Indian Institute of Management Bangalore

Corporate Strategy
PGP Elective (3 credits); Term 4

Instructor
Sai Yayavaram
E-107, Ph: Ext. 3751
sai.yayavaram@iimb.ac.in
Secretary: Mahalakshmi Sanjeev (Ph: Ext. 3278)

Course Overview
This course is offered for students who seek advanced exposure to corporate strategy. It 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 are faced by firms operating
in more complex, multi-dimensional environments.

The basic objectives of the Corporate Strategy course are to

 understand and apply the important analytical approaches and frameworks that underlie the
domain of corporate strategy
 understand how multi-business firms create and appropriate value through diversification,
vertical integration, strategic alliances, mergers & acquisitions and globalization.
 learn how to manage a) a diversified company b) outsourcing c) alliances d) post-merger
integration and e) a multinational firm.

Course Materials
The course packet contains all the cases and the reading material. You already have the textbook
prescribed to you for the Competition & Strategy course: Contemporary Strategy Analysis by Robert
M. Grant (8th Ed). We will continue to use Grant as the textbook for this course as well. In addition,
the following books are suggested as optional readings:
“Corporate Strategy: Tools for Analysis and Decision-Making” by Puranam & Vanneste
“Build, Borrow, or Buy: Solving the Growth Dilemma” by Capron & Mitchell
“Strategy for the Corporate Level” by Campbell, Whitehead, Alexander & Goold

Pedagogy
The dominant pedagogy for this course would be the case method. Rigorous analysis of cases
provides opportunities to simulate the “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 an opportunity for deeper analysis and exploration of
multi-business strategies. Attendance for all sessions is compulsory unless the student has a medical
emergency or has received prior approval from the instructor.

The course evaluation will have three components:

1. Class participation: 20%
2. 2 quizzes: 10% (5% for each quiz)
3. Mid-term exam: 30%
4. Group project & presentation: 40%

Class participation
The quality of the sessions, in a course such as this, is highly dependent on your involvement and
participation. These marks are given for both attending the session, and proactively and vocally
participating in the discussions.

Quizzes
The quizzes will have multiple-choice questions based on the assigned readings. There will be no
questions from the cases.

Mid-term exam
The mid-term exam will be based on a case analysis.

Group project & presentation

As part of the corporate strategy course, you are expected to work in small groups (groups will be
formed by the instructor) and study an Indian multi-business firm. There will be two components to
the group project: a written submission and a presentation. Each group member’s contribution will
be taken into account, through peer review, before the group’s marks are apportioned to each
individual group member.

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 or should
respond to these challenges.

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 also contain your key learning from the analysis that
has implications for both the company, and corporate strategy, in general.

The maximum length of the group report is 15 pages (double-spaced, 12 font size and 1 inch margin
on all sides) excluding references, tables and charts. The group report is due before session 19, and
the presentations are to be made during the classes held in sessions 19 and 20. All students are
expected to attend the presentations irrespective of whether their group is making the presentation.
Please submit both hard and soft copies of your report and presentation. The soft copies should be
submitted to mahalakshmi.sanjeev@iimb.ac.in.

Please acknowledge sources of all data/information used and provide a complete list of references.
If you refer to any other material (article, website, blog, egroup, etc.) in writing your project reports,
it must be explicitly acknowledged with full citations. Failure to acknowledge material sourced from
elsewhere will be considered as plagiarism and subject to PGP disciplinary rules. I will process your
reports through TurnitIn.com to check for plagiarism. Grading will be based on the quality of
analysis, rather than simple collection, collation, and presentation of data. I will be available for
consultation on the project for the duration of the term.

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Other Administrative Details
Since faculty members tend to have somewhat different expectations as to class behavior and
course norms, I'd like to outline a few of my expectations concerning such matters.
1. I plan to be prepared for every class and I expect you to do the same. Since I frequently call
on individuals whose hands are not raised, you should let me know before the start of the
class if some emergency has made it impossible for you to be prepared adequately for that
class.
2. I consider attendance at every class to be very important. In the event that you do have to
miss a class during the semester, I would appreciate it if you would let me know in advance
of that class. The penalty for going below 80% for attendance is a single grade point drop.
3. I will be happy to discuss the course, your progress, or any other issues of interest to you on
an individual basis.
4. Group work is acceptable and strongly encouraged for purposes of case preparation for
classroom discussion.
5. Laptops, smart phones, and other electronic devices may not be used in class.

Dates

Session Topic/ Case Date

1 Ice Fili
2 Ice Fili (continued)
3 Walt Disney
Choice of firm for group project
4 Google
5 General Electric
6 Tata Group
7 Coca-Cola in 2011
8 Mini cases & Lecture
Quiz 1
9 Bharti Airtel
10 UTV and Disney
Midterm examination
11 Sonata
12 Cadbury Schweppes
13 Cadbury Schweppes (continued)
14 Guest lecture
15 Lincoln Electric
16 Mini cases & Lecture
17 Haier
18 Levendary Cafe
Project report & slides
19 Project presentations
20 Project presentations
Quiz 2

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 Class Schedule

Module 1: Introduction to corporate strategy

Sessions 1 & 2: Overview of corporate strategy

Readings:
 Porter, “From competitive advantage to corporate strategy”
 Anand, “Corporate strategy: Module note”
Case: Ice-Fili
Assignment questions:
1. How structurally attractive is the Russian ice cream market? How is it likely to evolve?
2. What are the potential sources of competitive advantage in the Russian ice cream market?
3. How well positioned is Ice-Fili relative to its key competitors?
4. What strategic options does Ice-Fili have? What strategy would you recommend to Anatoliy
Shamanov? Be specific.

Module 2: Product diversification

Session 3: Motives for diversification

Reading:
 Grant, Chapter 11, “Diversification strategy”
Case: The Walt Disney Company: The Entertainment King
Assignment questions:
1. Why has Disney been successful for so long?
2. What did Michael Eisner do to rejuvenate Disney? Specifically, how did he increase net income
in his first four years?
3. Has Disney diversified too far in recent years?

Session 4: Building corporate advantage

Readings:
 Collis & Montgomery, “Creating corporate advantage”
 Campbell, Goold & Alexander, “Corporate strategy: The quest for parenting advantage”
Case: Google Inc.: What’s the corporate strategy? (Grant textbook, Case 20)
Assignment questions
1. What is Google’s corporate strategy? Does Google have a clear vision of what it wants to
become?
2. Evaluate Google’s diversification into new products and businesses, with particular reference to
(a) browsers (Chrome), (b) mobile phone operating systems (Android), and (c) mobile devices
(Motorola).
3. Does Google need to refocus? How should Google delineate its corporate boundaries and which
businesses or products would you recommend abandoning or selling (if any)?

Session 5: Managing the multi-business firm

Reading:
 Grant, Chapter 14, “Implementing corporate strategy: Managing the multibusiness Firm”
Case: Jeff Immelt and the reinventing of General Electric (Grant textbook, Case 22)
Assignment questions
1. In what ways has Jeff Immelt redirected the strategy of GE?
2. To what extent is this strategy well aligned (a) with the requirements of 21st century business
environment and (b) GE’s resources and capabilities?

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3. What organizational changes has the new strategy necessitated? Will GE be able to successfully
execute the strategy?
4. Will Immelt’s strategy be successful? Are there alternative corporate strategies that GE should
consider—break-up in particular?

Session 6: Diversification in emerging economies

Reading:
 Khanna and Palepu, “Why Focussed Strategies May Be Wrong for Emerging Markets”
 Ramachandran, Manikandan, and Pant, “Why Conglomerates Thrive (Outside the US)”
Case: Creating a Corporate Advantage: The Case of the Tata Group
Assignment questions
1. How does the Tata Group add value to its group companies?
2. What should be the key strategic and organizational priorities for the Group Chairman with the
year 2025 as the time horizon?

Module 3: Vertical Integration

Session 7: Motives for vertical integration - I

Reading:
 Grant, Chapter 11, “Vertical integration and the scope of the firm”
Case: Coca-Cola in 2011: In search of a new model
Assignment questions
1. What are Coca-Cola’s competitive advantages?
2. What are the biggest challenges facing Coke today? How serious are these challenges?
3. What were the pros and cons of buying CCE – the largest acquisition in Coke’s history? Does it
address the challenges? Improve the prospects of reaching the 2020 vision?
4. What should Coke do with CCE going forward? Own/retain CCE? Follow a “beer” model? Replay
the “hospital ward” strategy? Other? Why?

Session 8: Motives for vertical integration - II

Reading:
 Stuckey & White, “When and when not to vertically integrate"
Cases: Mini cases to be distributed in class

Session 9: Managing vertical integration/ Outsourcing

Reading:
 Gottfredson, Puryear & Phillips, “Strategic 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?

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Module 4: Alliances and joint ventures

Session 10: Motives for alliances

Readings:
 Grant, Chapter 15, “External growth strategies: Mergers, acquisitions, and alliances”
 Bamford, Ernst & Fubini, “Launching a world class joint venture”
Case: UTV and Disney: A strategy alliance (A)
Assignment questions:
1. How could UTV become a Rs. 5 billion company by 2008 and a Rs. 10 billion company by 2010?
What could the role of the strategic alliance be in the growth of the company?
2. What were the global opportunities for UTV? How would an alliance with Disney give UTV an
edge in its international operations?
3. What were the advantages and disadvantages in going ahead with a strategic alliance with
Disney? What could be a viable alternative to the alliance with Disney, keeping in mind the
increase in revenue proposed by Ronnie Screwvala?
4. What were the competitive advantages of UTV? How could these be exploited in order to
expand the company and develop its own brand? Should UTV go for an all-out global expansion?
Or should it solidify its domestic business and expand in India while forming case-by-case
partnerships with international studios for its international operations?

Session 11: Managing alliances

Readings:
 Hughes & Weiss, “Simple rules for making alliances work”
 Kale & Singh, “Managing strategic alliances: What do we know now, and where do we go from
here”
Case: Sonata Software Ltd., India: Building competitive advantage through an international JV
Assignment questions:
1. What were Sonata’s strategic objectives in entering into the joint venture with TUI AG?
2. What are the typical challenges faced by IJVs? Which of these challenges did Sonata and TUI
face, and how did they address them?
3. Evaluate the financial performance of Sonata since its JV with TUI. What impact did TUI Infotec
have on Sonata’s performance?
4. Did Sonata achieve its strategic objectives in the JV?
5. What factors contributed to the success of the venture? How likely is the Sonata-TUI Infotec JV
to be successful in the future?
6. Should BK and his management team decide to continue Sonata’s JV with TUI AG beyond 2011
or not?

Module 5: Mergers & Acquisitions

Sessions 12 & 13: Motives for M&A

Reading:
 Christensen, Alton, Rising and Waldeck, “The new M&A playbook”
Case: Cadbury Schweppes: Capturing Confectionery (A)
Assignment questions:
1. As a member of the board of Cadbury Schweppes would you approve a bid of more than $4
billion for Adams? Why? Why not?

Session 14: M&A – Post merger integration - Guest Lecture

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Readings:
 Kale, Singh & Raman, “ Don’t integrate your acquisitions, partner with them”
 Bouchikhi & Kimberly, “Making mergers work”

Session 15: Evaluation of modes of entry

Reading:
 Dyer, Kale & Singh, “When to ally and when to acquire”
Case: Lincoln Electric
Assignment questions:
1. Put yourself in CEO John Stropki’s shoes. Should Lincoln Electric expand into India by investing in
a major production facility there?
2. If you were to expand into India, would you enter through acquisition, a greenfield site, or some
type of joint venture? Which factors would inform your decision among these entry mode
choices?
3. In which countries is Lincoln Electric likely to be most successful or least successful? Why? How
would this guide your own choice of where to place Lincoln Electric’s production facilities
abroad?

Module 6: Strategy in a global context

Session 16: Motives for globalization

Readings:
 Grant, Chapter 12, “Global Strategy and the Multinational Corporation”
 Ghemawat, “Distance still matters: The hard reality of global expansion”
Cases: Mini cases to be distributed in class

Session 17: Emerging Market Companies Going Global

Reading:
 Khanna & Palepu, "Emerging giants: Building world-class companies in developing countries"
Case: Haier: Taking a Chinese company global
Assignment questions:
1. Why was Haier so successful in China?
2. Was Haier’s decision to globalize into developed markets early on a good strategy?
3. Can Haier build on its success in niche products to become a dominant global brand in high-end
white goods?
4. Is Haier’s “three thirds” strategy a viable or wise approach?

Session 18: Managing a multinational firm

Reading:
 Ghemawat, “Managing differences: The central challenge of global strategy”
Case: Levendary Café: The China Challenge
Assignment Questions:
1. What is your evaluation of the way Levendary Café has entered the China market?
2. What changes (if any) should Mia Foster make? Specifically, what should she do about Louis
Chen? And what change (if any) would you propose at headquarters?
3. Prepare a specific action program for Foster to help her deal with the need for continued growth
in China. What should be on the agenda for her meeting with Chen?

Sessions 19 & 20: In-class Project Presentations