(BUS 401 - Vanderkalen) Chapter 1 and Walmart Case PDF

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Chapter 1 lecture notes very helpful for actual studying for exam (lecture and reading based). Study guide for midterm 1 very useful....

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Lecture 1 Walmart Case Discussion I. What is the single most important factor that lead to phenomenal growth? A. Treats suppliers with respect, so that they will help out even during the bad times. Kmart and GM did not, so they failed during the recession B. Buying in high volumes and selling at lowest prices. Suppliers get to sell large quantities, and still receive profit. C. Low cost culture is all around II. Walmart’s business strategic choices A. Market served: rural areas B. Value proposition: lowest cost C. Resources and capabilities: D. Barriers to entry/sustain competitive advantage: III. Cost does NOT meant the same as price IV. Why does Walmart have issues expanding internationally? A. Cultural disconnect - American values vs. other country (Japanese minimalism, Italian specialization)

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The purpose of a business is... A. NOT to gain a profit (profit is a choice) 1. Ex: Amazon didn’t make a profit in the beginning, instead invested it back into R&D then made profit later B. To create value for the owners 1. Stock value, shareholder profits Corporate forms, California A. B-Corp: owners cannot sue CEO for misappropriation 1. Ex: mindbody is no longer publicly traded company because its shareholders sued the CEO for misappropriation. B. Conventional For-Profit C. Not-for-Profit D. Benefit: Giving a portion to charity, doing good is part of their mission 1. Ex: Doc Burnstein's (1st), Runaway Girl (2nd) E. California Corporation Code: allows CA corps to “do good,” as demanded by trends in consumer demographics What is competition? A. Regulations: the rules of the game B. Managers must change the rules to be in their favor/advantage 1. Ex: Motor oil businessman enacted a law that allowed him to get paid for auto businesses to get their oil cleaned C. Special interest for yourself

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D. Everything has a lobbyist E. Only bad when they’re not in your special interest What is a strategy? A. Plan to beat the competition B. Dynamic, always changing; NOT fixed C. Plan to achieve competitive advantage Strategy Formulation A. Strategy → Competitive advantage → shareholder value 1. What markets are being served? 2. What is the unique value proposition? 3. What resources/capabilities are needed? 4. How do we create barriers to imitation to sustain competitive advantage? Strategic management A. Analysis → Strategic decisions → actions Strategic management process A. Intended strategy → unrealized part → something happens→ emergent strategy → realized strategy → back to intended strategy Expansion + Contraction = the business cycle A. Honda succeeded by selling scooters 1st in the US

In the cost advantage strategy, cost drives margin, but in the differentiation strategy, margin drives margin Price-cost=margin - More flexibility - More liquidity - Secret sauce...