Syllabus TEK017
Strategic management

 

Course name:                          Strategic management

Course code:                           TEK017

Department:                            Department of Technology Management and Economics

 

Examiner                                   Joakim Björkdahl

 

Responsible teachers        Professor Joakim Björkdahl
                                                        Lic.Eng Charlotta Kronblad
                                                        Professor Martin Wallin                                

                                                        firstname.lastname@chalmers.se

 

Course coordinator:         Charlotta Kronblad

                                                      chakro@chalmers.se

                                     

Level:                                         Advanced

Credits:                                    7.5 ECTS

 

Period:                                    Quarter 2, Fall semester 2019

 

Scheduled lectures:  Block schedule A: Mondays and Wednesdays starting November 4. Check schedule for exact hours (in syllabus and Canvas for updates and changes).

Scheduled contact hours:  Contact hours are provided, see Project work and Schedule.

Office hours:   Preferably, please approach us directly after lectures and during scheduled contact hours. All questions between lectures are handled by the course coordinator (chakro@chalmers.se)

 

Purpose and course overview

The purpose of this course is to train students in strategy analysis. Strategy analysis deals with the identification of problems, options and solutions that improve firm performance. The course is concerned with decisions and actions that shape the future of firms by establishing, sustaining and enhancing the basis for their competitive advantage. The course will discuss fundamental strategy theories/models and illustrate their use through case discussions. The ultimate aim of the course is to help students work more effectively and successfully in their professional careers.

 

Learning outcomes

After completion of the course, the student should be able to:

• Apply tools and theories of strategy analysis
• Analyze and devise plans for how business units create and sustain competitive advantage (i.e., business strategy)
• Analyze and define the scope of the firm (i.e., corporate strategy)
• Participate in strategic decision-making
• Convey insights from strategy analysis

 

Organization

The course consists of lectures, case work and class discussions focusing on the learning outcomes.

 

Literature

Grant, R.M. (2019) Contemporary Strategy Analysis. Wiley, 10th edition. The book is available at Cremona.

 

Examination

The examination consists of (a) written end-term exam (b) written project work; and (c) case work.

 

All material discussed and handed out during the course is ground for examination. Note: Grant (2019) is essential to the course and necessary for the written exam, the written project work, and the case work.

 

Written end-term exam:  15 January 2020 (max 72 points)

 

Project work:  Project work to be completed in groups of 5 students (max 26 points). Information regarding project work to be found below.

 

Case discussions:   2 cases to be prepared individually or in (self-organized) groups. 1 point per case is allocated to attending students, 0 points to non-attending students or non-prepared students. Information regarding case discussions can be found below.

 

Panel discussion:  To not participate in the final presentation of project work will render 2 points deduction from the project work (individually).

 

Bonus points/mini cases:  Students can earn a maximum of 3 bonus points through individual hand-ins. These bonus points can only be used the same period as the course is given (i.e., Quarter 2 2019). Information regarding bonus points/mini cases can be found below.

 

Grades

Grades are allocated in the following way:

5: total number of points ≥ 80

4: total number of points ≥60 and < 80

3: total number of points ≥40 and < 60

Fail: total number of points < 40

 

To pass students need to acquire at least 29 points on the written exam.

 

Written end-exam

The exam will be a closed book exam.

 

Project work

Information on how to carry out the project work can be found below:

 

Deadline

• All tasks need to be completed and uploaded to Canvas no later than Thursday December 12at 5PM.

 

Organization

• The work is carried out in teams of students
• Group formation is made on first day of class
• The size of groups is limited to five students
• Respect the deadlines (see below, penalties apply for late submissions)

 

Scheduled contact hours

• The teaching team offers scheduled contact hours (three occasions, see schedule) to provide input on the project work. The system is first-come-first-serve. Please note the teachers will close the session should no students be present (despite being scheduled to run to a later point). Remember to come prepared to make the most of the time. No other formal tutoring will be provided.

 

Task

• Your task is to conduct a strategic analysis of one publicly listed firm of your choosing. Suggestion: it is usually more rewarding to select a firm in an industry that is undergoing or is likely to undergo major changes due to e.g. new technologies, new entrants, globalization etc.
• The overall task is to identify key strategic challenges of the firm and propose actions that will improve the competitive situation of the firm (in short, “a new strategy”). To achieve this objective, you will need to (at least):
  • Analyze the current competitive situation in the industry using the Porter’s five forces model
  • Appraise the firm’s performance
  • Diagnose the sources of poor or good performance
  • Conduct a resource analysis and identify the firm’s current competitive dis-/advantage
  • Identify a desirable future competitive position that likely improves competitive advantage and firm performance
  • Devise actions (e.g., investments, divestments, resource/capability acquisitions, changes in degree of vertical integration, changes in business model etc.) that likely improve competitive advantage and firm performance
  • Set performance targets
• Remember that all actions should be backed up by data, analysis and supportive arguments. Detail and precision will be rewarded. Sloppy analysis and unsupportive conclusions will not be rewarded. Please ensure that you have used the appropriate frameworks and tools in your analysis.
• Remember that numbers are usually more meaningful when put in relation to something, for example by developing ratios (e.g., R&D spending over sales, gross margin etc.), sales or R&D spending compared to previous years, or market share compared to competitors.
• Remember to correctly cite sources.
• It may help to imagine you are presenting your analysis to the current owners or potential owners of the firm.
• We expect you to primarily draw on publicly available resources such as annual reports, trade journals/reports, industry reports, patent databases, financial databases etc., but you should feel free to interact with industry experts when that is possible/desirable. Digging out interesting/relevant data (qualitative or quantitative) will be rewarded.

 

Written hand-in

• Your work will result in a report in the form an executive memo (5 pages, Times New Roman 12 single space, save as .pdf) supplemented with backup slides (max 50 slides, save as .pdf) that provides data, analysis and supporting evidence.
• Construct the executive memo in such way that a high-level executive understands the problem/issue at stake and is likely to adopt the suggested solution (meaning that the solution is appropriate, believable and actionable).
• A good executive memo synthesizes complex data into a succinct and coherent whole that allows a decision-maker in a few minutes of reading to understand the problem, supporting evidence and solutions. You will need to explicitly state not only the problem but also your findings. You will want to signal some of the pros and cons of your reasoning for change, and highlight your key findings and recommendations. The executive memo does not chronicle the story that lies behind the problem nor does it track the development of your research (you have back-up slides for that).
• The executive memo should make clear:
  • Whois the key stakeholder? Who is the audience and what is the intended use of the memo?
  • Whatis the problem or issue in terms of current strategy?
  • Whyis change needed?
  • Whatare the strategic options/choices? What are your findings on this issue? Provide pros and cons of each option and summarize findings. As you introduce or describe the findings, you might also briefly summarize the methodology used to compile and examine the data.
  • Howcan the client/executive take action? Recommend primary course/s of action.
  • What are your supporting reasons for selecting or highlighting that course of action? You might introduce the recommendations with a “So what?” or central goal in mind. You might also include a timeline of action.
  • Why is this urgent? You may state urgency in a short concluding line or two.
  • Construct the supporting slides in such way that they can be read as a print-out, that is, the slide deck is not primarily a presentation document. In other words, you may use more words than you would usually do when making slides. Include a brief summary of the executive memo in the slide deck.
• b. you should not use the executive memo to demonstrate that you have completed all tasks outlined above (e.g., Porter analysis, resource analysis etc.). We expect you to use the backup slides for this purpose.

Panel discussion

• Four groups (select one or two representatives per group) will be asked to join a panel discussion together with invited guests with prominent backgrounds in strategy. You will be given a chance to briefly present your analysis and your strategic recommendations before the conversations starts. These groups will be informed the day after hand-in (i.e., on December 13).
• Some hints, focus the presentation on: what is the firm’s major strategic challenge, what is the support for that conclusion, what can the firm do to improve its competitive situation, why do we believe that?
• All students are expected to participate and we encourage questions and comments to the panel.

Grading

Grading is based on the written hand-in

 

Case discussions

Organization

• Cases are prepared individually or in (self-organized) groups
• Cases will be available in the book. If a case is not available in the book it will be available for download through Canvas (about a week in advance).

 

Task

• Be prepared to discuss the case in class. For example, we expect you to be able to discuss questions such as what is the problem, why is this a problem, what can the company do about the problem, what suggestions can you give to the manager/CEO/board member etc.? Specific questions for each case are found below in Case, 1 and Case 2. Be prepared to back up claims with data/information from the case.

 

• No hand-in

 

Grading and participation in the classroom

 

• 1 point per case is allocated to attending students, 0 points to non-attending students or non-prepared students.

 

• No make-ups.

 

• Classroom time will revolve primarily around discussion of the cases. As in all such case-oriented classes, attendance and participation are not only desired, but required to properly distill the material. During class, you should be prepared to lead off the discussion of any question in a significant way as well as to discuss salient issues which are not addressed per se in the assigned questions. As in any case discussion, it is crucial that you are well-prepared, listen carefully to others, and build on/critique previous comments. Clearly, you must participate in class if you are going to share your ideas with others. It is the quality of comments, however, not the quantity, that is germane.

 

Case 1: Starbucks (1 point)

 You should be able to answer/discuss the following questions:

• What is Starbucks’ strategy
• How well is Starbucks performing?
• Assess Starbucks’ strategy in terms of its fit (with its business environment and its internal resources/capabilities) and its internal coherence.
• Is Starbucks’ success sustainable? (Or: Would you buy Starbucks’ stock for your retirement portfolio?)

 

Case 2: Apple (1 point)

 You should be able to answer/discuss the following questions:

• What, historically, have been Apple’s competitive advantages?
• Conduct an industry analysis of the personal computer industry. Are the dynamics favorable or problematic for Apple?
• How sustainable is Apple’s competitive position in computers and smartphones?
• What next (if any) business should Apple diversify into?

 

Bonus points

Students can earn bonus points through individual hand-ins of mini-cases in advance of lectures. The student selects one question per mini-case and writes around one page of text to address the question. Hand-in through Canvas the day before class at 5PM at latest– no exceptions. Max 0.5 point per hand-in, max 3 points in total. See course schedule (end of syllabus) for information which mini-case is discussed in which lecture. All mini-cases are found in the course book except for Facebook, Ford and American Apparel (will be uploaded on Canvas).

 

Mini-cases and questions

Facebook:

• The two main methods for valuing a private company are (a) applying ratios (e.g. price/earnings) for comparable companies (b) using DCF analysis to estimate the net present value of a company. How useful are these approaches in estimating the value of Facebook shares?
• How can the analysis of competition and competitive advantage assist us in valuing Facebook’s shares?
• What role do real options play (a) in the value of Facebook’s shares and (b) in Facebook’s strategy?

 

Ford:

• The world automobile industry has experienced a downward trend in profitability since the 1960s. (The appendix shows that between 1980 and 2009, the trend of ROE for the leading producers was mostly downward.) What changes in the structure of the world auto industry have caused competition to intensify and profitability to decline?
• How is the structure of the world automobile industry likely to change over the next five years? What effect will these changes have on competition and profitability in the industry?
• Are there any segments of the world automobile market that you think will offer superior profitability over the next five years?
• Looking longer term (to 2026), what factors do you think will drive the evolution of the automobile industry?
• Which factors will determine which companies will be most successful in the automobile world during the next ten years (i.e. what will the key success factors be)?

 

Harley Davidson:

• Identify Harley-Davidson’s strategy and explain its rationale.
• Compare Harley-Davidson’s resources and capabilities with those of Honda. What does your analysis imply for Harley’s potential to establish cost and differentiation advantage over Honda?
• What threats to continued success does Harley-Davidson face?
• How can Harley-Davidson sustain and enhance its competitive position?

 

Walmart:

• How well is Walmart performing? To what extent is its performance attributable to industry 
attractiveness and to what extent to competitive advantage? 

• In which of Walmart’s principal functions and activities (namely: purchasing, distribution and warehousing, instore operations, marketing, IT, HRM, and organization and management systems/style) do its main competitive advantages lie? Identify the distinctive resources and capabilities in each of these functions and activities.
• To what extent is Walmart’s competitive advantage sustainable? Why have other retailers had limited success in imitating Walmart’s strategy and duplicating its competitive advantage?
• What challenges does Walmart currently face? What measures does it need to take to sustain its recent performance and defend against competitive (and other) threats?

 

American Apparel:

• The textile/clothing sector is vertically de-integrated: design, textile manufacture, clothing manufacture, distribution are undertaken by mainly by specialist firms. Why?
• What is American Apparel’s strategy? What role does vertical integration play in this strategy?
• What are the sources of American Apparel’s current difficulties? Advise the CEO on what American Apparel should do next and, in particular, whether it should replace its in-house Los Angeles manufacturing with outsourcing to contract manufacturers in low-cost locations? 

 

Alpahabet (Google):

• What is Alphabet’s corporate strategy? Does Alphabet have a clear vision of what it wants to become?
• Evaluate Alphabet’s diversification into new products and businesses, with particular reference to (a) browsers (Chrome), (b) mobile phone operating systems (Android), (c) mobile devices (Motorola), and (d) driverless cars.
• Does Alphabet need to refocus? How should Alphabet delineate its corporate boundaries and which businesses or products would you recommend abandoning or selling (if any)?

 

Academic honesty

 You are expected to follow the Chalmers’ guidelines for academic honesty and integrity.

 

All documents handed in will be run through Urkund, our system for plagiarism control.

 

Staff

 Joakim Björkdahl

Professor, Chalmers

Examiner and main teacher

 

Martin Wallin

Professor, Chalmers

Main teacher

 

Charlotta Kronblad

PhD student, Chalmers

Teacher and course coordinator

 

Schedule

 

Date, time, place	Main topics	Readings	Comment
Monday November 4 10.00-12.00 Vasa A	Entering the field of strategy	Ch., 1, 15	Case groupings
Wednesday November 6 10.00-12.00 HC2	Goals, values and performance	Ch. 2	Minicase: Facebook
Monday November 11 10.00-12.00 Vasa A	Industry analysis	Ch. 3, 4	Minicase: Ford
Wednesday November 13 10.00-12.00 HC2	Case: Starbucks
Wednesday November 13 13.15-15.00	Reserve slot
Monday November 18 10.00-12.00 Vasa A	Resources and capabilities	Ch. 5	Minicase: Harley Davidson
Wednesday November 20 10.00-12.00 Vasa 6	Contact hours (case)
Monday November 25 10.00-12.00 Vasa A	Competitive advantage	Ch. 7	Minicase: Walmart
Wednesday November 27 13.15-15.00 Vasa 5	Contact hours (case)
Monday December 2 10.00-12.00 Vasa A	Strategic change and the Management of Innovation	Ch. 8, 9
Wednesday December 4 10.00-12.00 HC2	Vertical integration and the scope of the firm	Ch. 10, 14	Minicase: American Apparel
Wednesday December 4 13.15-15.00 Vasa 6	Contact hours (case)
Monday December 9 08.00-10.00	Reserve slot
Monday December 9 10.00-12.00 Vasa A	Diversification and portfolio analysis	Ch. 12, 13	Minicase: Google
Wednesday December 11 10.00-12.00 HC2	Case: Apple
Wednesday December 18 10.00-13.00 Vasa A	Final presentations Krister Boëthius and Magnus Terrvik, Headland
Wednesday December 18 15.00-17.00 Vasa A	Summarizing the field of strategy
January 15, 2020	Exam