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Nike Case Due Next Tuesday Guest Speaker Thursday Randy Conrads of Classmates and Red Week

Nike Case Due Next Tuesday Guest Speaker Thursday Randy Conrads of Classmates and Red Week. Cancelling Group Presentation Requirement (was to be worth 15%) Exam 1 20 23.5 Exam 2 20 23.5 Paper 20 23.5 Strategic Issue 10 11.76 Cases 10 11.76 Group Case 5 5.88.

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Nike Case Due Next Tuesday Guest Speaker Thursday Randy Conrads of Classmates and Red Week

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  1. Nike Case Due Next Tuesday • Guest Speaker Thursday • Randy Conrads of Classmates and Red Week

  2. Cancelling Group Presentation Requirement (was to be worth 15%) • Exam 1 20 23.5 • Exam 2 20 23.5 • Paper 20 23.5 • Strategic Issue 10 11.76 • Cases 10 11.76 • Group Case 5 5.88

  3. Entrepreneurship & Intrapreneurship

  4. Entrepreneurship • The process of uncovering and developing an opportunity to create value through innovation and seizing that opportunity without regard to either resources (human and capital) or the location of the entrepreneur—in a new or existing company (Churchill, 1992: 586).

  5. Entrepreneurship Characteristics • Commercial leanings • Lack of structure/self-control • Visionary tendencies • Risk-taking/appetite for uncertainty • Persistence • Doer/high initiative • Charisma and extroversion

  6. Entrepreneurship Characteristics • High-energy level • Strong self-image • Team building skills/uses contacts and connections • Views failure as learning • Commitment and fun

  7. Entrepreneurs vs Managers

  8. Intrapreneurship Characteristics • Understands the environment • Visionary and flexible • Creates management options • Encourages teamwork • Encourages open discussion • Builds a coalition of supporters • Persists

  9. Intrapreneurship Environment • New ideas encouraged • Trial and error encouraged. Failure ok! • Resources available and accessible • Long time horizon • Appropriate reward system • Sponsors and champions available • Support of top management

  10. “It is the customer who, in the end, determines how many people are employed and what sort of wages companies can afford.” Lord Robens

  11. Strategy in High Technology Industries

  12. High Technology Industries • Rapidly changing scientific knowledge underlying attribute for competition • R&D/Sales • Battle over technical standard, format, and dominant design • Set by decree, cooperation, public domain, but mostly through consumer choices

  13. Benefits for Standards • Compatibility • Reduce consumer uncertainty • Reduce production costs • Increase in complementary products – Network effects – which greatly enhances sustainability • Lock outs and switching costs

  14. Wining Format Wars • Ensure complementary products • Killer applications • Razor and blade strategy • Cell phones, printers, satellite TV/radio, video games • Cooperative competition • Licensing

  15. Technological Change • If the automobile had developed at the same rate as the microchip, a Roll Royce would: • Cost $2.75 • Go 3 Million miles on a gallon of gas

  16. TV Industry – Paradigm Shifts Black & White TV

  17. Color TV Black & White TV

  18. Color TV Black & White TV

  19. Big Screen TV Color TV Black & White TV

  20. Big Screen TV Color TV Black & White TV

  21. HDTV Big Screen TV Color TV Black & White TV

  22. HDTV Incremental evolution included remote controls,cable ready tuners, stereo sound systems, screen-in-a-screen, etc Big Screen TV Color TV Black & White TV

  23. Competitive Dynamics • Competitive action within an industry. • Strategic and tactical action does not occur within a vacuum • What industries have high competitive dynamics? • What sort of actions/tactics are taken?

  24. Drivers of Competitive Dynamics • numerous/equally balanced competitors • slow growth • high fixed/storage costs • lack of differentiation/switching costs • high exit barriers • Etc… Competitive Dynamics Rivalry

  25. Competition in the Pharmaceutical Industry • Reps tripled to 90K last 10 years • 12B on sales force, 2.76B on ads • Managed care bet – Pfizer from 14th to 1st • 529 visits yearly, average length – 2.5 min • 8% remember • Glaxo can reach 80% of the Drs in a week • “Is this necessary. No, but if my competitors do it and I can’t, then I’m at a disadvantage. This has been an arms race in the worst possible manner.”

  26. Types of Competitive Responses • First Movers - initial competitive action • advantages and disadvantages • Fast Followers or Capable Competitors- respond quickly to first movers • Late Entrants - day late and a dollar short

  27. Chapter 9-10 Corporate Level Strategy

  28. Beverages Foods Snack Foods Frito-Lay North America Frito-Lay International Quaker North America Pepsi-Cola North America Gatorade/Tropicana North America PepsiCo Beverages International

  29. Snack Foods Frito-Lay North America Funyuns Sunchips Cracker Jack Chester’s popcorn Grandma’s cookies Munchos Smartfood Baken-ets fried pork skins Oberto meat snacks Lay’s Ruffles Doritos Santitas Fritos Cheetos Rold Gold

  30. Snack Foods Frito-Lay International Bocabits wheat snacks Crujitos corn snacks Fandangos corn snacks Hamkas snacks Niknaks cheese sticks Quavers potato snacks Sabritas potato chips Twisties cheese snacks Walkers potato crisps Walkers Square potato snacks Walkers Monster Munch Corn snacks Miss Vickie’s potato chips Gamesa cookies Dippas Sonric’s sweet snacks

  31. Snack Foods Frito-Lay International Bocabits wheat snacks Crujitos corn snacks Fandangos corn snacks Hamkas snacks Niknaks cheese sticks Quavers potato snacks Sabritas potato chips Twisties cheese snacks Walkers potato crisps Walkers Square potato snacks Walkers Monster Munch Corn snacks Miss Vickie’s potato chips Gamesa cookies Dippas Sonric’s sweet snacks

  32. Beverages Pepsi-Cola North America Pepsi-Cola Mountain Dew Slice Mug Sierra Mist FruitWorks Lipton Dole Aquafina Frappuccino SoBe AMP

  33. Beverages Gatorade/Tropicana North America Gatorade Propel Tropicana Dole juices

  34. Beverages PepsiCo Beverages International Loóza juices and nectars Copella juices Frui’Vita juices Tropicana 100 juices

  35. Foods Quaker North America Quaker rice cakes and granola bars Rice-A-Roni side dishes Near East couscous/pilafs Aunt Jemima mixes & syrups Quaker grits Quaker Oats Cap’n Crunch cereal Life cereal Quisp cereal King Vitaman cereal Mother’s cereal

  36. How are we going to compete and gain a competitive advantage in each of our businesses? Foods Business Level Strategies Quaker North America Quaker rice cakes and granola bars Rice-A-Roni side dishes Near East couscous/pilafs Aunt Jemima mixes & syrups Quaker grits Quaker Oats Cap’n Crunch cereal Life cereal Quisp cereal King Vitaman cereal Mother’s cereal

  37. Snack Foods Beverages Foods Corporate Level Strategy 1) What businesses do we want to compete in? 2) How do manage effectively across businesses

  38. Where did they go?

  39. Goals of Corporate Strategy Moves to enter new businesses Boosting combined performance of the businesses Capturing synergies and turning them into competitive advantages Establishing investment priorities and steering resources into business units

  40. 4 Corporate Level Strategies • 1) Vertical Integration • 2) Strategic Outsourcing • 3) Horizontal Integration • 4) Diversification – two or more different businesses with distinct operations

  41. 1) Vertical Integration • Forward or backwards • Full integration • Taper integration • Benefits • Build barriers to entry • Facilitates investment in specialized assets • Protecting product quality • Improved scheduling • Risks • Costs • Rapid technological changes • Demand predictability

  42. Alternatives to Vertical Integration • Competitive bidding • Long term contracts or strategic alliances Form of Relationship Markets & Competitive Bidding Hybrid & Contracts/Alliances Vertical Integration

  43. 2) Outsourcing • Cost reduction and differentiation • Hold-ups, scheduling and hallowing out

  44. 3) Horizontal Integration • Acquiring or merging with industry competitors • Reduce cost and economies of scale • Increasing value through wider product line or product bundling • Manage industry rivalry • Increase buyer and supplier power

  45. 4) How to Diversify? 1) Internal Development - corporate entrepreneurship or internal venturing • able to appropriate a larger portion of wealth • avoids complexities of multiple partners • time consuming and requires diversity of organizational capabilities

  46. 4) How to Diversify? 2) Strategic Alliances and Joint Ventures • entering a new market via the combination of complementary resources - do more together • cost reduction & sharing • development/diffusion of technology Problems • appropriate partners - skills and compatibility • trust and commitment • communication

  47. Who Makes a Geo? Geo Storm was actually manufactured by Isuzu. The Storm is the Isuzu Impulse. Geo Prizm = Toyota Corolla Geo Tracker = Suzuki Sidekick Geo Metro = Suzuki Esteem or Swift w/hatchback No Geo cars were actually made by General Motors. They were all imported from foreign manufacturers.

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