Strategic ManagementJohn D. MacomberWhy Strategy?Why You?Why these tools?My Planning StepsThe AEC/EPC Value System:Analyzing Strategic Options: Key ConceptsIndicators of Segment Profitability:“Five Forces” Model - M. PorterStrategic ManagementJohn D. MacomberStrategic ManagementJohn D. MacomberOptional ReviewStrategic Management Review John Macomber 2Why Strategy?• It’s about how businesses compete.• How can you earn above average returns?To do this, you consider:• Selection of industries• Selection of segments• Choice of tactics• How to IMPLEMENT!Strategic Management Review John Macomber 3Why You?• You will be principals in firms• You will have to decide what to do:– What markets?– What services?– Where to dedicate your time?– What kinds of people?• You probably will be part of a team.Strategic Management Review John Macomber 4Why these tools?Have a structure:• Hold a linear conversation• Handle lots of information• Organize team thinking• Lay out your assumptions• Plan ACTION!That helps you:• Analyze• Evaluate• Argue• DECIDE• DOStrategic Management Review John Macomber 5My Planning Steps1. What is going on - get the big picture2. Review Mission – why are we here?3. External Scan – what’s the landscape?4. Internal Scrutiny - what are our strengths & weaknesses now?5. Strategic Analysis – what could we do?Strategic Management Review John Macomber 6The AEC/EPC Value System:Owner/OperatorLaborSubcontractorEngineerConstructorDesignerSponsorDistributorPermanent FinanceEnd UserConsultantProject FinanceLand and PermissionsLaborMaterialMaterialBuilding ProductManufacturerStrategic Management Review John Macomber 7Analyzing Strategic Options: Key ConceptsIndustry Value SystemWhat roles do we play: now & proposed?Market SegmentationWhat can we sell to whom: Possibilities now & proposed?Attractiveness: 5 ForcesWhat to whom: Analysis now & proposedGeneric StrategiesHaving chosen what to whom, how?The Firm Value ChainHaving chosen how, what details & budgets?Strategic Management Review John Macomber 8Indicators of Segment Profitability:“Five Forces” Model - M. PorterBarriers to EntryBarriers to ExitSupplier Bargaining PowerBuyer Bargaining PowerExisting Rivalry Availability of SubstitutesAttractiveness of an Industry or of a Segment is a function of these forces.Use them in selection of segments - and in defense of segments.Strategic ManagementJohn D. MacomberLecture Notes: Review-- end