James Costantini Professor of Strategy Session 1 Strategy

Introduction

Performance varies within industries

Companies Intel AMD Ford VW Honda Toyota Revenues $52 bn $ 7 bn $131 bn $142 bn $109 bn $231 bn Mkt. Cap $130 bn $ 4 bn

$ 46 bn $ 53 bn $ 29 bn $ 109 bn
Data from October, 2011

Match them up
Three Large Firms In: Revenues Mkt. Cap

Auto industry (Ford, VW, Toyota)

$215 bn

$208 bn

Soft Drinks industry (Coke, Pepsi, Dr. Pepper)

$504 bn

$262 bn

IT industry (Microsoft, Apple, Google)

$117 bn

$798 bn

Data from October, 2011

Performance varies across industries

200

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800

1000

1200

1400

1600

1800

2000

Avg. Equity ($B) (1984-2002)

Source: Strategy and the Business Landscape, Ghemawat, pp. 18

One perspective on why industry matters

When an industry with a reputation for tough economics meets a manager with a reputation for excellent performance, its usually the industry that keeps its reputation intact - Warren Buffett

Overall strategy process

Set goals Develop sources of competitive advantage

Test the strategy

Strategy Process
Formulate the strategy

Shape and adapt to external environment

Course objectives
More systematic understanding of the drivers of superior performance at the industry, business and corporate levels Familiar with standard strategy tools and concepts Increased ability to systematically analyze complex, multidimensional business problems and to effectively communicate conclusions

Course overview
Date Monday 31 October Session (case) Group assignment due time Individual poll due time Session1: INTRODUCTION TO STRATEGY AND COURSE OVERVIEW (IKEA A) PART 1: BUSINESS UNIT STRATEGY Session 2: COMPETITIVE POSITION (Supermarkets in India) Session 3: THE CHALLENGE OF INDUSTRY DYNAMICS (Music Industry) All groups due by 9am Odd groups: Saurer case (Session 4) Even groups: Airborne Express case (Session 5) Session 4: SUSTAINING COMPETITIVE ADVANTAGE (Saurer) Session 5: COMPETITIVE ADVANTAGE IN A CHANGING INDUSTRY (Airborne Express)

Wednesday 2 November Thursday 10 November Wednesday 16 November

Thursday 17 November Friday 18 November

Course overview (continued)

Date Session (case) Group assignment due time Individual poll due time Tuesday 22 November Wednesday 23 November PART 2: DEVELOPING STRATEGY Session 6: PATHS TO CREATING NEW MARKET SPACE (Circus Industry) Honda and British Motorcycle Industry Due by 6pm Session 7: RESPONSE TO COMPETITOR GROWTH (Honda and British Motorcycle Industry) All groups Session 9 group exercise due by 9am Session 8: ORIGINS OF STRATEGY (IKEA B) Session 9: NON-CUSTOMERS: REACH BEYOND EXISTING DEMAND

Thursday 24 November

Thursday 1 December

Friday 2 December (Double session)

Course overview (continued)

Date Session (case) Group assignment due time Individual poll due time easyGroup Due by 6pm Session 10: LEVERAGING OF COMPETITIVE ADVANTAGE (EasyGroup) Session 11: FROM BUSINESS TO CORPORATE STRATEGY (Flat-Screen Televisions) PART 4: CONCLUSION All groups due by 7pm: Olam case Session12: WRAP-UP (Olam) PART 3: CORPORATE STRATEGY Monday 5 December Tuesday 6 December Thursday 8 December

Thursday 8 December Friday 9 December

Group work, polls and grading

Group work for classes 4 or 5, 9 and 12 due by deadline in course outline handed in by email to Strategy.ftb@insead.edu Individual polls for classes 7 and 10 due by deadline in course outline and completed on course web site Grading: 20% individual (class participation and individual polls) 25% group work 55% exam

Tips on doing cases and group work

Individual work
Read the case with clear questions in mind the study questions are for this - as this is much more efficient Whether you read the readings before or after the case is personal preference: Course outline indicates key readings

Group work
Information: Only use information in the case supplemented by reasonable assumptions Work allocation: dont allocate pieces to those most familiar with that type of analysis this bores the person doing it and others dont learn much Face to face meetings are best for discussion and debate: budget time for this but run the meetings well

Classroom norms
Engage fully
Arrive on time No mobile devices (laptops, phones, etc.) unless relevant to the class Remain in class until the end of each session

Rules of engagement
Come prepared and ready to question and debate Always behaving tolerantly and with respect towards your peers

Readings, recap notes and slides

Annotated slides and brief recap notes for each session posted on course web site Readings: to help you navigate the readings, these are split into:
Key Readings: Key readings cover the principal concepts, approaches and frameworks covered in the course. Reference Readings: Reference readings provide a deeper look at specific conceptual issues: these are recommended for those planning to take strategy electives. Topic Readings: Topic readings focus on specific issues covered in the course.

Learning about Strategy

Enjoyable
Feels like real business Integrates other MBA topics Develops CEO perspective Creative and analytical Can learn from personal experience and observation Multiple routes to success no single correct answer Enjoyable challenge

Less Enjoyable(?)
No right answer difficult to ace the case Issue: choice of best analytical perspective/tools Data paradox: oMore data: less value opportunity oLess data: more opportunity (maybe) Mostly an iterative/learning process

Some issues for reflection

Value and limitations of strategy tools and frameworks Role of uncertainty (luck of the draw) and foresight in superior performance What keeps smart and determined competitors from copying a firms competitive advantages?

How to reach me
If you would like to meet with me for any reason, individually or as a group, email Jessica Verin (at jessica.verin@insead.edu) or myself directly (at james.costantini@insead.edu). I am in office EW 1.09.