Corporate Strategy Analysis

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  • 1. Corporate Strategy Analysis B01:2101:6A Professor Robert Lamb Summer 2002 Office: 7-53 KMC: 998-0231 Office Hrs: By Appointment email rlamb@stern.nyu.edu Fax (212) 995-4235 Teaching Ast: Louis Martin: lam298@stern.nyu.edu Tel: home: 201-251-2751 cell: 917-837-5979 URL: http://www.stern.nyu.edu/mgt/courses/b2101/lamb/ USEFUL RESEARCH SOURCES Corporate Strategy Students: This is a compressed course because of your schedule. Yet, every subject we cover may be critical in your careers because corporate strategy decisions and failures impact most firms. That is why corporate strategy decisions and problems are in the business news every day. Because this Course is so very Short, I urge you to buy the Text & Cases + read first 3 chapters, GE Case, Vertical Integration: Fisher Body& General Motors, before our first class. It is important that you be prepared for each class discussion. THE GOALS OFCORPORATE STRATEGY & BUSINESS STRATEGY Business Strategy’s goal is to gain sustainable competitive advantage in one business, whereas Corporate Strategy’s goal is to manage a multi-business firm to create corporate-wide advantages that benefit each business. For example: Corporate Strategy evaluates whether Walt Disney should own theme parks, sports teams, restaurants, television networks, and movie production and how the corporation can add value to each of its individual businesses. Business strategy analyzes each individual business of Disney relative to its competitors. For example: ABC (one of Disney’s television networks) needs a business strategy to succeed against CBS, NBC, Fox and cable TV networks. We Focus on the Following Topics in this Course Why we have firms. How today’s converging industries impact firms. What are firm resources? Where do valuable resources come from? How can resources be shared across multi-businesses to grow value? Scale & scope advantages of the firm: Should it Build? Buy? Or Ally? Why do we have multi-business firms? Do they add or subtract value? Why Corp. scope results from Transaction Cost Economics & Hold Up? Is there a relation between firm performance and corporate structure? Is the role for corporate headquarters to centralize or decentralize? How to best manage the process of mergers, alliances, JVs, franchises? We compare classic to virtual corporations and to Internet corporations What are good ways to implement corporate strategies, and why?
  • 2. Texts and Other Class Materials From the Bookstore 1. Corporate Strategy: A Resource Based Approach (C&M) by David Collis & Cynthia Montgomery. Irwin McGraw Hill 2 Corporate Strategy Cases & Readings (CSCR) Includes: GE’s Two-Decade Transformation: Jack Welch’s Leadership Newell Company: Corporate Strategy Daimler Benz Merger Negotiation with Chrysler 3M Corporation-Innovation : Two Readings KFC In Japan: A Franchise Corporation 2. Handout on: AOL Time Warner for Your Group Analysis I will also hand out key news articles & reports for discussion in class Grading Information 40% of your grade is based on your Group Paper on: AOL-Time Warner vs. Microsoft 10% of your grade will be based on your class participation 50% of your grade will be based on your Final Exam June 11. Session 1. PM: Resources, Transaction Costs, Convergence of Industries Converging Industries & Dynamics of Corporate Strategy 1. Converging Industries Impact Corporate Strategy: Examples: Communications, Finance, Health Care, Transportation and New Materials. Read (C&M) Ch 1.2 I hand out slides in class on Convergence of Industries’ Impact on Strategy. 2. The Resource View of The Firm Links The Corporation’s Strategy to Each of its Businesses’ Strategies? Why do Firms create and update Key Resources: Physical Assets, Intangible Assets and Organizational Capabilities? We compare creation & sustainability of Walt Disney’s resources to Intel, Merck & Goldman Sachs? 3. The Transaction Cost Economics View of The Firm: Read: Vertical Integration, Fisher Body & General Motors. Does GM need to buy Fisher Body or simply enter a long-term contract for car hoods. Should corporations build from within, buy from the market, Merge, Acquire, JV, Ally, Network, Franchise or License? On Final Exam, 1 question, worth 20% of total, is on concepts in this class.
  • 3. June 13. Session 2. PM: GE Corporation: Managing a Multi-Business Giant. 1. Read: GE Case (CSRS) “GE Capital: GE’s Secret Weapon” Read GE articles & Handouts on GE Capital GE’s Financial Revaluation & Jeff Immelt’s Education. “Business Strategy and Industry Analysis”(C&M p. 48-55) “Scale and Scope Within an Industry”, p. 57-76. “Diversified Expansion” p.77-102. 2. What is GE Corporation’s relation to the Seven Forces of Competition in: GE Capital, Aerospace, Medical Systems, Power Systems, Appliances & the Internet? 3. How does GE use 4 Types of Corporate Strategy: 1. Diversify, 2. Turnaround, 3. Transfer Skills & 4. Share Resources? How did GE compress its Value Chain? 4. How did GE exploit Value Migration to expand profit? What is GE’s “Social Architecture” and how does it impact GE’s implementation of strategy? 5. Contrast the GE-Honeywell merger to the 1000 prior mergers under Welch. 6. Analyze GE’s current Financial Strategy in depth. June 16. AM Sunday: Session 3. Managing Mergers: Failures and Successes: Allies 1. Miss-Managed Mergers: Read Handouts: The Synergy Trap: Ch. Do You Feel Lucky? Sirowar and “Winning in the Consolidating World”: Grubb: & Lamb; Six ways to profit from your competitors' mergers, and your firm's own. 2. Managing Mergers: Read: Newell Company: Corporate Strategy + Rubbermaid How was Newell able to rank 24th in S&P 500 for 10 Years for ROI until 1998? What do you think of the Rubbermaid acquisition and its implementation? 3. Read: Daimler Chrysler Merger (CSRS) + Mitsubishi update handout Why did Daimler propose the merger? Daimler’s Merger Implementation? 4. Managing JV’s + Alliances: Star Airline Alliance: IBM’s 100,000 alliances Read: “Collaborate with Your Competitors & Win”. On Final Exam, 1 question, worth 20% of total, will focus on this topic & cases
  • 4. June 16. PM: Sunday: eBay: Internet Firm: Outsource, 3M: Corporate Innovation: 1. eBay: Managing an Internet Growth Company. Read: 2 brief articles on: eBay 2.Contract Manufacture: Read: “Have Factory Will Travel” and “Flextronics” 3. 3M: Profile of an Innovative Company Case & article on 3M’s CEO from GE. How does 3M develop resources? How does this affect its financial statements? At 3M, Why is Innovation: “A Process of Mindful Replication”? How can firms exploit streams of innovation, both internal and external? Read: (C&M) p. 134-144 “Managing the Multi-Business Corporation” Plus (C&M) Ch. 7. “Creating Corporate Advantage” June 18. PM. Session 5. Global Franchise Corp: Global Financial Services: 1. Global Franchising: Read KFC in Japan Case. Compare McDonalds, Gas Stations, Car Dealers: Strategies for Managing a Global Corporation, Why did KFC Franchise? What did KFC Franchise? Your evaluation of KFC management of its Franchisees: In US? Or Overseas? Should anything be changed at KFC headquarters? Or to Expand Across Asia? 2. Global Financial Services: One-Stop-Shop Giant Citigroup vs. focused specialists in underwriting, brokerage, custody, credit cards, loan syndication and insurance. Read: Handouts on Citigroup, Financial Services Firms, J.P. Morgan-Chase: UBS, Deutsche Bank, Goldman Sachs, “The Financial Specialists Challenge”. What corporate strategies work best in Financial Services? Why? What strategies work worst in Financial Services? Why? June 20. PM Session 6. AOL Time Warner vs. Microsoft: Group Reports Due Implementation Of Strategy Using Supply Chain Mgt. Review Course Concepts & Cases to Prepare You For Take Home Exam 2. Supply Chain Mgt, Enterprise Resource Planning, Customer Relationship Mgt, Procurement Mgt, Internet Mgt: Read: My 4 page Slides on: Supply Chain Mgt., 3. Review of Key Course Concepts & Cases to Prepare You for Final Exam: Take Home Final Exam Handed Out. Take Home Exam Due Back June 27.