1. Robin Hood Does Robin Hood have a mission?
What INTERNAL issues/problems is he facing?
What EXTERNAL issues problems is he facing?
What alternatives might be consider?
What should he do?

2. Strategic Management Dr. Don Neubaum don.neubaum@bus.oregonstate.edu
400E Bexell

3. Class Sessions Monday & Wednesday - 8:00am
Both in 415 Bexell
Monday & Wednesday – 2:00PM
207 Bexell

4. WIC Writing Intensive Curriculum
Writing as a critical aspect of the learning process
Significant portion of your grade – over 30%
Reflecting writing with typical business content

5. Grading Individual Grades - 80% Group Grades – 20%
Midterm/Final – 20% each (40% total)
Industry analysis – 20%
Case write ups – 5% (10% total)
Strategic issue summary – 10%
Group Grades – 20%
In-class case exam – 10%
Strategic plan presentation – 10%

6. Grades
If you NEED a specific grade in this class, other than to simply “pass,” then you MUST me and come see me by the end of next week.

7. Midterm and Final Multiple Choice and Short Answer Midterm – 10/22
Chapters 1-4
Final – 12/5
Chapters 5-13, non-cumulative
Both exams will focus on lecture material and text terms.

8. Typical Questions
What four generic strategies exist? Why does Porter call them generic?
According to Porter, when should firms diversify? What rules does he forward to judge the merits of diversification?
What is the goal of executive compensation? Why is it so difficult to design an effective compensation package?
What are the axis on the BCG and the GE Nine-Cell Matrix? Which model is superior and why?

9. Industry Analysis
Within teams, you will select one of the following industries
Pharmaceutical
Supermarket/Grocery Store
Wireless Communication (service providers)
Casual Dining (Applebee’s)
DIY Retailing (Home Depot)
Due 10/31
Highest team average will receive 5 extra points

10. Case Write Ups Analyzing two cases Napster - Due 10/8 Nike – Due 11/14
3 pages, double spaced
Specific questions and guidelines will be provided for each case
Re-write each based on feedback you get from classmates.

11. Strategic Issues Start most class sessions with 2-3 of these
Articles from WSJ, Forbes, Fortune, etc. highlighting an aspect of strategy
2 page summary and a short (3 - 5 slides) 5 minute presentation
Written feedback – allowing you to re-write the paper and redo your slides
Sign up sheet will be distributed
Graded equally on paper and presentation

12. Group In class Case Exam
Group Exam – 10/29
Case handed out a week ahead of time
Questions ed to you the morning of the 29th
Answers due by the end of the day
Work in your group using laptop/PC and your answers to me in the evening

13. Group Strategic Plan and Presentation
Groups of four or five
Last week of the quarter – 11/26 and 11/28
Company of your choice, with my approval
PowerPoint presentation of 20 minutes – no paper necessary
Can not analyze a company in Pharmaceutical, supermarket, wireless communication, casual dining, or DIY retailing industries
Sign up sheet for time slots will be distributed

14. Peer Evaluations
Your group members will evaluate your contribution throughout the quarter
Your group grades can be adjusted up and down, based upon their assessment of your contribution and effort.

15. One Minute Papers
Write a short, ungraded essay at the end of most classes:
1) something you learned
2) giving an example
3) asking a question or clarification
4) making a comment
5) anything else
Paper notebook with name and section marked on the cover

16. Participation
While not specifically graded, I will be assessing your attendance, participation and one-minute papers.
Final grades might be adjusted up and down, based upon my assessment.
Students attending every class period will receive 5 points on the final

17. Golden Rule “No Tolerance” policy for cheating
Guilty parties receive an F and will be dropped from the class
Disciplinary actions may be taken

18. Standing-O Earn 5 bonus points on midterm
Announce to us a recent accomplishment or achievement
While you may do as many Standing-Os you want, you can only earn the 5 points once

19. Team Specials
Teams can earn points from “Team Specials” tasks and assignments
These points are tabulated over the quarter
Students may also request team special points, subject to instructor approval
Awards:
Gold – exempt from Final
Silver – 15 points added to midterm
Bronze – opt out of one essay on final

20. Be thinking about who you might want in your group
Be thinking about who you might want in your group. We will be forming them early in class Wednesday.

21. Get out a single sheet of paper and write down some thoughts or ideas to the question
“What makes a company successful”
You have about 2-3 minutes

22. Now, pass the paper (don’t exchange).
Spend a couple of minutes elaborating, structuring, adding, critiquing, etc. the paper you received.

23. What is Strategy and Why is it Important?
Chapter One
What is Strategy and Why is it Important?

25. Why do we need strategy?
The reasons why firms succeed and fail is perhaps the central question in strategy
Answers the fundamental question of the firm
Where we are now?
Where we going?
How are we going to get there?

26. Hi Dr. Neubaum:
I followed up with our chairmen and
CEO today, and found that our board
of directors determined development
of a strategic plan is premature at
this time.

27. Strategic Management Defined
decisions and actions that determine long-term performance
formulation and implementation of plans designed to achieve objectives
an action managers take to achieve one or more of an organization’s goals
unifying theme that gives coherence and direction to organizational/individual decisions
game plan management has for positioning the company in its chosen market, competing successfully, satisfying customers, and achieving good business performance
management’s action plan for running the business and conducting operations; commitment to pursue a particular set of actions in growing the business, attracting customers, competing successfully, conducting operations, and improving financial and market performance

28. The “How” of Strategy How will we
Grow? Build clientele? Improve performance?
Lower cost? Superior products? Outstanding service? Target high or low end? Narrow or board product line? Focus on one part of the vertical chain or be fully integrated? Local or global competitor? Single or multiple industry? Manufacture or outsource? Offensive or defensive? Incremental or radical change? Conservative or bold?

29. What is Strategy?
Strategy is not doing similar activities better than your rivals – that’s operational effectiveness
continual improvement not a sustainable advantage
industry-wide cost reductions do not lead to increased profitability
examples: PCs, automobiles, airlines

30. What is Strategy?
Strategy is performing different activities or performing similar activities in a different way
As suggested by the book: 4 of the most dependable approaches are 1) low cost, 2) differentiating features, 3) fulfilling specialized needs, and 4) build unassailable set of capabilities.

31. Who sells the most toilet paper in the U.S?
1 billion rolls
Who is the country’s largest retailer of wine?
Who is the country’s third largest grocer?
Where can you buy Dom Perignon for $90, $11,000 crystal vases, 42-plasma screen TVs for $3,000, and live Maine lobsters?

32. What is Strategy?
1) Strategy is performing different activities or performing similar activities in a different way
Strategy is about positioning
a) Variety-based positioning
offering a unique choice of goods/services - Chic-fil-a, GameStop
b) Needs-based positioning
serving most/all of a particular group of customers’ needs - Babies R Us
c) Access-based positioning
serving a set of customers that require unique access – Kinkos, Movie Gallery, Superette

33. What is Strategy? vs. vs. vs. vs.
2) Strategy is about choosing a position which requires tradeoffs, choosing what not to do
without tradeoffs, all firms would imitate
vs.
vs.
vs.
vs.

34. Time Magazine HARD TO STRADDLE AND REPOSITION!
So why haven't American, United, US Airways and the three other full-service carriers, which lost $11 billion last year and stand to lose an additional $5 billion this year, followed the lead of the profitable discounters by cutting costs and fares? Because that's not the way their business works. They have made, and lost, their money by providing the frequent departures, quick connections, spacious seats and other amenities that have been demanded by business flyers and charging them dearly for that service — more than five times the cost of a discount fare.
HARD TO STRADDLE AND REPOSITION!

35. What is Strategy? Tradeoffs arise from
2) Strategy is about choosing a position which requires tradeoffs, choosing what not to do
without tradeoffs, all firms would imitate
Tradeoffs arise from
inconsistent image/reputation
different activities, products, equipment, employees, skills, systems, machines
priorities, internal coordination, and control

36. What is Strategy?
3) Strategy is about combining activities as advantages come from fit and reinforcing

37. Secondary Airports
No meals
Short hauls
No seats
No baggage
transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares

38. Secondary Airports
No meals
Short hauls
No seats
No baggage
transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares

39. Secondary Airports
No meals
Short hauls
No seats
No baggage
transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares

40. Secondary Airports
No meals
Short hauls
No seats
No baggage
transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares

41. Secondary Airports
No meals
Short hauls
No seats
No baggage
transfers
Quick Turns
Standard Fleet
Lean ground crews
Low Fares

42. Secondary Airports
Secondary Airports
No meals
No meals
Short hauls
No seats
No baggage
transfers
No baggage
transfers
No baggage
transfers
Quick Turns
Quick Turns
Standard Fleet
Lean ground crews
Low Fares
Low Fares

43. Secondary Airports
Secondary Airports
No meals
No meals
Short hauls
No seats
No baggage
transfers
No baggage
transfers
No baggage
transfers
Quick Turns
Quick Turns
Standard Fleet
Lean ground crews
Low Fares
Low Fares
How can Delta copy that?
What about Jet Blue?

44. What is Strategy?
3) Strategy is about combining activities as advantages come from fit and reinforcing
Operational effectiveness is about excellence in individual activities
Fit/integration increases sustainability by reducing imitability

45. What is Strategy?
4) The desire to grow is most threatening to an effective strategy

46. What is Strategy?
4) The desire to grow is most threatening to an effective strategy
Blurs uniqueness
Creates compromises
Reduces fit
Erodes original advantages

47. Fig. 1.2: A Company’s Strategy Is Partly Proactive and Partly Reactive

48. Fig. 1.2: A Company’s Strategy Is Partly Proactive and Partly Reactive
Emergent strategy elements

49. Strategic Inflection Points
Order-of-magnitude change that
Dramatically alters future prospects
Mandates radical revision
Critical decisions have to be made
Responding quickly lessens a company’s chances of
Becoming trapped in a stagnant business
Letting attractive new growth opportunities slip away

50. Prior to mid-1980s Starting in mid-1980s 1998 Focus on memory chips
Abandon memory chip business (due to lower-cost Japanese companies
Become preeminent supplier of microprocessors to PC industry
Make PC central appliance in workplace and home
1998
Shift focus from PC technology to becoming the preeminent building block supplier to Internet economy

51. What do Good Strategies Have in Common?
Consistent, long-term
goals and objectives

52. What do Good Strategies Have in Common?
Consistent, long-term
goals and objectives
Reflects and understanding
of the environment

53. What do Good Strategies Have in Common?
Consistent, long-term
goals and objectives
Reflects and understanding
of the environment
Takes resources
into consideration

54. What do Good Strategies Have in Common?
Consistent, long-term
goals and objectives
Reflects and understanding
of the environment
Takes resources
into consideration
Effectively
implemented

55. What do Good Strategies Have in Common?
Consistent, long-term
goals and objectives
Reflects and understanding
of the environment
Strategic
Effectiveness
(fit)
Takes resources
into consideration
Effectively
implemented

56. Managerial Process of Crafting and Executing Strategy
Chapter Two
Managerial Process of Crafting and Executing Strategy

57. Fig. 2.1: The Strategy-Making, Strategy-Executing Process

58. Developing a Strategic Vision
A strategic vision describes the route a company intends to take in developing and strengthening its business. It lays out the company’s strategic course in preparing for the future.
A strategic vision exists only as words and has no organizational impact unless and until it wins the commitment of company personnel and energizes them to act in ways that move the company along the intended strategic path!

59. Elements of a Strategic Vision
Delineates management’s aspirations for the business
Provides a panoramic view of “where we are going” by charting a strategic path
Is distinctive and specific
Avoids use of generic, dull & boring language that could apply to most any company
Captures employees’ emotions steers them in a common direction
Is challenging and a bit beyond a company’s immediate reach

62. Examples of Strategic Visions
Hilton Hotels Corporation
Our vision is to be the first choice of the world’s travelers. Hilton intends to build on the rich heritage and strength of our brands by:
Consistently delighting our customers
Investing in our team members
Delivering innovative products and services
Continuously improving performance
Increasing shareholder value
Creating a culture of pride
Strengthening the loyalty of our constituents.

63. Examples of Strategic Visions
Caterpillar
Be the global leader in customer value.
eBay
Provide a global trading platform where practically anyone can trade practically anything.

64. Strategic Vision vs. Mission
A strategic vision concerns “where we are going”
Markets to be pursued
Future product/ market/ customer/ technology focus
Kind of company management is trying to create
The mission statement focuses on its “who we are and what we do”
Current product and service offerings
Customer needs being served
Technological and business capabilities

65. Mission Statements Boundaries of the current business
A well-conceived mission statement distinguishes a company’s business makeup from that of other profit-seeking enterprises in language specific enough to give the company its own identify!
Boundaries of the current business
Fundamental purpose that sets it apart from other firms of its type
Conveys
Who we are,
What we do, and
Why we are here

66. Don’t offer me things
Don’t offer me shoes
Offer me comfort for my feet & the pleasure of walking
Don’t offer me clothes
Offer me fashion, style, or an certain image
Don’t offer me books
Offer me hours of escape & the benefit of knowledge
Don’t offer me furniture
Offer me comfort and a peaceful place to lounge
Offer me ideas, emotions, ambience, feelings, benefits

67. (Our) vision is to dominate the global foodservice business industry
(Our) vision is to dominate the global foodservice business industry. Global dominance means setting the performance standards for customer satisfaction while increasing market share and profitability through our Convenience, Value and Execution Strategies.

68. (Our) vision is to dominate the global toothpick industry
(Our) vision is to dominate the global toothpick industry. Global dominance means setting the performance standards for customer satisfaction while increasing market share and profitability through our Convenience, Value and Execution Strategies.

69. Our mission is to provide a customer a means of moving people and things up, down, sideways over short distances with higher reliability than any similar enterprise in the world.

70. One vision drives everything we do: A computer on every desk and in every home using great software as an empowering tool

71. Our business is renting cars
Our business is renting cars. Our mission is total customer satisfaction.

72. Our business is leasing camels
Our business is leasing camels. Our mission is to totally alienate all of our customers.

73. To be the premier organization in nurturing and enriching the bond between people and animals

74. We supply the computing industry with chips, boards, systems, and software. Our products are used as “building blocks” to create advanced computing systems for PC users. Our mission is to be the preeminent building block supplier to the new computing industry worldwide.
To be the leading supplier of PCs and PC servers in all customer segments.

75. Fig. 2.1: The Strategy-Making, Strategy-Executing Process

76. Objectives Turns mission into performance outcomes
Organizations produce what is measured
Long and Short term
Strategic Intents
All levels of the organization
Top-down, not Bottom-up

77. Types of Objectives Required
Financial Objectives
Strategic Objectives
Outcomes focused on improving financial performance
Outcomes focused on improving competitive vitality and future business position $

78. 6 Characteristics of a Good Objective
1. Stretching/Motivating

79. 6 Characteristics of a Good Objective
2) Measurable

80. 6 Characteristics of a Good Objective
4) Realistic/Achievable

81. 6 Characteristics of a Good Objective
3) Agreeable

82. 6 Characteristics of a Good Objective
5) Timebound

83. 6 Characteristics of a Good Objective
6) Understandable

84. 6 Characteristics of a Good Objective
U SMART
Understandable
Stretching
Measurable
Agreeable
Realistic
Timebound

85. Objectives
To be one of the top three banking companies in terms of market share in all significant markets we serve.
To provide shareholders a secure investment with a superior return.
To be the low-cost producer of aluminum and to outperform the average ROE of the Standard and Poor’s industrial stock index.
To achieve 100% total customer satisfaction… everyday…in every restaurant…for every customer
To be the industry's innovative leader
30% of the company’ annual sales must come from products fewer than four years old

86. Objectives
Increase sales growth 6% to 8% and accelerate core earning growth from 13% to 15% per share in each of the next five years
Capitalize on e-commerce
Develop a smart card strategy that will help us play a key role in shaping on-line payments
Reduce greenhouse gasses by 10% by 2010
We want to operate 6,000 stores by 2010
Cut corporate overhead costs by $30 million per year

87. Importance of Stretch Objectives
There’s no better way to avoid ho-hum results than by setting stretch objectives and using compensation incentives to motivate organization members to achieve the stretch performance targets!
BHAG = Big Hairy Audacious Goals!

88. Leading versus Lagging Indicators
Current financial results are “lagging indicators” reflecting results of past decisions and actions—good profitability now does not translate into stronger capability for delivering better financial results later
However, meeting or beating strategic performance targets signals growing competitiveness & strength in the marketplace, thus developing the capability for better financial performance in the years ahead
Good strategic performance is thus a “leading indicator” of a company’s capability to deliver improved future financial performance
Unless a company sets and achieves stretch strategic objectives, it is not developing the competitive muscle to deliver even better financial results in the years ahead!

89. Setting financial and strategic objectives
A balanced scorecard for measuring company performance is optimal; it entails
Setting financial and strategic objectives
Placing balanced emphasis on achieving both types of objectives
Just tracking financial performance overlooks the importance of measuring whether a company is strengthening its competitiveness and market position.
The surest path to sustained future profitability year after year is to relentlessly pursue strategic outcomes that strengthen a company’s business position and give it a growing competitive advantage over rivals!

90. Fig. 2.1: The Strategy-Making, Strategy-Executing Process

91. Fig. 2.1: A Company’s Strategy-Making Hierarchy

92. Levels of Strategic Management

93. Levels of Strategic Management
Answers the question “Where?”

94. Levels of Strategic Management
Answers the question
“How?”
“How?”
“How?”

95. HP’s Corporate Strategy
Financial
Services
Enterprise
Storage &
Servers HP
Services
Software
Personal
Systems
Imagining
and Printing
Where are we going to compete?
What businesses are we in?

96. HP’s Business Strategy
Financial
Services
Enterprise
Storage &
Servers HP
Services
Software
Personal
Systems
Imagining
and Printing
How are we going to compete against Sun Microsystems?
How are we going to compete against
Dell?
Xerox?
Cannon?

97. HP’s Business Strategy
Financial
Services
Enterprise
Storage &
Servers HP
Services
Software
Personal
Systems
Imagining
and Printing
Profits are won and lost at the business level!!

98. So….how can firm’s be profitable?
1) Choose an attractive industry in which to compete - Where we compete?
Corporate level strategy
2) Attain a competitive advantage within an industry - How we compete?
Business level strategy

99. Two Models of Profitability
I/O Model (Industrial/Organizational Economics Model)
Resource Based View of the Firm

100. I/O Model Strategy & Performance General Environment
Industry Environment
Competitive Environment
General Environment
Industry Environment
Competitive Environment
3 Assumptions
1) external environment imposes pressures/constraints
2) firms within an industry possess similar resources
3) resources are highly mobile
Therefore, firms must identify attractive segments within
an industry and acquire skills/resources to achieve
superior profitability
It’s about finding the right “place” to compete.

101. Resource Based View Strategy The Firm’s & Resources & Performance
Capabilities
Strategy
&
Performance
3 assumptions
1) internal environment critical to strategic action
2) firms are bundles of unique resources
3) resources may not be mobile across firms
Therefore, firms must develop the skill and resources to
take advantage of opportunities in their industries
It’s about finding the right “way” to compete.

102. Fig. 2.1: The Strategy-Making, Strategy-Executing Process

103. Team Name
Write a team mission
Write 3 objectives for your team
Send them to by 8PM Tuesday