BUAD 497 Week 1 Notes
BUAD 497 Week 1 Notes BUAD 497
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This 3 page Class Notes was uploaded by Emily Laurienti on Saturday August 27, 2016. The Class Notes belongs to BUAD 497 at University of Southern California taught by Prof. Michael Mische in Fall 2016. Since its upload, it has received 157 views. For similar materials see Strategic Managment in Business Administration at University of Southern California.
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Date Created: 08/27/16
Class One 8.23.16 Sun Tzu philosophy—strategy is all about out-thinking your opponent. Seeing and winning a fight long before the battle is fought You’re either creating, extending, capturing, or defending a market. Six Modules 1. Overview of Strategy—what is strategy, what is the mind of a strategist? Comes in four forms: Transformational, transactional, opportunistic, situational Transformational—iPhone Transactional—Android roll screen Opportunistic—Engineer discovered that the microwave from the radar was melting his chocolate and created the microwave oven Situational—where are you? How companies get into trouble, how they turn around. 2. Performing environmental, industry decomposition and analysis—every industry lives in a much larger environment. What drives an industry? What drives an environment? The economy drives an industry. Therefore, what drives an economy? 3. Competitive Dynamics—Rivalries create opportunity. You get better products and attract better people. What’s a disruptive technology vs. a destructive technology? What is innovation in strategy? How does one company change from one state to another state? 4. Capabilities, recources, capacities, and constraints—What are the restraints? Barriers to entry. Do we want to enter an industry? What will our competitors think if we enter an industry? 5. Corporate strategy, strategy formulation, governance and fiduciary responsibilities of the BOD—high level identity strategy. What is the legal liability for an officer and director in corporate strategy? 6. Contemporary issues, ethics and corporate social responsibility—what’s up in strategy? Class Two 8.25.16 What is the definition of strategy? It is a process. Designed to create long term and sustainable economic and competitive dominance Process to find a better or superior position—this could be from an already good position or when your company is in trouble Strategies should be about 12-18 months because the environment is so fluid Ambitions for strategy—determines the types of strategy you’ll use 1. Creating—When you have an idea for a new business that hasn’t been tapped into yet 2. Capturing—When your company is already existent but you have a new idea for it 3. Extending—When your company is already existent but you have a new idea for it 4. Defending—When your competitor makes a move that requires a response from you (price war, sales war, advertising war, ambiance war) Strategy comes in different forms and flavors Transformational—PC from typewriter, invention of the car, Amazon o These are almost always destructive—they destroy the status quo Transactional--how to get more, vertical and horizontal structures, economies of scale. They occur in a larger framework of the business Opportunistic—discovering something by accident or seeing an opportunity in the market. o Glide dental floss was originally a surgical suture that a doctor used as floss. o Obamacare was opportunistic for smaller businesses and the insurance companies. Situational—when your company is in trouble and you need a strategy to get out of trouble. o If there’s a disruption in your supply chain Which type of strategy you use is determined by where you are in the lifecycle of the market Lifecycle of a market—Strategy looks very different depending on which phase you’re in 1. Birth—Creating, trying to make a better position for yourself. Will also have an element of defending because of the risk. Will probably use a transformational strategy People are entering the industry, others are exiting. If there’s more people entering than exiting, that’s an indication of attractiveness. Formation of barriers to entry Very turbulent, lots of uncertainty The birth stage grows in waves until the market coalesces and dominant strategies stimulate the growth o Compaq computers built the first portable computer. The dominant design in this case was to add a hinge 2. Growth— Whenyoujumpfrombirthtogrowth,establishedplayerscomeintothemarket o 1981 IBM launched the PC, and that’s when it became a huge product Transactional, capturing market share, defending market share You can’t have growth unless you have a significant infrastructure—Tesla is struggling to grow because it doesn’t have strong infrastructure in states other than California No oneis going to rush to build the infrastructure unless theythink the dominant design has popped out Infrastructure barriers slow growth Fueled by clustering—when multiple industries support a primary design. o When cars were invented, tires needed to be made, someone needed to change the tires, gas stations came to exist 3. Maturity—Transformational, transactional. In this phase companies usually focus on economies of scale; driving the cost down to maintain or improve profitability o Smart companies take a portion ofthose savings and invest in R+D to see what’s in the birth and growth phase Sometimes pursue two strategies simultaneously—transformational within the company to make them more productive and 4. Decline Barriers to exit—may not be practical or may not be allowed by law o Union labor, creditors, etc. 5. Death—a company can still be saved in the death phase but your options for strategy are very limited Situational strategies, defending, trying to find a better position Apple vs. Samsung Stages Example Both companies are in maturity If Apple seems to be in decline, it may be because the industry as a whole is in decline and they have such a huge market share. Three quarters can indicate a decline Switching costs—when you’ve already invested in one technology and are switching to a different one, how much will it cost you to do that? Some are direct costs, some are indirect o Direct might be switching systems, indirect might be training employees to understand the new system