1. BBA 473 Strategic Planning and Policy Analysis

2. Course Objective
To look at an organization from the CEO’s perspective and to understand the necessity of leadership and entrepreneurship in an organization. The organizations strengths, weaknesses, opportunities and threats must be analyzed in order to formulate a strategic plan of action, goals, and controls to meet those goals.

3. Course Outcomes
Develop the student’s capacity to think strategically about a company, its business position, and how it can gain sustainable competitive advantage.
Build skills in conducting strategic analysis in a variety of industries, especially to provide the student with a stronger understanding of competitive challenges.

4. Course Outcomes
Give students hands on experience in crafting business strategy, reasoning carefully about strategic options, using what-if analysis to evaluate alternatives, and making strategic decisions.
Improve student’s ability to manage the organizational process by which strategies get formed and executed.

5. Course Outcomes
Integrate the knowledge gained in earlier core courses in the business school curriculum.
Develop powers of managerial judgment and improve ability to create results oriented action plans.
Elevate importance of ethical principles, personal and company values.

6. What is Strategic Management?

7. “If you don’t know where you’re going, you’re liable to wind up someplace else!”
-- Yogi Berra

8. “Plans are nothing; planning is everything!”
-- Dwight D. Eisenhower

9. What do we mean by strategy?
Strategy is grounded in the array of competitive moves and business approaches management depends on to produce successful performance.
Strategy is management’s game plan for strengthening the organization’s position, pleasing customers, and achieving performance targets.

10. Without a strategy, managers have:
No thought-out course to follow
No roadmap to manage by
No action program to produce the intended result

11. Good strategy and good strategy execution are the most trustworthy signs of good management.

12. Three Fundamental Strategic Questions
Where are we currently?
Where do we want to be in the future?
How will we get there?

13. Strategic planning is a “disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it.”

14. Benefits of Strategic Planning
Increased effectiveness
Increased efficiency
Improved understanding and better learning
Better decision making
Enhanced organizational capabilities
Improved communications and public relations
Increased political support

15. What does a company’s strategy consist of?
Company strategies concern:
How to satisfy customers
Broad or narrow product line?
Amount of customer service provided?
How to grow the business
Concentrate on a single business strategy?
Diversify into related or unrelated industries?
Expand globally?

16. How to respond to changing industry and market conditions
How best to capitalize on new opportunities
How to manage each functional piece of the business
How to achieve strategic and financial objectives

17. Strategic Competitiveness
Achieved when a firm successfully formulates and implements a value-creating strategy
Sustained Competitive Advantage
Occurs when a firm develops a strategy that competitors are not simultaneously implementing
Provides benefits which current and potential competitors are unable to duplicate
Above-Average Returns
Returns in excess of what an investor expects to earn from other investments with similar risk 4

18. The Strategic Management Process
Involves the full set of:
Commitments
Decisions
Actions
which are required for firms to achieve:
Strategic Competitiveness
Sustained Competitive Advantage
Above-Average Returns 9

19. Components of Strategic Management Process
Recognizing and evaluating external and internal environment.
Development of strategic mission.
Strategy Formulation
Strategy Implementation
Evaluation of performance

20. 21st Century Competitive Landscape
Rapid technological changes
Rapid technology diffusions
Dramatic changes in information and communication technologies
Increasing importance of knowledge
Fundamental nature of competition is changing
The pace of change is relentless....
and increasing
Traditional industry boundaries are blurring, such as...
Computers
Telecommunications 25

21. 21st Century Competitive Landscape
The global economy is changing
People, goods, services and ideas move freely across geographic boundaries
New opportunities emerge in multiple global markets
Markets and industries become more internationalized
Traditional sources of competitive advantage no longer guarantee success
New keys to success include:
Flexibility
Innovation
Speed
Integration 30

22. Stakeholders:
Groups who are affected by a firm’s performance and who have claims on its wealth
The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders
Capital Market
Stock market/Investors
Debt suppliers/Banks
Firm
Product Market
Primary Customers
Suppliers
Organizational
Employees
Managers
Non-Managers 59

23. Stakeholder Involvement
Two issues affect the extent of stakeholder involvement in the firm
Capital Market
Organizational 1
How do you divide the returns to keep stakeholders involved?
Product Market

24. Stakeholder Involvement
Two issues affect the extent of stakeholder involvement in the firm
Capital Market
Organizational 2
How do you increase the returns so everyone has more to share?
Product Market

25. Components of the General Environment
Economic
Demographic
Sociocultural
Competitive
Environment
Industry Environment
Political/Legal
Global
Technological 10

26. General Environment Demographic Segment Population size Age structure
Geographic distribution
Ethnic mix
Income distribution

27. General Environment Economic segment Inflation rates Interest rates
Trade deficits or surpluses
Budget deficits or surpluses
Personal savings rate
Business savings rates
Gross domestic product

28. General Environment Political/Legal Segment Antitrust laws
Taxation laws
Deregulation philosophies
Labor training laws
Educational philosophies and policies

29. General Environment Sociocultural segment Women in the workplace
Workforce diversity
Attitudes about quality of worklife
Concerns about environment
Shifts in work and career preferences
Shifts in product and service preferences

30. General Environment Technological Segment Product innovations
Applications of knowledge
Focus of private and government-supported R&D expenditures
New communication technologies

31. General Environment Global Segment Important political events
Critical global markets
Newly industrialize countries
Different cultural and institutional attributes

32. External Environmental Analysis
A continuous process which includes
Scanning: Identifying early signals of environmental changes and trends
Monitoring: Detecting meaning through ongoing observations of environmental changes and trends
Forecasting: Developing projections of anticipated outcomes based on monitored changes and trends
Assessing: Determining the timing and importance of environmental changes and trends for firms’ strategies and their management

33. Industry Environment
A set of factors that directly influences a company and its competitive actions and responses.
Interaction among these factors determine an industry’s profit potential.
Threat of new entrants
Power of suppliers
Power of buyers
Product substitutes
Intensity of rivalry

34. Bargaining Power of Suppliers
Porter’s Five Forces
Model of Competition
Threat of New Entrants
Threat of New Entrants
Bargaining Power of Suppliers
Rivalry Among Competing Firms in Industry
Bargaining Power of Buyers
Threat of Substitute Products 23

35. Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Making new product introductions
Increasing consumer warranties or service
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but may be costly to smaller competitors 25

36. Rivalry Among Existing Competitors
Cutthroat competition is more likely to occur when:
Numerous or equally balanced competitors
Slow growth industry
High fixed costs
Lack of differentiation or switching costs
High storage costs
Capacity added in large increments
High strategic stakes
High exit barriers
Diverse competitors 26

37. Competitor Analysis
The follow-up to Industry Analysis is effective analysis of a firm’s Competitors
Competitive
Environment
Industry Environment 33

38. Competitor Analysis Response Assumptions
What assumptions do our competitors hold about the future of industry and themselves?
Response
What will our competitors do in the future?
Current Strategy
Does our current strategy support changes in the competitive environment?
Where do we have a competitive advantage?
Future Objectives
How do our goals compare to our competitors’ goals?
How will this change our relationship with our competition?
Capabilities
How do our capabilities compare to our competitors? 38

39. Sustainable Competitive Advantage
Chapter 2
External Environment
What the Firm Might Do
Sustainable
Competitive
Advantage
Chapter 3
Internal Environment
What the Firm Can Do 5

40. Challenge of Internal Analysis
How do we effectively manage current core competencies while simultaneously developing new ones?
How do we assemble bundles of resources, capabilities and core competencies to create value for customers?
How do we learn to change rapidly?

41. Resources What a firm Has... What a firm has to work with:
its assets, including its people and the value of its brand name
Tangible Resources
Financial *
Physical
Human Resources
Organizational
Resources represent inputs into a firm’s production process...
such as capital equipment, skills of employees, brand names, finances and talented managers
Intangible Resources
Technological *
Innovation
Reputation
“Some genius invented the Oreo. We’re just living off the inheritance.”
F. Ross Johnson,
Former President & CEO, RJR Nabisco 21

42. Capabilities What a firm Does...
Capabilities represent:
the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective.
Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firm’s tangible and intangible resources that are based on the development, transmission and exchange or sharing of information and knowledge as carried out by the firm's employees.
Capabilities become important when they are combined in unique combinations which create core competencies which have strategic value and can lead to competitive advantage. 26

43. Core Competencies What a firm Does... that is Strategically Valuable
For a strategic capability to be a Core Competency, it must be:
Valuable
Rare
Costly to Imitate
Nonsubstitutable 34

44. Core Competencies What a firm Does... that is Strategically Valuable
Core Competencies must be:
Valuable
Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment
Rare
Capabilities that are possessed by few, if any, current or potential competitors
Costly to Imitate
Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity
Nonsubstitutable
Capabilities that do not have strategic equivalents, such as firm-specific knowledge or trust-based relationships 42