Strategic Management Semester Notes

Dirty place that is run down neighborhood Downtown are, low technology, disorganized, not high intelligent life forms Mixing liquids with powder in various sizes and colors (Basic Color White) Workers mixing paint, driving vehicles, inventorying product, part time Couple of trucks and mixing machines, labor intensive Glidden, DuPont- Higher shipping costs (Paint is heavy) National Market, many colors (wide selection and sizes) quality texture, brand Keys to success (Inner City)- Availability/service, adequate quality, value price Year 1- $60,000,2 workers $30,000 per worker

Year 5- $1,800,000, 38 workers $47,368 per worker Profitability- Net income $17,610, Salary $132,000, Mom $66,000 Selling Expenses $72,460 Total $287,620 Liquidity- Cash/Salaries Payable $1,500/$22,480 Sales/Inventory $1,784,000/$18,660= 77 3. 8 Days Sales/Accounts receivable $1,784,000/$242,320= 7. 36 49. 36 Days Sales/ Accounts payable $1,784,000/$217,820= 8. 19 44. 57 days The Wallace Group Electronics- Engineers, thinking, calculating, skilled, technology, radar evasion, geeky Plastics- Heat substances >Liquids, Extrusion>tubes>Molds Cool> take mold away. Chemicals- Big vats, Danger signs McKesson Corporate Governance

Board of Directors- responsible that the company has an appropriate strategy (Vision), responsible to the owners (stockholders), manage the use of resources, select the CEO * Board Trends- Split the CEO/Chairman of Directors, Getting Smaller, forced to buy company stock/own stock, more diverse (more female, more global) * Inside- (1/4) Key executives from inside the company CEO, CFO, possibly 1-2 more * Outside- (3/4) Prominent People, from the industry? New ideas, Knowledge, Connections, objectivity * Board Committees- Compensation Committees, Audit, Executive, Nominating Managers/Employees, Stockholders (Owners)

Buying and selling drugs Packaging Shipping (Drugs) Inventory Net Profit Margin 1996- 1. 04% 1997- . 85% 1998- . 74% HBOC- 1995- 1. 1% 1996- 8. 67% 1997- 11. 9% 1998- 20% Healthcare Software- Comprehensive integrated, hospitals, 9,000 customers- Cross selling Ethics Archie Carroll 1. ) Make a Profit 2. ) Be legal 3. ) Be ethical- Based on societies definition 4. ) Have Values Stakeholders Primary- Stockholders, Customers, employees, suppliers-creditors, government Secondary- Employer Family, community, NGO, activists, AARP 1. ) Utilitarian Argument 2.

) Fairness/Justice Argument 3. ) Rights Argument Glaxo Smith Klein *Manufacturing Pills Pharmaceutical Prescriptions Manufacture of Health Products/hygiene Marketing/Sell the Pills * Describe the pill to the Doctor> Doctor pushes the pill> Subscription> Patient to Pharmacy * Direct to consumer (DTC) Patents Research and Development Packaging/Shipping Get approval- FDA- Work with Government 2001- Prescription Pharmaceuticals $25 billion 2002- Prescription Pharmaceuticals $27 billion Growth- 9% Gross Profit Margin- 78% Net Income- 26% Research and Development- 14% Marketing- 38%

Leadership (Movie) 1. Col Davenport and troops > “Mom” 2. Gen Savage > “Boss” Tough Love External Analysis Threats/Opportunities Societal Level Technology Government Regulations/Politics Economy Culture/Fashion Demographics Task Level (Porters 5 forces) Competition Suppliers Customers Potential New Entrants Substitute Products Red Hook Producing Liquids for consumption Medium sized vats > tubes > kegs Distributed regionally throughout the NW NE Restaurants/Pubs/Taverns/Brew Pub Product Quality > “Taste” Educated, Higher Income, Adventuresome, Status, Young, Men & Women

Budweiser Producing Liquids for consumption Huge sized vats Bottle > Everywhere> 7/11, Kroger, Gas station Inexpensive Lower income, Men, Less educated, Older, Fat Drunk Craft Beer Industry “Limited”- 3% of US population Growing fast Fragmented- 1,300 breweries 1. Boston Beer- Samuel Adams 25% of the Limited population 2. Pete’s- 8. 8% 3. Sierra Nevada- 5. 5% 4. Red Hook- 4. 7% Imports7% Traditional Beer Industry 90-93% of the Market Bud (AB) Miller Market not growing Task Bud Dominates distribution Only one competitor- No new entrance Red Hook No distribution

Thousands of competitors Wine Societal Bud Dead of Arrival Red Hook Women Higher income Functions Organization Does it support the strategy? * Communicate * Control Culture What is it? Does it support the strategy? Marketing Price Product Promotion Place Finance Currency Management Investments Debt load HR Hiring Firing Training Labor Relations Benefit Management Compensation Operations Break even Learning curve Process R&D Product Process The Vermont Teddy Bear Co. Toy “American” Symbol- Happy Family Sentimental Statement of feeling Collectible- Valuable Legal