1. Copyright 2005 Prentice Hall1 BUS 411 DAY 1

2. Copyright 2005 Prentice Hall Ch 1 -2 Agenda Class roll call Instructor Introduction Syllabus review Instructor’s Educational Philosophy Web Resources General Information about class BlackBoard A quick look at the Strategic Management Process Model

3. Copyright 2005 Prentice Hall Ch 1 -3 Instructor Tony Gauvin  Assistant Professor of E-Commerce  216 Nadeau Hall  (207) 834-7519 or Extension 7519  TonyG@maine.edu TonyG@maine.edu

4. Copyright 2005 Prentice Hall Ch 1 -4 Instructional Philosophy Out-Come based education Would rather discuss than lecture  Requires student preparation Hate grading assignments  Especially LATE assignments Use class interaction, assignments, exams (mid-term and final) and Case Study Reports to determine if outcomes are met.

5. Copyright 2005 Prentice Hall Ch 1 -5 A Philosophy of Education Secondary Education  Bloom level 1 (mostly) with some level 2 exposure 100 level course  Bloom level 1 & 2 200 level course  Bloom level 2 & 3 & 4 300 level course  Bloom level 3 & 4 & 5 400 level course (and graduate school)  Bloom 4 & 5 & 6 The practice of Strategic Management is at Bloom level 4, 5 & 6  Chapter is Bloom 2, 3, 4 & 5; so is the midterm  My job is to get you to those higher level of cognitive ability  Case Study analysis exposes you to level 4, 5 & 6 cognitive abilities  Final will be be level 2-6 The business management program is beginning to use Bloom taxonomy which is one of the most widely accepted models for student outcome assessment in higher education. The eCommerce program is based on Blooms taxonomy from the very beginning

6. Copyright 2005 Prentice Hall Ch 1 -6 Web Resources Blackboard https://www.courses.maine.edu https://www.courses.maine.edu Strategic Management Club Online http://www.strategyclub.com http://www.strategyclub.com Prentice Hall http://wps.prenhall.com/bp_david_sm_10 http://wps.prenhall.com/bp_david_sm_10 Instructor’s Web Site http://perleybrook.umfk.maine.edu http://perleybrook.umfk.maine.edu Strategic Management Society (SMS) http://www.smsweb.org/ http://www.smsweb.org/ Strategic Management At Wharton http://knowledge.wharton.upenn.edu/index.cfm?fa=viewCat&CID=7 http://knowledge.wharton.upenn.edu/index.cfm?fa=viewCat&CID=7

7. Copyright 2005 Prentice Hall Ch 1 -7 BUS 411 Survival Primer Read Material BEFORE the class discussion  Conclusion & Key Terms at EOC  Issues for Review at EOC  Experiential Exercises Check WebCT Often Use the additional resources identified in syllabus ASK questions about what you didn’t understand in readings DON’T do homework at last minute. REVEIW lectures and notes Seek HELP if you are having difficulties OFFER feedback and suggestions to the instructor in a constructive manner Student Study Groups are STONGLY Encouraged

8. Copyright 2005 Prentice Hall Ch 1 -8 Resource Review Syllabus Contract for Classroom behavior Blackboard

9. Copyright 2005 Prentice Hall Ch 1 -9 Bribe List (2008) 2008 BMW M6 1947 HD FLH “knucklehead” 2008 Audi R8 Waltz HardCore Chopper 1950 Buick RoadMaster Convertible 1972 SS 402 El Camino 1970 Oldsmobile 442 (W-30 option) 1967 Shelby Cobra GT350

10. Copyright 2005 Prentice Hall Ch 1 -10 What is Strategy? http://www.google.com/search?hl=en&lr=&rls =GGLG,GGLG:2005- 42,GGLG:en&oi=defmore&defl=en&q=define: strategy http://www.google.com/search?hl=en&lr=&rls =GGLG,GGLG:2005- 42,GGLG:en&oi=defmore&defl=en&q=define: strategy How is this applied to business?? What do you need to know to be able to think strategically? What is tactical?

11. Copyright 2005 Prentice Hall Ch 1 -11 Differences? Executive Administrator Manager Supervisor Foreman Employee Who is responsible for Strategic Planning? Who has greater rewards/risk?

12. Copyright 2005 Prentice Hall Ch 1 -12 Strategic Management Process Model

13. Copyright 2005 Prentice Hall Ch 1 -13 Thoughts If we know where we are and something about how we got there, we might see where we are tending – and if the outcomes which lie naturally in our course are unacceptable, to make timely changes - Abraham Lincoln Without a strategy, an organization is like a ship without a rubber, going around in circles. It’s like a tramp it has no place to go. - Joel Ross and Michael Kami

14. Copyright 2005 Prentice Hall Ch 1 -14 For Next Class Get familiar with all the resources  Textbook  Blackboard  WebSites Read Chapter One and Google Case study

15. Copyright 2005 Prentice Hall15 BUS 411 DAY 2

16. Copyright 2005 Prentice Hall Ch 1 -16 Agenda Review of last Class  Questions? Discuss the Nature of Strategic Management  Describe the strategic-management process.  Explain the need for integrating analysis and intuition in strategic management.  Define and give examples of key terms in strategic management.  Discuss the nature of strategy formulation, implementation, and evaluation activities.  Describe the benefits of good strategic management.  Explain why good ethics is good business in strategic management.  Explain the advantages and disadvantages of entering global markets.  Discuss how a firm may achieve sustained competitive advantage.  Explain ISO 9000, 14000, and 14001  Discuss the relevance of Sun Tzu’s The Art of War to strategic management. Assignment #1

17. Copyright 2005 Prentice Hall Ch 1 -17 Chapter 1 The Nature of Strategic Management Strategic Management: Concepts & Cases 11 th Edition Fred David

18. Copyright 2005 Prentice Hall Ch 1 -18 Themes in the Text Global Considerations – impact virtually all strategic decisions E-commerce – vital strategic management tool Natural environment – important strategic issue

19. Copyright 2005 Prentice Hall Ch 1 -19 Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives Strategic Management – Defined

20. Copyright 2005 Prentice Hall Ch 1 -20 Art & Science

21. Copyright 2005 Prentice Hall Ch 1 -21 Strategic Management In essence, the strategic plan is a company’s game plan

22. Copyright 2005 Prentice Hall Ch 1 -22 Strategic Management achieves a firm’s success through integration –– Management MIS Production/OperationsFinance/Accounting Marketing Research & Development

23. Copyright 2005 Prentice Hall Ch 1 -23 Vision & Mission Strategy Formulation External Opportunities & Threats Internal Strengths & Weaknesses Long-Term Objectives Alternative Strategies Strategy Selection

24. Copyright 2005 Prentice Hall Ch 1 -24 Issues in Strategy Formulation New business opportunities Businesses to abandon Allocation of resources Expansion or diversification International markets Mergers or joint ventures Avoidance of hostile takeover New business opportunities Businesses to abandon Allocation of resources Expansion or diversification International markets Mergers or joint ventures Avoidance of hostile takeover

25. Copyright 2005 Prentice Hall Ch 1 -25 Strategy Implementation Annual Objectives Policies Employee Motivation Resource Allocation

26. Copyright 2005 Prentice Hall Ch 1 -26 Strategy Implementation Action Stage of Strategic Management – Most difficult stage Mobilization of employees & managers Interpersonal skills critical Consensus on goal pursuit Action Stage of Strategic Management – Most difficult stage Mobilization of employees & managers Interpersonal skills critical Consensus on goal pursuit

27. Copyright 2005 Prentice Hall Ch 1 -27 Strategy Evaluation Internal Review External Review Performance Metrics Corrective Actions

28. Copyright 2005 Prentice Hall Ch 1 -28 Strategy Evaluation Final Stage of Strategic Management Subject to future modification Today’s success no guarantee of future success New & different problems Complacency leads to demise Final Stage of Strategic Management Subject to future modification Today’s success no guarantee of future success New & different problems Complacency leads to demise

29. Copyright 2005 Prentice Hall Ch 1 -29 Peter Drucker: -- Think through the overall mission of a business. Ask the key question: “What is our Business?” Prime Task of Strategic Management

30. Copyright 2005 Prentice Hall Ch 1 -30 The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty Integrating Intuition and Analysis

31. Copyright 2005 Prentice Hall Ch 1 -31 Intuition is based on:  Past experiences  Judgment  Feelings Integrating Intuition and Analysis Intuition is useful for decision making in:  Conditions of great uncertainty  Conditions with little precedent

32. Copyright 2005 Prentice Hall Ch 1 -32 Involve Management at all levels Intuition & Judgment Influence all Analyses Integrating Intuition & Analysis

33. Copyright 2005 Prentice Hall Ch 1 -33 Analytical Thinking Integrating Intuition & Analysis Intuitive Thinking

34. Copyright 2005 Prentice Hall Ch 1 -34 Advice from Gen. Colin Powell Part I: "Use the formula P = 40 to 70, in which P stands for the probability of success and the numbers indicate the percentage of information acquired.“ Part II: "Once the information is in the 40 to 70 range, go with your gut." --- Colin Powell (former US Sectary of State) http://www.blaisdell.com/powell/ http://www.blaisdell.com/powell/

35. Copyright 2005 Prentice Hall Ch 1 -35 Organizations must monitor events On-going process Internal and external events Timely changes Adapting to Change

36. Copyright 2005 Prentice Hall Ch 1 -36 “Anything that a firm does especially well compared to rival firms” Strategic Management is Gaining and Maintaining Competitive Advantage

37. Copyright 2005 Prentice Hall Ch 1 -37 1. Adapting to change in external trends, internal capabilities and resources Achieving Sustained Competitive Advantage 2. Effectively formulating, implementing & evaluating strategies

38. Copyright 2005 Prentice Hall Ch 1 -38 Rate & magnitude of change increasing dramatically Adapting to Change E-commerce Demographics Technology

39. Copyright 2005 Prentice Hall Ch 1 -39 Effective Adaptation Adapting to Change Requires long-term focus

40. Copyright 2005 Prentice Hall Ch 1 -40 What kind of business should we become? Are we in the right fields Are there new competitors? What strategies should we pursue? How are our customers changing? Adapting to Change – Key Strategic Management Questions

41. Copyright 2005 Prentice Hall Ch 1 -41 It's Not the Big That Eat the Small... It's the Fast That Eat the Slow” http://www.amazon.com/Its-That-Small-Its-Fast-Slow/dp/0066620546

42. Copyright 2005 Prentice Hall Ch 1 -42 Key Terms Various Job Titles: Chief Executive Officer (CEO) Chief Strategy Officer (CSO) President Owner Board Chair Executive Director Strategists – Firm’s success/failure

43. Copyright 2005 Prentice Hall Ch 1 -43 Vision Statement – What do we want to become? Mission Statement – What is our business? Key Terms

44. Copyright 2005 Prentice Hall Ch 1 -44  Largely beyond the control of a single organization Key Terms Opportunities and Threats (External)

45. Copyright 2005 Prentice Hall Ch 1 -45 Opportunities & Threats (External) Key Terms Analysis of Trends: Economic Social Cultural Demographic/Environmental Political, Legal, Governmental Technological Competitors

46. Copyright 2005 Prentice Hall Ch 1 -46  Process of conducting research and gathering and assimilating external information Key Terms Opportunities & Threats Environmental Scanning (Industry Analysis)

47. Copyright 2005 Prentice Hall Ch 1 -47 Basic Tenet of Strategic Management Key Terms Opportunities & Threats Strategy Formulation Take advantage of External Opportunities Take advantage of External Opportunities Avoid/minimize impact of External Threats Avoid/minimize impact of External Threats

48. Copyright 2005 Prentice Hall Ch 1 -48  Controllable activities performed especially well or poorly Key Terms Strengths & Weaknesses (Internal)

49. Copyright 2005 Prentice Hall Ch 1 -49 Strengths & Weaknesses (Internal) Key Terms Typically located in functional areas of the firm Management Marketing Finance/Accounting Production/Operations Research & Development Computer Information Systems

50. Copyright 2005 Prentice Hall Ch 1 -50 Assessing the Internal Environment Key Terms Strengths & Weaknesses Internal Factors Performance Metrics Financial Ratios Industry Averages Survey Data

51. Copyright 2005 Prentice Hall Ch 1 -51 SWOT Analysis More Information  http://www.quickmba.com/strategy/swot/ http://www.quickmba.com/strategy/swot/ Source: http://www.gslis.utexas.edu/~l3871sio/handout/swot.gif

52. Copyright 2005 Prentice Hall Ch 1 -52  Mission-driven pursuit of specified results more than one year out Key Terms Long-term Objectives

53. Copyright 2005 Prentice Hall Ch 1 -53 Long-term Objectives Key Terms Essential for ensuring the firm’s success Provide direction Aid in evaluation Create synergy Focus coordination Basis for planning, motivating, and controlling

54. Copyright 2005 Prentice Hall Ch 1 -54  Means by which long-term objectives are achieved Key Terms Strategies

55. Copyright 2005 Prentice Hall Ch 1 -55 Strategies Key Terms Some Examples Geographic expansion Diversification Acquisition Market penetration Retrenchment Liquidation Joint venture

56. Copyright 2005 Prentice Hall Ch 1 -56  Short-term milestones that firms must achieve to attain long-term objectives Key Terms Annual Objectives

57. Copyright 2005 Prentice Hall Ch 1 -57  Means by which annual objectives will be achieved Key Terms Policies

58. Copyright 2005 Prentice Hall Ch 1 -58 Example Strategies in Action in 2005

59. Copyright 2005 Prentice Hall Ch 1 -59 Example Strategies in Action in 2005

60. Copyright 2005 Prentice Hall Ch 1 -60  Dynamic & Continuous  More formal in larger organizations Strategic Management Model Strategic Management Process

61. Copyright 2005 Prentice Hall Ch 1 -61 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies Chapter 6 Implement Strategies: Mgmt Issues Chapter 7 Implement Strategies: Marketing, Fin/Acct, R&D, CIS Chapter 8 Measure & Evaluate Performance Chapter 9 Vision & Mission Chapter 2 Comprehensive strategic management model

62. Copyright 2005 Prentice Hall Ch 1 -62 1. Identify Existing -- Strategic Management Model Vision Mission Objectives Strategies

63. Copyright 2005 Prentice Hall Ch 1 -63 2. Audit external environment 3. Audit internal environment 4. Establish long-term objectives 5. Generate, evaluate & select strategies 6. Implement selected strategies 7. Measure & evaluate performance Strategic Management Model

64. Copyright 2005 Prentice Hall Ch 1 -64 Benefits of Strategic Management Proactive in shaping firm’s future Initiate and influence firm’s activities Formulate better strategies Systematic, logical, rational

65. Copyright 2005 Prentice Hall Ch 1 -65 Benefits of Strategic Management Financial Benefits Improvement in sales Improvement in profitability Productivity improvement

66. Copyright 2005 Prentice Hall Ch 1 -66 Benefits of Strategic Management Non- Financial Benefits Improved understanding of competitors strategies Enhanced awareness of threats Reduced resistance to change Enhanced problem-prevention capabilities

67. Copyright 2005 Prentice Hall Ch 1 -67 Benefits of Strategic Management (Greenley) 1.Identification of Opportunities 2.Objective view of management problems 3.Improved coordination & control 4.Minimizes adverse conditions & changes 5.Decisions that better support objectives

68. Copyright 2005 Prentice Hall Ch 1 -68 Benefits of Strategic Management (Greenley – cont’d ) 6.Effective allocation of time & resources 7.Internal communication among personnel 8.Integration of individual behaviors 9.Clarify individual responsibilities 10. Encourage forward thinking

69. Copyright 2005 Prentice Hall Ch 1 -69 Benefits of Strategic Management (Greenley – cont’d ) 11. Encourages favorable attitude toward change 12. Provides discipline and formality to the management of the business

70. Copyright 2005 Prentice Hall Ch 1 -70 Why Some Firms Do No Strategic Planning  Poor reward structures  Fire-fighting  Waste of time  Too expensive  Laziness  Content with success

71. Copyright 2005 Prentice Hall Ch 1 -71 Why Some Firms Do No Strategic Planning  Fear of failure  Overconfidence  Prior bad experience  Self-interest  Fear of the unknown  Honest Difference of Opinion  Suspicion

72. Copyright 2005 Prentice Hall Ch 1 -72  Principles of conduct within organizations that guide decision making and behavior Business Ethics & Strategic Management Business Ethics defined –

73. Copyright 2005 Prentice Hall Ch 1 -73  Prerequisite for good strategic management Business Ethics & Strategic Management Good business ethics –

74. Copyright 2005 Prentice Hall Ch 1 -74  Provides basis on which policies can be devised to guide daily behavior and decisions in the workplace Business Ethics & Strategic Management Code of business ethics –

75. Copyright 2005 Prentice Hall Ch 1 -75  Misleading advertising  Misleading labeling  Harm to the environment  Insider trading  Dumping flawed products on foreign markets  Poor product or service safety  Padding expense accounts Business Ethics & Strategic Management Business practices always considered unethical –

76. Copyright 2005 Prentice Hall Ch 1 -76  ISO 9000 focuses on quality control  > 1.5 million companies incorporate ISO  http://www.iso.org/iso/iso_catalogue/manag ement_standards/iso_9000_iso_14000.htm http://www.iso.org/iso/iso_catalogue/manag ement_standards/iso_9000_iso_14000.htm Natural Environment Perspective ISO used to gain strategic advantage

77. Copyright 2005 Prentice Hall Ch 1 -77  Voluntary standards  ISO 14001 standard for Environmental Management System  Firms minimize harmful effects on environment Natural Environment Perspective ISO 14000 standards

78. Copyright 2005 Prentice Hall Ch 1 -78  Parent company  Host country The Nature of Global Competition International/multinational corporations

79. Copyright 2005 Prentice Hall Ch 1 -79  Cultural differences  Norms  Values  Work ethic The Nature of Global Competition Strategy implementation may be difficult

80. Copyright 2005 Prentice Hall Ch 1 -80 Advantages of International Operations  Absorb excess capacity  Reduce unit costs  Spread risk over wider markets  Low-cost production facilities

81. Copyright 2005 Prentice Hall Ch 1 -81 Advantages of International Operations ( cont’d )  Less intense competition  Lower taxes  Economies of scale

82. Copyright 2005 Prentice Hall Ch 1 -82 Sun Tzu and the Art of Business The Six Principles from Sun Tzu and the Art of Business: Six Principles for Managers  Mark McNeilly (Oxford Press University - 1996) Capture your market without destroying it  "Generally in war, the best policy is to take a state intact; to ruin it is inferior to this....For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill." Avoid your competitor's strength, and attack their weakness  "Now an army may be likened to water, for just as flowing water avoids the heights and hastens to the lowlands, so an army avoids strength and strikes weakness." Use foreknowledge and deception to maximize the power of business intelligence.  "Know the enemy and know yourself; in a hundred battles you will never be in peril." Use speed and preparation to swiftly overcome the competition.  "To rely on rustics and not prepare is the greatest of crimes; to be prepared beforehand for any contingency is the greatest of virtues." Use alliances and strategic control points in the industry to "shape" your opponents and make them conform to your will.  "Therefore, those skilled in war bring the enemy to the field of battle and are not brought there by him." Develop your character as a leader to maximize the potential of your employees.  "When one treats people with benevolence, justice and righteousness, and reposes confidence in them, the army will be united in mind and all will be happy to serve their leaders."

83. Copyright 2005 Prentice Hall Ch 1 -83 Assignment #1 Prepare a two to three page paper (not less than 500 and not more than 1000 words) that covers the listed requirements. Turn in a well formatted typed document in the assignments section of Blackboard.  Prepare Mission and Vision statements for yourself (25 %)  Carefully articulate your career objectives (25 %)  Perform a SWOT analysis of your current situation as it relates to you desired career objectives (25 %)  Develop a strategic plan (less than a page!) that takes you from your current situation to your desired career objectives (25 %) This assignment is due Monday, February 4 at 2:00 PM Resources  http://humanresources.about.com/cs/strategicplanning1/a/strategicplan.htm http://humanresources.about.com/cs/strategicplanning1/a/strategicplan.htm  http://change.monster.com/articles/swot/ http://change.monster.com/articles/swot/  http://www.mindtools.com/pages/article/newTMC_05_1.htm http://www.mindtools.com/pages/article/newTMC_05_1.htm  http://www.work911.com/planningmaster/ http://www.work911.com/planningmaster/