STRATEGIC MANAGEMENT AND SOCIAL RESPONSIBILITY POWER POINT SET 4: MISCELLANEOUS
ROLE OF THE CEO • Strategist • Mentor • Visionary • Guru • Futurist • Champion • Leader
AGENDA OF RESPONSIBILITIES Individuals (IT) Pre-Course - Bio & Picture Intro to Strategic Audit MINI CASE(s) As Assigned (S, S√, S√√) MIDI CASE - MID Term Exam (Letter Grade) Template Feedback Team Member Rating Constructive Comments [Peer Eval] - Maxi Case Optional: Strategic Plan -- Career Plan
AGENDA OF RESPONSIBILITIES (Cont’d) PARTICIPATION TEAM (IT) Form Teams – Roles Weekly - Chapter Questions With key issues/answers email to Lead Discussion (Per Schedule) Maxi Case – Choice of company (approval) Prepare Report – Strategic Plan Template Present Strategic Plan MISC – Team Assignment – Micro Cases
MIDI Case: One (1), five (5) page (approximately), individually written case analysis (business plan) that must include: • Your mission for the future of the organization. • Your future objectives for the organization. • Your analysis and quantitative forecast of industry and company. • Your strategic decisions, i.e., actions, with results, to accomplish objectives. • A three (3) year pro forma income statement. • Your participation in class discussion and case debrief.
TEAM STRATEGIC PLAN MAXI: A STRATEGIC PLAN that incorporates two efforts: Effort 1: A 25 Page Written Report (Approximately) Effort 2: Team Discussion/Presentation
Effort 1: A 25 Page Written Report The following must be included in the strategic plan report: • Future mission and objectives decided by you. • Analysis and forecast of social, technical, economic, and political forces with attention to global aspects. • Analysis of industry history and quantitative industry forecast on a global and domestic basis. • Illustration and source of a share analysis. • Evaluation of alternative strategies. • Decision on strategic course showing basis and actions, with results, required to achieve indicated performance goals on each major strategic action • Organizational process changes with schedules and budgets • Pro-forma financial statements, I.e., cash flows balance sheets, and income statements to show impact of decision in the short-term, intermediate-term and long-term for a minimum of 5 years. • Sufficient research, quantitative analysis, style, and organization to meet business planning standards. • Typed, doubled spaced, table of contents, number pages, exhibits, and indicate sources.
Effort 2: Team Discussion/Presentation • Each team must run a one (1) hour maximum discussion or presentation of the case. • The presenting team also indicates its role and audience role, both f which must be internal to the organization. • For intelligent participation in the team case discussions and to help in the selection of the third individual case, each team must provide one copy of each of the following materials to every class member and the instructor:
Strategic Audit and Decision Making: A Structure • Context - Environmental/Industry • SLEPT (Social, Legal, Economic, Political, Technological) Forecast(s) • Company • Industry • History - Now/Future • Mission - All Stakeholders • Internal, Transactional, Influencers, Vision, Core Values, etc. • Objectives (Qualitative, Quantitative) • Drucker Model (8) (E) - Below
STRUCTURE, CONT’D PERFORMANCE - Design/Audit System View • ADAPTIVE - 3 Questions What is Business? What will business be? [as is] What should business be? (E) EFFECTIVENESS (Drucker 8) Market Human Resources Innovation Financial Resources Profit Material Resources Societal Productivity (e) Efficiency Cost (versus) Scope/Quantity Quality Time
SYSTEM VIEW (CONT’D) Global Dimensions (MACROECONOMICS - Global; Clusters/Culture; Comparative Advantages, etc) SWOT Internal S - Strengths W - Weakness [Core Competence] External O - Opportunity T - Threat
PORTER’S ANALYSIS (Link to O.T.) National / Global Barriers to Entry Government Action Rivalry Among Competitors Barriers to Exit Power of Suppliers Power of Buyers Availability of Substitutes CONCLUSION: Attractive?
Market Penetration Market Development Product Development Backward Integration Forward Integration Horizontal Integration Horizontal Diversification Vertical Diversification 9. Concentric Diversification 10. Conglomerate 11. Cooperative (Joint Venture) Strategic Alliance 12. Defensive - Retrenchment - Divestiture - Liquidation 13. Do Nothing STRATEGY FORMULATION13 Strategic Options - ClustersStrategy Implementation and ControlMIS System Corporate Leadership/CultureRE: Ongoing Process
MGMT 450STRATEGIC AUDIT FORMAT General Economy You CONTEXT History Now Future All Stakeholders Priorities MISSION Formulation (A) e/E QUAL Quant (SUCCESS) OBJECTIVES (Personal|Professional) 3Q’s ACTION(S) IMPLEMENTATION APPRAISAL Evaluation Control TOOLS TECHNIQUES B\C RELEVANT ETC BEPOINT ISSUES S W O T PORTER EVALUATION CONTROL RECOMMENDATIONS PRIORITIES REFORMULATION (REVISIT Model)
DELPHI FORCASTING Q1. Estimate rate of inflation in the United States during next 12 months. ________% Q2. Estimate rate of unemployment in the United States during next 12 months. ________% Q3. Estimate prime rate for corporations in the United States during next 12 months. ________% Q4. Consumer confidence index in the United States during next 12 months. Use scale 1 to 10, with 10 highest ________%
Strategic ManagementInformation Knowledge vs. System Organization Level Strategic Tactical Operational Tech Perf. 10% 90% Planning External Information 40% 60% It = Ik + Is 90% 10% Control Internal Information
Strategic ManagementOrgan. Vs Information/Skills Organ. Level Strategic Tactical Operational Tech Perf. Skills Conceptual Behavioral Technical • 65 30 5 • 40 30 • 5 30 65 It = Ik + Is
Global ModelsCorporate Governance Firm Executive Management Issues: Plan – Control Authority Responsibility(s) Information Flow Stakeholders: Shareholders Financial Institutions: Banks, Insurance Co., etc. Government Community Unions – Employees Customers Suppliers etc. Board of Directors: Keiretsu Euro-Interlocking Directors Government – Mercantilism Socialist – State Capitalism
Joe Smith and Outsourcing Joe Smith started the day early having set his alarm clock (MADE IN JAPAN) for 6 a.m. While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG). He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA). After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today. After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) and continued his search for a good paying AMERICAN JOB. At the end of yet another discouraging and fruitless day, Joe decided to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN INDONESIA), and then wondered why he can’t find a good paying job in……AMERICA…..
Management Strategy Responsibilities Philanthropic Be a good Corporate citizen Contribute resources to the Community; improve quality of life The Pyramid of Corporate Social Responsibility Ethical Be ethical Obligation to do what is right, just and fair avoid harm Legal Obey the Law Law is society’s codification of right and wrong Play by the rules of the game. Economic Be profitable The foundation upon which all others rest
Triad Leadership @ Drexel • CQ (Conceptual Quotient) • TQ (Technical Quotient) • EQ (Emotional Quotient) Peer Relations (Team-building) Politics (Power-management) Personal Insight (Self-awareness) EQ Connectivity (IT/Internet use) Puzzle TQ CQ Security Performance Persona Opportunity (company- and/ Industry-specific)
Porter’s Five Competitive Forces • Supplier Power • - Supplier concentration • Importance of volume to supplier • Differentiation of inputs • Impact of inputs on cost or differentiation • Switching costs of firms in the industry • Presence of substitute inputs • Threat of forward integration • Cost relative to total purchases in industry • Barriers to Entry • Absolute cost advantage • Proprietary learning curve • Access to inputs • Government policy • Economies of scale • Capital requirements • Brand identity • Switching costs • Access to distribution • Expected retaliation • Proprietary products • Threat of Substitutes • Switching costs • Buyer propensity to substitute • Relative price performance of substitutes Rivalry • Degree of Rivalry • Exit barriers • Industry concentration ratio • Fixed costs/Value added • Industry growth • Intermittent overcapacity • Product differences • Switching costs • Brand identity • Diversity of rivals • Corporate stakes • Buyer Power • Bargaining leverage • Buyer volume • Buyer information • Brand identity • Price sensitivity • Threat of backward integration • Product differentiation • Buyer concentration vs industry • Substitutes available • Buyers’ incentives
MGMT 450 Strategy and Business PolicyInternal Assessment of Firms Four Characteristics: Resources – Capabilities Important in Sustaining Competitive Advantage DURABILITY – Rate at which firms underlying resources and capabilities depreciate or become obsolete TRANSPARENCY – Speed with which other firms can understand the relationship of resources and capabilities supporting a successful firm’s strategy. Capability that requires a complex pattern of various resources and is more difficult to comprehend than a capability based on a single key resource. TRANSFERABILITY – Ability of competitors to gather the resources necessary to support a competitive challenge. (e.g. Duplicating the primary source of Rocky Mountain spring water may be difficult. Also brand names may be impossible to transfer with out purchase or a license.) REPLICABILITY – Ability of competitors to use resources and capabilities to duplicate a firm’s success. (e.g. brand manager from P&G competitor may fail to identify least visible coordination mechanisms or fail to note behaviors of another company’s brand manager may conflict with company’s culture.)
Location Analysis COST FACTORS • Power • Labor • Material • Taxes • Water • Insurance • Transportation Total Composite Site Cost QUANTITATIVE FACTORS IN LOCATION ANALYSIS • Labor Supply • Union Activity • Labor Skills Available • Community Attitudes Towards Company Activities • Local Transportation Facilities • Recreation • Community Growth Potential • Universities, Colleges and Research Centers • Community Tax Status
Developing Enterprise StrategyIndustry Structure and Environmental Opportunities*
Developing Enterprise StrategyIndustry Structure and Environmental Opportunities* * Gaining and Sustaining Competitive Advantage by Jay B Barney - 2004
Executive Management TriangleStrategy – Technology - Organization STRATEGY FORMULATION/IMPLEMENTATION Investment Portfolio Strategic Alternative Risk vs. Return Resource Allocation PERFORMANCE EVALUATION ORGANIZATION ALTERNATIVE STRUCTURES Business Unit/Product Geography/Place Customer Function Span 21 CENTURY DYNAMICS Global/Multi-Govt’al Societal Core Competence Staffing-Culture Value Chain ALTERNATIVES Outsource Joint Venture Strategic Alliances Licensing Etc. TECHNOLOGY CHANGE PROCESS – Inbound Logistics Operations PRODUCT – Admin. Operations R&D Outbound Logistics Marketing, Sales Distribution Service
Organization DesignStrategic Alternatives Executive Strategic Level Primary Product Place Business Unit Customer Function Tactical Level Secondary (Matrix) Technical Performance Level Tertiary Span of Management
Management – Union RelationsPhases/Processes PHASE I – LEGISLATIVE (THE LAW OF THE LAND) COLLECTIVE BARGAINING Dispute Resolution Warfare Cooling – Off Fact Finding Conciliation Mediation Arbitration MANAGEMENT UNION CONTRACT 5 Major Sections PHASE III – JUDICIAL (PROTEST & APPEAL) PHASE II – EXECUTIVE (ADMINISTRATIVE INITIATIVE) Dispute Resolution Grievance Procedure Arbitration Warfare
Strategic Alliance Model Figure 1a. The Impact of Strategic Alliance on the Creation of Low Cost Distinct Competencies. Lower R & D Cost Technology Licensing Lower Distribution Cost -Lower Cost of Operations -Higher Quality Products -Lower Prices -Economies of Scale -Broader Markets Marketing Licensing Low Cost Distinct Competencies Access to Distribution Channels Qualified Licensing Higher Barriers to Entry Cross-Licensing Low Cost Access to Technology Joint-Sourcing Lower Cost of supply Operating Efficiency
Strategic Alliance Model - 2 Figure 1b. The Impact of Strategic Alliance on the Creation of Differentiation Distinct Competencies. Access to New Technology Technology Joint Venture Access to Marketing Expertise -Quality Product -Brand Name Recognition -Broader Markets Differentiation Distinct Competencies Higher Barriers to Entry Marketing Joint Venture Increased Knowledge Patent Pool Control Entries to the Markets Access to R & D
E Information Hub Model Financial Institutions Manufacturers Distributors Subcontract Manufacturers Information Hub Consumer Retailers Suppliers Logistics Providers
Information Distortion and The Bullwhip Effect Increasing Order Variability Up the Supply Chain ? Customers Wholesalers Manufacturers Suppliers Retailers
Business Life Cycle - Starbucks Sales Time Start-up Growth Decline Maturity
Country Clusters • Americans focus on working as individuals where as the Far East cultures place a high importance on collectivism and stress teamwork. • The U.S. is not as willing as the Far East to accept hierarchical or uneven distribution of power. Americans expect closer relationships between superiors and subordinates than the Eastern cultures. • Both Clusters have little emphasis on structure and security. The cultures’ tendency to let time ‘have its way’ is a willingness to accept risk. • The high Masculinity dimension reflects a stress on independence and masculine traits and less on interdependence and gender equality. • Americans live more for today (short-term), and find less respect for age and place more emphasis on formal written contracts. The Far East emphasizes long-term values; persistence and respect for age & tradition.