Contemporary Strategy Analysis: Concepts, Techniques

First published 2005 by Blackwell Publishing Ltd Set in 10/12pt Galliard by Graphicraft Limited, Hong Kong The publisher’s policy is to use permanent paper from mills that operate a sustainable forestry policy, and which has been manufactured from pulp processed using acid-free and elementary chlorine-free practices.


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BJECTIVESOFTHEKey Features of the Book5TRATEGICANAGEMENTThe Concept of Strategy (Chapter 1)17PART II: THE TOOLS OF STRATEGIC MANAGEMENTGoals, Values, and Performance (Chapter 2)21Analysis of Industry and Competition (Chapters 3 and 4)24Analyzing Resources and Capabilities (Chapter 5)28Organization Structure and Management Systems (Chapter 6)32The Nature and Sources of Competitive Advantage; Cost and Differentiation Advantage (Chapters 7, 8, and 9)35Industry Evolution (Chapter 10)38Technology-based Industries and the Management of Innovation (Chapter 11)39
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Guide for InstructorsHelp you to select cases to use with the text;Provide you with slides that reproduce Þgures from the book and summarize
EATURESOFTHEmental concepts and principles of strategy, to reßect current academic thinking andmanagement practice, and to give students the tools they need to formulate andimplement strategies in order to enhance the performance of the organizations thatMy Goals in Writing the Booking core strategy courses at the University of British Columbia.website: http://
The Objectives of
the Guide
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2The new edition has been retitled: Robert M. Grant, Cases to Accompany Contemporary Strategy Analysis,Fifth Edition, Blackwell Publishers, 2005.
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is to draw upon the experiences of users of the book toGiven that most courses on strategic management are built around case discus-covered by the book. The new edition of Cases inContemporary Strategy Analysiscomprisesa range of case studies, most of which have been specially written to accom-In practice, the text is used with a wide range of cases (notably with cases avail-Stanford, Insead, London Business School, IMD, IESE, Western Ontario, and thesuccessfully with the text in several leading schools.Supporting Materials: PowerPoint SlidesPowerPoint slides that summarize key points from each of the cases in the are the result of my desireto create a textbook that is analytically incisive, practical, and thoroughly up to date.in the continuing growth in the volume and range of strategy research, as evidencedBusiness Policy and Strategy Division of the Academy of Management (up nearly540 percent between 2000 and 2003) and the launch of several new strategy jour-nals. Most of the theoretical foundations of strategic management are drawn fromizational sociology, systems science, and biology. One indicator of the dynamism ofthe Þeld is that strategic management is less a recipient of theories and research management of technology, entrepreneurship, and the evolutionary theory of the
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Once the primary tools of strategy analysis have been acquired, students are encour-Part III develops ÒThe Analysis of Competitive AdvantageÓ by integrating industry analysis and resource analysis. After establishing the key principles of competitive advantage in Chapter 7, Chapters 8 and 9 explore cost andPart IV applies this analysis of competitive advantage to formulating and Part V deals with corporate strategy in relation to vertical scope (Chapter 13),international scope (Chapter 14), and product scope (Chapter 15). Chapterlooks at the themes and ideas likely to inßuence strategic management at theAnalyzing Competitive Advantage: Beyond SWOTThe principal determinant of superior proÞtability is competitive advantage. Hence,the primary task of both business strategy and corporate strategy is to create andthe two most important areas of strategy analysis are, Þrst, analysis of the industryFIGURE 1
THE INDUSTRY
Goals and ValuesSTRATEGY
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of NokiaÕs home base in Finland. Is this a strength or a weakness? To the extent thatit puts Nokia in close contact with the worldÕs most heavily penetrated wireless tele-extent that it saddles Nokia with high labor costs, high taxes, and a currency thathas appreciated by about 50 percent against the US dollar, it is a weakness.The key strategic issue for Nokia is not some arbitrary classiÞcation of 3G tech-tions of 3G technology are for competition and competitive advantage in the market for wireless handsets. Similarly with resources and capabilities: the key is notContemporary Strategy Analysis dispenses with simplistic frameworkssuch as SWOT analysis in favor of a focus upon the fundamentals of strategy andcompetitive advantage. Thus, rather than use SWOTÕs fourfold classiÞcation of thefactors relevant to strategic decision making, the Þrst part of the book concentratestaxonomies for their own sake Ð my approach is to promote understanding of theWhatÕs New About the Fifth Edition?are no new chapters and no major reorganizations of the sequence of topics. Thekey changes are extensions of the book to include emerging ideas in strategy ana-shorter than its predecessor.Since the last edition, the main developments in the external environment haveand telecommunication) boom, and overall disenchantment over the dawning of theÒNew Economy.Ó The result has been a Òback-to-basicsÓ movement among bothrepeal the laws of economics nor invalidate the principles of management has rein-other ways too. Since 2001, the cause of shareholder capitalism has been damaged
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izational change has been developed substantially in an attempt to integrateconcepts and ideas drawn from evolutionary economics, population ecology,and the management of technology as well as the more conventional strategyliterature. The result is a more integrated attempt to link together the keytechnological drivers of industry evolution with the dynamics of changing organ-izational populations, and the challenge of organizational adaptation to change.developments in evolutionary processes at the level of both the industry andThe discussion of strategies for has beenreorganized to consider more closely the experiences of leading-edge multi-nationals Ð such as Procter & Gamble, GE, Toyota, and Cemex Ð in linkingof recent ideas based around corporate identity and coherence, real optionsThe chapter on the ÒManaging the Multibusiness CorporationÓ) has a new section on corporateing themes in strategy during these early years of the twenty-Þrst century. organization structure, and recent evidence on leadership.
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2.Is the book suitable for undergrads too?also suitable for undergraduate courses in strategic management? My answer is anissues to be taken into account in teaching strategic management to students wholack signiÞcant business experience, but this is certainly no excuse for approachingstudents. My experience of teaching undergraduates at Georgetown, BocconiUniversity, and City University is they like the book, they are well able to handlethe concepts and analysis within the book, and they beneÞt greatly from its many3.What balance between case discussion and exposition/lecture?was to liberate metheories, thereby releasing more time for interactive class discussion Ð case analysisings. Case discussion is extremely valuable for illustrating the key concepts of strat-egy and getting students to apply particular frameworks and techniques. However,is usually not enough. My experience is that the frameworks for analyzing industrystructure (e.g. Five-Forces) and resources and capabilities are fairly simple, but theor through tests and coursework) to encourage students to apply the basic frame-works and key concepts to multiple examples and real-world situations.My own approach is to devote a week to each main major topic (e.g. industryanalysis, resource analysis, diversiÞcation, etc.). Students are required to prepare theassigned case and read the relevant chapter of the textbook. The Þrst class is devotedto class discussion of the assigned case. I use the second class of the week to gen-eralize the issues arising from the case and to reinforce the learning with additionaltry analysis I begin with a case such as the US airline industry. In the second classto a number of different situations. For example: why has the tobacco industry remainedthe oil and gas companies earn much higher returns on their upstream than their
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Topics, Outlines, and
PART I: INTRODUCTION
ONCEPTOFTRATEGYClass TopicsFor students to appreciate what strategy is both in a business context and inTo introduce the basic framework for strategy analysis Ð in terms of The principal themes I stress in introducing the course in strategy management are:
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the same elements as were derived from the Madonna discussion. The empha-sis here is on the analysis of the external environment (the industry) and ana-This approach to strategy Ð as a direction, as a sense of identity, and as ato the Þrm) Ð is very different from earlier notions of strategy as planning.Hence, I Þnd it useful to review the evolution of strategic managementemerged in the late 1950s (see Table 1.2).This raises issues concerning the role and nature of strategy-making prac-they have strategies, (b) whether these strategies are implicit or explicit, and(c) how they might apply the ideas and framework outlined in the class (andin Chapter 1 of the book) to developing a career strategy.instructors to accompany the introductory chapter of the book. The criticalfactor is not so much the precise content of the case as the role of the instruc-ing with. Particularly suitable cases are those which deal broadly with issues ofbusiness success; those which consider the roles of goals/values, organizationalboth analytical aspects of strategy and the human and process issues (especiallythe role of the leader/general manager).There is some advantage in using cases which are relatively simple (there willthe Þrst class with a case, many students will have little time for preparation).(e.g. S. Kotha and D. Glassman, , University of Washington, 2003, http://depts.washington.edu/bacisb/gbc/starbucks_Þnal.doc; S. Kotha and M. Schilling, ÒStarbucksCorporation (A),Ó in Hitt, M. A. et al. (eds),
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PART II: THE TOOLS OF STRATEGIC MANAGEMENT
OALSClass TopicsGiven that strategy is about achieving success and, in the business world, success isabout creating value for owners, I put a heavy emphasis on evaluating the Þnancialholder value maximization. My goals here are:To emphasize the importance of performance diagnosis. Before moving intowhat are the sources of its superior or inferior performance?To review the studentsÕ basic Þnancial knowledge, including the calculationeconomic versus accounting proÞt (including EVA), and DCF approaches toDisaggregating ROCE into sales margins and capital productivity ratios.to assess the current strategy of the company.itative strategic analysis in a world of uncertainty.Setting performance targets: the increasing role of performance managementstrategic targets. The use and usefulness of
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Laura AshleyHoldings plcLaura AshleyÕs traditionally English country styles were in the vanguard of thedeath of its founder, the company lost its sense of identity and went into decline.tional improvement can revive the company, or whether the Laura Ashley lookWalt Disney Company at the beginning of the EisnerÐWells eraThe early 1980s were a difÞcult time for Disney. Economic recession, heavypredators. The situation requires that students appraise DisneyÕs performanceproblems? There are several cases dealing with this period. These include:and J. W. Vincze, Strategic Management: Text and Casesstrategic analysis. The program of restructuring and cost cutting at Scott Papercompanies move into its local market.
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mobiles, PDAs, travel agents) and to ask how structural changes are likely toexplore the realities of competition at a more micro level Ð the is within the US newspaper industry, yet its competitors are primarily the; few other of AmericaÕsWashington Postany industry. I typically use the world automobile industry (see Chapter 4,Strategy Capsule 4.3) and ask students why, during the 1990s, were the SUVtomers and their choice criteria, and then at competition and how companiessurvive it (see Chapter 3, Figure 3.5). I also look at how KSFs change overcompanies will be most successful over the next Þve years?The US Airline Industry in 2004Cases to Accompany Contem-performance was disastrous, with only Southwest Airlines showing consistentairlines entering Chapter 11. The case allows students to identify and analyzeof the past decade and a half. The case also shows how the companiesÕ strat-
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Cases Dealing With More Dynamic Aspects of Competitionis more dynamic and recognizes the key role of speciÞc competitors and their inter-actions. In this area there is considerable scope for using game theory concepts toAirways and Aer Lingus. How will these giants respond to tiny RyanairÕs entry intotake competitor analysis and predict competitive responses.A blow-by-blow account of the competitive battle between Kodak and Polaroid incompetitive interaction and an excellent basis for competitor analysis. A good case(Harvard Business School Again, a classic situation for exploring the competitive interactions between two industry-dominating players in the Þercely competitive, yet highly proÞtable marketfor cola drinks. Excellent case for the analysis of industry structure and industry attractiveness, the impact of structural changes on competition, and competitor pet food producers in the late 1980s. A key feature of the case is the extension ofmarket in order to help preserve their positions in other markets.Power Play (A): Nintendo in 8-bit Video Games
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companies may acquire the resources, but this doesnÕt guarantee cap-Chelsea have talented and expensive players, but during 1995Ð2003lesson is that we donÕt know much about how capabilities work, whatIn terms of applying resource and capability analysis, a critical require-ment is that students have some idea of how to appraise the resourcesand capabilities are needed to meet these success factors, or to beginmajor activities, and the resources that each capability requires. Which-. The resources and capabilities can then be shown example, preferably an organization that is familiar to everyone. AtThe purpose of this analysis is to generate strategy implications. Heresibility of outsourcing activities where the ÞrmÕs capabilities are weak.But the key area of strategy is the exploitation of strengths. In whichmarket segments and in relation to which customers are a ÞrmÕsI Þnish up with the question of whether and how Þrms can develop newThe class session on knowledge management Þts in well after discussion ofhow companies develop capabilities. The danger is that the scope of know-
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(INSEAD Case by S. Ghoshal and C. Butler. Reprinted inR. De Wit and R. Meyer, role in the creation of capabilities. This case explores how KaoÕs unique cor-porate culture, management values, structure, information systems, and com-mitment to learning result in remarkable new product development capabilityOn the challenge of developing new capabilities, the following cases are useful.Resource-based strategies involve two major issues: exploiting existingresources and capabilities for the future. This case deals primarily with the sec-core photographic market from chemical imaging to digital imaging. KodakÕscapabilities in chemical imaging are less and less relevant to its future successin the imaging market. The company has already made a critical strategic deci-sion Ð it will be an imaging company rather than a chemical/pharmaceuticalimaging capabilities. However, the strategy is not working well Ð the company(see: ÒRebirth of the Swiss Watch Industry, 1980Ð92 (A),Ó HarvardThe rebirth of the Swiss watch industry under Nicholas HayekÕs leadership isone of the greatest ever turnaround stories in recent business history. From astrategy viewpoint, the key interest is how a fragmented, declining industry onthe brink of Þnancial failure was able to restructure under the leadership ofNicholas Hayek and develop the capabilities that permitted it to be inter-
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The basis for structure Ð functions, products, and geographical areas as theContingency issues Ð what types of structures are suited to what types of HR management systems, Þnancial planning, strategic planning, and cultureGaining appreciation of why companies are organized in the way they are andor simply by exploring some real-world examples. For example, asking stu-MBA program, executive programs), matrix organization tions). The advantages and disadvantages of each basis of organization can bestructural changes. For example:The classic example of the product-division structure was GM, with itsseparate Chevrolet, Cadillac, Oldsmobile, Buick, Truck, and Parts divi-sions. Since the early 1980s these product divisions have been increas-ingly collapsed so that by the late 1990s GM possessed a single Northorganized around geographical ofÞces and project teams. As the needmarketing, change management, IT), and communities-of-practice.Ask students to explain these organizational changes.
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PART III: THE ANALYSIS OF COMPETITIVE ADVANTAGEATUREANDOURCESOFDVANTAGEOSTANDIFFERENTIATION
DVANTAGEClass TopicsMy primary goal in exploring competitive advantage is to bring together the twosides of our analytical framework Ð the industry environment and the Þrm Ð to consider how positions of competitive advantage are created and destroyed, and toprimary focus, issues of both cost efÞciency and product differentiation are relevant.Hence, my cases in this section are used as vehicles for analyzing both cost and dif-ferentiation. For example, while Harley-DavidsonÕs competitive advantage is basedThe material in Chapter 7 explores the dynamics of competitive advantage. Itbuilds upon the analysis of resources and capabilities to show how competitiveadvantage emerges and how the processes of imitation result in its erosioncompetitive characteristics of the ÞrmÕs market, which in turn depend upona companyÕs cost competitiveness.The analysis of differentiation advantage (Chapter 9) is concerned with iden-ings. A key feature of this matching process is exploring linkages between thevalue chain of the Þrm and that of its customers.
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Harley-Davidson cases available, this case is distinguished by its focus on thecases listed under ÒChapter 5. Analyzing Resources and CapabilitiesÓ) can advantage; in particular, Wal-MartÕs ability to establish an unassailable cost advantage together with remarkable ßexibility and responsiveness. (For this purpose GhemawatÕs Harvard Business School case, dise selection, and business practices are well-known, why is it that competi-(by M. Schilling and S. Kotha, it is available at http://us.badm.washington.edu/kotha/personal/pdf%20Þles/starbuck.pdf, and isreprinted in R. M. Grant and K. E. Neupert,chain of coffee houses. The case allows an interesting discussion of the natureof StarbucksÕ differentiation (the company offers a complex package of prod-tems which underlie this differentiation strategy and make it effective in anSouthwest Airlines has a competitive advantage within the US airline industrythat has been sustained for almost two decades. The result is that Southwestage. The case explores the basis of its cost and differentiation advantages andadvantages, differentiation analysis, the imitability of competitive advantage, and the formulation of an entry strategy which best reconciles the potentialstrengths of a newcomer with industry success factors.
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, by R. Casadesus-Masanel and M. G. Rukstad,C. M. Christensen, Stanford Case No. SM95.Other cases I have used to explore industry and Þrm evolution include:Industry and CompetitionÓ above for details). The case offers potential notEMI and the CT Scanner(see below) I use primarily for analyzing innovationand the management of technology. A central issue in the case is the speedof industry change during its early years and the need for EMI to develop itsBASEDNDUSTRIESANDTHEANAGEMENTOF
NNOVATION11)Class TopicsI concentrate primarily on businesses where innovation and managing technologyare the keys to competitive advantage. These include both emerging industries andindustries which continue to be technology-based such as electronics, chemicals,The principal topics I cover are:Alternative strategies to exploit an innovation;Competition in markets where standards are important;
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of industry evolution, since a key feature of these industries is the speed withwhich industry structure changes and the basis for competitive advantage9-383-194 and 9-383-195. Reprinted in R. M. Grant,One of the all-time-greats among strategy cases, this case deals with a broadrange of strategic issues concerning the exploitation of an exceptionallypromising innovation Ð the X-ray scanner Ð by a British music and electronicsof licensing, joint venture, or a wholly owned new venture? At the end of appeared, and EMI must: (a) assess its competitive situation, particularly withan organizational structure and management systems to deal with the internalThe case traces the development of the video games industry through its majoreras of market dominance: from Atari, to Nintendo, to Sega, and Þnally to therise of Sony as the market leader. The case explores the strategies of the dif-ferent players, providing a basis for the discussion of key success factors in thePower Play (A): Nintendo in 8-bit Video Gameskey players in the video games industry and explores the basis of value creationvides a particularly vivid example of the use of technology and management ofrelations with customers and complementors (especially games developers) to
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(Harvard Business School Case No. 9-The case traces the evolution of the credit operations of a small, Rochester-The case explores the potential for information technology to create strategicwere so reluctant to adopt the approach advocated by the consultants, whetherCapital OneÕs competitive advantage is sustainable, and what the opportunit-Steinway & Sons case considers the roots of SteinwayÕs sustained competitive advantage in thealso an excellent case for exploring the creation and sustaining of competitivecost efÞciency and its ability to provide its customers with superior service, and(Harvard Business School Case No. 9-793-035) which considersthe strategic issues facing new CEO William Avery in 1989 in the light of con-as a world leader in the kitchen knife segment. A fascinating case for the study
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Among the cases useful for analyzing vertical integration decisions, see:Birds EyeÕs competitive advantage was built upon market dominance throughits construction of a vertically integrated chain. The case raises important issuesover the industryÕs life cycle.The merger of AOL and Time Warner in 2000 was widely regarded as themerger of a Ònew mediaÓ company with an Òold mediaÓ company. In fact, thetion of the merger was between AOLÕs internet service business and TimeWarnerÕs cable assets. The case offers an opportunity to assess the argumentsThe international oil and gas majors are leading examples of vertical integra-(especially Saudi Aramco) in the upstream sector. Like its peers, Eni is com-mitted to vertical integration Ð in many ways it is more vertically integratedservice companies. This commitment to vertical integration is especially import-ant in natural gas, where Eni explores for gas, builds pipelines and both marketsgas and converts it into electricity. The case offers students the opportunity to explore the rationale behind EniÕs recent strategy and to develop a futurestrategy that can allow the company to adjust the scope of its activities to the(called Òpharmacy beneÞt managerÓ), against the background of general movesto be faring poorly, Merck seems to have managed the Medco integration
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The key issues that these cases bring up, which can then be generalized andexplored in greater depth, are:transferability and replicability of the ÞrmÕs competitive advantage areWhat mode of foreign market entry should a Þrm adopt? Again, issuesof resources and capabilities and the need for local market knowledge,strategy taking a uniÞed approach to the world market, or a strategythat adapts to the speciÞcs of each national market?Euro Disney: From Dream to Nightmare 1987Ð94 examines the subsequent performance of the venture. In examining the initialthe complex mode of entry that Disney devised (a joint venture, licensing con-tract, and management contract). The subsequent difÞculties of Euro Disneynational service companies.(Harvard Business School Case No. 9-shows, exploiting global scale and network economies encounters signiÞcant
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from several aspects. Its commitment to environmental responsibility andproducts, its employees, and its customers. But can the Body Shop system andimage, which has proven so successful in Britain, be transplanted to America?ABBÕs Global Relays Business: Building and Managing a Global MatrixABBÕs innovative, decentralized, network form of organization has resulted in the company attracting more attention from management scholars than insight into the structure and process that reconcile entrepreneurial decentral-IVERSIFICATIONTRATEGYANDANAGINGTHE
ULTIBUSINESSORPORATIONClass TopicsDiversiÞcation lies at the heart of corporate strategy and gives rise to some of themost contentious strategy decisions. Over the past 30 years, diversiÞcation has beenresponsible for the destruction of more shareholder value than any other corporatethe range of industries over which a Þrm can transfer its competitive advantage.Economies of scopecan be exploited efÞciently through market transactions).The obverse of diversiÞcation is the divestment of non-core businesses. I regarddiversiÞcation and divestment decisions as symmetric.
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In examining the management of diversiÞed companies, I tend to devoteoperating businesses (I draw heavily on the work of Andrew Campbell andvides a wonderful background for a detailed examination of how corporatecases (e.g. Jack Welch: General ElectricÕs RevolutionaryGeneral Electric: Jack WelchÕs Second Wave (A)vices, e-commerce, and automobile distribution. At the same time, a numberof major businesses are facing cash ßow difÞculties, and several are clear moneylosers. These include Virgin Cola, Virgin Rail, the Þnancial services ventures,the motley collection of business ventures, to determine whether any of thebusinesses should be divested; to establish clear criteria to guide future newdiversiÞcation; and to recommend changes in the Þnancial and managementa French supplier of water, garbage, and sewage services, into a multinationalsupplier of a wide range of network services including water, electricity,telecommunications, and entertainment. The case requires students to explorebackground of a French business context which raises issues of corporate governance, Þnancial structure, and a legal environment that imposes severeadded piquancy to the analysis of its corporate strategy.
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there is a ÒNew EconomyÓ and, if so, what does it mean for Þrm strategy.While skeptical of any major discontinuity created by the Òknowledge-basedÓentry barriers ushered in by information technologies are having the effect ofEmerging concepts and theories. Among the themes that are currentlyof complexity theory for strategy and organization, and the question of ßex-On the basis that innovation in strategic management is driven by businesspractice rather than academic theorizing, my starting point is typically withstrategy and organization, the AES case is particularly suitable. In particular,make decisions are consistent with recent thinking about complexity and self-Alternatively, if I have devoted only a single class session to this topic, I maydispense with a formal case discussion and simply ask students for examplesmethods. The high-tech sector is a fertile source of examples (e.g. Sun Micro-systems, Cisco Systems, Dell Computer). But other companies in more maturesectors also offer a rich source of new management thinking. For example:W. L. GoreÕs approach to shared ownership, incentives, and devolvedBPÕs unusual corporate structure that reconciles high levels of decen-tralization with strong centralized accountability, and team-based
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Oticon, a Danish manufacturer of hearing aids, was transformed from a tradi-ing Company on Earth: An Interview with Andy Law of St. LukeÕs,Ó The article outlines the development of the innovative, employee-ownedorganization, and the management of creativity. Chairman and cofounderapproach. ÒWeÕre fundamentally convinced that there is a connection betweenco-ownership, creativity, collaboration, and competitive advantage...TheÞrm requires people to peel away all the levels of their personalities...Self-knowledge is the DNA of a creative company in the creative age.Ó The articleprovides a basis for discussing the viability of alternatives to shareholder-owned, proÞt-maximizing corporations in an era where competitive advantage(Steven E. Prokesch, ÒUnleashing the Power of Learning: An Interviewknowledge management systems, and performance-driven philosophy thathave made BP the most admired of the oil and gas majors under BrowneÕsdistributed by European Case Clearing House.)Within emerging new organizational forms, open-source software commu-nities are among the most radical Ð and also the most successful. Of these, Linux, which has developed a free operating system to challenge MicrosoftÕsmodel that lies behind Linux (and to a great extent, other open-source com-munities) and also shows how a giant computer company like IBM can create
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Georgetown UniversityMBA ProgramMGMT 570.STRATEGIC
MANAGEMENT
of creating shareholder value over the long term. The strategy of a Þrm is the set ofdecisions it makes concerning how it will achieve superior performance, and henceThis course presents a framework and set of tools for formulating successful strat-to the Þrm and on developing strategies to access these sources of proÞtability. Weview strategy as a link between the Þrm and its business environment. This impliesthat there are two primary areas of analysis: the external industry environment of theA central theme of the course is the analysis of competitive advantage. Superiordeploying internal resources and capabilities to exploit the key success factors withinthe ÞrmÕs industry environment. We will analyze the potential for competitiveof the overall framework is to address the development and management of inter-
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SSESSMENTANDSSIGNMENTS
Final Examination30%Group Project30%Case Submissions20%Class Participation20%
: Details of the format and date of the Þnal exam will beproject will be announced in a separate handout. Please note that your group pre-analyze (concisely) the issues identiÞed in the discussion questions for the case andaccepted. It is important that your analysis drives to a conclusion, opinion or decision.: I will systematically call on individuals to ensure that everyonecomments already made, evading the question or diverting from the core issues of
The required text is: Robert M. Grant, cases are drawn primarily from Cases to Accompany Contemporary Strategy AnalysisThe readings designated [S] are available in electronic form on the Share (S) driveunder Grant, Rob/Mgmt 570. The readings designated [P] are available in the Course
I.Concept of Strategy
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analysis. Conduct the analysis and prepare an overhead of your work to present toIII.Analysis of Resources and Capabilities:Resources and Capabilities: IntroductionResource-based strategies. Identifying and appraising resources and capabilities. Thedeterminants of sustainable competitive advantage.: Wal-Mart Stores Inc. (from Grant casebook).1.What is Wal-MartÕs strategy? Why has it been so successful?2.What are the key resources and capabilities that give Wal-Mart competitiveadvantage in each of the major stages of its value chain?3.How sustainable is Wal-MartÕs competitive advantage?Session 8, Wed. September 27: C. K. Prahalad and G. Hamel, ÒThe Core Competence of the: C. K. Prahalad and G. Hamel, ÒThe Core Competence of theCases:(A) Rocking in Shangri-la (from article on MTV from (B) Richard Branson and the Virgin Group of Companies (from Grant case-1.Do MTV/Virgin have a Òcore competenceÓ (or core capability)? What is it?2.Describe how the core competence of MTV/Virgin is translated into the deliv-3.How do the two companies preserve and develop their core competencies?IV.Competitive Advantage in Industry EnvironmentsSession 9, Mon. October 2the value chain to analyze cost and differentiation advantage. Competitive advant-
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VERVIEWStrategic management deals with the ways Þrms build and sustain superior compet-itive positions and achieve long-run proÞtability. Successful strategy design and imple-mentation requires an understanding of the ÞrmÕs external environment and its internalresources and capabilities. It also requires an integrated view of the Þrm that spansfunctional areas such as operations, marketing, and Þnance. Strategic analysis drawsof strategic management.To gain expertise in applying these concepts, frameworks, and techniques inthe reasons for good or bad performance by an enterprise;the best means of implementing the chosen strategy.To integrate the knowledge gained in previous and parallel courses.To develop your capacity as a general manager in terms of:Ðan appreciation of the work of the general manager;Georgetown UniversitySTRATEGICMANAGEMENT
undergraduate business majors]
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Does the comment simply repeat facts from the case, or does it provide ana-repetitive, or contradictory?In making my overall assessment of class participation, the overarching criterion is
GYour Þnal grade will be based upon the following items:
Coursework 110%Coursework 210%Coursework 310%Coursework 410%Class Participation20%Final Exam40%
OURSEWORKof the cases listed below. The maxi-the same day that the case is being discussed. Late submissions will not be accepted.You are encouraged to discuss the cases with your classmates, but please write your1.The US Airline Industry. (For submission on Jan. 13.)Use PorterÕs ÒFive Forces of CompetitionÓ framework to show how the2.Ford and the World Automobile Industry. (For submission on Jan. 27.)
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This introductory class will give an overview of the course; it willexplore the role and nature of strategy; consider the development: Madonna (from Grant casebook).1.Why has Madonna been so successful for so long?2.Does Madonna have a strategy? If so, what are the main: The US Airline Industry in 2004 (from Grant casebook).1.How has the US airline industry performed Þnancially dur-2.To what extent can the industryÕs low proÞtability be attri-3.In what ways, and with what success, have the airlinesÕ strat-4.What is the outlook for industry proÞtability during theLecture/Discussion
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value chain to identify and analyze resources and capabilities andat the extent to which a company is able to deploy its capabilitiesto other markets.: Wal-Mart Stores, Inc. (from Grant casebook).1.To what extent is Wal-MartÕs performance attributable to2.In which of Wal-MartÕs principal functions and activities3.To what extent has W-M been able to transfer the com-US (a) to other countries, (b) to other retail sectors and4.To what extent is W-MÕs competitive advantage sustainable?5.Looking ahead, what measures does W-M need to take tosustain its recent performance and defend against competit-We will use Eastman Kodak as the basis for examining the prob-lems that companies face in developing new capabilities.: Eastman Kodak: Meeting the Digital Challenge (from Grant1.What is KodakÕs strategy for building a presence in digital
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Analyzing Cost and Differentiation Advantage(continued)We will look at the analysis of cost and differentiation advantageManaging Organizational ChangeBeer, M., R. A. Eisenstat and B. Spector. ÒWhy Change Pro-: McGuire, S. (1999). Note on Gender Discrimination and1.What are HootersÕ primary sources of competitive advantage?2.What challenges/threats does Hooters face?3.What type of change is called for? (Please use the frame-work discussed in the previous class session).4.Prepare an outline of the actions that you think Hootersas well as speciÞc change actions.5.Suppose that upon graduation you are offered a job as asenior manager at HOA. The pay is ÒmodestÓ but you arebe exercised 5 years from now. Would you take the job?:No classUsing EMIÕs management of its CT scanner invention, we will examine competition and competitive advantage in emerging and
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Using the Virgin Group as an example, we examine the rationale1.Does the Virgin Group have a corporate strategy?2.Does membership of the Virgin Group of companies add value3.Which businesses if any should Branson consider divesting?4.What criteria should Branson apply in deciding what new5.What changes in the Þnancial structure, organizationalThe theory of the M-form. The role of the corporate headquar-ters. Corporate management systems: strategic planning, Þnancial: General Electric (from Grant casebook).1.What were the principal strategic and organizational initiat-ives introduced by Welch at GE and inherited by Immelt?2.Why has the management system created by Welch been so successful? Can you detect a theory of management or3.What should Jeff Immelt do to sustain and revive GEÕs trackup (like so many other diversiÞed companies)?
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BJECTIVESformulating Þrm strategy. The course focuses upon what has become known as thea collection of resources and capabilities and emphasizes the role of these resourcesespecially relevant to companies competing in markets subject to intense competi-tion and rapid rates of change. In such markets, a companyÕs internal capabilitiesoffer a more secure basis on which to deÞne long-term strategy than external cus-tomer focus. The course builds upon your core strategic management course andextends the part that dealt with the internal analysis of the Þrm. Our emphasis will behow organizational capabilities are created and developed. We shall give particularattention to those resources and capabilities required for competitive advantage inknowledge-based industries Ð this will take us into issues of knowledge managementideas that are reshaping current thinking about strategic management and organiza-Georgetown UniversityCAPABILITY-BASED STRATEGY
Sections 20 and 21
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[Note: You may base this coursework entirely on your own perceptions of MSB,other schools, and the US market for MBA education. However, you may also wish.) Your Uncle Charlie has beenKodak possesses the resources and capabilities needed to support the strat-egy, and assesses the potential of the strategy to deliver positive returns tofor your views on the issues facing BAH. Write a concise memo that (a) com-egy to date; (c) makes recommendations for what BAH might do to over-scanner business and to recommend a strategy for the business that is in thebest interests of EMIÕs shareholders.) On thebasis of an identiÞcationof key success factors in the world market for video game consoles, a pro-jection of how this market is likely to evolve, and an assessment of the com-panyÕs resources, capabilities, and strategic goals, recommend a strategy forPrepare a paper and a 10-minute presentation on an organization whose structure,systems, and management style are innovatory or unusual and can provide insightor inspiration for companies seeking to develop the capacity to compete effectivelywish to use an organization from outside the world of business: e.g. a sports team, acharity, a religious organization, an entertainment organization (band, circus, theater
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Discussion questions:1.Appraise Laura AshleyÕs Þnancial performance.2.Identify reasons for deteriorating performance.3.Consider whether and how Laura Ashley might be restored:Identifying and Appraising Resources and Capabilities Ð :To gain expertise in identifying and appraising an organizationÕs:Grant, ÒAnalyzing Resources and CapabilitiesÓ and ÒThe Natureand Sources of Competitive AdvantageÓ (Chapters 5 and 7 ofedn); especially pp. 144Ð55.55.US News & World Report, Best Graduate School (forsummary see [S]); FT MBA Rankings [S] and FT MBA RankingsMethodology [S].Class discussion:GeorgetownÕs McDonough School of Business (discussion of:Identifying and Appraising Resource and Capabilities::To develop understanding of the critical characteristics of resourcesand capabilities and their link with competitive advantage. Todevelop the strategy implications of resource/capability analysis.:Grant, ÒAnalyzing Resources and CapabilitiesÓ and ÒThe Natureand Sources of Competitive AdvantageÓ (Chapters 5 and 7 ofand Sources of Competitive AdvantageÓ (Chapters 5 and 7 ofMon. March 31:Developing Organizational Capability:Baghai, M., C. Coley and D. White, ÒTurning capabilities into advan-Baghai, M., C. Coley and D. White, ÒTurning capabilities into advan-Dorothy Leonard Barton ÒCore capabilities are core rigidities,ÓStrategic Management JournalStrategic Management JournalGrant, ÒAnalyzing Resources and CapabilitiesÓ (Chapter 5 of Con-temporary Strategy Analysis, 5thedition); especially pp. 162Ð71.Ð71.Discussion questions:1.Was Fisher right to divest KodakÕs chemical and healthcare2.What is KodakÕs strategy for developing its digital imaging
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:Grant, ÒTechnology-Based Industries and the Management ofEMI and the CT Scanner (A) and (B) EMI and the CT Scanner (A) and (B) Discussion questions:(A Case) Evaluate EMIÕs entry strategy: should EMI develop a newbusiness to produce and market the CT scanner, or should EMI(B Case) What problems does EMIÕs medical electronics business:Competitive Advantage and Capabilities in Emerging and:To recognize some general issues arising from the EMI case withpetitive advantages of different types of company in technology-based and newly established industries. To apply these concepts to:Grant, ÒIndustry EvolutionÓ (Chapter 10 of :Competing for StandardsTo identify sources of network externalities.:C. Shapiro and H. Varian, ÒThe Art of Standards Wars,ÓC. Shapiro and H. Varian, ÒThe Art of Standards Wars,ÓCase:Rivalry in the Video Games Industry [S].Discussion questions:1.What are key success factors in this industry?2.In what sense and for what reasons is this a Òwinner-take-3.What strategies and what circumstances have allowed new-4.[Last names beginning AÐF:] What should Microsoft do?
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BJECTIVESWelcome to the world of the general manager! The course in Strategic Managementwith its 36 sessions is a central part of your program at the University. It integratesthe skills and knowledge you have acquired in your previous coursework. Our per-you will learn how to manage strategic processes and to develop a competitive mar-ket strategy for a single business. We will discuss value-based strategy, the analysisthe Þrst exam, you will be promoted to a general manager or chief executive ofÞcerin corporate strategy: resource allocation, realizing synergies, enabling knowledge sharing, and managing diversiÞcation. We will study the nature of the problems andchallenges confronted by managers responsible for business and corporate strategyand the skills needed by them to function effectively as strategists and organizationstrategy in companies that are active in multiple businesses. As such it incorporatesimportant recent developments in strategy that bring a broader perspective to issues of competitive advantage. The course will provide you with a ÒtoolkitÓ whichyou might be able to draw upon in case you will be faced with general managementUniversitˆ Commerciale STRATEGICMANAGEMENT
Markus Venzin
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Part II: Business Unit Strategy
Learning Objectives Ð Themes
1.Strategy as a quest for proÞt.2.Diagnosing proÞt performance.3.Cash ßow vs. accounting4.The goal of the Þrm: proÞtabilityG. Bennet Stewart, ÒEVA: fact and McKinsey & Co./Wiley, 1995, during 1982Ð4.
Learning Objectives Ð Themes
1.IdentiÞcation of different types of2.Knowing the impact of resources3.Distinction of the resource-basedapproach of strategic managementas opposed to the market-based4.IdentiÞcation of key resources.Skills Ð The Key to SustainableOrganizational Behavior and Strategyresources and capabilities?
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Sessions 19Ð21 (8/9.11): Competitive Strategy
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Sessions 13Ð15 (18/19.10.): Creating Industry Foresight
Learning Objectives Ð Themes
1.Get an overview of forecasting2.Draw an industry scenario.Kees von der Heijden, ...At Shell,
Learning Objectives Ð Themes
1.Understanding the concept of2.Developing a vision Ð deriving3.Knowing different types of4.Knowing how to develop and5.Knowing how to develop andJames Collins and Jerry Porras,What is H-DÕs strategy?
Learning Objectives Ð Themes
1.Understanding the basic 2.Designing organizations: structure
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Sessions 34Ð35 (20.12.): Competitive Advantage and Industry Evolution
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Sessions 31Ð33 (13/14.12.): DiversiÞcation Strategies
Learning Objectives Ð Themes
1.Under what circumstances does2.What are the motives for3.Managing the diversiÞcationand capabilities that createBranson sell off?
Learning Objectives Ð Themes
1.Understanding industry life cycles.2.Analyzing different industry3.Making resource allocation4.Anticipating and shaping theare likely to be most successfulduring the next 10 years?
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