strategic management - Emerging Trends and Market Analysis Elevator Pitch and Executive Summary

Prof. Bulzacki MGMT 661

Strategic Management

Week 1

https://www.linkedin.com/in/adrian-bulzacki/

WHAT IS STRATEGIC MANAGEMENT?

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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DEFINITION

• Entails the formulation, implementation, and evaluation of cross-functional decisions that enable an organization to achieve its long-term objectives. It's fundamentally about setting the direction of a business and coordinating its resources to pursue this direction with the aim of achieving competitive advantage and long-term success in the marketplace.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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BENEFIT

• Strategic Management equips you with the ability to think critically about the direction of a business, make informed strategic decisions, and understand the complex dynamics of implementing these decisions in a real-world context. The course aims to prepare future leaders who can navigate the challenges of the contemporary business environment with innovative approaches that build on conventional business practices.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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AS OF A RECENT STUDY, WHAT PERCENTAGE OF COMPANIES ACTIVELY ENGAGE IN STRATEGIC MANAGEMENT PRACTICES HAVE BEEN SHOWN TO OUTPERFORM THEIR PEERS IN TERMS OF PROFITABILITY AND MARKET SHARE? • Less than 25%

• Over 80%

• Approximately 40%

• About 60%

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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MAJOR ELEMENTS

• Strategy Formulation • This is the phase where strategic vision, mission, and goals are developed.

• Strategy Implementation • This step focuses on executing the chosen strategies.

• Evaluation and Control • The final stage involves monitoring performance and making adjustments as necessary to ensure that

strategic objectives are met.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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STRATEGY FORMULATION

• Developing a strategic vision and mission: Outlining what the organization wants to become and articulating its core purpose.

• Setting objectives: Defining specific performance targets to measure the organization's progress towards its vision.

• Crafting strategies and tactics: Determining the actions and approaches that will be taken to achieve the set objectives. This includes business-level strategies (how to compete), corporate-level strategies (what businesses to be in), and network-level strategies (how to structure resources and relationships across organizations).

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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STRATEGY IMPLEMENTATION

• Implementing and executing tactics and strategies: Mobilizing resources and putting the strategies into action through projects, initiatives, and day-to-day operations.

• Organizational and environmental analyses: Understanding the internal and external environments in which the organization operates to make informed decisions.

• Leadership, communication, teamwork, and cross-functional integration: Essential skills for navigating the complexities of implementing strategies across different parts of the organization.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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EVALUATION AND CONTROL

• Developing evaluation and measurements of performance: Using metrics and benchmarks to assess how well the organization is performing against its strategic goals.

• Adjusting strategies in response to feedback and changing conditions: Being adaptive and flexible to ensure continued alignment with the strategic vision and objectives.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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CONTEMPORARY ASPECTS

Strategic Management also involves adapting to modern challenges and opportunities, such as:

• Digital platform strategies: Understanding how digital platforms can be leveraged for competitive advantage.

• Collaborative innovation strategies: Engaging with partners, customers, and other stakeholders to drive innovation.

• Corporate governance and corporate social responsibility: Balancing the interests of various stakeholders while ensuring ethical conduct and contributing positively to society.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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SMALL BUSINESS ADVANTAGE

If we consider a small business for example, there are many strategies that allow for small business to be disruptive with good strategy:

• Innovation

• Low burn rate

• Key market focus

• Access to market analysis

• Tax incentives

• Maintain close relations with Customer

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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NETFLIX EXAMPLE

One fascinating example that highlights the importance of strategic management in adapting to the rapidly changing business environment involves Netflix's transition from DVD rentals to streaming services. This shift is often cited as a textbook case of a company successfully navigating a disruptive change in its industry by fundamentally altering its business model.

Background

Initially, Netflix operated on a DVD rental model, sending DVDs to customers via mail. However, with the advent of high-speed internet and the increasing consumer demand for instant access to entertainment, Netflix recognized the need for change.

Strategic Shift

In 2007, Netflix launched its streaming service, allowing subscribers to watch television shows and movies on their personal computers. This move was not simply an addition to their DVD rental service but a strategic pivot towards what they saw as the future of entertainment consumption.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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NETFLIX EXAMPLE

Statistics and Outcomes

• Subscriber Growth: This strategic pivot contributed significantly to Netflix's growth. From 2007 to 2013, Netflix's streaming subscribers grew from zero to over 40 million in the U.S. alone. As of early 2023, Netflix had over 230 million subscribers globally.

• Financial Performance: Netflix's revenue soared alongside its subscriber base, from $1.2 billion in 2007 to over $30 billion in 2022.

• Market Leadership: This move cemented Netflix's position as a leader in the online streaming space, essentially creating a new industry that challenged traditional television and movie distribution models.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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NETFLIX EXAMPLE

Lessons and Strategic Insights

• Anticipating Market Trends: Netflix's shift to streaming services exemplified how anticipating and acting on future market trends is crucial for long-term success.

• Willingness to Disrupt Oneself: By moving away from the DVD rental model, Netflix demonstrated that sometimes, companies must be willing to disrupt their own successful business models to stay relevant and competitive.

• Investment in Technology and Content: The success of Netflix's streaming service was also due to its significant investment in technology infrastructure to ensure a smooth streaming experience and in original content to attract and retain subscribers.

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DISTINGUISHING BETWEEN STRATEGIC MANAGEMENT AND TACTICS

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DISTINGUISHING BETWEEN STRATEGIC MANAGEMENT AND TACTICS

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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Aspect Strategy Tactics

Focus Determining the direction and scope

of the organization. Executing specific actions to achieve

strategic objectives.

Scope Broad, affects the entire

organization. Narrow, specific actions or series of

actions. Timeframe Long-term Short-term

Questions Answered "What should we do to achieve our

long-term objectives?" "How do we achieve our specific

goals in the short term?"

Key Concerns Vision and mission, competitive

positioning, market analysis, setting long-term goals.

Operational plans, resource allocation, setting performance

metrics, flexibility and adaptation.

Examples Entering a new market, developing a

new product line, restructuring the company.

Launching a marketing campaign, optimizing the supply chain, hiring

for specific roles.

SOME CURRENT TRENDS IN STRATEGIC MANAGEMENT • Digital Transformation: Integrating digital technologies for efficiency and value creation.

• Sustainability and ESG: Emphasizing environmental, social, and governance factors in strategy.

• Agile Strategy Implementation: Adopting flexible strategies for quick response to market changes.

• Customer-Centric Strategies: Focusing on superior customer experiences and personalization.

• Innovation and Disruptive Technologies: Leveraging new technologies for competitive advantage.

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SOME CURRENT TRENDS STRATEGIC MANAGEMENT

• Globalization vs. Localization: Balancing global reach with tailored local approaches.

• Collaboration and Strategic Alliances: Forming partnerships for mutual benefits, including with competitors.

• Remote Work and Future of Work: Adapting strategies for remote work and digital collaboration.

• Data-Driven Decision Making: Utilizing analytics and AI for strategic insights and decisions.

• Focus on Health and Well-being: Prioritizing health, safety, and well-being in business operations.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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WHAT LEADS TO SUCCESS IN MANAGING A SMALL BUSINESS? • Clear Vision and Mission: Guide strategic direction and decisions.

• Comprehensive Environmental Scanning: Understand market trends and organizational capabilities.

• Effective Strategy Formulation: Craft strategies to leverage strengths and opportunities.

• Adaptive and Flexible Planning: Adjust strategies based on changing conditions.

• Stakeholder Engagement: Ensure alignment and buy-in from key stakeholders.

• Strong Leadership and Communication: Provide clear direction and maintain open communication.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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WHAT LEADS TO SUCCESS IN MANAGING A SMALL BUSINESS? • Alignment of Resources and Capabilities: Match resources with strategic needs.

• Effective Implementation and Execution: Translate plans into actionable tasks.

• Performance Monitoring and Evaluation: Use metrics and feedback to monitor success.

• Culture of Continuous Improvement: Foster learning, adaptability, and innovation.

• Emphasis on Sustainability and Ethics: Incorporate sustainability and ethics into strategic decisions.

• Utilization of Technology and Data: Leverage technology and data for insights and innovation.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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DOING AN INTROSPECTIVE STRATEGIC MANAGEMENT ANALYSIS

Core Values and Culture

Strategic Vision and Leadership

Resources and

Capabilities

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FACTORS AFFECTING THE FUTURE OF STRATEGIC MANAGEMENT

Examples

Globalization—The increasing interconnectivity of markets means strategies need a global perspective while also being adaptable to local nuances.

Technological Advancements—Rapid technological changes, especially in AI, data analytics, and machine learning, are transforming how strategies are developed and executed.

Innovation Pace—The acceleration of innovation cycles requires strategies to be more flexible and adaptive to remain competitive.

Regulatory Changes–Evolving legal and regulatory landscapes, including privacy laws and international trade agreements, impact strategic decision-making.

Societal Expectations—Growing expectations for corporate social responsibility, including sustainability and ethical conduct, influence strategic priorities.

Economic Uncertainty—Fluctuations in the global economy, such as recession risks and shifting trade dynamics, necessitate more agile and resilient strategic planning.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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FACTORS AFFECTING THE FUTURE OF STRATEGIC MANAGEMENT

Examples

Demographic Shifts—Changes in population demographics affect market demands and the labor force, which in turn affect strategic workforce planning and product development.

Competitive Dynamics—The rise of new competitors, especially from non-traditional industries or start-ups, forces established firms to reassess their strategic positioning.

Resource Scarcity—Scarcity of natural resources and the need for sustainable management practices are increasingly becoming a strategic concern.

Data Proliferation–The explosion of data availability provides opportunities for insights but also requires strategic management of information and cybersecurity.

Consumer Behaviour—Changing consumer preferences and the rise of the empowered consumer demand strategies that are customer-centric and responsive to feedback.

Remote Work Trends—The normalization of remote work influences organizational structure, talent management, and operational strategies.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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POORLY PLANNED GROWTH

• Overextension of Resources: Rapid expansion can stretch resources thin, impacting quality and operational efficiency.

• Cash Flow Problems: Growing too quickly can create cash flow challenges, as capital is tied up in inventory, new hires, or expansion efforts.

• Supply Chain Disruption: Sudden growth can strain the supply chain, leading to delays, shortages, or increased costs.

• Cultural Dilution: Fast growth can dilute a company’s culture and values, leading to a loss of identity and decreased employee engagement.

• Decreased Customer Satisfaction: Scaling up too quickly can result in poorer service, product issues, or failing to meet customer expectations.

• Quality Control Issues: Rapid increases in production or service provision can lead to a decline in quality control standards.

• Management Overwhelm: Rapid growth can overwhelm management teams, leading to poor decision-making and strategic blunders.

• Inadequate Infrastructure: Existing processes and systems may be insufficient to handle increased operational demands.

• Increased Competition: Entering new markets or scaling operations may attract more competitors and increase competitive pressure.

• Compliance and Legal Issues: Expansion can bring about unforeseen regulatory compliance issues, especially when moving into new geographic regions.

• Employee Burnout: Fast-paced growth can lead to overworked employees, decreased morale, and higher turnover rates.

• Integration Issues: Acquiring new businesses or merging during rapid growth can lead to integration problems with systems, processes, and teams.

UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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THANK YOU QUESTIONS? UCW – MGMT 661- Strategic Management - Prof. Adrian Bulzacki

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