuable –Rare –Imperfectly imitable

43 43 LO: Competitive Advantage (CA) & Generic Strategies (GSs) Define competitive advantage (CA) Know the relationship between CA and core competencies. Define Porter’s generic strategies (GSs) Know Porter’s recommendation regarding the GSs. Know the relationship between Porter’s GSs and CA. Define best cost provider Know the proposed relationship between a best cost provider and CA. Decide whether you think Porter’s recommendations should be followed.

44 44 Define Competitive Advantage (CA) & Relate to Core Competence CA: A fairly SUSTAINABLE advantage over competitors resulting in above average performance Relationship Strategy Selection Competitive Advantage Core Competence

45 45 Define Porter’s GSs Differentiation: The product or service is unique. Appeals to a broad segment of the market because of superior features or attributes. May cost more to produce but company can charge more. Low cost provider: The product or service is basic. Appeals to a broad section of the market. The company has a lower cost structure than all rivals. Focus: Focuses on a narrow customer group and differentiates its offering based upon the unique needs of that group or is able to develop a lower cost structure due to unique attributes of that group.

46 46 Porter’s Recommendations Regarding GSs Use just 1 GS All efforts towards 1 GS. Zero tradeoffs Avoid stuck in middle. Occasionally can find win win & advance in more than one strategic direction

47 47 The Relationship between GSs and CA Passionately pursuing 1 GS ---> CA. Superior profits –Differentiation -- Higher price compensates for higher cost. –Low cost - Same price as competitor but bigger profit margin or lower price same margin per unit but more volume so greater profits. –Focus -- Either of the above but characteristics of segment allows. Different skills & core competencies –Differentiation –Low cost –Focus Relationship Different GSs Competitive Advantage Different Core Competence

48 48 $10 Auction Playing for real money!!!! If you are not willing to possibly lose money do not become involved!!!!!! Absolutely no talking once bidding begins. Use hands to indicate bids. Bidding starts at 50 cents and increases in increments of 50 cents. You can’t bid twice in a row. The highest bidder will get the $10 but must also give me their bid. The second highest bidder must pay me what they bid.

49 49 The Relationship between GSs and CA In part, to gain CA –Signal –Retaliate –Resources in one direction Be only one seriously competing in that way. Develop unassailable position.

50 50 Best Cost Provider Def & Relationship to CA Def: Product or service is not unique and is not basic. Represents a better value than competitive products. Lower price for similar benefits or same price for more benefits. Company must have cost advantage over CLOSE compets. This strategy was not mentioned by Porter in his original work. Book says can lead to CA. Greater market share, possible more profits per unit. –What would Porter say? Why?

51 51 LO: ODI Know advantages and disadvantages of first moving. Know factors that make innovations harder and easier to adopt. Be able to do a break-even analysis based upon fixed cost, variable costs, and price. Be able to calculate $ amount of customer benefits in ODI case

52 52 ODI: 1. What factors about the product and market would make it easier to convince farmers to adopt the lenses. (Think in terms of the nature of the product, generalizations about farmers, etc.) 2. What factors would make it harder to convince farmers to adopt the lenses? (Objections one may have to overcome, nature of the product, generalizations about farmers, etc) 3. Why might it be easier or harder for the market to accept this product than it would be for market, in general, to accept new products, in general? 4. What are the benefits of being THE FIRST to go ahead with the contact lenses. Why would one want to beat the competition? 5. What are the drawbacks of being THE FIRST? Why would one choose to wait to introduce the product? 6. Given the assumptions of the case, how many lenses would ODI have to sell in year 1 to break even? 7. What specific dollar amount does the farmer gain per chicken per year if they adopt the lenses? 8. Which generic strategy would you follow in year 1? WHY? What specific strategy would you follow? Sell to whom, where, how big a market? WHY?

53 53 Test 1 About 30 to 35 multiple choice questions 60% of test (About 10 to 15 of which will be on readings) 4 essay questions 40% of test Learning objectives from READINGS for the first exam. (To avoid thinking about the wrong article when asked a question on the test, it might be helpful to be familiar with the names of the articles) The articles on mission statements make some recommendations regarding who should be involved in developing a mission statement --- make sure that you are familiar with their recommendations. From page 93 and 94, understand the three ways in which a five force analysis might influence the formulation of strategy. Make sure you have an in-depth understanding of each way. What are the four things that lead to sustainability (pages 64-68)? Make sure you understand each. Within each primary and support activity there are three activity types that play a different roll in competitive advantage. (Page 81-82). Be familiar with each. On pages 85 and 86 understand what the article means by vertical linkages. From page 121, know the common required skills and resources and common and the common organizational requirements for each generic strategy. On pages 123 and 124 know the risks associated with each generic strategy. On page know the conditions that lead to pure strategies and the conditions that lead to mixed strategies. From pages 97 to 107, be able to describe the characteristics associated with each of the competitive environments (emerging, high velocity, maturing, stagnating, and fragmented industries) and strategies for competing in each. Be able to distinguish between multicountry and global strategies (pages 109 and 110).

54 54 Multiple choice questions relating to lectures for the first exam. Multiple choice questions will relate to the learning objectives. Essay Topics For Exam 1 Rules for essays requiring that you come up with a business example: 1) The example should not be something used in class or book; 2) The example should be unique. Essay question 1 Use a SWOT analysis to determine a strategy to reach a personal goal that is important to you. If you have done this in advance it can be turned in with the test. Follow the same format used on the sheet describing Magnum's strategy. Only include 1 opportunity, 1 threat, 1 strength, & 1 weakness. Essay question 2 Essay question 2 will be about 1 of the items below. (You will learn which at the time of the exam). For all of the items below, use an actual company or industry in your example. Also to receive full credit, your example should come from a newspaper, magazine or Internet article which is less then 2 months old. Although the article does not need to use the same terminology that the class used, it should illustrate the general concept. Feel free to be creative. You will also need to include the article with your test. DO NOT WRITE (OR TYPE) ON THE ARTICLES prior to the test. Since you do not know which of the above items will be on the test, to be fully prepared, you need to bring in articles for each of the items below. Provide an example of fit. Provide an example of feedback. Provide examples of key success factors. Provide an example of an industry specific ratio. Provide an example of synergy. Essay question 3 You will be asked to do a break-even analysis. Essay question 4 will reflect one of the four items below. Relate the value chain to an actual company. Be able to identify and explain each part of the value chain. Reconstruct the strategic management model developed in class – Including being able to give an example of each part. Use an example to illustrate the relationship between core competence (Know traits of core competence according to lecture), strategy and competitive advantage. Conduct a five force analysis for an actual industry. Be able to mention two underlying factors for each force and explain how they affect the force.

55 55 Take Home Exam Question. Conduct a SWOT analysis to determine a strategy to reach whatever personal goal is important to you. You may not, however, choose for your goal, landing a job, getting a promotion, losing weight, getting in better shape, or graduating. Only list one opportunity, one threat, one strength, and one weakness. You will be graded on writing style (which includes how clearly you label your answer) as well as content. The example below includes the format you should use to answer the question. Example: How might Magnum use a SWOT analysis to form a strategy to achieve a personal goal. Assume Magnum is caught on a dessert island with a 12 foot tall villain who wants to kill him. Step 1: List the goal and indicate a strength, weakness, opportunity and threat. Goal: To continue to live. Strength: A very good swimmer Weakness: Magnum's small size Opportunity: Mainland is 1/4 mile away. Threat: Villain with a club Step 2: Choose a strategy Magnum should swim to shore. Step 3: Defend your choice by showing how your strategy utilizes or maximizes the importance of the strength and opportunity and avoids or minimizes the importance of the weakness and threat. Swimming to shore utilizes Magnum's superior ability to swim thereby maximizing his strength. Swimming to shore allows Magnum to reach the mainland, thereby maximizing the opportunity that it is only 1/4 mile away. Swimming to shore minimizes the importance of Magnum's weakness because being large does not make one a better swimmer. Swimming to shore minimizes the importance of the villain's club because he will not able to hold on to it while swimming after Magnum.

56 56 LO: Strategic Treatment of Conclusions from 5 Force Analysis Know why one does a 5 force analysis Know 3 strategies firms can select to contend with low industry profitabilty Know 3 strategies firms can select to contend with strong forces Know 3 strategies firms can select to contend with important underlying factors

57 57 Strategic Treatment of Conclusions from 5 Force Analysis Conclusion: Potentially low industry profitability –Strategic Treatment Avoid industry Diversify Locate profitable operating environment Conclusion: A strong force is... –Strategic Treatment Emphasize in planning Locate operating environment where force is weaker Develop strength to contend with force Conclusion: The most imporant underlying factor is... –Strategic Treatment Change underlying factor Develop relevant strength to contend with underlying factor Locate operating environment where underlying factor is less important

58 58 LO: The Grand Strategies Know the difference between generic strategies and grand strategies. Know which of the grand strategies are corporate level and which are business level. Know how to define and identify (distinguish between) each of the grand strategies. Know some of the advantages and disadvantages of each of the grand strategies.

59 59 Difference between Generic and Grand Strategies Grand strategy more specific. Generic strategy guides choice of grand strategy

60 60 Grand Strategies: Distinctions, Level, & Adv. & Disadv. Apple develops first micro-computer 3M develops the post -it note pad Coke acquires bottling facilities (or builds own) A major oil company moves into retail gas stations Stu Leonard Dairy “Market” opens salad bar and starts selling ribs Pepsi splits from restaurants operations. Agilent and Hewlett Packard KFC advertises “When did you last have KFC? Have some today.” Skin so soft sells their skin softener as a bug repellent GM and Toyota get together to produce the Geo Kmart and Yahoo launch internet site Iacocca takes over Chrysler; stops producing larger cars A cigarette company, Philip Morris buys Miller beer. A Maine ski resort buys a company that repairs air- conditioners in Florida Diamler Benz buys Chrysler Eastern Airlines-Sells shuttle to Trump, routes to Delta and Continental and planes to other companies. Eventually they close their doors.

61 61 LO: CITA What general factors lead to the formation of a new venture? What critical success factors are important to new ventures How did the remote environment influence CITA What were the differences and difficulties of dealing with diverse cultures. How can several concept be used to help CITA choose a product line.

62 62 LO: Wendy’s What were key environmental considerations in the fast-food industry at the time Wendy's entered the market? What was Wendy's early strategy/objectives/mission? Which of Porter's generic strategies was Wendy's following, early in the case? Evaluate Wendy's early strategy. What were Wendy's functional strategies? How did Wendy's functional strategies relate to their strategy? How did functional strategies support each other? Why did Wendy's change from it's initial strategies?

63 63 Implementation Overview Functional strategies –Support Strategy –Support Each Other 7 S –Strategy –Staff –Structure –Skills –Systems –Shared values –Style Institutionalizing the Strategy Controls

64 64 Paper 2. Due on the last day of class. Find business articles, less than 8 months old, about companies that illustrate the grand strategies. You need to use one article per strategy. The article does not need to use the same terminology as the class. Highlight or underline the two sentences in the article that most clearly reflects the strategy chosen. Although the paper should be understandable even if someone has not read the article, you still must include the article with your paper. You will be graded on writing style, as well as, content. The assignment must be typed. You may NOT help each other finding articles. 1) Write one or two paragraphs that clearly explains why you think the article illustrates the strategy you have chosen. Be very specific. 2) As per our class discussion, clearly indicate one of the major advantages (i.e., an advantage mentioned on the overhead) and one of the major disadvantages (i.e., a disadvantage mentioned on the overhead) typical of that strategy. 3) Explain how the advantage and disadvantage apply to your example. Be very specific. Normal Assignment: If you turn in 11 of the grand strategies, you may earn up to a maximum of 40/40 point Reduced Assignment: If you turn in 7 of the grand strategies, you may earn up to a maximum of 30/40 points. Do not count combination strategies as one of the grand strategies!

65 65 TEST 2: KNOW LEARNING OBJECTIVES FROM CLASS LECTURES SINCE THE MID- TERM. About 30 multiple choice questions 60% of test (90 pts) (About 8 will be from readings, 19 on lecture material since the last exam and 3 questions from pages 97 to 107 (Be able to describe the characteristics associated with each of the competitive environments (emerging, high velocity, maturing, stagnating, and fragmented industries) and strategies for competing in each). 4 essay questions 40% of test (60pts) Essay Question 1: There will be one essay question on one of the topics below. A) Apply the three tests of a diversification move. Use a real company in your example (although, the company does not actually have to be diversifying). Your example should be unique. What outcome is needed for the test to suggest that the move will enhance shareholder value. Your answer should clearly indicate that you understand what each of the tests of diversification is. Your answer should be at most 7 seven sentences. B) Give two examples from the Wendy’s case illustrating how functional strategies supported business level strategies and two examples of how strategies from different functional areas supported each other. C) Using concepts from the lecture build a case that CITA should pursue the glazed mosaics. Find at least one reason why you would not blindly follow the analysis! Essay Question 2: The instructor mentioned several policies that might lead him to achieving his goal of having members of his entrepreneurship class who are not members of a specific group provide feedback to other groups in the class on that group's project. A) What ONE change could lead the instructor to achieve this goal. Justify your answer and make sure your answer relates to the seven "S" model. This answer should be no more than two sentences max. B) I will ask how you might adjust or change an S to help achieve the instructor's goal. I will specify which S during the exam. Make sure your answer clearly indicates that you understand the definition of the S. Your answer to part B does necessarily imply that this is the only change that you would make.

66 66 TEST 2 Continued: Essay Question 3: To successfully implement a strategy, all aspects of the company and the company's environment should "fit" together. Collectively, the Rothchilde article and the Deshpande article suggest that BCG quadrants (e.g., dog, cash cow, question mark or star), type of leaders, cultures, strategies, and industry lifecycle stages should all fit together (see attached sheet). For the exam be ready to justify the articles choices of how specific types of leaders, cultures, strategies, industry lifecycle stages and quadrants fit together -- I will specify which quadrant at the time of the exam. This question MAY be open note. Your answer should be no more than 7 sentences max. Essay Question 4: This question will require that you use the "Competitive Advantage to Corporate Strategy" and the "Corporate Strategy: Quest for Parenting Advantage" articles to analyze B&D's diversification strategies. The specific question(s) will be a subsection of the questions asked on the handout on B&D (See next page). Also see the handout for more specific grading criteria. This question(s) MAY be open note. You will have a total of one half hour to answer essay questions 3 and 4. Multiple Choice Questions from Readings: Be able to define each of the concepts of corporate strategy and know in general how effective the article thinks each of the strategies usually is. (page 157 to page 166). Know what managers' biggest mistakes are when diversifying according to page 179. Know the questions one should ask when assessing a business strategy (page 182). Know entire reading on “Designing Organizational Structure” (Beginning on page 532) Other multiple choice questions from the readings will relate to issues studied in preparation for the essay questions.

67 67 Essay Question 4: Further details. Certain question(s) on the final will be identical or very similar to the ones below (and will account for a significant amount of points on the final). You may only discuss these questions with students currently enrolled in Prof. Simon's MGT 435 class. While you may take notes on what your class members say, you may not copy or get any written or typed material from your classmates. You may ask the instructor to clarify any of the questions below. A MAJOR part of the grading of the essays will reflect how well students used concepts within the Competitive Advantage to Corporate Strategy and the Corporate Strategy: Quest for Parenting Advantage articles to analyze B&D's diversification strategies. 1) Was Black and Decker's acquisitions of GE's houseware division a good idea? To answer this question you should discuss whether you think the acquisition meets the three tests of adding value (As discussed in today's lecture and the article "Competitive Advantage to Corporate Strategy"). Why or why not? (While all three tests should be discussed, pay special attention to the better-off test). Also justify your answer by discussing which one of the four corporate strategies (As discussed in the lecture and the article Competitive Advantage to Corporate Strategy) the GE acquisition represents? Why? You may also argue that the diversification efforts reflected more than just one strategy. Finally, use may be asked to use the concepts in the "Corporate Strategy: Quest for Parenting Advantage" article to determine where on the parenting-fit matrix the acquisitions would be placed to justify your answer. 2) Was the Emhart Corporation acquisition a good idea? Make sure your answer to this question addresses the issues mentioned above. In the case of Emhart, you may want to argue that some of the specific units acquired were a good idea and others were not (If you wish to make this point just discuss two of the units in detail). Do make sure to draw an overall conclusion, however. Criteria I will use in grading the answers for the exam: A. Correct and appropriate use of concepts. B. Superior answers will utilize detailed ideas and tools in the articles that underlie the main concepts (e.g., if asked about the three tests, students should apply some of the ideas in the article that help determine if an acquisition passes a given test). C. While you may discuss some post hoc results to support you points, this should not be the major thrust of your answer. Primarily use information that was available at the time of the acquisitions. You may also make REASONABLE assumptions but make sure you clearly state them.

68 68 LO: Seven S’s Be able to define each S Be able to give an example of each S Understand Major Points of 7 S Model

69 69 Define & Example of 7 S Strategy-The plan to achieve objectives, mission --- How? Staff - People – Hard --Pay Scales, Formal training, Selection, Etc –Soft--Morale, Attitudes Structure-- How to divide and coordinate tasks Skills--What firm does best Systems--Formal and informal procedures that make org “go” Shared values-Culture-Beliefs, Traditions, and Operating style. Style-Top level- Leadership.

70 70 LO: Staff, Structure & Skills What are elements of staff Relate staff to a company’s strategy What are elements of structure Know the three rules of structure Relate structure to a company’s strategy Relate skills to concepts in prior parts of course. Relate skills to a company’s strategy

71 71 LO: Systems, Shared Values, & Style Types of systems Types of reward systems & major message Relate systems to a company’s strategy Know the importance of shared values (Culture) How to identify shared values How to manage culture Relate shared values to a company’s strategy Why listen? Relate style to a company’s strategy

72 72 Shared Values Importance –very --- esp to implim. How identified –Shared stories –Org winners How to manage culture –Set example –Get dominant core Relate culture to strategy


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