Strategic Management
Dr. Margaret HughesMorgan
Fall 2014
Dept. of Management
Marquette University Graduate School of Management
Milwaukee, WI
Office: 208 Stratz Hall
E-mail: margaret.hughes-morgan@marquette.edu
COURSE DESCRIPTION
Welcome! This course is the capstone class of the business curriculum. In this course I will
address the question: What makes a firm successful? I define success in terms of creating
shareholder value over the long term. Inherent in understanding how to create shareholder value
is an understanding of how Wall Street and the stock market works, thus we will go over this in
our first class. The strategy of a firm is the set of decisions it makes concerning how it will
achieve superior performance, and hence create value for shareholders.
During the course, I and the text will present frameworks and tools for formulating successful
strategies. The focus is on identifying and analyzing the internal and external sources of
competitive advantage available to the firm and on developing strategies to access these sources
of profitability. I view strategy as a link between the firm and its environment. This implies that
there are two primary areas of analysis: the external industry environment of the firm, and the
internal environment of the firm (the resources and capabilities it possesses).
A central theme of the course is the analysis of competitive advantage. Superior performance is
primarily the result of building sustainable competitive advantage through deploying internal
resources and capabilities to exploit the key success factors within the firm’s industry. We will
analyze the potential for competitive advantage and design strategies that can build comparative
advantage. Thus, the essence of the overall framework is to address the development and
management of internal resources and capabilities in relation to the external environment to
achieve competitive advantage.
The course is concerned not just with analysis but also with decisions. In our case discussions of
individual companies, you will be taking the role of a senior executive or consultant. You will be
required to make decisions concerning key strategy issues and indicate how your decisions will
be implemented.
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COURSE OBJECTIVES
1. To develop your ability to think strategically.
2. To acquire familiarity with the central concepts, frameworks, and techniques of strategic
management.
3. To gain expertise in applying strategic concepts, frameworks and techniques in order to
understand the reasons for good or bad firm performance, generate strategic options for a
firm, assess those options under conditions of imperfect information, select the most
appropriate option or strategy, and recommend the best means for implementing that option
or strategy.
COURSE MATERIALS
Robert Grant, 2008, Contemporary Strategy Analysis: Concepts, Techniques,
Applications. 6th Edit. Oxford, UK: Blackwell Publ.
Course pack of cases and additional readings.
COURSE STRUCTURE
This course is designed to be interactive. Thus, your attendance and involvement in the
class discussions are an important part of the course. Your level of contribution will
account for 10% of the final grade.
COURSE GRADING
Quizzes (8)
750 pts
Case Facilitation
50 pts
Two Case Write-ups 200 pts
1000 pts
Grades will be calculated on the basis of available points and no extra credit is available. Final
point scores will be converted into course grades using the following scale:
A (94-100%)
AB (88-93.9%)
B (84-87.9%)
BC (78-83.9%)
C (74-77.9%)
CD (68-73.9%)
D (60-67.9%)
F (0-59.9%)
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QUIZZES
Eight quizzes are offered throughout the semester. Quizzes include multiple choice, short
answer and essay questions covering the readings (textbook chapters, articles and cases)
and lecture material covered during class. The quizzes are open book, timed and done
online outside of class. Each quiz opens at 5:05pm on the day of class (except day 1) and
remains open for 5 days (closing midnight Thurs). Each quiz covers the materials
presented that weekend. Thus, quiz one covers material assigned for August 14 and is
available from August 14 through Aug 19.
CASE STUDIES
There are eight (8) cases assigned throughout the semester, some in class, some online
presentations (see “Schedule”). Each team must write-up the Apple Case and the
Pandora Case. Cases must be turned in by the beginning of the class in which they are
due. Please e-mail them to me. The cases must be typed and are limited to four pages.
For each case, I have provided questions (found at the end of this syllabus) for you to
answer. Your write-up must answer each question. Please number your answers and you
may use bullet points in your answer. These questions will also be the starting point for
our class discussion of the case. Regardless of whether you write up a case or not,
everyone is expected to come to class prepared to discuss all assigned cases. Each group
will be responsible for facilitating one of the case discussions. I will talk more about this
the first day.
The case studies have been selected to expose you to a wide range of strategic situations.
Case analysis puts you in the shoes of those faced with actual managerial situations and
asks you to assess, understand and respond to issues facing the actors in the case based on
limited information and a finite time frame. Your success depends largely on your ability
to apply the frameworks and concepts of this class.
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SCHEDULE
* Changes may be made to the slides prior to class. I will repost by the day before each
class. Due to copyright issues some slides may not be posted.
Class
Topic
Assignments
Aug. 14
Introduction
Creating Unique Value
Wall Street 101
Grant: 1 & 2
Starbucks: A Crack in the Mug
Seize the Advantage…
How to Analyze Cases online presentation
Aug. 16
Value Chain Analysis
Restoring Value Creation
Grant: 5, 6 & 8
Ducati
What is strategy?
Aug 23
Business Strategy
Developing Dual Advantages
Grant: 9 & 10
Ryanair online presentation
Ryanair Part B
Can you say what your strategy is?
Sept 20
Market Structure I
Building Resilient Firms
Grant: 3 & 4
Dollar General
The Quest for resilience
Oct. 4
Market Structure II
Challenging Market Dominance
Global Strategies
Grant 15
Apple Inc., 2012
Industry Transformation
Oct. 18
Industry Transformation
Responding to Disruptive Events
Grant: 11 &12
Pandora
Disruptive Technologies
Nov. 1
Competitive dynamics
Playing the Game to Win
Services Strategy Lecture
Grant: 13 &14
Cola Wars Continue: Coke & Pepsi 2006
Predicting your competitor’s…
Nov. 15
Corporate Strategy
Creating Synergies
Strategy Simulation
Grant: 16 & 17
Creating Corporate Advantage
Disney online presentation
Dec 6
Graduation!!!
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TOPIC DESCRIPTIONS
Creating Unique Value: Introduction to the concept of strategy
The notion of strategy is introduced including the concepts of mission statements, goals or
objectives, strategy, profit, and shareholder value. These concepts are used to develop a
stakeholder perspective for examining firms as value creating mechanisms. In addition, we
will distinguish between value creation and value capture, between business strategy and
corporate strategy and between accounting and market measures of performance.
Restoring Value Creation: Value chain analysis and the resource-based view
Differences in performance between firms in a given product-environment can be traceable to
idiosyncratic competencies or core capabilities that rest on unique and difficult to imitate
resources (e.g., culture of innovation, product-development expertise). These competencies
create competitive advantages in the market such as price advantages, product design
advantages, service advantages etc. Long-term survival depends on sustaining competitive
advantages in markets that evolve with changes in technology, socio-political factors,
competitor strategies and so forth. This module looks at how competitive advantages are
created and sustained by nurturing core competencies that in turn allow for continual
enhancement of current advantages, or leveraging of knowledge into new product-markets.
Creating Dual Advantages: Cost leadership and product differentiation strategies
Businesses may choose from a variety of competitive advantages (or strategies) for
competing in the marketplace. These advantages range from those resting primarily on
price/cost advantages, and those that rest on some form of differentiation (e.g., unique
product design or features, customer service, product placement and so forth). This module
looks at what it takes to pursue each strategy successfully, and the long-term implications of
pursuing each strategy.
Building Resilient Firms: Industry structure and environmental trends
Growth in demand eventually gives way to maturity and this corresponds to a consolidation
of industry capacity in the hands of a few firms. These firms tend to reduce competitive
rivalry in order to improve overall profitability. Though beneficial in the short term, this
strategy makes extant firms vulnerable to new entrants with new business models.
Conversely, existing firms often hold monopoly positions on critical assets that new entrants
must access if they are to succeed. In this module we look at how mature markets differ from
growth environments, and at how industry conditions provide
Challenging Market Dominance: The role of new entrants in industry evolution
Businesses operate within an industry structure represented by suppliers, customers,
competitors, potential entrants, the makers of substitutes and makers of complementary
products. These parties each have a financial stake in how you conduct your business, and if
they have sufficient power, can influence your firm’s profitability. In this module we look at
how industry structure, and in particular the bargaining power of stakeholders can affect firm
profitability, and how changes in the broader environment may affect the power of these
stakeholders.
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Responding to Disruptive Events: How disruptive technologies upset the status quo
This module explores how industry transitions brought on by advancing technologies or
changing regulations affect competitive advantage and market structure. It examines how
firms attempt to respond to these challenges, and why many fail to respond.
Playing the Game to Win: Competitive dynamics through game theoretic lens
Managing stakeholder relations is a search for an optimal relationship with stakeholders that
results in the creation rather than destruction of value. Game theory provides a framework for
understanding the implications of competitive rivalry and cooperation in value creation and
destruction.
Looking for Synergies: Corporate strategy, mergers, acquisitions, and alliances
Few companies today are single business firms. Generally they own and operate businesses in
multiple industries, some related some not. How companies acquire and manager across
diverse businesses reflects corporate strategy. Within corporate strategy, possibly the most
effort in both time and money is devoted to mergers and acquisitions. This occurs despite the
overwhelming evidence suggesting that mergers and acquisitions rarely produce positive
returns. In this section we look at the factors that lead firms to an acquisition strategy, and
why so many acquisitions (and mergers) appear to fail. In addition, we also examine the
nature of strategic alliances as an alternative to formal ownership. Under this form, two firms
enter into a formal agreement to cooperate on some specific business venture. Firms appear
to be choosing this form of relationship in order to avoid some of the pitfalls of outright
ownership; however, alliances raise their own unique problems and threats.
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QUESTIONS FOR WRITTEN CASE ANALYSES
Answer the questions assigned for each case in four pages or less. Be sure to number you
answers. You may use a bullet point style. Be sure to support your answers.
Starbucks: A crack in the mug?
1. What is Starbuck’s strategy? That is, what are they really selling?
2. What three or four factors distinguish Starbucks as a company and contributed to its
initial growth?
3. What are the main problems that emerged in 2007 and 2008? In considering this
question, think about their expansion and branding strategies.
Ducati
1. What have been the results from our recent restructuring efforts? What evidence exists
that our restructuring efforts have been successful?
2. Can we sustain our current competitive position? Is Honda a serious threat to our market
position?
3. Looking toward the future, are the growth targets established by Minoli feasible? What
options do we have to satisfy these objectives and which should we pursue?
Ryanair
1. What is your assessment of Ryaniar’s launch strategy? Was it a good strategy? In your
answer consider potential market demand, pricing and Ryanairs’ likely cost structure.
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? That is, how much in Irish pounds could they lose?
Dollar General
1. What job(s) is Dollar General really doing for its customers? Describe.
2. Who are Dollar General’s real competitors? Why these firms?
3. Can Wal-Mart effectively respond to Dollar General’s every-day low pricing?
Apple Inc. 2012
1. Analyze the dynamics of the PC industry. Are these dynamics favorable to problematic to
the Macintosh business? Why or why not?
2. Has Jobs finally solved Apples’ long-standing problems with respect to the Macintosh
business? Why or why not?
3. The iPod-iTunes business has been a spectacular success. Has Jobs found a new formula
to create a sustainable competitive advantage for Apple? Defend your answer.
Hint: Consider AL and BA’s strategy, goals, assumptions, capabilities when answering Q2.
When answering Q3, consider whether Ryanair can make money at 98 Irish pounds (i.e.,
consider both fixed and variable costs).
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Pandora
1. What re the key elements of Pandora's business model? Is this model viable? How does
the advent of the Internet change the structure and economics of the music industry?
2. Given investor pressure for profitability, what would you recommend about seeking next
round funding and dealing with the heavy users?
3. What job is Pandora doing for its customers? Who else could provide this job? Would
Pandora disrupt these other providers?
4. Can Pandora earn a positive return from this job?
Cola Wars Continue: Coke and Pepsi in 2006
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?
Walt Disney Company
1. What did Michael Eisner do to rejuvenate Disney? Specifically, how did he increase
net income in his first four years?
2. Has Disney diversified too far in recent years? Defend your answer?
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