Session

Preparation Guide

1. Introduction to Strategy

1. Read the articles by Lewis (10mins) and Ghemawat articles (1.4 hrs)
2. Read the Argyle Diamonds case and address these questions (1.5hrs):

• What are the alternatives open to Argyle Diamonds in its relationship with the CSO? Should Argyle break away from the CSO? If Argyle stays, on what terms?
• What factors determine the financial success of a diamond miner such as Argyle? You may search websites and articles (or contact people you know in this industry) to find out more.
• Sketch an industry value chain for diamonds (i.e. identify all the stages at which various organisations ‘add value’ to the diamonds). Where does the CSO fit in and why is it so strong? Why have Zaire, Botswana and Russia failed to establish rival marketing systems? Is there any reason to believe that Argyle would do any better?

If you have extra time and would like to learn more, watch the video on the Oppenheimer diamond cartel. Follow the link from the 'outline' page to this video.

2. Industry Analysis - Porter's Five Forces

1. READ (1hr): Grant, “The Determinants of Industry Profit”, in ‘Contemporary Strategy Analysis’, Blackwell, 1998, pp54-70.
2. SKIM (10mins): Michael E. Porter, “How Competitive Forces Shape Strategy,” Harvard Business Review 1979 (pp. 32-41)
3. Case (2hrs): Crown Cork & Seal.

• Using Porter’s 5 Forces framework, analyze CCS’s position in the steel-can manufacturing industry
  • Use this to characterize the industry in terms of cost and revenue drivers (at the time of the case).
  • Evaluate CCS’ strategy till 1997: what made it successful? What were the problems, if any, with this strategy?
• Assess John Connelly’s role in shaping CCS’ strategy.
  • Does strategic thinking make a difference?
• It is 1977 and John Connely wants to retire. You are taking over as CEO and about to meet the board. Will you continue pursuing CCS’s prior strategy ?
  • Full time syndicates 1-5 must say “no”, 6-10 say “yes”.
  • Part time syndicates 1-4 must say “no”, 5-8 say “yes”.
• Syndicates 4 & 8 will present (full time & part time). These syndicates should submit a short case analysis before class.
  

3. Competitive Positioning via Cost Leadership

1. READ (1hr): Ghemawat & Rivkin, “Creating Competitive Advantage”.
   
2. Case (2hrs): Honda A

• Analyze Honda’s competitive position
  • Conduct an activity analysis of the factors that drive Willingness to Pay and Opportunity Cost for Honda.
    • It might help to use figures like in the Ghemawat-Rivkin reading (Session 3) or the Porter reading (Session 4). How do they relate to Honda’s experience curve?
    • Within the constraints of data available, you may conduct some simple quantitative analysis of relative cost and willingness to pay
  • Does Honda have sustainable competitive advantage?
  • Groups FT1, FT5, PT1, PT5 to submit a report on Honda's competitive position to me beforehand (max 500-word) & prepare for the in-class scenario below.
• Prepare for this in-class Scenario: It is 1981, and Sochiro Honda has called a meeting of his top two Vice Presidents (you are one of them!). Sochiro wants to know whether it is now time for Honda to really take on Harley Davidson in selling large bikes.
  • Full time syndicates 1-5 must say “yes”, 6-10 say “no”.
  • Part time syndicates 1-4 must say “yes”, 5-8 say “no”.
  • We’ll have an in-class debate.
    
    

4. Competitive Positioning via Differentiation

1. READ (1hr): Porter 1996, "What is Strategy?”.
   
2. Case (2hrs): Ducati

• Analyze Ducati’s competitive position
  • Is Ducati’s strategy built upon variety-based positioning, needs-based positioning, or access-based positioning?
  • Sketch an Activity Map for Ducati (c/f Porter 1996). Is there a good “fit”?
  • How easy is it for a competitor to copy Ducati?
  • Groups FT3, FT7, PT3, PT7 to submit a report on Ducati's competitive position to me beforehand (max 500-words) & prepare for the following scenario.
• Prepare for the in-class Scenario:
  It is April 2001. Abel Halpern has just read the latest report from Ducati (ie the HBS case study) and has called for a meeting with Minoli. Abel is a Partner at Texas Pacific, the investment group that helped drive the Ducati turnaround. While happy with Minoli’s past performance, he is worried that money is being squandered on museums, clubs and other wasteful projects. That money might have been better used to reduce Ducati’s cost structure and/or develop a long-term competitive position. Perhaps Minoli has lost sight of his competitors?
  • Full time syndicates 1-5 will play the role of Minoli, 6-10 will play Abel.
  • Part time syndicates 1-4 will play the role of Minoli, 5-8 will play Abel.
  Prepare for the meeting by setting up a meeting agenda. Include questions and answers for the opposing team, using facts, figures and analysis from the case to support your position. The meeting will be held in class.

Note: The above scenario is pure fiction. Any resemblance to persons dead or alive is entirely coincidental.

5. Putting Together the Ideas from Weeks 1-4

1. Skim through Doug Dow's slides on the "5Cs". It's something we'll discuss in class, but not something you have to use for the Cola Wars case.
2. Case (3hrs): Cola Wars. Today's case is slightly different -we'll be spending almost all of the session on this case as a way to revise and put together the ideas discussed in weeks 1-4.

• Pre-class:
  • Each student should read the Cola Wars case. Use the lessons learnt in weeks 1-4 to analyze the competitive position of Coke & Pepsi.
  • Syndicates PT2, PT6, FT6,FT9 and FT10 are to create a strategy document (max 500 words) analyzing Coca Cola's competitive position at the time of the case and recommending it a strategy moving forwards.
• In-class: The Cola War Strategy Competition
  • Each syndicate that submitted a report will propose a strategy for Coca Cola moving forwards. Please limit your presentation to 10mins.
  • The class will then vote for a winning team.
  • Taking the winning entry as given, all syndicates will break out for 45mins to propose a counter-strategy for Pepsi.

I will post some fun & optional links on the course outline soon.

6.Resource Based View - Internal Competencies and Capabilities

1. READ (1hr): Stalk, Evans & Shulman, “Competing on Capabilities”, HBR, 1992.
2. SKIM (10mins): Saloner, Shepard & Podolny, “Strategic Management”, 2001, Chapter 3, pp39-53
3. Case: Wal*Mart (2hrs)

• Pre-class:
  • All students to read the case. Enjoy the fun links on the course outline page.
  • Syndicates PT4, FT2, and FT4 are to create a strategy document (max 500 words) analyzing Wal*mart's internal competencies at the time of the case and recommending it a strategy moving forwards.
    • Sketch a Strategy Map (Kaplan&Norton) for Wal*mart. Pay special attention to the "internal process" and "learning & growth" sections. What can you conclude are Wal*mart's main capabilities?
    • Identify 3 indicators that you would use as CEO of Wal*mart to measure (and monitor) its capabilities.
    • How well do Wal*mart's Discount stores, Sams club, Supercenters and International stores fit with its capabilities? Which of these should Wal*mart focus on as it moves forwards (circa 1993)?
• In-class:
  • Syndicates that prepared the report will present their findings for 10minutes.
  • Every syndicate will then break out for 30mins to discuss the case.

7. Technology as a Capability

1. Read Teece (1hr)
2. Skim Bower & Christensen (10mins)
3. Case: Microsoft Xbox (2hrs)

• Syndicates FT1, FT8, PT1, PT8 to prepare a 500-word report to analyze the following:
  • The PC Game Industry is characterized by waves of entry.
    • Briefly analyze what factors enabled Atari, Nintendo, Sega and Sony to successfully enter the industry. Why did others fail?
  • Consider the case of Microsoft XBOX.
    • Identify the relevant complementary assets (CA) and intellectual property (IP).
    • Which of the complementary assets are generic, which specialized?
    • Who captures the rewards of playing in this industry
• Prepare for the in-class Scenario:
  • It is Feb 2000. Seamus/Microsoft decides to enlist the help of top independent game maker Electronic Arts to make titles for the Xbox console and help take on Sony’s Playstation (http://www.playerschoicegames.com/xbox.html)
    • Full time syndicates 1-5 will play the role of Seamus, 6-10 will play EA’s CEO
    • Part time syndicates 1-4 will play the role of Seamus, 5-8 will play EA’s CEO
  • Prepare for the meeting with the other party. The agenda: (a) to negotiate a deal between the 2 firms (b) discuss terms of the deal, e.g. how to structure payments, sharing of profits & IP rights, (c) mechanisms by which employees of each firm will cooperate with each other. The meeting will be held in class.
  • Prior to class, think about questions and answers for the opposing team, as well as what kind of deal to offer/accept/reject. Use facts, figures and analysis from the case to support your position. Please do not discuss the case with the other team before class.

8. Resource Based View- Acquiring New Competencies

1. Read Kapoor-Lim on knowledge-based acquisitions
2. Skim Hsu-lim paper on knowledge bridging

Syndicates FT5, FT8, PT5 to prepare a 500-word report to analyze the HP case :

• This portion should constitute 70% of your report:
  • Analyze HP’s attempt at integrating new capabilities from Compaq. What did they do well/ what did they do poorly?
  • Using freemind, create a mindmap exploring the options faced by Marcello at the end of the case. What should he do? Have fun, be creative!
• This exercise should constitute 30% of your report:
  • Obtain a sample of 10 inventors who were at Compaq before the merger (not statistically significant, just for fun). Did they remain productive after the merger? What about 10 inventors from HP from around the same time period?
  • Free patent searching is available at http://www.uspto.gov/patft/index.html, http://www.google.com/patents/ and http://patents.nus.edu
• Please present a 10-minute summary of the report in class

9. Game Theoretic Approach

1. Read: Brandenbuyrger & Nalebuff HBR article
2. Review Coopetition textbook you read in Managerial Economics

Syndicates FT3, FT6, FT10, PT3, PT6 to each prepare a 500-word report to analyze the the Google case :

• Pre-class: PARTS analysis (Brandenburger-Nalebuff, HBS 1995):
  • Identify the game that google is playing, along with the players in the game and google’s “added value” in this business.
    • Sketch a “value net”.
    • If possible, obtain a quantitative estimate of Google’s added value at the time of the case. Make any reasonable assumptions doing so, but please state them
  • What are the rules of the game? Has Google changed them?
• Present a table summarizing the tactics used by each player.
• Analyze whether google has adequately addressed the scope of the game
• In-class: You are Senior VP for Strategic Planning at Google. It is early 2006. Eric Schmidt has called a senior management meeting. On the agenda are two items:
  1. You are to present what you think Google’s key competitors (Microsoft, Yahoo, Ebay) will do, and Google’s “best response” to them.
  2. A number of shareholders and board members are grumbling about the $1b investment in AOL. He wants you to assess whether this was in retrospect a good move, and whether Google should continue with similar investments. Odd-numbered syndicates to say ‘yes’, even-numbered syndicates to say ‘no’
• Note: You should use the PARTS analysis to help you in tackling the agenda items.

10. Game Theoretic Approach

1. Read: Brandenbuyrger & Nalebuff HBR article
2. Review Coopetition textbook you read in Managerial Economics

Syndicates FT2, FT7, PT2, PT7 to each prepare a 500-word report to analyze the the Google case :

• Pre-class:
  • With reference to Brandenburger & Nalebuff, Is Vermijs(HSC) doing the right thing in terms of Rules and Tactics?
  • Dynamics of Bitter Competition
    • Sketch a Game Tree for the Bitter Competition case
      • Sample game tree: http://www.negotiation.hut.fi/theory/PrisonersDilemma.html
      • Explain each stage clearly in terms of actions & possible payoffs.
    • In the initial stage of the game, what should Vermijs do? E.g. should HSC enter various markets or not, taking into account possible future scenarios?
• In-class:We will simulate a meeting at Searle
  • Your syndicate will have a conversation in class between various members of the Nutrasweet/searle team.
  • Prepare a dialog for the conversation. The goal is to decide whether to retaliate aggressively against entry by HSC [yes], or to accommodate entry [no].
  • Odd-numbered syndicates to say ‘yes’, even-numbered syndicates to say ‘no’
  • Note: this is NOT a meeting between Nutrasweet and HSC

11. Summary and Review, Implementation.

Sketch a Value Chain, Activity Map and Strategy Map of the firm you work in (or one you are familiar with, preferably first-hand, but if not, use one of the cases you encountered at MBS).

12. Rescheduled