7. Strategy

8/8/2019 7. Strategy

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Business 301Business 301

College of BusinessCollege of Business

Montana State UniversityMontana State University

7. Planning & Strategy7. Planning & Strategy


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7. Strategy Agenda7. Strategy Agenda1. In-Class Activity & Discussion: Planning Survey

2. Strategy Content Traditional Planning Model

Mission

Personal Mission

Identify Company Missions

Honda Strategy-prepare for class discussion- see D2L document

Levels of strategy

Types of strategy

Business Strategy Methods Jet Blue Video will watch & discuss in class

Lodging Industry prepare for class activity worth 10 points

SWOT review

Planned vs. Emergent Strategy Honda Strategy II prepare for class discussion- see D2L document

Value Creation & Strategic Resources

1. Closing Announcements


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I am proactive rather than reactive.

I set aside enough time and resources to study and completeprojects.

I am able to budget money to buy the things I really want

without going broke.

I have thought through what I want to do inschool.

I have a plan for completing my major.

My goals for the future are realistic.

Now Add Up Your Score & Divide By 6.

Please Complete the FollowingPlease Complete the Following

SurveySurveyIndicate how much you agree/disagree with the 6 statements below as they relate to

your school & personal life. Use the scale below to record your answers:1 2

3 4 5

Strongly Disagree Strongly AgreeNeutral


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Personal Planning Survey ResultsPersonal Planning Survey Results

In-Class Discussion QuestionsIn-Class Discussion Questions

What is the purpose of this survey? What does itmeasure?

What did you think of as you responded to thesequestions?

How many think their survey results are accurate?

How many feel that they couldimprove their personal goal-setting and planning skills?


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Organizational

Environments

Organizational

Decision-Making

StrategicStrategic

ManagementManagement

(Planning &(Planning &


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Content Road MapContent Road Map

PlanningPlanning

ManagementManagement

OrganizingOrganizing LeadingLeading ControllingControlling

Week I-II: What is it?Where did it come

from?Why does it matter?

Week II-VI:DecisionmakingEnvironmentStrategyChangeGlobalEthics

WeekV,X,XIII:StructureTeamsHR

Week VII-IX, XI:Organizational BehaviorMotivationLeadershipCommunication

Practical ExperiencePractical Experience

Week X-XV: ExecutiveBriefings


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Planning & StrategyPlanning & StrategyLearning Objectives

21. explain mission statements & give an example.

22. discuss & explain planning & strategy. Also see Text.

23. identify the key elements & levels of strategy.

24. identify & give examples of the 5 generic strategies. Also see Lodging

Industry activity

25. describe & apply SWOT analysis. Also see Robin Hood Exercise from

earlier class!

26. differentiate Planned vs. Emergent Strategy

27. discuss how one can create value for a

firm.

28. explain & identify strategic resourcesfor multiple types of organizations.


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TraditionalTraditional PlannedPlannedStrategyStrategy

ModelModel

Defining the Mission and Setting Top-Level GoalsDefining the Mission and Setting Top-Level Goals

External Analysis of Opportunities and ThreatsExternal Analysis of Opportunities and Threats

Internal Analysis of Strengths and WeaknessesInternal Analysis of Strengths and Weaknesses

Selection of Appropriate StrategiesSelection of Appropriate Strategies

Implementation of Chosen StrategiesImplementation of Chosen Strategies

Basic Strategic Planning ModelBasic Strategic Planning Model

Obj

#22-23


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What is Your Mission?What is Your Mission?

What is really important to you? What is central to who you are?

What would you want people to say about

you after you die?

Take 5 minutes to write a personal missionstatement Bring this to class with name

& date.

Will discuss & collect this in

class (For 1 participation point)!

Obj

#21


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Mission StatementMission Statement

Enduring statement of purpose

Identifies the scope of business

Product

Market

Reflects values and priorities

Obj

#21


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What is our reason for being, our purpose?

What is unique about our organization?

Who should be our principle customers?

How do we make money?

What are the core beliefs, values of the

firms?

Mission: Key DimensionsMission: Key Dimensions

Obj

#21


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Hondas U.S. StrategyHondas U.S. Strategy

Think about these questions and prepare to

discuss them in class

1. What was Hondas strategy in the U.S.?

2. Who were Hondas customers?

3. Was their strategy successful? Why?

4. What can we learn about strategy from Honda?


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Three Levels of StrategyThree Levels of Strategy

Mission and Vision(What business should we be in?)

Business Goals

Competitive Advantage

Marketing R & D HR Operation Finance

Functional Level

Corporate level

Business level

Obj

#23


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Generic StrategiesGeneric Strategies

Differentiation or Low Cost: Differentiation: Need to be different than competitor

Low Cost: Produce products at a lower cost

Focused or Broad: Focused: Occupy a specific (narrow) niche

Broad: Cover a range of niches andcustomers

Obj

#24


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Ways to DifferentiateWays to Differentiate

Quality: High standards, reliability, dependability.

Customer Responsiveness: Ability to respond to a

wide range of customers needs.

Innovation: Short cycle time

for new ideas

Obj

#24


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Ways to Create CostWays to Create Cost

AdvantageAdvantage Lower Cost Structures

More Efficient Operations

Reduce Services Customers Dont Want

Obj

#24


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5 Generic Strategies5 Generic Strategies

M

ark

et

M

ark

et

Type of Advantage SoughtType of Advantage Sought

Overall Low-CostOverall Low-CostLeadershipLeadership

StrategyStrategy

Overall Low-CostOverall Low-CostLeadershipLeadership

StrategyStrategy

BroadBroadDifferentiationDifferentiation

StrategyStrategy

BroadBroadDifferentiationDifferentiation

StrategyStrategy

FocusedFocused

Low-CostLow-Cost

StrategyStrategy

FocusedFocused

Low-CostLow-Cost

StrategyStrategy

FocusedFocused

DifferentiationDifferentiation

StrategyStrategy

FocusedFocused

DifferentiationDifferentiation

StrategyStrategy

Best-CostBest-Cost

ProviderProviderStrategyStrategy

Best-CostBest-Cost

ProviderProvider

StrategyStrategy

Lower CostLower Cost DifferentiationDifferentiation

BroadBroad

RangeRange

ofof

BuyersBuyers

NarrowNarrow

BuyerBuyer

SegmentSegment

or Nicheor Niche

Obj

#24


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Video Case: JetBluesVideo Case: JetBlues

StrategyStrategy Will Watch in Class!

Obj

#24


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TraditionalTraditional PlannedPlannedStrategyStrategy

ModelModel

Defining the Mission and Setting Top-Level GoalsDefining the Mission and Setting Top-Level Goals

External Analysis of Opportunities and ThreatsExternal Analysis of Opportunities and Threats

Internal Analysis of Strengths and WeaknessesInternal Analysis of Strengths and Weaknesses

Selection of Appropriate StrategiesSelection of Appropriate Strategies

Implementation of Chosen StrategiesImplementation of Chosen Strategies

Basic Strategic Planning ModelBasic Strategic Planning Model

CorporateStrategy

SWOT

Analysis

Business-Level

Strategy

Functional-Level

Strategy

Obj

#25


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Identifying OpportunitiesIdentifying Opportunities

Opportunities inOpportunities in

the Environmentthe Environment

Opportunities inOpportunities in

the Environmentthe EnvironmentOrganizationsOrganizations

ResourcesResources

OrganizationsOrganizations

ResourcesResources

Organizations

Opportunities

Obj

#25


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SWOT Analysis:SWOT Analysis: What to Look ForWhat to Look For

Potential Resource

Strengths

Potential Resource

Weaknesses

Potential Company

Opportunities

Potential External

Threats

Powerful strategy

Strong financialcondition

Strong brand nameimage/reputation

Widely recognizedmarket leader

Proprietarytechnology

Cost advantages

Strong advertising

Product innovation

skills

Good customerservice

Better productquality

Alliances or JVs

No clear strategicdirection

Obsolete facilities

Weak balance sheet;excess debt

Higher overall coststhan rivals

Missing some keyskills/competencies

Subpar profits . . .

Internal operatingproblems . . .

Falling behind inR&D

Too narrow productline

Weak marketingskills

Serving additionalcustomer groups

Expanding to newgeographic areas

Expanding product

line Transferring skills tonew products

Vertical integration

Openings to take MSfrom rivals

Acquisition of rivals

Alliances or JVs toexpand coverage

Openings to exploitnew technologies

Openings to extendbrand name/image

Entry of newcompetitors

Loss of sales tosubstitutes

Slowing market

growth Adverse shifts inexchange rates &trade policies

Costly newregulations

Vulnerability to

business cycle Growing leverage ofcustomers/suppliers

Shift in buyer needsfor product

Demographicchanges

INTERNAL EXTERNAL

Adapted from Thompson & Strickland, 2003. Strategic Management: Concepts & Cases. 13th Ed.

Obj

#25


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Honda Part II: The Real StoryHonda Part II: The Real Story

Again, we will discuss this in class- so take a

look at the D2L document prior to class

1. What was Hondas Strategy in the U.S.?

2. Was it all planned ahead of time?3. What mistakes did they make?

4. How did they change strategy?

5. What can we learn from

Honda?


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Planned vs. Emergent StrategyPlanned vs. Emergent Strategy

Planned: Need to assess the environment

and internal strengths and weaknesses to

form strategy and implement Emergent: When implementing strategy,

need to be ready to update & take

advantage of opportunities asthey arise:

Lesson: Strategies are living

documents

Obj

#26

P t 5 F D i iP t 5 F D i i


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POTENTIAL

ENTRANTS

INDUSTRY

COMPETITORS

SUBSTITUTES

SUPPLIERS CUSTOMERS

Porters 5 Forces DrivingPorters 5 Forces Driving

Industry CompetitionIndustry Competition


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Value Creation StrategiesValue Creation Strategies

How do organizations developcompetitive advantages?

By acquiring and developingresources that provide corecapabilities and core competencies

How does the organizationdo that?

Obj

#27


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Resource-based Theory:Resource-based Theory:

Types of ResourcesTypes of Resources

Financial resources

assets, liabilities, credit

Physical resources

technology, plant, equipment, raw materials, capital

Organizational resources

formal structure, systems for coordination and

control, culture, reputation, fit Human capital resources

skills, experience, intelligence,

motivation, commitment, ownership

Obj

#28


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4 Criteria for Strategic4 Criteria for Strategic

ResourcesResources (Barney, 1990)(Barney, 1990)

How do we know if its a strategic resource?

Valuable

Rare

Difficult to copy or substitute

Exploited by the organizationObj

#28


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Take-Away PointsTake-Away Points

Strategy & Strategic Plans always stem from thepurpose of the organization- its mission.

Strategy is typically but not always a top-downprocess.

It is important to think through a companyspurpose, goals, andlong-term plans to develop adeliberate business strategyto guide its actions.


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Upcoming AssignmentsUpcoming Assignments

Lodging Industry Exercise- download andprepare for class activity. I will collect your work

for 10 points.

Research Outline #1 deadline- check D2L fordate.

Participation Quiz #5

Content Quiz #3

Documents

7. Strategy