STRATEGIC MANAGEMENT
MGNT 4660-01
Spring 2010
Class Meetings:
Instructor:
Office:
Office Hours:
Telephone:
E-Mail:
Required Text:
Monday and Wednesday from 12:30 to 1:45 PM in Room 40
Robert J. Pearce
Room 115, Richards College of Business
Monday and Wednesday from 10:00 AM to Noon and 2:00 to 3:00 PM
678-839-4831
rpearce@westga.edu
Formulating Business Strategy: Concepts & Cases for the Undergraduate
PURPOSE
This course is designed to serve as the capstone in your business education. You will study the
total enterprise from the senior executive’s point of view. To the fullest extent possible, you will
be placed within the context of a general manager’s role, and asked to act in the best interest of
the organization and its constituents. Such a position presumes that you are adequately versed in
the functional areas of accounting, marketing, finance, human resources, and information
systems. As such, this course offers the means for you to integrate previous studies into a holistic
view of the business organization.
PREREQUISITES
You must be a “business major” and a senior in good standing to register for this course. You
must also have successfully completed the Core Area F courses as well as ECON3402,
FINC3511, MGNT3600, and MKTG3803.
METHODS
My goal is to facilitate your learning process by creating a student-centered participatory
learning environment. Toward that end, I will provide general guidance and ample assistance.
However, the primary responsibility for learning is yours. Indeed much (most?) of your learning
may come from working within a small group. Discussions within teams and preparation for
classroom presentations are therefore a crucial part of your learning experience. In order to
acquire an in-depth understanding of all the material, each student should spend about one (1)
hour in preparation for each session.
The material in this course will be covered with a mix of lecture, independent research, and case
studies. However, independent research and case study will be the primary mechanisms for
learning. In case study, you will be presented with a series of written representations of real
world business situations, wherein you will find a body of descriptive information that is often
incomplete, ambiguous, and comprised of an unstructured mix of fact and opinion. Within that
context, you will be asked to actively engage your critical thinking skills in the analysis of
complex business problems.
LEARNING OUTCOMES
1
This course is intended to significantly enhance your education in the following ways:
1. To develop your capacity to think strategically about a company, its business position, how it
can gain sustainable competitive advantage and formulate plans to ensure organizational
viability. [LG 5, 6]
2. To develop skills using strategic and functional level analytical tools in a variety of
companies and industries to facilitate the development and implementation of effective
business strategy. [LG 2, 4]
3. To integrate and synthesize knowledge gained in business core courses into a comprehensive
approach to managing a multifunctional business organization. [LG 4]
4. To organize and present strategic and operational information appropriate to professional
standards and practices. [LG 1, 3]
To the course learning objectives go to
http://www.westga.edu/~mgmtbus/courselearningobj.html
Please note that you (the student) are at the center of the learning process. Consequently, the
foregoing learning outcomes are fully possible only when you are actively involved in and
commit sufficient personal resources to the learning process.
STUDENT EVALUATION
Each student is required to complete the following work:
1. Competitive Landscape Report
Æ 20%.
2. Strategic Performance Evaluation Report
Æ 35%
3. Two quizzes
Æ 20%.
4. Team “case” presentation
Æ 15%.
5. Participation/text
Æ 10%
Your scores from the foregoing work will be weighted as indicated. If the weighted average on
all work is below 60, then your overall grade for this course is F. If the weighted average on the
work is > 60 but < 70, then your overall grade for this course is D. If the weighted average is >
70 but < 80, then your overall course grade is C. If the weighted average is > 80 but <90, then
your overall grade for this course is B. If the weighted average on all the work is > 90, then your
overall grade for this course is A. No late submissions accepted! Assignments must be turned in
on the day assigned, at the start of class.
Academic Honesty
Students are expected to adhere to the highest standards of academic honesty. Both the Honor
Code and the Student Conduct Code prohibit academic dishonesty, which is defined to include
“All forms of academic dishonesty including cheating, fabrication, plagiarism, and facilitating or
allowing academic dishonesty in any academic exercise.” Cheating means using or attempting to
use unauthorized materials, information or study aids. Fabrication means falsification or
unauthorized invention of any information or citation. Plagiarism means representing the words
or ideas of another as one’s own. Plagiarism occurs when a student uses or purchases ghostwritten papers. It also occurs when a student utilizes the ideas of or information obtained from
another person without giving credit to the person. If plagiarism or another act of academic
dishonesty occurs, it will be dealt with in accordance with the academic misconduct policy as
stated in the Student Handbook.
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Class Schedule and Tentative Course Outline:
Spring 2010 – MGNT4660 - 01
Date
Presentation/Lecture Topic
January 6th What to expect in this course
Solicit group choices and segment/company preferences
11th Form groups and assign companies
Start Chapter 1 – Introduction and overview
13th Chapter 1 (cont’d)
18th Martin Luther King Holiday
20th Start Chapter 2 – Where are we now?
25th
“
th
27
“
February 1st Chapter 2 (cont’d)
3rd Collect Industry Landscape Reports
Start Chapter 3 – What is the current business strategy?
th
8 Review results and summarize the first assignment
Chapter 3 (Cont’d)
10th Chapter 3 (Cont’d)
15th Chapter 4 – Are you satisfied with the current strategy?
17th
“
22nd
“
24th
“
st
March 1 Collect Strategic Performance Evaluation Reports
Start Chapter 5 – Solving simple business problems
3rd Chapter 5 (cont’d)
8th
“
th
10
“
15th First Quiz
17th Review 1st Quiz
Chapter 5 (cont’d)
22nd Spring Break
24th Spring Break
29th Chapter 5 (Cont’d)
31st Second Quiz
April 5th Review 2nd Quiz
Assign teams and case presentations
Robin Hood – Making recommendations
7th Group Work Session
12th Students Present – Ashley’s Sandwich Shop
Students Present – JP’s Cyber Café
14th Students Present – Kristen’s Videos
Students Present – Pasta Perfect
19th Group Work Session
21st Students Present – Steadman Realty
Students Present – Mid-South Sausage
26th Students Present - Bahamas Divers Resort
28th Students Present – Walsh Petroleum
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Assignments
Read Chapter 1
Read Chapter 2
First Assignment is Due
Read Chapter 3
Read Chapter 4
Second Assignment is Due
Sample problems in text
“
“
“ “
Prepare for First Quiz
Sample problems in text
Sample problems in text
Prepare for Second Quiz
Read the Robin Hood case
Turn in text book
Turn in text book
Turn in text book
Turn in text book
Turn in text book
Turn in text book
Turn in text book
Turn in text book
Guidance and Instructions for the First and Second Assignments
The grade given to your report(s) will of course reflect the content presented. However, grading
will also take into account the level of learning evidenced in your submission. For example, the
lowest level of learning reflects little more than a surface knowledge and simple recitation of
source data and text. In such a case, your report will be heavily dependent upon the recall of
material, specific facts, theories, etc. Higher levels of learning are evident in the following ways:
•
•
•
•
•
Comprehension is shown by translating material from one form to another (e.g., words to
numbers), by interpreting material (e.g., explaining or summarizing), and by predicting
consequences or effects.
Application refers to the ability to use learned material in concrete situations, which includes
the application of such things as rules, methods, concepts, principles, laws and theories.
Analysis refers to the ability to break down material into its component parts so that its
organizational structure may be understood. This may include the identification of parts and
the relationships between those parts.
Synthesis refers to the ability to put parts together to form a new whole.
Evaluation is concerned with the ability to define criteria and judge the value of material.
Note: These criteria are also given considerable weight in evaluating “case” presentations.
The format for the Industry Landscape Report should adopt an outline and layout fully
consistent with that displayed in the “Scoring Worksheet,” which is included at the back of this
syllabus. Your report should not exceed 6 pages of text, excluding a cover page and Appendix.
Use 12 point font and single or 1.5 spaces between lines. Staple the pages in the upper left
corner. Do not put the material into any kind of folder or binder.
The Strategic Performance Evaluation Report should adopt an outline and layout fully
consistent with that displayed in the “Scoring Worksheet,” which is shown on the last page of
this syllabus. Your report should not exceed 10 pages of text, excluding a cover page and
Appendix. Use 12 point font and single or 1.5 spaces between lines. Staple the pages in the upper
left corner. Do not put the material into any kind of folder or binder.
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FOR YOUR ANALYSIS & DISCUSSION IN CLASS
(Your active participation is expected)
With regard to the Robin Hood case:
1. What problems does Robin have?
2. What strategic options does Robin Hood have?
3. Does it make sense to impose a fixed transfer tax to counter the decline in revenues?
4. What about expanding the band’s operations to include areas to the north, south, east, and
west of Sherwood Forest as a way of rejuvenating revenues and cash flows?
5. Why not try to end the campaign by killing the Sheriff?
6. What are the pros and cons of accepting the offer of the barons to assist in securing King
Richard’s release from prison?
7. What plan of action do you recommend? How should Robin implement the recommended
plan? What steps are needed to make the recommended strategy work successfully?
STUDENT “CASE” PRESENTATIONS
Ashley’s Sandwich Shop
1. What level of daily sales (dollars) will yield break-even for Ashley’s Sandwich Shop?
2. Approximately how many customers are required for that level of sales?
3. Approximately how many customers are required to achieve a 20% increase in her pre-tax
profit (i.e., to go from $5,800 to $6,960)?
JP’s Cyber Café
1. Using the market research firm’s “realistic projections,” what do you estimate his near-term
ROA to be? How does the ROA change under the “pessimistic” projections?
2. Would you recommend that JP accept the partnership offer from JTL? Or should he proceed
on his own? Offer a thorough discussion of your reasoning.
NOTE: Do all your work in Jamaican dollars – do not convert to U.S. dollars!
5
Kristen’s Videos
Most all of Kristen’s friends work for large companies, invest their money aggressively in the
stock market, and gloat over the fact that their investment earn pre-tax ROIs in the range of 20%
to 25%. Kristen was beginning to think that she was missing out, especially now that
Blockbuster moved in on her business. Although she wants the same rates of return that her
friends claim, she still wants to earn it out of her Video business. Therefore, she has decided to
make some major changes in an effort to significantly improve the long-term performance of her
business. She will go to a 2-night rental policy and increase the rental fee/price to $2.49 per tape.
Although she is worried that this price increase could cause a significant decrease in tape rental
volume, a market research expert advised her that a much more aggressive advertising and
promotion posture will keep the volume decrease nearer the 5% level. Your task is to develop a
thorough and detailed assessment of Kristen’s proposed strategy and tell her what you think she
should do.
Pasta Perfect Inc.
1. What has Pasta Perfect done well?
2. What insights do you gain from analyzing the financial data in Exhibits 1, 2, and 3?
3. What has gone wrong?
4. What specific changes to the current strategy would you recommend? Justify your proposal
by offering a thorough discussion of your reasoning.
NOTE: In each of the following cases the business owner/manager is concerned with a fairly
limited (e.g., local) competitive landscape. Adopt that same perspective in your presentations,
especially relative to question #1.
Mid-South Sausage Company
1. Where are we now? (Refer to Chapter 2 and Figure 2.3).
2. What is the firm’s current business strategy? (Refer to Chapter 3 and Figure 3.1).
3. Are you satisfied with the current strategy? (Refer to Chapter 4 and Figure 4.3).
4. What set of problems did you identify in your assessment of the company’s business
strategy? What are the critical issues confronting the firm?
5. What specific changes to the current strategy would you recommend? Justify your proposal
by offering a thorough discussion of your reasoning.
Steadman Realty Company
1.
2.
3.
4.
Where are we now? (Refer to Chapter 2 and Figure 2.3).
What is the firm’s current business strategy? (Refer to Chapter 3 and Figure 3.1).
Are you satisfied with the current strategy? (Refer to Chapter 4 and Figure 4.3).
Offer a well-developed and thorough argument to convince Mr. Steadman his best strategy
for future growth requires him to hire an office/sales manager, stay focused on Hendrix, and
diversify into other areas (be specific) of the real estate business
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Bahamas Divers Resorts
1. Where are we now? (Refer to Chapter 2 and Figure 2.3).
2. What is the firm’s current business strategy? (Refer to Chapter 3 and Figure 3.1).
3. Are you satisfied with the current strategy? (Refer to Chapter 4 and Figure 4.3.)
4. Make a strong (i.e., thorough and balanced) argument to explain why the Rascals option is
preferred.
Walsh Petroleum
1. Where are we now? (Refer to Chapter 2 and Figure 2.3).
2. What is the firm’s current business strategy? (Refer to Chapter 3 and Figure 3.1).
3. Are you satisfied with the current strategy? (Refer to Chapter 4 and Figure 4.3).
4. Make a strong (i.e., thorough and balanced) argument for the convenience store option.
5. Make a strong (i.e., thorough and balanced) argument for the Valley Oil acquisition.
Scoring Worksheet:
Industry Landscape Report (Spring 2010)
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Industry _________________________ Team Members ____________________
__________________________________________________________________
Point
Values
Topic
Part I
Part II
Introduction to the Industry and what follows in the Report
What are the key characteristics of the industry?
10
75
• Industry Size….in $billions (25 pts)
• Industry 5-Year Growth….in % per year (10 pts)
• Industry Profitability….as measured by net income
margin and return on assets (20 pts)
NOTE: As a minimum I expect you to take advantage of the
Census, Trade Associations, the S&P Industry Reports,
Value Line, and data from the 10K’s of major companies in
this industry. Therefore, include an Appendix to clearly and
completely identify the sources/references you used.
Finally, make it clear how each source contributed to the
above analyses. (20 pts)
Part III
Develop and fully describe an appropriate SGM for the
industry. Be sure to thoroughly discuss and explain:
• the axes chosen (5 pts)
• the positioning of the groups (5 pts)
• the companies displayed in the groups (5 pts)
Total points earned
Scoring Worksheet:
Strategic Performance Evaluation Report (Spring 2010)
8
15
Student ___________________________________Company ____________________________
Topic
Introduction to the Company and summary of what follows in the Report
Your Company’s Positioning Strategy
• Offer a clear illustration of the industry Strategic Group Map (3)
• Highlight and explain your company’s position/group (3)
• Identify direct competitors and major rivals, and justify/explain those
choices (6)
• Marketing mix – address each of the 4 P’s (6)
• Key operating strategies (6)
• Answer 3 key questions and offer your company’s mission statement (6)
Performance Evaluation of Your Company
Part
Evaluate & assess your firm’s competitive strength, supported by….
III
• A thorough discussion of the firm’s organizational strengths/
resources: core and distinctive competencies (6 pts)
• A thorough discussion of market share & rank (levels, trends, and
comparisons) (6 pts)
Evaluate & assess your firm’s financial performance, supported by….
• A thorough discussion of revenue growth results (levels, trends, and
comparisons) (5 pts)
• A thorough discussion of net income margin (levels, trends, &
comparisons) (5 pts)
• A thorough discussion of ROA results (levels, trends, and
comparisons) (3 pts)
• Appendix to include pages from company 10-Ks with necessary
financials highlighted in yellow (10 pts)
Evaluate & assess threats to the sustainability of your firm’s strategy….
• How vulnerable is your firm’s future performance to imitation
threats? (5 pts)
• How vulnerable is your firm’s future performance to substitution
threats? (5 pts)
• How vulnerable is your firm’s future performance to holdup? (5 pts)
• How vulnerable is your firm’s future performance to threats from
changes in the business environment? (5 pts)
• How vulnerable is your firm’s future performance to the threat of
stalemate? (5 pts)
Part IV Conclusion
• Identify the most important strategic problems confronting the firm.
• Which of those problems poses the most critical strategic issue?
Why?
Total points earned
Part I
Part II
9
Points
5
30
60
5