This document contains the agenda and notes for a class on strategic management. It discusses conducting an internal scan of an organization using various frameworks like the resource-based view, value chain analysis, and analyzing internal issues. Students are assigned homework to conduct an internal analysis of a Thai multinational enterprise using these concepts and present a SWOT analysis in the next class. Peer evaluation of other groups' results will also occur.

1. WK6 Agenda News, ASEAN MNEs Video clips discovery BBA Strategic audit Homework 1 MIB, BBA 2010

2. Video Clips Discovery What are forces of the changes in the first two video clips? What’s the trend? What’s the industry situation? Thailand? MIB, BBA 2010 2

3. Video Clips Discovery What are their core competencies? How do these companies make money? Do these companies have a complete vertical integration? Do these companies have a sustainable advantage? Durability Imitability(transparency, transferability, replicability) Other meanings for sustainable? MIB, BBA 2010 3

4. Environmental Scanning In three groups, use the strategic audit sheets(part I-V) to provide a SWOT analysis for BBA programs in three different universities. What are the key success factors? How do we make money? MIB, BBA 2010 4

5. Homework Select Thai MNEsand do the internet research using the strategic audit sheet to provide a summary Current Situation(performance, mission, vision, strategy) Board and management External environment scanning Internal environment scanning Core competency Competitive advantage Provide SWOT using EFAS, IFAS MIB, BBA 2010 5

6. WK6.2 Agenda NEWS, ASEAN MNEs Lecture Mind map BBA SWOT Homework MIB, BBA 2010 6

7. Strategy Strategic management: A set of managerial decision and actions that determines the long run performance of a corporation. Strategy: A master plan to achieve your mission and objective. MIB, BBA 2010 7

8. Strategic Decision Making Process See the strategic checklist sheet MIB, BBA 2010 8

9. Strategy and Structure MIB, BBA 2010 9

11. Corporate level strategy

12. Business level strategy

15. Growing health consciousness

16. Expanding seniors market

17. Impact of the Generation Y boomlet

18. Declining mass market

19. Changing pace and location of life

20. Changing household composition

21. Increasing diversity of workforce & marketThailand trends Environment Health Politic Society MIB, BBA 2010 12

22. Industry Environment How will the societal environment affect the industry environment? MIB, BBA 2010 13

24. Product differentiation: if no difference should invest in marketing

25. Capital requirements: stock market

26. Switching costs: difficulty in switching the product, Window

27. Access to distribution channels: existing firms are better

28. Cost disadvantages for new entrants: existing firms have advantages on patent, learning curve, raw material, and location.

29. Government policy: limited by licensing in some industries (banking, fisheries)MIB, BBA 2010 14

31. Rate of industry growth: bigger pie with higher growth

32. Product or service characteristics: price war for commodity products

33. Amount of fixed costs and exit costs: high competition in high fixed and exit costs, pharmaceutical industry

34. Capacity: excess supply if full capacity, oil, egg

35. Diversity of rivalsMIB, BBA 2010 15

37. Bargaining Power of Buyers

38. Bargaining Power of Suppliers

39. Relative Power of Other StakeholdersMIB, BBA 2010 16

41. Price ceiling of a product is the switching price to a substitute product.

42. Bargaining Power of Buyers: large buyers, many alternative suppliers, backward integration capability, low switching cost, low profit margin, unimportance to final product

43. Bargaining Power of Suppliers: Oligopoly, high switching cost, no substitute, forward integration capability

44. Relative Power of Other StakeholdersMIB, BBA 2010 17

45. II. Industry Life Cycle What would happen in each phase? Number of the companies Size of the companies Strategy Price MIB, BBA 2010 18 Fragmented Consolidated

46. III. Strategic Groups and Types A strategic groups Similar strategies Similar resources Strategic types Defender: limited product lines and cost, focus on improving efficiency Prospectors: broad product lines, focus on product innovation and market opportunities Analyzers: operate in many market areas (stable: efficiency and variable: innovation) Reactors: inconsistent in strategy-structure-culture relationship Who’s the direct competitor? MIB, BBA 2010 19

47. Strategic Factors Apply to BBA MIB, BBA 2010 20

48. EFAS and Industry Matrix Your external analysis and position in the industry. How your competitors respond to each factor. MIB, BBA 2010 21

49. Mind map and BBA Exercise Prepare the mind map for this lecture. Continue BBA Exercise Strategic factors Use the word “BECAUSE” to provide your supporting reasons. Example: BBA students are…because… MIB, BBA 2010 22

50. Homework What industry that you choose? MNEs? EFAS and Industry Matrix Continue lecture for internal factor MIB, BBA 2010 23

51. WK6.3 Agenda News: World Cup(Spain), 3G, new director for BOT, ladies’ journey, Carrefour, Princess speech ASEAN MNEs Competitive Intelligence exercise Lecture Mind map, BBA exercise, Homework update MIB, BBA 2010 24

52. Competitive Intelligence Exercise Careful study of trade journals. Wiretapping the telephones of competitors. Posing as a potential customer to competitors. Getting loyal customers to put out a phony "request for proposal” soliciting competitors' bids. Buying competitors' products and taking them apart. Hiring management consultants who have worked for competitors. Rewarding competitors' employees for useful "tips." Questioning competitors' customers and/or suppliers. Buying and analyzing competitors' garbage. Advertising and interviewing for non-existent jobs. Taking public tours of competitors' facilities. Releasing false information about the company in order to confuse competitors. Questioning competitors' technical people at trade shows and conferences. Hiring key people away from competitors. Analyzing competitors' labor union contracts. Having employees date persons who work for competitors. Studying aerial photographs of competitors' facilities. MIB, BBA 2010 25

53. Internal Scanning MIB, BBA 2010 26

54. I.Resource Based Approach Resources+capability+competencycompetitive advantage Resources: Tangible: Physical assets: plant, equipment, and location Capital: credit rating, capital management Technology: patent, R&D Intangible: employees and skills, culture, reputation, brand Capabilities: ability to use its resources, ability to turn input into output Competency: cross functional integration and coordination of capabilities, use VRIO framework to evaluate its competency Avon: door to door selling Wal-Mart: logistic Oriental Hotel: customer service MIB, BBA 2010 27

55. I.ResourceBased Approach VRIO Framework MIB, BBA 2010 28

56. Resource Based Approach to Strategy Analysis Resources+capability+competencycompetitive advantage Match capability with resourceor resource with capability Which way is easier? MIB, BBA 2010 29

57. Sustainable Competitive Advantage Durability: depreciation rate of the firm’s resources, capabilities, or core competencies Examples: Intel, cassette tapecdmp3mp4 Imitability: duplication rate by others Transparency:understanding speed of other firms to the relationship of resources and capabilities supporting a successful firm’s strategy Transferability:competitors ability to get the resources and capabilities necessary for the competitive challenge Replicability: competitors duplication ability, the use of resources and capabilities to imitate the firm’s success Explicit knowledge vs. Implicit knowledge Which one is easier to copy? MIB, BBA 2010 30

58. II. Business Models 6. Time Model: SONY R&D 1st mover 7. Efficiency Model: Wal-Mart, Dell 8. Blockbuster Model: movies, pharmaceutical companies 9. Profit Multiplier Model: Walt Disney 10. Entrepreneurial Model: niche market 11. De Facto Standard Model: free for basic product How can we use business model for our internal scanning? Do your competitors use the same business model? How do these companies make money in each business model? Customer Solutions Model: IBM, consulting firms Profit Pyramid Model: GM Multi-Component System/Installed Base Model: HP printer and ink cartridge, Gillette razor and blade Advertising Model: news paper, dot.com Switchboard Model: ebay, NY material museum MIB, BBA 2010 31

59. III. Value Chain Analysis Value chain: Linked set of value-creating activities beginning with basic raw material and ending with distributors getting final goods into hands of customers MIB, BBA 2010 32

60. III. Value Chain Analysis The importance or weight of each activity(strength and weakness) depends on the type of business. Retail business: logistic, Pharmaceutical or electronic: R&D How can we use value chain for our internal scanning? Compare your value chain to the industry key success factors as well as your competitors value chain. Examine the company product lines for strength& weakness (divisional structure). Synergies among product lines (economies of scope)? MIB, BBA 2010 33

61. Organizational Structure Examine the organizational structure before the value chain to see the availability of resources and capabilities (reverse, 2nd school of thought). How will the organizational structures be your strengths or weakness? Specialization, control, command, decision, communication flow MIB, BBA 2010 34

62. Other Internal Issues Corporate culture: identity, commitment, stability, and employee behavior Marketing: positioning, segmentation, product life cycle, marketing mix, brand Financial: financial leverage, capital budgeting R&D: R&D intensity(% R&D spending),patent, publication, new product, technology transfer, technology discontinuity HR: teams, temporary workers, quality of life and diversity MIB, BBA 2010 35

63. Mind Map & BBA Exercise How to do the internal scanning? How can we apply sufficiency economy philosophy with internal scanning? IFAS textbook example MIB, BBA 2010 36

64. Homework Industry? Annual Reports? News? SWOT analysis on Wednesday July 14, 2010 Each team will have to evaluate other teams’ results. MIB, BBA 2010 37