Date

Topic

Class activities

Assignments

34

Business Unit Strategy

External analysis – Industry analysis

66

Mid-course evaluation

Barney, Looking inside for competitive advantage

Duncan, Ginter, & Swayne, Competitive advantage and Internal Org Assessment

34

12

11

22

Forbes Handout

G: 2 page writeup

10

Coca-Cola versus Pepsi-Cola and the Soft Drink Industry (No case writeup)

35

Corporate Strategy

Mid-course evaluation

29

14

38

Lubatkin & Lane, Psst...The merger mavens still have it wrong!

27

14

33

Exercise: Develop a post acquisition integration plan

Gutknecht & Keys, Mergers, acquisitions and takeovers: Maintaining morale of survivors

14

9

Strategy Implementation

Course materials evaluation

15

Date

Company

Your Situation/Setting

Analysis/Topic Sentence

Likely Frameworks

Hint:

Before you write up the analysis & recommendations check out the Gallo example again for formatting and style. It’s not easy to get a rigorous analysis and recommendations into a 2 page executive briefing. Also, don't forget the consulting scenario & try to have some fun with it ;-)

The 5 forces framework in the Gallo example may be especially useful for identifying the underlying sources of conflict and profitability in the MLB industry. This is a critical starting point for exploring how you would change this if creating a new league. The first step in applying a five forces analysis is always to figure out which stakeholders go in each box. Consider:

• What products, services, or assets must teams buy or rent from others?
• Who buys the product from teams (fans are one customer)?
• What are the barriers to entering the industry?
• What are viable substitutes for the customers listed above?

Then you need to tackle the bargaining power issue. What factors grant each buyer or supplier bargaining power? How has this lead to the situation in 1995. Now what do you suggest that Ned should do about this?

Hint:

1. Begin with the overall strategy. This drives the economic analysis and helps focus you on the big picture. You might start with where they open their stores.
2. Economics: What is the extent (%) of WM's advantage compared to the rest of the industry? Map the % advantages onto the value chain to identify what part of the organization drives the advantage.

• Exhibit 6 shows aggregated industry economics for 1993. You can use this to compare Wal*Marts cost structure to that of its rivals. Unfortunately, this is not sufficiently detailed to look at separate elements of the value chain.
• However, the more fine-grained analysis is in the text allowing you to divide up the advantage into various elements of the value chain. For example, eliminating manufacturers’ representatives reduced purchase prices by 3-4% (p.7). It is easier to put items like these in specific places on the value chain. Other such factors are listed in the case in discussions of merchandising, operations, distribution, vendor relationships, HRM, and management. If you wish, these can be expressed in dollars by multiplying by 1993 sales.
• Value Chain Analysis: The article in the packet focuses on analyzing strengths & weaknesses in each area of the value chain. However, since your client is K-mart, they really need to know the strengths (e.g., what to imitate). You can put the measures ($ or %) from above right on the value chain to show the importance (or lack thereof) for each source of advantage.

3. Operations- Map to value chain: Map all of the cost savings identified to the value chain. What specific policies or organizational attributes lead to the low cost structure identified above?
4. Sustainability/Imitability: To what extent could K-mart imitate the policies? (e.g., are they firm specific, socially complex or causally ambiguous?). What dilemmas would they have to resolve? What has Changed: In order to understand why performance has slowed, you should read the "diversification" section. This describes what they have done subsequent to their original strategy. Why didn't they stick to the old strategy? Why aren't the new strategies as successful? How much can they rely on the sources of advantage you identified in these additional businesses?

Note: The Gallo example focuses on industry analysis while the Monsanto example explores the scope of a multi-business firm. Neither of these fit the Wal*Mart case so you shouldn’t copy the examples too closely. However, as I have indicated, the value chain may help you organize your analysis.

Hint:

You might start with these practices that are already common in investment banking. Then add or modify practices to reflect the unique nature of your client's firm (focusing on the information technology sector). Then you need to identify an action plan for how to proceed and build the firm. What should your client do?

A few people have asked me if this is about barriers to entry (a la 5 forces). This is a piece of it but I don't want 5 forces to be the focus of your writeups. Basically, Chad has asked you to help him set up a winning business model. The model has to deal with the human asset dilemmas that they would encounter on an ongoing basis as well as the initial entry barriers. As it happens, venture capital firms would very much want to know that you have thought through these issues before they come up in an urgent way.

You should probably begin by considering specifically the types of people that the firm must hire (Wall St. v. Silicon valley, etc.) and how the work is structured. Then the management dilemmas should be apparent? How will they hire, retain, motivate, and manage such assets? Your recommendations should be specific so the managers know what to do. For example, don't just say "set up a culture" but tell them how to do it – they need action steps.

human assets

Hint:

While K-III creates value through acquisitions, they also maintain a portfolio of related companies. Which of the 6 value creation strategies do they seem to apply? Note that while they argue that they actively avoid creating synergies between businesses, you should separate what they say from what they do. Do the targets perform significantly better after the acquisition? Why? What competencies must K-III have on board to execute the value creation strategy successfully?

Then look back at Maxwell. What can they imitate? How should they go about it? Give them some implementable action steps given the difficulties in imitation that you have identified.

Hint:

The primary value creation efforts appear to be operational economies (linking value chain activities) and transferring core competencies. How do they accomplish these tasks? You might use the value chain to organize your analysis to look at each policy or procedure and identify operational economies and/or core competencies that arise from it.

For core competencies, you should be able to explain how they: 1) Maintain expertise centrally, 2) Transfer expertise to divisions, and 3) the strategic nature of the expertise (valuable, rare, & hard to imitate...). For operational economies, you should be able to identify where they might achieve cost or differentiation advantages by combining or coordinating activities across lines of business.

In your recommendations, you may suggest that HP study whether a policy should be implemented (action step) since you haven't been asked to review HP's organization. However, you should be aware of which steps might be hard to imitate. This is especially true of core competencies. There is basic information about HP at: www.hp.com/abouthp though you are not expected you to research HP.

Hint:

Hint:

Value Creation Strategy: First, figure out which of the 6 ways to create value WV is TRYING to implement (there may be more than one). They are unlikely to create value if they aren't trying. Are there any opportunities that they might be missing because they are off the "radar scope?" Also, see the "Guilty until proven innocent" slide -- what is the likelihood that the strategy will actually create value?

Implementation & Competencies: Second, just because they are trying doesn't mean it will be successful. What actions must they take to create value that way? What competencies or capabilities must WV have in place to pull it off?

Recommendations For OP: Finally, your recommendations should focus on what Goizueta Partners needs to do to create value in this way. You can assume that OP has enough resources that they are serious about trying to imitate the strategy. Do they have the critical resources or competencies you identified above? Feel free to make an assumption here -- if the competency is rare, it may be reasonable to assume that OP doesn't have it (you may include assumptions you make about their capabilities in a cover memo if this helps). What action steps should they take to acquire the resources and implement a winning strategy? What are the barriers to their implementing your recommendations?

Hint:

In class, we will go beyond this to look more at the acquisition process. However, the process follows from the value creation strategy. You may also want to draw on the Lubatkin & Lane article – this is strongly linked to material we have already covered.

• Treat your search as full-time work. Each workday should be structured as a workday, with a schedule of events.
• Compile a list of the 20 companies you would most like to work for, and then research them. Call the secretary of the executive who is most likely to hire you and ask for the annual report and other corporate materials.
• Keep researching. Mr. Lunder went to stores that sold American Greetings cards and products, asking the store manager: How is the service? Are you happy with American Greetings products? How can things be improved? He also received permission to accompany a sales rep for a day.
• Write a one-page personal marketing letter, selling yourself to the person who is hiring, which isn’t necessarily the company’s human resources executive. Explain what you have learned (including some flattering comments on the company's innovations) and how you would fit in.

• Enclosing a resume is a one-way ticket to the personnel department. If asked for a resume, tell them you need a week to update it. Then try to focus on the aspects of your career that fit what the company is looking for.
• Try to set up a 20-minute "informational meeting" with the hiring person. (Don’t call it an interview.) If you get the person’s voice mail, suggest a time, like 7 a.m. tomorrow.
• Tell the hiring person what you know and admire about the company, and your skills. Have five smart questions on the company’s strategy. Only at the end of the meeting, suggest you are looking for work.
• Mr. Lunder advises listening to motivational tapes to keep spirits and energy high, and checking whether your target has more job cuts in its future. You wouldn’t want to have to do this again.

--Kevin Salwen

Effectiveness Criteria

HP Example