Starbucks

MBA 660 Integrative Business Strategy Kevin P. Gallagher, Ph.D . Associate Professor Department of Management Agenda ► Overview of syllabus ► Class Assignments / Group Project ► Introduction to My Case Method ► Overview of class concepts ► Example of Prep Sheet using My Method Teaching Philosophy ► Experiential • Learning is more effective when approached as a process of exploration and reflection rather than prescription and regurgitation ► Other Experiential Models of Education • Engineering • Medicine • Law Case Study Approach ► Context for discussing specific problems ► Consistent shared context for discussion ► Offers ability to study variety of industries ► Simulates real -world approach to problem identification and resolution ► Selection/scoping problem is important ► No single right answer – are better and worse! ► Logical and mechanical basis of your analysis and support of proposed solution is basis of my evaluation of your work Evaluation ► Participation 20% ► Homework i.e. Preparation 30 % ► Quizzes 20 % ► Group Project 3 0 % Wk Date Reading Assignment: complete all prior to doing the homework Homework Assignments due Night BEFORE Class by 10 pm Project Deliverables Due before class at 6 1. Aug 30 Class Introduction 2. Sept 6 Concept of Strategy: Goals, Values, Objectives What is Strategy?

Can You Say What Your Strategy Is? Starbucks’s 3. Sept 13 Industry Analysis Five Competitive Forces Shape Strategy Using the Balanced Score Card as a Strategic Management System Airline Industry 4. Sept 20 Competitor analysis and dynamics Competing for Advantages: From Industry Analysis to Competitive Dynamics Choosing Corporate and Global Scope Ford and World Auto Industry 5. Sept 27 Analyzing resources and capabilities Competitive Advantage: The Value Chain and Your P&L Competing on Resources Wal Mart 6. Oct 4 Sources of competitive advantage When Marketing IS Strategy Twelve Ways Companies to Innovate Harley 7. Oct 11 Industry evolution, maturity, and strategic change Reinventing Your Business Model Meeting the Challenge of Disruptive Kodak 8. Oct 18 Management of innovation and technology Strategy and the Internet Half Truths -First Mover Advantage New York Times 9. Oct 25 Project day 10. Nov 1 Implementing strategy Turning Great Strategy into Great Performance The Secrets of Successful Strategy Execution Project External and Internal Analysis Due 11. Nov 8 Organization structure and management systems Note on Organization Design Who Has the D? How Clear Decision Roles Enhance Organizational Performance HW: Your own organization or W.L. Gore 12. Nov 15 Managing scope and vertical integration When (Not) To Vertically Integrate Three Trends that Will Change How You Manage:

Digitization, Globalization, Politicization American Apparel 13. Nov 22 Thanksgiving NO CLASS 14. Nov 29 Corporate strategy: Diversification and external growth From Competitive Advantage to Corporate Strategy How to Build Collaborative Advantage General Electric 15. Dec 6 Corporate strategy: Managing globally Managing Differences: The Central Challenge of Global Strategy Competitive Advantage of Nations Chipotle Final Project Reports Due 16. Dec 13 Presentations Final Project Presentations Class Preparation ► Read the articles (HBSP course pack) ► Read the case study (VitalSource ) ► Complete case study analysis or HW question • Usually a one page case preparation sheet plus a one page executive summary • Submit in Blackboard Wednesday by 9 pm • Bring a printed copy to class and turn in ► Participate in the discussion Case Prep Sheet • A. Issue – what problem are you addressing? • B. Analysis – applying framework • C. Alternatives with Decision Criteria and Assessment • D. Recommendation and Implementation • E. Assumptions / Missing Info • One page – single spaced – outline form – bullet points • Then write a one -page executive summary • Double spaced in full sentences with paragraphs • Your audience is the protagonist in the case study • Should explain / describe the situation, complication, solution Overview of Class / Concept ► What is strategy? ► The evolution of strategic management ► A framework for strategy analysis ► Corporate strategy and business strategy ► Vision and mission statements ► My case analysis process 9 Strategy: a plan, method or series of actions designed to achieve a specific goal or effect Wordsmythe Dictionary (http://www.wordsmyth.net) Strategy is the pattern of objectives, purposes or goals and the major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be. Kenneth Andrews -The Concept of Strategy (Irwin, 1971) The determination of the long -run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. Alfred Chandler -Strategy and Structure (MIT Press, 1962) What is Strategy? The Evolution of Strategic Management 11 What is Strategy? ► Creation of a unique and valuable position, involving a set of activities ► Requires trade -offs in choosing what to do, and what not to do ► Involves creating a fit among activities ► -M. Porter Unifying theme that gives coherence and direction to the actions and decision of an individual or an organization 13 What Makes a Successful Strategy? 14 Framework for Strategy Analysis Business Strategy Environment / Industry Analysis Competitive Advantage Internal Analysis Framework for Strategy Analysis Business Strategy Environment / Industry Analysis Competitive Advantage Internal Analysis • Opportunities • Threats • Profit • Growth • Strengths • Weaknesses • Plans • Policies Framework for Strategy Analysis Business Strategy Environment / Industry Analysis Competitive Advantage Internal Analysis • Macro environment • Porter’s 5 Forces • Critical success factors • Cost Advantage • Differentiation • Capabilities • Resources • Mechanisms • Strategic Alignment • Goals and Objectives 18 The Basic Business Strategy Framework Strategy as a Link Between the Firm and its Environment Sources of Superior Profitability 19 Describing Strategy (game plan) Current Positioning vs. Future Direction Strategy as Positioning • Where are we going? (scope = domain) • Product market scope • Geographic scope • Vertical scope • How are we competing? • What is the basis of our competitive advantage? (advantage = means) Strategy as Direction • What do we want to become? • Vision statement (what we believe/how we will behave) • What do we want to achieve? • Mission statement (why we exist) • Performance goals (objectives) • How will we get there? • Guidelines for development • Priority for capital exp., R&D etc. • Growth modes: organic, M&A, alliances • How are we progressing? • Balanced Score Card ► Profit and vision are necessary to effectively motivate a workforce ► Shared vision creates a community of interests ► A clear mission is needed before alternative strategies can be formulated ► Requires participation by as many managers as possible is important Vision & Mission Vision & Mission ► Great benefits can be achieved if an organization • Systematically revisits their vision and mission statement • Treats them as living documents • Considers them to be an integral part of the firm’s culture Comprehensive Mission Statement Vision Clear Business Vision Vision Agreement on the basic vision for which the firm strives to achieve in the long term is especially important. “What do we want to become?” “The last thing IBM needs right now is a vision.” (July 1993) Vision “What IBM needs most right now is a vision.” (March 1996) – Louis V. Gerstner, Jr., CEO, IBM Corporation General Motors’ vision is to be the world leader in transportation products and related services. Vision Statement Examples Mission Statements are also called ► Creed statement ► Statement of purpose ► Statement of philosophy ► Statement of beliefs ► Statement of business principles ► A statement “defining our business” ► An enduring statement of purpose that distinguishes one organization from other similar enterprises ► A declaration of an organization’s “reason for being” ► “What is our reason for being (business)?” ► Reveals : • whom we want to serve • what the organization wants to be Mission Statement Benefits of Mission Statements ► Better financial results ► Unanimity of purpose ► Resource allocation ► Establishment of culture ► Focal point for individuals ► Establishment of work structure ► Basis of assessment and control ► Resolution of divergent views Resolution of Divergent Views ► A genuine decision must be based on divergent views to have a chance to be a right and effective decision ► Considerable disagreement over vision and mission statements can cause trouble if not resolved Mission Components Customers Markets Employees Public Image Self -Concept Philosophy Survival, Growth, Profits Products or Services Technology Proctor & Gamble will provide branded products and services of superior quality and value that improve the lives of the world’s consumers. As a result, consumers will reward us with industry leadership in sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper. Mission Statement Examples Components of a Good Mission Statement • Customers • Products and services • Markets • Technology • Survival, growth, profits • Philosophy • Self -image • Public image • Employees Dell’s mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet consumer expectations of highest quality; leading technology; competitive pricing; individual and company accountability; best -in -class service and support; flexible customization capability; superior corporate citizenship; financial stability. Mission Statement Examples At L’Oreal, we believe that lasting business success is built upon ethical standards which guide growth and on a genuine sense of responsibility to our employees, our consumers, our environment and to the communities in which we operate. Mission Statement Examples We aspire to make PepsiCo the world’s premier consumer products company, focused on convenient foods and beverages. We seek to produce healthy financial rewards for investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive to act with honesty, openness, fairness and integrity. Mission Statement Examples Fleetwood Enterprises will lead the recreational vehicle and manufactured housing industries in providing quality products with a passion for customer -driven innovation. We will emphasize training, embrace diversity and provide growth opportunities for our associates and our dealers.

We will lead our industry in the application of appropriate technologies. We will operate at the highest levels of ethics and compliance with a focus on exemplary corporate governance. We will deliver value to our shareholders, positive operating results and industry -leading earnings. Mission Statement Examples Case Prep Sheet • A. Issue – need to address deficiencies in mission statement • B. Analysis – applying 9 part framework for mission statement, current statement is missing or deficient in… • C. Alternatives – 1) enhance 2) revise 3) do nothing (note: must defend why) • Decision Criteria – most helps performance, least intrusive • Assessment of Alternatives – Y-Enhance X -revise X -nothing • D. Recommendation – Enhance • Implementation – make changes and then have reviewed by management, repeat • E. Assumptions / Missing Info – Input from management For next class… ► Get the course pack and case text ► Read Articles ► Read the case study (Starbucks) ► Complete Homework 1 ► Submit both pages in a single file to assignment link in Bb by 10pm night BEFORE class This Week’s Case Questions • Read the article "What is strategy" and "Can you say what your strategy is?", and then using the framework presented in class for articulating the current position and future direction of a strategy, answer the following questions: • Describe Starbucks’ strategy in terms of current positioning and future direction. (analysis section of prep sheet) • What do you see as the greatest alternative risks or challenges they face moving forward? (alternatives section) • Make a recommendation as to which is greatest and how to proceed in addressing it. (recommendation section) Case Prep Sheet • A. Issue – what problem are you addressing? • B. Analysis – applying framework • C. Alternatives with Decision Criteria and Assessment • D. Recommendation and Implementation • E. Assumptions / Missing Info • One page – single spaced – outline form – bullet points • Then write a one -page executive summary • Double spaced in full sentences with paragraphs • Your audience is the protagonist in the case study