Maximizing Profits: Strategic Management for Competitive Advantage - Prof. Trudi Ferguson, Exams of Strategic Management

Download Maximizing Profits: Strategic Management for Competitive Advantage - Prof. Trudi Ferguson and more Exams Strategic Management in PDF only on Docsity! 8/26/2008 University of Southern California Marshall School of Business BUAD 497: STRATEGIC MANAGEMENT Fall 20078 Instructor: Trudi Ferguson. Office: Phones: Office: 1-213-740-0738 Email: tferguso@marshall.usc.edu Section: Section TTh. Office Hours: Tuesday 11 to 12 noon and by Appointment Prerequisites: Successful completion of all core business requirements COURSE DESCRIPTION This course introduces the concepts, tools, and first principles of strategy formulation and competitive analysis. It is concerned with managerial decisions and actions that materially affect the success and survival of business enterprises. The course focuses on the information, analyses, organizational processes, and skills and business judgment managers must use to design strategies, position their businesses and assets, and define firm boundaries, to maximize long-term profits in the face of uncertainty and competition. Strategic Management (BUAD 497) is an integrative and interdisciplinary course in two important respects: 1. The course assumes a broad view of the environment that includes buyers/consumers, suppliers, technology, economics, capital markets, competitors, government, and global forces and it assumes that the external environment is dynamic and characterized by uncertain changes. In studying strategy, this course draws together and builds on all the ideas, concepts, and theories from your functional courses such as Accounting, Economics, Finance, Marketing, Organizational Behavior, and Statistics. However, it is much more than a mere integration of the functional specialties within a firm. 2. The course takes a general management perspective. It views the firm as a whole, and examines how policies in each functional area are integrated into an overall competitive strategy. We designed this course to develop the “general management point of view” among participants. This point of view is the best vantage point for making decisions that effect long run business performance. The key strategic business decisions of concern in this course involve determining and shaping organizational purpose to evolving opportunities, creating competitive advantages, choosing competitive strategies, securing and defending sustainable market positions, and allocating critical resources over long periods. Decisions such as these can only be made effectively by viewing a firm holistically, and over the long term. This course is intended to help you develop skills for formulating strategy. These skills will help you in whatever job you take after graduation as well as in your personal investing and choice of employment. The strategy formulation process demands the mastery of a body of analytical tools and the ability to take an integrative point of view. You will develop these skills through: • In-depth analysis of industries and competitors • Prediction of competitive behavior • Techniques for analyzing how firms can develop and sustain competitive advantages over time NOTE: BUAD 497 is a core course taught by several instructors. Policies regarding assignments and grading may be different for each instructor. Be sure to refer ONLY to this syllabus. 2 EDUCATIONAL OBJECTIVES Theory and Concepts. The central concept of this course is that of competitive strategy. Definitions abound, but they all share some sense of the allocation of critical resources over relatively long periods in pursuit of specific goals and objectives. Successful strategies exploit external conditions, entrepreneurial insights, and internal resources, seeking configurations of prices, preferences, technologies, and information that offer opportunities for sustainable competitive advantage. Strategy can be usefully thought of as the comprehensive alignment of an organization with its future environment. Success, however, depends not only on the soundness of the strategy, but also on its effective implementation through appropriate organizational and administrative choices. In the end, unforeseen external factors may cause a well-conceived and executed strategy to fail, in spite of its initial wisdom -- but a poor strategy badly executed increases the chances of failure. Opportunities to act strategically often do not come labeled as “strategic” and occur infrequently. If missed, or mismanaged, they can prove disastrous for any firm. Understanding the concept of competitive strategy formulation is a primary educational objective of this course. This will involve mastering an array of economic, strategic, and organizational concepts and theories, and acquiring an integrative general manager’s point of view. The course will cover theories for in-depth industry and competitor analysis, for anticipating and predicting future industry developments, and for examining the impact of change (in technologies, tastes, government regulations, global competition, and other important environmental forces) on competition and industry evolution. The course will also examine the economic underpinnings of competitive advantages, and the fundamental conditions that allow firms to conceive, develop, and sustain, advantageous strategic positions. While our primary focus will be on mastering strategy formulation at the business unit or competitive level, the course will also examine corporate and global strategy issues such as diversification, vertical integration, economies of scope across related businesses, the transfer of technology and core competencies, and international expansion and growth. Analytical Skills. Theoretical concepts are a great aid to understanding, but by themselves, they do not help resolve real business problems or challenges. Also needed are analytical skills and techniques that can be applied to the data to "fill in" the facts and premises assumed in the theories. A second educational objective is further to increase each student’s inventory of useful analytical skills and tools. Some of the tools are quantitative -- analyzing financial statements, computing comparative buyer costs, and calculating the effects of scale and learning on production costs, for example -- while others are qualitative. Learning how to apply these techniques, and, more importantly, when to apply them is a key objective of the course. In learning to size-up a business and its problems or opportunities, this course will require you to conduct "full blown" strategic analyses. That is, identifying firms’ strategies and testing them for consistency, recognizing potential entrepreneurial opportunities and strategic challenges/problems, selecting and establishing competitively protected market niches, identifying competitive advantages and shaping defenses to circumvent the advantages of rivals, formulating and implementing internally consistent business strategies, and designing efficient and effective organizations. Rhetorical Skills. The best analysis in the world will have little effect if it cannot be communicated to others. Managers must be able to articulate their views coherently and persuasively, and they must be skilled at understanding and analyzing other points of view. Management is a "verbal sport" perhaps 90% of a typical manager's day is consumed by oral communication. Time is often scarce. You must learn to make convincing arguments and to make them quickly, or the merits of their ideas are likely to become simply irrelevant. This skill takes practice, and we will place a great deal of emphasis on it in class. Wisdom. Much of the knowledge that successful managers and consultants employ consists of "rules of thumb" about what issues are likely to be important in certain kinds of business situations. These rules of thumb, or heuristics, are often implicit in the thinking of people who have never bothered to articulate them explicitly. A fourth goal of this course is to help you build up your set of useful "stories" and heuristics for your future managerial careers. In this course, we are as much interested in developing an appreciation for the art of management as we are in understanding the science of management. Tools alone will not a strategist make. While the ability to master 5 Group Written Strategy Analysis. You will write one 30 page strategic analysis of an organization as part of a group. This will be a self selected group of 4 to 6 students working together. The evaluation criteria and format are in Appendix A. The group strategy analysis will include a detailed analysis of the industry within which it competes, the organization’s source of competitive advantage, the sustainability of the firm’s competitive advantage, and a strategic plan for the organization’s future. The 30-page analysis is due in the second to last week of classes. You may chose among the following topics: Yahoo (and the Microsoft bid), Lenovo and IBM, Airbus and Boeing, Starbuck’s current strategy, strategy of greening a particular organization…see J. Greenblatt, and other preapproved organizational choices. Your choice of organization must be turned into me not later than 9/18 in Session 8. Part 1a of the assignment (see Appendix A) is due 10/9 and the remainder of the assignment (Part 1b through 1c) must be turned in 11/25 in Session 27. In order to help you apply the course materials, two days near the end of the course are set aside for oral reports on the firm you selected. There will be 4 to 6 presentations on each of the last two days of class. Analyses should include an industry analysis as well as identification of the resources, capabilities, and sustainable competitive advantage together with your recommendation on whether to buy sell or hold their stock and to seek employment with them. Group Case Presentation. You will participate in one case analysis presentation to the class as part of a group. The case analysis will be a case from our assigned readings. There is no required paper but I will collect your power point slides. You will be assigned to a group of 4 to 6 students. You will make your group presentations using audiovisuals and use your business communication skills to explain and defend your conclusions. Presentations should take approximately 1 hour: 30 minutes for the presentation and 30 minutes to answer audience questions. Your presentations will be evaluated on your audiovisual materials turned in at the start of the session, your oral presentation, and your answers to questions. The evaluation form is posted in Blackboard. Group Challenge Teams. When a team is presenting their case analysis, I expect everyone in the class will be able to ask questions. In order to maintain a high level of interaction and discussion, two non-presenting groups will be designated as “Challenge Teams.” Their task is to prepare questions for the presenting team based on their own independent analysis of the case. The role of “Challenge Team” rotates from one case to another so that all teams have opportunities to both present and challenge. Your challenge team will be evaluated on your case preparation notes (see item #2 under Case Preparation above for details) and on the depth and relevance of your questions during the presentation. At the end of the session, each challenge team member should turn in both their previously prepared typed written case notes of the case and a list of the key questions to be asked during the session. The challenge questions are rated individually. Each team will then randomly draw a number from 1 to 12, which will be your team number corresponding to the matrix of case assignments at the end of the class schedule in this document. This matrix indicates the one case for which your team is the presenter and the two for which you are the challenger. The matrix is organized so that teams have equally challenging cases and course coverage. Peer Evaluations. Each of you will complete a peer evaluation of the members of your group case analysis/ challenge teams and another peer evaluation for your short company analysis team (if different). The peer evaluation form is in Appendix B for you to submit electronically through Blackboard. Your peer evaluation is due not later than the last day of class before the final exam period and your care in completing it forms part of your participation/commitment grade. Individual Commitment and Participation. Because case courses require active participation in order to advance the learning of all participants, your overall commitment and attitude toward this course, and your daily active verbal participation in case discussions, will be closely monitored. In grading class commitment and participation, I will consider both the quantity and quality of your class contributions. Class participation is obviously a function of your preparation, skills, attitude, and willingness to commit yourself actively in front of colleagues and me. A classroom is a cost-free environment for experimenting and learning to "play the game." Make use of it. Shyness is no excuse. Research Participation: This part of your grade will be based on effective contributions to class discussions. These include input that is relevant to the course content and the topic of discussion. Participation also comprises involvement in research activities. You can choose one of two options to fulfill this requirement. Please note that, if you do not complete one of these two options, you will lose the points for this part of your grade. 6 Option 1: First, you can participate in research studies. To do this, you will attend sessions outside of class, conducted by researchers in MOR at Marshall. You will earn one credit for each separate study you complete; most sessions are no more than an hour long. You will need to obtain 2 credits during the semester in order to fulfill the research requirement. If you choose this option, please register for an account at http://marshall.usc.edu/497studysignup (see instructions in Blackboard) no later than September 17, 2008. Those who do not register by this date will be required to complete Option 2. After you verify your account, you will need to check the site regularly to find open studies and sign yourself up for appointments. Studies are scheduled throughout the semester, on various days and times. It’s important that you complete your credit early; if you wait until the end of the semester, there may not be enough studies available. You are not guaranteed an available study spot. Please note: If you reserve a time and then fail to appear without notifying the researcher 24 hours in advance, you will receive a 1 credit penalty, and will have to complete a total of 3 credits’ worth of studies for the semester. To receive full participation points, you must earn your first credit by October 31, 2008. Your other credit can be earned any time before December 5, 2008. Option 2: Your second way to complete the research requirement is to write 2 short, 3-page research papers on topics prearranged with your instructor. Students must be aged 18 or older by October 15, 2008 in order to choose option 1; otherwise, you will need to use option 2. Papers must be turned in to Jennifer Lim in BRI 306 no later than December 5, 2008 . 7 With regard to quality, the dimensions include: Relevance -- does the comment bear on the subject at hand? Comments that do not link up with what the discussion is focusing on can actually detract from the learning experience. Causal Linkage -- are the logical antecedents or consequences of a particular argument traced out? Comments that push the implications of a fact or idea as far as possible are generally superior. Responsiveness -- does the comment react in an important way to what someone else has said? Analysis -- is the reasoning employed consistent and logical? Evidence -- have data from the case, from personal experience, from general knowledge been employed to support the assertions made? Importance -- does the contribution further our understanding of the issues at hand? Is a connection made with other cases we have analyzed? Clarity -- is the comment succinct and understandable? Does it stick to the subject or does it wander? I expect that you will make brief notes or outlines -- identify critical problems, "crank-all-the-numbers," do the financials, generate alternative recommended courses of action, and generate ideas for their implementation. I will call on students at random, to take the lead in various aspects of class discussions at least once or twice during the semester. If you are not present, are late, or are not sufficiently prepared to make a substantial contribution to the class discussion, you will lose points for class contribution. If you make helpful comments, you will accumulate points for class contribution. Since it is unlikely that there will be enough opportunities to call on each of you more than once or twice, be warned that failure to be thoroughly prepared, on all occasions, can be devastating to your overall grade. Familiarity with Current Event Business News. The theories we are discussing in class have daily manifestations in the current world of business. An important part of your education is familiarity with current business environments and changes. During the course of this semester you should keep abreast of business headlines and be up to date on important stories. Looking at the L.A. Times business headlines daily (or your favorite news sources) should keep you current. I will include one or two questions on the quizzes concerning the most important business developments. Individual Quizzes. I will give short unannounced quizzes during the course to test the level of preparation for case discussions. These quizzes will be at the beginning of class and can be five to six multiple choice or short answer questions. No make-up opportunities are available if you are absent or late. Included in these quizzes will be a few questions on recent important current event business news Individual Final Exam A final exam will ONLY be given during the exam time specified by the University. The exam will consist of questions on an exam case passed out to you one week prior to the exam. The format is similar to case presentations and discussions (e.g., you will be asked to diagnose problems and make recommendations for action based on all the materials covered in this course). The anticipated times are listed in the course schedule attached at the back of the syllabus. However, you are responsible for confirming this date and time in the university schedule of classes. COURSE POLICIES Attendance. Class attendance is critically important! All missed classes result in a loss of class contribution and participation. Habitual lateness (and leaving class early), for whatever reason, will be noted as evidence of low course commitment. Attendance is a central part of the learning and the grade. I take attendance. More than three missed classes throughout the semester for any and all reasons will negatively impact your grade. Turn off all Communication and Entertainment Devices. Please note that all communication devices such as computers, cell phones, Blackberries, etc. capable of sending and or receiving electronic communication and all entertainment devices such as iPods or other MP3 players are to be turned off and kept off throughout the class session. Receiving or sending communication or entertainment during class disrupts the learning environment and is rude to those around you. No computers should be open or on during class. Notes will be posted in Blackboard. Returned Assignments The Marshall School of Business policy for returning papers is as follows: 10 Appendix A: Group Written Strategy Analysis 1. Evaluation Criteria: a. Industry analysis (35%) i. How well are the 5-forces identified? ii. How well are the 5-forces used to answer the following: 1. For whom is the industry potentially profitable now? 2. How should the 5-forces be modified to insure future profitability for the focal firm? b. Competitive advantages of focal firm (45%) i. How well are the firm’s competitive advantages identified? ii. How well are the firm’s resources and capabilities analyzed as sources of competitive advantage iii. How well does the analysis fit the firm’s actions to the changes in the industry structure needed to insure future profitability? iv. How well is the sustainability of the firm’s competitive advantages analyzed? c. Recommendations (20%) i. How well do the recommendations fit with the industry and firm situation? ii. How well would the recommendations insure abnormal returns for the firm? d. References 2. Format Length: 30 pages maximum. 20 pages for cover page, table of contents, and written analysis and 10 pages for attachments. First page: Cover page with title, course title, number, and section, and each team member’s name with e- mail address. Second page: Table of Contents Page 3-20: Content of your analysis. Attachments: 10 pages to include supporting analyses such as spreadsheet models, diagrams of value chain, 5-forces, etc. Please do not include materials prepared by others outside your group (e.g., newspaper articles, internet downloads). References should include books, academic articles, newspaper clippings, on-line sources, interviews in proper academic format of either MLA or APA. These references are not counted as part of your 30-page maximum. This section is very important because it indicates how broadly you searched for information, how well you were able to synthesize the materials you found, and how much insight or depth of analysis you were able to develop. Margins: 1” margins (left, right, top, bottom) Size paper: 8.5” x 11.0” Size type: 12-point type Line spacing: double-spaced for all text (not for tables, analyses, references, or block quotations) Page numbers: pages numbered in the upper right corner (no page number on first page). 11 12 Appendix B: Peer Evaluation Please allocate 100 points across all the members of your team apart from yourself to reflect your assessment of their individual contributions to the team effort. I will treat your assessments as confidential. Your name: ___________________ Team-member name: Contribution: 1. _____________________ _____ 2. _____________________ _____ 3. _____________________ _____ Total: 100 In the space below, provide some summary comments that can be fed back to each of your team members: Greatest Strength 1. ________________________________________________________________ ________________________________________________________________ 2. ________________________________________________________________ ________________________________________________________________ 3. ________________________________________________________________ ________________________________________________________________ Areas for Improvement: 1. ________________________________________________________________ ________________________________________________________________ 2. ________________________________________________________________ ________________________________________________________________ 3. ________________________________________________________________ ________________________________________________________________ 15 10/21 Tues. 17 Section 5 Case: Disney's The Lion King (A): The $2 Billion Movie (GC) 10/23 Thurs.. 18 ELC: Leadout/ Myers Briggs 10/28 Tues 19 Case: Electronic Arts in Online Gaming (GC) Section 5: Video Case - General Motors: Driving the World from Detroit? 10/30 Thurs. 20 Section 5 Case: Cisco (GC) 11/4 Tues 21 Lecture/Discussion: Internationalization (HIH: 8) Section 6 Case: Jollibee Foods Corp. (A): International Expansion (GC) 11/6 Thurs.. 22 ELC: International Negotiations 11/11 Tues. 23 DUE/ Group Planning Time 11/13 Thurs. 24 Outline of Company Analysis and Issue Review Session GETTING INSIDE THE FIRM: MANAGING SUBSIDIARIES AND PEOPLE Section 7: Video Case - The E-Bay Effect/ Group Planning Time 11/18 Tues. 25 Section 7 Case: Cirque du Soleil/ Group Planning Time 11/20 Thurs. 26 11/25 Tues. 27 Lecture/Discussion on Leadership, Decisions (HIH: 11, 13) Section 8 Case: Euro Disney Group Planning Time FINAL EXAM REVIEW SESSION 11/27 Thurs. PARTS 1b AND 1c OF GROUP WRITTEN STRATEGY ANALYSIS DUE (See Appendix A) Thanksgiving 12/2 Tues. 29 Group Planning Time 12/4 Thurs.. 6 Short Company Analysis Presentations 6 Short Company Analysis Presentations 12/10 - 17 Final 4:30 to 6:30 Section 15097R It is your responsibility to verify this date and time. 8:00 Class Final Dec 16 4:30 to 6:30 2:00 Class Final Dec 11 2:00 to 4:00 16 CP = reading in the Course Package; HIH = reading in text; V = video case Group Case Presentation and Challenge Cases (GC) Group Section Case 1 2 3 4 5 6 7 8 9 10 11 12 Total 2 Wal*Mart Stores P C C 3 3 Adolph Coors in the Brewing Industry P C C 3 3 Coca-Cola versus Pepsi-Cola The Soft Drink Industry P C C 3 4 Catepillar P C C 3 4 Leadership Online (A): Barnes and Noble versus Amazon.com C C P 3 5 Newscorp P C C 3 5 Disney's The Lion King (A): The $2 Billion Movie C P C 3 5 Electronic Arts in Online Gaming C C P 3 5 Cisco P C C 3 5 Jollibee Foods Corp. (A): International Expansion C C P 3 5 Cirque du Soleil C C P 3 8 Euro Disney C C P 3 Total = 3 3 3 3 3 3 3 3 3 3 3 3 Where: P = Present, C = Challenge