Slide 1Book ParadigmSlide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Slide 30Slide 31Slide 32The Tools of The Tools of Strategic Strategic AnalysisAnalysisChapter 1Chapter 1The Tools of Strategic AnalysisThe Tools of Strategic Analysis22Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyBook Paradigm•Resource Based – View of the Firm•VIRO–V = Value–R = Rarity–I = Imitability–O = OrganizationThe Tools of Strategic AnalysisThe Tools of Strategic Analysis33Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & Hesterly1984 Profits: $242 MillionTheme Park Operations: 77 percent of profitsConsumer Products: 22 percent of profitsFilmed Entertainment: 1 percent of profitsWalt Disney CompanyThe Tools of Strategic AnalysisThe Tools of Strategic Analysis44Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyHired Michael Eisner - 19841. Increased admission prices at theme parks1984 - $186 m 1989 - $787 m2. Focused on movie studios (character development)1984 - $2.42 m 1994 - $845 m3. Diversified into television (ABC), hotels, retail stores,sport team, cruise line, publishing, consumerproducts, licensing, etc. (Huey & McGowan, 1995)Walt Disney CompanyMarket Cap: 1984 = $2 billion 1994 = $28 billionToday’s Market CapThe Tools of Strategic AnalysisThe Tools of Strategic Analysis55Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyDefinition of StrategyStrategy: A firm’s plan to gaincompetitive advantageEisner’s theory may have been:People will pay a premium price for extraordinaryentertainment. We have the necessary resources tocreate extraordinary entertainment. Therefore, let’sredeploy our resources in a different way and offersomething extraordinary to people.The Tools of Strategic AnalysisThe Tools of Strategic Analysis66Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyMission ObjectivesExternalAnalysisInternalAnalysisStrategicChoiceStrategyImplementationCompetitiveAdvantageThe Strategic Management ProcessThe Tools of Strategic AnalysisThe Tools of Strategic Analysis77Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyThe Strategic Management ProcessObjectivesExternalAnalysisInternalAnalysisStrategicChoiceStrategyImplementationCompetitiveAdvantageMissionThe Tools of Strategic AnalysisThe Tools of Strategic Analysis88Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyThe Strategic Management ProcessObjectives:• specific, measurable targets• the things a firm needs to ‘do’ to achieveits mission• should influence other elements in the strategicmanagement processThe Tools of Strategic AnalysisThe Tools of Strategic Analysis99Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyThe Strategic Management ProcessExternal and Internal AnalysisExternal AnalysisSystematic Examinationof the EnvironmentInternal Analysis• interest rates• demographics• social trends• technology• human resources(knowledge)• manufacturingabilities• technologyThe Tools of Strategic AnalysisThe Tools of Strategic Analysis1010Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyThe Strategic Management ProcessStrategic ChoiceExternalAnalysisInternalAnalysisStrategicChoiceBusinessLevelCorporateLevel• positioninga business• which businesses?The Tools of Strategic AnalysisThe Tools of Strategic Analysis1111Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyThe Strategic Management ProcessStrategy Implementation• how strategies are carried out• who will do what• organizational structure and control• who reports to whom• how does the firm hire, promote, pay, etc.The Tools of Strategic AnalysisThe Tools of Strategic Analysis1212Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management & Competitive Advantage - Barney & HesterlyStrategic Management & Competitive Advantage - Barney & HesterlyA Strategy Is Only As Good As Its ImplementationStrategy ImplementationThe Strategic Management Process• every strategic choice has strategy implementationimplications• strategy implementation is just as important asstrategy formulationThe Tools of Strategic AnalysisThe Tools of Strategic Analysis1313Copyright © 2006 Pearson Prentice Hall. All rights reserved. Copyright © 2006 Pearson Prentice Hall. All rights reserved. Strategic Management &