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The University of Texas at Dallas BPS 6310 STRATEGIC MANAGEMENT Spring 2006

Professor Sumit Majumdar Office: (972) 883 4786 majumdar@utdallas.edu SOM 3.433 Office Hours: By appointment Objectives of the Course: • • • To develop analytic skills to identify key issues and formulate appropriate strategies for complex business situations. To understand how to analyze industry dynamics To understand how to respond to competitive challenges & improve corporate performance.

Main thrust of course and short outline: To Understand How to Achieve Sustained Competitive Advantage § § § § § § The basic purpose of strategy is to take a series of decisions and make a series of moves which are designed to achieve sustained competitive advantage. One must relate moves back to outcomes, that is the extent to which these moves actually affect business performance. Ultimately business performance is based on the performance achieved in competitive domains, so a great deal of strategic thinking is all about understanding how to compete. This course focuses on the many competitive moves that businesses make and the types of analyses required to make these moves effective. You will learn how to undertake an analysis of the industry environment and an analysis of a company’s internal resources. The main moves that flow from such an analysis are o positioning versus competitors in terms of the cost and quality of products, o positioning in terms of the scope of businesses classified as vertical or horizontal integration, o positioning with respect to innovation. The basic premise of the course is that making winning moves depends on finding profitable patterns of activities or business models that meet customer demands for solutions, and doing so repeatedly.

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There are human resources issues to implement strategy and the question of global markets. There are IB and OB classes covering these topics and this class will not go into these issues. Nevertheless, we will continuously address issues of strategy implementation as we analyze the various concepts and the cases that have been assigned for the class.

There are seven broad areas that are covered: What is Strategy? Performance: the Key to a Successful Strategy Competitive Dynamics: Strategy Not Done in Isolation Inflection Points: The Value of “Getting it” Early SWOT: Matching External Opportunities & Threats with Internal Strengths and Weaknesses How to Do Industry and Environmental Analysis Porter’s Five Forces Industry Boundaries The Analysis of Social and Political Factors Stakeholder Analysis How to Analyze a Company's Resources Resources, Capabilities, and Competencies The Need to Replicate Successes Continuously Building Capabilities Organizational learning How to Position a Company within an Industry Generic Strategies: Low Cost and High Quality Strategic Groups The Broad Basis for Segmentation Heterogeneity as Source of Competitive Advantage Company Positioning, Mergers and Acquisitions and Corporate Strategy Scope of the Firm Portfolio management New Trends Innovation and Company Positioning Finding and Exploiting New Opportunities Forecasting Technology Push and Market Pull Obstacles to Realization Conclusion: Making the Moves that Win Profitable Patterns or Models of Business Customer Demand for Solutions Searching the Value Chain

Learning Methods: This is both a concepts based and a case based class. Concepts: From readings, lectures and discussion. Group Case Analysis: Applying concepts to cases where key issues are identified and recommendations made. Strategic Analysis: Comparing companies to understand their strategies for sustained competitive advantage. § § § This is an integrative course that takes into account all the management functions including accounting, finance, marketing, and operations. Classes will profile a short situation that illustrates the main theme of the class. Each class also portrays the main concepts with which it deals with discussion of a case involving two businesses that have been long standing competitors, for example: o Intel vs. AMD, o Amazon.com versus Barnes & Noble, o Dell versus Gateway, o Best Buy versus Circuit City, o Charles Schwab versus Morgan Stanley, o Disney versus AOL Time Warner, o Monsanto versus Du Pont. The rivalry between these companies is a good starting point for a discussion of the class concepts. The aim is to deal with the case companies given the current situations they face when we discuss the cases and not at the time the cases were written.

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Please come prepared to participate in each class. Course materials can be found on the WebCT site. Regularly consult the site for information about the course. Reading Material: § § The required book for this course is “Alexander the Great’s Art of Strategy” by Partha Bose, Gotham Books, 2003. This book is available at the book store. On the WebCT site you will find chapters from a textbook that will be used for this class. The book has been written by a colleague, Alfred Marcus, for McGraw Hill called Management Strategy: Sustaining Competitive Advantage. That will be the main source for the conceptual strategy related text material. Some of the cases come from another book he is writing called Winning Moves: A Case Book that Marsh Publications will have published. The chapters and the case are available for downloading at the WebCT site.

§ § Grading:

Class participation: 20 points Group analysis of cases: 40 pts ~ The cases will be put on the WebCT Final exam case: 40 pts ~ The case will be handed out halfway during the term

Serial Number Class 1 Class 2

Date
th

Detailed Course Schedule Agenda Topic The Basics of Strategy Introduction What is the class all about? Concepts class What is strategy?

Details of Readings

11 January 18th January

Bose ~ Introduction and Chapter 1 Marcus ~ Chapter 1 internal Bose ~ Chapter 2 Marcus ~ Chapters 2 and 3 Intel versus AMD Barnes and Noble versus Amazon

Class 3

25th January

Concepts class

Industry analysis

and

Class 4 Class 5 Class 6

1st February 8th February 15th February

Case class Case class Concepts class

Market positioning and Bose ~ Chapter 5 and 9 mergers Marcus ~ Chapters 4 and 5 Dell versus Gateway Best Buy Circuit City versus

Class 7 Class 8 Class 9 Class 10 Class 11 Class 12

22nd February 1st March 15th March 22nd March 29th March 5th April

Case class Case class Case class Globalization Case class Concepts class

Charles Schwab versus Morgan Stanley Bose ~ Chapter 7 Marcus ~ Chapter 6 Walt Disney vs Time Warner Innovation, Bose ~ Chapters 6 and 8 entrepreneurship and re- Marcus ~ Chapter 7 invention Monsanto vs Du Pont Final case presentation

Class 13 Class 14

12th April 19th April

Case class Final class

Assignments: 1. Group analysis of cases: § For each class topic there are 2 case questions. You have to choose which particular firm’s approach you will take. I will ensure that the groups cover each of the firms equally. Groups meet before class time. § Each group is expected to develop a series of 4 to 6 Power Point overheads to answer one of the questions related to the case. The overheads should summarize your answers to the following detailed issues: § What is the main challenge the company faces? § How should it respond to this challenge? § How are its competitors like to react to what it does? § What is the outcome likely to be? § The overheads can be in the form of figures, tables, and diagrams. For each session, two groups will be called on to present their overheads to the class. After the first class I will list the groups that will start the discussion for each case class. § For the following class meeting, all groups should write a memo that answers the case question and hand in their overheads along with their memo. § Only if your group is not willing to include your name in its submissions, should you hand in your own memo and overhead the Class after the scheduled class. § If your group is called upon to present its answer to a case question to the class as a whole, use the overheads to get the discussion started. Be honest with the class about aspects of your answer about which you are unsure. Solicit the class’ help. The presenting groups should be prepared to talk for about 10 to 20 minutes. The rest of the class time will be devoted to class discussion. § As a member of the class, be sure to participate in these discussions. Think about what the presenting group has said. What do you think? Has the presenting group missed something? Are its ideas on target, or off? What can be done to strengthen the presenting group’s answer? 2. Memo: Recall that memos are due the class after the case is discussed. Appendices are permitted if you want to amplify or develop your points. Memos should have no more than 2 single-spaced pages of text excluding appendices. Below I have presented the elements of what would be in a good memo.
A Good Mem o To: • • • Current Challenge What is the problem/threat/opportunity? How have these been analyzed? What is the issue -- the negative assumption, the complication -- that necessitates action? What is the pivotal question that must be addressed? Why? Recommended Strategy What is the main action that should be taken to alleviate the problem you have identified? Why this action rather than some other? Did you consider alternatives? Why did you reject them?

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What moves should be made? These moves must be implementable? If there are internal or external barriers, if there are serious limitations, or constraints that might stand in the way of the moves you are advocating, how can they be overcome? Substantiate each element in the moves you are proposing? Try to be specific as specific as possible. Who should do what, how, and in what time period? How will other parties (competitors in particular) respond to these moves? Will their responses effectively neutralize the moves you are proposing and make them null and void? In the end, what difference will the moves you are recommending make? How likely are they to solve the problem you have identified? What problems will they create in their wake? Why do you think the strategy you are proposing should be carried out and what difference it would make? Who will be better off? In short run? In the long run? What are the uncertainties? What risk is involved?

Case Questions Intel and AMD Analyze the rivalry between Intel and AMD in terms of the need to find the right balance between exploiting strengths and exploring for new business opportunities. 1. What is the competitive challenge AMD faces from Intel? How should AMD fend off this challenge? Analyze the situation and give advice to management. or 2. What is the competitive challenge Intel faces from AMD? How should Intel fend off this challenge? Analyze the situation and give advice to management. Barnes and Noble and Amazon.com Analyze Barnes and Nobles’ and Amazon.com’s existing rivals, potential new entrants, the threat of substitutes, and the bargaining power of suppliers and customers. 1. Based on your assessment of Amazon.com’s customers, suppliers, competitors, etc., what is the competitive challenge that Amazon.com faces from Barnes and Noble? Analyze the situation and give advice to management. or 2. Based on your assessment of Barnes and Noble’s customers, suppliers, competitors, etc., what is the competitive challenge that Barnes and Noble faces from Amazon.com? Analyze the situation and give advice to management. Dell and Gateway Assess the resources, capabilities, and competencies that Dell commands in comparison to the resources, capabilities, and competencies that competitors like Gateway command. 1. Can Gateway build the resources, capabilities, and competencies to challenge Dell? As a management consultant, what would you tell Gateway to do? or 2. Does Dell have the resources, capabilities, and competencies to maintain an advantage in the long run? What should Dell do to counter the moves that competitors such as Gateway might make??

Best Buy and Circuit City Analyze how Best Buy reinvents itself to better combine low cost and differentiation than such competitors as Circuit City. 1. What does Circuit City have to do to catch up to Best Buy? How should it distinguish itself from Best Buy? or 2. As a management consultant, your role is to think through what Best Buy should do next. How should it reinvent itself again to assure that it will maintain an advantage over competitors like Circuit City? Morgan Stanley and Charles Schwab In light of U.S. financial scandals, analyze how Charles Schwab and Morgan Stanley Dean Witter have been repositioning themselves between being low cost and full service brokerages. 1. Assess the threat posed to Morgan Stanley by a competitor like Schwab. How should Morgan Stanley respond to this threat? or 2. Assess the threat posed to Charles Schwab by a competitor like Morgan Stanley. How should Charles Schwab respond?

Disney and Time Warner Assess the logic behind the acquisitions Walt Disney and Time Warner have made and assess the approaches they are taking to achieve synergy among their diverse holdings. 1. Time Warner’s ability to confront companies like Disney depends on how it manages its diverse holdings. Provide advice to management. or 2. Disney currently seems to be in a position where it can make gains on Time Warner. What should it do? Du Pont and Monsanto Analyze the ways in which du Pont’s strategy is different from Monsanto’s and assess the extent to which du Pont and Monsanto are likely to succeed. 1. What can Du Pont learn from Monsanto’s experience? What should it do to assure its long-term success? or 2. What moves should Monsanto now make? How will it meet the challenge from Du Pont?