Professor Charles McMillan

charlesmcmillansgi@gmail.com
September 17,21-2015

SGMT 6000 Session 1

Corporate Strategy Course

Framework

 Many course names Business

Strategy, Strategic Management,
Corporate Strategy, Leadership and
Strategy, etc..
Multiple viewpoints historical,
economic, psychological,
organizational;
Multiple tools: case studies, crosssectional, longitudinal, author insights,
statistical, etc.;
Different Levels Functional, Business,
Corporate, Enterprise.

Quick Overview of Course

Searching for the Holy Grail

 Core Theme: Canadian firms dont play

Hardball.

Study of Strategy for the Organization as

an Integrated Whole;
Best Practice Organizational Framework vs.
How Organizations are Managed;
Strategy: Integration of behavioural
science, economics, and basic statistics;

6000 Course Framework

SGMT 601:
Necessary
Frameworks

Real Chore =
Too Many Readings,
Required Course
Sweet Spot

Ideal Learning
Experience

SGMT 6000 Three Viewpoints

More complexity, Global Mind-Set

Time Frames: Decades Since Early 1950s

Case
Studies

Theory of
The Firm

Competitive
Positioning
Corporate
Alignments

Brand Value
Networks,
Time Based

Evolution of Strategic Management

 Strategy usually involves three levels:

Organizational, business, and functional.

Future orientation of a firm, providing

coordinated decision, based on internal
capabilities against external environmental
benchmarks;

Set of decisions and actions that result in

formulation and execution of ideas and
plans to achieve key objectives;

Strategic Management

 Competitive
Forces

Life Cycles

Industry
Positioning

Asset
Positioning

Corporate
Strategy

Stretch Assets
Reinforcing Strengths

Exploit Competencies

Value
Positioning

Start ups
Transformations

Innovations

Corporate Strategy Models

Strategic Choice: Fork in the Road

Drucker

Schumpeter

David Ricardo

Adam
Smith

Max Weber/
Fred Taylor

Karl Marx

Key Concepts:

Military Writers:
Machiavelli,
Von Clausewitz,
Napoleon

Military
Practitioners:
Caesar, Genghis Khan

Ancient
Writers;
Sun Tsu

Key Concepts: Management,

Innovation, Competitive Advantage,
Innovation, Human Psychology

Manoeuvre, unity of command,

Surprise, deception, simplicity

Thus we may know that there are five essentials for victory:
1 He will win who knows when to fight and when not to fight.
2 He will win who knows how to handle both superior and inferior forces.
3 He will win whose army is animated by the same spirit throughout all its ranks.
4 He will win who, prepared himself, waits to take the enemy unprepared.
5 He will win who has military capacity and is not interfered
with by the sovereign.
Sun Tzu, The Art of War

History of Strategy

Strategy Learning from History

Environmental Change: Volatility Index

Daily, Weekly
In-House
QC Tools

Countries
Branding
Promotions

Cash flow
Borrowing
Share Price

Processes
Products
Engineering
IT Tools

Four T Strategic Analysis

Tactics
Operations
Execution
Short Term
Taking Charge
Changing
Map

Strategy
Decision Makers
Top Priorities
Medium Term
Declarative
Stable
Directional

Leadership, the Organization, and Capacity for Change

Diverse Audience
Broad Direction
Long Term
Inspirational
Enduring
High Energy

Vision

Vision, Strategy, and Tactics

Strategy: A Matter of Timing

Globalization and its Consequences

 Other tools: business plan, study firm

(Osler model), study non-business
approaches;
Harvard: Spend a term in a poor
country.

No one model Harvard case study

approach, highly theoretical (Chicago);

Traditionally, major integrating

course total vs. silo-functional view;

SGTM in Business Schools

The Business of Business Schools

 Like fashion goods, rapid growth

means decline in quality;
Core product is debased by bad
theories taught by weak theorists;
MBA Schools face Bipolar Shopping
Disorder Weak Schools want the
Business Model of the Top Schools,
without the Payoff Few schools meet
the Louis Vuitton Brand Advantage

Core Thesis: Business Schools are like

Luxury Goods: Losing Their Luster

 Huge Growth in Business Education

2000 + Schools;
Three Levels Top 20 (Mostly
American Harvard, Wharton, plus
LBS, INSEAD), next 20-30 but with
large drop, then the rest.
Top Schools enjoy, apart from Faculty
size and critical mass, location
(financial centers), first rate
university brand, and global name
professors.

Management: The New Source of

Comparative Advantage

3.33
2.98
3.18
3.15
3.18

USA

Britain

Sweden

Japan

Germany

3.40

3.20

3.54

3.16

3.44

3.35

Monitoring

SOURCE: Adopted from Bloom and Reenen (2010).

3.13

Overall Score

Canada

Country

3.24

3.25

3.22

2.93

3.23

3.02

Targeting

2.95

2.90

2.86

2.88

3.30

3.02

Incentives

336

188

270

762

695

344

Sample Size

Productivity and Management Scores by Country

Performance

Actual Output:
Growth, Benchmarks

Theoretical Output:
Knowledge, Change,
Resource Allocations,
Will, Finance, Luck

Time

Strategy
Gap

Theory: Business Schools Improve Management Quality

Best Practice (Firms Apple, GE,

Toyota, etc.)
Consulting
Business
Schools

2000+

Academic World/ Intellectual Content

Consulting Adaptation Best Practice

1970s+

Source of MBA Thinking/Course

Content

Global Consulting
Companies,
Investment
Banks

Journals,
Conferences

Best Practice Companies

(Best of the Breed,
Best and the Rest)

Corporate
Universities

Executive Education,
Publishing Houses

Business Schools
(First Tier-Theoretical
Work; Second TierDissemination
Factories

Multiple Work Assignments, Careers, Teaching, Publishing

Corporate Strategy Development

 Access to firms and

internal corporate
date;
Reputation of
Consultants (practical)
vs. Academics (too
abstract);
Consultants have
Talent, resources, and
speed;
Huge data base of
benchmarks,
industries, and global
reach;

Well trained from best

schools;
Academics are highly
focused (but also
narrow);
Few Time pressures;
Public domain, free
from narrow interests;
Publish or Perish;
US Domination
(English);
Hierarchy of Journals;

Strong dissemination
channels, media,
journals;

Leading Consultant Advantages

Leading Academic Advantages

Academics vs. Consultants Advantages

Consultants Disadvantages

Revenues, not
intellectual insight,
drives business model
for consultants;
Problem solving drives
consulting platforms
(e.g. Competitive
Forces, Process-ReEngineering, TimeBased Competition);
Over-generalization of
findings from specific
industries, firms;
Market reputation
drives sales
reputation.

Academic Disadvantages

Academics talk to
themselves via unread
journals;
Narrow disciplinary
focus;
Too often, data drives
research topics;
Methodologies drive
data analysis: surveys,
cross-sectional, Public
statistics;
Hierarchy of Journals
and schools inhibit
public dissemination.

Academics vs. Consultants Advantages

High
Impact

Global:
Energy, Internet,
Technology,
Etc.
Regional:
e.g. Europe,
Latin
America

Industry
Impacts:
Technology,
Financial

Competitive
Advantage

Corporate
Strategy

Corporate Strategy And Levels of Analysis

Tools:
Scale, Experience
Curves,
Cost Analysis,
Industry structure and
supply curves

Price:
Cost Leadership

People
Tools:
Collaboration
Strategic
Alliances
Networks
Blue Ocean
Cloud Computing

Processes
Tools:
Value Chain
Quality TQM
Balanced Score
Board
Resource-Base
Time

Positioning
Tools:
BCG Growth/
Share Matrix
GE Matrix
McKinsey 7s
Scenarios

1970s Price Low Cost Leadership

1980s Industry Position and Portfolio Analysis
1990s Organizational Processes and Capabilities
2000 + - People, Networks, Sustainability

The Four Ps of Strategy:

Changing Focus of Corporate Strategy

 Need for multiple talents,

viewpoints, understanding of core
strengths.

Extreme complexity and volatility

of the External Environment;

Recognition of the Global Game;

New Models: Synthesis of

Multiple Views

Going
International

Creating
New
Business

Growth
Strategies

Energizing
The
Business
Leveraging
The
Business

Organizational Growth
Strategies

Three Waves of Globalization

Science-Based
Innovation:
Schumpeter

Scale &
Specialization:
A. Marshall

Factor
Endowments:
D. Ricardo
Wealth Creation:
Per Capita GNP

Countries and The Wealth Creation Process

Management
Innovation
USA: 100,000 MBAs
Canada: 7000 MBAs
China: 10,000 MBAs

Sources of
Wealth:
1. Factor Endowments
2. Scale Economies
3. Science Innovation
Globalization
Gap?

Per Capita
GDP
Impact

Globalization: A Management Gap?

Country
Growth

Market Openness

Domestic
Domestic
Environment
Environment

Entry
Entry Exit
Exit
Barriers
Barriers
Adjustment
Adjustment

New Rules and Players

International Expansion

Value
s
Chain
Value Chain
Chains
sophistication
sophistication
sophistication
Adjustment
Adjustment

Global
Competition

Time

Global Growth Model for Industries

Assets, Decisions
Decentralized, but HQ
controlled

Tight Planning and

Control linkages

Operations abroad
Appendages to HQ

International Organization

Complex Coordination:
Cooperation & Shared Decision
Making, Culture

Flows of
Resources,
People and
Information
among
Independent Units

Distributed
Resources
&
Capabilities

Transnational Organization:
The Corporate Center

Global Organization

MACRO - ECONOMICS

Entrepreneurial
vision

Resource-based
Perspective

Organizational
History

Institutional
Focus

Core Competencies

STRATEGIC
OPTIONS

ORGANIZATIONAL PSYCHOLOGY

Organizational Learning

POLITICAL ECONOMY

4. Organizational
Effectiveness

3. Internal
Competences

2. Technological
Positioning

1. Competitive
Focus

Strategic Positioning

Global Management Global Competition

Worldwide
Learning

Tilting to
International

Tilting to
Multinational

Global
Integration

National
Responsiveness

Tilting to
Global

Ecosystem Collaboration

AUTO Industry: MBAs vs. Engineers

 Three Cs Strategic continuity,

commitment, and constant
improvement.

Clear and understandable tradeoffs

choosing what not to do;

Activities in value chain are aligned and

reinforce each other;

A different, tailored value chain;

A unique value proposition;

Benchmarks of Good Strategy

Setting
Direction,
Creating
Strategy

Implementation:
People
Issues

General
Management
Tasks

Vision,
Mission,
Values

Performance
Measures

Strategy and the General Manager

Value
Chain

Operating Model

Organizational
Design

Business Model
Cost
Model

Target
Product/Service Revenue
Segment
Offering
Model

Value Proposition

The Complexities of a Business Model

Weak

Operations

Strong

Value
Destruction

Bad
Management

Value
Creation

Poor
Execution

Flawed

Strong

Strategy

Strategy and Operations

Protected Market
Technology Obsolescence
Poor Management/Leadership
Slack: Easy Access to Resources
Bad Business Plan: Value Proposition
All of the Above

Why Flawed Strategy?

Impact of Bad Strategies

Skills & Competencies

Longevity
Yes Men Culture
Top Down Bureaucracy
Bias Towards the Past
Celebrates Executives

Capacity To Learn
Single Loop Decisions
Budgets Determine Action
Strong Rules Culture
Short Time Horizons

Low
Organizational
Innovation

Capacity To Listen
Strong Hierarchy
Group Think
Data Determines Analysis
Organizational Paralysis

Capacity To Motivate
Pay Incentives Only
Day to Day Actions
Strong Rumour Mill
High Psychological Exit
Work to Rule

Five Competitive Forces of Ineffective Leadership

Bad Strategic Choices

Deming: 85-15 Rule

Organizational Structure, Design
HR Training
Technology-People Systems,
Interface
Poor Learning Tools, Leadership
Myopia
All of the Above

Strategy: Why Poor Execution?

 Global System Competition (Oil, China)

Competitive Dynamics (Hardball
Strategies)
Creative Destruction-Technology
Disruption (Schumpeter)
Internal Dynamics: Culture, Integration
Political Frameworks (Cold War,
Terrorism, Third World, etc., Regulations,
CSR)
Internet, Communications Revolution

Strategic Dilemmas for

Managers

Worst Strategy:
Sweeping under the Rug

Defining the Business

Markets

Existing

Distinctive Competencies New

Domain
of
Leaders

The Domains of Entrepreneurial Leaders

Managing Organizational Renewal:

New

Existing

Devastate Rivals Profit Sanctuaries

Plagiarize with Pride, i.e. Learn
Deceive the Competition: Surprise
Unleash Overwhelming Force 4ts
Raise Competitors Costs

Win

Tools of Ruthless Intensity, Will to

Industry Hardball

 Two case write-ups Individual (5-6

pages no extra material-Internet
search needed);
Required Readings Importance of
Certain papers;
Group Project end of course;
Final Exam.
Each session opening student
questions

SGMT 6000

Course Text, Readings

Preparation, Thinking, Core Topics
Outside Readings/Handouts
Cases: Preparation, Thinking,
Conclusions
Class Preparation: One Lesson
Learned
Writing Cases: Conclusion Focused
General Materials: Readings,
Newspapers

Course Preparation

Competitive Analysis: Five Forces

Resource Based: VRIO
PEST
SWOT
Four T Trade, technology, talent,
treasury
5-6 Pages, start with Conclusion

Case Analysis: Diagnosis vs.

Symptoms, Tactics and Tools

 Models allow a framework to

understand details by comparison.

MBA course tools: e.g. a) theories

(perfect market vs. monopoly), b)
direct comparison (GM vs. Toyota), c)
corporate history (I, II, III), d)
consulting models (BCG
growth/market share, e) your own
explanatory model.

What is the business model for this

organization: what accounts for failure
or success?

Case Analysis: Models