Module 9 Flashcards Preview

RMI > Module 9 > Flashcards

Flashcards in Module 9 Deck (27):
1

OBJECTIVES

1)Explain strategic Risk and its role in the global financial crisis
2) Describe and adaptive strategy
3) Describe the four areas strategy should incorporate
4)Compare the different strategies of Harley Davidson, Molson-Coors, and Haverty's chain

2

Global financial crisis

Global financial crisis was "a failure of risk management"
-strategy played a role

3

Strategy, strategic risk

Strategic risk is any decision that can have a negative or positive impact on the profitability of a firm.
-Mistakes in strategy can be severe
-Did companies forgo long-term strategy for quick profits?

4

Ex of poor strategic decisions

Blockbuster decided to not deliver movies while Netflix did

5

Strategy should make companies

-more competitive
-alert to their circumstances
-resilient

6

Did Strategy cause crises?

Probably not, just tried to make a quick buck.

-Warren Buffet- only invest in what you understand
-Michael porter companies are sacrificing strategy for a quick buck

7

Is there a problem with Strategy

Competitive advantage time shortened (only going to be relevant for 6 months now)
-Positional volatility of leaders
-How "cool" is Facebook?

8

How to solve the problem with strategy

Create an adaptive strategy
-Instead of developing one strategy based on "analysis, prediction, and deduction"
-Create a set of "optimal conditions" for the continuous emergence of superior strategies

9

Adaptive strategy will incorporate

-Risk
-Boundaries
-Corporate purpose
-Enviorment

10

Systemic risk is real

Systemic risk is real
-What happens to one company affects everyone. Ex- failure of BOA
-Real trade-off between efficiency and redundancy/excess capacity

11

Strategy must define boundaries

Market definitions/segments
What activities should we pursue
How broad should our scope be
What are your core competencies

12

Strategy should define corporate purpose

Shareholder value is a result of your strategy not your strategy
Must consider
-Stability
-Growth
-Employees

13

Strategy should reflect environment

-Demographic trends
-Consumption trends

14

Harley Davidson

BRAND EQUITY
-Strategic risk management
Involves taking "opportunistic risks"
Understanding, monitoring, and managing this risk is imperative
16 strategic risk @ Harley
-Anything with neg impact on image (Brand equity)

15

Molson Coors

Strategy group produces: short-term, medium-term, and long term strategies
-Risk management: what risks threaten thwarting those goals
-Ex; taxation and regulation are main concerns

16

Haverty's

Selling furniture driven by disposable income
-Recent recession really hurt (more than they tough)
-More sophisticated tracking of the economy to predict future sales

17

Supply

Describe the tradeoff between efficiency and redundancy with respect to supply chain
-Explain the four benefits of modeling supply chain risks
Explain the relationship between chipotle's business model and its supply chain

18

Overview

-supply chain- What events can cause a material disruption to an organization's supply chain
- Just in time" delivery recusing the need to stock excessive amounts of stock

19

Supply chain

how any organization goes from raw materials to finished product

20

Supply chain risk

anything that can interrupt the ultimate product delivery (anywhere along that supply chain)

21

Supply Chains do not do well with low probability/high impact events

Ex- Katrina

22

How to deal with Supply Chain loss

Ignote cause of disruption
Develop a model that focuses on time to recover of the supplier
and
Our exposure to that supplier, risk exposure index

23

Methodical approach

does not forget about small , low-cost commodity suppliers which can have a large impact

4 benefits of approach
1-Identifies hidden exposures
2- Avoids the need for predictions about rare events
3- Reveals supply chain dependencies and bottlenecks
4- Promotes discussion and learning within the organization

24

Chipotle
Supply Chain Problems

-6 outbreaks of food born illness
-514 sick in 14 states reported
-Stock drops 40%, same store sales down 30% in Dec
-Numerous lawsuits
-Something in their supply chain caused them to get bad food

25

Chipotles Business Model

Fresh produce
Meat w/o antibiotics
Local and Food with integrity
Fresh

Moes is more focused on supply chain and standardized product

26

Problem with chipotle

Harder to manage
-Local cooking- Variation
-Growing quickly
-Gets harder, not easier as volume increases

27

Real Tradeoffs

Moes vs Chipotle
-Instead of efficiency vs redundancy
-Centralized freezing/cooking, quality control v local, fresh- never frozen quality ingredients