Domino's Pizza

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Strategic Management
Management 430 Instructor Ralph Heidl Ivy Yang
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Outline of Today

• Course overview (1030 1100am)
• Basic strategic concept (1100 1135am)
• Ice breaking (1140 1150am)
• Capstone simulation (1150 1215am)
• Class on Thursday (1215 1220am)

Break (1135 1140am)
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Whats going on here?
Computers
ROA
Pharmaceuticals
Textiles
Number of firms
Returns (in 2000)
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The Essence of Strategic Management is
Competitiveness
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• The fundamental question of strategic management
  
• Why are some firms more successful than others?

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• The purpose of the Strategic Management Process
  is to enable a firm to achieve strategic
  competitiveness and earn above average returns.

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Course Motivation

• Strategic management whats the use?
• Develop critical skills
• Understanding
• Analyzing
• Synthesizing
• Communicating
• Cooperating

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Course Motivation

• Strategic management whats the use?
• Getting a job (Survey of Recruiters, WSJ, 2003)
• 1 Communication and interpersonal skills
• 2 Ability to work well within a team
• 3 Analytical and problem-solving skills
• 8 Strategic thinking
• 14 General management point of view

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Course Structure

• Theoretical frameworks
• Case analysis
• Class discussion
• Business simulation

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Grading System
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Chapter 1

• Strategic Management and
• Strategic Competitiveness

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Strategic Competitiveness
is achieved when a firm successfully
formulates and implements a value-creating
strategy.
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Strategic Competitiveness
is achieved when a firm successfully formulates
and implements a value-creating strategy
Sustainable Competitive Advantage
occurs when a firm implements a
value-creating strategy other companies are
unable to duplicate or find it too costly to
imitate.
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Strategic Competitiveness
is achieved when a firm successfully
formulates and implements a value-creating
strategy.
Sustainable Competitive Advantage
occurs when a firm implements a
value-creating strategy other companies are
unable to duplicate or find it too costly to
imitate.
Above-Average Returns
are returns in excess of what an investor
expects to earn from other investments with a
similar amount of risk
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Above-Average Returns

























Return










































Risk
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Above-Average Returns

























Return










































Risk
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Above-Average Returns
Return
Risk
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Above-Average Returns
Return
Risk
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Above-Average Returns
Return
Risk
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Above-Average Returns
Return
Risk
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Above-Average Returns
Above Average
Return
Risk
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Above-Average Returns
Above Average
Return
Risk
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Above-Average Returns
Above Average
Return
Below Average
Risk
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Strategic management is a process used to create
a competitive advantage that produces above
average returns.
Strategic Management Process
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Chapter 2
The Strategic Management Process
External
Environment
Chapter 3
Internal
Environment
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Chapter 2
The Strategic Management Process
External
Environment
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
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Chapter 2
The Strategic Management Process
External
Environment
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
Strategy Formulation
Strategy Implementation
Chapter 4
Chapter 5
Chapter 10
Business-Level
Competitive
Corporate
Strategy
Dynamics
Governance
Strategic
Actions
Chapter 7
Chapter 6
Chapter 13
Corporate-Level
Entrepreneurship Innovation
Acquisitions
Restructuring
Strategy
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Chapter 2
The Strategic Management Process
External
Environment
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
Strategy Implementation
Strategy Formulation
Chapter 4
Chapter 5
Chapter 10
Business-Level
Competitive
Corporate
Strategy
Dynamics
Governance
Strategic
Actions
Chapter 7
Chapter 6
Chapter 13
Corporate-Level
Entrepreneurship Innovation
Acquisitions
Restructuring
Strategy
Strategic
Competitiveness
Above Average
Returns
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Chapter 2
The Strategic Management Process
External
Environment
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
Strategy Formulation
Strategy Implementation
Chapter 4
Chapter 5
Chapter 10
Business-Level
Competitive
Corporate
Strategy
Dynamics
Governance
Strategic
Actions
Chapter 7
Chapter 6
Chapter 13
Entrepreneurship Innovation
Acquisitions
Corporate-Level
Restructuring
Strategy
Strategic
Competitiveness
Above Average
Feedback
Returns
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Two Approaches to the Strategic Management Process

• The Industrial/Organizational (IO) Model
  (External)
• The Resource Based Model (Internal)

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The New Competitive Landscape
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The New Competitive Landscape

• A Global Economy
• People, goods, services, and ideas move freely
  across geographic borders
• Significant opportunities emerge in multiple
  global markets
• Markets and industries become more
  internationalized

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Globalization

• The spread (or diffusion) of economic innovations
  around the world and the political and cultural
  adjustments that accompany this diffusion.

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The New Competitive Landscape

• Technology
• Rapid technological changes
• Rapid technology diffusions
• Dramatic changes in information technologies
• Increasing importance of knowledge

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Through the Ages
Stone ?-3500 BC
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Through the Ages
Bronze/Iron 3500 BC - 1200 BC
Stone ?-3500 BC
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Through the Ages
Agricultural 1200 BC - 1800 AD
Bronze/Iron 3500 BC - 1200 BC
Stone ?-3500 BC
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Through the Ages
Industrial 1800 - Late 20th C.
Agricultural 1200 BC - 1800 AD
Bronze/Iron 3500 BC - 1200 BC
Stone ?-3500 BC
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Through the Ages
Information
Industrial 1800 - Late 20th C.
Agricultural 1200 BC - 1800 AD
Bronze/Iron 3500 BC - 1200 BC
Stone ?-3500 BC
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Alternative Models of Superior Returns
Industrial Organization Model
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Resource-Based Model
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I/O Model of Superior Returns
The Industrial Organization Model suggests that
above-average returns for any firm are largely
determined by characteristics outside the firm.
The I/O model focuses on industry structure or
attractiveness of the external environment rather
than internal characteristics of the firm.
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The Industrial/Organizational Model

• The external environment determines strategies
  that will result in superior returns
• Most competing firms in an industry possess
  similar resources
• Resources are highly mobile between firms

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Resource-Based Model of Superior Returns
The Resource-Based Model suggests that
above-average returns for any firm are largely
determined by characteristics inside the firm.
The Resource-Based view focuses on developing or
obtaining valuable resources and capabilities
which are difficult or impossible for rivals to
imitate.
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The Resource Based Model

• Each firm is a collection of unique resources
  that are the source of firm returns
• Over time firms acquire different resources and
  develop unique capabilities
• Resources may not be highly mobile across firms
  within an industry

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Chapter 2
The Strategic Management Process
External
Environment
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
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Strategic Intent
Winning competitive battles through deciding how
to leverage internal resources, capabilities, and
core competencies.
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Strategic Intent
Winning competitive battles through deciding how
to leverage internal resources, capabilities, and
core competencies.
Strategic Mission
An application of strategic intent in terms of
products to be offered and markets to be served.
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We are dedicated to being the worlds best at
bringing people together -- giving them easy
access to each other and to the information and
services they want and need anytime, anywhere.
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We are dedicated to being the worlds best at
bringing people together -- giving them easy
access to each other and to the information and
services they want and need anytime, anywhere.
To best satisfy Americas snacking needs by
providing fun foods within arms reach.
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We are dedicated to being the worlds best at
bringing people together -- giving them easy
access to each other and to the information and
services they want and need anytime, anywhere.
To best satisfy Americas snacking needs by
providing fun foods within arms reach.
The mission of Southwest Airlines is dedication
to the highest quality of Customer Service
delivered with a sense of warmth, friendliness,
individual pride and Company Spirit.
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We are dedicated to being the worlds best at
bringing people together -- giving them easy
access to each other and to the information and
services they want and need anytime, anywhere.
To best satisfy Americas snacking needs by
providing fun foods within arms reach.
The mission of Southwest Airlines is dedication
to the highest quality of Customer Service
delivered with a sense of warmth, friendliness,
individual pride and Company Spirit.
To unlock the potential of Nature -- To improve
the quality of Life.
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Groups who are affected by a firms performance
and who have claims on its performance
Stakeholders
The firm must maintain performance at an adequate
level in order to maintain the participation of
key stakeholders
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Groups who are affected by a firms performance
and who have claims on its performance
Stakeholders
The firm must maintain performance at an adequate
level in order to maintain the participation of
key stakeholders
Capital Market
Firm
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Groups who are affected by a firms performance
and who have claims on its performance
Stakeholders
The firm must maintain performance at an adequate
level in order to maintain the participation of
key stakeholders
Capital Market
Firm
Product Market
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Groups who are affected by a firms performance
and who have claims on its performance
Stakeholders
The firm must maintain performance at an adequate
level in order to maintain the participation of
key stakeholders
Capital Market
Firm
Product Market
Organizational
Employees Managers Non-Managers
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Breaking the ice

• Form groups of 4-5 people
• this is not necessarily your final group
• Designate one person to record responses
• you do not need to record names

• Discuss the following
• your major
• your nationality
• the languages you speak
• your career interests/goals
• where you work now (type of job and industry), if
  applicable
• your astrological sign
• any special hobbies or talents you possess

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Class of Thursday

• External environment
• Macro factors
• Five forces model