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DHV '04
DHV 2004
Corporate Strategy
Professor Larry Matteson
DHV '04
This Morning
• Course overview
• Course agenda
• Strategic alignment
• Formulating strategy
• Strategy and the organization
DHV '04
Objectives of the Course
• Introduce a framework for creating and analyzing strategy
• Apply leading contemporary thought on strategy analysis and formation in class discussion and case studies
• Practice in synthesis of developing strategic alternatives
DHV '04
Course Overview
Frameworkfor
analysis
Competitive Strategy Corporate Strategy
Functional Strategy
Implementation
Organization
DHV '04
Date MorningLecture & Discussion Topic
AfternoonLecture & Discussion Topic
Assignment
Mon 4/19/04
IntroCorporate organization, values and strategyStrategic alignmentFormulating a strategy
Frameworks for Strategic Analysis Porter’s Competitive ForcesMarket Focused viewResource based view
Prepare for class discussion of the case
Tues 4/20/04
Class discussion Marketing Strategy Operations strategyCompetitive advantage
Organizational learning Experience effects Change management Class discussion
DHV applications prepare for class presentations
Wed 4/21/04
Strategic implementationAchieving results DHV applications break out sessions Team presentations
SOCIAL EVENT
Thru 4/22/04
Organizational transformation and strategy implementation
DHV structure for the future
Strategic collaborationAlliances and acquisitionsCourse Summary DHV wrap-up
CLOSING EVENT
Agenda For The Week
DHV '04
Deliberate Emergent
Pluralistic
Profit-Maximizing
PROCESSES
OUTCOMES
Generic Perspectives On Strategy
DHV '04
Getting Off The Treadmill
• Create And Dominate Emerging Opportunities• Quest For Competitiveness
– Restructuring-smaller– Reengineering -Better– Reinventing-different
• Organizational Transformation Required
DHV '04
Strategy
Capabilities& ResourcesLandscape
Internal consistencyFit among strategicchoices and policies
External consistencyFit between the strategyand the outside world
Dynamic consistencyFit between the strategy and thefirm’s capabilities and resources
Three Interplays, Three Tests
DHV '04
HOW DO WE MAKE MONEY?
HOW SHOULD WE COMPETE?
WHAT CAPABILITIES ARE REQUIRED?
CORPORATE
STRATEGY
BUSINESS UNIT STRATEGY
FUNCTIONAL STRATEGY
Strategic Alignment
DHV '04
• Objectives Which Are Long Term
• Simple and Agreed to
• Reflect a Profound Understanding ofThe Competitive Environment
• Objective Appraisal of Resources
Characteristics of Strategy
DHV '04
Strategy:(The ship is going generally west)
Current resources
Requiredresources
The Strategic Plan:adjusting the resource map to meet future requirements
DHV '04
Strategy Formulation Process
• Environmental Scanning
• Internal Assessment
• Strategic Alternatives
• Valuation and Choice
• Implementation
DHV '04
GOVERNMENT COMPETITORSTECHNOLOGY CUSTOMERS
VALUES AND BELIEFS
VISION
STRATEGY
POLICY
STRUCTURE AND PROCEDURES
Role Of Top Management
DHV '04
• SUPPLIERS
• COMPETITORS
• CUSTOMERS
ECONOMY
TECHNOLOGY
GOVERNMENT SOCIAL
STRUCTURE
DEMOGRAPHICS
Environmental Scanning
DHV '04
Business Units and Product- Markets
Core Competencies
Strategic Architecture
Strategic IntentBasic Values and Beliefs
Governance Structure
Organizational Capabilities
Administrative Processes and Formal Structure
Operations Strategy and Implementation
Organizational Alignment
DHV '04
Stakeholders of the Firm
• Customers
• Employees
• Suppliers
• Lenders
• Communities
• Shareholders
DHV '04
• If the price mechanism is an efficient means of allocating resources why do firms exist? Why aren’t all transactions arms length market transactions?
• If organizing within a hierarchy of a firm reduce market costs why aren’t all transactions done within the hierarchy? Why isn’t there just one large firm?
• Is there an optimal size of a firm? What are the controlling factors?
DHV '04
Cost
Minimum Efficient Scale Size
Long RunAverage Cost
Economies of Scale
DHV '04
Cost
Size
Technology economies of scale
Cost of congruentgoals
Total cost
Firm Size
DHV '04
Four Basic Strategic Choices
Value of Local Responsiveness
Val
ue o
f C
onso
lida
tion
International
Global Transnational
Multidomestic
DHV '04
Characteristics of Four strategies
Multi-domestic Global International Transnational Configuration of assets and capabilities
Decentralized and nationally self-sufficient
Centralized and globally scaled
Sources of core competencies centralized, others decentralized
Dispersed, interdependent, and specialized
Role of overseas operations
Sensing and exploiting local opportunities
Implementing parent company strategies
Adapting and leveraging parent company’s core competencies
Differentiated contributions by national units to integrated worldwide operations
Development and diffusion of knowledge
Knowledge developed and retained within each unit
Knowledge developed and retained at the center
Knowledge developed at the center and transferred to overseas units
Knowledge development jointly and shared worldwide
DHV '04
Sustaining Competitive Advantage
Consumer Surplus
Value Chain Surplus
Firm’s portion of surplus
Factor cost for the value chain
Firm’s Profitability
Industry long term profitability
Time
Profitability
DHV '04
Takeaway
• The course will analyze and develop strategies in a variety of contemporary business situations. – Strategies built on resources, markets and organization – Impact of technology and globalization will be covered– Mature and declining firms will be considered
• Frameworks and models will be introduced and used in analysis and synthesis of strategy
• Corporate strategic analysis will include– Competitive strategic analysis– Impact of government policy on corporate strategy– Impact of corporate governance on strategy