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Chancellor Signature Date COLLEGE OF BUSINESS ADMINISTRATION UNIVERSITY OF HAWAII AT MANOA

BUS 632: BUSINESS POLICY AND STRATEGY

Course Description

BUS 632 focuses on strategic management of firms. It deals with the concepts, tools, and principles of strategy formulation, implementation, and competitive analysis. The goal is to explore a variety of functions and responsibilities of a general manager. Key tasks of the general manager that will be emphasized in the course include analyzing the global environment, formulating and implementing strategy, allocating resources, designing organizations, managing diversification, and creating value in a global context.

Class discussions will be based on lectures, readings, and case analysis.

Students are expected to purchase the core material for the course listed below. In addition, occasional handouts will be distributed in class.

D.J. Collis & C.A. Montgomery: Corporate Strategy: A Resource-Based Approach, 2nd ed., IrwinlMcGraw-Hill, New York, NY, 2005 (labeled C&M).

BUS 632 Course Packet (labeled CPl.

Course Outline

The field of strategic management explores how firms achieve competitive advantage in the context of single and multi-business firms. The single-business firm must leverage its distinctive strengths to exploit industry opportunities. In order to add value, the multi-business firm must do much more than merely hold a diversified portfolio of business units - such ownership must increase the competitive position of each business unit. We will explore what managers do to create value in and across businesses. In addition, alliances, acquisition, and divestiture comprise an increasingly significant component of strategy. By the end ofthe course, you will be able to:

> Explain how firms create value and compete at the business level. > Explain how firms can add value by holding more than one line of business. > Design policies and incentives that help a firm to manage multiple strategic business units. > Understand the implications ofthe internet for business and corporate strategy. > Explain how firms can add value through alliances, acquisitions, and divestitures.

We will start our study of strategy at the business level and examine the challenges of managing a firm competing in a single industry. An integral part of this study will be an exploration of the environment, resources, and capabilities underlying strategy and how they may be leveraged among varying settings and situations. In most large- and medium-sized firms, corporate strategy is different from business strategy because of the multiplicity of businesses in which the firm

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involved. We will explore the differences between corporate- and business-level (or divisional level) strategies and the requirements each places on managers at different levels in the finn.

Strong analytical skills are prerequisite to good strategies. However, strategic management is more than analysis, especially financial analysis (How many of us did a NPV calculation and rushed out to buy Yahoo, Amazon, eBay, Google, or Webvan, when they went public? This is exactly the level of uncertainty managers face!). To be sure, financial and other types of analysis are important, and we will explore and apply several analytical techniques for positioning a firm or a business unit within a competitive environment. But such analyses are complicated by the tradeoffs inherent in any situation, and reflect the fact that organizations consist of many players with competing objectives, drastic time constraints, and limited objective information, When dealing with these tradeoffs, general managers confront the judgmental issues involved in establishing organizational purpose and balancing economic and non-economic objectives. In each class, we will attempt to expose these tradeoffs and to test our ideas about the appropriate relationships among them.

Finally, strategic management requires moving beyond analysis and tradeoffs into the realm of strategic action. Once the analytical problem of selecting a business or corporate strategy has been dealt with, we should know which action steps to undertake and make recommendations accordingly. Since many firms appear to follow similar strategies (look at most airlines, for example), knowing how to execute the selected strategy.is essential to success. To the extent possible with each case, we will deal with the various combinations of systems (information, control, reward, etc.), organization structures, and people necessary to execute a given strategy. We will test our ideas about the relationships between strategy and these other elements as we proceed through the course.

Themes

To help you develop your strategic thinking skills, the course is organized around three themes in strategic management: (1) the role of the general manager, (2) identifying and leveraging business resources to create competitive advantage in an industry, and (3) leveraging resources to grow and manage the multi-business finn.. While points (2) and (3) are somewhat self explanatory, point (1) may not be and is therefore explored briefly below.

Most of the courses you take in a masters program teach you how to excel in functional areas, such as human resources, finance, accounting, marketing, operations, or information systems. Employers expect you to have such functional expertise. However, employers also want to understand the "big picture" -- therefore, the overarching perspective in this course is that of the general manager whose responsibility is the health of the entire finn or a multi-market or multi product division.

The key tasks involved in general management include detecting and adapting to environmental change, procuring, allocating and integrating resources and capabilities across subparts of the organizations, and, at the most senior levels, determining the purpose and setting of corporate direction. Successful general managers are highly competent in problem identification and analysis, and have a strong action orientation.

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One purpose of this course is to provide an environment that will allow you to practice and hone I these skills, while at the same time, gain a conceptual understanding of the strategic manager's -...... ,I task. Another purpose is to provide you with some fundamental accounting of your portfolio of managerial skills. General managers are in the position to make strategic decisions for the finn. Note that such managers are not "generalists" in the sense that they need to know a little bit of everything, but not very much of anything. To be effective, general managers need to have in depth understanding of the generic problems in all the relevant functional areas. Furthermore, they must be able to deal with problems and issues at the level of the total enterprise and its relationships with relevant external environments.

Functional specialists will benefit from the general management perspective developed in this course, even though they may not be (or even want to be) general managers. The basis of strategy is that every function's actions should be coordinated with the overall needs of the business. In fact, functional specialists are the people on whom general managers must rely to inform and implement their strategies. Since such functional managers can be subject to sub optimizing pressure, they too need to understand the general manager's perspective.

Preparation & Participation

For the learning process to be really effective, it .is necessary that you carefully prepare the cases/readings before class and actively participate in the case discussions during 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. I view any comment - including questions - as "-' worthwhile, so long as it does not interrupt the flow of the discussion by reverting to a point long-since passed. "Good" participation adds to our collective learning.

Some cases do not have "right answers," while others do. Even though there may not be "right" solution to a case, I usually will share with you my views on a case's issues. I do this not to impose a "preferred solution" on you, but because I feel that I have a responsibility as a person experienced in this field to let you hear my viewpoint.

I will be happy to discuss with you individually any matters relating to class participation, or to any other aspects ofthe course.

Disability Access

Students with disabilities are encouraged to contact the KOKUA Program for information and services. Services are confidential and students are not charged for them. Contact KOKUA at 956-7511 (voice/text), [email protected], or Student Services Center, Room 13.

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Topics and Assignments

1. INTRODUCTION

"An Introduction to Corporate Strategy" (Chapter 1, pp. 2-24 C&M)

2. JOINT VENTURE & COMPETITIVE STRATEGY

Student Information Sheet Due

"Resources and Rents" (Chapter 2, pp. 26-63, C&M) AUTODRAFT CORPORATION (to be distributed)

1. What is your best estimate of the Japanese computer graphics industry's future growth? 2. What is the strategic significance of the collaboration with Autodraft for Nihon Drafting? For Suzuki? 3. Which option should Autodraft choose, 100% own, Nihon, Suzuki, or other?

3. INDUSTRY ANALYSIS & GLOBAL STRATEGY (I)

"Scale and Scope within an Industry" (Chapter 3, pp. 64-84, C&M) PNEUMATIQUES MICHELIN lA, IB, & II (to be distributed)

1. Analyze the situation from the perspectives of four different actors: the Canadian government, Canadian subsidiaries of U.S. companies, U.S. companies, and the U.S. government. 2. What has been Michelin's strategy in the past? 3. What should it be in the future, and how does the investment in Canada fit in?

4. INDUSTRY ANALYSIS & GLOBAL STRATEGY (II)

"Diversified Expansion" (Chapter 4, pp. 86-113, C&M) CATERPILLAR TRACTOR CO. (CP)

1. What are the key success factors in Caterpillar's strategy? 2. What changes do you see in the industry? 3. How well is CAT positioned for the future? What recommendations would you make to Lee Morgan at the meeting in October 1981? KOMATSU LIMITED (CP) .

1. What are the sources of Komatsu's success? 2. How was this company able to challenge CAT when others had failed?

4 3. How did environmental forces and industry changes affect Komatsu's competitive ~ position vis-a-vis CAT? What recommendations would you have for Ryoichi -...... ,I Kawai?

5. BUILDING STRATEGIC CAPABILITIES

EURO DISNEY: THE FIRST 100 DAYS (CP)

1. Assess Disney's decision to build a theme park in France. Was it a wise decision? 2. What is Euro Disney's target market, and what are the implications for the development and organization of the park? 3. What aspects of the traditional Disney theme park formula might prove to be transferable to Euro Disney, and which might prove to be specific to the United States and/or Japan? What issues should a firm think through before extending a successful service concept across cultural boundaries? 4. Assess the implementation of Euro Disney's service delivery system. What could the firm have done differently? 5. What lessons has Euro Disney learned that could be applied to the development of the second theme park? Should the park be adapted for the local market from the U.S. model, and if so, in what ways? 6. Should Euro Disney proceed with the next step of development? What recommendations would you make regarding staffing, training, and general management?

QUESTIONABLE PAYMENTS ABROAD: GULF IN ITALY (CP)

1. What do you think of Mr. Pignatelli's actions in the commissioning of the Milan refinery, such as a) the use of gas coupons as "omaggi", and b) the hiring of the consulting firm (Andergip) to provide "public relations and technical services"? 2. How should Italian country manager handle such future incidents? Analyze the three options. a. Play it straight (i.e., no questionable payments). b. Delegate-up (i.e., ask what he should do to the headquarters in Pittsburgh). c. Play their game (i.e., pay up). 3. Which option do you choose? 4. What changes, if any, would you recommend to the Gulf board as a result of your analysis of this case?

6. STRETCH, LEVERAGE & DIVERSIFICATION: SERVICE INDUSTRY

"Organizational Limits to Firm Scope" (Chapter 5, pp. 114-147, C&M) MCKINSEY & COMPANY: MANAGING KNOWLEDGE AND LEARNING (CP) 1. How was this obscure little firm of "accounting and engineering advisors" able to grow into the world's most prestigious consulting firm fifty years later? What was the unique source ofcompetitive advantage?

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2. How effective was Ron Daniel in leading McKinsey to respond challenges identified in the Commission on Firm Aims and Goals? What contribution did Fred Gluck make to the required changes? 3. How effective has the firm been in its two-decade long change process? 4. What is your evaluation of Rajat Gupta's "four-pronged" approach to knowledge development and application within McKinsey? As a senior partner, what specific advice would you give him?

7. IMPLEMENTATION (I)

"Managing the Multibusiness Corporation" (Chapter 6, pp. 148-191, C&M) TEXTRON, INC. (CP)

1. How does Textron contribute value to its twenty-eight business units? 2. What structure, systems, and procedures has Textron adopted to realize that value? 3. In which businesses is it appropriate for Textron to compete? 4. Does Textron have a viable long-term strategy? Was it a good strategy in the sixties? Would it be a good strategy today? 5. Where do we see conglomerates today?

BERKSHIRE PARTNERS (CP)

1. How does Berkshire Partners add value to its businesses? 2. Does the firm have a viable, sustainable corporate strategy? 3. What would you recommend if you were a general partner of the firm?

8. IMPLEMENTATION (II)

"Creating Corporate Advantage" (Chapter 7, pp. 192-205, C&M) BRL HARDY: GLOBALIZING AN AUSTRALIAN WINE COMPANY (CP)

1. How do you account for BRL Hardy's remarkable post merger success? 2. What is the source of the tension between Stephen Davies and Christopher Carson? How effectively has Steve Millar handled their differences? 3. Should Millar approve Carson's proposal to launch D'stinto? Why/why not? 4. What recommendation would you make to the organization concerning the conflicting proposals for Kelly's Revenge and Banrock Station? What would you decide to do as Carson? As Millar?

IDEAL STANDARD FRANCE: PAT PATERSON (CP)

1. Evaluate Pat Paterson's first month as general manager of ISF. What are the main problems and pressures he faces? How well is he dealing with them?

6 2. Review the three courses of action outlined in the case. Which plan should he .J recommend to Mr. Marquard next week? What problems and constraints limit his recommendations? 3. Was Paterson the right choice for country manager for ISF?

9. MIDTERM

TBA

10. MIDTERM REVIEW

"Corporate Governance" (Chapter 8, pp. 206-233, C&M)

11. GLOBAL COMPETITION

"Corporate Transformation: The Dynamics of Corporate Strategy" (Chapter 9, pp. 234-266, C&M) . .. PHILIPS.versus MATSUSHITA: A NEW CENTURY, A NEW ROUND (CP)

1. What has been the source of Philips' competitiveness? 2. What is the source of Philips' problems? Analyze Mr. Van der Klugt's reorganization in 1987. How well suited were the traditional strategy and organization in guiding the company in 1998? 3. What is your recommendation to Mr. Gerald Kleisterlee? 4. How did Matsushita' succeed? What were its distinctive competencies and weaknesses? 5. What do you think ofthe changes Matsushita has made to date -- the objectives, implementation, and impact? 6. What are the main problems Kunio Nakamura faces? 7. How is it similar to/different from Philips' strategy?

12. COMPETITIVE DYNAMICS

CAT FIGHT IN THE PET FOOD INDUSTRY (A) (Case 3-4, C&M)

I. Who is best positioned in the pet food industry in 1986? Why? 2. Is this industry stable in 1986? Who has staked out strong-holds? Where? How? 3. What should Ralston-Purina do? Is it threatened? 4. Who do you predict will bid for Anderson-Clayton? Why? 5. Who is likely to attack whom? Where? How?

13. FINAL PROJECT PRESENTATIONS

TBA

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14. FINAL PROJECT PRESENTATIONS

TBA

15. CONCLUSIONS

Fjnal Project Due

SUMMARY & CONCLUSIONS

NOTE

We will generally follow this syllabus. However, occasional changes may be made on short notice for special events/topics, guest presenters, or videotapes relevant to topical issues .scheduled during the semester.

8 BUS 632 Business Policy and Strategy

How proposed course will link to the stated learning goals of the degree program?

#1: Demonstrate and apply knowledge of the functional areas of business (best business practice)

The goal of BUS 632 is to explore a variety offunctions and responsibilities of a general manager. Many cases introduce various aspects ofthe best business practice. See, e.g., weeks 3, 4, 6, 7, and 11.

#3: Understand and apply management skills to the Asia-Pacific business environment

We use Asia-Pacific business cases. See weeks 2,4,8, and 11.