Section 3: Writing a Good Case Analysis; CSG Round 6 MBA 299: Strategy Rob Seamans & Richard Wang 4-11-2008
Agenda for today <ul><li>Case write-ups  </li></ul><ul><li>More strategy frameworks  </li></ul><ul><li>Preparing for CSG R...
Goals for the case write-ups <ul><li>Give you the chance to apply the tools you’re learning in class </li></ul><ul><li>Let...
Game plan for successful case write-ups <ul><li>Develop a thesis </li></ul><ul><ul><li>Focus on and prioritize core issues...
Have a thesis <ul><li>A thesis is not a statement of facts, but rather a statement about ideas </li></ul><ul><ul><li>State...
Use an analytical framework <ul><li>Examples of standard frameworks </li></ul><ul><ul><li>Cost leadership vs. differentiat...
Use an analytical framework <ul><li>Coors </li></ul><ul><ul><li>Strategies are about commitments.  </li></ul></ul><ul><ul>...
Use quantitative analysis <ul><li>Basics of quantitative analysis covered in section last week. </li></ul><ul><li>Use quan...
Top 10 List <ul><li>1. Do have a thesis </li></ul><ul><li>2. Do use a customized analytical framework  </li></ul><ul><li>3...
Agenda for today <ul><li>Case write-ups </li></ul><ul><li>More strategy frameworks </li></ul><ul><li>Preparing for CSG Rou...
Going beyond Porter’s Five Forces <ul><li>This week: </li></ul><ul><ul><li>Cost/differentiation </li></ul></ul><ul><ul><li...
Cost vs. differentiation <ul><li>Low cost – focus on operations </li></ul><ul><ul><li>Essential in a commodity business bu...
Risks to cost/differentiation strategies <ul><li>Can you defend your low cost position? </li></ul><ul><ul><li>Technologica...
Core competencies <ul><li>Core competencies lie at the heart of a firm’s source of competitive advantage </li></ul><ul><ul...
Identifying core competencies <ul><li>Value chains are a good place to start </li></ul><ul><li>Then benchmark cost and cap...
Core competencies often take advantage of competitors’ weaknesses <ul><li>What is Dell’s core competency?  </li></ul><ul><...
Core competencies and corporate strategy <ul><li>Can be a very useful tool for thinking about the boundary of the firm </l...
Core competencies as a model <ul><li>Very intuitive mental model of a firm </li></ul><ul><ul><li>Create profit by focusing...
Agenda for today <ul><li>Case write-ups </li></ul><ul><li>More strategy frameworks </li></ul><ul><li>Preparing for CSG Rou...
Am I on a path to make money? <ul><li>If you had done nothing, by end of Round 6 you would have had in the bank $1,000,000...
You should do better in Rounds 7-10 <ul><li>Some teams may have less than the “break even” amount of money in the bank at ...
Thinking about remaining round strategy <ul><li>If you DIDN’T make money in a market, why would you choose to rebuild your...
Thinking about remaining round strategy <ul><li>Should you enter other markets? </li></ul><ul><ul><li>You should consider ...
Feedback on CSG Strategy Journal 1 <ul><li>Most of the CSG strategy journals look good </li></ul><ul><li>Some typical prob...
Thinking about Strategy Journal 2 <ul><li>Strategy Journal 2 should cover what your initial strategy was (very brief), wha...
Next Time <ul><li>More Strategy Frameworks </li></ul><ul><ul><li>Game Theory </li></ul></ul><ul><ul><ul><li>Sequential Mov...
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Game Theory: A Simple Introduction

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Game Theory: A Simple Introduction

  1. 1. Section 3: Writing a Good Case Analysis; CSG Round 6 MBA 299: Strategy Rob Seamans & Richard Wang 4-11-2008
  2. 2. Agenda for today <ul><li>Case write-ups </li></ul><ul><li>More strategy frameworks </li></ul><ul><li>Preparing for CSG Round 6 </li></ul>
  3. 3. Goals for the case write-ups <ul><li>Give you the chance to apply the tools you’re learning in class </li></ul><ul><li>Let you get creative in shaping the analysis (strategy is an art……) </li></ul><ul><li>Prep you for the mid-term & final exam </li></ul><ul><li>*Reminder: take home mid-term April 14 th </li></ul>
  4. 4. Game plan for successful case write-ups <ul><li>Develop a thesis </li></ul><ul><ul><li>Focus on and prioritize core issues </li></ul></ul><ul><ul><li>Be insightful </li></ul></ul><ul><li>Use a framework </li></ul><ul><ul><li>Strategy theories we learn in class </li></ul></ul><ul><li>Implement well </li></ul><ul><ul><li>Bring in case data to support key points and assumptions </li></ul></ul><ul><ul><li>Use quantitative analysis if possible </li></ul></ul><ul><ul><li>Organize your write-up and tell coherent story </li></ul></ul>
  5. 5. Have a thesis <ul><li>A thesis is not a statement of facts, but rather a statement about ideas </li></ul><ul><ul><li>Statements of facts : Who, what, and where </li></ul></ul><ul><ul><li>Statements of ideas : How and why, with supporting facts </li></ul></ul><ul><li>Which of the following is more interesting? </li></ul><ul><ul><li>For the past twenty years Coke and Pepsi have dominated the carbonated drinks market </li></ul></ul><ul><ul><li>Coke’s aggressive branding strategy has been a fundamental strategy leading to competitive advantage </li></ul></ul><ul><li>Your paper should consistently focus on your thesis </li></ul>
  6. 6. Use an analytical framework <ul><li>Examples of standard frameworks </li></ul><ul><ul><li>Cost leadership vs. differentiation </li></ul></ul><ul><ul><li>Porter’s 5 forces </li></ul></ul><ul><ul><li>Internal/external </li></ul></ul><ul><ul><li>Game theory </li></ul></ul><ul><li>Don’t apply frameworks mechanically </li></ul><ul><ul><li>Pick and choose the most appropriate parts of each to create a customized framework </li></ul></ul>
  7. 7. Use an analytical framework <ul><li>Coors </li></ul><ul><ul><li>Strategies are about commitments. </li></ul></ul><ul><ul><li>Thinking ahead distinguishes the lucky from the good. </li></ul></ul><ul><li>Cola Wars </li></ul><ul><ul><li>Industry analysis tells us a lot – Porter’s 5 forces is the bedrock analysis </li></ul></ul><ul><ul><li>Differentiation strategy blunts incentives for price war </li></ul></ul><ul><li>Matching Dell </li></ul><ul><ul><li>Cost leadership strategy possible, especially when it takes advantage of constraints of existing competitors </li></ul></ul><ul><li>Ryanair </li></ul><ul><ul><li>Need to consider competitive reactions when formulating strategy </li></ul></ul>
  8. 8. Use quantitative analysis <ul><li>Basics of quantitative analysis covered in section last week. </li></ul><ul><li>Use quantitative analysis to support your thesis </li></ul><ul><ul><li>Sometimes will need to do some calculations to build a basic understanding and build a factual foundation. </li></ul></ul><ul><ul><li>Caution: In making business decisions, the scarce resource is usually not data, but insight. </li></ul></ul><ul><ul><li>Good case understanding helps one to identify the critical analysis. </li></ul></ul>
  9. 9. Top 10 List <ul><li>1. Do have a thesis </li></ul><ul><li>2. Do use a customized analytical framework </li></ul><ul><li>3. Don’t advance arguments without support </li></ul><ul><li>4. Let your thesis/ideas drive your analysis. </li></ul><ul><li>5. Don’t force quantitative analysis – if nothing jumps out at you, support your point another way (qualitative logic, statement of fact, quotes from key players) </li></ul><ul><li>6. Do present a balanced argument, but don’t be indecisive. CYA is not a decision. </li></ul><ul><li>7. Don’t give extraneous recommendations </li></ul><ul><li>8. Don’t turn in a laundry list of bullet points (like this) </li></ul><ul><li>9. Don’t pull in lots of outside material </li></ul><ul><li>10. Don’t get the facts wrong </li></ul>
  10. 10. Agenda for today <ul><li>Case write-ups </li></ul><ul><li>More strategy frameworks </li></ul><ul><li>Preparing for CSG Round 6 </li></ul>
  11. 11. Going beyond Porter’s Five Forces <ul><li>This week: </li></ul><ul><ul><li>Cost/differentiation </li></ul></ul><ul><ul><li>Core competencies </li></ul></ul><ul><li>Next week: </li></ul><ul><ul><li>Game theory </li></ul></ul><ul><ul><li>Value net </li></ul></ul><ul><ul><li>Transaction cost economics </li></ul></ul>
  12. 12. Cost vs. differentiation <ul><li>Low cost – focus on operations </li></ul><ul><ul><li>Essential in a commodity business but can work in almost every business </li></ul></ul><ul><ul><ul><li>Ruthlessly efficient/lean – Dell, Ryanair (after initial strategy failed) </li></ul></ul></ul><ul><ul><ul><li>High scale/utilization – Beer giants </li></ul></ul></ul><ul><li>Highly differentiated – focus on unique quality </li></ul><ul><ul><li>Strong brand – Coke </li></ul></ul><ul><ul><li>Target profitable niche with very high quality product </li></ul></ul><ul><ul><li>IP protected product - Pharmaceuticals </li></ul></ul>
  13. 13. Risks to cost/differentiation strategies <ul><li>Can you defend your low cost position? </li></ul><ul><ul><li>Technological or preference changes can erase scale advantages </li></ul></ul><ul><ul><li>Hard to be lean and mean forever </li></ul></ul><ul><ul><li>Often advantage lies in one stage in the value chain (more on this later) – is it vulnerable? </li></ul></ul><ul><li>Can you defend your highly differentiated position? </li></ul><ul><ul><li>Brand is not always a sufficient BTE – imitators can get close </li></ul></ul><ul><ul><li>Preferences change, new brands can outflank old tired ones </li></ul></ul>
  14. 14. Core competencies <ul><li>Core competencies lie at the heart of a firm’s source of competitive advantage </li></ul><ul><ul><li>Some special ability to control costs or produce differentiated products </li></ul></ul><ul><ul><ul><li>Dell’s supply chain management </li></ul></ul></ul><ul><ul><li>Effective as a combination of hard to imitate processes and knowledge </li></ul></ul>
  15. 15. Identifying core competencies <ul><li>Value chains are a good place to start </li></ul><ul><li>Then benchmark cost and capabilities against competitors </li></ul><ul><ul><li>If you are the “best” in a segment of the value chain you probably have a core competency in that activity </li></ul></ul><ul><li>The deeper/more specific you can be the better </li></ul>Sales Mark eting Manu facturing Develop- ment Research
  16. 16. Core competencies often take advantage of competitors’ weaknesses <ul><li>What is Dell’s core competency? </li></ul><ul><ul><li>Why did it work? </li></ul></ul><ul><ul><li>Why couldn’t IBM/HP replicate it? </li></ul></ul>
  17. 17. Core competencies and corporate strategy <ul><li>Can be a very useful tool for thinking about the boundary of the firm </li></ul><ul><ul><li>At the business unit level think about what activities in the value chain are best performed internally and which can be outsourced </li></ul></ul><ul><ul><li>At the corporate level think about which business units are central to the firm and which can be spun off </li></ul></ul><ul><li>Note the close relationship between synergies and core competencies in this set-up </li></ul>
  18. 18. Core competencies as a model <ul><li>Very intuitive mental model of a firm </li></ul><ul><ul><li>Create profit by focusing on what you are good at </li></ul></ul><ul><li>Not always clear what is a core competency and/or how the concept differs from sources of competitive advantage </li></ul><ul><li>Can be tautological (we’re good at what we’re good at) </li></ul><ul><li>Not a dynamic model </li></ul><ul><ul><li>Sony was supposed to have a core competency in miniaturization but they missed the iPod market </li></ul></ul>
  19. 19. Agenda for today <ul><li>Case write-ups </li></ul><ul><li>More strategy frameworks </li></ul><ul><li>Preparing for CSG Round 6 </li></ul>
  20. 20. Am I on a path to make money? <ul><li>If you had done nothing, by end of Round 6 you would have had in the bank $1,000,000*(1.02)^6= $1,126,000 </li></ul><ul><li>Capacity depreciates. Once your capacity is scrapped, you’ll have to reinvest in capacity to “play” in the remaining rounds. </li></ul><ul><li>Opportunities for strategic moves? What ties firms to markets? </li></ul>
  21. 21. You should do better in Rounds 7-10 <ul><li>Some teams may have less than the “break even” amount of money in the bank at the end of Round 6. </li></ul><ul><li>Rounds 7-10 are the chance to take advantage of what you gained in the earlier rounds: </li></ul><ul><ul><li>Better information </li></ul></ul><ul><ul><li>Sent signals to competitors </li></ul></ul><ul><ul><li>Both you and your rivals have a better understanding of strategy than when you started. </li></ul></ul><ul><ul><li>More sophisticated in anticipating, making, and responding to signals, entry, capacity, and pricing moves. </li></ul></ul>
  22. 22. Thinking about remaining round strategy <ul><li>If you DIDN’T make money in a market, why would you choose to rebuild your factory? </li></ul><ul><ul><li>You expect fewer entrants in Round 7 (Why?) </li></ul></ul><ul><ul><li>You expect better pricing in Rounds 7-10, even with the same number of entrants (Why?) </li></ul></ul><ul><ul><li>You expect the Magic CSG Fairy to bless your team </li></ul></ul><ul><li>Should you stay in a market because you’re “committed” to it? </li></ul>
  23. 23. Thinking about remaining round strategy <ul><li>Should you enter other markets? </li></ul><ul><ul><li>You should consider whether there are any profitable markets for you to enter in the second half of the game. </li></ul></ul><ul><ul><li>Don’t be too constrained by previous decisions! </li></ul></ul><ul><li>Which other markets will your competitors enter? </li></ul>
  24. 24. Feedback on CSG Strategy Journal 1 <ul><li>Most of the CSG strategy journals look good </li></ul><ul><li>Some typical problems: </li></ul><ul><ul><li>Over-use of bullet points (these are meant to be memos, not power point presentations) </li></ul></ul><ul><ul><li>Overly descriptive, without talking about expected market/competitive dynamics </li></ul></ul><ul><ul><li>Little if any discussion of alternative scenarios or contingency plans if game doesn’t develop as expected </li></ul></ul>
  25. 25. Thinking about Strategy Journal 2 <ul><li>Strategy Journal 2 should cover what your initial strategy was (very brief), what you learned in rounds 1-6, what (and why) your strategy is going forward, along with how you expect the game to play out . If you think you may have been mistaken in your initial strategic thinking, it helps a lot to explain that now. </li></ul><ul><li>Assuming you lost money in your initial market(s) in Rounds 1-6, a big part of your CSG memo needs to be why you did (or didn’t) choose to rebuild capacity for Rounds 7-10 </li></ul>
  26. 26. Next Time <ul><li>More Strategy Frameworks </li></ul><ul><ul><li>Game Theory </li></ul></ul><ul><ul><ul><li>Sequential Moves </li></ul></ul></ul><ul><ul><ul><li>Repeated Game </li></ul></ul></ul><ul><ul><ul><li>Signaling Game </li></ul></ul></ul><ul><ul><li>Value net </li></ul></ul><ul><ul><li>Transaction cost economics </li></ul></ul>
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