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Corporate Strategy Course Outline – Harvard Business School

David Collis

Day 1 - Introduction and Course Overview

8:30 AM - 9:50 AM

CORP_STRAT: Corporate Strategy Section 01

Aldrich Hall 210

TOPIC: INTRODUCTION AND COURSE OVERVIEW

As an introduction to the course, we will consider widely different approaches to corporate strategy with respect to the optimal business portfolio and organization design. The readings provide some examples and anecdotes to begin the discussion. You might also review your notes on corporate strategy from the RC STRATEGY module that covered the Disney, Pixar, and Danaher cases.

Materials

Readings

Available until May 29, 2014 11:59 PM

Corporate Strategy_Syllabus 2014


Corporate Strategy_Final Paper Guidelines 2014


Corporate Strategy_Course Outline 2014


Corporate Strategy EC 2014_Introduction_Slides


Assignments

Introduction and Course Overview

1) Does effective corporate strategy involve spinning off businesses and “sticking to the knitting”’ as News Corp. and ITT have done, or leveraging a “core competence” into new businesses like 3M (and Disney)? Why? Under what conditions?

2) Is it better to structure a multibusiness enterprise by divisions as Sears (and Danaher) has done, or by functions as Microsoft has done? Why? Under what conditions?

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Thursday, January 30, 2014

Day 2 - Newell Rubbermaid

8:30 AM - 9:50 AM


Aldrich Hall 210

MODULE ONE: RESOURCES AND THE CONTINUUM OF CORPORATE STRATEGIES

After the introductory session, we dive straight into a module that identifies the enduring logic of all effective corporate strategies and provides an opportunity to apply the core frameworks of the course.

We start by noting that it is valuable resources that underpin effective corporate strategies. We then demonstrate how those resources and strategies can be arrayed along a continuum that, simplistically, extends from unrelated to related diversification, and how we can summarise corporate strategies according to the Objective, Advantage, Scope (OAS) framework.

- How do we identify valuable resources?- Under what conditions are they valuable?- How do resources determine the alignment of the other elements of corporate strategy along the continuum?- How can we succinctly describe an effective corporate strategy?

Building on the RC module on Corporate Strategy, the course identifies valuable resources (popularly, but incorrectly, termed core competences) that can function as the “Mickey Mouse” that adds value to the corporate portfolio. By studying strategies at firms as different as Silver Lake and Tata, it introduces a continuum, ranging from conglomerates and private equity firms to tightly related corporate entities and startups, and demonstrates that the same logic of “better off” and “ownership” applies to every effective corporate strategy. By looking at corporate strategy around the world we can also demonstrate that the presence of market failures turns what appear to be pedestrian resources in developed countries, such as management talent, into a source of value creation across businesses in emerging markets. This explains the preponderance of “groups” in such countries.

Cases in the module also allow us to study three of the four levers corporations use to create value – exploiting synergy across businesses, changing the strategy of the individual business units, and allocating resources to more attractive businesses. The logic of any effective corporate strategy can then be captured in a company’s statement of its objective, scope and corporate advantage.

TOPIC: EFFECTIVE CORPORATE STRATEGY

By comparing and contrasting a period of successful corporate strategy at Newell, with the company’s later struggle to create value, we will identify the elements of an effective corporate strategy and find a way to succinctly capture that in a brief statement of the strategy’s Objective, Scope, and Advantage.

Materials

Newell Rubbermaid: Strategy in Transition (HBS #704491)


Assignments

Newell Rubbermaid

1) What was the classic Newell corporate strategy? Why did it work so well?

2) Why did Newell change corporate strategy in the late 90s? Did it have any other alternatives?

3) How do you evaluate the new corporate strategy under Joe Galli? How big a step change is the strategy? What does he have to change?

4) What should Newell-Rubbermaid do now?

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Wednesday, February 5, 2014

Day 3 - AOL/Time Warner

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: SYNERGIES “REAL OR APPARENT”

In what is still the largest corporate merger in US history, AOL and Time Warner merged in 2000 in a deal worth nearly $200 billion. The deal has since been identified by some (including Bloomberg Business Week and Rupert Murdoch) as the worst merger in US history. We will use the arguments advanced by analysts in favor of the merger, and then those advanced (even by some of the same analysts) in favor of the demerger to understand the conditions under which real synergies are created.

Materials

AOL/Time Warner: To Merge or Demerge? (HBS #707556)


Assignments

AOL/Time Warner

1) Should AOL and Time Warner have merged in 2000? How credible were the synergies they identified?

2) Should AOL and Time Warner have demerged in 2006? How credible are the gains to demerger that are identified? How much farther should Time Warner go with its spinoffs if AOL is demerged?

3) Why did AOL and Time Warner merge in 2000?

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Thursday, February 6, 2014

Day 4 - TPG China

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: CHANGING STRATEGY IN THE BUSINESS UNITS

We will examine the new strategy put in place at a Chinese shoe retailer, Daphne, by its new owner, the private equity firm TPG. We will first focus on whether there is a valid strategic logic to the new business model of “fast fashion”, and then ask whether and how corporate entities (whether pe or public companies) are able to know more about delivering the best strategy for a business than executives who run that business full-time.

Materials

TPG China: Daphne International (HBS #813055)


Assignments

TPG China

1) As a limited partner of TPG would you support the deal to invest in Daphne International in 2009?

2) Is the new strategy proposed for Daphne by TPG likely to be successful? Under what conditions is “Fast Fashion” a viable strategy for retailers like Zara?

3) How can corporate parents, whether pe or public companies, know more about the strategy for a business than experienced executives in those businesses?

4) What levers does TPG have to get Daphne to adopt the new strategy?

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Friday, February 7, 2014

Day 5 - International Management Group

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: OWNERSHIP AND APPROPRIABILITY OF RESOURCES

In 2001, International Management Group (IMG) is the dominant company in talent representation and sports marketing. Over 40 years under its founder and CEO, Mark McCormack, who is credited with having created the industry of sports management, IMG has expanded from athlete representation into a host of other arenas--including producing and broadcasting television shows, operating training academies, and representing models and classical music artists. We will use the case to discuss whether there is a logic to IMG's broad vertical and horizontal scope, and examine where ownership of the firm’s, as opposed to the talent’s, unique resources vests.

Materials

International Management Group (IMG) (HBS #702409)


Recommended Reading--Corporate Strategy: A Resource-Based Approach, Chapter 2: Resources and Rents (please read pages 27-55 only)


Assignments

International Management Group

1) What do you consider to be IMG's corporate strategy?

2) Where does the value in the relationship between clients and IMG reside? Is it with the agents? With IMG? Elsewhere?

3) Evaluate IMG's various decisions to enter new areas or lines of business. What is the logic behind these moves, and how sound is this logic? What are the limits to IMG's expansion into new businesses?

4) What do you perceive to be the biggest challenges in structuring an organization such as IMG's? How might these be difficulties be overcome?

5) If you were a potential competitor to IMG, what strategy would you pursue to compete against it? Where is IMG most vulnerable today?



Day 6 - Silver Lake

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: PRIVATE EQUITY AS A CORPORATE STRATEGY

The case describes the founding and evolution of Silver Lake -- the first and most successful private equity firm to specialize in the technology sector. By 2010, Silver Lake is faced with the decision of whether and where to expand -- into new sectors, new types of financing, or new geographies. If it decides to grow internationally, in which countries should it invest and how should it enter these markets? The discussion enables us to understand which (if any) are the valuable skills of private equity firms, and whether and how these capabilities transfer across geographies and sectors.

Materials

Silver Lake (HBS #711420)


Assignments

Silver Lake

1) What were the historic reasons for Silver Lake's success?

2) In what direction should Silver Lake expand today? why? what underlying resources and capabilities will your suggestion expansion build on?

Geographically.

New types of investment within technology; e.g., venture capital, growth capital….

Additional business sectors; e.g., sustainable energy, infrastructure, retail…; other….

3) If it grows geographically, which country/countries should it enter? What strategy for entry into a new country should it adopt?



Day 7 - Creating a Corporate Advantage: The Case of the Tata Group

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: GROUPS IN EMERGING MARKETS

The case describes the Tata group , which although larger and more successful than many, is indicative of a common corporate form in emerging markets – the diversified business group (often with family ownership). We will investigate why this form of organization exists in such countries, but is less common in developed markets; the challenges groups face as their economies become integrated into the global economy; and how such groups are organized to create shareholder value across such disparate sets of businesses.

Materials

Creating a Corporate Advantage: The Case of the Tata Group (ISB005)


Assignments

Creating a Corporate Advantage: The Case of the Tata Group

1) Why has the Tata group been successful? Is there a limit to the type of business in which it can successfully compete?

2) How is Tata organized to create value across such a disparate set of businesses? How is that different to a conglomerate in the US (like Danaher or GE)?

3) What changes would you recommend to the role of the centre? Should it make the subscription of its services by group companies mandatory?

4) Why are business groups like Tata common in emerging markets, but much less common in developed countries?

5) What strategic choices do such groups face as their economies open up to global competition, and liberalise domestically?



Day 8 - Video Lecture

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: RESOURCES AND CORPORATE STRATEGY

Materials

Video Lecture


Corporate Strategy 2014_Resources Delivered_Slides


Required Reading--Strategies of Unrelated Diversification (HBS #705480)


Assignments

Video Lecture

The lecture will focus on the RESOURCES that corporate strategies are based on. It will identify the conditions that make resources distinctive and valuable, and will outline a resource based strategy. In addition the lecture will introduce the continuum of corporate strategies that stretch from related to unrelated diversifiers, and will show how that continuum can be interpreted as extending from specific to general resources.

The slides to accompany the video lecture can be found in the materials section of today's class on the Learning Hub.

There will be no class on this day. Instead students can watch the streamed video lecture at their convenience, and can use the time to begin work on their paper by identifying the resources that underlie their subject company’s corporate strategy. A two slide PowerPoint on that topic is due to be e-mailed to Prof. Collis at [email protected] by 6:00 p.m. on Wed., Feb. 19th.



Day 9 - Class Presentations

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: RESOURCES AND CORPORATE STRATEGY

Materials

Resources Example


ResourcesShortAmended


Assignments

Class Presentations

A two slide PowerPoint on the resources of the company, which is the subject of your paper, is due to be e-mailed to Prof. Collis at [email protected] by 6:00 p.m. on Wed., Feb. 19th.

We will use this class for three purposes. First, to discuss questions, concerns or clarifications arising from the video lecture. Second, we will examine a number of student analyses of their subject company’s resources to see how the notion of resources can be applied in practice. Third, we will resolve any issues remaining from earlier classes.



Day 10 - Birds Eye

8:30 AM - 9:50 AM


Aldrich Hall 210

MODULE TWO: THE SCOPE OF THE CORPORATION

The second module in Corporate Strategy addresses the issue of the scope of the corporation – how far can a company extend its operation into additional markets. These markets could be new channels of distribution, new products, new technologies, new geographies, or additional steps (whether forward or backward) in the value chain. As every company of every size has to determine the limit to its scope, this module includes startups and smaller companies as well as large diversified corporations.

The first test of whether a company should expand its scope into a new market is the better-off test -is there an improvement to the competitive advantage of the new business? Thus we must always understand what are the company’s underlying resources and how they either increase the willingness to pay or volume, or reduce the cost in the new business.

However, because there is always a contractual alternative to keeping the new business inside the corporate hierarchy, we must also consider the ownership test – is it cheaper to perform the new activity or business inside the firm than through some form of contractual alternative?

In fact, to justify entering a new market it must be true that the “NET” of better off and ownership tests are positive by keeping the new business within the hierarchy. In many cases, this occurs when the firm’s resources do add value to the new business and the cost inside the hierarchy is lower than in the market. However, there are cases, typically involving vertical integration, when the firm is actually not better off in the new market (a third party is more efficient at that activity), but the ownership advantage is so high because the cost of the market transaction is so high, that it is value creating to extend the scope of the firm into that business.

The module begins by examining vertical integration in the classic case of Birds Eye and the introduction of frozen foods in order to establish the principles involved in the theory of transaction costs. It is these that determine the relative cost of performing activities inside a corporate hierarchy and through market exchange, and so focus our attention on the ownership test. We follow this by examining the contribution that vertical integration has made to the success of the New World in the global wine industry.

The second part of the module looks at scope decisions within a business. Amgen has to decide whether to expand from novel biotech products into the so-called biosimilar market. Cree has to decide which emerging segment of the LED market is should pursue. These cases bring attention back to the resources and the better off test, but remind us that we should never forget the underlying attractiveness of any new industry we try to enter.

We then shift to consider what should be the appropriate scope of new businesses as we look at a new online fashion retailer and an emerging technology that threatens to disrupt higher education - MOOC’s. As well as determining what is the correct scope of these entities and the criteria that determines that scope, we will ask the question whether strategy matters in small entrepreneurial firms? The impression given in TEM and Field 3 is that strategy is perhaps unnecessary in the rush to test MVP’s and given the ability to pivot and fail fast. Is this true? Or does strategy actually matter even more to resource constrained entities that have to be very careful about their choice of scope?

TOPIC: VERTICAL INTEGRATION AND TRANSACTIONS COSTS

We begin the module that addresses the scope of the corporation with a classic example of vertical integration – the make versus buy decision. Birds Eye introduces frozen food to the U.K. and has to establish a frozen food distribution chain from the farm and sea, to the retailer and the consumer. Which of the activities along the value chain, from farming, freezing, storing, transportation, retail distribution, etc., should Birds Eye do itself, and for which should it buy from others on some form of contractual agreement. Discussion of the alternatives at different points in the value chain allows us to apply ideas of transactions cost economics to the vertical integration decision. By the end of the period Birds Eye’s initial dominance of the emerging industry has eroded as merchant markets appear at each stage of the value chain, and it is confronted with the need to reexamine its choice of scope.

Materials

Birds Eye and the U.K. Frozen Food Industry (A) (HBS #792074)


Required Reading--When and When Not to Vertically Integrate, Sloan Management Review, Spring 1993


Recommended Reading--Corporate Strategy: A Resource-Based Approach, Chapter 5: Organizational Limits to Firm Scope (please read pages 115-147 only)


Birds Eye and the U.K. Frozen Food Industry (B) (HBS #792078)


Assignments

Birds Eye

1) Critically examine Birds Eye's choices of whether or not to integrate at each stage of the value chain, specifically: a. Birds Eye's decision to own cold stores; b. Its decision not to get into pea production itself, or to own the farmland on which peas are grown; c. Its decision not to own pea harvesters, but to sign repurchase contracts with cooperatives; d. Its decision not to manufacture display cabinets or rent them to retail stores. Which of these choices do you consider to be compelling; and, which not?

2) How do Birds Eye's choices stack up against the transactions costs logic for vertical integration that is described in the article by Stuckey and White?

3) Does a vertically integrated producer have a competitive advantage in 1982? What would you recommend that Birds Eye do?



Day 11 - Global Wine Wars

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: VERTICAL INTEGRATION AND COMPETITIVE ADVANTAGE

The century’s old wine industry has seen more change in country market shares than most manufactured goods businesses in the last three decades. Producers from the New World (Australia in particular) have gained share against the traditional Old World producers (France in particular). We will examine the reasons for this transformation of a mature agricultural business, and the role that the structure of the industry in different countries plays.

Materials

Global Wine Wars: New World Challenges Old (A) (HBS #303056--case not available for electronic download)


Global Wine Wars: New World Challenges Old (B) (HBS #304016--case not available for electronic download)


Assignments

Global Wine Wars

1) How have "New World" countries and firms been so successful in the wine business? Why have "Old World" producers failed?

2) What should French wine producers do to restore their competitiveness?

3) More generally, what role does industry structure play in the competitiveness of nations in a global economy?



Day 12 - Amgen

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: SCOPE WITHIN AN INDUSTRY

Kevin Sharer, then CEO of Amgen Inc., is confronted with the decision to enter (or not to enter) the emerging biosimilars business – the analogy of generics in the biotechnology-based drug world. This was no run-of-the-mill decision; it represented a major shift in scope for Amgen – from focusing purely on innovation to also pursuing imitation. Moreover, it was clear even then that the outcome of that decision – whether it was a good or bad choice – would not be known for many years, but could significantly influence Amgen’s future fortunes. We examine this critical decision in order to understand the factors that determine the appropriate scope of a corporation within a related set of businesses.

Note that the case protagonist, Kevin Sharer, is now a Strategy professor at HBS and taught some of you last year. He will be attending class!

Materials

Amgen Inc.: Pursuing Innovation and Imitation? (A) (HBS #714424--case distributed through Course Distribution)


Amgen Inc.: Pursuing Innovation and Imitation? (B) (HBS #714426)


Assignments

Amgen

1) Would you advise Kevin Sharer to enter the biosimilars market or to stay out?

2) What factors are you basing your decision on? Quantitative or qualitative? Financial returns? Industry structure and attractiveness? Competitive advantage? Resources and capabilities? Risk? Other?

Note that estimating the size of the market and Amgen’s profitability under the two scenarios described in the case might be useful in answering this question.

3) How should Sharer proceed if Amgen does decide to enter biosimilars?

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Thursday, March 6, 2014

Day 13 - Cree

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: SCOPE WITHIN AN INDUSTRY

Cree, a world leader in LED technology, is confronted with deciding which market it should pursue. It has to choose between going after the backlighting business for flat screen televisions (so-called LED televisions), and/or to pioneer the general lighting market for LEDs by offering its own replacement LED bulbs to consumers. While questions of technological progress and environmentalism impact the choice, debating the merits of the three alternatives clarifies the criteria to be applied when expanding the scope of the firm into adjacent markets.

Materials

Cree, Inc.: Which Bright Future? (HBS #711457--case distributed through Course Distribution)


Cree, Inc.: An Update (HBS #711491)


Assignments

Cree

1) As of 2007, should Cree pursue the television backlighting or the general lighting markets? Or should it go after both markets?

o If it pursues general lighting and sells its own brand of bulb should it go after the residential or the commercial market? The replacement or the new construction market? (Understanding the total cost of ownership from Exhibits 8, 9, and 10 should be useful in this regard.)

2) What criteria lead you to make your decision?

3) Is your choice affected by forecasts about the future costs and performance of LEDs? Do you believe those forecasts?

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Friday, March 7, 2014

Day 14 - Nasty Gal

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: SCOPE OF A NEW BUSINESS

Sophia Amoruso started Nasty Gal in her bedroom in 2006. By 2013 it has grown to be a successful and cutting edge online retailer with revenues well over $100 million. Along the way Ms. Amoruso has made a number of decisions about the appropriate scope of the emerging business. In early 2014 her executive team is debating where to go next if the growth is to continue. The caselet allows discussion of the link between resources and business scope; the sustainability of competitive advantage; and the (un)importance of strategy to startup and entrepreneurial firms.

Assignments

Nasty Gal

1) Why has Nasty Gal been a success? Will it continue?

2) Should Nasty Gal expand its scope in any of the possible ways identified in the case? Why? Why not?

o How does your recommended choice of scope relate to your answer to the first question?

3) How much of a strategy do you believe that Nasty Gal has pursued along the way?

4) Does strategy matter to firms that are developing their business model, or are the TEM concepts for new ventures all that is necessary to ensure success?

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Wednesday, March 12, 2014

Day 15 - edX

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: SCOPE OF THE CORPORATION

We will examine the future of MOOCs (massive online open courses) and their potential to disrupt the higher education industry. In this context, what should edX – the Harvard University sponsored

platform for MOOCs - look like? What should be its scope? As Harvard Business School develops its own online initiatives, how might that differ from edX and why?

Materials

edX Strategies for Higher Education (distributed in class on Friday, March 7)


Assignments

edX

Please read the edX case paying attention to the arguments for and against the MOOC form of education.

Please go to the edX site at https://www.edx.org/ and sign up for the demonstration course (demoX) at https://www.edx.org/course/edx/edx-edxdemo101-edx-demo-1038. You can then browse that course for a few minutes to get a sense of what these things called MOOCs actually look like!

1) What do you think of MOOCs? Are they the future of higher education? Wildly overblown?

a. Would you ever take a MOOC? Under what conditions?

2) What role will MOOCs play in higher education in the future? Which type of institutions and stakeholders will be most affected by their introduction?

3) If you were the President of Harvard University what would you want to be the design of edX given the objectives of broadening access to higher education, furthering research in teaching and pedagogy, and retaining control of intellectual property?

a. What should be the business model for edX?

i. Should it develop a consumer brand?

ii. Who should own the IP for a course?

iii. Who should credential and accredit students taking courses?

iv. Other issues you would be concerned about as President?

b. How should edx be monetized?

i. Keep it free?

ii. Freemium?

iii. Other revenue sources?

4) What should HbX - Harvard Business School’s online offering - look like?

a. What courses? For whom? How delivered? At what price? Other considerations?

5) Does your answer for HbX differ from your recommendations for edX? How? Why?




8:30 AM - 9:50 AM


Aldrich Hall 210


Materials

Video Lecture


Corporate Strategy 2014_Scope of the Corporation Assignment_Slides


Corporate Strategy 2014_The Scope of the Corporation_Slides


Assignments

Video Lecture

A video lecture and slides will be available on this day (Thursday, March 13) that summarise this module of the course.

Please e-mail two slides which address what you believe is the appropriate scope of the company that is the subject of your paper to me ([email protected]) by 6:00 p.m. on Thursday, March 13th. A template and examples are provided in the attached file. We will use this class to review the ideas covered in the module, answer questions about the video lecture, and have presentations on your papers.



Day 17 - Class Presentations

8:30 AM - 9:50 AM


Aldrich Hall 210


Assignments

Class Presentations

Please e-mail two slides which address what you believe is the appropriate scope of the company that is the subject of your paper to me ([email protected]) by 6:00 p.m. on Thursday, March 13th. A template and examples are provided in yesterday's assignment. We will use this class to review the ideas covered in the module, answer questions about the video lecture, and have presentations on your papers.



Day 18 - Cadbury Schweppes (A)--(Day 1)

8:30 AM - 9:50 AM


Aldrich Hall 210

MODULE THREE: LEVERS OF CHANGE

This module addresses the levers that corporations have to change their portfolios and reconfigure their corporate strategies. To date we have primarily looked at corporations at a point in time and asked

whether they have an effective corporate strategy. In this module we look at changes to portfolios over time by examining the Merger and Acquisition process, internal entrepreneurship, ambitious corporate transformation attempts, and ongoing resource allocation processes that each affect the direction of the corporation.

While we have to be sure that the specific moves are consistent with the overall corporate strategy, the emphasis in the module is on the managerial choices and challenges involved in successfully evolving the corporate portfolio over time so that it continues to create shareholder value.

TOPIC: MERGERS AND ACQUISITIONS

An obvious way that companies change their scope is through acquisition. We begin the module by examining the strategic, financial and managerial implications of the acquisition process, as well as the detailed analysis of potential synergies and the post-merger integration process. Cadbury has been involved in M&A both as an acquirer and a divestor, and we will follow its progress over a decade as its portfolio undergoes many changes.

We begin the two day series examining Cadbury’s bid for Adams, the number two player in the gum industry. This will be a diversification away from Cadbury’s core chocolate and sugar confectionery business and will be the largest acquisition it has made. Is this a sensible move? Are there synergies between gum and chocolate? Across geographies? Between organisations?

Materials

Cadbury Schweppes: Capturing Confectionery (A) (HBS #708453)


The Scope of the Corporation_Evaluation Criteria


Assignments

Cadbury Schweppes (A)

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?



Day 19 - Cadbury Schweppes (B)--(Day 2)

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: MERGERS AND ACQUISITIONS

We will continue to follow Cadbury, beginning with a detailed quantification of potential synergies and their calculation, before tracking the company’s evolution until today.

Materials

Cadbury Schweppes (B) (HBS #708454--to be distributed in class on Thursday, 3/27/14)


Cadbury Schweppes: Capturing Confectionery (B) (HBS #708454)


Cadbury Schweppes: Capturing Confectionery (C) (HBS #708455)


Cadbury Schweppes: Capturing Confectionery (D) (HBS #708491)


Assignments

Cadbury Schweppes (B)

1) Do the synergy plans make it more or less likely that you will support the bid? Which do you believe? Which are you skeptical of?

o How does Cadbury calculate the value at stake for each synergy?o What is the balance between cost and revenue synergies?

o How do these synergies relate to the strategic issues we discussed yesterday?

Collapse Wednesday, April 2, 2014

Wednesday, April 2, 2014

Day 20 - Tennant

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: INTRAPRENEURSHIP

With Tennant we address the issue of corporate intrapreneurship – entrepreneurial behavior inside larger organisations. In TEM you learnt about entrepreneurial startups – newly created entities that seek to bring an innovation to market. Here was ask the question of whether and how corporations can foster such behavior and so generate growth beyond their core business. What are the pros and cons of cultivating a new business within an existing firm rather than as a stand-alone entity? If innovations have a greater chance of success outside the corporate umbrella, where does that leave the future of such entities?

The context is a revolutionary cleaning technology ech20 that has been developed in the research department of a well-established floor cleaning company. The market potential for this is still uncertain as is the best route to market and whether or not the technology should be made available to competitors. The obvious entry is to work with Tennant’s existing clients, but how will the current business react to such a move?

In deciding how Karla Leis, the newly appointed head of the initiative, should move forward, we will examine the tradeoffs involved in keeping an entrepreneurial venture inside a large corporation.

Materials

Tennant Company (HBS #810040--case distributed through Course Distribution)


Assignments

Tennant Company

1) Assume the technology works as projected. Where will Orbio be in revenues in 5 years? (a) 0-$5M, (b) 5-25, (c) 25-50, (d) >50 million.

2) If you were Killingstad, what decision would you make regarding Orbio’s (a) governance, (b) financing, (3) measurement, (4) management and compensation, and (5) transfer pricing with other divisions of Tennant.

3) If you were Leis, what decision would you favor regarding Orbio’s (a) governance, (b) financing, (3) measurement, (4) management and compensation, and (5) transfer pricing with other divisions of Tennant.

4) Suppose that Orbio was a “pure” start-up. How would a pure startup created to pursue the Orbio opportunity differ from this company?

5) Would the chances of success for Orbio be better or worse if it were an independent company?

6) Should Tennant spin-off Orbio? If so, when?

7) What are the three most pressing decisions the company must make to successfully launch Orbio?

8) How should Leis assess and prioritize the potential markets that Orbio might pursue?

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Thursday, April 3, 2014

Day 21 - The Transformation of Thomson

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: CORPORATE TRANSFORMATION

When confronted by poor performance, a declining core business, or a massive change in its external environment, large scale transformation is often the only way forward for a business. In LEAD you saw examples of such transformations, including Jack Welch at GE. Here we adopt the corporate strategy framing of WHAT changes are necessary to transform a corporation, rather than focusing on the process of HOW to change the corporation. The two are obviously intertwined so we will draw on your earlier learnings in the class ie spend a little time reflecting on the GE case, but the intent is to examine the levers that have to be altered and how those fit together to form a coherent new corporate strategy.

The context is the transformation of Thomson – a previously State owned French enterprise – which exits its core business – consumer electronics – after decades of struggle (and having previously acquired the GE and RCA consumer electronics assets that Jack Welch was divesting!). By 2007 Thomson is in the middle of recreating itself as a “video solutions provider operating all along the video value chain” and we will evaluate its progress and consider next steps.

Materials

The Transformation of Thomson (HBS #708428--case distributed through Course Distribution)


Assignments

The Transformation of Thomson

1) How do you evaluate the transformation of Thomson so far? How much further do they have to go?

2) What levers has Thomson employed to effect change? Which are easier to deploy? More difficult?

3) What are the next steps that Frank Dangeard should take? Does he have the right businesses? The right organization structure? Culture?

4) How does the Thomson case compare to other corporate transformations you have studied? What makes for a successful transformation?



Day 22 - Ciba-Geigy

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: RESOURCE ALLOCATION

Every corporation has to allocate resources, capital, people, etc among the various businesses in the portfolio. How this lever is applied can make a substantial difference to corporate performance and to achieving balance in meeting financial objectives. One of the great corporate strategy innovations – BCG’s growth share matrix – introduced the terms cash cows, dogs, and stars to the corporate lexicon and it, and other similar portfolio planning tools, have been widely adopted to manage the resource allocation process. We will examine the use and misuse of such tools in this vital aspect of corporate strategy.

The case describes an investment decision confronting the chemicals and pharmaceutical company, Ciba-Geigy, in one of its more mature and competitive businesses. The firm operates with a rigorous portfolio planning methodology that governs resource allocation across its various businesses and which affects financial objectives, compensation, and staffing in those businesses. In principle, portfolio planning suggests that the investment decision should not be made, but the business head believes the investment is critical to the long term success of the business.

Materials

Portfolio Planning at Ciba-Geigy and the Newport Investment Proposal (HBS #795040)


Assignments

Ciba-Geigy

1) Should Ciba-Geigy make the Newport Investment and if so, which option should it pursue?

2) How does portfolio planning help or hinder this decision?

3) What are the purposes of portfolio planning? Does it fulfil those goals?

4) What else needs to be considered when deciding in which businesses a corporation should compete?



Day 23 - FBI

8:30 AM - 9:50 AM


Aldrich Hall 210

MODULE FOUR: ORGANIZATION DESIGN

In the last module of the course we turn our attention to the internal organization design of the corporation. How can the organization structure, systems, processes and culture be designed to ensure that businesses in the portfolio truly benefit from corporate resources and yet still pass the ownership test?

We will examine formal organization structure as one tool for designing the administrative context; we'll see what roles the corporate headquarters should play and what degree of authority they should have over the operating units; the debate over public versus private ownership; as well as revisiting organizational approaches to maintaining innovation and supporting continuous corporate transformation.

TOPIC: ORGANIZATION STRUCTURE

We start the module looking at organization design in a non-traditional setting – the FBI. After the impact of 9/11 in 2001 the country is confronted with the need to add a new mission (think new business) for the FBI (domestic intelligence) to the FBI’s traditional role of law enforcement. The President has to decide how best to organize the country’ s agencies and whether the new mission can best be accommodated within the FBI’s structure. If Director Mueller of the FBI is given the role, how should he alter the agency’s organization design and move forward in the protection of the country’ security?

Materials

Federal Bureau of Investigation, 2001 (Abridged) (HBS #710450)


Federal Bureau of Investigation (B) (HBS #707553--to be distributed in class on Wednesday, April 9)


Recommended Reading--Corporate Strategy: A Resource-Based Approach, Chapter 6: Managing the Multibusiness Corporation


Assignments

FBI

1) In 2001 should the President of the United States give the FBI ongoing, long term responsibility for domestic intelligence? Or should he create a new specialized agency for the task?

After reading the FBI (B) case:

2) How do you assess the FBI's efforts through early 2007? Is the Bureau moving in the right direction?

3) Why does Director Mueller want to transform the FBI into an intelligence-led, threat-based national security organization? Practically, what must he do to pull off such a dramatic transformation? What obstacles will he encounter, and how should he tackle them?



Day 24 - The Guardian

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: ORGANIZING FOR STRATEGIC CHANGE

The newspaper industry is currently being “disrupted” by online news and advertising. Many newspapers are falling by the wayside, others, like the Washington Post and Boston Globe, are changing hands with new owners, Jeff Bezos and John Henry, respectively, looking to find new ways to maintain their viability. In this environment, the liberal British newspaper, “The Guardian”, has been one of the most successful entities in addressing the changing external environment.

We will examine the drivers of change within the newspaper industry, and then focus our attention on understanding how The Guardian has been able to succeed better than most in making the transition.

Materials

The Guardian: Transition to the Online World (HBS #709464)


Newspaper Cost Structure Exhibit


Video Lecture


Corporate Strategy 2014_Changing the Scope of the Firm_Slides


Assignments

The Guardian

1) What are the underlying causes of the collapse of the traditional print newspaper business model?

2) What will the structure of the text-based news industry look like in the future? Is a pure online newspaper viable? (Examination of the Excel exhibit attached above on the cost structure of a newspaper might be useful here.)

3) Why has the Guardian been a relative success in its transition to the online world? What else can/should the Guardian do going forward?

4) What lessons can be learned about how to manage large corporations for strategic renewal?

Collapse Friday, April 18, 2014

Friday, April 18, 2014

Day 25 - Dell

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: PUBLIC versus PRIVATE GOVERNANCE

Last year saw founder, Michael Dell, make an offer with Silver Lake Partners to take the personal computer company, Dell, private. The bid process lasted many months as the Board investigated alternatives, addressed a rival offer from Carl Icahn, shopped the company, and sought guidance from outside advisors. The case provides extracts from the presentations that were provided Board members as they wrestled with deciding whether or not to accept a final offer from Michael Dell.

The case discussion allows us to confront the issue of corporate governance and debate the merits of public versus private ownership. Who is the best owner for Dell as it struggles to remedy strategic failings in the face of a declining and evolving pc market that it once dominated? Are there decisions and actions that can only be taken when a firm is private, or do public firms actually have advantages when attempting to change corporate strategy?

Materials

Taking Dell Private (HBS #714421)


Assignments

Dell

1) What are the strategic problems facing Dell? Are the proposed solutions likely to be successful?

2) What are the pros and cons of Dell making a strategic shift as a public vs. private company?

3) Did the Dell board run a good process? Would you have done anything different?

4) As a board member of Dell, would you accept Michael Dell’s offer?

5) Would you put your own money in Dell at Michael Dell’s price--$13.88?



Day 26 - Maersk

8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: ROLE OF HEADQUARTERS

The Maersk group, Denmark’s largest company and a leader in the global shipping and oil businesses, has undergone a radical transformation in the last decade. The group has moved from being run as a single integrated business into a “premium conglomerate” with separate business units each accountable for their own performance.

As part of this evolution, the group headquarters has been radically redesigned. After six years in its new form, CEO Nils Andersen, is revisiting the size, roles and authority of the various group functions. The case allows us to examine in what ways headquarters can add value to the business units, and how the relationship between headquarters and business units can best be managed.

In particular, we will focus on three functions – a shared service (procurement); a value adding activity (HR); and a required public company function (monitoring performance). Examining the different

determinants and requirements of these three functions allows us to cover the range of roles a corporate headquarters undertakes in a multi-business corporation.

NOTE: Lucien Alziari the Group Head of HR will be attending class.

Materials

Group Functions at the Maersk Group (to be distributed through Course Distribution on Tuesday, April 22 afternoon)


Assignments

Maersk

1) Is the Maersk Group’s Headquarters effective in adding value to the “premium conglomerate?” Is it the right size? Does it have the right authority?

Specifically,

2) Why has group procurement grown in size greatly? Should it now take over the purchasing of major capital expenditures?

3) Does Lucien Alziari have the right approach to the role of HR in the group? Does group HR add value to the business units?

4) Is performance management effective in driving results in the business units? How could it be changed to improve “pressure“on the business units?




8:30 AM - 9:50 AM


Aldrich Hall 210

TOPIC: ORGANISATION

Every corporation has to design the administrative context within which the business units operate. This includes the formal organisation structure, the size of and functions performed by the headquarters

staff, and the management processes for control and coordination of the discrete businesses. This lecture will cover these issues and how their design can be aligned with the overall corporate strategy so that they effectively deploy distinctive resources across the business portfolio.

Materials

Video Lecture


Corporate Strategy 2014_Organisation_Slides


Collapse Thursday, May 1, 2014

Thursday, May 1, 2014

Day 28 - Summary Lecture

8:30 AM - 9:50 AM


Aldrich Hall 210

Materials

Corporate Strategy 2014_Summary Lecture_Slides


Assignments

Summary Lecture

There will be no class preparation.

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