Strategic Analysis Syllabus

Strategic Analysis
MGMT-UB.0018
Fall 2016
Syllabus

Professor Claudine Gartenberg

Contact info: Tisch 709, Phone: (212) 998-0414, email: [email protected]
Office hours: Thursdays, 12:00-1:00 (after 9/29), By appointment (prior to 9/29)
Class Timing: Tuesdays and Thursdays 2:00-3:15 (Section 01), 3:30-4:45 (Section 02)
Teaching Fellows: Cary Wang; [email protected] (Section 01); Shrey Patel;
[email protected] (Section 02)

COURSE OVERVIEW

A survey of 1,500 senior managers in 20 countries cited strategy formulation as the most important skill
of a good CEO, by an enormous 25% margin.1 This course provides an introduction to the main
components of business strategy, including how managers answer the following questions: what
businesses should we be in? what products should we offer? which customers should we serve? how can
we deliver effectively? how should we organize and govern ourselves? how sustainable is our position?

Typically, we consider firm performance to be determined by the convergence of three factors:

- The external environment or industry factors in which a firm operates

- The competitive position or strategy it adopts within that context
- The set of activities by which it implements its position
- The scope and organization of the firm

Through a series of case discussions and lectures, we will examine how these four factors interact with
each other to determine firm profit over time. One objective of this course is to develop an analytical
toolkit that helps answer the questions above. The primary objective of the course, however, is to teach
you to be a better – meaning more systematic, logical, complete, critical – strategic thinker. This means
being able to combine rigorous thinking with creativity and good judgment across a range of situations.

The emphasis of the course is not on understanding conceptually difficult material, but on applying
relatively simple ideas to think about how a firm generates and sustains profits. Accordingly, we will use
cases and in-class exercises to apply the theoretical frameworks introduced in class. To be successful in
this course, you must spend time actively and rigorously thinking about the given case. Not preparing for
class and expecting to passively absorb the material will do you about as much good as watching an
exercise class from the sidelines.
                                                                                                                       
1
Korn/Ferry International Study, cited by Joseph Quigley in Vision: How Leaders Develop It, Share It, and Sustain It, 1993,
cited by Roberts and Saloner, “Strategy and Organization” in Handbook of Organizational Economics, 2013.

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COURSE STRUCTURE

Grading
Class participation and attendance 30%
Assignments 25%
Midterm exam (October 25) 15%
Final assignment 30%
Total: 100%

Overall, I generally adhere to the school’s guideline: approximately 30%-35% of enrolled students will
receive an A or A-.

Structure
This is a case-based class, and the centerpiece of all of our activities will be our case discussions.
Unless otherwise specified, you will be asked to prepare one case per week. Thorough case preparation
is mandatory, since the most important lessons of the class will come from the case discussion.
Therefore, by design, class participation and case assignments together comprise the majority of your
grade. Aim to spend about 2-3 hours to prepare each case ahead of time.

In preparing for class, use only the material assigned: you will not need, nor should you seek, outside or
post-case data on the firm or industry. Seeking material from outside the course or from students who
have already taken the course is a violation of the honor code. On the flip side, if you have direct
experience with any of the companies or industries that we will discuss, let me know ahead of time so I
can make sure to call on you at the appropriate time.

The course is divided into four sections. The first section focuses on how to select a competitive position
within a given industry context. The second section then examines changes in contexts over time, in the
form of competitive rivalries and innovation. The third section covers corporate strategies of related
businesses and the fourth section covers conglomerates and other forms of unrelated diversification.

Section 1: Analyzing and selecting competitive positions

Module 1: Introduction to competitive strategy

Module 2: How do we understand competitive position?
Module 3: How do firms create and capture value?
Module 4: How do industries (and their structures) affect profits?
Module 5: How do different positions within the same industry affect profits?

Section 2: Strategic interaction and dynamics

Week of 10/25: Midterm

Module 6: How does rivalry between firms affect profits?
Module 7: How do platform dynamics affect competition?

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Section 3: Corporate strategies of related businesses

Module 8: Introduction to corporate strategy

Module 9: Vertical integration: where should the vertical boundaries of the firm be?
Module 10: Horizontal integration: across what businesses should a firm operate?

Section 4: Conglomerates and unrelated diversification

Module 11: Unrelated diversification

Module 12: Holding companies and business groups
Module 13: Modern-day conglomerates

OTHER REQUIREMENTS

Attendance and Lateness policy

Preparation, attendance, and participation are essential in this class. Lateness will hamper your ability to
learn the material, impact your grade through missed participation opportunities, and can disrupt the
flow of the class. Accordingly, late arrivals and absentees will face penalties on participation grade. I
follow the official Stern attendance policy, excerpted here -

Attendance:

Required and part of grade.

Faculty will excuse absences only in the case of documented serious illness,
family emergency, religious observance, or civic obligation. If you will miss
class for religious observance or civic obligation, you must inform your
instructor no later than the first week of class. Recruiting activities and business
trips are not acceptable reasons for absence from class.

If a student is absent from the first day of an intensive course, the instructor may
request that the student be removed from the course.

Arriving Late, Leaving Early, Coming & Going

Students are expected to arrive to class on time and stay to the end of the class
period. Arriving late or leaving class early will have impact on the course grade.
Students may enter class late only if given permission by the instructor and can
do so without disrupting the class. (Note that instructors are not obligated to
admit late students or may choose to admit them only at specific times and
instructors are not obligated to readmit students who leave class.)

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Participation

Attendance, preparation, and participation are essential in this class, as in any class based on case
method. Learning opportunities are maximized when all students are actively engaged in class
discussion. Some ideas on ways to maximize your participation score and what you learn from class:
• Read the case carefully before class
• Look at the guidance questions on the syllabus below and think about potential answers
• Prepare the assignment and make sure you understand your group’s answer
• Try to link the readings and the case – they are assigned together for a good reason
• Listen carefully to the comments of others – repeating prior comments is not helpful but building
constructively on prior comments can be beneficial
• Be willing to take a chance and actively engage in class
• Ask good questions. This is a skill to be practiced; good answers are rare but so are good
questions.

Most class participation will be voluntary; however, to ensure that everyone has the opportunity to be
involved, individuals can be “cold-called.” Similarly, for the sake of your classmates, do not seek to
maximize “airtime” – it is the quality, not the quantity, of your participation that will be rewarded.

Weekly assignments

There are weekly case-related assignments designed to help you prepare for the class discussion. The
assignments are due at the start of class. You can work alone or in groups up to four people as long as
you specify whom you worked with in the assignment. Aim to spend 2 – 3 hours preparing each case
and completing the assignments. The details of each assignment will be posted on NYU Classes.

There are a total of 9 assignments due for the class, 7 of which will be graded. This means that you may
drop 1 assignment from each half of the course (Modules 1-7 in the first half, and Modules 8-13 in the
second half). Alternately, you may complete more than 8 assignments and I will take your top 8 grades.
This is entirely up to you.

The grading will be done on ✓,✓+,✓- basis, with most assignments earning a ✓.

Midterm

We will have an in-class midterm on October 25, 2016. Bring a calculator and pens or pencils.
Otherwise, no electronics or other test aids are allowed.

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COURSE COMMUNICATION

A course website has been created for this course, which you should check on a regular basis for updates
to this syllabus and announcements. The course syllabus, class roster, lecture notes, class discussion
questions, assignment information, and general course announcements will all be posted (either before
or after class).

CLASSROOM NORMS AND OTHER TOPICS

Laptops and other electronics: Regarding electronics, this class follows school policy: “laptops, cell
phones, smartphones, recorders, & other electronic devices may not be used in class.”

Honor Code: Please remember that you are governed by the MBA Honor Code. Moreover, every
student is obligated to report any suspected violation of that code. You can find more information on the
MBA Honor Code at http://w4.stern.nyu.edu/scorp/committee.cfm?doc_id=4797 .

Students with Disabilities: If you are having trouble in class, I want to know about it as soon as
possible. I will do my best to help students who, despite a sincere and solid effort, are experiencing
difficulty. If you have a qualified disability and will require academic accommodation during this
course, please contact the Moses Center for Students with Disabilities (CSD, 998-4980) and provide me
with a letter outlining recommended accommodations.

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SCHEDULE

Class Topics and Reading Assignments

Note: these questions might change – always check the course site for the latest
assignments!

Note: Case assignments are due at the beginning of class.

Note: (CCP) refers to the Case Course Pack. (RCP) refers to the Reading Course
Pack. While we will not discuss the readings explicitly during class, they will be
extremely important in completing the assignments and understanding course
material. It can also serve as reference after the course is completed.

CCP Link: http://cb.hbsp.harvard.edu/cbmp/access/51508622

RCP Link: http://cb.hbsp.harvard.edu/cbmp/access/51510054

Interested in learning more? Entirely optional reading list for your personal interest
(in other words, not necessary for the course):

Lords of Strategy, Walter Kiechel

Valuation: Measuring and Managing the Value of Companies, McKinsey & Co
Competitive Strategy, Michael Porter
Competitive Advantage, Michael Porter
The Modern Firm: Organization Design for Performance and Growth, John Roberts
The Sharing Economy, Arun Sundarajan

Welcome to class!
Module 0:
Introduction to Strategic Analysis
9/6/16
Introduction to competitive strategy, Day 1
Module 1:
Overview of the main questions of competitive strategy
9/8/16
Case: Dogfight over Europe: Ryanair (A) (CCP)

Reading: What is Strategy? (RCP); Strategy Reading: Competitive Advantage

(RCP)

Preparation question:

1. Can the Ryan brothers make money at the I£98 fare they propose?

Assignment:

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This is a practice assignment, you do not need to submit anything. Do your best to
answer the preparation question above. While it is just practice, it will help you
follow the class discussion more closely.

Use the assignment worksheet posted on NYU Classes under the Lessons Tab
for guidance in this assignment.
 
Introduction to competitive strategy, Day 2
9/13/16
Case: Dogfight over Europe: Ryanair (A), continued

Preparation question:

1. Based on our analysis last class and your assessment of the situation, should
RyanAir launch? In your answer, don’t forget to consider the following
questions:

• How do you expect Aer Lingus and British Airways to respond? Why?

• How costly would it be for Aer Lingus and British Airways to retaliate
against Ryanair’s launch rather than accommodate it?

(remember that the numerical analysis that we did last class should inform, but not
dictate, your thinking, so think hard about your assessment)

Assignment:

Please submit your answer to question 1 as no more than a 1/2 page (single spaced)
write up on NYU Classes.

Note: For this and every subsequent assignment, you must type in the names of
everyone who worked on your assignment within your submission (at the top of the
document or wherever is convenient – but it must be visible when we open the
document to grade your answer)

How do industries (and their structures) affect profits?

Module 2:
How are the underlying economics of an industry determined and how do they relate
9/20/16 to the average profits of firms? What is the relationship between different stages of
the value chain in an industry?

Case: Cola Wars Continue: Coke and Pepsi in 2010 (CCP)

Reading: Strategy Reading: Industry Analysis (RCP)

Preparation questions:

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1. Why, historically, has the soft drink industry been so profitable?

2. Compare the economics of the concentrate business to that of the bottling
business? Why is the profitability so different?
3. How has the competition between Coke and Pepsi affected the industry’s
profits?
4. How can Coke and Pepsi sustain their profits in the wake of flattening
demand and the growing popularity of non-CSDs?

Assignment:

No written assignment for this class, but be prepared to discuss the case in detail in
class.

Module 3: What do we mean by competitive position?

9/27/16 Case: Trader Joe’s (CCP)

Reading: Financial Statements and Ratio Analysis (RCP)

Preparation question:

1. How do firms in the supermarket industry make money?

2. What are the key sources of Trader Joe’s competitive advantage?
3. What are the main threats to Trader Joe’s competitive advantage? Is their
advantage sustainable?

Assignment:

No written assignment for this class, but be prepared to discuss the case and the
questions above in detail in class.

Module 4: How do firms create and capture value?

10/4/16 How do we determine customers’ willingness to pay for a product? How does WTP
relate to a firm’s activities and competitive position?

Case: Husky Injection Molding Systems (CCP)

Reading: Quantitative Analysis of Competitive Position: Customer Demand and

Willingness to Pay (RCP)

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Preparation questions:

1. What is Husky’s strategy? Why has the company been so successful in the
period prior to the recent problems?
2. Are Husky injection molding systems worth the premium price the
company charges?
3. What has caused Husky’s current difficulties?
4. How might Robert Schad, Husky’s CEO, and the company respond? How
should they respond?

Assignment:

Please submit your answer to question 2 on NYU Classes. Use the assignment
worksheet posted on NYU Classes under the Lessons Tab for guidance in this
assignment.

How do different positions within the same industry affect profits?

Module 5:
What does it mean to occupy different positions in an industry? How do firms
10/11/16 identify and locate themselves in these positions?

Case: Airborne Express (CCP)

Reading: Analyzing Relative Costs (RCP)

Preparation questions:

1. How and why has the express mail industry structure evolved in recent years?
How have the changes affected small competitors?  
2. How has Airborne survived and recently prospered in its industry?  
3. Quantify Airborne’s sources of advantage.  
4. What must Robert Brazier, Airborne’s President and COO, do in order to
strengthen the company’s position?  
 
Assignment:

Please submit your answer to question 3 on NYU Classes. Use the assignment
worksheet posted on NYU Classes under the Lessons Tab for guidance in this
assignment.
 
 
How does rivalry between firms affect profits?
Module 6:
How do firms respond to strategic actions by their competitors?
10/18/16

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Cases: Airbus vs. Boeing (A) (CCP)

Reading: Game Theory and Business Strategy (RCP)

Preparation questions:

1. What are the drivers of value creation and value capture in this industry?
2. As of 1992, who is doing better – Boeing or Airbus? Explain why.
3. What would be the value of a new VLCT to both companies?
4. If you were Airbus, how would you respond to Boeing? Should Airbus
collaborate with Boeing in the development of the VLCT?

Assignment:

Please submit your answer to question 3 on NYU Classes. A template to help you
complete the assignment can be downloaded from NYU Classes under the Lessons
Tab.

10/25/15 MIDTERM EXAM IN CLASS

How does platform competition affect strategy?

Module 7:
How can firms compete in industries with platform dynamics?
10/27/16
Case: None

Reading: Mastering the Intermediaries (RCP); Products to Platforms: Making

the Leap (RCP); What Would It Take to Disrupt a Platform Like Facebook?
(RCP)

Note: check course platform for additional readings

Assignment:
 
No written assignment for this class, but be prepared to apply the concepts from the
articles in class.

11/1/16
Case: Amazon, Apple, Facebook and Google (CCP) (continued)

Assignment:

Group assignment to be discussed in class.

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Introduction to corporate strategy

Module 8:
Overview of the main questions of corporate strategy and the logic of multi-business
11/3/16 firms

Case: The Walt Disney Company: The Entertainment King (CCP)

Reading: From Competitive Advantage to Corporate Strategy (RCP); Note on

Corporate Strategy (RCP)

Preparation questions:

1. Why has Disney been successful for so long?

2. What did Michael Eisner do to rejuvenate Disney? Specifically, how did
he increase net income in his first four years? How about the next 4 years?
Are either /  both strategies sustainable? Why or why not?
3. Has Disney diversified too far in recent years? What businesses would you
divest and why? If you were looking to acquire businesses, which ones
would you look to acquire and why (excluding Pixar, see next case).

Assignment:

Submit your responses to the bolded questions as a one page (max) PDF file on NYU
Classes
 
Vertical integration: where should the vertical boundaries of the firm be?
Module 9:
What should the vertical boundaries of the firm be? How can managers make the
11/10/16 “make-or-buy” decision?

Case: The Walt Disney Company and Pixar, Inc.: To Acquire or Not to Acquire?
(CCP)

Reading: Market Failures (RCP)

Preparation questions:

1. Which is greater: the value of Pixar and Disney in an exclusive relationship

or the sum of the value that each could 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 (i.e., must Disney acquire Pixar?)

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3. If Disney does acquire Pixar, what challenges do you foresee and how would
you meet them?

Assignment:

Submit your responses to the bolded questions as a one page (max) PDF file on NYU
Classes

Horizontal integration: across what businesses should a firm operate?

Module 10:
What are sources of “corporate advantage” in human capital intensive industries?
11/17/16
Case: International Management Group (IMG) (CCP)

Reading: Strategies of Related Diversification (RCP)

Preparation questions:

1. Who controls (captures) the value from IMG’s relationships with its
talent? Is it the agents? IMG? Someone else? Explain your answer.
2. Evaluate IMG’s decisions to enter new areas or lines of business. Which
businesses do you consider most sensible, and which are least compelling?
3. What are the biggest challenges in structuring an organization like IMG?
How might these difficulties be overcome?  
4. If you were a potential competitor to IMG, what strategy would you pursue to
compete against it? Where do you think IMG is most vulnerable today?  

Assignment:

Submit your responses to the bolded questions as a one page (max) PDF file on NYU
Classes
 

Introduction to unrelated diversification

Module 11:
Case: Beatrice (CCP)
11/22/16
Preparation questions:

1. Before 1979, in what ways did Beatrice's corporate strategy create

value?

2. It is easy to blame a CEO for company's challenges. Did Dutt's strategic

reorientation hurt Beatrice or would the company have been even worse off
without his changes?

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3. Should Dutt be removed from his position in 1985?

4. Regardless of who leads the company, what should Beatrice's corporate

strategy be going forward?

Assignment:

No assignment for Beatrice, just read the case and be ready for a mini-class discussion

Holding companies and business groups

Module 12:
Why do firms own unrelated businesses? Is it ever justified?
11/29/16
Cases: House of Tata, 1995: The Next Generation (A);

Tata questions:

1. Which, if any, of the following initiatives undertaken by Ratan Tata do you

think were good ideas:
a. creation of a group brand
b. building of equity interlocks among the Tata companies
c. sale of a part of Tata Industries Limited to the Hong Kong-based
Jardine Matheson group
d. revitalization of Tata Administrative Services
2. What do you think of some critics’ opinion that Ratan Tata was moving
the group of companies in exactly the opposite direction from where it
should have been going?

Assignment:

Submit your responses to the bolded questions as a one page (max) PDF file on NYU
Classes

Modern-day conglomerates
Module 13:
Why do conglomerates exist in the US?
12/6/16
Case: Danaher Corporation (CCP) ; Toyota NUMMI (link on NYU Classes)

Optional reading: Strategies of Unrelated Diversification (RCP); Corporate

diversification (NYU Classes);

Preparation questions:
1. (NUMMI) If you were the Van Nuys plant manager, what would you have
done differently to save the plant?

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2. Why has Danaher been so successful as a multi-business conglomerate over

the past two decades? What do you see as the core attributes of its strategy
that have allowed it to sustain superior performance during this period?
3. Would you invest in Danaher today? Why or why not?

Assignment:

Submit your responses to the bolded questions as a one page (max) PDF file on NYU
Classes
12/15/16 Course wrap up

12/22/16 Final Project due

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