STRATEGIC MANAGEMENT SEMINARS

1. STRATEGIC MANAGEMENTSEMINARS October 13, 2011 Week 1

2. Our goal? Practice all steps of strategic planning process • Choose a company for which to formulate a strategic business plan • Identify / formulate: - mission statement – framework w/in which strategy shall be crafted - corporate vision – where do we want to be in # years - business aims -> specific objectives • Scan the environment – carry out external, internal & industry analysis -> situational analysis -> Internal analysis - core business & competencies, resources available, corp. structure, required inputs, corp. culture => IFAS (Internal Factor Analysis Summary)

3. Our goal? Practice all steps of strategic planning process • Environment scanning cont’d: -> External analysis - PEST(LE) => EFAS (External Factor Analysis Summary) - Industry Analysis (task environment): -> Porter’s Five (Six) forces => Industry Matrix - Situational Analysis – finding a strategic fit b/w external opportu- nities & internal strengths - mitigating harmful effects of external threats due to internal weaknesses => SFAS (Strategic Factor Analysis Summary) => SWOT analysis

4. Strategic Management Model Existing business model Existing Mission, vision, goals, objectives, corp. values SWOT => Strategic choice External analysis -> opportunities, threats Internal analysis -> strengths, weaknesses Functional-level strategies Business-level strategies Corporate-level strategies Strategy implementation

5. Strategic Management Cycle

6. Which sector? What company? … your choice • http://www.top500.de/g0037200.htm • http://www.europages.co.uk/ • http://www.hbi.cz/index.php?Lang=en • http://www.hoovers.com/ • http://www.marketresearch.com/ • http://www.business.com/ • http://www.expats.cz/directory/#482 • http://www.rusmarket.com/ • http://www.thomasnet.com/ • http://no1construction.com/ • http://dir.yahoo.com/business_and_economy/directories/companies/

7. Which companies do these mission statements represent? • "To experience the joy of advancing and applying technology for the benefit of the public“ • "To build a place where people can come to find and discover anything they might want to buy online." • "To produce high-quality, low cost, easy to use products that incorporate high technology for the individual. We are proving that high technology does not have to be intimidating for non-computer experts.

8. Mission statementKodak vs. Polaroid KODAK: “We will build a world-class, results-oriented culture based on our six key values: - respect for the individual, uncompromising integrity, trust, credibility, - continuous improvement and personal renewal - recognition and celebration of achievement through which we will grow more rapidly than our competitors by providing customers and consumers with solutions they need to capture, store, process, output and communicate images to people and machines anywhere, anytime.” POLAROID: “… to put the latest cutting edge technology in the peoples’ hands and give them the power to use it comfortably, affordably… and in an instant.”

9. Mission statements Take a wild guess • BMW vs. Mercedes • McDonalds vs. KFC • IBM vs. Apple • Acer vs. Dell • Google vs. Yahoo

10. Mission statement samples BMW: "The BMW Group is the world's leading provider of premium products and premium services for individual mobility.“ Mercedes: “We invented the automobile - now we are passionately shaping its future. As a pioneer of automotive engineering, we feel inspired and obliged to continue this proud tradition with groundbreaking technologies and high-quality products.”

11. Mission statement samples McDonalds: “to provide the fast food customer food prepared in the same high-quality manner world-wide that is tasty, reasonably-priced & delivered consistently in a low-key décor and friendly atmosphere." KFC: “to sell food in a fast, friendly environment that appeals to pride conscious, health minded consumers.”

12. Mission statement samples IBM: "At IBM, we strive to lead in the invention, development and manufacture of the industry's most advanced information technologies, including computer systems, software, storage systems and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide." Apple: "To produce high-quality, low cost, easy to use products that incorporate high technology for the individual. We are proving that high technology does not have to be intimidating for noncomputer experts."

13. Mission statement samples Dell: "To be the most successful computer company in the world at delivering the best customer experience in markets we serve.“ Acer: "Measuring and tracking the effects of climate change demands accurate reporting. ACER believes in a grassroots approach - utilizing citizen scientists to conduct such measurement in a scientifically sound manner.”

14. Mission statement samples Google: “Google’s mission is to organize the world‘s information and make it universally accessible and useful.” Yahoo: 1. “To connect people to their passions, communities, and the world’s knowledge.” • "Yahoo's mission is to be the most essential global Internet service for consumers and businesses."

15. Mission statements – conclusion? Questions to consider • Why are some mission statements similar? • Why do they look so broad or general? • Would it pay to narrow a mission statement down? Your task • For the company of your choice, formulate a mission statement in your own words based on your current knowledge about the company. • Identify the mission statement based on your research.

16. Corporate vision McDonalds: “… be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile.“ Toyota: "To become the most successful and respected lift truck company in the U.S.” Avery Dennison : "To be recognized as the world's best coating and converting company by providing innovative decorating, information transfer and bonding solutions that enable our customers' success.“ - Manufacturing pressure sensitive labeling materials, retail apparel ticketing, graphics imaging media , office products, specialty tapes

17. Corporate vision Your task • Identify the corporate vision for your company • Can be found directly in the vision statement or derived from a mix of information provided by top management. • Will be subject to re-evaluation / reconsideration after SWOT analysis based on EFAS, IFAS, and SFAS are performed

18. Progress check External analysis • Socio-economic (societal) environment – PEST(LE) analysis - analyzing general forces that do NOT directly affect business activities in the short-run BUT they DO influence long-term decisions - i.e. forces that regulate the exchange of materials, energy, money, and information • Task environment –> industry analysis (Porter’s 5 forces)

19. External analysis – Macro-environment -> PEST(LE) How do economic factors affect our business in the “world of tomorrow, NOT today”? • GDP trends • Interest rates • Currency exchange rates • Inflation rates • Money supply • Level of unemployment • Wage/price control • Energy availability and costs • Disposable and discretionary income • Devaluation/revaluation

20. External analysis – Macro-environment -> PEST(LE) How do economic factors affect our business in the “world of tomorrow, NOT today”? • Higher GDP => higher consumer expenditures => alleviating competitive pressures w/in industry => potential for expansion => => higher profits => OPPORTUNITY • Fall in GDP => lower profits => price wars due to market saturation • Higher interest rates => borrowing becomes more expensive => FMCGs go unaffected (nearly) => THREAT => drop in demand for housing => fall in demand for cars, home appliances, capital equipment => higher cost of company’s capital => less able to raise funds to invest in new assets

21. External analysis – Macro-environment -> PEST(LE) How do economic factors affect our business in the “world of tomorrow, NOT today”? • Exchange rates - e.g. Czech company with majority of sales & revenues derived from trade with customers in Euro-zone - cheaper Euro => lower revenues after conversion to CZK holding sales constant => THREAT - cheaper USD against Japanese Yen => 240 Yen/USD down to 85 Yen/USD => increase in price of imported goods from Japan (e.g. cars) => protection against competition from abroad => => OPPORTUNITY

22. External analysis – Macro-environment -> PEST(LE) How do economic factors affect our business in the “world of tomorrow, NOT today”? • Price inflation => destabilization of economy => economic growth slowing down => e.g. unstable currency => difficult/hazardous to engage in investment planning => THREAT -> real value of future returns becoming uncertain – long-term projects • Price deflation => real price of fixed payments goes up => harms companies w/regular fixed repayments of debt => THREAT => lower discretionary income

23. External analysis – Macro-environment -> PEST(LE) How do economic factors affect our business in the “world of tomorrow, NOT today”? • “Boeing” sample problem • “Exchange rates” example • “Prices of inputs” example • “Industrial production level” example