There are four parts to the final course project. The first part of the project is the initial project proposal, which will be submitted to the instructor for approval--before continuing with the rest of the project. It includes the Introduction to the Project Proposal. The first part of the project will identify the company of choice that will seek an expansion opportunity to an oversee area of choice. Be sure to identify the country and mode of entry. In addition, provide an introduction and overview of the selected company along with an initial analysis of the growth opportunity. Write a 1000 word, APA style paper where you complete the requirements for Part 1 of the Project Proposal. Part 1 must include the following: Introduction: Provide an introduction and overview of the selected company along with an initial analysis of the growth opportunity. Identify the following: • Country of choice • Mode of entry In your paper include a title sheet and 2-3 references. Only one reference may be found on the internet. The other references must be found in the Grantham University online library. Only the body of the paper will count toward the word requirement. You will also find a document below which covers the entire project, please download and keep this document for future reference throughout the course. Course Overview Business Policy and Strategy is the capstone course for business administration majors. This advanced course is designed to provide students with a general management perspective of the total business enterprise. Students learn new strategy formulation, implementation, and evaluation concepts and techniques. Students use this new knowledge, coupled with knowledge acquired from other courses, to chart the future direction of different types of organizations. The course builds on previous courses in diverse functional areas to offer insights and analytical tools which a general manager needs to plan and implement successful business policies and strategies. The course emphasizes the practical application of business theory to business problems. Project Introduction Purpose You will select a company and then identify and analyze a strategy for its growth into an overseas market. Course Objectives ? Discuss the nature of strategy formulation, implementation, and evaluation activities. ? Describe the nature and role of vision and mission statements in strategic management. ? Discuss ten major external forces that affect organizations: economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive. ? Discuss the importance of gathering competitive intelligence. ? Explain how to determine and prioritize a firm’s internal strengths and weaknesses. ? Explain how to develop a SWOT Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and QSPM. ? Identify important behavioral, political, ethical, and social responsibility considerations in strategy analysis and choice. ? Explain market segmentation and product positioning as strategy implementation tools. ? Discuss the nature and role of research and development in strategy implementation. ? Explain how computer information systems can determine the success of strategy implementation efforts. Project Logistics There are four parts to the final course project. The first part of the project is the initial proposal, which will be submitted to the instructor for approval. The second part is research on opportunities and cultural challenges in the country you choose for your company’s expansion. Next, you will conduct a strategic audit on various areas. Finally, you will put it all together into a written analysis of your proposed strategic plan. A final presentation of the proposed plan will be the culmination of the project. Deliverables ? Project Part 1: Project Proposal (requires instructor approval) Assigned: Week 2 ? Project Part 2: Cultural Exchange and Marketing Strategy Assigned: Week 4 ? Project Part 3: Strategic Audit Assigned: Week 6 ? Project Part 4: Final Proposal and Presentation Assigned: Week 8 Project Part 1: Project Proposal Assignment Requirements: There are four parts to the final course project. The first part of the project is the initial proposal, which will be submitted to the instructor for approval. The first part of the project will identify the company of choice that will seek an expansion opportunity to an oversee area of choice. Be sure to identify the country and mode of entry. In addition, provide and introduction and overview of selected company along with an initial analysis of the growth opportunity. Steps to complete Part 1 Introduction: Provide an introduction and overview of the selected company along with an initial analysis of the growth opportunity. Identify the following: ? Country of choice ? Mode of entry Submission Requirements: Submit a two- to three-page Word document using 12-pt. font and APA format ? Project Part 2: Cultural Exchange and Marketing Strategy Assignment Requirements: Now that you have your approved idea for the project it is time to begin the second part of the project, which builds on Project Part 1. Using the same company of choice that is proposing an expansion opportunity oversee, conduct research on the country. Specifically focus on the culture and cultural exchange. For the culture, review the web site http://geert-hofstede.com/ to compare the cultural differences between the countries. Identify the cultural differences and consider the cultural exchange. In addition, research and choose the best distributions method: Product/Market, Pricing, and Positioning. Identify the following: ? Cultural differences ? Cultural exchange ? Distribution Methods Submission Requirements: Submit a two- to three-page Word document using 12-pt. font and APA format ? Project Part 3: Strategic Audit Assignment Requirements: Now that you have conducted a cultural review along with developing some marketing strategies for entry into the country, it is time to begin the third part of the project, which continues from Project Part 2. Using the same company of choice that is proposing an expansion opportunity oversea, conduct a strategic audit on the following areas: ? Internal environment ? External environment ? Strengths ? Problem analysis ? Recommendations and implementation costs Submission Requirements: Submit a two- to three-page Word document using 12-pt. font and APA format ? Project Part 4: Final Proposal and Presentation Assignment Requirements: It’s time to finalize your research and put together your final proposal. Below is the summary of what is required for the final proposal. Project Part 4 is the final written analysis of your company’s strategic plan. Be sure to include: ? Summary ? Executive Summary Submit all of the previous project parts, incorporating any feedback received from your instructor. Required Sections: Part 1 Introduction ? Introduction and overview of your selected company along with an initial analysis of the growth opportunity ? Country of Choice ? Mode of Entry Part 2 Cultural Exchange and Marketing Strategy ? Cultural Differences ? Distributions Methods:Product/Market, Pricing and Positioning Part 3 Strategic Audit ? Internal Environment ? External Environment ? Strengths ? Problem Analysis ? Recommendations and Implementation Costs In addition, create a 10-15 minute PowerPoint Recorded presentation in which you describe in detail the key decisions you made in Project Parts 1, 2, and 3 and the reasons for those decisions. Include any additional items of your choice to support the proposal for expansion. Submission Requirements: Submit your final written analysis of the company’s strategic planfor the expansion opportunity oversee. It should be eight to ten pages in length. Submit the recorded presentation video. W2 Lecture 1 "Environmental Scanning and Monitoring Trends" Environmental Scanning and Monitoring Trends The focus of this lecture will be on the aspects of an organization’s environment and the competitive forces that influence the intensity of rivalry within an industry. Please be sure to review chapter 3, Pages 59-84, this lecture is a supplement to the readings. Environmental Scanning Analysis of the environmental factors usually takes into account the following: Ecological, Economic Forces, Technological Forces, Political-Legal Forces, and Sociocultural Forces. Environmental scanning uses the macro-level factors such as general ecological, economic trends, changes in demographic structure, or social and political trends are unimportant for strategy analysis. These factors may be critical determinants of the threats and opportunities a company will face in the future. The key issue is how these more general environmental factors affect the ?rm’s industry environment (Figure 3.1) below. Key question to consider: 1.Do you know of any examples of companies not adapting to the changing environment? 2.How can a development in a corporation’s natural and societal environments affect the corporation through its task environment? 3.Why is Environmental Analysis important? An example for a company not adapting to the changing environment can be found by reading about General Electric, the Strategy Capsule 7.5 on page 193 of the course text book. Before an organization can begin strategy formulation, it must scan the external environment to identify possible opportunities and threats and its internal environment for strengths and weaknesses. Environmental scanning involves the monitoring, evaluation and dissemination of information from the external and internal environments to key people within the corporation. Identifying External Environmental Variables Natural environment •Physical resources •Wildlife •Climate Societal environment •Social systems that influence long-term decisions •Economic forces •Technological forces •Political-legal forces •Sociocultural forces Task environment •Groups that directly affect a corporation and are affected by the corporation •Government •Local communities •Suppliers •Competitors •Customers •Creditors •Unions •Special interest groups/trade associations How can a development in a corporation’s natural and societal environments affect the corporation through its task environment? •Developments or trends in a corporation’s natural or societal environment typically do not affect the corporation directly, but rather indirectly, through their impact on one or more stakeholder groups in the corporation’s task environment. •The trend toward dual-career couples is a recent development in the societal environment of any company operating in the U.S. or Canada. •Sociocultural forces regarding the changing role of women plus the trend toward single family households combined with the economic forces of high interest rates and inflation in the 1970s to send both men and women searching for full-time jobs in addition to their being parents. •This development in the societal environment continues to affect companies through its impact on employee/union groups (who ask for parental leave and/or company-sponsored day care centers), customers (employed parents who increasingly shop for convenience goods because of time constraints), and special interest groups and even governments (who ask business firms to help support local schools and deal with community social problems). •As another example, the trend toward global warming may not directly affect a company making toys, but may affect it indirectly through a sociocultural trend supporting the use of rechargeable batteries and solar cells as replacements for disposable batteries. Such a sociocultural trend may be reflected in changing customer preferences or in new government regulations or incentive programs. Why is Environmental Analysis important? A changing environment can help as well as hurt a company. Many pioneering companies have gone out of business because of their failure to adapt to environmental change or, even worse, because of their failure to create change. Monitoring Trends Key Question to consider: 1.Given the vast number and range of external in?uences, how can managers monitor and analyze the environment? The practice of monitoring trends is an in-depth examination of key factors within a corporation’s task environment which include the following perspectives: •(Popularized by Michael Porter) refers to an in-depth examination of key factors within a corporation’s task environment. Table 3.2, on pages 64-65 of the course text book, identi?es Porter's the four structural variables in?uencing competition and pro?tability. •The natural, societal, and task environments must be monitored to detect the strategic factors that are likely in the future to have a strong impact on corporate success or failure. How can managers monitor and analyze the environment? The starting point is some kind of system or framework for organizing information. Environmental in?uences can be classi?ed by source, for example, into political, economic, social, and technological factors what is known as PEST. Another framework, which is discussed in this lecture is called STEEP. STEEP Analysis Large corporations categorize the societal environment in any one geographic region into four areas and focus their scanning in each area on trends that have corporate-wide relevance. By including trends from the natural environment, this scanning can be called STEEP: •Sociocultural •Technological •Economic •Ecological •Political-legal forces Economic Trends Trends in the economic part of the societal environment can have an obvious impact on business activity. •An increase in interest rates means fewer sales of major home appliances. Why? A rising interest rate tends to be reflected in higher mortgage rates. Because higher mortgage rates increase the cost of buying a house, the demand for new and used houses tends to fall. •The rapid economic development of Brazil, Russia, India, and China (often called the BRIC countries) is having a major impact on the rest of the world. •With India graduating more English speaking scientists, engineers, and technicians than all other nations combined, it has become the primary location for the outsourcing of services, computer software, and telecommunications. Changes in the technological part of the societal environment can also have a great impact on multiple industries. •Improvements in computer microprocessors have not only led to the widespread use of personal computers but also to better automobile engine performance in terms of power and fuel economy through the use of microprocessors to monitor fuel injection. •A comprehensive list of technological breakthroughs that are already having a significant impact on many industries. Summary: The focus of this lecture was on the aspects of an organization’s environment and the competitive forces that influence the intensity of rivalry within an industry. As we know, a changing environment can help as well as hurt a company. Being able to continuously monitor to the macro-level factors such as general ecological, economic trends, changes in demographic structure, or social and political trends are an important for strategy analysis. The starting point for strategic analysis is to develop some kind of system or framework for organizing information. W2 Lecture 2 "Industry Analysis Provides Competitive Intelligence for Forecasting" Industry Analysis Provides Competitive Intelligence for Forecasting The focus of this lecture will focus on the Porter five forces analysis framework for industry analysis to understand the competitive forces that influence the intensity of rivalry within an industry. In addition, the lecture will also cover the techniques used to categorize international industries based on their pressures for coordination and local responsiveness and also how to construct strategic group maps to assess the competitive positions of firms in an industry. Please be sure to review chapter 4, Pages 87-107, this lecture is a supplement to the readings. Industry Analysis Key Question to consider: 1.According to Porter, what determines the level of competitive intensity in an industry? 2.According to Porter’s discussion of industry analysis, is Pepsi Cola a substitute for Coca Cola? 3.Why is environmental uncertainty an important concept in strategic management? What determines the level of competitive intensity in an industry? The five forces presented by Michael Porter, plus the sixth force (other stakeholders) proposed by Ed Freeman, are briefly: •Threat of new entrants •Rivalry among existing firms •Threat of substitute products or services •Bargaining power of buyers •Bargaining power of suppliers •Relative power of other stakeholders Is Pepsi Cola a substitute for Coca Cola? According to Porter, (Also found on page 97 of the course text book) substitute products are those products that appear to be different but can satisfy the same need as another product. This means that in Porter’s mind, substitutes do not have similar product characteristics, but are still able to satisfy the same need. This indicates that Porter would not view Pepsi and Coke as true substitutes, but two versions/brands of the same product. Thus, Porter would view coffee and tea (both having caffeine) as being substitutes for a soft drink cola. The whole idea of Porter’s approach to industry analysis is to get people to go beyond the obvious when considering what effects the level of competitive intensity within an industry. Threat of New Entrants New entrants to an industry typically bring to it new capacity, a desire to gain market share, and substantial resources. •They are, therefore, threats to an established corporation. •The threat of entry depends on the presence of entry barriers and the reaction that can be expected from existing competitors. •An entry barrier is an obstruction that makes it difficult for a company to enter an industry. •Further discussion can focus on threats from new entrants, rivalry among existing firms, threat of substitute products or services, the bargaining power of buyers, the bargaining power of suppliers, and the relative power of other stakeholders. Entry Barriers Some of the possible barriers to entry are: •Economies of scale: Scale economies in the production and sale of microprocessors, for example, gave Intel a significant cost advantage over any new rival. •Product differentiation: Corporations such as Procter & Gamble and General Mills, which manufacture products such as Tide and Cheerios, create high entry barriers through their high levels of advertising and promotion. •Capital requirements: The need to invest huge financial resources in manufacturing facilities to produce large commercial airplanes creates a significant barrier to entry for any competitor to Boeing and Airbus. •Switching costs: Once a software program such as Excel or Word becomes established in an office, office managers are very reluctant to switch to a new program because of the high training costs. •Access to distribution channels: Small entrepreneurs often have difficulty obtaining supermarket shelf space for their goods because large retailers charge for space on their shelves and give priority to the established firms that can pay for the advertising needed to generate high customer demand. •Cost disadvantages independent of size: Once a new product earns sufficient market share to be accepted as the standard for that type of product, the maker has a key advantage. Microsoft’s development of the first widely adopted operating system (MS-DOS) for the IBM-type personal computer gave it a significant competitive advantage over potential competitors. Its introduction of Windows helped to cement that advantage so that the Microsoft operating system is now on more than 90% of personal computers worldwide. •Government policy: Governments can limit entry into an industry through licensing requirements by restricting access to raw materials, such as oil-drilling sites in protected areas. Strategic Groups A set of business units or firms that pursue similar strategies with similar resources and categorizing firms in any one industry into a set of strategic groups is very useful as a way of better understanding the competitive environment. Mapping Strategic Groups •Because a corporation’s structure and culture tend to reflect the kinds of strategies it follows, companies or business units belonging to a particular strategic group within the same industry tend to be strong rivals and tend to be more similar to each other than to competitors in other strategic groups within the same industry. •Strategic groups in a particular industry can be mapped by plotting the market positions of industry competitors on a two-dimensional graph, using two strategic variables as the vertical and horizontal axes. For an example of Mapping Strategic Groups, Figure 4.7 below shows strategic groups within the world automobile industry Why is environmental uncertainty an important concept in strategic management? It can be argued that without environmental uncertainty, there would be no need for strategic management. The Arab oil embargo of 1973 is said to be the single most influential event causing the formation of planning departments in most U.S. corporations. The embargo showed managers just how vulnerable their companies were to environmental change. A key part of strategic management, environmental scanning is a tool used to help avoid strategic surprise and cope with an uncertain environment. If the environment were certain and predictable, environmental scanning would be a rather easy chore. Simple extrapolation would be the only type of forecasting needed. In a complex and changing world, however, those corporations that engage in environmental scanning and strategic planning tend to deal better with environmental uncertainty and to be more successful than their non-planning brethren. Competitive Intelligence Within any industry, there are usually certain key success factors that a company’s management must understand to be successful. Key success factors •Variables that can significantly affect the overall competitive positions of companies within any particular industry •Typically vary from industry to industry and are crucial to determining a company’s ability to succeed within that industry Industry matrix •An industry matrix summarizes the key success factors within a particular industry. •The matrix can also provide a weight for each factor based on how important that factor is for success within the industry. •The matrix also specifies how well various competitors in the industry are responding to each factor. Usually determined by the economic and technological characteristics of the industry and by the competitive weapons on which the firms in the industry have built their strategies Defining Competitive Intelligence: Competitive intelligence involves the systematic collection and analysis of information about rivals for informing decision making. It has three main purposes: •To forecast competitors future strategies and decisions •To predict competitors likely reactions to a ?rm’s strategic initiatives •To determine how competitors behavior can be in?uenced to make it more favorable Michael Porter proposes a four-part framework for predicting competitor behavior (Figure 4.3). •Competitor’s current strategy: To predict how a rival will behave in the future, we must understand how that rival is competing at present. •Competitor’s objectives: To forecast how a competitor might change its strategy, we must identify its goals. •Competitor’s assumptions about the industry: A competitor’s strategic decisions are conditioned by its perceptions of itself and its environment. •Competitor’s resources and capabilities: Evaluating the likelihood and seriousness of a competitor's potential challenge requires assessing the strength of that competitor’s resources and capabilities. Forecasting With the existence of the Internet, it is now possible to scan the entire world! Key Question to consider: 1.How can anyone monitor and keep track of all the trends and factors in the worldwide societal environment? 2.If most long-term forecasts are usually incorrect, why bother doing them? With the existence of the Internet, it is now possible to scan the entire world. Nevertheless, the vast amount of raw data makes scanning for information similar to drinking from a fire hose. If a new development is reported regarding a particular product category, top management may then send memos asking people throughout the organization to watch for and report on developments in related product areas. The many reports resulting from these scanning efforts, when boiled down to their essentials, act as a detailed list of external strategic factors. Creating a Scanning System •In forecasting, it is important to discuss the danger of assumptions. •Environmental scanning provides reasonably hard data on the present situation and current trends, but intuition and luck are needed to accurately predict whether these trends will continue. •Brainstorming, expert opinion, and statistical modeling are also very popular forecasting techniques. The rolling J-curve style of forecasting •When current environmental trends (such as the price of oil) look bad or when a new product introduction is not doing as well as expected, managers and analysts are tempted to use the rolling J-curve style of forecasting, in which present trends are discounted in the hope that everything will soon improve as hoped. •Well known among strategic planners, the rolling J-curve forecast is feared with good reason by most executives. •For example, if a new program is not resulting in increased sales as anticipated, the person in charge of the program simply alters the forecast by announcing that the decrease is only temporary and that the expected increase will occur sometime soon. •Sales can thus be diagramed on a chart with the actual sales figures curving downward over time and the estimated future sales figures forming the upward curve of the J (while everyone continues to hope for a “light at the end of the tunnel”). •Companies can go bankrupt using these kinds of forecasts in which hope substitutes for analysis. External Strategic Factors External strategic factors are key environmental trends that are judged to have both a medium to high probability of occurrence and a medium to high probability of impact on the corporation. The origin of competitive advantage lies in the ability to identify and respond to environmental change well in advance of competition. There are two approaches to identifying external strategic factors: Issues priority matrix and External strategic factors Issues priority matrix Used to identify and analyze developments in the external environment, here is an example: Issues priority matrix: How it works: 1.Identify a number of likely trends emerging in the natural, societal, and task environments. These are strategic environmental issues, those important trends that, if they occur, determine what the industry or the world will look like in the near future. 2.Assess the probability of these trends actually occurring, from low to medium to high. 3.Attempt to ascertain the likely impact (from low to high) of each of these trends on the corporation being examined. The External Factors Analysis Summary (EFAS) •After strategic managers have scanned the societal and task environments and identified a number of likely external factors for their particular corporation, they may want to refine their analysis of these factors by using a format similar to the below example, “External Factors”. EFAS (External Factors Analysis Summary) Table •One way to organize the external factors into the generally accepted categories of opportunities and threats •Another way to analyze how well a particular company’s management (rating) is responding to these specific factors in light of the perceived importance (weight) of these factors to the company. If most long-term forecasts are usually incorrect, why bother doing them? This question is based upon the assumption that most long-term forecasts are usually incorrect. One must keep in mind that some things are easier to forecast than others. For example, a forecasted drop in the demand for tricycles in three years will very likely occur if it is based upon a strong drop in the present birth rate. Nevertheless, most people would probably agree that forecasts going out five to ten years have a low probability of becoming reality in today’s dynamic world. The text takes the position that even if predictions prove to be wrong, the very act of scanning and forecasting the environment helps managers take a broader perspective. It also forces managers to take an active rather than a passive orientation toward the external environment. It encourages calculated risks and is more likely to result in strategic management instead of reactive management. Summary: The focus of this lecture will focus on the Porter five forces analysis framework for industry analysis to understand the competitive forces that influence the intensity of rivalry within an industry. In addition, the lecture will also cover the techniques used to categorize international industries based on their pressures for coordination and local responsiveness and also how to construct strategic group maps to assess the competitive positions of firms in an industry.