Graduate School of International Management International University of Japan MGT 1050 Strategic Management Fall 2011 Instructor: Toshiro Wakayama

Teaching Assistant: Deeptangshu Thapa

Office: 312 Phone: 427 Office Hours: After class or by appointment Email: [email protected]

Email: [email protected]

Motivation: The challenge and the dilemma of strategic management What is strategy? The answer to this question varies among different schools of strategy studies. However, it is generally agreed that the firm’s strategy, as a whole, is essentially of an integrative nature and does not break into parts that can be separately addressed. Yet, in an individual managerial situation, the manager must focus on the specific strategic theme of the situation as if it were a separable part of the whole strategy. How does the manager comprehend the whole of the strategy if it is not a collection of parts? How does the manager successfully complete a specific strategic task if it is an inseparable part of the whole? Clearly, the dilemma to manage here is to maintain the undisturbed focus on the part while developing a broader picture of the whole.

Learning Objectives This course is an introduction on the fundamentals of strategic management. It introduces the basic tools, concepts and frameworks useful in conceiving a firm’s strategy as an irreducible whole. Throughout the course, the essential task of students is to develop the ability to take an integrative perspective when making a decision in a specific business situation.

Important Note This course serves as a critical prerequisite to advanced strategy courses in subsequent terms, such as Global Strategy in the winter term and Innovation and New Business Creation in the spring term.

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Required Materials ▪

Textbook:  Contemporary Strategy Analysis, 7th Edition, R. Grant, Blackwell Publishing, 2010.

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Articles:  What is Strategy? M. Porter, Harvard Business Review, November-December 1996. Harvard Business Review articles are available through MLIC Online Databases.

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Cases         

Cola Wars Continue: Coke and Pepsi in 2010, 9-711-462, Harvard Business School, May 2011 (revised). Delta Air Lines (A): The Low-Cost Carrier Threat, 9-704-403, Harvard Business School, January 2005 (revised). Matching Dell, 9-799-158, Harvard Business School, June 1999. Strategic Planning at United Parcel Service, 9-306-002, Harvard Business School, June 2006 (revised) Arauco (A): Forward Integration or Horizontal Expansion? 9-705-474, Harvard Business School, March 2009 (revised). P&G Japan: The SK-II Globalization Project, 9-303-003, Harvard Business School, March 2004 (revised). Google Inc., 9-910-036, Harvard Business School, April 2011 (revised). GE’s Two-Decade Transformation: Jack Welch’s Leadership, 9-399-150, Harvard Business School, May 2005 (revised). HTC Corp. in 2009, 9-709-466, Harvard Business School, November 2010 (Revised). This case is for the final exam.

References (not required, reserved at MLIC) ▪

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Economics of Strategy, Third Edition, D. Besanko, et al., John Willey & Sons, 2004 Corporate Strategy: A Resource-Based Approach, D. Collis and C. Montgomery, 2nd Edition, McGraw-Hill, 2005

Grading ▪ ▪ ▪ ▪

Final Exam (Case Analysis): 30% Case Memos (Group): 30% Peer Evaluation: 20% Class Participation: 20%

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Weekly Agenda Week 1 Introduction ▪ Course Overview ▪ What is Strategy? Readings: ▪ What is Strategy? M. Porter, Harvard Business Review ▪ CSA1  A Brief History of Business Strategy (13~16)  Strategic Management Today (16~26) Week 2 Analysis of the External Environment ▪ Industry Structure: Five Forces Analysis ▪ Industry Dynamics Readings: ▪ CSA  Analyzing Industry Attractiveness (66~77) Case: ▪ Cola Wars Continue: Coke and Pepsi in 2010. Week 3 Analysis of Internal Capabilities ▪ Resources and Capabilities ▪ Value Chain ▪ Systemic View of Capabilities Readings: ▪ CSA  The Resources of the Firm (127~131)  Appraising Resources and Capabilities (135~139)  The Challenge of Capability Development (152~158) Case: ▪ Delta Air Lines (A): The Low-Cost Carrier Threat Week 4 Sources of Competitive Advantage ▪ Cost Advantage ▪ Differentiation Advantage ▪ Structural Advantage Readings: ▪ CSA  Types of Competitive Advantage: Cost and Differentiation (222~224)  The Sources of Cost Advantage (231~239)  The Nature of Differentiation and Differentiation Advantage (247~249) Case: ▪ Matching Dell 1

Course Textbook: Contemporary Strategy Analysis, 7th edition. For each reading assignment, read the designated sections in the CSA textbook (pages in parentheses). You may skip “Strategy Capsules” in assigned sections. 3

Week 5 Strategy Process ▪ Planning Process ▪ Emergent Strategy Readings: ▪ CSA  Using Scenarios to Prepare for the Future (287~288)  The Strategic Planning System (435~437) Case: ▪ Strategic Planning at United Parcel Service Week 6 Vertical Integration (Vertical Scope) ▪ Transaction Costs ▪ Costs of Internalization ▪ Boundary Dilemma Readings: ▪ CSA  Transaction Costs and the Scope of the Firm (349~352)  The Costs and Benefits of Vertical Integration (352~361) Case: ▪ Arauco (A): Forward Integration or Horizontal Expansion? Week 7 Multinational Strategies (Geographical Scope) ▪ National Diamond Framework ▪ Global Efficiency ▪ Local Responsiveness ▪ Worldwide Innovation and Learning Readings: ▪ CSA  Analyzing Competitive Advantage in an International Context (374~378)  Applying the Framework: Foreign Entry Strategies (382~385) Case: ▪ P&G Japan: The SK-II Globalization Project Week 8 Diversification (Product Scope) ▪ Motives for Diversification: Growth, Risk Reduction, Profitability ▪ Competitive Advantage from Diversification: Economies of Scope, Economies from Internalizing Transactions, etc ▪ Related and Unrelated Diversification Readings: ▪ CSA  Motives for Diversification (406~409)  Competitive Advantage from Diversification (409~414) Case: ▪ Google Inc. Week 9 Managing the Multibusiness Corporation 4

Portfolio Planning: Growth-Share Matrix, GE/McKinsey Matrix (including their shortcomings) ▪ Cross-business Synergies ▪ Corporate Transformation Readings: ▪ CSA  The Role of Corporate Management (430)  Managing the Corporate Portfolio (431~434)  Managing Individual Businesses2 (434~440)  Managing Linkages between Businesses (440~443)  Managing Change in the Multibusiness Corporation (443~448) Case: ▪ GE’s Two-Decade Transformation: Jack Welch’s Leadership ▪

Week 10 Conclusion and Final Exam ▪ Guest Speaker (Possibly scheduled on a different date) ▪ Course Wrap-up (Case questions for Final Exam to be announced)

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Skip the subsection “Using PIMS in Strategy Formulation and Performance Appraisal” (439~440). 5