What is our business?
Objectives
Purpose
Mission
Goals
Vision
Values
Competence
Resources
Levels of strategy
Proudct market Opportunity
Monday, April 28, 2008
Objectives
Objectives specify the results sought through the ongoing, long-run operations of the organization. These outcomes may consist not only of the desired results insofar as the organation's customer is concerned but also of what the organization perceives as the long range results it intends to achieve internally.
To have meaningful impact, objectives must be operational; that is they must be capable of being converted into specific targets and specific actions. They must give direction to the activity of the organization. They must set forth long-run organizational priorities. They must become the basis for work and for achievement. They must serve as standards against which performance is to be measured.
Since the role of objectives is to guide the concentration of resources and effort towards the desired ends, objectives should be selective. Objectives are needed in all areas on which the long-term survival and success of the organization depend. The important areas are:
1. Market
2. Technology
3. Innovation
4. Profitability
5. Efficiency
6. Resources
7. Social responsibility
The objectives of an organization may undergo revision over a period of time to meet changing circumstances.
Source
Strategy and Policy: Concepts and Cases
by
Thompson and Strickland
Business Publications, Texas, 1978
To have meaningful impact, objectives must be operational; that is they must be capable of being converted into specific targets and specific actions. They must give direction to the activity of the organization. They must set forth long-run organizational priorities. They must become the basis for work and for achievement. They must serve as standards against which performance is to be measured.
Since the role of objectives is to guide the concentration of resources and effort towards the desired ends, objectives should be selective. Objectives are needed in all areas on which the long-term survival and success of the organization depend. The important areas are:
1. Market
2. Technology
3. Innovation
4. Profitability
5. Efficiency
6. Resources
7. Social responsibility
The objectives of an organization may undergo revision over a period of time to meet changing circumstances.
Source
Strategy and Policy: Concepts and Cases
by
Thompson and Strickland
Business Publications, Texas, 1978
Purpose
A business is defined by the want the customer satisfies when he buys a product or a service from a business organization.
To satisfy the customer (means to satisfy a specific want of the customer) is the mission and purpose of every business.
The question "What is our business?" can be answered ony by looking at the business from the outside, from the view point of customer and market.
The purpose of a company has to be one of the wants of customers in the market.
The customer is not attached to any product, service or company. He wants to know wht the product or service will do for him tomorrow. He is interested in his own wants, his values and his desires and world as he sees it. Therefore any serious attempt to define "what our business is" must start with the customer, his wants, his situation, his behavior, his expectations, and his values.
Therefore a searching enquiry needs to carried out to answer questions such as:
Who is our customer and what his needs?
Where is the customer?
What does the customer buy?
Is it status? Comfort? Satisfaction of a physical need? An ego need? Security?
What is value to the customer?
Is it price? Function? Quality? Service? Economy of use? Durability? Styling? Convenience?
These questions plainly need to be posed and answered at the inception of a business and whenever it gets into trouble.
But even when the business is successful, the organization have to examine their business purpose as the definition may become obsolete in the context of changes in the products and markets. The periodical examination of purpose in the light of customer studies and research will help the organization to look ahead and anticipate the impact of changes in the environment.
At any point of time, the purpose stated by the company has to be the answer to the question "What should our business be?" This question is periodically answered by the top management as a part of its setting the strategy for the future period.
Reference
Strategy and Policy
Thompson and Strickland,
Business Publications, 1978
To satisfy the customer (means to satisfy a specific want of the customer) is the mission and purpose of every business.
The question "What is our business?" can be answered ony by looking at the business from the outside, from the view point of customer and market.
The purpose of a company has to be one of the wants of customers in the market.
The customer is not attached to any product, service or company. He wants to know wht the product or service will do for him tomorrow. He is interested in his own wants, his values and his desires and world as he sees it. Therefore any serious attempt to define "what our business is" must start with the customer, his wants, his situation, his behavior, his expectations, and his values.
Therefore a searching enquiry needs to carried out to answer questions such as:
Who is our customer and what his needs?
Where is the customer?
What does the customer buy?
Is it status? Comfort? Satisfaction of a physical need? An ego need? Security?
What is value to the customer?
Is it price? Function? Quality? Service? Economy of use? Durability? Styling? Convenience?
These questions plainly need to be posed and answered at the inception of a business and whenever it gets into trouble.
But even when the business is successful, the organization have to examine their business purpose as the definition may become obsolete in the context of changes in the products and markets. The periodical examination of purpose in the light of customer studies and research will help the organization to look ahead and anticipate the impact of changes in the environment.
At any point of time, the purpose stated by the company has to be the answer to the question "What should our business be?" This question is periodically answered by the top management as a part of its setting the strategy for the future period.
Reference
Strategy and Policy
Thompson and Strickland,
Business Publications, 1978
Goals
The goals of an organization are the intermediate quantitative and qualitative "performance target" which management seeks to attain in moving toward organizational objectives.
Thus whereas objectives are long range in nature, goals are short range. They serve to indicate the speed and momentum which management seeks to maintain in accomplishing the organization's objectives.
They direct the attention of both management and employees toward the desired standards of performance and behavior in the near term.
Illustrations of goals:
1. Our target is to have market share of 15 percent this year and 17.5 percent next year.
2. We seek to gain enough accounts this year to reach our goal of $50 million in assets under management.
Goals become the rallying point for coordinating the activities of subunits as they act as a basis for establising common goalposts.
Acceptance of the objectives of the organization and goals derived therefrom promotes teamwork and a united approach to the working of the organization.
Thus whereas objectives are long range in nature, goals are short range. They serve to indicate the speed and momentum which management seeks to maintain in accomplishing the organization's objectives.
They direct the attention of both management and employees toward the desired standards of performance and behavior in the near term.
Illustrations of goals:
1. Our target is to have market share of 15 percent this year and 17.5 percent next year.
2. We seek to gain enough accounts this year to reach our goal of $50 million in assets under management.
Goals become the rallying point for coordinating the activities of subunits as they act as a basis for establising common goalposts.
Acceptance of the objectives of the organization and goals derived therefrom promotes teamwork and a united approach to the working of the organization.
Sunday, April 27, 2008
Organizational Competence and Resources
The strategist has to choose among available product-market opportunities, the opportunity which is viable with the organization's current competencies and resources.
Basic Strategic Alternatives
1. Concentration on a single business
2. Horizonal integration
3. Vertical integration
4. Diversification
5. Joint ventures
6. Innovation
7. Retrenchment
8. Divestiture
9. Liquidation
2. Horizonal integration
3. Vertical integration
4. Diversification
5. Joint ventures
6. Innovation
7. Retrenchment
8. Divestiture
9. Liquidation
Developing a Strategic Profile for the Company- Part 3
Information regarding economy, industry and companies.
Where to find them and procure them?
Economy
US Department of Commerce
Survey of Current Business (monthly)
Business Conditions Digest (monthly)
US Industrial Outlook (publication now discontinued)
Statistical Abstract of the United States
Where to find them and procure them?
Economy
US Department of Commerce
Survey of Current Business (monthly)
Business Conditions Digest (monthly)
US Industrial Outlook (publication now discontinued)
Statistical Abstract of the United States
Competitive Environment and Strategy
Jerry Wall, "What the Competition is doing: YOur need to know" Harvard Business Review, vol. 52, no. 6, (Nov-Dec 1974), pp. 22
Evaluation of Strategic Alternatives
Match with the organization's competence and financial resources.
Contribution of overall performance
Competitive edge
Minimum administrative problems
Expected profitability
Fit with organization's philosophy, and personality
Timing
Options
Contribution of overall performance
Competitive edge
Minimum administrative problems
Expected profitability
Fit with organization's philosophy, and personality
Timing
Options
Structuring an Effective Organization to Suit Strategy
Model of stages of organizational development
Malcolm S. Salter, "Stages of 'Corporate Development," Journal of Business Policy, vol 1, no. 1 (Spring 1970), pp.23-27.
Donald H. Thain, "Stages of Corporate Development," The Business Quarterly, (Winter 1969), pp. 32-45
the underpinning of this concept is that enterprises can be arrayed along a continuum running from very simple to very complex organizational forms and tath there is a tendency for an organization to move into more complex forms as it grows in size, market coverage and product line diversity.
Malcolm S. Salter, "Stages of 'Corporate Development," Journal of Business Policy, vol 1, no. 1 (Spring 1970), pp.23-27.
Donald H. Thain, "Stages of Corporate Development," The Business Quarterly, (Winter 1969), pp. 32-45
the underpinning of this concept is that enterprises can be arrayed along a continuum running from very simple to very complex organizational forms and tath there is a tendency for an organization to move into more complex forms as it grows in size, market coverage and product line diversity.
Thursday, April 10, 2008
OSA Operations Simulations Analysis
http://www.osawh.com/
Dr. Warren Huang Wall Street Journal Street daily Economy, Energy, Market OSA Blog : www.osaglobalstrategicmanagement.com
Do not miss this proactive structural price mechanism based strategic financial modeling and risks valuation, simulation for investment , trillion dollar recession hedging strategy workshops series by OSA proactive solution pioneer Dr.Warren Huang
Millions of global /China top fund managers and investment management teams bring their management/s operating problems into our strategic fund allocation and wealth management workshops. take home billion dollar proactive structural solution, avoided trillion dollar housing, stock market loss due betting on the wrong side of interest rates and bull/bear market trend, ready to implement
Dr. Warren Huang accurately warned on Wall Street Journal Market beat Blog Sept.19, 2007 that US housing price slump continue into summer 2008 drag economy into inflationary recession and US, global stock indices bear market correction, oil above 110, Bear Stearn 30 billion dollar MBS hedge funddespite Fed rate cuts He also warned top QFII management on Peking Univ June 2007 International Financial Engineering Conference that China overheated housing, stock market wealth gain resulted inflation over 7 % will lead to China Peoples Bank credit tightening to remove excessive liquidity, Housing, stock markets follow US housing price slump, recession, bear market correction, with Shanghai A testing 3000- 4000 till summer 2008
Dr. Warren Huang Wall Street Journal Street daily Economy, Energy, Market OSA Blog : www.osaglobalstrategicmanagement.com
Do not miss this proactive structural price mechanism based strategic financial modeling and risks valuation, simulation for investment , trillion dollar recession hedging strategy workshops series by OSA proactive solution pioneer Dr.Warren Huang
Millions of global /China top fund managers and investment management teams bring their management/s operating problems into our strategic fund allocation and wealth management workshops. take home billion dollar proactive structural solution, avoided trillion dollar housing, stock market loss due betting on the wrong side of interest rates and bull/bear market trend, ready to implement
Dr. Warren Huang accurately warned on Wall Street Journal Market beat Blog Sept.19, 2007 that US housing price slump continue into summer 2008 drag economy into inflationary recession and US, global stock indices bear market correction, oil above 110, Bear Stearn 30 billion dollar MBS hedge funddespite Fed rate cuts He also warned top QFII management on Peking Univ June 2007 International Financial Engineering Conference that China overheated housing, stock market wealth gain resulted inflation over 7 % will lead to China Peoples Bank credit tightening to remove excessive liquidity, Housing, stock markets follow US housing price slump, recession, bear market correction, with Shanghai A testing 3000- 4000 till summer 2008
TALENT PORTFOLIO MANAGEMENT:
TALENT PORTFOLIO MANAGEMENT:
LEVERAGING HUMAN ASSETS IN INVESTMENT BANKING
AND CAPITAL MARKETS
by Paul Aldrich
http://www.ctnet.com/NR/rdonlyres/CF180B0C-8308-4F4B-8851-22068D9A08B9/1554/IFR_TalentManagementExecSummaryPXA_707.pdf
LEVERAGING HUMAN ASSETS IN INVESTMENT BANKING
AND CAPITAL MARKETS
by Paul Aldrich
http://www.ctnet.com/NR/rdonlyres/CF180B0C-8308-4F4B-8851-22068D9A08B9/1554/IFR_TalentManagementExecSummaryPXA_707.pdf
Improve Productivity in Investment Banking Through Collaborative Email
7 Ways to Improve Productivity in Investment Banking Through Collaborative Email
Collaborative Email combines the power of collaborative capabilities with the familiarity and ease of use of Email. Bankers want a tool that extends Email, as opposed to a specialized tool that is separated from Email. Collaborative Email has emerged as the strategic weapon that promises to provide support for collaborative processes that are mission-critical to bankers. This paper provides seven ways to improve productivity in investment banking through Collaborative Email.
Download full paper from
http://whitepapers.zdnet.co.uk/0,1000000651,260084784p-39000628q,00.htm
after registration
Collaborative Email combines the power of collaborative capabilities with the familiarity and ease of use of Email. Bankers want a tool that extends Email, as opposed to a specialized tool that is separated from Email. Collaborative Email has emerged as the strategic weapon that promises to provide support for collaborative processes that are mission-critical to bankers. This paper provides seven ways to improve productivity in investment banking through Collaborative Email.
Download full paper from
http://whitepapers.zdnet.co.uk/0,1000000651,260084784p-39000628q,00.htm
after registration
Video - Future of asset management - Patrick Dixon
Future of asset management and other financial services related global trends - by Dr Patrick Dixon
59 min 44 sec - 16 Jun 2007
www.globalchange.com
http://video.google.co.uk/videoplay?docid=-7675270257654006023
59 min 44 sec - 16 Jun 2007
www.globalchange.com
http://video.google.co.uk/videoplay?docid=-7675270257654006023
Knowledge Acquisition In Investment Banking
Abstract of paper to be presented at The Eighth International Conference on Knowledge, Culture and Change in Organisations 2008. The Conference will held at the Cambridge University, United Kingdom from 5-8 August 2008.
Knowledge Acquisition In Investment Banking: Opportunities For HR Professionals
By: Dr Carol Royal, Loretta O'Donnell
In a knowledge economy, it is essential for analysts of listed companies to understand, analyse and systematically articulate the drivers of intangible value within listed firms. This is essential for the process of more transparent investment recommendations. This paper examines current knowledge management practices within two investment banking firms, with a focus on the work of securities analysts, and observes a knowledge gap in the approach of analysts to analysing intangible value creation. In particular, the significant role of human capital as a driver of value in listed firms, is not well understood by securities analysts or their clients, and yet, as the human capital literature (Bassi and McMurrer, 2007; Mayo, 2001) suggest, human capital can be a lead indicator of potential future firm value. This knowledge gap is partly historical, as the professional licencing requirements of securities analysts has not, to date, included specific skill development in the qualitative forms of data analysis required for systematic human capital analysis. This is a component (2000-2005) of a larger study conducted from 1996-2005 in investment banks in Australia, Asia and the UK. The authors use an adaptation of Hodson and Sullivan’s (2002) three phase model of professional knowledge acquisition as a basis for highlighting new organisational development opportunities for HR professionals: bridging the human capital knowledge acquisition gap lobbying regulators to make changes in the training underpinning the licensing of securities analysts; accessing formal university courses in qualitative analysis, using professional associations for non-technical, non-traditional, strategic forms of knowledge acquisition and, finally, creating performance management systems to embed this form of knowledge acquisition into the work of securities analysts.
Paper: Knowledge Acquisition In Investment Banking
--------------------------------------------------------------------------------
Dr Carol Royal
Senior Lecturer, Director Masters of Technology Management, Australian School of Business, University of New South Wales
Sydney, NSW, AUSTRALIA
Dr Carol Royal (BA, M Com, PhD, UNSW) is the Director of the Masters of Technology management and senior lecturer in the School of Organisation and Management, Australian School of Business, at the University of New South Wales in Sydney, Australia. She was adjunct to the Australian Graduate School of Management and has had many years experience in corporate life as a practitioner in the human resources profession and as a management consultant.
--------------------------------------------------------------------------------
Loretta O'Donnell
lecturer, Australian School of Business, University of New South Wales
Sydney, NSW, AUSTRALIA
Loretta O'Donnell (BA(Hons), Dip Ed, MBA (AGSM)) has been a management consultant for twenty years. She is undertaking her doctoral studies at Macquarie Graduate School of Management, Macquarie University, Sydney. She is lecturing in the Australian School of Business, at the University of New South Wales, Sydney, Australia.
--------------------------------------------------------------------------------
Ref: M08P0105
http://m08.cgpublisher.com/proposals/105/index_html
Knowledge Acquisition In Investment Banking: Opportunities For HR Professionals
By: Dr Carol Royal, Loretta O'Donnell
In a knowledge economy, it is essential for analysts of listed companies to understand, analyse and systematically articulate the drivers of intangible value within listed firms. This is essential for the process of more transparent investment recommendations. This paper examines current knowledge management practices within two investment banking firms, with a focus on the work of securities analysts, and observes a knowledge gap in the approach of analysts to analysing intangible value creation. In particular, the significant role of human capital as a driver of value in listed firms, is not well understood by securities analysts or their clients, and yet, as the human capital literature (Bassi and McMurrer, 2007; Mayo, 2001) suggest, human capital can be a lead indicator of potential future firm value. This knowledge gap is partly historical, as the professional licencing requirements of securities analysts has not, to date, included specific skill development in the qualitative forms of data analysis required for systematic human capital analysis. This is a component (2000-2005) of a larger study conducted from 1996-2005 in investment banks in Australia, Asia and the UK. The authors use an adaptation of Hodson and Sullivan’s (2002) three phase model of professional knowledge acquisition as a basis for highlighting new organisational development opportunities for HR professionals: bridging the human capital knowledge acquisition gap lobbying regulators to make changes in the training underpinning the licensing of securities analysts; accessing formal university courses in qualitative analysis, using professional associations for non-technical, non-traditional, strategic forms of knowledge acquisition and, finally, creating performance management systems to embed this form of knowledge acquisition into the work of securities analysts.
Paper: Knowledge Acquisition In Investment Banking
--------------------------------------------------------------------------------
Dr Carol Royal
Senior Lecturer, Director Masters of Technology Management, Australian School of Business, University of New South Wales
Sydney, NSW, AUSTRALIA
Dr Carol Royal (BA, M Com, PhD, UNSW) is the Director of the Masters of Technology management and senior lecturer in the School of Organisation and Management, Australian School of Business, at the University of New South Wales in Sydney, Australia. She was adjunct to the Australian Graduate School of Management and has had many years experience in corporate life as a practitioner in the human resources profession and as a management consultant.
--------------------------------------------------------------------------------
Loretta O'Donnell
lecturer, Australian School of Business, University of New South Wales
Sydney, NSW, AUSTRALIA
Loretta O'Donnell (BA(Hons), Dip Ed, MBA (AGSM)) has been a management consultant for twenty years. She is undertaking her doctoral studies at Macquarie Graduate School of Management, Macquarie University, Sydney. She is lecturing in the Australian School of Business, at the University of New South Wales, Sydney, Australia.
--------------------------------------------------------------------------------
Ref: M08P0105
http://m08.cgpublisher.com/proposals/105/index_html
Competition in Investment Banking
Research paper
A comprehensive measure of overall investment banking competitiveness for follow-on offerings that aggregates the various dimensions of competition such as fees, pricing accuracy, analyst recommendations, distributional abilities, market making prowess, debt offering capabilities, and overall reputation is attempted in this paper. The measure allows to incorporate trade-offs that investment banks may use in competing for new or established clients.
The authors find that firms who seek a higher reputation underwriter face relatively non-competitive markets. In contrast, firms who switch to similar-quality underwriters enjoy more intense competition among investment banks which manifests in lower fees and more optimistic recommendations.
Investment banks do compete vigorously for some clients, with the level of competition related to the likelihood of gaining or losing clients. Finally, investment banks not performing up to market norms are more likely to be dropped in the follow-on offering.
Download the full paper from
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=491722
A comprehensive measure of overall investment banking competitiveness for follow-on offerings that aggregates the various dimensions of competition such as fees, pricing accuracy, analyst recommendations, distributional abilities, market making prowess, debt offering capabilities, and overall reputation is attempted in this paper. The measure allows to incorporate trade-offs that investment banks may use in competing for new or established clients.
The authors find that firms who seek a higher reputation underwriter face relatively non-competitive markets. In contrast, firms who switch to similar-quality underwriters enjoy more intense competition among investment banks which manifests in lower fees and more optimistic recommendations.
Investment banks do compete vigorously for some clients, with the level of competition related to the likelihood of gaining or losing clients. Finally, investment banks not performing up to market norms are more likely to be dropped in the follow-on offering.
Download the full paper from
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=491722
Management in Securities Firms - a 1962 Speech by Cohen
Download from
http://www.sec.gov/news/speech/1962/102562cohen.pdf
It contains thoughts on managing securities companies
http://www.sec.gov/news/speech/1962/102562cohen.pdf
It contains thoughts on managing securities companies
Outlook for Mergers and Acquisitions in 2008
17 Jan 2008
Chris McMahon, Brian Doyal and Chris Coetzee share their thoughts
Middle Market Will Remain Largely Insulated from Economic Turmoil
While there’s only one economy, various sub-segments of the capital market exist. The middle market is one sub-segment that has escaped much of the downturn from credit market turmoil, according to Chris McMahon, Managing Director and Head of U.S. Mergers and Acquisitions at Baird.
Across the board, deal activity slowed in the second half of 2007, explains McMahon. However, that trend was felt mostly in the larger merger market. The number of deals valued over $1 billion fell 40 percent from August through October compared to the same period in 2006. Middle market activity – deals under $1 billion – decreased only 8 percent during the same period.
“Traditionally, the primary lenders for middle market M&A deals are not the ‘bulge bracket’ banks. This middle market universe of lenders is less vulnerable to the credit crunch than the larger banks, and as a result, their activity hasn’t slowed as much. In addition, the ‘bulge bracket’ banks now view larger deals as more risky and are reaching down into the middle market, further keeping the segment active.”
Moreover, in a fiercely competitive market, companies understand that pursuing a middle market M&A buyout strategy can help them achieve scale. “While speaking with company executives at Baird’s 2007 Industrials Conference, it struck me that almost all of them have significant M&A objectives for 2008,” says McMahon. “They view transactions as an important supplement for organic growth.”
Furthermore, McMahon emphasizes that such deals will get done despite market turmoil. “Corporate balance sheets are as healthy as they’ve ever been. There is substantial capacity to support M&A activity.”
Business Services: A Hot Sector for 2008
Within the middle market, many sectors are further insulated from economic turmoil, says Brian Doyal, Managing Director and Head of Services and Technology group at Baird.
“Business process outsourcing and off shore outsourcing are hot sectors for 2008. Players in these sectors can actually become more active amid a downturn as companies pursue outsourcing to cut costs,” according to Doyal.
He predicts litigation and regulatory services, government outsourcing, healthcare services and companies involved in “green” initiatives in the waste and environmental management industry will also be winners in 2008.
The industrial sector, however, is heading into the wind. “Valuations of many industrial companies may have already peaked in several sectors and Asian outsourcing efficiencies have already been realized,” adds McMahon. “Global footprints will be critical as the North American industrial economy will be challenged.”
Cross-Border Activity Will Continue to Increase with India at the Helm
In 2008, the number of cross-border mergers and acquisitions will continue to increase – but not for the reasons one might think, says Doyal.
“The assertion that a weak U.S. dollar will drive inbound US M&A activity is false,” notes Doyal. Although a weak dollar does drive increased foreign purchasing of US capital goods, there is no currency arbitrage when you are paying US dollars for a domestic business based on its future, dollar denominated cash generation capabilities.”
Most of the inbound US M&A activity is actually driven by foreign companies desire to have a greater local sales and marketing presence and service delivery capability. Strong growth in developing countries such as India and China is giving companies the confidence and financing capability to reach out beyond their borders for acquisition targets. Case in point: India. Indian outbound cross-border deals have more than doubled each of the last three years and in August of this year volume hit a staggering $30 billion.
“Indian companies are becoming increasingly aggressive buyers,” says Doyal. “And the reasons they’re buying Western companies are often falsely assumed. Access to the marketing, sales and other expertise of Western firms is the primary reason Western companies are purchased by Indian firms; not to move the business offshore as commonly believed.”
Private Equity Firms Will Undergo Increased Competition, Revise Focus
“New entrants to the M&A game are providing fresh competition to private equity players,” says Chris Coetzee, Managing Director of Financial Sponsors group at Baird. “This competition will only increase in 2008.”
Now in the mix are public investment vehicles like Special Purpose Acquisition Companies (SPACs), explains Coetzee. Additionally, increased investment from the sovereign funds of China and Middle Eastern countries will affect the playing field.
Coetzee adds that as the competition heats up, private equity firms will increasingly focus on specialized sectors. “Many private equity firms will change their focus. Limited partners will continue requiring that funds specialize – digging deeper and buying smarter.”
About Chris McMahon, Brian Doyal and Chris Coetzee
With 20 years of investment banking experience, Chris McMahon is a Managing Director of investment banking at Baird focusing on the industrial sector. He is Head of Baird's U.S. Mergers and Acquisitions activities and a member of the firm's Investment Banking Management Committee and M&A Fairness Opinion Committee.
Brian Doyal is a Managing Director and Head of Baird’s Services, Technology and Health Care Groups with 20 years of experience. In addition to serving as Group Head, Mr. Doyal covers a wide range of services sectors, including BPO, Customer Care, Human Capital, Information and Professional Services, and is a member of Baird’s Investment Banking Management Committee.
Chris Coetzee is head of Baird’s Financial Sponsor Group and a member of the firm’s Investment Banking Management Committee and M&A Fairness Opinion Committee. Mr. Coetzee has 17 years of Investment Banking experience.
###
About Baird
Baird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has nearly 2,200 associates serving the needs of individual, corporate, institutional and municipal clients. Baird oversees and manages client assets of over $78 billion. Committed to being a great place to work, Baird was recognized as one of the FORTUNE 100 Best Companies to Work For® in 2004, 2005, 2006 and 2007. Baird’s principal operating subsidiaries are Robert W. Baird & Co. in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s private equity operations. For more information, please visit Baird’s Web site at www.rwbaird.com.
http://www.rwbaird.com/news/currentnews/fraNewsRelease117.aspx?Seg=1919
Chris McMahon, Brian Doyal and Chris Coetzee share their thoughts
Middle Market Will Remain Largely Insulated from Economic Turmoil
While there’s only one economy, various sub-segments of the capital market exist. The middle market is one sub-segment that has escaped much of the downturn from credit market turmoil, according to Chris McMahon, Managing Director and Head of U.S. Mergers and Acquisitions at Baird.
Across the board, deal activity slowed in the second half of 2007, explains McMahon. However, that trend was felt mostly in the larger merger market. The number of deals valued over $1 billion fell 40 percent from August through October compared to the same period in 2006. Middle market activity – deals under $1 billion – decreased only 8 percent during the same period.
“Traditionally, the primary lenders for middle market M&A deals are not the ‘bulge bracket’ banks. This middle market universe of lenders is less vulnerable to the credit crunch than the larger banks, and as a result, their activity hasn’t slowed as much. In addition, the ‘bulge bracket’ banks now view larger deals as more risky and are reaching down into the middle market, further keeping the segment active.”
Moreover, in a fiercely competitive market, companies understand that pursuing a middle market M&A buyout strategy can help them achieve scale. “While speaking with company executives at Baird’s 2007 Industrials Conference, it struck me that almost all of them have significant M&A objectives for 2008,” says McMahon. “They view transactions as an important supplement for organic growth.”
Furthermore, McMahon emphasizes that such deals will get done despite market turmoil. “Corporate balance sheets are as healthy as they’ve ever been. There is substantial capacity to support M&A activity.”
Business Services: A Hot Sector for 2008
Within the middle market, many sectors are further insulated from economic turmoil, says Brian Doyal, Managing Director and Head of Services and Technology group at Baird.
“Business process outsourcing and off shore outsourcing are hot sectors for 2008. Players in these sectors can actually become more active amid a downturn as companies pursue outsourcing to cut costs,” according to Doyal.
He predicts litigation and regulatory services, government outsourcing, healthcare services and companies involved in “green” initiatives in the waste and environmental management industry will also be winners in 2008.
The industrial sector, however, is heading into the wind. “Valuations of many industrial companies may have already peaked in several sectors and Asian outsourcing efficiencies have already been realized,” adds McMahon. “Global footprints will be critical as the North American industrial economy will be challenged.”
Cross-Border Activity Will Continue to Increase with India at the Helm
In 2008, the number of cross-border mergers and acquisitions will continue to increase – but not for the reasons one might think, says Doyal.
“The assertion that a weak U.S. dollar will drive inbound US M&A activity is false,” notes Doyal. Although a weak dollar does drive increased foreign purchasing of US capital goods, there is no currency arbitrage when you are paying US dollars for a domestic business based on its future, dollar denominated cash generation capabilities.”
Most of the inbound US M&A activity is actually driven by foreign companies desire to have a greater local sales and marketing presence and service delivery capability. Strong growth in developing countries such as India and China is giving companies the confidence and financing capability to reach out beyond their borders for acquisition targets. Case in point: India. Indian outbound cross-border deals have more than doubled each of the last three years and in August of this year volume hit a staggering $30 billion.
“Indian companies are becoming increasingly aggressive buyers,” says Doyal. “And the reasons they’re buying Western companies are often falsely assumed. Access to the marketing, sales and other expertise of Western firms is the primary reason Western companies are purchased by Indian firms; not to move the business offshore as commonly believed.”
Private Equity Firms Will Undergo Increased Competition, Revise Focus
“New entrants to the M&A game are providing fresh competition to private equity players,” says Chris Coetzee, Managing Director of Financial Sponsors group at Baird. “This competition will only increase in 2008.”
Now in the mix are public investment vehicles like Special Purpose Acquisition Companies (SPACs), explains Coetzee. Additionally, increased investment from the sovereign funds of China and Middle Eastern countries will affect the playing field.
Coetzee adds that as the competition heats up, private equity firms will increasingly focus on specialized sectors. “Many private equity firms will change their focus. Limited partners will continue requiring that funds specialize – digging deeper and buying smarter.”
About Chris McMahon, Brian Doyal and Chris Coetzee
With 20 years of investment banking experience, Chris McMahon is a Managing Director of investment banking at Baird focusing on the industrial sector. He is Head of Baird's U.S. Mergers and Acquisitions activities and a member of the firm's Investment Banking Management Committee and M&A Fairness Opinion Committee.
Brian Doyal is a Managing Director and Head of Baird’s Services, Technology and Health Care Groups with 20 years of experience. In addition to serving as Group Head, Mr. Doyal covers a wide range of services sectors, including BPO, Customer Care, Human Capital, Information and Professional Services, and is a member of Baird’s Investment Banking Management Committee.
Chris Coetzee is head of Baird’s Financial Sponsor Group and a member of the firm’s Investment Banking Management Committee and M&A Fairness Opinion Committee. Mr. Coetzee has 17 years of Investment Banking experience.
###
About Baird
Baird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has nearly 2,200 associates serving the needs of individual, corporate, institutional and municipal clients. Baird oversees and manages client assets of over $78 billion. Committed to being a great place to work, Baird was recognized as one of the FORTUNE 100 Best Companies to Work For® in 2004, 2005, 2006 and 2007. Baird’s principal operating subsidiaries are Robert W. Baird & Co. in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s private equity operations. For more information, please visit Baird’s Web site at www.rwbaird.com.
http://www.rwbaird.com/news/currentnews/fraNewsRelease117.aspx?Seg=1919
Wednesday, April 9, 2008
Strategic Management I MIT Open Courseware 15.902
http://ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-902Fall-2006/CourseHome/index.htm
This course focuses on some of the important current issues in strategic management. It will concentrate on modern analytical approaches and on enduring successful strategic practices. It is consciously designed with a technological and global outlook since this orientation in many ways highlights the significant emerging trends in strategic management. The course is intended to provide the students with a pragmatic approach that will guide the formulation and implementation of corporate, business, and functional strategies.
Required Textbook
Hax, Arnoldo C., and Dean L. Wilde. The Delta Project: Discovering New Sources of Profitability. New York, NY: Palgrave, 2001. ISBN: 0312240465.
Recommended Textbook
Hax, Arnoldo C., and Nicolas S. Majluf. The Strategy Concept and Process: A Pragmatic Approach. 2nd ed. Upper Saddle River, NJ: Prentice Hall, 1996. ISBN: 0134588940.
Each day's reading is listed below.
Course readings. SES # TOPICS Readings
I. Introduction and Overview of Strategic Management
1 The Delta Model Hax and Wilde. Chapters 1 and 2.
2 Porter's Frameworks and the Resource-Based View of the Firm Porter, Michael E. "Towards a Dynamic Theory of Strategy." Strategic Management Journal 12 (1991): 95-117.
Grant, Robert H. "The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation." California Management Review 33, no. 3 (1991).
Hax and Wilde. Chapter 12.
II. Business Strategy
3 Customer Segmentation and Customer Value Proposition Hax, Arnoldo C. "Achieving the Potentials of Your Organization - How to Overcome the Dangers of Commoditization." MIT Sloan Working Paper No. 4260-02. (September 2002).
4 The Firm as a Bundle of Competencies and Putting it All Together Hax and Wilde. Chapters 3-5.
5 Industry Structure and Competitive Interaction
6 The Decommoditization of a Business
7 Competitive Positioning
III. Technology and Industry Transformation
8 Sustaining Competitive Advantage
9 Competitive Dynamics
10 Putting it All Together: Integrating The Critical Tasks of Strategy Hax and Wilde. Chapter 6.
IV. Corporate Strategy
11 Corporate Strategy - The Core Concepts Hax, Arnoldo, and Nicolas Majluf. "Corporate Strategic Tasks." European Management Journal12, no. 4 (1994): 366-381.
12 Corporate Philosophy and Culture
13 General Principles of Organization Design Galbraith, Jay R. "Linking Customers and Products - Organizing for Product and Customer Focus," and "Structuring Global Organizations." Chapters 2 and 4 in Tomorrow's Organization. Edited by Susan A. Mohrman, Jay R. Galbraith, and Edward E. Lawler III. Jossey-Bass, 1998. ISBN: 0787940046.
14 Human Resources Management and Knowledge Management
15 Business Processes: The Core Concepts and Managing the Global Supply Chain Hax and Wilde. Chapter 7.
V. Aggregate and Granular Metrics
16 Metrics of Value Creation Hax and Majluf. Chapter 17.
"America's Best and Worst Wealth Creators." Fortune, December 18, 2000.
"America's Best and Worst Wealth Creators." Fortune, December 10, 2001.
Slywotzky, Adrian J., and Richard Wise. "The Growth Crisis and How to Escape It." Harvard Business Review (July 2002): 72-83.
17 The Balanced Scorecard and Granular Metrics Hax and Wilde. Chapters 9 and 10.
Kaplan, Robert S., and David P. Norton. "Having Trouble with Your Strategy? Then Map It." Harvard Business Review (September-October 2000): 167-176.
VI. Integration
18 Organizational Leadership
General References
Bartlett, C., and S. Ghoshal. Managing Across Borders: The Transnational Solution. Boston, MA: Harvard Business School Press, 2002.
Brandenburger, A. M., and B. J. Nalebuff. Co-opetition. New York, NY: Doubleday & Company, 1996.
Kim, W. Chan, and R. Mauborgne. Blue Ocean Strategy. Boston, MA: Harvard Business School Press, 2005.
Christensen, C. The Innovator's Dilemma: When Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press, 1997.
———. The Innovator's Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.
Collis, D., and C. Montgomery. Corporate Strategy: Resources and the Scope of the Firm. Westport, CT: Irwin Press, 1997.
Cusumano, M. A., and C. C. Mardikes, eds. Strategic Thinking for the New Economy. Hoboken, NJ: Jossey-Bass, 2001.
Foster, R., and S. Kaplan. Creative Destruction. New York, NY: Doubleday & Company, 2000.
Galbraith, J. Designing the Global Corporation. Hoboken, NJ: Jossey-Bass, 2000.
Ghemawat, P., D. Collis, G. Pisano, and J. Rivkin. Strategy and the Business Landscape. Upper Saddle River, NJ: Prentice Hall, 2001.
Hamel, G., and C. K. Prahalad. Competing for the Future. Boston, MA: Harvard Business School Press, 1996.
Hayes, R., G. Pisano, and D. Upton. Strategic Operations: Competing Through Capabilities. New York, NY: Free Press, 1996.
Kaplan, R. S., and D. P. Norton. Strategy Maps: Converting Intangible Assets Into Tangible Outcomes. Boston, MA: Harvard Business School Press, 2004.
Pfeffer, J. The Human Equation. Boston, MA: Harvard Business School Press, 1998.
Porter, M. Competitive Advantage. New York, NY: Free Press, 1985.
———. The Competitive Advantage of Nations. New York, NY: Free Press, 1990.
Prahalad, C. K., and V. Ramaswamy. The Future of Competition. Boston, MA: Harvard Business School Press, 2004.
Reichheld, F. Loyalty Rules. Boston, MA: Harvard Business School Press, 2001.
Saloner, G., A. Shepard, and J. Podolny. Strategic Management. New York, NY: John Wiley & Sons, 2001.
Shapiro, C., and H. Varian. Information Rules. Boston, MA: Harvard Business School Press, 1999.
Stern, J. M., and J. S. Shiely. The Eva Challenge: Implementing Value-Added Change in an Organization. New York, NY: John Wiley & Sons, 2001.
Thompke, S. Experimentation Matters: Unlocking the Potential of New Technologies for Innovation. Boston, MA: Harvard Business School Press, 2003.
Ulrich, D. Human Resource Champions. Boston, MA: Harvard Business School Press, 1997.
von Hippel, E. Democratizing Innovation. Cambridge, MA: MIT Press, April 2006. ISBN: 0262720477.
Lecture Notes
Lecture notes files. SES # TOPICS
I. Introduction and Overview of Strategic Management
1 The Delta Model (PDF - 5.5 MB)
2 Porter's Frameworks and the Resource-Based View of the Firm (PDF 1 - 1.6 MB) (PDF 2) (PDF 3)
II. Business Strategy
3 Customer Segmentation and Customer Value Proposition (PDF - 4.7 MB)
4 The Firm as a Bundle of Competencies and Putting it All Together (PDF 1 - 1.6 MB) (PDF 2)
5 Industry Structure and Competitive Interaction
6 The Decommoditization of a Business (PDF)
7 Competitive Positioning (PDF 1) (PDF 2)
III. Technology and Industry Transformation
8 Sustaining Competitive Advantage (PDF)
9 Competitive Dynamics (PDF 1 - 3.0 MB) (PDF 2 - 1.4 MB)
10 Putting it All Together: Integrating The Critical Tasks of Strategy
IV. Corporate Strategy
11 Corporate Strategy - The Core Concepts (PDF 1 - 1.7 MB) (PDF 2 - 1.2 MB) (PDF 3 - 1.1 MB)
12 Corporate Philosophy and Culture
13 General Principles of Organization Design (PDF 1 - 3.7 MB) (PDF 2) (PDF 3)
14 Human Resources Management and Knowledge Management
15 Business Processes: The Core Concepts and Managing the Global Supply Chain
V. Aggregate and Granular Metrics
16 Metrics of Value Creation
17 The Balanced Scorecard and Granular Metrics
VI. Integration
18 Organizational Leadership
http://ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-902Fall-2006/LectureNotes/index.htm
Assignments
Assignment cases. SES # TOPICS CASES AND QUESTIONS
I. Introduction and Overview of Strategic Management
1 The Delta Model Questions for Discussion
i. Which of the three options presented - Best Project, Total Customer Solutions, System Lock-In - seems to be the most appropriate, and under which conditions?
ii. Select some companies that you are familiar with and try to identify what, in your judgment, is the existing strategic positioning of the company and whether you would suggest a better alternative.
2 Porter's Frameworks and the Resource-Based View of the Firm Questions for Discussion
i. How would you use the three frameworks?
ii. Does anyone of them seem to you to dominate the others or could you benefit from selectively using all of them?
II. Business Strategy
3 Customer Segmentation and Customer Value Proposition Questions for Discussion
i. Identify a company that you are familiar with and try to perform a customer segmentation.
ii. Position the resulting tiers in the Delta Model Triangle.
iii. At least for one tier, develop a creative custom value proposition.
4 The Firm as a Bundle of Competencies and Putting it All Together Questions for Discussion
i. How does the resource-based view of the firm compare with the methodology suggested by the Delta Model to address the firm's competencies?
ii. Select a company that you are familiar with and try to identify its existing and desired capabilities.
5 Industry Structure and Competitive Interaction Yoffie, David B., and Yusi Wang. "Cola Wars Continue: Coke® and Pepsi in the Twenty First Century." Boston, MA: Harvard Business School Case 9-702-442, January 11, 2002.
Questions for Discussion
i. Why is the soft drink industry so profitable?
ii. Compare the economics of the concentrate business to the bottling business; why is the profitability so different?
iii. How has competition between Coke® and Pepsi affected the industry profits?
iv. Can Coke® and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-carbonated drinks?
You might consider using Porter's Five Forces Framework to address some of these issues.
6 The Decommoditization of a Business Anand, Bharat N., Michael G. Rukstad, and Christopher H. Paige. "Capital One Financial Corporation." Boston, MA: Harvard Business School Case 9-700-124, April 24, 2000.
Questions for Discussion
i. What are the key elements of Capital One's strategy that allows them to differentiate themselves from the rest of the industry?
ii. How sustainable is Capital One's competitive advantage? What can competitors do?
iii. Is the strategy transportable to other industries?
In responding to question "i", you might identify Capital One's competencies by considering the eight strategic positionings that are part of the Triangle in the Delta Model.
7 Competitive Positioning Ghemawat, Pankaj, Stephen P. Bradley, and Ken Mark. "Wal*Mart Stores in 2003." Boston, MA: Harvard Business School Case 9-704-430, September 18, 2003.
Questions for Discussion
i. What are the sources of Wal*Mart's competitive advantage in discount retailing?
ii. How sustainable will its position be in the future?
iii. What challenges does Wal*Mart face?
In responding to question "i", you might identify Wal*Mart's competencies by considering the eight strategic positionings that are part of the Triangle in the Delta Model
III. Technology and Industry Transformation
8 Sustaining Competitive Advantage Rivkin, Jan W., and Michael E. Porter. "Matching DELL™." Boston, MA: Harvard Business School Case 9-799-158, June 06, 1999.
Ghemawat, Pankaj, and Jan W. Rivkin. "Creating Competitive Advantage." Boston, MA: Harvard Business School Case 9-798-062, January 25, 1998.
Questions for Discussion
i. How and why did the personal computer industry come to have such low average profitability?
ii. Why has DELL™ been so successful?
iii. Prior to the recent efforts by competitors to match DELL™ (1997-1998), how big was DELL™'s competitive advantage? Specifically, calculate DELL™'s advantage over Compaq in serving a corporate customer.
iv. How effective have competitors been in responding to the challenge posed by DELL™'s advantage? How big is DELL™'s remaining advantage?
DELL™ is properly being presented as one of the most innovative companies, the creator of a business model that has received a great deal of attention in the networked economy. Questions i. and ii. can be addressed using Porter's Five Forces and Porter's Value Chain frameworks respectively. The third question allows for you to do some numerical calculations to quantify DELL™'s advantage over Compaq. You are welcome to work in groups in preparation of this analysis.
9 Competitive Dynamics Ghemawat, Pankaj, and Bret Baird. "Leadership Online (A): Barnes & Noble vs. Amazon.com." Boston, MA: Harvard Business School Case 9-798-063, May 26, 1998.
Corts, Kenneth S., and Jan W. Rivkin. "A Note on Microeconomics for Strategists." Boston, MA: Harvard Business School Case 9-799-128. March 30, 1999.
Questions for Discussion
i. Based on your own experience of traditional bookselling and your exploration of online bookselling, compare willingness-to-pay for books supplied by these two business models.
ii. Also compare the forecast long-run cost position of a successful online bookseller to Barnes & Noble's traditional business model. (Assume that Exhibits 4 and 7 in the case reflect average discounts of 10% off list price for Barnes & Noble's traditional bookstores and 25% off list for the online bookseller.)
iii. Assess Barnes & Noble's response to the substitution threat from AMAZON®. How did AMAZON® respond in turn, and to what net effect?
iv. Who will be the online leader? Will it ever make much money selling books (as opposed to selling stock)?
Please contrast the competitive positioning of a traditional, off-line, competitor like Barnes & Noble vs. an on-line channel like Amazon.com. With regard to question i., a customer willingness to pay for a product or a service is the maximum amount of money a customer is willing to part with in order to obtain a product or a service. The question is whether you find any significant difference in your willingness to pay for a book being acquired under these two different channels. In question ii. You might want to use the most recent data provided in Exhibit 4 (1996 for Barnes and Noble) and Exhibit 7 (F2001E for AMAZON®). Remember that Barnes & Noble provides 10% discount off list price, and AMAZON® provides 25%. The case is a good vehicle also to talk about the substitution threat Barnes & Noble and how it is responding against AMAZON®.
10 Putting it All Together: Integrating The Critical Tasks of Strategy Questions for Discussion
i. What is the role of the frameworks that we have discussed in the course (Porter, Resource-Based View for the Firm, and the Delta Model) in the definition of the critical strategic tasks?
ii. Be ready to discuss the issues that you face when implementing a business strategy.
IV. Corporate Strategy
11 Corporate Strategy - The Core Concepts Questions for Discussion
i. What are the central differences that exist between the development of a corporate and a business strategy?
ii. Should corporate strategy be formulated first and then followed by the development of the individual business strategies that are part of the corporate portfolio (a top-down approach), or should the business strategies be done first and then followed b the formulation of a corporate strategy (bottom-up approach)?
iii. Under which conditions do you favor one approach vs. another?
Be prepared to discuss each of the 10 corporate tasks described in the Hax and Majluf paper.
12 Corporate Philosophy and Culture Aguilar, Francis J., and Arvind Bhambri. "Johnson & Johnson (A)." Boston, MA: Harvard Business School Case 9-384-053, August 19, 1983.
Aguilar, Francis J., and Arvind Bhambri. "Johnson & Johnson (B): Hospital Services." Boston, MA: Harvard Business School Case 9-384-054, August 19, 1983.
Questions for Discussion
(Johnson & Johnson (A))
i. Comment on Johnson & Johnson (J&J) philosophy and culture. Are they overdoing their decentralization policy? What is your opinion about "The Credo?"
ii. How are strategic and operational responsibilities handled at J&J? Do you like their strategic planning process and their executive compensation?
(Johnson & Johnson (B): Hospital Services)
iii. By establishing the Hospital Services Group (HSG), J&J seems to be taking an action against the fiber of its decentralization philosophy and culture. Do you agree with that decision?
iv. Comment on the charter of HSG. How would you prevent possible conflicts between HSG and the J&J companies?
Although these cases on the surface are quite old, they address some very critical issues that have profound relevance in management regardless of time. The A case presents a company that is enormously consistent in terms of its culture, management processes, and philosophy. Decentralization is the trademark of that organization. Case B deeply challenges the effectiveness of this management structure. I have two very interesting tapes of Jim Burke, who was CEO of Johnson & Johnson at that time that I would like for you to see.
13 General Principles of Organization Design Questions for Discussion
i. What are the advantages and disadvantages of the three major organizational archetypes: functional, divisional, and holding organizational forms?
ii. How do you develop a properly balanced Back-End Front-End organizational form?
iii. How do you assume proper horizontal coordination across the individual organizational units?
14 Human Resources Management and Knowledge Management Bartlett, Christopher A. "McKinsey and Company: Managing Knowledge and Learning." Boston, MA: Harvard Business School Case 9-396-357. June 28, 1996
Questions for Discussion
i. How was the obscure little firm of "accounting and engineering advisors" able to grow into the world's most prestigious consulting firm fifty years later? What was the unique source of competitive advantage developed by James O. McKinsey and later Marvin Bower?
ii. How effective was Ron Daniel in leading McKinsey to respond to challenges identified in the Commission on Firm Aims and Goals? What contribution did Fred Gluck make to the required changes?
iii. Judging by the evidence in the three mini-cases of front-line activities in the mid-1990s, how effective has the firm been in its two-decade long change process?
What is your evaluation of Rajat Gupta's "four-pronged" approach to knowledge development and application within McKinsey? As a senior partner, what specific advice would you give him?
15 Business Processes: The Core Concepts and Managing the Global Supply Chain Yoshino, Michael Y., and Anthony St. George. "Li & Fung (A): Beyond 'Filling in the Mosaic' -- 1995-98." Boston, MA: Harvard Business School Case 9-398-092. January 05, 1998.
Questions for Discussion
i. How is Li and Fung able to maintain margins three times those of the rest of the industry? What are its specific strengths and how does it differ from more traditional competitors?
ii. What attributes of Chinese business culture does the company exhibit? Are these strengths for the company?
iii. What are the benefits of the Li and Fung matrix sourcing system?
iv. How does the venture capital group contribute to Li and Fung's growth? What are the challenges the company faces going ahead and what issues does it need to address in order to expand? How and where should it expand?
V. Aggregate and Granular Metrics
16 Metrics of Value Creation Questions for Discussion
i. Discuss the role of metrics that contribute to the economic value generated by a strategy.
17 The Balanced Scorecard and Granular Metrics Questions for Discussion
i. Make sure that you understand the role played by aggregate and granular metrics both in defining a strategy and in monitoring its execution.
VI. Integration
18 Organizational Leadership Bartlett, Christopher A., and Meg Wozny. "GE's Two-Decade Transformation: Jack Welch's Leadership." Boston, MA: Harvard Business School Case 9-399-150. April 28, 1999.
Questions for Discussion
i. How difficult a challenge did Welch face in 1981? How effectively did he take charge?
ii. What is Welch's objective in the series of initiatives he launched in the late 1980s and early 1990s? What is he trying to achieve in the round of changes he put in motion in that period? Is there a logic or rationale supporting the change process?
iii. How does such a large, complex diversified conglomerate defy the critics and continue to grow so profitably? Have Welch's various initiatives added value? If so, how?
iv. What is your evaluation of Welch's approach to leading change? How important is he to GE's success? What implications for his replacement?
This course focuses on some of the important current issues in strategic management. It will concentrate on modern analytical approaches and on enduring successful strategic practices. It is consciously designed with a technological and global outlook since this orientation in many ways highlights the significant emerging trends in strategic management. The course is intended to provide the students with a pragmatic approach that will guide the formulation and implementation of corporate, business, and functional strategies.
Required Textbook
Hax, Arnoldo C., and Dean L. Wilde. The Delta Project: Discovering New Sources of Profitability. New York, NY: Palgrave, 2001. ISBN: 0312240465.
Recommended Textbook
Hax, Arnoldo C., and Nicolas S. Majluf. The Strategy Concept and Process: A Pragmatic Approach. 2nd ed. Upper Saddle River, NJ: Prentice Hall, 1996. ISBN: 0134588940.
Each day's reading is listed below.
Course readings. SES # TOPICS Readings
I. Introduction and Overview of Strategic Management
1 The Delta Model Hax and Wilde. Chapters 1 and 2.
2 Porter's Frameworks and the Resource-Based View of the Firm Porter, Michael E. "Towards a Dynamic Theory of Strategy." Strategic Management Journal 12 (1991): 95-117.
Grant, Robert H. "The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation." California Management Review 33, no. 3 (1991).
Hax and Wilde. Chapter 12.
II. Business Strategy
3 Customer Segmentation and Customer Value Proposition Hax, Arnoldo C. "Achieving the Potentials of Your Organization - How to Overcome the Dangers of Commoditization." MIT Sloan Working Paper No. 4260-02. (September 2002).
4 The Firm as a Bundle of Competencies and Putting it All Together Hax and Wilde. Chapters 3-5.
5 Industry Structure and Competitive Interaction
6 The Decommoditization of a Business
7 Competitive Positioning
III. Technology and Industry Transformation
8 Sustaining Competitive Advantage
9 Competitive Dynamics
10 Putting it All Together: Integrating The Critical Tasks of Strategy Hax and Wilde. Chapter 6.
IV. Corporate Strategy
11 Corporate Strategy - The Core Concepts Hax, Arnoldo, and Nicolas Majluf. "Corporate Strategic Tasks." European Management Journal12, no. 4 (1994): 366-381.
12 Corporate Philosophy and Culture
13 General Principles of Organization Design Galbraith, Jay R. "Linking Customers and Products - Organizing for Product and Customer Focus," and "Structuring Global Organizations." Chapters 2 and 4 in Tomorrow's Organization. Edited by Susan A. Mohrman, Jay R. Galbraith, and Edward E. Lawler III. Jossey-Bass, 1998. ISBN: 0787940046.
14 Human Resources Management and Knowledge Management
15 Business Processes: The Core Concepts and Managing the Global Supply Chain Hax and Wilde. Chapter 7.
V. Aggregate and Granular Metrics
16 Metrics of Value Creation Hax and Majluf. Chapter 17.
"America's Best and Worst Wealth Creators." Fortune, December 18, 2000.
"America's Best and Worst Wealth Creators." Fortune, December 10, 2001.
Slywotzky, Adrian J., and Richard Wise. "The Growth Crisis and How to Escape It." Harvard Business Review (July 2002): 72-83.
17 The Balanced Scorecard and Granular Metrics Hax and Wilde. Chapters 9 and 10.
Kaplan, Robert S., and David P. Norton. "Having Trouble with Your Strategy? Then Map It." Harvard Business Review (September-October 2000): 167-176.
VI. Integration
18 Organizational Leadership
General References
Bartlett, C., and S. Ghoshal. Managing Across Borders: The Transnational Solution. Boston, MA: Harvard Business School Press, 2002.
Brandenburger, A. M., and B. J. Nalebuff. Co-opetition. New York, NY: Doubleday & Company, 1996.
Kim, W. Chan, and R. Mauborgne. Blue Ocean Strategy. Boston, MA: Harvard Business School Press, 2005.
Christensen, C. The Innovator's Dilemma: When Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press, 1997.
———. The Innovator's Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.
Collis, D., and C. Montgomery. Corporate Strategy: Resources and the Scope of the Firm. Westport, CT: Irwin Press, 1997.
Cusumano, M. A., and C. C. Mardikes, eds. Strategic Thinking for the New Economy. Hoboken, NJ: Jossey-Bass, 2001.
Foster, R., and S. Kaplan. Creative Destruction. New York, NY: Doubleday & Company, 2000.
Galbraith, J. Designing the Global Corporation. Hoboken, NJ: Jossey-Bass, 2000.
Ghemawat, P., D. Collis, G. Pisano, and J. Rivkin. Strategy and the Business Landscape. Upper Saddle River, NJ: Prentice Hall, 2001.
Hamel, G., and C. K. Prahalad. Competing for the Future. Boston, MA: Harvard Business School Press, 1996.
Hayes, R., G. Pisano, and D. Upton. Strategic Operations: Competing Through Capabilities. New York, NY: Free Press, 1996.
Kaplan, R. S., and D. P. Norton. Strategy Maps: Converting Intangible Assets Into Tangible Outcomes. Boston, MA: Harvard Business School Press, 2004.
Pfeffer, J. The Human Equation. Boston, MA: Harvard Business School Press, 1998.
Porter, M. Competitive Advantage. New York, NY: Free Press, 1985.
———. The Competitive Advantage of Nations. New York, NY: Free Press, 1990.
Prahalad, C. K., and V. Ramaswamy. The Future of Competition. Boston, MA: Harvard Business School Press, 2004.
Reichheld, F. Loyalty Rules. Boston, MA: Harvard Business School Press, 2001.
Saloner, G., A. Shepard, and J. Podolny. Strategic Management. New York, NY: John Wiley & Sons, 2001.
Shapiro, C., and H. Varian. Information Rules. Boston, MA: Harvard Business School Press, 1999.
Stern, J. M., and J. S. Shiely. The Eva Challenge: Implementing Value-Added Change in an Organization. New York, NY: John Wiley & Sons, 2001.
Thompke, S. Experimentation Matters: Unlocking the Potential of New Technologies for Innovation. Boston, MA: Harvard Business School Press, 2003.
Ulrich, D. Human Resource Champions. Boston, MA: Harvard Business School Press, 1997.
von Hippel, E. Democratizing Innovation. Cambridge, MA: MIT Press, April 2006. ISBN: 0262720477.
Lecture Notes
Lecture notes files. SES # TOPICS
I. Introduction and Overview of Strategic Management
1 The Delta Model (PDF - 5.5 MB)
2 Porter's Frameworks and the Resource-Based View of the Firm (PDF 1 - 1.6 MB) (PDF 2) (PDF 3)
II. Business Strategy
3 Customer Segmentation and Customer Value Proposition (PDF - 4.7 MB)
4 The Firm as a Bundle of Competencies and Putting it All Together (PDF 1 - 1.6 MB) (PDF 2)
5 Industry Structure and Competitive Interaction
6 The Decommoditization of a Business (PDF)
7 Competitive Positioning (PDF 1) (PDF 2)
III. Technology and Industry Transformation
8 Sustaining Competitive Advantage (PDF)
9 Competitive Dynamics (PDF 1 - 3.0 MB) (PDF 2 - 1.4 MB)
10 Putting it All Together: Integrating The Critical Tasks of Strategy
IV. Corporate Strategy
11 Corporate Strategy - The Core Concepts (PDF 1 - 1.7 MB) (PDF 2 - 1.2 MB) (PDF 3 - 1.1 MB)
12 Corporate Philosophy and Culture
13 General Principles of Organization Design (PDF 1 - 3.7 MB) (PDF 2) (PDF 3)
14 Human Resources Management and Knowledge Management
15 Business Processes: The Core Concepts and Managing the Global Supply Chain
V. Aggregate and Granular Metrics
16 Metrics of Value Creation
17 The Balanced Scorecard and Granular Metrics
VI. Integration
18 Organizational Leadership
http://ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-902Fall-2006/LectureNotes/index.htm
Assignments
Assignment cases. SES # TOPICS CASES AND QUESTIONS
I. Introduction and Overview of Strategic Management
1 The Delta Model Questions for Discussion
i. Which of the three options presented - Best Project, Total Customer Solutions, System Lock-In - seems to be the most appropriate, and under which conditions?
ii. Select some companies that you are familiar with and try to identify what, in your judgment, is the existing strategic positioning of the company and whether you would suggest a better alternative.
2 Porter's Frameworks and the Resource-Based View of the Firm Questions for Discussion
i. How would you use the three frameworks?
ii. Does anyone of them seem to you to dominate the others or could you benefit from selectively using all of them?
II. Business Strategy
3 Customer Segmentation and Customer Value Proposition Questions for Discussion
i. Identify a company that you are familiar with and try to perform a customer segmentation.
ii. Position the resulting tiers in the Delta Model Triangle.
iii. At least for one tier, develop a creative custom value proposition.
4 The Firm as a Bundle of Competencies and Putting it All Together Questions for Discussion
i. How does the resource-based view of the firm compare with the methodology suggested by the Delta Model to address the firm's competencies?
ii. Select a company that you are familiar with and try to identify its existing and desired capabilities.
5 Industry Structure and Competitive Interaction Yoffie, David B., and Yusi Wang. "Cola Wars Continue: Coke® and Pepsi in the Twenty First Century." Boston, MA: Harvard Business School Case 9-702-442, January 11, 2002.
Questions for Discussion
i. Why is the soft drink industry so profitable?
ii. Compare the economics of the concentrate business to the bottling business; why is the profitability so different?
iii. How has competition between Coke® and Pepsi affected the industry profits?
iv. Can Coke® and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-carbonated drinks?
You might consider using Porter's Five Forces Framework to address some of these issues.
6 The Decommoditization of a Business Anand, Bharat N., Michael G. Rukstad, and Christopher H. Paige. "Capital One Financial Corporation." Boston, MA: Harvard Business School Case 9-700-124, April 24, 2000.
Questions for Discussion
i. What are the key elements of Capital One's strategy that allows them to differentiate themselves from the rest of the industry?
ii. How sustainable is Capital One's competitive advantage? What can competitors do?
iii. Is the strategy transportable to other industries?
In responding to question "i", you might identify Capital One's competencies by considering the eight strategic positionings that are part of the Triangle in the Delta Model.
7 Competitive Positioning Ghemawat, Pankaj, Stephen P. Bradley, and Ken Mark. "Wal*Mart Stores in 2003." Boston, MA: Harvard Business School Case 9-704-430, September 18, 2003.
Questions for Discussion
i. What are the sources of Wal*Mart's competitive advantage in discount retailing?
ii. How sustainable will its position be in the future?
iii. What challenges does Wal*Mart face?
In responding to question "i", you might identify Wal*Mart's competencies by considering the eight strategic positionings that are part of the Triangle in the Delta Model
III. Technology and Industry Transformation
8 Sustaining Competitive Advantage Rivkin, Jan W., and Michael E. Porter. "Matching DELL™." Boston, MA: Harvard Business School Case 9-799-158, June 06, 1999.
Ghemawat, Pankaj, and Jan W. Rivkin. "Creating Competitive Advantage." Boston, MA: Harvard Business School Case 9-798-062, January 25, 1998.
Questions for Discussion
i. How and why did the personal computer industry come to have such low average profitability?
ii. Why has DELL™ been so successful?
iii. Prior to the recent efforts by competitors to match DELL™ (1997-1998), how big was DELL™'s competitive advantage? Specifically, calculate DELL™'s advantage over Compaq in serving a corporate customer.
iv. How effective have competitors been in responding to the challenge posed by DELL™'s advantage? How big is DELL™'s remaining advantage?
DELL™ is properly being presented as one of the most innovative companies, the creator of a business model that has received a great deal of attention in the networked economy. Questions i. and ii. can be addressed using Porter's Five Forces and Porter's Value Chain frameworks respectively. The third question allows for you to do some numerical calculations to quantify DELL™'s advantage over Compaq. You are welcome to work in groups in preparation of this analysis.
9 Competitive Dynamics Ghemawat, Pankaj, and Bret Baird. "Leadership Online (A): Barnes & Noble vs. Amazon.com." Boston, MA: Harvard Business School Case 9-798-063, May 26, 1998.
Corts, Kenneth S., and Jan W. Rivkin. "A Note on Microeconomics for Strategists." Boston, MA: Harvard Business School Case 9-799-128. March 30, 1999.
Questions for Discussion
i. Based on your own experience of traditional bookselling and your exploration of online bookselling, compare willingness-to-pay for books supplied by these two business models.
ii. Also compare the forecast long-run cost position of a successful online bookseller to Barnes & Noble's traditional business model. (Assume that Exhibits 4 and 7 in the case reflect average discounts of 10% off list price for Barnes & Noble's traditional bookstores and 25% off list for the online bookseller.)
iii. Assess Barnes & Noble's response to the substitution threat from AMAZON®. How did AMAZON® respond in turn, and to what net effect?
iv. Who will be the online leader? Will it ever make much money selling books (as opposed to selling stock)?
Please contrast the competitive positioning of a traditional, off-line, competitor like Barnes & Noble vs. an on-line channel like Amazon.com. With regard to question i., a customer willingness to pay for a product or a service is the maximum amount of money a customer is willing to part with in order to obtain a product or a service. The question is whether you find any significant difference in your willingness to pay for a book being acquired under these two different channels. In question ii. You might want to use the most recent data provided in Exhibit 4 (1996 for Barnes and Noble) and Exhibit 7 (F2001E for AMAZON®). Remember that Barnes & Noble provides 10% discount off list price, and AMAZON® provides 25%. The case is a good vehicle also to talk about the substitution threat Barnes & Noble and how it is responding against AMAZON®.
10 Putting it All Together: Integrating The Critical Tasks of Strategy Questions for Discussion
i. What is the role of the frameworks that we have discussed in the course (Porter, Resource-Based View for the Firm, and the Delta Model) in the definition of the critical strategic tasks?
ii. Be ready to discuss the issues that you face when implementing a business strategy.
IV. Corporate Strategy
11 Corporate Strategy - The Core Concepts Questions for Discussion
i. What are the central differences that exist between the development of a corporate and a business strategy?
ii. Should corporate strategy be formulated first and then followed by the development of the individual business strategies that are part of the corporate portfolio (a top-down approach), or should the business strategies be done first and then followed b the formulation of a corporate strategy (bottom-up approach)?
iii. Under which conditions do you favor one approach vs. another?
Be prepared to discuss each of the 10 corporate tasks described in the Hax and Majluf paper.
12 Corporate Philosophy and Culture Aguilar, Francis J., and Arvind Bhambri. "Johnson & Johnson (A)." Boston, MA: Harvard Business School Case 9-384-053, August 19, 1983.
Aguilar, Francis J., and Arvind Bhambri. "Johnson & Johnson (B): Hospital Services." Boston, MA: Harvard Business School Case 9-384-054, August 19, 1983.
Questions for Discussion
(Johnson & Johnson (A))
i. Comment on Johnson & Johnson (J&J) philosophy and culture. Are they overdoing their decentralization policy? What is your opinion about "The Credo?"
ii. How are strategic and operational responsibilities handled at J&J? Do you like their strategic planning process and their executive compensation?
(Johnson & Johnson (B): Hospital Services)
iii. By establishing the Hospital Services Group (HSG), J&J seems to be taking an action against the fiber of its decentralization philosophy and culture. Do you agree with that decision?
iv. Comment on the charter of HSG. How would you prevent possible conflicts between HSG and the J&J companies?
Although these cases on the surface are quite old, they address some very critical issues that have profound relevance in management regardless of time. The A case presents a company that is enormously consistent in terms of its culture, management processes, and philosophy. Decentralization is the trademark of that organization. Case B deeply challenges the effectiveness of this management structure. I have two very interesting tapes of Jim Burke, who was CEO of Johnson & Johnson at that time that I would like for you to see.
13 General Principles of Organization Design Questions for Discussion
i. What are the advantages and disadvantages of the three major organizational archetypes: functional, divisional, and holding organizational forms?
ii. How do you develop a properly balanced Back-End Front-End organizational form?
iii. How do you assume proper horizontal coordination across the individual organizational units?
14 Human Resources Management and Knowledge Management Bartlett, Christopher A. "McKinsey and Company: Managing Knowledge and Learning." Boston, MA: Harvard Business School Case 9-396-357. June 28, 1996
Questions for Discussion
i. How was the obscure little firm of "accounting and engineering advisors" able to grow into the world's most prestigious consulting firm fifty years later? What was the unique source of competitive advantage developed by James O. McKinsey and later Marvin Bower?
ii. How effective was Ron Daniel in leading McKinsey to respond to challenges identified in the Commission on Firm Aims and Goals? What contribution did Fred Gluck make to the required changes?
iii. Judging by the evidence in the three mini-cases of front-line activities in the mid-1990s, how effective has the firm been in its two-decade long change process?
What is your evaluation of Rajat Gupta's "four-pronged" approach to knowledge development and application within McKinsey? As a senior partner, what specific advice would you give him?
15 Business Processes: The Core Concepts and Managing the Global Supply Chain Yoshino, Michael Y., and Anthony St. George. "Li & Fung (A): Beyond 'Filling in the Mosaic' -- 1995-98." Boston, MA: Harvard Business School Case 9-398-092. January 05, 1998.
Questions for Discussion
i. How is Li and Fung able to maintain margins three times those of the rest of the industry? What are its specific strengths and how does it differ from more traditional competitors?
ii. What attributes of Chinese business culture does the company exhibit? Are these strengths for the company?
iii. What are the benefits of the Li and Fung matrix sourcing system?
iv. How does the venture capital group contribute to Li and Fung's growth? What are the challenges the company faces going ahead and what issues does it need to address in order to expand? How and where should it expand?
V. Aggregate and Granular Metrics
16 Metrics of Value Creation Questions for Discussion
i. Discuss the role of metrics that contribute to the economic value generated by a strategy.
17 The Balanced Scorecard and Granular Metrics Questions for Discussion
i. Make sure that you understand the role played by aggregate and granular metrics both in defining a strategy and in monitoring its execution.
VI. Integration
18 Organizational Leadership Bartlett, Christopher A., and Meg Wozny. "GE's Two-Decade Transformation: Jack Welch's Leadership." Boston, MA: Harvard Business School Case 9-399-150. April 28, 1999.
Questions for Discussion
i. How difficult a challenge did Welch face in 1981? How effectively did he take charge?
ii. What is Welch's objective in the series of initiatives he launched in the late 1980s and early 1990s? What is he trying to achieve in the round of changes he put in motion in that period? Is there a logic or rationale supporting the change process?
iii. How does such a large, complex diversified conglomerate defy the critics and continue to grow so profitably? Have Welch's various initiatives added value? If so, how?
iv. What is your evaluation of Welch's approach to leading change? How important is he to GE's success? What implications for his replacement?
Strategic Management II MIT Open Courseware 15.904
Course Description
This half-semester course is intended to be an extension of course 15.902, Strategic Management I, with the purpose of allowing the students to experience an in-depth application of the concepts and frameworks of strategic management. Throughout the course, Prof. Hax will discuss the appropriate methodologies, concepts, and tools pertinent to strategic analyses and will illustrate their use by discussing many applications in real-life settings, drawn from his own personal experiences.
Highlights of this Course
This course includes a full set of lecture notes, based on the two course textbooks. Both texts are co-authored by Professor Hax. Examples of student projects are also available in the assignments section.
Syllabus
Prerequisite
15.902, Strategic Management I
Broad Description of the Course
This course is intended to be an extension of course 15.902, Strategic Management I, with the purpose of allowing the students to experience an in-depth application of the concepts and frameworks of strategic management. Throughout the course, Professor Hax will discuss the appropriate methodologies, concepts, and tools pertinent to strategic analyses and will illustrate their use by discussing many applications in real-life settings, drawn from his own personal experiences.
Teaching Methodology
This course will use a combination of readings, case studies, lectures, and group research projects conducted by the students. The primary focus of the course will be on students working in teams to develop the strategic analysis of a business of their choice.
Required Textbooks
Hax, and Majluf. The Strategy Concept and Process: A Pragmatic Approach. 2nd ed. Prentice Hall, 1996.
Hax, and Wilde. The Delta Project: Discovering New Sources Of Profitability. Palgrave, 2001.
Readings from these books will be reassigned to allow for further more in-depth reflection on each relevant topic.
Package of additional readings might be distributed as the course progresses.
Requirements
The requirements are two-fold:
Group assignment for the development of a business strategy. The students will select their own groups, limited to at most 4 people per group, to develop a full business strategy. The students will present a written report. The report should address the following issues:
Executive Summary
Strategic Positioning of the Business
Customer Segmentation and Customer Value Proposition
Mission of the Business
Environmental Scan at the Business Level (Opportunities and Threats)
Internal Scrutiny at the Business Level (Strengths and Weaknesses)
Strategic Agenda of the Business
Customer Targeting
Operational Effectiveness
Innovation
Aggregate and Granular Metrics
Economic Evaluation of the Business Strategy
Conclusions
SES # TOPICS READINGS
1 The Frameworks of Strategic Management Revisited Hax, and Majluf, Chapters 1 and 2.
Hax, and Wilde, Chapter 1.
2 Customer Segmentation and Customer Value Proposition Hax, and Majluf, Chapters 3 and 4.
Hax, and Wilde, Chapters 2-5.
3 The Crafting of the Strategic Agenda Hax, and Majluf, Chapters 5-8.
Hax, and Wilde, Chapter 6.
4 Corporate Strategic Issues Hax, and Majluf, Chapters 9-17.
5 Customer Targeting Hax, and Wilde, Chapter 7.
6 Operational Effectiveness Hax, and Majluf, Chapter 21.
7 Strategy and Organizational Structure
Guest Lecturer: Hansjörg Wyss (Chairman and CEO, Synthes-Stratec)
8 Innovation Hax, and Majluf, Chapter 20.
9 Functional Strategies: The Case of Human Resources Management Hax, and Majluf, Chapters 18 and 19.
10 Aggregate and Granular Metrics Hax, and Wilde, Chapters 9 and 10.
11 Implementing Strategy
Guest Lecturer: Tom Stephens (Chairman, Unilever De México)
General References
Bartlett, C., and S. Ghoshal. Managing Across Borders: The Transnational Solution. Harvard Business School Press, 2002.
Brandenburger, A. M., and B. J. Nalebuff. Co-opetition. Doubleday, 1996.
Christensen, C. The Innovators Dilemma: When Technologies Cause Great Firms to Fail. Harvard Business School Press, 1997.
Collis, D., and C. Montgomery. Corporate Strategy: Resources and the Scope of the Firm. Irwin, 1997.
Cusumano, M. A., and C. C. Mardikes, eds. Strategic Thinking for the New Economy. Jossey Bass, 2001.
Foster, R., and S. Kaplan. Creative Destruction. Currency Doubleday, 2000.
Galbraith, J. Designing the Global Corporation. Jossey Bass, 2000.
———. Designing Organizations: An Executive Briefing on Strategy, Structure, and Process. Jossey Bass, 1995.
Ghemawat, P., D. Collis, G. Pisano, and J. Rivkin. Strategy and the Business Landscape. Prentice Hall, 2001.
Ghoshal, S., and C. A. Bartlett. The Individualized Corporation. HarperBusiness, 1997.
Goold, M., A. Campbell, and M. Alexander. Corporate-level Strategy: Creating Value in a Multibusiness Company. Wiley, 1994.
Grove, A. Only the Paranoid Survive: How to Exploit the Crisis Points that Challenge Every Company and Career. Currency Doubleday, 1996.
Hamel, G. Leading the Revolution. Harvard Business School Press, 2000.
Hamel, G., and C. K. Prahalad. Competing for the Future. Harvard Business School Press, 1996.
Hayes, R., G. Pisano, and D. Upton. Strategic Operations: Competing through Capabilities. Free Press, 1996.
Kaplan, R. S., and R. Cooper. Cost and Effect. Harvard Business School Press, 1998.
Kaplan, R. S., and D. P. Norton. The Strategy-focused Organization. Harvard Business School Press, 2001.
Kotter, J. P. Leading Change. Harvard Business School Press, 1996.
McTaggart, J., P. Kontes, and M. Mankins. The Value Imperative: Managing for Superior Shareholder Returns. The Free Press, 1994.
Pfeffer, J. The Human Equation. Harvard Business School Press, 1998.
Porter, M. Competitive Advantage. Free Press, 1985.
———. The Competitive Advantage of Nations. Free Press, 1990.
Reichheld, F. Loyalty Rules. Harvard Business School Press, 2001.
Saloner, G., A. Shepard, and J. Podolny. Strategic Management. John Wiley, 2001.
Slywotzky, A. J., and D. J. Morrison. The Profit Zone. Times Business, 1997.
Ulrich, D. Human Resource Champions. Harvard Business School Press, 1997.
Utterback, J. Mastering the Dynamics of Innovation: How Companies Can Seize Opportunities in the Face of Technological Change. Harvard Business School Press, 1994.
Strategy and the Internet
Bovet, D., and J. Martha. Value Nets. Wiley, 2000.
Brynjolfsson, E., and G. Urban, eds. Strategies for e-Business Success. Jossey Bass, 2002.
Cusumano, M., and D. Yoffie. Competing on Internet Time. Touchstone, 2000.
Evans, P., and T. Wurster. Blown to Bits. Harvard Business School Press, 2000.
Kelly, K. New Rules for the New Economy. Viking, 1998.
Shapiro, C., and H. Varian. Information Rules. Harvard Business School Press, 1999.
Siebel, T. M. Taking Care of e-Business. Currency Doubleday, 2001.
Slywotsky, A., and D. Morrison. How Digital is Your Business. Crown Business, 2000.
Tapscott, D., D. Ticoll, and A. Lowy. Digital Capital. Harvard Business School Press, 2000.
Journals of Particular Relevance
California Management Review
Harvard Business Review
Sloan Management Review
Strategic Management Journal
Lecture Notes
Lecture notes for this course are listed below by topic.
The Five Frameworks for the Study of Strategy (PDF)
Business Strategy (PDF)
Customer Targeting (Marketing) Strategy (PDF)
Operational Effectiveness (Supply Chain) Strategy (PDF)
Innovation (Technology) Strategy (PDF)
Granular Metrics, Feedback and Experimentation (PDF)
Aggregate Metrics and the Balanced Scorecard (PDF)
http://dspace.mit.edu/html/1721.1/36362/15-904Fall-2003/OcwWeb/Sloan-School-of-Management/15-904Strategic-Management-IIFall2003/LectureNotes/index.htm
Examples of two group assignments:
Example 1 (PDF)
Example 2 (PDF)
http://dspace.mit.edu/html/1721.1/36362/15-904Fall-2003/OcwWeb/Sloan-School-of-Management/15-904Strategic-Management-IIFall2003/Assignments/index.htm
This half-semester course is intended to be an extension of course 15.902, Strategic Management I, with the purpose of allowing the students to experience an in-depth application of the concepts and frameworks of strategic management. Throughout the course, Prof. Hax will discuss the appropriate methodologies, concepts, and tools pertinent to strategic analyses and will illustrate their use by discussing many applications in real-life settings, drawn from his own personal experiences.
Highlights of this Course
This course includes a full set of lecture notes, based on the two course textbooks. Both texts are co-authored by Professor Hax. Examples of student projects are also available in the assignments section.
Syllabus
Prerequisite
15.902, Strategic Management I
Broad Description of the Course
This course is intended to be an extension of course 15.902, Strategic Management I, with the purpose of allowing the students to experience an in-depth application of the concepts and frameworks of strategic management. Throughout the course, Professor Hax will discuss the appropriate methodologies, concepts, and tools pertinent to strategic analyses and will illustrate their use by discussing many applications in real-life settings, drawn from his own personal experiences.
Teaching Methodology
This course will use a combination of readings, case studies, lectures, and group research projects conducted by the students. The primary focus of the course will be on students working in teams to develop the strategic analysis of a business of their choice.
Required Textbooks
Hax, and Majluf. The Strategy Concept and Process: A Pragmatic Approach. 2nd ed. Prentice Hall, 1996.
Hax, and Wilde. The Delta Project: Discovering New Sources Of Profitability. Palgrave, 2001.
Readings from these books will be reassigned to allow for further more in-depth reflection on each relevant topic.
Package of additional readings might be distributed as the course progresses.
Requirements
The requirements are two-fold:
Group assignment for the development of a business strategy. The students will select their own groups, limited to at most 4 people per group, to develop a full business strategy. The students will present a written report. The report should address the following issues:
Executive Summary
Strategic Positioning of the Business
Customer Segmentation and Customer Value Proposition
Mission of the Business
Environmental Scan at the Business Level (Opportunities and Threats)
Internal Scrutiny at the Business Level (Strengths and Weaknesses)
Strategic Agenda of the Business
Customer Targeting
Operational Effectiveness
Innovation
Aggregate and Granular Metrics
Economic Evaluation of the Business Strategy
Conclusions
SES # TOPICS READINGS
1 The Frameworks of Strategic Management Revisited Hax, and Majluf, Chapters 1 and 2.
Hax, and Wilde, Chapter 1.
2 Customer Segmentation and Customer Value Proposition Hax, and Majluf, Chapters 3 and 4.
Hax, and Wilde, Chapters 2-5.
3 The Crafting of the Strategic Agenda Hax, and Majluf, Chapters 5-8.
Hax, and Wilde, Chapter 6.
4 Corporate Strategic Issues Hax, and Majluf, Chapters 9-17.
5 Customer Targeting Hax, and Wilde, Chapter 7.
6 Operational Effectiveness Hax, and Majluf, Chapter 21.
7 Strategy and Organizational Structure
Guest Lecturer: Hansjörg Wyss (Chairman and CEO, Synthes-Stratec)
8 Innovation Hax, and Majluf, Chapter 20.
9 Functional Strategies: The Case of Human Resources Management Hax, and Majluf, Chapters 18 and 19.
10 Aggregate and Granular Metrics Hax, and Wilde, Chapters 9 and 10.
11 Implementing Strategy
Guest Lecturer: Tom Stephens (Chairman, Unilever De México)
General References
Bartlett, C., and S. Ghoshal. Managing Across Borders: The Transnational Solution. Harvard Business School Press, 2002.
Brandenburger, A. M., and B. J. Nalebuff. Co-opetition. Doubleday, 1996.
Christensen, C. The Innovators Dilemma: When Technologies Cause Great Firms to Fail. Harvard Business School Press, 1997.
Collis, D., and C. Montgomery. Corporate Strategy: Resources and the Scope of the Firm. Irwin, 1997.
Cusumano, M. A., and C. C. Mardikes, eds. Strategic Thinking for the New Economy. Jossey Bass, 2001.
Foster, R., and S. Kaplan. Creative Destruction. Currency Doubleday, 2000.
Galbraith, J. Designing the Global Corporation. Jossey Bass, 2000.
———. Designing Organizations: An Executive Briefing on Strategy, Structure, and Process. Jossey Bass, 1995.
Ghemawat, P., D. Collis, G. Pisano, and J. Rivkin. Strategy and the Business Landscape. Prentice Hall, 2001.
Ghoshal, S., and C. A. Bartlett. The Individualized Corporation. HarperBusiness, 1997.
Goold, M., A. Campbell, and M. Alexander. Corporate-level Strategy: Creating Value in a Multibusiness Company. Wiley, 1994.
Grove, A. Only the Paranoid Survive: How to Exploit the Crisis Points that Challenge Every Company and Career. Currency Doubleday, 1996.
Hamel, G. Leading the Revolution. Harvard Business School Press, 2000.
Hamel, G., and C. K. Prahalad. Competing for the Future. Harvard Business School Press, 1996.
Hayes, R., G. Pisano, and D. Upton. Strategic Operations: Competing through Capabilities. Free Press, 1996.
Kaplan, R. S., and R. Cooper. Cost and Effect. Harvard Business School Press, 1998.
Kaplan, R. S., and D. P. Norton. The Strategy-focused Organization. Harvard Business School Press, 2001.
Kotter, J. P. Leading Change. Harvard Business School Press, 1996.
McTaggart, J., P. Kontes, and M. Mankins. The Value Imperative: Managing for Superior Shareholder Returns. The Free Press, 1994.
Pfeffer, J. The Human Equation. Harvard Business School Press, 1998.
Porter, M. Competitive Advantage. Free Press, 1985.
———. The Competitive Advantage of Nations. Free Press, 1990.
Reichheld, F. Loyalty Rules. Harvard Business School Press, 2001.
Saloner, G., A. Shepard, and J. Podolny. Strategic Management. John Wiley, 2001.
Slywotzky, A. J., and D. J. Morrison. The Profit Zone. Times Business, 1997.
Ulrich, D. Human Resource Champions. Harvard Business School Press, 1997.
Utterback, J. Mastering the Dynamics of Innovation: How Companies Can Seize Opportunities in the Face of Technological Change. Harvard Business School Press, 1994.
Strategy and the Internet
Bovet, D., and J. Martha. Value Nets. Wiley, 2000.
Brynjolfsson, E., and G. Urban, eds. Strategies for e-Business Success. Jossey Bass, 2002.
Cusumano, M., and D. Yoffie. Competing on Internet Time. Touchstone, 2000.
Evans, P., and T. Wurster. Blown to Bits. Harvard Business School Press, 2000.
Kelly, K. New Rules for the New Economy. Viking, 1998.
Shapiro, C., and H. Varian. Information Rules. Harvard Business School Press, 1999.
Siebel, T. M. Taking Care of e-Business. Currency Doubleday, 2001.
Slywotsky, A., and D. Morrison. How Digital is Your Business. Crown Business, 2000.
Tapscott, D., D. Ticoll, and A. Lowy. Digital Capital. Harvard Business School Press, 2000.
Journals of Particular Relevance
California Management Review
Harvard Business Review
Sloan Management Review
Strategic Management Journal
Lecture Notes
Lecture notes for this course are listed below by topic.
The Five Frameworks for the Study of Strategy (PDF)
Business Strategy (PDF)
Customer Targeting (Marketing) Strategy (PDF)
Operational Effectiveness (Supply Chain) Strategy (PDF)
Innovation (Technology) Strategy (PDF)
Granular Metrics, Feedback and Experimentation (PDF)
Aggregate Metrics and the Balanced Scorecard (PDF)
http://dspace.mit.edu/html/1721.1/36362/15-904Fall-2003/OcwWeb/Sloan-School-of-Management/15-904Strategic-Management-IIFall2003/LectureNotes/index.htm
Examples of two group assignments:
Example 1 (PDF)
Example 2 (PDF)
http://dspace.mit.edu/html/1721.1/36362/15-904Fall-2003/OcwWeb/Sloan-School-of-Management/15-904Strategic-Management-IIFall2003/Assignments/index.htm
Tuesday, April 8, 2008
MIT Open Course on Strategy 15-928 Proseminar
Home > Courses > Sloan School of Management > Strategic Management and Consulting Proseminar
Strategic Management and Consulting Proseminar: Theoretical Foundations
Themes of the course are:
Theme 1. Restoring Credibility and Winning Stakeholders Trust.
Theme 2. Focus on Short-Term Efficiency - Cost Containment and Implementation.
Theme 3. Largest Destruction of Shareholder Value - How Could It Happen?
Theme 4. Structuring the Organization for Unstable Markets.
Theme 5. Motivating Employees in a Turbulent Environment - Becoming an Employer of Choice.
Theme 6. Globalization - The Question of Fairness.
Theme 1. Restoring Credibility and Winning Stakeholders Trust
The seemingly endless disclosures of lapses in the integrity in Corporate America have shaken the confidence in businesses and their financial reports. The major task is to enforce the principles of transparency and accountability involving every member of the corporate reporting supply chain: company executives, boards of directors, independent auditors, information distributors, third party analysts, investors, standard setters, and market regulators.
Robert Eccles (Founder and President of Advisory Capital Partners, and former Professor at Harvard Business School)
Paul Tellier (President and CEO, Bombardier)
Theme 2. Focus on Short-Term Efficiency - Cost Containment and Implementation
The economic downturn that we have experienced in the last year and a half has generated a concentration of attention on the bottom line and an emphasis on developing a lean and cost-efficient infrastructure, and a strong belief that execution is everything. The challenge is to address these short-term pressures in a way that we do not compromise the future of the organization.
James McTaggart (Founder and CEO, Marakon Associates)
Jürgen Weber (Chairman of the Executive Board, Lufthansa)
Theme 3. Largest Destruction of Shareholder Value - How Could It Happen?
As of September 30, 2002, the S&P 500 has fallen roughly 45% and NASDAQ has fallen 78% from their March 2000 highs. Countless technology and telecommunications companies have fallen 90+% or have disappeared. Something to the order of $7 trillion of equity value has evaporated over this period. The big question is why did this happen and are there any lessons to be drawn to prevent a similar occurrence in the future.
Stewart Myers (Gordon y Billard Professor, MIT Sloan)
Hans-Jörg Rudloff (Chairman of the Executive Committee, Barclays Capital)
Theme 4. Structuring the Organization for Unstable Markets
The greatest concerns are to assure business continuity, stabilization of earnings in volatile markets, disaster recovery, and mechanisms to successfully face disruptive technologies. These conditions require an organization with a continuous capacity for adaptation. We will explore what are the critical elements of such a structure.
Philip Evans (Senior Vice President, Boston Consulting Group)
Rudi Lamprecht (Member of the Managing Board, Siemens AG)
Theme 5. Motivating Employees in a turbulent Environment - Becoming an Employer of Choice
In these difficult economic times, it has become even more critical to attract, satisfy, and retain the top talent.
Gary Cowger (President, GM North America)
Christopher Bartlett (Thomas D. Casserly, Jr. Professor of Business Administration, Harvard Business School)
Theme 6. Globalization - The Question of Fairness
Globalization has both strong supporters and detractors. There are those that advocate globalization as a powerful means to bring more prosperity and democracy into the world. The detractors argue that the rewards of globalization are spread unequally and inequitably both among citizens of a given country and across countries in the world community. How can we shape the direction of globalization in a just and equitable way?
Philip Khoury (Dean, School of Humanities, M.I.T.)
Dale Laurance (President, Occidental Petroleum)
http://ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-928Strategic-Management-and-Consulting-Proseminar--Theoretical-FoundationsSpring2003/StudyMaterials/index.htm
Study Materials of the course
Course Summary, Prepared by Students (PDF)
Book Summary by Professor Arnoldo Hax (PDF)
http://ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-928Strategic-Management-and-Consulting-Proseminar--Theoretical-FoundationsSpring2003/LectureNotes/
Lecture Notes
The following strategic questions are based on discussions by guest lecturers:
Strategic Questions from Lecture 1: Guest Lecturer Rudi Lamprecht, Siemens AG (PDF)
Strategic Questions from Lecture 2: Guest Lecturer Philip Evans, BCG (PDF)
Strategic Questions from Lecture 3: Strategic Questions from Dr. Dale Laurance, Occidental Petroleum (PDF)
Strategic Questions from Lecture 4: Strategic Questions from Philip Khoury, Kenan Sahin Dean of the School of Humanities, Arts, and Social Sciences (PDF)
Strategic Questions from Lecture 5: Strategic Questions from Stewart Myers, Gordon y Billard Professor of Finance (PDF)
Strategic Questions from Lecture 6: Strategic Questions from Hans-Joerg Rudloff, Chairman of the Executive Committee, Barclays Capital (PDF)
Strategic Questions from Lecture 7: Strategic Questions from Jurgen Weber, Chairman of Executive Board, Lufthansa (PDF)
Strategic Questions from Lecture 8: Strategic Questions from Jim McTaggart, Co-Chairman and Co-Founder, Marakon Associates (PDF)
Strategic Questions from Lecture 9: Strategic Questions from Gary Cowger, President of General Motors – North America (PDF)
Strategic Questions from Lecture 10: Strategic Questions from Professor Christopher Bartlett, Harvard Business School (PDF)
Strategic Questions from Lecture 11: Strategic Questions from Bob Eccles, Founder and president of Advisory Capital Partners, former HBS Professor (PDF)
Strategic Questions from Lecture 12: Strategic Questions from Michael Armstrong, Chairman of Comcast Corp. (PDF)
Strategic Management and Consulting Proseminar: Theoretical Foundations
Themes of the course are:
Theme 1. Restoring Credibility and Winning Stakeholders Trust.
Theme 2. Focus on Short-Term Efficiency - Cost Containment and Implementation.
Theme 3. Largest Destruction of Shareholder Value - How Could It Happen?
Theme 4. Structuring the Organization for Unstable Markets.
Theme 5. Motivating Employees in a Turbulent Environment - Becoming an Employer of Choice.
Theme 6. Globalization - The Question of Fairness.
Theme 1. Restoring Credibility and Winning Stakeholders Trust
The seemingly endless disclosures of lapses in the integrity in Corporate America have shaken the confidence in businesses and their financial reports. The major task is to enforce the principles of transparency and accountability involving every member of the corporate reporting supply chain: company executives, boards of directors, independent auditors, information distributors, third party analysts, investors, standard setters, and market regulators.
Robert Eccles (Founder and President of Advisory Capital Partners, and former Professor at Harvard Business School)
Paul Tellier (President and CEO, Bombardier)
Theme 2. Focus on Short-Term Efficiency - Cost Containment and Implementation
The economic downturn that we have experienced in the last year and a half has generated a concentration of attention on the bottom line and an emphasis on developing a lean and cost-efficient infrastructure, and a strong belief that execution is everything. The challenge is to address these short-term pressures in a way that we do not compromise the future of the organization.
James McTaggart (Founder and CEO, Marakon Associates)
Jürgen Weber (Chairman of the Executive Board, Lufthansa)
Theme 3. Largest Destruction of Shareholder Value - How Could It Happen?
As of September 30, 2002, the S&P 500 has fallen roughly 45% and NASDAQ has fallen 78% from their March 2000 highs. Countless technology and telecommunications companies have fallen 90+% or have disappeared. Something to the order of $7 trillion of equity value has evaporated over this period. The big question is why did this happen and are there any lessons to be drawn to prevent a similar occurrence in the future.
Stewart Myers (Gordon y Billard Professor, MIT Sloan)
Hans-Jörg Rudloff (Chairman of the Executive Committee, Barclays Capital)
Theme 4. Structuring the Organization for Unstable Markets
The greatest concerns are to assure business continuity, stabilization of earnings in volatile markets, disaster recovery, and mechanisms to successfully face disruptive technologies. These conditions require an organization with a continuous capacity for adaptation. We will explore what are the critical elements of such a structure.
Philip Evans (Senior Vice President, Boston Consulting Group)
Rudi Lamprecht (Member of the Managing Board, Siemens AG)
Theme 5. Motivating Employees in a turbulent Environment - Becoming an Employer of Choice
In these difficult economic times, it has become even more critical to attract, satisfy, and retain the top talent.
Gary Cowger (President, GM North America)
Christopher Bartlett (Thomas D. Casserly, Jr. Professor of Business Administration, Harvard Business School)
Theme 6. Globalization - The Question of Fairness
Globalization has both strong supporters and detractors. There are those that advocate globalization as a powerful means to bring more prosperity and democracy into the world. The detractors argue that the rewards of globalization are spread unequally and inequitably both among citizens of a given country and across countries in the world community. How can we shape the direction of globalization in a just and equitable way?
Philip Khoury (Dean, School of Humanities, M.I.T.)
Dale Laurance (President, Occidental Petroleum)
http://ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-928Strategic-Management-and-Consulting-Proseminar--Theoretical-FoundationsSpring2003/StudyMaterials/index.htm
Study Materials of the course
Course Summary, Prepared by Students (PDF)
Book Summary by Professor Arnoldo Hax (PDF)
http://ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-928Strategic-Management-and-Consulting-Proseminar--Theoretical-FoundationsSpring2003/LectureNotes/
Lecture Notes
The following strategic questions are based on discussions by guest lecturers:
Strategic Questions from Lecture 1: Guest Lecturer Rudi Lamprecht, Siemens AG (PDF)
Strategic Questions from Lecture 2: Guest Lecturer Philip Evans, BCG (PDF)
Strategic Questions from Lecture 3: Strategic Questions from Dr. Dale Laurance, Occidental Petroleum (PDF)
Strategic Questions from Lecture 4: Strategic Questions from Philip Khoury, Kenan Sahin Dean of the School of Humanities, Arts, and Social Sciences (PDF)
Strategic Questions from Lecture 5: Strategic Questions from Stewart Myers, Gordon y Billard Professor of Finance (PDF)
Strategic Questions from Lecture 6: Strategic Questions from Hans-Joerg Rudloff, Chairman of the Executive Committee, Barclays Capital (PDF)
Strategic Questions from Lecture 7: Strategic Questions from Jurgen Weber, Chairman of Executive Board, Lufthansa (PDF)
Strategic Questions from Lecture 8: Strategic Questions from Jim McTaggart, Co-Chairman and Co-Founder, Marakon Associates (PDF)
Strategic Questions from Lecture 9: Strategic Questions from Gary Cowger, President of General Motors – North America (PDF)
Strategic Questions from Lecture 10: Strategic Questions from Professor Christopher Bartlett, Harvard Business School (PDF)
Strategic Questions from Lecture 11: Strategic Questions from Bob Eccles, Founder and president of Advisory Capital Partners, former HBS Professor (PDF)
Strategic Questions from Lecture 12: Strategic Questions from Michael Armstrong, Chairman of Comcast Corp. (PDF)
Sunday, March 9, 2008
Strategy Theory - Managing Organizational Processes
Strategy formulation for an upcoming period and redesigning the organization to support the strategy are followed by execution. In this activity, the general manager's priorities tend to focus on seeing that prescribed processes are effectively carried towards achieving the goals set forward. The tasks involved in this activity pose tests of the manager's basic administrative abilities.
TS (p.147)
Related Advanced Content
Organizational Theory: A Strategic Perspective, 1e
Donald Lester, Middle Tennessee State University
John A. Parnell, Ph.D., University of North Carolina at Pembroke
Atomicdog Publishing
2007
Description
In Organizational Theory: A Strategic Perspective, authors Donald Lester and John Parnell present the major theoretical perspectives that have contributed to our understanding of organizations in a clear, engaging style. The text presents the concepts of organizational theory from a strategic perspective. These concepts are not only the foundation for understanding organizations, they are also the basis for managing them effectively. Current examples appear throughout the text, and the “Best Practice” features in each chapter highlight specific companies and show how they strategically manage key concepts of organizational theory. The authors also provide students with “real world” applications in the “Career Points” features. Seven cases are included at the end of the text for in-depth study.
Table of Contents
I. INTRODUCTION
1. Foundations of Organization Theory
II. STRATEGIC MANAGEMENT
2. Organizational Strategy and Performance
3. Managing the External Environment
4. Goals and Organizational Effectiveness
III. INTERNAL CONTEXT OF ORGANIZATIONS
5. Organizational Structure and Design
6. Organizational Life Cycle and Growth
7. Organizational Culture and Ethics
IV. MANAGING ORGANIZATIONAL PROCESSES
8. Decision Making, Power and Politics
9. Innovation and Organizational Change
10.Organizational Technology
V. FUTURE CHALLENGES
11. Knowledge Management and the Learning Organization
12. Global Dynamics
VI. INTEGRATIVE CASES
Case A: Walton Arts Center: Act 2
Case B: AstroTech Fuel Systems
Case C: I’m From the Government—and I’m Here to Help You
Case D: AAA Construction: A Family Business in Crisis
Case E: Kerrie’s Challenge: Leading an Unpopular Change
Case F: The Zone Reorganization: Developing a Strategy for Managing Change
Case G: Murata Chemicals: A Case Study
http://www.atomicdogpublishing.com/BookDetails.asp?Session=B64152E0-7AC6-4066-9184-1DB3F4ED6AF1&BookEditionID=156
TS (p.147)
Related Advanced Content
Organizational Theory: A Strategic Perspective, 1e
Donald Lester, Middle Tennessee State University
John A. Parnell, Ph.D., University of North Carolina at Pembroke
Atomicdog Publishing
2007
Description
In Organizational Theory: A Strategic Perspective, authors Donald Lester and John Parnell present the major theoretical perspectives that have contributed to our understanding of organizations in a clear, engaging style. The text presents the concepts of organizational theory from a strategic perspective. These concepts are not only the foundation for understanding organizations, they are also the basis for managing them effectively. Current examples appear throughout the text, and the “Best Practice” features in each chapter highlight specific companies and show how they strategically manage key concepts of organizational theory. The authors also provide students with “real world” applications in the “Career Points” features. Seven cases are included at the end of the text for in-depth study.
Table of Contents
I. INTRODUCTION
1. Foundations of Organization Theory
II. STRATEGIC MANAGEMENT
2. Organizational Strategy and Performance
3. Managing the External Environment
4. Goals and Organizational Effectiveness
III. INTERNAL CONTEXT OF ORGANIZATIONS
5. Organizational Structure and Design
6. Organizational Life Cycle and Growth
7. Organizational Culture and Ethics
IV. MANAGING ORGANIZATIONAL PROCESSES
8. Decision Making, Power and Politics
9. Innovation and Organizational Change
10.Organizational Technology
V. FUTURE CHALLENGES
11. Knowledge Management and the Learning Organization
12. Global Dynamics
VI. INTEGRATIVE CASES
Case A: Walton Arts Center: Act 2
Case B: AstroTech Fuel Systems
Case C: I’m From the Government—and I’m Here to Help You
Case D: AAA Construction: A Family Business in Crisis
Case E: Kerrie’s Challenge: Leading an Unpopular Change
Case F: The Zone Reorganization: Developing a Strategy for Managing Change
Case G: Murata Chemicals: A Case Study
http://www.atomicdogpublishing.com/BookDetails.asp?Session=B64152E0-7AC6-4066-9184-1DB3F4ED6AF1&BookEditionID=156
Strategy Theory - Motivatinal considerations
Motivation is a key ingredient of strategy implementation.
It is important for orgafnizational subunits and individuals to have reasonably strong commitment to the achivements of the enteroprise's goals, objectives, and overall strategy.
Motivation is brought about most fundamentally by the organization's reward punishement structure.
Ts (pp.147-150)
Herzberg, Frederick. 'One More Time: How do You Motivate Employees," Harvard Business Review, Vol.51, No.3 (May Jne 1973), pp.162-80
Roche, w.J., and MacKinnon, N.L., "Motivating People with Meaningful Work," HBR, Vol.48, No.3, May June 1970, pp.97-110
It is important for orgafnizational subunits and individuals to have reasonably strong commitment to the achivements of the enteroprise's goals, objectives, and overall strategy.
Motivation is brought about most fundamentally by the organization's reward punishement structure.
Ts (pp.147-150)
Herzberg, Frederick. 'One More Time: How do You Motivate Employees," Harvard Business Review, Vol.51, No.3 (May Jne 1973), pp.162-80
Roche, w.J., and MacKinnon, N.L., "Motivating People with Meaningful Work," HBR, Vol.48, No.3, May June 1970, pp.97-110
Strategy Theory - Leadership
A course on Strategic Leadership
Strategic Leadership and Decision Making
http://www.maxwell.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/cont.html
Strategic Leadership and Decision Making
http://www.maxwell.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/cont.html
Strategy Theory - Problem Areas in Managing People
1. Having adequate people with required skills and performance record.
2. Recruitment and development policy
3. Identifying key executives and developing contingency strategies to manage their absence.
4. Training people
5. Performance appraisal relative to the performance of people in other organizations.
6. Compensation policy
7. Performance appraisal criteria
8. Choice between direct intervention versus management based on guidelines, planning, budgeting, and compensation systems.
TS (pp.159-161)
2. Recruitment and development policy
3. Identifying key executives and developing contingency strategies to manage their absence.
4. Training people
5. Performance appraisal relative to the performance of people in other organizations.
6. Compensation policy
7. Performance appraisal criteria
8. Choice between direct intervention versus management based on guidelines, planning, budgeting, and compensation systems.
TS (pp.159-161)
Strategy Theory - Playing the Power Game
The challenges faced by strategic leaders in implementing complex and long-range consequential decisions demand that they be sophisticated with respect to issues of leadership, power and influence. The changes that are shaping the nature of work in today's complex organizations require that we develop the political will, expertise and personal skills to become more flexible, innovative and adaptive. Without political awareness and skill, we face the inevitable prospect of becoming immersed in bureaucratic infighting, parochial politics and destructive power struggles, which greatly retard organizational initiative, innovation, morale and performance (Kotter 1985)
Strategic leaders require politicl awareness and ability to manage the power and related issues
NATURE OF STRATEGIC LEADER POWER
A number of authors writing in Strivastva's Executive Power (1992) argue that power at the strategic organization level is manifested and executed through three fundamental elements: consensus, cooperation, and culture.
"An organization is high in consensus potential when it has the capacity to synthesize the commitment of multiple constituencies and stakeholders in response to specific challenges and aspirations." In this area, strategic leader power is derived from the management of ideas, the management of agreement, and the management of group and team decision making processes.
"Cooperative potential refers to an organization's capacity to catalyze cooperative interaction among individuals and groups." Power is employed by a strategic leader in the management of organization structures, task designs, resource allocation, and reward systems that support and encourage this behavior.
"Cultural/spiritual potential refers to a sense of timeless destiny about the organization, its role in its own area of endeavor as well as its larger role in its service to society." Strategic leaders use power in this area to manage and institutionalize organizational symbols, beliefs, myths, ideals and values. Their strategic aim is to create a strong culture that connects the destiny of the organization to the personal goals and aspirations of its members.
Jacobs' seminal work of general officer job requirements can be linked to the above conceptual requirements for successfully acquiring and managing strategic leader power potential. His study of the work environment of general officers provides a context for looking at strategic performance requirements. He found three job demands consistently reported by the survey respondents. They were long-term vision, consensus building, and command team building.
Refer
Zalenik, Abraham, "Power and Politics in Organizational Life" Harvard Business Review, Vol 48, no.3, May Jue 1970, pp.47-60
TS(pp.161-164)
Leveraging Power and Politics (A comprehensive writeup)
http://www.maxwell.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch17.html
Strategic leaders require politicl awareness and ability to manage the power and related issues
NATURE OF STRATEGIC LEADER POWER
A number of authors writing in Strivastva's Executive Power (1992) argue that power at the strategic organization level is manifested and executed through three fundamental elements: consensus, cooperation, and culture.
"An organization is high in consensus potential when it has the capacity to synthesize the commitment of multiple constituencies and stakeholders in response to specific challenges and aspirations." In this area, strategic leader power is derived from the management of ideas, the management of agreement, and the management of group and team decision making processes.
"Cooperative potential refers to an organization's capacity to catalyze cooperative interaction among individuals and groups." Power is employed by a strategic leader in the management of organization structures, task designs, resource allocation, and reward systems that support and encourage this behavior.
"Cultural/spiritual potential refers to a sense of timeless destiny about the organization, its role in its own area of endeavor as well as its larger role in its service to society." Strategic leaders use power in this area to manage and institutionalize organizational symbols, beliefs, myths, ideals and values. Their strategic aim is to create a strong culture that connects the destiny of the organization to the personal goals and aspirations of its members.
Jacobs' seminal work of general officer job requirements can be linked to the above conceptual requirements for successfully acquiring and managing strategic leader power potential. His study of the work environment of general officers provides a context for looking at strategic performance requirements. He found three job demands consistently reported by the survey respondents. They were long-term vision, consensus building, and command team building.
Refer
Zalenik, Abraham, "Power and Politics in Organizational Life" Harvard Business Review, Vol 48, no.3, May Jue 1970, pp.47-60
TS(pp.161-164)
Leveraging Power and Politics (A comprehensive writeup)
http://www.maxwell.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch17.html
Thursday, March 6, 2008
Heidi Miller - JP Morgan Chase Treasury and Securities Services-Strategy
October 2004
In SIBOS Conference, 11-15 October 2004, Heidi Miller put forth four existential questions for the banking and transaction processing industry.
Existential Question #1: “Why do we make things so complicated for our clients?”
Existential Question # 2: “How can we help our customers become more efficient and productive, when our own back offices are so expensive, fragmented, outdated and ‘non-interoperable?”
Existential Question #3: “If we truly aspire to be leaders in the payments and securities industries, why is it that so many innovations in this business are pioneered by non-banks?”
Example given: In less than one year, PayPal built a person-to-person payments solution that met the needs of the market better than any built by banks in the past five years.
Question #4: “If we can send a secure message to any company over the internet, why should we pay SWIFT to do it for us?”
(Source: http://www.swift.com/index.cfm?item_id=43378)
------------
October 2006
Heidi Miller
Last year, forward-looking strategy took more of a backseat because we needed to deal with merger-related activity and fixing the factory floor.
My business is the payments and securities piping. I have to plan for price compression.
I better have the best efficiency and operating costs out there.
On the growth dimension, I have to see if I can boost business growth by providing existing customers with additional products. At the same time, I'll look at my penetration in a client segment. There are some industries, like asset management, where I work with every single major player. But in other industries I need to extend my reach.
I have to tackle the issue of expanding internationally. Our international revenues are approximately 30 percent of our total revenues, a smaller share than that of itigroup or HSBC. I need to think short-term measures like putting more sales people into some regions, and longer-term ones like developing targeted product features.
Another longer-term challenge is payment innovation, since I worry that non-bank competitors will be more nimble in creating answers to evolving customer needs. (See Heidi's address at SIBOS conference in October 2004).
Heidi mentioned stored value cards as an innovation of JP Morgan Chase. we helped to develop them, we sold them to FEMA during Hurricane Katrina, and now we're packaging them as solutions for insurance companies. They're cost-effective, and they're easier for the customers. That's the kind of thing we want to be doing more and more.
(Source: http://money.cnn.com/2006/09/29/magazines/fortune/mpw.miller.fortune/index.htm)
-----------------
September 28, 2007
Which women banker can be found atop U.S. Banker magazine’s latest list of the 25 most powerful women in banking?
If you said Heidi G. Miller,54, now the head of J.P. Morgan Chase’s treasury and securities services group, you are correct.
Treasury and Securities Services has played a key role developing business for J.P. Morgan’s commercial and investment banking, building on its longstanding relationships with corporate clients. In the second quarter, it generated record revenues of $1.7 billion, up 10 percent over the prior year and a return on equity of 47 percent. And on a standalone basis, U.S. Banker says, the division would have been last year’s most profitable U.S. bank.
(Source: http://dealbook.blogs.nytimes.com/2007/09/28/heidi-who-surveying-the-top-women-bankers/)
In SIBOS Conference, 11-15 October 2004, Heidi Miller put forth four existential questions for the banking and transaction processing industry.
Existential Question #1: “Why do we make things so complicated for our clients?”
Existential Question # 2: “How can we help our customers become more efficient and productive, when our own back offices are so expensive, fragmented, outdated and ‘non-interoperable?”
Existential Question #3: “If we truly aspire to be leaders in the payments and securities industries, why is it that so many innovations in this business are pioneered by non-banks?”
Example given: In less than one year, PayPal built a person-to-person payments solution that met the needs of the market better than any built by banks in the past five years.
Question #4: “If we can send a secure message to any company over the internet, why should we pay SWIFT to do it for us?”
(Source: http://www.swift.com/index.cfm?item_id=43378)
------------
October 2006
Heidi Miller
Last year, forward-looking strategy took more of a backseat because we needed to deal with merger-related activity and fixing the factory floor.
My business is the payments and securities piping. I have to plan for price compression.
I better have the best efficiency and operating costs out there.
On the growth dimension, I have to see if I can boost business growth by providing existing customers with additional products. At the same time, I'll look at my penetration in a client segment. There are some industries, like asset management, where I work with every single major player. But in other industries I need to extend my reach.
I have to tackle the issue of expanding internationally. Our international revenues are approximately 30 percent of our total revenues, a smaller share than that of itigroup or HSBC. I need to think short-term measures like putting more sales people into some regions, and longer-term ones like developing targeted product features.
Another longer-term challenge is payment innovation, since I worry that non-bank competitors will be more nimble in creating answers to evolving customer needs. (See Heidi's address at SIBOS conference in October 2004).
Heidi mentioned stored value cards as an innovation of JP Morgan Chase. we helped to develop them, we sold them to FEMA during Hurricane Katrina, and now we're packaging them as solutions for insurance companies. They're cost-effective, and they're easier for the customers. That's the kind of thing we want to be doing more and more.
(Source: http://money.cnn.com/2006/09/29/magazines/fortune/mpw.miller.fortune/index.htm)
-----------------
September 28, 2007
Which women banker can be found atop U.S. Banker magazine’s latest list of the 25 most powerful women in banking?
If you said Heidi G. Miller,54, now the head of J.P. Morgan Chase’s treasury and securities services group, you are correct.
Treasury and Securities Services has played a key role developing business for J.P. Morgan’s commercial and investment banking, building on its longstanding relationships with corporate clients. In the second quarter, it generated record revenues of $1.7 billion, up 10 percent over the prior year and a return on equity of 47 percent. And on a standalone basis, U.S. Banker says, the division would have been last year’s most profitable U.S. bank.
(Source: http://dealbook.blogs.nytimes.com/2007/09/28/heidi-who-surveying-the-top-women-bankers/)
Monday, March 3, 2008
Art of War by Sun Tzu - Introduction
When the post-war achievements of the Japanese industry began to make a significant impression in the West, and everyone began inquiring as to what the secret of Japan’s success was,
Sun Tzu’s The Art of War – a Chinese military treatise-- was a book that was often discussed. One reason was that many Japanese companies make the book required reading for their key executives. “…the book has gained popularity in corporate life; there have been a variety of business books written that apply its lessons to “office politics” and corporate strategy,” says Wikipedia. “The book is also popular among Western business management, who have turned to it for inspiration and advice on how to succeed in competitive business situations.”
(http://www.mbauniverse.com/innerPage.php?id=mb&pageId=13)
Sun Tzu’s “Art of War” is considered to provide the most profound lessons for leadership, and victory in East or the West. Today its principles are applied to business all over the world. This classic body of work came from life and death scenarios, which evolved from empire, trade and political struggles. Obviously today’s corporate world does not induce anywhere near as strong a mechanism for change, or success, as the consequences of failure in business are far less than warfare. Nonetheless, the trickle down lessons from the “Art of War” are definitely applicable to any organized effort, project or business. Although Chinese in origin, the “Art of War” and lessons from Zen were adopted by Japanese groups such as the Samurai and Corporate Japan for clarity of mind, decision making and strategy.
(http://www.eslteachersboard.com/cgi-bin/asia/index.pl?noframes;read=24)
Sun Tzu’s The Art of War – a Chinese military treatise-- was a book that was often discussed. One reason was that many Japanese companies make the book required reading for their key executives. “…the book has gained popularity in corporate life; there have been a variety of business books written that apply its lessons to “office politics” and corporate strategy,” says Wikipedia. “The book is also popular among Western business management, who have turned to it for inspiration and advice on how to succeed in competitive business situations.”
(http://www.mbauniverse.com/innerPage.php?id=mb&pageId=13)
Sun Tzu’s “Art of War” is considered to provide the most profound lessons for leadership, and victory in East or the West. Today its principles are applied to business all over the world. This classic body of work came from life and death scenarios, which evolved from empire, trade and political struggles. Obviously today’s corporate world does not induce anywhere near as strong a mechanism for change, or success, as the consequences of failure in business are far less than warfare. Nonetheless, the trickle down lessons from the “Art of War” are definitely applicable to any organized effort, project or business. Although Chinese in origin, the “Art of War” and lessons from Zen were adopted by Japanese groups such as the Samurai and Corporate Japan for clarity of mind, decision making and strategy.
(http://www.eslteachersboard.com/cgi-bin/asia/index.pl?noframes;read=24)
Sun Tzu Chapter 1
LAYING PLANS
1. Sun Tzu said: The art of war is of vital importance to the State.
2. It is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected.
3. The art of war, then, is governed by five constant factors, to be taken into account in one's deliberations, when seeking to determine the conditions obtaining in the field.
4. These are: (1) The Moral Law; (2) Heaven; (3) Earth; (4) The Commander; (5) Method and discipline.
5,6. The Moral Law causes the people to be in complete accord with their ruler, so that they will follow him regardless of their lives, undismayed by any danger.
7. Heaven signifies night and day, cold and heat, times and seasons.
8. Earth comprises distances, great and small; danger and security; open ground and narrow passes; the chances of life and death.
9. The Commander stands for the virtues of wisdom, sincerely, benevolence, courage and strictness.
10. By method and discipline are to be understood the marshaling of the army in its proper subdivisions, the graduations of rank among the officers, the maintenance of roads by which supplies may reach the army, and the control of military expenditure.
11. These five heads should be familiar to every general: he who knows them will be victorious; he who knows them not will fail.
12. Therefore, in your deliberations, when seeking to determine the military conditions, let them be made the basis of a comparison, in this wise:--
13. (1) Which of the two sovereigns is imbued with the Moral law? (2) Which of the two generals has most ability? (3) With whom lie the advantages derived from Heaven and Earth? (4) On which side is discipline most rigorously enforced? (5) Which army is stronger? (6) On which side are officers and men more highly trained? (7) In which army is there the greater constancy both in reward and punishment?
14. By means of these seven considerations I can forecast victory or defeat.
15. The general that hearkens to my counsel and acts upon it, will conquer: let such a one be retained in command! The general that hearkens not to my counsel nor acts upon it, will suffer defeat:--let such a one be dismissed!
16. While heading the profit of my counsel, avail yourself also of any helpful circumstances over and beyond the ordinary rules.
17. According as circumstances are favorable, one should modify one's plans.
18. All warfare is based on deception.
19. Hence, when able to attack, we must seem unable; when using our forces, we must seem inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.
20. Hold out baits to entice the enemy. Feign disorder, and crush him.
21. If he is secure at all points, be prepared for him. If he is in superior strength, evade him.
22. If your opponent is of choleric temper, seek to irritate him. Pretend to be weak, that he may grow arrogant.
23. If he is taking his ease, give him no rest. If his forces are united, separate them.
24. Attack him where he is unprepared, appear where you are not expected.
25. These military devices, leading to victory, must not be divulged beforehand.
26. Now the general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory, and few calculations to defeat: how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose.
1. Sun Tzu said: The art of war is of vital importance to the State.
2. It is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected.
3. The art of war, then, is governed by five constant factors, to be taken into account in one's deliberations, when seeking to determine the conditions obtaining in the field.
4. These are: (1) The Moral Law; (2) Heaven; (3) Earth; (4) The Commander; (5) Method and discipline.
5,6. The Moral Law causes the people to be in complete accord with their ruler, so that they will follow him regardless of their lives, undismayed by any danger.
7. Heaven signifies night and day, cold and heat, times and seasons.
8. Earth comprises distances, great and small; danger and security; open ground and narrow passes; the chances of life and death.
9. The Commander stands for the virtues of wisdom, sincerely, benevolence, courage and strictness.
10. By method and discipline are to be understood the marshaling of the army in its proper subdivisions, the graduations of rank among the officers, the maintenance of roads by which supplies may reach the army, and the control of military expenditure.
11. These five heads should be familiar to every general: he who knows them will be victorious; he who knows them not will fail.
12. Therefore, in your deliberations, when seeking to determine the military conditions, let them be made the basis of a comparison, in this wise:--
13. (1) Which of the two sovereigns is imbued with the Moral law? (2) Which of the two generals has most ability? (3) With whom lie the advantages derived from Heaven and Earth? (4) On which side is discipline most rigorously enforced? (5) Which army is stronger? (6) On which side are officers and men more highly trained? (7) In which army is there the greater constancy both in reward and punishment?
14. By means of these seven considerations I can forecast victory or defeat.
15. The general that hearkens to my counsel and acts upon it, will conquer: let such a one be retained in command! The general that hearkens not to my counsel nor acts upon it, will suffer defeat:--let such a one be dismissed!
16. While heading the profit of my counsel, avail yourself also of any helpful circumstances over and beyond the ordinary rules.
17. According as circumstances are favorable, one should modify one's plans.
18. All warfare is based on deception.
19. Hence, when able to attack, we must seem unable; when using our forces, we must seem inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.
20. Hold out baits to entice the enemy. Feign disorder, and crush him.
21. If he is secure at all points, be prepared for him. If he is in superior strength, evade him.
22. If your opponent is of choleric temper, seek to irritate him. Pretend to be weak, that he may grow arrogant.
23. If he is taking his ease, give him no rest. If his forces are united, separate them.
24. Attack him where he is unprepared, appear where you are not expected.
25. These military devices, leading to victory, must not be divulged beforehand.
26. Now the general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory, and few calculations to defeat: how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose.
Sun Tzu Chapter 2
WAGING WAR
1. Sun Tzu said: In the operations of war, where there are in the field a thousand swift chariots, as many heavy chariots, and a hundred thousand mail-clad soldiers, with provisions enough to carry them a thousand li, the expenditure at home and at the front, including entertainment of guests, small items such as glue and paint, and sums spent on chariots and armor, will reach the total of a thousand ounces of silver per day. Such is the cost of raising an army of 100,000 men.
2. When you engage in actual fighting, if victory is long in coming, then men's weapons will grow dull and their ardor will be damped. If you lay siege to a town, you will exhaust your strength.
3. Again, if the campaign is protracted, the resources of the State will not be equal to the strain.
4. Now, when your weapons are dulled, your ardor damped, your strength exhausted and your treasure spent, other chieftains will spring up to take advantage of your extremity. Then no man, however wise, will be able to avert the consequences that must ensue.
5. Thus, though we have heard of stupid haste in war, cleverness has never been seen associated with long delays.
6. There is no instance of a country having benefited from prolonged warfare.
7. It is only one who is thoroughly acquainted with the evils of war that can thoroughly understand the profitable way of carrying it on.
8. The skillful soldier does not raise a second levy, neither are his supply-wagons loaded more than twice.
9. Bring war material with you from home, but forage on the enemy. Thus the army will have food enough for its needs.
10. Poverty of the State exchequer causes an army to be maintained by contributions from a distance. Contributing to maintain an army at a distance causes the people to be impoverished.
11. On the other hand, the proximity of an army causes prices to go up; and high prices cause the people's substance to be drained away.
12. When their substance is drained away, the peasantry will be afflicted by heavy exactions.
13,14. With this loss of substance and exhaustion of strength, the homes of the people will be stripped bare, and three-tenths of their income will be dissipated; while government expenses for broken chariots, worn-out horses, breast-plates and helmets, bows and arrows, spears and shields, protective mantles, draught-oxen and heavy wagons, will amount to four-tenths of its total revenue.
15. Hence a wise general makes a point of foraging on the enemy. One cartload of the enemy's provisions is equivalent to twenty of one's own, and likewise a single picul of his provender is equivalent to twenty from one's own store.
16. Now in order to kill the enemy, our men must be roused to anger; that there may be advantage from defeating the enemy, they must have their rewards.
17. Therefore in chariot fighting, when ten or more chariots have been taken, those should be rewarded who took the first. Our own flags should be substituted for those of the enemy, and the chariots mingled and used in conjunction with ours. The captured soldiers should be kindly treated and kept.
18. This is called, using the conquered foe to augment one's own strength.
19. In war, then, let your great object be victory, not lengthy campaigns.
20. Thus it may be known that the leader of armies is the arbiter of the people's fate, the man on whom it depends whether the nation shall be in peace or in peril.
1. Sun Tzu said: In the operations of war, where there are in the field a thousand swift chariots, as many heavy chariots, and a hundred thousand mail-clad soldiers, with provisions enough to carry them a thousand li, the expenditure at home and at the front, including entertainment of guests, small items such as glue and paint, and sums spent on chariots and armor, will reach the total of a thousand ounces of silver per day. Such is the cost of raising an army of 100,000 men.
2. When you engage in actual fighting, if victory is long in coming, then men's weapons will grow dull and their ardor will be damped. If you lay siege to a town, you will exhaust your strength.
3. Again, if the campaign is protracted, the resources of the State will not be equal to the strain.
4. Now, when your weapons are dulled, your ardor damped, your strength exhausted and your treasure spent, other chieftains will spring up to take advantage of your extremity. Then no man, however wise, will be able to avert the consequences that must ensue.
5. Thus, though we have heard of stupid haste in war, cleverness has never been seen associated with long delays.
6. There is no instance of a country having benefited from prolonged warfare.
7. It is only one who is thoroughly acquainted with the evils of war that can thoroughly understand the profitable way of carrying it on.
8. The skillful soldier does not raise a second levy, neither are his supply-wagons loaded more than twice.
9. Bring war material with you from home, but forage on the enemy. Thus the army will have food enough for its needs.
10. Poverty of the State exchequer causes an army to be maintained by contributions from a distance. Contributing to maintain an army at a distance causes the people to be impoverished.
11. On the other hand, the proximity of an army causes prices to go up; and high prices cause the people's substance to be drained away.
12. When their substance is drained away, the peasantry will be afflicted by heavy exactions.
13,14. With this loss of substance and exhaustion of strength, the homes of the people will be stripped bare, and three-tenths of their income will be dissipated; while government expenses for broken chariots, worn-out horses, breast-plates and helmets, bows and arrows, spears and shields, protective mantles, draught-oxen and heavy wagons, will amount to four-tenths of its total revenue.
15. Hence a wise general makes a point of foraging on the enemy. One cartload of the enemy's provisions is equivalent to twenty of one's own, and likewise a single picul of his provender is equivalent to twenty from one's own store.
16. Now in order to kill the enemy, our men must be roused to anger; that there may be advantage from defeating the enemy, they must have their rewards.
17. Therefore in chariot fighting, when ten or more chariots have been taken, those should be rewarded who took the first. Our own flags should be substituted for those of the enemy, and the chariots mingled and used in conjunction with ours. The captured soldiers should be kindly treated and kept.
18. This is called, using the conquered foe to augment one's own strength.
19. In war, then, let your great object be victory, not lengthy campaigns.
20. Thus it may be known that the leader of armies is the arbiter of the people's fate, the man on whom it depends whether the nation shall be in peace or in peril.
Sun Tzu Chapter 3
ATTACK BY STRATAGEM
1. Sun Tzu said: In the practical art of war, the best thing of all is to take the enemy's country whole and intact; to shatter and destroy it is not so good. So, too, it is better to recapture an army entire than to destroy it, to capture a regiment, a detachment or a company entire than to destroy them.
2. Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.
3. Thus the highest form of generalship is to balk the enemy's plans; the next best is to prevent the junction of the enemy's forces; the next in order is to attack the enemy's army in the field; and the worst policy of all is to besiege walled cities.
4. The rule is, not to besiege walled cities if it can possibly be avoided. The preparation of mantlets, movable shelters, and various implements of war, will take up three whole months; and the piling up of mounds over against the walls will take three months more.
5. The general, unable to control his irritation, will launch his men to the assault like swarming ants, with the result that one-third of his men are slain, while the town still remains untaken. Such are the disastrous effects of a siege.
6. Therefore the skillful leader subdues the enemy's troops without any fighting; he captures their cities without laying siege to them; he overthrows their kingdom without lengthy operations in the field.
7. With his forces intact he will dispute the mastery of the Empire, and thus, without losing a man, his triumph will be complete. This is the method of attacking by stratagem.
8. It is the rule in war, if our forces are ten to the enemy's one, to surround him; if five to one, to attack him; if twice as numerous, to divide our army into two.
9. If equally matched, we can offer battle; if slightly inferior in numbers, we can avoid the enemy; if quite unequal in every way, we can flee from him.
10. Hence, though an obstinate fight may be made by a small force, in the end it must be captured by the larger force.
11. Now the general is the bulwark of the State; if the bulwark is complete at all points; the State will be strong; if the bulwark is defective, the State will be weak.
12. There are three ways in which a ruler can bring misfortune upon his army:--
13. (1) By commanding the army to advance or to retreat, being ignorant of the fact that it cannot obey. This is called hobbling the army.
14. (2) By attempting to govern an army in the same way as he administers a kingdom, being ignorant of the conditions which obtain in an army. This causes restlessness in the soldier's minds.
15. (3) By employing the officers of his army without discrimination, through ignorance of the military principle of adaptation to circumstances. This shakes the confidence of the soldiers.
16. But when the army is restless and distrustful, trouble is sure to come from the other feudal princes. This is simply bringing anarchy into the army, and flinging victory away.
17. Thus we may know that there are five essentials for victory: (1) He will win who knows when to fight and when not to fight. (2) He will win who knows how to handle both superior and inferior forces. (3) He will win whose army is animated by the same spirit throughout all its ranks. (4) He will win who, prepared himself, waits to take the enemy unprepared. (5) He will win who has military capacity and is not interfered with by the sovereign.
18. Hence the saying: If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
1. Sun Tzu said: In the practical art of war, the best thing of all is to take the enemy's country whole and intact; to shatter and destroy it is not so good. So, too, it is better to recapture an army entire than to destroy it, to capture a regiment, a detachment or a company entire than to destroy them.
2. Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.
3. Thus the highest form of generalship is to balk the enemy's plans; the next best is to prevent the junction of the enemy's forces; the next in order is to attack the enemy's army in the field; and the worst policy of all is to besiege walled cities.
4. The rule is, not to besiege walled cities if it can possibly be avoided. The preparation of mantlets, movable shelters, and various implements of war, will take up three whole months; and the piling up of mounds over against the walls will take three months more.
5. The general, unable to control his irritation, will launch his men to the assault like swarming ants, with the result that one-third of his men are slain, while the town still remains untaken. Such are the disastrous effects of a siege.
6. Therefore the skillful leader subdues the enemy's troops without any fighting; he captures their cities without laying siege to them; he overthrows their kingdom without lengthy operations in the field.
7. With his forces intact he will dispute the mastery of the Empire, and thus, without losing a man, his triumph will be complete. This is the method of attacking by stratagem.
8. It is the rule in war, if our forces are ten to the enemy's one, to surround him; if five to one, to attack him; if twice as numerous, to divide our army into two.
9. If equally matched, we can offer battle; if slightly inferior in numbers, we can avoid the enemy; if quite unequal in every way, we can flee from him.
10. Hence, though an obstinate fight may be made by a small force, in the end it must be captured by the larger force.
11. Now the general is the bulwark of the State; if the bulwark is complete at all points; the State will be strong; if the bulwark is defective, the State will be weak.
12. There are three ways in which a ruler can bring misfortune upon his army:--
13. (1) By commanding the army to advance or to retreat, being ignorant of the fact that it cannot obey. This is called hobbling the army.
14. (2) By attempting to govern an army in the same way as he administers a kingdom, being ignorant of the conditions which obtain in an army. This causes restlessness in the soldier's minds.
15. (3) By employing the officers of his army without discrimination, through ignorance of the military principle of adaptation to circumstances. This shakes the confidence of the soldiers.
16. But when the army is restless and distrustful, trouble is sure to come from the other feudal princes. This is simply bringing anarchy into the army, and flinging victory away.
17. Thus we may know that there are five essentials for victory: (1) He will win who knows when to fight and when not to fight. (2) He will win who knows how to handle both superior and inferior forces. (3) He will win whose army is animated by the same spirit throughout all its ranks. (4) He will win who, prepared himself, waits to take the enemy unprepared. (5) He will win who has military capacity and is not interfered with by the sovereign.
18. Hence the saying: If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
Sun Tzu Chapter 4
TACTICAL DISPOSITIONS
1. Sun Tzu said: The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy.
2. To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself.
3. Thus the good fighter is able to secure himself against defeat, but cannot make certain of defeating the enemy.
4. Hence the saying: One may know how to conquer without being able to do it.
5. Security against defeat implies defensive tactics; ability to defeat the enemy means taking the offensive.
6. Standing on the defensive indicates insufficient strength; attacking, a superabundance of strength.
7. The general who is skilled in defense hides in the most secret recesses of the earth; he who is skilled in attack flashes forth from the topmost heights of heaven. Thus on the one hand we have ability to protect ourselves; on the other, a victory that is complete.
8. To see victory only when it is within the ken of the common herd is not the acme of excellence.
9. Neither is it the acme of excellence if you fight and conquer and the whole Empire says, "Well done!"
10. To lift an autumn hair is no sign of great strength; to see the sun and moon is no sign of sharp sight; to hear the noise of thunder is no sign of a quick ear.
11. What the ancients called a clever fighter is one who not only wins, but excels in winning with ease.
12. Hence his victories bring him neither reputation for wisdom nor credit for courage.
13. He wins his battles by making no mistakes. Making no mistakes is what establishes the certainty of victory, for it means conquering an enemy that is already defeated.
14. Hence the skillful fighter puts himself into a position which makes defeat impossible, and does not miss the moment for defeating the enemy.
15. Thus it is that in war the victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory.
16. The consummate leader cultivates the moral law, and strictly adheres to method and discipline; thus it is in his power to control success.
17. In respect of military method, we have, firstly, Measurement; secondly, Estimation of quantity; thirdly, Calculation; fourthly, Balancing of chances; fifthly, Victory.
18. Measurement owes its existence to Earth; Estimation of quantity to Measurement; Calculation to Estimation of quantity; Balancing of chances to Calculation; and Victory to Balancing of chances.
19. A victorious army opposed to a routed one, is as a pound's weight placed in the scale against a single grain.
20. The onrush of a conquering force is like the bursting of pent-up waters into a chasm a thousand fathoms deep.
1. Sun Tzu said: The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy.
2. To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself.
3. Thus the good fighter is able to secure himself against defeat, but cannot make certain of defeating the enemy.
4. Hence the saying: One may know how to conquer without being able to do it.
5. Security against defeat implies defensive tactics; ability to defeat the enemy means taking the offensive.
6. Standing on the defensive indicates insufficient strength; attacking, a superabundance of strength.
7. The general who is skilled in defense hides in the most secret recesses of the earth; he who is skilled in attack flashes forth from the topmost heights of heaven. Thus on the one hand we have ability to protect ourselves; on the other, a victory that is complete.
8. To see victory only when it is within the ken of the common herd is not the acme of excellence.
9. Neither is it the acme of excellence if you fight and conquer and the whole Empire says, "Well done!"
10. To lift an autumn hair is no sign of great strength; to see the sun and moon is no sign of sharp sight; to hear the noise of thunder is no sign of a quick ear.
11. What the ancients called a clever fighter is one who not only wins, but excels in winning with ease.
12. Hence his victories bring him neither reputation for wisdom nor credit for courage.
13. He wins his battles by making no mistakes. Making no mistakes is what establishes the certainty of victory, for it means conquering an enemy that is already defeated.
14. Hence the skillful fighter puts himself into a position which makes defeat impossible, and does not miss the moment for defeating the enemy.
15. Thus it is that in war the victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory.
16. The consummate leader cultivates the moral law, and strictly adheres to method and discipline; thus it is in his power to control success.
17. In respect of military method, we have, firstly, Measurement; secondly, Estimation of quantity; thirdly, Calculation; fourthly, Balancing of chances; fifthly, Victory.
18. Measurement owes its existence to Earth; Estimation of quantity to Measurement; Calculation to Estimation of quantity; Balancing of chances to Calculation; and Victory to Balancing of chances.
19. A victorious army opposed to a routed one, is as a pound's weight placed in the scale against a single grain.
20. The onrush of a conquering force is like the bursting of pent-up waters into a chasm a thousand fathoms deep.
Sun Tzu Chapter 5
ENERGY
1. Sun Tzu said: The control of a large force is the same principle as the control of a few men: it is merely a question of dividing up their numbers.
2. Fighting with a large army under your command is nowise different from fighting with a small one: it is merely a question of instituting signs and signals.
3. To ensure that your whole host may withstand the brunt of the enemy's attack and remain unshaken-- this is effected by maneuvers direct and indirect.
4. That the impact of your army may be like a grindstone dashed against an egg--this is effected by the science of weak points and strong.
5. In all fighting, the direct method may be used for joining battle, but indirect methods will be needed in order to secure victory.
6. Indirect tactics, efficiently applied, are inexhaustible as Heaven and Earth, unending as the flow of rivers and streams; like the sun and moon, they end but to begin anew; like the four seasons, they pass away to return once more.
7. There are not more than five musical notes, yet the combinations of these five give rise to more melodies than can ever be heard.
8. There are not more than five primary colors (blue, yellow, red, white, and black), yet in combination they produce more hues than can ever been seen.
9. There are not more than five cardinal tastes (sour, acrid, salt, sweet, bitter), yet combinations of them yield more flavors than can ever be tasted.
10. In battle, there are not more than two methods of attack--the direct and the indirect; yet these two in combination give rise to an endless series of maneuvers.
11. The direct and the indirect lead on to each other in turn. It is like moving in a circle--you never come to an end. Who can exhaust the possibilities of their combination?
12. The onset of troops is like the rush of a torrent which will even roll stones along in its course.
13. The quality of decision is like the well-timed swoop of a falcon which enables it to strike and destroy its victim.
14. Therefore the good fighter will be terrible in his onset, and prompt in his decision.
15. Energy may be likened to the bending of a crossbow; decision, to the releasing of a trigger.
16. Amid the turmoil and tumult of battle, there may be seeming disorder and yet no real disorder at all; amid confusion and chaos, your array may be without head or tail, yet it will be proof against defeat.
17. Simulated disorder postulates perfect discipline, simulated fear postulates courage; simulated weakness postulates strength.
18. Hiding order beneath the cloak of disorder is simply a question of subdivision; concealing courage under a show of timidity presupposes a fund of latent energy; masking strength with weakness is to be effected by tactical dispositions.
19. Thus one who is skillful at keeping the enemy on the move maintains deceitful appearances, according to which the enemy will act. He sacrifices something, that the enemy may snatch at it.
20. By holding out baits, he keeps him on the march; then with a body of picked men he lies in wait for him.
21. The clever combatant looks to the effect of combined energy, and does not require too much from individuals. Hence his ability to pick out the right men and utilize combined energy.
22. When he utilizes combined energy, his fighting men become as it were like unto rolling logs or stones. For it is the nature of a log or stone to remain motionless on level ground, and to move when on a slope; if four-cornered, to come to a standstill, but if round-shaped, to go rolling down.
23. Thus the energy developed by good fighting men is as the momentum of a round stone rolled down a mountain thousands of feet in height. So much on the subject of energy.
1. Sun Tzu said: The control of a large force is the same principle as the control of a few men: it is merely a question of dividing up their numbers.
2. Fighting with a large army under your command is nowise different from fighting with a small one: it is merely a question of instituting signs and signals.
3. To ensure that your whole host may withstand the brunt of the enemy's attack and remain unshaken-- this is effected by maneuvers direct and indirect.
4. That the impact of your army may be like a grindstone dashed against an egg--this is effected by the science of weak points and strong.
5. In all fighting, the direct method may be used for joining battle, but indirect methods will be needed in order to secure victory.
6. Indirect tactics, efficiently applied, are inexhaustible as Heaven and Earth, unending as the flow of rivers and streams; like the sun and moon, they end but to begin anew; like the four seasons, they pass away to return once more.
7. There are not more than five musical notes, yet the combinations of these five give rise to more melodies than can ever be heard.
8. There are not more than five primary colors (blue, yellow, red, white, and black), yet in combination they produce more hues than can ever been seen.
9. There are not more than five cardinal tastes (sour, acrid, salt, sweet, bitter), yet combinations of them yield more flavors than can ever be tasted.
10. In battle, there are not more than two methods of attack--the direct and the indirect; yet these two in combination give rise to an endless series of maneuvers.
11. The direct and the indirect lead on to each other in turn. It is like moving in a circle--you never come to an end. Who can exhaust the possibilities of their combination?
12. The onset of troops is like the rush of a torrent which will even roll stones along in its course.
13. The quality of decision is like the well-timed swoop of a falcon which enables it to strike and destroy its victim.
14. Therefore the good fighter will be terrible in his onset, and prompt in his decision.
15. Energy may be likened to the bending of a crossbow; decision, to the releasing of a trigger.
16. Amid the turmoil and tumult of battle, there may be seeming disorder and yet no real disorder at all; amid confusion and chaos, your array may be without head or tail, yet it will be proof against defeat.
17. Simulated disorder postulates perfect discipline, simulated fear postulates courage; simulated weakness postulates strength.
18. Hiding order beneath the cloak of disorder is simply a question of subdivision; concealing courage under a show of timidity presupposes a fund of latent energy; masking strength with weakness is to be effected by tactical dispositions.
19. Thus one who is skillful at keeping the enemy on the move maintains deceitful appearances, according to which the enemy will act. He sacrifices something, that the enemy may snatch at it.
20. By holding out baits, he keeps him on the march; then with a body of picked men he lies in wait for him.
21. The clever combatant looks to the effect of combined energy, and does not require too much from individuals. Hence his ability to pick out the right men and utilize combined energy.
22. When he utilizes combined energy, his fighting men become as it were like unto rolling logs or stones. For it is the nature of a log or stone to remain motionless on level ground, and to move when on a slope; if four-cornered, to come to a standstill, but if round-shaped, to go rolling down.
23. Thus the energy developed by good fighting men is as the momentum of a round stone rolled down a mountain thousands of feet in height. So much on the subject of energy.
Sun Tzu Chapter 6
WEAK POINTS AND STRONG
1. Sun Tzu said: Whoever is first in the field and awaits the coming of the enemy, will be fresh for the fight; whoever is second in the field and has to hasten to battle will arrive exhausted.
2. Therefore the clever combatant imposes his will on the enemy, but does not allow the enemy's will to be imposed on him.
3. By holding out advantages to him, he can cause the enemy to approach of his own accord; or, by inflicting damage, he can make it impossible for the enemy to draw near.
4. If the enemy is taking his ease, he can harass him; if well supplied with food, he can starve him out; if quietly encamped, he can force him to move.
5. Appear at points which the enemy must hasten to defend; march swiftly to places where you are not expected.
6. An army may march great distances without distress, if it marches through country where the enemy is not.
7. You can be sure of succeeding in your attacks if you only attack places which are undefended.You can ensure the safety of your defense if you only hold positions that cannot be attacked.
8. Hence that general is skillful in attack whose opponent does not know what to defend; and he is skillful in defense whose opponent does not know what to attack.
9. O divine art of subtlety and secrecy! Through you we learn to be invisible, through you inaudible; and hence we can hold the enemy's fate in our hands.
10. You may advance and be absolutely irresistible, if you make for the enemy's weak points; you may retire and be safe from pursuit if your movements are more rapid than those of the enemy.
11. If we wish to fight, the enemy can be forced to an engagement even though he be sheltered behind a high rampart and a deep ditch. All we need do is attack some other place that he will be obliged to relieve.
12. If we do not wish to fight, we can prevent the enemy from engaging us even though the lines of our encampment be merely traced out on the ground. All we need do is to throw something odd and unaccountable in his way.
13. By discovering the enemy's dispositions and remaining invisible ourselves, we can keep our forces concentrated, while the enemy's must be divided.
14. We can form a single united body, while the enemy must split up into fractions. Hence there will be a whole pitted against separate parts of a whole, which means that we shall be many to the enemy's few.
15. And if we are able thus to attack an inferior force with a superior one, our opponents will be in dire straits.
16. The spot where we intend to fight must not be made known; for then the enemy will have to prepare against a possible attack at several different points; and his forces being thus distributed in many directions, the numbers we shall have to face at any given point will be proportionately few.
17. For should the enemy strengthen his van, he will weaken his rear; should he strengthen his rear, he will weaken his van; should he strengthen his left, he will weaken his right; should he strengthen his right, he will weaken his left. If he sends reinforcements everywhere, he will everywhere be weak.
18. Numerical weakness comes from having to prepare against possible attacks; numerical strength, from compelling our adversary to make these preparations against us.
19. Knowing the place and the time of the coming battle, we may concentrate from the greatest distances in order to fight.
20. But if neither time nor place be known, then the left wing will be impotent to succor the right, the right equally impotent to succor the left, the van unable to relieve the rear, or the rear to support the van. How much more so if the furthest portions of the army are anything under a hundred LI apart, and even the nearest are separated by several LI!
21. Though according to my estimate the soldiers of Yueh exceed our own in number, that shall advantage them nothing in the matter of victory. I say then that victory can be achieved.
22. Though the enemy be stronger in numbers, we may prevent him from fighting. Scheme so as to discover his plans and the likelihood of their success.
23. Rouse him, and learn the principle of his activity or inactivity. Force him to reveal himself, so as to find out his vulnerable spots.
24. Carefully compare the opposing army with your own, so that you may know where strength is superabundant and where it is deficient.
25. In making tactical dispositions, the highest pitch you can attain is to conceal them; conceal your dispositions, and you will be safe from the prying of the subtlest spies, from the machinations of the wisest brains.
26. How victory may be produced for them out of the enemy's own tactics--that is what the multitude cannot comprehend.
27. All men can see the tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.
28. Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances.
29. Military tactics are like unto water; for water in its natural course runs away from high places and hastens downwards.
30. So in war, the way is to avoid what is strong and to strike at what is weak.
31. Water shapes its course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing.
32. Therefore, just as water retains no constant shape, so in warfare there are no constant conditions.
33. He who can modify his tactics in relation to his opponent and thereby succeed in winning, may be called a heaven-born captain.
34. The five elements (water, fire, wood, metal, earth) are not always equally predominant; the four seasons make way for each other in turn. There are short days and long; the moon has its periods of waning and waxing.
1. Sun Tzu said: Whoever is first in the field and awaits the coming of the enemy, will be fresh for the fight; whoever is second in the field and has to hasten to battle will arrive exhausted.
2. Therefore the clever combatant imposes his will on the enemy, but does not allow the enemy's will to be imposed on him.
3. By holding out advantages to him, he can cause the enemy to approach of his own accord; or, by inflicting damage, he can make it impossible for the enemy to draw near.
4. If the enemy is taking his ease, he can harass him; if well supplied with food, he can starve him out; if quietly encamped, he can force him to move.
5. Appear at points which the enemy must hasten to defend; march swiftly to places where you are not expected.
6. An army may march great distances without distress, if it marches through country where the enemy is not.
7. You can be sure of succeeding in your attacks if you only attack places which are undefended.You can ensure the safety of your defense if you only hold positions that cannot be attacked.
8. Hence that general is skillful in attack whose opponent does not know what to defend; and he is skillful in defense whose opponent does not know what to attack.
9. O divine art of subtlety and secrecy! Through you we learn to be invisible, through you inaudible; and hence we can hold the enemy's fate in our hands.
10. You may advance and be absolutely irresistible, if you make for the enemy's weak points; you may retire and be safe from pursuit if your movements are more rapid than those of the enemy.
11. If we wish to fight, the enemy can be forced to an engagement even though he be sheltered behind a high rampart and a deep ditch. All we need do is attack some other place that he will be obliged to relieve.
12. If we do not wish to fight, we can prevent the enemy from engaging us even though the lines of our encampment be merely traced out on the ground. All we need do is to throw something odd and unaccountable in his way.
13. By discovering the enemy's dispositions and remaining invisible ourselves, we can keep our forces concentrated, while the enemy's must be divided.
14. We can form a single united body, while the enemy must split up into fractions. Hence there will be a whole pitted against separate parts of a whole, which means that we shall be many to the enemy's few.
15. And if we are able thus to attack an inferior force with a superior one, our opponents will be in dire straits.
16. The spot where we intend to fight must not be made known; for then the enemy will have to prepare against a possible attack at several different points; and his forces being thus distributed in many directions, the numbers we shall have to face at any given point will be proportionately few.
17. For should the enemy strengthen his van, he will weaken his rear; should he strengthen his rear, he will weaken his van; should he strengthen his left, he will weaken his right; should he strengthen his right, he will weaken his left. If he sends reinforcements everywhere, he will everywhere be weak.
18. Numerical weakness comes from having to prepare against possible attacks; numerical strength, from compelling our adversary to make these preparations against us.
19. Knowing the place and the time of the coming battle, we may concentrate from the greatest distances in order to fight.
20. But if neither time nor place be known, then the left wing will be impotent to succor the right, the right equally impotent to succor the left, the van unable to relieve the rear, or the rear to support the van. How much more so if the furthest portions of the army are anything under a hundred LI apart, and even the nearest are separated by several LI!
21. Though according to my estimate the soldiers of Yueh exceed our own in number, that shall advantage them nothing in the matter of victory. I say then that victory can be achieved.
22. Though the enemy be stronger in numbers, we may prevent him from fighting. Scheme so as to discover his plans and the likelihood of their success.
23. Rouse him, and learn the principle of his activity or inactivity. Force him to reveal himself, so as to find out his vulnerable spots.
24. Carefully compare the opposing army with your own, so that you may know where strength is superabundant and where it is deficient.
25. In making tactical dispositions, the highest pitch you can attain is to conceal them; conceal your dispositions, and you will be safe from the prying of the subtlest spies, from the machinations of the wisest brains.
26. How victory may be produced for them out of the enemy's own tactics--that is what the multitude cannot comprehend.
27. All men can see the tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.
28. Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances.
29. Military tactics are like unto water; for water in its natural course runs away from high places and hastens downwards.
30. So in war, the way is to avoid what is strong and to strike at what is weak.
31. Water shapes its course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing.
32. Therefore, just as water retains no constant shape, so in warfare there are no constant conditions.
33. He who can modify his tactics in relation to his opponent and thereby succeed in winning, may be called a heaven-born captain.
34. The five elements (water, fire, wood, metal, earth) are not always equally predominant; the four seasons make way for each other in turn. There are short days and long; the moon has its periods of waning and waxing.
Sun Tzu Chapter 7
MANEUVERING
1. Sun Tzu said: In war, the general receives his commands from the sovereign.
2. Having collected an army and concentrated his forces, he must blend and harmonize the different elements thereof before pitching his camp.
3. After that, comes tactical maneuvering, than which there is nothing more difficult. The difficulty of tactical maneuvering consists in turning the devious into the direct, and misfortune into gain.
4. Thus, to take a long and circuitous route, after enticing the enemy out of the way, and though starting after him, to contrive to reach the goal before him, shows knowledge of the artifice of DEVIATION.
5. Maneuvering with an army is advantageous; with an undisciplined multitude, most dangerous.
6. If you set a fully equipped army in march in order to snatch an advantage, the chances are that you will be too late. On the other hand, to detach a flying column for the purpose involves the sacrifice of its baggage and stores.
7. Thus, if you order your men to roll up their buff-coats, and make forced marches without halting day or night, covering double the usual distance at a stretch, doing a hundred LI in order to wrest an advantage, the leaders of all your three divisions will fall into the hands of the enemy.
8. The stronger men will be in front, the jaded ones will fall behind, and on this plan only one-tenth of your army will reach its destination.
9. If you march fifty LI in order to outmaneuver the enemy, you will lose the leader of your first division, and only half your force will reach the goal.
10. If you march thirty LI with the same object, two-thirds of your army will arrive.
11. We may take it then that an army without its baggage-train is lost; without provisions it is lost; without bases of supply it is lost.
12. We cannot enter into alliances until we are acquainted with the designs of our neighbors.
13. We are not fit to lead an army on the march unless we are familiar with the face of the country--its mountains and forests, its pitfalls and precipices, its marshes and swamps.
14. We shall be unable to turn natural advantage to account unless we make use of local guides.
15. In war, practice dissimulation, and you will succeed.
16. Whether to concentrate or to divide your troops, must be decided by circumstances.
17. Let your rapidity be that of the wind, your compactness that of the forest.
18. In raiding and plundering be like fire, is immovability like a mountain.
19. Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.
20. When you plunder a countryside, let the spoil be divided amongst your men; when you capture new territory, cut it up into allotments for the benefit of the soldiery.
21. Ponder and deliberate before you make a move.
22. He will conquer who has learnt the artifice of deviation. Such is the art of maneuvering.
23. The Book of Army Management says: On the field of battle, the spoken word does not carry far enough: hence the institution of gongs and drums. Nor can ordinary objects be seen clearly enough: hence the institution of banners and flags.
24. Gongs and drums, banners and flags, are means whereby the ears and eyes of the host may be focused on one particular point.
25. The host thus forming a single united body, is it impossible either for the brave to advance alone, or for the cowardly to retreat alone. This is the art of handling large masses of men.
26. In night-fighting, then, make much use of signal-fires and drums, and in fighting by day, of flags and banners, as a means of influencing the ears and eyes of your army.
27. A whole army may be robbed of its spirit; a commander-in-chief may be robbed of his presence of mind.
28. Now a soldier's spirit is keenest in the morning; by noonday it has begun to flag; and in the evening, his mind is bent only on returning to camp.
29. A clever general, therefore, avoids an army when its spirit is keen, but attacks it when it is sluggish and inclined to return. This is the art of studying moods.
30. Disciplined and calm, to await the appearance of disorder and hubbub amongst the enemy:--this is the art of retaining self-possession.
31. To be near the goal while the enemy is still far from it, to wait at ease while the enemy is toiling and struggling, to be well-fed while the enemy is famished:--this is the art of husbanding one's strength.
32. To refrain from intercepting an enemy whose banners are in perfect order, to refrain from attacking an army drawn up in calm and confident array:--this is the art of studying circumstances.
33. It is a military axiom not to advance uphill against the enemy, nor to oppose him when he comes downhill.
34. Do not pursue an enemy who simulates flight; do not attack soldiers whose temper is keen.
35. Do not swallow bait offered by the enemy. Do not interfere with an army that is returning home.
36. When you surround an army, leave an outlet free. Do not press a desperate foe too hard.
37. Such is the art of warfare.
1. Sun Tzu said: In war, the general receives his commands from the sovereign.
2. Having collected an army and concentrated his forces, he must blend and harmonize the different elements thereof before pitching his camp.
3. After that, comes tactical maneuvering, than which there is nothing more difficult. The difficulty of tactical maneuvering consists in turning the devious into the direct, and misfortune into gain.
4. Thus, to take a long and circuitous route, after enticing the enemy out of the way, and though starting after him, to contrive to reach the goal before him, shows knowledge of the artifice of DEVIATION.
5. Maneuvering with an army is advantageous; with an undisciplined multitude, most dangerous.
6. If you set a fully equipped army in march in order to snatch an advantage, the chances are that you will be too late. On the other hand, to detach a flying column for the purpose involves the sacrifice of its baggage and stores.
7. Thus, if you order your men to roll up their buff-coats, and make forced marches without halting day or night, covering double the usual distance at a stretch, doing a hundred LI in order to wrest an advantage, the leaders of all your three divisions will fall into the hands of the enemy.
8. The stronger men will be in front, the jaded ones will fall behind, and on this plan only one-tenth of your army will reach its destination.
9. If you march fifty LI in order to outmaneuver the enemy, you will lose the leader of your first division, and only half your force will reach the goal.
10. If you march thirty LI with the same object, two-thirds of your army will arrive.
11. We may take it then that an army without its baggage-train is lost; without provisions it is lost; without bases of supply it is lost.
12. We cannot enter into alliances until we are acquainted with the designs of our neighbors.
13. We are not fit to lead an army on the march unless we are familiar with the face of the country--its mountains and forests, its pitfalls and precipices, its marshes and swamps.
14. We shall be unable to turn natural advantage to account unless we make use of local guides.
15. In war, practice dissimulation, and you will succeed.
16. Whether to concentrate or to divide your troops, must be decided by circumstances.
17. Let your rapidity be that of the wind, your compactness that of the forest.
18. In raiding and plundering be like fire, is immovability like a mountain.
19. Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.
20. When you plunder a countryside, let the spoil be divided amongst your men; when you capture new territory, cut it up into allotments for the benefit of the soldiery.
21. Ponder and deliberate before you make a move.
22. He will conquer who has learnt the artifice of deviation. Such is the art of maneuvering.
23. The Book of Army Management says: On the field of battle, the spoken word does not carry far enough: hence the institution of gongs and drums. Nor can ordinary objects be seen clearly enough: hence the institution of banners and flags.
24. Gongs and drums, banners and flags, are means whereby the ears and eyes of the host may be focused on one particular point.
25. The host thus forming a single united body, is it impossible either for the brave to advance alone, or for the cowardly to retreat alone. This is the art of handling large masses of men.
26. In night-fighting, then, make much use of signal-fires and drums, and in fighting by day, of flags and banners, as a means of influencing the ears and eyes of your army.
27. A whole army may be robbed of its spirit; a commander-in-chief may be robbed of his presence of mind.
28. Now a soldier's spirit is keenest in the morning; by noonday it has begun to flag; and in the evening, his mind is bent only on returning to camp.
29. A clever general, therefore, avoids an army when its spirit is keen, but attacks it when it is sluggish and inclined to return. This is the art of studying moods.
30. Disciplined and calm, to await the appearance of disorder and hubbub amongst the enemy:--this is the art of retaining self-possession.
31. To be near the goal while the enemy is still far from it, to wait at ease while the enemy is toiling and struggling, to be well-fed while the enemy is famished:--this is the art of husbanding one's strength.
32. To refrain from intercepting an enemy whose banners are in perfect order, to refrain from attacking an army drawn up in calm and confident array:--this is the art of studying circumstances.
33. It is a military axiom not to advance uphill against the enemy, nor to oppose him when he comes downhill.
34. Do not pursue an enemy who simulates flight; do not attack soldiers whose temper is keen.
35. Do not swallow bait offered by the enemy. Do not interfere with an army that is returning home.
36. When you surround an army, leave an outlet free. Do not press a desperate foe too hard.
37. Such is the art of warfare.
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