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  1. 1. GLOBAL STRATEGIC MANAGEMENT BA 502 COURSE OUTLINE Fares Boulos Kermit O. Hanson Visiting Professor 604-983-6946 Teaching Assistant: Dan Liska 415-794-2495 1 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  2. 2. I. COURSE DESCRIPTION & OBJECTIVES Global Strategic Management follows and builds on the concepts presented and discussed in Strategic Management (BA 500). Global Strategic Management is divided into two parts. In Part I, the focus will be on Corporate Strategy issues typically faced at or very near the corporate centre, namely diversification and global expansion, either organically or through mergers and acquisitions. In Part II, the focus will shift to Business Unit strategy formulation by discussing a new concept called ‘Blue Ocean Strategy’, which espouses innovation 1 as the key source of competitive advantage and hence value creation. Beyond strategy formulation issues in both Parts I & II, Global Strategic Management will also explore the challenges posed in strategy implementation and process; how to make strategy happen and go from the elegant world of strategy-by-the-graph to the sometimes messy and unpredictable organizational realities of dealing with people with conflicting motivations. And true to its ‘Global’ label, the whole course will take place in a global context, sometimes by addressing the specific challenges faced by corporations and individuals as they expand their operations and reach beyond their national borders, at other times by simply informing our learning from the experience of companies operating outside of the U.S. Finally, while not a specific focus of Global Strategic Management, issues of leadership and how they influence strategic decision- making will also be brought in the discussion whenever appropriate. By the end of Global Strategic Management, you should have enhanced your abilities to recognize, assess and deal with the challenge of the general manager and/or strategist operating in the global environment of the 21st century. II. PHILOSOPHY AND EXPECTATIONS Global Strategic Management will run in a business-like fashion, much like a well run company does, and will adopt a certain code of behaviour that in turn will drive my expectations of you. These expectations include: Coming to class fully prepared to engage in discussion. As a rule of thumb, you’ll need to spend at least four hours of study for each 2-hour session. Being on time for all meetings and assignments and respecting deadlines. If you can’t meet a deadline for extenuating reasons, please let me know ahead of time so that we can discuss alternative arrangements. If you can’t attend a class, please inform me ahead of time. Participating in vigorous debate in class (see participation guidelines below). 1 ‘Innovation’ is used here in a broad context to embrace all manners of strategic innovation and is not confined nor does it necessarily include technological innovation. 2 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  3. 3. Seeking continuous improvement throughout the course. Producing work of the highest quality in every respect and always to the best of your abilities. Being accountable to your team member colleagues and classmates. Having fun. III. ASSIGNMENTS AND GRADING The course grade will be made up of four components weighted as follows: 1. Team case write-up………………………………………………..………….20% 2. Team Project – Blue Ocean assignment……………………………………...25% 3. Final Exam……….…………………………………………………………...40% 4. Class participation……….…………………………………………………...15% 1. Team Case Write-Up (20%) Each Team is responsible for preparing and writing an analysis of a case according to the following schedule. Team number Assigned Case 1, 2, 11,12 Session 5: Shurgard Self-Storage 3, 4, 13,14 Session 6: Silvio Napoli at Shindler India 5, 6, 15,16 Session 6: Nike and International Labour Practices 7, 8,17,18 Session 7: DaimlerChrysler Merger 9, 10,19,20 Session 7: Cadbury Schweppes The write-up MUST NOT exceed 1500 words and should be typed in Times New Roman, 12pt, double-spaced text. You can include up to 3 exhibits in addition to the text, if you wish. The case write-up should address the questions assigned to each case and should address each question separately. The case write ups should be emailed to me by 17.00 the day before the session when the case will be discussed. Please include your Team number and case name in the email subject header. 2. Team Project (25%) Blue Ocean Assignment (short write-up and a presentation) The topic of sessions 10-13 is Blue Ocean Strategy (BOS), the strategy framework pioneered by INSEAD’s professors Chan Kim and Renée Mauborgne, which they published in a book of the same title in 2005. The various reference readings assigned for Sessions 10-13 explain the conceptual framework and methodology behind BOS. The objective of this assignment is to give students (in their Teams) the opportunity to practice BOS live by identifying examples of companies that have developed successful 3 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  4. 4. BOS strategies and by drawing their ‘Strategy Canvas’ (sometimes referred to as a ‘Value Curve’ in the reference readings). Groups must conduct their own research and are encouraged to draw from their own work experience to identify a strategic move that represents a BOS. The table below contains assignments of BOS sources (paths) that individual groups should illustrate in their assignment. The various paths are explained in Kim and Mauborgne’s ‘Creating New Market Space’ article assigned and that you can find in the Course Pack. Team number Source of Blue Ocean Value Innovation 1, 2, 11,12 Path 1: across alternative/substitute industries 3, 4, 13,14 Path 2: across strategic groups within industries 5, 6, 15,16 Path 3: across the chain of buyers 7, 8,17,18 Path 4: across complementary offerings 9, 10,19,20 Path 5: across functional or emotional appeal to buyers IMPORTANT: Your BOS example must NOT be drawn from any of the cases/examples described in the Blue Ocean Strategy book or in any of the HBR articles written by Kim and Mauborgne or in any of the assigned reference readings or case studies for Sessions 10-13. Other HBR articles, Internet, news and other sources can provide you with ample examples of BOS. With an example illustrating an individual path to reconstructing market boundaries in mind, you should consult the instructions laid out in the document ‘How to Recognize a Value Innovation for your Blue Ocean Strategy’ (reading for Session 10). This will allow you to identify whether your example truly represents a BOS. Once you’re satisfied that you’ve found an appropriate example, you should write up answers to Questions 1-4 (Session 11) and prepare a slide presentation on your findings. This combined write-up + slide presentation project will be worth 25% of the grade. The write-up can be in a mix of prose and bullet points and should be no longer than 700 words (i.e., approximately three pages of 12pt, double spaced text). The presentations should be short and to the point. There is a strict limit of five minutes and two slides for each presentation. The write-ups AND presentations should be e-mailed to me by 18.00 on June 2. I will select several presentations and will ask Teams to present their findings during Session 11. I will select the Teams to present to ensure that we cover as many of the concepts as possible within the time available and also to cover a variety of industries and products. If I do not select your Team, this may not necessarily relate to the quality of the work. In other words, whether or not your Team is chosen to present will not have a bearing on your grade for this assignment. 4 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  5. 5. 3. Final Exam (40%) The final exam will be a recap of the whole course. The exam’s purpose is to test each individual student’s knowledge and ability to assimilate the ideas and concepts discussed throughout the course. It is NOT a group or team effort. 4. Class Participation (15%) Students are expected to participate in class by discussing the assigned case studies and readings and by critiquing Team presentations. While participation is expected, what will count most is quality not quantity. Quality of discussion will be measured by: Making insightful and relevant comments Showing intellectual curiosity by going beyond the obvious Being clear, logical and to the point Listening to others respectfully and with full attention Seeing various sides of arguments and challenging views presented in the case or by other students Adding value, e.g., avoiding repeating case facts or other’s comments. Integrating and building on knowledge from previous lectures, other courses or personal experiences. Class discussion is a test of each individual student’s ability to assimilate and discuss the course’s concepts. While participation by all students is encouraged at any time, I’ll be cold-calling on several students at the start of each session to lead the case discussion assigned for that session. As such, each student is expected to come to class fully prepared to tackle the case discussion as if he/she were leading the discussion that day. If you’re not able to discuss a particular case and would like to avoid being called on in class, please let me know ahead of time and the reasons why. Gambling on not being called on in class is not a good idea and called-on students who are unprepared and have not notified me will be marked down accordingly (zero). Your ability to lead a case discussion when cold-called upon will count for an important part of your overall class participation component of 15%. Please note that the class participation grade will vary widely among students; in other words students who do not participate at all or whose participation is of low quality will receive a failing grade for this component of the overall grade. Students are encouraged to discuss the cases in their Teams and also among teams in their sections. However, to protect the integrity of the class discussions, students must not discuss the cases with students from the other section or to obtain notes from or discuss the cases with students from prior years. Anyone aware of such activities should bring them to my attention or report them to the Honour Code Committee. 5 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  6. 6. The case studies that we’ll cover in class describe specific strategic issues at a specific point in time. Please note that all case analysis and discussion in writing and in class must be based on the information provided in the case only. Students must not ‘fast forward’ by consulting the Internet and searching for information about the current situation of the companies under investigation, and evidence of such forward-looking attempts will be marked negatively. Where appropriate, I’ll update the current situation of companies that we’ll be discussing in class. It’s possible, however, that you may have prior knowledge and experience about some of the companies and issues that we’ll be discussing in the case studies. If that’s the case, please let me know as soon as possible so that we can discuss how best to put your experience to the benefit of the learning in class. IV. READINGS AND LECTURE NOTES All the readings and case studies are available in the course pack from University Readers at: Global Strategic Management is a case-based course focused heavily on discussions in class. The use of laptops (or any other electronic devices) is prohibited in class. I’ll produce a complete set of PowerPoint slides for each lecture. The slides will be posted on Blackboard the day after the lecture with my annotated comments. The slides + the readings in the Course Pack will be ample reference material for your studies. If you’d still like to read more on Strategy, I can refer the following textbooks: ‘Strategy and the Business Landscape’, by Pankaj Ghemawat, Prentice Hall, 2000. ‘Blue Ocean Strategy’ by Chan Kim and Renée Mauborgne, HBS Press, 2005. V. HOW TO REACH ME All assignments are to be emailed to me at: I’ll be available to meet during my office hours, a schedule of which will be distributed in Session 1. I’m also available for consultation by phone at: 604-983-6946 and by email. Dan Liska, my TA, is also available at: The detailed course outline follows. Good luck to all and I look forward to meeting you on Wednesday 7 May and to working with you over the following weeks. Fares Boulos March 2008. 6 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  7. 7. GLOBAL STRATEGIC MANAGEMENT – BA 502 COURSE OUTLINE Wednesday 7 May STRATEGY REVISITED & DIVERSIFICATION Session 1: WHAT IS STRATEGY? Case Study: • Low Cost Airlines in 2006 Questions: 1. Why is Southwest Airlines so successful? 2. Should Southwest change its policy and offer seat assignments? Reference Reading: • Global Strategic Management Course Outline. • ‘What is Strategy?’ by Michael Porter, Harvard Business Review, November-December 1996. • ‘Competing on Resources’, by Collis and Montgomery, Harvard Business Review, July-August 1995. Session 2: CREATING VALUE THROUGH DIVERSIFICATION Case Study: • Extending the “easy” Business Model Team Assignments for Class Discussion 2 : 1. Teams 1 & 11: Why was easyJet successful? 2. Teams 2 & 12: How successful is the internet café business? Why? What are its prospects? 3. Teams 3 & 13: How successful is the easyCar business? Why? What are its prospects? 2 Teams should consider all assignment questions in their pre-class case discussion. Each Team, however, should concentrate and focus on their assigned question as they’ll be called in class to lead the discussion around that question. 7 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  8. 8. 4. Teams 4 & 14: How big is the UK cinema exhibition industry segment? What have been the drivers of market size over the past few years? How do you see the industry evolving over the next five years? 5. Teams 5 & 15: How attractive is the cinema exhibition industry segment? Are the trends pointing toward a more or less attractive industry? Why? 6. Teams 6 & 16: Discuss why easyGroup should enter the cinema business. What are your assumptions and how likely are they to hold? 7. Teams 7 & 17: Discuss why easyGroup should NOT enter the cinema business. What are your assumptions? 8. Teams 8 & 18: As an established movie distributor, how do you feel about easyGroup’s proposed entry into the cinema exhibition business? How would you react to their entry? Why? 9. Teams 9, 10 & 19, 20: What is the strategic logic behind easyGroup’s corporate strategy of diversification? What conditions are necessary for it to succeed? Are these conditions present? ************************************************************************ 8 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  9. 9. Wednesday 14 May COLLABORATION & STRATEGY PROCESS Session 3: CREATING VALUE THROUGH COLLABORATION Case Study: • Bertelsmann: Corporate Structures and the Internet Age, • ‘Bertelsmann Strives to Avoid Fate of Rivals’, International Herald Tribune, July 27, 2002. Questions: 1. What’s the glue that holds Bertelsmann together? As the general manager of one of the business units, what benefits do you derive from being part of the Bertelsmann family of companies? 2. Is coordination truly a must for Bertelsmann? Are there real opportunities for synergy? What are they? 3. In what way is the Internet changing the media industry and the segments in which Bertelsmann operate? 4. What are the main barriers to increased collaboration inside Bertelsmann? 5. What are the main drivers of collaboration inside Bertelsmann? 6. Has Middelhoff gone far enough? Too far? What would you do in his place? CRAFTING STRATEGY I Case Study: • Honda ‘A’, Questions: 1. Why was Honda so successful in the motorcycle industry, particularly in the U.S.? 2. How well was this strategy planned in advance? What are the indications pointing out that this strategy was well thought out and executed according to a well laid out plan? ************************************************************************ 9 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  10. 10. Thursday 15 May COLLABORATION & STRATEGY PROCESS (CONTINUED) Session 4: Case studies and reading material for this session will be distributed in class. ************************************************************************ 10 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  11. 11. Wednesday 21 May GLOBAL EXPANSION Session 5: CREATING VALUE BEYOND YOUR BORDERS Case Study: • Shurgard Self-Storage: Expansion to Europe Questions: 1. What’s your assessment of Shurgard and the self-storage business? 2. How has Shurgard performed in Europe to date? Do you predict the company will succeed or fail? 3. What is your view of Shurgard’s expansion plans in Europe? Is it realistic to plan for 133-170 stores by 2003? What challenges will Shurgard’s management face in implementing this strategy? 4. The consortium is proposing to invest €122 million by 2003 in return for 43.3% ownership in Shurgard Europe. Is this a fair valuation? 5. What is your view of the terms and conditions of the proposed financing, e.g., board membership? Are they reasonable? 6. Would you advise Shurgard to go ahead with the expansion strategy and plan, and to accept the proposed financing? Reference Readings: • ‘Seven Myths to Ponder Before Going Global’, by S. Rangan, Financial Times, Mastering Strategy Survey, 29 November 1999. • ‘The End of Corporate Imperialism’, C.K. Prahalad and Kenneth Lieberthal, Harvard Business Review, August 2003. ************************************************************************ 11 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  12. 12. Friday 23 May GLOBAL EXPANSION & CSR Session 6: MANAGING ACROSS CONTINENTS AND CULTURES Case Study: • Silvio Napoli at Schindler India (A) Questions: 1. Was Silvio the right choice for General Manager of Schindler’s India operations? 2. As Luc Bonnard, how would you evaluate Silvio’s performance as GM of India operations in his first seven months? What advice, if any, would you offer? 3. What advice (if any) would you give to Silvio on how he should handle the order for elevators with non-standard glass walls? 4. How should Silvio deal with the challenges he’s facing over the issues of transfer pricing and the limited technical cooperation he’s getting from the European plants? Reference Readings: • ‘The Myth of the Generic Manager: New Personal Competencies for New Management Roles’, by C. A. Bartlett and S. Ghoshal, California Management Review 40 (1): 92-116, Fall 1997 Session 7: MANAGING STAKEHOLDERS Case Study: • Hitting the Wall: Nike and International Labour Practices. Questions: 1. Does Jeff Ballinger have a convincing argument about Nike’s alleged corrupt labour practices? 2. Does Nike have a convincing response to Ballinger? 3. Rate Nike’s performance in terms of how it handled the publicity surrounding its labour practices? Could/Should the company have done anything differently? 4. What is a ‘fair’ wage in Vietnam or Indonesia? Who should determine this number? How should Nike think about and handle this issue? 12 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  13. 13. Reference Reading: • ‘Strategy & Society: The Link Between Competitive advantage and Corporate Social Responsibility’, by Michael Porter and Mark R. Kramer, Harvard Business Review, December 2006. ************************************************************************ 13 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  14. 14. Friday 30 May MERGERS & ACQUISITIONS AND CORPORATE RENEWAL Session 8: CREATING VALUE THROUGH MERGERS & ACQUISITIONS Case Study: • DaimlerChrysler Merger: The Quest to Create “One Company” • ‘Gentlemen: Start your engines’, Fortune, June 8, 1998. Questions: 1. Explain the 3-4 key elements of the strategic logic underlying the DaimlerChrysler merger. Does this logic make sense? 2. Summarize the expected benefits that the Daimler/Chrysler merger was expected to yield. How significant were the benefits in the context of the merger’s size? Do these benefits make sense given the announced strategic logic? 3. In the context of the Waterman et al article, how different were the two companies merging? Did these differences facilitate or hinder the post-merger integration process? In what ways? 4. Compare and contrast the leadership styles of the three main actors in this case, Schrempp, Eaton and Stallkamp: Were their styles complementary and did they work to achieve the desired results? As each of the 3 main actors - Schrempp, Eaton and Stallkamp- what would you have done differently, if anything? Reference Readings: • ‘The Dubious Logic of Global Megamergers’, by Pankaj Ghemawat and Fariborz Gandar, Harvard Business Review, July-August 2000. • ‘Structure is not Organization’, by Waterman et al, Business Horizons, June 1980. Session 9: MANAGING CORPORATE RENEWAL Case Study: • Cadbury Schweppes ‘A’: The Strategic Dilemma of Trebor Bassett, (continued on next page) 14 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  15. 15. Questions: 1. Why was Cadbury performing so poorly before Sunderland took over? 2. As John Taylor, what are your problems? What would you do, and how? 3. As John Sunderland, what are your problems? What would do, and how? Reference Reading: • ‘What is Value Based Management’, by Timothy Koller, The McKinsey Quarterly, Number 3, 1994, pp. 87-101. Reference Reading – Distributed in Class • ‘Managing for Value – It’s Not Just About the Numbers’, by Haspeslagh, Noda and Boulos, Harvard Business Review, July-August 2001. ************************************************************************ 15 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  16. 16. Wednesday 4 June BLUE OCEAN STRATEGY Session 10: BLUE OCEAN STRATEGY I – INTRODUCTION & 6 PATHS Case Study: • The Evolution of the Circus Industry (A) • ‘The Circus is Coming’, The Herald Rock Hill, SC, 24 January 2003 Questions: 1. How attractive was the circus industry in the early 1980s? Why? 2. What were the factors (key elements of product, service and delivery) that traditional circus companies competed on? 3. What would be your advice to an outsider considering entering the circus industry in the early 1980s: Go or No Go? Why? Reference Reading: • ‘Creating New Market Space’, by Chan Kim and Renée Mauborgne, Harvard Business Review, January-February 1999, reprint 99105. • ‘How to Recognize a Value Innovation for your Blue Ocean’, by Andrew Shipilov, INSEAD note 09/2006-5398, 2006. Session 11: BLUE OCEAN STRATEGY TEAM PRESENTATIONS Questions to be addressed in the BOS assignment: 1. Based on your research and/or experience can you identify a BOS strategic move? Which one of the 6 paths was this BOS move based on? 2. As compared to the existing typical industry offerings, what factors has the company Eliminated, Reduced, Raised or Created in creating its BOS value proposition? 3. When comparing the Strategy Canvas (ValueCurve) of this offering to that of typical existing industry offerings, is there clear evidence of Focus and Divergence? Can you formulate a compelling Tagline for this BOS? 4. What non-customers have been drawn into the use of this BOS value proposition? Which adoption hurdles have been eliminated by the company to attract them? What were the alternatives against which the offering has been priced? ************************************************************************ 16 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor
  17. 17. Friday 6 June BLUE OCEAN STRATEGY Session 12: BLUE OCEAN STRATEGY II – BUYER UTILITY GRID & BUSINESS MODEL Case Study: • NTT DoCoMo iMode, Value Innovation at DoCoMo. Questions: 1. How attractive was the telecom industry in Japan at the time that i-mode was launched? What would you conclude from a 5-Forces analysis? 2. How did DoCoMo combine the strengths of the mobile phone and the PC? And how did the resulting Strategy Canvas for DoCoMo differ from those of the mobile phone and PC? 3. Where and how did i-mode create new buyer utilities? What’s i-mode’s business model? 4. How did DoCoMo make profits out of its i-mode services? Reference Reading: • ‘Knowing a Business Idea When You See One’, by Chan Kim and Renée Mauborgne, Harvard Business Review, September-October 2000, reprint R00510. Session 13: BLUE OCEAN STRATEGY III – REACHING FOR NON-CUSTOMERS Case Study: • Videos will be shown in class ************************************************************************ 17 Global Strategic Management BA 502 Fares Boulos Kermit O. Hanson Visiting Professor