United States Business

1
United States Business

• Competition Competitive Advantage
• Management of U.S. Business Organizations
• Product Life Cycles
• Organization Capability

2
Downfall(article by Bianco)

• Failure to commercialize break through
• Underestimation of the ink jet printer
• Executive suite discard
• Success led to complacency
• Constant restructuring / repositioning
• Patent expiration

3
Image Problem at Xerox(article by Eisenberg)

• Xerox is caught in a paradigm shift
• Email/ download documents vs. copying
• Analog replaced by digital
• Competitors have caught up
• Arrogance of management no to reorganization
• Sales organization no training
• Product imitation

4
Economic Drivers

• What change forces are driving the economy
• Technology
• Unemployment
• Globalization
• Financial Markets

5
A New Economy?

• How different is the changing economy?
• Is the new economy really a new way of thinking?
• Are we really in a new business cycle?

6
A New Economy

• Costs are being reduced so radically that new
  ways of doing business arise
• - technology
• - alliances
• - mergers/acquisitions
• Global markets intensify the pressure to cut
  costs.
• Creativity is passing capital as the key to
  growth.

7
The New Economy (article by Coy)

• Be wary of predictions
• There is more volatility technology, global,
  competition
• Understand growth drivers
• Capital spending
• Venture capitalists
• IPOs

8
Lessons Learned from the Bust(article by Weber)

• No amount of information can offset human
  judgment.
• Clouded judgment prevents us from seeing what the
  numbers really mean
• Cheap financing can distort real demand
• It is critical to analyze customers businesses
• Forecasting demand is an inexact science
• Gathering good information does not guarantee
  that we will use it wisely.

9
Capitalism Under Siege

• There is a common misunderstanding
• - most companies do care about long term
  relationships with their customers
• Old customers do more business than new
  customers
• Old customers have lower sales costs
• Old customers provide referrals

10
Capitalism Under Siege

• companies do gouge customers
• many business decisions are driven be ego/greed
• some large mergers make no sense - personal
  ambition
• unending mismanagement
• supervisors make mistakes and workers suffer the
  consequences
• downsizing

11
Defining Competition

• How would you define the competition faced by
  .....
• General Motors
• Nintendo
• Guaranty National
• American Cancer Society
• Baylor University

12
Competitive Advantage . . . .

• Change and competition are two key aspects of
  developing competitive advantage.
• Competitive advantage occurs because of perceived
  customer value and/or uniqueness.
• Competitive advantage can come from anywhere in
  an organization.
• Competitive advantage is temporary.

13
When Competitive Advantage Is Not Enough

• A FOCUS ON BEATING THE COMPETITION CAN BE
• COUNTER PRODUCTIVE?
• When strategic thinking regresses to competition,
  companies often imitate, not innovate
• Focusing on competition is feature dominated
• Feature dominated products - not needed,
  confusing, irritating

14
Competitive Advantage Is Not Enough
WHEN

• Companies should focus on value innovation
• The customer is at the focus of strategic
  thinking
• Innovation seeks new ways to do things

15
Competitive Advantage Is Not Enough
WHEN

• Challenge managers to dominate the market
• Pursue radically superior value
• Raise frame-breaking questions

16
Motorola's Deadly Sins (article by Kessler)

• Nepotism hire the best
• Not invented here look outside
• Competing with Customers why?
• Thinking that Manufacturing is Innovation
  usability is key
• Vertically integrating think outside the box
  for product use
• Failing to leverage the Brand marketing is a
  must
• Hiding in the high end profit, revenue, growth,
  customer satisfaction, etc.

17
Misusing Competitive Intelligence(Cohen Article)

• Companies engage in much competitive intelligence
• Companies need improvement in translating data
  into useful information
• Know your markets!
• Know your competitors! They probably know you.
• How to get competitive information
• -customers -web sites
• -salespeople -annual reports
• -analysts -trade shows
• -trade publications -competitors customers

18
Competitive Intelligence (article by Gross)

• Four Types of C. I. Activity
• Environmental scanning
• Competitor Intelligence (S.W.A.T.)
• Synthesis
• Decisions/ actions

19
Competitive Intelligence (article by Gross)

• Efficiency doing things right
• Effectiveness doing right things
• C I provides for educated guesses and likely
  scenarios

20
Hypnotic Danger of Competitive Analysis(article
by Harari)

• Competitors may be using yesterdays solutions
• Definitions of competitor are too narrow

21
Traditional Product Life Cycle
Intro
Growth
Maturity
Decline
Volume
Time
22
Accelerated Product Life Cycle
Volume
Time
23
The New Business Cycle

• The new business cycle is tied to the health of
  high tech
• The economy is vulnerable to a high tech slowdown

24
The New Business Cycle

• Impact on the economy of the expansion of high
  tech
• - lower unemployment
• - faster growth
• - less inflation
• ..than ever dreamed possible

25
The New Business Cycle

• The High Tech Multiplier Effect
• 1 new high-tech job creates 6.7 new jobs
  elsewhere

26
The New Business Cycle

• What drives the old business cycle???
• - retail sales
• - new home starts
• - industrial production
• semiconductor shipments and other high tech
  growth measures are given little importance

27
Silicon Valley Reboots (article by Stone)

• After the boom and bust another cycle of
  innovation
• Viable business plan
• Working prototypes
• Sense of commitment
• What have we learned?

28
Restating the 90's (article by Mandel)

• Workers fared well
• Education
• Low unemployment drove up wages
• Foreign investment created new jobs
• Productivity gains are real and sustainable

29
Peter Drucker Talking About Tomorrow(article by
Petzinger)

• - cycles of economy vs. cycles of industry
• - scarcity of goods does not pertain to
  information
• - economists operate under old axioms
• 1. National economy is a mix of activity in
  which monetary and fiscal policy determine
  behavior
• 2. If you sell something, youve lost it
• 3. Scarcity

30
Peter Drucker Talking About Tomorrow(article by
Petzinger)

• 1. Goods/services are increasingly global, even
  if your market is local
• 2. You have no information unless you share it.
• 3. Scarcity does not apply to information

31
Peter Drucker Talking About Tomorrow(article by
Petzinger)

• Key reason for turnover is lack of respect
• - salary is a short-term motivator
• - responsibility is key
• Schools are not preparing young people
• - math and numeric literacy are not the same
• - we dont synthesize

32
Five Deadly Business Sins(Article by Drucker)

• Worship of higher profit margins and premium
  pricing
• Mispricing a new product by charging what the
  market will bear
• Cost driven pricing
• Slaughtering tomorrows opportunity on the alter
  of yesterday
• Feeding problems and starving opportunities

33
Flaws in the Management of U.S. Business
Organizations

• No clear link between strategy and operations
• Performance measurement systems lead to
  dysfunctional behaviors
• Reward systems tend to reinforce dysfunctional
  behaviors
• Short term perspective
• Bottom line perspective
• Inaccurate reporting
• Corporate culture not supportive of
  competitiveness
• Insufficient concern with quality and
  productivity
• Bureaucratic hindrances

34
The Myth of Market Share (Miniter)

• Why All the Fuss About Market Share?
• 1. Leadership--dominant firm can add product
  features or reduce marginal profit to control
  price
• consumers decide what is important
• consumers decide value
• cutting margins to reduce price
• why, if youre the leader
• why invite competitive matching (pricewar)

35
The Myth of Market Share (Miniter)

• 2. As market share increases, so do profits
• growing share by reducing price
• what do existing customers think?
• 3. Economies of scale. The more you make, the
  cheaper per unit

36
By Larry G. Wheeler, President CEO,Mrs.
Bairds Bakeries, Inc.
VALUES

• What we do here is a job. It is not life itself.
  It is not even close.
• When we are on the job, however, we work
  incredibly hard to achieve strong business
  results. We are intolerant of those who do not
  work hard.
• We recognize that we can accomplish more by
  working together than we can by working alone.
• We value individual differences and especially
  respect opinions that are different from our own.

37
- cont.
VALUES

• We are courageous and decisive. We make tough
  calls. We are action-oriented, not
  process-oriented.
• We are straight and honest with each other at all
  times. And we walk our talk.
• We may have cake and sing on someones birthday,
  but we understand that we have to show people
  that they are valued in better ways than that.
• We strive to be externally focused. We believe
  that Marketing is not a department it is what we
  all do.

38
- cont.
VALUES

• We tell people more than we may feel they really
  need to know. We encourage people to take
  ownership and be responsible for their respective
  areas of work. We always err on the side of
  giving too much rope.
• We laugh a lot. -December 1995

39
Chapter 1 - Understanding the U.S. Business
System

• Factors of production - Basic resources
• Economic systems - Foundation for business
  decisions
• U.S. Economic System - How our economy works
• Markets
• Supply and Demand
• Private enterprise
• Degrees of competition

• Private enterprise
• Degrees of competition

40
Chapter 1 - Understanding the U.S. Business
System

• Economic Goals - What impacts the economy
• Stability
• Full employment
• Growth
• Economic Performance - What results
• Gross National Product (GNP)
• Productivity
• Balance of Trade
• National Debt

41
Chapter 1 - Understanding the U.S. Business
System

• Learn the language of the trade
• Business laws of not always work
• How do broad economic issues affect business?
• How will broad economic issues affect you?
• How will you select a profession?

42
Background Slides

• You will be responsible for this material
• This will help you on the Edward Jones Project

43
Benefits, Costs, and Risks of Four Strategic
Options LICENSING

• Costs Risks
• 1. Appropriation of Technology
• 2. Increased Competition in End Market Lower
  Profits

• Benefits
• 1. Wide Initial Distribution
• 2. Co-opts Competitors Reduced Consumer
  Confusion
• 3. Builds Market Expectations Increase Supply of
  Complementary Products

44
Benefits, Costs, and Risks of Four Strategic
Options STRATEGIC ALLIANCES

• Benefits
• 1. Wide Initial Distribution
• 2. Co-opts Competitors Reduced Consumer
  Confusion
• 3. Builds Market Expectations Increase Supply of
  Complementary Products
• 4. Superior Technology may Result

• Costs Risks
• 1. Appropriation of Technology
• 2. Increased Competition in End Market Lower
  Profits

45
Benefits, Costs, and Risks of Four Strategic
OptionsPRODUCT DIVERSIFICATION

• Benefits
• 1. Increased Supply of Complementary Products
• 2. Profit from Core and Complementary Products

• Costs Risks
• 1. Additional capital Commitments Higher
  Costs of Failure

46
Benefits, Costs, and Risks of Four Strategic
Options AGGRESSIVE POSITIONING(Penetrating
pricing, product proliferation, wide
distribution)

• Benefits
• 1. Accelerates Adoption of Technology
• 2. Preempts Rivals

• Costs Risks
• 1. Loss of Ability to Skim Market
• 2. Requires High Initial Investments
  Higher Costs of Failure