L O-The Strat. Mgt.

Process
• Define Strategic Management State similarities
among strat. mgt. models
• Reconstruct “class” strat. mgt. model
• Define parts of model
• Define fit
• Provide example of fit
• Define synergy
• Provide example of synergy
• Define feedback
• Provide examples of feedback
• Know parts of a SWOT anal. and how to
perform
• Know purpose of SWOT analysis

1
 STRATEGIC
MANAGEMENT

Definition: The process of

forming and implementing a
mission, strategies, and
objectives to enhance
organizational performance.

2
 STRATEGIC
MANAGEMENT
MODEL

Mission

D
E
S
POSS IBLE
I
External Internal
Environment Environment
R
E
D

Strategy
&
Objectives

Feedback
Implementation

3
 Parts of the Model

• Mission- Broad outline of orgs. activity

and business make up. Includes product
scope, market scope, & technology.
• External Environment -Conditions outside
of the firm.
• Internal Environment- Conditions within
the firm.
• Strategy- How an organization attempts to
achieve its objectives.
• Objectives- Desired results- What
SPECIFICALLY the organization wants to
achieve (goals).
• Implementation- All activities associated
with putting the strategy in place.

4
 Define Fit

• 1 part of model is logically

connected to other parts

5
Provide Example of Fit

• Mention and give example of

part of model for a specific
company (e.g. Strategy).
• Mention/give example for
another part for company (e.g.
Implementation)
• Explain why the two examples
support each other.

6
 Define synergy
• Sum of parts of system produce
greater total when working together
than when working alone.
– 1+1=3

7
 Provide Example Synergy
• Use real business example
• Not ridiculous
• Identify distinct parts
• How much independently
• How much together
• Why more together

8
 Define Feedback
& Give Example
• Define
– Collection of post implementation
results to enhance future decision
making.
• Example
– State
• strategy or objective
• result
• how affect future decisions

9
 Parts and Performance of a
SWOT Analysis
• Identify mission (goals)
• Isolate Opportunities and Threats
– External Conditions
• Isolate Strengths and Weaknesses
– Internal Conditions
• Choose strategies to avoid (or
minimize) W&T and utilize (or
maximize) S & O.
• Explain how strategy accomplishes
above.

10
 Purpose of SWOT
Analysis
• Identifying a strategy to achieve
your mission (goals) which
utilizes your strengths and
opportunities and avoids your
weaknesses and threats.

11
Revising Comp.Strategy
1) Identify Mission
2) Analyze External Environment
3)Analyze Internal Environment
4)List current LT strategy and LT
objectives
5)  Evaluate Current Strategy
6) Consider new strategies; Type of
strategy
7) Evaluate new strategies
8)  Re-evaluate long-term objective.
9)  Implement new strategy
a.Consider remaining draw backs
strategy
10) Feedback

12
Paper 1.
 
Pick 4 of the items from the list below (One of the items must be item 1 and another item
2). For the each of the items chosen you must find an article from the Internet, newspapers,
or magazines about a current business situation. The article must be less than 8 months old.
Specifically, the articles (4 in all) should discuss companies or industries that illustrate the
items. Write one or two paragraphs that clearly explain how the article illustrates the item.
Although the paper should be understandable even if someone has not read the article, you
still must include the article with your paper. Attach all the articles at the very end of your
paper. You must type your paper and make sure it clearly indicates which item you are
answering. Discuss each of the four items independently. Be sure to indicate which of
the questions you are answering!
 
I will grade you on writing style and content. Your write-up should clearly show that you
understand the concepts you are using, clearly explain how the article illustrates the
concept, and clearly be closely tied to points made in the relevant course pack reading or
lecture on that concept.
 
Mandatory items:
Item 1. From the lecture on five forces or the reading on "How competitive forces shape
strategy" explain how one of the underlying factor's we discussed is strengthening a force
and how the company has adjusted its strategy to cope with the underlying factor.
Item 2. Provide an example of a company's international strategy. Is the strategy
multicountry or global? Why? Using points in the course pack (read pages 109, 110, 112,
113), as well as details in the current event business article explain whether it makes more
sense to pursue a multi-country strategy or a global strategy in the particular case mentioned
in the business article.
 
Pick any two of the items below:
Item 3. Explain how a firm is effectively aligning it strategy to avoid threats or weaknesses.
Item 4. Explain how a lower or mid-level employee clearly influenced the overall strategic
direction of the entire firm.
Item 5. On page 6 of the course pack, the second paragraph under long-term objectives, lists
how to increase the value of objectives. Find an example of an objective and explain
whether or not it meets at least three of criteria in the article (The list of criteria is,
motivating, measurable, achievable, and consistent with the other objectives of the firm).
Item 6. On page 14 through 22 the reading mentions "tight" fit, "early" fit and the "fragility"
of fit. Find an article that illustrates any of these three concepts.
Item 7. Explain how a firm has modified its strategy to better fit one of the elements in the
remote environment.
Item 8. According the reading starting on page 96, explain how a firm is using a strategy
that is consistent with its industry environment (i.e., emerging industries, high velocity
markets, maturing industries, declining industries, or fragmented industries). Be sure your
paragraph clearly shows which of the industry environments the company is in, as well as,
explaining how the strategy the firm is using is consistent with that environment.
13
 L O-Mission
• Define a mission.
• Know what a mission includes.
• Compare and contrast a mission
statement and a mission.
• Know why a mission is needed.
• Know what to keep in mind when
designing a mission.
• Evaluate a mission.
• Define “stakeholder.”
• Know how to reconcile the
conflicting needs of stakeholders.

14
 What is Mission, What
Includes
• What is it.
– Purpose
– Unique
– Values of decision makers
• Includes
– Product scope-Needs satisfied
– Market
– Technology
– Stakeholders
• Importance
• Claims

15
 Compare Contrast: Mission
and Mission Statement

Mission Mission Statement

• Needed • Helpful
• Communicated in • Written or Oral
multiple ways communication
• What is being • One potential form
supported. of support
• Few organizations • Many organizations
have. have.
• Content same • Content same

16
 Why Needed

• Purpose
• Screening
• Guide
– Resource allocation
– Strategy
• Tone

17
 Keep in Mind when
Designing a Mission
• Duration
• Unique
• Motivating
• Permeate Organization
• Realistic
• Mean it.

18
 Evaluate a Mission

• Make sure to:

– Include needed parts.
– Meet needs.
– Keep everything in mind.

19
 Define Stakeholder

• Any group that has a justifiable

reason for expecting a firm will
satisfy their claims in a
responsible manner.

20
 Reconciling the Needs
of Stakeholders
• Decide importance.
• Understand specific claims.
• Have mission reflect
importance and claims.
• Be willing to reassess.
• Try not to antagonize any
stakeholder.

21
 LO: The External
Environment
• Define and distinguish among three levels
of environment.
• Understand the need to assess the external
environment.
• List the five elements within the remote
environment.
• Define key success factors.
• Know errors regarding KSFs.
• Define & give example of industry
specific ratios.
• List five forces and know the difference
among the forces.
• Define underlying factors.
• Know how underlying factors affect the
strength of a force.
• Know how to use information from five
force analysis to form strategy.
• Perform a five force analysis
• Know the three types of conclusions
derived from a five force analysis.
• Know major point about operating
environments. 22
Define and Distinguish among the 3
Levels of Environment.

Remote Environment

- Economic - Political
- Social - Technological
- Ecological

Industry Environment
Key Success Factors
Industry Specific Ratios
Five Force Model
Driving Forces

Operating Environment
Strategic Group
Labor
Creditor
Customers
Suppliers

The Firm

23
 Define Levels of
Environment & Know
Differences
• Define
– Remote Environment: Originates
beyond, & irrespective of a firm’s
operation. Difficult for 1 firm to
influence.
– Industry Environment: Collection of
firms offering similar products or
services, & the entities directly related
to those firms (Includes five forces.)
– Operating Environment: Those entities
that the specific firms deals with.
• Distinguish
– As one moves from remote to operating
environment:
• More control
• More immediate surroundings
• There are fewer participants
– Lines between is blurred.

24
 Remote Environment:
Five Elements
• Elements
– Economic: Disposable
income, inflation, interest
rates, etc.
– Social: Collective beliefs,
values, attitudes, opinions &
lifestyles reflected by society.
– Political: Taxes, laws, gov. as
customer and competitor.
– Technological: Computers,
faxes etc.
– Ecological: Pollution, fewer
resources.

25
 Industry Environment:
Key Success Factors
• Definition
– Skills, resources, & activities.
– Especially important to survival of
almost all participants in a specific
industry.
– Does not assure success.
• Relationship to Performance
– Missing KSF--- Firm Failure
– Threshold Level of KSF -- Possible
Survival
– High level -- Survival to superior
performance.
– Sometimes need something more than
KSFs for superior performance

26
 Manager Errors: Key
Success Factors
• Believe having a threshold
level on all KSFs is enough
for high performance.
• Below a threshold level on
1 or more.
• Investing (time, effort, $,
etc.) in a KSF beyond
point of meaningful
return.

27
Define/Give Example
of Industry Specific
Ratio
• A ratio especially
important to a
specific industry.
• Helps determine
profitability.
• Often captures
utilization of
scarce resource. 28
 Finding A Prom Date
Movies
Redwings

Tuxes, Students
Dates
Dresses at School

Nearby
University

29
 Industry Environment:
Five Forces
• Competitive Rivalry (Sellers)- Other
firms within the industry.
• Potential Entrants - Companies
formerly not in the industry.
• Substitutes - Firms from other
industries that offer products or
services fulfilling similar needs.
• Suppliers - Those companies who
supply the industry with products or
services.
• Buyers - Those companies or
individuals who purchase the
industry’s product or service.

30
 Define Underlying
Factors
• Underlying factors:
Conditions that
increase the power of a
given force.
• Each force has its own
unique set of
conditions or
underlying factors.

31
 UNDERLYING FACTORS THAT MAKE FORCES STRONGER

Competitive rivalry (jockeying for position) is a powerful force given the following underlying
factors:
 
1. Many competitors (Compared to other industries)
2. Competitors equal in size and/or very large
3. Slow growth in demand
4. High fixed costs
5. Undifferentiated products
6. High exit barriers
 
Potential entrants are a powerful force given the following underlying factors:
(NOTE: If potential entrants are powerful, it is easier for outsiders to enter the industry. This is
favorable to those not in the industry, but makes the industry less desirable to those participating in it.)
 
1. The industry has few economies of scales
2. Easy access to technology and know-how
3. Little product differentiation (no loyalty)
4. Low capital requirements
5. Few cost disadvantages independent of size
6. Easy access to distribution channels
7. Few government rules that deter entry
 
Substitute products are a powerful force given the following underlying factors:
 
1. The price of substitutes is low compared to your industry
2. The benefits are high compared to your industry
3. There are low switching costs when purchasing substitutes
 
Buyers are a powerful force given the following underlying factors:
 
1. They purchase in large volume or there are few buyers
2. Your products are undifferentiated
3. Your products represent a significant percentage of a buyer's total costs
4. The buyer is not very profitable
5. Quality of your product is not important to buyer
6. Your product does not save buyer money
7. The buyer can integrate backward
 
Suppliers are a powerful force given the following underlying factors:
 
1. There are few suppliers -they are more concentrated than your industry
2. The suppliers' product is differentiated
3. Supplier product has few substitutes
4. The supplier can integrate forward
32
 Using information from five
force analysis to form strategy

1. Identify industry (Where in the distribution

chain does it fall). Who are the suppliers and
buyers?
2. Identify a strong force (Porters 5 Force Model)
relative to the industry
3. Clearly identify underlying factor that makes
the force strong (If doing as part of paper 1,
question 1, provide specific support from the
article)
4. Mention the specific firm within the industry
(center box, competitive rivalry)
5. State what is being done to contend with the
underlying factor. (If doing as part of paper 1,
question 1, provide specific support from the
article)

33
 Performing A Five Force
Analysis

1. Specify industry
2. List all five forces
3. For each force, indicate
important underlying factors
4. Summarize the strength of each
force based upon the number
and importance of underlying
factors.

34
 Performing A 5 Force Analysis
Force Important Underlying Strength
Factors of Force
Comp.
Rivalry

Potent.
Entr.

Subs

Buyer

Suppl.

35
 3 Types of Conclusion Derived
from 5 Force Analysis

1. Determine the strongest forces

e.g., Competitive Rivalry & New
Entrants
2. Determine which underlying factors are
most important by determining the ones
that have greatest influence on the
strongest forces.
e.g., High fixed costs,
Undifferentiated products.
3. Determine industry attractiveness & comp.
riv. based upon strength of forces
combined
e.g., Industry not attractive.
Rivalry intense.

36
 Major Point about
Operating Environments
• General conditions in an
industry (e.g., power of a force
or underlying factors) may
differ from the conditions
within a specific operating
environment within the
industry.

37
 Strategic Group Map
Shoe Industry
High

Quality

Low

Low High
Marketing Expenditure

38
Why Conduct Strategic
Analysis?
• Simplifies analysis.
• Ident. competitors
• Finds uncovered
spaces.
• Isolates factors that
might hurt/help some
groups more than
others.
39
 L O-Internal Environment
• Know parts of value chain and how
to conduct a value chain analysis.
• Know the definition of a core
competence.
• The attributes of a core competence.
• Know what makes a strength or
weakness relevant.

40
 Parts of Value Chain
Conducting Analysis
• Parts (In book)
– Primary activities parallels flow of
goods.
– Support activities affect each of
primary activities
– Effectiveness/efficiency in activities
affects profit margin.
• Conducting Analysis
– Mention one part of value chain
• Describe activity as it relates to company
(For support activity, describe how affects
several primary activities).
• Specify whether activity differs from
others in industry
• Indicate likely affect on profit margin
41
 Core Competence:
Def. & Attributes
• Core competence: A company’s
skills, capabilities or resources
that serve as a basis for building
a sustainable competitive
advantage.
• Attributes
– Valuable
– Rare
– Imperfectly imitable

42
 LO: Competitive Advantage (CA)
& Generic Strategies (GSs)

• Define competitive advantage (CA)

• Know the relationship between CA and
core competencies.
• Define Porter’s generic strategies (GSs)
• Know Porter’s recommendation regarding
the GSs.
• Know the relationship between Porter’s
GSs and CA.
• Define best cost provider
• Know the proposed relationship between a
best cost provider and CA.
• Decide whether you think Porter’s
recommendations should be followed.

43
 Define Competitive
Advantage (CA) & Relate to
Core Competence

• CA: A fairly SUSTAINABLE

advantage over competitors
resulting in above average
performance
• Relationship

Core Competitive
Strategy Selection
Competence Advantage

44
 Define Porter’s GSs
• Differentiation: The product or service is
unique. Appeals to a broad segment of
the market because of superior features
or attributes. May cost more to produce
but company can charge more.
• Low cost provider: The product or
service is basic. Appeals to a broad
section of the market. The company has
a lower cost structure than all rivals.
• Focus: Focuses on a narrow customer
group and differentiates its offering
based upon the unique needs of that
group or is able to develop a lower cost
structure due to unique attributes of that
group.

45
 Porter’s Recommendations
Regarding GSs

• Use just 1 GS
• All efforts
towards 1 GS.
• Zero tradeoffs
• Avoid stuck in
•
middle.
Occasionally can find win win & advance in more than one
strategic direction

46
 The Relationship between
GSs and CA
• Passionately pursuing 1 GS ---> CA.
• Superior profits
– Differentiation -- Higher price
compensates for higher cost.
– Low cost - Same price as competitor
but bigger profit margin or lower price
same margin per unit but more volume
so greater profits.
– Focus -- Either of the above but
characteristics of segment allows.
• Different skills & core competencies
– Differentiation
– Low cost
– Focus
• Relationship
Different Core Different Competitive
Competence GSs Advantage
47
 $10 Auction

• Playing for real money!!!! If you

are not willing to possibly lose
money do not become involved!!!!!!
• Absolutely no talking once bidding
begins. Use hands to indicate bids.
• Bidding starts at 50 cents and
increases in increments of 50 cents.
• You can’t bid twice in a row.
• The highest bidder will get the $10
but must also give me their bid.
• The second highest bidder must pay
me what they bid.

48
 The Relationship between
GSs and CA

• In part, to gain CA
– Signal
– Retaliate
– Resources in one direction
• Be only one seriously
competing in that way.
• Develop unassailable position.

49
 Best Cost Provider
Def & Relationship to CA
• Def: Product or service is not
unique and is not basic. Represents
a better value than competitive
products. Lower price for similar
benefits or same price for more
benefits. Company must have cost
advantage over CLOSE compets.
This strategy was not mentioned by
Porter in his original work.
• Book says can lead to CA. Greater
market share, possible more profits
per unit.
– What would Porter say? Why?

50
 LO: ODI
Know advantages and
disadvantages of first moving.

Know factors that make

innovations harder and easier to
adopt.

Be able to do a break-even
analysis based upon fixed cost,
variable costs, and price.

Be able to calculate $ amount of

customer benefits in ODI case

51
 ODI:
1. What factors about the product and market would
make it easier to convince farmers to adopt the
lenses. (Think in terms of the nature of the
product, generalizations about farmers, etc.)
2. What factors would make it harder to convince
farmers to adopt the lenses? (Objections one may
have to overcome, nature of the product,
generalizations about farmers, etc)
3. Why might it be easier or harder for the market to
accept this product than it would be for market, in
general, to accept new products, in general?
4. What are the benefits of being THE FIRST to go
ahead with the contact lenses. Why would one want
to beat the competition?
5. What are the drawbacks of being THE FIRST? Why
would one choose to wait to introduce the product?
6. Given the assumptions of the case, how many
lenses would ODI have to sell in year 1 to break
even?
7. What specific dollar amount does the farmer gain
per chicken per year if they adopt the lenses?
8. Which generic strategy would you follow in year 1?
WHY? What specific strategy would you follow?
Sell to whom, where, how big a market? WHY?

52
Test 1
 
About 30 to 35 multiple choice questions 60% of test
(About 10 to 15 of which will be on readings)
4 essay questions 40% of test
 
Learning objectives from READINGS for the first exam.
(To avoid thinking about the wrong article when asked a question on the test, it might be
helpful to be familiar with the names of the articles)
 
The articles on mission statements make some recommendations regarding who should be
involved in developing a mission statement --- make sure that you are familiar with their
recommendations.
 
From page 93 and 94, understand the three ways in which a five force analysis might
influence the formulation of strategy. Make sure you have an in-depth understanding of
each way.
 
What are the four things that lead to sustainability (pages 64-68)? Make sure you
understand each.
 
Within each primary and support activity there are three activity types that play a different
roll in competitive advantage. (Page 81-82). Be familiar with each.
 
On pages 85 and 86 understand what the article means by vertical linkages.
 
From page 121, know the common required skills and resources and common and the
common organizational requirements for each generic strategy.
 
On pages 123 and 124 know the risks associated with each generic strategy.
 
On page 128-129 know the conditions that lead to pure strategies and the conditions that
lead to mixed strategies.
 
From pages 97 to 107, be able to describe the characteristics associated with each of the
competitive environments (emerging, high velocity, maturing, stagnating, and fragmented
industries) and strategies for competing in each.
 
Be able to distinguish between multicountry and global strategies (pages 109 and 110).
 

53
 
Multiple choice questions relating to lectures for the first exam.
 
Multiple choice questions will relate to the learning objectives.
 
Essay Topics For Exam 1
 
Rules for essays requiring that you come up with a business example:
1) The example should not be something used in class or book;
2) The example should be unique.
 
Essay question 1
 
Use a SWOT analysis to determine a strategy to reach a personal goal that is important to you. If you
have done this in advance it can be turned in with the test. Follow the same format used on the sheet
describing Magnum's strategy. Only include 1 opportunity, 1 threat, 1 strength, & 1 weakness.
 
Essay question 2
 
Essay question 2 will be about 1 of the items below. (You will learn which at the time of the exam).
For all of the items below, use an actual company or industry in your example. Also to receive full
credit, your example should come from a newspaper, magazine or Internet article which is less then 2
months old. Although the article does not need to use the same terminology that the class used, it
should illustrate the general concept. Feel free to be creative. You will also need to include the article
with your test. DO NOT WRITE (OR TYPE) ON THE ARTICLES prior to the test. Since you do
not know which of the above items will be on the test, to be fully prepared, you need to bring in
articles for each of the items below.
 
Provide an example of fit.
Provide an example of feedback.
Provide examples of key success factors.
Provide an example of an industry specific ratio.
Provide an example of synergy.
 
Essay question 3
 
You will be asked to do a break-even analysis.
 
Essay question 4 will reflect one of the four items below.
 
Relate the value chain to an actual company. Be able to identify and explain each part of the value
chain.
Reconstruct the strategic management model developed in class – Including being able to give an
example of each part.
Use an example to illustrate the relationship between core competence (Know traits of core
competence according to lecture), strategy and competitive advantage.
Conduct a five force analysis for an actual industry. Be able to mention two underlying factors for
each force and explain how they affect the force. 54
 
Take Home Exam Question.
 
Conduct a SWOT analysis to determine a strategy to reach whatever personal goal is important
to you. You may not, however, choose for your goal, landing a job, getting a promotion, losing
weight, getting in better shape, or graduating. Only list one opportunity, one threat, one
strength, and one weakness. You will be graded on writing style (which includes how clearly
you label your answer) as well as content. The example below includes the format you should
use to answer the question.
 
Example: How might Magnum use a SWOT analysis to form a strategy to achieve a personal
goal. Assume Magnum is caught on a dessert island with a 12 foot tall villain who wants to kill
him.
 
Step 1: List the goal and indicate a strength, weakness, opportunity and threat.
 
Goal: To continue to live.
 
Strength: A very good swimmer
Weakness: Magnum's small size
Opportunity: Mainland is 1/4 mile away.
Threat: Villain with a club
 
Step 2: Choose a strategy
 
Magnum should swim to shore.
 
Step 3: Defend your choice by showing how your strategy utilizes or maximizes the importance
of the strength and opportunity and avoids or minimizes the importance of the weakness and
threat.
 
Swimming to shore utilizes Magnum's superior ability to swim thereby maximizing his strength.
Swimming to shore allows Magnum to reach the mainland, thereby maximizing the opportunity
that it is only 1/4 mile away.
Swimming to shore minimizes the importance of Magnum's weakness because being large does
not make one a better swimmer.
Swimming to shore minimizes the importance of the villain's club because he will not able to
hold on to it while swimming after Magnum.

55
 LO: Strategic Treatment of
Conclusions from 5 Force
Analysis

• Know why one does a 5 force

analysis
• Know 3 strategies firms can
select to contend with low
industry profitabilty
• Know 3 strategies firms can
select to contend with strong
forces
• Know 3 strategies firms can
select to contend with important
underlying factors

56
 Strategic Treatment of
Conclusions from 5 Force
Analysis
• Conclusion: Potentially low industry
profitability
– Strategic Treatment
• Avoid industry
• Diversify
• Locate profitable operating environment
• Conclusion: A strong force is ...
– Strategic Treatment
• Emphasize in planning
• Locate operating environment where force is weaker
• Develop strength to contend with force
• Conclusion: The most imporant underlying
factor is...
– Strategic Treatment
• Change underlying factor
• Develop relevant strength to contend with
underlying factor
• Locate operating environment where underlying
factor is less important

57
 LO: The Grand Strategies

• Know the difference between

generic strategies and grand
strategies.
• Know which of the grand
strategies are corporate level and
which are business level.
• Know how to define and identify
(distinguish between) each of the
grand strategies.
• Know some of the advantages
and disadvantages of each of the
grand strategies.

58
Difference between Generic
and Grand Strategies
• Grand strategy more specific.
• Generic strategy guides choice
of grand strategy

59
 Grand Strategies: Distinctions, Level,
& Adv. & Disadv.

• Apple develops first micro-computer

• 3M develops the post -it note pad
• Coke acquires bottling facilities (or builds own)
• A major oil company moves into retail gas stations
• Stu Leonard Dairy “Market” opens salad bar and starts
selling ribs
• Pepsi splits from restaurants operations.
• Agilent and Hewlett Packard
• KFC advertises “When did you last have KFC? Have
some today.”
• Skin so soft sells their skin softener as a bug repellent
• GM and Toyota get together to produce the Geo
• Kmart and Yahoo launch internet site
• Iacocca takes over Chrysler; stops producing larger
cars
• A cigarette company, Philip Morris buys Miller beer.
• A Maine ski resort buys a company that repairs air-
conditioners in Florida
• Diamler Benz buys Chrysler
• Eastern Airlines-Sells shuttle to Trump, routes to Delta
and Continental and planes to other companies.
Eventually they close their doors. 60
 LO: CITA

• What general factors lead to the

formation of a new venture?
• What critical success factors are
important to new ventures
• How did the remote environment
influence CITA
• What were the differences and
difficulties of dealing with diverse
cultures.
• How can several concept be used to
help CITA choose a product line.

61
 LO: Wendy’s
• What were key environmental
considerations in the fast-food industry at
the time Wendy's entered the market?
• What was Wendy's early
strategy/objectives/mission?
• Which of Porter's generic strategies was
Wendy's following, early in the case?
• Evaluate Wendy's early strategy.
• What were Wendy's functional strategies?
• How did Wendy's functional strategies
relate to their strategy?
• How did functional strategies support each
other?
• Why did Wendy's change from it's initial
strategies?

62
 Implementation Overview
• Functional strategies
– Support Strategy
– Support Each Other
• 7S
– Strategy
– Staff
– Structure
– Skills
– Systems
– Shared values
– Style
• Institutionalizing the Strategy
• Controls 63
Paper 2. Due on the last day of class.
 
Find business articles, less than 8 months old, about companies that illustrate the grand
strategies. You need to use one article per strategy. The article does not need to use the
same terminology as the class. Highlight or underline the two sentences in the article that
most clearly reflects the strategy chosen. Although the paper should be understandable even
if someone has not read the article, you still must include the article with your paper. You
will be graded on writing style, as well as, content. The assignment must be typed. You may
NOT help each other finding articles.
 
1) Write one or two paragraphs that clearly explains why you think the article illustrates the
strategy you have chosen. Be very specific.
2) As per our class discussion, clearly indicate one of the major advantages (i.e., an
advantage mentioned on the overhead) and one of the major disadvantages (i.e., a
disadvantage mentioned on the overhead) typical of that strategy.
3) Explain how the advantage and disadvantage apply to your example. Be very specific.
 
Normal Assignment: If you turn in 11 of the grand strategies, you may earn up to a
maximum of 40/40 point
Reduced Assignment: If you turn in 7 of the grand strategies, you may earn up to a
maximum of 30/40 points.
 
Do not count combination strategies as one of the grand strategies!

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TEST 2:

KNOW LEARNING OBJECTIVES FROM CLASS LECTURES SINCE THE MID-

TERM.
 
About 30 multiple choice questions 60% of test (90 pts)
(About 8 will be from readings,
19 on lecture material since the last exam and 3
questions from pages 97 to 107 (Be able to
describe the characteristics associated with
each of the competitive environments
(emerging, high velocity, maturing,
stagnating, and fragmented industries)
and strategies for competing in each).

4 essay questions 40% of test (60pts)

 
Essay Question 1: There will be one essay question on one of the topics below.

A) Apply the three tests of a diversification move. Use a real company in your example
(although, the company does not actually have to be diversifying). Your example should be
unique. What outcome is needed for the test to suggest that the move will enhance
shareholder value. Your answer should clearly indicate that you understand what each of the
tests of diversification is. Your answer should be at most 7 seven sentences.
 
B) Give two examples from the Wendy’s case illustrating how functional strategies
supported business level strategies and two examples of how strategies from different
functional areas supported each other.
 
C) Using concepts from the lecture build a case that CITA should pursue the glazed
mosaics. Find at least one reason why you would not blindly follow the analysis!
 
Essay Question 2: The instructor mentioned several policies that might lead him to
achieving his goal of having members of his entrepreneurship class who are not members of
a specific group provide feedback to other groups in the class on that group's project.
A) What ONE change could lead the instructor to achieve this goal. Justify your answer and
make sure your answer relates to the seven "S" model. This answer should be no more than
two sentences max.
B) I will ask how you might adjust or change an S to help achieve the instructor's goal. I
will specify which S during the exam. Make sure your answer clearly indicates that you
understand the definition of the S. Your answer to part B does necessarily imply that this is
the only change that you would make.
 

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TEST 2 Continued:

Essay Question 3: To successfully implement a strategy, all aspects of the company and the
company's environment should "fit" together. Collectively, the Rothchilde article and the
Deshpande article suggest that BCG quadrants (e.g., dog, cash cow, question mark or star),
type of leaders, cultures, strategies, and industry lifecycle stages should all fit together (see
attached sheet). For the exam be ready to justify the articles choices of how specific types
of leaders, cultures, strategies, industry lifecycle stages and quadrants fit together -- I will
specify which quadrant at the time of the exam. This question MAY be open note. Your
answer should be no more than 7 sentences max.
 
Essay Question 4: This question will require that you use the "Competitive Advantage to
Corporate Strategy" and the "Corporate Strategy: Quest for Parenting Advantage" articles to
analyze B&D's diversification strategies. The specific question(s) will be a subsection of
the questions asked on the handout on B&D (See next page). Also see the handout for more
specific grading criteria. This question(s) MAY be open note. You will have a total of one
half hour to answer essay questions 3 and 4.
 
Multiple Choice Questions from Readings:
 
Be able to define each of the concepts of corporate strategy and know in general how
effective the article thinks each of the strategies usually is. (page 157 to page 166).
 
Know what managers' biggest mistakes are when diversifying according to page 179.
 
Know the questions one should ask when assessing a business strategy (page 182).

Know entire reading on “Designing Organizational Structure” (Beginning on page 532)  

Other multiple choice questions from the readings will relate to issues studied in preparation
for the essay questions.

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Essay Question 4: Further details.
 
Certain question(s) on the final will be identical or very similar to the ones below (and will
account for a significant amount of points on the final).
 
You may only discuss these questions with students currently enrolled in Prof. Simon's
MGT 435 class. While you may take notes on what your class members say, you may not
copy or get any written or typed material from your classmates. You may ask the instructor
to clarify any of the questions below. A MAJOR part of the grading of the essays will
reflect how well students used concepts within the Competitive Advantage to Corporate
Strategy and the Corporate Strategy: Quest for Parenting Advantage articles to analyze
B&D's diversification strategies.
 
1) Was Black and Decker's acquisitions of GE's houseware division a good idea?
 
To answer this question you should discuss whether you think the acquisition meets the
three tests of adding value (As discussed in today's lecture and the article "Competitive
Advantage to Corporate Strategy"). Why or why not? (While all three tests should be
discussed, pay special attention to the better-off test). Also justify your answer by
discussing which one of the four corporate strategies (As discussed in the lecture and the
article Competitive Advantage to Corporate Strategy) the GE acquisition represents? Why?
You may also argue that the diversification efforts reflected more than just one strategy.
Finally, use may be asked to use the concepts in the "Corporate Strategy: Quest for
Parenting Advantage" article to determine where on the parenting-fit matrix the acquisitions
would be placed to justify your answer.
 
2) Was the Emhart Corporation acquisition a good idea? Make sure your answer to this
question addresses the issues mentioned above. In the case of Emhart, you may want to
argue that some of the specific units acquired were a good idea and others were not (If you
wish to make this point just discuss two of the units in detail). Do make sure to draw an
overall conclusion, however.
 
Criteria I will use in grading the answers for the exam:
 
A. Correct and appropriate use of concepts.

B. Superior answers will utilize detailed ideas and tools in the articles that underlie the
main concepts (e.g., if asked about the three tests, students should apply some of the ideas in
the article that help determine if an acquisition passes a given test).

C. While you may discuss some post hoc results to support you points, this should not be
the major thrust of your answer. Primarily use information that was available at the time of
the acquisitions. You may also make REASONABLE assumptions but make sure you
clearly state them.
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 LO: Seven S’s

• Be able to define each S

• Be able to give an example of
each S
• Understand Major Points of 7 S
Model

68
 Define & Example of 7 S
• Strategy-The plan to achieve
objectives, mission --- How?
• Staff - People
– Hard --Pay Scales, Formal
training, Selection, Etc
– Soft--Morale, Attitudes
• Structure-- How to divide and
coordinate tasks
• Skills--What firm does best
• Systems--Formal and informal
procedures that make org “go”
• Shared values-Culture-Beliefs,
Traditions, and Operating style.
• Style-Top level- Leadership.
69
 LO: Staff, Structure &
Skills
• What are elements of staff
• Relate staff to a company’s
strategy
• What are elements of structure
• Know the three rules of
structure
• Relate structure to a company’s
strategy
• Relate skills to concepts in prior
parts of course.
• Relate skills to a company’s
strategy 70
 LO: Systems, Shared
Values, & Style
• Types of systems
• Types of reward systems & major
message
• Relate systems to a company’s
strategy
• Know the importance of shared
values (Culture)
• How to identify shared values
• How to manage culture
• Relate shared values to a company’s
strategy
• Why listen?
• Relate style to a company’s strategy

71
 Shared Values
• Importance
– very --- esp to implim.
• How identified
– Shared stories
– Org winners
• How to manage culture
– Set example
– Get dominant core
Relate culture to strategy

72