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Corporate Strategy
                        Course Module in Competition and Strategy
Course Modules help faculty select an...
Corporate Strategy: An HBSP Course Module

Transformation: Jack Welch’s                                       rev.2005
Lea...
Corporate Strategy: An HBSP Course Module

component businesses and the markets they serve. GE is arguably the ultimate co...
Corporate Strategy: An HBSP Course Module

existence of relationship-specific investments, are insufficient to explain eff...
Corporate Strategy: An HBSP Course Module


Alternative 1: Gucci Group N.V. (A) David L. Yoffie
Examines the turnaround of...
Corporate Strategy: An HBSP Course Module

Alternative: Tyco International (A) Robert E. Kennedy & Cynthia A. Montgomery
T...
Corporate Strategy: An HBSP Course Module

Globalization; International business; Resource allocation. Setting: Japan, Chi...
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Nghien Cu Cong Dong B 10

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Nghien Cu Cong Dong B 10

  1. 1. Corporate Strategy Course Module in Competition and Strategy Course Modules help faculty select and sequence HBS Publishing titles for use in segments of a course. Each module represents subject matter experts’ thinking about the best materials to assign and how to organize them to facilitate learning. In making selections, we’ve received guidance from faculty at Harvard Business School and other major academic institutions. Each module recommends four to six items. Whenever possible at least one alternative item for each main recommendation is included. Cases form the core of many modules, but we also include readings from Harvard Business Review, HBS background notes, and other course materials. I. Overview of suggested content (HBS cases unless otherwise noted) Title Author Product Publication Pages Teaching Number Year Note 1. Introductory Reading Creating Corporate Advantage Collis & 98303 1998 14p -- (HBR) Montgomery Alternative: Note on Corporate Piskorski 705449 2005 10p -- Strategy 2. Strategies of Vertical Integration Birds Eye and the U.K. Frozen Collis 792074 1992 19p 795109 Food Industry (A) rev.1994 B:792078 1992 3p rev.1996 Alternative: Celulosa Arauco: Casadesus- 705474 2005 35p 705474 Forward Integration or Masanell Horizontal Expansion? 3. Strategies of Related Diversification Newell Co.: Corporate Strategy Montgomery 799139 1999 22p 702401 rev.2005 Alternative 1: Gucci Group N.V. Yoffie 701037 2001 21p 701088 (A) B:701089 2001 2p same C:702479 2002 4p same Alternative 2: News Corp. Anand 702425 2002 38p 705419 4. Strategies of Unrelated Diversification GE’s Two-Decade Bartlett 399150 1999 24p 300019 Harvard Business School Publishing 800-545-7685 (Outside the U.S. and Canada 617-783-7600) custserv@hbsp.harvard.edu www.hbsp.harvard.edu/educators
  2. 2. Corporate Strategy: An HBSP Course Module Transformation: Jack Welch’s rev.2005 Leadership Or GE’s Two-Decade Bartlett 301040 2001 2 hrs. same Transformation: Jack Welch’s Leadership (Multimedia Case) Alternative: Tyco International Kennedy & 798061 1998; 25p 701134 (A) Montgomery rev.2001 5. Strategies for Growth from Product Innovation Apple 2005 Yoffie 705469 2005 9p 702473 Alternative: The Walt Disney Rukstad & 701035 2001 27p 705495 Company: Entertainment King Collis 6. Strategies for International Expansion Making China Beautiful: Jones 805003 2005 27p 806027 Shiseido and the China Market Alternative: Dell Computer Tan & Young 903M19 2003 17p 803m19 Corp.: Investment in Malaysia as a Global Strategic Tool (Ivey School) II. Rationale for selection and sequencing the items in this module The readings recommended for the opening segment help to familiarize students with the key concepts and language of corporate strategy and to distinguish corporate issues from those associated with competitive strategy at the product or unit level. Subsequent segments of this module are organized according to the main strategic categories that individual cases explore. The cases in segment 2 concentrate on vertical integration. The main choice, on Birds Eye, is an older case but remains one of HBS’s most popular cases on vertical integration. The alternative, a 2005 case on a Chilean wood pulp and products company, provides an unusually detailed consideration of the question, how far should integration go? The main choice for segment 3, Newell Corporation, is an example of related diversification at its most disciplined, and the case’s emphasis on relationships with retailers, especially Wal-Mart, casts a revealing spotlight on industry systems. The first alternative case on Gucci Group depicts a broader range of products; broader still is the acquisition-built portfolio of NewsCorp. Because the Newell case presents such a detailed examination of a narrowly focused corporate structure it provides a great setup for discussing the largely out-of-favor conglomerate model. Emphasizing classic conglomerates, segment 4 invites students to identify the value that these corporations provide to their Harvard Business School Publishing 800-545-7685 (Outside the U.S. and Canada 617-783-7600) custserv@hbsp.harvard.edu www.hbsp.harvard.edu/educators
  3. 3. Corporate Strategy: An HBSP Course Module component businesses and the markets they serve. GE is arguably the ultimate conglomerate, and the case examining the Jack Welch era looks over the wide array of businesses GE owned. As an alternative to GE, we have chosen to recommend the case on Tyco despite the obvious concern that students might be skeptical about anything the administration of Dennis L. Koslowski said or did. If you are comfortable in persuading your students that Koslowski’s lawbreaking had relatively little to do with the actual building and shaping of Tyco you will be rewarding them with an unusually clear and orderly explanation of how the conglomerate model – despite its counterintuitive features – can produce impressive results. In the preceding two segments, students will have studied corporations building growth by buying firms and reshaping them to behave according to a specific corporate model. In segment 5, students study a different source of growth -- the successful development, launch, and exploitation of a groundbreaking product. The main selection examines how Apple manages the tremendous growth surge provided by iPod. The alternative case looks at Disney’s multidirectional exploitation of the hit movie “The Lion King.” Finally, segment 6 looks at global expansion as a platform for corporate growth. Having expanded successfully across much of the world while building a vast beauty products corporation, Japan’s Shiseido faces perhaps its toughest challenge in building business in China, where every big player in the cosmetics industry is avidly battling for market share. The alternative case on Dell has a complementary angle as the PC giant seeks to strengthen its presence in Asia not just to manufacture cheaply but to serve a rapidly growing market segment. III. Detailed description of recommended items 1. Introduction Creating Corporate Advantage David J. Collis and Cynthia A. Montgomery (Harvard Business Review) This article presents a comprehensive framework for value creation in the multibusiness company. It addresses the most fundamental questions of corporate strategy: What businesses should a company be in? How should it coordinate activities across businesses? What role should the corporate office play? How should the corporation measure and control performance? Through detailed case studies of Tyco International, Sharp, the Newell Company, and Saatchi and Saatchi, co-authors David Collis (Yale School of Management) and Cynthia Montgomery (Harvard Business School) demonstrate that the answers to all those questions are driven largely by the nature of a company's special resources--its assets, skills, and capabilities. These range along a continuum from the highly specialized at one end to the very general at the other. A corporation's location on the continuum constrains the set of businesses it should compete in and limits its choices about the design of its organization. Applying the framework, the authors point out the common mistakes that result from misaligned corporate strategies. The company examples demonstrate that one size does not fit all. One can find great corporate strategies all along the continuum. Subjects: Competition; Competitive advantage; Corporate strategy; Performance measurement; Portfolio management Alternative: Note on Corporate Strategy Mikolaj Jan Piskorski (HBS background note) Introduces students to the study of corporate strategy. Focuses on questions of scope and ownership. Examines both horizontal and vertical integration. Underscores the point that economies of scope, or the Harvard Business School Publishing 800-545-7685 (Outside the U.S. and Canada 617-783-7600) custserv@hbsp.harvard.edu www.hbsp.harvard.edu/educators
  4. 4. Corporate Strategy: An HBSP Course Module existence of relationship-specific investments, are insufficient to explain effective corporate strategy unless there are important obstacles to contractual solutions. Learning Objective: To focus on the essential issues and problems of corporate strategy. Subjects: Corporate strategy; Diversification; Horizontal organization; Mergers & Acquisitions; Vertical integration 2. Strategies of Vertical Integration Birds Eye and the U.K. Frozen Food Industry (A) David J. Collis Describes the forty-year evolution of the U.K. frozen food industry, and traces the emergence, dominance, and the decline of Birds Eye. Its success is as a vertically integrated producer, distributor, and marketer of frozen foods that pioneers the industry in the U.K. Its decline as other firms enter all stages of the value chain is seen as a result of its earlier success that yields it an unsustainable strategic position. Examines vertical integration as a strategy, the analytic rationale to be vertically integrated, and the disadvantages of vertical integration. Subjects: Competition; Corporate strategy; Supermarkets; Vertical integration. Setting: United Kingdom; Frozen food; large; 1948-1984. Alternative: Celulosa Arauco: Forward Integration or Horizontal Expansion? Ramon Casadesus Masanell Celulosa Arauco is a major Chilean producer of market pulp and wood products. Owning over 1.2 million hectares of forest in Chile, Argentina, and Uruguay, the company's key advantage is the ideal growing conditions in which the company's forests are located. As of early 2004, Arauco is the third largest producer of market pulp (pulp sold on the open market) and is considering increasing its capacity, tying it with Brazilian competitor Aracruz as the world's largest producer. The first phase of the project has been approved by the board of directors and includes a sawmill, plywood mill, and energy complex valued at $120 million. Now, Alejandro Perez, Arauco's president and CEO, is seeking approval for the second phase of the project, which would include the company's sixth market pulp plant at a cost of $1.2 billion. Perez's concerns about the volatility of market prices for the past three years led the company to diversify into wood products like panels, medium-density fiberboard, and other remanufactured wood products. These divisions are highly successful and currently account for approximately 50% of Arauco's revenues. Perez is debating whether the company and its shareholders would be better served by a forward integration into the paper business instead of increasing the company's capacity in market pulp. Learning Objective: To analyze vertical integration and determine the limits to which the firm should be integrated. Subjects: Competitive advantage; Corporate strategy; Decision making; Expansion; Vertical integration. Setting: Chile, Forest products, $1.5 billion, 2004. 3. Strategies of Related Diversification Newell Co.: Corporate Strategy Cynthia A. Montgomery In 1998, Newell Co., a manufacturer of low-tech, high-volume consumer goods, acquired Calphalon Corp., a high-end cookware company, and Rubbermaid, a $2 billion manufacturer of consumer and commercial plastic products. The case focuses on Newell's strategy and its elaboration throughout the organization, as well as the importance of selecting appropriate acquisitions to grow the company. Do Calphalon and Rubbermaid fit with the company's long-term strategy of growth through acquisition and superior service to volume customers? A rewritten version of an earlier case. Subjects: Acquisitions; Corporate strategy; Diversification; Strategic planning. Setting: Illinois, consumer products, $3.3 billion, 1998. Harvard Business School Publishing 800-545-7685 (Outside the U.S. and Canada 617-783-7600) custserv@hbsp.harvard.edu www.hbsp.harvard.edu/educators
  5. 5. Corporate Strategy: An HBSP Course Module Alternative 1: Gucci Group N.V. (A) David L. Yoffie Examines the turnaround of Gucci and its transition from a single brand to a multi-brand company. A rewritten version of an earlier case. Learning Objective: Strategic transformation, changing industry structure, and corporate strategy. Subjects: Corporate strategy; Industry structure. Setting: Global, fashion industry, $2 billion, 1993-2000. Alternative 2: News Corp. Bharat Anand In 2001, News Corp. is the smallest of the major media and entertainment conglomerates, but it has the broadest global presence. In an effort to establish a major distribution presence in the United States, News Corp. had looked to acquire DirecTV, the largest U.S. direct broadcast satellite provider, in what many observers had considered would be a quot;transforming acquisition.quot; After 20 months of trying to do so, and the recent competitive offer from Echostar, Rupert Murdoch, chairman and CEO of News Corp., withdrew the company's bid for DirecTV. This case describes how Murdoch has created a global empire from a single newspaper in Australia. News' major assets include its newspaper businesses, film and television production, satellite broadcasting, television channels, and book and magazine publishing. Also describes News' distinctive operating style and Murdoch's role in shaping the corporate culture. News Corp. must now confront three sets of questions. First, how important is it for News Corp. to establish a distribution presence in the United States, and should it pursue a different approach? Second, how should it tackle the deteriorating economics of two of its core businesses: newspapers and network television? Third, what will be the impact of recent repeals of cross-ownership restrictions in the media industry on News Corp.'s competitive position vis-a-vis other major conglomerates? Learning Objective: To examine the strategic rationale for media and entertainment companies to establish a presence in both content and distribution. To analyze the corporate strategy of a media conglomerate and how it might best position itself within a rapidly consolidating industry, the logic of corporate evolution, the appropriate role for public policy in the media industry, and the sustainability of advantage of a family-controlled conglomerate. Subjects: Acquisitions; Conglomerates; Expansion; Media relations; Public policy; Vertical integration. Setting: Global; Entertainment, media; $13.8 billion, 2001. 4. Strategies of Unrelated Diversification GE’s Two-Decade Transformation: Jack Welch’s Leadership Christopher Bartlett GE is faced with Jack Welch's impending retirement and whether anyone can sustain the blistering pace of change and growth characteristic of the Welch era. After briefly describing GE's heritage and Welch's transformation of the company's business portfolio of the 1980s, the case chronicles Welch's revitalization initiatives through the late 1980s and 1990s. It focuses on six of Welch's major change programs: The quot;Softwarequot; Initiatives, Globalization, Redefining Leadership, Stretch Objectives, Service Business Development, and Six Sigma Quality. Learning Objective: To expose students to GE's revitalization efforts, including corporate strategy development, transformational change, management and leadership, and corporate renewal. Subjects: Business policy; Change management; Conglomerates; Corporate culture; Corporate strategy; Executives; Leadership; Organizational change; Organizational development; Strategy implementation. Setting: United States, global; $100 billion; 1981-98. Harvard Business School Publishing 800-545-7685 (Outside the U.S. and Canada 617-783-7600) custserv@hbsp.harvard.edu www.hbsp.harvard.edu/educators
  6. 6. Corporate Strategy: An HBSP Course Module Alternative: Tyco International (A) Robert E. Kennedy & Cynthia A. Montgomery Tyco, a diversified U.S. conglomerate, has grown rapidly for more than 20 years. This case examines Tyco's acquisition strategy as well as its internal control systems. Learning Objective: To analyze a firm adding value as a diversified conglomerate. Subjects: Acquisitions; Conglomerates; Control systems; Corporate strategy; Organizational structure. Setting: United States, manufacturing industries, $5 billion, 1985-1996. 5. Strategies for Growth from New Products Apple 2005 David L. Yoffie Apple has reaped the benefits of its innovative music player, the iPod. However, its PC and server business continue to hold small market share relative to the worldwide computer market over the past few years. Will the iPod lure new users to the Mac? Will Apple be able to produce another cutting-edge device quickly? Learning Objective:To contrast Apple's success in creating and marketing the iPod with its results in its other hardware categories. To evaluate past performance and consider what the future may hold for a company that relies heavily on periodic bursts of innovation. Subjects: Computer systems; innovation. Setting: United States; Computer industry, consumer electronics; $8.2 billion; 2004-05. Alternative: The Walt Disney Co.: The Entertainment King Michael G. Rukstad & David J. Collis The first ten pages of this case are comprised of the company's history, from 1923 to 2001. The Walt years are described, as is the company's decline after his death and its resurgence under Eisner. The last five pages are devoted to Eisner's strategic challenges in 2001: managing synergy, managing the brand, and managing creativity. Students are asked to think about the keys to Disney's mid-1980s turnaround, about the proper boundaries of the firm, and about what Disney's strategy should be beyond 2001. Subjects: Competitive advantage; Corporate strategy; Diversification; Strategy formulation; Strategy implementation. Setting: United States, entertainment industry, $25.4 billion, 1923-2000. 6. Strategies for International Expansion Making China Beautiful: Shiseido and the China Market Geoffrey G. Jones Describes the multinational growth of Shiseido, the world's fourth-largest cosmetics company, with a focus on its strategy in China since 1981. Explores the challenges facing firms in the globalization of a culturally specific industry such as cosmetics. The Japanese company displayed an early interest in international expansion, but its early investments were lost during World War II. Thereafter, it sought to build businesses in Europe and North America, but was challenged by market conditions quite different from those in Japan. Even within its home market, deregulation and the entry of foreign firms during the 1990s led to a significant loss in market share. Shiseido entered China in 1981 and built Aupres, a large cosmetics brand specifically aimed at Chinese women. Further growth followed, and in 2003, plans were announced to build a large network of voluntary chain stores. Highlights managerial challenges of growing the China business further in the face of increasing competition and provides a framework for discussing the challenges of prioritizing the allocation of resources in a global business. Learning Objective: To illustrate the strategic and managerial challenges facing global firms in a culturally specific industry such as cosmetics. Subjects: Business history; Competition; Entrepreneurship; Harvard Business School Publishing 800-545-7685 (Outside the U.S. and Canada 617-783-7600) custserv@hbsp.harvard.edu www.hbsp.harvard.edu/educators
  7. 7. Corporate Strategy: An HBSP Course Module Globalization; International business; Resource allocation. Setting: Japan, China; cosmetics, personal care products; 2004. Alternative: Dell Computer Corp.: Investment in Malaysia as a Global Strategic Tool Justin Tan and Michael Young (Ivey School) Dell Computer Corp. is one of the largest computer manufacturers in the world. The company's international business strategy has supported its global position and performance facing the Asian economic crisis. Its investment in Malaysia reduced its foreign exchange exposure and supported its low- cost advantage. Now Dell must decide whether to expand its commitment in Malaysia and/or other locations, such as China. Subjects: Emerging markets; Globalization; International business; Risk management; Strategy formulation. Setting: Malaysia, computer industry, large, 2001. Harvard Business School Publishing 800-545-7685 (Outside the U.S. and Canada 617-783-7600) custserv@hbsp.harvard.edu www.hbsp.harvard.edu/educators

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