COMPETITIVE AND CORPORATE STRATEGY Instructor: Jeffrey Macher E‐mail: jtm4@georgetown.edu COURSE OVERVIEW Competitive and Corporate Strategy is concerned with managing the competitive position and long‐term development of the business enterprise in order to ensure its survival and success. Every firm must create and sustain a competitive advantage if it is to survive and prosper over the long‐term. This course provides frameworks, tools and concepts to help students analyze and understand the creation of competitive advantage. Industries differ in the extent to which they provide opportunities for sustained profitability. Industries also evolve over time, providing firms with continuously changing opportunities and threats. Finally, firms in an industry jockey for position through their actions and interactions. Every firm seeks to obtain a competitive position in an industry through an appropriate configuration of its assets and products in order to generate superior value for its customers. The first section of the course examines the challenges of external analysis. While industry and competitor analysis provides firms insights into what they must do to succeed, it does not throw much light on what they can do. Resource and capability analysis (and the investigation of the firm’s ‘core competence’) provides an insight into firms’ strengths and weaknesses (as they relate to the external environment). An understanding of firms’ internal strengths enables them to fully exploit and build their capabilities to compete successfully. The second section of the course focuses on internal analysis. Based on the results of the above external and internal analyses, firms must choose strategies that lead to value creation and value capture, as well as a sustained ability to compete. The third section of the course deals with strategies for sustaining competitive advantage. While competitive strategy focuses within the context of a particular industry, another important aspect is corporate strategy. Corporate strategy examines the question of the appropriate scope of a firm’s activities. In particular, the advantages and disadvantages of various forms of diversification (i.e., geographic, horizontal and vertical) and develop several frameworks for assessing the design and implementation of strategy across multiple lines of business. Students are placed in the position of key decision makers (or their advisors) and are asked to solve problems related to the development or maintenance of the competitive advantage of the firm. Readings and cases developed by leading researchers and practitioners in the field are used to provide contextual familiarity and teach the tools and skills required for competitive analysis. 1
ADMINISTRATION Course Materials Course materials consist of readings and cases. Readings are taken from the text‐only book, Contemporary Strategy Analysis (7TH Edition: Wiley Publishers), by Robert Grant. Particular chapters for each class session are marked BK on this syllabus. The book is available or online at http://www.amazon.com. Either the 6TH or 7TH edition will be sufficient. Cases come in two types. The first type is cases written by Robert Grant and marked GR on the syllabus. These cases are posted to Blackboard under the appropriate folder and are provided gratis. The second type is cases from Harvard Business School (HBS) and marked HBS on the syllabus. These cases are posted to the HBS website at http://cb.hbsp.harvard.edu/cb/access/13781337 and require purchase. You need to first register on the site to create a user name if you do not already have one. All course materials are PDF documents and you can open them with Adobe Reader. You will have access to the course materials for six months. After you register, you can get to the coursepack at any time by doing the following: 1. Visit hbsp.harvard.edu and log in. 2. Click My Coursepacks, and then click WWZ – Competitive and Corporate Strategy – 2013. You are responsible for reading the book chapters and cases in advance of class each day, and coming to class prepared to discuss them. The course outline below provides detailed information on the readings and cases to be prepared for each class session, as well as assignment questions for the cases. Any additional materials will be distributed on an as‐needed basis via Blackboard or in‐class handouts. Internet We will make extensive use of the internet for e‐mail communication. All of the material presented in class will be available in electronic Adobe Acrobat .pdf format. If you do not already have Adobe Reader, you can download it for free from www.adobe.com. Course Scheduling The class meeting times are as follows: 
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MON TUE WED THU 01 JUL 2013 02 JUL 2013 03 JUL 2013 04 JUL 2013 
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09.00‐11.30h 09.00‐11.30h 09.00‐11.30h 09.00‐11.30h MON TUE WED THU 08 JUL 2013 09 JUL 2013 10 JUL 2013 11 JUL 2013 09.00‐11.30h 09.00‐11.30h 09.00‐11.30h 09.00‐11.30h Attendance and Preparation Regular attendance and good preparation are prerequisites for being a valuable participant in the class. If you will be unable to attend a class, please advise me as early as possible. The class will start promptly on time and will run for the entire session. Arriving late or leaving early disrupts the class and lessens your contribution; please do so only when absolutely necessary. If you come to class unprepared, please let us know before class starts. Preparation implies that you have completed the assignments, and that you have taken time to think about them, and that you are prepared to discuss them thoughtfully in class. EVALUATION Grading 2
Grading will be based on your performance in class participation, two case write‐up submissions, and a final exam. The grading weights are as follows: Class Participation Case Write‐ups (2) Final Examination 25% 25% 50% Class Participation Class participation is graded every class session on a scale from 0 to 5. If you do not attend a class session, you get a 0. I do not understand the concept of how someone can “make up class participation” if it was missed, so do not bother asking us how to do this. If you attend class, you start out at a 2.5. You earn (and lose) points based on your performance. We emphasize quality over quantity participation. Please recognize that we cold‐call—a lot—from very basic and simple questions to more detailed and probing questions. Please be prepared. Your participation in class is expected to help both your own learning and that of your peers. Please come to class everyday, prepared with analysis, which at a minimum addresses the assignment questions. To participate effectively, offer focused comments which either show how a particular concept is illustrated in the case or how a substantive problem can be solved; avoid repeating case facts. Since the course uses cases extensively, class discussion is an important part of the course. In evaluating class participation, we will ask the following questions: 
Is the participant a good listener? 
Do the comments reflect careful analysis? 
Do the comments add to understanding of the situation? 
Is there a willingness to try new ideas or are all comments “safe”? 
Is the participant considerate of other class members? Case Write‐up Submissions Individuals or teams (of up to three students) must submit two case write‐up during the course, before the start of class on the day in which the case is discussed. Each case write‐up submission is up to four pages of text (1.5 line spacing, 12‐point Times New Roman font) and up to one page of accompanying exhibits (figures, charts, tables, etc.) if appropriate. Do not include any other attachments. One of the following case write‐ups must be completed. Address all of the questions listed in the detailed course outline. 
Cola Wars – 01 JUL 
Eastman Kodak – 03 JUL 
Wal‐Mart Stores – 04 JUL 
Harley Davidson– 08 JUL 
Walt‐Disney and Pixar – 09 JUL 
Newell Company – 11 JUL Final Exam The final exam will be administered at the end of the course. The final examination is cumulative. 3
COURSE OUTLINE (SHORT) DAY SESSIO
N TOPICS READINGS CASE COMPETITIVE STRATEGY 01 JUL Introduction to Course BK (CH 1) Industry Structure and Five Forces BK (CH 3) HBS Cola Wars 01 02 JUL 02 Industry Structure and The Value Net BK (CH 4) GR Rivalry in Video Games 03 JUL 03 Resources and Capabilities BK (CH 5) GR Eastman Kodak Competitive Advantage BK (CH 8) 04 JUL 04 Cost Advantage BK (CH 9) Competitive Advantage BK (CH 8) Differentiation Advantage BK (CH 9) 08 JUL GR Walmart Stores 05 GR Harley‐Davidson CORPORATE STRATEGY 09 JUL 06 Vertical Integration BK (CH 14) HBS Walt‐Disney and Pixar 10 JUL 07 Geographic Expansion BK (CH 15) GR Walmart Stores 11 JUL 08 Horizontal Diversification BK (CH 16) HBS Newell Company BK – Grant Textbook; GR – Grant case; HBS – HBS Single‐Click Access case 4
COURSE OUTLINE (DETAILED) SESSION 01 Readings Study Questions Readings Study Questions Introduction BK Grant “The Concept of Strategy” (CH 1) BK Grant “Industry Analysis: The Fundamentals” (CH 3) 1. Why are political, economic, social and technological trends important to firm strategy? 2. How might the structural characteristics of an industry influence firm strategy? 3. When is the bargaining power of buyers and suppliers greatest? 4. How can firms reduce threats from new entrants, rivals or substitutes? Industry Structure and Five Forces HBS Cola Wars Continue: Coke and Pepsi in 2010 1. Why, historically, has the soft drink industry been so profitable? 2. Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? 3. How has the competition between Coke and Pepsi affected the industry’s profits? 4. How can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non‐CSDs? SESSION 02 Readings Study Questions Industry Structure and The Value Net BK Grant “Further Topics in Industry and Competitive Analysis” (CH 4) GR Rivalry in Video Games 1. What are the key success factors in the video games hardware industry? 2. In what sense and for what reasons is this a “winner‐take‐all” market? 3. What strategies and circumstances have allowed newcomers to unseat established market leaders and reshape the industry? 4. What does Sony need to do to regain market share? What should Microsoft do? What should Nintendo do? SESSION 03 Readings Study Questions Readings Study Questions Resources and Capabilities BK Grant “Analyzing Resources and Capabilities” (CH 5) 1. What are resources? What are capabilities? 2. How can resources and capabilities be appraised? 3. What are the challenges in developing resources and capabilities? 4. How should resources and capabilities be leveraged? GR Eastman Kodak’s Quest for a Digital Future 1. What is Eastman Kodak’s strategy for developing its digital imaging business? What is the rationale for that strategy? 2. What challenges does Eastman Kodak face and what are its prospects of 5
becoming a leader in digital imaging? 3. Does Eastman Kodak possess the resources and capabilities needed to be successful in the market for digital imaging products? How is Eastman Kodak acquiring and building the capabilities it needs? 4. What advice would you offer Antonio Perez? SESSION 04 Readings Study Questions Readings Study Questions Competitive Advantage BK Grant “The Nature and Sources of Competitive Advantage” (CH 8) 1. How does competitive advantage emerge? How is competitive advantage sustained? 2. How does competitive advantage differ in emerging industries? 3. What value chain aspects are most important for Porter’s “generic” strategies? Cost Advantage GR Wal‐Mart Stores Inc., 2009 1. To what extent is Wal‐Mart’s performance attributable to industry attractiveness and to what extent to competitive advantage? 2. In which of Wal‐Mart’s principal functions and activities (namely: purchasing, distribution and warehousing, in‐store operations, marketing, IT, HRM, and organization and management systems/style) do WalMart's main competitive advantages lie? 3. How can Wal‐Mart sustain and enhance its competitive position? Why have other retailers had limited success in imitating Wal‐Mart’s strategy and duplicating its competitive advantage? 4. Looking ahead, what measures does Wal‐Mart need to take to sustain its performance and defend against competitive (and other) threats? SESSION 05 Readings Study Questions Differentiation Advantage BK Grant “Differentiation Advantage” (CH 9) GR Harley‐Davidson Inc., 2008 1. Identify Harley‐Davidson's strategy and explain its rationale. 2. Compare Harley‐Davidson's resources and capabilities to those of Honda. What does your analysis imply for Harley’s potential to establish cost and differentiation advantage over Honda? 3. What threats does H‐D face? 4. How can Harley‐Davidson sustain and enhance its competitive position? 6
SESSION 06 Readings Study Questions Vertical Integration BK “Vertical Integration and the Scope of the Firm” (CH 14) HBS The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire? 1. Which is greater: the value of Pixar and Disney in an exclusive relationship, or the sum of the value that each could create if they operated independently of one another or were allowed to form relationships with other companies? 2. Assuming that Pixar and Disney are more valuable in an exclusive relationship, can that value be realized through a new contract? Or is common ownership required (i.e., must Disney acquire Pixar)? 3. If Disney does acquire Pixar, how should Bob Iger and his team organize and manage the combined entity? What challenges do you foresee, and how would you meet them? SESSION 07 Readings Study Questions Geographic Expansion BK “Global Strategies and the Multinational Corporation” (CH 15) GR Wal‐Mart Stores Inc., 2009 1. To what extent has Wal‐Mart been able to transfer the competitive advantage it established in discount retailing in the United States: (a) to other countries; and (b) to other retail sectors and formats? 2. What has been Wal‐Mart’s performance in international markets? 3. What geographic areas or regions should Wal‐Mart focus on? SESSION 08 Readings Study Questions Horizontal Diversification BK “Diversification Strategy” (CH 16) HBS Newell Corporation: Corporate Strategy 1. Does Newell have a successful corporate‐level strategy? Does the company add value to the businesses within its portfolio? 2. What are Newell”s distinctive resources? 3. What challenges face the company in the late 1990s? 4. In this context, does the acquisition of Calphalon make sense? Rubbermaid? 7