EMBA @UNA Business Policy Florence, Alabama July 13, 2002.

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EMBA @UNA Business Policy Florence, Alabama July 13, 2002

Transcript of EMBA @UNA Business Policy Florence, Alabama July 13, 2002.

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  • EMBA @UNA Business Policy Florence, Alabama July 13, 2002
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  • Intense Competition Globalization Technology Competitors Deregulation Innovation Customers Demographics Geo Politics
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  • 39 members of the Class of 17 were alive in 87 18 in 87 F100 18 F100 survivors under-performed the market by 20% just 2 (2%), GE & Kodak, outperformed the market Forbes100 from 1917 to 1987
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  • March 54,321 2002 255,260 Layoff Scenario
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  • Number of Public and Private Chapter 11 Bankruptcies (in thousands) 9.2 10.2 11 00 01 02 Estimated Source: Fortune, April 15, 2002
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  • Fortune 500 Results (April 15, 2002) In 2001, 97 FORTUNE 500 companies reported losses, for a total of $148.5 billion In 2000, 53 FORTUNE 500 companies reported losses, for a total of $18.1 billion %Billions Revenues3.3$7,420 Profits-53.5$206 Deepest Dive In 47 years of Fortune 500
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  • Industry Dominant Competitor Traditional Competitor Strategic Innovator Airline American Delta, United, Northwest Southwest Car Rental Hertz Avis, NationalEnterprise CoffeeMaxwell HouseFolgers, Nescafe Starbucks TV NBC CBS, ABC CNN SteelUS Steel Bethlehem, NationalNucor PhotocopierXerox IBM, Kodak, Ricoh Canon Source: Markides, 2001
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  • GE Powers Dramatic Change 1/2 Worlds Market In Power Generation Equipment Acquired Nuovo Pignone Surround the Customer
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  • Moved into Supplying Services Moved into supplying equipment Enlarged pond to $48 billion ExistingNew Existing New Customers Needs A B D C $20 Billion $5-10 Billion $18 billion Moved into Supplying Services Moved into supplying equipment Enlarged pond to $48 billion
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  • GE Power Systems 1998 pond is $700 billion 37 times as big as the Market defined and served three years previously Existing New Existing New Customers Needs A B D $700 Billion
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  • The Creosote Bush Drips poisonous oil, kills everything around it Dominant microprocessor strategy was Intels creosote bush No other businesses could sprout around it
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  • Intel at Crossroads, Again?? Business Goes To New Heights Business Declines Inflection Point Memory Chip Business Microprocessors 1985 Valley of Death
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  • Intel at Crossroads, Again?? Business Goes To New Heights Business Declines Inflection Point Microprocessors Internet appliances 1999 Valley of Death
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  • 2 84% market in PC processors 2100% of profits 2 90% of revenues 2Growth in Processor market slowing Down PC Components
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  • New Business Group New rules for funding new projects No more tight budgets No more rigorous reviews of internal startups Similar to venture-capital financing Launched about 25 seed projects Spent more than $50 million on these projects
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  • Information Appliances Move Intel into the home, somehow Screen phones E-mail terminals TV set-top boxes
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  • Communication Products Home Networking Broadband Modems PC-based Telephony Server Appliances Ethernet Hubs Small Networking Switches Specialized Servers for Web Traffic and speeding up e-commerce
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  • Networking Chips Fastest growing category among chips Used in modems, network interface cards, switches, and routers Acquired a lot of companies Level One Communications ($2.2 billion) NetBoost ($215 million) Softcom Microsystems ($149 million)
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  • Web-hosting for clients (Citigroup) Vivonic: digital handheld health planner PassEdge: technology for protecting digital content Installing 3,000 information terminals on the back of seats of Madison Square Garden Equip doctors with secure Ids to encourage online medicine New Business Group
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  • Sony In Troubled Waters Personal Computers Cell Phones Video Games 3 of the Biggest Opportunities Where IS SONY? Where IS SONY? DIGITAL ERA
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  • The Playstation Dream Begins bought a Nintendo game for his daughter sound was awful games were stored on magnetic cartridges
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  • KUTARAGIS BRIGHT IDEA Confident that the system could be vastly improved Use storage system he developed for the Mavica Improve processor speed
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  • WHAT ABOUT SONY? No one at Sony shared Kutaragis enthusiasm for the videogame business Kutaragi met with Nintendo instead Nintendo liked Kutaragis suggestions Nintendo products a toy Threw a fit when news leaked out Failure to realize potential of the product Sonys President protected the project
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  • Kutaragi seen as a traitor Kutaragi isolated within the company Project moved to a different location Project Update
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  • Sony had to convert to digital, information-based company Transition bland business computers to a fun product Kutaragi threatened to leave Sony Kutaragi promised to create a platform for Sonys future growth Two years later Playstation released Tremendous success Kutaragi became Head of Engineering What would Sony Do?
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  • Kutaragi becomes CEO of Sony Computer Entertainment Sony releases PS2 Most profitable division within Sony Possibility of the marriage between TV, Film, Computers, Music, and the Internet Is PS2 a platform for Sonys future growth?
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  • 1982: Provided online quote Provided trading services Vision: Someday, everyone would own computers and invest through them with unprecedented efficiency and control. 1992: Offered services through AOL & Compuserve 1996: ww.etrade.com ww.etrade.com Meet complex investing, banking, lending, & planning needs of households across their entire financial cycle
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  • Investing Stocks, Bonds, Options Mutual Funds Research Banking Checking Savings CD Money Market Lending Mortgage Home Equity Loans Auto Loans Credit Cards Plan & Advice Retirement College Savings Asset Allocation Estate Planning Insurance
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  • Serves 45 million per day 29,000 McDonalds 121 countries $40 Billion in 2000 Best known brands Undisputed fast food leader Stock price is low Slow same store sales growth Europes mad-cow scare Weak currencies New items disastrous Health-conscious customers
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  • Chi-chi coffees and desserts Cold Sandwiches FRESH ingredients Diner Inside McTreat Reinvention! It is about Survival!
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  • Virgins Business Definition Challenge existing rules Give customers a better break Be more entertaining Beat complacent incumbents Culture is one of WHY NOT rather than WHY
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  • Worlds largest aircraft manufacturer Live internet connections on passenger jets Air Traffic Control Systems using satellite technology Aircraft Service Business Financing
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  • SET UNREASONABLE EXPECTATIONS
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  • Chryslers Minivan Baby Boomers Getting Older (With Growing Families) Lifestyle changes (Soccer Moms) Space Problems Vans Were Too Large (Commercial) Station Wagon Sales Were Falling Morphed Pickup, Station Wagon, Passenger Car The Minivan was Born!!!The Minivan was Born!!!
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  • CNN 24 Hour News Changes in lifestyle longer and unpredictable work hours Changes in Technology handicams and suitcase size satellite linkups Changes in Regulatory Environment growth of cable TV industry Changes in geopolitics interconnectedness of economies
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  • STRETCH YOUR BUSINESS DEFINITION You have to be either #1 or #2 to survive From the wellhead to the consumer What is our share of the stomach? From cradle to grave
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  • Segmenting the Market Continuously strive to break up a market into smaller pieces VW with its Beetle Xerox and Ricoh Apple and iMac Daimler-Benz and the Automobile Industry Saturn and the Automobile Industry
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  • THE LEADER innovates is an original is an original develops develops focuses on people focuses on people inspires trust inspires trust has a long-range perspective has a long-range perspective asks what and why asks what and why has their eyes on the horizon has their eyes on the horizon originates originates challenges the status quo challenges the status quo is their own person is their own person does the right thing does the right thing THE MANAGER THE MANAGER administers is a copy is a copy maintains maintains focuses on systems and structure focuses on systems and structure relies on control relies on control has a short-range view has a short-range view asks how and when asks how and when has their eyes always on the bottom line has their eyes always on the bottom line imitates imitates accepts the status quo accepts the status quo is the classic good soldier is the classic good soldier does things right does things right Leaders vs. Managers
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  • Why Grow? Imagination Energy Motivation Creativity Excitement Commitment Maintain Status Quo = Beginning of the End
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  • Innovation Venture Capitalist Thousands of business plans Drug Industry 5,000 to 10,000 compounds Sea Turtles 1,000 eggs Human Procreation 59,999,999 sperms
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  • What should be done? Institutionalize experimentation Reward excellent failures Punish mediocre success Facilitate and encourage newer voices Creative destruction
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