Ikea

Discussion Notes

Teaching Notes: Finntrack

Strategy: Analysis and Practice ©2005 McGraw-Hill Education Europe

Index
• Workshop – Case Analysis – Debate – Case Questions – How to Use Your Workshop Resources – Disclaimer – Learning Objectives • Multinational Corporations • Introduction to Retailing and IKEA – Introduction to IKEA – Corporate Strategy • Competitive Position: Competitive Advantage – Strategic Planning – Competition – What is Sustainable Competitive Advantage – Sustainable Competitive Advantage – Competitive Strategies

• Business Analysis – Business Drivers – Quantitative Methods – Strategic Business Analysis – Organisation – Organisational Culture – Financial Statements - The System – Financial Statements - Analysis • Financial Ratios

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Index
• Strategic Capability: Core Competence – Corporate Capabilities – Core Competency – Strategic Intent – Innovation – Theory of Constraints – Value Chain • IKEA Modified Value Chain – Six Sigma • Global Strategies • Process Analysis for Strategic Decisions – Game Theory • Competitive Strategy: the Analysis of Strategic Position – Lecture • Competitive Strategy: the Analysis of Strategic Capability – Lecture • Global Strategies and International Advantage – Lecture • Process Analysis for Strategic Decisions – Lecture

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Workshop
This workshop series is designed to compliment Teaching and Learning Strategies for undergraduate, postgraduate and executive level Strategic Management and related programmes and courses using the case studies featured in the text below. The overall aim is to support the learning contents offered in the relevant chapters of the book whilst expanding participants‟ knowledge and skills base required to understand, review and analyse the decisions taken during the company‟s strategy development and implementation processes.
Strategy Analysis and Practice John McGee, Warwick Business School Howard Thomas, Warwick Business School David Wilson, Warwick Business School

Case Analysis
A case study is a particular method of qualitative research. Rather than using large samples and following a rigid protocol to examine a limited number of variables, case study methods involve an in-depth, longitudinal examination of a single instance or event: a case. They provide a systematic way of looking at events, collecting data, analyzing information, and reporting the results.

Click on Image Source: doyleresearch

As a result the researcher may gain a sharpened understanding of why the instance happened as it did, and what might become important to look at more extensively in future research.

Case Analysis
Case studies lend themselves especially to generating (rather than testing) hypotheses.
• The scope and relevance of case studies • Types of case study • Illustrative case studies • Exploratory case studies • Critical instance case studies • Program implementation case studies • Program effects case studies • Cumulative case studies • Business school case studies • Medical case studies • History of the case study • Conclusions • Notable case studies • References • See also • External links

Click on Image Source: © Inter IKEA Systems B.V. 2002-2006

Workshop Debate
Workshop discussion topics have been divided into six parts according to the relevant chapters of the book involved in the case study:

1. 2. 3. 4. 5. 6.

Introduction Business Analysis Competitive Position: Competitive Advantage Strategic Capability: Core Competence Global Strategies Strategic Decision Making

You should ensure that you have understood the contents of chapters 6, 7, 11 and 13 prior to attending any of the above debates.
Also see: How to Use Your Workshop Resources Learning Objectives Learning from Case Studies: A Short Guide for Students

Case Questions
Please Note: At your instructor’s discretion the indicative questions below and elsewhere in this resource may be varied or deemed unnecessary for teaching and learning purposes for some courses or modules. 1. Using the information given in the Case Study and this resource, describe the Elements of IKEA’s Organisational Culture.

2. How has the Organisational Culture shaped IKEA’s Business Model?
3. Measure the value of IKEA’s Organisational Culture.

Also see Learning Using Case Studies for further information Also see A Model for Case Analysis and Problem Solving

How to Use Your Workshop Resources
Viewing
You will need either MS PowerPoint program or PowerPoint Viewer installed on your computer. The latter may be downloaded free from Microsoft website here. Navigation The Learning Contents (Literature Reviews) are linked to a relevant public domain on the Internet. Most, if not all pictures/images are „clickable‟, i.e. linked to its source which provides further information on the topic or the copyright holder.

If your version of PowerPoint does not show navigation buttons on the slide, right click on the screen and select your destination from the dialogue box. Alternatively use the small arrowheads, indicating „previous‟ and „next‟.

Disclaimer
This information is provided with the understanding that the authors and publishers do not assume any legal responsibility for the completeness or accuracy of the contents or any opinions or views expressed on these pages or linked destination sources.
It is the nature of the media (Internet) that some of the pages may not always be available due to broken or dead links, withdrawals, etc. Whilst the publishers will be pleased to take any appropriate corrective action, for example, by replacing or removing the sources when possible, they unable to assume any legal responsibility for unavailability of any third party material for whatever reason beyond their direct control.

Learning Objectives
The main objective of the workshops is to evaluate IKEA’s corporate strategic planning process and outcomes and their impact on the company’s business level operations. Participants will have an opportunity of developing and enhancing their • strategic thinking and internet research skills • analytical and critical thinking skills by reviewing the factors that influenced corporate centre's decisions on the business

Multinational Corporations
A multinational corporation (MNC) or multinational enterprise (MNE) or transnational corporation (TNC) is a corporation/enterprise that manages production establishments or delivers services in at least two countries.

• • • •

Critiques Examples In fiction Furnishings
• International Furnishing Market

• See also
• Fostering Growth and Promoting a Responsible Market Economy - A G8 Declaration

Annual Report on the Guidelines for Multinational Enterprises The 2005 edition includes a special focus on corporate responsibility in the developing world

Multinational Corporations
Multinational corporations (MNC) are often divided into three broad groups: • Horizontally integrated multinational corporations manage production establishments located in different countries to produce same or similar products. • Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. • Diversified multinational corporations manage production establishments located in different countries that are neither horizontally or vertically integrated.

Multinational Corporations
Multinationals have played an important role in globalization. Given their international reach and mobility, prospective countries, and sometimes regions within countries, must compete with each other to have MNCs locate their facilities (and subsequent tax revenue, employment, and economic activity) within. To compete, countries and regional political districts offer incentives to MNCs such as tax breaks, pledges of governmental assistance or improved infrastructure, or lax environmental and labour standards. This process of becoming more attractive to foreign investment can be characterized as a race to the bottom.

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Introduction to Retailing
Retailing consists of the sale of goods/merchandise for personal or household consumption either from a fixed location such as a department store or kiosk, or away from a fixed location and related subordinated services.[1] In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public or end user customers, usually in a shop, also called store. Retailers are at the end of the supply chain. Marketers see retailing as part of their overall distribution strategy.

Click on Images Source: © Inter IKEA Systems B.V. 2002

Introduction to Retailing
• • • • Shops and stores Retail pricing See also References

Click on Image. Larger Image Source: San Diego State University

Introduction to IKEA
IKEA is a Swedish home furnishings retailer. It has 231 stores in 33 countries, most of them in Europe, the rest in the United States, Canada, Asia and Australia. More than 20 opened during 2005. IKEA is one of the few store chains to have locations both in Israel and in other Middle Eastern nations.

IKEA is generally pronounced (IPA /i'ke.a/) but in many English-speaking regions, it is pronounced (IPA /aɪ'ki:ə/) rhyming with the word "idea". The IKEA catalogue, containing about 12,000 products, is printed in 160 million copies (2006) worldwide, and distributed free of charge. [2] IKEA is famous for its affordable furniture which consumers are required to assemble for themselves.

Click on Image Source: en.wikipedia.org

Introduction to IKEA
• • • • • • • • • • • • • • • • • •

Overview Organization History Products Financial Community Impact Store Format Corporate structure Criticisms Diversity Design Reform IKEA Organisational Culture Popular Culture IKEA's Debut in Each Country Corporate Strategy See also Notes External links • Data • Directory

Click on Image Source: Inter IKEA Systems B.V. 1999 - 2006

Introduction to IKEA
Ingvar Kamprad, believes that: "Most things still remain to be done - a glorious future! Time is your most important asset. Split your life into10minute units and sacrifice as few as possible to futurities" (Mclvor, Laurance, 1994: 38). The corporate culture of Ikea is built upon this philosophy all the way from design teams to suppliers and to the customer. A continuous strife for improvement in all areas of the value chain is an effective way to shape the industry to better fit Ikea's future strategies. Due to the uniqueness of Ikea's strategic positioning, being the largest competitor in its field, the firm has the advantage of setting the phase of the industry.

Click on Image Source: IKEA Deutschland

Introduction to IKEA
Bureaucracy is fought at all levels in the organization. Kamprad believes that "simplicity and common sense should characterize planning and strategic direction" (Bartlett et Al, 1993: 78).

In addition, the culture emphasizes efficiency and low cost which is not to be achieved on the expense of quality or service.
Symbolic policies, such as only flying economy class and stay at economical hotels, employing young executives and sponsoring university programs have made cost part of corporate culture and has further inspired the influx of entrepreneurship into the organization.
Source: Johan Olsson

Click on Image Source: www.csd.uwo.ca

Introduction to IKEA
For instance, all design teams enjoy complete autonomy in their work, but are expected to design new appealing products regularly.

Click on Image Source: Themanager.org

Corporate Strategy
• Background
• Objectives • International Strategy Case Study: How Ikea of Sweden Got to India

• Financial Strategy Re. Case Study: How Ikea of Sweden Got to India

• Marketing • Advertising and Public Relations • Management Strategy
Re. Case Study: How Ikea of Sweden Got to India Click on Image. Larger Image Source: © The M. Polo Group, 2002

• Cultural Challenge • Corporate and Social Responsibility • Conclusions
Re. Case Study: How Ikea of Sweden Got to India

• Also see • Ikea knockoffs a hit with India's elite Swedish chain has no stores there, but its furniture catalog is used by carpenters as a guide to copy designs • In India, it‟s IKEA without the assembly

Corporate Strategy - Background
Background
• The Values that Characterize IKEA
• Vision • Objectives
• Mission (IKEA Concept)

• Product • Turnover • Stores
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• Store Openings 2005 - 2006
• IKEA Catalogue • IKEA Franchising
© Inter IKEA Systems B.V. 2003 - 2006

Source: © Inter IKEA Systems B.V. 1999 - 2004

Corporate Strategy - Objectives
The Challenge
IKEA want to increase the return on investment for the catalogue distribution, which is a substantial investment, and remain ahead of the competition in terms of business strategy. IKEA needs to ensure that catalogue distribution is targeted to reach people who are likely to be or become IKEA customers in terms of their demographic attributes and their likelihood to travel to the store. IKEA requires a solution to maximise their return on investment while expanding their appeal and maintaining their dominant market position. Specifically IKEA‟s key objectives are to: • Identify target consumer types and geographic areas for distribution of catalogue • Identify types and areas with poor sales potential • Increase sales return on catalogue expenditure • Develop business strategy
Source: caci.co.uk

Corporate Strategy - International
• The Internationalization of IKEA
• Joint Ventures • Alternative Entry Strategies • Expansion by Franchising

• Supporting Organizational Structure
• Balance of Autonomy and Strategic Direction

Click on Image. Larger Image. Source: © Transcultural Synergy Ltd

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - International
Joint Ventures
Ikea will need to look at joint ventures and strategic alliances to become successful in the Indian market. Since the government requires that local business operations require 51% control by Indian nationals, Ikea's first step will be to find franchise owners. These in turn will have to form alliance and joint ventures to raise enough capital to develop the links necessary to form a successful entity. In high-risk markets (defined as those that are not similar to Scandinavian markets) Ikea's local market strategy is to develop supplier links in the host country. This is meant to reduce the strategic risk that may result from political legal and financial issues. By developing a relationship with local suppliers, the suppliers can provide valuable input into the opportunities and threats. Joint Ventures mean even more. They establish that the local owner/operators become an integral part of the stakeholder group. It is expected that they will therefore be more contentious of operations and therefore be more successful.

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - Financial
International Financial Market
• The Foreign Exchange Market Foreign Exchange Market • Currency options and futures

Derivatives traders at the Chicago Board of Trade. Foreign Exchange Options by Wikipedia

Click on Image Source: Wikipedia

Main Text Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - Financial
Financial Strategy
The cost of establishing a new store (approximately 22,000 items) is quite high when considering:

• • • • •

Building acquisition, layout and design Sourcing franchise owners and human resources Establishing local supplier links Advertising and promotion of the new location (catalogues are expensive) Stocking the new store

The advantage of borrowing money locally is that the cost of borrowing will be protected from inflation and exchange rate fluctuations. Investment money taken from reserves of other operations may not carry any interest cost and therefore be a cheaper source of investment. In the case of India, if Ikea decides to franchise its operations there, the problem of financing the operation is taken care of through franchising fees and royalties. Return of profit/royalties to Ikea of Sweden could be facilitated in the transfer of product produced in India thus increasing the marginal return from everyone involved.
Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - Financial
Financial Strategy
Profits
Profits in India should be maintained at a similar level to other countries. Since the per capita income of Indian peoples is substantially lower than other markets, product will have to be modified to lower price categories and volumes will have to increase to offset the difference. Except in the largest cities, operation costs should be lower than Western Europe. Labour costs are substantially lower in India, but the Ikea store concept requires little human resources, so cost reductions must rely on other overhead such as store, warehousing, power, taxes and advertising. Probably the most effective method for cost reduction is to source a higher percentage of goods form India. Even Scandinavian designs could be reproduced in India.

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - Marketing
Marketing
Printable Fact Sheets: • The IKEA catalogue • How IKEA creates its low prices • How IKEA is organised • IKEA products are manufactured all over the world • The right quality for IKEA products • IKEA provides solutions for all domestic needs • IKEA stores - everything under one roof Distribution - from supplier to store Click here to IKEA main menu
Click on Image Source: Inter IKEA Systems B.V.
1999 - 2006

Corporate Strategy - Marketing
Marketing
Ikea does not have its own manufacturing facilities. Instead, it is using subcontracted manufacturers all over the world for supplies. All research and development activities are, however, centralized in Sweden. In order to maintain low cost, Ikea shoppers are Pro-sumers - half producers, and half consumers (Normann, 1993: 70). In other words, they have to assemble the products themselves. To facilitate shopping, Ikea provides catalogs, tape measures, shopping lists and pencils for writing notes and measurements. Car roof racks are available for purchase at cost and Ikea pick-up vans/mini trucks are available for rental (Economist, 1994: 101).

Click on Image Source: Inter IKEA Systems B.V. 1999 - 2006

Source: Johan Olsson, 1996

Corporate Strategy - Marketing
Marketing
Effective marketing through catalogues usually attracts the customer at first, what keeps customers coming back is good service.
Ikea believes that a strong in-stock position in which the most popular style and design trends are correctly anticipated is crucial to keep satisfied customers. For that, Ikea depends on leading-edge technology. According to Ikea's logistics manager, "there are a lot of Just-In-Time concepts built into how we're trying to do business" (Chandler, 1993: 12). Ikea has developed its own global distribution network.

Click on Image Source: Inter IKEA Systems B.V.
1999 - 2006

Source: Johan Olsson, 1996

Corporate Strategy - Marketing
Marketing
By utilizing control points in the distribution cycle, the firm is able to insure timely deliver of products to retail stores all over the world.
Internationally, these stores range in size from 20,000 to 30,000 square feet in Hong Kong and in Singapore to 500,000 square feet in Stockholm, Sweden. Ikea has over 1,800 suppliers located in over 50 different nations (Retail Business, 1995: 78).

Ikea's, marketing manager believes that Consumer tastes are merging globally.

Click on Image Source: Inter IKEA Systems B.V. 1999 - 2006

Source: Johan Olsson, 1996

Corporate Strategy - Marketing
Marketing
In one example, Ikea, which has been importing the "streamlined and contemporary Scandinavian style" to the United States since 1985, found at least one opportunity to export an American style to Europe, as Europeans are picking up on some American furnishing concepts. In order to respond to this new demand, Ikea now market "American style" furnishings for the European market.

Click on Image Source: © 2006 by the US-China Business Council

Source: Johan Olsson, 1996

Corporate Strategy - Marketing
Advertising and Public Relations
Ikea's success is based on the relatively simple idea of keeping the cost between manufacturers and customers down. According to Ingvar Kamprad, the founder of Ikea; "To design a desk which may cost $1,000 is easy for a furniture designer, but to design a functional and good desk which shall cost $50 can only be done by the very best. Expensive solutions to all kinds of problems are often signs of mediocrity." (Chandler, 1993: 12)

Costs are kept under control starting at the design level of the value-added chain. Ikea also keeps costs down by packing items compactly in flat standardized embalages and stacking as much as possible to reduce storage space during and after distribution in the logistics process (Economist, 1994: 101).
Source: Johan Olsson, 1996

Click on Image Source: Forbes

Corporate Strategy - Advertising and PR
Advertising and Public Relations
• Online Promotion
• IKEA stand at HotelExpo 2006 exhibition • IKEA catalog “Furnishing Recipes for Hotels Big and Small”

• “Fixhult” print ad for IKEA
• “Uninterruptible Food Supply”, IKEA print ad • IKEA print ad “Any table can become a smorgasbord” • IKEA promotion page “Office of Decorum”
Click on Image Source: © 1995–2006 Art. Lebedev Studio

Corporate Strategy - Advertising and PR
Advertising and Public Relations
• “Four Neat Examples of Orderly Business Practices”, an IKEA print ad
• IKEA B-to-B website • B2B IKEA • Do you know what‟s the Swedish for “thanks”?

Click on Image Source: Inter IKEA Systems B.V. 1999 - 2006

Corporate Strategy - Management
IKEA Management Strategy
IKEA is a very successful multinational corporation, which indicates that earlier discussed focused generic, or long-term strategy of cost leadership and product differentiation has served it well. IKEA approaches unknown, small, high risks markets by franchising. So this company actively expands in this field as well. IKEA has a lot of subsidiaries in many countries of the world. Franchisees have to carry basic items, but have the freedom to design the rest of the products.

Click on Image. Larger Image Source: Kanji Quality Culture Also see Management by Wikipedia.

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - Management
• Cost leadership as a part of the management process • Differentiation strategy

Click on Image Source: Professional Management Review Africa

Corporate Strategy - Culture
Cultural Challenge
In international business, the culture is very important and we can consider one fundamental element " the culture shock" where there are several stages in the difference of the country‟ culture: the honeymoon stage (we know that it is a new culture and we want to be there), the irritation-hostility stage, the gradual adjustment and the bi-culturalism, at this stage, the company gets a comfortable way in the settlement of the new culture.

Click on Image Source: Inter IKEA Systems B.V. 1999 - 2006

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - Culture
Cultural Challenge
But, few countries in the world have such an ancient and diverse culture as India. India‟s culture has been enriched by successive waves of migration, which were absorbed into the Indian way of life. And, the diversity lies the continuity of Indian civilization and social structure from the very earliest times until the present day. Modern India presents a picture of unity in diversity to which history provides no parallel. Moreover, the Indian Council for Cultural Relations (ICCR) has been working to project Indian culture abroad and to bring to India the rich manifestations of international culture. It has thus become a major vehicle of international cultural exchange.
Doing Business in India Source: © 2000-2005 Executive Planet Inc.

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - Culture
Cultural Challenge
We can also focus on the Indian‟s process of development, which has been accompanied by significant social changes and an increasing awareness about issues. This period has also seen the burgeoning of the voluntary movement in India.

Today, the Government makes constant attempts to promote values like democracy and independence and India is working to have equal opportunities in all spheres of life. We cannot rule out the Indian Art, because it is also an Art of social, political and religious influences. It changed and evolved with the evolution of a civilization, which is full of remarkable innovation.

Click on Image Source: india-seminar.com

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - Culture
Cultural Challenge
Finally, we can make point on Indian religion, because it is another way of life and an entire part of Indian tradition.
So in doing business with India, IKEA have to make attention with the culture and the communication (verbal and non-verbal) because the communication can be interpreted in different meanings and can provoke some mistakes, misunderstanding and also some troubles. So, the firm has to be careful with the context where it decides to set up its business.

Click on Image Source: © 2003 international-businesscenter.com

Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Corporate Strategy - CSR
Corporate and Social Responsibility
“Is it possible to make traditional business objectives and social and environmental responsibility work together for the benefit of the many? We believe they can work very well together. IKEA makes good business while being a good business. We realize that we are only at the beginning and we have a long way to go but we are proud of the results achieved so far. IKEA CSR activity involves three main areas: children, better living and environmental projects.”
Click on Image Source: Inter IKEA Systems B.V. 1999 - 2006

Corporate Strategy - CSR
Corporate and Social Responsibility
“IKEA wants its products to have the minimum impact on the environment. And for these products to be manufactured in a socially responsible way.

• Low price but not at any price
• The IKEA code of conduct • We use resources wisely • Projects we support

• Read our brochure and report
• UK corporate and social responsibility”
© Inter IKEA Systems B.V. 2003 - 2006

Corporate Strategy - CSR
Corporate and Social Responsibility
• Special Report: Tackling Child Labour • Child Labour Resource Guide

Source:

Corporate Strategy - Conclusions
Conclusion, Appendices and References
Together with innovative changes in the value chain, where consumers become Pro-sumers and suppliers are turned into consumers, the concept of marketing high quality products at low cost through a focused generic strategy, intended for the globally emerging middle-class has served Ikea well. Centralized control and product standardization is two necessary components of the firm's long-term strategy. In addition, the company has facilitated its international expansion through owned subsidiaries subsidiaries and franchises. Future localization pressures will force Ikea to change its global strategy in order to become more sensitive to local demands. Greater emphasis on joint ventures and strategic alliances represent possible vehicles to further build on Ikea's focus strategy. A new transnational oriented organizational structure would further provide the necessary infrastructure needed to support such vehicles towards true internationalization. This in turn would impact on the present homogenous Scandinavian culture and introduce new values, ideas and, perhaps, broaden Ikea's core competencies.
Source: Global Perspectives: Case Study: How Ikea of Sweden Got to India

Business Analysis
1. Benefits of Business Analysis 2. Roles of Business Analysts 3. Business Process Improvement 4. Goal of Business Analysts 5. External Links Also see Quantitative Method From Wikipedia, the free encyclopedia
Larger Image Source: BizEd Click on Image

Business Drivers
Also see
• Association of Master Upholsterers and Soft Furnishers • Furniture Industry Research Association (FIRA) • Kitchen Specialists Association (KSA) • National Bed Federation (NBF) • The association for British Furniture Manufacturers (BFM) • Economic Value Added
Larger Image Source: Metapraxis

Quantitative Methods
Quants Handbook
Lecture 1: Functions & Economic Relationships Lecture 2: Economic Models/Linear Models Lecture 3: Basic Differential Calculus Lecture 4: Optimisation Lecture 5: Functions of Several Variables Lecture 6: Unconstrained Optimisation Lecture 7: Constrained Optimisation Lecture 8: Growth & Dynamics Lecture 9: Introduction to Difference Equations
Click on Image Source: Brian C. McCarthy Ohio University

Source: Bob Beachill Leeds Metropolitan University [email protected]

Strategic Business Analysis
SWOT Analysis
• PEST market analysis tool • Porter's Five Forces Model • Resources and Capabilities

• Value Chain
• Managing Your Value Chain • Organisation • Organisational Culture • attitudes, • values, • beliefs, • norms and • customs • Organisational Capabilities • Financial Analysis
Larger Image Click on Image Source: Wikipedia Click on Image Source: QuantAA

Organisation
An organization or organisation (read more about -ize vs -ise) is a formal group of people with one or more shared goals. The word itself is derived from the Greek word ὄργανον (organon) meaning tool. The term is used in both daily and scientific English in multiple ways. • Organization terms • Organisation in sociology • Organisation in management and organisational studies • Organization theories • Organizational structures • Pyramids or hierarchies • Committees or juries • Staff organization or crossfunctional team • Matrix organization • Ecologies • "Chaordic" organizations • See also
• Related lists

• References

Click on Image. Larger Image. Source: Howell & Costley

Financial Statements: The System

Larger Image Larger Image Click on Images Source: Investopedia.com

Financial Statements: Analysis
1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) Financial Statements: Introduction Financial Statements: Who's In Charge? Financial Statements: The System Financial Statements: Cash Flow Financial Statements: Earnings Financial Statements: Revenue Financial Statements: Working Capital Financial Statements: Long-Lived Assets Financial Statements: Long-Term Liabilities Financial Statements: Pension Plans Financial Statements: Conclusion Printer friendly version (PDF format)
Source: Investopedia.com Larger Image Click on Image Source: Investopedia Inc

Financial Ratios
A financial ratio is a ratio of two numbers of reported levels or flows of a company. It may be two financial flows categories divided by each other (profit margin, profit/revenue). It may be a level divided by a financial flow (price/earnings). It may be a flow divided by a level (return on equity or earnings/equity). The numerator or denominator may itself be a ratio (PEG ratio). • Ratios
• • • • • • Flow-to-flow Level-to-level Ratio-to-ratio To cash flow To earnings To market cap Larger Image Download Financial Ratio Analysis (177K) for Microsoft Excel. Source: Baarns Consulting Group

• See also • External links

Competitive Position: Competitive Advantage
Literature Review
• Strategic Planning • Competition

• What in the World is Competitive Advantage?
• Competitive Postion: Competitive Advantage • What is Sustainable Competitive Advantage • Sustainable Competitive Advantage • Creating Business Value
Click on Image Source: BRS

• Interest Alignment Rents and Competitive Advantage
• Performance measures to support competitive advantage
Click on Image Source: businessballs.com

Competitive Position: Competitive Advantage
Literature Review
• Competitive strategy • Michael Porter: Generic Strategies • Risk-related Challenges

Larger Image Click on Image Source: Vadim Kotelnikov, GIVIS, Ten3 East-West

Also see Annotated Lecture Outline

Strategic Capability: Core Competence
Literature Review
• Corporate Capabilities • Core Competency • Strategic Intent • Innovation • New Paradigm: Resource-Based Theory • Theory of Constraints • Value Chain • IKEA Modified Value Chain • Organisational Culture • Organisational Structure • Economic Value Added • Six Sigma
Larger Image Click on Image Source: Sumitomo Corporation

Also see Annotated Lecture Outline

Global Strategies
Literature Review
• Going Global: Assess Market Opportunities • Institutions and Business Strategies in Emerging Economies: A Study of Entry Mode Choice • Globalization, Models of Competitive Advantage and Skills • The Competition of Countries • Competitiveness of Nations: The Fundamentals • Economist Country Briefings
Click on Image Source: Agrium Inc. 2004

Also see Annotated Lecture Outline

Strategic Decision Making
Literature Review
• Decision Theory • Decision Making • Game Theory • The Future of Game Theory

Click on Image Source: Yale Economic Review

Also see Annotated Lecture Outline

Strategic Planning
Strategic planning consists of the process of developing strategies to reach a defined objective. As we label a piece of planning "strategic" we expect it to operate on the grand scale and to take in "the big picture" (in contradistinction to "tactical" planning, which by definition has to focus more on the tactics of individual detailed activities).

Click on Image Source: Long Range Planning - International Journal of Strategic Management

"Long range" planning typically projects current activities and programs into a revised view of the external world, thereby describing results that will most likely occur (whether the planner wants them or not!)
Also See Introduction to Strategic Management

Strategic Planning
"Strategic" planning tries to "create" more desirable future results by

(a) influencing the outside world or
(b) adapting current programs and actions so as to have more favorable outcomes in the external environment.

Click on Image Source: [email protected]

Strategic Planning
• Methodologies • Situation Analysis • Identifying cultures • Perspectives • Ethnographical versus Clinical approach • Functionalistic versus Interpretionistic approach • Artifacts • Visible artifacts • Invisible artifacts • Culture types • Changing cultures and strategy • Approaches • Resistance • Measurements • Goals, objectives and targets • Mission statements and vision statements • Why strategic plans fail • External links

Click on Image. Larger Image Source: University of Cambridge, Department of Engineering

Competitive Position: Competitive Advantage
Competition is the act of striving against another force for the purpose of achieving dominance or attaining a reward or goal, or out of a biological imperative such as survival. Competition is a term widely used in several fields, including economics, business, politics, and sports. Competition may be between two or more forces, life forms, agents, systems, individuals, or groups, depending on the context in which the term is used.

• Sizes and levels of competition • Consequences of competition • Competition in different fields
• Economics and business competition • Competition in biology and ecology • Competition in politics • Sports competition • Competition in education

• The Study of competition
• Competitiveness
• Econometrics

• See also

Click on Image Source:Brecker Associates

Sustainable Competitive Advantage
• Owning Competitive Advantage • Competition

• Hypercompetition

Larger Image Click on Image Source: Vadim Kotelnikov, GIVIS, Ten3 East-West

Sustainable Competitive Advantage
In marketing and strategic management, sustainable competitive advantage is an advantage that one firm has relative to competing firms. The source of the advantage can be something the company does that is distinctive and difficult to replicate, also know as a core competency, for example P&G' ability to derive superior consumer insights and implement them in managing its brand portfolio.

Larger Image Click on Image Source: Infosys Consulting

Creating Business Value
Information technology facilitates new and more efficient way of creating business value in the new economy. As a result, instead of the traditional vertically integrated value chains, organizations must adopt business models based on independent layers of value-creating activities.

• Meltdown of the Value Chain
Impact of rising strength of emerging economies on market expansion Role of emerging market conditions on first mover advantages Sources of first mover advantages in emerging markets Strategies to sustain these advantages

• Complementing for Complexity: Leading Through Managing The first mover in an emerging market

Source: General Management Review

Competitive Strategy: Michael Porter
• Michael Porter: Generic Strategies

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Strategic Capability: Core Competence
• Internal capabilities • Corporate capabilities

• Resource-based view
• Capabilities in the new economy • Synergy • Patents • Effective leadership • Teamwork • Continuous learning
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• Tacit knowledge

Core Competency
• Core Competency
• The Work of Hamel and Prahalad

• Sustainable competitive advantage
• Synergy

• The Competence Problem
• Principles and Functions of Management - Henri Fayol • Qualities of a Successful Manager • The Motivation and Performance Obsession • Leadership and Management • Managerial Competency Questionnaire
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Strategic Intent
• Corporate Vision, Mission, Goals and Strategies • Your Enterprise Strategy • Dynamic Business Strategy • Strategy Innovation • Marketing and Selling

• Strategic Thinking
• New-to-the-World Product Development • Managing Your Value Chain • Strategy Implementation
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Innovation
• Efficiency Improvement • New ways of doing business

• New rapidly globalizing economy
• Technological innovation
• Technology Transfer

• Fast Company • Reaching and servicing customers • The Entrepreneur • Innovation project management
• Roadmaps
• Guiding principles • Business processes
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New Paradigm: Resource-Based Theory
• Strategic Marketing and the Resource Based View of the Firm • Business Strategy
• Setting Objectives & Planning

• Customer Satisfaction
• Performance Management • Performance Measurement System

• Balanced Scorecard (BSC)
• Service-Profit Chain • Sustainable Growth Strategies

• Porter's Five Forces Model for Industry Analysis • Economic Value Added (EVA) • Business Architect
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Theory of Constraints
Theory of Constraints (TOC) is a body of knowledge on the effective management of (mainly business) organizations, as systems. The author is Eliyahu M. Goldratt, with many others contributing to the body of knowledge.
• The Thinking Process (TP) • Throughput Accounting
• Application-specific TOC solutions • Operations • Supply Chain / Logistics • Finance and Accounting • Project Management • Marketing and Sales • The Six Necessary and Sufficient Questions relating to Technology • Development and practice • Also See • References

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A Guide to Implementing the Theory of Constraints (TOC)

Value Chain

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IKEA Modified Value Chain
Michael Porter argues that an organization can enhance its competitive positioning by performing key internal activities in the value chain at a lower cost and better than its competitors (Bartol et al, 1993: 211).

The value chain approach identifies two major activities- primary and secondary. Primary actives include production, marketing, logistics and after-sale functions. Secondary activities, on the other hand, are identified as support processes to primary activities.

IKEA Modified Value Chain
These include, firm infrastructure, Human Resource Management. Technology development, and procurement. The ultimate purpose of the firm is to add as much customer "value" in each of the primary activities (Pearce et. al, 1993: 184187). Ikea has modified the value chain approach by integrating the customer in the process and introducing a two-way value system between customers, suppliers, and Ikea's headquarters. In this global sourcing strategy, the customer is a supplier of time, labor, information, knowledge and transportation. On the other hand, the suppliers are customers, receiving technical assistance from Ikea's corporate technical headquarters through various business services. The company wants customers to understand that their role is not to consume value, but rather to create it (Norrmann et al, 1993: 67).

IKEA Modified Value Chain
Ikea's role in the value chain is to mobilize suppliers and customer to help them further add value to the system. Customers are clearly informed in the catalogs of what the firm's business systems provides, and what they are expected to add to the final process. In order to furnish the customer with good quality products at a low cost, the firm must be able to find suppliers that can deliver high quality items at low cost per unit. The headquarters provides carefully selected suppliers with technical assistance, leased equipment and the necessary skills needed to produce high quality items. This long-term supplier relationship does not only produce superior products, but also add internal value to the suppliers (Normann et al, 1993: 72). In addition, this value-chain modification differentiates Ikea from its competition.

Organisational Culture
Organizational culture comprises the attitudes, values, beliefs, norms and customs of an organization. Whereas organizational structure is relatively easy to draw and describe, organizational culture is considered to be less tangible and more difficult to measure. It is also called Company Culture.

• Influences on organizational culture • Strong/Weak cultures • Classifying organizational culture • Johnson‟s Cultural Web • Hofstede • Deal and Kennedy • Charles Handy • Edgar Schein • Elements of culture • Critical Views on Organizational Culture • Figures in organizational culture • See also • Sources

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Organisational Structure
Organizational structure is the way in which the interrelated groups of an organization are constructed. The main concerns are effective communication and coordination.

• Pre-bureaucratic • Bureaucratic • Functional Structure • Divisional Structure • Post-Bureaucratic • Matrix organization
• Multi-Unit Organization • Adhocracy

• See also

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Economic Value Added
What Does Economic Value Added Really Mean?
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Six Sigma
Six Sigma was pioneered by Bill Smith at Motorola in 1986[1]. Originally, it was defined[2] as a metric for measuring defects and improving quality; and a methodology to reduce defect levels below 3.4 Defects Per (one) Million Opportunities (DPMO). Six Sigma is a registered service mark and trademark of Motorola, Inc[3]. Motorola has reported over US$17 billion savings[4] from Six Sigma to date. AlliedSignal and GE became early adopters of Six Sigma and reported benefits of over US$300 million during its first year of application[5]. Their CEO's, Larry Bossidy and Jack Welch, played a vital role in popularizing Six Sigma. Other major organizations who claim to have benefited from Six Sigma implementation are Ford, Caterpillar, Microsoft, Raytheon, Quest Diagnostics, Seagate Technology, Siemens, Merrill Lynch, Lear, 3M and many more.
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Six Sigma
• Definition • Application & Success
• • • • • Healthcare Banking Insurance Construction Military

• Methodology
• DMAIC • DMADV

• Roles Required for Implementation • Examples of Some Key Tools Used • Criticisms of Six Sigma
• • • • • Of its origin Of the term: Six Sigma Of statistics Of methods Of effects

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• References • See also • External links

Global Strategies
Globalisation
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Global Strategies
Globalization (or globalisation1) refers to the worldwide phenomenon of
technological, economic, political and cultural exchanges, brought about by modern communication, transportation and legal infrastructure as well as the political choice to consciously open cross-border links in international trade and finance. • • • • • • • • • • • Meaning & Debate History Nature and existence of globalization Characteristics Anti-globalization Pro-globalization (globalism) Other uses Measurement of Globalization Notes See also External links

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Comparative Advantage
In economics, the theory of comparative advantage explains why it can be beneficial for two countries to trade, even though one of them may be able to produce every kind of item more cheaply than the other. What matters is not the absolute cost of production, but rather the ratio between how easily the two countries can produce different kinds of things. The concept is highly important in modern international trade theory.

• Origins of the theory • Analysis of Ricardo's theory
• • • • Examples Example 1 Example 2 Example 3

• • • •

More complexities References See also External links

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International Trade
International trade is the exchange of goods and services across international boundaries or territories. In most countries, it represents a significant share of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact. Increasing international trade is the usually primary meaning of "globalization".

• International trade theory
• • • • Ricardian model Heckscher-Ohlin model Specific Factors Gravity model

• Regulation of international trade • Risks in international trade
• Economic risks • Political risks

• See also • External links
• Data
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Multinational Corporations
A multinational corporation (MNC) or multinational enterprise (MNE) or transnational corporation (TNC) is a corporation/enterprise that manages production establishments or delivers services in at least two countries.

• • • •

Critiques Examples In fiction See also
• Fostering Growth and Promoting a Responsible Market Economy - A G8 Declaration

Annual Report on the Guidelines for Multinational Enterprises The 2005 edition includes a special focus on corporate responsibility in the developing world

Multinational Corporations
Multinational corporations (MNC) are often divided into three broad groups: • Horizontally integrated multinational corporations manage production establishments located in different countries to produce same or similar products. • Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. • Diversified multinational corporations manage production establishments located in different countries that are neither horizontally or vertically integrated.

Multinational Corporations
Multinationals have played an important role in globalization. Given their international reach and mobility, prospective countries, and sometimes regions within countries, must compete with each other to have MNCs locate their facilities (and subsequent tax revenue, employment, and economic activity) within. To compete, countries and regional political districts offer incentives to MNCs such as tax breaks, pledges of governmental assistance or improved infrastructure, or lax environmental and labour standards. This process of becoming more attractive to foreign investment can be characterized as a race to the bottom.

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Decision Theory
Decision theory is an interdisciplinary area of study, related to and of interest to practitioners in mathematics, statistics, economics, philosophy, management, and psychology. It is concerned with how real decision-makers make decisions, and with how optimal decisions can be reached. • Normative and descriptive decision theory • What kinds of decisions need a theory?
• Choice between incommensurable commodities • Choice under uncertainty • Pascal's Wager of choice under uncertainty • Alternatives to probability theory • Intertemporal choice • Social decisions

• • • •

Complex decisions Paradox of choice See also References

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Decision Making
Decision making is the cognitive process of selecting a course of action from among multiple alternatives. Every decision-making process produces a final choice. It can be an action or an opinion. It begins when we need to do something but we do not know what. Therefore decision-making is a reasoning process which can be rational or irrational, and can be based on explicit assumptions or tacit assumptions.

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Decision Making
• Decision making style • Cognitive and personal biases in decision making • Cognitive neuroscience of decision making • Decision making in groups
• Principles

• • • • • • • •

Decision making in one's personal life Decision making in healthcare Path dependency Decision making in business and management See also References External links Some important research journals
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Game Theory
Game theory is a branch of applied mathematics that studies strategic situations where players choose different actions in an attempt to maximize their returns. First developed as a tool for understanding economic behavior, game theory is now used in many diverse academic fields, ranging from biology, psychology to philosophy. Beginning in the 1970s, game theory has been applied to animal behavior, including species' development by natural selection. Because of interesting games like the prisoner's dilemma, in which rational selfinterest hurts everyone, game theory has been used in political science, ethics and philosophy. Finally, game theory has recently drawn attention from computer scientists because of its use in artificial intelligence and cybernetics.

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Game Theory
• Representation of games
• Normal form • Extensive form

• Types of games
• • • • Symmetric and asymmetric Zero sum and non-zero sum Simultaneous and sequential Perfect information and imperfect information • Infinitely long games

• Uses of game theory
• Economics and business • Descriptive • Normative • Biology • Computer science and logic • Political science • Philosophy

• History of game theory • Notes • References

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Also see Game Theory, Strategic Behavior, and Oligopoly

Competitive Position - Competitive Advantage
1/4
Lecture Opening Remarks It is useful to start the session by recapping on the previous lecture and emphasizing the notion of „strategy as imperfection‟ or the quest for „unfair‟ advantage. This lecture explores the idea of competitive advantage in more detail and puts some flesh on the bare bones of generic strategies introduced in the preceding session. The lecture focuses on the idea that strategy is about the position of an organisation with respect to its markets and competitors (the so called market-based or positioning school) and looks at the relationships between market structure, pricing and strategy.
The Market Positioning School A recap on the „generic strategies‟ framework introduced briefly in the last chapter and restatement of the stuck in the middle hypothesis.

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Competitive Position - Competitive Advantage
2/4

The Nature and Source of Cost Advantage A more detailed look at the nature and sources of cost advantage focussing on the links between economies of scale, scope and learning and the achievement of cost advantage. The Nature and Source of Differentiation Advantage A more detailed look at the nature and source of differentiation advantage and the risks associated with this strategy emphasising the difference between differentiation and cost based strategies. Identifying the potential for differentiation. The Concept of Competitive Advantage A definition of competitive advantage and a description of its constituent elements. An explanation of firm-specific imperfections as the source of competitive advantage and the interrelationship between industry structure and competitive advantage.. This latter point may be omitted from undergraduate lectures and developed in a tutorial context. Figure 6.7. An explanation of the concept of sustainability and its determinants (on undergraduate programmes this may be included a little later in the course)

Competitive Position - Competitive Advantage
3/4
Three Major Routes to Competitive Advantage: Is it possible for a firm to pursue more than one generic strategy? A re-statement of the „stuck in the middle‟ hypothesis and a summary of the reasons for arguing that, in order to be successful, a firm should commit to a single strategy. The critique of this position and the implications of composite strategies. The relationship between generic strategies and market structure (this may be omitted on undergraduate programmes). On undergraduate programmes the following sections may form the basis of a second lecture
Market Segmentation Analysis The rationale for market segmentation analysis. The concept of offer curves and price/quality trade-offs (this element may be omitted on undergraduate programmes). The identification of segmentation variables. Value Creation and Value Analysis The concept of value and consumer surplus. The link between value, competitive strategy and competitive advantage. Value maps could be included if time permits but can be omitted without losing the main thrust of the argument.

Competitive Position - Competitive Advantage
4/4
Strategic Group Analysis An explanation of the concept of strategic groups and rationale for this kind of analysis. Mapping strategic groups over time and strategic groups in practice. Industry Transformation Using the 5 forces framework to gain insight into industry transformation. On undergraduate programmes this may be omitted from the main lecture and developed in tutorial sessions.
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Business Models This is an optional part of this session and may be considered in a later slot. An explanation of the terminology. The key elements of a business model. Business models in practice. Achieving a sustainable and defensible strategic position.

Strategic Capability: Core Competence 1/3
Lecture – a recap of prior concepts and the logic of the market-based view of the firm. A discussion of the way this lecture fits with the overall framework of the strategy course. SLIDE: Figure 1.6 A systemic model of strategy The Resource-based View of the Firm- an explanation of the main tenets of the resourcebased view and the ways in which it differs from the market-based view. SLIDE: The market-based versus the resource-based view of the firm.

The Language of Resources and Capabilities – a discussion of key terminology, for example „capabilities‟, „competences‟, „strategic assets‟ highlighting the fact that different authors use different terms to refer to similar concepts. SLIDE: Some key definitions SLIDE: Core Competences = Distinctive Capabilities = Strategic Assets The Importance of Intangibles – an explanation of what is meant by intangibles and why they are considered to be of particular importance SLIDE: Identifying Intangibles p. 263

Strategic Capability: Core Competence 2/3
Determining the Value of Competences – an explanation of the concepts of imitability, durability, substitutability and appropriability. SLIDE: Figure 7.5 Linking the Market-based and Resource-based Views – discussion of the ways in which these two perspectives complement each other which draws on the notion of key success factors. For undergraduates this could be the concluding slide. SLIDE 7.10 SLIDE: Figure7.6

Strategic Capability: Core Competence 3/3
Competence-based Competition – an introduction to the notions of strategic intent and strategic innovation, emphasizing the role of learning. SLIDE: Figure 7.7 Competitive strategy in practice – some prescriptive advice about managing the business for value and positioning the business for growth. More suited to postgraduate students with management experience. SLIDE: Figure 7.2 SLIDE: Figure 7.15
Concluding comments – a brief summary of the key ideas highlighting of the fact that every firm is different and that managerial processes, information and communication together with intangible assets and core competences are central to developing and sustaining competitive advantage.

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Global Strategies 1/6
Lecture The 'global strategies and international advantage' topic covers a lot of ground and on undergraduate programmes it might be worthwhile covering the topic over two lectures. The first lecture could focus on the concept globalization and the pursuit of international competitive advantage at the nation and industry level. The second could focus on firm level choices and the strategic options available to international firms Introduction – opening remarks should establish the link with previous lectures on competitive and corporate strategy and explain this lecture‟s focus on the global arena.
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Global Strategies 2/6
The Terminology of International Business – an explanation of key terms and the introduction of the notions of internationalization and globalization. Slide: The terminology of international business (list of key definitions drawn from p.412 and 413) The Context of International Strategy – a brief review of the major trends in trade and foreign direct investment. A discussion of the factors driving globalization Slide: Table 11.1 and 11.2

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Global Strategies 3/6
National Competitive Advantage – an introduction to, and explanation of, the determinants of national competitive advantage (Porter‟s diamond model). Lectures to postgraduate audiences could also include a discussion of the limitations of the model (discussed on p.434-436 of the text) and introduce the double diamond model. Slide: Figure 11.1 The Internationalization process – an explanation of the ways in which domestic firms develop their overseas activities and the evolution of different forms engagement in foreign markets over time. A summary of the advantages and disadvantages of these different forms of international activity, e.g. licensing, foreign direct investment, etc. Slide: Figure 11.2

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Global Strategies 4/6
From international to global strategies – a reiteration of the opening themes of internationalization, moving to a discussion of the strategic options available to multinational firms, introducing the notion of multi-domestic and global strategies. Slide: Figure 11.3 Slide: Bullet points contrasting multi-domestic and global strategies The Drivers of Globalization – a discussion of the forces that are driving the industries and firms to go global and the limitations of, and tensions in, this process Slide: Table 11.4 Global v Local – an outline of the trade-offs between standardisation and differentiation and the link between the strategic environment and available strategic options. Slide: Table 11.5 Strategic Choices – an explanation of Bartlett and Ghosal's four basic strategies used to enter and compete in international environments Slide: Figure 11.5 The Best of Both Worlds – Transnational Strategies – an outline of what is understood by a transnational strategy and an explanation of implementing this strategy in practice.

Global Strategies 5/6
Strategy and Organization – a return to one of the key themes running through the strategy literature, namely the strategy/structure debate. A discussion of the fit between strategy and structure in international firms, paying particular attention to Bartlett and Ghoshal's (1989) model. If time permits the lecturer may also like to re-introduce the notions of country-specific and firm-specific advantages and Rugman & D'Cruz's (2000) 'flagship'model Slide: Figure 11.7 Slide: Figure 11.11 (optional) Managing International Organizations – an explanation of the complexity inherent in organising a multi-product, multi-market firm and a discussion of the ways in which managers may seek to organise and control such businesses. Slide: Bullet points for and against a matrix structure Slide: Figure 11.13

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Global Strategies 6/6
Concluding Comments – a summary of some of the main themes including the nature of globalization and the significance of national competitive advantage, the global/local debate and the way this connects with firm-specific versus country-specific advantages, the tantalizing possibility of gaining the 'best of both worlds' through transnationality and the possibilities and problems of developing appropriate organizational structures and systems to make the transnational organization a reality
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Strategic Decision Making 1/4
Lecture - a discussion of the change in emphasis from micro and macroeconomic analyses of strategy to more process-based approaches. A re-iteration of the earlier theme of 'what happens when strategy meets organization?' Slide: Figure 2.2 Different perspectives on strategic decision-making - an explanation of Mintzberg, Quinn and Ghoshal's (1998) 5 'Ps' of strategy and a discussion of the ways in which the dominant view of strategic decisionmaking has changed over time. Slide: Bullet points outlining the 5 Ps of strategy

Making Choices - an explanation of rules of thumb and option selection techniques emphasizing the fact that the way strategy is viewed determines, at least in part, the techniques used to aid decision-making. Slide: Table 13.1

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Strategic Decision Making 2/4
Game Theory - an explanation of the basic terminology and approach of game theory and the introduction of a simple game such as the Prisoners' Dilemma. Undergraduate lectures may choose to omit the slide and merely introduce the general concept of game theory. Slide: Table 13,2 Sensitivity Analysis - a brief explanation of the technique Slide - Definition of sensitivity analysis from 13.2.2 Options - an explanation of the key dimensions of strategic options namely the identification of additional or alternative capabilities and the identification of potential future markets and/or new customer behaviours. Slide: Figure 13.1

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Strategic Decision Making 3/4
Decision-making Processes: Thinking and Acting - a reiteration of the point that decision-making is not a simple process that happens in a linear sequence - a period of thinking and followed by a period of acting. Decision-making and the development of alternative courses of action are fashioned in their doing. An explanation of different perspectives on decision-making processes e.g. planned v chaotic Slide: Figure 13.2 and the architecture of strategic decision-making The architecture of strategic decision making - the importance of decision-specific characteristics and organizational context to decision-making processes. (Please note: undergraduate tutors may decide to omit this topic from the lecture and to explore these issues raised in separate lectures.) Slide: Bullet points taken from top of page 514 Slide: bullet points taken from middle of page 515

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Strategic Decision Making 4/4
Strategic Decision-making and Performance - a discussion of the relationship between decision processes and their outcomes, highlighting the importance of the knowledge base of managers and the receptivity of the organizational context Slide: factors of success - bullet points of subheadings in 13.5.2 Closing remarks - A re-statement of the key themes of the lecture placing emphasis on not only the choices made but also on how managers make decisions and the relationship between decision-making processes and performance outcomes.

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