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Indian Institute of Management Bangalore

Corporate Strategy (CorpStrat)


EPGP Elective (3 credits); Term IV; Instructor: Srinivasan R (CSP)
Introduction
This course is offered for students who seek advanced exposure to corporate strategy. This course
(CorpStrat) will build upon your core course, Competition & Strategy (C&S), which dealt with
strategies for single business firms. The principal focus of this course will be the strategic issues that
relate to firms operating in more complex, multi-dimensional environments. The course will seek to
provide students with in-depth understanding of how multi-business firms create and appropriate
value.
The course introduces students to issues of corporate strategy, managing business houses, vertical
integration, diversification, strategic alliances & joint ventures, and mergers & acquisitions
strategies. This course does not explicitly focus on internationalization and globalization by firms,
though most sessions deal with international firms/ strategies in the context of other corporate
strategy decisions.
Pedagogy
The dominant pedagogy for this course would be the case method. Rigorous analysis of cases
provides opportunities to simulate real world inside the classroom, as well as enabling
participative learning. Lecture-discussions would elucidate and summarize concepts and theories.
Student case projects also provide you with opportunity for deeper analysis and exploration of
multi-business strategies.
The course evaluation would have two components:
1. Project: 40%
2. End-term examination: 60%
You already have the textbook prescribed to you for the Competition & Strategy course:
Contemporary Strategy Analysis by Robert M Grant (7th Ed). We will continue to use that as one of
the textbooks for this course as well. In addition to that, the text Takeovers, Restructuring and
Corporate Governance by Weston, Mitchell, and Mulherin, (Pearson Education) is issued to you.
Projects
As part of the CorpStrat course, you are expected to work in small groups (group size depends on
enrollment in the course) and study an Indian multi-business firm. The purpose of the project is to
understand the corporate strategy of the firm, appreciate the challenges posed by the business
environment, and analyze how the firm is responding/ should respond to those.
Please choose an Indian company (a publicly listed company should help you source sufficient data)
that operates in multiple businesses. Document its diversification strategy over time and describe
how it has managed its portfolio of businesses. Elaborate on the dominant means of diversification
by the firm through strategic alliances, joint ventures, mergers & acquisitions, or in-house
development. Critically analyze the value the company has added by leveraging its corporate
resources and advantage.
Your report should highlight how you perceive the changes in the relevant business environment,
and what the company is/ should be doing. Your report should also contain your key learning from
the analysis that has implications for both the company, and corporate strategy, in general.

Schedule
Module 1: Introduction to corporate strategy
Readings:
From competitive advantage to corporate strategy
Creating corporate advantage
Corporate strategy: The quest for parenting advantage
Session 1: Understanding a firms corporate strategy and the concept of corporate advantage
Case: None
Session 2: Building corporate advantage
Case: Monsantos March into Biotechnology (A)
Assignment questions
1. Why did Monsanto decide to pursue biotechnology?
2. Evaluate the approach taken by Hanley and Schneiderman to build internal capabilities for
biotechnology at Monsanto. What could they have done differently?
3. Identify and discuss the pros and cons of different ways in which Monsanto could obtain
external knowledge in biotechnology.
4. Why did Monsanto choose BST as the first product to pursue? Do you agree with this
choice? Why / why not?
5. Should Monsanto organize its biotechnology R&D by function or by market? Why?
6. What direction should Monsantos biotechnology research take in the future?
Module 2: Managing a portfolio of businesses
The nature of diversified business groups: A research design and two case studies
Why focused strategies may be wrong for emerging markets
The right way to restructure conglomerates in emerging markets
Chapter 17 (Grant)
Session 3: Role of the corporate office
Case: RPG Enterprises, 1995
Assignment questions:
1. Is it advantageous for a company to be part of RPG Enterprises?
2. Does the RPG Enterprises reputation help the group companies in any way?
3. How is this changing after 1991?
4. Evaluate the restructuring plan that Harsh Goenka has put in place.
Readings:

Session 4: Managing business groups in emerging economies


Case: The House of Tatas, 1995: The next generation (A)
Assignment questions
1. Which, if any, of the following initiatives undertaken by Ratan Tata do you think were good
ideas Creation of a group brand, building of equity interlocks among the Tata companies,
Sale of a part of Tata Industries Limited to the Hong Kong based Jardine Matheson Group,
and Revitalization of the Tata Administrative Services?
2. What do you think of some critics opinion that Ratan Tata was moving the group companies
in exactly the opposite direction from where it should have been going?

Module 3: Vertical Integration & Diversification


Readings:
How business corporations grow
Is vertical integration profitable?
Manufacturing: The new case for vertical integration
Skate to where the money will be
To diversify or not to diversify?
Why diversify? Four decades of management thinking
How Diversified should Indian Business Houses be?
Chapter 14 & 15 (Grant)
Session 5: Growth through vertical integration & Diversification
Case: None
Session 6: Introduction to Outsourcing
Case: Strategic outsourcing at Bharti Airtel Limited
Assignment questions:
1. What must Bharti do well to succeed in the Indian mobile phone market? What are Bharti's
core competencies?
2. Do you think Bharti should enter the outsourcing agreements outlined by Gupta? What do
you see as advantages and disadvantages of such agreements? How do the different
outsourcing agreements work towards building these core competencies?
3. If you were Bharti, what major concerns would you have about entering an outsourcing
agreement with IBM? With Ericsson, Nokia, or Siemens?
4. How would you structure the agreements to address your concerns and capture any
advantages you have identified? What governance mechanisms would you design for the
agreements?
5. Assume the role of IBM or Nokia. What major concerns would you have about entering an
agreement with Bharti? How would you structure the agreement and the governance
mechanisms?
Session 7: Diversification strategy
Case: Asahi Glass Company: Diversification strategy
Assignment questions:
1. How successful have AGC diversifications been?
2. Did the company need to diversify? Did it choose appropriate businesses? The correct mode
for diversification?
3. What should AGC do with its electronics business today?
Session 8: Managing vertically integration/ diversification (growth)
Case: Mahindra Powerol: Powering entrepreneurial growth within a corporate group
Assignment questions:
1. Critically analyze Powerols business model and elucidate how it helped Powerol secure and
sustain its competitive advantage?
2. How has Powerol responded to the saturating/ shrinking telecom business opportunity? Do
you believe that such a diversification strategy would be sustainable? Which of the
resources that Powerol acquired/ possessed during the telecom market evolution, can they

leverage as they forward integrate into services? Do they need to build/ acquire new
capabilities?
3. How does Powerol achieve its growth aspirations/ sustain its growth trajectory? Should it
change its primary business model?
Session 9: Managing vertically integration/ diversification (acquisitions)
Case: Havells India: The Sylvania acquisition decision
Assignment questions:
1. Does the proposed acquisition make strategic sense for Havells? Why or why not?
2. What are the major risks associated with this acquisition? Can these be managed, given the
differences in product mixes between Havells and Sylvania?
Session 10: Managing a vertically integrated firm
Case: Sharp Technology: Technology strategy
Assignment questions:
1. Why has Sharp been successful for so long?
2. Is Sharp today an end products or a components company?
3. Should Sharp enter into the Intel and Apple joint ventures?
4. How is Sharp able to coordinated and integrate activities across the corporation?
Module 4: Alliances and joint ventures
Readings:
When to ally and when to acquire
Launching a World-class Joint Venture
Competing in Alliance Constellations: A Primer for Managers
Chapter 15 (Grant)
Session 11: Alliances as organizational forms
Case: Corning: A network of alliances
Assignment questions:
1. How appropriate is Houghtons use of partnerships as a means of achieving his strategy?
What benefits and risks do you see? What advice would you offer him in general about
establishing alliances?
2. What implications will the concept of Corning as an evolving network have on the firms
management practice?
3. What are the criteria for evaluating the three proposals before the management
committee? How do the proposals meet these criteria?
4. What are your specific recommendations to the management committee about the three
proposals before them?
Session 12: Managing alliances
Case: Handspring Partnerships
Assignment questions:
1. Rank order the importance of Handsprings various partnerships. What criteria did you use to
rank the partnerships and why? How important were the relationships of Handsprings
founders to their ability to form partnerships? With respect to the form and use of

partnerships, how was Handsprings position different from other start-ups? What are some
of the detrimental aspects of partnerships? How should a start-up avoid them?
2. What were the pros and cons to Handspring of licensing Palms OS? Should Handspring have
pursued parallel paths by developing their own OS, in addition to licensing Palms? Were
there special risks in the relationship with Palm? If so, what were they?
Session 13: Managing international joint ventures
Case: Xerox and Fuji Xerox
Assignment questions:
1. What role has Fuji Xerox played in Xerox.s global strategy? How do you expect this role to
change in the future?
2. Is Fuji Xerox a successful joint venture in 1990? How do you measure its performance?
Please be as concrete and specific as possible.
3. What were the key success factors in this alliance in the past? Do you expect these factors to
change in the future?
4. Consider the different options for reorganization listed in Exhibit 11. Select one option in
each functional area and be prepared to explain why you prefer it over the others.
Module 5: Mergers & Acquisitions strategy
Readings:
The Dubious Logic of Global Megamergers
Building Deals on Bedrock
Why do firms merge/ acquire?
Chapters 6, 7 & 8 (WMM)
Session 14: Merger motives
Case: Idea Cellulars acquisition of Spice Telecom
Assignment questions:
1. Do you think Idea Cellular should go ahead with the acquisition of Spice Communications?
What are the motives for Idea to acquire Spice? What are the possible benefits for Idea
Cellular due to this acquisition?
2. What would be the role of TMI in the merged entity? Should Idea buy out TMIs stake as
well?
3. How should Idea & Spice handle the revised M&A guidelines issued by DOT?
Session 15: Mergers for international expansion and diversification motives
Case: Hindalcos acquisition of Novelis: The making of a giant
Assignment questions:
1. Was the merger a good decision? Should it have happened at all?
2. Did Hindalco pay a fair price for Novelis?
3. Now that the deal has happened, how much value addition has been done to both the
parties involved in the acquisition? How much of Novelis turn around can be attributed to
Hindalco? How much value has been added to Hindalco by Novelis?
4. Has Hindalco eroded the value to its shareholders?
Session 16: Financial motives of mergers
Reading: Chapters 9 & 10 (WMM)

Case: Hanson 1990


Assignment questions:
1. How would you describe the corporate strategy of Hanson?
2. What kind of firms would Hanson acquire?
3. Do you believe that Hanson itself is an acquisition target? Justify.
Session 17: Due Diligence process and practice
Reading: Chapters 13 & 22 (WMM)
Case: None
Session 18: Divestments
Reading: Chapter 11 (WMM)
Case: Saatchi and Saatchi Company, PLC: Corporate Strategy
Assignment Questions:
1. Why was Saatchi and Saatchi successful for long?
2. What should Dreyfus do now? How would you evaluate the options in front of Dreyfus and
Saatchi and Saatchi? What are the risks with Zenith?
Session 19: Takeover defenses
Reading: Chapter 19 (WMM)
Case: Philip Morris Companies and Kraft, Inc.
Assignment Questions:
1. How did the stock market assess Philip Morriss $90 per shard bid for Kraft?
2. What is the impact of Krafts restructuring plan on the takeover contest?
3. What is the value to shareholders of the restructuring proposed by Kraft?
Session 20: Post-merger integration
Reading: Chapter 22 (WMM)
Case: Tata Tea Ltd. and Tetley, PLC (A)
Assignment Questions:
1. What are the challenges in reaping the synergies in the merger?
2. What should be the priorities for Khusrokhan amongst the integration problems? Which
ones should he tackle first? Why?