BMGT 682

1. BMGT 682 Welcome to Strategic Management

2. Please take a minute and introduce yourself To the people sitting around you Greetings & Introductions My introduction: My name is Ray Van Ness And So please feel free to call me “Ray”

3. (1) My background… … the prism through which all information I give you is filtered ACCOUNTANT to PROFESSOR • 20+ years in business followed by 30+ 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 for a few days and decided to begin a second career • Here I am, 30 + years into my second career 

4. Introductions • Overview of Your course •  Details of website specifically for you •  Course as a Professional Development workshop (slide 2a) •  Course purpose and objectives (slide 2b) •  Distribution and Discussion of Syllabus (slide 2c) • (3) Discussion of Teams and Responsibilities – “6” Teams (slide 3) •  Elect Team leaders • Team Discussion (Chitchat) •  Exchange contact information • (4) Team Assignments: (slide 4) • > Strategic Concepts • > Case Studies • (5) Lecture: Critical Thinking & Thoughts about Strategy (slide 5) • (6) Movie: “Tiffany & Company” 3-minutes: A Story of Imagination, Creativity, Entrepreneurial Courage, and American Business (slide 6) • (7) Closing Remarks by Professor • (8) Brief meeting with Team 6 and Team 1

5. (2a) Overview of Your Course: 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

6. (2b) Course Purposes and Objectives • Create a business-like think tank to identify problems and opportunities • To provide an opportunity to imagine creative solutionsfor 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 tothe • 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)

7. (2c) Syllabus: Distribution & Discussion Syllabus -- click

8. (3) Formation of 6 Teams The Professor has divided the class into 6 distinct Teams Teams will elect (3) leaders for their team (President, VP, & Secretary)

9. (4) Team Assignments (see syllabus) Team 1: Team 2: Team 3: Team 4: Team 5: Team 6: Team 6: You will be presenting Chapter 2: Charting A Company’s Direction. 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 2: Kraft Foods, Inc. Go to pages 12-14 of your SYLLABUSfor directions. Teams 2, 3, 4, & 5:Read Chapter 21 in the text AND read Case 21 – page C-287)

10. (5) Lecture: Critical Thinking & Thoughts about Strategy

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

12. 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

13. 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)

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

15. 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

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

17. An Effective Strategy leads to Sustainable Competitive Advantage.

18. 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) 2 and 4 are very closely related

19. 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

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

21. 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 a firm’s (1) choice of industry and (2) generic competitive strategy. • Even companies that are not classified as conglomerates have the option of slowly diversifying their business pursuits. If a company chooses to stay firmly in an industry that is in decline or to hotly competitive it has made a strategic choice on which they should be judged. (Eastman Kodak, Dell, Netflix, etc.) • Was it wise or was it unwise? • Even the competitive strategy they select within an industry should be judged. e.g. Would a “differentiation strategy” have been better for this particular company than a “cost leadership strategy”? (JC Penny)

22. Common sizing • Financial Common-sizing is a process of: • Convertingbalance sheets, income statements, and other financial statements to percentages. • Strategic common-sizing is a process of: Comparingcommon(generic) financialindicators of companies to macro-strategic choices. This involves a series of questions to be asked and answered by the TMT. Crucial macro-strategic questions include: Should we stay in this business? If yes, how should we compete in the future? If not, what businesses should we be in?

23. 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.

24. (6) Movie, Meeting, Closing comments • Movie: Tiffany & Company (3 minutes) • (2) Closing comments • (3) Professor meeting with Team 6 and Team 1