工商管理专业MBALecture

Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,REVISION LECTURE MONDAY,1,Vertical Integration Definitions,Vertical Integration:,refers to a firmss ownership of the vertically related activities. The greater the firms ownership extends over successive stages of the value chain for its product, the greater the degree of vertical integration. The extent of vertical integration is indicated by the ratio of a firms value added to its sales revenue: the more a firm makes rather than buys, the greater its value added relative to its sales revenue.,Vertical integration can be either,backward,where the firm takes ownership and control of producing its own or other inputs, or,forward, where the firm takes,ownership and control of activities previously undertaken by customers.,Vertical integration,may be full or partial. Some Wineries are fully integrated: they produce the wine from the grapes they grow, and the sell it all through direct distribution. Some wineries in California and France do this. Most are partially integrated: home grown grapes supplemented with purchased grapes; they sell some wine through own tasting rooms, but most through independent distributors.,2,Strategies: DIVERSIFICATION,Diversification two broad types:,Related diversification is development beyond the present product and market, but still within the broad confines of the industry. For Example Unilever is a diversified corporation, but virtually all its interests are in the consumer goods industry.,(a) Backward integration,refers to inputs into the current business further back in the value system e.g. Raw materials, machinery, labour,(b) Forward integration,refers to activities which are concerned with the companys outputs e.g. Transport, distribution, repairs, and servicing. These are further forward in the value system,(c) Horizontal integration,refers to activities which are competitive with or directly complementary to a companys present activities,Unrelated diversification refers to activity development beyond the present industry into products/markets, which at face value, may bear no clear relationship with present products/markets.,3,Some Reasons for related Diversification,Possible advantages,Examples /Comments,1. Control of supplies,Quantity,Quality,Price,Tea Processors own plantations to secure continuity of Supply.,Components for motor cars may need to be manufactured by the company,Printing facility can be cheaper in -house,2. Control of markets,UK shoe manufacturers own retail outlets to gain guaranteed distribution,3. Access of information,Manufacturers are involved in machinery development companies to keep abreast of development,4. Cost savings,Fully integrated steel plants save cost on reheating and transport,Building on: Expertise,Technology,Accountancy Firms moving into tax advice or corporate recovery,Transfer to similar technical requirements in another field,6. Spreading Risk,Avoid overreliance on one product/market, but build on related experience,7. Resource Utilisation,Under-utilised manufacturer acquires company with compatible products to fill capacity,4,Some reasons for unrelated diversification,Possible Advantages,Examples/Comments,Need to use excess cash or,safeguard profits,Buying a tax loss situation,2. Personal values or objectives of powerful figures,Personal image locally or nationally may be a strong motive,Exploiting underutilised resources,Farmers use fields for camp sites, festivals,Companies hire their conferences facilities,4. Escape from present business,A companys products may be in decline and unrelated diversification is the only escape,5.Spreading risk,Some companies believe it is good sense to have all their eggs in one basket.,6. Even out cyclical effects in a given sector,Toy manufacturers make a subcontract for plastic mould products for industry.,7. Benefits from synergistic effects,Positive cash flow from one business used to funding requirements of another,5,Portfolio Analysis,Market Power,and,Market Share,are important concepts for a strategic business unit to consider.,Relative market share,means the amount of market share a firm has relative to it competitors,There is an established relationship between market power and performance in commercial organisations.,Useful to break down market share by segments and to examine market share within those segments,What is important is to see which market segments are important from corporate/profit point of view.,Segment may be more competitive or growing more or bigger,6,?,Low unstable, analyse to see,Whether business can be grown into a star or will it degenerate into a DOG,STAR,High, stable growing,Invest for growth,DOGS,Low Unstable,Cash flow neutral,Or negative,Cash Cows,High Stable,High Earnings,Good Cash flow,A,N,N,U,A,L,R,A,T,e,O,F,M,A,R,K,E,T,G,R,O,W,T,H,(%),n,High,L,O,W,Low Relative Market Share High,THE BCG GROWTH SHARE MATRIX,7,A star is an SBU,which has a high market share in a growth market.,The firm may be spending heavily to gain that share , but experience curve benefits should mean that costs are reducing over time and at faster rate than competitors,The question mark is an SBU,with high growth but does not have a high market share.,Firm could be spending heavily but not reducing costs and not making inroads on competition,The Cash Cow,has a high market share in a mature market.,Low growth market conditions stable,need to spend is less. High relative market share means SBU able to maintain unit cost levels below competitors.,Dogs,have low share in static or declining markets,worst of all combinations, may drain cash and use disproportionate amount of time and resources.,Growth Share Matrix for Portfolio Analysis,8,Collaborative arrangements are there for all to see they include:,Strategic alliances; joint ventures; public private partnerships;,Co-ordinated service delivery; supply chain agreements; joint marketing arrangements; research and development partnerships etc.,Public and voluntary sectors have many examples as well, from joint delivery of services, co-ordinated delivery of services ; partnerships to tackle social care issues to economic development,9,Rapid economic and technological change,A declining growth rate and competitive pressures,Global interdependence,Blurred boundaries among business, government and labour,Shrinking federal revenues for social programmes,Dissatisfaction with the judicial process for solving complex problems,Differing perceptions of environmental,risk,Grays Seven Factors that contribute to Collaboration,21/09/2024,10,Leader Behaviour Style,Participative:,a consultative style that involves seeking suggestions and ideas from subordinates and involving them in decisions.,Directive:,subordinates are told clearly what is expected of them, and given specifics about how to achieve that,Supportive:,falls between the two previous, and is characterised by the creation of a warm, friendly atmosphere in the group and consideration for the needs of sub-ordinates,Achievement orientated:,Using non directive ways to set challenging goals and seeking improved performance. Often using excellent standards as a model to be achieved and showing confidence that these can be achieved by employees.,11,Key point leadership occurs when one attempts to influence the behaviour of an individual or group,Three core skills involved,Diagnosing,cognitive skill,Adapting a,behavioural skill,Communicating,a process skill,Some Key Internal Skills of Leaders.,Management of Attention :,Communicate direction and objectives to others,Management of meaning:,ability to create and communicate meaning so that others understand,Management of Trust:,authenticity and consistency in messages,Management of Self:,knowing oneself and to work with that,Management of the,situation and the task,12,Broad Categories are:,Set Strategic Direction, Set and Communicate the Values; Support the implementation through resource allocation and problem solving,Design systems in support of action; review structures,Focus on the manageable; Develop skills in people,Symbolise the company to the outside world,Preserve what makes the company special,Set the standard for performance,Motivate employees and develop new skills and competences,Provide role models,Make success attainable and human,Ensure that their are resources available,Lets look at some tools leaders have,13,Planning & Design School.,The design school,is based on the idea of rational planning, based on strategic analysis of the internal and external environment. The idea is that managers engage in deliberate, rational analysis. The design school does allow for the idea,of creativity.,This is in terms of the original conception of the idea/ concept/ strategy, and how it alters overtime as the realities of the internal and external environment are considered by the strategists. A good way to think of this is if you were designing and building a house. Concept alters as the concept and ideas become realities. Tools you use are SWOT analysis see slides Lecture 2 , and next 2 slides,Key points Design school,Consistency,:,the strategy must not present mutually inconsistent goals and policies,Consonance:,the strategy must represent an adaptive response to the external environment and to the critical changes occurring within it.,Advantage:,the strategy must provide for the creation/maintenance of competitive advantage in the selected area of activity,Feasibility:,The strategy must neither overtax available resources nor create unsolvable sub problems,14,14,Entrepreneurs Emergent,Here the emphasis is on the leader and on mental states such as:,judgement, intuition, wisdom, experience, insight.,Vision,and,perspective,are key ideas here ( remember the working definition of creativity by Sternberg and Lubart (1991) SLIDE 12,Vision,serves as both an inspiration and a sense of what needs to be done a guiding idea.,Entrepreneurial,concept comes for economics in particular Joseph Schumpeter (1950) Schumpeter was concerned with how organisations keep surviving in changing situations.,He was concerned with how the leader created ideas, new ways of doing things: within this he introduced the notion of,creative destruction,Schumpeter was aware that economists like to deal with such things as money, machinery, land. He was concerned with things that are less tangible.,Schumpeter held the view:,That entrepreneurs have not accumulated any kind of goods, nor created original means of production but have employed existing means of production differently, more appropriately, more advantageously. They have carried out new combinations. And their profit, the surplus to which no liability corresponds, is an entrepreneurial profit.,The key thing here is doing things in new ways and the capitalist bore the risk.,Importantly Schumpeter thought that once the founder /leader ceased to innovate he/she was no longer an entrepreneur.,Richard Branson is someone who fits the idea of an Entrepreneur.,15,Key points of Entrepreneurships,Strategy,exists in the mind of the leader as perspective, this is a long term direction, a vision of the organisations future.,The process of strategy formation is semiconscious at best, rooted in leaders experience and intuition, the strategy may be conceived or adopted from others, but the Leader will internalise it in his or her own behaviour.,The Leader promotes the,vision,single-mindedly, maintained close personal control of implementation,The strategic vision is thus malleable,the strategy can be deliberate and emergent, deliberate in vision and emergent is how it unfolds.,The organisation is equally,malleable, responsive to the leaders directives, many of the procedures and power relationships are suspended to allow leader to manoeuvre,Entrepreneurial strategy,tends to form of a niche, one or more positions in market protected form the forces of outright competition,Richard Branson CEO Virgin Corporation classic Entrepreneur,16,An,issue we return to,Intentionality versus emergent strategies,Intentionality implies;, planning, thinking, writing things down, monitoring and reporting on plan, learning and adaptation,A way of demonstrating clear doing, direction, commitment etc.,Emergence implies,:,a pattern of thinking and doing,Flexibility, opportunism, adaptive,flexibility/ alternatives/options,Entrepreneurship,Strategic Incrementalism,New strategies emerge over time,Flexibility, shaping,Gradually blend a coherent set of actions over time.,17,Strategy Formation Key Points,Strategy formulation,is primarily concerned with the,how,question, with process:,How,are strategies formed, implemented and changed?,We have discussed several ways of thinking about strategies a broad perspective would suggest the process is seen variously:,Rational, Intentional, Goal- directed , as well as Intuitive.,What is clear is that their in not one unifying theory of how it is. Not necessarily a problem,FOUR PHASES OF FORMULATION,Identification,Mission Setting, Agenda Setting,Diagnosis:,External Assessment Internal Assessment,Conception:,Option Generation, Option selection,Realisation :,Action taking, Performance control (,SEE PYRAMID DIAGRAM) Performance Management,18,Roles of Strategy,Strategy as a planning tool,which gives direction to the organisation- a plan of what to do and aim for.,Strategy as a support to decision making, strategy gives coherence to the decisions of an individual and the organisation. Bounded Rationality of our decisions. We are limited by the amount of information the human brain can handle. Strategy helps in several ways:,Simplifies decision by constraining the range of decision alternatives,By acting as a heuristic rule of thumb that reduces the search for suitable solutions,A strategy making process permits the knowledge of different people to be polled and integrated,A strategy making process facilitates the use of analytic tools and frameworks ( SWOT, PEST),Strategy as a co-ordinating device,:,The greatest challenge of managing an organisation is co-ordinating the actions of different organisational members. Communicating the vision, goals, objectives and position of the company is an important role of the CEO and Top Management Team. The strategic planning process can provide a forum for this to take place. Here it is important that all groups in the organisation take part. Once this is implemented then the next phase is to ensure that all organisation members are working and moving forward in the same direction. The name for this,is performance management, which is a series of goals, targets, and performance measures for individuals and groups, divisions, department , throughout the organisations.,19,PERFORMANCE MANAGEMENT FRAMEWORK,SERVICE/BUSINESS PLANS,DIRECTORATE PLANS & STRATEGIES,CORPORATE,PLANS,& STRATEGIES,STRATEGIC PLAN,ORGANISATION,WIDE,LOCAL,STRATEGIC,OPERATIONAL,COMPETITIVE ADVANTAGE,INDIVIDUAL STAFF PERFORMANCE , ACCOUNTABILITY & APPRAISALS,20,Strategic Change Key points,Strategic Change is an intellectual challenge in terms of thinking through the approach to be adopted, as well as a process of assisting people to deal with change and uncertainty.,In broad terms strategic change is concerned with findings ways of successfully dealing with changes in markets, government policies, competitiveness, technologies etc.,Key to change is the ability of the firm to maintain position in the market while undergoing a major change process.,The challenge of dual strategies how a company manages its existing activities while also nurturing new initiatives that will form the basis for its business in the future.,Key concern can be the existing capabilities of the firm and the individual competencies of employees e.g. Management systems and employee skills,Example:,British Airways and Continental failed to establish low budget airlines. Others like Google and 3M have managed dual strategies.,HSBC Banking has managed the dual strategy of cost leadership and differentiation in full service banking and internet banking,21,A Framework for a Change architecture,Clarity in governance and accountability,Engagement for key stakeholders in appropriate ways,Securing alignment from the majority of the key stakeholders to the change process,Effective, credible, accessible and appropriately transparent performance measures to gauge progress and success,A balanced set of performance measures presented on a common framework (e.g. balanced scorecard approach),Acquiring or developing new skills and capabilities and the mobilization of commitment and resources,Learning to use our current knowledge to enhance our future knowledge in a search for enhancement of our products and services,22,Porters five forces of industry competitiveness,SUPPLIERS,INDUSTRY,COMPETITORS,Rivalry among,existing firms,POTENTIAL,ENTRANTS,SUBSTITUTES,Threat of new,Entrants,Threat of new,substitutes,Bargaining power of buyers,Bargaining power of suppliers,Buyers,23,SUPPLIER POWER,Factors determining power of suppliers relative to producers; same as those determining power of producers relative to buyers- see Buyer Power Box,INDUSTRY RIVALRY,Concentration,Diversity of competitors,Product differentiation,Excess capacity and exit barriers,Cost conditions,THREAT OF SUBSTITUTES,Buyer propensity to substitute,Relative prices and performance of substitutes,THREAT OF ENTRY,Capital Requirements,Economies of scale,Absolute cost advantage,Product differentiation,Access to distribution channels,Government and legal barriers,Retaliation by established producers,BUYER POWER,Price,Sensitivity,Bargaining Power,Cost of product relative to total cost Size and concentration of buyers relative to producers,Product differentiation, competition between Buyers switching costs; Buyers Information,Buyers Buyers ability to backward integrate,The Factors that influence Porters Five Forces of Competition,24,