Business Policy Assignment
Mark1987
class_1_intro_to_course-post_class_slides.pptxBUSI 4940.001 Summer 5 Week 1 Class 1: Welcome to our class!
1
A tough, challenging course
But so is management…and LIFE!
Identify and address strategic issues
Ambiguous, complex real-world issues
“Choice”, not solutions and answers
Five broad objectives:
Think – integrate; open; synthesis
Process – organized analysis & argument
Tools - mechanics
Communication – written/verbal
Teams – leverage for benefit; handle diversity
Not everyone wants to get into Management
General Overview
Name
Major
Something interesting -some suggestions----
about your work e.g. “I’m a bungee-jumping cord tester…”
About your family/home e.g. “I have 3 pet iguanas and 1 kangaroo”
About your hobbies/interests e.g. “I invented the internet.”
Syllabus
Blackboard Learn
Clickers – set up/test
CHANNEL 61
I’ve used clickers before
Yes
No
What’s a clicker?
I aspire to a management career
Yes
No
Not sure yet
Definition
A concrete expression of how an organization intends to compete and win in the marketplace
Strategy expressed in terms of
Goals
Product Focus and Market Focus
Value Proposition
Core Activities
What is Strategy?
Note the rising levels of risk, investment, uncertainty of implications, and time-frames as you move down the list below . . .
Choosing a cereal for breakfast
Making a withdrawal at the ATM
Purchasing an iPad
Purchasing a car
Sun-bathing
Getting an education
Being Strategic
They involve major investments
They have long-term implications, often in multiple areas
They often involve high levels of risk/uncertainty
The Nature of Strategic Actions
Remember that any action can be viewed as being strategic, depending on your frame of reference.
In the business context, your challenge is to think like the CEO, President or, General Manager of the organization, not as a VP of a functional area like Finance Marketing, Human Capital, etc. . . . ., and delineate those actions that are truly “strategic” from those that are “functional.”
The Nature of Strategic Actions
https://www.youtube.com/watch?v=Q96pCI8aOQQ
Which of these actions typically involve “strategic” decisions
for an organization?
Altering the products/services offered by the organization
Altering the markets serviced by the organization
Altering the way the organization creates value for its customers
Streamlining customer-service procedures
Increasing the size of the sales-force
Improving payment terms with buyers.
Switching to a different ERP-platform provider
Hiring a new marketing manager
On Being Strategic . . .
Which of these actions typically involve “strategic” decisions
for an organization?
Altering the products/services offered by the organization
Altering the markets serviced by the organization
Altering the way the organization creates value for its customers
Streamlining customer-service procedures
Increasing the size of the sales-force
Improving payment terms with buyers.
Switching to a different ERP-platform provider
Hiring a new marketing manager
On Being Strategic . . .
After just three years, Winchester Pizzas has franchise stores in nine southern states and master franchisees lined up in six more. Is targeting new stores in the rest of the US strategic?
Yes
No
30
Barty Crouch’s Custom Computers has done well simply by word of mouth and a great Internet presence. But Barty Crouch Sr. feels increased awareness will grow the firm. Is shifting resources for a doubling of advertising strategic?
Yes
No
30
In the late 1970s Cadillac suffered due to demand for smaller, more economical cars. Leveraging a GM (Chevy) platform, they introduced the Cimarron, a smaller, “Cadillac” model. Was that strategic?
Yes
No
30
Strategic actions are not made in a vacuum
Competitors; Customers; Suppliers; Institutions; Innovators; Technology
No industry is completely stable
Most industries face considerable change
Strategic Actions in a Dynamic Environment
Adapt .. Adapt . . Adapt or CHANGE CHANGE CHANGE
| Drivers of Organizational Change in the Firm’s External Environment | |
| Environmental Dynamics | The increasingly turbulent environment |
| 2. Environmental Scope and Munificence | Globalization of products and markets |
| Environmental Uncertainty and Risk | Political/Social/Economic/Technological |
Adapt .. Adapt . . Adapt or CHANGE CHANGE CHANGE
| Drivers of Organizational Change From Inside the Firm | |
| Mission, Vision & Goals | Instigated by the organization’s stakeholders. . . . |
| Strategy of the firm | Instigated by the organization’s top management . . . |
| Organizational Capabilities | Structure, processes and leadership. |
Effective business management IS NOT largely a matter of common sense.
Effective business management IS a result of effective data collection, data interpretation, and the use of conceptual frameworks to diagnose and monitor activities in the firm and in its environment. (Allan Tudehope)
Managers and strategists are information processors
Job of the General Manager: MANAGING CHANGE
Internal Environment
The Criterion of Consistency
Consistency (“fit”) between the firm and its environment
Strategy as the critical linking variable
Managing Organizational Change
Business
Capabilities
External Environment
Strategy
BC S E
THE DIAMOND-E FRAMEWORK
Management
Preferences
Organization
Resources
STRATEGY
Environment
Business capabilities
Fit Between Environment, Strategy, and Business Capabilities
Strategy
Goals
Product/Market Focus
Value Proposition
Core Activities
We begin by understanding the ENVIRONMENT in which the firm competes
External
Environment
Key Survival Factors
Drivers of Change
Business
Capabilities
Resources
Management Preferences
Organizing Processes
What is it?
A process for achieving consistency between the firm and its environment
You will be required to use the skills acquired in your undergraduate business foundation courses
Accounting, Decision Sciences, Finance, Information Systems, HR/OB, Management, Economics, and Marketing
The Strategic Business Integration (SBI) Process
At each process stage, you will have tools and concepts to apply
Each phase has been converted to a template with questions and steps to follow
Primary phases involve
Collecting as much relevant data as possible
Organizing the data and analyzing the data
Drawing conclusions or recommendations
Tools and Templates
A Pictorial Representation of What’s Covered in the Course
SBI
Parts 1A & 1B
SBI
Part 2A
SBI
Part 2B
SBI
Part 3A
SBI
Part 3B
Analyze the External Environment of the Firm
Analyze the Strategy of the Firm
Analyze the Capabilities of the Firm
Identify Strategic Gaps
Develop New Strategy
Identify Required Capabilities Changes
Prepare Complementary Functional Plans
Develop an implementation Plan
Assess Financial Viability
It has three sequential parts:
Part-1: Analyze the environment(A) and status of the firm (B)
Deconstruct and understand the business landscape and the specific firm within that context
Part-2: Assess strategic fit (A) and formulate new strategy (B)
Assess E-S-BC fit issues and propose possible changes
Part-3: Develop an implementation plan (A)and confirm
financial viability of the proposal (B)
Details of the implementation plan
Details of expected results
The SBI Process: A Carefully Orchestrated Exercise in Deconstruction and Reconstruction of Information
Part-1
Part-3
Part-2
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P.E.S.T.
Political, Economic, Social, and Technological Forces
The BROAD environment
Influence multiple industries
Influence all firms in an industry ‘equally’
Great indicators of what is BECOMING more influential….’early warning signals’
May be ‘Rules of the game’
Broad effects on demand, values, market needs
Five Forces
Industry specific
Different forces that affect profitability / opportunity for profitability
Porter – a competition for economic value –
Substitute or Rival?
Substitute – same or similar function (met need) BUT via a different means (Pizza delivery v Frozen Pizza)
Rival – same met need via same/similar function and means (Bing v. Google)
Market Commonality; Resource Similarity (Chen, 1996)
Still dependent on how you define the industry
THE FIVE FORCES MODEL (Porter article – determinants/indicators of force)
POTENTIAL
ENTRANTS
SUPPLIER
POWER
INDUSTRY
RIVALRY
BUYER
POWER
SUBSTITUTE
PRODUCTS
Primary Entry Barriers:
Economies of Scale
Product Differentiation
Capital Requirements
Switching Costs
Cost Disadvantages Independent of Scale
Government Policy
Power of Substitutes driven by
The relative price and performance of substitutes
Switching costs
Buyers propensity to substitute
Determinants of Buyer Power Include
The relative concentration of buyers and sellers
The volume of purchases
The relative switching costs of buyers and sellers
Ability of buyers to backward integrate
The buyers price sensitivity
Determinants of Supplier Power Include
Relative concentration
Presence of substitutes
Relative switching costs
Relative threat of integration
Importance of the supplies
Differentiation of the supplies
Determinants of Rivalry Include
Industry Growth
The number and balance of rivals
Differentiation
Percentage of fixed costs
Brand identity and product differences
Exit barriers and corporate stakes
SBI-1(A): Understand Your Industry
What is the average performance – growth, profitability, etc.?
What are the KEY SURVIVAL FACTORS demanded?
What are the DRIVERS OF CHANGE?
What will the industry look like in the future?
This requires research and analysis!
Key Success Factors (KSFs)
Based on the powerful forces you have identified, what MUST a firm do minimally well to survive in this industry?
Think ‘above’ the given/obvious ‘survival factors’ to identify KEY factors
Prioritize them by how they relate to the most powerful forces affecting the industry
Key Success Factors (KSFs)-EXAMPLES
Efficiencies Through E-Commerce/Technology
• Reliable Delivery
• Strong Service
• Solid Sales and Support Staff
Drivers of Change (DOC)
What trends from your PEST analysis are changing the nature of the environment?
What forces of industry profitability are changing or may change in the near future?
Prioritize these based on the scope and magnitude of their effect on firm performance and survival
Drivers of Change (DOC)-EXAMPLES
Increasing globalization of the industry;
Changes in who buys the products and how they use it.
Exit of major firms/”big players”
Growing buyer for preferences a more standardized product instead of strongly differentiated products
Changing societal concerns, attitudes, and lifestyles
Industry Attractiveness
Based on current status (size, growth, profits, etc.), and on your knowledge of forces and trends, how attractive is this industry now? (Not how difficult is it to get into…just how attractive is it)
Now, consider the trends you are aware of…how attractive (same, more, less) will the industry be in five years?
Viable Strategic Orientations
Based on all you know about the industry, what combinations of product focus, market focus, and value proposition do you conclude are most viable for survival and success in this industry?
Alternatively, which strategic orientations do you think are ‘bad ideas’ here?
Conducting and Communicating an Environmental Analysis
Industry research
Patterns/clues – drill into possible KSFs/DOC
Gather facts; document sources; verify if can
Cover each component thoroughly
P.E.S.T. and all 5 forces
Identify, list, describe, cause/effect, etc.
Synthesize - Analyze - Prioritize
Don’t report data – Argue your conclusions then give the data that supports them
Next class June 4:
Do syllabus quiz on-line
Online “Terms and Definitions” assignment
Between classes June 6:
Team preferences due via email
REMEMBER:
TEAMS of 7/8– Choice and/or Assignment
1 of each: MKTG, FIN, ACCTG, Risk/Ins/FinServ
Subsequent Class June 9:
Read Textbook: Ch. 2.
Submit individual assignment Part 1 at 6 PM (2 hard copies)
You should also review the Blackboard supplemental reading on Evaluating the Environment
There will be GRADED clicker questions on the readings next class! Please come prepared!
For Next Few Classes….
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