Case Studies: For each, you will submit your electronic document (.doc, .docx, or PDF) via Blackboard before class begins on the assigned date. Your case study will be not less than six pages in length. It will be double spaced, 12 point font, 1\" margins throughout. Appendices, charts, citations and endnotes are not included in the page length constraints. Do not plagiarize sources; if you feel compelled to quote an external source, use attributions and citations. appropriate Be aware of the Similarity Score before you press the submit button. If you have more than 10% similarity score on the submitted case study, you will receive an automatic zero. No exceptions. Your case study will be direct and to the point, but will not be so brief as to only provide veneer without necessary depth. It will be insightful and thoughtful and present your answers to the specific questions provided. It will also present your creative application of the course material to the topic at hand. Cases will be graded based upon comprehension and application of the course material (both textbook and lecture), as well as your insight, interpretation and attempt to draw business conclusions from the case and questions posed. In other words, do not simply regurgitate the textbook or lecture material to respond to the case questions. Use your own insight and creative thinking to form an informed opinion about the case and include your opinions and insights in your paper. Also, I will be reading this as a basic business document; do not expect the best grade possible if your paper is replete with grammatical errors, spelling errors and other basic writing flaws. Expect significant and painful decline in grading for late submission. Mgmt 3600 - Theories of Management Name: John Doe Case Study: John D. Rockefeller and the Standard Oil Trust Central Issue: How is it possible that a person like John D. Rockefeller builds up a very successful company like the Standard Oil Company of Ohio and accumulates such richness in spite of the fact that he was affected in the childhood by opposed characters of his parents? Recommended Course of Action: Businessmen like Rockefeller should use their strengths of character (e. g. organizational genius, audacity) to detect opportunities in infant industries like the oil industry at the second half of the 19th century and harness them by building and expending fast an efficient company. Linked to this entrepreneurs have to make decisions which can cause moral conflicts both with employees and with outsiders. Basis for Recommendation: On the one hand I selected the recommendation because the \"new\" oil industry was a promising investment for Rockefeller with the chance to earn high profits. Despite the risk of losing all his money in this new field of business he invested $ 4,000 in 1863 in a Cleveland petroleum refinery. On the other hand Rockefeller's success was based on his principles of parsimony: avoid paying a profit to anyone and methodical cost cutting. These goals made it for example possible to sell refined petroleum products with a profit, though there were vicious price wars in the oil industry. Furthermore Rockefeller got the \"best minds\" by coopting them after he absorbed competitors, so that in his company worked very competent employees. Although Rockefeller was dominant, he could delegate great responsibility to his managers and focus on strategic orientation of Standard Oil. Therefore it was possible to create and develop such a company as an immense and organized force. Reasonable Alternatives: 1. Pursue an aggressive strategy by expanding at any price. Rockefeller borrowed lots of money from banks to expand the refinery, and then he borrowed more to build a second refinery. Often it is inevitable that an entrepreneur needs to take the risk to set up a business. This is rejected because borrowing too much could be risky and jeopardize the existence of the company. 2. Eliminate competitors by unfair practices. Rockefeller for instance worked out a \"rebate scheme\" between a few major refiners and the railroads going into Pennsylvania oil regions (South Improvement Plan). The practices helped Rockefeller and the other companies, which were included in the plan, to obtain a high profit, but nonparticipating refiners became uncompetitive and were forced to sell to Rockefeller or go bankrupt. This option is rejected because of the illegalities, moral conviction, and businessmen like Rockefeller will be not setting good examples of \"honorable businessmen\". 3. Hold down a \"normal\" occupation. Rockefeller could work still as a bookkeeper at his first job. This was consistent with his perfectionistic character, exacting work by examining each bill and pouncing on errors to correct them. But every person has an inner force which seeks for success and appreciation in life. This is rejected because with this type of attitude it is questionable, if a person can achieve its goals and be satisfied with situation in life. Significant Factors: 1. Education 2. Risky investments 3. Competitive strategy 4. Cost reduction 5. Morally reprehensible\" decisions 6. Centralized company Discussion: 1 Education: Rockefeller's character was influenced strongly in his childhood by the opposed characters of his parents. On the one hand his slick and cunning father taught him that sentimentality should not influence business transactions. This could be the basis of the \"businessman\" Rockefeller who performed wily and self-assured actions compared with the competitors. The characteristic ensured for his great success in business. On the other hand, there was Rockefeller's \"private\" character as compensation based on the moral contents which his mother gave him like church attendance or to be charitable. Rockefeller for example gave gifts of nearly $ 550 million over his lifetime. 2 Risky investments: Rockefeller borrowed lots of capital to expand his refinery and to build up a second one. He made these investments though by the late 1860s refining capacity was three times greater than oil production. Despite a chaotic situation and very volatile prices in the oil industry Rockefeller took the full risk and used his keen sense of promising opportunities and/ or fortune to build up a big company with high proceeds. 3 Competitive strategy: Furthermore Rockefeller obsessed several competitive strategies. His expansion strategy, including for example sales of kerosene often at a price below production costs, enabled him to sell a high volume of the refined petroleum products and to extend the market share of Standard Oil. According to that Rockefeller used economies of scale with the possibility to produce with low costs. Further he ensured competition among his managers. Rockefeller requested monthly cost statements for each refinery to motivate his employees to achieve maximum performance. 4 Cost reduction: Also Rockefeller realized his principles of parsimony. To avoid paying a profit to anyone he used for instance the strategy of a \"horizontal integration\" and set up his own barrel-making factory. So Rockefeller had not to pay a price including a profit margin to other suppliers and he controlled the production steps and quality. In addition Rockefeller made the added value efficiently. Lumber for barrel staves for example was kiln-dried before shipment, making it lighter and inducing lowering transportation costs. With this relentless \"cost cutting\" and efficiency Rockefeller was able to make money with his products while competitors had to sell products at a loss to stay in business. 5 \"Morally reprehensible\" decisions: Moreover Rockefeller's decisions, which seemed to be unacceptable for outsiders, were a foundation-stone for success and growth of Standard Oil. This included for instance the rebate scheme of the South Improvement Plan, to spy on competitors with waybills detailing them shipments he got, to receive information of competitors' employees or to misroute shipments of competitors. Therewith Rockefeller knew about the operations of them and could manipulate their processes. He used this knowledge to provide benefits so that Standard Oil could engage such a strong market position producing 90 percent of the nation's refining output. 6 Centralized company: Finally Rockefeller led Standard Oil as a centralized and coordinated company. He required a statement of the exact net worth of Standard Oil every morning or oil prices had to be calculated to three decimals. Although Rockefeller was the \"string-puller\" of Standard Oil, he delegated responsibility to his competent managers and did not spoke harshly to any employee. Thereby the operational activities were accomplished by Rockefeller's motivated employees so that he could concentrate on the strategic orientation of Standard Oil. So Rockefeller for example realigned his company to satisfy the demand of the automotive industry for gasoline to compensate the decline in revenues. Note: (Case Study is a 6 page requirement) Must follow exact outline of the case study in terms of format, outline and length. Any deviation from the framework of the case study outline, points will be deducted. Page 1 must contain Central Issue, Recommendation Course of Action and Basis for Recommendation. Page 2 must consist of Reasonable Alternatives and Significant factors. Pages 3 to 6 must include Discussion derived from the Significant Factors. No overlapping from one page to the next. Mgmt 3600 - Theories of Management Name: Case Study: Must follow exact outline of the case study in terms of format, outline and length. Any deviation from the framework of the case study outline, points will be deducted. Page 1 must contain Central Issue, Recommendation Course of Action and Basis for Recommendation. Page 2 must consist of Reasonable Alternatives and Significant factors. Pages 3 to 6 should include Discussion derived from the Significant Factors. No overlapping. Central Issue: (One or two sentence, must always start out with a question, must be specific to the content of the case and state the issue or problem in concrete, objective, measurable terms) (20pts) - Recommended Course of Action: (one or two sentence, state your recommendation in both quantitative and qualitative terms and outline of action to be taken) (20pts) - Basis for Recommendation: (one paragraph, summarizing the important reasons for selecting this recommended course of action instead of others listed in the Reasonable Alternatives section) (20pts) - Reasonable Alternatives: 1. .... ........ . This is rejected is because................. 2. .... ........ . This is rejected is because................. 3. .... ........ . This is rejected is because................. (Identify at 3 to 5 reasonable alternatives and your rational for not selecting those alternatives. Listing of possible actions which could be taken. There must be reasonable within the framework of the case and must provide the pool from which the Recommended Course of Action is drawn.) (20pts) - Significant Factors: 1. 2. 3. 4. 5. 6. 7. 8. (A listing of the categories of management theory pertinent to the case. This list should be used as the analytical presentation in the Discussion Section. In effect, the list of Significant Factors serves as a table of contents. Be sure to keep categories expressed at an appropriate level of abstraction.) (20pts) - Discussion: Using the list of Significant Factors as the major paragraph headings, prepare a discussion analyzing each factor. Include statements of the factors relative importance. This discussion should be convincing review of the situation so that reader accepts your Central Issue and Recommended Course of Action. (20pts) Significant Factor # 1: Significant Factor # 2: Significant Factor # 3: Significant Factor # 4: Significant Factor #5: Significant Factor #6: Significant Factor #7: Significant Factor #8: Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-1 Management, 3rd edition Hitt/Black/Porter Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-2 Managerial Challenges: From the front line Blaine Halvorson First job: Designed clothes for rock band and MTV, while in college Motto: Everyone should take a leap of faith once in their lives and see if they can do something great Management Style: Thinking outside of the box Having tremendous drive Chief Creative OfficerJunk Food, Inc. Global www.junkfoodclothing .com/ Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-3 Summary: Key Topics Managementa process Managerswhat they do Challengeschange; resources; strategic; entrepreneurial Historical approachesChina, Egypt, Rome, USA Functionsplanning, organizing, directing, controlling Rolesfigurehead, leader, liaison Job dimensionsactivities/duties; standards/performance levels Managerswhat skills they need Technical skills Interpersonal skills Conceptual Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-4 Learning Objectives After studying this chapter, you should be able to: Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-5 What Is Management? Management Processseries of activities Resourcesassembling and using Tasksacting in a goal- directed manner to accomplish Activitiescarried out in an organizational setting Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-6 Managerial Challenges Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-7 Managerial Challenges Managing Change Managing change Most persistent, pervasive and powerful challenge for managers Requires managers to gain employee acceptance Causes of change Technology Globalization Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-8 Managerial Challenges Managing Resources Managers must manage resources Financial capital Human resources Physical resources Technology Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-9 Managerial Challenges Managing Strategically Managing Strategically Establish goals and formulate strategies for achieving organization's goals Implement strategies by accomplishing goals that contribute to organization's ultimate performance Build an organization's capabilities and leverage them for competitive advantage Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-10 Managerial Challenges Managing Entrepreneurially Managing Entrepreneurially Searching for new opportunities Identifying new ideas for new markets Emphasizing actions to take advantage of uncertainty Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-11 Historical Approaches to Management Ancient Chinaart of warfare Ancient Egyptbuilding of Roman Empirebuilding of Industrial Revolution pyramids roads and viaducts modern management Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-12 What Managers Do Managerial activities differ by: Functions managers serve Roles in which managers operate Dimensions of each manager's job Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-13 Managerial Functions Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-14 Managerial Function: Planning Planning involves: Estimating future conditions and circumstances Making decisions based on these estimations about what work is to be done: By the manager By all of those for whom the manager is responsible Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-15 Managerial Function: Organizing Organizing involves: Paying attention to: Structure of relationships among positions People occupying those positions Linking that structure to the overall strategic direction of the organization Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-16 Managerial Function: Directing Directingprocess of influencing other people to attain organizational objectives: Motivating others Interacting effectively in group and team situations Communicating in support of others' efforts Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-17 Managerial Function: Controlling Regulating the work of those for whom a manager is responsible, including: Setting standards of performance in advance Monitoring ongoing (realtime) performance Assessing a completed performance Feeding backresults of the evaluation control process to the planning process Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-18 Managerial RolesMintzberg Figure 1.2 Another approach to understanding managerial work Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-19 Managerial Roles: Interpersonal Figurehead: ceremonial activitiesshowing the flag Leader: influencing or directing otherstranslating authority into actual influence Liaison: contacting others outside the formal chain of commandinternal and external Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-20 Managerial Roles: Informational Monitorseeking information to be aware of crucial developments Disseminatorreceiving and sending information Spokespersonrepresenting the views of the unit for which the manager is responsible Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-21 Managerial Roles: Decisional Entrepreneurexploring new opportunities Disturbance handleracting as a judge or problem solver in conflicts among employees Resource allocatordeciding how resources will be distributed Negotiatormaking accommodations with other units Copyright 2012 Pearson Education, Inc. publishing as Prentice 1-22 Managerial Job Dimensions: Stewart Three dimensions characterize a managerial job regardless of level and type of unit in an organization Demandsmade on it Constraintsplaced on it Choicespermitted in it Another insight about the work of a manager Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-23 Managerial Job Dimensions: Demands Demandswhat the holder of a particular managerial position must do Types Activities or duties to carry out Standards or levels of minimum performance Sources Organization Immediate boss Organization of work activities Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-24 Managerial Job Dimensions: Constraints Constraintsfactors that limit the response of the manager Time Budgets Technology Attitudes Legal of subordinates regulations Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-25 Managerial Job Dimensions: Choices Choicesdiscretionary behavior How work is to be done How much work is to be done Who will do the work What initiatives will be undertaken from almost infinite possibilities Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-26 Two Managerial Jobs: Different Demands Exhibit 1.3 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-27 Two Managerial Jobs: Different Constraints Exhibit 1.3 continued Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-28 Two Managerial Jobs: Different Choices Exhibit 1.3 continued Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-29 What Skills Do Managers Need? Exhibit 1.4 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-30 Importance of Managerial Skills at Different Organizational Levels High Low Exhibit 1.5 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-31 Who Succeeds? Who Doesn't? Exhibit 1.6 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-32 Who Succeeds? Who Doesn't? Exhibit 1.6 continued Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-33 Who Succeeds? Who Doesn't? Exhibit 1.6 continued Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-34 Summary: Key Topics Managementa process Challengeschange; resources; strategic; entrepreneurial Historical approachesChina, Egypt, Rome, USA Managerswhat they do Functionsplanning, organizing, directing, controlling Rolesfigurehead, leader, liaison Job dimensionsactivities/duties; standards/performance levels Managerswhat skills they need Technical skills Interpersonal skills Conceptual Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-35 Managerial Challenges: The Rest of the Story From the front line Blaine Halvorson Learning: How to become an effective manager Change: In 2005, Delta Apparel acquired the company Halvorson remained and continued to build the business Result: Halvorson and Groff became wealthy individuals Plans to extend the brand to new products and to open Junk Food retail stores in the future Chief Creative OfficerJunk Food, Inc. Global www.junkfoodclothing .com/ Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-36 Closing Case: FedEx's Successful Internationalization No. Question 1 2 Why has FedEx been so successful in Asia? 3 Is the FedEx move to close its hub in the Philippines and build a new one in China a good decision for its Asian operations? Explain. 4 Can you identify the application of the managerial functions of planning, organizing, and controlling in FedEx activities? Explain. Can competitors imitate FedEx's approach in international markets and take market share away from the company? Why or why not? Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-37 Copyright Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 1-38 Management, 3rd edition Hitt/Black/Porter Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-1 Managerial Challenges: From the front line Sharon Wright First job: Half Price Books at 13 years old sorting and shelving paperbacks Motto: Philanthropic activities enrich your life Management Style: Collaborative CEO Half Price Books Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-2 Key Topics How ethics developindividual and managerial Ethical decision makingapproaches Utilitarian approach Moral rights approach Universal approach Justice approach Moral intensity factor consequences vs. consensus Social responsibility Making better ethical decisions Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-3 Learning Objectives After studying this chapter, you should be able to: Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-4 Ethics and Social Responsibility Why should I care about corporate social responsibility or managerial ethics or whether or not my employees have health care benefits? Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-5 Ethics and Social Responsibility Decisions, judged to be wrong ethically or legally Hurt those directly affected by decision Can boomerang to generate negative publicity Hurt a company's stock price Destroy shareholder value Hurt opportunities for future employment Hurt firm's ability to recruit high-quality employees Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-6 Ethics and Social Responsibility Good managerial ethics and corporate social responsibilitygenerate significant, positive consequence for... Employees Customers Shareholders Communities Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-7 Development of Individual Ethics Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-8 Basic Approaches to Ethics Ethical dilemmaschoice between two competing but arguably valid options Frameworks for ethical decision making Utilitarian approach Moral rights approach Universalism approach Justice approach Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-9 Basic Approaches to Ethics Ethical dilemmaschoice between two competing but arguably valid options How the approaches help Understand how other people approach ethical dilemmas Avoid an ethical lapse a decision that is contrary to one's stated beliefs and company policies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-10 Basic Approaches to Ethics: Utilitarian Focus: The consequences of an action What is the greatest good? Ex. Keep grain moving was needed to keep 2,000 employed ? = Good of saving the jobs, justified paying off government officials ? = What if unemployment were high in the region Different people may see the outcome differently in terms of good and bad Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-11 Basic Approaches to Ethics: Moral Rights Focus: Examination of the moral standing of actions independent of their consequences Some things are simply right or wrong When two actions have moral standing, then the positive or negative consequences of each will determine the more ethical Managerial challenge = moral standing of most issues is debatable Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-12 Basic Approaches to Ethics: Universalism Focus : Choosing a course of action that you believe can apply to all people under all situations Do unto others as you would have them do unto everyone, including yourself\" Choose a course of action you believe can apply to all people under all situations The issue of rights Rights stem from freedom and autonomy Actions that limit freedom and autonomy generally lack moral justification Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-13 Basic Approaches to Ethics: Justice Focus: How equitably the costs and benefits of actions are distributed Costs and benefits of actions: Costs and benefits should be equitably distributed Rules should be impartially applied Those damaged because of inequity should be compensated Distributive justice Equitable distribution is based on performance Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-14 Basic Approaches to Ethics: Justice Focus: How equitably the costs and benefits of actions are distributed Distributive justice Equitable distribution is based on performance Procedural justice Ensure that people consent to the decision-making process Ensure process is administered impartially Compensatory justice If distributive and procedural justice fail, those hurt by inequitable distribution of rewards are compensated Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-15 Factors of Moral Intensity Moral Intensity : Degree to which people see an issue as an ethical one Exhibit 2.1 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-16 Factors of Moral Intensity Magnitude of the Consequences Level of impact anticipated Impact is independent of whether consequences are positive or negative Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-17 Factors of Moral Intensity Social Consensus The extent to which members of a society agree that an act is either good or bad Population diversity weakens social consensus Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-18 Factors of Moral Intensity Probability of Effect Probability of the consequences The higher the probability of the consequence, the more intense the sense of ethical obligation Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-19 Factors of Moral Intensity Temporal Immediacy Interval between the time the action occurs and the onset of its consequences The greater the time interval, the less intensity people typically feel toward the issue Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-20 Factors of Moral Intensity Proximity Closeness leads to more consideration of the consequences The closeness the decision maker feels to those affected Closeness increases feeling that it has ethical implications Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-21 Factors of Moral Intensity Concentration of Effect Focus of effect on only a few or disbursed across many individuals Higher concentration leads to feelings of greater ethical responsibility Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-22 Corporate Social Responsibility Obligation corporations have to constituencies and the nature and extent of those obligations Constituencies Shareholders Customers Employees Specific communities Society at large Government Issueconstituencies may not share same expectations Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-23 Efficiency Perspective Managers responsibility = Maximize profits for the owners of the business Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-24 Efficiency Perspective Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-25 Social Responsibility Perspective Firms have responsibilities and obligations to society as a whole, not just shareholders Frequently companies outsource work to factories with lowcost labor in countries abroad, similar to this factory in Ho Chi Minh City, Vietnam. Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-26 Social Responsibility Perspective Key Stakeholders . Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-27 Managerial Challenges Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-28 Efficiency vs. Social Responsibility Perspectives Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-29 Corporate Responses Exhibit 2.3 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-30 Corporate Responses Exhibit 2.3 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-31 Strategic Corporate Social Responsibility Three fundamental criteria guide managers Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-32 Strategic Corporate Social Responsibility A Criteria Matrix Problem in Society Problem in Society Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-33 How Firms Make Better Ethical Decisions Code of ethics A formal one- to three-page statement outlining the types of behavior that are and are not acceptable Codes generally stress Being a good \"organization citizen\" Guiding employee behavior away from unlawful or improper acts that could harm the organization Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-34 Johnson & Johnson Credo Exhibit 2.5 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-35 Johnson & Johnson Credo Exhibit 2.5 continued Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-36 Categories in Codes of Ethics Cluster 1 \"Be a dependable organizational citizen.\" UnClustered Items Cluster 2 \"Don't do anything unlawful or improper that will harm the organization.\" Cluster 3 \"Be good to our customers.\" Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-37 Adoption of Codes of Ethics Exhibit 2.6 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-38 Subjects Addressed in Codes of Ethics Exhibit 2.7 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-39 Subjects Addressed in Codes of Ethics Subject Most Often US firms Least Often US firms Employee conduct Political interests Innovation and technology Most Often European firms Least Often European firms Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-40 Successfully Implementing Codes of Ethics Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-41 Foreign Corrupt Practices ActFCPA How governments can foster ethical behavior Cannot corrupt actions of foreign officials, politicians, or candidates Cannot make payments to any person when they have "reason to know" that the payments might be used to corrupt the behavior of officials Must take steps to provide "reasonable assurance" that transactions are in compliance with the law and to keep detailed records of them Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-42 Summary: Key Topics How ethics developindividual and managerial Ethical decision makingapproaches Utilitarian approach Moral rights approach Universal approach Justice approach Moral intensity factor consequences vs. consensus Social responsibility Making better ethical decisions Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-43 Managerial Challenges: Rest of the Story From the front line Sharon Wright Learning: My mom made a commitment to do the right thing, and it's my job to uphold it Change: Growth forced firm to become more organized. Invested in computer and inventory systems. Too costly to maintain full health care benefits for part-time workers. Result: 2,500 employees; 100 stores in 16 states, mainly in Texas CEO Half Price Books www.halfpricebooks. com/ Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-44 Closing Case: No. Nicolo Pignatelli and Gulf Italia Question 1 2 What should Pignatelli do? What would you do and why? 3 Bribes are illegal in Italy. Even if bribes were common practice there, would this justify paying them? Pignatelli seems to be leaning in the direction of hiring a consultant who might use part of the money for bribes. If Pignatelli does not pay the bribes directly, does this absolve him of responsibility? continued Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-45 Closing Case: No. Nicolo Pignatelli and Gulf Italia Question 4 Does Pignatelli have a responsibility to Italian citizens to build an environmentally friendly refinery above and beyond what the law requires? Is it appropriate for Gulf to spend this extra money and essentially take it away from shareholders? 5 How would you feel if you were a lower-level employee in the company and learned that Pignatelli intended to pay bribes to get things \"debottlenecked\"? What would your ethical obligations be? Should you ignore the situations or confront Pignatelli? Should you inform your direct boss or go to the media? Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 2-46 Copyright Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-47 Management, 3rd edition Hitt/Black/Porter Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-1 Managerial Challenges: From the front line Chetan Chadhury First job: Summer intern at Deloitte Motto: Do unto others as you would have others do unto you Management Style: Hands-on approach that is both collegial and collaborative. Keeping team members informed and involved; trusting and allowing them to work independently Manager, Strategy and Operations Deloitte www.deloitte.com/view/e n_CA/ca/index.htm Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-2 Key Topics Globalization Market effect Business effect Global mindset International Management Country environmentsinstitutional and cultural Entry strategiestypes, reasons for using, and risk involved Managing people and teamsacross cultures Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-3 Learning Objectives After studying this chapter, you should be able to: Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-4 Globalization Flow of good and services, capital (money), and knowledge across country borders Enhances economic interdependence among countries and organizations Allows both small and large firms from developed and less developed economies to compete Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-5 Understanding a Country's Environment Institutional Cultural Environment Environment + Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-6 Country's Institutional Environment Country's rules, policies, and enforcement processes Political-legal Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-7 Country's Institutional Environment: Economic Dimension Economies are classified as: Developed economies Larger economies with effective capital markets Emerging economies Rapidly growing with underdeveloped capital markets Developing economies Weak economies with little capital available for growth Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-8 Country's Institutional Environment: Political-Legal Dimension Includes country's political risk, regulations, laws, and enforcement Governments develop laws to govern behavior of citizens and organizations Some \"rules\" are excessive and discourage foreign investment Effect on Business Intellectual property rights Securities law Amount of regulation/deregulation Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-9 Country's Institutional Environment: Physical Infrastructure Includes quantity and quality roads/highways, bridges telephone lines airports Poor infrastructure makes it difficult for foreign firms to distribute products Countries wanting foreign investment must develop infrastructure Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-10 Country's Institutional Environment Clusters Cluster Description Examples 1 Developing and transitional economies. High in regulatory control and low in political rights. Brazil, Russia, Nigeria 2 Emerging market countries that are more advanced than Cluster 1 but still need to develop institutional dimensions. Higher on political rights but lowest on monetary policy and second highest on investment restrictions. China, India, Netherlands, Singapore 3 4 Second highestPolitical-legal regulatory controls but high on political rights. Strong physical infrastructures. Finland, France, Germany Most developed institutional infrastructure with Japan, the balanced regulatory controls and political rights United States and strong economic and physical infrastructure. Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-11 Country's Institutional Environment Cluster #1 Developing transitional Brazil Russia Political-legal Nigeria Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-12 Country's Institutional Environment Cluster #2 Emerging Economies China India Singapore Political-legal Nether -lands Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-13 Country's Institutional Environment Cluster #3 Mostly-Developed Countries Finland France Political-legal Germany Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-14 Country's Institutional Environment Cluster #4 Developed Countries United States United States Japan Political-legal Japan Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-15 Country's Culture Culture Learned set of assumptions, values, and behaviors Accepted by group of people Passed on to newcomers Affects human behavior Begins when a group of people faces a set of challenges Evolves and changes with time Dramatically influences how people observe and interpret the business worldopportunity vs. threat Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-16 National Culture Exerts a strong influence on the nature of a country's institutions Two prominent studies of culture Geert HofstedeDutch scholar Robert Houseled large group of researchers Both studies identified at least four prominent dimensions of national culture Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-17 National Cultural Dimensions Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-18 National Cultural Dimensions: Power Distance Extent to which people accept power and authority differences among people Power Distance High Power Distance Low Power Distance People accept power differences People like to regard themselves as equal Philippines, Venezuela, Mexico Austria, Israel, Denmark Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-19 National Cultural Dimensions: Uncertainty Avoidance Extent to which people can accept uncertainty or ambiguity Uncertainty Avoidance High Uncertainty Avoidance Prefer clear norms that govern behavior (i.e., avoid uncertainty) Indonesia, Japan Low Uncertainty Avoidance Have fewer rules and are comfortable in ambiguous situations (i.e., can accept uncertainty) Sweden, the Netherlands, United States Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-20 National Cultural Dimensions: Individualism Collectivism I = Extent people's identities are self-oriented C=Extent a people's identities are a function of the group(s) to which they belong Individualism Collectivism High Individualism Low Individualism (Individualistic nation) (Collective nation) People take care of themselves and immediate family High emotional independence Emphasize and reward individual achievement United States, Great Britain Emotional dependence on institutions Emphasize group membership China, Venezuela, Pakistan Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-21 National Cultural Dimensions: Gender Focus Masculine Feminine Extent to which people value masculine or feminine traits High Masculine Trait Value Low Masculine Emphasize activities that lead to success, money, material possessions Work long hours; fewer vacations United States Emphasize activities that show caring of others Enhance quality of life (value Feminine traits) India Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-22 National Cultural Dimensions Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-23 Cultural ValuesScores (Select Countries) Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-24 International Market Entry Strategies Least Risky Most Risky Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-25 Market Entry Strategies Advantages Exporting Manufacturing products in a firm's home country and shipping them to a foreign market. Low cost Low risk to licensor Disadvantages Potential trade barriers Establishment of marketing and distributing systems in foreign market Transportation costs Smaller returns Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-26 Market Entry Strategies Licensing Arrangements that allow a local firm in the new market to manufacture and distribute a firm's product. Advantages Less capital investment Least amount of risk Disadvantages Licensor has little control over product and use of brand Smaller returns Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-27 Market Entry Strategies Advantages Share costs and risks between partners Strategic Alliances Cooperative arrangements between two firms in which they agree to share resources to accomplish a mutually desirable goal. Access to resources not previously available Learn capabilities from partner Disadvantages Management disagreement Share profits New types of alliancesoutsourcing and off-shoring Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-28 Market Entry Strategies Advantages Fast way to enter foreign market Cross-Border Acquisitions Acquisitions of local firms made by foreign firms to enter a new international market. Can start operations immediately Disadvantages Can cause controversy in local public Integrating two previously independent companies can be challenging Targeted acquisitions may cost a premium Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-29 Market Entry Strategies Advantages Wholly-Owned Subsidiaries Direct investments to establish a business in a foreign market in which the business is 100% owned and controlled by the focal firm; also called Greenfield Venture. Maximum control over operations Buffer assets from competitors in the market Disadvantages Complex, risky and expensive to launch Must establish relationships with suppliers, buyers, etc. Must learn about culture and institutional environment on your own Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-30 Managing International Operations Taking a Global Focus Taking a Region-Country Focus Taking a Transnational Focus Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-31 Managing International Operations Global Focus Important decisions made at home office Subsidiaries follow same strategies Advantage Economies of scale Disadvantage No flexibility for subsidiaries to make local market decisions Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-32 Managing International Operations Region-Country Focus Important decisions made by subsidiaries in local markets Advantage Allows subsidiaries to react quickly to changes in marketplace Disadvantage Expensive; difficult for home office to oversee Decentralized to subsidiaries Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-33 Managing International Operations: Transnational Focus Both home office and subsidiaries make important decisions Advantages Good combination of global efficiency and local responsiveness Outperforms other approaches Centralized and decentralized Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-34 Managing Across Cultures High- and Low-Context Cultures High-Context Cultures Low-Context Cultures People pay close attention to the situation and its various elements in assessing appropriate behavior Situation may or may not make a difference in what is considered appropriate behavior AmericanCanadian GermanSwiss ScandinavianEnglish VietnameseChinese Japanese Korean ArabGreek High- or low-context cultures are neither right nor wrong, just different Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-35 Managing Multicultural Teams Challenges managing multi-cultural teams Dependence on electronic communication (virtual teams) Basic communication issues Building trust among team members with different values (swift trust: rapid development of trust in teams about task activities) Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-36 Developing a Global Mindset Global mindset Cognitive attributes that allow an individual to influence individuals, groups, and organizations from diverse socio-cultural and institutional environments Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-37 Summary: Key Topics Globalization Market effect Business effect Global mindset International Management Country environmentsinstitutional and cultural Entry Strategiestypes, reasons for using, and risk involved Managing people and teamsacross cultures Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-38 Managerial Challenges: Rest of the Story From the front line Chetan Chadhury Learning: Adapt to the local culture to better respond to and satisfy the client's needs Change: Reached out to local people to better understand the culture Team changed how they worked with the client by adapting to the local culture. Result: Manager, Strategy and Operations Deloitte Project was successful www.deloitte.com/vie w/en_CA/ca/index.htm Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-39 Closing Case: Trying to Change the Corporate Culture of a Multinational Enterprise: General Semiconductor No. Question 1 In your opinion, what actions taken by Ostertag stood the most chance of changing General Semiconductor's culture? 2 Do you think requiring everyone in a multinational firm to carry around a card with the firm's core values on it can change a company's culture? Why or why not? 3 In your opinion, was Ostertag managing the cross-cultural operations effectively in the process of trying to change the firm's culture? Explain. 4 Did Ostertag appear to have a global mind-set? Why or why not? Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 3-40 Copyright Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-41 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-1 Management, 3rd edition Hitt/Black/Porter Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-2 Managerial Challenges: From the front line Rick Prichett Motto: \"Don't Blink\" One should reevaluate their situation when necessary, but never take their eyes off the target. Stare down your challenges; be thankful for them; but if you blink, you lose. Management Style: Treat people fairly; be tolerant as long as they are trying. Delegate responsibility; allow them flexibility to do the job. Get the right people on the bus. Regional President Houston North Markets Spirit of Texas Bank Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-3 Key Topics Competitive Strategic Advantagecomponents management process Environmental analysisrole General environmentfive dimensions Industry/competitor environmentsfive forces Internal analysisvalue chain analysis and SWOT Strategiestypes and implementation Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-4 Learning Objectives After studying this chapter, you should be able to: Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-5 Strategic Management? Requires an understanding of: Strategic Management Processseries of activities How to develop an overall strategy Intended targets of the strategy Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-6 Competitive Advantage Ability of a firm to win consistently over the long term in a competitive situation Created through the achievement of four criteria Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-7 Competitive Advantage Criteria Superior Value Firm provides products and services that produce value that is superior to competitors Types of superior value Comparative advantage Compared to others, the value is superior Distinctive competence Superior product is result of a unique competence HP printersmeets all four Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-8 Competitive Advantage Criteria Rarity How many other firms hold similar capabilities? None No other firm has the capabilities needed to provide the quality/quantity of products and services. = have rarity If your capabilities produce superior value for the customers >1 = do not have rarity Superior product is result of a unique competence Applenew releases Capabilities that provide superior value for customers and that are rare will produce only a temporary advantage. Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-9 Competitive Advantage Criteria Difficult to imitate Firm must try to avoid competitor imitation of its capabilities that create superior value to the customers Must create barriers difficult for others to imitate firm's capabilities Tangible barriers Size, location Intangible barriers Company's culture Corporate reputation Disneyfriendly (hire/train) Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-10 Competitive Advantage Criteria Nonsubstitutability Inability for another firm to fulfill a customer's need by alternative means To sustain its competitive advantage, customers must find it difficult to find a substitute that equally satisfies their desire for a product/service Godivataste/smoothness Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-11 Turning Competitive Advantage into Profits Above-average returns = profits greater than the average for a comparable set of firms compared by industry and size function of cost-price margins. Firms must manage their resources to capture profits from their competitive advantage Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-12 Strategic Management Process: Setting Direction Planning Process Set Plan and carry out the strategy's implementation organization's general direction and objectives Monitor Formulate a specific strategy results and make necessary adjustments Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-13 Strategic Management Process Exhibit 4.1 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-14 Determining the Strategic Vision General identity + direction + level of aspirations Short and compelling Heart of the strategy and strategic plan Provides view of firm over the long term + what it should achieve in future Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-15 Formulating the Mission Statement Strategic Intent = sentence Mission Statements = much longer Company philosophy Company identity or self- concept Principal products or services Customers and markets Geographic focus Obligations to shareholders Commitment to employees Fundamental purpose of the organization Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-16 Formulating the Mission Statement Exhibit 4.2 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-17 Strategic Visions Kellogg Vision and Mission Kellogg Company's Vision and Mission Statements define our focus upon sustainable growth, our broadened definition of social responsibility and the true strength of our companyour people and our brands. Our Vision encompasses the full spectrum of our stakeholders including shareowners, employees, customers, consumers and communities. Our Mission articulates where we are as a company today and where we wish to be in the future. Our Vision and Mission do not stand alone. They are integrated with our focused strategy and operating principles as well as the foundations of our business: our K Values, people and commitment to social responsibility. Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-18 Strategic Visions Kellogg www.kelloggcompany.com/company.aspx?id=888 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-19 Strategic Vision - Xerox Our Strategic Vision To be the world's document company www.xerox.com/downloads/usa/en/i/ir_Code_of_Conduct_EmployeeHandbook.pdf Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-20 Strategic Vision The Walt Disney Company Our Strategic Vision Our strategic intent is to help people find better ways to do great work by constantly leading in document technologies, products and services that improve our customers' work processes and business results. Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-21 Strategic MissionsStarbucks Starbucks Mission Our mission is to inspire and nurture the human spirit one person, one cup, and one neighborhood at a time. http://assets.starbucks.com/assets/company-profile-feb10.pdf Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-22 Mission Statement - Xerox Our Mission Statement Our strategic intent is to help people find better ways to do great work by constantly leading in document technologies, products and services that improve our customers' work processes and business results. www.xerox.com/downloads/usa/en/i/ir_Code_of_Conduct_EmployeeHandbook.pdf Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-23 Mission Statement - Xerox Our Core Values Our core values are the key principles that guide our conduct and our relationships. They define how we engage with each other and our customers, how we deliver value and how we behave. They connect us to each other and make our successes possible. Each of us is accountable to align our conduct with our core values. We We We We We We succeed through satisfied customers. aspire to deliver quality and excellence in all we do. require premium return on assets. use technology to develop market leadership. value our employees. behave responsibly as a corporate citizen www.xerox.com/downloads/usa/en/i/ir_Code_of_Conduct_EmployeeHandbook.pdf Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-24 Conducting an External Environmental Analysis Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-25 External Environment General Environment Can influence effectiveness of a firm's strategy Managers must conduct an analysis of the general environment Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-26 External: General Environment Demographics Societal values Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-27 External: General Environment Product technological changes Process technological changes Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-28 External: General Environment Current economic conditions Economic cycles Structural changes Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-29 External: General Environment Laws and regulations Government spending Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-30 External: General Environment Impact on and interaction with the other forces Institutional forces Physical forces Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-31 General Environment of Coca-Cola Adapted from Exhibit 4.3 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-32 Porter's Five Forces Industry and Competitive Environment New Entrants Industry competitors Suppliers Customers Rivalry among existing firms Substitutes Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-33 Porter's Five Forces Industry and Competitive Environment Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-34 Porter's Five Forces Industry and Competitive Environment Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-35 Profit and Industry Report Exhibit 4.4 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-36 Jet Blue Industry and Competitive Environment Exhibit 4.5 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-37 Internal Analysis: Value Chain Exhibit 4.6 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-38 Integrating Internal and External Analyses Internal Environment Strengths Weaknesses Tools Core competencies framework Resource analysis framework Value chain framework SWOT Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-39 Integrating Internal and External Analyses External Environment Opportunities Threats Tools Product life cycle analysis Portfolio analysis Five forces framework SWOT Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-40 Setting Strategic Objectives Strategic objectives translate the strategic intent and mission into concrete and measurable goals Facilitate a firm's ability to Allocate resources appropriately Reach a shared understanding of priorities Delegate responsibilities Hold people accountable for results Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-41 Formulating a Strategy Competitive strategydetermining how the company is going to compete and achieve its strategic objectives, mission, and ultimate strategic intent Generic strategies Techniques and tools Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-42 Formulating a Strategy Generic competitive strategies Cost leadership Differentiation Focus Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-43 Generic Business-Level Strategies Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-44 Strategy Implementation Seven S Framework Managers need to take account of all seven of the factors to be sure of successful implementation of a strategy Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-45 Strategy Implementation Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-46 Summary: Key Topics Competitive Strategic Advantagecomponents Management process Environmental analysisrole General environmentfive dimensions Industry/competitor environmentsfive forces Internal analysisvalue chain analysis and SWOT Strategiestypes and implementation Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-47 Managerial Challenges: Rest of the Story From the front line Rick Prichett Learning: Strategic flexibility and capacity to navigate in a challenging environment Change: Two major changes in strategy Result: Now leads a successful regional community bank Regional President Houston North Markets Spirit of Texas Bank Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-48 Closing Case: No. Blockbuster Is Fighting for Survival Question 1 How successful do you predict that Blockbuster's recent moves (agreements with TiVo and major movie studios) will be? Please explain. 2 Can Blockbuster avoid bankruptcy and survive? Justify your response. 3 Should Blockbuster increase its entry into international markets where digital-on-demand technology is not yet available? 4 In what other ways can Blockbuster try to re-define its core business and pursue other options in entertainment or home electronics? What strategy would you recommend to save the business? Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-49 Copyright Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-50 Management, 3rd edition Hitt/Black/Porter Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-1 Key Topics Planning PurposeTypes of PlansChallenges Six elements of planning process Budgets As a planning tool Types Goals Planning process for managing performance Goal setting principles Effective goal characteristics Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-2 Managerial Challenges: From the front line Matt Kincaid First job: Sold CUTCO knives for Vector Marketing Corporation Motto: He who rolls up his sleeves seldom loses his shirt. Management Style: A holistic perspective on business Make a positive difference in many people's lives. Ph.D. student and Instructor Former restaurant ownermanager and former management consultant Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-3 Learning Objectives After studying this chapter, you should be able to: Define planning and explain its purpose Differentiate between strategic, tactical, and operational plans Describe the interrelationship between an organization's types of plans and the levels at which they are developed Explain the planning process Discuss budgeting as a planning tool List and explain the five characteristics of effective goals Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-4 Discussion: You as a Planner Planning is an activity that most of us admit we need to improve No. Question 1 What do you already plan on a regular basis? 2 What have you missed because of not planning? 3 What could you do to improve your planning effectiveness? 4 If you are good at planning, what advice would you give to others who are not as good at planning? Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-5 Overview of Planning Objectives End states or targets to achieve Plans Means to achieve desired targets Planning Decision-making process Focuses on future of an organization and How it will achieve its goals Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-6 Types Types of Objectives Plans of Plans Learning 3-5 years Midterm 1 year Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-7 Types of Plans: Key Differences Adapted from Exhibit 5.1 5-8 Types of Plans: Key Differences Adapted from Exhibit 5.1 5-9 Organizational Levels: Key Questions Functional Level What activities must my unit perform well to meet customer expectations? What competitor information do we need compete effectively? What are our unit's strengths and weaknesses? 5-10 Organizational Levels Corporate Business Functional Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-11 Interaction: Plans and Levels Exhibit 5.2 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-12 The Planning Process Exhibit 5.3 5-13 The Planning Process Forecasts Critical tools for analysis Analyzing External Environment Environmental uncertainty The more uncertainty, the more flexibility required Contingency plans Benchmarking Investigating the best practices by competitors and non-competitors and The results that they produce Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-14 The Planning Process Resources available Human capital Analyzing Internal Resources What do we currently have? Can current people work on new projects? Do we need new people? Can develop people for new projects? Financial What do we have available? Can we obtain additional funding debit or equity markets? Technology Have cutting-edge technology? Can we gain access at cost-effective price? Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-15 The Planning Process Priorities and multiple objectives Setting Objectives o Establish which objectives are most important Measuring objectives o Financial performance Profits relative to sales Profits relative to assets Many others o Non-financial performance Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-16 The Planning Process Developing Action Plans Sequence timing and Gantt charts Accountability Who is accountable for which actions? Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-17 Gantt Chart Exhibit 5.4 Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 5-18 The Plan