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Session 1Session 1

History and Overview ofStrategic Management

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Session ObjectivesSession Objectives

To Develop an Understanding of the (brief) History of Strategic Management.

To Develop a Conceptual Understanding of the Paradigm Shift from Business Policy to Strategic Management

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Colleges of Business AdministrationColleges of Business Administration

Very young compared to philosophy, science, religion, literature…

So we’re still trying to figure out the right way to teach students how to be effective business administrators

For example – right now we have major disagreements and issues regarding ethics and leadership among universities worldwide

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What is the best model?What is the best model?

Ford Foundation study of “best practices” of b-schools during the late 1940s found

Need to develop a multi-disciplinary understanding of Business

Ergo a capstone course that introduces accountants to marketing, marketers to operations, production managers to human resources…

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This capstone course was most often called Business Policy at that time…

So that name has stuck even though the way we attempt to achieve this integrative perspective through the capstone course has evolved

The business policy model has been replaced by the strategic management model

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Word for the DayWord for the Day

Paradigm

We have experienced a paradigm shift over the past 60 years from the business policy paradigm to the strategic management paradigm

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What is the First “Strategy” for any Business?What is the First “Strategy” for any Business?

It’s that Key Idea in the Entrepreneur’s mind for Satisfying a societal/marketplace need by Providing/producing a product/service that will Yield an excess of price over cost of its provision that Incents the provider to continue/expand its delivery

(Capitalism 101)

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The Business Policy Model would thenThe Business Policy Model would then

Focus on becoming as efficient as possible in the development and delivery of the product or service.

What’s Missing in this Paradigm?

The effectiveness issue Focuses on doing things right but not whether the

business is doing the right thing The entrepreneurial aspect of the business Must start with the health of the key idea

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So under the BP modelSo under the BP model

IBM would be the most efficient manufacturer of time clocks

Disney would be the most efficient producer of animated (mouse oriented) cartoons

Seven Eleven would be a well run diary product provider

3M would be an excellent mining and manufacturing company

Winthrop would provide excellent training for women in teaching and home economics

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So we must start with the health of the key idea(s)

Are we doing the right things?

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WHAT IS THE LIFE EXPECTANCY OF THESE KEY IDEAS?

LONGER OR SHORTER TODAY THAN DURING THE MID 20TH

CENTURY?

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A MORE RATIONAL

PARADIGM WOULD BEGIN BY CONSIDERING THE HEALTH OF THE BUSINESS’S KEY IDEA OR KEY IDEAS

THAT’S STRATEGIC MANAGEMENT

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Strategic MGMT is Multi-DisciplinaryStrategic MGMT is Multi-Disciplinary

Integrative with input from an understanding of the interworkings of finance, accounting, marketing, research and development, human resources, operations, information management,…

These are the functional specialties that contribute to the general management of the firm.

You have studied these fundamentals separately.

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What is Strategy?What is Strategy?

Large-scale, future-oriented plan for interacting with competitive environment to achieve objectives

Company’s “game plan”

Framework for managerial decisions

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SO WE WILL NOT TOTALLY ABANDON THE NOTION OF BUSINESS POLICIES – THEY ARE IMPORTANT

BUT WE WILL NOT CONSIDER POLICIES (WHICH WE WILL COME TO REFER TO AS FUNCTIONAL STRATEGIES/POLICIES) UNTIL WE’VE ESTABLISHED THAT WE ARE DOING THE RIGHT THINGS

EFFECTIVENESS BEFORE EFFICIENCY