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Ray Van Ness

MGT 682. Welcome to Strategic Management. Ray Van Ness. Outline for January 19, 2011. Introductions Overview of Your course & Brief Lecture – Critical Thinking and Thoughts about Strategy (3) Course purposes and objectives

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Ray Van Ness

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  1. MGT 682 Welcome to Strategic Management Ray Van Ness

  2. Outline for January 19, 2011 • Introductions • Overview of Your course & Brief Lecture – Critical Thinking and Thoughts about Strategy • (3) Course purposes and objectives • (4) Formation of “6” Teams, election of a Team leaders, Team Exercise (formation of team constitution) • (5) Team Assignments: (& distribution of Syllabus) • > Strategic Concepts • > Case Studies • (6) Movie: “Strategy Should Continuously Evolve” 4-minutes • (7) Closing Remarks by Professor • (8) Brief meeting with Team 6 and Team 1

  3. (1) My background… … the prism • 20+ years in business followed by 27+ years of teaching: • began as general accountant then… • Traveling Internal Auditor for International shoe manufacturing Corp. • Cost Accountant • Controller then entered finance and became … • Vice President of Finance, elected to board of directors, later elected as Executive VP, then President & CEO, then • Branched into business acquisitions (entrepreneurship) • Later, retired, smiled, and decided to carve a new career as a professor.

  4. (2) Overview: This course will be conducted as a Professional Development Workshop • Experiential – Opinions – Discussions – Creative Tension • Strategic Concepts presented by you • Case Studies of Companies presented by you • Strategic Debates by you – Peer to Peer learning www.albany.edu/faculty/vanness

  5. (3) Course Purposes and Objectives • Create a business-like think tank to identify problems and opportunities • To provide an opportunity to imagine creative solutions for solving problems • and/or capitalizing on opportunities • To provide an opportunity to experience an environment of differences of • opinion and observe how tensions from this environment can be • healthy and creative (Creative Tension) • To introduce various concepts and analytical frameworks to add to the • portfolio of business knowledge, skills, and abilities • To support and encourage peer to peer learning • To encourage and support the sharing and then clarifying (after feedback) • personal opinions, thoughts, concerns, and ideas • (Enhanced thinking and effective expression - debating)

  6. (4) Formation of 6 Teams The Professor will divide the class into 6 distinct Teams Teams will elect (3) leaders for their team (President, VP, & Secretary) (Team leaders earn extra credit)

  7. (5) Team Assignments (see syllabus)

  8. (6) Critical Thinking … is a prerequisite to thinking strategically. • Revealing words: • cannot vs. will not • need vs. want • impossible vs. difficult • problem vs. symptom

  9. Thinking Strategically:The Three Big Strategic Questions 1.What’s the company’s present situation? 2.Where does the company need to go from here? 3.How should it get there? A company’s answer to “How it will we get there?” is itsstrategy

  10. Strategy… • Consists of Management’scompetitive movesandbusiness approaches • Combinesplanning, decision-making,and actions • Strategies can be: OFFENSIVE(primary goal: grow market share; pressure competitors) CONSERVATIVE (primary goal: avoid risks; minimize confrontations with strong competitors)

  11. Strategy is reflected in “actions rather than words”

  12. Strategy is HOWto . . . The Hows ThatDefine a Firm's Strategy • How to grow the business • How to please customers • How to outcompete rivals • How to manage each functionalpiece of the business (R&D, production, marketing, HR, finance, and so on) • How to respond to changing market conditions • How to achieve targeted levels of performance

  13. Copying competitive moves of other successful companies rarely works!

  14. An Effective Strategy leads to Sustainable Competitive Advantage.

  15. Four Strategic Approaches toBuilding Sustainable Competitive Advantage Successful firms develop bases for competitive advantage 1. Cost leadership(Advantage: Known for low prices) (Wal-Mart) 2. Differentiation(Advantage: Distinctive, desirable features to product or service) (Harley-Davidson) 3. Narrow market niche(Advantage: able to satisfy the need and desires of customers within a micro market) (Antique Car parts companies) 4. Developing superior expertise and resources (Advantage: able to make it difficult for competitors to replicate products or services) (Microsoft)

  16. Evolution of strategies is powered by: Strategies are always works in progress… Changes may be necessary to react to • Shifting market conditions • Technological breakthroughs • Fresh moves of competitors • Evolving customer preferences • Emerging market opportunities • New ideas to improve strategy • Crisis situations A Company’s strategy is partly Proactive and Partly Reactive

  17. Strategies are dynamic and planners perpetually ask: > Is our current path ineffective?> Should we become more aggressive and/or innovative (proactive)?> Should we become more flexible and adaptive to changing market and/or competitive realities?

  18. Remember • No two companies are exactly alike • No two companies are totally different • Financial Common sizing enables the comparison of performance levels of companies of various sizes – large companies can be compared to small companies • Strategic common sizing enables the assessment of strategic choices. Companies with different generic strategies can be compared to each other on the basis of strategic choice

  19. Common sizing • Financial Common sizing is a process of converting balance sheets, income statements, and other financial statements to percentages. • Strategic common sizing is a process of comparing common key financial indicators of companies with different generic strategies. This addresses the question of how various strategies can affect a firm’s financial performance.

  20. A business chooses the industry(ies) in which to continue competing and this is part of their ongoing macro-strategy. Different industries have varying influence on corporate financial performance… Some industries offer more growth opportunities than others. Therefore, comparing performance of firms in different industries can provide valuable information about key dimensions of a firm’s macro-strategy. If financial performance is unsatisfactory to stakeholders, the firm should revisit its macro-strategy.

  21. (7) Out of Class assignment Team 6: You will be presenting Chapter 2: Crafting & Executing Strategy. Power Points are on the course website to help you with your planning. Select a MAXIMUM of 20 slides for your presentation. Team 1: You will be presenting Case 1: Whole Foods Market. You will provide an overview of the case and then answer the following questions: (a) What are the chief elements of the strategy that Whole Foods Market is pursuing? (b) Do you think John Mackey has a good strategic vision for Whole Foods? (c) How well is Whole Foods Market performing financially? (d) Do you approve of the decision to acquire Wild Oats Market? What are the pros and cons? (e) Were John Mackey’s Internet postings unethical or in any way inappropriate? Teams 2, 3, 4, & 5:Read Chapter 2 in the text AND read Case 1 on page C-2 of the text

  22. (8) Team Activity – Case 8 • Brief Movie • (2) Team Assignments & Team Exercise

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