Marshall School of Business University of Southern California BUAD 497: STRATEGIC MANAGEMENT Spring, 2006 M/W 6pm to 7:50pm ACC 201 Professor: Jonathan Jaffee Office: Bridge Hall 301 Phone: USC Office: (213) 821-5708 Email: [email protected] Office Hours: Wednesday 3:00-4:00pm or by appointment COURSE DESCRIPTION BUAD 497, Strategic Management, examines how companies attempt different business and corporate strategies to achieve or maintain a competitive advantage, leading (hopefully) to sustained superior performance. We do this through the use of readings, cases, lectures, discussion, and a course assignment (a strategic analysis of an existing company). BUAD 497 focuses on four main substantive areas of interest: Module 1: Basics of “Business Strategy” Module 2: Managing Strategic Change Module 3: Basics of “Corporate Strategy” Module 4: International Strategy Module 1: Basics of Business Strategy starts off with the key frameworks of “business strategy” including Porter’s Five Forces, which examines a firm’s position in its industry or external environment, the Resource-Based View of the firm, which examines the quality of a firm’s internal attributes, and Porter’s Generic Strategies, which examines different types of preferred strategies (e.g., differentiation versus cost-leadership). The cases are used to help illustrate the application of these different analytical frameworks to inform a company’s strategy. These business strategy frameworks, especially the Five Forces, are the building blocks of all strategic management. It should be noted that by “business strategy”, we are referring to the strategies of firms that focus on only a single industry (e.g., In’n’out Burger). “Corporate strategy” (Module 3) focuses on the strategic issues of conglomerates or multi-divisional firms that compete in many industries (e.g., Proctor & Gamble, GE, etc). This distinction will become clearer as the course progresses, and isn’t a big deal.BUAD 497: Strategic Management Spring, 2006 2 Module 2: Managing Strategic Change examines practical issues that come with trying to implement business strategies. The purpose of this module is to understand that it is fine (and fun) for us to “recommend” certain business strategies, but companies have to deal with the practical problems of implementing them, including disrupting a firm’s existing routines and culture. In particular, we study the practical problems of implementing business strategy through the case study of three companies: Phillips, Intel, and 3M. Module 3: Basics of Corporate Strategy extends our business strategy frameworks by grappling with the different and particular strategic issues of companies that compete in multiple industries or have multiple strategic business units. We focus on the following issues in this module: 1. The basic tenets of corporate strategy 2. Diversification and the notion of core competences 3. Corporate governance and “managing” the managers 4. Vertical integration, Transaction Cost Economics, and the “make or buy decision” 5. Hyper-competitive rivalries and “multi-market” competition 6. Issues of creating a new division within an existing company We address this important part of strategic management by examining several interesting cases of corporate strategy, including Walt Disney, TYCO (not the toy company), Birds Eye Frozen Foods, Ralston Purina and other pet food companies, and General Motors’ Saturn Car Company. Module 4: International Strategy is a brief foray (just 2 classes) into issues of international and global strategy. We learn the very basics of international strategy here, which are dealt in greater detail in other Marshall School classes, including MOR 492 (Global Strategy). Business Cases In terms of business cases, case analysis requires considerable time and effort. One effective strategy is to read the case quickly a first time (to get a sense of the firm, industry, and main strategic issues) and then read it a second time more carefully, making notes about the case and thinking about the key questions of the case. For each business case covered in class, there are questions involving the company’s strategy. The questions for each case are attached at the back of this syllabus. You should be able to answer these questions for all cases covered in class. COURSE REQUIREMENTS AND GRADING Course grading is based on the following components: Class Attendance and Participation: 15% Midterm Exam: 30% Group Project, Paper & Presentation: 20% Final Exam: 35% Total Grade: 100%BUAD 497: Strategic Management Spring, 2006 3Class Attendance and Participation As Woody Allen once remarked, “90% of success is just showing up.” This is certainly true for this class. If you show up for most, if not all, of the classes, you’ll probably do well. If you miss classes, you will probably have a tough go of it. In this regard, 15% of your class grade is based on class attendance and participation. In terms of class preparation and participation, I expect everyone to do all the assigned readings. I have tried to keep the number of readings (articles and cases) to a reasonable number, so that you will have time to not only understand the article or case’s main points but think about how the article / case relates to the course’s other readings. I may “cold-call” or “warm-call” students to monitor whether students are doing the reading. If you do not understand some of the concepts, that is fine, as we will discuss these issues in class. However, you must be prepared for each and every class and reading. Your class participation grade will be based on the quality, not quantity, of your comments for both the cases and readings. Group Project: Strategic Analysis of a Company (paper and presentation) The group project for this course entails a strategic analysis of an existing company that you choose. This should be done in groups of either 4 or 5 students. You (collectively) should imagine yourselves as the company’s top management team (or, as a team of consultants) in charge of an assessment of a company’s current strategy and recommendations for its future strategy. My recommendation is that you choose a company that is going through some tough times or is struggling with some key strategic issues. Or, you can choose a company that is