strategic management jay anand management certificate program ohio state university email:...

Strategic Management

Jay AnandManagement Certificate Program

Ohio State Universityemail: [email protected]

Tel: (614) 247-6851Fax: (614) 292-7062

Copyright © J. Anand 2

What is Strategy?

• The word “strategy” is derived from the Greek word ‘strategus’: art of the general.

• Some common definitions:– Strategy is the pattern of major objectives and goals, and is

the essential policies and plans for achieving these goals.– Strategy is the match between the organization and

environment.– Strategy is an integrated set of actions aimed at securing

sustainable competitive advantage.

• But what is strategy, really?


Skill Pyramid for Success

TechnicalSkills

HumanSkills

StrategicSkills


Levels of Strategy

TopMgmt.

TopMgmt.

BusinessUnit 1Auto

BusinessUnit 2

Electronics

Region1

Asia

Region2

Europe

BusinessUnit 3Hotels

Region3

N. America

Corporate Strategy International Strategy

Business Unit Strategy


Business Unit Performance

Environmental Forces:Macro Factors

Industry Structure

Strategy Formulation/Implementation

Performance


Environmental Analysis

THE INDUSTRYENVIRONMENT

• Customers • Suppliers• Competitors

Government

Naturalenvironment

Technology Demographics

Economy

Social structure


Basic Issues

• What is the structure of this industry? What are the major competitive forces? What are the major trends?

• What does it take to do better than average in this industry? What are the sources of sustainable competitive advantage?


Industry Profitability

Drugs 21.4% 11.8%Printing and publishing 15.5 7.1Food and kindred products 15.2 6.6Chemicals and allied products 15.1 7.5Petroleum and coal products 13.1 6.5Instruments and related products 12.9 7.2Industrial chemicals and synthetics 12.9 6.2Paper and allied products 12.5 6.0Aircraft, guided missiles, and parts 12.4 4.1Fabricated metal products 12.3 5.7Motor vehicles and equipment 11.6 5.6Rubber and misc. plastic products 11.6 5.1Electric and electronic equipment 11.5 5.4Machinery, except electrical 11.1 5.8Stone, clay, and glass products 10.4 4.8Textile mill products 9.3 4.3Nonferrous metals 8.3 3.9Iron and steel 3.9 1.5

ROE ROA


Determinants of Industry Profits

• Potential profits determined by creation of value for the customer. Value to a customer depends upon the intensity of need and the availability of substitutes.

• Actual profits (as opposed to potential profits) depend on intensity of competition.

• Distribution of profits depends on relative bargaining power between firms at different stages in the value chain.


Firm Profitability

American Home Products 19Merck 16Bristol Myers Squibb 14Eli Lilly 14Schering Plough 13Upjohn 10Pfizer 9American Cyanamid 7

Oregon Steel Mills 12Worthington 10Nucor 9USX-US Steel 3Inland Steel 2ARMCO -1Bethlehem -2LTV -3

ROA%


INDUSTRY ANALYSIS

• Attractiveness• Key Success

Factors

COMPETITIVE ANALYSIS

COMPANY ANALYSIS

• Capabilities

• Likely actions and reactions

• Objectives

• Capabilities


Competitive Advantage

Customer

Your company Competition

Value Value

CompetitiveAdvantage



Type ofAdvantage

Differentiation

Low Cost

•Hard to get•Always erodes over time due to obsolescence and imitation•Need to constantly renew competitive advantage

Resources/Capabilities


Perspectives on Strategy

External• What the firm should do?• Opportunities and Threats• Planning/Decision-making

Industry structural analysis

Competitive analysis

Competitive positioning

Strategic marketing planning

Portfolio planning

Internal• What can the firm do?• Strengths and Weaknesses• Resources and capabilities

Total quality management

Re-engineering

Core competence

Resources/capabilities perspective

Learning organization


Unpacking Competitive Advantage

• How did the US basketball team perform in the last 3 Olympics (2000-Sydney, 2004-Athens & 2008-Beijing))?

• Why is Afghanistan so difficult to rule?• What causes famines?• Why are the smartest people are not always the best

managers/leaders?• Why do small start-ups contribute disproportionate

innovations despite having fewer resources?


“The way a team plays as a whole determines its success. You may have the greatest bunch of individual stars in the world, but if they don’t play together, the club won’t be worth a dime.”

George Herman (Babe) Ruth, Jr.


Competitive Domain


Implementation

•Markets•Segments

•Low cost•Differentiation•Underlying resources

•Organizational structure•Systems•Culture

Business Unit Strategy

Decision Maker/Leader


Corporate/International Strategy

Shareholders

Firm

Business Unit 1

BusinessUnit 2

Shareholders

Firm 1 Firm 2

Business Unit 1

Business Unit 2

Synergies:2+2=5?


Decision Maker/Leader

Competitive Domain


Implementation

•Industries/Markets•Countries/Regions

•Core competencies•Synergies•Financial benefits

•Organizational structure•Systems•Culture•Leadership

Corporate/International Strategy


Effective Strategy

• Easy to understand and communicate; supported by in-depth analysis

• Combines qualitative and quantitative analysis; questions underlying assumptions

• Cross-functional• Makes choices; provides guidance for making

tactical decisions• Flexible; includes contingency plans• Anticipates and addresses implementation issues

besides strategy analysis


Developing Strategic Skills

• Common-sense?• Read books?• Work experience?• Combination of frameworks and simulated

diverse experiences


Personal Action in a Strategic Context

• Do you understand the environment and strategic context of your organization?

• Do you know how your actions support the strategy of your organization?

• What contacts/knowledge do you have that would be valuable inputs to strategy formulation and implementation?

• Do you demonstrate the commitment and persistence to achieve the desired results?

• In spite of your intentions, are your actions supporting or impeding the strategic efforts?

• Are you developing the leadership qualities required to excel?

strategic management jay anand management certificate program ohio state university email:...

Documents

word strategy

jay anandwhat

major competitive forces

allied products12

distribution of profits

actual profits

jay anandskill pyramid

related products12