* Week 1: Introduction & Overview of Strategy

* Autumn 2017

* Dr Peter Massingham

* MGMT314
Strategic Management

11
* Ms Rhodora Dizon rdizon@uow.edu.au
* Mr Barry Stevenson barryst@uow.edu.au
* Mr Ty Christopher tchristo@uow.edu.au
* Ms Rose Crothers rosec@uow.edu.au
* Ms Anita Goddard anitag@uow.edu.au
* Mr Bill Pomplun billp@uow.edu.au
* Dr Peter Massingham peterm@uow.edu.au

*Teaching team

12
* Part 1: Subject Management
* Part 2: Introduction to strategy and why it is
important

*Lecture Agenda

13
14
1. Evacuation Procedures
2. Subject description
3. Subject learning outcomes
4. Capstone course & pre-requisites
5. Lecture schedule
6. Readings
7. Tutorial program
8. Assessment

*Subject Management

15
*Evacuation Procedures

16
The subject deals with the strategic management
process and planning functions in the business
enterprise. Emphasis will be placed on the
process by which opportunities and threats to the
business enterprise are recognised and evaluated,
and on the strategies required to meet these
challenges. Topics include: business mission;
customer and competitor analysis; industry
analysis; environmental analysis; strategy and
organisation; alternative business strategies.

*Subject Description

18
 * On successful completion of this subject, students will be able
to:
1. Explain how business strategies are formulated and
demonstrate the impact of strategic management on the
success of the enterprise;
2. Demonstrate an understanding of and apply key concepts in
analysing and developing business strategies;
3. Proffer and justify reasoned arguments in the area of
strategic management through written assignments, case
presentations, discussion groups and examination essays;
4. Critically evaluate, present and defend strategic management
issues/problems and potential solutions through case studies.

*Subject Learning Outcomes

19
 * MGMT 314 is the capstone subject for management
major and should be taken in the final session/year of
your degree.
* As a capstone subject, Strategic Management integrates
all the functional components and their management
from the perspective of the Chief Executive Officer or the
top management team. It is important that students
should bring their knowledge of other related subjects
and apply their knowledge to the issues raised in this
subject. This makes it necessary that students should
take this course during their final session/year of their
degree study.

*Capstone course & pre-reqs

110
* Introduction and Overview of Strategy Ch 1
* Charting a Companys Direction:
Its Vision, Mission, Objectives & Strategy Ch 2
* Evaluating a Companys External Environment Ch 3
* Evaluating a Companys Resources,
Capabilities and Competitiveness Ch 4
* The Five Generic Competitive Strategies Ch 5
* Strengthening a Companys Competitive Position Ch 6
* Mid-Session Test in your Lecture
* Strategies for Competing in International Markets Ch 7
* Corporate Strategy Ch 8
* Building an Organisation Capable of Good Strategy Execution Ch 10
Managing Internal Operations Ch 11
* Corporate Culture and Leadership Ch 12
* Ethics, Corporate Social Responsibility, Environmental Sustainability and
Strategy Ch 9
* Review, and Discussion on Final Examination

*Lecture schedule
111
* Major Text(s)
* Thompson, AJ Jr., Peteraf, MA, Gamble, JE & Strickland, AJ. (2015)
Crafting & Executing Strategy. The Quest for Competitive
Advantage: Concepts & Cases, (20th edition), McGraw-Hill Irwin,
NY., USA Students are recommended to buy/have this textbook
(available from the University Bookshop @ $220).
* Key readings materials are in the library e-readings under
MGMT314. Specific articles in the e-readings to be read for the
semester will be indicated in the lecture slides by an asterisk (*).
* Textbook details are available online from the University Bookshop
at http://unicentre.uow.edu.au/unishop/
* Recommended Background and Further Reading see subject
outline page 6.

*Readings

112
*At each tutorial, all students are
expected to participate actively in one
of the following roles:
*A member of the Presenting Team
*A member of the Dissenting Team
*An active participant in the debate,
*by all class members, who are
*NOT Presenting
*OR Dissenting

*The Tutorial Process

113
 * Tutorial Groups
Autumn 2017

Group
Group A
A Group
Group B
B

** MondayMonday 10:30-
10:30- 12.30
12.30 (Rm
(Rm 19.G024)
19.G024) -- Group
Group 1A
1A PM
PM
** Monday
Monday 14.30-
14.30- 16.30
16.30 (Rm
(Rm 24.103)
24.103) -- Group
Group 2A
2A RD
RD
** Monday
Monday 16:30-
16:30- 18.30
18.30 (Rm
(Rm 24.101)
24.101) -- Group
Group 3A
3A BS
BS
** Wednesday
Wednesday 10:30-
10:30- 12.30
12.30 (Rm
(Rm 67.303)
67.303) -- Group
Group 4A
4A RD
RD
** Friday
Friday 11:30-
11:30- 13.30
13.30 (Rm
(Rm 24.102)
24.102) -- Group
Group 5A
5A AG
AG
** Monday
Monday 14.30-
14.30- 16.30
16.30 (Rm
(Rm 24.103)
24.103) -- Group
Group 6B
6B RD
RD
** Monday
Monday 16.30-
16.30- 18.30
18.30 (Rm
(Rm 24.101)
24.101) -- Group
Group 7B
7B TC
TC

Section
Section A
A Tutorial
Tutorial Groups
Groups meet
meet on
on Weeks
Weeks 2,
2, 5,
5, 8,
8, 10
10 &12
&12 of
of the
the semester.
semester.
Section
Section B
B Tutorial
Tutorial Groups
Groups meet
meet on
on Weeks
Weeks 3,
3, 6
6 ,9,
,9, 11
11 &
& 13
13 of
of the
the semester.
semester.

See
See specific
specific cases
cases for
for each
each week
week in
in Subject
Subject Outline.
Outline. The
The above
above groups
groups are
are subject
subject to
to enrolment
enrolment
numbers
numbers

** BS
BS =
= Barry
Barry Stevenson;
Stevenson; RD=
RD= Rhodora
Rhodora Dizon;
Dizon; Ty
Ty Christopher
Christopher =
= TC;
TC; Anita
Anita Goddard
Goddard =
= AG
AG
PM
PM =
= Peter
Peter Massingham
Massingham

114
* Ms Rhodora Dizon is the head tutor.
* Please email Rhodora for routine enquiries such
as tutorial enrolments, grades uploaded into
moodle
* All other matters contact the subject
coordinator.
* If in doubt, contact the subject coordinator (he
may pass it onto Rhodora).

*Head Tutor

115
* The SMP system allocates students randomly to ensure equity.
* Students not enrolled in a tutorial will be allocated by the subject
coordinator.
* Changes to tutorials will be subject to availability and must have
grounds for special consideration it doesnt fit my busy work
university schedule is not sufficient grounds. Contact the subject
coordinator.
* Students are not to switch tutorials with other students without
approval from the subject coordinator.
* Please inform the subject coordinator if you withdraw from a
tutorial, so others cant take your spot.
* Students should attend the first tutorial. If not, your may be given
to another student who has requested that tutorial.

*Tutorial Enrolment

116
* Lectures
* Tutorials
* Textbook
* Subject moodle site
* Textbook website and online resources
* Additional readings
* Teaching team

*Learning Resources

117
A. TOTAL OF: 30% of total grade
B. Presenting Team:
* Written Executive Summary 8%
* Maximum six (6) pages
* Presentation 8%
* & Defense 2%
B. Dissenting Team:
* Critique 6%
C. Preparation and Participation (for 2 cases)
* Preparation of a one (1) page summary 3%
* Participation (Questions and Discussion) 3%

*Tutorial Assessment
118
A. TOTAL OF: 20% of total grade
* 50 multiple choice questions
* Covering textbook and lecture materials from Week 1 to 6.
* Venue at your normal lecture room and time

*Mid Term Test

119
A. TOTAL OF: 50% of total grade
* The final examination will be a formal three hour examination,
based on essay-type questions. The exam will be designed to test
the student's knowledge and understanding of the theoretical and
applied content of the course and the ability to express them.
Coverage of the examination includes all materials in the
lectures, textbook and readings during the whole semester

*Final Exam
120
Criteria Q1 Exceeds Expectations Meets Expectations Below Expectations
(Out of 12.5)
Analyses a given topic Discussion of factors that Defined the five forces No five forces model
(SELECT) make each of the five forces model and each of the five 0 marks
6 marks stronger or weaker forces 1-3 marks
4-6 marks
Collects and uses Impact on competition; Discussion of strategic Inadequate argument about
reference material and strategic group mapping; questions regarding the the five forces model
data as appropriate KSFs external environment; red 0 marks
(CONNECT) 3-4 marks ocean, blue ocean
4 marks 1-2 marks

Provides examples Designs strategic group maps Uses the forces model to No examples
demonstrating practices, or red ocean/blue ocean assess strengths &
principles or theories to maps to visualise weaknesses of each of the General conclusions with
arrive at logical competitive positions five forces for a case little MGNT314
conclusions 2-2.5 marks covered by this subject 0 marks
(DEMONSTRATE) 1-1.5 marks
2.5 marks

121
122
*WHAT IS STRATEGY and
WHY IS IT IMPORTANT?
123
1. What we mean by a companys strategy.
2. The concept of a sustainable competitive advantage.
3. The five most basic strategic approaches for setting a company
apart from rivals and winning a sustainable competitive
advantage.
4. That a companys strategy tends to evolve because of changing
circumstances and ongoing efforts by management to improve
the strategy.
5. Why it is important for a company to have a viable business
model that outlines the companys customer value proposition
and its profit formula.
6. The three tests of a winning strategy.

*Learning Objectives

124
125
CORE CONCEPT

A companys strategy is its action

plan for outperforming its
competitors and achieving superior
profitability

126
The
The Evolution
Evolution of
of Strategic
Strategic Management
Management
1950s 1960s
1960s&&early
early1970s
1970s
1950s Corporate planning:
Financial
Financialbudgeting:
budgeting: Corporate planning:
Corporate plans
Operational budgeting
Operational budgeting Corporate plans
based
basedonon5-10
5-10yryreconomic
economic
Capital budgeting
Capital budgeting forecasts
forecasts
Diversification
Diversification

?? 33key
keychanges:
changes:
1.1. Changing
Changingconcept
conceptofofstrategy
strategy
2.2. Changing
Changing processes ofstrategy
processes of strategyformulation
formulation
3.3. New tools of strategy analysis
New tools of strategy analysis
1990s
1990s&&early
early2000s
2000s
Quest Late
Late1970s
1970s&&1980s
Questfor
forShareholder
ShareholderValue:
Value: Emergence of
1980s
Strategic
Refocusing, outsourcing, delivering, cost cutting Emergence of Strategic
Refocusing, outsourcing, delivering, cost cutting Management:
Quest Management:
Questfor
forCompetitive
CompetitiveAdvantage:
Advantage: Industry analysis
Emphasis on resources & Industry analysis
Emphasis on resources & Competitive positioning
capabilities Competitive positioning
capabilities Strategic priorities: locating
Flexibility & innovation Strategic priorities: locating
Flexibility & innovation ininattractive
Collaborationalliances, networks attractiveindustries
industries&&
Collaborationalliances, networks establishing
establishingmarket
market
Succeeding in dynamic (Schumpeterian) leadership
Succeeding in dynamic (Schumpeterian) 27 leadership
markets
markets
127
What
What is
is Strategy?
Strategy?

*Distinguishing strategy from tactics:

*Strategy is the overall plan for deploying resources
to establish a favorable position.
*Tactic is a scheme for a specific maneuver.

Characteristics of strategic decisions:

Important.
Involve a significant commitment of resources.
Not easily reversible.

28

128
 *What is strategy?
*Strategy is about winning. (Grant, page 4)
*Strategy. The art of war, especially the planning of
movements of troops and ships etc; into favourable
positions; plan of action or policy in business or
politics etc. (Oxford Pocket Dictionary)
*The determination of long run goals and objectives
of an enterprise, and the adoption of courses of
action and the allocation of resources necessary for
carrying out these goals. (Chandler, 1962)

129
 *What is strategy?
*What business strategy is all about is, in a word,
competitive advantageThe sole purpose of
strategic planning is to enable a company to gain,
as efficiently as possible, a sustainable edge over
its competitors. (Ohmae, 1983)
*Strategy is about competitionStrategy is the
creation of a unique and valuable position,
involving a different set of activities. (Porter, 1996)
*A strategy is a set of concrete plans the help the
firm outperform the market. (Oster, page 4, 1994)

130
 *What is strategy?
*Manage for uniqueness, develop a distinctive
competence, create competitive advantage(but) what
will restrain rivals from imitating or even improving (on
what you can do?) sustainable competitive advantage
(is the key). (Ghemawat, 1986).
*The real sources of competitive advantage are to be
found in managements ability to consolidate corporate-
wide technologies and production skills into
competencies that empower individual businesses to
adapt quickly to changing opportunities. (Prahalad and
Hamel, 1990)

131
 *What is strategy?
*Opportunities for creating value are shifting from
managing tangible assets to managing knowledge-
based strategies that deploy an organisations
intangible assets (Kaplan & Norton, 1996)
*Environments and organisations are SUBJECTIVE
realities that are perceived and enacted in different
waysthe East challenges the Western view of
strategic management, considering rational analytic
approaches to be myopic and an oversimplification
of reality. (Schneider & Barsoux, 1998)

132
* Gauses principle of competitive exclusion: no two
species can co-exist that make their living in an identical
way
* Leads to variety: the richer the environment, the greater
the number of potentially significant variables that can
give each species a unique advantage
* Difference between evolution and business? Strategists
can use their imagination and ability to reason logically
to accelerate the effects of competition
* For further information: See B.D. Henderson, The Origin
of Strategy, 1989, in Strategy, HBR, 1991, Chapter 1

* What is strategy?
133
* Two fundamental issues:
* What are the determinants of long-term industry
profitability?
* How can the company influence them?
* The positioning school refers to research on
ways to position a firm within its industry
* For further informationsee Michael Porter,
How competitive forces shape strategy, in
Strategy, HBR, 1991.

* What is strategy?
134
35

135
136
137
Levels
Levels of
of Strategy
Strategy

INDUSTRY
ATTRACTIVENESS

Which
CORPORATE
RATE OF PROFIT businesses STRATEGY
ABOVE THE COST should we be
OF CAPITAL in?

How do we
make
money? COMPETITIVE
ADVANTAGE

How should we BUSINESS

STRATEGY
compete?
38

138
 * What is our present situation?
* Business environment and industry conditions
* Firms financial and competitive capabilities
* Where do we want to go from here?
* Creating a vision for the firms future direction
* How are we going to get there?
* Crafting an action plan for heading the firm in the
intended direction, staking out a market position,
attracting customers, achieving the targeted financial and
market performance, and getting the firm
where it wants to go is its strategy.

* WHAT DO WE MEAN BY STRATEGY?

139
 * Strategy is all about How:
How to attract and please customers.
How to compete against rivals.
How to position the firm in the marketplace.
How best to respond to changing economic
and market conditions.
How to capitalize on attractive opportunities
to grow the business.
How to achieve the firms performance targets.

*WHAT IS STRATEGY ABOUT?

140
 *A firm needs a strategy to specify what actions are
going to be taken:
* To improve its financial performance.
* To strengthen its competitive position.
* To gain a sustainable competitive advantage over its
market rivals.
*A creative, distinctive strategy:
* Helps produce above-average profits.
* Increases competitive pressures on rivals.

*WHY BOTHER WITH STRATEGY?

141
*Strategy is about competing differently from rivals

* Doing what they dont do or doing it better!
* Doing what they cant do!
* Doing things in ways that attract customers and set
a firm apart from its rivals.

* Doing things in a manner calculated to produce a

competitive edge over rivals.

* Knowing what the firm must do and also what it

must not do.

*STRATEGY AND
COMPETITORS
142
FIGURE 1.1 Identifying a Companys StrategyWhat to Look For

143
ILLUSTRATION
CAPSULE 1.1
*Starbuckss Strategy in
the Coffeehouse Market

* Key elements of Starbuckss strategy:

* Train baristas to serve a wide variety of specialty coffee
drinks that allow customers to satisfy their individual
preferences in a customized way.
* Emphasize store ambience and elevation of the customer
experience at Starbucks stores.
* Purchase and roast only top-quality coffee beans.
* Foster commitment to corporate responsibility.
* Expand the number of Starbucks stores domestically and
internationally.
* Broaden and periodically refresh in-store product offerings.
* Fully exploit the growing power of the Starbucks name and
brand image with out-of-store sales.
144

144
145
 Strategies
Strategies for
for Building
Building
Competitive
Competitive Advantage
Advantage

Low-cost
Low-cost Broad
Broad
provider
provider differentiation
differentiation

Focused
Focused Focused
Focused
low-cost
low-cost Best-cost
Best-cost differentiation
differentiation
provider
provider

*BASIC STRATEGIC
APPROACHES
146

146
* Building a competitive advantage by:
*Striving to become the industrys low-cost provider
(efficiency).
*Outcompeting rivals on differentiating features
(effectiveness).
*Offering the lowest (best) prices for differentiated
goods (best-cost provider).
*Focusing on better serving a niche markets needs
(efficiency and\or effectiveness).

*STRATEGIC APPROACHES
147

147
148
CORE CONCEPT
*A firm achieves a competitive advantage when it provides
buyers with superior value compared to rival sellers or
offers the same value at a lower cost to the firm.
*The firm achieves a sustainable competitive advantage if
its advantage persists despite the best efforts of
competitors to match or surpass its advantage.

149
149
CORE CONCEPT
* A companys deliberate strategy consists of proactive
strategy elements that are both planned and realized as
planned; its emergent strategy consists of reactive strategy
elements that emerge as changing conditions warrant.
* Managers modify strategy in response to:
*Changing market conditions
*Advancing technology
*Fresh moves of competitors
*Shifting buyer needs
*Emerging market opportunities
*New ideas for improving the strategy
150
FIGURE 1.2 A Companys Strategy Is a Blend of Proactive Initiatives
and Reactive Adjustments

151
152
 * THE RELATIONSHIP BETWEEN
A FIRMS STRATEGY AND
ITS BUSINESS MODEL

Realized Business
Strategy $$$? Model
Competitive Value
Initiatives Proposition

Business
Profit Formula
Approaches

153
CORE CONCEPT

*How the business will make money :

*By providing customers with value.
*The firms customer value proposition
*By generating revenues sufficient to cover costs and
produce attractive profits.
*The firms profit formula
It takes a proven business modelone that
yields appealing profitabilityto demonstrate
viability of a firms strategy.

154
* The Customer Value Proposition
* Satisfying buyer wants and needs at a price
customers will consider a good value.

*The greater the value provided (V) and

the lower the price (P), the more
attractive the value proposition is to
customers.

*BUSINESS MODEL
ELEMENTS
155
*The Profit Formula
* Creating a cost structure that allows for acceptable
profits, given that pricing is tied to the customer value
proposition.
* Vthe value provided to customers
* Pthe price charged to customers
* Cthe firms costs
* The lower the costs (C) for a given customer value
proposition (VP), the greater the ability of the business
model to be a moneymaker.

* BUSINESS MODEL ELEMENTS

(CONTD)
156
 The Strategic
Fit Test

The Competitive Winning The Performance

Advantage Test Test
Strategy

*IS OUR STRATEGY A

WINNER?
157
158
 *select

59

159
 *connect

60

160
*demonstrate

61

161
* Week 2 Charting a Companys Direction: Its
Vision, Mission, Objectives and Strategy
* Thompson et al., Chapter 2
* Tutorials begin for Group A
* Introduction, guidelines on case presentation,
team formation, and discussion of trial case -
Edward Marshall Boehm, Inc. (see Appendix A
in subject outline.)

*Next Week

162