STRATEGIC MANAGEMENT

16153 – MIS 44285-001

16177 – MIS 44285-002

Fall, 2014 – Monday/Wednesday 11:00-12:15 pm

August 25, 2014-December 8, 2014

Business Bldg #215

Professor: Ilgaz Arikan                                                                                                         

Office: Business Bldg. #413                                                                                                  

E-mail: ilgaz.arikan.teaching@gmail.com

Required readingS

• Assigned readings and cases from the Harvard Business School Site

Course INTRODUCTION

This course covers two big topics: business strategy (strategic management of individual businesses) and corporate strategy (strategic management of issues specific to the multi-business firm). We examine the following topics:

Business Strategy:

1. What is strategy?
2. External Analysis and Porter’s 5 Forces
3. Value Added and Competitor Analysis
4. Internal Analysis and the Resource Based View

Corporate Strategy:

5. Why do we have firms?
6. What determines firm boundaries?
7. When should firms expand into new markets?
8. How should firms expand into new markets?

Course Objectives

This course focuses on strategy & policy development and execution for gaining and sustaining competitive advantages. We focus on strategic management of entrepreneurial and well-established firms, and operational and financial structures of firms and markets in various contexts. There is no one particular types of business or industry we are targeting. The goal is to learn and apply the tools for effective strategy formulation and implementation. The overall course objectives are:

1. Master the tools and methods for situation analysis, strategy formulation, correction, and execution in both a domestic and in a global context.
2. To evaluate Government-Industry-Firm relations and to examine the competitive advantage of firms in dynamic industries.
3. To learn to assess macroeconomic and microeconomic conditions for markets, evaluate the potential impact of these conditions. 

This course is designed to provide tools for a framework analysis and not a “cookbook” of solutions. This way of thinking will provide an effective and powerful toolbox that one can use when thinking about global firms’ problems and solutions.

Approach to Problems and Solutions

The approach taken to analyze and solve management problems in this course is one of applied economics; with one major distinction: the rules of the game we face are exogenous, hard to change, and most often we take certain things as “given”. However, this does not mean the outcome of the game is predetermined. On the contrary, a firm’s performance depends on its understanding of the markets, opportunity costs of forgoing other options, constituents in the system and whether its product and strategies are compatible with the environment it is entering into. So the entire responsibility falls on the “manager” to develop strategies to create and sustain rents. With this in mind, the ultimate goal is to strengthen students’ ability to identify the root cause of a problem, to formulate effective solutions, and to devise implementation strategies.

The course material stresses the importance of theory in solving problems, and combines theory development with both examples and case analyses that illuminate and challenge the theory. The material is not technical, as it is presented in this course, but the theoretical foundations of it are very complex. Hence, it is important to keep up with the readings and to pay close attention to class discussions, and to keep good notes. Failure to do so often leaves students lost and confused when it comes time to apply the material. As a general rule of thumb for every classroom hour, you should study the material for about two hours outside the class.

Course Materials

Textbook: There is no textbook assigned for this course. We will use HBS cases, HBR readings, and handouts. As a refresher, you might want to refer to the following sources for more advanced topics and coverage and as a reference.

            Milgrom & Roberts. 1992. Economics, Organizations & Management

            Barney. 2005. Gaining and Sustaining Competitive Advantage.

Collis & Montgomery. 1997. Corporate Strategy: A Resource Based Approach

Palepu, Healy & Bernard. 2003. Business Analysis and Valuation: Using Financial Statements, Text and Cases

Brigham & Ehrhardt. 2004. Financial Management : Theory and Practice

Stancill. 2004. Entrepreneurial Finance: For New and Emerging Businesses

Cases: We will use HBS readings & cases to accompany the course and these will be available from the HBS website under MyCourses. You will need to log in to the Harvard site and pay for the cases.

https://cb.hbsp.harvard.edu/cbmp/access/28534726

Course Requirements and Grading

We will be establishing a dynamic and effective learning environment where open and rigorous discussion will be the norm. This requires a commitment on your part for participation and attendance. Participation is a major course component in this class. The following are the primary principles for grading in this course:

• The requirements of this course are identical for everyone; it is not possible to “make up” for poor performance through extra credit.
• The due dates and times of cases and course schedule is announced on the first day of class. These due dates and times are fixed and will not be rescheduled unless there is a weather related shift in the university-college calendar of classes.

·                     Participation:                          25 points ………. (individual)

·                     Written Case Analysis:          50 points ………. (group)

·                     Final Exam:                            25 points ………. (individual)

Participation & Attendance: Attendance to class is mandatory, but participation is not. If you choose not to participate, please note that you will lose a lot of points. You do not earn points for attending a session. You earn points by participating in the class discussion. There is cold-calling in this class. If you are late or absent from class 20 minutes or more, you are counted as absent for that day. You can be absent for 2 days without incurring a penalty. If you are absent for 3 days, your final grade is lowered 10%. If you are absent for more days, the following grade reduction will apply: 4 day absence, 15%; 5 day absence, 20%; 6 day absence, 25%. If you are absent from class for more than 6 days, you will automatically fail the course. There is no make up for days missed. *Absences due to travel, broadly defined leisure and social activities, job interviews, career fairs, etc. do not count as “excused” absences. If you are going to miss a class, or a group meeting, make sure you inform your group members in advance.

For the learning process to be effective, you will need to participate actively during every class. Only by actively participating in class discussions, you will sharpen your own insights and those of your classmates. You will learn the content of the course, and as importantly, the process of analysis and implementation that is critical to successful management. The expectations are that you analyze, comment, question, discuss, and build on others’ contributions. Participation enables you to learn from your colleagues and to help them learn from you.

Class participation involves being clear about your position and supporting it with facts, while also being willing to seek alternative perspectives on the situation. The ability to present one’s ideas concisely and persuasively, and to respond effectively to ideas of others, is a key success factor in any management position. There is clear value of and reward attached to effective participation. Hence, there will be no reward for those who talk for the sake of being heard.

For each class session a maximum of 3 points can be earned. The points are assigned as follows: “0” for no participation or no significant contribution to class learning; “1” for non-substantial comments where it is evident that the comments are not grounded in the readings; “2” for substantial arguments that do not go beyond the arguments in the readings and that lack insight of synthesis; and “3” for strong comments that integrate concepts and generate new insights. I place very strong emphasis on class participation and keep daily record.

            Written Case Analysis: As a group, you are to turn in analyses for FOUR cases (Ducati, Disney, Newell, Teva). All cases are equally weighted. The 2 practice cases (Coke and Apple) were used in the past semesters as the final exam cases. These should give you an indication about the difficulty of the final exam case.

Each group will have max 5 people. It is up to you to analyze the cases using the case analysis tools you have learned in class. I do not assign students into groups. It is your responsibility to decide on and form your groups. You will need to stay in that group till the end of the semester. There will be NO transfers across groups during the semester.

You may use a number of case analysis tools such as Five Forces, Strategic Fit analysis, Diamond, Balanced Scorecard, VRIO, etc. when appropriate. You may use outside resources, only to give an update on the company; please make sure you cite your references and clearly give credit to the author(s). Each written case analysis should be not more than 8 single spaced pages (font size 10 or 11). You may want to include graphs, tables and other figures (maximum 6 pages) to support your analyses.  All group members will receive the same grade that is assigned to the group; however, if a group member is not fulfilling his/her responsibilities on the written case, his/her grade will be downgraded using the average score[1] other group members have assigned to this individual. Please turn in your analysis at the beginning of class.

All case write ups must be turned in BOTH in hard copy in class, and posted on the Blackboard site in electronic copy. When posting your electronic copy, name the file as “name of the company, and last names of the group members”. On all electronic copies anti-plagiarism software is run, and if it detects foul play, the entire group gets a zero for that assignment. Additional action will be taken per “Academic Integrity” guidelines which are appended at end of this syllabus. One hard-copy of the case write up is due at the beginning of class. Please staple your work. On the cover page, write the name of the case, and the first & last names of all group members. The hard-copy and the electronic copy must be identical documents. Only the hard copy will be graded.

            Final Exam: At the end of the semester, a final exam will be given. It will be an HBS case (Harley Davidson) and you will be asked to answer 5 questions. This is an individual effort case write up, not a group work. You cannot discuss the case with your group members or with your classmates. As long as the answers are coherent, you may use bullet points. You are required to purchase the case from the HBS Publishing website. Please do not discuss the case or the answers with your peers. You should read the final exam case on your own (I strongly suggest reading several times and taking notes as you develop some thoughts). The exam is open notes. The final exam will be given on the university assigned date/time/classroom and this information will be provided to all students both in class, and via email. When you turn in your final exam, please make sure you turn in your peer evaluation forms as well. Your course grade will not be released if the evaluation forms are missing.

PRACTICE CASE WRITE UPS

For those of you who choose to do practice case write ups, two cases are designated as “Practice Cases”. These are Coke, and Apple. This is entirely optional. If you decide to turn in a case write up, I will grade it as if it is a mandatory case, but will NOT record your grade. These practice cases will NOT substitute for any grade component, but are provided to you as a practice opportunity. I strongly recommend taking advantage of this opportunity and turn in a practice write-up to see your mistakes and to be able to improve on your deficiencies. This is a group exercise, not an individual case write up.

COURSE PREREQUISITES

Strategy courses are traditionally formulated as “capstone” courses, relying on knowledge of all of the major areas of business studies such as finance, accounting, marketing, operations management and logistics, and organizational behavior. I will be asking you to draw on all of your knowledge accumulated during your business studies, and I will also assume you understand how all of these areas interrelate in the management of businesses. If you have any concerns about the prerequisites for this course, please contact your faculty advisor/registrar’s office and/or the department administrative personnel. In addition, I will expect a high level of sophistication in analytical and communication skills. The students in the course who do not have the proper prerequisite risk being deregistered from the class.

REQUIRED MATERIALS 

A number of required readings & cases are posted the HBS site. You will need to PURCHASE these cases online from the HBS site. First, you need to register on the site to create a user name if you do not already have one. After you register, you can get to the coursepack at any time by doing the following:

1.      Visit hbsp.harvard.edu and log in.

2.      Click My Coursepacks, and then click Strategic Management Fall 2014. Here is the link to access MyCourse site:

https://cb.hbsp.harvard.edu/cbmp/access/28534726

To facilitate your planning and preparation, a table containing the course schedule that covers the required reading for each class, the case to be discussed, and the schedule of assignments and due dates is included. Make sure that you find the correct readings to prepare for each class. Importantly, I reserve the right to revise or alter in any way the course schedule and the materials in this syllabus.

COURSE COMMUNICATION

A Blackboard website has been created for this course. Please check Blackboard on a regular basis. I have a tendency to post updates and comments on the course website that will make the class easier and more interactive. This course website also will contain the course syllabus, discussion questions, assignment information, and other announcements. When appropriate, this information will also be sent to you via email.

CLASSROOM RULES

In order to maximize our time in the classroom and minimize distractions:

1. Please turn OFF all electronic devices (i.e. laptops, cell phones, etc) during the class session. No exceptions. Hence, please do NOT use electronic devices in class.
2. Do NOT bring food into the classroom.
3. To communicate, please ONLY send an email to my teaching email address (ilgaz.arikan.teaching@gmail.com). For 44285 teaching, I do not respond to emails sent to the Kent email due to the heavy volume. 

ACADEMIC INTEGRITY

I expect all students to:

• Represent themselves truthfully in all situations;
• Conduct themselves in a manner that does not seek to gain an unfair advantage over other members of the Kent State community;
• Demonstrate respect for all property that does not belong to them;
• Be personally accountable for one’s own actions.

• Discussing, reviewing, or receiving notes/papers on any assignment or quiz with students who have taken the class previously (either in another section or in a prior year).
• Submitting papers that do not exclusively include individual or group work, respectively.
• Using any assignment in this course in fulfillment of an assignment in another course without prior written consent of both professors.

Disability Policy

University policy 3342-3-01.3 requires that students with disabilities be provided reasonable accommodations to ensure their equal access to course content. If you have a documented disability and require accommodations, please contact the instructor at the beginning of the semester to make arrangements for necessary classroom adjustments. Please note, you must first verify your eligibility for these accommodations through Student Accessibility Services (contact 330-672-3391 or visit http://www.kent.edu/sas/index.cfm for more information on registration procedures).

Enrollment/Official Registration, Graduation, Outcomes Assessment, Course Withdrawal

Enrollment/official registration:

Students have responsibility to ensure they are properly enrolled in classes.  You are advised to review your official class schedule (using Student Tools on FlashLine) during the first two weeks of the semester to ensure you are properly enrolled in this class and section.  Should you find an error in your class schedule, you have until Sunday, September 7, 2014 to correct the error.  If registration errors are not corrected by this date and you continue to attend and participate in classes for which you are not officially enrolled, you are advised now that you will not receive a grade at the conclusion of the semester for any class in which you are not properly registered.

For all junior and senior level classes:

If you are eligible to graduate, it is your responsibility to apply for graduation before the set deadline (May Graduation: Apply before September 15^th August Graduation: Apply before December 15^th December Graduation: Apply before March 15^th). If you apply after the deadline you will be assessed a $200 late fee. Please see your academic advisor as soon as   possible if you are uncertain as to your progress toward graduation.  To apply for graduation complete the following steps: Log onto your Flashline account (1) Click on the Student Tools tab (2) Look in the Graduation Planning Tool Box (3) Click on Application for Graduation. If an error message appears, you must contact your advisor.

For all Business Policies courses:

Outcomes assessment is a requirement for M&IS 44285, Business Policy/Strategy.  Therefore, if you are enrolled in this course during the current semester, you must complete two outcome measures as part of your class, regardless of when you are actually graduating.  More information will be shared by your professor during the semester.  Completion of the two measures is required for you to receive your final grade in M&IS 44285.

The course withdrawal deadline:

For Fall 2014, the course withdrawal deadline is Sunday, November 2, 2014.

Grading Scale

Final grades (for the recitation section) will be computed on the basis of the total number of points earned on the written assignments and participation by the student. I do not provide letter grades on individual exams, or on assignments. There is no curve in this class; hence all students have an equal chance at getting an A in the course.  Final course grades will be assigned according to the following scale:

Instructor’s Perspective on Education

I believe that the main purpose of academic education is to teach you to think independently, creatively and effectively. These are the types of thinking skills that will carry you through the rest of your life, and make you successful at whatever it is you choose to do. How do we develop such thinking skills? It is not easy. But certain things help in this direction. First, we know that active learning is more effective than passive learning. Second, content acquisition is an important preliminary step to understanding most subjects. However, for effective understanding to occur, it must always be accompanied by analysis. Analysis demands greater mental effort, which is painful in the short run but highly satisfying in the long run. The problem is, it is easier to say this than to actually accomplish it, particularly in a large classroom such as this one.  In particular, it is also not so easy to accomplish this in a lecture format, which often promotes passive learning.   Because of this, I try to foster class discussion whenever I can.  Even if this is a bit uncomfortable for you at times due to the size of the class, I truly believe that it will pay off in the end by helping you to think about, remember and understand the material better. As a general rule of thumb, for every classroom hour, you should prepare for two hours outside the class to study for the material.

Grade Appeal Policy

Grades on course components are intended to reflect the overall quality of performance of student(s), and these are relative. If you think your grade does not reflect your performance for a course component, please submit a written appeal within 3 days of receiving your grade. Only written appeals will be considered and your assignment will be re-graded. Please make sure you clearly indicate your reasoning and provide sources for your arguments. Grades for participation component cannot be appealed, but please feel free to contact me during the quarter to check your standing in class.

Office Appointments

I will be available to discuss any issues of concern to you after class. If this time is not adequate, we can set up an appointment during office hours set for this course: (on M&W between 10:00-10:55 am, and 12:20-1:00 pm). Given the number of students enrolled in my sections, I strongly suggest for you to make an appointment by email.  I can always be reached via email and my usual reply rate is within 6 hours. If as a group (or as an individual) you ask a question which gives you an advantage over your classmates, I conceal your identity and reply to all the students. Usually, my response follows the edited content of the initial inquiry. For the case write ups, I strongly suggest meetings where all group members are present.

Academic Misconduct and Academic Honesty

I expect all students to complete all assignments, exams, and course deliverables with fairness and honesty. Academic integrity is essential to maintaining an environment that fosters excellence in teaching, research, and other educational and scholarly activities. At Kent State we presume that all students have read and understand our university's Code of Student Conduct. Please note that ignorance of this policy is never considered an excuse for academic misconduct.

Academic honesty: Cheating means to misrepresent the source, nature, or other conditions of your academic work (e.g., tests, papers, projects, assignments) so as to get undeserved credit.   In addition, it is considered to be cheating when one cooperates with someone else in any such misrepresentation.  The use of the intellectual property of others without giving them appropriate credit is a serious academic offense.  It is the University's policy that cheating or plagiarism result in receiving a failing grade for the work or course.  Repeat offenses result in dismissal from the University.

Peer Evaluation Form

Please be honest, frank and detailed as much as you can about the performance of your teammates. For each group member, please fill out a form and submit in a sealed envelope together during the final class session. These forms will NOT be shared with the administrative personnel, or with the student, under any circumstances. Each member’s overall grade on the project will be downgraded or upgraded depending on the peer evaluation feedback based on his/her performance. If you fail to submit a form for your group members, your final course grade will NOT be released.

Name of the evaluated         : _____________________________________      

Name of the evaluator         : _____________________________________

1 – never        2 – rarely        3 – sometimes                        4 – usually                 5 – always

I. Please circle your responses.

Has the student attended your group meetings?                                    1     2     3     4     5

Has the student notified a teammate if he/she would not                  1     2     3     4     5

be able to attend a meeting or fulfill a responsibility?

Has the student made a serious effort at assigned work                                      1     2     3     4     5

before the group meetings?

Does the student attempt to make contributions in group                   1     2     3     4     5

meetings when he/she can?

Does the student cooperate with the group effort?                                                 1     2     3     4     5

II. Overall rating on the following scale: ____________________ (Insert one of the given words.)

Excellent:             Consistently went above and beyond—tutored teammates, carried more than his/her fair share of the load

Very good:           Consistently did what he/she was supposed to do, very well prepared and cooperative

Satisfactory:        Usually did what he/she was supposed to do, acceptably prepared and cooperative

Ordinary:             Often did what he/she was supposed to do, minimally prepared and cooperative

Marginal:             Sometimes failed to show up or complete assignments, rarely prepared

Deficient:            Often failed to show up or complete assignments, rarely prepared

Unsatisfactory: Consistently failed to show up or complete assignments, unprepared

Superficial:         Practically no participation

No show:             No participation at all

III. Out of 100, I would rate this member’s effort and performance for the group project as: ___________

IV. Comments: Please attach a separate paper if you need to make comments on an individual’s effort and if you believe this form is not adequately representing your experience.

CLASS SCHEDULE

* Please note that due to unforeseen events, the professor may need to make adjustments to the above course schedule. If such adjustments are made, the announcements for these changes will be emailed to you and posted on Carmen.

Case Help

When you study the cases, you should be able to answer these basic questions. If you, as a group, are having a hard time in coming up with solid answers, you should go back to the drawing board and rethink the case. 

Coke & Pepsi

1.      Using the competitive forces model, compare the attractiveness of the concentrate business to that of the bottling business. How profitable is the concentrate industry segment versus the bottling segment?

2.      Which competitive forces best explain why is profitability is so different between these two industry segments.

3.      How has the competition between Coke and Pepsi affected the industry’s profits?

Apple Inc.

1.      How attractive is the PC industry? Conduct an industry analysis on the PC industry (A) in its early stages, and (B) in its later stages. Comment on how the industry has evolved.

2.      How profitable are firms in the PC industry? How does this compare to Apple’s profitability? Use data from the case to calculate and compare profitability ratios for Apple with those of its closest competitors.

3.      Apple has entered the market for MP3 players, smartphones and tablets. How attractive are these markets versus the PC industry?

4.      What historically have been Apple’s major competitive advantages?

5.      What are Apple’s current competitive advantages? Use Barney’s framework.

6.      Compare Apple’s performance with its major competitors in the PC industry. Why is Apple’s profitability so different?

Ducati

1.      What are the opportunities and threats facing firms in the motorcycle industry, in general, and in the sports industry segment, in particular?  Apply the competitive forces model to evaluate current and future industry profitability prospects.

2.      What are the relevant value drivers and cost drivers in this industry? What generic strategy does Ducati pursue?

3.      Given your analysis, what are Ducati’s competitive advantages and disadvantages relative to its closest competitors?

4.      Apply VRIO framework to determine if Ducati has a sustainable competitive advantage.

Disney

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.      Does Disney pursue vertical integration? Apply transaction cost economics to understand Disney’s vertical expansion decisions.

4.      What corporate strategy does Walt Disney employ? Identify and explain all types of diversification/integration within Disney’s overall corporate strategy.

5.      Evaluate the benefits and costs of each type of diversification. From this analysis state and justify (through quantitative analysis) whether Disney is creating or destroying value via diversification?

6.      Which expansion modes have Disney utilized to implement its corporate strategy? Use facts from the case to identify the benefits and costs of each expansion mode.

Newell

1.      Does Newell have a successful corporate-level strategy? Does the company add value to the businesses within its portfolio?

2.      What are Newell’s distinctive resources? Apply VRIO framework, and use it to evaluate Newell’s expansion strategy.

3.      What challenges faced the company in the late 1990s?

4.      Does the acquisition of Calphalon make sense?

5.      Does the acquisition of Rubbermaid make sense?

6.      While evaluating the Calphalon and Rubbermaid acquisitions, would you recommend any alternative expansion modes?

Appendix: Titles of the Additional Optional Reading

Barney, Jay B., 1995. “Looking Inside for Competitive Advantage”, Academy of Management Executive, Vol. 9, No, 4.

Eccles, Robert G., Kersten L. Lanes, and Thomas C. Wilson, 1999. “Are You Paying Too Much for that Acquisition?” Harvard Business Review, Vol. 77 Issue 4, p136-146.

Hamel, Gary, Yves L. Doz, and C. K. Prahalad, 1989. “Collaborate with Your Competitors—and Win” Harvard Business Review, Vol. 67 Issue 1, p133-139.