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MGMT 321 Class 7 Management Clinic

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consulting. Lack of clear vision and. consensus among partners on ... Acquire or merge with an existing marketing strategy consulting firm. Internal or external ... – PowerPoint PPT presentation

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Title: MGMT 321 Class 7 Management Clinic


1
MGMT 321Class 7Management Clinic
  • Agenda
  • Current events
  • Case Stick to the core or
  • go for more?

2
The Newest in Airline Creature Comforts
3
Stick to the core or go for more?
  • Company
  • Advaark
  • Seven year old advertising firm with 550 million
    in billings and 400 employees
  • Best known for unforgettable ads
  • Run by two partners, Ian Rafferty and George
    Caldwell

4
Stick to the core or go for more?
  • Key issue
  • Should Advaark stick to its core competence in
    advertising or diversify into marketing strategy
    consulting?

5
Stick to the core or go for more?
  • Core competence
  • Resources and capabilities that serve as a source
    of competitive advantage for a firm over its
    rivals
  • Core competencies are resources and capabilities
    that are
  • Valuable (allow firm to exploit opportunities or
    neutralize threats)
  • Rare (possessed by few other firms)
  • Costly to imitate (other firms cannot obtain them
    or at a cost disadvantage to obtain them)
  • Nonsubstitutable

6
Stick to the core or go for more?
  • Break up into smaller groups for discussion
  • Move around the room so you can more easily talk
    face-to-face
  • Try joining a different group so you can meet new
    class members

7
Stick to the core or go for more?Group
Discussion Questions
  • Conduct a SWOT analysis on Advaark related to its
    decision to diversify into marketing strategy
    consulting
  • How do you assess Advaarks strengths,
    weaknesses, opportunities and threats relative to
    the diversification decision?

8
SWOT Analysis of Advaarks Decision
9
SWOT Analysis of Advaarks Decision
10
Industry Analysis
  • Conduct a five-forces analysis of the marketing
    strategy consulting industry
  • How do you assess the attractiveness of the
    marketing strategy consulting industry?

11
Five Forces Model
12
Industry Analysis Strategy Consulting
Barriers to entry Low
Industry Competitors Diverse firms ranging
from business strategy to marketing research
to advertising
Power of Suppliers Low
Power of Buyers High
Substitutes In-house research
13
BCG Matrix
  • High
  • Market
  • Growth
  • Rate
  • Low
  • High Low
  • Relative Market Share

Question marks
Stars
Cash cows
Dogs
14
The Diversification Decision
  • Should Advaark diversify into marketing strategy
    consulting?

15
Implementing the Diversification Decision
  • Assuming Advaark decides to pursue Raffertys
    idea, what is the best way to do so?
  • What alternatives approaches exist?

16
Alternative Approaches to Diversifying Advaark
  • Make or buy
  • Grow the existing business by hiring human
    resources and investing in the resources needed
    to support it
  • Acquire or merge with an existing marketing
    strategy consulting firm
  • Internal or external
  • Keep new business inside Advaark
  • Spin-off a new business that will operate
    independently of the advertising agency

17
Alternative Approaches to Growing Advaark by
Diversification
  • Grow Existing Business
  • Market penetration (existing market)
  • New markets
  • Geographic expansion
  • Strategic alliances and joint ventures

18
Key Take Away
  • Growth always involves taking calculated risks
    and companies need to assess the risks and
    potential outcomes of any new growth initiative
    while also ensuring that excessive analysis
    doesnt hinder the speed of decision making
  • Chris Zook
  • Head of Worldwide Practice, Bain Company

19
Key Take Aways
  • The fundamental question managers must answer
    What business are we in?
  • Many argue that businesses should not stray from
    their core competencies
  • Makes it extremely important for firms to know
    what their core competence is what they do
    better than anybody else
  • Every business decision especially strategic
    decisions involves risk
  • You cant eliminate risk but you can try to
    reduce it by careful analysis and effective
    implementation

20
Next Class
  • Lecture on organizing
  • Chapters 6 7
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