Strategy - Dr. David L. Deephouse University of Alberta School of Business

Texts: ORG A 641 Custom Courseware / Readings Package;

Capstone^®; Simulation available at http://www.capsim.com

Prerequisites: All required first year MBA core courses.

Course Goals:

• To advance your knowledge of the formulation and implementation of business and corporate strategies.
• To examine the activities of general managers as they attempt to create competitive advantage.
• To extend your familiarity with the complexities of large, complex, global corporations.
• To give you the experience of working as a team of top managers running a simulated company.

Course Description:

This course is the Capstone^®; class of the MBA curriculum. It focuses on the tasks of top managers (chief executive officers, presidents, and division managers) as they formulate and implement the strategies that set the general direction of an organization and thus critically affect its success. One task is developing an understanding of a company's current position and its historical development. A second task is generating and evaluating strategic alternatives and selecting from them. A third task is coordinating all the operational and functional components of the organization, such as managing the classic tension between marketing and production. Thus, a basic understanding of the MBA core courses is necessary. We will use readings, cases, and a business simulation to enhance our understanding of these top management tasks.

This course consists of two essential parts - knowing and doing. The "knowing" part of the course involves learning about strategic management and the organization of business enterprises. The readings, lectures, and case discussions are designed to help you understand strategic management concepts. At the beginning of each class, the Discussion of Current Business segment provides an opportunity to see how strategy concepts are used in the business world. Moreover, there are three short written assignments, called "Think Pieces," that ask you to reflect personally on the strategic leadership material presented in the course.

The "doing" part of the course involves your participation in a business simulation, the analysis of cases, and other experiential exercises in the class. The business simulation, called Capstone^®;, provides you with the opportunity to gain hands-on experience in running a business as a member of a top management team. Each team must evaluate situations and make decisions in competing with other management teams for resources and markets. Each team will formulate and implement strategies that integrate production, marketing, R&D, HR, and financial functions within a practical decision-making framework. You will be able to experience decision making under conditions of uncertainty, the trade-offs necessary among different functions, and the impact of decisions on performance within a competitive market.

While we will examine many central strategic management issues, we cannot possibly anticipate all the issues you will confront in the years ahead - few predicted either the high-tech boom or its bust of the last five years. Our primary mission therefore is to help you develop ways of thinking and learning that will make you a more effective manager and leader throughout your career. This requires that you learn how to perceive and respond to changes in business environments, assess and marshal organizational capabilities, and make insightful decisions and recommendations.

And although you may not become a top manager, this course may be useful in other ways. As a job seeker, your knowledge of a company's strategy may impress its recruiters and help you decide among different companies. As an employee, you can use your knowledge of strategy to understand how you can add value to the company. Moreover, you may be able to position yourself in parts of the corporation that will be more successful, leading to promotions and higher pay. As an investor, you will be able to evaluate better the prospects of different stocks and business opportunities. And as an individual, applying the tools of strategy can help you determine what you really want from life and how to get it.

Daily Class Activities

Except for the first and the last two classes, each class meeting generally will proceed as follows.

1. Discussion of Current Business Conditions.
2. Questions on last week's material.
3. Discussion of Readings and Cases.
4. Break.
5. More Discussion of Readings and Cases.
6. Lecture on next week's material.
7. Discussion of Capstone^®; Simulation.

Current Business Conditions: At the beginning of each class, several assigned students will report on interesting cases of strategic management and top management actions found in recent news stories.

Readings and Cases: We will learn some tools of strategic management from readings. We will use these tools in analyzing real companies and leaders as presented in case studies. The case study method has been found to be particularly useful for training professionals in the art of diagnosing complex unstructured problems. Cases include some essential information for analysis, but, just as in the real world, not all the information you might want. You must make the best judgments and interpretations that you can with the information provided. Case discussions rely heavily on your participation, while I serve as a facilitator or moderator. Consequently, you will be expected to present and defend your point of view in the class as well as to develop or critique the points that others have made.

Several discussion questions for each day's readings and cases are in the Daily Assignments section below. The discussion questions are meant as a starting point for your analysis, but it is important for you to go beyond the questions and develop insights based on your unique background, knowledge, and reasoning. Moreover, you are encouraged to bring your own questions about the readings to class.

Think Pieces on Leadership

I have asked you to write three short pieces on leadership. Each is separated from the other by several weeks. Each piece asks you to think and write about your experiences with leadership and management, both outside this course and within it. Each think piece should be no longer than one page. Details on each assignment are provided below.

Capstone^®; Team Assignments

Simulations are becoming more commonly used in companies. [2] They are useful in building teamwork and illustrating the dynamics of competition under uncertainty. They also help managers experiment with different alternatives. Our class will be organized into teams of about four people for the Capstone^®; simulation. When forming teams, you should consider the expertise of various team members in different functional areas. Like the research on top management teams, a team that is diverse in functional backgrounds and cognitive perspectives often outperforms those which are not diverse. Moreover, you are cautioned about selecting your friends because sometimes friendships become strained by this extended series of assignments. Another criterion for team formation is the compatibility of schedules for group meetings. However, there is some flexibility because this simulation is web-based.

There will be two practice rounds and eight official rounds of the simulation. As the official rounds progress, the game will become more involved as more decision activities are added (labour negotiations, human resource development, sales and promotion choices, TQM). Decisions be uploaded to the Capstone^®; website by Monday before midnight so that I can process them Tuesday. Please note that the clock on the Capstone^®; website is set on Eastern Time. There will be four major assessment activities, as follows.

1. Initial Strategy Statement (Due September 23). Summarize your company's intended strategy in no more than four typed, double-spaced pages. An outline format is fine. Your statement should answer the following questions:

• What position do you seek in the marketplace?
• What will differentiate your company? How will this lead to superior performance?
• What is your plan for getting there? How will you reach that position, and under what timetable?
• What trade-offs are you making? What are you deciding not to do?
• How will you create fit among your whole system of functional activities (e.g., marketing, finance, production, R&D, and HR).
• How are you organizing your top management team? What roles is each person performing?

2. Overall Performance. You will receive points based on how well your company met its performance objectives, called success measurements in Capstone^®;. You will select your performance measures before the first official round.

3. Final Board Report (Due December 4). Each team will maintain a record of its activities including such things as strategic changes, assumptions employed, decisions made, the outcomes of those decisions, and the reasons for these activities. Based on this information, each team will report to its Board of Directors and shareholders. I will evaluate the written report, and a Board of Directors (i.e., members of the other industry) will evaluate your verbal presentation.

Your Board Report is not intended to be an academic paper. It should be truthfully inform your Board of your company's effectiveness and prospects. It should be a formal typed, double-spaced, ten to fifteen page report, not including attachments and appendices. The Board Reports should include, at a minimum:

• A comparison of your actual strategies used with the original intended strategy.
• An evaluation of your strategies within the context of the competitive environment and your internal resources and capabilities.
• A description of the strategic decisions you made over time, why you made them, and how you implemented them.
• An analysis of the market and competition at the end of the simulation.
• The strategy you would select for the next few rounds.
• A discussion of what you learned from your experience, what worked well, and what you would do differently in the future.

4. Evaluation of verbal presentation by board members (November 27 or December 4). Your board members (i.e., those class members in the other industry) will evaluate your presentations. The material in your presentation should be a condensed version of your written report.

Participation

A critical factor in making this course a learning experience is the quality of your participation. Therefore, you are expected to read the material before class and contribute to class discussions. A thorough understanding of strategic management problems often requires a detailed debate in class. But it is the quality of participation, not the quantity, that is important. Quality participation fits in the flow of conversation while enlightening others about the issues and ideas. Other characteristics of quality participation include:

• Suggesting new and useful material from the cases or readings for the discussion.
• Interpreting evidence with an alternative perspective.
• Synthesizing prior points into a meaningful conclusion or provocative question.
• Identification of an important assumption.
• Soundly critiquing a reading.
• Proposing meaningful new questions that need to be asked about the topic.
• Formulating an action plan.

Because the course (and life) is cumulative, material that has been used previously in this class or in your past experience is welcome. You will also receive points for satisfactory completion of experiential, decision, and learning exercises in class and for discussing current business conditions. Thus, regular attendance is helpful.

Course Policies

Course Web Site: I plan to post my brief lecture notes on the day before the lecture is given. Notes on each day's Discussion of Cases and Readings will be posted after class. If material is not yet on the website that you think should be there, please telephone or e-mail me.

Missed assignments. Based on the material in the University of Alberta Calendar for exams (section 23.5.6), any student who is incapacitated because of illness, is suffering from severe domestic affliction, or has other compelling reasons (including religious conviction) may apply for an excused absence for a missed assignment. Excused absence for a missed assignment is a privilege, not a right, and is granted at the discretion of the instructor or the Faculty, depending on the circumstances. Only those students who, because of incapacitating illness, severe domestic affliction or other compelling reasons (including religious conviction) have missed an assignment are permitted an excused absence.

Appropriate conduct. My goal in this course is to create a supportive environment for learning based on open, constructive debate. This requires all of us to be engaged with the material and with each other in a professional manner, with courtesy and respect for each other's individuality. Discrimination, malicious criticism, and disruption of class are examples of unacceptable conduct. For others, see the Code of Student Behavior [pp. 710-730 of the university calendar, or online athttp://www.ualberta.ca/~unisecr/gfcPM.htm#30].

The value of your MBA degree, and of degrees given by the University of Alberta as a whole, depends on the integrity of each student's coursework. Activities that damage the value of your degree include plagiarism, cheating, distributing confidential academic material, and assisting another student in the commission of an academic offence. The University may expel, suspend, reprimand, or reduce a course mark of any student who takes such actions, as outlined in the Code of Student Behavior.

DAILY ASSIGNMENTS

4 September Welcome. Three questions. Capstone^®; Demonstration. Class introductions.

11 September Leadership I. Capstone^®; team formation day.

Readings

Kotter, J. P. 1990. What leaders really do. Harvard Business Review, 68 (3): 3-11. ISBN-ISSN-Harvard-Ivey No.: 0017-8012 Reprint 90309.

Ireland, R. D. & Hitt, M. A. 1999. Achieving and maintaining competitiveness in the 21st century: The role of strategic leadership. Academy of Management Executive, 13 (1): 43-57. ISBN-ISSN-Harvard-Ivey No.: 0896-3789; 1079-5545.

Beamish, P. W. & Nakamura, Y. 1999. Sony's Yoshihide Nakamura on structure and decision making. Academy of Management Executive, 13 (4): 12-16. ISBN-ISSN-Harvard-Ivey No.: 0896-3789; 1079-5545.

Hodgetts, R. M. & Stavropoulos, W. 1999. Dow Chemical's William Stavropoulos on structure and decision making. Academy of Management Executive, 13 (4): 29-35. ISBN-ISSN-Harvard-Ivey No.: 0896-3789; 1079-5545.

Ford, R. C. & Lee, J. 2002. Darden Restaurants CEO Joe Lee on the importance of core values: Integrity and fairness. Academy of Management Executive, 16 (1): 31-36. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Discussion Question:

1. How well do Nakamura, Stavropoulos, and Lee exemplify leadership in terms of Kotter's and Ireland and Hitt's conceptualizations?

Think Piece:

Using Kotter's distinctions between leadership and management, answer the following questions in one paragraph each on no more than one page.

1. Write about one specific experience with leadership, either when you were a leader or when you were being led.
2. Write about one specific experience with management, either when you were a manager or when you were being managed.

Assignment:

Obtain Capstone^®; materials. Complete Tutorials 1 and 2. Practice using the spreadsheets.

16 September Capstone^®; Practice Round 1 Decisions Due

18 September Strategy

Readings

Mintzberg, H. 1987. The strategy concept I: Five Ps for strategy. California Management Review, 30 (1): 11-24. ISBN-ISSN-Harvard-Ivey No.: 0008-1256.

Porter, M. E. 1996. What is strategy? Harvard Business Review, 74 (6): 61-78. ISBN-ISSN-Harvard-Ivey No.: 0017-8012 Reprint 96608.

Hambrick, D. C. & Fredrickson, J. W. 2001. Are you sure you have a strategy? Academy of Management Executive, 15 (4): 48-59. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Discussion Question:

1. Based on the interviews with Nakamura, Stavropoulos, and Lee, what would Mintzberg, Porter, and Hambrick and Fredrickson say about the strategies do Sony, Dow, and Darden Restaurants?

23 September Practice Round 2 Decisions Due

25 September Performance

Readings

Barney, J. B. 1997. What is performance? Chapter 2 of. Gaining and sustaining competitive advantage: 30-64. Reading, MA: Addison-Wesley. ISBN-ISSN-Harvard-Ivey No.: 0-201-51285-8.

George, W. W. & Van de Ven, A. H. 2001. Medtronic's Chairman William George on how mission-driven companies create long-term shareholder value. Academy of Management Executive, 15 (4): 39-47. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Discussion Questions:

1. What would William George say to Jay Barney about performance?
2. If you were CEO of a firm, how would you define performance?

Assignments:

Complete the Capstone^®; Situation Analysis Exercise (Chapter 4 of Team Member Guide).

Submit your team's initial strategy statement.

30 September Round 1 Decisions Due. Select Success Measurements (Performance Targets).

2 October Internal Resources and Capabilities

Readings

Duncan, W. J., Ginter, P. M., & Swayne, L. E. 1998. Competitive advantage and internal organizational assessment. Academy of Management Executive, 12 (3): 6-16. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

King, A. W., Fowler, S. W., & Zeithaml, C. P. 2001. Managing organizational competencies for competitive advantage: The middle-management edge. Academy of Management Executive, 15 (2): 95-106. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Foley, S., Mahmood, T., Bradley, S. P., & Ghemawat, P. 1994. Wal*Mart Stores, Inc. Harvard Business School Case: 1-21. ISBN-ISSN-Harvard-Ivey No.: 9-794-024.

Discussion questions:

1. Use an income statement to compare Wal-Mart's performance with that of the discount industry.
2. Use the value chain to identify Wal-Mart's key resources and capabilities.
3. How sustainable is Wal-Mart's competitive position? Rank each of Wal-Mart's distinctive competencies in order of ease of imitation.

7 October Round 2 Decisions Due

9 October Industry and Competitive Analysis

Readings

Review Industry and Competitive Analysis Materials from OA 501.

Smith, K. G., Ferrier, W. J., & Grimm, C. M. 2001. King of the hill: Dethroning the industry leader. Academy of Management Executive, 15 (2): 59-70. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Gordon, E. J. & Montgomery, C. A. 1999. Newell Company: Corporate Strategy. Harvard Business School Case: 1-22. ISBN-ISSN-Harvard-Ivey No.: 9-799-139.

Discussion questions:

1. Sketch a life cycle graph (volume over time) for the discount retail industry from 1960-1993. Identify various components of the life cycle.
2. Examine the Five Forces in the industry.
3. Consider how Wal-Mart has managed the Five Forces, particularly those which have changed over time.
4. In particular, consider the evolving relationship between Wal-Mart, Newell Corporation, and Rubbermaid.
5. What other competitive tools did Wal-Mart use to dethrone other retailers?

14 October HAPPY THANKSGIVING!! (Round 3 Decisions Still Due.)

16 October Corporate Strategy

Readings

Markides, C. C. 1997. To diversify or not to diversify. Harvard Business Review, 75 (6): 93-99. ISBN-ISSN-Harvard-Ivey No.: 0017-8012 Reprint 97608.

Goold, M. & Campbell, A. 1998. Desperately seeking synergy. Harvard Business Review, 76 (5): 131-143. ISBN-ISSN-Harvard-Ivey No.: 0017-8012 Reprint 98504.

Discussion questions:

1. Compare Exhibits 1 and 2. How has Newell's strategy changed over time?
2. What types of products does Newell provide?
3. How do Newell's individual business create value for volume retailers?
4. What parenting advantage does Newell headquarters provide (i.e., how does HQ create value for its business units?)
5. Is the Caphalon acquisition a good idea? Why or why not?
6. Is the Rubbermaid acquisition a good idea? Why or why not?

21 October Round 4 Decisions Due

23 October Leadership II

Readings

Mintzberg, H. 1990. The manager's job: Folklore and fact. Harvard Business Review, 68 (2): 163-176. ISBN-ISSN-Harvard-Ivey No.: 0017-8012 Reprint 90210.

Rowe, W. G. 2001. Creating wealth in organizations: The role of strategic leadership. Academy of Management Executive, 15 (1): 81-94. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Kroll, M. J., Toombs, L. A., & Wright, P. 2000. Napoleon's tragic march home from Moscow: Lessons in hubris. Academy of Management Executive, 14 (1): 117-128. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Discussion questions:

1. Mintzberg wrote his piece before the onslaught of the internet. How has the internet affected the managerial roles?
2. Have you experienced either visionary leadership or strategic leadership, as presented by Rowe?
3. Sam Walton defied conventional wisdom in the creation of Wal-Mart? How come he and later Wal-Mart management was not afflicted with hubris?
4. What role might hubris play in a market bubble, such as the rise and fall of dot.coms, telecoms and media companies in the last seven years?

Think Piece:

In your Capstone^®; team, what managerial roles do you enjoy? Which would you prefer not to do? Why?

28 October Round 5 Decisions Due.

30 October International Strategy

Readings

Gupta, A. K. & Govindarajan, V. 2001. Converting global presence into global competitive advantage. Academy of Management Executive, 15 (2): 45-56. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Gupta, A. K. & Govindarajan, V. 2002. Cultivating a global mindset. Academy of Management Executive, 16 (1): 116-126. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Bartlett, C. A. 1999. BRL Hardy: Globalizing an Australian Wine Company. Harvard Business School Case: 1-20. ISBN-ISSN-Harvard-Ivey No.: 9-300-018.

Discussion questions:

1. Some analysts criticized the merger of BRL and Hardy. What accounts for the initial success of BRL Hardy after the 1992 merger?
2. Why are there tensions between Stephen Davies and Christopher Carson? How well has Steve Millar managed the relationship between these two crucial managers? Do they have global mindsets?
3. Would you authorize the launch of the D'istinto brand? Why or why not? What strategic, organizational, or financial factors are most important?
4. What action would you take regarding the competing proposals for Kelly's Revenge and Banrock Station? Why? What strategic, organizational, or financial factors are most important?
5. Will BRL Hardy turning its global presence into sustained competitive advantage?

4 November Round 6 Decisions Due.

6 November International Mergers and the Transnational Matrix

Readings

Marks, M. L. & Mirvis, P. H. 2001. Making mergers and acquisitions work: Strategic and psychological preparation. Academy of Management Executive, 15 (2): 80-92. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Javidan, M. & von Pierer, H. 2002. Siemens CEO Heinrich von Pierer on cross-border acquisitions. Academy of Management Executive, 16 (1): 13-15. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Whalen, W. J., Lightfoot, R. W., Moreton, P., Bartlett, C. A., & Crane, D. B. 1994. Merging Asea and Brown Boveri. Harvard Business School Case: 1-22. ISBN-ISSN-Harvard-Ivey No.: 9-394-146.

Simons, R. & Bartlett, C. A. 1992. Asea Brown Boveri. Harvard Business School Case: 1-16. ISBN-ISSN-Harvard-Ivey No.: 9-192-139.

Bartlett, C. A. 1993. ABB's Relays Business: Building and Managing a Global Matrix. Harvard Business School Case: 1-23. ISBN-ISSN-Harvard-Ivey No.: 9-394-016. 

Discussion questions:

1. What does each firm bring to the merger?
2. What difficulties are faced by the merger?
3. How would you evaluate Percy Barnevik's first four months as he prepares for the merger of Asea and Brown Boveri?
4. What is the strategy of ABB?
5. How is work different for Joe Baker and Don Jans under ABB, compared to Westinghouse?
6. As Don Jans, what would you propose to Joe Baker and Ulf Gundemark about the Comsys project? How would Baker and Gundemark respond? Should Göran Lindahl get involved?
7. Why has ABB been relatively successful with the global matrix when many other companies have failed? What roles do Jans, Baker, Gundemark, and Lindahl play?
8. Would you want a middle management position like Josef Durr's or Don Jans's?
9. How well is ABB creating organizational advantage by resolving the three internal contradictions of "global and local, big and small, radically decentralized with centralized reporting and control." (ABB page 6). Does ABB provide a model for 21st century corporations?
10. Overall, what is more important to success, the strategic logic of the merger or its implementation?

11 November Remembrance Day (Round 7 Decisions Still Due.)

13 November Strategic Alliances

Readings

Das, T. K. & Teng, B. S. 1999. Managing risks in strategic alliances. Academy of Management Executive, 13 (4): 50-62. ISBN-ISSN-Harvard-Ivey No.: 0896-3789; 1079-5545.

Inkpen, A. C. 1998. Learning and knowledge acquisition through international strategic alliances. Academy of Management Executive, 12 (4): 69-80. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Cyr, D. & Manley, J. 1999. Industry Minister John Manley on technology and competitiveness. Academy of Management Executive, 13 (2): 8-12. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Cyr, D. & Gisel, G. 1999. Sierra Systems' CEO Grant Gisel on high technology alliances. Academy of Management Executive, 13 (2): 13-16. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Cyr, D. 1999. High tech, high impact: Creating Canada's competitive advantage

through technology alliances. Academy of Management Executive, 13 (2): 17-26. ISBN-ISSN-Harvard-Ivey No.: 0896-3789; 1079-5545.

Nanda, A. & Bartlett, C. A. 1994. Corning Incorporated: A Network of Alliances. Harvard Business School Case: 1-26. ISBN-ISSN-Harvard-Ivey No.: 9-391-102.

Discussion questions:

1. How did Jamie Houghton change Corning's strategy, structure, control systems, operations and performance? What crucial problems remain?
2. What strategic role are alliances playing in Jamie Houghton's vision of Corning?
3. How well prepared is Corning to manage its joint venture relationships? What techniques are they using to increase the likelihood of success?
4. How well has Corning managed the risks of alliance well?
5. What is the role of learning in Corning's alliances?
6. What are your recommendations to the management committee on the 3 proposals? How do they fit with Corning's strategy and culture? What are the underlying reasons for each of these alliances

18 November Round 8 Decisions Due.

20 November Fads, Myths, and Jargon

Readings

Katzenbach, J. R. 1997. The myth of the top management team. Harvard Business Review, 75 (6): 83-91. ISBN-ISSN-Harvard-Ivey No.: 0017-8012 Reprint 97604.

Gibson, J. W. & Tesone, D. V. 2001. Management fads: Emergence, evolution, and implications for managers. Academy of Management Executive, 15 (4): 122-133. ISBN-ISSN-Harvard-Ivey No.: 0896-3789.

Pfeffer, J. & Sutton, R. I. 1999. The smart-talk trap. Harvard Business Review, 77 (3): 134-114. ISBN-ISSN-Harvard-Ivey No.: 0017-8012 Reprint 99310.

Discussion questions:

1. If Katzenbach observed your Capstone^®; company, what would he say about your "team-ness?"
2. What management practices do you think are fads? What practices are durable?
3. Would you leverage your functional core competence into sustained competitive advantage under conditions of structural inertia within a re-engineering process?

Think Piece:

In two paragraphs total, answer the following on Katzenbach's "The myth of the top management team."

1. When did your team really work as a team? If you never really worked as a team, when did you think it should have?
2. When did your team work as a team when you think it would have been better off as individuals doing their own thing?

27 November Industry 1 Board Presentations

4 December Industry 2 Board Presentations. Written Board Reports Due.