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MBA 614 Strategic Innovation and Competitive Rivalry

MBA 614 Strategic Innovation and Competitive Rivalry. Walter J. Ferrier, Ph.D. The Paper Fight. Two stacks of paper Anything goes… … Go!. The Paper Fight. What happened?. The Paper Fight. What happened? Another round…?. The Paper Fight. What happened? Another round …?

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MBA 614 Strategic Innovation and Competitive Rivalry

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  1. MBA 614 Strategic Innovation and Competitive Rivalry Walter J. Ferrier, Ph.D.

  2. The Paper Fight • Two stacks of paper • Anything goes… …Go!

  3. The Paper Fight • What happened?

  4. The Paper Fight • What happened? • Another round…?

  5. The Paper Fight • What happened? • Another round…? • What was different this time…?

  6. The Big Picture RIM Business Fundamentals New Product Development Supply Chain Management Mergers & Acquisitions Electives Project Connect

  7. The Big Picture Top-line Revenue: • Opportunity-seeking • Innovation advantage • Uniqueness advantage RIM Business Fundamentals New Product Development Supply Chain Management Mergers & Acquisitions Electives Project Connect

  8. The Big Picture Operational Efficiency: • Cost advantage • Timing advantage • Quality advantage RIM Business Fundamentals New Product Development Supply Chain Management Mergers & Acquisitions Electives Project Connect

  9. The Big Picture Growth and Synergy: • Diversification • Scale advantages • Corporate Venturing RIM Business Fundamentals New Product Development Supply Chain Management Mergers & Acquisitions Electives Project Connect

  10. The Big Picture New Product Development Strategy, Competitive Rivalry NPD Processes Marketing Management Processes Finance Accounting

  11. Schedule

  12. Topics and Readings Live Web Links

  13. Graded Assignments

  14. What is strategic management?

  15. Strategic Management…Action that Creates Value Pazzo’s Lynagh’s Pub Lynagh’s Pub

  16. Competitive Outcomes Coke’s Strategic Actions Pepsi’s Strategic Actions Rivalry Organizational Characteristics Industry Characteristics

  17. Strategic Management – Developing a set of coordinated and integrated capabilities, decisions, and actions required to achieve competitive advantage…

  18. … i.e., action that creates value Profit = (Price – Cost) x Qty.

  19. Strategic Management in the News • Low price leader…Price cutting • Differentiated player…Unique product or marketing • M&A…Restructuring…Turnaround • Alliance…Joint venture • New international market…Off-shore manufacturing • New plants & equipment…Efficient manufacturing • Market pioneer…Innovator….New products

  20. Strategy in “Other Markets” and Non-Profits Educational Institutions, Departments & Programs Philanthropic Organizations Regulated Utilities Political & Social Organizations Environmental Organizations Government Institutions Creative Arts Organizations Religious Organizations Resources Legitimacy Human Capital “Market Share” Position Reputation Survival Effectiveness Attention

  21. Where Does Strategy Occur? CEO & Board of Directors Top Management • Functional • Management • Marketing • Production • R&D • Logistics • Acct./Fin. Everyone else Strategy is everyone’s job

  22. Be strategy-savvy… Top Management Don’t let this be you. ?

  23. Start-ups, small business, autonomous business units YOU will be a top officer, strategist, decision-maker: • Pazzo’s vs. Joe Bologna’s vs. Domino’s • Lexington Brewing Co. vs. Anheuser-Busch • John’s Running Shop vs. Footlocker • Pannell’s Swim Shop vs. Dick’s Sporting Goods

  24. What do strategists do/think about? • Strive for competitive advantage / above-average returns • Assess external factors causing change • Develop internal factors that create advantage • Navigate stakeholder landscape • Strategic management process… Five Stages

  25. External Stuff Globalization Technological change Diverse and increasingly vocal and influential stakeholders Wall Street The Natural Environment Internal Stuff Building functional capabilities Organizational culture Leadership Strategic HRM Board of Directors Efficiency What else…..?

  26. Levels of Strategy • Corporate Strategy • Business Strategy • Functional Strategy Value can be created an any or all levels

  27. Corporate Strategy • Decide scope/reach of the firm In which businesses or industries do we compete? GENERAL ELECTRIC Aircraft Engines Light Bulbs Appliances Power Generation

  28. Corporate Strategy PROCTER & GAMBLE Soaps Food Beverages Paper Products

  29. Corporate Strategy PEPSI Carbonated Beverages Juices, Water, Sports drinks Snack Foods Fast Food

  30. Corporate Strategy COCA-COLA Carbonated Beverages Juices, Water, Sports drinks

  31. Business Strategy • Since we’re in the XYZ industry, how do we compete? Profit = (Price – Cost) x Qty. • Cost advantage • Size advantage • Differentiation advantage • Positional advantage…New market space • Bridge converging industries

  32. Functional Strategy • Given our choice of corporate- and/or business-level strategy… • Marketing • Production • R&D • Human resource management • Finance • How do we coordinate and integrate business functions to carry out the strategy? • What functional changes or innovations are required to improve the strategy?

  33. 1. Articulate Mission / Intent Strategic Planning Process • Sense of purpose, direction… • In which industries does firm compete? • How does firm compete? • Who are customers? • Who are competitors?

  34. 2. Set Objectives & Performance Targets • Financial • Achieve 10% ROE and $1.55 EPS by YE2011 • Increase stock price by $4.00-5.00/share • Strategic • Become low price leader in industry by YE2012 • Enter five new country markets by YE2014

  35. 3. Develop a Strategy • Strategic themes/thrusts …How to compete: • International expansion • Increase brand name and reputation • Innovate by introducing new products • Aggressive behavior against rivals in old products

  36. 4. Implement Strategy • Develop action plan at functional level • Establish European distribution center • Buy warehouse facility near airport in Germany • Re-tool with robotic material handling system • Create new ad campaign for 2012 Olympics • Get endorsement contract with Lance Armstrong, Marylou Retton, Mia Hamm, and Michael Johnson • Develop TV ad with Spike Lee • Launch new version of product • Create multifunctional design team • License Oracle’s newest technology • Increase R&D budget by 30% • Cut prices on older version of product by 33%

  37. 5. Evaluation and Adjustment • Assess results relative to goals • Established price leadership in 2012 • Achieved only 4% ROI in 2011 • Identify new opportunities / constraints • New technologies are coming • Rivals are merging • Change strategy / implementation plan (as needed)

  38. Strategic Planning vs. Strategizing Intended Strategy Strategy Carried Out Dropped Strategic Actions Emergent Strategic Actions

  39. Strategic Planning is “Dead” • Flexibility, Quick Decisions • Adaptive Agility • Opportunism • White space opportunity • New voices and perspective • Experimentation • Innovation • Dynamic Maneuvering • Break the rules • Thrive in chaos

  40. Strategic Management …Questions?

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