Introduction to Strategic Management PDF

W1 Monday, September 16, 2024 5:40 PM Sept. 17 INTRODUCTION TO STRATEGIC MANAGEMENT Module Structure Strategic Analysis ○ Intro ○ External analysis ○ Internal analysis Strategy formulation ○ Business strategy ○ Corporate strategy Strategy implementa...

W1 Monday, September 16, 2024 5:40 PM Sept. 17 INTRODUCTION TO STRATEGIC MANAGEMENT Module Structure Strategic Analysis ○ Intro ○ External analysis ○ Internal analysis Strategy formulation ○ Business strategy ○ Corporate strategy Strategy implementation ○ Entrepreneurial strategy ○ Technology strategy Assessments: 1) Individual: (50%) 60-minute 30Q multiple-choice test - W7 during seminar in-class test most comes from lecture material & a few from readings 2) Group-work: (50%) group 20-30min oral assessment (5ppl). Choose topic & research it Critically review topic, understand application of theories/frameworks in topic, reflect theory & application. Seminar tutor will ask Qs abt topic, including theory, practice & implications ******put unit code when emailing EFIMM0114 CONTENT A Multi-Perspective Field Definitions from boundary-spanners (those whose work involves strategic mang & one other) reveal diff perspectives: ○ Economist: "strategic mang = scientific stufy of plans that firms build & impleme to achieve & maintain competitive advantage" ○ Sociologist: "study of how organizations create value, including not only 'the pla but also the organizational configuration that it's combined w" ○ Management theorist: "SM = study of decisions & actions taken by top executive teams for firms to be competitive in marketplace" t -> t. t on e ent an' es &  ○ Economist: "strategic mang = scientific stufy of plans that firms build & impleme to achieve & maintain competitive advantage" ○ Sociologist: "study of how organizations create value, including not only 'the pla but also the organizational configuration that it's combined w" ○ Management theorist: "SM = study of decisions & actions taken by top executive teams for firms to be competitive in marketplace" Definitions of Strategy Kenneth Andrews = "pattern of objs, purposes, or goals & major policies & plans for achieving these goals, stated in way to define what business company = in or to be in & kind of company it is or is to be" Alfred Chandler = "determination of long-run goals & objs of enterprise, & adoption of courses of action & allocation of resource necessary for carrying out goals" Peter Drucker = "firm's theory abt how to gain competitive advtg" Michael Porter = "competitive strategy = being diff. deliberately choosing diff set of activities to deliver unique mix of value" ○ !!!!!!! TEST SUBJECT: Michael Porter introduced industrial organization into strategy The nature of strategy Strategy = ○ Long-term direction of organization ○ Gaining advantage over competitors ○ Addressing changes in the business env ○ Building on resources & competences (capability) Examples A café/hairdresser ○ No FIT bc health concerns *****FIT = an important concept in strategy Hotels in LDN ○ Ritz vs easyHotel § 5 star vs easyjet hotel ○ Who's got a better strategy? § ….different strategies…targetting diff customers It is about…. Intended (planned) strategy -> deliberate strategy -> realised strategy Other factors: emergent strategy (not planned)….ex.: online teaching bc it was necessa during COVID…wasn't planned but had to emerge with this strategy If deliberate strategy doesn't work then => unrealised strategy Levels of Strategy  If deliberate strategy doesn't work then => unrealised strategy Levels of Strategy Ex: Disney ○ divisions § Parks § Streaming platform § Toy stores § Movie business ○ Departments: w/in divisions = HR, marketing etc ○ EG.: Corporate strategy = for Disney… business strategy = for the Parks… functional strategies = for HR External Analysis Levels in the external env ○ "surroundings of an organization; climate in which org functions. Concept become challenging when we try to move from simple description of env to analysis of its properties" (Ginter & Duncan) ○  ○ ○ Ex.: Coca-Cola § Org = CocaCola § Competitors = Pepsi § Industry = beverage § Macro-env = PEST (EL) Framework ○ ○ Want low interest rate to be able to borrow money ○ Look out for inflation Industry Analysis……WILL BE IN TEST ○  ○ Steps in industry analysis - can only be used to analyze business…not corporation bc a corporations can be in diff industries 1) Define industry boundaries i. Can be ricky, but don't obsess if it's "correct" ii. Consistent & useful iii. Define boundaries of industry…be specific 2) Map the key players i. Players can take on multiple roles ii. Begin w rivals… 1) Whether someone = classifies as competitor or substitute depends on industry definition 2) …& then their buyers & suppliers, substitutes, & potential entrants 3) …& make sure identify final customer, even if not direct customer a) Ultimately, value = created for that grp 3) Clarify whether the analysis = from perspective of an incumbent or entrant 4) Assess the power of each to influence prices, costs & volumes i. Now & in future FACTORS: 1) Rivalry intense if… i. Low concentration (ie no dominant players) ii. Undifferentiated product iii. Exit barriers iv. Rivals will sell even at low margins 1) Perishable prods 2) Large fixed & low marginal costs v. Low industry growth 2) Buyer power high if… i. High price sensitivity 1) Represents high share of buyers' total cost  1) Perishable prods 2) Large fixed & low marginal costs v. Low industry growth 2) Buyer power high if… i. High price sensitivity 1) Represents high share of buyers' total cost 2) Little impact on quality of buyers' own output ii. High bargaining sensitivity 1) Few buyers 2) Low switching costs 3) Undifferentiated product 4) Potential for backward integration 3) Supplier power high if… i. Analysis = analogous to that of buyer power 4) Threat of entry high if… i. Low capital requirements ii. No economies of scale iii. Access to inputs iv. Access to distribution channels v. No switching costs for customers vi. No legal & regulatory barriers vii. No threat of retaliation 5) Threat of substitutes high if… i. No small diff in price-performance btwn industry's prod & substitute ii. Low switching costs for buyers when moving from industry's product to the substitute Interpreting industry analyses ○ Unattractive industry has: § Low entry barriers § Suppliers & buyers w strong bargaining positions § Strong competitive threats from prod substitutes § Intense rivalry among competitors ○ Attractive industry has: § High entry barriers § Suppliers & buyers w little bargaining power § Few competitive threats from prod substitutes § Relatively moderate rivalry ○ ……..analysis of 5 forces w/in given ind allows firm to determine industry's attractiveness in potential to earn avrg or +avrg returns ○ Stronger competitive forces = lower potential to earn profits Criticism of 5 Forces ○ Six force: complements (Brandenburger & Nalebuf, 1996) § Ex.: can't use iPhone w/out App Store apps  industry's attractiveness in potential to earn avrg or +avrg returns ○ Stronger competitive forces = lower potential to earn profits Criticism of 5 Forces ○ Six force: complements (Brandenburger & Nalebuf, 1996) § Ex.: can't use iPhone w/out App Store apps ○ Static § Not a dynamic framework you can analyze over time ○ No prediction § Can only analyze what happened before ○ Not explain competitive advtg § Bc internal factors