1. BBA 473 Strategic Planning and Policy Analysis

6. What is Strategic Management?

7. “ If you don’t know where you’re going, you’re liable to wind up someplace else!” -- Yogi Berra

8. “ Plans are nothing; planning is everything!” -- Dwight D. Eisenhower

10. Without a strategy, managers have: No thought-out course to follow No roadmap to manage by No action program to produce the intended result

11. Good strategy and good strategy execution are the most trustworthy signs of good management.

13. Strategic planning is a “disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is , what it does , and why it does it .”

17. Sustained Competitive Advantage Above-Average Returns Returns in excess of what an investor expects to earn from other investments with similar risk Occurs when a firm develops a strategy that competitors are not simultaneously implementing Provides benefits which current and potential competitors are unable to duplicate Strategic Competitiveness Achieved when a firm successfully formulates and implements a value-creating strategy

18. which are required for firms to achieve: Above-Average Returns Strategic Competitiveness Sustained Competitive Advantage The Strategic Management Process Involves the full set of: Actions Commitments Decisions

22. Stakeholders: Groups who are affected by a firm’s performance and who have claims on its wealth The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders Organizational Employees Managers Non-Managers Firm Capital Market Stock market/Investors Debt suppliers/Banks Product Market Primary Customers Suppliers

23. Stakeholder Involvement Two issues affect the extent of stakeholder involvement in the firm How do you divide the returns to keep stakeholders involved? 1 Capital Market Product Market Organizational

24. Stakeholder Involvement Two issues affect the extent of stakeholder involvement in the firm How do you increase the returns so everyone has more to share? 2 Capital Market Product Market Organizational

25. Components of the General Environment Political/Legal Economic Technological Global Demographic Sociocultural Competitive Environment Industry Environment

34. Threat of Substitute Products Threat of New Entrants Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Porter’s Five Forces Model of Competition Rivalry Among Competing Firms in Industry

35. Rivalry Among Existing Competitors Intense rivalry often plays out in the following ways: Jockeying for strategic position Using price competition Staging advertising battles Making new product introductions Increasing consumer warranties or service Occurs when a firm is pressured or sees an opportunity Price competition often leaves the entire industry worse off Advertising battles may increase total industry demand, but may be costly to smaller competitors

36. Cutthroat competition is more likely to occur when: Rivalry Among Existing Competitors Numerous or equally balanced competitors Slow growth industry High fixed costs Lack of differentiation or switching costs High storage costs Capacity added in large increments High strategic stakes High exit barriers Diverse competitors

37. Competitor Analysis The follow-up to Industry Analysis is effective analysis of a firm’s Competitors Competitive Environment Industry Environment

38. Competitor Analysis Assumptions What assumptions do our competitors hold about the future of industry and themselves? Current Strategy Does our current strategy support changes in the competitive environment? Future Objectives How do our goals compare to our competitors’ goals? Capabilities How do our capabilities compare to our competitors? Response What will our competitors do in the future? Where do we have a competitive advantage? How will this change our relationship with our competition?

39. Chapter 2 External Environment What the Firm Might Do Chapter 3 Internal Environment What the Firm Can Do Sustainable Competitive Advantage

41. Tangible Resources What a firm Has ... What a firm has to work with: its assets, including its people and the value of its brand name Resources represent inputs into a firm’s production process... such as capital equipment, skills of employees, brand names, finances and talented managers Intangible Resources “ Some genius invented the Oreo. We’re just living off the inheritance.” F. Ross Johnson , Former President & CEO, RJR Nabisco Resources Financial * Physical * Human Resources * Organizational * Technological * Innovation * Reputation *

42. What a firm Does ... Capabilities represent: the firm’s capacity or ability to integrate individual firm resources to achieve a desired objective. Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firm’s tangible and intangible resources that are based on the development, transmission and exchange or sharing of information and knowledge as carried out by the firm's employees. Capabilities become important when they are combined in unique combinations which create core competencies which have strategic value and can lead to competitive advantage . Capabilities

43. For a strategic capability to be a Core Competency, it must be: Core Competencies What a firm Does ... that is Strategically Valuable Valuable Rare Costly to Imitate Nonsubstitutable

44. Core Competencies must be: Nonsubstitutable Capabilities that do not have strategic equivalents, such as firm-specific knowledge or trust-based relationships What a firm Does ... that is Strategically Valuable Core Competencies Valuable Rare Costly to Imitate Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity Capabilities that are possessed by few, if any, current or potential competitors Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment