Strategic Management Dr. Don Neubaum don.neubaum @bus.oregonstate.edu

1. Strategic ManagementDr. Don Neubaumdon.neubaum@bus.oregonstate.edu 541-737-6036 400E Bexell

2. Class Sessions • Tuesday & Thursday - 8:00am • Tuesday & Thursday - 10:00am • Both in 415 Bexell

3. 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

4. Grading • Individual Grades - 80% • Midterm/Final – 20% each (40% total) • Industry analysis – 20% • Case write ups – 2 @ 5% (10% total) • Strategic issue summary – 10% • Group Grades – 20% • In-class case exam – 10% • Strategic plan presentation – 10%

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

6. Midterm and Final • Multiple Choice and Short Answer • Midterm – 2/5 • Chapters 1-4 • Final – 3/20 • Chapters 5-13, non-cumulative • Both exams will focus on lecture material and text terms.

7. 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?

8. Industry Analysis • Within teams, you will select one of the following industries • Personal Computer • Soft Drink • Cruise Line • Airlines • Gaming (Casinos and Gaming Resorts) • Due 2/14 • Highest team average will receive 5 extra points

9. Case Write Ups • Analyzing two cases • Due 1/22 and 2/29 • 3 pages, double spaced • Specific questions and guidelines will be provided for each case • Re-write each based on feedback you get from classmates. Rewrite as many times as you wish.

10. 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

11. Group In class Case Exam • Group Exam – 2/12 • Case handed out a week ahead of time • Questions posted on the morning of the 12th • Answers due by the next morning • Work in your group using laptop/PC and email your answers to me

12. Group Strategic Plan and Presentation • Groups of four or five • Last week of the quarter – 3/11 and 3/13 • Company of your choice, with my approval • PowerPoint presentation of 20 minutes – no paper necessary • Can not analyze a company in the Personal Computer, Gaming, Cruise Line, Airlines or Soft Drink industries • Sign up sheet for time slots will be distributed

13. 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.

14. 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

15. 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

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

17. 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

18. 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

19. In lieu of a case…. • Attend • 3 page write up detailing the “take-aways” from the presentation

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

21. 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?

22. 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

23. What is Strategy? Strategy is not doingsimilar activitiesbetter 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

24. What is Strategy? • Strategy is performingdifferent activitiesor performing similar activities in adifferent 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.

25. What is Strategy? 1) Strategy is performingdifferent activitiesor performing similar activities in adifferent way Strategy is about positioning a) Variety-based positioning • offering a unique choice of goods/services – • b) Needs-based positioning • serving most/all of a particular group of customers’ needs - c) Access-based positioning • serving a set of customers that require unique access –

26. What is Strategy? 2) Strategy is about choosing apositionwhich requirestradeoffs, choosing whatnotto 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

27. What is Strategy? 3) Strategy is aboutcombiningactivities as advantages come fromfitandreinforcing

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

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

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

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

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

33. 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

34. What is Strategy? 3) Strategy is aboutcombiningactivities as advantages come fromfit andreinforcing Operational effectiveness is about excellence in individual activities Fit/integration increases sustainability by reducing imitability

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

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

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

38. What do Good Strategies Have in Common?

39. Chapter Two Managerial Process of Crafting and Executing Strategy

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

41. 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 itwins the commitmentof company personnel and energizes them to act in ways that move the company along the intended strategic path!

42. 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

45. A strategic vision concerns “wherewe 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 Technologicaland businesscapabilities Strategic Vision vs. Mission

46. Mission Statements 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 currentbusiness • Fundamental purpose that sets it apart from other firms of its type • Conveys • Who we are, • What we do, and • Why we are here

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

48. 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

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

50. 6 Characteristics of a Good Objective