Henry Birdseye Weil
Massachusetts Institute of Technology
Broad Description of the Course
This is a workshop course on competitive assessment, market analysis, and corporate strategy in a cross-section of international industries. Term-long, analytically-intensive projects will focus on these issues from the perspective of a major "player" in each industry. The emphasis will be on technology/capital intensive industries, e.g., telecommunications, airlines, financial services, motor vehicles, aerospace, and petroleum. The selected industries will be "international" in the sense that markets are globalizing, competitors are consolidating into a small number of world-wide mega-players, and important customers are located outside the principal companies' home regions.
Teaching Methodology
A team of students will assume the role of advisors to the senior executives of each selected firm. They will be required to: define the current and recent past sources of competitive advantage for their firm; compare and contrast this with key competitors; analyze the forces driving development of their market and the dynamics of competition; project the future performance of their firm under various competitive scenarios; identify and evaluate promising changes in the firm's strategy; and decide on specific changes to be implemented. The course projects will combine serious conceptualization, formal analysis (some type of modeling), and significant information assembly.
Quantitative modeling will be a significant component of the course projects. Modeling will be used to analyze past and future patterns of market development, the principal determinants of market shares and profitability, major sources of business risk, potential changes in corporate strategy, and likely competitor responses. System dynamics, econometrics, and formal game theory, or a combination of these, are the preferred methodologies. Students are expected to have an adequate background in their selected methodologies.
Scenario development will be a second major component of the course projects. The student teams will formulate comprehensive scenarios for the future business environment including competitive, technological, regulatory, and political factors. The modeling work should indicate key factors on which the scenarios will focus. The models then will be used to analyze the business risks posed by alternative scenarios and to test the performance of potential corporate strategies under those scenarios.
At four milestones in the course, each team will present its work to the rest of the class. The other students will be expected to question the presenting team from the perspective of that firm's executives. Senior executives from the industries being analyzed will be invited to critique several of the team presentations. In addition, each team will have a faculty "reader" who reviews its work and provides suggestions.
In between the team presentations, there will be lectures and discussion of issues pertinent to the course projects, for example, strategic risk management, effects of the social and institutional context on international competition, strategic modeling, scenario development. Background readings will be assigned for each session. The readings have been selected to permit deeper exploration of ideas introduced in prerequisite courses and integration of several analytical paradigms into the course projects. Active, thoughtful class participation is essential to the success of this course.
Requirements
The requirements for the course and the contribution of each towards the final grade are as follows.
1. Course Project Presentations (50%)
Each team is required to make executive presentations at the four milestones of the course project:
These presentations should be clear and concise, in a style appropriate for the senior executives of a major corporation. At the first two milestones, one-half hour will be allocated to each team for presentation and discussion. One hour per team will be allocated at the last two milestones. Copies of the presentations should be submitted to the instructor and distributed to all class members and guests. Each presentation should be led by a different team member, according to a rotation determined by the team.
2. Course Project Report (30%)
At the end of the course each team is required to submit a report that describes the methodologies used, the analyses performed, the major analytical results, and the team's conclusions and recommendations. Again, the report should be clear and concise, in a style appropriate for the senior executives of a major corporation. It should include an executive summary of ten pages or less.
3. Class Participation (20%)
Active, thoughtful class participation is a very important element of this course. In preparation for the presentation sessions, class members should review earlier presentations by the other teams and formulate questions that reflect the issues and concerns of those companies' senior executives. They should be a demanding audience and set high standards of professionalism, e.g., analytical rigor, practicality, communications effectiveness, and attention to details, for the others. Readings are assigned for each session. Students should be prepared to discuss these materials in class.
Pre-requisites
The prerequisites are: 15.219/15.220 International Management; 15.933 Advanced Strategic Management or 15.932 Technology Strategy; and a methodology course acceptable to the instructor. Students are assumed to be familiar with the core literature on corporate strategy, international management, and an appropriate methodology. The course readings provide an overview of these prerequisites. The instructor will ensure that each team has a balance of methodological expertise and knowledge of the industry.
Session 1 -- 4 February
Getting organized; lecture and discussion: "Market Dynamics -- Commoditization of Technology- Based Services."
reading
Hamel, Gary and C.K. Prahalad, "Strategic Intent," Harvard Business Review, May-June 1989; reprint no. 89308.
Session 2 -- 11 February
Team proposals; lecture and discussion: "A Case Example of Strategic Modeling"
readings
Baldwin, Carliss Y., and Kim B. Clark, "Capabilities and Capital Investment: New Perspectives on Capital Budgeting," Journal of Applied Corporate Finance, Vol. 5, No. 2, Summer 1992.
Prahalad, C.K. and Gary Hamel, "The Core Competence of the Corporation," Harvard Business Review, May-June 1990; reprint no. 90311.
Weil, Henry Birdseye and Leon S. White, "Business Transformation: The Key to Long-term Survival and Success," MIT International Center for Research on the Management of Technology Working Paper WP#108-94, May 1994.
Session 3 -- 25 February
Presentation No. 1: company assessments (based on conceptual models)
Guest: James H. Ross, Chairman, The Littlewoods Organization
readings
Porter, Michael E., "Towards a Dynamic Theory of Strategy," Strategic Management Journal, Vol. 12, Winter 1991.
Taylor, William, "The Logic of Global Business: An Interview with ABB's Percy Barnevik," Harvard Business Review, March-April 1991; reprint no. 91201.
Session 4 -- 4 March
Lecture and discussion: "Strategic Risk Management" (Professor Donald Lessard)
readings
Dixit, Avinash K. and Robert S. Pindyck, "The Options Approach to Capital Investment," May-June 1995; Harvard Business Review, reprint no. 95303.
Kogut, Bruce and Nalin Kulatilaka, "Option Thinking and Platform Investments: Investing in Opportunity," California Management Review, Vol. 36, No. 2, Winter 1994.
Lessard, Donald R. and John B. Lightstone, "Volatile Exchange Rates Can Put Operations at Risk," Harvard Business Review, July-August 1986; reprint no. 86405.
Session 5 --11 March
Presentation No. 2: competitive assessments (again, based on a conceptual model)
readings
Porter, Michael E., "The Competitive Advantage of Nations," Harvard Business Review, March-April 1990; reprint no. 90211.
Taylor, William, "Message and Muscle: An Interview with Swatch Titan Nicholas Hayek," Harvard Business Review, March-April 1993; reprint no. 93205.
Session 6 -- 18 March
Lecture and discussion: "Scenario Development and Strategic Modeling"
Guest: Dr. Chris Clark, Director of Strategy and Forecasting, BP Oil
readings
de Gues, Arie P., "Planning as Learning," Harvard Business Review, March-April 1988; reprint no. 88202.
Wack, Pierre, "Scenarios: Uncharted Waters Ahead," Harvard Business Review, September-October 1985; reprint no. 85516.
Weil, Henry Birdseye, "Strategic Learning: Preparing Senior Managers for the Future," in Vers une École Européenne du Management Stratégique, Paris: AFCET/AfplanE, 1990.
Session 7 -- 1 April
Lecture and discussion: "Strategy Analysis"
readings
Froot, Kenneth A., David S. Scharfstein, and Jeremy C. Stein, "A Framework for Risk Management," Journal of Applied Corporate Finance, Vol. 7, No. 3, Fall 1994.
Lyneis, James M., "A Dynamic Model of Technology Diffusion," in Proceedings of the 1993 International System Dynamics Conference.
Paich, Mark and John D. Sterman, "Boom, Bust, and Failures to Learn in Experimental Markets," Management Science, Vol. 39, No. 12, December 1993.
Session 8 -- 8 April
Presentation No. 3: strategy analyses (based on formal models)
readings
Bartlett, Christopher A. and Sumantra Ghoshal, "Managing Across Borders: New Organizational Responses," Sloan Management Review, Vol. 29. No. 1, Fall 1987.
Guillén, Mauro F., "The Age of Eclecticism: Current Organizational Trends and the Evolution of Managerial Models," Sloan Management Review, Vol. 36, No. 1, Fall 1994.
Session 9 -- 15 April
Remaining presentations of strategy analyses
reading
Killing, J. Peter, "Understanding Alliances," in Farok J. Contractor and Peter Lorange, eds, Cooperative Strategies In International Business, Lexington, MA: Lexington Books, 1988.
Session 10 -- 29 April
Lecture and discussion: "Effects of the Social and Institutional Context on
International Competition" (Professor Edward Steinfeld)
readings
Whitley, Richard, "Societies, Firms, and Markets: the Social Structuring of Business Systems," in R. Whitley, ed, European Business Systems -- Firms and Markets in their National Contexts, London: Sage Publications, 1992.
Ziegler, Nicholas J., "Institutions, Elites, and Technological Change," World Politics, Vol. 47, No. 3, April 1995.
Session 11 -- 6 May
Final presentations of course projects
Session 12 -- 13 May
Remaining final presentations
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Special Seminar in International Management, Henry Birdseye Weil, MIT Sloan, Spring 1997.