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Strategy Formulation and Implementation MBA 6293

Full-Time MBA Program Fisher College of Business

Spring, 2017

Professor Jay Dial Office 860 Fisher Hall Email dial.12@osu.edu Phone 292-5438 Reading packet There is a required reading packet available through Harvard

Business School Publishing that includes course readings and cases for classroom discussion. This is copyrighted material and each student must purchase an individual copy of the reading packet.

Course Overview

This is fundamentally a course in general management. The course is about the creation and maintenance of long-term value for the organization. It is concerned with both the determination of the strategic direction of the firm and the management of the strategic process. The course builds on prior studies of functional areas while recognizing that most real business problems are inherently multi-functional in nature. Thus, this course employs an explicitly integrative approach in which we adopt the role of the general manager who has the responsibility for the long-term health of the entire organization. The course would be taught through the case method of instruction. Course Objectives

1. Understand the nature of strategic competitiveness and develop the ability to analyze the competitive environment facing a firm, assess the attractiveness of the industry and isolate potential sources of competitive advantage and disadvantage.

2. Develop business level strategies by defining the type of advantage sought, scope of

operations and activities required to deliver the chosen strategy. Assess the likely sustainability of firm strategies and competitive positions.

3. Discriminate among the types of data that general managers need to evaluate alternative

scenarios. Make quantitative assessments of strategic alternatives and develop logical, coherent and persuasive analyses for a desired course of action.

4. Consider the actions of competitors and how that impacts your ability to reach your

strategic goals. Develop courses of actions that incorporate the actions of multiple players in the marketplace.

5. Integrate knowledge and apply analytical techniques from various disciplines, including

finance, accounting, marketing, operations, organization theory and organizational behavior and particularly economics. The goal is to identify and analyze strategic issues and develop solutions in the form of actionable plans with the purpose of developing and sustaining competitive advantage.

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6. Consider how to effectively implement plans within the constraints imposed by the

complex behavior of individuals within organizations. Each student should be able to effectively communicate his or her conclusions in both oral and written form.

7. Assess differing styles of management and leadership and consider the essential role of

personal values in leading an organization. ================================================================= Class Format - The Case Method: Why We Rely on Discussion Learning Most of our class time will be spent discussing business cases. Why do we rely on the case method so extensively and how do these discussions enhance our learning? The case-study method brings a “real world” approach to business education in at least three important ways. First, case discussions generate a dynamic process of vigorous questioning and responding, examination and debate among students and discussion leader. Because strategy issues are often characterized by ambiguity, complexity or uncertainty, this course is more about asking the right questions than it is about knowing the right answers. Rather than simply lecture about the current state of “best practices,” we recognize that theories change over time but reasoning skills survive. So the case method helps students to refine their skills as insightful questioners, rather than just good answer-finders. In this model of learning, it is the journey more than the destination that matters. In addition, discussion learning requires all students to participate actively in the learning experience. The MBA degree is about more than just acquiring a tool box of analytical skills. It is also about developing the ability to contribute to the group so that we expand the boundaries of everyone’s learning. Just as in management, there is no formula that you can follow for every case. Nevertheless, over the course of the academic quarter, students gradually build on a combination of theory and analysis as well as judgment and experience to acquire important skills that the general manager needs. The case method requires a high level of student commitment where students personally engage the problem and “own” the solution. Consequently, the case method is inherently a student-oriented process. Walter Wriston has said, “Good judgment comes from experience. Experience comes from bad judgment.” As in the “real world,” the case method replicates the trial-and-error experience of seasoned managers, thereby deepening judgment. It also does so in the low risk environment of the classroom where career casualties are not at stake. Second, the case method trains students to think as administrators (rather than as scholars), so that they: (1) see a problem looking for solutions rather than a concept looking for applications, (2) focus on defining and prioritizing a maize of tangled problems and determining which one(s) to attack with the limited time and resources available, (3) appreciate differing agendas and points of view, and (4) take action, not just report findings. Third, by linking analysis with individual action, the case method encourages moral awareness by requiring students to take a stand. The give-and-take of case discussion often brings to the surface subtle ethical dilemmas that might otherwise be missed. The case method helps students learn to assess and embrace the tradeoffs among different stakeholders’ interests. The case method requires students to use all of their knowledge,

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skills and experience to respond in real time to the questions raised in class and to effectively communicate their ideas to classmates to create a greater shared understanding of the problem at hand. Thus, students also become the teachers as well as learners. In sum, we teach with case studies because the method embodies important values of professional education. The case method is not simply a technique; it is a rich philosophy about judgment, analysis, action and learning. (The preceding was adapted from an article by Robert F. Bruner) While our applications will emphasize exercise of judgment, by no means is this course “theory free.” We will learn to break down complex problems into manageable analytical issues where we can then apply a rigorous set of theoretical tools. The analytical approaches in our “strategy tool kit” will be covered in the required readings prior to each case. These readings have been carefully selected to convey often complex topics in a concise, understandable manner. In general, I have assigned managerially-oriented readings and spared you the pain of reading pointy-headed, scholarly-type articles. Since these readings articulate much of the theoretical content of the course, they will be crucial to your comprehension of our course concepts. It is extremely important that you read, study and discuss the articles with each other when assigned so that you will be able to apply the concepts to our case discussions. The key requirement of this course is that you THINK. This course requires that you synthesize material that you have learned in prior classes in your business education in conjunction with new concepts we will introduce. I will ask that you add a dose of common sense and filter these ideas through your own experiences and “world view.” We will reach consensus on some issues, yet many among you will have differing interpretations as we proceed through the course. This is the nature of strategy and policy issues. You may find yourself occasionally frustrated by the ambiguity and the difficulty of assimilating conflicting points of view. Welcome to real life. Our readings and case discussions are designed to help you understand how firms formulate and implement strategies under the impetus of competition, technology, government action, and other important contextual forces. This, in turn, requires a deep understanding of the functional strategies associated with economics, marketing, operations, finance and human resources. Our challenge in this course will be to integrate your learning from other courses in a synthesis with new material introduced here to see how general managers develop functional strategies into overall business and corporate strategies and to see how their chosen strategies are implemented. While this may not happen overnight, over the course of the quarter, you can expect to begin to see how the “pieces fit together.” You will be better prepared to enhance your careers with a more comprehensive vision of the firm as a whole and your role in it. Requirements and Evaluation Criteria Class Contribution 40% Written assignments 30% Final Exam 30% Total 100%

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Class Contribution Most of your learning will occur in preparation for and participating in the case discussions. To enhance your preparation and learning, I strongly encourage you to use study groups to discuss the cases prior to class. To guide you in your preparation, this syllabus includes preparation questions for each case. As noted earlier, the complexity of the course material relies heavily on discussion learning. This process allows the cumulative insights of your colleagues to contribute to the evolution of the class’s learning. Thus, the entire class learning experience relies on each of you taking responsibility for contributing to the discussion. In order to do so, it is imperative that each of you is present and fully prepared each day. In order to emphasize the necessity to be prepared for and to contribute to each class, class contribution will comprise a significant portion of your grade. As is the case with real world work environments, you are judged not by what you know but by what you contribute. Note that this is distinct from merely participating in the discussions. Even if you feel that you know the material, unless you share your insights with the class, I cannot adequately evaluate your preparedness and contribution. Students are never penalized for making comments which don’t appear to be the “right answer.” It is only through consideration of many diverse opinions and viewpoints that we will move toward a greater shared understanding of the multi-dimensional material which this course entails. Each day, I will ask one or more individuals to “open” the case with a summary of the key issues along with his or her analysis of those issues. It is important that each of you be prepared to respond to the invitation to open the discussion. In the unlikely event that you are not prepared for class, then please let me know beforehand so that I might spare both of us the embarrassment of my calling on you. You should be able to identify the key issues, problems and opportunities facing the central case protagonists, to articulate and evaluate alternative approaches to problems, and to describe the course of action that you recommend and the reasons for yours recommendations. I may begin the discussion with one of the questions in the syllabus or with another question. It is important to appreciate that every student is an important cog in the class discussion, and that it is equally important that each of us listen carefully to one another and attempt to build on or constructively critique prior comments. Please resist the temptation to jump to topics that are not specifically open for discussion. Some of the specific things that will have an impact on effective class contribution and on which you will be evaluated include: m Is there a willingness to take intellectual risks and test new ideas or are all comments

“safe”? (For example, repetition of case facts without analysis or conclusions or repeating comments already been made by someone else do not represent intellectual risk-taking nor do they earn credit towards your class contribution evaluation.)

m Is the contributor a good listener? m Are the points made relevant to the discussion? Are they linked to the comments of

others and to the themes that the class is exploring together?

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m Do the comments add to our understanding of the situation? Are they incisive? Do they cut to the core of the problem?

m Is there a willingness to challenge the ideas that are being expressed by discussants or

the professor? m Does the contributor integrate material from past classes or the readings where

appropriate? Do the comments reflect cumulative learning over the strategy course and the MBA curriculum or does the contributor merely consider each case in isolation?

Finally, I understand that participating in class can be an intimidating experience initially, and I will try to help you in any way that I can. I will evaluate each person’s contribution for each and every class and keep a running score on class contribution. In addition, I will request volunteers to be peer evaluators for each class period. Those students will offer a confidential interpretation of the quality of class contribution that I will use to supplement to my own evaluation. It is through the combined effort of the class that we develop an open environment for discourse and examination of ideas and experience tells us that this is where a substantial amount of your learning will occur in this class. With that in mind, your commitment to contributing to this environment not only determines the success of the class, but also helps to define your grade in the course. Consequently, your attendance is vital and will affect your contribution score. While it is your business whether you want to attend class and contribute, your classmates also bear the cost when you fail to do so. Thus, in an effort to internalize the externality arising from absences from class, you will bear the cost to your contribution score when you choose to miss a class. Interviews are not excused absences. As required by school policy, grading will be based on relative rather than absolute standards. ================================================================= Written Assignments There will be several written assignments, most performed in groups. Groups will consist of the study groups that you have been assigned for your first year. The assignments are listed in the syllabus. Each group will turn in three of the five total written assignments in addition to one individual assignment. I also reserve the right to add additional written assignments during the semester, particularly if I feel that the class is failing to prepare adequately for case discussions. Final Exam You will receive a case to read and prepare approximately one week prior to the final exam. On the day of the exam, you will be given the exam essay questions and will have four hours to complete the questions. The exam is open book and open note and you may work with classmates to prepare for the exam.

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Classroom Policies Attendance: A major part of your learning in this course will take place in the classroom. Because the course is designed to help you develop a personal synthesis and perspective, it is not possible to make up for an absence, nor can you offer a contribution to classmates when you are not present. The Professor will excuse absences only in the case of documented serious illness, family emergency, religious observance, or civic obligation. If you will miss class for religious observance or civic obligation, please inform him no later than the first week of class. Recruiting activities are not acceptable reasons for absence from class. Technology: The use of laptops, smartphones, & other electronic devices are not allowed in class. While I see benefits to their use, they have considerable negative externalities and I have found that their disadvantages ultimately outweigh their advantages. The inappropriate use of technology is an indicator of poor class contribution. ================================================================= Academic Integrity (Academic Misconduct) Academic integrity is essential to maintaining an environment that fosters excellence in teaching, research, and other educational and scholarly activities. Thus, The Ohio State University and the Committee on Academic Misconduct (COAM) expect that all students have read and understand the University’s Code of Student Conduct [can be found at http://studentaffairs.osu.edu/pdfs/csc_12-31-07.pdf], and that all students will complete all academic and scholarly assignments with fairness and honesty. Ignorance of the Code is not an excuse for violation. Students must recognize that failure to follow the rules and guidelines established in the University’s Code of Student Conduct and this syllabus may constitute “Academic Misconduct.” Additional guidance for maintaining academic integrity can be found at Ten Suggestions for Preserving Academic Integrity [can be found at http://oaa.osu.edu/coamtensuggestions.html]. The Ohio State University’s Code of Student Conduct (Section 3335-23-04) defines academic misconduct as: “Any activity that tends to compromise the academic integrity of the University, or subvert the educational process.” Examples of academic misconduct include (but are not limited to) plagiarism, collusion (unauthorized collaboration), copying the work of another student, and possession of unauthorized materials during an examination. Ignorance of the University’s Code of Student Conduct is never considered an “excuse” for academic misconduct, so I recommend that you review the Code of Student Conduct and, specifically, the sections dealing with academic misconduct. If I suspect that a student has committed academic misconduct in this course, I am obligated by University Rules to report my suspicions to the Committee on Academic Misconduct. If COAM determines that you have violated the University’s Code of Student Conduct (i.e., committed academic misconduct), the sanctions for the misconduct could include a failing grade in this course and suspension or dismissal from the University. While most students have high standards and behave honorably, like every academic institution, we encounter cases of academic misconduct. It is the obligation of students and

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faculty to report suspected cases of academic and student misconduct. Students can report suspected violations of academic integrity or student misconduct to faculty or to a program's leadership. All reported cases of academic misconduct are actively pursued and confidentiality is maintained.

JAY DIAL BIO

Dr. Jay Dial is Clinical Professor of Management & Human Resources at The Ohio State University’s Fisher College of Business. Professor Dial teaches strategy, microeconomics and leadership courses in Fisher’s MBA and undergraduate programs. He has been honored with the Alumni Association Award for Distinguished Teaching, Ohio State’s highest honor granted for teaching and has been admitted to the University Academy of Teaching. He has been recognized as the Outstanding Professor in the Full-time, Working Professional, Executive MBA and Bright MBA Programs more than twenty times and has also received the College’s highest teaching award, the Daniel Westerbeck Pace Setters Award for Graduate Teaching. Dial is a regular contributor to Fisher’s custom executive programs working with various clients, such as Nationwide, Textron, The Limited, Cardinal Health, OSU Medical Center/Ross Heart Hospital and the Abbott Nutrition among others. Dial has also worked in executive programs at Cornell University and Tulane University working with senior executives from Fortune 100 companies, such as IBM, Citibank, Chase Manhattan, Intel and Hewlett-Packard. He has also consulted to a broad variety of clients on strategy issues, including Aeropostale, NetJets, Cardinal Health, Greif, Timken, Roadway, Lubrizol, Baker-Hughes, Amerisource Bergen, Keybank, Tosoh America and Sterling Commerce. Professor Jay Dial’s interests include competitive strategy, leadership and governance issues. He has published scholarly articles in various journals, including the Academy of Management Review, Journal of Financial Economics and Journal of Management. Professor Dial is the author of numerous Harvard Business School teaching cases and also conducts seminars throughout the world for business school faculty on teaching with the case method. Professor Dial joined the Ohio State faculty in 2002 after previously serving on the faculties at Case Western Reserve University and Texas A&M University. He also worked as a management consultant with Deloitte & Touche (now Deloitte Consulting) in Boston, focusing on corporate finance and corporate strategy issues. Prior to that, he worked in brand management at Kraft at their Glenview, IL world headquarters. Dial holds a Doctor of Business Administration degree in General Management from Harvard University and has an MBA from the University of Chicago with concentrations in Business Policy, Finance and Marketing. He is a summa cum laude graduate of Old Dominion University in Norfolk, VA where he majored in Marketing and, upon graduation, was named the University Outstanding Scholar. Jay lives in Upper Arlington, OH with his wife Aparna and son Bennett, 9, and daughter Annika, 5. He enjoys woodworking, movies, jazz and acoustic music and rooting for the Cincinnati Reds, Dallas Cowboys and Buckeyes.

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TOPIC COURSE CALENDAR Mon 1/9 Tu 1/10 Wed 1/11 Th 1/12 Fri 1/13

BUILDING COMPETITVE ADVANTAGE

Course Introduction

Intel Corporation:

1968-1997

INDUSTRY STRUCTURE

Mon 1/16 Tu 1/17 Wed 1/18 Th 1/19 Fri 1/20

Holiday- MLK Day

Cola Wars Continue: Coke & Pepsi in 2010

INDUSTRY STRUCTURE & STRATEGIC POSITIONING

Mon 1/23 Tu 1/24 Wed 1/25 Th 1/26 Fri 1/27

Crown Cork & Seal in1989 *

Lego: The Crisis

RESPONDING TO DISRUPTIVE INNOVATION

Mon 1/30 Tu 1/31 Wed 2/1 Th 2/2 Fri 2/53

Responding to the Wii?

Nintendo’s Disruptive Strategy: Implications for the

Video Game Industry

CREATING ADVANTAGE-LOW COST

Mon 2/6 Tu 2/7 Wed 2/8 Th 2/9 Fri 2/10

Lincoln Electric

Airborne Express*

CREATING ADVANTAGE- LOW COST OR DIFFERENTIATION

Mon 2/13 Tu 2/14 Wed 2/15 Th 2/16 Fri 2/17

Husky Injection Molding Systems *

eHarmony

CREATING COMPETITIVE ADVANTAGE

Mon 2/20 Tu 2/21 Wed 2/22 Th 2/23 Fri 2/24

Delta Airlines: Low-Cost Carrier

Threat

Matching Dell *

EXAMINING APPROPRIATE SCOPE OF THE FIRM

Mon 2/27 Tu 2/28 Wed 3/1 Th 3/2 Fri 3/3

No class- reading day

Harlequin Enterprises: The MIRA Decision

DISRUPTIVE INNOVATION

Mon 3/6 Tu 3/7 Wed 3/8 Th 3/9 Fri 3/10 U.S. Toy Industry

Uber: Changing the

Way the World Moves

COURSE CALENDAR CONTINUED ON NEXT PAGE

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TOPIC COURSE CALENDAR

Mon 3/13 Tu 3/14 Wed 3/15 Th 3/16 Fri 3/17

SPRING BREAK

BUSINESS MODELS

Mon 3/20 Tu 3/21 Wed 3/22 Th 3/23 Fri 3/24 Wal-Mart Stores

Discount Operations

Aldi: The Dark Horse Discounter

Trader Joe’s

COMPETING BUSINESS MODELS

Mon 3/27 Tu 3/28 Wed 3/29 Th 3/30 Fri 3/31

Movie Rental Business: Blockbuster, Netflix

and Redbox

eBay Inc. and Amazon.com

COMPETITIVE DYNAMICS

Mon 4/3 Tu 4/4 Wed 4/5 Th 4/6 Fri 4/7

Dogfight Over Europe: Ryanair (A)

Ready-to-Eat

Breakfast Cereal Industry *

PERSONAL LEADERSHIP & TRANSFORMATION

Mon 4/10 Tu 4/11 Wed 4/12 Th 4/13 Fri 4/14 GE’s Two-Decade Transformation:

Jack Welch’s Leadership

The Individual and the Corporation:

Kathy Levinson and E*Trade (A)

LEADERSHIP & TRANSFORMATION

Mon 4/17 Tu 4/18 Wed 4/19 Th 4/20 Fri 4/2 Starbucks Coffee:

Transformation and Renewal

Asahi Breweries, Ltd.

Mon 4/24 Tu 4/25 Wed 4/26 Th 4/27 Fri 4/28

Course Wrap-up

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READINGS, ASSIGNMENTS AND PREPARATION QUESTIONS SESSION 1 Monday, January 9, 2017 TOPIC: Course Introduction READING: Michael E. Porter, “What Is Strategy?” Harvard Business Review,

Nov/Dec, 1996 CASE: none

SESSION 2 Wednesday, January 11, 2017 TOPIC: Building Sustainable Competitive Advantage READING: Michael Porter, “Understanding Industry Structure,” Harvard Business

School background note CASES: Intel Corporation: 1968-1997 PREPARATION QUESTIONS: 1. What was Intel’s strategy in DRAMs? What accounts for Intel’s dramatic decline in

market share in the DRAM market between 1974-1984? To what extent was Intel’s failure a result of its strategy?

2. What strategy did Intel use to gain a competitive advantage in microprocessors?

What threats has Intel faced in sustaining its competitive advantage in microprocessors and what strategies has it used with each? Why has Intel been able to sustain its advantage in microprocessors, but not in DRAMs?

3. Assess the future prospects of Intel. What is the biggest threat it faces? Whom

should it be most worried about? Put yourself in the position of Intel senior management and craft a strategy to deal with these threats.

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SESSION 3 Wednesday, January 18, 2017 TOPIC: Industry Analysis and Sustainability of Competitive Position READING: Kevin Coyne, “Sustainable Competitive Advantage: What It Is, What It

Isn’t,” Business Horizons, Jan/Feb 1986 (posted on Canvas) CASE: Cola Wars Continue: Coke and Pepsi in 2010 PREPARATION QUESTIONS: 1. Why is the soft drink industry so profitable?

2. Compare the economics of the concentrate business to the bottling business: why is the profitability so different?

3. Why do concentrate producers want to vertically integrate into bottling? 4. Are the international businesses in large and growing markets like India, China and

Indonesia likely to evolve with a similar industry structure? Why or why not?

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SESSION 4 Monday, January 23, 2017 TOPIC: Industry Structure and Competitive Positioning READING: Joan Magretta, “Why Business Models Matter,” Harvard Business Review, May

2002 CASE: Crown Cork and Seal in 1989 GROUP ASSIGNMENT (for all groups):

Complete the matrix posted on Canvas which analyzes the industry structure for the metal container industry. Answer in 4-5 double-spaced pages:

1. Is the metal container industry an attractive industry? Why or why not?

2. Describe how Crown Cork and Seal how has strategically positioned itself to deal with key industry forces. Explain why they have made those choices and how their actions respond to industry structure issues. (Hint: Evaluate Crown’s positioning in the context of the firm’s functional area strategies: product choices, marketing and service, production process, research and development, finance and international strategy.)

3. What is Crown Cork and Seal’s strategy? Based on the system of activities that

CC&S has created, what customers do you infer would be the focus of Crown Cork’s attention? How do they create and capture value with their chosen system of activities?

PREPARATION QUESTIONS: 1. What are the key strategic issues that Avery needs to consider? What strategic options are open to him? 2. If we are going to analyze the industry that Crown Cork competes in, what is the

appropriate industry to analyze? 3. How attractive has the metal container industry been over the years?

4. How well did Crown Cork do under John Connelly?

5. What significant changes are taking place in the industry?

How should the new CEO Bill Avery respond?

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SESSION 5 Wednesday, January 25, 2017 TOPIC: Competitive Positioning READING: none CASE: LEGO (A): The Crisis PREPARATION QUESTIONS: 1. What has led the LEGO group to the edge of bankruptcy? 2. What is your assessment of management moves during the “growth period that wasn’t”

(1993-1998) and the “fix that wasn’t” (1999-2004)? 3. As Jorgen Knudstorp, what would you do throughout the LEGO Group in order to turn

the company around? Be specific.

SESSION 6 Monday, January 30, 2017 TOPIC: Disruptive Innovation and Evolution of Industry Structure READINGS: Carl Shapiro and Val Varian, “The Art of Standard Wars,” California

Management Review, Winter 1999 Joseph L. Bower and Clayton M. Christensen, “Disruptive Technologies:

Catching the Wave,” Harvard Business Review, Jan, 1995 CASE: Responding to the Wii? PREPARATION QUESTIONS: 1. How structural attractive is the video game console industry in 2008?

2. How has the structural attractiveness of the industry changed over time, and why?

3. Why have the incumbents in the industry had so much trouble maintaining their industry

leadership position? 4. How did the revenue model where console makers charge royalties to game developers

for the right to produce emerge? Is it an effective model for console makers? 5. What are the most important lessons from the evolution of the video game industry that

Kazuo Hirai and Sony should keep in mind as they try to formulate a strategy for regaining industry leadership from Nintendo?

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SESSION 7 Wednesday, February 1, 2017 TOPIC: Evolution of Industry Structure and Response to Disruptive Innovation READING: Max Wessel and Clayton M. Christensen, “Surviving Disruption,”

Harvard Business Review, Dec, 2012 CASE: Nintendo’s Disruptive Strategy: Implications for the Video Game Industry PREPARATION QUESTIONS: 1. Discuss the evolution of the video game industry, particularly in terms of competition

and technology.

2. What does “disruptive technology” mean? What are the principles behind it? 3. Analyze Nintendo’s disruptive strategy in detail. What are the main features of this

strategy that have made the Wii such an overwhelming success? 4. Assess the key competition faced by Nintendo’s Wii. What are the strategies and

options available to competitors to meet Nintendo’s challenge?

5. What are Sony’s strategic options for regaining industry leadership? Which one would you recommend to Kazuo Hirai to pursue?

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SESSION 8 Monday, February 6, 2017 TOPIC: Sustainability of Strategic Position

READINGS: Barney, “Looking Inside for Competitive Advantage,” Academy of Management Executive (posted on Canvas) Ghemawat and Rivkin, “Creating Competitive Advantage” CASE: Lincoln Electric PREPARATION QUESTIONS:

1. How would you describe Lincoln Electric’s approach to the organization and motivation of their employees?

2. What role do you think this approach has played in Lincoln’s performance over the last

25 years? Have any other factors been more important? 3. What factors will be critical to Lincoln’s continued success? What recommendations

would you make to Mr. Willis? 4. What is the applicability of Lincoln’s approach to motivation to other companies and

situations? Why don’t more companies operate like Lincoln?

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SESSION 9 Wednesday, February 8, 2017 TOPIC: Competitive Dynamics

READING: Yoffie & Cusamano, “Judo Strategy,” Harvard Business Review, Jan-Feb, 1999

CASE: Airborne Express (A) GROUP ASSIGNMENT (For Odd-numbered groups): 1. Using the data provided in Exhibit 3 in the case as a starting point, calculate the

cost structure for Airborne relative to the competitor shown on a per package basis. To the extent possible, focus on estimating marginal costs rather than simply dividing total cost for a category by quantity shipped. Complete the cost structure comparison which has been posed on Canvas.

Respond in about 2-3 double-spaced additional pages to the following:

2. Describe how Airborne’s activities (and particularly its choices in regard to scope) shape their cost structure. Does Airborne have a sustainable advantage?

3. What would you recommend to Robert Brazier, Airborne’s President and

COO, in regard to the two issues posed in the case: a) should Airborne shift to a distance-based pricing model and b) should they pursue to alliance with RPS? What risks do they face?

PREPARATION QUESTIONS:

1. How and why has the express mail industry structure evolved in recent years? How have the changes affected small competitors?

1. How has Airborne survived, and recently prospered, in its industry?

2. Quantify Airborne’s source of advantage.

4. What must Robert Brazier, Airborne’s President and COO, do in order to strengthen the

company’s position?

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SESSION 10 Monday, February 13, 2017 TOPIC: Building Sustainable Advantage

READING: none CASE: Husky Injection Molding Systems GROUP ASSIGNMENT (for even-numbered groups): Answer the following in 3-4 double-spaced pages: 3. What is Husky’s strategy (i.e., type of advantage sought)? What is the

fundamental logic by which Husky makes money? Describe Husky’s choices in regard to breadth of scope in terms of products, customers and geography and illustrate how their activities support those choices.

2. Quantify the willingness to pay for a Husky machine relative to a competitor’s machine. In other words, how much would a customer have to spend to replace one Husky PET perform system. (Hint: Use assumptions found on page 4 and in Exhibits 6 and 11. In making the comparison, consider input costs and other operating costs including floor space. Take into account the amount a customer would have to spend to get comparable production as well as the ongoing operating costs to determine a customer’s upper bound for willingness to pay. Hand in your analysis separately from questions 1 and 3.

3. What recommendations would you make to Schad to turn around the company’s

performance? Be specific in regard to scope, pricing and anything else you deem relevant.

PREPARATION QUESTIONS: 1. What is Husky’s strategy? Why has the company been so successful in the period prior

to the recent problems?

2. Are Husky injection molding systems worth the premium price the company charges? Be precise and support with quantifiable analysis.

3. What has caused Husky’s current difficulties? 4. How should Schad and the company respond?

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SESSION 11 Wednesday, February 15, 2017 TOPIC: Sustaining Competitive Advantage

READING: none CASE: eHarmony PREPARATION QUESTIONS: 1. Why do people want to meet others on-line instead of finding them in the real world?

2. How structurally attractive is the on-line personals market? 3. Does eHarmony have a competitive advantage? If so, where does it come from? 4. How would you quantify whether eHarmony has an advantage? And if so, how much

of an advantage is it? 5. How serious is the competitive threat to eHarmony?

6. Which of the four options should Waldorf pursue?

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SESSION 12 Monday, February 20, 2017 TOPIC: Sustaining Competitive Advantage

READING: none CASE: Delta Air Lines: The Low-Cost Carrier Threat (A) PREPARATION QUESTIONS: 1. During the 1990s, none of the five largest air carriers in the United States earned its

cost of capital. Why do such low rates of return on investment persist in the airline industry?

1. Despite the challenging industry environment, airlines like Southwest Airlines and

JetBlue earn enviable returns. How? 2. Why have all of the low-cost substitutes of legacy airlines, including Delta Express,

failed? 3. What will happen to Delta Air Lines if it continues to respond to low-cost airlines in the

way it has in the past? Can you size up, roughly, the financial consequences of continuing with the status quo?

4. What are the strategic options available to the cross-functional team that Mark Balloun

co-leads? What steps should the team take to choose among the options? What recommendation should they make to Delta’s board?

5. Based on the information available to you, what course of action would you

recommend to Delta’s board?

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SESSION 13 Wednesday, February 22, 2017 TOPIC: Threats to Sustainability and Competitive Dynamics READING: Kenneth Corts and Debbie Freier, Judo in Action,” Harvard Business School

background note CASE: Matching Dell

GROUP ASSIGNMENT (for odd-numbered groups): Respond in about 1-2 double-spaced pages to the following: What is your assessment of the industry attractiveness of the personal computer industry (focusing on the manufacturers of personal computers)? Discuss the key forces which create this situation. Respond in about 1-2 additional double-spaced pages to the following: What type of advantage is Dell pursuing? What are the key activities that Dell performs? Why is each of these activities advantageous for Dell? How do these activities fit with the rest of what Dell does? How do these activities respond to the PC industry’s structural characteristics you identified above? Respond in about 2-3 additional double-spaced pages to the following: Perform the analysis on Dell’s and competitors’ cost structures using the assumptions indicated in the one page handout posted on Carmen (use Compaq for the comparison). Using this information and the average price per quarter data on PC prices (Exhibit 10b), what does this tell you about the nature of Dell’s competitive strategy and importantly, the decisions they have made about how to compete in the industry? Has it changed between 1996 and 1998? Focus on Dell and Compaq for your explanation of cost and pricing decisions. (Also hand in your cost structure analysis with your answer.) PREPARATION QUESTIONS: 1. How and why did the personal computer industry evolve into this situation?

2. Why has Dell been so successful?

3. Prior to the recent efforts by competitors to match Dell (1997-1998), how big

was Dell’s competitive advantage?

4. How sustainable is Dell’s position?

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SESSION 14 Wednesday, March 1, 2017 TOPIC: Appropriate Scope of the Firm READING: none CASE: Harlequin Enterprises: The MIRA Decision

PREPARATION QUESTIONS: 1. Who are Harlequin’s series customers and what value does Harlequin’s product create

for them?

2. Where in its value chain does Harlequin create unique value? How does it create and capture this value?

3. Series romance fiction is one of the most profitable areas of book publishing. Why is it

so difficult for direct competitors to imitate or replicate Harlequin’s series strategy? 4. Should Harlequin be worried about competition in its core series romantic fiction

business?

5. What are the key differences and similarities between the series romance business and the traditional single-title fiction business?

6. What does Harlequin bring to the single-title business?

7. Should Harlequin enter the single-title market? Why, or why not? If so, how?

8. Is the profit potential in single-title business similar to, or different from the series

business?

9. As a member of the Torstar board (Harlequin’s parent company), you are being asked to approve the MIRA single-title initiative. What questions would you have for Donna Hayes?

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SESSION 15 Monday, March 6, 2017 TOPIC: Industry Structure, Industry Attractiveness and Strategic Positioning READING: Amar Bhide, “The Questions Every Entrepreneur Must Answer,” Harvard

Business Review, Nov-Dec, 1996. CASE: The U.S. Toy Industry (posted on Carmen) INDIVIDUAL ASSIGNMENT (for all students): 1. Complete the matrix for the two segments in the U.S. Toy Industry and hand in a hard

copy with your assignment. Be sure that you briefly describe each factor that you consider relevant within the box provided. Fill in each box as best you can with either a +, - or ? for each factor you identify. There may be more than one than one factor affecting price, cost, quantity or risk for each industry force, and they may be inconsistent so that opposing forces create counterveiling effects.

For example, under Buyer Power, you will list who the likely buyers are in each segment. In other words, what distribution channel will the toy company use to distribute its products? How powerful are those buyers? Why are they powerful (or not) in regard to the price? How might each distribution channel affect the toy firm’s costs, quantities or sales volume? Each industry force will not necessarily affect every driver (price, cost, quantity, risk).

2. Next (this is exciting, isn’t it?), develop a detailed business plan (3-4 pages of text) for

the toy company. a.) Develop a positioning strategy to deal with the industry structure. b) Describe how your strategy responds to the opportunities and threats created by the

industry structure you analyzed for Q. 1. As you describe the activities in this system, consider how each might either reduce power of industry forces or add value.

c) Explain how your strategy will create a competitive advantage for your firm.

Note: Stick to the facts as they are written. The case is set in 1980. Do not suggest an

internet-based strategy if you want a passing grade. Stick to one of the two products suggested in the case, either the poseable action figures or the large molded toys.

This assignment allows you build important skills that relate to strategy formulation and implementation. This represents an important step in moving from retrospective analysis of actions taken (as we have seen in prior cases) to developing your own sets of action moving forward. Moving from analysis to action is a crucial element in building your general management skill set and developing your ability to integrate key concepts in a realistic business setting.

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SESSION 16 Wednesday, March 8, 2017 TOPIC: Business Models READINGS: Mark W. Johnson, Clayton M. Christensen and Henning Kagermann,

“Reinventing Your Business Model,” Harvard Business Review, Dec, 2008

Michael E. Porter and Jan Rivkin, “Industry Transformation” CASE: Uber: Changing the Way the World Moves

PREPARATION QUESTIONS: 1. Do you agree or disagree with Uber’s surge pricing policy? What are the reasons it can

be perceived as unfair? What does it mean to say that a pricing policy is exploitative? What are the risks of the policy to Uber? Given these risks, should Uber modify its policy? Be prepared to defend your answer.

2. Uber is notoriously aggressive in its business tactics. It frequently operates without

getting regulatory approval and it often ignores legal concerns; as a consequence, the company has become a lightning rod for criticism. Do you agree with Uber’s aggressive tactics? Is there a more diplomatic way for Uber to conduct its business? Should Uber be taking more of a “tiptoe” approach when it enters new markets?

3. Uber has become enormously popular among consumers in a very short period of time.

How has the company accomplished this? 4. How well does Uber treat its drivers? From a driver’s standpoint, is it better to drive for

Uber or is it better to drive for a taxi/limo service? Is it economically more attractive to drive for Uber? What would you imagine are the biggest complaints drivers have about driving for Uber? What would you imagine are the most appreciated benefits? What is the profile of a typical Uber driver, and how does it compare to the profile of the typical taxi or limo driver?

5. How robust is Uber’s operating model? Where are the weak links in its service model?

Is Uber vulnerable? In what way

6. In its relatively short life span, Uber has attracted a lot of media attention. Why is this? What is it about the Uber business model that is both compelling and polarizing? In addition, why has Uber managed to achieve such a high valuation? What are the pros and cons of a high valuation?

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SESSION 17 Monday, March 20, 2017

Two complementary cases are assigned for this day. Both are relatively short cases.

Read the Wal-mart case and consider the preparation questions. However, the bulk

of the class discussion will focus on the issues raised in the Aldi case and how they

might impact the Wal-Mart competitive situation.

TOPIC: Building Sustainable Advantage

READINGS: Frances Frei, “The Four Things a Service Business Must Get Right,” Harvard Business Review, April, 2008.

Joan Magretta, “Competitive Advantage: The Value Chain and Your

P&L—Applying Michael Porter’s Value Chain Framework to Your Business” (Chapter 3 from Understanding Michael Porter)

CASE: Wal-Mart Stores Discount Operations PREPARATION QUESTIONS: 1. How do you explain Wal-Mart’s extraordinary performance in discount retailing? Is a

favorable industry structure the reason?

2. What, historically, has been Wal-Mart’s key source of competitive advantage in discount retailing?

3. How sustainable is Wal-Mart’s competitive advantage in discount retailing in 1986?

TOPIC: Building Sustainable Advantage

READINGS: none CASE: Aldi: The Dark Horse Discounter PREPARATION QUESTIONS: 1. Should Wal-Mart be worried about Aldi? Should Aldi be worried about Wal-Mart?

2. Do you believe Aldi to be at a competitive advantage or disadvantage relative to Wal-

Mart? 3. What is Aldi's strategy? 4. In locating its stores, should Aldi avoid locating close to a Wal-Mart store?

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SESSION 18 Wednesday, March 22, 2017

TOPIC: Building Sustainable Advantage

READINGS: none CASE: Trader Joe’s

PREPARATION QUESTIONS:

1. How do firms in the supermarket industry make money?

• Please conduct a financial ratio analysis using the data in Exhibit 2. How do the results reflect the different strategies pursued by those four firms?

• What do the results say about how firms in this industry can deliver strong financial returns in different ways?

2. What are the key sources of Trader Joe’s competitive advantage? 3. What are the main threats to Trader Joe’s competitive advantage? Is their advantage

sustainable? 4. How would you modify Trader Joe’s strategy moving forward?

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SESSION 19 Monday, March 27, 2017 TOPIC: Disruptive Innovation and Competing Business Models READING: none CASE: Movie Rental Business: Blockbuster, Netflix and Redbox

PREPARATION QUESTIONS: 1. How do the different players in the movie rental value chain provide and capture value? 2. What factors led to Netflix’s growth? How should Blockbuster have responded to the

challenge posed by Netflix? 3. What factors led to Redbox’s growth? How and why was it able to capture market

already dominated by big players such as Blockbuster and Netflix? 4. What are the key success factors in the movie rental business? How do Redbox,

Blockbuster, and Netflix compare along those dimensions? 5. How would you advise these companies to modify their strategies and structures going

forward?

SESSION 20 Wednesday, March 29, 2017 TOPIC: Competing Business Models

READING: none

CASE: eBay Inc. and Amazon.com (A)

PREPARATION QUESTIONS:

1. What are the key drivers of profitability in eBay’s business model?

2. What are the key drivers of profitability in Amazon’s retail business model? How does its retail business model interact with that of eBay?

3. As it shifted to a retail and platform business model, how successful was Amazon in

overcoming barriers to entry in the third-party seller market? What business choices were critical in altering the competitive dynamic?

4. What would you recommend for eBay going forward, and why?

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SESSION 21 Monday, April 3, 2017

TOPIC: Competitive Dynamics

READING: Brandenburger and Nalebuff, “The Right Game: Use Game Theory to Shape Strategy,” Harvard Business Review

opy Coughlan, Freier and Kaiho “Competitor Analysis: Anticipating Competitive Actions”

CASE: Dogfight Over Europe: Ryanair (A)

PREPARATION QUESTIONS:

1. What is your assessment of Ryanair’s launch strategy?

2. How do you expect Aer Lingus and British Airways to respond? Why?

3. How costly would it be for Aer Lingus and British Airways to retaliate against Ryanair’s launch rather than accommodate it?

4. Can the Ryan brothers make money at the I£98 fare they propose?

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SESSION 22 Wednesday, April 5, 2017

TOPIC: Competitive Dynamics

READING: none CASE: The Ready-to-Eat Breakfast Cereal Industry in 1994 GROUP ASSIGNMENT (for even-numbered groups): 1. How significant have the barriers to entry been in the RTE cereal industry?

Calculate what the cost of entry would be for a major branded cereal entrant and for a private label entrant. (Cost of entry means the cost to get up and running for a new player not currently operating in the industry—these costs do not include raw materials costs but would include other costs related to advertising or slotting required to gain entry into the marketplace.)

Assume that each entrant wants to operate at minimum efficient scale and that

new product introduced attains an average market share of 0.2%. Show the total cost of entry for a both major branded cereal and a private label entrant. (Hint: Given those two assumptions, how many product launches will it take for a new entrant to reach efficient scale?)

2. How do the cost structures of private label and branded cereal manufacturers

differ? Complete the value chains included in the course pack to estimate the margins for

the branded versus the private label competitors. 3. Calculate on a per pound basis what the operating profit impact will be for

General Mills’ simultaneous reduction in trade promotions and price reduction. How will total operating profit be impacted? Assume that market shares remain unchanged for the major players. What will the impact be for the other players?

Hand in your analyses for the above three questions. Then respond in 2-3 pages or less to the following questions. State your rationale for your answers. 4. What does General Mills hope to accomplish with its April 1994 reduction in trade

promotions and prices? Under what conditions would the stable market share assumption (above in question #3) be true? Is that realistic? Is that General Mills’ goal?

5. What are the risks associated with these actions? How do you expect General

Mills’ competitors to respond? Be specific about the expected actions of each of the other three major players (Kellogg, General Foods/Post, Quaker) and explain why. Look forward and reason back.

PREPARATION QUESTIONS on next page

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PREPARATION QUESTIONS: 1. Why has RTE cereal been such a profitable business? What changes have led to the current

industry crisis? 2. Why have private labels been able to enter this industry successfully? How do the cost

structures of private label and branded cereal manufacturers differ? 3. What does General Mills hope to accomplish with its April 1994 reduction in trade

promotions and prices? What are the risks associated with these actions? How do you expect General Mills’ competitors to respond? What should General Mills do?

SESSION 23 Monday, April 10, 2017

TOPIC: Leadership and Transformation

READING: Kotter, “What Leaders Really Do,” Harvard Business Review, May/June 1990

CASE: GE’s Two Decade Transformation: Jack Welch’s Leadership

PREPARATION QUESTIONS:

1. How difficult a challenge did Welch face in 1981? How effectively did he take charge? 2. What is Welch’s objective in the series of initiatives he launched in the late 1980s and

1990? 3. How does such a large, complex diversified conglomerate defy the critics and continue

grow so profitably? 4. What is your evaluation of Welch’s management approach? How important is he to

GE’s success? What implications are there for his replacement? 5. GE has been a source of management innovation for decades. What is it that you

learned, if anything, from the experience of Jack Welch?

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SESSION 24 Wednesday, April 12, 2017

TOPIC: Leadership and Transformation

READINGS: Clayton M. Christensen, “How Will You Measure Your Life?” Harvard Business Review, July-August 2010.

Robert E. Quinn, “Moments of Greatness: Entering the Fundamental

State of Leadership,” Harvard Business Review, July-August 2005. CASE: The Individual and the Corporation: Kathy Levinson and E*Trade (A)

PREPARATION QUESTIONS: 1. What are Kathy Levinson’s obligations? 2. What factors should she weigh in deciding what to do? 3. What are Levinson’s options? Which one should she choose? 4. As an investor in E*Trade, what decision would you want her to make?

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SESSION 25 Monday, April 17, 2017 The Starbucks case, as published, is very long at 71 pages (YIKES!, but consider the outstanding value on a "per page" basis as it costs no more than the typical HBS case!) For the obvious part, there are twenty pages of footnotes which most of you will choose to discard or simply not print at all (think of them as ready-to-eat cereal coupons, except that they have no redemption value). As the case title suggests, we will focus on the Transformation and Renewal aspects of the case. I'd recommend you skip pages 27-35 entirely and pick up the case at the bottom of page 36 and read through the end at page 40. Most of the exhibits are not really all that informative either (although they are still "technically" part of the case.) Take a look at Exh 1 (Schultz's memo), Exh 8 and 9. Yes, it is still long even skipping these parts. Perhaps you will want to get in the mood by consuming a Starbucks product (or some other highly-caffeinated beverage) while reading. Nevertheless, this case is a good fit with the last module of the course and continues our look at the roles and responsibilities of firms. This case provides a rare detailed look inside the renewal at a large corporation that is will be well worth the investment when we are prepared.

TOPIC: Leadership and Transformation

READING: Christensen, Marx and Stevenson, “The Tools of Cooperation and Change,” Harvard Business Review, October, 2006

CASE: Starbucks Coffee Company: Transformation and Renewal

PREPARATION QUESTIONS:

1. What were the most important factors behind Starbucks decline in 2007 and 2008? How much of this did Schultz see in 2007? In 2008? Which factors were less obvious?

2. What were the most important aspects of Starbucks transformation? Why did these

matter to the survival and transformation of the company? How generalizable are such initiatives in the broader context of business turnarounds?

3. What do you think Schultz means when he says that Starbucks is “redefining the role of

a for-profit company?” What do you make of Schultz’s take on corporate responsibility, and its impact on the bottom line?

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SESSION 26 Wednesday, April 19, 2017 TOPIC: Leadership and Transformation, Competitive Dynamics / Putting it all

together

READINGS: none CASE: Asahi Breweries, Ltd.

PREPARATION QUESTIONS:

1. Is Asahi a successful enterprise? By what standard?

2. Define the corporate strategy of Asahi Breweries, Ltd. as of 1989. What competitive concepts, economic and non-economic objectives, key operating policies, and timed sequence of moves characterize the strategic logic of this enterprise?

3. What specifically did Messrs. Murai and Higuchi bring to Asahi? How would you

characterize their policies, behavior and contributions? 4. What is your assessment of Asahi’s investment and profit plan presented in Exhibit 1?

SESSION 27 Monday, April 24, 2017 Course Wrap-Up No bonus learning time