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Strategy Introduction

Strategy Introduction. What is “strategic”?. Macro Levels of constructs and analysis Levels of Management Intentional – an optimal strategy creates success vs. accidentally achieving it. Related to performance Financial performance Other forms of criterion. What is Strategy?.

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Strategy Introduction

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  1. Strategy Introduction

  2. What is “strategic”? • Macro • Levels of constructs and analysis • Levels of Management • Intentional – an optimal strategy creates success vs. accidentally achieving it. • Related to performance • Financial performance • Other forms of criterion

  3. What is Strategy? Business literature is saturated with jargon and “catch phrases”, many incorporating the word “strategy” in some form. Here are the fundamental concepts (Know these): • Strategy: A means to an end • Strategic Management: Continuous adjustments to plans as a result of new information • Strategic Planning: Episodic review or creation of your strategy plan to create an alignment of plans/assets towards a goal. • Long Range Planning: Not necessarily strategic planning. Planning for events beyond the quarter or the year.

  4. Back to Strategy- Strategy: A means to an end. “How you get there” Strategy: A means to an end Strategic Management: Continuous adjustments to plans as a result of new information Strategic Planning: Episodic review or creation of your strategy plan to create an alignment of plans/assets towards a goal. Long Range Planning: Not necessarily strategic planning. Planning for events beyond the quarter or the year.

  5. Back to StrategyStrategy: A means to an end. “How you get there” Our ability to identify the “best way” to get from A to B is only as good as our ability to assess points A & B.

  6. Getting from A to B • How to get there requires knowing where both “there” and “here” are. • A: Where we are now (here): • Internal Factors • External Factors • B: Where we want to be in the future (there): • Short term • Long term

  7. Getting from A to B If Getting “there” requires a commitment of resources and attention… And if external factors (as well as internal) are always changing (and they are)…. What value is a strategic plan? Does it work for every company? What are the hazards of planning?

  8. 53 51 49 47 41 41 -50 -40 -30 -10 0 10 20 30 40 50 Expected Winners in Selected Occupations Network System and Data Communication Analysts Personal and Home Care Aides Home Health Aides Computer Software Engineers Applications Veterinary Technologists and Technicians Personal Financial Advisors Percentage change for 2006-2016 Adapted from: Figure 2-1: Winners and Losers in Selected Occupations: Percentage Change Forecasts for 2006-2016

  9. -50 -41 -41 -40 -40 -36 -36 -50 -40 -30 -10 0 10 20 30 40 50 Expected Losers in Selected Occupations Photographic processing machine operators File clerks Pattern makers Telephone operators Photographic processors Shoe Machine operators and tenders Textile knitting & weaving machine setters, operators & tenders Percentage change for 2006-2016 Adapted from: Figure 2-1: Winners and Losers in Selected Occupations: Percentage Change Forecasts for 2006-2016

  10. Change The rate of change in society is accelerating. • Of the last 800 life-spans of human history: • The first 650 were spent in caves • Only the last 70 saw communication from one lifetime to the next. • Only the last six saw widespread printed word. • Only the last four saw time measured with precision. • Only the last two saw the electric motor. • Only the current lifetime has seen the overwhelming majority of material goods we take for granted today.

  11. Winners and Losers in Strategy • A new way of thinking • Recognition of SWOTs • Bourne Identity • Within and Between Person cognitive synthesis • Execution, Execution, Execution

  12. Mind Computer Interface TechnologyCNN News

  13. Should this matter to you? • Who should care about this? • Product Innovation: Entertainment • Nintendo, Xbox (Microsoft), Playstation (Sony) • Apple, Dell, AMD, Intel, Verizon, Samsung, Motorola • Other applications • Flight- Boeing, EADS • Weapons- Northrup Grumman, Lockheed

  14. 12/30/2009- 2 Billion Apps downloaded for the Apple I-phone • What does this mean for… • Sprint, ATT • Verizon (4G towers with no 4G phones) • New markets for gaming companies • Requirements of Google’s Android powered phone

  15. Health Care Reform: The Public Option

  16. What does this mean for… • Aetna • Assurant • Unicare • Any firm offering health insurance? • Any firm not offering health insurance?

  17. Strategy ApplicationBlack Disciples- South Side Chicago

  18. Business: Southside Franchise of the “Black Disciples” Industry: Illicit drugs/protection • General Manager: “J.T.” • 29 years old • BA-Business University of Chicago • Previous Job: Office Supplies Sales Rep • Manages 260 person organization • 20% revenues for 12 sq block territory to the “Board of directors” 2005: Levtit & Dubner “Why do drug dealers still live with their moms”

  19. Business: Southside Franchise of the “Black Disciples” • Nonwage Costs: • Wholesale Cost $ 7,400 of Drugs • Board of $ 5,000 • Directors Fee: • Mercenary $ 1,300 • Fighters • Weapons $ 300 • Miscellaneous $ 2,400 • Total Monthly $14,000 • non-wage costs Revenues: Drug Sales $24,800 Dues: $ 5,100 Extortionary $ 2,100 Taxes Total Monthly $32,000 Revenue • 2005: Venkatesh & Levitt “Why do drug dealers still live with their moms”

  20. The Black Disciples • “Board of Directors” (20 of them, oversee 120 franchises) • G.M. of the Southside franchise: “J.T.” • Officers-3: • Enforcer: Ensured gang members’ safety • Treasurer: Overseas gang’s liquid assets • Runner: Manages exchanges between gang & suppliers • Foot Soldiers-50-60: Sell product on franchised locations • Rank and File-200+: seek protection from other gangs, or potential position as foot soldier.

  21. The Black Disciples Total Net Monthly Income without labor: $ 18,000 J.T. has 260 employees How much do you think J.T. made?

  22. The Black Disciples Total Net Monthly Income without labor: $ 18,000 How much do you think J.T. Made? $8,500/month Labor expense: $9,500/month

  23. The Black Disciples Average hourly for foot soldier: $3.30 (officers: $7.00) Employment Conditions-typical fate in four years of employment: • No. of times arrested: 5.9 • No. of nonfatal wounds or injuries: 2.4 • This doesn’t include injuries from gang admonishment for rules violations. • Chances of being killed: 1 in 4 Why do people work here?

  24. The Black Disciples Tournament Theory: You must prove yourself at lower level to gain access to next level. Motivation is from lure of future level achievement. • “Board of Directors”: 20 $500,000+/year • G.M. “J.T.”: 120 $100,000+/year • Officers: 360 $15-20K/year • Foot Soldiers: 7,500 $6K/year • Rank and File: 24,000 -$250/year

  25. Application of tournament theory • “ I know it’s not a lot of money but keep doing such a good job and you’ll be a manager soon!” • “ I know it’s not a lot of money but keep managing well and you’ll be an executive soon!” • Pyramid Schemes

  26. How the Great Fall

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