COMPETITIVE STRATEGY
Instructor:
Jeffrey Macher
E-mail:
jeffrey.macher@georgetown.edu
COURSE OVERVIEW
Competitive Strategy is concerned with managing the development and competitive position of the
business enterprise in order to ensure its survival and long-term success. Every firm must create and
sustain a competitive advantage if it is to survive and prosper. This course provides frameworks, tools and
concepts to help students analyze and understand the creation and sustainability of competitive
advantage.
Political, economic, demographic and social environments differ and evolve across industries. 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. The first section of the
course examines the external environment.
While industry analysis provides firms insights into what they must do to succeed, it does not shed much
light on what they can do. Resource and capability analysis provides an insight into firms’ strengths and
weaknesses (as they relate to the external environment). An understanding of internal strengths enables
firms to fully exploit and build their capabilities to compete successfully, while an understanding of
internal weaknesses suggests recommendations for improvment. The second section of the course
focuses examines the internal environment.
Firms in an industry jockey for position through their actions and interactions. Every firm seeks to obtain a
unique and sustainable competitive position through an appropriate configuration of its assets and
products in relation to the external environment in order to generate superior value for its customers.
The third section of the course examines distinct business strategies with particular emphasis around
competitive positioning, low-cost and differentiation, and vertical integration.
ADMINISTRATION
Course Materials
Course materials consist of journal articles, book chapters, and cases. Journal articles represent some of
the most popular Harvard Business Review articles on strategy and strategic concepts, and are designated
HBS in the syllabus. Journal articles require registration and purchase and are available at the HBS course
website.
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Book chapters are taken from a popular strategy textbook. Book chapters designated GD in the syllabus.
Book chapters are are posted to my Google drive website.
Cases come in two types. The first type is written by Robert Grant and marked GD in the syllabus. These
cases are provided free of charge, and are posted to my Google drive website. The second type is from
Harvard Business School (HBS) and designated HBS in the syllabus. These cases require purchase and are
posted to the HBS course website.
For the HBS material, you must 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 two 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 Strategy – 2016.
You are responsible for reading the journal articles 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 my Google drive website.
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:
• MON 04 JUL 2016
09.00-11.30h
• TUE
05 JUL 2016
09.00-11.30h
• WED 06 JUL 2016
09.00-11.30h
• THU
07 JUL 2016
09.00-11.30h
The class will meet in WWZ S13.
•
•
•
•
MON
TUE
WED
THU
11 JUL 2014
12 JUL 2014
13 JUL 2014
14 JUL 2014
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.
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EVALUATION
Grading
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 Exam
30%
30%
40%
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. Any of the cases can be analyzed, but one case
write-up must be completed in the first week of the course (i.e., Sessions 01 – 04) and one case write-up
must be completed in the second week (i.e., Sessions 05 – 08).
Each case write-up submission is up to three 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. Address all of the questions listed in the detailed course outline.
Final Exam
The final exam will be administered at the end of the course and will be taken in class (not a take home
exam). The final examination is cumulative. The final exam is closed book. The final exam is scheduled for
21 JUL (TUE) from 14:00 to 15:30. The room will be announced at a later date.
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COURSE OUTLINE (SHORT)
DAY
SES TOPICS
READINGS
CASE
EXTERNAL ENVIRONMENT
04 JUL
01
05 JUL
02
HBS Porter (1996)
Introduction
Industry Structure & Five Forces HBS Porter (2008)
Industry Structure & Value Net
HBS B&N (1995)
HBS Cola Wars
GD Rivalry in Video Games
INTERNAL ENVIRONMENT
06 JUL
03
Resources and Capabilities
HBS C&M (2008)
GD Eastman Kodak
07 JUL
04
Resources and Capabilities
HBS P&H (2008)
GD Zara 2014
BUSINESS STRATEGIES
HBS Porter (1996)
11 JUL
05
Competitive Positioning
HBS McGahan (1994)
HBS Airborne Express
GD BD&vW (2008)
12 JUL
06
Low Cost Advantage
GD Barney (2007:CH 7) HBS Ryanair
13 JUL
07
Differentiation Advantage
GD Barney (2007:CH 8) GD Harley Davidson
14 JUL
08
Vertical Integration
GD Barney (2007:CH 6) HBS Disney-Pixar
GD – Macher Google Drive Material; HBS – HBS Single-Click Access Material
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COURSE OUTLINE (DETAILED)
SES 01 – 04 JUL
Readings
Questions
Reading
Questions
Case
Questions
SES 02 – 05 JUL
Reading
Questions
Case
Questions
Introduction
HBS Porter (1996) “What is Strategy”
1. What is strategy?
2. Is operational effectiveness strategy?
3. Is competitive positioning strategy?
Industry Structure and Five Forces
HBS Porter (2008) “The Five Competitive Forces That Shape Strategy”
1. How might the structural characteristics of an industry influence firm strategy?
2. When is the bargaining power of buyers and suppliers greatest?
3. How can firms reduce threats from new entrants, rivals or substitutes?
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?
Industry Structure and The Value Net
HBS Brandenburger and Nalebuff (1995) “The Right Game: Use Game Theory to
Shape Strategy”
1. What does the Value Net add beyond Porter’s Five Forces to firm strategy?
2. What is the role and importance of complementors?
GD 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?
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SES 03 – 06 JUL
Readings
Study Questions
Case
Study Questions
SES 04 – 07 JUL
Readings
Study Questions
Case
Study Questions
SES 05 – 11 JUL
Readings
Questions
Case
Questions
Resources and Capabilities
HBS Collis and Montgomery (2008) “Competing on Resources”
1. What are resources? What are capabilities?
2. How can resources and capabilities be appraise, measured and leveraged?
3. What are the challenges in developing resources and capabilities?
GD Eastman Kodak’s Quest for a Digital Future
1. What was Eastman Kodak’s strategy for developing its digital imaging business?
What is the rationale for that strategy?
2. Does Eastman Kodak possess the requisite resources and capabilities to be
successful in the market for digital imaging products?
3. Why did the strategy fail? Was there better alternatives?
4. What advice would you give to the board about Eastman Kodak’s next steps?
Resources and Capabilities
HBS Prahalad and Hamel (1996) “The Core Competence of the Organization”
1. What are the core competencies of an organization?
2. How can competencies be redeployed?
3. Can core competencies become core rigidities?
GD Zara 2014
1. What is Zara’s strategy for competing in the fashion industry?
2. From a value chain perspective, what resources and capabilities does Zara
possess that allow it to be successful?
3. Should Zara modify its business model and operating systems to account for (1)
its increasing size, (2) its global footprint, and (3) its online sales?
Competitive Positioning
HBS Porter (1996) “What is Strategy?” Harvard Business Review.
HBS McGahan (1994) “Note on Competitive Positioning” Harvard Business School
Note
GD Baum, Dobrev and van Witteloogstuijn (2008) “Strategic Ecology: What
Management Can Learn From Ecology” Rotman Magazine
1. What is competitive positioning?
2. What activities does competitive positioning rely on?
3. Understand the different frameworks related to competitive positioning (e.g.,
entrants vs. incumbents; generic low-cost vs. differentiation; niche width; etc.)
HBS Airborne Express
1. How and why has the express mail industry structure evolved in recent years?
How have the changes affected small competitors?
2. How has Airborne Express survived, and recently prospered, in this industry?
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3. Quantify Airborne Express’ sources of competitive advantage.
HINT 1 – It is often useful to analyze a company’s cost position relative to its
rivals and to examine the willingness to pay (WTP) of customers for the
company’s products relative to competitors’ products. The case allows you to
analyze the relative costs of Airborne Express in detail. Compare the costs of an
overnight letter shipped by Airborne Express to one shipped by Federal Express.
HINT 2 – To examine relative costs, start with the cost structure of a Federal
Express overnight letter, given in Exhibit 3. Use information in the case and your
understanding of what influences each cost item to estimate each of the items
for Airborne Express.
HINT 3 – The case does not allow you to compare WTP across companies more
than qualitatively, but it does permit you to examine relative prices.
4. What must Robert Brazier, Airborne Express’ President and COO, do in order to
strengthen the company’s position?
HINT 4 – In preparing your answers, the table available on the course website might
be useful in keeping track of the differences among the competitors.
SES 06 – 12 JUL
Readings
Questions
Case
Questions
SES 07 – 13 JUL
Readings
Questions
Readings
Cost Leadership
GD “Cost Leadership” (CH 07) in J.B. Barney Gaining and Sustaining Competitive
Advantage
1. What is cost leadership?
2. How does low-cost competitive advantage emerge and how is sustained?
3. How do firms organize for cost leadership?
4. What are some examples of firms with substantial cost advantages?
Low Cost Advantage
HBS Dogfight over Europe: Ryanair (A)
1. Based on an industry and competitive positioning analyses, what is your
assessment of Ryanair’s launch strategy? Will Ryanair’s launch strategy be
profitable?
2. How will Ryanair’s competitors likely respond?
3. Will Ryanair gain a sustainable competitive advantage?
Differentiation Advantage
GD “Product Differentiation” (CH 08) in J.B. Barney Gaining and Sustaining
Competitive Advantage
1. What is differentiation?
2. How does differentiation competitive advantage emerge and how is sustained?
3. How do firms organize for differentiation?
4. What are some examples of firms with substantial differentiation advantages?
GD Harley-Davidson Inc., May 2012
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Study Questions
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 opportunities and threats does H-D face?
4. How can Harley-Davidson sustain and enhance its competitive position?
SES 08 – 14 JUL
Readings
Vertical Integration
GD “Vertical Integration” (CH 06) in J.B. Barney Gaining and Sustaining Competitive
Advantage
1. What is vertical integration?
2. What are the strengths and weaknesses of different organizational
arrangements?
3. How might firm capabilities alter vertical integration decisions?
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?
Readings
Questions
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