1. Please take handouts at the front of the room & Use Name Cards
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2.  Introduction & Overview
 Instructor
 Assignments
 What are the most critical factors
influencing firm performance?
 Video Case: Why your PC isn’t a Xerox?
 RFH Case on Monday
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3. Consulting:
 Strategy, Organization & Management
 M&A: Valuation of human assets for tax purposes
Teaching (Wisconsin, Wash U, Emory, Wharton, HEC Paris, UCLA):
 Strategy (19 yrs Undergrad through Executives)
 Executive Education programs (M&A, Strategy)
Research:
 Competitive Advantage
 M&A of human asset intensive firms
 Strategy in uncertain & high velocity environments
(Real options, creativity, forecasting)
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4. 4 Strategic Management

5. Group Level (50%)
 (20%) 2 case analyses (6 ppt slides)
 (30%) Final project (≤15 pgs)
Individual Level (50%)
 (20%) 2 quizzes (lowest counts 5%)
 (20%) Participation
 (10%) Electronic Polls (9 of 13)
Next Steps
 Teams of 5-6 (w/in sec) – sign up form
 Team case writeup preferences (ranked)
 Cases, Readings, Polls
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6.  What determines a company’s
profitability?
 Why do some companies
succeed, while others fail?
 How can we distinguish between
a good strategy and a bad one?
(Rumelt, 2011, McKinsey Quarterly)
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7. 9 Strategic Management

8. External factors: Internal factors:
 Number & behavior of  Resources controlled by
competitors the firm
(e.g., reputation, proprieta
 Barriers to entry
ry technology)
 Industry-wide technology
 Ability to innovate/change
 Macroeconomic cycles
 Incentives/control systems
 Social/regulatory/political
 Leadership
environment
 Customers & suppliers  Organization
 Culture
 Substitute products
 Systems/processes
What might the firm do? What can the firm do?
Opportunities & Threats Strengths & Weaknesses
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9.  What use is a “laundry list” of factors?
 How important are each of these factors?
 How does their importance vary according to
each company’s situation?
 When & how can companies manipulate
these factors to their advantage?
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10. 12 Strategic Management

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12. Decomposition of Variation in Profit Rates
for Business Units of Diversified Companies
Corporate
parent effect
4%
Business-
unit effect Unexplained
32% variation
43%
Year effect
2% Industry effect
19%
Source: McGahan & Porter (1997 Strategic Management Journal)
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13. 15 Strategic Management

14. 1. Analyze industry structure & external trends to predict
prospects for a strategy;
2. Assess a firm’s resources for their potential to generate
a competitive advantage;
3. Evaluate multi-business strategies;
4. Develop M&A/alliance strategies to access capabilities;
5. Make decisions in uncertain & turbulent environments;
6. Apply tools learned across the curriculum.
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15.  Diagnosis of the nature of the challenge
simplifies the often overwhelming complexity
by identifying the most critical factors.
 A Guiding Policy defines the overall approach
chosen to cope with the obstacles identified in
the diagnosis.
 Coherent Actions are coordinated Vision
steps to support achieving the
Mission
guiding policy.
Values
“Strategy”
* Rumelt, R. 2011, The Perils of Bad Strategy. McKinsey Quarterly
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16. Internal Analysis (SW) External Analysis (OT)
• Value chain • PESTEL
• VRINE • 5 Forces
• Corporate value • Game theory
Strategy
Arenas
Staging Economic
Vehicles
Pacing Logic
Differentiators
Implementation Strategy
• Business plan People
Symbols
Structure
• Resource allocation Rewards Processes
• Organizational design
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17.  Some people make things happen.
 Some people watch things happen.
 Some people wonder what happened.
Goal of this Course:
 Make sure you’re not in the last group.
 Provide tools to help you join the 1st group.
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18. Left Hemisphere Right Hemisphere
 Linear, sequential, logic  Holistic, intuitive, non-
al thought process linear thought process
 Symbolic representation  Concrete representation
(words & numbers) (e.g., hands on).
 Reality-based  Imagination-oriented
orientation processing
 Quantitative  Qualitative
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19. https://buswisc.qualtrics.com/SE/?SID=SV_8dWKspcjUm3lpdi
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20. 24 Strategic Management

21.  Teams
 Members
 Case Schedule
 Project proposal (10/3)
Company, data, analysis, types of
recommendations
 No class Monday – Team meetings?
 Seating chart (team exercise next class)
 Forum
 Palisade Decision Tools (@Risk, Precision
Tree, etc.). Install before 9/19
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22. 26 Strategic Management

23. Internal Analysis (SW) External Analysis (OT)
• Value chain • PESTEL
• VRINE • 5 Forces
• Corporate value • Game theory
Strategy
Arenas
Staging Economic
Vehicles
Pacing Logic
Differentiators
Implementation Strategy
• Business plan People
Symbols
Structure
• Resource allocation Rewards Processes
• Organizational design
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24.  What is Google’s strategy?
 In the Mobile Arena?
 Corporate (across businesses)?
 How might Motorola add value to Google
(over the $12.5B paid)?
 What are the biggest risks to Google?
 How will Google do in the deal? Buy/Hold/Sell?
 What should Google do next:
 To realize the potential value?
 To minimize the risks?
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25. 29 Strategic Management

26. 70%
60%
60%
50%
40%
30%
30%
20%
9%
10%
0%
Bad Move (Sell) No Impact (Hold) Good Move (Buy)
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27. 80%
76%
70%
60%
50%
40%
30%
20%
11%
8%
10% 4%
0%
0%
Vertical Integration
Power Over Partners hwart OS EntrantsReduce OS Rivalry
T Other
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28. 70%
67%
60%
50%
40%
30%
20% 16%
9%
10%
3% 5%
0%
Customers go Anti-trust Over bid Can't integrate Other
to MS
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29. Low Cost Uniqueness
Broad Cost Differentiation
Market Leadership
Narrow Focused Low Focused
Market Cost Differentiation
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30. Price
Your Price } Advantage
Industry
avg. cost Industry
avg. price
Advantage { Your cost
Cost
Cost or Product Design or
Efficiency Customer Intimacy
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31. Arenas
Staging Economic
& Logic Vehicles
Pacing
Differentiators
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32.  Strategies for market position:
 Operational Efficiency: Deliver products or
services at the lowest cost
 Product/Service Design: Offer the most
innovative products or services.
 Customer Intimacy: Nurture close customer
relationships.
 Profitability: How can these strategies drive a
wedge between costs and price?
 Implications for being “stuck in the middle”?
Source: Treacy, M. and Wiersema, F. 1995. The Discipline of Market Leaders
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33. Strategy
People Structure
Symbols
Rewards Processes
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