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Chapter  One Strategic Management:  Creating Competitive Advantages
After studying this chapter, you should have  a good understanding of: ,[object Object],[object Object],[object Object],[object Object],[object Object],Learning Objectives TRANSPARENCY-
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Strategic Management Concepts Exhibit 1.1 TRANSPARENCY-
The Strategic Management Process Exhibit 1.2 TRANSPARENCY- Chapter 1 Analyzing Goals and Objectives Chapter 2 Analyzing the External Environment Chapter 3 Analyzing the Internal Environment Chapter 4 Assessing Intellectual Capital Chapter 5 Formulating Business-Level Strategies Chapter 7 Formulating International Strategies Chapter 6 Formulating Corporate-Level Strategies Chapter 8 Formulating Internet Strategies Chapter 9 Implementation: Strategic Controls Chapter 10 Implementation: Organization Design Chapter 11 Strategic Leadership: Excellence, Ethics, and Change Chapter 12 Strategic Leadership: Fostering Entrepreneurship Strategy Analysis Strategy Formulation Strategy Implementation Chapter 13 Case Analysis
Excellent versus Poor Boards of Directors Fortune  magazine recently pinpointed some of the key attributes of some excellent and poor boards of directors.   Source: Boyle, M. 2001. The dirty half-dozen: America’s worst boards.  Fortune , May 14: 250. With permission.  Exhibit 1.3 TRANSPARENCY- Hall of Fame A good board is hard to find, but a few draw raves year after year. Coca-Cola  This feisty board isn’t afraid to make waves, nixing CEO’s Doug Daft’s plan to acquire Quaker Oats last year. Intel   Its big-name directors regularly assess one another’s performance, a rarity in the boardroom. Pfizer   This year the Wharton School named this board—packed with heavy hitters—the second best in the nation. Target   The proof is in the performance. This unflashy board has presided over years of solid returns. Texas Instruments  Deadly serious about good governance, TI’s board had near-perfect attendance in 2000. Hall of Shame Entrenched, clubby, blind to shareholder concerns: These boards just don’t get it. Advanced Micro Devices  Talk about weak: This board slavishly kowtows to omnipotent founder/CEO Jerry Sanders. Archer Daniels Midland  As the stock falls near ten-year lows, the family-controlled board twiddles its thumbs. Maxxam  With loads of common and preferred stock, CEO/Chairman Charles Hurwitz has most of the voting power. Occidental Petroleum  Its board pays CEO Ray Irani obscene amounts even as the company underperforms its peers. Warnaco  This board, dominated by Chairman/CEO Linda Wachner, seems to exist solely to redefine excessive CEO pay.
Social Responsibility at McDonald’s:  Some Elements ,[object Object],[object Object],[object Object],[object Object],[object Object],Source: McDonald’s Corporation 1999 Annual Report, page 6. Exhibit 1.4 TRANSPARENCY-
Brainpower Weighs In Source: Colvin, G. 2000. We’re worth our weight in Pentium Chips.  Fortune ,  March 20: 68. Exhibit 1.5 TRANSPARENCY- PRODUCT PRICE WEIGHT in pounds PRICE  per pound Pentium III 800MHz microprocessor $851.00 0.01984 $42,893.00 Viagra (tablet) $8.00 0.00068 $11,766.00 Gold (ounce) $301.70 0.0625 $4,827.20 Herm è s scarf $275.00 0.14 $1,964.29 Palm V $449.00 0.26 $1,726.92 Saving Private Ryan  on DVD $34.99 0.04 $874.75 Cigarettes (20) $4.00 0.04 $100.00 Who Moved My Cheese ? by Spencer Johnson $19.99 0.49 $40.80 Mercedes-Benz E-class four-door sedan $78,445.00 4,134.00 $18.98 The Competitive Advantage of Nations  by Michael Porter $40.00 2.99 $13.38 Chevrolet Cavalier four-door sedan $17,770.00 2,630.00 $6.76 Hot-rolled steel (ton) $370.00 2,000.00 $0.19
Comparing Wellpoint Health Network’s Vision and Mission Source: Company Records Exhibit 1.6 TRANSPARENCY- Vision WELLPOINT will redefine our industry : Through a new generation of consumer-friendly products that put individuals back in control of their future. Mission The WELLPOINT companies provide health  security  by offering a  choice  of quality branded health and related financial services  designed  to meet the  changing  expectations of individuals, families and their sponsors throughout a  lifelong  relationship.
Strategic Objectives ,[object Object],[object Object],[object Object],[object Object],[object Object],Exhibit 1.7 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Company Documents and Annual Reports  TRANSPARENCY-

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Strategic Management

  • 1.  
  • 2. Chapter One Strategic Management: Creating Competitive Advantages
  • 3.
  • 4.
  • 5. The Strategic Management Process Exhibit 1.2 TRANSPARENCY- Chapter 1 Analyzing Goals and Objectives Chapter 2 Analyzing the External Environment Chapter 3 Analyzing the Internal Environment Chapter 4 Assessing Intellectual Capital Chapter 5 Formulating Business-Level Strategies Chapter 7 Formulating International Strategies Chapter 6 Formulating Corporate-Level Strategies Chapter 8 Formulating Internet Strategies Chapter 9 Implementation: Strategic Controls Chapter 10 Implementation: Organization Design Chapter 11 Strategic Leadership: Excellence, Ethics, and Change Chapter 12 Strategic Leadership: Fostering Entrepreneurship Strategy Analysis Strategy Formulation Strategy Implementation Chapter 13 Case Analysis
  • 6. Excellent versus Poor Boards of Directors Fortune magazine recently pinpointed some of the key attributes of some excellent and poor boards of directors. Source: Boyle, M. 2001. The dirty half-dozen: America’s worst boards. Fortune , May 14: 250. With permission. Exhibit 1.3 TRANSPARENCY- Hall of Fame A good board is hard to find, but a few draw raves year after year. Coca-Cola This feisty board isn’t afraid to make waves, nixing CEO’s Doug Daft’s plan to acquire Quaker Oats last year. Intel Its big-name directors regularly assess one another’s performance, a rarity in the boardroom. Pfizer This year the Wharton School named this board—packed with heavy hitters—the second best in the nation. Target The proof is in the performance. This unflashy board has presided over years of solid returns. Texas Instruments Deadly serious about good governance, TI’s board had near-perfect attendance in 2000. Hall of Shame Entrenched, clubby, blind to shareholder concerns: These boards just don’t get it. Advanced Micro Devices Talk about weak: This board slavishly kowtows to omnipotent founder/CEO Jerry Sanders. Archer Daniels Midland As the stock falls near ten-year lows, the family-controlled board twiddles its thumbs. Maxxam With loads of common and preferred stock, CEO/Chairman Charles Hurwitz has most of the voting power. Occidental Petroleum Its board pays CEO Ray Irani obscene amounts even as the company underperforms its peers. Warnaco This board, dominated by Chairman/CEO Linda Wachner, seems to exist solely to redefine excessive CEO pay.
  • 7.
  • 8. Brainpower Weighs In Source: Colvin, G. 2000. We’re worth our weight in Pentium Chips. Fortune , March 20: 68. Exhibit 1.5 TRANSPARENCY- PRODUCT PRICE WEIGHT in pounds PRICE per pound Pentium III 800MHz microprocessor $851.00 0.01984 $42,893.00 Viagra (tablet) $8.00 0.00068 $11,766.00 Gold (ounce) $301.70 0.0625 $4,827.20 Herm è s scarf $275.00 0.14 $1,964.29 Palm V $449.00 0.26 $1,726.92 Saving Private Ryan on DVD $34.99 0.04 $874.75 Cigarettes (20) $4.00 0.04 $100.00 Who Moved My Cheese ? by Spencer Johnson $19.99 0.49 $40.80 Mercedes-Benz E-class four-door sedan $78,445.00 4,134.00 $18.98 The Competitive Advantage of Nations by Michael Porter $40.00 2.99 $13.38 Chevrolet Cavalier four-door sedan $17,770.00 2,630.00 $6.76 Hot-rolled steel (ton) $370.00 2,000.00 $0.19
  • 9. Comparing Wellpoint Health Network’s Vision and Mission Source: Company Records Exhibit 1.6 TRANSPARENCY- Vision WELLPOINT will redefine our industry : Through a new generation of consumer-friendly products that put individuals back in control of their future. Mission The WELLPOINT companies provide health security by offering a choice of quality branded health and related financial services designed to meet the changing expectations of individuals, families and their sponsors throughout a lifelong relationship.
  • 10.