Los Angeles EMBA
Arvind Bhambri
Theme 4
2014
Competitive Strategy
The purpose of this module in theme 4 is to lay the foundation for an integrative view of
strategy analysis and development. The ultimate purpose of a strategist is to create and
sustain competitive advantage to create and capture value. Towards this end, a strategist
needs, at minimum, to do the following:
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
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Understand a company’s external environment with sufficient insight to identify
valuable opportunities;
Configure the company’s activities to achieve a competitive advantage;
Sustain and renew the company’s competitive advantage in the face of competitive
actions; and
Ensure that the company not only creates value but also captures it.
Our discussion of strategy will be spread over two themes: 4 and 8. In theme 4, we will
begin with a basic overview of strategy, and introduce generic strategies, activity systems
and business models. We will build on these basic concepts in theme 8 with a deeper
discussion of industry mapping, competitive advantage, competitor dynamics, corporate
scope, and renewal.
The strategy readings and cases in theme 4 are listed below.
Readings:
Can You Say What Your Strategy Is? D. Collis and M. Rukstad HBR R0804E
What is Strategy? Michael Porter, Harvard Business Review (HBR 4134)
Blue Ocean Strategy, W. Chan Kim and R. Mauborgne (HBR R0410D)
Competitive Advantage: The Value Chain and your P&L, Joan Magretta (HBSP 8890BC)
Strategic Intent, G. Hamel and C. K. Prahalad (HBR 6657)
The Five Competitive Forces that Shape Strategy, Michael Porter, (HBR R0801E)
Why the Lean Start-up Changes Everything, Steven Blank (HBR R1305C)
Cases:
Dogfight over Europe: RyanAir (A) (9-700-015)
Teva Pharmaceutical Industries (9-707-441)
Tesla Motors (9-714-413)
Friday, April 4, 2014
8:50 am – 12:10 pm
Elements of Strategy
Competitive strategy is the set of goals, policies, and activities that position a company in
its environment. By definition, strategy is not about doing what other companies are
already doing. Instead, it is about being different in a way(s) that creates value for a
significant group of customers and enables you to capture a fair share of the value that you
create.
This case, set in 1986, is a business school classic. It describes Ryanair’s initial launch
strategy. Ryanair must compete with established companies like Aer Lingus and British
Airways that will likely retaliate against Ryanair. This case gives us a chance to explore
Ryanair’s strategy, positioning, and sustainability through a series of cases that we will
discuss over two days.
Discussion Questions
1. What is your assessment of Ryanair’s launch strategy?
2. How do you expect Aer Lingus and British Airways to respond? Why?
3. How costly would it be for Aer Lingus and British Airways to retaliate against
Ryanair’s launch rather than to accommodate it?
4. Can the Ryan brothers make money at the fare they propose?
Readings:
Dogfight Over Europe: Ryanair (A) (9-700-015)
What is Strategy? Michael Porter, Harvard Business Review (HBR 4134)
Can You Say What Your Strategy Is? D. Collis and M. Rukstad HBR R0804E
Saturday, April 5, 2014
8:50 am – 12:10 pm
Elements of Strategy (2)
RyanAir’s transformation from a company on the verge of bankruptcy to a thriving
profitable airline offers a textbook case in strategy development. As you read about
Ryanair’s transformation, ask whether the strategic planning process in your company
would enable a transformation similar to what happened at Ryanair.
Discussion Questions
1. How did RyanAir go from the brink of bankruptcy to become one of the most
profitable airlines in the world? (Try to use frameworks from the four assigned
articles for this weekend to gain insights into RyanAir’s turnaround).
2. What are the most serious threats faced by RyanAir at the end of the case?
3. How serious is the threat posed by Go?
4. If you were in Michael O’Leary’s position, what would you do?
Readings:
Dogfight Over Europe: Ryanair (C) (9-700-017) (case will be distributed in class at the end
of discussion on Friday)
Blue Ocean Strategy, W. Chan Kim and R. Mauborgne (HBR R0410D)
Competitive Advantage: The Value Chain and your P&L, Joan Magretta (HBSP 8890BC)
Friday, April 18, 2014
1.10 pm – 4.30 pm
Industry Structure and Strategic Positioning (1)
Some of the earliest frameworks for systematic strategic analysis were introduced in 1980
by Michael Porter in the now classic Competitive Strategy: Techniques for Analyzing
Companies and Industries. Central to Porter’s approach is the classic 5-Forces framework
for assessing industry attractiveness by looking from the outside-in. A counterpoint to
Porter’s framework is the inside-out approach made popular by Hamel and Prahalad. We
will understand these two fundamental and complementary approaches to strategy by
looking at Teva, an Israel based pharmaceutical company.
Key Topics
Industry Structure
Competitive advantage
Case: Teva Pharmaceutical Industries, Ltd. 9-707-441
Questions:
1. Why was the pharmaceutical industry one of the most profitable industries in the
world through the 1980s?
2. What have been the most important changes in the pharmaceutical industry’s
structure during the past two decades? What do the changes imply for the strategy
of a Big Pharma company?
3. How did Teva succeed in Israel? Why did such a company emerge in Israel? How did
Teva set itself apart from its competitors in Israel?
4. As the CEO of Teva, which markets would you concentrate on developing going
forward?
5. As an executive in “big pharma,” what approach would you take to deal with Teva?
6. Where is Teva vulnerable going forward?
Multiple choice closed notes quiz today
Readings:
Teva Pharmaceutical Industries, Ltd. 9-707-441
The Five Competitive Forces that Shape Strategy, Michael Porter, HBR (R0801E)
Strategic Intent, G. Hamel and C. K. Prahalad (HBR 6657)
Saturday, April 19, 2014
1.10 pm – 4.30 pm
Industry Structure and Strategic Positioning (2)
When Tesla debuted its stock on NASDAQ in June 2010, it was the first initial public
offering by an American automaker since Ford’s debut in 1956. Today, the stock is soaring
at a price above $200 and Elon Musk, Tesla’s CEO, is a celebrity often called the “new Steve
Jobs.” We will use the successes and challenges faced by Tesla to go deeper into the central
task of a strategist, i.e., understand existing barriers to success and develop creative ways
of surmounting them.
Key topics
Industry structure
Competitive advantage
Business canvas
Preparation questions:
1.
What are the structural barriers that have prevented new entrants from succeeding
in the automobile industry?
2.
In what ways has Tesla overcome these barriers?
3.
Do you think that Tesla has achieved a sustainable advantage that will enable it to
succeed long term?
4.
Would you recommend that Tesla be a niche company or a company with a broad
product line attempting to serve multiple market segments?
Readings:
Tesla Motors (9-714-413)
Why the Lean Start-up Changes Everything, Steven Blank (HBR R1305C)
Take home case exam will be distributed. Written analyses are to be submitted
before 10 am, Monday, April 28, 2014.