MGMT 4002 Dalhousie University Module 2 Apple Inc Scenario Planning Discussion due at 16th: In this discussion post you are required to search out a compan

MGMT 4002 Dalhousie University Module 2 Apple Inc Scenario Planning Discussion due at 16th: In this discussion post you are required to search out a company that participates in Scenario Planning (Royal Dutch Shell is not to be used).Briefly describe the different scenarios the organization has developed. Please identify which of the scenarios you think is the most likely to occur and explain why you think so.Review the scenarios posted by at least two other students and comment on whether you agree or disagree with the likelihood of the chosen scenario and why.(Note: you are to search out companies that carry out future oriented scenario planning and not just identify and/or discuss various strategies of a company – this posting requires you to do some comprehensive research). 300 words , comments on classmate’s post 30-40 words MGMT 4002
Strategy Implementation
Module 2 – Strategic Management Processes
1
Learning Objectives
• Demonstrate your previously acquired knowledge about
strategy formulation and analysis;
• Explain and utilize appropriate tools, theories and key strategic
concepts associated the strategy implementation process;
• Critically examine the strategy implementation of various
organizations and assess the implications of those findings;
• Enhance your skills and ability to work as part of a team;
• Formulate and implement a competitive strategy for a footwear
company utilizing the Business Strategy Simulation
Module 2 – Strategic Management Processes
2
Strategy-Making, Strategy-Executing Process
Source: Adapted from Arthur A. Thompson and Glo-Bus Software, Inc.
Module 2 – Strategic Management Processes
3
Strategic Vision vs Mission Statement
Vision
Concerns the future business
path – “where we are going”
ü Markets to be pursued
ü Future product/market/
customer/technology focus
ü Kind of company
management is trying to
create
Module 2 – Strategic Management Processes
Mission
Concerns the present business
purpose – “where we are and
what we do”
ü Current products & services
ü Customer needs and groups
being served
ü Geographic coverage
4
Financial Objectives
Outcomes focused on
improving “financial
performance”
Strategic Objectives
Outcomes focused on
improving “competitive
strength and market
standing”
$
Module 2 – Strategic Management Processes
5
Strategy Execution Process
Phase 3
Crafting a Strategy
• Astute entrepreneurship
• Searching for new
opportunities
• New and/or better ways
• Timely response
Phase 4
Implementing & Executing
Strategy
Phase 5
Evaluating Performance &
Making Corrective
Adjustments
• Operations Oriented
• Tough and time-consuming
• Changing customer needs
• Key Tasks
o Improving efficiency
• Correcting what is not working
• New opportunities through advances
• Organizational Learning
o Measurable progress
Module 2 – Strategic Management Processes
6
Scenario Planning
Disruptive
Innovation
Strategy in a Single /
Multiple Industry
Module 2 – Strategic Management Processes
Blue Ocean Strategy
Strategy
Implementation
Balanced
Scorecard
Competitive Strength
Analysis
7
Scenario Planning
v3 things to consider:
ØThings we know we know
ØThings we know we don’t know
ØThings we don’t know we don’t know
vGood scenarios instill a good appreciation for the variety of factors that shape
the future
ØUses collective learning and reduces tunnel vision
vForces hidden assumptions in managers to the surface
Module 2 – Strategic Management Processes
8
Why Use Scenario Planning?
vStrategy is about the future
ØScenarios help to model the future and develop probabilities and relationships
üBest-known use is by Shell for the last 30 years
vSimplify data and relationships into a few possible states
ØUsed to reduce uncertainty to probabilities.
üVery important for decisions
ØAllows change management
vProvides strategic directions and leads to choices
ØUnder prediction and over determination are problems
Module 2 – Strategic Management Processes
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Scenario Planning Methodology
vDefine scope and timing of models
ØShell goes out 20+ years: an ad agency might go out 5-10 years
vIdentify stakeholders and their interests
vIdentify basic economic, industry and social trends
vIdentify key uncertainties in the environment
vConstruct initial scenario themes
ØNeed labeling for major scenarios: capture essence in a title
ØEverything is connected
ØRoyal Dutch Shell – leader in scenario planning
Module 2 – Strategic Management Processes
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Scenario Planning
Disruptive
Innovation
Strategy in a Single /
Multiple Industry
Module 2 – Strategic Management Processes
Blue Ocean Strategy
Strategy
Implementation
Balanced
Scorecard
Competitive Strength
Analysis
11
What is a Blue Ocean Strategy
v Seeks to gain a dramatic, durable competitive advantage by
Ø Abandoning efforts to beat out competitors in existing markets and
Ø Inventing a new industry or distinctive market segment to render existing
competitors largely irrelevant and
Ø Allowing a company to create and capture altogether new demand
Module 2 – Strategic Management Processes
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What is Different about a Blue Ocean?
Typical Market Space
n Industry boundaries are
defined and accepted
n Competitive rules are well
understood by all rivals
n Companies try to
outperform rivals by
capturing a bigger share of
existing demand
Blue Ocean Market Space
n Industry does not exist yet
n Industry is untainted
by competition
n Industry offers wide-open
opportunities if a firm has a
product and strategy allowing
it to
v Create new demand and
v Avoid fighting over existing
demand
Module 2 – Strategic Management Processes
13
Blue Ocean Strategy
v Successful companies build their competitive advantage by
redefining their product offering through value innovation
Ø
Creating a new market space
v Blue ocean – Wide open market space where a company can
chart its own course
Module 2 – Strategic Management Processes
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Blue Ocean Strategy
v To redefine its market and create a new business-level strategy, a
company must:
Ø Eliminate factors that rivals take for granted, and reduce costs
Ø Reduce certain factors below industry standards, and lower costs
Ø Raise certain factors above industry standards, and increase value
Ø Create factors that rivals do not offer, and increase value
Module 2 – Strategic Management Processes
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Scenario Planning
Disruptive
Innovation
Strategy in a Single /
Multiple Industry
Module 2 – Strategic Management Processes
Blue Ocean Strategy
Strategy
Implementation
Balanced
Scorecard
Competitive Strength
Analysis
16
vInnovation: using new knowledge to transform organizational
processes or create commercially viable products and services
Ø Latest technology
Ø Results of experiments
Ø Creative insights
Ø Competitive information
Managing Innovation
Module 2 – Strategic Management Processes
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v Degree of innovativeness
Ø Radical Innovations
Ø
Ø
Ø
Ø
Fundamental changes and breakthroughs
Evoke major departures from existing practices
Can be highly disruptive
Can transform or revolutionize a whole industry
v Incremental Innovations
Ø Enhance existing practices
Ø Small improvements in products and processes
Ø Evolutionary applications within existing paradigms
Types of Innovation
Module 2 – Strategic Management Processes
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v Product and Process Innovations
Ø Product Innovations
Ø Efforts to create product designs
Ø Applications of technology to develop new products for end users
Ø More radical and common during earlier stages of an industry’s life cycle
Ø Associated with differentiation strategies
Types of Innovation
Module 2 – Strategic Management Processes
19
v Product and Process Innovations
Ø Process Innovations
Ø
Ø
Ø
Ø
Ø
Ø
Ø
Improving efficiency of an organizational process
Manufacturing systems and operations
Can improve materials utilization
Shorten cycle time
Increase quality
More likely to occur in later stages of an industry’s life cycle
Associated with cost leader strategies
Types of Innovation
Module 2 – Strategic Management Processes
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Five Challenges of Innovation
Seeds versus
weeds
Internal versus
external staffing
Experience versus
initiative
Building
capabilities versus
collaborating
Module 2 – Strategic Management Processes
Incremental versus
preemptive launch
21
Defining the Scope of Innovation
v Firms must define the “strategic envelope” (scope of the innovation
efforts)
v In defining the strategic envelope, a firm should answer several
questions:
Ø How much will the innovation cost?
Ø How likely is it to actually become commercially viable?
Ø How much value will it add; that is, what will it be worth if it works?
Ø What will be learned if it does not pan out?
Module 2 – Strategic Management Processes
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Entrepreneurial Leadership
Entrepreneur(s)
v Vision may be entrepreneur’s most important asset
Ø Able to communicate with a wide audience
Ø Willing to make unpopular decisions
Ø Determined to make sure your message gets through
Ø Create and implement quality systems and methods that will survive
Vision
Ø Ability to envision realities that do not yet exist
v Dedication and drive are reflected in hard work
Dedication
and Drive
Ø
Ø
Ø
Ø
Ø
Ø
Patience
Stamina
Willingness to work long hours
Internal motivation
Intellectual commitment to the enterprise
Strong enthusiasm for work and life
Module 2 – Strategic Management Processes
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Opportunity Analysis Framework
Sources: Based on J. A. Timmons and S. Spinelli, New Venture Creation, 6th ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2004); and W. D. Bygrave, “The Entrepreneurial Process,” in W. D.
Bygrave, ed., The Portable MBA in Entrepreneurship, 2nd ed. (New York:Wiley, 1997).
Module 2 – Strategic Management Processes
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Characteristics of Good Opportunities
Good Business
Opportunity
Attractive
Value creating
Achievable
Durable
Before launching opportunity as a business:
ü Evaluate readiness and skills of entrepreneurial founder or team
ü Consider availability and access to resources
Module 2 – Strategic Management Processes
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Entry Strategies
v There are three types of new
entry strategies:
Ø
Pioneering New Entry
Ø
Imitative New Entry
Ø
Adaptive New Entry
v After entering a market, a firm must also decide what
strategies will work for the new firm
v Generic strategies offer the best approach for a new firm.
Overall Cost Leadership
Differentiation
Focus
Module 2 – Strategic Management Processes
26
Scenario Planning
Disruptive
Innovation
Strategy in a Single /
Multiple Industry
Module 2 – Strategic Management Processes
Blue Ocean Strategy
Strategy
Implementation
Balanced
Scorecard
Competitive Strength
Analysis
27
v Two approaches for evaluating firm performance
Ø Financial ratio analysis
ü Balance sheet
ü Income statement
Ø Balanced scorecard (stakeholder perspective)
ü Employees
ü Customers
ü Owners
Evaluating Firm Performance
Module 2 – Strategic Management Processes
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v Five types of financial ratios
Ø
Ø
Ø
Ø
Ø
Short-term solvency or liquidity
Long-term solvency measures
Asset management (or turnover)
Profitability
Market value
vMeaningful ratio analysis must include
Ø Analysis of how ratios change over time
Ø How ratios are interrelated
Financial Ratio Analysis
Module 2 – Strategic Management Processes
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vProvides a meaningful integration of many issues that come into evaluating a
firm’s performance
vFour key perspectives
Ø How do customers see us? (customer perspective)
Ø What must we excel at? (internal perspective)
Ø Can we continue to improve and create value? (innovation and learning perspective)
Ø How do we look to shareholders? (financial perspective)
The Balanced Scorecard
Module 2 – Strategic Management Processes
30
vTime
Customer
Perspective
vQuality
vPerformance and service
vCost
v
Internal Business
Perspective
Processes
Ø
Cycle time
Ø
Quality
Ø
Employee skills
Ø
Productivity
v
Decisions
v
Actions
v
Coordination
v
Resources and capabilities
The Balanced Scorecard
Module 2 – Strategic Management Processes
31
vIntroduction of new products
Innovation &
Learning
Perspective
and services
vGreater value for customers
vIncreased operating efficiencies
v Profitability
v Growth
Financial
Perspective
v Shareholder value
v Increased market share
v Reduced operating expenses
v Higher asset turnover
The Balanced Scorecard
Module 2 – Strategic Management Processes
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A Balanced Scorecard Approach
Module 2 – Strategic Management Processes
33
Balanced Scorecard
Module 2 – Strategic Management Processes
34
Scenario Planning
Disruptive
Innovation
Strategy in a Single /
Multiple Industry
Module 2 – Strategic Management Processes
Blue Ocean Strategy
Strategy
Implementation
Balanced
Scorecard
Competitive Strength
Analysis
35
Implementing Strategy in a Single Industry
Product
Structure
v Grouping employees into separate product groups
v To focus on the best ways to increase effectiveness of
the product
Market
Structure
v Grouping employees into separate customer groups
v To focus on satisfying needs of a particular customer
group in the most effective way
Geographic
Structure
v Grouping employees into different geographic regions
v To satisfy the needs of customers within different
regions of a state or country
Module 2 – Strategic Management Processes
36
Implementing Strategy in a Single Industry
Matrix
Structure
ProductTeam
Structure
Focus
v Way of grouping employees in two ways simultaneously to
maximize the rate at which different kinds of products can be
developed
v Two-boss employees: Report both to a project boss and a
functional boss
v Way of grouping employees by product or project line
but employees focus on the development of only one
particular type of product
v Developing a narrow range of products aimed at one or
two market segments defined by type of customer or
location
Module 2 – Strategic Management Processes
37
Implementing Strategy in an Industry
Cost
Leadership
v Choosing a combination compatible with lowering
cost structure while preserving ability to attract
customers
Differentiation
v Company must design its structure, control, and culture
around the particular source of its competitive
advantage
v Makes it difficult to standardize activities and increases
the bureaucratic costs
Module 2 – Strategic Management Processes
38
Maximizing the Power of a Strategy
Making choices that complement
a competitive approach and
maximize the power of strategy
Offensive and
Defensive
Competitive
Actions
Competitive
Dynamics and the
Timing of Strategic
Moves
Module 2 – Strategic Management Processes
Scope of
Operations along
the Industry’s
Value Chain
39
Choosing Which Rivals to Attack
Best Targets for
Offensive Attacks
Market leaders
that are in
vulnerable
competitive
positions
Runner-up firms
with weaknesses
in areas where
the challenger
is strong
Struggling
enterprises on
the verge of
going under
Module 2 – Strategic Management Processes
Small local
and regional
firms with limited
capabilities
40
Defensive Strategies
PROTECTING MARKET POSITION AND COMPETITIVE ADVANTAGE
Purposes of Defensive
Strategies
Lower the firm’s risk
of being attacked
Weaken the impact
of an attack
that does occur
Module 2 – Strategic Management Processes
Influence challengers
to aim their efforts
at other rivals
41
v Timing’s Importance:
Ø Knowing when to make a strategic move is as crucial as knowing what move to
make.
Ø Moving first is no guarantee of success or competitive advantage.
Ø The risks of moving first to stake out a monopoly position must be carefully
weighed.
TIMING A FIRM’S OFFENSIVE AND DEFENSIVE STRATEGIC MOVES
Module 2 – Strategic Management Processes
42
v When pioneering helps build a firm’s reputation and creates strong brand loyalty.
v When a first mover’s customers will thereafter face significant switching costs.
v When property rights protections thwart rapid imitation of the initial move.
v When an early lead enables movement down the learning curve ahead of rivals.
v When a first mover can set the technical standard for the industry.
CONDITIONS THAT LEAD TO FIRST-MOVER ADVANTAGES
Module 2 – Strategic Management Processes
43
v When pioneering is more costly than imitating and offers negligible experience or
learning-curve benefits.
v When the products of an innovator are somewhat primitive and do not live up to buyer
expectations.
v When rapid market evolution allows fast followers to leapfrog a first mover’s products
with more attractive next-version products.
v When market uncertainties make it difficult to ascertain what will eventually succeed.
THE POTENTIAL FOR LATE-MOVER ADVANTAGES
OR FIRST-MOVER DISADVANTAGES
Module 2 – Strategic Management Processes
44
Strengthening a Firm’s Market Position via Scope of Operations
Defining the Scope of
the Firm’s Operations
Range of its
activities
performed
internally
Breadth of its
product and
service offerings
Extent of its
geographic
market
presence and
its mix of
businesses
Module 2 – Strategic Management Processes
Size of its
competitive
footprint on
its market
or industry
45
Why M & A Strategies Sometimes Fail
vStrategic Issues:
ØCost savings may prove smaller than expected.
ØGains in competitive capabilities take longer to realize or never materialize at all.
vOrganizational Issues
ØCultures, operating systems and management styles fail to mesh due to resistance to change
from organization members.
ØLoss of key employees at the acquired firm.
ØManagers overseeing integration make mistakes in melding the acquired firm into their own.
Module 2 – Strategic Management Processes
46
Types of Vertical Integration Strategies
Vertical Integration
Choices
Full
Integration
Partial
Integration
Module 2 – Strategic Management Processes
Tapered
Integration
47
Advantages of a Vertical Integration Strategy
Benefits of a Vertical
Integration Strategy
Add materially
to a firm’s
technological
capabilities
Strengthen
the firm’s
competitive
position
Module 2 – Strategic Management Processes
Boost
the firm’s
profitability
48
Disadvantages of a Vertical Integration Strategy
vIncreased business risk due to large capital investment.
vSlow acceptance of technological advances or more efficient production methods.
vLess flexibility in accommodating shifting buyer preferences that require non-internally produced parts.
vInternal production levels may not be of sufficient volumes to allow for economies of scale.
vCapacity matching problems for efficient production of internally-produced components and parts.
vRequirements for different resources and capabilities.
Module 2 – Strategic Management Processes
49
Capturing the Benefits of Strategic Alliances
Being sensitive
to cultural
differences
Picking a good
partner
Recognizing that
the alliance must
benefit both sides
Strategic
Alliance Factors
Ensuring both
parties keep their
commitments
Structuring the
decision-making
process for swift
actions
Module 2 – Strategic Management Processes
Adjusting the
agreement over
time to fit new
circumstances
50
How to Make Strategic Alliances Work
vCreate a system for managing the alliance.
vBuild trusting relationships with partners.
vSet up safeguards to protect from the threat of opportunism by partners.
vMake commitments to partners and see that partners do the same.
vMake learning a routine part of the management process.
Module 2 – Strategic Management Processes
51
Three Approaches for Competing Internationally
Module 2 – Strategic Management Processes
52
The Quest for Competitive Advantage in the International Arena
Build Competitive Advantage
in International Markets
Use international
location to lower
cost or differentiate
product
Share resources
and capabilities
Module 2 – Strategic Management Processes
Gain cross-border
coordination
benefits
53
Scenario Planning
Disruptive
Innovation
Strategy in a Single /
Multiple Industry
Module 2 – Strategic Management Processes
Blue Ocean Strategy
Strategy
Implementation
Balanced
Scorecard
Competitive Strength
Analysis
54
Evaluating the Strategy of a Diversified Company
Attractiveness
of industries
Strength of
Business Units
Cross-business
strategic fit
Diversified
Strategy
Fit of firm’s
resources
Allocation of
resources
Module 2 – Strategic Management Processes
New Strategic
Moves
55
Step 1: Evaluating Industry Attractiveness
How attractive are the
industries in which the firm
has business operat…
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