Faculty
Professor Richard A. D'Aveni
Objectives
Course Overview - Using Diplomatic and Military Strategy in Business
Although there is no need to purchase them, this course is intended for students who wish to be exposed to the strategic perspectives developed in two books written by Professor D'Aveni: Strategic Supremacy and Hypercompetition. The underlying thesis of these books is based on the vast strategy literature that exists regarding international relations and military science. These literatures are often ignored by business schools. But as corporations become large and multinational, they begin to look and act like the multinational empires found in ancient history and modern times. Similar to nation states, large powerful corporations stake out spheres of influence within their competitive space. They struggle for turf as if they were playing on a global chessboard. And they use their spheres to interact with rival global corporations in ways that enhance their market power. These interactions can lead to:
A division of the market and establishment of "borders" among competitors,
Mutual assured destruction,
Testing and probing using parts of their geo-product portfolio for different purposes,
A struggle for control over the offensive/defensive mindsets of other players.
Just as in international relations, the strategies used by rival spheres of influence affect how the players see and play “the game.” Actions can stimulate aggressive, defensive, stabilizing, or retreating mindsets. So strategic supremacy is a matter of having superior influence over (1) where the rivals locate their spheres in the competitive space, and (2) the mindset of those rivals about where they have the will and capability to win.
It is also (in part) a matter of using tactics that rely on speed, surprise, and other techniques from military strategy. Thus industry and global political leaders can be disrupted and displaced by ambitious hypercompetitors or revolutionaries who seek to:
Use competitive dynamics to outmaneuver each other and to use creative disruption to throw competitors off guard,
Change the rules of competition using a series of incremental competitive initiatives that:
Cause profit pools to evolve
Drive industry life cycles
Eliminate competitors
Undermine their competencies
Change the rules of competition swiftly and massively through the use of:
Revolutionary new products and business models, or
Industry re-invention
The history of world politics and international business competition has always been characterized by a tension between the forces for change and the forces of stability—the revolutionaries versus the establishment. This course will address how and why some firms seek market stability while others seek disruption and chaos, looking at industries as self-organizing “competitive pressure systems” that act like the international system of nation states creating a world order or disorder.
The perspectives of military and international relations provide a different perspective for managers who must learn to think like their competitors in global markets. On continents lacking an “MBA-culture,” such as Europe and Asia, managers often structure their strategic thinking using non-economic mental models. For example, training based on the classics provides many Europeans with a historical perspective of strategy routed in the politics of European dynasties vying for power over the continent and far-flung colonial empires. In Asia, the game called “Go” and books written for or about war lords, such as Sun Tzu’s The Art of War, form the basis of many managers’ strategic thinking. Thus, even though this course is “off the beaten path” for MBAs, and even though it at times deviates from economics-based approaches, it will be useful in understanding the mental models of many of the most important rivals you will face during your career.
Course Goals and Takeaways
While military and diplomatic thinking is one goal of this course, it is necessary to relate this type of thinking to practical business frameworks. In order to achieve this pedagogical goal, the course will develop several consulting tools. You should walk away from this course with a few techniques and frameworks for analyzing and creating portfolio strategies as well as strategies for competitor selection and the use of multi-market contact and competitive positioning. These include: sphere of influence analysis, price-benefit mapping, and competitive pressure mapping. You should also walk away with some consulting tools and frameworks for mapping guerilla-like moves and counter-moves, including competitive maneuvering in the price-quality and strongholds arenas as well as hypercompetitive and revolutionary methodologies for creating rule-shifting strategies. These tools and frameworks are intended to be “differentiators” that will distinguish you from the pack of MBAs trained only in the more traditional strategic concepts, tools and theories. To get the full grasp of these tools, you may be asked to do a project using these tools, so you will learn by doing them.
Who Should Take the Course
This course is primarily intended for those students planning to go into consulting, but will also be useful to those who are interested in strategic planning, market research, competitive intelligence, securities analysis, and general management. It will also be of interest to those who want to be the future leaders and better citizens of their nations, with a wish to broaden their understanding of international relations and military strategy in order to become better able to interpret the geo-political events shaping our times.
Requirements
Course Administration
In the Classroom—Case Discussion
My expectation is that you will come to the class having already thought through and analyzed the cases. This way, we can devote the bulk of the class time to thinking about and responding to each other’s analyses of the cases and only the necessary minimum to getting the facts out.
I encourage active student participation in class. I should point out that most students typically tend to underestimate-rather than overestimate-the worth of what they have to say. Thus, if you are ever in doubt, I encourage you to speak up instead of staying quiet. It is especially important to get the contributions of international students and visiting students from overseas universities to help understand the local context of the cases if they are set in locations outside the U.S.
If you are inadequately prepared to lead off the discussion of the particular case, you may:
ask before class not to be called on,
pass when you are called, or
“wing it.”
These actions are listed in increasing order of negative evaluation.
With cases, my role in the class is to help facilitate discussion. In part, I serve as a clarifier and sometimes an intensive questioner in order to help you present and develop your ideas. One of my primary roles is to manage the class process and to assure that the class achieves an understanding of the case situation. Another of my primary roles is to provide you with a summary of the cases’ major issues and the relevant research/literature (if any) on those issues. However, the goal is for you to discover the main issues on your own or through responding to my in-class questions. So, the primary responsibility for learning must rightfully fall upon the student. This makes your preparation, as well as your cooperation and open mindedness during class, critical.
Clearly, there is no single correct solution to any of these cases. There are, however, several wrong solutions and many lessons to be learned. There are also solutions which are inadequately supported with analysis, and there are solutions and analyses which are ineffective because they are not presented in an orderly and persuasive fashion. We should work together to see to it that each class session is a lively, stimulating, and intellectually rewarding venture in group learning. We are individually and collectively responsible for achieving that end.
Each case has its own integrity and, thus, it stands on its own. You may draw on personal experiences if you believe they are substantive, insightful, and generalizable. Generally, I am not concerned with what was the actual outcome of the case. Such an approach would imply that there is a “right answer”. The actual outcome of a situation may or may not reflect a good solution. In some cases firms get lucky or suffer bad fortune, so often the actual outcome of the case does not tell us a complete story unless we process the information through a theory-based filter, such as military science and the theory of international relations. In those instances where there was a particularly interesting outcome, it will be shared with the class.
To get a full assessment of your preparation, there may also be up to two twenty minute unannounced quizzes administered during class sessions. These quizzes will count towards your class participation grade and they help me to assess the learning of those students who are quieter in class due to cultural differences.
Please note that class participation is very important to your grade. Sitting in class without speaking during case discussions or asking questions of the speakers will earn an LP for class participation, even if you attend all classes. Speaking only in response to cold calls will earn the same grade unless the answers are outstanding.
In the Classroom - Speaker Presentations
My expectation is that you will attend all presentations by invited speakers (unless they are specifically identified as optional). While it is tempting to skip speaker sessions because of your other duties and because you will not be cold called, it is very important that you attend because it reflects poorly on the Tuck school if a CEO comes to an empty room and it decreases our ability to get other CEOs to come in the future. Your actions affect more than your self in this situation. The CEOs are dedicating their valuable and limited time as well as considerable corporate expense to talk to a very small audience. You will probably not get the opportunity to see such a high-powered group of CEOs such as this again, and they deserve our consideration and respect considering what they are doing for you.
You are required to prepare for the speakers by doing any reading assigned by the speakers as well as to gather your thoughts on any assignment questions that they might ask you to think about. You must prepare questions for the speakers based on those readings and assignments that evidence specific knowledge about the speaker's company, not just generic questions.You should also look at the company's website (or check other library resources if the website is unavailable or in a language you do not speak) to familiarize yourself with the company's products and competitive strategy. If the speaker has not addressed competitive strategy and the strategies of his/her competitors, as they have been requested to do, then you should ask about the competition's and the company's competitive strategy and how it has evolved to make the speech relevant to the course. Since many of the speakers are CEOs of big companies, they often talk about whatever is on their minds and stray from the core theme of the course. So it is your responsibility to bring them back to competitive strategy issues through your questions.
Because many of the speakers will not explicitly know or use the military and diplomatic strategies or other frameworks in the course, it is also your responsibility to ask them about how they use military and diplomatic thinking in their companies. If you ask whether they use Clausewitz or Sun Tzu, most will say no. You will have to ask specific questions about their use of the principles of strategy discussed during the course.
The final exam will include questions that ask you to do a summary and critical analysis of some of the speakers’ presentations and to apply the course concepts to what the speakers talked about.
Written Assignments—Two Speaker Write ups
Two write ups based on speakers’ presentations are required. You must signup on the door of my office for two of the following speakers:
Fred T. Festa, Chairman, President & CEO, W.R. Grace & Co. (9/28)
Gary Rodkin, President & CEO, ConAgra Foods (9/29)
Greg Maffei, CEO, President & Managing Director, Liberty Media Holding Co. (10/5)
Rick Goings, Chairman & CEO, Tupperware Brands Corp. (10/6)
Frank T. MacInnis, Chairman & CEO, EMCOR Group, Inc. (10/13)
William Achtmeyer, Chairman, Managing Partner, President & CEO, The Parthenon Group, LLC (10/27)
Dr. Surya Mohapatra, Chairman, President & CEO, Quest Diagnostics (11/3)
Signups are first come first serve. My academic coordinator will email you when the signup sheets are posted on my office door.
The speaker write up should be 3 pages in length, 12 pt font, double spaced, single sided. The write up should include your summary of the presentation, and your analysis of the company’s competitive strategy based on the models presented in class and the readings. A strong paper would do a summary of the strategy, a SWOT analysis of its strategy, a critique based on the principles and frameworks discussed in the course and its readings, and suggestions going forward for the company that would be suggested by these principles and frameworks. If the speaker does not talk about what you need to do this write up, you should be prepared to ask the speaker questions that allow you to gather the facts necessary to do the write up.
The write ups are due one week after the speaker’s session and a hard copy should be turned into my academic coordinator (205-Tuck).
Research in the library or on the internet is permitted (for the write up only, not for the case write ups or the final exam). You may have to do a lot of interpretation of facts to make your best judgment about what and why the CEO is doing what he/she is doing. Just state your assumptions.
Papers will be graded on the basis of their: thoroughness, accuracy, clarity, conciseness, organization and application of the principles and tools learned in this course. A big plus is given for identifying something new and unique that adds to your learning experience by showing that you understand and use the course concepts.
Written Assignments—One Case Write up
Each student is required to signup for one case write-up. This is a four-page, double spaced (minimum font size = 12) paper answering the case questions assigned in the syllabus. The write-up is due at the beginning of the class session, and students doing the case write-up are expected to take the lead in the class discussion that day. A signup sheet will be posted on my office door. The possible case choices are:
The Globalization of CEMEX (10/12)
Cat Fight in the Pet Food Industry (10/26)
Caterpillar Tractor (11/10)
Komatsu (11/16)
Signups will be limited for each case to insure all cases get equal coverage, so the signups are first come, first serve. My academic coordinator will email you when the signup sheets are posted on my office door.
No outside research is permitted. Please use only the assigned readings, assigned film (if any) and the case. You may use materials and concepts presented earlier in the course.
Final Examination
There will be a three hour take home exam, which will be passed out on the last day of class. This is open book to your notes and the cases and assigned readings only. You must not talk to anyone about the exam or background facts necessary for answering the exam questions. The exam must be written by you alone.
The exam will include questions about:
the speakers’ presentations (for which you may not do any research on the internet or in the library during the exam)
applications or critiques of the tools discussed in class, including price-benefit mapping, stronghold analysis, sphere of influence mapping, hypercompetition, or competitive pressure analysis, and/or
a case with questions. If a case is given, you should not use any reference source, person, website or any other source to look up what the company actually did regarding this case.
Your answers should apply the concepts and frameworks from the course, and must stick within the page limitations set out in the instructions.
You will be on the Tuck honor code for this exam.
Materials
Materials will be either in the course packet or handed out in class. There is no text book.
Additional Guidelines
- Attendance is obviously important; other activities, including job interviews, ought to be scheduled so as not to conflict with class meetings whenever possible. Two or more absences may have a serious impact on your class participation grade. You are on the honor code to report all absences to the professor. Excused absences may be granted for health or family emergencies, as well as religious reasons.
- Classes will begin on time. I will appreciate it if you are in the classroom before the class starts.
- I frequently call on students who do not have their hands raised. If you are not prepared for class, please notify me in advance.
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Laptops and notebooks are not permitted during class. Doing email or surfing the net often restricts comprehension and limits participation, thereby reducing your learning or those of others. Laptops should not be used during class for emailing, researching the cases, surfing the net, or any unrelated purpose. If you must, laptops may be used for official assignments that ask you to prepare a spreadsheet analysis or power point presentations.
- Consideration for the speakers is crucial to make a good impression on them. They have given up a lot of their time to come to speak to a small audience at Tuck. So please arrive on time, and do not walk out during their lectures for coffee, bathroom breaks, etc. Please plan ahead for such needs. The speakers are of such high status that they are not used to this kind of treatment, and because of their generation, may even interpret it as rude or insulting.
Tuck Honor and Social Codes
The Tuck honor and social codes strictly apply to this course. Severe violations may jeopardize your grade in the course.
The following statements should further define role of these codes in this course:
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You are encouraged to form study groups to prepare the assigned cases or lectures for each day, but the actual speaker and case write-ups must be written up individually.
- You should not use any handouts or power points distributed in previous years or other sections of the course.
- Disruption of the learning experience for others should be avoided, which means that each student should respect the opinions of others and the professor, even if personal, cultural or national differences lead to conflicting views or political incorrectness from the American perspective.
Please report any suspected Honor Code violations to the Judicial Board. You should also feel free to ask the professor for clarification of “gray areas” without prejudice before infractions occur or to admit fault to the professor so that a satisfactory resolution can be achieved without going to the Judicial Board.
Anticipation of Speaker Cancellations
Because of the responsibility of the speakers and the severity of these difficult times, we must anticipate and forgive them if some cancel last minute. Some will be hit by pressing business crises, such as take over attempts, public relations issues, and legal issues. If they do cancel, and we can anticipate that some will, class will still be scheduled—we will use the time for:
Substitute Case: Fort Ticonderoga, on Retreat Strategy (in the course pack).
Debriefing the CEO talks for their main views of strategy, using the frameworks of the course and/or frameworks that they are using as their mental maps.
The final exam may include materials covered in any class when a cancellation occurs.
You will be notified by email if a cancellation occurs. Please be vigilant: monitor for notices concerning cancellations and prepare the Fort Ticonderoga case in advance of class.
Expect Frequent Updates of the Syllabus for Speaker Assignments/Readings
All of the speakers have been asked to provide titles, readings, and assignment questions for their sessions. However, because they are busy, most will only provide that information last minute. Please excuse this constant updating of the syllabus and check before class for them as well. I apologize but they can not be avoided. Of course, all parts of the syllabus related to the Professor’s class assignments are in the syllabus as of the beginning of the course, and will not be changed except under extreme or unforeseen circumstances.
General Information
The professor receives no royalities or other renumeration from any articles, book chapters, materials, or movies he has formally assigned for this course, even his own materials, articles, and books.
All required materials will be in your course pack. However, five copies of the optional readings will be placed on reserve in Feldberg Library for students wishing to delve into further depth on the topics of this course.
Grading
Class Participation* 30%
Speaker Write ups 20%
Case Write Up 20%
Final Examination 30%
* Includes unannounced in-class quizzes, if any, as well as attendance and in-class involvement.
Schedule
Session 1: Monday
September 14
Combining the Use of Defensive, Offensive and Alliance Strategies
Overview of Concepts from Military and Geo-Political/Diplomatic Strategy
Case:
Tuckman, Barbara W., "The Guns of August: German and French Strategy in 1914" from Mintzberg & Quinn, The Strategy Process, 1991, pp. 148-165, 2nd ed
Reading:
"Von Clausewitz 'On War': Technical Note on Strategy," edited by James Brian Quinn, 1985.
Questions:
Answer the questions at the end of the case.
What does the "military/diplomatic model" tell you about the key elements of offensive versus defensive strategy?
How do you apply these concepts to business?
Session 2: Tuesday
September 15
Defensive and Offensive Military Strategy in Business
Case:
The Disposable Diaper Industry (HBS 9-380-175)
Reading:
"Marketing Strategy and the Science of Warfare" by Philip Kotler and
Ravi Singh Achrol, pp. 94-133, Chapter 4 of Competitive Strategic
Management, ed. by Robert B. Lamb (Prentice-Hall, Engelwood Cliffs,
NJ, 1984.)
Questions:
Identify the existing entry barriers to the disposable diaper industry.
What should P&G do to defend against entry? Identify the appropriate defensive military strategy using the Kotler and Achrol reading and then specify the business tactics to implement that strategy.
What should J&J and Union Carbide do given what P&G is likely to do? Identify the appropriate offensive military strategy using the Kotler and Achrol reading and then specify the business tactics to implement that strategy.
Calculate the cost of entry to become a national brand. Someone will be selected to show and defend their calculations to the class.
Is there any way for J&J to protect its "baby franchise" against P&G without fighting P&G in the disposable baby diaper market?
Last Names A-H should be prepared to discuss J&J's entry strategy and cost of entry.
Last Names I-Z should be prepared to discuss Union Carbide's entry strategy and cost of entry.
Everyone should be prepared to discuss P&G's responses to these entrants and estimate how much each response will cost P&G versus how much it will raise the cost of entry to J&J and Union Carbide.
Session 3: Monday
September 21
Battlefield Positioning - Especially in Tough Situations
Reading:
"Mapping Your Competitive Position", Richard D'Aveni, HBR, November 2007
Lecture/Discussison: Beating the Commodity Trap, Richard D'Aveni, forthcoming, 2010, Harvard Business Press
Optional Reading: Hypercompetition Chapter 1, Richard D'Aveni; The Free Press, 1994
Session 4: Tuesday September 22
Spheres of Influence in Geo-Politics and Business
Conceptualizing your competitive space
The struggle for power over that space
Defining a sphere of influence within that space
Using a sphere of influence to gain or hold strategic supremacy over rivals in that space
Readings:
"Constructing a Forcefield to Deflect Competitors: Spheres of Influence,"
Richard D'Aveni, Financial Times of London, Friday, August 16,
2002, page 9.
"Global Gamesmanship" Ian MacMillan, Alexander B. Van Putten, and Rita Gunther McGrath, HBR, May 2003, pp. 62-71, (Reprint # 3620).
Session 5: Monday September 28
Fred T. Festa, Chairman, President & CEO, W.R. Grace & Co.
Topic: Recalibrating Business Strategies During a Global Economic Downturn
Like many corporations, specialty chemical provider W. R. Grace & Co. has been impacted by the current economic downturn. CEO Fred Festa will discuss how the company has used the downturn as a reflection point to review business processes, especially those involving sourcing, inventory and cash flow, as well as country specific business plans. Collectively, these activities will enhance the way that Grace operates around the globe and better position the company for an eventual economic recovery.
Session 6: Tuesday September 29
Gary Rodkin, President & CEO, ConAgra Foods
Topic: The Tipping Point
Readings: TBA
Session 7: Monday October 5
Gregg Maffei, CEO, President & Managing Director, Liberty Media Holding Co.
Topic: Moneyball in the Media Business
Reading:"Moneyball: The Art of Winning an Unfair Game", Chapter 4: Field of Ignorance, Michael Lewis; W.W. Norton & Co. 2003.
Available in ACS course folder for Chapter 4.
For more informatin about Liberty Media, you are invited to visit their website:
Session 8: Tuesday October 6
Rick Goings, Chairman & CEO, Tupperware Brands
Topic: Mission...Model...Mindset
Keeping the Wolf at Bay!
Readings:
"Luxury for the Masses", by Michael Silverstein and Neil Fiske, Harvard Business Review #R0304C,
"The Quest for Resilience" by Gary Hamel and Liisa Valikangas, Harvard Business Review #R0309C,
"Blue Ocean Strategy", by W. Chan Kim and Renee Mauborgne, Harvard Business Review #R0410D.
Session 9: Monday October 12
Spheres of Influence and Industry Leadership: Using overlaps to negotiate borders and establish strategic supremacy over competitors--Playing the Global Chess Match
Case:
The Globalization of Cemex (HBS 9-701-017)
Reading: “Leaders of the Pack: A look at strategy for securing market domination—and keeping it.” Wall Street Journal Weekend Edition, March 3-4, 2007, page R9.
Reread: “Global Gamesmanship” by Ian MacMillan, Alexander van Putten and Rita McGrath, HBR, May 2003, pp. 62-71, (Reprint # 3620).
Questions:
What are Cemex's competitive advantages versus its rivals?
Why has it expanded into the particular geographic markets it has? Why has it followed the sequence of geographic moves that it has?
What advantages over rivals does it get from its current geographic position on the global chess board? What are the pros and cons of its current choices?
What are the spheres of influence of Cemex's most important rivals? How do you evaluate their relative strengths and weaknesses?
Where should Cemex expand next? How can it improve its position on the global chess board, increasing its power over selected rivals, defending its core turf, attacking critical players, establishing a balance of power with others, etc.?
Optional Reading: (Available Only After Class) "Corporate Shperes of Influence" MIT Sloan Management Review, Summer 2004, 45(4): 38-46
Session 10: Tuesday October 13
Fort Ticonderoga Case and Debrief Speakers
Frank MacInnis of EMCOR has had to cancel. In his place, prepare the case Fort. Ticoneroga (in course pack), for discussion. We will also debrief the speakers so far this term.
Sessison 11: Monday October 26
Stronghold Analysis: Building and Using a Sphere of Influence against Multiple Rivals
Cases:
Cat Fight in the Pet Food Industry (A) (HBS 9-391-189) to be prepared before class
Cat Fight in the Pet Food Industry (B) to (D) (HBS 9-391-195 through 9-391-197) to be handed out in class.
Reading:"The Balance of Power" by Richard D'Aveni, MIT/Sloan Management Review, Summer 2004, Vol. 45, No. 4, (Reprint # 45415).
Questions:
Who is best positioned in the pet food industry in 1986?
Who has staked out what strongholds? Where? How?
What should Ralston Purina do?
Who do you predict will bid for Anderson-Clayton? Why?
Who is likely to attack whom? Why?
Recommended Optional Reading: for those interested in more depth on the Stronghold Analysis and Mapping used during class discussion: Chapter 3, Hypercompetition, by Richard D'Aveni, pp. 114-151 (The Free Press, Simon & Schuster, 1994). There are copies of the book on reserve in Feldberg Library.
Session 12: Tuesday October 27
William Achtmeyer, Chairman & CEO, Parthenon Group
Topic: TBA
Session 13: Monday November 2
Using Competitive Pressure Mapping--Understanding How Competitiors Use Competitive Pressure to Stabilize or Disrupt the Current Industry Structure
Reading:"Competitive Pressure Systems: Mapping and Measuring Multimarket Contact", by Richard A. D'Aveni, MIT/Sloan Management Review, October 2002
Be prepared to use the methods from the assigned reading in class. We will do an exercise calculating competitive pressures and then interpreting some competitive pressure maps.
Session 14: Tuesday November 3
Dr. Surya Mohapatra, Chairman, President & CEO, Quest Diagnostics
Topic: QUEST FOR GROWTH
General Website:
Q3 Earnings:
History:
Annual Reports:
Press Releases:
Session 15: Monday November 9
The Center of Gravity: Using Hypercompetitive Tactics to Out-Maneuver or Overwhelm Competitors by Destroying their Competitive Advantage
Hypercompetitive strategies -- Winning through concatenating a series of unsustainable moves
Destroying the advantage of rivals
The failure of oligopoly-based models of strategy
Selecting the right strategic model for the pattern of turbulence you face
Methods for mapping and analyzing competitive dynamics
Methods for creative disruption of industry leaders and proactively changing the rules of the game and shifting the basis of competition to your advantage
Readings:
"Maneuver Warfare: Can Modern Military Strategy Lead you to Victory?" by Eric Clemons and Jason Santamaria, April 2002, HBR, (Reprint # R0204D).
"Operational Logic: Selecting the Center of Gravity" by Col.William W. Mendel and Col. Lamar Tooke, Military Review, June 1993, 73(6): 2-11.
"Hard Ball: Five Killer Strategies for Trouncing the Competition" by George Stalk, Jr and Rob Lachenauer, HBR, April 2004, pp. 62-71, (Reprint # R0404C).
Optional Readings:
"Waking Up to the New Era of Hypercompetition", The Washington Quarterly, Winter 1998.
"Strategic Supremacy through Distruption and Dominance", MIT Sloan Management Review, April 10, 2003, page 1 and A6.
Session 16: Tuesday November 10
Global Leadership Porter-Style - Back to Barriers to Entry and Strategic Fit
Case: Caterpillar Tractor Company
HBS Case (9-385-276)
Reading: “How Global Companies Win Out”. Hout, Thomas M., Porter, Michael E. and Rudden, Eileen; Harvard Business Review (Reprint 82504)
Questions:
What are the key elements in Caterpillar’s historical strategy? What is the source of its outstanding success in the worldwide earth-moving equipment industry?
What changes do you see in the industry and the competitive environment? What implications do they have for companies in the industry?
How well is Cat positioned for the future? What recommendations would you make to Lee Morgan?
Be prepared for an Opening Cold Call to discuss how the global environment is changing and what must be changed at CAT to deal with these changes.
Session 17: Monday November 16
The Struggle for Global Dominance-The Unconventional Tactics of Globall Challengers
Case: Komatsu Limited (to be handed out at end of previous class) HBS Case (9-385-277)
Readings:
"Strategic Intent", Gary Hamel & C.K. Prahalad, Harvard Business Review, May-June 1989, pp. 63-77 (Reprint R0507N)
"Coping with Hypercompetition: Utilizing the New7S's Framework", Academy of Management Executive, 1995, 9(3): 45-57.
Optional Reading: "The Empire Strikes Back: Counter Revolutionary Strategies for Industry Leaders," Harvard Business Review, Nov. 2002, pp. 66-74.
Questions:
How does Komatsu disrupt CAT’s Strengths? Why does Komatsu use the sequence of initiatives it does? Were they planned?
How does Komatsu see its source of competitive advantage differently from CAT?
What should CAT do to counter Komatsu?
Special Session: Monday November 16 (7pm to 11pm)
Showing of The Godfather, Part I, Location: Stoneman Classroom
Notes:
You may rent the movie at a video store and view it in private at your convenience. Otherwise, this public showing is available. In addition, 10 DVDs will be on reserve in the Feldberg Library. You may borrow them, but for the convenience of your classmates, please return them promptly and try to gather a group of students to watch the DVD if possible, because copies are in limited supply.
The movie is rated R. While it is one of the most highly acclaimed films of all time, it does contain some nudity, explicit language, violence and racist comments. If the Godfather Part I offends your sensibilities, I will give you a written summary of the film that expunges the potentially offensive materials. This summary provides a scene by scene description that will be adequate preparation for the class.
Do not rely on your memory of the movie. It is important that you view the film within 3 days of the class session. There are many subtleties in the movie that are critical to analyzing the strategies used in the movie.
Look at the disclaimer and notes associated with tomorrow's class.
As you watch the film, please take notes. Watch carefully for:
Key People
Motives
Power bases
Relationships
Style & personality
Organizational Characteristics
Roles & formal structure
Hierarchy
Deviant cultural attributes
Important changes over time
Key Events in the movie
Purpose
Effect on strategic decision making process
Interactions among the people at these events
Body language of the key players
Action/strategic implications
Causal connections between an event and subsequent events
How power struggles play themselves out
How do the characteristics of the key people and the organization affect the key events?
Session 18: Tuesday November 17
Strategy as Revolution-Disrupting and Distracting the Competition
Discussion: The Godfather, Part I.
Readings:
"Strategy as Revolution," Gary Hamel, 1997, HBR, (Reprint # 96405).
The Art of War by Sun Tzu, translated by Samuel B. Griffith, (London, Oxford University Press), 1963, pages 63-71, 77-84, 96-101 and 102-110.
“Curveball: Strategies to Fool the Competition,” George Stalk, Jr., HBR, September 2006, pp. 115-122.
Optional Reading: "How to Lock out the Mafia," Charles Grutzner, HBR, March-April, 1970 (Reprint # 70205).
Questions:
How is the Corleone Family changing over time? Why?
Are they revolutionizing their industry or reacting to external changes?
How do the main characters affect the organization's "vision" of the future?
How does Michael Corleone use the principles of Sun Tzu?
How can you use them in business -- ethically?
Important Disclaimer
Today's exercise is obviously not intended to teach you to adopt the morals or methods of the characters in the movie. Nor does the professor endorse the violent tactics, management style, racist comments, and values of the characters.
This exercise is simply to observe revolution in an industry and to understand how it comes about. This "industry" is so deviant that it highlights difficult to see issues about morality and strategy as revolution.
Final Note
The Italian-American characters in this movie are not representative of the approximately 25 million law abiding, decent and loyal Italian-Americans living in the USA. Most importantly, please keep in mind the cartoon attached to this syllabus.
