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MBA 581 Strategic Management
Winter Semester 2004 Instructor: Mark H. Hansen Office: Phone: 773 TNRB 422-4362 Section 1 Class Time: TTH 9:30-10:50 Room: 220 TNRB E-mail: mh_hansen@byu.edu MBA581/Syllabus-Winter-04-Section 1
Office Hours: 1:00 – 2:00 pm TTH I. Course Description
The purpose of this course is to help students understand the concept of competitive advantage so that they can help firms achieve and sustain competitive advantage. Above-normal economic returns are the intended result of competitive advantage. Thus, this course is about helping firms achieve superior economic returns—not just surviving. The subject matter of this course will expose students to different approaches of explaining and analyzing the competitive situation a firm faces. To accomplish this, we will adopt the point of view of the general manager of a firm, although many of the concepts apply to other levels of management as well. The approaches presented in the course will allow students to analyze a firm's situation and recommend courses of action that will improve the competitive position of the firm. The course will consist of traditional lecture and discussion, case analysis, and student group work. You will be required to apply theory and techniques from other business disciplines in analyzing and formulating strategies in response to the cases we will study. Cases often contain ambiguous and incomplete information, as do most ‗real-life‘ situations. Managers are called upon to make important decisions in the face of ambiguity and uncertainty. This ambiguity is a significant part of the value of the case method. Effective communication of ideas will be imperative in the course. The best ideas in the world are of little value if they cannot be communicated. Lively class discussions of ideas and recommendations will make the class more enjoyable and more informative. Critics of management education sometimes argue that management is nothing more than applied common sense. This course will help you realize that there is more to management than common sense. Several different models and frameworks will be introduced which will allow you to analyze competitive situations and arrive at conclusions that go well beyond mere common sense. However, these conclusions should never be at odds with common sense.
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II. Course Objectives In addition to the academic objectives listed below, it is my fervent hope that you will be able to use the things we learn in this class in personal, family, and church relationships. Many of the principles and models we will discuss can and should be applied in these relationships. To this end, and consistent with the mission of Brigham Young University, we will endeavor to ―...provide an environment enlightened by living prophets and sustained by those moral virtues which characterize the life and teachings of the Son of God.‖ (The Mission of Brigham Young University, 1995). Therefore, we will occasionally look to the scriptures and the writings of prophets. I strongly encourage you to raise questions about the consistency between what we are learning in class and gospel principles. One area of potential contradiction that I hope you will be able to reconcile is the difference between the interests of the firm and the interests of the consumer. Traditional economic models indicate that consumers are best off in nearly perfectly competitive markets. In such a market, firms earn only normal economic profits. This class is all about helping firms earn above-normal economic profits, or, in other words, helping firms avoid nearly perfectly competitive markets. Students in the past have wondered if we should be in the business of teaching firms how to avoid letting the markets they serve become nearly perfectly competitive. Each student needs to resolve this apparent paradox to his or her satisfaction. My intent is that your exposure to strategy will be as rigorous as that at any other university. However, your exposure to strategy will be based on a foundation of moral principles consistent with the gospel of Jesus Christ. The academic objectives of the class are listed below. Please note that the attainment of these academic objectives, with appropriate modification, will serve you well in all other areas of your lives. 1. Each student should be able to analyze the competitive situation facing a firm and make recommendations that will help the firm achieve and sustain competitive advantage. Each student should be able to apply analytical techniques from finance, accounting, organizational theory, organizational behavior, marketing, economics, and related business disciplines. Each student should be able to persuasively communicate his or her analytical conclusions, both verbally and in writing.
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3 4. Students should develop an appreciation for the responsibilities and potential influence of executives. Students should also develop an understanding of the importance of integrity in business and all of life.
III. Text & Reading Materials Required: Case Packet at the BYU Bookstore Articles that can be accessed through the BYU Lee Library Access to the Wall Street Journal or Fortune Magazine Directions for Accessing HBR Articles You can access articles in Harvard Business Review (and many other journals) by going to the BYU library home page: www.lib.byu.edu/hbll/ and clicking on the ―Article Indexes‖ tab along the top. Then click on the following items in sequence: Alphabetical List of Periodical Indexes Business Source Premier (EBSCO) "Advanced Search" (tab/menu item along the top of the page) Search for the desired article by listing words for author, title, and/or journal title combinations in the search fields. Example: Type ―porter‖ in the first field and select AU Author; then type ―strategy‖ in the second field and select TI Article_title; then type ―harvard business review‖ in the third field and select ―SO Journal_name.‖ The resulting search list includes the first HBR reading, ―What is Strategy?‖ by Michael Porter. 5. Click on search to get a list of articles fitting the criteria you specify. 6. You may read articles on-line, download, or print. 1. 2. 3. 4.
IV. Grading Grades for the course will be computed as follows:
Mid-term Exam ............................ Final Exam ..................................... Individual Semester Paper ........... Strategic Analysis Project ............ Participation .................................. A. Exams
20% 15% 15% 30% 20%
4 The exams will consist of multiple choice and short answer questions. Multiple choice questions will be based on the articles and other material presented in class. Short answer questions will be based on brief cases (1-2 pages). You will be asked to respond to five or six questions based on the cases. B. Individual Semester Paper We will read and discuss three papers dealing with our responsibilities concerning material wealth and the poor. One of these papers, entitled ―Wealth and Poverty‖ by Richard E. Johnson, Ph.D., a sociology professor at BYU, is considered by many to be provocative. The other two papers are messages from general authorities. We will spend a day in class discussing these articles. Students will write a five-page, double-spaced paper in response to these readings and discussion. The first two pages of the paper should be dedicated to addressing one or two of Johnson‘s points with which you either agree or disagree. The final three pages of the paper should describe your personal philosophy about wealth generation, accumulation, and distribution. The papers will be graded based upon: 1) the soundness of the reasoning employed to either agree or disagree with Johnson, and 2) the strength of your personal philosophy. My purpose in having you read these papers is to cause you to think seriously about your rights and responsibilities relating to the material wealth that you will likely obtain in this life. This is an exercise that students have appreciated in the past. In fact, some have written that the experience has significantly changed their views.
C. Strategic Analysis Project Groups of five or fewer people will be formed for this project. Each group will choose either a live project (a real company with a real issue) or an archival project. Those choosing an archival project will examine a significant strategic action that has been announced within one year‘s time by a large public company. Those choosing an archival project should choose a company large enough to attract media attention so that information gathering will be possible. I strongly encourage you to choose a live project. Students have had very positive experiences in the past. Many have stated that the live projects were the most rewarding experiences of their college career. I will have several live projects from which you can choose, or you can do a project for a company with which you are acquainted. Typically the live projects have dealt with an important strategic decision faced by the company such as introducing a new product or service, buying another business, or some other strategically significant issue.
5 Whether you do an archival or a live project, the analysis should include all the relevant concepts and frameworks that are covered in class. You need to consider the likely response of customers and competitors to the action being analyzed. In the end, the strategic analysis should present a very convincing case for the likely outcome of the strategic action—either success or failure. You will be asked to turn in an interim report of your analysis during the semester. This interim report will be graded. I will also give feedback on the report. We will take the necessary class time to discuss the project throughout the course. The grading of the project will consist of three elements: the interim report, the final written report, and an oral presentation. The project constitutes 30 percent of the course grade. This 30 percent will be allocated as follows: 10 % to the interim report, 10% to the final written report, and 10% to the oral presentation. The final written report is due at the time of the oral presentation. There will be a group evaluation form completed by each member of each group. If a group member is identified as not having carried a reasonable share of the load, that person‘s grade on the project will be adjusted. This adjustment has cost students a whole letter grade in the past. Group members have an obligation to be candid in this evaluation. The written work for this project must be double-spaced with the pages numbered. Also, you must include citations and a references page so that your sources could be further examined if needed. No page limit or minimum will be imposed. Just bear in mind that you should be writing for an executive audience that highly values efficient writing.
D. Class Participation The class participation points for the course will be based on a combination of attendance, verbal participation, quizzes, and writing assignments. Attendance will figure into your participation grade as follows. If you very seldom miss class but seldom speak in class, you will receive roughly 70 percent of the participation grade. If you often miss class but speak regularly when you do attend, you will likewise receive roughly 70 percent of the participation grade. During case discussions you should be prepared to carry the discussion for several minutes at a time if called upon to do so. My hope as an instructor is that we will have case discussions marked by thought provoking comments, occasionally punctuated with
6 lively banter. Disagreement can be a healthy thing if the discussion remains civil and respectful. Our discussions should always lead toward a better solution. Quality, as well as quantity, of in-class comments will be considered in assigning participation points. The success of the case method as a pedagogy depends on the preparedness of both the instructor and the students. I commit to you that I will be prepared. My expectation is that you will be prepared as well. You should also come to class prepared to discuss the assigned readings in depth even though we may not discuss every assigned reading. The participation portion of your grade will be dependent on your preparedness as demonstrated by what you say in class. Please bear in mind that if you don‘t speak out in class I have no way of knowing whether or not you are prepared. I won‘t know if your silence is due to a shy personality or to a lack of preparation. We may have several quizzes throughout the course if it becomes apparent that students are not coming to class prepared. These quizzes will then become part of the participation grade. There will also be small assignments given periodically that will be part of the participation grade. You are responsible for letting me know when you will be gone. You need to let me know before your absence if you want to be able to make up a quiz or assignment.
V. Preventing Sexual Harassment Title IX of the Education Amendments of 1972 prohibits sex discrimination against any participant in an educational program or activity that receives federal funds. The act is intended to eliminate sex discrimination in education. Title IX covers discrimination in programs, admissions, activities, and student-to-student sexual harassment. BYU‘s policy against sexual harassment extends not only to employees of the university but to students as well. If you encounter unlawful sexual harassment or gender based discrimination, please talk to your professor; contact the Equal Employment Office at 422-5895 or 367-5689 (24-hours); or contact the Honor Code Office at 4222847. VI. Students With Disabilities Brigham Young University is committed to providing a working and learning atmosphere which reasonably accommodates qualified persons with disabilities. If you have any disability which may impair your ability to complete this course successfully,
7 please contact the University Accessibility Center (422-2767). Reasonable academic accommodations are reviewed for all students who have qualified documented disabilities. Services are coordinated with the student and instructor by the UAC Office. If you need assistance or if you feel you have been unlawfully discriminated against on the basis of disability, you may seek resolution through established grievance policy and procedures. You should contact the Equal Employment Office at 422-5895, D-282 ASB. VII. Academic, Professional, and Personal Integrity Brigham Young University enjoys a reputation for developing graduates with high levels of integrity. This reputation draws recruiters to our campus and is therefore something to be protected and nurtured. Most students come to this university already possessing this integrity. However, it is important that academic activities maintain, support, and promote integrity. To that end, several issues deserve attention. First, academic work must never be presented as one‘s own if the work is not, in fact, one‘s own. When the work of others is incorporated into a paper, proper credit must be given to the creator of the work. Second, groups should not be abused by shirking or free loading. Groups can facilitate learning in many valuable ways. However, they can also easily be abused. It is okay for group members to cover for one another occasionally due to illness or other legitimate conflicts. Intentional and avoidable shirking are ethical breaches that should not be tolerated. As a practical matter, shirkers are quickly spotted and labeled in organizations. Students should be aware of the spirit of the law regarding group work. Groups should not become merely work allocation mechanisms. The idea behind a group assignment is to facilitate learning through interaction. Allocating specific work to group members is acceptable, even desirable. But, the work should then be combined, discussed, and improved by the group. Third, the way we treat others, both in their presence and their absence, is a very real reflection of our integrity. We must maintain a respectful atmosphere in the classroom at all times. This does not mean that we cannot disagree. On the contrary, disagreement can be enlightening in an atmosphere of respect. Finally, we should become more aware of the importance of our integrity in all settings. This includes developing an implicit consideration of the ethical implications of our actions. This also includes coming to a realization that having integrity is not just a moral or religious issue. Our integrity, or the lack of it, has important professional and societal consequences.
8 Strategy is often referred to as the search for economic rents. This search involves many decisions. In this sense, strategy is all about decision making. My hope is that we will learn to make decisions that reflect a high level of integrity. Business decisions should be guided by the same morals that guide other decisions we make in life. Please, never be guilty of justifying a questionable decision or action by saying, ―It‘s just business.‖
9 Course Outline Date Tues Thurs 1-6 1-8 Topic Introduction – Why Strategy? Economic Context of Strategy & Competitive Advantage Assignment What is Strategy? (Porter, HBR 1996) What’s Wrong with Strategy? (Campbell & Alexander, HBR, 1997) How Competitive Forces Shape Strategy (Porter, HBR, 1979) Charles Schwab Corp. (A) 9-300-024 *(S.A.P Proposal Due by 5:00 pm)* Competing on Resources: Strategy in the 1990’s (Collis & Montgomery, HBR, 1995) Intel Corp.: 1968-97 9-797-137 The Right Game: Use Game Theory to Shape Strategy (Brandenburger & Nalebuff, HBR, 1995) Ready to Eat Breakfast Cereals 9-795-191 The Superefficient Company (Hammer, HBR, 2001) Swarm Intelligence: A Whole New Way to Think About Business (Bonabeau & Meyer, HBR, 2001) IBP and the US Meat Industry 9-391006 Discovering New Points of Differentiation (MacMillan & McGrath, HBR, 1997) Ford Motor Company: Dealer Sales & Service 9-690-030 *S.A. Project Interim Report Due*
Tues Thurs Tues
1-13 1-15 1-20
Industry Analysis Case #1 Firm Resources
Thurs Tues
1-22 1-27
Case #2 Competitive Dynamics
Thurs Tues Thurs
1-29 2-3 2-5
Competitive Dynamics Exercise Case #3 Competing on Efficiency (Cost)
Tues Thurs
2-10 2-12
Case #4 Competing on Differentiation
Tues Thurs Tues
2-17 2-19 2-24
Monday Instruction- No Class Meeting Case #5 Mid-term Exam Review
10 Thurs Tues 2-26 3-2 Mid-term Exam Corporate Level Strategy From Competitive Advantage to Corporate Strategy (Porter, HBR, 1987) Jack Welch: GE‘s Revolutionary 9394-065 Are You Paying Too Much for That Acquisition? (Eccles, Lanes, & Wilson, HBR, 1999) Your Best M&A Strategy (Rovit and Lemire, HBR, 2003) Cisco Systems, Inc: Acquisition Integration for Manufacturing OIT26 Greed, Selfishness, & Overindulgence (Christensen, Ensign, May 1999) Wealth & Poverty (Johnson, 1994) The False Gods We Worship (Kimball, Ensign, June, 1976) Distance Still Matters: The Hard Reality of Global Expansion (Ghemawat, HBR, 2001) British Sugar in China 9-599-059 Collaborative Advantage: The Art of Alliances (Kanter, HRB, 1994) SAP America 9-397-057 *Personal Papers Due* Why Incentive Plans Cannot Work (Kohn, HBR, 1993) Rethinking Rewards (Perspectives in HBR, Nov-Dec, 1993) Robert Shapiro and Monsanto 9-801426
Thurs Tues
3-4 3-9
Case #6 Mergers & Acquisitions
Thurs Tues Thurs
3-11 3-16 3-18
Case #7 Guest Speaker Comp. Adv. & Social Responsibility
Tues
3-23
International Strategy
Thurs Tues Thurs Tues
3-25 3-30 4-1 4-6
Case #8 Cooperative Strategies Case #9 Organizational Structure & Control
Thurs Fri
4-8 4-16
Case #10 Final Exam 7:00-10:00 am