Prof. Bulzacki MGMT 661

Strategic Management

Week 1

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WHAT IS STRATEGIC MANAGEMENT?

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DEFINITION

• Entails the formulation, implementation, and evaluation of cross-functional decisions that enable an organization to achieve its long-term objectives. It's fundamentally about setting the direction of a business and coordinating its resources to pursue this direction with the aim of achieving competitive advantage and long-term success in the marketplace.

UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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BENEFIT

• Strategic Management equips you with the ability to think critically about the direction of a business, make informed strategic decisions, and understand the complex dynamics of implementing these decisions in a real-world context. The course aims to prepare future leaders who can navigate the challenges of the contemporary business environment with innovative approaches that build on conventional business practices.

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AS OF A RECENT STUDY, WHAT PERCENTAGE OF COMPANIES ACTIVELY ENGAGE IN STRATEGIC MANAGEMENT PRACTICES HAVE BEEN SHOWN TO OUTPERFORM THEIR PEERS IN TERMS OF PROFITABILITY AND MARKET SHARE? • Less than 25%

• Over 80%

• Approximately 40%

• About 60%

UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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MAJOR ELEMENTS

• Strategy Formulation • This is the phase where strategic vision, mission, and goals are developed.

• Strategy Implementation • This step focuses on executing the chosen strategies.

• Evaluation and Control • The final stage involves monitoring performance and making adjustments as necessary to ensure that

strategic objectives are met.

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STRATEGY FORMULATION

• Developing a strategic vision and mission: Outlining what the organization wants to become and articulating its core purpose.

• Setting objectives: Defining specific performance targets to measure the organization's progress towards its vision.

• Crafting strategies and tactics: Determining the actions and approaches that will be taken to achieve the set objectives. This includes business-level strategies (how to compete), corporate-level strategies (what businesses to be in), and network-level strategies (how to structure resources and relationships across organizations).

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STRATEGY IMPLEMENTATION

• Implementing and executing tactics and strategies: Mobilizing resources and putting the strategies into action through projects, initiatives, and day-to-day operations.

• Organizational and environmental analyses: Understanding the internal and external environments in which the organization operates to make informed decisions.

• Leadership, communication, teamwork, and cross-functional integration: Essential skills for navigating the complexities of implementing strategies across different parts of the organization.

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EVALUATION AND CONTROL

• Developing evaluation and measurements of performance: Using metrics and benchmarks to assess how well the organization is performing against its strategic goals.

• Adjusting strategies in response to feedback and changing conditions: Being adaptive and flexible to ensure continued alignment with the strategic vision and objectives.

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CONTEMPORARY ASPECTS

Strategic Management also involves adapting to modern challenges and opportunities, such as:

• Digital platform strategies: Understanding how digital platforms can be leveraged for competitive advantage.

• Collaborative innovation strategies: Engaging with partners, customers, and other stakeholders to drive innovation.

• Corporate governance and corporate social responsibility: Balancing the interests of various stakeholders while ensuring ethical conduct and contributing positively to society.

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SMALL BUSINESS ADVANTAGE

If we consider a small business for example, there are many strategies that allow for small business to be disruptive with good strategy:

• Innovation

• Low burn rate

• Key market focus

• Access to market analysis

• Tax incentives

• Maintain close relations with Customer

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NETFLIX EXAMPLE

One fascinating example that highlights the importance of strategic management in adapting to the rapidly changing business environment involves Netflix's transition from DVD rentals to streaming services. This shift is often cited as a textbook case of a company successfully navigating a disruptive change in its industry by fundamentally altering its business model.

Background

Initially, Netflix operated on a DVD rental model, sending DVDs to customers via mail. However, with the advent of high-speed internet and the increasing consumer demand for instant access to entertainment, Netflix recognized the need for change.

Strategic Shift

In 2007, Netflix launched its streaming service, allowing subscribers to watch television shows and movies on their personal computers. This move was not simply an addition to their DVD rental service but a strategic pivot towards what they saw as the future of entertainment consumption.

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NETFLIX EXAMPLE

Statistics and Outcomes

• Subscriber Growth: This strategic pivot contributed significantly to Netflix's growth. From 2007 to 2013, Netflix's streaming subscribers grew from zero to over 40 million in the U.S. alone. As of early 2023, Netflix had over 230 million subscribers globally.

• Financial Performance: Netflix's revenue soared alongside its subscriber base, from $1.2 billion in 2007 to over $30 billion in 2022.

• Market Leadership: This move cemented Netflix's position as a leader in the online streaming space, essentially creating a new industry that challenged traditional television and movie distribution models.

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NETFLIX EXAMPLE

Lessons and Strategic Insights

• Anticipating Market Trends: Netflix's shift to streaming services exemplified how anticipating and acting on future market trends is crucial for long-term success.

• Willingness to Disrupt Oneself: By moving away from the DVD rental model, Netflix demonstrated that sometimes, companies must be willing to disrupt their own successful business models to stay relevant and competitive.

• Investment in Technology and Content: The success of Netflix's streaming service was also due to its significant investment in technology infrastructure to ensure a smooth streaming experience and in original content to attract and retain subscribers.

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DISTINGUISHING BETWEEN STRATEGIC MANAGEMENT AND TACTICS

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DISTINGUISHING BETWEEN STRATEGIC MANAGEMENT AND TACTICS

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Aspect Strategy Tactics

Focus Determining the direction and scope

of the organization. Executing specific actions to achieve

strategic objectives.

Scope Broad, affects the entire

organization. Narrow, specific actions or series of

actions. Timeframe Long-term Short-term

Questions Answered "What should we do to achieve our

long-term objectives?" "How do we achieve our specific

goals in the short term?"

Key Concerns Vision and mission, competitive

positioning, market analysis, setting long-term goals.

Operational plans, resource allocation, setting performance

metrics, flexibility and adaptation.

Examples Entering a new market, developing a

new product line, restructuring the company.

Launching a marketing campaign, optimizing the supply chain, hiring

for specific roles.

SOME CURRENT TRENDS IN STRATEGIC MANAGEMENT • Digital Transformation: Integrating digital technologies for efficiency and value creation.

• Sustainability and ESG: Emphasizing environmental, social, and governance factors in strategy.

• Agile Strategy Implementation: Adopting flexible strategies for quick response to market changes.

• Customer-Centric Strategies: Focusing on superior customer experiences and personalization.

• Innovation and Disruptive Technologies: Leveraging new technologies for competitive advantage.

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SOME CURRENT TRENDS STRATEGIC MANAGEMENT

• Globalization vs. Localization: Balancing global reach with tailored local approaches.

• Collaboration and Strategic Alliances: Forming partnerships for mutual benefits, including with competitors.

• Remote Work and Future of Work: Adapting strategies for remote work and digital collaboration.

• Data-Driven Decision Making: Utilizing analytics and AI for strategic insights and decisions.

• Focus on Health and Well-being: Prioritizing health, safety, and well-being in business operations.

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WHAT LEADS TO SUCCESS IN MANAGING A SMALL BUSINESS? • Clear Vision and Mission: Guide strategic direction and decisions.

• Comprehensive Environmental Scanning: Understand market trends and organizational capabilities.

• Effective Strategy Formulation: Craft strategies to leverage strengths and opportunities.

• Adaptive and Flexible Planning: Adjust strategies based on changing conditions.

• Stakeholder Engagement: Ensure alignment and buy-in from key stakeholders.

• Strong Leadership and Communication: Provide clear direction and maintain open communication.

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WHAT LEADS TO SUCCESS IN MANAGING A SMALL BUSINESS? • Alignment of Resources and Capabilities: Match resources with strategic needs.

• Effective Implementation and Execution: Translate plans into actionable tasks.

• Performance Monitoring and Evaluation: Use metrics and feedback to monitor success.

• Culture of Continuous Improvement: Foster learning, adaptability, and innovation.

• Emphasis on Sustainability and Ethics: Incorporate sustainability and ethics into strategic decisions.

• Utilization of Technology and Data: Leverage technology and data for insights and innovation.

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DOING AN INTROSPECTIVE STRATEGIC MANAGEMENT ANALYSIS

Core Values and Culture

Strategic Vision and Leadership

Resources and

Capabilities

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FACTORS AFFECTING THE FUTURE OF STRATEGIC MANAGEMENT

Examples

Globalization—The increasing interconnectivity of markets means strategies need a global perspective while also being adaptable to local nuances.

Technological Advancements—Rapid technological changes, especially in AI, data analytics, and machine learning, are transforming how strategies are developed and executed.

Innovation Pace—The acceleration of innovation cycles requires strategies to be more flexible and adaptive to remain competitive.

Regulatory Changes–Evolving legal and regulatory landscapes, including privacy laws and international trade agreements, impact strategic decision-making.

Societal Expectations—Growing expectations for corporate social responsibility, including sustainability and ethical conduct, influence strategic priorities.

Economic Uncertainty—Fluctuations in the global economy, such as recession risks and shifting trade dynamics, necessitate more agile and resilient strategic planning.

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FACTORS AFFECTING THE FUTURE OF STRATEGIC MANAGEMENT

Examples

Demographic Shifts—Changes in population demographics affect market demands and the labor force, which in turn affect strategic workforce planning and product development.

Competitive Dynamics—The rise of new competitors, especially from non-traditional industries or start-ups, forces established firms to reassess their strategic positioning.

Resource Scarcity—Scarcity of natural resources and the need for sustainable management practices are increasingly becoming a strategic concern.

Data Proliferation–The explosion of data availability provides opportunities for insights but also requires strategic management of information and cybersecurity.

Consumer Behaviour—Changing consumer preferences and the rise of the empowered consumer demand strategies that are customer-centric and responsive to feedback.

Remote Work Trends—The normalization of remote work influences organizational structure, talent management, and operational strategies.

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POORLY PLANNED GROWTH

• Overextension of Resources: Rapid expansion can stretch resources thin, impacting quality and operational efficiency.

• Cash Flow Problems: Growing too quickly can create cash flow challenges, as capital is tied up in inventory, new hires, or expansion efforts.

• Supply Chain Disruption: Sudden growth can strain the supply chain, leading to delays, shortages, or increased costs.

• Cultural Dilution: Fast growth can dilute a company’s culture and values, leading to a loss of identity and decreased employee engagement.

• Decreased Customer Satisfaction: Scaling up too quickly can result in poorer service, product issues, or failing to meet customer expectations.

• Quality Control Issues: Rapid increases in production or service provision can lead to a decline in quality control standards.

• Management Overwhelm: Rapid growth can overwhelm management teams, leading to poor decision-making and strategic blunders.

• Inadequate Infrastructure: Existing processes and systems may be insufficient to handle increased operational demands.

• Increased Competition: Entering new markets or scaling operations may attract more competitors and increase competitive pressure.

• Compliance and Legal Issues: Expansion can bring about unforeseen regulatory compliance issues, especially when moving into new geographic regions.

• Employee Burnout: Fast-paced growth can lead to overworked employees, decreased morale, and higher turnover rates.

• Integration Issues: Acquiring new businesses or merging during rapid growth can lead to integration problems with systems, processes, and teams.

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THANK YOU QUESTIONS? UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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Prof. Bulzacki MGMT 661

Strategic Management

Week 2

https://www.linkedin.com/in/adrian-bulzacki/

INTRODUCTION TO EXTERNAL ENVIRONMENT

The external environment refers to the set of conditions outside an organization that can impact its performance and strategy. This environment is beyond the direct control of the company but crucial for its strategic planning and decision-making. Understanding the external environment helps companies anticipate changes, seize opportunities, and mitigate threats.

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COMPONENTS OF THE EXTERNAL ENVIRONMENT

1. Macro-environment: This includes the broader forces affecting not only the industry but the whole society. These can be categorized using frameworks like PESTEL, which stands for:

 Political: Government policies, stability, tax guidelines, trade regulations, and political events.  Economic: Economic trends, growth rates, interest rates, inflation, and unemployment conditions that affect consumer purchasing power and business

operations.  Social: Societal and cultural aspects such as demographics, education levels, cultural trends, and lifestyle changes.  Technological: Innovations, technological developments or barriers, and the rate of technological change.  Environmental: Environmental issues, ecological conditions, climate change, and sustainability practices.  Legal: Laws, mandatory regulations, and legal constraints including labor laws, consumer laws, and health and safety regulations.

2. Industry and sector analysis: This part of the external environment looks at the more immediate operational landscape in which a company operates. It includes the analysis of competitors, market size, market growth or decline, market trends, and the overall attractiveness of the industry.

3. The competitive environment: This involves the analysis of the specific market competition. It includes the strategies of current and potential competitors, their strengths and weaknesses, market positioning, and how all these factors influence the competitive dynamics of the industry.

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WHY IT MATTERS: EXTERNAL ENVIRONMENT

• Strategic Alignment: Companies need to align their strategies with the external environment to ensure relevance and competitiveness. For instance, a tech company might need to innovate rapidly in response to technological advancements to maintain its market position.

• Risk Management: By understanding the external environment, companies can foresee potential risks and develop strategies to address them effectively.

• Opportunity Identification: Analyzing the external environment can reveal new market opportunities, whether through emerging technologies, shifts in consumer preferences, or changes in regulatory landscapes.

• Resource Allocation: Insights from the external environment help in smarter allocation of resources. For example, understanding economic conditions can help a company decide whether to expand operations or conserve cash.

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ENVIRONMENTAL SCANNING

Environmental scanning is a method used by organizations to monitor, evaluate, and disseminate information from the external and internal environments. The goal of environmental scanning is to identify potential opportunities and threats outside the organization to facilitate proactive, rather than reactive, strategies in business planning.

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KEY ASPECTS OF ENVIRONMENTAL SCANNING:

1. Continuous Process: Environmental scanning should be an ongoing activity that organizations conduct regularly. This ensures that they stay current with changes that may affect their operations, strategies, and competitive advantage.

2. Broad Scope: It encompasses a wide range of elements both external and internal to the organization. Externally, it looks at factors like economic conditions, market trends, political landscapes, technological innovations, social changes, and regulatory frameworks. Internally, it involves assessing strengths and weaknesses, resources, current strategies, and employee capabilities.

3. Information Gathering: This involves collecting information from various sources such as news outlets, market reports, trade associations, scientific journals, and insights from stakeholders including customers, suppliers, and competitors.

4. Analysis: The gathered information is analyzed to identify patterns, trends, and emerging issues. This analysis helps in forecasting future conditions and assessing their possible impact on the organization.

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IMPORTANCE OF ENVIRONMENTAL SCANNING:

• Strategic Decision Making: By providing a clear, current picture of the environment in which the company operates, environmental scanning aids strategic decision-making. It helps managers anticipate and respond to changes in the external environment effectively.

• Opportunity Identification: Regular scanning can reveal new business opportunities, potentially lucrative markets, and ideas for product innovation. This allows organizations to capitalize on these opportunities before competitors do.

• Threat Avoidance: Environmental scanning helps in identifying potential threats to the organization’s welfare early enough that they can be mitigated or avoided altogether.

• Resource Allocation: With a better understanding of the business landscape, organizations can make more informed decisions about where to allocate resources in order to maximize returns and minimize risks.

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TECHNIQUES USED IN ENVIRONMENTAL SCANNING:

• SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats): Helps in assessing internal and external factors that could impact the organization's objectives.

• PESTEL Analysis (Political, Economic, Social, Technological, Environmental, Legal): Focuses on macro-environmental factors that might influence the organization’s performance.

• Porter’s Five Forces: Analyzes the competitive intensity and attractiveness of a market.

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MACRO-ENVIRONMENTAL ANALYSIS

Macro-environmental analysis is a crucial strategic tool used to assess the broader external factors that impact an organization's operations and decision-making. This analysis helps organizations understand the dynamic and often uncontrollable elements that could influence their business in the short or long term. It typically involves examining aspects across different domains using tools like PESTEL analysis, which stands for Political, Economic, Social, Technological, Environmental, and Legal factors.

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COMPONENTS OF MACRO-ENVIRONMENTAL ANALYSIS:

1. Political Factors: These involve government policies, political stability or instability in a market, tax policies, trade restrictions and tariffs, labor laws, and environmental regulations. Political factors can affect how a company operates and its profitability. For example, a change in government can lead to changes in business regulations or fiscal policies that could affect the business.

2. Economic Factors: This includes economic growth rates, interest rates, exchange rates, inflation, and unemployment rates in the economy. Economic indicators dictate the economic climate and purchasing power of consumers and businesses. For instance, high inflation rates may reduce consumer spending, affecting businesses that rely on high consumer demand.

3. Social Factors: These reflect the societal forces that include cultural trends, demographics, population analytics, lifestyle changes, and education levels. Social shifts can impact on the demand for a business’s products and services. For example, an aging population may increase the demand for healthcare services.

4. Technological Factors: These entail emerging technological advancements, innovation, internet infrastructure, and barriers to technology. The pace of technological change can influence how an organization delivers its products and services. Companies need to keep abreast of technological developments to maintain a competitive edge.

5. Environmental Factors: Environmental concerns include climate change, weather, and environmental regulations that impact how companies operate and the products they offer. Companies are increasingly pressured to develop sustainable practices and reduce their environmental footprint.

6. Legal Factors: This includes all regulatory frameworks and laws that a company might need to comply with. Legal factors affect how a company operates, its costs, and the products it offers. This could include consumer laws, safety standards, labor laws, and antitrust laws.

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PURPOSE AND IMPORTANCE OF MACRO- ENVIRONMENTAL ANALYSIS • Risk Management: Understanding macro-environmental factors helps businesses anticipate and mitigate risks before they become unmanageable.

• Opportunity Recognition: By examining the macro environment, companies can spot emerging trends and capitalize on them to gain a competitive advantage.

• Strategic Planning: Macro-environmental analysis provides essential data for strategic planning. It enables businesses to align their strategies with the external environment.

• Long-term Vision: This analysis helps businesses in forecasting and preparing for the future, ensuring sustainability and growth in changing conditions.

Overall, macro-environmental analysis is vital for businesses to navigate the complexities of global markets. It helps in building robust strategies that are responsive to the external environment, enhancing the organization's ability to thrive amid uncertainties.

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INDUSTRY AND SECTOR ANALYSIS

Industry and sector analysis are essential components of strategic planning, providing insights that help businesses understand the market conditions they operate within and guide their competitive strategies. These analyses allow companies to gauge the overall health of the industry or sector, identify key trends, and determine their positioning relative to competitors.

Definitions:

Industry Analysis: Focuses on a specific industry and examines the market dynamics, key players, competitive environment, market growth or decline, technological developments, regulatory impacts, and other factors specific to that industry. This analysis helps in understanding the external factors that affect all businesses within that marketplace.

Sector Analysis: Broader than industry analysis, sector analysis examines a larger segment of the economy, which can encompass several related industries. For example, the financial sector includes industries such as banking, insurance, and investment services.

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COMPONENTS OF INDUSTRY AND SECTOR ANALYSIS:

1. Market Structure: Analyzing how an industry is structured is crucial. This includes understanding whether the industry is fragmented or consolidated, the number of players, and their market shares.

2. Competitive Dynamics: This involves identifying the intensity of competition within the industry, which can be influenced by factors such as barriers to entry, level of rivalry, and the threat of substitutes. Porter’s Five Forces analysis is a popular tool used here.

3. Growth Trends: Analyzing past growth patterns and forecasting future growth. This includes looking at factors like historical sales growth, innovation in the industry, and external economic factors that could impact growth.

4. Regulatory Environment: Understanding the impact of laws and regulations on the industry. This includes current and potential future legislation that might affect how companies operate within the sector.

5. Technological Changes: Identifying technological advancements that could disrupt or enhance the way the industry operates. This involves assessing the adoption of new technologies, potential cost savings, and increased efficiencies.

6. Economic Impact: Analyzing how broader economic conditions affect the industry. This includes factors such as consumer spending, economic downturns, and currency fluctuations.

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IMPORTANCE OF INDUSTRY AND SECTOR ANALYSIS:

• Strategic Decision Making: Provides a solid foundation for making informed strategic decisions, such as market entry, product development, and competitive positioning.

• Risk Assessment: Helps in identifying potential risks in the industry or sector, including economic downturns, technological disruption, or regulatory changes.

• Opportunity Identification: By understanding industry trends and dynamics, companies can spot opportunities for innovation, market expansion, or strategic partnerships.

• Performance Benchmarking: Allows a company to compare its performance against industry standards and competitors, identifying areas for improvement or investment.

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THE COMPETITIVE ENVIRONMENT

The competitive environment of a business refers to the external market landscape in which a company operates. It encompasses all the forces and conditions that influence a company's ability to compete effectively in its industry. Analyzing the competitive environment is crucial for understanding the dynamics that affect market position and profitability.

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KEY ELEMENTS OF THE COMPETITIVE ENVIRONMENT:

1. Competitors: Identifying who the direct and indirect competitors are, their strengths, weaknesses, market share, and strategies. Understanding competitors helps a company determine its own competitive advantages and areas where it may be vulnerable.

2. Market Conditions: Includes market demand, supply conditions, pricing trends, and the overall size and growth rate of the market. These factors determine the potential for profitability and expansion within the industry.

3. Customer Base: Understanding the needs, preferences, and buying behaviors of customers. This involves segmenting the market and targeting specific customer groups whose needs align best with the company's offerings.

4. Barriers to Entry: These are factors that prevent or hinder new competitors from easily entering an industry. Barriers can include high startup costs, access to technology, regulatory requirements, and customer loyalty to established brands.

5. Threat of Substitutes: The degree to which products from other industries can replace or compete with the company’s products. A high threat of substitutes can limit a company’s pricing power and market share.

6. Supplier Power: Represents the bargaining power of suppliers who provide inputs necessary for the industry. High supplier power can affect a company’s margins and its ability to control costs.

7. Buyer Power: Reflects the influence that customers have over the pricing and quality of products. When buyers have significant power, they can demand lower prices or higher product quality, impacting profitability.

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IMPORTANCE OF UNDERSTANDING THE COMPETITIVE ENVIRONMENT: • Strategic Planning: Insights from analyzing the competitive environment are crucial for strategic planning, allowing companies to position themselves effectively in the market.

• Innovation and Adaptation: Understanding competitive pressures can drive innovation and adaptation, as companies must continuously improve their offerings and operations to maintain a competitive edge.

• Risk Management: By understanding the competitive landscape, companies can better anticipate and manage potential risks related to new entrants, competitive actions, and changes in market conditions.

• Resource Allocation: It helps in making informed decisions about where to allocate resources in order to exploit competitive advantages and minimize weaknesses.

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HOW A CORPORATION IS GOVERNED

Stockholders

Board of Directors

Corporate Officers

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REMOVAL OF CEO EXAMPLE

Known:

6 Directors

CEO is a Director and Chairman of the Board

6 Officers

“CEO operates under the privilege of the Board”

3 Board members in favour and 1 maybe

COO is the ideal replacement.

Steps:

1. Secessions Plan

2. Review U.S.A./Company Charter/Director’s Charter/Employee Agreement/Business Act/Company Minute Book

3. Read the Room (Life rule: Never call a vote without knowing the result in advance)

4. Consult Legal 1. Reason’s

5. Schedule Meeting of the Board (COO) 1. Agenda (Define the Chair)

1. Removal of CEO

2. 2nd and Maybe Remove as Director.

3. Define Conflicts.

4. Appoint new CEO

2. Reason’s for calling the vote.

6. Initiate Board Meet

7. Vote/Meeting Minutes.

8. Revoke Email and System Access.

9. Bonus: Press Release

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ROBERT'S RULES OF ORDER

Robert's Rules of Order is the most widely used set of rules for meeting conduct in the United States. It provides guidelines for running meetings, making decisions, and voting in a structured manner. The rules are designed to ensure that meetings are fair and that all members have the opportunity to voice their opinions.

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Motion or Action Purpose What to Say Can Interrupt

Speaker Need a Second

Can Be Debated

Can Be Amended

Votes Needed

Call to Order To officially start the meeting. "The meeting will come to order." No No No No None

Approve Minutes To confirm the record of the last meeting.

"Are there any corrections to the minutes?"

No No No Yes Majority

Adjourn To end the meeting. "I move that we adjourn." No Yes No No Majority Recess To take a short break. "I move that we recess for…" No Yes Yes Yes Majority

Complain about Noise, etc.

To request a disturbance be addressed.

"I rise to a question of privilege regarding…"

Yes No No No None (Ruling by Chair)

Suspend the Rules To temporarily set aside a rule.

"I move to suspend the rules…" No Yes No No Two-thirds

Object to the Consideration

To prevent a motion from being considered.

"I object to the consideration of this motion."

Yes No No No Two-thirds against consideration

Amend a Motion To modify a motion. "I move to amend the motion by…" No Yes Yes Yes Majority

Withdraw a Motion To remove a motion from consideration.

"I request to withdraw my motion." No No No No Majority if objected, otherwise none

Call for the Orders of the Day

To return to the scheduled agenda.

"I call for the orders of the day." Yes No No No None

Point of Order To correct a procedural error. "Point of order." Yes No No No None (Ruling by Chair)

Appeal To challenge a ruling of the chair.

"I appeal the decision of the chair." Yes Yes Yes No Majority

Suspend the Rules To temporarily alter or set aside rules.

"I move to suspend the rules…" No Yes No No Two-thirds

Point of Information To ask a clarifying question. "Point of information." or "I rise to a point of information."

Yes No No No None

Division of the Assembly

To request a re-vote for clarity.

"I call for a division." Yes No No No None

Lay on the Table To temporarily postpone discussion on an item.

"I move to lay the matter on the table."

No Yes No No Majority UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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DISCUSSION: INTEGRATION OF ANALYSES

How a company can integrate insights from environmental scanning, macro- environmental analysis, and industry analysis to make strategic decisions.

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DISCUSSION: ENVIRONMENTAL SCANNING TECHNIQUES

Discuss best practices for environmental scanning in various industries. How do companies gather and analyze data to stay ahead of market trends?

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DISCUSSION: THE COMPETITIVE ENVIRONMENT

How do barriers to entry affect competition in high-tech industries compared to traditional industries?

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GROUP ACTIVITY: ENVIRONMENTAL SCANNING SIMULATION Conduct a simulation where students perform an environmental scanning exercise for a fictitious company. Have them identify key opportunities and threats and present their findings.

UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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ONLINE DISCUSSION: ENVIRONMENTAL SCANNING TECHNIQUES Discuss best practices for environmental scanning in various industries. How do companies gather and analyze data to stay ahead of market trends?

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THANK YOU QUESTIONS? UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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Prof. Bulzacki MGMT 661

Strategic Management

Week 2

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INTRODUCTION TO EXTERNAL ENVIRONMENT

The external environment refers to the set of conditions outside an organization that can impact its performance and strategy. This environment is beyond the direct control of the company but crucial for its strategic planning and decision-making. Understanding the external environment helps companies anticipate changes, seize opportunities, and mitigate threats.

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COMPONENTS OF THE EXTERNAL ENVIRONMENT

1. Macro-environment: This includes the broader forces affecting not only the industry but the whole society. These can be categorized using frameworks like PESTEL, which stands for:

 Political: Government policies, stability, tax guidelines, trade regulations, and political events.  Economic: Economic trends, growth rates, interest rates, inflation, and unemployment conditions that affect consumer purchasing power and business

operations.  Social: Societal and cultural aspects such as demographics, education levels, cultural trends, and lifestyle changes.  Technological: Innovations, technological developments or barriers, and the rate of technological change.  Environmental: Environmental issues, ecological conditions, climate change, and sustainability practices.  Legal: Laws, mandatory regulations, and legal constraints including labor laws, consumer laws, and health and safety regulations.

2. Industry and sector analysis: This part of the external environment looks at the more immediate operational landscape in which a company operates. It includes the analysis of competitors, market size, market growth or decline, market trends, and the overall attractiveness of the industry.

3. The competitive environment: This involves the analysis of the specific market competition. It includes the strategies of current and potential competitors, their strengths and weaknesses, market positioning, and how all these factors influence the competitive dynamics of the industry.

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WHY IT MATTERS: EXTERNAL ENVIRONMENT

• Strategic Alignment: Companies need to align their strategies with the external environment to ensure relevance and competitiveness. For instance, a tech company might need to innovate rapidly in response to technological advancements to maintain its market position.

• Risk Management: By understanding the external environment, companies can foresee potential risks and develop strategies to address them effectively.

• Opportunity Identification: Analyzing the external environment can reveal new market opportunities, whether through emerging technologies, shifts in consumer preferences, or changes in regulatory landscapes.

• Resource Allocation: Insights from the external environment help in smarter allocation of resources. For example, understanding economic conditions can help a company decide whether to expand operations or conserve cash.

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ENVIRONMENTAL SCANNING

Environmental scanning is a method used by organizations to monitor, evaluate, and disseminate information from the external and internal environments. The goal of environmental scanning is to identify potential opportunities and threats outside the organization to facilitate proactive, rather than reactive, strategies in business planning.

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KEY ASPECTS OF ENVIRONMENTAL SCANNING:

1. Continuous Process: Environmental scanning should be an ongoing activity that organizations conduct regularly. This ensures that they stay current with changes that may affect their operations, strategies, and competitive advantage.

2. Broad Scope: It encompasses a wide range of elements both external and internal to the organization. Externally, it looks at factors like economic conditions, market trends, political landscapes, technological innovations, social changes, and regulatory frameworks. Internally, it involves assessing strengths and weaknesses, resources, current strategies, and employee capabilities.

3. Information Gathering: This involves collecting information from various sources such as news outlets, market reports, trade associations, scientific journals, and insights from stakeholders including customers, suppliers, and competitors.

4. Analysis: The gathered information is analyzed to identify patterns, trends, and emerging issues. This analysis helps in forecasting future conditions and assessing their possible impact on the organization.

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IMPORTANCE OF ENVIRONMENTAL SCANNING:

• Strategic Decision Making: By providing a clear, current picture of the environment in which the company operates, environmental scanning aids strategic decision-making. It helps managers anticipate and respond to changes in the external environment effectively.

• Opportunity Identification: Regular scanning can reveal new business opportunities, potentially lucrative markets, and ideas for product innovation. This allows organizations to capitalize on these opportunities before competitors do.

• Threat Avoidance: Environmental scanning helps in identifying potential threats to the organization’s welfare early enough that they can be mitigated or avoided altogether.

• Resource Allocation: With a better understanding of the business landscape, organizations can make more informed decisions about where to allocate resources in order to maximize returns and minimize risks.

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TECHNIQUES USED IN ENVIRONMENTAL SCANNING:

• SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats): Helps in assessing internal and external factors that could impact the organization's objectives.

• PESTEL Analysis (Political, Economic, Social, Technological, Environmental, Legal): Focuses on macro-environmental factors that might influence the organization’s performance.

• Porter’s Five Forces: Analyzes the competitive intensity and attractiveness of a market.

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MACRO-ENVIRONMENTAL ANALYSIS

Macro-environmental analysis is a crucial strategic tool used to assess the broader external factors that impact an organization's operations and decision-making. This analysis helps organizations understand the dynamic and often uncontrollable elements that could influence their business in the short or long term. It typically involves examining aspects across different domains using tools like PESTEL analysis, which stands for Political, Economic, Social, Technological, Environmental, and Legal factors.

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COMPONENTS OF MACRO-ENVIRONMENTAL ANALYSIS:

1. Political Factors: These involve government policies, political stability or instability in a market, tax policies, trade restrictions and tariffs, labor laws, and environmental regulations. Political factors can affect how a company operates and its profitability. For example, a change in government can lead to changes in business regulations or fiscal policies that could affect the business.

2. Economic Factors: This includes economic growth rates, interest rates, exchange rates, inflation, and unemployment rates in the economy. Economic indicators dictate the economic climate and purchasing power of consumers and businesses. For instance, high inflation rates may reduce consumer spending, affecting businesses that rely on high consumer demand.

3. Social Factors: These reflect the societal forces that include cultural trends, demographics, population analytics, lifestyle changes, and education levels. Social shifts can impact on the demand for a business’s products and services. For example, an aging population may increase the demand for healthcare services.

4. Technological Factors: These entail emerging technological advancements, innovation, internet infrastructure, and barriers to technology. The pace of technological change can influence how an organization delivers its products and services. Companies need to keep abreast of technological developments to maintain a competitive edge.

5. Environmental Factors: Environmental concerns include climate change, weather, and environmental regulations that impact how companies operate and the products they offer. Companies are increasingly pressured to develop sustainable practices and reduce their environmental footprint.

6. Legal Factors: This includes all regulatory frameworks and laws that a company might need to comply with. Legal factors affect how a company operates, its costs, and the products it offers. This could include consumer laws, safety standards, labor laws, and antitrust laws.

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PURPOSE AND IMPORTANCE OF MACRO- ENVIRONMENTAL ANALYSIS • Risk Management: Understanding macro-environmental factors helps businesses anticipate and mitigate risks before they become unmanageable.

• Opportunity Recognition: By examining the macro environment, companies can spot emerging trends and capitalize on them to gain a competitive advantage.

• Strategic Planning: Macro-environmental analysis provides essential data for strategic planning. It enables businesses to align their strategies with the external environment.

• Long-term Vision: This analysis helps businesses in forecasting and preparing for the future, ensuring sustainability and growth in changing conditions.

Overall, macro-environmental analysis is vital for businesses to navigate the complexities of global markets. It helps in building robust strategies that are responsive to the external environment, enhancing the organization's ability to thrive amid uncertainties.

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INDUSTRY AND SECTOR ANALYSIS

Industry and sector analysis are essential components of strategic planning, providing insights that help businesses understand the market conditions they operate within and guide their competitive strategies. These analyses allow companies to gauge the overall health of the industry or sector, identify key trends, and determine their positioning relative to competitors.

Definitions:

Industry Analysis: Focuses on a specific industry and examines the market dynamics, key players, competitive environment, market growth or decline, technological developments, regulatory impacts, and other factors specific to that industry. This analysis helps in understanding the external factors that affect all businesses within that marketplace.

Sector Analysis: Broader than industry analysis, sector analysis examines a larger segment of the economy, which can encompass several related industries. For example, the financial sector includes industries such as banking, insurance, and investment services.

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COMPONENTS OF INDUSTRY AND SECTOR ANALYSIS:

1. Market Structure: Analyzing how an industry is structured is crucial. This includes understanding whether the industry is fragmented or consolidated, the number of players, and their market shares.

2. Competitive Dynamics: This involves identifying the intensity of competition within the industry, which can be influenced by factors such as barriers to entry, level of rivalry, and the threat of substitutes. Porter’s Five Forces analysis is a popular tool used here.

3. Growth Trends: Analyzing past growth patterns and forecasting future growth. This includes looking at factors like historical sales growth, innovation in the industry, and external economic factors that could impact growth.

4. Regulatory Environment: Understanding the impact of laws and regulations on the industry. This includes current and potential future legislation that might affect how companies operate within the sector.

5. Technological Changes: Identifying technological advancements that could disrupt or enhance the way the industry operates. This involves assessing the adoption of new technologies, potential cost savings, and increased efficiencies.

6. Economic Impact: Analyzing how broader economic conditions affect the industry. This includes factors such as consumer spending, economic downturns, and currency fluctuations.

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IMPORTANCE OF INDUSTRY AND SECTOR ANALYSIS:

• Strategic Decision Making: Provides a solid foundation for making informed strategic decisions, such as market entry, product development, and competitive positioning.

• Risk Assessment: Helps in identifying potential risks in the industry or sector, including economic downturns, technological disruption, or regulatory changes.

• Opportunity Identification: By understanding industry trends and dynamics, companies can spot opportunities for innovation, market expansion, or strategic partnerships.

• Performance Benchmarking: Allows a company to compare its performance against industry standards and competitors, identifying areas for improvement or investment.

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THE COMPETITIVE ENVIRONMENT

The competitive environment of a business refers to the external market landscape in which a company operates. It encompasses all the forces and conditions that influence a company's ability to compete effectively in its industry. Analyzing the competitive environment is crucial for understanding the dynamics that affect market position and profitability.

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KEY ELEMENTS OF THE COMPETITIVE ENVIRONMENT:

1. Competitors: Identifying who the direct and indirect competitors are, their strengths, weaknesses, market share, and strategies. Understanding competitors helps a company determine its own competitive advantages and areas where it may be vulnerable.

2. Market Conditions: Includes market demand, supply conditions, pricing trends, and the overall size and growth rate of the market. These factors determine the potential for profitability and expansion within the industry.

3. Customer Base: Understanding the needs, preferences, and buying behaviors of customers. This involves segmenting the market and targeting specific customer groups whose needs align best with the company's offerings.

4. Barriers to Entry: These are factors that prevent or hinder new competitors from easily entering an industry. Barriers can include high startup costs, access to technology, regulatory requirements, and customer loyalty to established brands.

5. Threat of Substitutes: The degree to which products from other industries can replace or compete with the company’s products. A high threat of substitutes can limit a company’s pricing power and market share.

6. Supplier Power: Represents the bargaining power of suppliers who provide inputs necessary for the industry. High supplier power can affect a company’s margins and its ability to control costs.

7. Buyer Power: Reflects the influence that customers have over the pricing and quality of products. When buyers have significant power, they can demand lower prices or higher product quality, impacting profitability.

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IMPORTANCE OF UNDERSTANDING THE COMPETITIVE ENVIRONMENT: • Strategic Planning: Insights from analyzing the competitive environment are crucial for strategic planning, allowing companies to position themselves effectively in the market.

• Innovation and Adaptation: Understanding competitive pressures can drive innovation and adaptation, as companies must continuously improve their offerings and operations to maintain a competitive edge.

• Risk Management: By understanding the competitive landscape, companies can better anticipate and manage potential risks related to new entrants, competitive actions, and changes in market conditions.

• Resource Allocation: It helps in making informed decisions about where to allocate resources in order to exploit competitive advantages and minimize weaknesses.

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HOW A CORPORATION IS GOVERNED

Stockholders

Board of Directors

Corporate Officers

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REMOVAL OF CEO EXAMPLE

Known:

6 Directors

CEO is a Director and Chairman of the Board

6 Officers

“CEO operates under the privilege of the Board”

3 Board members in favour and 1 maybe

COO is the ideal replacement.

Steps:

1. Secessions Plan

2. Review U.S.A./Company Charter/Director’s Charter/Employee Agreement/Business Act/Company Minute Book

3. Read the Room (Life rule: Never call a vote without knowing the result in advance)

4. Consult Legal 1. Reason’s

5. Schedule Meeting of the Board (COO) 1. Agenda (Define the Chair)

1. Removal of CEO

2. 2nd and Maybe Remove as Director.

3. Define Conflicts.

4. Appoint new CEO

2. Reason’s for calling the vote.

6. Initiate Board Meet

7. Vote/Meeting Minutes.

8. Revoke Email and System Access.

9. Bonus: Press Release

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ROBERT'S RULES OF ORDER

Robert's Rules of Order is the most widely used set of rules for meeting conduct in the United States. It provides guidelines for running meetings, making decisions, and voting in a structured manner. The rules are designed to ensure that meetings are fair and that all members have the opportunity to voice their opinions.

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Motion or Action Purpose What to Say Can Interrupt

Speaker Need a Second

Can Be Debated

Can Be Amended

Votes Needed

Call to Order To officially start the meeting. "The meeting will come to order." No No No No None

Approve Minutes To confirm the record of the last meeting.

"Are there any corrections to the minutes?"

No No No Yes Majority

Adjourn To end the meeting. "I move that we adjourn." No Yes No No Majority Recess To take a short break. "I move that we recess for…" No Yes Yes Yes Majority

Complain about Noise, etc.

To request a disturbance be addressed.

"I rise to a question of privilege regarding…"

Yes No No No None (Ruling by Chair)

Suspend the Rules To temporarily set aside a rule.

"I move to suspend the rules…" No Yes No No Two-thirds

Object to the Consideration

To prevent a motion from being considered.

"I object to the consideration of this motion."

Yes No No No Two-thirds against consideration

Amend a Motion To modify a motion. "I move to amend the motion by…" No Yes Yes Yes Majority

Withdraw a Motion To remove a motion from consideration.

"I request to withdraw my motion." No No No No Majority if objected, otherwise none

Call for the Orders of the Day

To return to the scheduled agenda.

"I call for the orders of the day." Yes No No No None

Point of Order To correct a procedural error. "Point of order." Yes No No No None (Ruling by Chair)

Appeal To challenge a ruling of the chair.

"I appeal the decision of the chair." Yes Yes Yes No Majority

Suspend the Rules To temporarily alter or set aside rules.

"I move to suspend the rules…" No Yes No No Two-thirds

Point of Information To ask a clarifying question. "Point of information." or "I rise to a point of information."

Yes No No No None

Division of the Assembly

To request a re-vote for clarity.

"I call for a division." Yes No No No None

Lay on the Table To temporarily postpone discussion on an item.

"I move to lay the matter on the table."

No Yes No No Majority UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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DISCUSSION: INTEGRATION OF ANALYSES

How a company can integrate insights from environmental scanning, macro- environmental analysis, and industry analysis to make strategic decisions.

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DISCUSSION: ENVIRONMENTAL SCANNING TECHNIQUES

Discuss best practices for environmental scanning in various industries. How do companies gather and analyze data to stay ahead of market trends?

UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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DISCUSSION: THE COMPETITIVE ENVIRONMENT

How do barriers to entry affect competition in high-tech industries compared to traditional industries?

UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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GROUP ACTIVITY: ENVIRONMENTAL SCANNING SIMULATION Conduct a simulation where students perform an environmental scanning exercise for a fictitious company. Have them identify key opportunities and threats and present their findings.

UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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ONLINE DISCUSSION: ENVIRONMENTAL SCANNING TECHNIQUES Discuss best practices for environmental scanning in various industries. How do companies gather and analyze data to stay ahead of market trends?

UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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THANK YOU QUESTIONS? UCW – MGMT 661- Strategic Management – Prof. Adrian Bulzacki

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Organizational diagnosis assignment rubric

Total marks of the

assignment 100

% score 0-59 60-67 68-71 72-75 76-79 80-84 85-89 90-100

Grades F C B- B B+ A- A A+

Matery level Beginning Developing Competent Exceptional

Standard level Below standard Approaching standard At standard Exceeds standard

Grading criteria Weight

Political factors 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on

political factors.

The discussion

provides exceptional

insights on political

factors.

Economic factors 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on

economic factors.

The discussion

provides exceptional

insights on economic

factors.

Social factors 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on social

factors.

The discussion

provides exceptional

insights on social

factors.

Technological

factors 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on

technological

factors.

The discussion

provides exceptional

insights on

technological factors.

Environmental

factors 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on

environmental

factors.

The discussion

provides exceptional

insights on

environmental

factors.

Legal factors 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on legal

factors.

The discussion

provides exceptional

insights on legal

factors.

Ethical factors 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on ethical

factors.

The discussion

provides exceptional

insights on ethical

factors.

Strengths 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on

strengths.

The discussion

provides exceptional

insights on strengths.

Weaknesses 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on

weaknesses.

The discussion

provides exceptional

insights on

weaknesses.

Opportunities 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on

opportunities.

The discussion

provides exceptional

insights on

opportunities.

Threats 5

The discussion is

absent of lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on threats.

The discussion

provides exceptional

insights on threats.

Identified three

challenges and

discussed why

5

The challenges are

missing or

insufficiently

discussed.

The challenges are

mentioned but lack

explanation or analysis.

The challenges are

clearly identified

and briefly

discussed.

The challenges are

clearly identified and

comprehensively

discussed.

Discussed areas for

improvement to

stay competitive

10

The discussion is

absent or lacks

relevance.

The discussion is

minimal and lacks depth

or specificity.

The discussion

provides relevant

insights on areas

for improvement.

The discussion

provides exceptional

insights on areas for

improvement.

Stratregies to

overcome

challenges

15

The strategies are

missing or

insufficiently

discussed.

The strategies are

mentioned but lack

details or feasibility.

The strategies are

relevant and

feasible for

addressing the

challenges.

The strategies are

comprehensive,

innovative, and

highly feasible.

Quality of research

and analysis 5

Limited or no

reesearch or

analysis is evident.

Some research and

analysis present but

insufficient or lacking

depth.

Adequate research

and analysis

supporting the

assignment.

Comprehensive

research and anlysis

supporting the

assignment.

Writing quality 5

Numerous

grammar, spelling,

punctuation, and

citation errors.

Some grammar,

spelling, punctuation,

and citation errors

present.

Minor grammar,

spelling,

punctuation, and

citation errors.

Excellent grammar,

spelling,

punctuation, and

citation accuracy.

Followed

assignment

instructions and

APA guidelines

5

The student did

not follow

assignment

instructions or APA

guidelines.

The student partially

followed assignment

instructions or APA

guidelines.

The student

followed

assignment

instructions and

APA guidelines.

The student

meticulously

followed assignment

instructions and APA

guidelines.

Prof. Bulzacki BUSI 660

Small Business Management

Week 3

https://www.linkedin.com/in/adrian-bulzacki/

WHAT IS VALUE PROPOSITION?

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• A clear statement that explains how a product or service solves customers' problems or improves their situation (relevancy), delivers specific benefits (quantified value), and tells the ideal customer why they should buy from you and not from the competition (unique differentiation).

EXAMPLES OF VALUE PROPOSITION:

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•Amazon: "Everything from A to Z." Amazon's value proposition is about offering a vast selection of products with the convenience of quick delivery. It targets consumers looking for a one-stop shop with reliable service.

•Netflix: "See What's Next." This encapsulates Netflix's commitment to providing a wide array of entertainment options, including exclusive original content, to its subscribers, appealing to viewers seeking convenience and variety in entertainment.

•Tesla: "Accelerate the World’s Transition to Sustainable Energy." Tesla focuses on the innovative aspect of its electric vehicles and clean energy products, appealing to environmentally conscious consumers who also value advanced technology.

•Zoom: "Bringing the World Together, One Meeting at a Time." Zoom's value proposition highlights its role in facilitating easy, reliable, and high- quality video communication, appealing to businesses and individuals who need effective remote communication tools.

•Spotify: "Music for Everyone." This statement underlines Spotify’s extensive music library accessible to a wide range of audiences, appealing to music lovers who want personalized and on-demand music streaming services.

•Google: "Organize the World's Information and Make it Universally Accessible and Useful." Google's value proposition is about providing fast, relevant, and comprehensive search results, targeting virtually everyone who uses the internet for information.

• LinkedIn: "Connect. Find. Be Found." This proposition reflects LinkedIn’s role in professional networking, job searching, and recruitment, appealing to professionals and businesses looking to expand their professional network.

WHAT CUSTOMER PAINS DOES YOUR BUSINESS SOLVE?

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• Long Wait Times: A mobile app for restaurant reservations helps customers avoid the pain of waiting for a table by allowing them to reserve a spot ahead of time.

• Expensive Transactions: A financial tech company offers low-fee or fee-free money transfers, solving the pain of high transaction costs associated with international money transfers.

• Complex Software: A tech company creates user-friendly software that simplifies complex processes, solving the customer pain of dealing with complicated interfaces and workflows.

• Lack of Healthy Food Options: A meal delivery service specializes in organic and healthy meals, addressing the pain of finding quick, healthy, and affordable meal options.

UNDESIRED OUTCOMES

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ANCILLARY

FUNCTIONAL

SOCIAL

EMOTIONAL These outcomes are additional inconveniences associated with a product or service. For example, a fitness center located in an area with limited parking might lead to clients feeling inconvenienced and stressed about finding a parking spot.

These refer to situations where a product or service does not work as intended. For example, a mobile app designed for online shopping crashes frequently, leading to customer frustration and loss of sales.

This involves the negative social impact of a product or service. For instance, a new restaurant causing increased traffic and noise in a residential neighborhood, leading to complaints from residents.

These are related to the negative emotional responses from customers or stakeholders. An example could be customer anxiety caused by a complicated user interface in a banking app, making it difficult for them to access their account information.

UNDESIRED OUTCOMES

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OBSTACLES

RISKS

These are barriers that prevent customers from accessing or using a product or service. An example is a high-priced premium service that is unaffordable for a large segment of potential customers.

These are potential hazards associated with a product or service. For instance, a data breach risk in a new fintech app can lead to concerns about the theft of personal and financial information.

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UNEXPECTED

REQUIRED EXPECTED

DESIRED

WHAT CUSTOMER GAINS DOES YOUR BUSINESS PROVIDE?

These are the fundamental benefits that customers expect as a minimum from a product or service. For example, in a smartphone, a required gain would be the ability to make calls and send texts.

These gains are not essential but are typically anticipated by customers. For a smartphone, expected gains might include a high- quality camera, long battery life, and access to a variety of apps.

These are the benefits that customers would love to have but do not necessarily expect. In the case of the smartphone, this could be features like advanced AI capabilities for personalization or a highly durable, waterproof design.

These are the benefits that customers did not anticipate but find pleasantly surprising. An example for a smartphone could be an innovative feature like a solar-powered charging capability or a unique health monitoring function that sets it apart from other devices.

SELECTED BASIC LEGAL TERMINOLOGY

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ExamplesTerminology

Unwritten law derived from judicial decisions based on customs and usages accepted by the people.

Common law

Body of laws passed by federal, state, and local governments.Statutory law

Gives Congress the right to “regulate commerce with foreign nations, and among the several states.”

Interstate commerce clause

States’ right to regulate business, including the right to use the force of the state to promote the general welfare of citizens. All laws must be based on the federal or a state constitution.Police power

Implies that everyone is entitled to a day in court, and all processes must be equal and fair.Due process

SELECTED BASIC LEGAL TERMINOLOGY

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ExplanationTerminology

Deals with the rights and powers of the government.Public law

Deals with punishing those who commit illegal acts.Criminal law

Is administered between two or more citizens.Private law

Deals with violations against another person who has been harmed in some way.Civil law

A procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties

opt for a private dispute resolution procedure instead of going to court. Arbitration

BANKRUPTCY

• A formal legal condition of inability to repay debts.

• People or businesses can petition the courts to be relieved of this financial obligation.

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SOME PROBLEMS WITH GOVERNMENT REGULATION

• Difficulty of understanding some of the regulations, which can be confusing and restrictive.

• Enormous amount of paperwork involved in preparing and handling the reports needed to comply with government regulations and in maintaining the records needed to satisfy the regulators.

• Difficulty and cost of complying with the regulations.

• Regulations tend to discourage small firms from hiring more workers as their employment approaches the cutoffs set by federal laws and regulations.

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HOW OWNERS OF SMALL FIRMS CAN COPE WITH GOVERNMENT REGULATIONS • Learn as much as you can about the laws that can help you, such as CRA regulations.

• Challenge detrimental or harmful laws, by joining Small Business Associations.

• Become involved in the legal-political system to elect officials of your choosing who will help change the laws.

• Find a better legal environment by moving to a different location

• Learn to live with the laws and regulations

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DO I NEED A LAWYER?

Your lawyer has several roles: • Education • Knowledge of the law. • Ability to see the big picture. • Talent for weighing alternatives.

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WHERE CAN I FIND ONE?

• Personal referral from someone whose opinion you value: banker, minister, relative.

• Lawyer Referral and Information Services, provided by bar associations.

• Advertising: Internet, yellow pages, television.

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WHAT EXACTLY SHOULD I LOOK FOR?

i. First, look for appropriate experience and knowledge of your type of small business.

ii. Second, observe the lawyer’s demeanor, the style and atmosphere of his or her office, and any clients. Does he represent a competitor?

iii. Third, does the lawyer have time for you and your business? Did you have trouble getting an appointment or have a long telephone wait?

iv. Forth, discuss fees, for performance must be balanced against cost of service provided.

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SAMPLE CONTRACT FOR A LAWYER’S SERVICES

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SOCIAL RESPONSIBILITY

• A business’s obligation to follow desirable courses of action in terms of society’s values and objectives.

• Consumerism, employee relations, environmental protection, community relations.

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SOCIAL RESPONSIBILITY

Consumerism

The organized efforts of independent, government, and

business groups to protect consumers from undesirable

effects of poorly designed and poorly produced products.

Employee relations

Showing interest in and concern for employees’ rights, especially as to meaningful employment:

training, development, promotions, pay, health and

safety.

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SOCIAL RESPONSIBILITY

Pollution control

The effort to prevent the contamination or destruction of

the natural environment.

Environmental protection

Tries to maintain a healthy balance between people and

their environment.

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SOCIAL RESPONSIBILITY

Recycling

Reprocessing used items for future use.

Conservation

Means practicing the most effective use of resources, while considering society’s current and

future needs.

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SOCIAL RESPONSIBILITY: GOING GREEN

• Works best when you initially set up your office with recycled office supplies, as furniture and paper goods.

• Use products that are earth friendly or products that dissolve (corn pens and pencils?)

• Practice due diligence in this area as all others, and reduce your carbon footprint.

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SOCIAL RESPONSIBILITY: COMMUNITY RELATIONS

• Educational and medical assistance.

• Urban development and renewal.

• The arts, culture, and recreation.

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BUSINESS ETHICS

Business Ethics

The standards used to judge the rightness or wrongness of a business’s relations to others.

Deal ethically with employees, customers, competitors, and

others. Ethical and fair behavior will

grow your company.

Personal ethic

One’s own belief system that tells one what to do if or when the laws or any pertinent codes

or ethics are silent

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BUSINESS ETHICS ISSUES EXAMPLES

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Diversity and discrimination in the workplace

Theft

Data privacy

Whistleblowing

Corporate Espionage

Harassment

Health & Safety

Nepotism

UNITED AIRLINES CASE

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In 2017, one of the passengers was kicked off the flight… aggressively…

Reaction: losing customers, losing market price (4% fall),

Result: a settlement between United Airlines and Dr.Dao (passenger) is confidential, but some say it cost company $140 million… and possibly reputation.

WHAT TO DO TO AVOID ETHICAL DILEMMAS IN WORKPLACE 1. Set up the rules from the very beginning

2. Make sure to deliver ethical values to the employees

3. Remember to be the best example

4. Make communication transparent

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DISCUSSION – VALUE PROPOSITION AND BUSINESS IMPACT • How does a strong value proposition influence a business's success, and can you provide examples of companies whose distinct value propositions have significantly impacted their market position?

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A strong value proposition is crucial as it differentiates a business in a competitive market, addressing why a customer would choose its product or service over others. For example, Apple has a value proposition focused on innovation, quality, and design, which has helped them to carve out a significant market share and maintain customer loyalty. Similarly, companies like Tesla have disrupted the automotive industry with a value proposition centered around sustainable energy and cutting- edge technology, drawing in a customer base that values these aspects.

DISCUSSION – ETHICAL CONSIDERATIONS IN BUSINESS DECISIONS • In light of ethical dilemmas such as data privacy and workplace discrimination, how should businesses approach these issues, and what is the impact of ethical decision-making on a company's reputation and sustainability?

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Businesses should approach ethical dilemmas by fostering a culture of integrity and transparency. This includes clear ethical guidelines, employee training, and effective channels for reporting and addressing ethical concerns. The impact of ethical decision-making is profound; companies that actively address ethical dilemmas tend to build stronger trust with their customers and stakeholders, enhancing their reputation and long-term sustainability. For instance, companies like Patagonia, known for their commitment to environmental ethics and sustainability, have garnered a loyal customer base and industry respect.

DISCUSSION -SOCIAL RESPONSIBILITY AND ENVIRONMENTAL IMPACT • How do businesses balance profitability with social responsibility, particularly in environmental protection and community relations, and what is the role and impact of 'going green' initiatives on the business and the community?

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Balancing profitability with social responsibility involves integrating sustainable practices into business operations while maintaining financial health. This includes adopting eco-friendly practices, engaging in fair trade, and contributing to community development. The 'going green' initiatives, such as using renewable energy sources or reducing waste, not only help in reducing environmental impact but also can lead to cost savings and open new market opportunities. Companies like IKEA have shown that implementing sustainable practices can lead to operational efficiencies, innovation, and enhanced brand value, thereby benefiting both the business and the wider community.

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THE ROLE OF SWOT ANALYSIS

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Prof. Bulzacki BUSI 660

Small Business Management

Week 2

https://www.linkedin.com/in/adrian-bulzacki/

WHY IS PLANNING SO IMPORTANT TO SMALL BUSINESSES? Planning

• The process of setting objectives and determining actions to reach them.

Criteria

• Be prepared and be patient.

• Know where to get help.

• Form your own support system.

• Know the power of vertical integration*.

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*Vertical integration is a strategy that involves growth through the acquisition of

a producer, vendor, supplier, distributor, or other related company that the acquirer

may already be doing business with.

…PLANNING

• Where can I find needed personnel?

• How much profit can I expect?

• Planning should be the first in performing a series of managerial functions because it sets the future course of action for all aspects of business.

• Planning is the foundation you build on.

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HOW PLANNING RELATES TO OTHER MANAGERIAL FUNCTIONS

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`

WELL-DEVELOPED PLANS CAN:

• Interest moneyed people in investing in your business.

• Guide the owner and managers in operating the business

• Give direction to and motivate employees.

• Provide an environment to attract customers and prospective employees.

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WHY SMALL BUSINESS OWNERS NEGLECT PLANNING

• Day-to-day activities leave them little or no time for planning.

• They fear the problems and weaknesses planning may reveal.

• They lack knowledge of how to plan.

• They feel that future changes cannot be planned for.

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SOME OF THE MOST IMPORTANT TYPES OF PLANS AND PLANNING FUNCTIONS

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Strategic Planning Examples

Mission: The long-term direction of the business. To provide financial security at low cost.

Objectives: Shorter-term ends to help achieve the mission. • For total firm.

• For functional area.

• Earn a 20 percent return on investment in 2025. • Increase penetration of market by 25 percent by

2026.

Strategies: Means to achieve an end, or courses of action needed to achieve objectives.

• For total firm. • For functional area.

• Establish control procedures to control costs by 2025. • Use 1 percent of sales to improve and expand

service.

SOME OF THE MOST IMPORTANT TYPES OF PLANS AND PLANNING FUNCTIONS

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Operational Planning Examples

Policies: Guides action that provides consistency in decision making, particularly in repetitive situations.

Personnel policy: Promote from within, giving preference to promotions for present employees.

Methods and procedures: Prescribed manner of accomplishing desired output.

Employee selection procedure: Complete application form, test, interview, investigate, select.

Budgets and standards: Plans for future activities using measures for control.

Cash budget: For planning use of money.

THE ROLE OF STRATEGIC PLANNING PROVIDES COMPREHENSIVE LONG-TERM DIRECTION TO HELP A BUSINESS ACCOMPLISH ITS MISSION.

• Selecting the type of business to enter.

• Formulating the mission of the company.

• Deciding whether to start a new business, buy an existing one, or buy a franchise.

• Choosing the product or service to sell.

• Deciding on the market niche to exploit.

• Choosing the type of organization to use.

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THE ROLE OF SWOT ANALYSIS

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MISSION AND VISION

Vision

Explains what the business is stressing to become in the future.

Mission statement

Defines the present business scope and broadly describes the organization’s present capabilities, focus, and activities.

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TYPES OF PLANNING

• Strategic planning before starting the business.

• A business plan to attract investors, financiers, and prospective employees.

• Continuous operational planning and control before and after the business starts operating.

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WHEN WE STARTED A FURNITURE RETAIL CHAIN, WHAT DID WE CONSIDER? • Street retail (separate entrance)

• Malls

• Specialized malls (Home and furniture)

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Location

Location

Location

STREET RETAIL

Where is the best spot here?

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STREET RETAIL

Where is the best spot here?

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Entrance/Exit

Entrance/Exit

MALL

Which Property Should We Rent?

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Product Store (Supermarket)

1 2 3 4 5 6

7

8

9

IT DEPENDS!On the Entrance / Exit

MALL

The Traffic

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Product Store (Supermarket)

1 2 3 4 5 6

7

8

9

MALL

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Product Store (Supermarket)

1 2 3 4 5 6

7

8

9 The Traffic

How To Choose The Idea And Validate It?

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HOW TO CHOOSE THE IDEA AND VALIDATE IT? WORK IN TEAMS AND DISCUSS THE FOLLOWING

1. What are the main criteria to choose the idea for business? What rationale stands behind the idea?

2. How do we validate that the idea is worth time and other resources?

3. Make a small research, choose a company and prepare a very short story about how this business started.

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15 minutes to discuss

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WHAT IS VALUE PROPOSITION?

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WHAT CUSTOMER GAINS DOES YOUR BUSINESS PROVIDE?

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UNEXPECTED

REQUIRED EXPECTED

DESIRED

WHAT CUSTOMER PAINS DOES YOUR BUSINESS SOLVE?

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2024Prof. Adrian Bulzacki

BUSI 660

Small Business Management

Week 1

WHY DO WE STUDY SMALL BUSINESS?

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SOME PRO’S

• Small firms generate most new private employment.

• Public support is growing as many consumers lose favor with big business retailers.

• Many incentives, like tax credits, to do so.

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SELF-EMPLOYMENT IN CANADA

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HOW MANY SMALL BUSINESSES ARE THERE IN CANADA? HINT: THERE ARE 1.23 MILLION EMPLOYER BUSINESSES IN TOTAL (KEY S MALL BUSINESS STATISTICS – 2020, GOVERNMENT OF CANADA)

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• 500,000

• 1,200,000

• 900,000

• 50,000

(97.9% of all employer businesses are small businesses)

MOST OF SMALL BUSINESSES IN CANADA ARE LOCATED IN:

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• Quebec

• B.C.

• Ontario

• Alberta

(440,306 out of 1,200,571)

SMALL BUSINESS MUST HAVE AT LEAST TWO OF THE FOLLOWING FEATURES:

• Management is independent, because the manager usually owns the business.

• Capital is supplied and ownership is held by an individual or a few individuals.

• The area of operations is primarily local, although the market is not necessarily local.

• The business is small in comparison with the larger competitors in its industry

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DISTINGUISHING BETWEEN ENTREPRENEURIAL VENTURES AND SMALL BUSINESSES

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DISTINGUISHING BETWEEN ENTREPRENEURIAL VENTURES AND SMALL BUSINESSES

Small business

Independently owned and operated and is not dominant in

its field.

Entrepreneurial venture

The principal objectives of the owner are profitability and

growth.

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DISTINGUISHING BETWEEN ENTREPRENEURIAL VENTURES AND SMALL BUSINESSES

Small business Owner

Establishes a business primarily to further personal goals, including making a profit.

Entrepreneur

Goals include achievement, profit, and growth, achieved

through innovation and strategic management.

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WHY SMALL BUSINESS IS SO IMPORTANT?

• Encourage innovation and flexibility.

• Keep larger firms competitive

• Develop risk takers

• Generate new employment

• Maintain close relationships with customers and the community

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SOME CURRENT PROBLEMS FACING SMALL BUSINESSES

• Political and economic issues.

• World economy.

• Capital or financing issues.

• Unexpected growth.

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INADEQUATE FINANCING

• It cannot be stressed enough that a shortage of capital is the greatest problem facing small business owners.

• Without adequate funds, the small business owner is unable to acquire and maintain facilities, hire capable employees, produce and market a product, or run a successful business.

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INADEQUATE MANAGEMENT

• Many owners tend to rely on one-person management and are reluctant to release control, or to delegate responsibilities.

• They may not select qualified employees or may fail to give them enough authority and responsibility to manage adequately.

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SOME CURRENT TRENDS CHALLENGING SMALL BUSINESS OWNERS

• Exploding technology

• Occupational and industry shifts

• Global challenges

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OCCUPATIONAL AND INDUSTRY SHIFTS

Reinvention

The fundamental redesign of a business, often resulting in reduction in size and markets.

Reengineering

The redesign of operations, starting from scratch

Downsizing

Reducing the number of employees to increase efficiency.

Also called rightsizing.

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WHY PEOPLE START SMALL BUSINESSES?

• Satisfying personal objectives.

• Achieving business objectives.

• Achieve independence.

• Obtain additional income.

• Help their families.

• Provide products not available elsewhere.

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ACHIEVE BUSINESS OBJECTIVES

Objectives

• The goals toward which the activities of the business are directed.

• Service, profit, social, growth.

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Social objectives

Goals regarding providing a service to the community and doing their part in

environmental protection.

Profits

Are the reward for accepting business risks and performing an economic service.

Are needed to ensure the continuity of a business.

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WHAT LEADS TO SUCCESS IN MANAGING A SMALL BUSINESS?

• Serving an adequate and well-defined market for the product.

• Acquiring sufficient capital.

• Recruiting and using human resources effectively.

• Obtaining and using timely information.

• Coping effectively with government regulations.

• Having expertise in the field on the part of both the owner and the employees.

• Being flexible.

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DOING AN INTROSPECTIVE PERSONAL ANALYSIS

Values

Mental abilities

Attitudes

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FACTORS AFFECTING THE FUTURE OF AN INDUSTRY OR A BUSINESS

Examples of Factors Affecting Industry and Business Trends

Economics—gross national product (G N P), interest rates, inflation rates, stages of the business cycle, employment

levels, size and characteristics of business firms and not-for-profit organizations, and opportunities in foreign markets.

Technology—artificial intelligence, thinking machines, laser beams, new energy sources, amount of spending for

research and development, and issuance of patents and their protection.

Lifestyle—career expectations, consumer activism, health concerns, desire to upgrade education and climb the

socioeconomic ladder, and need for psychological services.

Political-legal–antitrust regulations, environmental protection laws, foreign trade regulations, tax changes, immigration

laws, childcare legislation, and the attitude of governments and society toward the particular the type of industry and

business.

Demographics—population growth rate, age and regional shifts, ethnic moves and life expectancy, number and

distribution of firms within the industry, and size and character of markets

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SOME AREAS OF CONCERN FOR SMALL BUSINESS OWNERS

• The success of smaller firms tends to be limited by factors such as inadequate management, shortages of capital, government regulation and paperwork, and lack of proper recordkeeping.

• Two other concerns are poorly planned growth and the threat of failure.

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POORLY PLANNED GROWTH

• Setting goals without realistic steps to meet them.

• Not training your employees well-enough so that you are unable to delegate responsibilities.

• Not preparing for emergencies.

• Being unable to deal with stress.

• Failure to seek help.

• The paradox itself: You own your business, yet you don’t enjoy it.

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STAGES IN THE DEVELOPMENT OF A SMALL BUSINESS

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THREATS OF FAILURE

Failure

Results from inability to succeed in running a business.

Discontinuance

A voluntary decision to

terminate a business, due to

health, family situation, or the

advantages of working for

someone else.

Personal (informal) failures

The owner who cannot succeed

voluntarily terminates the

business.

Formal failures

Failures ending up in court

with loss to creditors.

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UCW – BUSI 660 – Small Business Management – Prof. Adrian Bulzacki

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UCW – BUSI 660 – Small Business Management – Prof. Adrian Bulzacki

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BONUS: ENTREPRENEUR TOOLS

Entrepreneur Tools by Mohammad Keyhani | ZEEF

https://entrepreneur-tools.zeef.com/keyhanimo

UCW – BUSI 660 – Small Business Management – Prof. Adrian Bulzacki

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