Lecture 01: Introduction Niels-Erik Wergin Strategic Management Strategic Management Niels Wergin Tutors Niels Wergin course leader, lecturer, tutor Richard Jump lecturer, tutor Peter Reid tutor Contact Details / Office Hour in handbook Strategic Management Niels Wergin Timetable - changes Tutorial 7: Mon, 14:00-15:00, QA020, NOT QM020 (as listed in timetable) Tutorial 5: moved to Mon, 14:00-15:00, QA020, NOT 11:00-12:00 (as listed in timetable) Strategic Management Niels Wergin Assignments Group Presentation (not marked) Individual Report (30%) Case Analysis (70%) All based on one of four cases: Horizontal integration Vertical integration Alliances Restructuring Strategic Management Niels Wergin What We Expect From You Attend regularly Contribute to tutorials and group activities Buy the textbook Read the set chapters in advance Participate in / contribute to group presentation Prepare coursework (report, case analysis) Get familiar with library resources for SM Strategic Management Niels Wergin Core Textbook Barney and Hesterly (2008): Strategic Management and Competitive Advantage Concepts and Cases (2 nd ed.) Pearson Education ISBN-10: Price: 47.49 Strategic Management Niels Wergin Additional Textbook Johnson, Scholes, and Whittington (2007): Exploring Corporate Strategy (8 th ed.) FT Prentice Hall ISBN-10: Price: 44.99 Strategic Management Niels Wergin Profits: $242 Million 1984 Market Cap: $2bn Theme Park Operations: 77 percent of profits Consumer Products: 22 percent of profits Filmed Entertainment: 1 percent of profits Walt Disney Company Strategic Management Niels Wergin Hired Michael Eisner Increased admission prices at theme parks $186 m $787 m 2.Focused on movie studios (character development) $2.42 m $845 m 3.Diversified into television (ABC), hotels, retail stores, sport team, cruise line, publishing, consumer products, licensing, etc. Market Cap: 1984 = $2 billion 1994 = $28 billion Walt Disney Company (2) Strategic Management Niels Wergin Strategy: A firms theory about how to gain competitive advantage Strategic planning is planning for the long term Eisners approach: People will pay a premium price for extraordinary entertainment. We have the necessary resources to create extraordinary entertainment. Therefore, lets redeploy our resources in a different way and offer something extraordinary to people. Strategy a Definition Strategic Management Niels Wergin MissionObjectives External Analysis Internal Analysis Strategic Choice Strategy Implementation Competitive Advantage The Strategic Management Process Strategic Management Niels Wergin Objectives External Analysis Internal Analysis Strategic Choice Strategy Implementation Competitive Advantage Mission The Strategic Management Process Strategic Management Niels Wergin specific, measurable targets the things a firm needs to do to achieve its mission should influence other elements in the strategic management process Objectives Strategic Management Niels Wergin External Analysis Systematic Examination of the Environment Internal Analysis interest rates demographics social trends technology human resources (knowledge) manufacturing abilities technology External and Internal Analysis Strategic Management Niels Wergin External Analysis Internal Analysis Strategic Choice Business Level Corporate Level positioning a business which businesses? Strategic Choice Strategic Management Niels Wergin how strategies are carried out who will do what organizational structure and control who reports to whom how does the firm hire, promote, pay, etc. Strategy Implementation Strategic Management Niels Wergin A Strategy Is Only As Good As Its Implementation! every strategic choice has strategy implementation implications strategy implementation is just as important as strategy formulation Strategy Implementation (2) Strategic Management Niels Wergin Definition: the ability to create more economic value than competitors All elements of the strategic management process are aimed at achieving competitive advantage MissionObjectives External Analysis Internal Analysis Strategic Choice Strategy Implementation Competitive Advantage Competitive Advantage Strategic Management Niels Wergin The Ability to Create More Economic Value Than Competitors there must be something different about a firms offering compared to competitors offerings if all firms strategies were the same, no firm would have a competitive advantage competitive advantage is the result of doing something different and/or better than competitors Competitive Advantage Strategic Management Niels Wergin )Advantage based on quality: 2)Advantage based on cost: people choose the firms products or services because they are better than what competitors offer people are willing to pay a premium lower costs of production/distribution Example: Waitrose, Mercedes, British Airways Example: Lidl, Tata, Easy Jet Two Types of Competitive Advantage people choose the firms products or services because they are cheaper than what competitors offer Strategic Management Niels Wergin Tata vs. Mercedes-Benz Tata Nano No airbag, radio, AC, electric window lifts, central locking etc. Price (new): 1390 Mercedes S600 Very high build quality All extras imaginable Price (new): ca. 150k Strategic Management Niels Wergin success and failure, between mediocrity and excellence e.g. Rover vs. Toyota Strategy is often the difference between: a great manager and average managers e.g. Steven Jobs stumbling through life and moving ahead with purpose e.g. General Motors Strategy Matters