STRATEGIC FORMULATION CONSISTENT WITH PIMS: A MICRO-COMPUTER APPLICATION Developments in Business Simulation & Experiential Exercises, Volume 11, 1984 270 STRATEGIC FORMULATION CONSISTENT WITH PIMS: A MICRO-COMPUTER APPLICATION Barry Shane, Oregon State University Robert H. Collins, Oregon State University ABSTRACT Students at Oregon State University College of Business are using a computer program to learn the strategic formulation phase of business policy. The program requires students to systematically assess both internal and external conditions in a format consistent with the growing PIMS studies. Graphic output then indicates the generic strategies compatible with the corresponding student’s analysis of the firms competitive position. By changing combinations of variables in the assessment, the user can determine what strategies would be effective given the resource limitations and external constraints of the firm’s setting. Statement of the Problem To choose among alternative strategies, business policy students have had to rely upon static forms of evaluation. Once a strategy has been formulated, the testing of internal or external consistency is restricted by the few characteristics identified and by the inability to evaluate the selected strategy against anything more than opinion. There are, however, many combinations of resource acquisitions and deployment which would satisfy the needs for consistency within a strategy. How are students to examine and understand the many combinations of changing internal conditions and/or external boundaries that would permit successful pursuit of the selected strategy? Business simulations are primarily focused on other facets of dynamic business environments. The problem remains: first, what combination of changes in the bases of competition, industry strengths, financial structure and/or environmental conditions are appropriate for a given strategy? And second, what methods improve the understanding of these combinatorial options? Method A menu-driven computer program which can be viewed as a summary display of the PIMS findings applied to the business firm under evaluation is the method to be demonstrated. The key to assessing a firm’s relative position is the comparison of internal flexibility to external stability. Each of four dimensions 1) financial structure,2) competitive position 3) industry strengths and 4)stability of environment is evaluated separately and is determined by a composite of many factors. From this analysis specific strategic choices are developed and graphically displayed. The program follows closely the Strategic Position and Action Evaluation suggested in Strategic Management and Business Po1icy , Rowe, Mason and Dickel, Addison Wesley, 1982. Once the factors in all the dimensions are evaluated, the program graphically represents the reasonable strategic choices, given the conditions as provided by the user’s analysis. Obviously, the results can only be as good as the user’s meticulous assessment. Next, the user is asked if changes are to be made to any resources or constraints. When changes are made by the user, the subsequent displays indicate whether the selected strategy would still be feasible. If not, the generic strategy which would most approximate the changed internal strengths and environmental setting is presented. The menu driven options, therefore allow the user 1) to examine what changes in conditions or factors would be necessary to pursue another strategy or 2) to recognize what changes can be made within the current internally while continuing to be consistent within the current strategic choice. Several analyses can be done on multiple product/market elements, with printed hard copy as an option for each change in conditions. The diagnosis of any of the four major dimensions is performed with full screen editing capabilities so that the user can look for consistencies within any phase of his/her analysis. Any necessary corrections, therefore, can be made instantly before the complexity of analysis becomes overwhelming. Each of the four dimensions has between 10 and 20 individual factors and possible relationships. The program is written in BASIC and requires 92K and is currently being used on Apple III’s with graphics capabilities and will be available for the IBM PC. Program Use Students using the program follow on screen menus; no instructions are required. In fact, no previous experience using micro computers is necessary. General business policy theory and classroom instruction usually cover the basic background required. The first screen display is a menu of several programs used in the business policy case course: 1. the strategic formulation program 2. a multi-goal decision making matrix program 3. a strategic funds flow program a stakeholder analysis and assumption program. Selecting the first option, the user is presented with a short introduction and the first screen, Competitive Position. A few of the many factors listed are: 1. relative market share to next major competitor 2. relative perceived product quality 3. product replacement cycle 4. competition’s capacity utilization. For each of the factors, the user selects a value from an anchored scale. The scale has appropriate descriptors. An example would appear in this manner. product life cycle late- 0 1 2 3 4 5 6 9-early The “9” allows for either ‘not applicable’ or ‘cannot be determine’. Thus any factor need not be included if the user so chooses. After each full screen of analysis the user may add any additional factors appropriate to the dimension currently examined. A menu driven routine prompts a scale and descriptors. Responses are confined to the range of acceptable numbers. The program politely requests a proper response or will not Developments in Business Simulation & Experiential Exercises, Volume 11, 1984 271 continue. Thus, users cannot accidentally disrupt the systematic assessment. Each dimension is examined in this fashion, one screen at a time. Program Output When the analyses are completed, a new menu offers 1) a graphic display of the current position matched with strategic choices at indicated by the PIMS data 2) option for hard copy of no.1 or 3)option to go back and change rating for some of the factors as if new resource deployments were to be made or external conditions were to change. Completing any of the options returns the user to the menu. This enables multiple hard copies to be made when varying conditions for later study and classroom presentation. Upon instruction of the user, the program ends and returns to the original menu. The continuum of strategic alternatives used is: 1. concentric diversification 2. concentration 3. vertical integration 4 concentric merger 5. conglomerate merger 6. retrenchment 7. liquidation 8. divestiture 9. status quo It should be emphasized that the purpose of this program is not to determine otherwise undiscovered strategic opportunities. Rather, the output linking company strengths and weaknesses to appropriate strategies is predicated upon the user’s ability. Student Experience with the Program Business policy students have been using this program for two terms. The explanation and hands on experience required to use the program without further assistance has taken only one class period. Again, this is without any prior experience on micro computers. The interest and efficacy of the program is demonstrated by the requests from students in other policy classes to use the package of programs. This program is not required for case preparation. It is an option students may select when preparing policy cases. Yet, the log book kept with all micro computers indicates extensive daily use. Several advantages have become apparent with this program and its general approach. First, it overcomes the general uneasiness most senior faculty, who usually teach the policy course, may have computer literacy. Second, using the template/menu driven approach, it helps overcome the lack of student literacy in using strategic model8. It also demonstrates to users to the need for and use of strategic models. Also, this approach begins to remedy the lack of software available in other than entry level courses and provides support for development of computer assisted instruction in upper division courses. REFERENCES Rowe, A., Mason, B., and Dickel, K. Strategic Management and Business Policy. Addison Wesley Co., 1982. pp.155- 165. Collins, M. and Shane, B., Using Micro-Computers .to Support the Analysis of Complex Cases: It’s as Easy as 1-2- 3. Proceedings, ABSEL. January 1981L Table of Contents Volume 11, 1984 Simulation Gaming as a Means of Researching Substantive Issues: Another Look A Further Test of the Group Formation and its Impacts in a Simulated Business Environment Impact of Economic Patterns on Student Performance in Computer Business Simulation Games Majority Fallacy Game with Independent Student Simulation and a Case Introducing the Marketing Channel Laboratory A Comparative Evaluation of a Marketing Game A Study of Comparative Effectiveness of Problem-Solving Technologies The Impact of Hierarchical and Egalitarian Organization Structure on Group Decision Making and Attitudes Risk-Free Decision Making The EX-STRA Export Strategy Game Computer Education for Management Students Developing a Computer Game/Job Simulation to Teach Functional Literacy Skills Experiencing Socialization First Hand: An Experiential Exercise in Organizational Socialization Networking Distributive Versus Integrative Approaches to Negotiation: Experiential learning Through a Negotiation Simulation Managerial Education and the Real World: Foudations for Designing Educational Tools Diagnosing Group Climate to Improve Supervisory Effectiveness Student background as a Factor in Simulation Outcomes: The Collective bargaining Example The Use of Pre-Plays in Management Education Experiencing the Process Debrief: A Workshop ABSEL Megatrend Roots MEGATRENDS for Business Simulation and Experiential Learning The Effects and Consequences of the Megatrends on Simulation Gaming: One View Opportunities for the Future: ABSEL's Role Experiential Learning-Based Discussion vs. Lecture Based Discussion: A Comparative Analysis in a Classroom Setting An Evaluation of the Minitab Package in Teaching Business Statistics Concepts A Path Analytic Study of the Effects of Alternative Pedagogies Developing and Using Weighted Application Blanks: An Experiential Exercise Building Airplanes Individual vs. Group Grade: An Exercise in Decision making A Marketing Plan Exercise: Development of Interteam Cooperation Using a Coordinated Experiential Approach Using Student Experience as the Basis for a Consumer Behavior Learning Exercise Student Evaluations of Instructors: What do Students Believe? A Description of the SOFTCAT Computer Assisted Teaching System Comparisons of Practitioners' and Professors' Perceptions of Business Policy Content and Learning Methods The Perceived Relationship Between Pedagogies and Attaining Course Objectives in the Business Policy Course The Use of Simulation in the Teaching of Business Policy A Research Study on Strategic Decisions in a Business Simulation Strategic Management Decision Making Researched Via Simulation Gaming Using Simulation to Investigate Factors in Competitive Bidding Combining Experiential Learning and management Assistance A Model for Teaching Management Skills Putting Experience Back into Experiential Learning: A Demonstration The Teaching and Behavioral Measurement of Managerial/Organizational Competencies: Developing Experiential Exercises and Simulations A Simulation Game Model for Conglomerates QCLAB - A Microcomputer Laboratory in Quality Control CTSS: A Commodity Trading Simulation System Problem Solving: An Exercise on Learning, Coaching, and Operant Conditioning A Demonstration of the Effects of Feedback as a Category of Reinforcement The Assessment of Feedback and Disclosure in Interpersonal Relations: An Experiential Exercise A Study to Determine Whether the Teaching of Basic Grammar Skills in Business Communication Classes Improves Students' Business Letter Writing Corporate Maladies Through the Eyes of the Memo Writer: A Seldom Used Experiential Tool Executive Bailout at Shake & Spear, Inc. The H.E./L&P Merger Intercultural Nonverbal Communications: An Experiential Exercise The Evolving Business Policies Course - Is Management Gaming the Logical Pedagogy? The Use of Decision Simulations in Management Training Programs: Current Perspectives Humanizing the Business of Medicine: The Use of Simulated Patients to Train medical Students Systematic Integration of Simulation Methods in a Graduate Management Curriculum Modeling Non-Price Factors in the Demand Functions of Computerized Business Using Spacial Relationships to Estimate Demand in Business Simulations Two Algorithms For Redistribution Of Stockouts In Computerized Business Simulations Leadership And Strategic Behavior A Comparison Of Two Business Strategy Simulations For Microcomputers Incorporating Decision Support Systems Into Management Simulation Games: A Model And Methodology Using Micro-Computers To Support The Analysis Of Complex Cases: It's As Easy As 1-2-3 Strategic Formulation Consistent With Pims: A Micro-Computer Application