BUSINESS 400-040 T-R 6:30 pm ED 621
2013 Spring Semester
Instructor: Dr. Jim Mason
Office:
ED 526
Phone:
585-4710 or 789-6578 (home)
Office Hours: 9:30 pm T-R or by appointment
COURSE SUMMARY:
Business 400 is more than a capstone course. We are concerned with managing
competitive position and long-term enterprise development to ensure survival
and success.
A firm must create and sustain a competitive advantage if it is to survive and
prosper in the long run. We will develop frameworks, tools, and concepts needed
to analyze and understand the context of superior performance. Our course
concentrates on two areas of analysis: the enterprises external environment and
its internal environment. It makes the distinction between corporate and business
strategy.
Industries differ in the extent to which they provide opportunities for sustained
performance. They are dynamic and evolve over time, providing changing
opportunities and threats. Enterprises compete for position through their actions
and interactions, each seeking competitive position through its products and
services in order to generate superior customer value. We spend the first part of
our course exploring the challenges of external environmental analysis to gain
insight into what enterprises must do to succeed.
Resource and capability analysis define the enterprise’s core competencies and
provide insight into an enterprise’s strengths and weaknesses as they relate to
the external environment (opportunities and threats). An understanding of an
enterprise’s strengths enables the enterprise to more fully exploit and build its
capabilities to successfully compete. The second part of our course focuses on
internal analysis, the drivers of success and what an enterprise can do to
succeed.
Finally, we shall bring our external and internal analyses together to consider
strategy formulation and implementation that can create and sustain competitive
advantage.
OBJECTIVES:
Our intent is to develop an understanding of the central importance of
policy/strategy, to foster an attitude or appreciation of the general management
perspective, and to develop an effective conceptual framework.
The course will require us to:
1. Become comfortable with the principal concepts, frameworks, and
techniques of strategic management.
2.
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Gain expertise in their application in order to:
Understand the reasons for good or poor enterprise performance,
Generate strategy options for an enterprise,
Appraise strategic alternatives,
Select the most appropriate strategy,
Recommend the best means of implementing that strategy.
3. Integrate the knowledge gained in other courses
4. Develop our general management capacity in terms of:
• An appreciation of the general managers role,
• The ability to view enterprise problems from the general manager’ s
perspective,
• The ability to develop approaches to strategic problems,
• Developing enterprise judgment.
5. Improve our skills in discussing enterprise strategy and articulating
arguments about strategic issues.
TEXT:
Robert M. Grant, Contemporary Strategy Analysis: Text and Cases Edition,
Eighth Edition, Wiley, 2013 (e-book will work at considerably less cost)
The text provides a guide for the student in the analysis of general management
problems. Its content is not to be the theory of the firm nor of general
management. It does present a practical, as well as theoretical orientation. You
will be expected to draw upon and to integrate the theory and concepts of your
business courses to date.
GROUP WRITTEN CASE ASSIGNMENTS:
I have assigned one three person, group-written case analyses for classes
6. Tuesday May 28: Wal-Mart Stores Inc. June 2012
It is due at the beginning of the class! It will be a full case analysis with full
recommendations to management, with supporting analysis (20% of final grade).
Your conclusions are to be succinctly explained, and justified. We will use an A3
(11x17 inch paper) one page write-up. This will be a very different experience for
you.
This written A3 will serve as a source of feedback for both instructor and student.
It is to be prepared as a "report to management" rather than as the commentary
of a student analyst to the instructor. You are to assume the position of a
professional consultant writing to an audience of practicing managers. Therefore
your reports will be action oriented! In short, prepare an argument putting your
position forward and not an expository essay.
EXAMINATIONS:
Given the time constraints, we will use a single unannounced case as the basis
of the final examination (60% of final grade) and no mid-term.
PRESENTATIONS:
There will be no student case presentations this semester. Each student is
to be well prepared to discuss each assigned case in class...and be engaged.
You may want to form case study groups. I suggest you do your own preparation
and study the night before, and meet to discuss the case before class.
COURSE CONDUCT:
The area of strategic management presents a new level of conceptual complexity
for most students both because of the nature of the subject and because of the
multi-faceted character of the cases encountered. As a consequence, it is quite
easy to create a situation of "information overload" if too many materials are
assigned/used in the course. Therefore, we will try to use as few materials as
possible to complement the cases, and resort to discussion and lectures to
impart theoretical content. You will find two sets of power points on the class
web-CT site. One consists of the authors' slides, the second I have prepared as
"class notes". You may find them helpful.
We will try to have a number of senior managers visit our class. They will share
their experience with and insights into the strategic management function. Please
be attentive and engage them in discussion!
HOW WILL SUCCESS BE MEASURED IN THE COURSE?
It is most important to keep up with the course on a day-to-day basis. Do not let
anything slip that is not clear to you.... Make sure you understand what is going
on. Spend the necessary time and make sure you get the best value possible.
We will be concerned with two areas of evaluation: preparation and participation,
and written work.
1. Principal emphasis is on the class participation. Involvement plays a vital
part of the development of your abilities to cope with general management
situations; to find, analyze and solve problems, and to recognize
opportunities; to use basic concepts and tools; and to develop an overall
management point of view. You will be expected to develop knowledge
and skills to the point where you can participate freely, confidently and
positively in case discussion. It is expected that you will be prepared at all
times to participate with meaningful contributions on a voluntary basis
and/or when called upon. The normal role of the instructor will be to guide
discussions and help us to understand the theory and its applications. If
there is any reason why you feel you cannot make contributions during
class discussion, it is your responsibility to bring this to the instructor's
attention and seek assistance. Participation implies being
actively/purposefully caught up in the learning process.
In case discussions, for example, a meaningful contribution will be any
comments, questions, or analysis that are intended to advance the
general class understanding of the case or concept, its major problems,
key factors to consider, and appropriate decisions or plans of action that
could be undertaken.
2. Written work provides feedback to the instructor and to you as to how well
you are performing. Results will be judged on conciseness and clarity of
presentation, proportion of major concepts or issues dealt with, analysis
and use of analytic tools, and the soundness of arguments used to
support your points.
3. The following criteria will be applied to judge results of the final exam:
To be considered acceptable for the exam:
a) Must identify and analyze at least 80% of the major
problems/opportunities in the case.
b) Should identify the key assumptions based on information in the
case situation. Recognize that different but sound assumptions will
be made on the basis of the same information.
c) Must demonstrate that arguments used to accept or reject any
alternative solution are consistent with the assumptions and
calculations you have made, and are consistent with your prior
interpretations of case information.
d) Must present and explain a viable plan of action consistent with the
preceding analysis.
You will do your “thinking” in a conventional exam book and then an A-3 write-up.
HOW WILL FINAL GRADES BE DETERMINED?
The final grade will be a composite of the term's work and final exam. The final
exam will count 60% of the final mark. Class preparation and participation will
count for 20% of the final mark, and a group written case will count 20%. The
mark for the written case analysis may be adjusted to reflect your group's peer
evaluation of your performance.
Participation, to me, means to be actively involved in the learning process.
This includes active engagement in class/case discussions and requires
analysis beyond merely reading the case!
In evaluating class participation, I will be asking the following questions:
1. Is the participant a good listener? Do comments link previous contributions
and with the overall direction of the class discussion?
2. Do the comments reflect careful analysis?
3. Do the comments add to our understanding of the situation?
4. Is there a willingness to try new ideas or all comments “safe”?
5. Is the participant considerate of other class members?
SPECIAL ACCOMODATIONS:
Students who need accommodation because of a special need should discuss
accommodations with the University's Special Needs Coordinator and then with
me. The University of Regina's Policy for Accommodation is available on the
University website.
TENTATIVE SCHEDULE:
Class 1 Tuesday May 7: Introduction - The Concepts of Corporate and
Business Strategy
Please read: Chapter 1
* The nature of the course and expectations. Each chapter has learning
objectives! Pay attention to them…
* Evolution of the strategy problem.
* A strategic management model.
*Context of discovery vs. context of justification
* Blitz Electronics
*Alternative case approaches - pros & cons
*The A-3
*Classroom strategy.
Chapter 1 Self-Study Questions:
1. In relation to the four characteristics of successful strategies (clear, consistent,
long-term objectives; profound understanding of the environment; objective
appraisal of resources and effective implementation) assess France and
Germany’s strategy towards the Euro.
2. Using the model outlined in Figure 1.5 page 21, describe the faculty of
Business Administration’s strategy.
Class 2 Thursday May 9:
Case: Please be prepared to discuss Madonna
1. Why has Madonna been so successful in the world of entertainment?
2. Does Madonna have a strategy? If so, what are the main elements of that
strategy?
Please read: Chapter 2
Suggested Reading: S. Covey, The Seven Habits of Highly Effective People
(Simon & Schuster, 1989) Chapter 4 “Begin with the End in Mind: Principles of
Personal Leadership.”
Chapter 2 Self-Study Questions:
1. Table 2.1 page 38 compares companies according to different profitability
measures.
a. Which two of the six performance measures do you think are the most
useful indicators of how well the company is being managed?
b. Is return on sales or return on equity a better basis?
c. Several companies are highly profitable yet have delivered very low
returns to their shareholders. How is this possible?
2. Refer to Strategy Capsule 2.3, what additional data would you seek and what
additional cost and productivity ratios would you calculate to shed light on Ford’s
inferior ROCE relative to Toyota?
Class 3 Tuesday May 14: Financial Analysis as a Key Component in
Strategic Analysis
Please review: key financial ratio analysis from your earlier finance classes, and
Grant page 41 on.
Case: Please be prepared to discuss Valuing Facebook
1. What methods did investment analysts use to value Facebook?
2. What results do these approaches generate?
3. Use key financial ratio analysis tools from your finance class and analyze the
data at the end of the case.
4. What additional factors might impact Facebook’s future value?
EXTERNAL ANALYSIS
Industry Analysis- How Industry Structure Drives Competition and
Profitability
Class 4 Thursday May 16:
Case: Please prepare: Ford and the World Automobile Industry in 2009
Discussion Questions:
1. The world automobile industry has experienced a downward trend in
profitability since the 1960s. (Table 4.A2 shows this trend since the 1980s.) What
changes in the structure of the world auto industry have caused competition to
intensify and profitability to decline?
2. How is the structure of the world automobile industry likely to change over the
next five years (2010‐14)? What effect will these changes have on competition
and profitability in the industry?
3. What will be the Key Success Factors in the world automobile during the next
five years?
4. Are there any segments of the world automobile market that you think will offer
superior profitability over the next five years?
Class 5 Tuesday May 21
Case: Please be prepared to analyze and discuss Starbucks Corporation,
April 2012
1. How is Starbucks performing? Is Starbucks in dire straits?
2. What is Starbucks’ strategy?
3. Assess Starbucks’ strategy in terms of its “fit” and its “internal coherence”.
4. Is Starbucks’ success sustainable? Would you buy Starbucks’ stock for your
retirement portfolio?
Please read: Chapter 3
*Porter defines competitive strategy and identifies the two fundamental questions
in strategy1. What makes an industry attractive?
2. What positions within an industry lead to superior performance?
3. To what extent can an industry’s low profitability be attributed to industry
structure?
Chapter 3 Self-Study Questions:
1. The major forces shaping the business environment of the fixed-line telecom
industry are technology and government policy. The industry has been influenced
by fiber-optics (greatly increasing transmission capacity), new modes of
telecommunication, deregulation, and privatization. Using the 5 Forces of
competition model, show how each of these developments has influenced
competition in the fixed-line telecom industry.
2. With reference to Strategy Capsule 3.1 page 63, use the five forces framework
to explain why the tobacco industry is so profitable (as indicated by the
profitability of its dominant firms).
Class 6 Thursday May 23:
Case: Please be prepared to discuss: The US Airlines Industry in 2012
Discussion Questions:
1. Assess the overall financial performance of the US airline industry during the
past 20 years.
2. To what extent can the industry’s low average profitability during this period be
attributed to the structure of the industry? Which of Porter’s five forces has had
the biggest impact in depressing industry profitability?
3. What is the outlook for industry profitability during the next five years
(2013‐2017)?
4. Are there any strategies by the airlines that have been effective in moderating
the forces of competition? Are there strategies that the airlines could use to
improve industry profitability in the future?
5. What problems is Air Canada facing? Why?
Please Read: Chapter 4
Chapter 4 Self-Study Questions:
1. HP, Canon, Lexmark, and other manufacturers of inkjet printers make most of
their profits on the sale of cartridges. Why are cartridges more profitable than
printers? If cartridges were manufactured by different firms from those making
printers, would the situation be different?
2. In, November 2005, six of Paris’s most luxurious hotels were fined for
colluding on room rates. Regular guests showed little concern- noting that,
whatever the listed “rack rate”, it was always possible to negotiate substantial
discounts. Using the “prisoner’s dilemma” model, explain why the hotels were
able to collude over their listed rates but not over discounts?
3. During 2007-9, the Nintendo Wii established leadership over the Sony PS3
and Microsoft Xbox 360 in the market for video game consoles. Unlike Sony and
Microsoft, Nintendo is completely dependent upon the video games industry for
its revenues. How might Nintendo use the competitor analysis framework
outlined in figure 4.3 to predict the likely reactions of Sony and Microsoft to its
market success?
Topics for discussion: does industry matter, drawing market boundaries, the
role of complements, segmentation analysis, and utility of game theory….
INTERNAL ANALYSIS
Identifying and Appraising Resources and Capabilities
Class 7 Tuesday May 28 Written case analysis to be handed in class
Case: Please prepare: Wal-Mart Stores Inc. June 2012
Discussion Questions:
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 WM’s main competitive
advantages lie? Identify the distinctive resources and capabilities in each of
these functions/activities.
3. To what extent is WM’s competitive advantage sustainable? Why have other
retailers had limited success in imitating WM’s strategy and duplicating its
competitive advantage?
4. Looking ahead, what measures does WM need to take to sustain its recent
performance and defend against competitive (and other) threats?
Please read: Chapter 5
Chapter 5 Self-Study Questions:
1. The chapter argues that Apple’s key capabilities are product design and
product development which combine hardware technology, software engineering,
aesthetics, ergonomics, and cognitive awareness to create products with
superior user interface and unrivaled market appeal. How easy would it be for
Samsung to replicate Apple’s capabilities?
2. Many companies announce in their corporate communications: “Our people
are our most important resource.” In terms of the criteria listed in Figure 5.7, can
employees be considered to be of the utmost strategic importance?
3. Apply resource and capability to our Faculty of Administration. Begin by
identifying the resources and capabilities relevant to success in the market for
business education, appraise the resources and capabilities of our Faculty, then
make strategy recommendations regarding such matters as the programs and
courses offered and the overall positioning of the program and its offerings.
Developing Critical CapabilitiesThrough Organizational Design
Class 8 Thursday May 30
Case: Please prepare: Harley-Davidson, Inc. July 2008
Discussion Questions:
Please apply Porter’s value chain, (Figure 5.4 page 123, Figure 7.11 page 199
and Strategy Capsule 7.6 page 200) to your case analysis.
1. Identify Harley‐Davidson’s strategy and explain its rationale.
2. Compare Harley‐Davidson’s resources and capabilities with those of Honda.
What does your analysis imply for Harley’s potential to establish cost and
differentiation advantage over Honda?
3. What threats to continued success does Harley‐Davidson face?
4. How can Harley‐Davidson sustain and enhance its competitive position?
Please read: Chapter 6
Chapter 6 Self-Study Questions:
1. It has been argued that traditional approaches to strategic planning ( as per
Figure 6.1) are good systems for exercising control but are not much good for
developing strategy, especially for organizations facing change in their
environment. What do you think?
2. Within the University of Regina, which activities are organized mechanistically
and which organically? To what extent does the mode of organization fit the
different environmental contexts and technologies?
The Analysis of Competitive Advantage
Class 9 Tuesday June 4
Case: Please prepare Manchester United: Preparing for Life without
Ferguson
1. What should Gill’s strategic priorities be for Manchester United? Should the
primary focus be on financial or on team performance?
2. In terms of team capabilities, why has Manchester United been so successful
on the field during the 14 years to 2009? What role has Ferguson played in this
success?
3. What determines team capability in European professional football (soccer)?
4. What lessons should Gill draw from the strategies and organizational
structures of other leading clubs such as Real Madrid, Barcelona, AC Milan,
Bayern Munich, Chelsea, and Arsenal?
5. If Ferguson retires at the end of the 2012-13 season, what advice would you
give Gill and the Manchester United board regarding his replacement?
Please read: Chapters 7, 8 and 9
Chapter Self-Study Questions:
1. To what extent are the seven cost drivers shown in Figure 7.5 relevant in
analyzing the cost pr student in the Faculty of Business Administration. What
recommendations would you make to Dean Gaudes for improving cost efficiency
of our school?
2. Draw an organizational chart for the Faculty of Administration. Does the
Faculty operate with a matrix structure (for instance, are there
functional/discipline-based areas together with units managing individual
programs)? How would you reorganize the Faculty to make it more effective?
3. Consider the changes that have occurred in comparatively new industries
(wireless communication services, wireless handsets, video game consoles,
online auctions, bottled water). To what extent has the industry evolution followed
the pattern predicted by the industry life-cycle model? What particular feature
does the industry have that have influenced its pattern of evolution?
Business Strategies in Different Industry Contexts
Class 10 Thursday June 6
Case: please prepare Video Game Console Industry in 2012: The Next
Round
1. What are the key success factors in the video game hardware industry?
2. In what sense is it a “winner-take-all” industry?
3. What factors have changed the competitive dynamics and the basis for
competitive advantage in the industry in recent years?
4. Looking ahead, which factors will determine the basis of success in the next
(the 8th) product generation?
5. For the next generation of video gam,e consoles, make strategy
recommendations for:
Sony, (students with last names beginning with A-F)
Microsoft (students with last names beginning with G-P)
Nintendo (students with last names beginning with Q-Z)
Please read: Chapters 10 and 11
Chapter Self-Study Questions:
1. Established airlines are cutting costs to compete with the increasing number of
budget airlines. Yet, it is unlikely that they will ever match the costs of Southwest,
Ryanair. Or AirAisa. Which, if any, of the strategies outlined I chapter 10 offer the
best opportunities for established airlines to improve their competitive position?
2. “The Shifting Barrier between Firms and Markets” section in chapter 11 notes
that the large US companies account for a smaller percentage of total
employment- a development that is attributed to a more turbulent business
environment. Explain why external turbulence encourages outsourcing and
increased focus on core business.
CORPORATE STRATEGY
Global Strategies and the Multinational Corporation
Class 11 Tuesday June 11
Case: Please prepare Google Inc.: What’s the Corporate Strategy?
1. What is Google’s corporate strategy?
2. Evaluate Google’s diversification into new products and businesses, with
particular reference to (a) browsers (Chrome), (b) mobile phone operating
systems (Android), and (c) mobile devices (Motorola).
3. Does Google need to refocus? How should Google delineate its corporate
boundaries and which businesses or products would you recommend
abandoning or selling (if any).
Please read: Chapter 13 and 14
Chapter Self-Study Questions:
1. General Electric, Berkshire Hathaway, and Richard Branson’s Virgin Group
each comprise a wide range of different businesses that appear to have few
close technical or customer linkages. Are these examples of unrelated
diversification and do the corporate and ownership links within each groups result
in the creation of any value? If so, what are the sources of this value creation?
2. Which do you think is a better organizational form for a diversified,
multinational corporation: the divisionalized corporation (such as General
Electric, Philips, and Sony) or the holding company (such as Tata Group,
Samsung, and the Virgin Group)?
Implementing Corporate Growth Strategy
Class 12 Thursday June 13:
Case: Please prepare Outback Steakhouse: Going International
Discussion Questions:
1. What are the principal features of Outback Steakhouse’s strategy in the US?
Why has this strategy been so successful?
2. What are the key elements of the international expansion strategy being
proposed by Hugh Connerty?
3. Assess the proposed strategy in relation to (a) Should Outback expand
internationally, or would it be better to expand through starting new restaurant
chains within the US? (b) Does the strategy outlined by Connerty make
sense?
4. If Outback is to expand internationally, advise Chris Sullivan on (a) The
corporate strategy? optimal rate of international expansion; (b) the best mode
of entry into foreign markets; (c) Which country(ies) to enter first; (d) Whether
Connerty is the right person to head the International Division.
Please read: Chapter 15
Chapter 15 Self-Study Question
1. Different automobile companies have internationalized in different ways.
Toyota has expanded organically, establishing subsidiaries in overseas markets.
Ford went through a phase of acquisition. General Motors has favored strategic
alliances (Figure 15.1). What do you see as the advantages and disadvantages
og GM’s alliance-based international strategy?
Current Trends in Strategic Management
Class 13 Tuesday June 18
Case: Please prepare W.L. Gore & Associates: Rethinking Management
1. What are the distinctive features of W.L Gore’s organization and
management? To what extent do they represent a consistent management
based upon identifiable principles?
2. What are the advantages and disadvantages of W.L. Gore’s approach to
organization and management of the company?
3. To what extent is the W.L. Gore approach to organization and management
transferrable to other companies. And, if it is, to what types of company?
Please read: Chapter 16
Final Tuesday June 25 at 7:00 p.m.….