David Collis Strategy Course Outline

Corporate Strategy Course Outline Harvard Business
School
David Collis
Day1IntroductionandCourseOverview
8:30AM9:50AM
CORP_STRAT:CorporateStrategySection01
AldrichHall210
TOPIC:INTRODUCTIONANDCOURSEOVERVIEW
Asanintroductiontothecourse,wewillconsiderwidelydifferentapproachestocorporatestrategy
withrespecttotheoptimalbusinessportfolioandorganizationdesign.Thereadingsprovidesome
examplesandanecdotestobeginthediscussion.Youmightalsoreviewyournotesoncorporate
strategyfromtheRCSTRATEGYmodulethatcoveredtheDisney,Pixar,andDanahercases.
Materials
Readings
AvailableuntilMay29,201411:59PM
CorporateStrategy_Syllabus2014
CorporateStrategy_FinalPaperGuidelines2014
CorporateStrategy_CourseOutline2014
CorporateStrategyEC2014_Introduction_Slides
Assignments
IntroductionandCourseOverview
1)Doeseffectivecorporatestrategyinvolvespinningoffbusinessesandstickingtothe
knittingasNewsCorp.andITThavedone,orleveragingacorecompetenceintonew
businesseslike3M(andDisney)?Why?Underwhatconditions?
2)IsitbettertostructureamultibusinessenterprisebydivisionsasSears(andDanaher)
hasdone,orbyfunctionsasMicrosofthasdone?Why?Underwhatconditions?
CollapseThursday,January30,2014
Thursday,January30,2014
Day2NewellRubbermaid
8:30AM9:50AM
AldrichHall210
MODULEONE:RESOURCESANDTHECONTINUUMOFCORPORATESTRATEGIES
Aftertheintroductorysession,wedivestraightintoamodulethatidentifiestheenduringlogicofall
effectivecorporatestrategiesandprovidesanopportunitytoapplythecoreframeworksofthecourse.
Westartbynotingthatitisvaluableresourcesthatunderpineffectivecorporatestrategies.Wethen
demonstratehowthoseresourcesandstrategiescanbearrayedalongacontinuumthat,simplistically,
extendsfromunrelatedtorelateddiversification,andhowwecansummarisecorporatestrategies
accordingtotheObjective,Advantage,Scope(OAS)framework.
Howdoweidentifyvaluableresources?
Underwhatconditionsaretheyvaluable?
Howdoresourcesdeterminethealignmentoftheotherelementsofcorporatestrategyalongthe
continuum?
Howcanwesuccinctlydescribeaneffectivecorporatestrategy?
BuildingontheRCmoduleonCorporateStrategy,thecourseidentifiesvaluableresources(popularly,
butincorrectly,termedcorecompetences)thatcanfunctionastheMickeyMousethataddsvalueto
thecorporateportfolio.BystudyingstrategiesatfirmsasdifferentasSilverLakeandTata,it
introducesacontinuum,rangingfromconglomeratesandprivateequityfirmstotightlyrelated
corporateentitiesandstartups,anddemonstratesthatthesamelogicofbetteroffandownership
appliestoeveryeffectivecorporatestrategy.Bylookingatcorporatestrategyaroundtheworldwecan
alsodemonstratethatthepresenceofmarketfailuresturnswhatappeartobepedestrianresourcesin
developedcountries,suchasmanagementtalent,intoasourceofvaluecreationacrossbusinessesin
emergingmarkets.Thisexplainsthepreponderanceofgroupsinsuchcountries.
Casesinthemodulealsoallowustostudythreeofthefourleverscorporationsusetocreatevalue
exploitingsynergyacrossbusinesses,changingthestrategyoftheindividualbusinessunits,and
allocatingresourcestomoreattractivebusinesses.Thelogicofanyeffectivecorporatestrategycan
thenbecapturedinacompanysstatementofitsobjective,scopeandcorporateadvantage.
TOPIC:EFFECTIVECORPORATESTRATEGY
BycomparingandcontrastingaperiodofsuccessfulcorporatestrategyatNewell,withthecompanys
laterstruggletocreatevalue,wewillidentifytheelementsofaneffectivecorporatestrategyandfinda
waytosuccinctlycapturethatinabriefstatementofthestrategysObjective,Scope,andAdvantage.
Materials
NewellRubbermaid:StrategyinTransition(HBS#704491)
Assignments
NewellRubbermaid
1)WhatwastheclassicNewellcorporatestrategy?Whydiditworksowell?
2)WhydidNewellchangecorporatestrategyinthelate90s?Didithaveanyother
alternatives?
3)HowdoyouevaluatethenewcorporatestrategyunderJoeGalli?Howbigastepchange
isthestrategy?Whatdoeshehavetochange?
4)WhatshouldNewellRubbermaiddonow?
CollapseWednesday,February5,2014
Wednesday,February5,2014
Day3AOL/TimeWarner
8:30AM9:50AM
AldrichHall210
TOPIC:SYNERGIESREALORAPPARENT
InwhatisstillthelargestcorporatemergerinUShistory,AOLandTimeWarnermergedin2000ina
dealworthnearly$200billion.Thedealhassincebeenidentifiedbysome(includingBloomberg
BusinessWeekandRupertMurdoch)astheworstmergerinUShistory.Wewillusethearguments
advancedbyanalystsinfavorofthemerger,andthenthoseadvanced(evenbysomeofthesame
analysts)infavorofthedemergertounderstandtheconditionsunderwhichrealsynergiesarecreated.
Materials
AOL/TimeWarner:ToMergeorDemerge?(HBS#707556)
Assignments
AOL/TimeWarner
1)ShouldAOLandTimeWarnerhavemergedin2000?Howcrediblewerethesynergies
theyidentified?
2)ShouldAOLandTimeWarnerhavedemergedin2006?Howcrediblearethegainsto
demergerthatareidentified?HowmuchfarthershouldTimeWarnergowithitsspinoffsif
AOLisdemerged?
3)WhydidAOLandTimeWarnermergein2000?
CollapseThursday,February6,2014
Thursday,February6,2014
Day4TPGChina
8:30AM9:50AM
AldrichHall210
TOPIC:CHANGINGSTRATEGYINTHEBUSINESSUNITS
WewillexaminethenewstrategyputinplaceataChineseshoeretailer,Daphne,byitsnewowner,
theprivateequityfirmTPG.Wewillfirstfocusonwhetherthereisavalidstrategiclogictothenew
businessmodeloffastfashion,andthenaskwhetherandhowcorporateentities(whetherpeor
publiccompanies)areabletoknowmoreaboutdeliveringthebeststrategyforabusinessthan
executiveswhorunthatbusinessfulltime.
Materials
TPGChina:DaphneInternational(HBS#813055)
Assignments
TPGChina
1)AsalimitedpartnerofTPGwouldyousupportthedealtoinvestinDaphne
Internationalin2009?
2)IsthenewstrategyproposedforDaphnebyTPGlikelytobesuccessful?Underwhat
conditionsisFastFashionaviablestrategyforretailerslikeZara?
3)Howcancorporateparents,whetherpeorpubliccompanies,knowmoreaboutthe
strategyforabusinessthanexperiencedexecutivesinthosebusinesses?
4)WhatleversdoesTPGhavetogetDaphnetoadoptthenewstrategy?
CollapseFriday,February7,2014
Friday,February7,2014
Day5InternationalManagementGroup
8:30AM9:50AM
AldrichHall210
TOPIC:OWNERSHIPANDAPPROPRIABILITYOFRESOURCES
In2001,InternationalManagementGroup(IMG)isthedominantcompanyintalentrepresentationand
sportsmarketing.Over40yearsunderitsfounderandCEO,MarkMcCormack,whoiscreditedwith
havingcreatedtheindustryofsportsmanagement,IMGhasexpandedfromathleterepresentationinto
ahostofotherarenasincludingproducingandbroadcastingtelevisionshows,operatingtraining
academies,andrepresentingmodelsandclassicalmusicartists.Wewillusethecasetodiscusswhether
thereisalogictoIMG'sbroadverticalandhorizontalscope,andexaminewhereownershipofthe
firms,asopposedtothetalents,uniqueresourcesvests.
Materials
InternationalManagementGroup(IMG)(HBS#702409)
RecommendedReadingCorporateStrategy:AResourceBasedApproach,Chapter2:
ResourcesandRents(pleasereadpages2755only)
Assignments
InternationalManagementGroup
1)WhatdoyouconsidertobeIMG'scorporatestrategy?
2)WheredoesthevalueintherelationshipbetweenclientsandIMGreside?Isitwiththe
agents?WithIMG?Elsewhere?
3)EvaluateIMG'svariousdecisionstoenternewareasorlinesofbusiness.Whatisthe
logicbehindthesemoves,andhowsoundisthislogic?WhatarethelimitstoIMG's
expansionintonewbusinesses?
4)Whatdoyouperceivetobethebiggestchallengesinstructuringanorganizationsuchas
IMG's?Howmightthesebedifficultiesbeovercome?
5)IfyouwereapotentialcompetitortoIMG,whatstrategywouldyoupursuetocompete
againstit?WhereisIMGmostvulnerabletoday?
Day6SilverLake
8:30AM9:50AM
AldrichHall210
TOPIC:PRIVATEEQUITYASACORPORATESTRATEGY
ThecasedescribesthefoundingandevolutionofSilverLakethefirstandmostsuccessfulprivate
equityfirmtospecializeinthetechnologysector.By2010,SilverLakeisfacedwiththedecisionof
whetherandwheretoexpandintonewsectors,newtypesoffinancing,ornewgeographies.Ifit
decidestogrowinternationally,inwhichcountriesshoulditinvestandhowshoulditenterthese
markets?Thediscussionenablesustounderstandwhich(ifany)arethevaluableskillsofprivate
equityfirms,andwhetherandhowthesecapabilitiestransferacrossgeographiesandsectors.
Materials
SilverLake(HBS#711420)
Assignments
SilverLake
1)WhatwerethehistoricreasonsforSilverLake'ssuccess?
2)InwhatdirectionshouldSilverLakeexpandtoday?why?whatunderlying
resourcesandcapabilitieswillyoursuggestionexpansionbuildon?
Geographically.
Newtypesofinvestmentwithintechnology;e.g.,venturecapital,growthcapital.
Additionalbusinesssectors;e.g.,sustainableenergy,infrastructure,retail;other.
3)Ifitgrowsgeographically,whichcountry/countriesshoulditenter?Whatstrategyfor
entryintoanewcountryshoulditadopt?
Day7CreatingaCorporateAdvantage:TheCaseoftheTataGroup
8:30AM9:50AM
AldrichHall210
TOPIC:GROUPSINEMERGINGMARKETS
ThecasedescribestheTatagroup,whichalthoughlargerandmoresuccessfulthanmany,isindicative
ofacommoncorporateforminemergingmarketsthediversifiedbusinessgroup(oftenwithfamily
ownership).Wewillinvestigatewhythisformoforganizationexistsinsuchcountries,butisless
commonindevelopedmarkets;thechallengesgroupsfaceastheireconomiesbecomeintegratedinto
theglobaleconomy;andhowsuchgroupsareorganizedtocreateshareholdervalueacrosssuch
disparatesetsofbusinesses.
Materials
CreatingaCorporateAdvantage:TheCaseoftheTataGroup(ISB005)
Assignments
CreatingaCorporateAdvantage:TheCaseoftheTataGroup
1)WhyhastheTatagroupbeensuccessful?Istherealimittothetypeofbusinessinwhich
itcansuccessfullycompete?
2)HowisTataorganizedtocreatevalueacrosssuchadisparatesetofbusinesses?Howis
thatdifferenttoaconglomerateintheUS(likeDanaherorGE)?
3)Whatchangeswouldyourecommendtotheroleofthecentre?Shoulditmakethe
subscriptionofitsservicesbygroupcompaniesmandatory?
4)WhyarebusinessgroupslikeTatacommoninemergingmarkets,butmuchless
commonindevelopedcountries?
5)Whatstrategicchoicesdosuchgroupsfaceastheireconomiesopenuptoglobal
competition,andliberalisedomestically?
Day8VideoLecture
8:30AM9:50AM
AldrichHall210
TOPIC:RESOURCESANDCORPORATESTRATEGY
Materials
VideoLecture
CorporateStrategy2014_ResourcesDelivered_Slides
RequiredReadingStrategiesofUnrelatedDiversification(HBS#705480)
Assignments
VideoLecture
ThelecturewillfocusontheRESOURCESthatcorporatestrategiesarebasedon.Itwill
identifytheconditionsthatmakeresourcesdistinctiveandvaluable,andwilloutlinea
resourcebasedstrategy.Inadditionthelecturewillintroducethecontinuumofcorporate
strategiesthatstretchfromrelatedtounrelateddiversifiers,andwillshowhowthatcontinuum
canbeinterpretedasextendingfromspecifictogeneralresources.
Theslidestoaccompanythevideolecturecanbefoundinthematerialssectionoftoday's
classontheLearningHub.
Therewillbenoclassonthisday.Insteadstudentscanwatchthestreamedvideolectureat
theirconvenience,andcanusethetimetobeginworkontheirpaperbyidentifyingthe
resourcesthatunderlietheirsubjectcompanyscorporatestrategy.AtwoslidePowerPointon
thattopicisduetobeemailedtoProf.Collisatdcollis@hbs.eduby6:00p.m.onWed.,Feb.
19th.
Day9ClassPresentations
8:30AM9:50AM
AldrichHall210
TOPIC:RESOURCESANDCORPORATESTRATEGY
Materials
ResourcesExample
ResourcesShortAmended
Assignments
ClassPresentations
AtwoslidePowerPointontheresourcesofthecompany,whichisthesubjectofyour
paper,isduetobeemailedtoProf.Collisatdcollis@hbs.eduby6:00p.m.onWed.,Feb.
19th.
Wewillusethisclassforthreepurposes.First,todiscussquestions,concernsorclarifications
arisingfromthevideolecture.Second,wewillexamineanumberofstudentanalysesoftheir
subjectcompanysresourcestoseehowthenotionofresourcescanbeappliedinpractice.
Third,wewillresolveanyissuesremainingfromearlierclasses.
Day10BirdsEye
8:30AM9:50AM
AldrichHall210
MODULETWO:THESCOPEOFTHECORPORATION
ThesecondmoduleinCorporateStrategyaddressestheissueofthescopeofthecorporationhowfar
canacompanyextenditsoperationintoadditionalmarkets.Thesemarketscouldbenewchannelsof
distribution,newproducts,newtechnologies,newgeographies,oradditionalsteps(whetherforwardor
backward)inthevaluechain.Aseverycompanyofeverysizehastodeterminethelimittoitsscope,
thismoduleincludesstartupsandsmallercompaniesaswellaslargediversifiedcorporations.
Thefirsttestofwhetheracompanyshouldexpanditsscopeintoanewmarketisthebetterofftestis
thereanimprovementtothecompetitiveadvantageofthenewbusiness?Thuswemustalways
understandwhatarethecompanysunderlyingresourcesandhowtheyeitherincreasethewillingness
topayorvolume,orreducethecostinthenewbusiness.
However,becausethereisalwaysacontractualalternativetokeepingthenewbusinessinsidethe
corporatehierarchy,wemustalsoconsidertheownershiptestisitcheapertoperformthenew
activityorbusinessinsidethefirmthanthroughsomeformofcontractualalternative?
Infact,tojustifyenteringanewmarketitmustbetruethattheNETofbetteroffandownershiptests
arepositivebykeepingthenewbusinesswithinthehierarchy.Inmanycases,thisoccurswhenthe
firmsresourcesdoaddvaluetothenewbusinessandthecostinsidethehierarchyislowerthaninthe
market.However,therearecases,typicallyinvolvingverticalintegration,whenthefirmisactuallynot
betteroffinthenewmarket(athirdpartyismoreefficientatthatactivity),buttheownership
advantageissohighbecausethecostofthemarkettransactionissohigh,thatitisvaluecreatingto
extendthescopeofthefirmintothatbusiness.
ThemodulebeginsbyexaminingverticalintegrationintheclassiccaseofBirdsEyeandthe
introductionoffrozenfoodsinordertoestablishtheprinciplesinvolvedinthetheoryoftransaction
costs.Itisthesethatdeterminetherelativecostofperformingactivitiesinsideacorporatehierarchy
andthroughmarketexchange,andsofocusourattentionontheownershiptest.Wefollowthisby
examiningthecontributionthatverticalintegrationhasmadetothesuccessoftheNewWorldinthe
globalwineindustry.
Thesecondpartofthemodulelooksatscopedecisionswithinabusiness.Amgenhastodecide
whethertoexpandfromnovelbiotechproductsintothesocalledbiosimilarmarket.Creehastodecide
whichemergingsegmentoftheLEDmarketisshouldpursue.Thesecasesbringattentionbacktothe
resourcesandthebetterofftest,butremindusthatweshouldneverforgettheunderlyingattractiveness
ofanynewindustrywetrytoenter.
Wethenshifttoconsiderwhatshouldbetheappropriatescopeofnewbusinessesaswelookatanew
onlinefashionretailerandanemergingtechnologythatthreatenstodisrupthighereducation
MOOCs.Aswellasdeterminingwhatisthecorrectscopeoftheseentitiesandthecriteriathat
determinesthatscope,wewillaskthequestionwhetherstrategymattersinsmallentrepreneurialfirms?
TheimpressiongiveninTEMandField3isthatstrategyisperhapsunnecessaryintherushtotest
MVPsandgiventheabilitytopivotandfailfast.Isthistrue?Ordoesstrategyactuallymattereven
moretoresourceconstrainedentitiesthathavetobeverycarefulabouttheirchoiceofscope?
TOPIC:VERTICALINTEGRATIONANDTRANSACTIONSCOSTS
Webeginthemodulethataddressesthescopeofthecorporationwithaclassicexampleofvertical
integrationthemakeversusbuydecision.BirdsEyeintroducesfrozenfoodtotheU.K.andhasto
establishafrozenfooddistributionchainfromthefarmandsea,totheretailerandtheconsumer.
Whichoftheactivitiesalongthevaluechain,fromfarming,freezing,storing,transportation,retail
distribution,etc.,shouldBirdsEyedoitself,andforwhichshoulditbuyfromothersonsomeformof
contractualagreement.Discussionofthealternativesatdifferentpointsinthevaluechainallowsusto
applyideasoftransactionscosteconomicstotheverticalintegrationdecision.Bytheendoftheperiod
BirdsEyesinitialdominanceoftheemergingindustryhaserodedasmerchantmarketsappearateach
stageofthevaluechain,anditisconfrontedwiththeneedtoreexamineitschoiceofscope.
Materials
BirdsEyeandtheU.K.FrozenFoodIndustry(A)(HBS#792074)
RequiredReadingWhenandWhenNottoVerticallyIntegrate,SloanManagement
Review,Spring1993
OrganizationalLimitstoFirmScope(pleasereadpages115147only)
BirdsEyeandtheU.K.FrozenFoodIndustry(B)(HBS#792078)
Assignments
BirdsEye
1)CriticallyexamineBirdsEye'schoicesofwhetherornottointegrateateachstageofthe
valuechain,specifically:a.BirdsEye'sdecisiontoowncoldstores;b.Itsdecisionnottoget
intopeaproductionitself,ortoownthefarmlandonwhichpeasaregrown;c.Itsdecisionnot
toownpeaharvesters,buttosignrepurchasecontractswithcooperatives;d.Itsdecisionnotto
manufacturedisplaycabinetsorrentthemtoretailstores.Whichofthesechoicesdoyou
considertobecompelling;and,whichnot?
2)HowdoBirdsEye'schoicesstackupagainstthetransactionscostslogicforvertical
integrationthatisdescribedinthearticlebyStuckeyandWhite?
3)Doesaverticallyintegratedproducerhaveacompetitiveadvantagein1982?Whatwould
yourecommendthatBirdsEyedo?
Day11GlobalWineWars
8:30AM9:50AM
AldrichHall210
TOPIC:VERTICALINTEGRATIONANDCOMPETITIVEADVANTAGE
Thecenturysoldwineindustryhasseenmorechangeincountrymarketsharesthanmost
manufacturedgoodsbusinessesinthelastthreedecades.ProducersfromtheNewWorld(Australiain
particular)havegainedshareagainstthetraditionalOldWorldproducers(Franceinparticular).We
willexaminethereasonsforthistransformationofamatureagriculturalbusiness,andtherolethatthe
structureoftheindustryindifferentcountriesplays.
Materials
GlobalWineWars:NewWorldChallengesOld(A)(HBS#303056casenot
availableforelectronicdownload)
GlobalWineWars:NewWorldChallengesOld(B)(HBS#304016casenot
availableforelectronicdownload)
Assignments
GlobalWineWars
1)Howhave"NewWorld"countriesandfirmsbeensosuccessfulinthewinebusiness?
Whyhave"OldWorld"producersfailed?
2)WhatshouldFrenchwineproducersdotorestoretheircompetitiveness?
3)Moregenerally,whatroledoesindustrystructureplayinthecompetitivenessofnations
inaglobaleconomy?
Day12Amgen
8:30AM9:50AM
AldrichHall210
TOPIC:SCOPEWITHINANINDUSTRY
KevinSharer,thenCEOofAmgenInc.,isconfrontedwiththedecisiontoenter(ornottoenter)the
emergingbiosimilarsbusinesstheanalogyofgenericsinthebiotechnologybaseddrugworld.This
wasnorunofthemilldecision;itrepresentedamajorshiftinscopeforAmgenfromfocusingpurely
oninnovationtoalsopursuingimitation.Moreover,itwascleareventhenthattheoutcomeofthat
decisionwhetheritwasagoodorbadchoicewouldnotbeknownformanyyears,butcould
significantlyinfluenceAmgensfuturefortunes.Weexaminethiscriticaldecisioninorderto
understandthefactorsthatdeterminetheappropriatescopeofacorporationwithinarelatedsetof
businesses.
Notethatthecaseprotagonist,KevinSharer,isnowaStrategyprofessoratHBSandtaughtsomeof
youlastyear.Hewillbeattendingclass!
Materials
AmgenInc.:PursuingInnovationandImitation?(A)(HBS#714424casedistributed
throughCourseDistribution)
AmgenInc.:PursuingInnovationandImitation?(B)(HBS#714426)
Assignments
Amgen
1)WouldyouadviseKevinSharertoenterthebiosimilarsmarketortostayout?
2)Whatfactorsareyoubasingyourdecisionon?Quantitativeorqualitative?Financial
returns?Industrystructureandattractiveness?Competitiveadvantage?Resourcesand
capabilities?Risk?Other?
NotethatestimatingthesizeofthemarketandAmgensprofitabilityunderthetwoscenarios
describedinthecasemightbeusefulinansweringthisquestion.
3)HowshouldSharerproceedifAmgendoesdecidetoenterbiosimilars?
CollapseThursday,March6,2014
Thursday,March6,2014
Day13Cree
8:30AM9:50AM
AldrichHall210
TOPIC:SCOPEWITHINANINDUSTRY
Cree,aworldleaderinLEDtechnology,isconfrontedwithdecidingwhichmarketitshouldpursue.It
hastochoosebetweengoingafterthebacklightingbusinessforflatscreentelevisions(socalledLED
televisions),and/ortopioneerthegenerallightingmarketforLEDsbyofferingitsownreplacement
LEDbulbstoconsumers.Whilequestionsoftechnologicalprogressandenvironmentalismimpactthe
choice,debatingthemeritsofthethreealternativesclarifiesthecriteriatobeappliedwhenexpanding
thescopeofthefirmintoadjacentmarkets.
Materials
Cree,Inc.:WhichBrightFuture?(HBS#711457casedistributedthroughCourse
Distribution)
Cree,Inc.:AnUpdate(HBS#711491)
Assignments
Cree
1)Asof2007,shouldCreepursuethetelevisionbacklightingorthegenerallighting
markets?Orshoulditgoafterbothmarkets?
o
Ifitpursuesgenerallightingandsellsitsownbrandofbulbshoulditgoafterthe
residentialorthecommercialmarket?Thereplacementorthenewconstruction
market?(UnderstandingthetotalcostofownershipfromExhibits8,9,and10should
beusefulinthisregard.)
2)Whatcriterialeadyoutomakeyourdecision?
3)IsyourchoiceaffectedbyforecastsaboutthefuturecostsandperformanceofLEDs?
Doyoubelievethoseforecasts?
CollapseFriday,March7,2014
Friday,March7,2014
Day14NastyGal
8:30AM9:50AM
AldrichHall210
TOPIC:SCOPEOFANEWBUSINESS
SophiaAmorusostartedNastyGalinherbedroomin2006.By2013ithasgrowntobeasuccessful
andcuttingedgeonlineretailerwithrevenueswellover$100million.AlongthewayMs.Amorusohas
madeanumberofdecisionsabouttheappropriatescopeoftheemergingbusiness.Inearly2014her
executiveteamisdebatingwheretogonextifthegrowthistocontinue.Thecaseletallowsdiscussion
ofthelinkbetweenresourcesandbusinessscope;thesustainabilityofcompetitiveadvantage;andthe
(un)importanceofstrategytostartupandentrepreneurialfirms.
Assignments
NastyGal
1)WhyhasNastyGalbeenasuccess?Willitcontinue?
2)ShouldNastyGalexpanditsscopeinanyofthepossiblewaysidentifiedinthecase?
Why?Whynot?
o
Howdoesyourrecommendedchoiceofscoperelatetoyouranswertothefirst
question?
3)HowmuchofastrategydoyoubelievethatNastyGalhaspursuedalongtheway?
4)Doesstrategymattertofirmsthataredevelopingtheirbusinessmodel,oraretheTEM
conceptsfornewventuresallthatisnecessarytoensuresuccess?
CollapseWednesday,March12,2014
Wednesday,March12,2014
Day15edX
8:30AM9:50AM
AldrichHall210
TOPIC:SCOPEOFTHECORPORATION
WewillexaminethefutureofMOOCs(massiveonlineopencourses)andtheirpotentialtodisruptthe
highereducationindustry.Inthiscontext,whatshouldedXtheHarvardUniversitysponsored
platformforMOOCslooklike?Whatshouldbeitsscope?AsHarvardBusinessSchooldevelopsits
ownonlineinitiatives,howmightthatdifferfromedXandwhy?
Materials
edXStrategiesforHigherEducation(distributedinclassonFriday,March7)
Assignments
edX
PleasereadtheedXcasepayingattentiontotheargumentsforandagainsttheMOOCformof
education.
PleasegototheedXsiteathttps://www.edx.org/andsignupforthedemonstrationcourse
(demoX)athttps://www.edx.org/course/edx/edxedxdemo101edxdemo1038.Youcanthen
browsethatcourseforafewminutestogetasenseofwhatthesethingscalledMOOCs
actuallylooklike!
1)WhatdoyouthinkofMOOCs?Aretheythefutureofhighereducation?Wildly
overblown?
a.WouldyouevertakeaMOOC?Underwhatconditions?
2)WhatrolewillMOOCsplayinhighereducationinthefuture?Whichtypeof
institutionsandstakeholderswillbemostaffectedbytheirintroduction?
3)IfyouwerethePresidentofHarvardUniversitywhatwouldyouwanttobethedesign
ofedXgiventheobjectivesofbroadeningaccesstohighereducation,furtheringresearchin
teachingandpedagogy,andretainingcontrolofintellectualproperty?
a.WhatshouldbethebusinessmodelforedX?
i.Shoulditdevelopaconsumerbrand?
ii.WhoshouldowntheIPforacourse?
iii.Whoshouldcredentialandaccreditstudentstakingcourses?
iv.OtherissuesyouwouldbeconcernedaboutasPresident?
b.Howshouldedxbemonetized?
i.Keepitfree?
ii.Freemium?
iii.Otherrevenuesources?
4)WhatshouldHbXHarvardBusinessSchoolsonlineofferinglooklike?
a.Whatcourses?Forwhom?Howdelivered?Atwhatprice?Otherconsiderations?
5)DoesyouranswerforHbXdifferfromyourrecommendationsforedX?How?Why?
Day16VideoLecture
8:30AM9:50AM
AldrichHall210
Materials
VideoLecture
CorporateStrategy2014_ScopeoftheCorporationAssignment_Slides
CorporateStrategy2014_TheScopeoftheCorporation_Slides
Assignments
VideoLecture
Avideolectureandslideswillbeavailableonthisday(Thursday,March13)thatsummarise
thismoduleofthecourse.
Pleaseemailtwoslideswhichaddresswhatyoubelieveistheappropriatescopeofthe
companythatisthesubjectofyourpapertome(dcollis@hbs.edu)by6:00p.m.onThursday,
March13th.Atemplateandexamplesareprovidedintheattachedfile.Wewillusethisclass
toreviewtheideascoveredinthemodule,answerquestionsaboutthevideolecture,andhave
presentationsonyourpapers.
Friday,March14,2014
Day17ClassPresentations
8:30AM9:50AM
AldrichHall210
Assignments
ClassPresentations
Pleaseemailtwoslideswhichaddresswhatyoubelieveistheappropriatescopeofthe
companythatisthesubjectofyourpapertome(dcollis@hbs.edu)by6:00p.m.onThursday,
March13th.Atemplateandexamplesareprovidedinyesterday'sassignment.Wewilluse
thisclasstoreviewtheideascoveredinthemodule,answerquestionsaboutthevideolecture,
andhavepresentationsonyourpapers.
Day18CadburySchweppes(A)(Day1)
8:30AM9:50AM
AldrichHall210
MODULETHREE:LEVERSOFCHANGE
Thismoduleaddressestheleversthatcorporationshavetochangetheirportfoliosandreconfiguretheir
corporatestrategies.Todatewehaveprimarilylookedatcorporationsatapointintimeandasked
whethertheyhaveaneffectivecorporatestrategy.Inthismodulewelookatchangestoportfoliosover
timebyexaminingtheMergerandAcquisitionprocess,internalentrepreneurship,ambitiouscorporate
transformationattempts,andongoingresourceallocationprocessesthateachaffectthedirectionofthe
corporation.
Whilewehavetobesurethatthespecificmovesareconsistentwiththeoverallcorporatestrategy,the
emphasisinthemoduleisonthemanagerialchoicesandchallengesinvolvedinsuccessfullyevolving
thecorporateportfolioovertimesothatitcontinuestocreateshareholdervalue.
TOPIC:MERGERSANDACQUISITIONS
Anobviouswaythatcompanieschangetheirscopeisthroughacquisition.Webeginthemoduleby
examiningthestrategic,financialandmanagerialimplicationsoftheacquisitionprocess,aswellasthe
detailedanalysisofpotentialsynergiesandthepostmergerintegrationprocess.Cadburyhasbeen
involvedinM&Abothasanacquirerandadivestor,andwewillfollowitsprogressoveradecadeas
itsportfolioundergoesmanychanges.
WebeginthetwodayseriesexaminingCadburysbidforAdams,thenumbertwoplayerinthegum
industry.ThiswillbeadiversificationawayfromCadburyscorechocolateandsugarconfectionery
businessandwillbethelargestacquisitionithasmade.Isthisasensiblemove?Aretheresynergies
betweengumandchocolate?Acrossgeographies?Betweenorganisations?
Materials
CadburySchweppes:CapturingConfectionery(A)(HBS#708453)
TheScopeoftheCorporation_EvaluationCriteria
Assignments
CadburySchweppes(A)
1)AsamemberoftheBoardofCadburySchweppeswouldyouapproveabidofmore
than$4billionforAdams?Why?Whynot?
Friday,March28,2014
Day19CadburySchweppes(B)(Day2)
8:30AM9:50AM
AldrichHall210
TOPIC:MERGERSANDACQUISITIONS
WewillcontinuetofollowCadbury,beginningwithadetailedquantificationofpotentialsynergiesand
theircalculation,beforetrackingthecompanysevolutionuntiltoday.
Materials
CadburySchweppes(B)(HBS#708454tobedistributedinclassonThursday,
3/27/14)
CadburySchweppes:CapturingConfectionery(B)(HBS#708454)
CadburySchweppes:CapturingConfectionery(C)(HBS#708455)
CadburySchweppes:CapturingConfectionery(D)(HBS#708491)
Assignments
CadburySchweppes(B)
1)Dothesynergyplansmakeitmoreorlesslikelythatyouwillsupportthebid?Which
doyoubelieve?Whichareyouskepticalof?
o
HowdoesCadburycalculatethevalueatstakeforeachsynergy?
Whatisthebalancebetweencostandrevenuesynergies?
Howdothesesynergiesrelatetothestrategicissueswediscussedyesterday?
CollapseWednesday,April2,2014
Wednesday,April2,2014
Day20Tennant
8:30AM9:50AM
AldrichHall210
TOPIC:INTRAPRENEURSHIP
WithTennantweaddresstheissueofcorporateintrapreneurshipentrepreneurialbehaviorinside
largerorganisations.InTEMyoulearntaboutentrepreneurialstartupsnewlycreatedentitiesthat
seektobringaninnovationtomarket.Herewasaskthequestionofwhetherandhowcorporationscan
fostersuchbehaviorandsogenerategrowthbeyondtheircorebusiness.Whataretheprosandconsof
cultivatinganewbusinesswithinanexistingfirmratherthanasastandaloneentity?Ifinnovations
haveagreaterchanceofsuccessoutsidethecorporateumbrella,wheredoesthatleavethefutureof
suchentities?
Thecontextisarevolutionarycleaningtechnologyech20thathasbeendevelopedintheresearch
departmentofawellestablishedfloorcleaningcompany.Themarketpotentialforthisisstilluncertain
asisthebestroutetomarketandwhetherornotthetechnologyshouldbemadeavailableto
competitors.TheobviousentryistoworkwithTennantsexistingclients,buthowwillthecurrent
businessreacttosuchamove?
IndecidinghowKarlaLeis,thenewlyappointedheadoftheinitiative,shouldmoveforward,wewill
examinethetradeoffsinvolvedinkeepinganentrepreneurialventureinsidealargecorporation.
Materials
TennantCompany(HBS#810040casedistributedthroughCourseDistribution)
Assignments
TennantCompany
1)Assumethetechnologyworksasprojected.WherewillOrbiobeinrevenuesin5years?
(a)0$5M,(b)525,(c)2550,(d)>50million.
2)IfyouwereKillingstad,whatdecisionwouldyoumakeregardingOrbios(a)
governance,(b)financing,(3)measurement,(4)managementandcompensation,and(5)
transferpricingwithotherdivisionsofTennant.
3)IfyouwereLeis,whatdecisionwouldyoufavorregardingOrbios(a)governance,(b)
financing,(3)measurement,(4)managementandcompensation,and(5)transferpricingwith
otherdivisionsofTennant.
4)SupposethatOrbiowasapurestartup.Howwouldapurestartupcreatedtopursue
theOrbioopportunitydifferfromthiscompany?
5)WouldthechancesofsuccessforOrbiobebetterorworseifitwereanindependent
company?
6)ShouldTennantspinoffOrbio?Ifso,when?
7)Whatarethethreemostpressingdecisionsthecompanymustmaketosuccessfully
launchOrbio?
8)HowshouldLeisassessandprioritizethepotentialmarketsthatOrbiomightpursue?
CollapseThursday,April3,2014
Thursday,April3,2014
Day21TheTransformationofThomson
8:30AM9:50AM
AldrichHall210
TOPIC:CORPORATETRANSFORMATION
Whenconfrontedbypoorperformance,adecliningcorebusiness,oramassivechangeinitsexternal
environment,largescaletransformationisoftentheonlywayforwardforabusiness.InLEADyou
sawexamplesofsuchtransformations,includingJackWelchatGE.Hereweadoptthecorporate
strategyframingofWHATchangesarenecessarytotransformacorporation,ratherthanfocusingon
theprocessofHOWtochangethecorporation.Thetwoareobviouslyintertwinedsowewilldrawon
yourearlierlearningsintheclassiespendalittletimereflectingontheGEcase,buttheintentisto
examinetheleversthathavetobealteredandhowthosefittogethertoformacoherentnewcorporate
strategy.
ThecontextisthetransformationofThomsonapreviouslyStateownedFrenchenterprisewhich
exitsitscorebusinessconsumerelectronicsafterdecadesofstruggle(andhavingpreviously
acquiredtheGEandRCAconsumerelectronicsassetsthatJackWelchwasdivesting!).By2007
Thomsonisinthemiddleofrecreatingitselfasavideosolutionsprovideroperatingallalongthe
videovaluechainandwewillevaluateitsprogressandconsidernextsteps.
Materials
TheTransformationofThomson(HBS#708428casedistributedthroughCourse
Distribution)
Assignments
TheTransformationofThomson
1)HowdoyouevaluatethetransformationofThomsonsofar?Howmuchfurtherdothey
havetogo?
2)WhatlevershasThomsonemployedtoeffectchange?Whichareeasiertodeploy?More
difficult?
3)WhatarethenextstepsthatFrankDangeardshouldtake?Doeshehavetheright
businesses?Therightorganizationstructure?Culture?
4)HowdoestheThomsoncasecomparetoothercorporatetransformationsyouhave
studied?Whatmakesforasuccessfultransformation?
Day22CibaGeigy
8:30AM9:50AM
AldrichHall210
TOPIC:RESOURCEALLOCATION
Everycorporationhastoallocateresources,capital,people,etcamongthevariousbusinessesinthe
portfolio.Howthisleverisappliedcanmakeasubstantialdifferencetocorporateperformanceandto
achievingbalanceinmeetingfinancialobjectives.Oneofthegreatcorporatestrategyinnovations
BCGsgrowthsharematrixintroducedthetermscashcows,dogs,andstarstothecorporatelexicon
andit,andothersimilarportfolioplanningtools,havebeenwidelyadoptedtomanagetheresource
allocationprocess.Wewillexaminetheuseandmisuseofsuchtoolsinthisvitalaspectofcorporate
strategy.
Thecasedescribesaninvestmentdecisionconfrontingthechemicalsandpharmaceuticalcompany,
CibaGeigy,inoneofitsmorematureandcompetitivebusinesses.Thefirmoperateswitharigorous
portfolioplanningmethodologythatgovernsresourceallocationacrossitsvariousbusinessesand
whichaffectsfinancialobjectives,compensation,andstaffinginthosebusinesses.Inprinciple,
portfolioplanningsuggeststhattheinvestmentdecisionshouldnotbemade,butthebusinesshead
believestheinvestmentiscriticaltothelongtermsuccessofthebusiness.
Materials
PortfolioPlanningatCibaGeigyandtheNewportInvestmentProposal(HBS
#795040)
Assignments
CibaGeigy
1)ShouldCibaGeigymaketheNewportInvestmentandifso,whichoptionshouldit
pursue?
2)Howdoesportfolioplanninghelporhinderthisdecision?
3)Whatarethepurposesofportfolioplanning?Doesitfulfilthosegoals?
4)Whatelseneedstobeconsideredwhendecidinginwhichbusinessesacorporation
shouldcompete?
Day23FBI
8:30AM9:50AM
AldrichHall210
MODULEFOUR:ORGANIZATIONDESIGN
Inthelastmoduleofthecourseweturnourattentiontotheinternalorganizationdesignofthe
corporation.Howcantheorganizationstructure,systems,processesandculturebedesignedtoensure
thatbusinessesintheportfoliotrulybenefitfromcorporateresourcesandyetstillpasstheownership
test?
Wewillexamineformalorganizationstructureasonetoolfordesigningtheadministrativecontext;
we'llseewhatrolesthecorporateheadquartersshouldplayandwhatdegreeofauthoritytheyshould
haveovertheoperatingunits;thedebateoverpublicversusprivateownership;aswellasrevisiting
organizationalapproachestomaintaininginnovationandsupportingcontinuouscorporate
transformation.
TOPIC:ORGANIZATIONSTRUCTURE
WestartthemodulelookingatorganizationdesigninanontraditionalsettingtheFBI.Afterthe
impactof9/11in2001thecountryisconfrontedwiththeneedtoaddanewmission(thinknew
business)fortheFBI(domesticintelligence)totheFBIstraditionalroleoflawenforcement.The
Presidenthastodecidehowbesttoorganizethecountrysagenciesandwhetherthenewmissioncan
bestbeaccommodatedwithintheFBIsstructure.IfDirectorMuelleroftheFBIisgiventherole,how
shouldhealtertheagencysorganizationdesignandmoveforwardintheprotectionofthecountry
security?
Materials
FederalBureauofInvestigation,2001(Abridged)(HBS#710450)
FederalBureauofInvestigation(B)(HBS#707553tobedistributedinclasson
Wednesday,April9)
ManagingtheMultibusinessCorporation
Assignments
FBI
1)In2001shouldthePresidentoftheUnitedStatesgivetheFBIongoing,longterm
responsibilityfordomesticintelligence?Orshouldhecreateanewspecializedagencyforthe
task?
AfterreadingtheFBI(B)case:
2)HowdoyouassesstheFBI'seffortsthroughearly2007?IstheBureaumovinginthe
rightdirection?
3)WhydoesDirectorMuellerwanttotransformtheFBIintoanintelligenceled,threat
basednationalsecurityorganization?Practically,whatmusthedotopulloffsuchadramatic
transformation?Whatobstacleswillheencounter,andhowshouldhetacklethem?
Day24TheGuardian
8:30AM9:50AM
AldrichHall210
TOPIC:ORGANIZINGFORSTRATEGICCHANGE
Thenewspaperindustryiscurrentlybeingdisruptedbyonlinenewsandadvertising.Many
newspapersarefallingbythewayside,others,liketheWashingtonPostandBostonGlobe,are
changinghandswithnewowners,JeffBezosandJohnHenry,respectively,lookingtofindnewways
tomaintaintheirviability.Inthisenvironment,theliberalBritishnewspaper,TheGuardian,hasbeen
oneofthemostsuccessfulentitiesinaddressingthechangingexternalenvironment.
Wewillexaminethedriversofchangewithinthenewspaperindustry,andthenfocusourattentionon
understandinghowTheGuardianhasbeenabletosucceedbetterthanmostinmakingthetransition.
Materials
TheGuardian:TransitiontotheOnlineWorld(HBS#709464)
NewspaperCostStructureExhibit
VideoLecture
CorporateStrategy2014_ChangingtheScopeoftheFirm_Slides
Assignments
TheGuardian
1)Whataretheunderlyingcausesofthecollapseofthetraditionalprintnewspaper
businessmodel?
2)Whatwillthestructureofthetextbasednewsindustrylooklikeinthefuture?Isapure
onlinenewspaperviable?(ExaminationoftheExcelexhibitattachedaboveonthecost
structureofanewspapermightbeusefulhere.)
3)WhyhastheGuardianbeenarelativesuccessinitstransitiontotheonlineworld?What
elsecan/shouldtheGuardiandogoingforward?
4)Whatlessonscanbelearnedabouthowtomanagelargecorporationsforstrategic
renewal?
CollapseFriday,April18,2014
Friday,April18,2014
Day25Dell
8:30AM9:50AM
AldrichHall210
TOPIC:PUBLICversusPRIVATEGOVERNANCE
Lastyearsawfounder,MichaelDell,makeanofferwithSilverLakePartnerstotakethepersonal
computercompany,Dell,private.ThebidprocesslastedmanymonthsastheBoardinvestigated
alternatives,addressedarivalofferfromCarlIcahn,shoppedthecompany,andsoughtguidancefrom
outsideadvisors.ThecaseprovidesextractsfromthepresentationsthatwereprovidedBoardmembers
astheywrestledwithdecidingwhetherornottoacceptafinalofferfromMichaelDell.
Thecasediscussionallowsustoconfronttheissueofcorporategovernanceanddebatethemeritsof
publicversusprivateownership.WhoisthebestownerforDellasitstrugglestoremedystrategic
failingsinthefaceofadecliningandevolvingpcmarketthatitoncedominated?Aretheredecisions
andactionsthatcanonlybetakenwhenafirmisprivate,ordopublicfirmsactuallyhaveadvantages
whenattemptingtochangecorporatestrategy?
Materials
TakingDellPrivate(HBS#714421)
Assignments
Dell
1)WhatarethestrategicproblemsfacingDell?Aretheproposedsolutionslikelytobe
successful?
2)WhataretheprosandconsofDellmakingastrategicshiftasapublicvs.private
company?
3)DidtheDellboardrunagoodprocess?Wouldyouhavedoneanythingdifferent?
4)AsaboardmemberofDell,wouldyouacceptMichaelDellsoffer?
5)WouldyouputyourownmoneyinDellatMichaelDellsprice$13.88?
Day26Maersk
8:30AM9:50AM
AldrichHall210
TOPIC:ROLEOFHEADQUARTERS
TheMaerskgroup,Denmarkslargestcompanyandaleaderintheglobalshippingandoilbusinesses,
hasundergonearadicaltransformationinthelastdecade.Thegrouphasmovedfrombeingrunasa
singleintegratedbusinessintoapremiumconglomeratewithseparatebusinessunitseach
accountablefortheirownperformance.
Aspartofthisevolution,thegroupheadquartershasbeenradicallyredesigned.Aftersixyearsinits
newform,CEONilsAndersen,isrevisitingthesize,rolesandauthorityofthevariousgroupfunctions.
Thecaseallowsustoexamineinwhatwaysheadquarterscanaddvaluetothebusinessunits,andhow
therelationshipbetweenheadquartersandbusinessunitscanbestbemanaged.
Inparticular,wewillfocusonthreefunctionsasharedservice(procurement);avalueaddingactivity
(HR);andarequiredpubliccompanyfunction(monitoringperformance).Examiningthedifferent
determinantsandrequirementsofthesethreefunctionsallowsustocovertherangeofrolesacorporate
headquartersundertakesinamultibusinesscorporation.
NOTE:LucienAlziaritheGroupHeadofHRwillbeattendingclass.
Materials
GroupFunctionsattheMaerskGroup(tobedistributedthroughCourseDistribution
onTuesday,April22afternoon)
Assignments
Maersk
1)IstheMaerskGroupsHeadquarterseffectiveinaddingvaluetothepremium
conglomerate?Isittherightsize?Doesithavetherightauthority?
Specifically,
2)Whyhasgroupprocurementgrowninsizegreatly?Shoulditnowtakeoverthe
purchasingofmajorcapitalexpenditures?
3)DoesLucienAlziarihavetherightapproachtotheroleofHRinthegroup?Doesgroup
HRaddvaluetothebusinessunits?
4)Isperformancemanagementeffectiveindrivingresultsinthebusinessunits?How
coulditbechangedtoimprovepressureonthebusinessunits?
Day27VideoLecture
8:30AM9:50AM
AldrichHall210
TOPIC:ORGANISATION
Everycorporationhastodesigntheadministrativecontextwithinwhichthebusinessunitsoperate.
Thisincludestheformalorganisationstructure,thesizeofandfunctionsperformedbytheheadquarters
staff,andthemanagementprocessesforcontrolandcoordinationofthediscretebusinesses.This
lecturewillcovertheseissuesandhowtheirdesigncanbealignedwiththeoverallcorporatestrategy
sothattheyeffectivelydeploydistinctiveresourcesacrossthebusinessportfolio.
Materials
VideoLecture
CorporateStrategy2014_Organisation_Slides
CollapseThursday,May1,2014
Thursday,May1,2014
Day28SummaryLecture
8:30AM9:50AM
AldrichHall210
Materials
CorporateStrategy2014_SummaryLecture_Slides
Assignments
SummaryLecture
Therewillbenoclasspreparation.

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