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  • 1. MGMT 562 Business Strategy and Policy Fall 2003 CRN 15182 Sec. 002 Christopher A. DeMonico Office Hours by appointment Phone: 503-638-3623 Fax: 503-638-3623 e-mail: Course Catalog Description and Prerequisites: An integrative, capstone study of strategy formulation and implementation in international and domestic business enterprise. Case analysis and other appropriate methodologies are used to develop the skills and judgment necessary to provide overall direction to the organization. Special emphasis will be placed on how to successfully match competitive strategy with effective implementation policies. Prerequisites BA 551, 552 Course Learning Objectives: 1. Understand and apply the fundamental concepts of business strategy. 2. Integrate functional business disciplines in the development of strategy and implementation. 3. Apply the tools and concepts necessary to understand the business environment. 4. Articulate strategy as it fits to a given business environment. 5. Develop policies for effective implementation of strategy. Required Text and Reading Materials: 1. “Strategic Management and Business Policy”, Wheelen/ Hunger 2. Supplemental Reading Packets available from Clean Copy Grading Procedures: Possible points Case write-ups (5) 500 (100 points each) Company Strategy Profiles 100 Participation See below Course participants are expected to maintain high standards of academic honesty. Academic honesty is a requirement for passing this course. Total points possible for all assignments are 600. All assignment grades are added together and divided by 600 to calculate the final grade percentage. The letter grade ranges are as follows; A+ 96.00% or higher A 93.00% to 95.99% A- 90.00% to 92.99% B+ 86.00% to 89.99% B 83.00% to 85.99% B- 80.00% to 82.99% C+ 76.00% to 79.99% C 73.00% to 75.99% C- 70.00% to 72.99% Participation: This course relies on guest speakers, supporting material, case studies, and a research project to achieve the learning objectives. Your contribution through participation will be key to the quality of the learning experience for the entire class. 1
  • 2. With regard to cases, you should be prepared when you enter class to fully present your analysis and work as a group in order to reach the best possible course of action. Think of yourself as part of a management team that is coming together to reach actionable decisions. The quality of conclusions we reach will be a function of the preparation you bring to the discussion and the extent to which you provide insightful questions and analysis. Forming study teams for analyzing cases is strongly encouraged. Participation will also enhance what we learn from guest speakers. Each speaker has been asked to prepare 45 minutes of prepared remarks and then rely on questions to fill the remaining 15 minutes. Points will be deducted from your grade for missed classes. The first absence is excused regardless of reason and no points are deducted from your grade. Five points are deducted for a second absence, and 10 points for each subsequent absence regardless of reason. Requirements for Written Work: Effective writing is inextricably linked to the overall impact of your analysis and recommendations for a case. All written assignments should be well organized and free of grammatical errors. Case Write-ups: For any five of the seven Harvard Business School and Ivey case studies, write a brief which includes an executive summary and answers to the appropriate case questions below. When deriving your answers, specify the actions to be taken and a brief summary of the rationale that you employed to reach these recommendations. The length of these briefs is limited to four double-spaced pages of text, plus as many supporting exhibits as you need. Reaching the exact same conclusion as other members of your study team is fine, but writing your own paper is required. Exhibits should be referenced in the text where they have the most significant implications for your analysis. Company Strategy Profiles: Using secondary research and at least two interviews, profile an organization’s (for profit or non-profit) approach to strategy in terms of the criteria from any of the supporting concepts in the class. Also provide recommendations for improving the organization’s approach to strategy based on what you learn. This assignment should be done in teams of three, and is limited to eight double-spaced pages. Each team will be required to present a summary of the profile and what you learned. Your written profile contributes 100 possible points toward your overall grade. Presentations are not graded. This objective of the assignment is to profile the process for which strategy and plans are crafted within the organization, not the strategy itself, and for the class to have exposure to as many of these processes as practical. Suggestions for Writing Cases The format for the case write-ups include a two to three paragraph executive summary, and specific answers to the case questions contained in this syllabus. The executive summary can contain a short introduction and a statement of key recommendations and conclusions. The following suggestions can assist in preparing your written briefs; 1. Understand the case from all points of view, but particularly from the protagonist’s perspective. Argue for your recommendations with passion and don’t waffle. Take the perspective of a consultant who has been brought in to analyze the situation and provide recommendations. Give your best analysis and recommendations regardless of whether they would be politically saleable to the company. Moreover, be sure to point out that a particular strategy or action would be difficult to implement if that is your opinion. Strategy and implementation are interdependent. 2
  • 3. 2. Realize that issues you face in a case seldom have one best solution. You need to go out of your way to make the reasoning behind your recommendations apparent to the reader. 3. The case questions are open-ended to allow for multiple perspectives, however, your answers need to be formulated and supported using specific data from the case. Don’t state a bunch of facts or data without conclusions, and don’t state a conclusion without making it clear what data and assumptions you are using to reach that conclusion. For example, a SWOT analysis is often valuable when analyzing a case, but doesn’t do anything for the reader if you refer to an exhibit without stating key conclusions or implications from the analysis. Equally bad is stating what should be done without explaining why. There must be a path to your reasoning. Consider using the ladder of inference as a tool: data  meaning  assumptions  conclusions  beliefs actions If you come to a conclusion or a belief that a course of action is called for, walk up the ladder by being explicit about what data and assumptions lead you to recommend that course of action. 4. Don’t avoid the numbers, particularly with regard to estimating demand and profit/loss. Sometimes decent data is available, while other times it is not. 5. Use tools like SWOT, Value-Chain, Five Forces etc. when relevant. 6. Apply the concepts from all sources, text, lectures, and supporting reading material to the cases. Incorporate the current weeks material plus previous weeks into your analysis. More in depth analysis is expected as the class progresses. 7. Spend the extra time to polish your writing. Sloppy writing tarnishes the writer’s credibility. A numerical mistake makes all other quantifiable material questionable. 8. You have limited space and time. Make introductions short, and get to the point. 9. Don’t bother to conduct any research on the companies in the case. I am interested in the quality of recommendations derived only from the snapshot presented in the case. 10. An example case question and answer is provided below. Reference points are added in parentheses only to demonstrate how data from the case and concepts from the class are applied to the answers. You do not need to provide this information in your write-ups. Q). What Is Napster’s Business Model? A). The first component of a business model is the market. Markets are generally quantified by dollars. The size of the US market for music was estimated at $15 billion (Case Study p. 1) A business model usually describes how a company will add value to a given market and generally includes plans on how the company will be compensated for that added value. Napster had its market defined and segmented, e.g. “college students” were a key demographic (Case Study p. 12) It had a mission to facilitate music distribution on the Internet (Case Study p. 12) It even acknowledged Wheelen and Hungers’ Six Forces model (Wheelen and Hunger p. 61) in its attempt to influence the regulatory environment by active membership in the SDMI, an organization whose mission was to “create an open architecture … on which music can be accessed …” (Case Study p. 7) 3
  • 4. There is no clear picture presented in the Case Study about how Napster intended to get compensated for the value it added. Although it was not mentioned in the case, Napster had plans to support its operations with advertising revenue. Many end-users in its defined market were “staunchly anti-commercial” and embraced a “strong culture of free exchange … over the Net.” (Case Study p. 13) Napster’s customers’ desire to not pay matched its plan to have no revenue, but this generally does not make for a good business model. Case Study Questions Napster and MP3: Redefining the Music Industry 1. What is Napster’s business model? 2. How have Napster and MP3 changed the music industry? 3. Who are the winners in the industry transformation? Who are the losers? Why? 4. From the perspective of a stakeholder who stands to lose, is there anything you can do? 5. How will the industry change over the next five years? 6. As viewed from different perspectives (record company, retailer, MP3 Player manufacturer, Napster) what strategy will you pursue and how? Starbucks 1. What is Starbuck’s strategy? (To fully describe Starbucks strategy, it is important to first describe what drives their growth). 2. Given your assessment of its competitive premise, how should it leverage its resources and capabilities to achieve it’s growth objective, in other words, what strategies would you pursue if you were Howard Schultz and why? 3. What in your assessment, are Starbucks biggest challenges going forward? 4. How would you respond to the McDonald’s offer? Useful tools- Value chain Matching Dell 1. How and why did the personal computer industry come to have such low average profitability? 2. Why has Dell been so successful despite the low average profitability in the PC industry? 3. Prior to recent efforts by competitors to match Dell, (1997-1998), how big was Dell’s competitive advantage? (Attempt to quantify it). 4. How effective have competitors been in responding to the challenge posed by Dell’s advantage? 5. What should each of Dell’s major rivals (IBM, Compaq, HP, Gateway) do now? Komatsu Limited 1. What are the sources of Komatsu’s success? 2. How was this company able to challenge Caterpillar when so many larger and better established companies- like International Harvester, John Deere, and J.I. Case –had failed? 3. Are Kawai’s actions random or purposeful? 4. How are environmental forces and industry changes likely to affect Komatsu’s competitive position vis-a’-via Cat? What recommendations would you have for Ryoichi Kawai? For George Schaefer, CEO at CAT? 4
  • 5. Time Life Inc. 1. What challenge did John Fahey face in early 1992? What is your evaluation of the steps he took? What has been accomplished and what remains to be done as of January 1993? 2. What challenges does Candice Carpenter face as president of the video and television division? How should she proceed? 3. What challenges does John Hall face as president of the books division? What is your evaluation of his proposed action plan? 4. What should Fahey do about True Crime? 5. What distinctive general management skills are required to succeed in a creative business? Yahoo! : Business on Internet Time 1. How attractive is the Internet portal industry? 2. How would assess Yahoo!’s strategy to date? What are the components of their successes? 3. How are strategic decisions made at Yahoo! ? Is the process affective, why or why not? 4. What accounted for the merger and acquisition activity in the industry at this time? 5. What issues and opportunities would you address in a future strategy for Yahoo! ? Hewlett-Packard: The Flight of the Kittyhawk 1. What would you rate as the strengths and weaknesses regarding the way HP structured and supported the Kittyhawk development team? 2. What do you think of the way the team set out to find a market for the Kittyhawk? What correct turns and wrong turns did they make? 3. What do you think are the root causes of the failure of the Kittyhawk program? Is there any way HP could have avoided its fate by addressing those root causes? 5
  • 6. MGMT 562 - Business Strategy and Policy Topic Outline Fall 2003 Week 1 – October 2nd -Introduction to Strategy Reading assignment- Wheelen/Hunger- Chapters 1 and 2 Supplemental Reading Material Topics; 1. Course overview & objectives 2. Introduction to planning models 3. Setting a direction for growth and change 4. Providing a vision & mission for the business 5. Types of business level strategies Week 2- October 9th -Environmental/Industrial Analysis Case Study- Napster & MP3: redefining the music industry (901M02) Reading assignment- Wheelen/Hunger, chapters 3, Supplemental Reading Material Topics; 6. Goals of the external audit 7. Environmental Analysis 8. Industry Analysis 9. Game Theory overview 10. Profile Presentations assigned - expectations, format, due November 13th. Week 3 –October 16th -Internal Analysis Guest Speaker- Tina Lee- Principal, SmartForest Ventures Case Study- Starbucks- (98M006) Reading assignment- Wheelen/Hunger, Chapter 4 Supplemental Reading Material Topics; 11. Internal Analysis 12. Assessing Core Competencies 13. Establishing barriers to market entry Week 4- October 23rd -Competitive Positioning Guest Speaker- Michael Horne – CEO, Qualis Design Group Case Study- Matching Dell Reading assignment- Wheelen/Hunger, Chapter 5. Topics; 14. Relating distinctive competencies to relevant business opportunities 15. Differentiate to dominate 16. Growth strategies for new and emerging businesses 6
  • 7. Week 5-October 30th -Setting Objectives and Crafting Strategies Guest Speaker Nicole Vogel, -CEO, Portland Monthly Case Study- Komatsu Reading assignment- Wheelen/Hunger, chapters 6 and 7 Topics; 17. Setting objectives 18. Tools for crafting strategy Week 6- November 6th -Refining the Analysis Tools – Scenario Planning Guest Speaker- Mike Maerz – CEO, Etrieve Case Study - KPLU Radio Reading assignment- Supplemental Reading Material Topics; 19. Scenario planning- principles and applications Week 7- November 13th –Organizing for Action Guest Speaker- Strategy Profile Presentations Case Study- Time- Life Reading Assignment- Wheelen/ Hunger chapter 8 Supplemental Reading Material Topics; 20. Organizing for Action 21. Installing a strategic planning process in the organization Week 8- November 20th – Staffing & Directing Speaker- Phil Iosca, -CEO, Hanna Anderson, Co Case Study- Yahoo -Business On Internet Time Reading assignment- Wheelen/ Hunger chapter 9 Topics; 22. Strategy Deployment Week 9-November 27th – No Classes Week 10- December 4th – Evaluation and Control & Term Review Case Study- H-P Kittyhawk Reading assignment- Wheelen/Hunger chapter 10 Topics; 23. Financial & Operational metrics 24. Market & Customer metrics 25. Employee metrics 26. Review key material from term and relate to case study. 7