BA 458/BA 495

= How (Strategy)

What= is Strategy?

&= nbsp; A to B – answers the “how”

B

A

&= nbsp; Two points make a line

- =

= Risk

Where are we starting from (where/what is “A”)= ?

- = Where do you want to end up (where/what is B= )?

- = What you have to work with (resources/competencies)

- = What the landscape looks like (competitors, customers, economy, regulatory, …)

Stra= tegic Plan =3D Game Plan

&= nbsp; May not be a “formal” strategy; still have one

Alig= nment (all the wood behind the head of the arrow…)

What= kinds of firms do not need a formal strategy (document)?

Stra= tegy vs. Tactics

Stra= tegy as a Profession (Strategy is a “tool”)

- = 99% of all employers have < 500 employees (50% of private workforce)

- = Strategists (company size -> biggest of t= he big -> publicly traded)

- = Decision makers (delegate each decision to l= owest point possible)

Bias= towards action

&= nbsp; Les Schwab

- = Some watch things happen

- = Some make things happen

- = Some just ask “what happened”?

- = Which do you want to be

Plan it

CHI

PDX

Do it

Evaluate/Adjust

Repeat

= Env. Change

What if?

Continuous process (constantly adjusting; like auto pilot;= off course 90% of the time)

Envi= ronment constantly changing

- Rate of change increasing

- Technological innovation

- Communication (Letter -> Fax -> eMail -> Real-time online) (power^, cost_v, connect, always on)

- Technology transfer

- Looking for disruptive change (that’s where BIG opportunities are; cuts both ways)

- Embrace technology and change or become “road kill”

Stak= eholders – anyone with a stake in the outcome

- = Equity: shareholders/investors/owners (this = is who you work for)

- = Internal: employees

- = External: customers, suppliers, consultants,= lenders, community, government …

- = How about dogs, rocks, trees, rivers… ?

Goal= is above average returns

R = =3D r_f= + rβ

Guiding Function =3D> Under= stand for competitors too

- = Marketing

- = Engineering=

- = Manufacturi= ng

- = Other? (Des= ign, Legal, …)

Competitive Advantage

- = Defensible<= o:p>

- = Sustainable=

Vision

- = How are we = going to change the world (Microsoft, DuPont, …)

- = Big picture= , long term, help everyone “visualize” the destination

- = Assure alig= nment of destination

Mission

- = Medium terms goals leading to Vision

- = Flexible, pragmatic, adaptable

Values &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; establish organizational culture

- = Rules of engagement

- = What is imp= ortant to us -> how are we going to act (Ajit lying story)

- = “Good= to Great” – Can be anything; Must have them; Everyone must fit

- = Example: so= me companies encourage innovation; others discourage; either works<= /span>

- = Cigarette B= oats; Oakland Raiders

Goals/Objectives=

- = Usually sho= rt-term (monthly, quarterly, semi-annual, annual)

- = Tactical; d= rive execution

- = Measurable<= o:p>

- = Acme exampl= e

Competition

Environment (market, economy, politics, …)

Global Economy

- = Does it mat= ter to most firms?

o&nb= sp; Ole’ Ole’; Rescue Rooter; Garden ‘O Weed-n; Macy’s<= /span>

o&nb= sp; Offensive (Starbuck’s)

o&nb= sp; Defensive (General Motors)

- = Understand = the context (why we care)

- = Always be vigilant (just in case)

o&nb= sp; Manufacturi= ng (Panther Systems)

o&nb= sp; Outsourcing (Agilis)

- = Conscious of scale

Outsourcing

- = What is str= ategic

- = Depends on = the business/competition

- = Own the str= ategic =3D> outsource everything else

Policies

&n= bsp; Pro= cedural

&n= bsp; Eth= ics

&n= bsp; = ; Intern= al

&n= bsp; = ; Extern= al

&n= bsp; = ; &n= bsp; Legal

&n= bsp; = ; &n= bsp; Moral

Industrial Organization (I/O) Mode= l &= nbsp; 60’s – 80’s

- = Focus on ex= ternal factors

- = Pick the ri= ght industry/segment

- = Chapter 2

o&nb= sp; Environment= has constraints

o&nb= sp; Similar resources/strategies

o&nb= sp; Assume reso= urces ~equal

o&nb= sp; Rational and acting in best interest of stakeholders

- = Five forces= of competition

o&nb= sp; Threat of n= ew entrants

o&nb= sp; Power of suppliers

o&nb= sp; Power of bu= yers

o&nb= sp; Threat of substitutes

o&nb= sp; Intensity of competition

- = WZ: How eas= y is it to change?

Reality: Change industry/segment i= s hard and high risk

&n= bsp; Limited control over industry/exter= nal
Environmental Scanning

- = Monitoring<= span style=3D'mso-tab-count:2'> &= nbsp; &nbs= p; on the radar

- = Forecasting= &= nbsp; &nbs= p; predict outcome

- = Assessing &= nbsp; &nbs= p; timing/importance=

Resource Based Model &= nbsp; &nbs= p; &= nbsp; more current

- = Chapter 3

- = Focus on in= ternal resources/capabilities

- = Core compet= encies

Reality: Have to master both!=

Traditional Models

Albert Humphrey, Stanford, 60̵= 7;s & 70’s: SWOT analysis

Boston Consulting Group: BCG Model=

McKinsey & Company: GE/McKinsey Matrix

Michael Porter: Generic Competitive Strategies

Michael Porter: Five Forces Model<= o:p>

Contemporary Models

WZ: Strategic Marketing Model=

WZ: Multi-Layer Partnership Model<= o:p>

WZ: Natural Selection Model

Good to Great (Jim Collins): Hedge= hog Concept

Gartner Group: Magic Quadrant=

Custom Situational Models

Financial Analysis

Ratio Analysis

Trend Analysis

Sensitivity Analysis, …=

Business vs. Military Strategy

&n= bsp; The Art of War, Sun Tzu (512 BC)

&n= bsp; The Prince, Niccolo Machiavelli (1531)

&n= bsp; Lev= iathan, Thomas Hobbes (~1600)

&n= bsp; Ess= ays, Francis Bacon (~1600)

&n= bsp; On War, Carl Von Clausewitz (1812)

Over= view of the Text

Part I: Strategy, Internal, External<= /o:p>

Part II: Strategies

Part III: Everything else