ADM 1300 Lecture Notes - Lecture 8: Berkshire Hathaway, Warren Buffett, Usg Corporation
10 Nov 2018
School
Department
Course
Professor
➔ Strategy
◆ Planning leads to this
➔ Objectives
◆ Defining strategy
◆ Strategy Process (6 steps)
● Analysis of vision, mission, and objectives
● Analysis of organisation and industry
● Strategy formulation
● Strategy implementation
➔ Warren Buffett
◆ Berkshire Hathaway
◆ Owns a majority stake in Dairy Queen
◆ Strong ownership in American Express, Kraft, USG Corporation (Homebuilding)
◆ He says that companies must have a “moat” → competitive advantage
● Your company does something well that no one else can do as well as you
● Having the ability to undertake an operation, provide a service, deliver a product, better than anyone else in
the industry
○ There will always be people who will try to copy your model: competitors
● “Durable” or “Sustainable” Competitive Advantage → competitive advantage that’s able to last over a
period of time (make sure people can’t replicate what you’re doing)
○ Eg Snapchat and Instagram (Snapchat does not have a sustainable competitive advantage
currently)
➔ Strategy Process Stages
◆ 6 Step Process
● Stage #1
○ Organizational vision, mission, and goals/objectives
◆ Vision: dreams for the future
● Eg Microsoft in the 80s: for everybody to have a computer in their home in 20
years
◆ Mission: defines organization’s purpose (why do we exist); identifies organization’s
products and customers
◆ Goals: desire future outcomes to achieve (goal setting)
○ Goals/Objectives
◆ Depending on where you “sit”, your goals can be different
● Organization → maximizing profits
● Employees → higher wages
● Customers → higher dividends
● Management → promotions
○ Depending on the hierarchy of org/department
◆ Goals should meet mission → mission should help achieve the vision
● Stage #2 and #3
○ Organization and industry analysis
◆ SWOT Analysis
● Internal Strengths and Weaknesses
● External Opportunities and Threats
◆ Porter’s 5 Forces Model
● Competitive rivalry
○ Strength in the # of companies producing the same products and
services
○ Is there low/ high competitive rivalry? (how strong is it)
● Barriers to entry (new entrants)
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Document Summary
Owns a majority stake in dairy queen. Strong ownership in american express, kraft, usg corporation (homebuilding) He says that companies must have a moat competitive advantage. Your company does something well that no one else can do as well as you. Having the ability to undertake an operation, provide a service, deliver a product, better than anyone else in the industry. There will always be people who will try to copy your model: competitors. Durable or sustainable competitive advantage competitive advantage that"s able to last over a period of time (make sure people can"t replicate what you"re doing) Eg snapchat and instagram (snapchat does not have a sustainable competitive advantage currently) Eg microsoft in the 80s: for everybody to have a computer in their home in 20 years. Mission: defines organization"s purpose (why do we exist); identifies organization"s products and customers. Goals: desire future outcomes to achieve (goal setting) Depending on where you sit , your goals can be different.
