STRATEGY 390

Sections 002, 003 & 005

Autumn 2014

A. Course Description
This course is focused on developing concepts and analytical techniques for creating a sustainable competitive
advantage in highly competitive environments. The perspective employed in this course is that of the general
manager of the corporation, business, division, plant or other business unit whose overarching
responsibility is the success of the organization. At the core of strategy, and the general managers task, is the
definition of the scope of a firms activities, an understanding of where and how competitive advantage arises,
and how to bring about change in the organization in order to achieve a competitive advantage.

Historically, both in research and instruction, strategic management has focused on the role of top
management. While strategy remains one of the key responsibilities of senior executives, it is no longer the
restricted domain of CEOs. Many structural factors have contributed to this trend the flattening of
organizational hierarchies, the growth in entrepreneurial ventures and the birth of many hybrid forms of
business enterprises (e.g., joint ventures & strategic alliances) are just three causes. Perhaps most important,
however, is the increasing pace of change in the competitive landscape. This pace of change has been driven
by many forces including the astounding growth in global business and competition, advances in information
technology, and a general trend in industrialized nations away from government protection of, and
involvement in, commerce. As a result, competition is taking place in an environment in which a firms
distinct resources and/or capabilities can be eroded by quick learning, innovative competitors. In order to
succeed in this and future environments, managers must be able to translate their unit or departments plans
to the overall competitive success of the firm.

Mid-level managers and functional specialists alike are increasingly being challenged to take an organizational
perspective when confronting daily issues, and to ground strategic contributions in the operational realities of
the business. This course aims to develop and improve your ability to take the initiative and assume a
leadership role in a company, no matter what your formal position, or ownership interest, may be. In order
to achieve this aim the course has two goals. First, the course is structured to provide the foundational tools
and techniques of strategic management, including such applied topics as vertical integration, diversification,
globalization, innovation, growth and organizational design. Tools and techniques by themselves, however,
are of little competitive benefit if they cannot be applied with unique, well-grounded insights into new
methods of competition. Consequently, the second goal is to improve your decision-making and analytical
skills in crafting and implementing successful strategies. Alternatively stated, paraphrasing both Peter
Drucker and Spike Lee, to succeed you must be able to "do the right things" (#1) as well as "do things right"
(#2).

In order to capture the pragmatic, action-oriented nature of the general managers job and the complexity of
her responsibilities, this course is taught through the case method. Accompanying each case are specifically
chosen readings which provide foundational and technical tools that will aid you in addressing the cases.

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B. Course Logistics
Faculty: Brad Killaly
Office: Room 4472
E-Mail: killaly@umich.edu
Phone: Office TBD. Mobile (949) 231-9062 (txt or voice)
Office Hours: To be determined
Class Times: Mondays and Wednesdays, Room R1240
Section 002 (8:30-10:00h)
Section 003 (14:30-16:00h)
Section 005 (13:00-14:30h)

Course Materials
There is one required resources for the course. There is a course-pack that contains all of the cases and most
of the required reading for the course. A limited number of additional required readings will be distributed
directly through C-Tools as the semester progresses. I have decided not to require a textbook for two
reasons. First, the better texts include a large amount of material that is not central to our course.
Consequently I see no reason to ask participants to pay for material that will not be employed. Second, even
the better texts, including those geared to a senior course in strategy, are largely rudimentary and do not
delve to the depth of understanding required to motivate and convey the material.

C. Course Requirements & Evaluation

Your (i) final assessment (Letter Grade) in this course will be derived from a final numeric score (FSi). Your
final assessment will conform to the Ross School of Businesses prevailing guidance on assessment
distribution for core BBA courses. Your final numeric score (FSi) in this course is comprised of three
components:

Individual Participation (IPi) 20%

Individual Quizzes (Qi) 30%
Group Work (GWix) 50%

Thus, FSi = 0.20IPi + 0.30Qi + 0.50GWix

Note that your Group Work (GWix) is based on a final Group Project (GPx) which is 35% of the FSi and five
smaller Group Assignments (GAx) which, in aggregate, are 15% of the FSi. Additionally, your Group Work
(GWix) is subject to peer evaluation by each of your teammates. These dimensions are explained in greater
detail below.

Your final numeric score will be converted to a final assessment following completion of the course. The
rank order of the final numeric scores will be used in assigning assessments according to the distributional
policies of the Ross School BBA program. Your final numeric score will not be made available to you; only
your final assessment will be made available.

Individual Participation (IPi)

Your responsibilities for all classes are as follows:
1. Attend all classes promptly and in their entirety.
2. Complete ALL of the required readings (readings and cases) for the class, including this syllabus,
which is required reading.
3. Conduct an analysis of the case(s) based on the questions outlined in advance.

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4. Actively participate in the classroom discussion of the case, the case readings and the supplemental
readings.
5. Govern yourself according to Section D - Standards and Integrity as outlined in this syllabus.

As this is a case-based course much of your learning will come through open discussion of the case in class.
Consequently, your attendance at class will be considered in evaluating your participation. Within class,
participation involves being clear about your own position and defending it, and the willingness to seek
alternative perspectives on the situation. Participation enables you to learn from your colleagues and to help
them learn from you -- which is what the case method is all about. You are expected to participate effectively
in the class -- analyze, comment, question, discuss, and build on others' contributions. Good class
participation is not repeating case facts, monopolizing class time, or ignoring the contributions of fellow
participants. The ability to present one's ideas concisely and persuasively, and to respond effectively to the
ideas of others, is a key success factor in any leadership position. One of the goals of this course is to help
you enhance these abilities. Some of the behaviors that sharpen this ability and contribute to effective class
participation are captured in these questions:
Is the participant a good listener?
Are the points that are made relevant to the discussion? Are they linked to the comments of others
and the themes that the class is exploring? Are they adding new insights?
Do the comments add to our understanding of the situation?
Do the comments show evidence of analysis of the case?
Is there a willingness to challenge the ideas that are being expressed?
Is there a willingness to test new ideas, or are all comments safe? (For example, repetition of case
facts without analysis or conclusions, or repeating comments already made by someone else.)
Is material from past classes or the readings integrated where appropriate?
All of these will be considered in assessing your class participation.

It is important to emphasize that participation is measured as your attendance and oral participation in the
class. This course is specifically designed to develop and hone your ability to think on your feet and
verbally communicate your analyses clearly and logically. It is vitally important that you develop this skill as
the vast majority of the managers job involves verbal communication with colleagues, customers, suppliers,
investors, regulators etc. Most importantly, and potentially of greatest value, this ability will greatly enhance
your performance with recruiters. Learning to do so in a classroom is a far kinder and gentler venue than
attempting to do so in business when the stakes, both personally and financially, are far higher.

Some Suggestions on Case Preparation

There is generally no optimal method of tackling a case. A useful recommendation is to read the case
twice; the first time from start to finish without substantial reflection on the details. Your second read should
focus on the details and you should have in mind the questions posed for the case. In most of the cases there
is both valuable and extraneous information for the questions at hand. Sorting through the information in
order to conduct your analyses and craft your recommendations is one of the skills to be developed in this
course. Remember, skills develop over-time and improve with repeated, and guided, practice.

Frequently, accompanying each case is a required reading to be completed. These readings provide concepts
that can be employed to tackle the case. You are likely to find it more useful if you read the required reading
between your first and second read of the case, as you will be able to identify opportunities to apply the tools
once the context is established. Conducting the case analysis in advance, and arriving prepared for the case
discussion, is how one comes to act and think more strategically. At the core of this course is application of
the tools, not just understanding what the tools are. Even with extensive preparation you will no doubt find
that you will gain many new insights through a discussion of the case in class. In order to maximize your
learning in this course, you are encouraged to analyze and discuss the case and the underlying concepts with
your fellow section classmates. You are, however, NOT permitted to discuss the case with other sections,

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whether they are Professor Ostlers, or mine, if the case has already been discussed in earlier classes.
Such behavior is unethical and equivalent to cheating, and will be dealt with accordi ng to the Ross
Schools policies.

Cold-Calling
In order to foster dialogue I will frequently call on those of you who do not have your hands raised (a.k.a.
cold-calling). I will, as a rule, open a case discussion in this way. Given the size of the class and the number
of cases not everyone will be cold called, although over the course of the semester there will be ample
opportunity for you to participate. You must be aware, however, that the responsibility for you to
participate is entirely yours.

Individual Quizzes (Qi)

There will be three individual quizzes throughout the semester. Each quiz will be administered during the
regular class time meeting. Each quiz is equally weighted at 10% of FSi. The dates for these quizzes are:
Wednesday, October 1, 2014 (Q1i)
Monday, October 27, 2014 (Q2i)
Wednesday, November 19, 2014(Q3i)
No makeup quizzes will be given so if you miss class you will earn a score of zero. Extraordinary situations
should be brought to the facultys attention as early as possible. As you now know the dates ahead of time I
expect that no conflicts will arise. The reason for more frequent quizzes in lieu of a midterm and final is that
giving quizzes in this manner allows for earlier and more frequent feedback on your performance. This has
been proven to be beneficial in enhancing student learning, and has also been requested by students in the
past. An additional benefit is that your workload is more evenly spread out throughout the semester.

You are responsible for all of the required readings, supplementary readings, case preparations, material
presented in class via lecture and otherwise electronically transmitted (via power point, lecture or use of other
media). All quizzes will be closed book.

Group Work (GWix)

Half of your performance in the course will be based on group (x) work. The group work is based on five
short group assignments (GAx) and one large final group project (GPx).

Group Assignments (GAx)

In your groups you will complete five short group assignments during the course. Each assignment is
weighted at 3% of FSi, thus five assignments total 15% of FSi. These short written assignments will be due
on the following dates:
GA1x September 15
GA2x September 22
GA3x October 20
GA4x November 03
GA5x November 12

Group Final Project (GPx)

Please see Appendix A for a description of the Final Group Project.

Calculation of GWix
Once all group work is completed and evaluated, a Group Score (GSx) will be calculated as follows:

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GS x =0.30GA x +0.70GP x 1

However, your actual individual score (GWix) for the group work is based on your overall Group Score (GSx)
as well as your individual performance in the group work as evaluated by all of your fellow group members.
Note from above that GWix is the score that it is used in calculating your final score (FSi). This system is
basically one of a group base score (GSx) with an individual merit score (MSix the score you will receive
from your peers, which is also a function of GSx). The calculations are as follows:

GW ix = 0.7GS x + 0.3MS ix
M S ix = (GS x )x(IS i /AV ix ), where
IS i = Group members individual performance appraisal score (average of standardize
scores from group peers), and,
AV x =( IS ix /N GM x ), where,
IS ix = Sum of all group members individual scores
NGM x = Number of group members

To eliminate inequities among a groups easy and hard evaluators, each group members scores are
standardized to create relative scores. A sample evaluation that will likely be used is attached to this syllabus
as Appendix B.

Policies on Group Composition

In each section there will be 14 groups. This implies an approximate group size of 6. Accordingly, you are to
form groups of about 6 individuals from your specific section. Depending on the actual enrollment in each
section there may be a group or two that has either 5 or 7 members. You are not permitted to form groups
with members from another section. Group composition is to remain the same for the entire semester. You
are to provide a list of your group members by September 10th, 2014. Given the group formation process, I
may be compelled to assign or reassign (at the margin) group members in order to achieve an appropriate
number and size of groups. The responsibility for joining/forming/managing a group rests entirely with each
student. To motivate you in the management of your team I strongly encourage you to understand how the
team peer evaluations can affect your overall score in group work, and thus potentially your final assessment.
Please spend the time to structure your group carefully and discuss good group processes.

Policy on Grade Appeals

This course will prepare you to succeed in business. After graduation, supervisors will regularly evaluate your
performance; you will often disagree with their evaluations. Rarely will stopping by the boss office to lobby
for a better rating or complain about the process be rewarded with the greater compensation, more promising
projects, increasing responsibility or unusually early promotions. As such, neither lobbying for higher grades
nor complaining about grading will be rewarded in this course. However, mistakes will occasionally be made
and the merits of your work product may be underappreciated. Such instances are to be addressed as follows:

1. If you would like your grade on a specific quiz or assignment to be reconsidered, then you must
compose a memo that justifies further consideration of your work:
a. The memo must be submitted within 1 week of the original grade being distributed.
b. The memo must be no more than 1 page (12-pt font, single-single spaced, minimum 1
margins).
c. The memo must be physically delivered to the professor or his assistant.
d. All of the original work must accompany the memo.
2. The quiz or assignment will then be evaluated.
3. All grade appeals must conform to this procedure.

1
Note that this breakdown is equivalent to a 15% contribution of GAx to FSi, and a 35% contribution of GPx to FSi

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Note that you are more likely to be successful in business if you can persuade others logically, not
emotionally, in a concise and specific manner. Consequently, such appeals are most likely to result in more
positive evaluations upon review. Bear in mind that the grade appeal process is designed to prepare you to
succeed in business; the process should not be abused (i.e. treated as a lottery ticket with a low probability of
receiving a higher grade).

D. Standards & Integrity

Professional Standards
Professional Standards provide a guideline for professional behavior by students, and faculty inside the
classroom. I am committed to creating an environment in which every individual can work and study in a
culture of mutual respect. When making individual decisions we must keep in mind the interests of the many
other stakeholders. In general your behavior should be the same as if you were at a business meeting in a
well-run company.

Because of the course emphasis on case analysis, the major and important part of your learning in this course
will take place in the classroom. Therefore, the following professional conduct standards are expected.
Attending the class. Each class benefits from the attendance and participation of everyone. Your
score for participation will be affected by absences. Please sit in the assigned seat, and display a
legible name card at all times.
Arriving on time. Late arrivals are disruptive to the case discussion and others. From time to time
events may result in someone being late. Please enter the classroom with minimal disruption, and, if
necessary, sit at the back of the class with your name tent displayed if that results in a reduction of
disruption. Tardiness, in particular a pattern of tardiness, will negatively affect your participation
evaluation.
Phones, Recorders and Other Electronic Devices. As a matter of courtesy and productivity, I
would ask that personal communication devices be turned-off for the duration of the entire class. If
you must remain connected during the class, please let me know in advance of the class. In addition,
unless a formal accommodation is received to aid a students learning, audio and video recording of
the class is prohibited at all times.
Minimizing disruptions. Each class in this course is 1 hour and 20 minutes in duration. This is
very little time in each class to conduct a case analysis or lecture on core concepts. In order aid your
learning, and not to disrupt others learning, I ask that you not excuse yourself from class. The
disruption can be substantial given the close to full attendance and the physical design of the
classroom. This is not to say you cannot excuse yourself, for that would be inappropriate, but that
for everyones benefit I ask that you use sound judgment (i.e. illness, important (please inform me)
and emergency phone calls, use of the washroom etc.)
Focusing on the class. As this is a case based course there is little value in using electronic
equipment for learning. This course is about thinking. Accordingly you are not permitted to use
laptop computers during class. There may be some exceptions to this rule; however you will be
informed of this well in advance. The learning that occurs in class and case discussions does not lend
itself to electronic note taking. You will find the discussion much more productive and valuable if
everyone focuses on the case alone.
Respect. You should act respectfully toward all class participants. This may seem obvious, and
sound courtesy, however it bears repeating in a case based course. For example, many members of
the class will likely feel nervous or unsure during case discussion. This must not be construed as lack
of preparation or lack of understanding. Please be supportive and respectful to all in the course
(indeed, outside of the course as well).
Prepare using only class materials. Before a case is analyzed in class, you should neither read an
analysis of the cases nor discuss it with students who have previously discussed it in class (either in a

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previous year or in a different course or section). Similarly, you should not share the notes with
another student who may take the course at some later time. If you are in violation of this policy, or
know of someone who is, please discuss it with the professor.
Being prepared for class. I expect you to be fully prepared for each class and may call upon you to
start the discussion or answer a specific question during the class on any day. Preparation involves
not just thorough analysis, but also developing a personal position on the issues raised in the case.
Unless you have thought about and adopted a personal position, it is very hard to learn from others'
contributions in the class.
Student Learning Considerations
If you believe you need an accommodation for a disability, please let me know at the beginning of the
semester. As soon as you make me aware of your needs, we can work with the Office of Services for
Students with Disabilities to help us determine appropriate accommodations. I will treat all information as
fully confidential. If there are any other learning considerations about which you are concerned, let me know
at the beginning of the semester and I will discuss this with you individually.

Academic Honesty
This discussion of academic honesty is not exhaustive, and there may be areas that remain unclear to
you. If you are unsure whether some particular course of action is proper, it is your responsibility to
consult with your professor and/or teaching assistant for clarification.

Please take these guidelines seriously. When students are found to have violated academic standards,
disciplinary action will result. Possible consequences include grade reduction, an F grade, a transcript
notation, delay of graduation, or expulsion from the School.

Plagiarism
Plagiarism occurs when you use another's intellectual property (words or ideas) and do not acknowledge that
you have done so. Plagiarism is a very serious offense. If it is found that you have plagiarized -- deliberately
or inadvertently -- you will face serious consequences, as indicated above. The best way to avoid plagiarism is
to cite your sources - both within the body of your assignment and in a bibliography of sources you used at
the end of your document. In many cases it will be apparent if you copy prior year solutions for the group
assignments. Materials gathered through research via the Internet must be cited in the same manner as more
traditionally published material. Lack of such citation constitutes plagiarism. For more information please
visit: http://libraries.mit.edu/tutorials/general/plagiarism.html.

Academic Honor Code and Academic Honesty

Personal integrity and professionalism are fundamental values of the Ross School community. To help ensure
that these values are upheld and to maintain equitability in the evaluation of your work this course will be
conducted in strict conformity with the Academic Honor Code. The code and related procedures can be
found at the following website: http://www.bus.umich.edu/Academics/Resources/communityvalues.htm.
The site also contains comprehensive information on how to ensure that you have not plagiarized the work
of others. Claimed ignorance of the code and related information appearing on the site will be viewed as
irrelevant should a violation take place.

Group Assignments
When you are asked to work in teams, collaboration is expected and each team member must contribute
substantially to the deliverable.
Each team member must make a substantial contribution to the assignment. It is not, for example,
acceptable to divide the assignments amongst the team members (e.g., one person does one case and
another does the next), though the team may divide the work of any one assignment to complete it as
they deem appropriate.

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The team may not collaborate with other current or former students outside of the team, or consult
the work of current or former students.
The team may not use materials outside the course unless explicitly asked to in the instructions of the
assignment.

E. Class Schedule & Preparation

Please note that other readings, both required and optional, will be assigned throughout the course. Unless
otherwise noted, all cases and readings are required and are to be completed prior to class.

MODULE 1: COMPETITIVE ENVIROMENT AND BUSINESS LEVEL STRATEGY

CLASS 1 Wednesday, September 3

Course Introduction
Case: Honda A
Reading: The Perils of Bad Strategy
Questions: Come to class prepared to discuss the following:
1. What caused Hondas success?
2. What role did good management play in Hondas success?
3. How did you define good in your answer to question 2?

CLASS 2 Wednesday, September 3

Senior Convocation
Attendance at Senior Convocation is required for the course.

CLASS 3 Monday, September 8

Case: Honda B
Reading: Economics of Strategy (5th Edition, pages 11-34)
Crafting Strategy
Questions: We revisit the Honda case by now reading the Honda B version. Answer the same questions
as for Honda A:
1. What caused Hondas success?
2. What role did good management play in Hondas success?
3. How did you define good in your answer to question 2?
You are also to read and understand the chapter from Economics of Strategy. Come prepared
to discuss the relationship between cost and output, how to calculate profit, and how do
profit-maximizing firms set quantity and price?

CLASS 4 - Wednesday, September 10

Competitive Environment 1
Case: Cola Wars Continue: Coke and Pepsi in 2010
Reading: Understanding Industry Structure.
Questions: This case is one of the better illustrations of the influence of industry structure on incumbent
firm profitability. Take the time to become familiar with the dimensions of industry analysis as
outlined in the text. Preparing this case with other teammates will be helpful. Come to class
prepared to discuss the following:
1. Analyse and understand the factors in the industry that contribute to the profitability of
the soft drink industry. Distinguish between concentrate manufacturers and bottlers in
your analysis.
2. Has the competition between Coke and Pepsi resulted in lower profits?

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CLASS 5 Monday, September 15

Competitive Environment 2
Case: Lesser Antilles Lines: The Island of San Huberto.
Reading: Besanko et al. Economics of Strategy, pages 34-38.
Questions: Game theoretic approaches to understanding competitive moves (market entry, pricing, new
product development) are particularly powerful. Through the use of the Lesser Antilles case
we will understand the conditions under which game theory is powerful tool. Come to class
prepared to discuss the following:
1. Assess LALs past pricing strategy? Do you believe it is to be sustainable?
2. What are the managerial assumptions underpinning the table in Exhibit 4? Are they
realistic?
3. Now assume these assumptions (Q#2 above) are accurate. What action would you
recommend to LAL management? Be specific in how you would implement it.
4. Think of other current day contexts that you believe game theory insights, or thinking in a
game theoretic manner, would be helpful.

CLASS 6 Wednesday, September 17

Competitive Advantage
Case: None, although short articles will likely be distributed.
Reading: What is Strategy?
The Path to Insight
Questions: This class is largely lecture based, however everyone is required to come to class with an
example of a company that you believe has a competitive advantage

CLASS 7 Monday, September 22

Competitive Advantage: Cost
Case: Matching Dell
Reading: Barney Gaining and Sustaining Competitive Advantage (3rd Ed, Chapter 6)
Questions: Prepare for the case discussion by completing the team assignment.
1. How and why did the personal computer industry come to have such low average
profitability?
2. Why has Dell been so successful despite the low average profitability?

CLASS 8 Wednesday, September 24

Competitive Advantage: Differentiation
Case: eHarmony
Reading: Barney Gaining and Sustaining Competitive Advantage (3rd Ed, Chapter 7).
Questions: We examine the case of differentiation-based advantages by looking at the service industry.
continue our analysis of differentiation-based advantages by examining a manufacturing firm.
Come to class prepared to discuss:
1. Why do people want to meet others on-line instead of finding them in the real world?
2. Does eHarmony have a competitive advantage? If so where does it come from?
3. Which of the four options should Waldorf pursue?

CLASS 9 Monday, September 29

Competitive Advantage: Differentiation
Case: Ducati
Reading: Barney Gaining and Sustaining Competitive Advantage (3rd Ed, Chapter 7) same as for the
eHarmony case.
Questions: We continue our analysis of differentiation-based advantages by examining a manufacturing
firm. Come to class prepared to discuss:

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1. What are the factors that contributed to Ducatis turnaround?

2. Does Ducati now have a competitive advantage? How sustainable is this advantage?
3. Formulate a growth strategy for Ducati going forward.

CLASS 10 - Wednesday, October 1

Quiz #1

MODULE 2: SCOPE OF THE FIRM

CLASS 11 Monday, October 6

Scope of the Firm
Case: None
Reading: Creating Corporate Advantage
Contemporary Strategy Analysis Chapter 13
Questions: Preparation questions will be distributed in advance

CLASS 12 Wednesday , October 8

Corporate Strategy: Diversification
Case: Walt Disney Company: The Entertainment King
Reading: Re-read Creating Corporate Advantage
Questions: The Disney case is the first of four cases that address the scope of the firm. In this case we
will try to understand the concept of synergy as well as the notion of relatedness in
businesses that operating in different industries. In preparing for class and the case discussion
you should have thought about, and be prepared to discuss in class, your answers to the
following questions:
1. Why did Disney move into the parks and hotels industry? How do those moves change
the returns to investing in animation?
2. Is it sensible for Disney to move into music for young adults (e.g., Hannah Montana)?
Could a record studio do a better job?

Monday, October 13
Fall break. No class.

CLASS 13 Wednesday, October 15

Corporate Strategy: Diversification
Case: Disney Pixar
Reading: Contemporary Strategy Analysis Chapter
Questions: The Disney Pixar case is the first of a two-sequence study into vertical integration (make vs.
buy vs. hybrid contracting). This case deals with vertical integration in the service/knowledge
industry space, where the next case, Sensormatic, addresses vertical integration in the
manufacturing space. In preparing for class and the case discussion you should have thought
about, and be prepared to discuss in class, your answers to the following questions:
1. Which is great: the value of Pixar and Disney in an exclusive relationship, or the sum of
the value that each would create if they operated independently of one another or were
allowed to form relationships with other companies? Why?
2. Assuming that Pixar and Disney are more valuable in an exclusive relationship, can that
value be realized through a new contract? Or is common ownership required?
3. If Disney does acquire Pixar, how should Bob Iger and his team organize and manage the
combined entity? What challenges do you foresee and how would you overcome them?

CLASS 14 - Monday, October 20

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Corporate Strategy: Applied Vertical Integration

Case: Sensormatic Electronics Corporation (Case 681-095)
Reading: Contemporary Strategy Analysis Chapter 14 (from class 11)
Questions: The Sensormatic case allows us to investigate the logic of vertical integration from a
manufacturing perspective. It also allows us to inform the decision by conducting detailed
financial analyses. In preparing for class and the case discussion you should have thought
about, and be prepared to discuss in class, your answers to the following questions:
1. Evaluate the quality of Blakeys financial analysis of the two integration options? Come to
class with specific recommendations on how you would improve the analysis.
2. Is Sensormatic justified in backward integrating into the manufacture of injection-molded
plastic parts?

CLASS 15 Wednesday, October 22

Corporate Strategy: Globalization
Case: Kentucky Fried Chicken in China (A)
Reading: Managing Differences: The Challenges of Global Strategy
Questions: In preparing for class and the case discussion you should have thought about, and be prepared
to discuss in class, your answers to the following questions:
1. What was McDonalds strategy in China? How did it differ from KFCs strategy?
2. What are the advantages and disadvantages of these strategies?
3. What should McDonalds do next in China? How about KFC?

CLASS 16 Monday, October 27

Quiz #2

MODULE 3: GROWTH, INNOVATION AND APPLIED TOPICS

CLASS 17 Wednesday, October 29

Growth and Innovation Young Business
Case: Patagonia
Reading: TBD
Questions: In preparing for class and the case discussion you should have thought about, and be prepared
to discuss in class, your answers to the following questions:
1. Evaluate Patagonias business model. How important to Patagonias business model is its
environmental position?
2. What is your assessment of the Product Lifecycle Initiative (reduce, repair, reuse and
recycle)?
3. How fast can Patagonia grow? How fast should it grow?
4. How would Patagonias business model differ if the company were publicly held?

CLASS 18 - Monday, November 3

Growth and Innovation Mature Business
Case: Nucor at a Crossroads
Reading: None
Questions: In preparing for class and the case discussion you should have thought about, and be prepared
to discuss in class, your answers to the following questions:
1. Why has Nucor performed so well in the past?
2. How attractive do the economics of thin-slab casting look?
3. Is thin slab casting likely to afford Nucor a sustainable competitive advantage in flat rolled
products?

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CLASS 19 Wednesday, November 5

Executing Strategy: Getting the Deal Done
A required reading will be distributed during Class 18.

CLASS 20 Monday, November 10

Executing Strategy: Aligning People
Case: Arck Systems (A)
Reading: Tushman and OReilly (2002). Managerial Problem Solving: A Congruence Approach.
Chapter 4 in Winning Through Innovation.
Questions: In this class we introduce the congruence model of organization design as a tool for thinking
about how to execute a strategy. We will employ this model in a number of cases including the
Vitas and the Google case. We also address employee motivation as an important lever in
executing strategy. Come to class prepared to discuss:
1. What constitutes a sound strategy for a software company?
2. How do the pay-for-performance compensation plans at Arck and Lux differ?
3. Why do these two companies utilize different compensation plans?
4. If you were Bryan Mynor, then which differences would concern you most? Why? What,
if any, changes should Mynor make to Lux Softwares compensation plan?

CLASS 21 Wednesday, November 12

Executing Strategy: Organizational Design
Case: Vitas: Innovative Hospice Care
Reading: Re-read Tushman and OReilly
Questions: We will use the case to illustrate the importance of organization structure in trying to secure a
competitive advantage. We will again employ the congruence model, and this time apply it to
the service industry. The Vitas case also addresses whether and how to grow a business in
light of unattractive industry and economic conditions. Come to class prepared to discuss:
1. What dimensions of Vitas organization design contribute to its success? Be specific.
2. What is the logic behind the organizational structure of Vitas? Would you make any
changes that would improve performance?
3. Should Vitas continue its growth by employing a roll-up strategy? What are some of the
organizational challenges you anticipate with such a strategy? If not, what alternatives
would you suggest?
4. Provide a compelling logical argument for Vitas to remain a wholly own subsidiary of
Chemed Corporation. Chemed Corporation wholly owns one other business -> Roto-
Rooter (find information on this company by simply searching the internet).

CLASS 22 - Monday, November 17

Executing Strategy Design for Innovation
Case: Keeping Google Googly
Reading: Tushman and OReilly (again)
Questions: In preparing for class and the case discussion you should have thought about, and be prepared
to discuss in class, your answers to the following questions:
1. Use the congruence model to evaluate Googles business model, organizational structure,
policies and norms.
2. What accounts for Googles success?
3. What key challenges does Google face at the end of the case?
4. Devise a strategic plan to Keep Google Googley that is, to remain entrepreneurial and
to avoid bureaucratic obstacles to decision-making and innovation.

CLASS 23 - Wednesday, November 19

Quiz #3

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Monday, November 24
No formal class will be held, however meetings with the faculty to discuss group project progress may be
scheduled throughout the day.

Wednesday, November 26
No class, as per University of Michigan schedule, due to the Thanksgiving Holiday.

CLASS 24, 25 and 26 - December 1, 3 and 8 respectively

Engagement Presentations (aka Final Group Project presentations)

CLASS 27 - Wednesday, December 10

Course Conclusion & Strategic Career Guidance
Reading: 1. Pfeffer, J. and R.L. Sutton. The Smart Talk Trap (99310)
2. Lewis, M. (2008). A Calling in Life. A Bloomberg.com column, reader responses, and
rejoinder. To be posted to C-Tools.

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APPENDIX A - GROUP PROJECT OUTLINE

A. Context and Responsibilities

Your group is to act as a consultant to a major publicly traded company. Your goal is to provide a
comprehensive competitive evaluation of the company. This evaluation is composed of four components, all
of which the senior executives of the company have asked you to address:
1. Define the industry in which the company competes. Evaluate the evolution of the industry as well
as the key success factors for firms competing in the industry.
2. Identify two direct competitors to the company. Evaluate their strength as competitors.
3. Analyze your focal company. Be very aware of the companys history, and in historical and current
context evaluate their resources and/or capabilities and their current competitive position
(resources/capabilities, competitive advantage, sustainability).
4. Make 2 concrete recommendations to the firm which will lead to or enhance their competitive
advantage, both today and in the future. You must clearly demonstrate that the recommendations
are feasible and you must have a clear timeline and prioritization for the implementation of the
recommendations.

Your group will be allocated 25 minutes in total (15 presentation, 10 for questions and answers), including
questions and answers from the Strategy Committee of the Board of Directors of the Company, to present
the findings, analyses and recommendations of your engagement.

In addition to your presentation, you must deliver the following written products on the date of your
presentation:
1. An executive summary of your engagement. The executive summary must be single-spaced, use 12-
point times new roman font, and have minimum one inch margins on all dimensions. Appendices
do not count toward the page limit. The maximum length of the executive summary is three pages,
2. A complete printed copy of all slides and accompanying notes pages/back-up slides if any, to be used
in your presentation,
3. A detailed and complete journal and reference list of all research sources employed and research
analysis conducted in the course of your engagement, including but not limited to databases,
electronic sites, all library materials and other reference sources, and
interviews/conversations/correspondence with individuals (along with their phone numbers).

B. Logistical Matters
In each section there will be fourteen groups. Within each section, two groups will act as consultants to the
same company. Consequently, in each section there will be seven pairs of consulting teams. Each team is to
prepare to make a presentation on their engagement, and is to deliver all three written requirements noted
above.

Only one group within each pair will, however, make a presentation. The group within the pair not making
the presentation will act as the Strategy Committee of the Board of Directors of the Company, and will be
expected to critique the content of the consultants engagement and recommendations as laid out in the
presentation. Both the quality of the presentation and the critique will be equally weighted in the evaluation
of a groups performance. The decision of which group will present will be made on the day of the
presentation.

The list of companies to be studied will be distributed in the second day of class. I will later ask for your
preferences on companies and will try to match your preferences with the final selections

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APPENDIX B SAMPLE PEER EVALUATION

Please consider all group work the five group assignments, the final group project, and any other group exercises
during the course

YOUR NAME:
YOUR SIGNATURE:

Please use the following coding system to rate your group members and yourself in the table below.

Unsatisfactory Marginal Satisfactory Good Excellent

--------1-----------------------------2---------------------------3-----------------------------4---------------------------5--------

Score Description Explanation

Excellent Without this person, the quality of the group work would have been
5
Contributor significantly diminished.
Good Without this person, the quality of the group work would have been
4
Contributor diminished.
Satisfactory Without this person, the quality of the group work would have been
3
Contributor diminished somewhat.
Marginal Without this person, the quality of the group work would have been
2
Contributor about the same.
1 Unsatisfactory Contributor Without this person, the quality of the group work would have been improved.

Your Name: Name: Name: Name: Name: Name Name

Name:

Analyses of the cases,

material, and research
Knowledge and
application of tools and
techniques to the cases &
project
Facilitating the group
process*
Writing, editing and
presentation of all
submissions & project
Preparation and
participation in any group
course exercises
Overall contribution
(NOT intended as a
mean of the component
scores)

* Organizing meetings and workload, resolving conflicts, ensuring the participation of all Members, being a committed
group member, etc.
N.B.: 1) Due to division of labor within the group, certain categories may not apply to certain members. You may use
N/A in these circumstances, however please explain why a member received a N/A from you in your written
comments. 2) If you provide an overall assessment of a teammate that is lower than a four, you must provide
detailed written justification for your assessment on the reverse side.

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APPENDIX C COURSE SCHEDULE

CLASS DATE TOPIC Required Case & Readings Deadline
1 09/03 Introduction Honda A
Perils of Bad Strategy
2 09/03 BBA Senior Convocation
Required attendance for Strategy 390
3 09/08 Foundations of Strategy Honda B
Economics of Strategy (5th Ed, pages 11-34)
Mintzberg: Crafting Strategy.
4 09/10 Competitive Environment 1 Coke vs. Pepsi
Understanding Industry Structure
5 09/15 Competitive Environment 2 Lesser Antilles Lines Grp Assignment 1
Economics of Strategy (5th Ed., pages 34-38)
6 09/17 Competitive Advantage What is Strategy?
The Path to Insight
7 09/22 Competitive Advantage: Cost Matching Dell Grp Assignment 2
Barney Gaining and Sustaining Competitive
Advantage (3rd Ed, Chapter 6)
8 09/24 Competitive Advantage: Differentiation eHarmony
Barney Gaining and Sustaining Competitive
Advantage (3rd Ed, Chapter 7)
9 09/29 Competitive Advantage: Differentiation Ducati
10 10/01 Quiz #1 Quiz 1
11 10/06 Scope of the Firm Creating Corporate Advantage
Contemporary Strategy Analysis (Chapter 14)
12 10/08 Corporate Strategy: Diversification Disney: The Entertainment King
10/13 NO CLASS - BREAK
13 10/15 Corporate Strategy: Vertical Integration Disney Pixar
14 10/20 Corporate Strategy: Applied Vertical Sensormatic Grp Assignment 3
Integration
15 10/22 Corporate Strategy: Globalization KFC/McDonalds
Managing Differences: the Central Challenge of
Global Strategy (class )
16 10/27 Quiz #2
17 10/29 Growth & Innovation Young Patagonia
18 11/03 Growth & Innovation Mature Nucor Grp Assignment 4
19 11/05 Executing Strategy Getting the Deal Done Preparation documents to be distributed in class
18.
20 11/10 Executing Strategy Aligning People Arck Systems
Tushman and OReilly (2002). Managerial
Problem Solving: A Congruence Approach
21 11/12 Executing Strategy Organizational Design Vitas: Innovative Hospice Care Grp Assignment 5
22 11/17 Executing Strategy Design for Innovation Keeping Google Googly
23 11/19 Quiz #3 Quiz 3
11/24 No Class
Engagement Progress Updates as Required
11/26 No Class - Thanksgiving
24 12/01 Engagement Presentations
25 12/03 Engagement Presentations
26 12/08 Engagement Presentations
27 12/10 Course Conclusion / Strategic Career Smart Talk Trap
Guidance A Calling in Life

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