strategic management module 23

Strategic management (module#2 and #3) 박찬희 , 중앙대학교 경영대학 교수 Only for class discussion Never circulate without permission Key issues in ‘Strategic Management’ 1. Strategic Planning 2. Business Strategy 3. Corporate Strategy 4. Interactive reasoning 5. Strategic Decision Making 6. Strategy Evaluation & Control 7. External Relations This course will cover… • Strategic Planning – What is strategy : implication – Strategic planning process – Financial management as ‘resource planning’ – Scenario analysis and risk management – General manager’s challenge • Corporate Strategy – Logic of corporate operation – Identification of corporate advantage on the valuation chart – Corporate resource allocation • Business Strategy – Logic of business strategy and competitive reactions – Generic strategies : role of financial information – General manager’s challenge • Strategic Decision Making – Why do good managers choose poor strategies? – Significance and limitation of ‘system and process’ – General manager’s challenge • Interactive Reasoning – Lessons from ‘applied game theory’ – Real world solutions – Further reflections • Strategy Evaluation and Control – Why is control something more than numbers? – General manager’s challenge – Role of managerial discretion and judgment • External Relations – How to deal with the challenges from ‘external environments’? – PR / GR / IR – General manager’s challenge – Implication for working-level managers Business Strategy Porter’s 5-force model: application of ‘Bain IO’ - heritage of ‘structure-conduct-performance’ models Business Strategy (1) Strategy: what to do vs. how to do (Review) • General manager’s challenge – Strategy : What to do – Structure & Process : How to do – Making things done through people • Relative importance of ‘industry choice’? – Between-industry difference vs. within-industry difference – Firm heterogeneity and role of management – Competence, resource, strength… (all the same) – Critical problems of ‘industry importance’ arguments… • Only the living species are counted • Fit with own skills and resources… • Strategy from within vs.strategy from outside-in? – Discussions on ‘competitive advantage’ or ‘resource – No more than academic masturbation!!! Vision Capability Environment Strategy Performance Sustainable Advantage Basic framework typically adopted in so and so classes… Where does 5-force model fit? Vision, goal, strategy? The Industry Rivalry among Existing Players Threats from New Entrants Threats from Substitutes Bargaining Power of Buyers Bargaining Power of Suppliers Porter’s Five-Force Model Porter’s Five-Force Model Porter’s Five-Force Model: Practical Tests Porter’s Five-Force Model: Practical Tests • Rivalry among existing competitors: ‘concentration’ Rivalry among existing competitors: ‘concentration’ – Factors affecting the intensity of rivalry • Industry growth, fixed costs, product differences, brand identity, switching cost, corporate stakes, exit barrier, capacity utilization… – Exit Barrier : specialized assets, exit cost, strategic/emotional barriers, governmental & social barriers… • Threats from New Entrants Threats from New Entrants – Entry Barrier • Source: cost advantage, customer value, established relationship, competitor action, uncertain imitability • First mover’s advantage vs. Pioneering cost • Minimum efficient scale – Comparison with Boxing Fights or Battles… [...]... issue – – – – • Selection and evaluation of M&A targets Partner Relationship Marketing Strategic Procurement Strategic Alliance Discussion without financial analysis is misleading – Impact of deal structure – More than ‘financing cost’ or ‘capital structure’ Concept of Value Chain Firm infrastructure Human resource management 지원 활동 Technology development Procurement In-bound Manu- Out-bound Marketing... dependence • Contracting • Setting norms • Slack – Firm’s failure to live up to its potential • Cost of monitoring owners of co-specialized assets • Inertia • Failures of leadership – Prevention : stronger management Summary Theoretical Pie Imitation Hold Up substitution Realized Pie If there is a slack, the realized pie is smaller… Innovator’s dilemma • How to capture the dynamic changes in the industry?... is more difficult than ‘technology’ Emergence of ‘substitute pressure’ is more difficult to read… In case of ‘disruptive change’, things are much more difficult Initiating and executing the necessary strategic response isn’t easy, either Innovator’s dilemma – Cannibalization – Pioneering cost – Internal tournament mechanism • Clayton Christensen – ‘Disruptive Technologies’ – Myopic focus on ‘incumbent... advantage • Corporate advantage does exist – But not for everyone – Often leads to ‘chaos’ • Value creation – Identification and realization of synergy – Managing coordination / distraction cost – Financial management • Corporate operation – Organizing principle – Role of corporate office • Always reflect on the validity against the market – Corporate resource allocation vs financial market – Dealing with... Competencies • Resource Definition: Firm = Bundle of Resources • Activity Definition: Firm = Set of Discrete Activities – Value Chain Analysis Concept of Value Chain Firm infrastructure Human resource management Supporting activities Technology development Procurement In-bound Manu- Out-bound Marketing logistics facturing logistics & Sales Service M A R G I N Fundamental activities Inter-relationship... Business / System – Often needs loose coupling (similar to balancing) • M&A – Attractiveness / Cost of Entry / Better-Off – Design of ‘Deal Structure’ affects the effectiveness – Value Creation • Portfolio management / Restructuring / Transfer of skills / Shared activities • How to identify the value creation opportunities? ( 참고 ) 매경 Summer MBA ‘M&A 와 시너지’ Balanced portfolio : BCG Matrix • So many 2 by 2 . Strategic management (module# 2 and #3) 박찬희 , 중앙대학교 경영대학 교수 Only for class discussion Never circulate without permission Key issues in Strategic Management 1. Strategic Planning 2 reasoning 5. Strategic Decision Making 6. Strategy Evaluation & Control 7. External Relations This course will cover… • Strategic Planning – What is strategy : implication – Strategic planning. strategy : implication – Strategic planning process – Financial management as ‘resource planning’ – Scenario analysis and risk management – General manager’s challenge • Corporate Strategy – Logic