ECB3SM (2024-25) Lecture 01 - Strategy and Management PDF

Strategy and Management (2024-25) Lecture 01: What is Strategy? Wednesday, November 13,2024 Rajani Singh Lecturer: Utrecht University School of Economics Lecture 01 – Session Plan 1: Introduction 2: What is strategy? 3: Course Plan 4: Q&A Compo...

Strategy and Management (2024-25) Lecture 01: What is Strategy? Wednesday, November 13,2024 Rajani Singh Lecturer: Utrecht University School of Economics Lecture 01 – Session Plan 1: Introduction 2: What is strategy? 3: Course Plan 4: Q&A Composition of our group Conceptual framework Course material Thoughts of our group Big picture Evaluation Administrative issues My assumptions, role and recommendations About me… Rajani Singh ([email protected]) Research interests Corporate governance in emerging markets Emerging market multinationals Social entrepreneurship Teaching focus Strategy and Management Strategic management of Innovation Market Dynamics and innovation Strategy and Organization Thesis supervisions Strategy and Management 3  About you Strength Others 9% Economics and Multiple Supervisory Management 19% experience 7% 27% Language/ Creative Interest 23% Economics Preference for 84% Numbers 31% Academic Focus N= 93; As of 10 am today morning Total number of students enrolled in the course: 150 4 Strategy and Management: Group’s thoughts Success Planning Consulting optimization & problem solving Analysis Innovation Brainstorming Decisions Strategy and Management 5 Why is this course relevant for you? Strategist vs Economist Economist Social Welfare the Key Driver – Focus Curb supernormal profits. Increase competition Strategist Firm Performance the Key Driver - Maximize Supernormal Profits – Curb Competition! Interdependencies across functions in a business Career growth in an organization If strategy is about making choices, so is life! Strategy and Management 6 Overarching question and its implications Why do firms differ in performance? How do I analyze my firm’s external environment? How do I create competitive advantage for my firm at a point in time through a fit among my firm’s internal activities and resources? How do I sustain competitive advantage for my firm over time amidst competitive dynamics? Strategy and Management 7 Learning objectives for this week Explain the role of strategy in a firm’s quest for competitive àdvantage Define competitive advantage, sustainable competitive advantage, sustainable competitive disadvantage, and competitive parity Assess the origins of strategy and how views on strategy have changed over time Understand the challenges of strategy making Strategy and Management 8 Lecture 01 – Session Plan 1: Introduction 2: What is strategy? 3: Course Plan 4: Q&A Composition of our group Conceptual framework Course material Thoughts of our group Big picture Evaluation Conceptual framework and Administrative issues big picture My assumptions, role and recommendations The Concept of Strategy Strategic decisions share 3 Strategy is an overall plan for common characteristics deploying resources to They are important establish a favorable position They involve a significant commitment of resources They are not easily reversible Strategy and Management 10 Successful strategies Strategy is an overall plan for deploying resources to establish a Strategic decisions share 3 common characteristics They are important favorable position They involve a significant commitment of resources They are not easily reversible Successful Strategies Simple, consistent, long term goals Profound understanding of the competitive environment Objective allocation of resources Strategy and Management 11 Strategy: Key definitions Strategy: a plan, method, or series of actions designed to achieve a specific goal or effect. – Wordsmyth Dictionary The determination of the long-run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. – Alfred Chandler, Strategy and Structure Strategy is the pattern of objectives, purposes, or goals and the major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be. – Kenneth Andrews, The Concept of Corporate Strategy Strategy and Management 12 Evolution of Strategic Management: Dominant themes 1950 1970-1980 2000-2015 Operational budgeting Emergence of Strategic Adapting to turbulence Capital Budgeting Management Corporate Planning Quest for competitive advantage 1960 1980-1990 Strategy and Management 13 Describing Strategy Strategy is an overall plan for deploying resources to establish a favorable position (profitability, market share) Sam Walton (Walmart): offered lower prices. Steve Jobs (Apple): “put a ding in the universe.” Mark Zuckerberg (Facebook): made the world open and connected. Larry Page and Sergey Brin (Google): made information accessible. Strategy and Management 14 Of Strategies, Deliberate and Emergent, (Mintzberg & Waters 1985) Deliberate and emnergent strategies may be conceived as two ends of a continuumn along which real- world strategies lie (See Figure 1) Authors label various strategies on this continuum Planned, Entrepreneurial, Ideological, Umbrella, Process, Unconnected, Consensus and Imposed Authors do several case studies to understand the interplay between intended and realized strategy Strategy and Management 15 Pure Deliberate, Pure Emergent Strategy and Management 16 Planned Strategy Strategy and Management 17 Entrepreneurial Strategy Strategy and Management 18 Ideological Strategies Strategy and Management 19 Umbrella Strategy Strategy and Management 20 Process Strategy Strategy and Management 21 Unconnected Strategy Strategy and Management 22 Consensus Strategy Strategy and Management 23 Imposed Strategy Strategy and Management 24  Design vs Emergent Strategy Intended Strategy Strategy as conceived by the top management team Emergent strategy Decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to environmental constraints Realized Strategy Actual strategy that is implemented Source: Rothermal Strategy and Management 25 Corporate, Business, and Functional Strategy Source: Rothermal Strategy and Management 26 Strategy vs Tactics Strategy is the plan for deploying resources to establish a favorable position, plan to win a war! Tactic is a scheme for a specific action, manoeuvres to win a battle! Example: Amazon Prime vs. Free shipping by amazon Strategy and Management 27 Competitive Advantage Superior performance relative to other competitors in the same industry or the industry average. Competitive advantage is relative, not absolute. To assess competitive advantage, benchmark: Compare the firm to competitors in the same industry. Compare the firm to the industry average. Strategy and Management 28 Sustainable Competitive Advantage A firm that can outperform its competitors or the industry average over a prolonged period. Example: Apple (smartphone industry): Sustainable competitive advantage over Samsung. Has lasted over a decade. Strategy and Management 29 Competitive Disadvantage & Competitive Parity Competitive Disadvantage: a firm that underperforms: Its rivals. The industry average. Competitive Parity: two or more firms that perform at the same level. Strategy and Management 30 Gaining a Competitive Advantage Vision What do we want to accomplish ultimately? Mission How do we accomplish our goals? Values What commitments do we make? What safeguards do we put in place? How do we act both legally and ethically as we pursue our vision and mission? Strategy and Management 31 Vision An effective vision outlines a firm’s stretch goal Captures an organization’s aspiration. Spells out what the organization wants to accomplish. Identifies the long-term objective. Should be forward-looking and inspiring. Actions based on vision will: Build necessary resources. Build capabilities. Ensure continuous organizational learning. Ensure learning from failure. Vision Is Strategic Intent Research shows that vision statements and firm performance are related. This relationship is strongest when: The vision is customer oriented. Internal stakeholders help define the vision. Organizational structures align to the vision, for example, compensation. Voluntary Assignment 1: Choose a firm of your interest and go through its vision statement. See for yourself if it does or does not use an inspiring vision to effectively and clearly communicate what it ultimately wants to accomplish, while providing a stretch goal. Mission What an organization actually does. The products and services it will provide. The markets in which it will compete. Credible action that backs up the vision Voluntary assignment 2: For your chosen firm of interest, see if the mission is re- casted in a way that it will achieve its vision and do you see the firm taking credible actions towards these! Vision, Mission, Values Source: Rothermal Strategy and Management 35 Profit and Purpose Profits are to business as breathing is to life Breathing is essential to life but is not the purpose for living. Similarly, profits are essential for the existence of the corporation, but they are not the reason for its existence! Companies are increasingly accepting responsibilities that extend well beyond the immediate interest of shareholders: For ethical reasons For reasons of self interest Sustainability (it is in both society’s and the firm’s interests to sustain the ecosystem) Reputation (CSR enhances the firm’s reputation with consumers and third parties) License to operate (firms need the approval and support of the constituencies on which they depend) Strategy and Management 36 Strategic Leadership Who is a strategic leader? What does S(he) do? How do we become one? Source: Data from O. Bandiera, A. Prat, and R. Sadun (2012), “Management capital at the top: Evidence from the time use of CEOs,” London School of Economics and Harvard Business School Working Paper. Strategy and Management 37  Strategic Leadership Leaders can increase shareholder value Leaders can destroy shareholder value Mark Zuckerberg of Facebook Ken Lay of Enron Elon Musk of Tesla and SpaceX John Sculley of Apple Jeff Bezos of Amazon Bernard Ebbers of WorldCom Oprah Winfrey of HARPO Richard Fuld of Lehman Brothers Sheryl Sandberg of Facebook Richard Wagoner of General Motors Angela Ahrendts of Apple Robert Nardelli of The Home Depot and Chrysler Mary Barra of General Motors Ron Johnson of JC Penney Howard Schultz of Starbucks Strategy and Management 38 How Do You Become a Strategic Leader? It is a function of innate abilities and learning. Leadership actions reflect: Age, education, and career experiences Personal interpretations of situations Upper Echelon’s Theory Organizational outcomes reflect the values of the top management team. Their unique perspectives. Shaped by personal circumstances, values, and experiences. Outcomes include Strategic choices and performance levels. Strategy and Management 39 Big picture for “Strategy & Management” Strategy and Management 40 Lecture 01 – Session Plan 1: Introduction 2: What is strategy? 3: Course Plan 4: Q&A Composition of our group Conceptual framework Course material Thoughts of our group Big picture Evaluation Conceptual framework and Administrative issues big picture My assumptions, role and recommendations Course material Reading material Textbook: Grant, RM. and Jordan J. 2015. Foundations of Strategy Case Studies: Mini Cases, supported with guiding questions Assigned papers: Links in course manual Strategy and Management 42 Evaluation: Components 1. Case assignment and 2. Group Assignment 3. End term active participation Case presentation: 15% Report: 15% Multiple Choice Questions: 20 Active Participation: Group Presentation: 10% Open questions: 4 10% Team/ Individual: (25%) Team: (25%) Individual : (50%) Strategy and Management 43 1. Case Assignments and Active Participation (25%) Case Assignments Every week 2 teams will make a short presentation (15 mins+5 mins) in the tutorial on an assigned mini case The theme of the mini cases will focus on the key learning objectives for that week Case assignment presentation comprises 15% of your final grade Active Participation Active participation will be evaluated using the Peerwise Score. It comprises 10% of your final grade http://peerwise.cs.auckland.ac.nz/at/?uu_nl To access our course, "ECB3SM 2024-25", you will need to enter two pieces of information: Course ID = 27753 Identifier = Please enter your student ID Strategy and Management 44 1. Case Assignments and Active Participation (25%) Case Assignments (15%) Every week 2 teams will make a short presentation (15 mins+5 mins) in the tutorial on an assigned mini case The theme of the mini cases will focus on the key learning objectives for that week Case presentations 0-2 Evaluation quality criterion Team is not present or prepared. There is no presentation or content Case assignment presentation comprises 15% of your final grade presented by the team. The presentation does not deal with course material or homework materials. The team members do not show ownership over the topic and cannot adequately answer Q&A. 2-3.5 The team do not respond in a meaningful way to the case questions or problems. The content of the presentation is fully detached from the You will know your case assignment schedule in tutorial 01 required reading material or course material and fails to generate learnings or discussion for the class. Only few team members are able to present or adequately respond to questions. 4-5.5 The team response to the case questions only scratches the surface of the problem at hand. The content of the presentation seems largely detached from the reading material and does not evoke learnings or discussion for the class. Only few team members showcase ownership over the topic and can respond only vaguely to questions. 5.5-6.5 The team answers to the case question adequately responds to the case question, but remains superficial. The content of the presentation is limitedly linked to the required reading material and evokes only limited learnings or discussion for the class. Several team members showcase ownership over the topic and can respond to general questions. 6.5-7.5 The team answers to the case question provides a fitting response or solution to the case question, but there is room for more improvement and critical thinking. The content of the presentation is directly linked to the required reading material and evokes learning or discussion for the class. Most team members showcase ownership over the topic and WHY CASES? can adequately respond to any question. 7.5-8.5 The team answers to the case question provides a solid response or solution to the case question, and showcases critical thinking and depth of reasoning. The content of the presentation is directly linked to the reading material and evokes learnings or discussion for the class. All team members showcase ownership and mastery over the topic and can perfectly respond to any questions. 9-10 The team answers to the case question provides a great response or solution to the case question, it extends knowledge for the participants (e.g. the class learns something new) and showcases critical thinking and depth of reasoning. The content of the presentation is linked to both the required reading material and the recommended reading material and evokes learnings or discussion for the class. All team members showcase ownership and advanced mastery over the topic and can perfectly respond to any questions. Grading Rubric: Please refer Appendix 1 in Course Manual Strategy and Management 45 Class discussion for case analysis Critical evaluation to identify strengths and weaknesses of the presentation Did the team conceptualize the strategic problem well? Did they generate suitable options/alternatives? Did they evaluate the options to arrive at the final solution? Does the solution fit? Does the team make use of key ideas or theories? Does the work engage (or fail to engage) with key concepts? Are the arguments presented logically? A critical evaluation does not simply highlight negative impressions. It should deconstruct the work and identify both strengths and weaknesses. Case Assignments and Active Participation (25%) PeerWise (10%) Peerwise tags and associated deadlines to create questions You should create 4 questions from 4 different tags What_is_Strategy : November 20, 2024 External_Analysis: November 27, 2024 Internal_Analysis: December 4, 2024 Business_Strategy_I: December 11, 2024 Business_Strategy_II: December 18, 2024 Corporate_Strategy: January8, 2025 Global_Strategy: January 15, 2025 Please note, above deadlines are only for creating questions. You can answer questions till 8:00 a.m. , January 20th 2025. Please refer the guide for students in case of any queries https://peerwise.cs.auckland.ac.nz/docs/students/ Strategy and Management 47 2. Group Assignment (25%) Deliverables Written Report (15%) Recorded Presentation 15 minutes (10%) Submission Deadline: January 15, 2025, 5:00 P.M. via blackboard Burning Question: Who is in my Group?? Group Formation Good news:You can make your own groups Teams comprising 5 members Members should be in the same tutorial group In the first tutorial, please share details of your group with your tutor. If you are not in any group, your tutor will help you find one during the tutorial – just let her know in class. We will have the final groups by end of tutorial 01 Strategy and Management 48 2. Group Assignment SuggestedTimeline: Week 1-2: Firm selection and initial research. Week 3-4: Detailed strategic analysis. Week 5,6: Comparative analysis and report drafting. Week 7: Report finalization and presentation preparation. Week 8: Group presentation Submission and submission of the final report Interim Feedback: Need basis You may request for an interim feedback (via teams) ; it is not compulsory – so only if you need/want You may request for a time slot on Thursday January 9th and Friday January 10th. All team members need to be present for this meeting. If you need feedback, make sure to submit a draft via blackboard : Deadline : January 5th (Submitting earlier is okay, but not later : We need time to read and give constructive feedback – Please keep that in mind when you make your work plan.) Strategy and Management 49 Guide to Firm Analysis I keep six honest serving men (They taught me all I knew); Their names are What and Why and When; And How and Where and Who! Rudyard Kipling Why do we do Firm Analysis? Increase your understanding of what managers should and should not do in guiding a business to success. Build your skills in sizing up company resource strengths and weaknesses and in conducting strategic analysis in a variety of industries and competitive situations. Get valuable practice in identifying strategic issues that need to be addressed, evaluating strategic alternatives, and formulating workable plans of action. Enhance your sense of business judgment, as opposed to uncritically accepting the authoritative crutch of the professor or “back-of-the-book” answers. Gain in-depth exposure to different industries and companies, thereby acquiring something close to actual business experience. Elements of a Good Analysis 1. Identify all the pertinent issues that management needs to address 2. Perform appropriate analysis and evaluation, and 3. Propose an action plan and set of recommendations addressing the issues you have identified 1. Identification Provide a sharply focused diagnosis of strategic issues and key problems and that you demonstrate a good grasp of the company’s present situation Make sure you can identify the firm’s strategy and that you can pinpoint whatever strategy implementation issues may exist Consider beginning your discussion with an overview of the company’s situation, its strategy, and the significant problems and issues that confront management. State problems/issues as clearly and precisely as you can. 2. Analysis and Evaluation Look at marketing, production, managerial competence, and other factors underlying the organization’s strategic successes and failures. Decide whether the firm has valuable resource strengths and competencies and, if so, whether it is capitalizing on them. Check to see if the firm’s strategy is producing satisfactory results and determine the reasons why or why not. Probe the nature and strength of the competitive forces confronting the company. Decide whether and why the firm’s competitive position is getting stronger or weaker 2. Analysis and Evaluation You are required to offer analysis and evidence to back up your conclusions. Do not rely on unsupported opinions, over-generalizations, and platitudes as a substitute for tight, logical argument backed up with facts and figures. Demonstrate that you have command of the strategic concepts and analytical tools to which you have been exposed. Use them in your discussions. Your interpretation of the evidence should be reasonable and objective. Be wary of preparing a one-sided argument that omits all aspects not favorable to your conclusions. Likewise, try not to exaggerate or overdramatize. Endeavor to inject balance into your analysis and to avoid emotional rhetoric. 3. Recommendations Your set of recommendations should address all of the problems/issues you identified and analyzed. If the recommendations come as a surprise or do not follow logically from the analysis, the effect is to weaken greatly your suggestions of what to do. Obviously, your recommendations for actions should offer a reasonable prospect of success. High-risk, bet-the-company recommendations should be made with caution. State how your recommendations will solve the problems you identified. A final word… It goes without saying that your presentation should be well organized. Great ideas amount to little unless others can be convinced of their merit—this takes tight logic, the presentation of convincing evidence, and persuasive arguments ☺ Please refer course manual, pages 6-8 for further guidance/ suggestions for the group project Every week, I will allocate a part of the lecture time to discuss the group project, elaborate further on the target sections for that week and answer questions in class, if any! 2. End Term Exam (50%) Date: January 20th, 8:30-10:30 am, via remindo Format: Multiple Choice + Open Ended Questions MCQs: 20:2 : 40 Points Open ended questions: 3-4 , 60 points Lectures are leading exam material. They draw heavily from the book as well as real world examples – both are critical to do well on the exam. Book chapters and assigned readings for every class There will be atleast one open ended question and a few MCQs from the assigned readings Mock exam will be made available on blackboard by December 18th, 2024. Strategy and Management 58 Early exit Students To avoid confusion with the larger group, you will receive a detailed email later today that elaborates on your assessment criteria and dates. Strategy and Management 59 My recommendations: Key processes Learning from peers Attendance Regular preparation Readings and cases Preparation Individually and in groups Expect more from yourself and raise the bar Trust yourself and take a stand Participation Question your classmates and me Case analyses and PeerWise Teamwork Learn from each other Strategy and Management 60 My assumptions and role Mutual respect All of us bring something unique to class We will respect the views and time of fellow participants Facilitator I am committed to maximizing your learning experience Onus for deriving value lies with all of us If you feel that you have both feet planted on level ground, then the university has failed you. -Robert Goheen, 1961, President, Princeton University Strategy and Management 61 Course administration Lecturer : Rajani Singh ([email protected] ) Slides for lectures and tutorial will be posted on blackboard after each session Tutor: Anne-Sophie Halbertsma ([email protected]) Preparation and punctuality I will be prepared and in class on time; I expect the same from you Strategy and Management 62 Course administration If you send emails to your instructor regarding individual work (leave, questions etc.), please be sure to provide your tutorial group, and student number in the email. regarding group work, please be sure to include your groupmates in the cc, so that every team member has the same information. Office hours 9:00-11:00 am, Every Friday – By appointment ([email protected] ) (online meeting via teams) Strategy and Management 63 To keep an eye on… Lecture 01: Wednesday, November 13 Tutorial 01: Monday, November 18 and Tuesday, November 19 (Please refer your timetable for the relevant date and time for yourself) Lecture 02: Wednesday, November 20 Strategy and Management 64 Welcome once again and have fun!