Marshall School of Business, University of Southern California
MOR 465: ADVANCED METHODS
IN STRATEGY ANALYSIS
T, TH 10 am – 11:50 am BRI-8
Professor: Juan Carlos Araque
Office: Bridge Hall 301
Phone: USC Office: (213) 821-5708
Office Hours: Thursday 9:00 am - 10:00 am
Advanced Methods in Strategy Analysis is an advanced strategy elective designed for
business major undergraduates interested in the strategic management of businesses and
corporations. The course represents an extension of the frameworks and materials learned in
BUAD 497. In particular, MOR 465 focuses on four main substantive areas of interest:
Module 1: Basics of Corporate Strategy
Module 2: Competitive Rivalries
Module 3: Managing Strategic Change
Module 4: Academic Research on Strategy
Module 1: Basics of Corporate Strategy extends the frameworks and cases taught in
BUAD 497 on “Corporate Strategy”, meaning issues that companies with multiple strategic
business units face. We focus on the following issues in this module:
1. The basic tenets of corporate strategy;
2. Diversification and the notion of core competences;
3. Vertical integration, Transaction Cost Economics (TCE) & the “make or buy decision”; and
4. Corporate governance and “managing” the managers
We examine these issues through both Harvard Business Review readings and Harvard and
Stanford Business School cases.
Module 2: Competitive Rivalries examines in more detail how firms compete with
each-other in fast-moving markets. We read several chapters from the Hitt, Ireland &
Hoskisson (2005) book Strategic Management: Competitiveness and Globalization (Concepts
and Cases). By this stage of the course, we will also be immersed in the corporate simulation
(see below for more information), and we will use the materials in Hitt, et al. book to help
formulate corporate strategy for the simulation.
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Module 3: Managing Strategic Change examines practical issues that come with trying to
implement both business and corporate strategy. In particular, we study the practical
problems of implementing business and corporate strategy through the case study of three
companies: 3M, Phillips, and Agilent.
Module 4: Academic Research on Strategy represents a change of pace from the more
practitioner-oriented readings and cases. In the final weeks of the class, we examine how to
assess strategy, especially in terms of quantitative and empirical evaluations. You don’t need
to be “good in math” or a “statistics geek” to be able to read these materials and understand
quantitative ways of assessing strategy.
Note on Business Cases
Pioneered by the Harvard Business School faculty in the 1920s, the case method began as a
way of importing real business situations into the classroom. The goal is to study slices of
business reality and encourage greater meaning into the lessons of management education.
The case method forces students to deal with the kinds of decisions and dilemmas executives
confront every day.
In terms of mastering the comprehension of business cases, case analysis requires
considerable time and effort. One effective strategy is to read the case quickly a first time (to
get a sense of the firm, industry, and main strategic issues) and then read it a second time
more carefully, making notes about the case and thinking about the key questions of the case.
For each business case covered in class, there are questions involving the company’s
strategy. The questions for each case are attached at the back of this syllabus (and are also
available on Blackboard). You should be able to answer these questions for all cases covered
It is strongly recommended that students wishing to enroll in this class have already
completed BUAD 497 or be concurrently enrolled in BUAD 497. We invest the first couple of
classes reviewing fundamentals and basic tenets of business strategy.
Course grading is based on the following components:
Class Attendance and Participation: 20% (40 points)
Midterm Exam: 25% (50 points)
Simulation Case Exercise 15% (30 points)
One In-class (Team) Case Presentation: 10% (20 points)
Final Exam: 30% (60 points)
Total Grade: 100% (200 total points)
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Class Attendance and Participation
It is expected that you will attend class. If you cannot attend class for whatever reason or you
are going to be late, send me an email AHEAD of time to let me know. Role is taken the first
five minutes of class. If you are tardy, you can come to class, but it will be counted as being
absent. Unexcused absences and being tardy will hurt your grade. Participation means that
you are prepared for class by reading the articles/cases ahead of time and complete
assignments prior to class. Attending all classes and actively participating will earn you 20% of
your class grade.
I will call on students randomly to monitor whether students are doing the reading prior to
class. If you do not understand some of the concepts, that is fine, as we will discuss these
issues in class. However, you must be prepared for each and every class.
It is REQUIRED that each student write one page (single space, size 12) summarizing ONE
case/article per week. The article will be assigned one week ahead of time. If you are going to
be absent for any reason, students are allowed to turn in the one page summary by email.
Nonetheless, everyone should turn in their case summaries at the beginning of each class.
These notes will help your advanced strategy analysis skills. Your class participation grade
will be based on the quality, not quantity, of your comments for both the cases and readings.
Starting in the fourth week of the class (Tuesday, Jan 31), we will start with a corporate
strategy simulation: Corporation: A Global Business Simulation (Smith & Golden). The
simulation will be done in groups of 4 that you choose. I will provide the simulation manual.
The simulation requires groups to make decisions about investments in both individual
business units and in terms of corporate strategy (e.g., diversification into different business
units and the sale and acquisition of different business units).
The point of the corporate simulation is to put into play the theoretical ideas about business
and corporate strategy that we have been reading. It’s also supposed to be fun. However, the
simulation is worth 15% of your grade (30 points). Half of your simulation grade will be based
on quantitative success in the game (I will provide more details about the performance metrics
used later). The other half of the simulation will be based on short group reports that you
submit to me describing the logic of your strategy.
One In-Class (Team) Case Presentation
In the same groups as the simulation, each group will be required to present part of one of the
cases that we will be doing in class (answering one of the case questions). The group has
discretion about the presentation, but some kind of power-point presentation is probably
recommended. Once groups are formed, I will distribute a list of cases for groups to select
from in terms of preferences for this assignment. This assignment is worth 10% of your grade.
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Midterm and Final Exams
There will be one midterm exam (1.5 hour in length) in the ninth week before Spring Break
(Thursday March 9th). Its content is TBA (to be announced). The midterm is worth 25% of
your grade. Lastly, there is a final exam in this class. It is worth 30% of your grade, and it will
be given from 10 am – 11:50 am on May 4th. Its content is TBA (to be announced).
1. Advanced Methods on Strategy Analysis Course Reader, Spring 2005. University Book
2. Hitt, Ireland, Hoskisson (2006). Strategic Management: Competitiveness and
Globalization (Concept and Cases) 6th Edition; South-Western, Mason: OH.
3. In addition, I will be handing out additional materials as noted in the syllabus.
A Blackboard website has been created for this course: http://learn.usc.edu. You should begin
the habit of checking the Blackboard on a regular basis. The course syllabus, assignment
information, and any additional materials will be posted on this site.
Currently, I have a part-time professorship appointment with the Marshall School of Business.
This is my fourth year at USC. Prior to teaching Advanced Methods in Strategy Analysis, I
taught Organizational Behavior for two years. I have a Ph.D. in Public Administration (with a
concentration in Management) from the School of Policy, Planning, and Development (USC),
a Master’s Degree in International Relations from California State University, Los Angeles,
and a Bachelor’s Degree in Political Science from California State Polytechnic University,
Pomona. I have been in the United States for 15 years, going to school 14 of those years. I
have promised my wife, Carrie, and my two kids, Sean (9) and Rebecca (6), that I am pretty
much done with my education (They would leave me if I tried to pursue another degree ☺)
I am inspired in the research and design of public, private, and non-profit system structures to
support positive child and adolescent development and robust child-adult relationship building.
I have worked over ten years in the fields of public-private partnerships, education, community
development, and positive youth development. I am currently a member of the Orange County
Department of Education’s Institutional Review Board (IRB) and have authored numerous
reports and evaluation programs in positive youth development, academic achievement, and
resource mapping projects. I enjoy writing a weekly newspaper column for the Orange County
Register, targeting Spanish speaking families. My full time job is as Vice President of
Community Investments for the Orange County United Way.
I love sports. Back in college, I played NCAA Division II tennis and got to travel across the
country competing in open and collegiate tournaments. I am a hard-core USC football fan and
look forward to having our team beat UCLA and winning many more championships!
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MODULE I: BASICS IN CORPORATE STRATEGY
Session 1: 1/10 Course Introduction and Overview of Strategic Analysis
Session 2: 1/12 Business Strategy Overview:
How Competitive Forces Shape Strategy (Porter)
Competing on Resources (Collis & Montgomery)
Session 3: 1/17 Generic Strategies:
From Competitive Advantage: P. 11-26 (Porter)
What is Strategy? (Porter) HANDOUT
Session 4: 1/19 Corporate Strategy Basics
1st Part of Scope of the Corporation (Collis): P. 1-7 (up to Vertical Scope)
The Core Competence of the Corporation (Prahalad & Hamel)
Students form groups for simulation & in-class case presentations
Session 5: 1/24 Walt Disney Case
Walt Disney case
Session 6: 1/26 Vertical Integration
2nd Part of Scope of the Corporation (Collis): P. 8-15
Birds Eye case
Session 7: 1/31 Simulation Introduction
Simulation manual. In groups discuss your corporation’s strategy
Decision 1 of simulation due by Wed Feb 1 (3pm)
Session 8: 2/2 Creating Corporate Advantage
Creating Corporate Advantage (Collis & Montgomery)
The Necessary Art of Persuasian (Conger) HANDOUT
Results of 1st Round of Simulation
Session 9: 2/7 AOL Time Warner Case
AOL Time Warner case
Decision 2 of simulation due by class (12pm)
Session 10: 2/9 Corporate Governance: Managers Gone Amuck?
Corporate Governance (Collis & Montgomery textbook, Ch. 3)
Results of 2nd Round of Simulation
Session 11: 2/14 TYCO Case
Decision 3 of simulation due by class (12pm)
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MODULE II: COMPETITIVE RIVALRIES AND BUSINESS-LEVEL STRATEGY
Session 12: 2/16 Introduction to Competitive Rivalries and Competitive Dynamics
Competitive Rivalries and Competitive Dynamics (Hitt, Ireland, Hoskisson,
Ch. 5): P. 136-146
Results of 3rd Round of Simulation
Session 13: 2/21 Competitive Rivalries and Competitive Dynamics (cont.)
Competitive Rivalries and Competitive Dynamics (Hitt, Ireland, Hoskisson,
Ch. 5): P. 146-166
Decision 4 of simulation due by class (12pm)
Session 14: 2/23 Cat Fight in the Pet Food Industry Case
Cat Fight in the Pet Food Industry case
Results of 4th Round of Simulation
Session 15: 2/28 Business-Level Strategy
Business-Level Strategy & Competitive Rivalries (Hitt, Ireland, Hoskisson,
Ch. 4): P. 102-135
Decision 5 of simulation due by class (12pm)
Session 16: 3/2 PepsiCo Case
Results of 5th Round of Simulation
Session 17: 3/7 Midterm Exam Review Session
Session 18: 3/9 Midterm Exam (in class)
SPRING BREAK: MARCH 13 TO MARCH 18
MODULE III: MANAGING STRATEGIC CHOICE
Session 19: 3/21 Guest Speaker
TBA (To Be Announced)
Session 20: 3/23 Strategic Choice: Exploring v. Exploiting
Organization and Competitive Advantage: P. 102-106 & 111-118
3M: Profile of an Innovating Company
Decision 6 of simulation due by class (12pm)
Session 21: 3/28 Strategic Leadership
Strategic Leadership (Hitt, Ireland, Hoskisson, Ch. 12): P. 372-135
Results of 6th and Final Round of Simulation
Session 22: 3/30 Phillips Case & Corporate-Level Strategy
Corporate Level Strategy (Hitt, Ireland, Hoskisson, Ch. 6): P. 168-199
Corporate Governance (Collis & Montgomery): P. 179-197
The Phillips Group case
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Session 23: 4/4 Agilent Case: Organizational Change and Cooperative Strategy
Cooperative Strategy (Hitt, Ireland, Hoskisson, Ch. 9): P. 268-301.
Agilent technologies: Organizational change case
Session 24: 4/6 Strategic Entrepreneurship
Strategic Entrepreneurship (Hitt, et al., Ch. 13): P. 406-430
Introducing T-Shape Managers: Knowledge Management’s Next
Generation (Hansen & von Oetinger) HANDOUT
Session 25: 4/11 Simulation Audit
MODULE IV: ACADEMIC RESEARCH ON STRATEGY
Session 26: 4/13 Overview of Academic Research on Strategy
Reading TBA (To Be Assigned) HANDOUT
Session 27: 4/19 Theory of the Firm
Reading TBA (To Be Assigned) HANDOUT
Session 28: 4/21 Population Ecology
Reading TBA (To Be Assigned) HANDOUT
Session 29: 4/26 Transaction Cost Economics (TCE)
Reading TBA (To Be Assigned) HANDOUT
Session 30: 4/28 Final Exam Review Session
Session 31: 5/4 FINAL EXAM (in class: 10:00-11:50 am)
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Walt Disney Company:
1. Why has Disney, historically, been successful?
2. What does the Disney name contribute to each business? What are Disney’s core
competencies? What are its competitive advantages?
3. How does Disney manage the relationship between its businesses? How does Disney
achieve across-business unit synergy? Is this a good corporate strategy?
4. Evaluate Disney’s corporate moves. Does it make sense to forward integrate? To
expand Globally? To backward integrate? To diversify? For example, does it make
sense for Disney to launch the Mighty Ducks, Vacation Clubs, Hyperion Publishing?
What about the ABC acquisition?
1. Construct a value chain for the U.K. frozen food industry. Why did Birds Eye initially
integrate into the activities that it did, and why after Birds Eye had built the industry
other competitors did not have to be as vertically integrated. Identify the main firms in
each part of the value chain and when they entered.
2. Why did the frozen food industry deintegrate? Why did specialized intermediaries
3. Provide strategic advice for the top management team at Birds Eye. What should they
do to regain a position of dominance in the U.K. frozen food industry?
AOL Time Warner:
1. Did AOL have a sustainable competitive advantage in online services before the
merger? Where might it have been vulnerable?
2. What was Time Warner’s corporate strategy before the merger?
3. How does the merger help AOL? How does the merger help Time Warner?
4. What strategy should AOL Time Warner follow? Which synergies do you think are
most important for the new company? Where will the value be added?
5. What could go wrong with this merger? Are competitor responses to the merger a big
1. What is PepsiCo's corporate strategy under Calloway?
2. Compare PepsiCo's three businesses. How are they distinct from one another? What
are their individual potentials for success?
3. Has PepsiCo's organization contributed to or impeded realization of valuable
economies of scope?
4. What are the three very best cross-business opportunities for collaboration? Why?
5. Do you agree with Calloway's emphasis on the restaurant division, or Enrico's decision
to spin off the division to TriCon Global Restaurants?
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1. Does Tyco have a corporate-level advantage? Critique Tyco’s corporate strategy. Is
Tyco creating or destroying value? Does the firm do anything unusually well?
2. When over the life of a business does Tyco add value? Should this be one company or
3. Is Tyco’s strategy sustainable? What future strategic and corporate moves would you
4. If you were managing a firm, would you rather compete against a division of a
conglomerate like Tyco or an independent firm? Explain your answer.
1. Who is best positioned in the pet food industry in 1986? Has any firm developed a
"competing on the edge" strategy?
2. Who has staked out strongholds? Where? How? Is the industry stable in 1986?
3. What should Ralston Purina do? Is it threatened?
4. Who would you predict will bid for Anderson-Clayton? Why?
5. Who is likely to attack whom? Where? How?
6. Why are the barriers around the various segments evaporating? Did they really exist?
1. What explains 3M’s past performance? Please be specific and detailed. How has 3M’s
internal and external environment changed over time?
2. Can Porter’s 5 Forces explain 3M’s past success? Does 3M have superior “resources”
and/or “capabilities?” Why or why not?
3. Assess the strategies of 3M’s past CEOs, including De Simone? Has 3M been
heading in the correct direction (why or why not)? What would you recommend for
3M? For example, should they become more exploitative?
Agilent Case Questions:
1. Why did HP spin-off Agilent? Did HP go far enough in spinning off Agilent?
2. What is going to be Agilent’s competitive advantage (especially as compared to HP)?
3. What are the key challenges for Agilent? What should Agilent do to deal with both its
organizational and cultural transformation?
4. Do you think Agilent succeeded?
Philips Case Questions:
1. What were some of the strategic actions taken by Dekker and Van der Klugt from 1970
to 1987? What were the reasons behind these actions? Did Philips have any choice in
2. How substantial are the changes for Philips? Are they “core” (significant) or
“peripheral” (less important) changes? Please list out the main downsides of these
changes. How do the downsides of the changes compare to the positives that come
from the changes?
3. Should Phillips make these changes? Any there any changes that you are against?
Why? What changes are you in favor of? Why?
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