McGill University Desautels Faculty of Management Organizational Policy MGCR 423, Fall 2012

Instructor: Office: Tel: Email: Office Hours: Secretary: Professor Yuan Li Bronfman 406 (506 till October) (514)398-2054 yuan.li@mcgill.ca Tuesday 11:30 - 12:30pm, AND by appointment Kathi Murphy, (514)398-1255

COURSE DESCRIPTION
This course introduces the concepts, tools, and first principles of strategy formulation and competitive analysis. It is concerned with managerial decisions and actions that materially affect the success and survival of business enterprises. The course focuses on the information, analyses, organizational processes, and skills and business judgment managers must use to craft strategies, position their businesses and assets, and define firm boundaries, so as to maximize long-term profits in the face of uncertainty and competition. Organizational Policy (MGCR 423) is an integrative and interdisciplinary course in two important respects. First, it assumes a broad view of the environment that includes buyers/consumers, suppliers, technology, economics, capital markets, competitors, government, and global forces. And it assumes that the external environment is dynamic and characterized by uncertain changes. Second, the course takes a general management perspective. It views the firm as a whole, and examines how policies in each functional area can be integrated into an overall competitive strategy. In studying strategy, this course draws together and builds on all the ideas, concepts, and theories from your functional courses such as Accounting, Economics, Finance, Marketing, Organizational Behavior, and Statistics. This course, however, is much more than a mere integration of the functional specialties within a firm. It has been designed to develop among participants the general management point of view. The best vantage point, in fact the only valid vantage point, for making decisions that effect long run business performance is the general manager's point of view. The key strategic business decisions of concern in this course involve determining and shaping organizational purpose to evolving opportunities, creating competitive advantages, choosing competitive strategies, securing and defending sustainable market positions, and allocating critical resources over relatively long periods of time in pursuit of specific goals and objectives. Decisions such as these can only be can only be made effectively by viewing a firm holistically, and over the long term. This course helps students develop skills for formulating strategy. The strategy process demands the mastery of a body of analytical tools and the ability to take an integrative point of view. You will develop these skills through: In-depth analysis of industries and competitors Prediction of competitive behavior Techniques for analyzing how firms can develop and sustain competitive advantages over time

NOTE: While MGCR423 is a universal core course it is taught by several instructors. Policies regarding assignments and grading may be different for each instructor. Be sure to refer ONLY to the syllabus that is provided by your instructor. Please do NOT switch back and forth between other sections as content and test material may vary.

EDUCATIONAL OBJECTIVES
Theory and Concepts. The central concept of this course is that of competitive strategy. Definitions abound, but they all share some sense of the allocation of critical resources over relatively long periods of time in pursuit of specific goals and objectives. Successful strategies exploit external conditions, entrepreneurial insights, and internal resources, seeking configurations of prices, preferences, technologies, and information that offer opportunities for sustainable competitive advantage. Strategy can be usefully thought of as the comprehensive alignment of an organization with its future environment. Success, however, depends not only on the soundness of the strategy, but also on its effective implementation through appropriate organizational and administrative choices. In the end, unforeseen external factors may cause a well-conceived and executed strategy to fail, in spite of its initial wisdom -- but a poor strategy badly executed increases the chances of failure. Opportunities to act strategically occur infrequently. If missed, or mismanaged, they can prove disastrous for any firm. Understanding the concept of competitive strategy formulation is a primary educational objective of this course. This will involve mastering an array of economic, strategic, and organizational concepts and theories, and acquiring an integrative general managers point of view. The course will cover theories for in-depth industry and competitor analysis, for anticipating and predicting future industry developments, and for examining the impact of change (in technologies, tastes, government regulations, global competition, and other important environmental forces) on competition and industry evolution. The course will also examine the economic underpinnings of competitive advantages, and the fundamental conditions that allow firms to conceive, develop, and sustain, advantageous strategic positions. While our primary focus will be on mastering strategy formulation at the business unit or competitive level, the course will also examine corporate and global strategy issues such as diversification, vertical integration, economies of scope across related businesses, the transfer of technology and core competencies, and international expansion and growth. Analytical Skills. Theoretical concepts are a great aid to understanding, but by themselves they do not help resolve real business problems or challenges. Also needed are analytical skills and techniques that can be applied to the data to "fill in" the facts and premises assumed in the theories. A second educational objective is to further increase each students inventory of useful analytical skills and tools. Some of the tools are quantitative -- analyzing financial statements, computing comparative buyer costs, and calculating the effects of scale and learning on production costs, for example -- while others are more qualitative. Learning how to apply these techniques, and, more importantly, when to apply them is a key objective of the course. In learning to size-up a business and its problems or opportunities, this course will allow you experience in conducting "full blown" strategic analyses. That is, identifying firms strategies and testing them for consistency, recognizing potential entrepreneurial opportunities and strategic challenges/problems, selecting and establishing competitively protected market niches, identifying competitive advantages and shaping defenses to circumvent the advantages of rivals, formulating and implementing internally consistent business strategies, and designing efficient and effective organizations. Rhetorical Skills. The best analysis in the world will have little effect if it cannot be communicated to others. Managers must be able to articulate their views coherently and persuasively, and they must be skilled at understanding and critiquing other points of view. Management is a "verbal sport;" perhaps 90% of a typical manager's day is consumed by oral communication. Time is often scarce. You must learn to make convincing arguments and to make them quickly, or the merits of their ideas are likely to become simply irrelevant. This skill takes practice, and we will place a great deal of emphasis on it in class. Wisdom. Much of the knowledge that successful managers and consultants employ consists of "rules of thumb" about what issues are likely to be important in certain kinds of business situations. These rules of thumb, or heuristics, are often implicit in the thinking of people who have never bothered to articulate them explicitly. A fourth goal of this course is to help you build up your set of useful "stories" and heuristics for your future managerial careers. In this course we are as much interested in developing an appreciation for the art of management as we are in understanding the science of management. Tools alone will not a strategist make. While the ability to master analytical models, frameworks, and tools is essential, ultimate success is more strongly predicated on prescient judgment, entrepreneurial insight, iconoclastic vision, and a willingness to forcefully act with conviction.
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COURSE FORMAT AND THE CASE DISCUSSION METHOD

In order to achieve the objectives of the course, we will devote the majority of our class time to the analysis and discussion of selected management, competitive strategy, and business policy cases. Occasional lectures will be given to elaborate on key theoretical models and frameworks or to reinforce crucial concepts. These lectures, however, will be subordinate to the case analysis. Cases provide a natural "test-bed" for theory and provide vivid examples that aid memory of concepts. While nothing can surpass first hand personal industry and managerial experience as a basis for analysis and decision-making, case analysis is an indispensable proxy for the kind of knowledge that can only be gained through years of experience and research. A mix of old and new business cases has been selected on a range of companies from a variety of industry settings. Each case is intended to teach us something specific, yet each can teach many things. We will not attempt to exhaust each case of all its learning experiences, but rather build up a "war chest" of analytical tools, skills and insights, progressively over all the selected cases. The case discussion method builds important skills. First, it allows you to develop skills at problem definition in addition to problem solving. Cases typically do not have an obvious set of tasks whose performance will lead to mastery. Rather, they force you to sift through a mass of information, some of it irrelevant or contradictory, in order to identify the important or strategic issues. Second, the case method gives you a chance to deal with ambiguity. Most cases do not have obvious "right" answers. Managers must be able to function in situations where the right answer is not known, without falling into the trap of assuming that any answer is as good as another. Some analyses and proposed strategies are clearly wrong, and some are clearly better than others. A popular phrase in case analysis classes is "There are no right answers, but there are wrong answers." Case discussion techniques provide a chance to learn the meaning of analytical rigor in situations other than open-and-shut problems. While we will direct class discussions, the quality of your learning experience will be directly determined by: (1) your degree of preparation, active listening, and participation, and (2) your classmates' preparation, listening, and participation. Some will not agree with you, and you may be asked to defend your argument or change your mind. So long as criticism is directed at arguments and not at individuals, is relevant to the issues at hand and coherently argued, it is very much welcomed. Case Preparation. The cases provide you with information essential for subsequent discussion and debate but do so with different methods and constraints. The cases require active in-class participation to ensure the class success. The Case Discussion Outline in Appendix A provides you with discussion questions for each case. Case preparation should include: 1. 2. 3. 4. Rapidly read the assigned case and other materials to gain a general understanding of the industry, the firm, and the general competitive situation and issues. Carefully review the discussion questions for the session for clues as to what issues require special attention. Carefully re-read the case, taking notes that sort information, facts, and observations under a number of relevant headings. Use the discussion questions to guide your own thinking about the issues. Formulate theories or hypotheses about what is going on as you read ("the company loses money on small orders"), modifying or rejecting them as new information surfaces ("Table 2 shows that shipping costs per unit are higher for small orders, but only for long-distance shipments"). Perform quantitative analyses, crunching whatever numbers are available. It is also very important to provide quantitative support wherever possible, particularly when exploring various hypotheses as to the nature and importance of certain phenomena. (If the requisite data are not available in the case, precise descriptions of what data are missing often triggers ideas for making creative use of the information that is available.) It is usually worthwhile to identify trends in the firm or industry, preferably with a quantitative measurement. Some of these trends, often very important ones, will not be flagged in the text of the case. Prepare definitive conclusions before you come to class concerning the issues raised in the discussion questions. Also, try and anticipate the sequence of likely events and both their first and second level outcomes so that you can both see what is likely to happen and how your recommendations may change them. Bring your detailed notes with you to class to help guide your interventions in class discussions.

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You are strongly encouraged to form study groups that regularly meet to share insights and ideas about the assigned cases. While this is voluntary, experience shows that satisfactory performance in this course, and a good grade, depend on it. WARNING! There is a good chance that you will feel a bit confused or overwhelmed during the first module, or two, of the course. This is a byproduct of the peculiar structure of the strategy course that does not build up linearly by successively adding components of knowledge week by week. Rather, every case in a sense contains all the material in the entire course. Furthermore, the early theoretical concepts probably will not have much meaning for you until you have worked through a few cases. As a result, there is no logical way to begin except by immersion, i.e. throwing you in the deep end of the pool and letting you struggle to stay afloat. The good news is that the number of new ideas for you to learn drops off quickly after the first three modules, and old ideas continue to be relevant. This way you will get multiple chances to master the basic concepts of the course. So remember: SOME CONFUSION IS NORMAL AT FIRST. To have made it this far in your business program, simply put, you must be good. You have tackled numerous challenges, demonstrated a high level of competence, and mastered many very difficult courses and business concepts. So as this course attempts to overwhelm you, don't ever forget that you are good! Keep in mind that this capstone course has been expressly designed to make you even better. It will constantly push you and "help" you discover areas of weakness in need of improvement. We will test you with fire, in a cost-free environment. For some, this course will be "finishing school," for others, unfortunately, it will be like "boot camp." This is the course that makes you wish you had never sold those old textbooks -- because we will be using all the "stuff" in them, again. Whether you have aspirations for top management positions or not, this course will make you better in your own chosen business specialty.

COURSE EVALUATION
20% 25 25 30 100% In order to pass this course successfully, a passing grade must be achieved in the group and in the combined average of the individual components. Plus and minus grades will be assigned to those immediately above or below grade cutoff points. The distribution of grades will closely follow the guidelines of the Desaultels Faculty of Management. Please note that if your individual performance in the course is unsatisfactory, it will not be brought up by a good group grade. Attendance Policy. Class attendance is essential. All missed classes result in a loss in class contribution and participation points for that day. Students with an excessive number of absences are at risk of failing the course. Consideration will be given only for official university engagements, such as scheduled debating events and sports event. Habitual lateness (and leaving class early) will be noted as evidence of low course commitment and penalized. Individual In-Class Contribution. Your overall commitment and attitude toward this course, and your daily active verbal participation in case discussions, will be closely monitored. In grading class commitment and participation, I will consider both the quantity and quality of your class contributions. Class participation is obviously a function of your preparation, skills, attitude, and willingness to commit yourself actively in front of colleagues and me. A classroom is a cost-free environment for experimenting and learning to "play the game." Make use of it. Shyness is no excuse. I expect that you will make brief notes or outlines -- identify critical problems, "crank-all-the-numbers," do the financials, generate alternative recommended courses of action, and generate ideas for their implementation. I will call on students at random, to take the lead in various aspects of class discussions at least once or twice during the semester. If you are not present, are late, or are not sufficiently prepared to make a substantial contribution to the class discussion, you will lose points for class contribution. If you make helpful comments, you will accumulate
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Your grade in the course will be calculated as follows: Individual Contribution Group Project Midterm Final exam

points for class contribution. Since it is unlikely that there will be enough opportunities to call on each of you more than once or twice, be warned that failure to be thoroughly prepared, on all occasions, can be devastating to your overall grade. I score each of you at the end of each case discussion session using a 2 if you are present that changes to a 1 if you are late or leave early. For efforts above sitting in class, I upgrade to a 3, 4, or 5 depending on the quality of your participation. Comments that do more than simply recite facts will earn substantially more credit. For instance, comments that provide synthesis or raise counterintuitive points, will add much more to a students in-class contribution score. Comments that contain factual misstatements, demonstrate lack of adequate preparation, or are distracting because they come too late in the discussion, will not be rewarded. Attempts to dominate class discussion rarely result in consistent and significant contributions. With regard to quality, the dimensions include: Relevance -- does the comment bear on the subject at hand? Comments that do not link up with what the discussion is focusing on can actually detract from the learning experience. Causal Linkage -- are the logical antecedents or consequences of a particular argument traced out? Comments that push the implications of a fact or idea as far as possible are generally superior. Responsiveness -- does the comment react in an important way to what someone else has said? Analysis -- is the reasoning employed consistent and logical? Evidence -- have data from the case, from personal experience, from general knowledge been employed to support the assertions made? Importance -- does the contribution further our understanding of the issues at hand? Is a connection made with other cases we have analyzed? Clarity -- is the comment succinct and understandable? Does it stick to the subject or does it wander? Individual Assignment. You are required to hand in an individual opinion piece. To complete the assignment, you need to find a piece of news from recent newspapers, magazines, or company press releases. Your paper should comment on a major strategic action/move by a company, organization, or institution reported in the piece. In the paper, you need to employ at least three concepts covered in the course to shed light on your analysis of the strategy. Your commentary can focus on, but not limited to, the following aspects: What drive the organization to make this move? What is happening in the industry/sector/profession? What are the benefits and costs of the strategy? How should the organization implement its strategy? The paper should be maximum 750 words. At the end of the paper, you should list course concepts employed in the paper as key words. You should submit the paper together with the media piece. Policies for individual assignment. - PLEASE RETAIN A PERSONAL COPY OF THE ASSIGNMENT, IT WILL NOT BE RETURNED. - LATE HAND-IN WILL NOT BE ACCEPTED. NO EXCUSES, NO EXCEPTIONS. Group Project. Groups. Groups will remain intact for the entire semester. There will be times during the semester when you want to throttle one or more of your group members, but that is all part of the learning process of working in groups. I do not entertain any excuses at the end of the semester about group members who did not do their share of work. All such problems should be dealt with within the group (or with a little help from me if required) as soon as you perceive them. During the semester students will not be allowed to switch between groups, but I reserve the right to add and remove members from a group so as to fit class-wide requirements. All members of the group will receive the same grade for the final project, except in such instances as there is strong evidence from within the team that a certain individual or individuals have not contributed equally to the project. In such exceptional cases, I will use peer evaluations to adjust grades up or down. Group Company Strategy Analysis. You will write a strategic analysis of a firm as part of a group. The evaluation criteria and format are in Appendix B. Students MUST speak to someone directly involved with the company. Your must inform me of your choice of organization no later than Session 6. In order to monitor the progress of this group project, each group should submit an outline of their analysis no later than section 15. The outline should list key issues you will explore in depth for each section of the paper, and should emphasize how ideas in one section connect with other sections. Each group should discuss their project with me at least once before the final presentation. The final outcome of your project will be presented in the written report and the final presentation.

In fairness to all, your write-ups must adhere to the following format (in MS Word standard): fully double spaced, 1 margins all four sides, 12 point, Times New Roman font, maximum of 15 pages of text. You may include up to 2 additional pages of Exhibits, but these must not contain any critical arguments, alternatives, or recommendations. The general rule is that the 15 pages of text must stand on their own, and the Exhibits can only be used to supply background material and analysis such as tables, lists, and graphs (Exhibits can be single spaced). Feel free to discuss any formatting questions with me. Group Final presentation. Presentation should include an external analysis as well as identification of the resources, capabilities, and sustainable competitive advantage together with your recommendation for future growth strategies. Peer Evaluations. Each of you will complete a peer evaluation of the members of your group. The peer evaluation form is in Appendix C. Your peer evaluation is due no later than the last day of class before the final exam period and your care in completing it forms part of your participation/commitment grade. Midterm Exam. A midterm exam will be given to test your knowledge on the course material. The midterm exam may consist of multiple choice questions, short answer and short essay questions. It may contain case analysis as well. Final Exam. A final exam will be given during the exam time specified by the University. It may consist of short answer and short essay questions, as well as case analysis. The final exam will be based on the course readings, and the cases we have read throughout the semester. Turn off all Communication and Entertainment Devices. Please note that all communication devices such as computers, cell phones, smart phones, etc. capable of sending and or receiving electronic communication and all entertainment devices such as iPods or other MP3 players are to be turned off and kept off throughout the class session. Receiving or sending communication or entertainment during class disrupts the learning environment and will result in negative individual contribution grade.

COURSE MATERIAL
Required readings are from the textbook and the course pack. Textbook: Strategic Management: Competitiveness and Globalization (Concepts), 10th Edition, by Michael A. Hitt, R. Duane Ireland and Robert E. Hoskisson, published by South-Western, 2011. MGCR-423 Organizational Policy. Sections 003, 004 & 005. Professor Yuan Li. (other sections have a different packet).

Course Pack:

A MyCourses web site has been created for this course. Where permitted, the library has put some of the readings online. Go to www.mcgill.ca/library, course materials, and enter the course number. This course outline, discussion questions and other important materials will be posted on MyCourses web site for this course. Also, course announcements may be posted at MyCourses throughout the semester. You should begin the habit of checking this site on a regular basis.

ACADEMIC INTEGRITY
McGill University values academic integrity. Therefore all students must understand the meaning and consequences of cheating, plagiarism and other academic offences under the Code of Student Conduct and Disciplinary Procedures (see http://www.mcgill.ca/integrity/ for more information). As such, any suspected plagiarism, either from fellow students or from outside sources such as the Web, will be referred immediately to the Faculty Disciplinary Officer without further consultation with students, as per University Regulations.

COURSE SCHEDULE
DATE 1 2 3 4 5 6 W 9/5 M 9/10 W 9/12 M 9/17 W 9/19 M 9/24 TOPIC Module 1: Introduction Course Introduction & Overview Discussion: Strategic Thinking Discussion: Strategic Process Mini-Case: Honda Case: Wal*Mart Stores, Inc Module 2: Industry Analysis Discussion: External Analysis & Business Landscape Mini-Case: Diamond Case: Cola Wars Continue READING Course Outline HIH 1, CP 1 CP 2, CP 3 CP 4 HIH 2, CP 5 CP 6 ASSIGNMENTS

Group Company Selection

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

W 9/26 M 10/1 W 10/3 M 10/8 W 10/10 M 10/15 W 10/17 M 10/22 W 10/24 M 10/29 W 10/31 M 11/5 W 11/7 M 11/12 W 11/14 M 11/19

22 23 24 25 26

W 11/21 M 11/26 W 11/28 M 12/3 W 12/5

Module 3: Creating and Sustaining Competitive Advantage Discussion: Internal Analysis HIH 3 Case: Shouldice Hospital CP7 TBA No class Thanksgiving Discussion: Business-Level Strategy HIH 4 Case: Cirque du Soleil CP 8 Strategy Simulation: Wintel HIH 5 Mid-term Examination Case: Facebook CP 12 Module 4: Corporate Strategy Discussion: Corporate-Level Strategy HIH 6, Mini-Case: CAE CP 9 Case: Vivendi CP 10 Discussion: Restructuring, Mergers & Acquisitions HIH 7 Discussion: Global Strategy HIH 8, Mini-Case: Baidu CP 13 Case: Euro Disney CP 14 Module 5: Organizational Design Discussion: Cooperative Strategy HIH 9, CP 11 Discussion: Organization Structure and Leadership HIH 11 Case: To be handed in class Team Presentations TBA Presentation Teams 1&2&3 Presentation Teams 4&5&6 Presentation Teams 7&8&9 Presentation Teams 10 & Course Wrap-up

Group Company Analysis Outline

Individual Hand-In

1. Group Company Analysis Whole Paper 2. Peer Evaluation

TBD HIH CP

Final Exam denotes chapter reading that is in the Hitt, Ireland & Hoskisson, Strategic Management textbook denotes a reading that is available in the course packet

Appendix A: Case Discussion Outline Case: Objective: THE HONDA EFFECT Richard Pascales 1984 essay has stimulated important debates about the nature of management and strategy in the field of strategic management. It presents an alternative account of Hondas successful entry into the U.S. motorcycle market than that was presented by the Boston Consulting Group (BCG) to the British government in 1975. Juxtaposing the two versions of the same story can help us reflect on how ideas have evolved in the strategy field and build our own understanding of these concepts.

Discussion Questions:

1. Which version of the story Pascales and BCGs is more convincing to you? 2. Is strategy about planning or learning? 3. What is Hondas core competence? WAL*MART STORES, INC. The Wal*Mart case is an excellent case with which to study the integration of various concepts and tools of strategy. The case focuses on the evolution of Wal*Mart's remarkably successful discount operations. We are interested in mining this case for insights into Sam Waltons phenomenal success. The case will also serve as an introductory overview of the core ideas and concepts of this course. Sam Walton entered the Discount Retailing industry at a time when many historical competitors were being forced out of the market. So it is hard to argue that success is the result of luck. We will be forced to look very hard at Sam Waltons vision, Wal*Marts competitive strategy, and internal policies, for answers as to their success.

Case: Objective:

Discussion Questions:

1. Using the information in the Tables and text of the case, quantitatively estimate the extent of Wal*Mart's competitive advantage in discount retailing. For example, estimate the differences between Wal*Mart and its competitors costs of advertising, logistics, shrinkage, COGS, etc. Estimate the magnitude of Wal*Marts cost advantages in terms of increased margin (operating profit) or lower operating costs and expenses. Be as specific as possible. 2. How do you explain Wal*Mart's extraordinary performance in discount retailing? Is a favorable industry structure the reason? What was Sam Waltons profound insight that leads to Wal*Marts success? 3. How sustainable is Wal*Mart's competitive advantage in discount retailing in 1986? Where is Wal*Mart's advantage most sustainable? What are the bases of sustainability? Why can't competitors match what Wal*Mart does? 4. Draw a diagram of Wal*Marts business model that highlights all of Wal*Marts major activities. Link together any and all activities that support or complement other activities within Wal*Mart. If you do this in a comprehensive way you should be able to identify the nature and sources of Wal*Marts main competitive advantages, and appreciate how and why Wal*Mart is such a difficult competitor to compete with.

Case: Objective:

DE BEERS AND THE GLOBAL DIAMOND INDUSTRY From the 1930s until the 1990s, De Beers produced almost 90 percent of the worlds diamonds. However, its share fell gradually over time, and by the 1980s, was less than 50 percent. The global diamond industry provides a rich context to analyze changes in the external environment of the industry as well as competitive landscape within the industry.

Discussion Questions:

1. Analyze changes and new trends in the general environment. 2. Perform an industry five-force analysis of De Beers during the years of its domination. 3. What were the key mechanisms De Beers used to manage the value chain in the past?

Cases: Objectives:

COLA WARS CONTINUE: COKE AND PEPSI IN 2006 The case will provide us with an opportunity to explore how industry structure influences the level of profits earned by businesses within it. It will also allow us to start learning about useful diagnostic techniques for the analysis of industry structure, competitive positioning, and rivalry. An interesting artifact in the Soft Drink industry is that its major competitors have been earning above normal returns for almost a hundred years. Our task is to understand why they have been able to do this. We will focus on understanding the industry structure -- why the industry is organized the way it is, and how we might explain the high profits in the industry -- and on the Coke versus Pepsi battle, and what the Coke and Pepsi battle has been doing to the other smaller participants in the industry.

Discussion Questions:

1. Why has the soft drink industry been so profitable? Why has the soft drink industry evolved with a franchise bottler system? What is the underlying economic logic of bottling? Why have concentrate producers nurtured and preserved the bottling system? How does the bottling franchise system affect industry profit rates? Why has being a concentrate producer been such a gold mine? Some call it a "license to steal"! Why no significant entry of new producers? What are the driving competitive economics of the Soft Drink industry? 2. What is happening in the soft drink industry? How do the major developments affect smaller competitors?

Case: Objective:

SHOULDICE HOSPITAL LIMITED The Shouldice Hospital specializes in abdominal hernia surgery. It ranks top ten in medical tourism worldwide. Located in the suburb of Thornhill, 15 miles north of downtown Toronto, the Shouldice Hospital features a 130-acre elegant estate that looks like a resort. The doctors at the Shouldice Hospital practice the Shouldice method of hernia repair that Dr. Shouldice developed in the 1940s. While a surgeon in other hospitals typically performs 20-40 hernia operations a year, a Shouldice surgeon performs 700 hernia operations a year. What drives patients to the hospital? How does the hospital operate to accommodate around 40 hernia operations every weekday and keep patients for four days in the hospital? What is the business model of the Shouldice Hospital? An internal analysis of the hospital reveals its secrets for success.

Discussion Questions:

1. How does the Shouldice Hospital create value? 2. How do you account for its performance? 3. What are Shouldices core competencies? How defensible are its core competencies?

Case: Objective:

CIRQUE DU SOLEIL: CAN IT BURN BRIGHTER? Founded by a group of street performers in 1984, Cirque du Soleil gained international renown for providing unique entertainment. Cirque shows combined a blend of acrobatics, clowning, music, costumes, and scenery that evoked awe and wonder in audiences wherever the company pitched its tents. The company placed an extraordinary emphasis on encouraging creativity and exceptional performance. The companys growth meant that recruiting trips needed to uncover ever-larger pools of extraordinary artists. Casting Cirque shows had always been difficult. Just to fill-in turnover in the existing casts in 2002, Cirques casting director would need to recruit over 100 performers. Cirques growth challenges the ability of the company to integrate and support the artists they recruited.

Discussion Questions:

1. How imitable are the Cirques competitive advantages? 2. What key challenges does the Cirque face? 3. Taking the position of Guy Lalibert, what is the strategy going forward?

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Case: Objective:

FACEBOOK In September 2011, Facebook registered its 800 millionth user, cementing its position as the largest online social network in the world. However, since going public in May, 2012, Facebook has lost more than half of its market value in fourth months. Facebook was cash-flow positive and its revenue hit $4.33 billion in 2011. Yet many observers believed that the current business model, which relied on advertising, offered limited growth opportunities. The emergence of Google+ and Twitter as serious competitors provided additional challenges. This case places you in the role of the Facebook team; your task is to find solutions to the questions of how to best provide further monetization opportunities while also dealing with the challenges posed by their competitors.

Discussion Questions:

1. Why do people use Facebook and what do they do when they are there? 2. Evaluate the success of advertising on Facebook. 3. Evaluate the success of Facebook fan pages. 4. Evaluate Facebook Platform and Facebook for Websites.

Case: Objective:

CAE Headquartered in Montreal, CAE is a global leader in flight simulators and training services for the civil aviation industry and defense forces. CAE has always pursued diversification. However, its share price dropped significantly during the late 1990s and early 2000s. Bob Brown became the new CEO in 2004 and has turned the company around. CAE is an excellent vehicle with which to begin our study of diversification strategy.

Discussion Questions:

1. What is CAEs core business? What businesses do they plan to diversify to? 2. Which of the value creating reasons for diversification does it hope to rely on? 3. What value neutral reasons are there? What risks does it face?

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Case: Objective:

VIVENDI: REVITALIZING A FRENCH CONGLOMERATE Vivendi was a French utility company. Over the years, Vivendi expanded into many different business areas including construction, property, telecommunications, and media. Now it has completely transformed itself into a media and entertainment company. We will evaluate their aggressive expansion strategy and analyze if their diversification enhanced their corporate value.

Discussion Questions:

1. Based on the building blocks of corporate strategy (Resource, Business Scope, Ownership, Organizational Design), review the corporate strategy of Guy Dejouany. What did Dejouany do to create value for the corporation? 2. Same with question 1, for Messier. 3. This case tells you a story about two different CEO, Dejouany and Messier. Between these two, who had a better corporate strategy?

Case: Objective:

BAIDU Whereas everyone else in the world seems to use Google, the Chinese seem to prefer Baidu, a Chinese search engine now enjoying the competitive edge over Google. Baidu went public on Nasdaq in 2005 with a phenomenal success. After years of fierce competition with Google, it won in the battlefield. Yet will it achieve its ambitious plan for international expansion?

Discussion Questions:

1. What were the motives for Google to enter China? 2. What is Googles international strategy? 5. What were the motives for Baidu to expand overseas? 6. If Baidu were to enter the U.S., what kind of entry mode should it choose?

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Case: Objective:

EURO DISNEY: THE FIRST 100 DAYS The Disney Corporation needs no introduction. Most of us have been fascinated by the magic that it has created since childhood. By virtually everyones criteria, Disney is a hugely successful corporation. In this case we examine Disneys effort to transfer its Disney theme park concept to Europe. This case permits us again to look at the particular problems of a service corporation. It also allows us to examine problems/challenges that attend the transfer of a service concept to an unfamiliar setting. We will ask the questions: How should a company adapt its service concept across cultural boundaries when the concept may conflict with local norms and standards of behavior? Are tried and true delivery systems culturally specific, or is it simply that extra attention must be paid to their execution in foreign contexts? How can cross-border service opportunities be analyzed and evaluated to minimize the risk of failure?

Discussion Questions:

1. Assess Disneys decision to build a theme park in Europe. How can such a decision be evaluated, and was it a wise one? 2. What is Europe Disneys target market, and what are the implications for the development and organization of the park? 3. What aspect of the traditional Disney them park formula, in terms of park design and service design, might prove to be transferable to Euro Disney, and which might prove specific to the US and/or Japan? In general, what issues should a company think through before extending a successful service concept across cultural boundaries? 4. What lesson has Euro Disney learned which could be applied to the development of a second theme park? Should the park be adapted for the local market from the US model, and if so, in what ways? Should Euro Disney proceed with the next step of development? What recommendations would you make regarding staffing, training, and general management?

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Appendix B: Group Company Strategy Analysis Guidelines

1. Selecting A Company

From the perspective of this course, some companies are more interesting and more in need of a strategy analysis. For example, newly founded companies need strategy because they face a higher likelihood of failure than established companies do. Other examples include, but not limited to, companies that are expanding or shrinking rapidly in market share, companies that are undergoing strategic change and restructuring, and companies that face turbulent environment or hyper-competition. When you choose your company, think about what characteristics make it interesting and worthy of strategic appraisal. Instead of thinking about an individual company, you may start by picking an industry and then locate a company in the industry. Industries that are emerging face great uncertainty and thus provide great opportunities for strategic foresight. Technology-intensive industries are challenging to the mind of the strategist due to their complexity, the rapid rate of changes, and the inter-dependence among players. Service industries are becoming an increasingly larger part of the economy, yet we have limited understanding of competitive dynamics in these industries. Lastly, global industries span multiple institutional and cultural contexts, and therefore demand a high level of strategic thinking. You may choose an industry that does not belong to any of those industries mentioned here, yet is unique in other aspects that make it an interesting domain of inquiry.

2.

Content

The analysis should focus on major strategic moves made by the company within the last five years. Students MUST speak to someone directly involved with the company. Sections of analysis should include: 1) Organizational Introduction: major segments & basic data: ownership/sales/operating income/balance sheet/share price history etc. 2) What are the external challenges facing the firm (i.e., de-regulation, industry consolidation, changes in industry five forces)? How has it coped with them? 3) What are the firms resources, capabilities, and core competencies? What has the firm done to sustain its competitive advantage? 4) What strategic direction does the firm adopt, why? How did the firm choose to do it (organization/implementation/changes)? 5) Present several growth alternatives for the firm. What future direction would you recommend? Develop a thoughtful plan of action to make this happen. (A chart is very useful in this regard.) Include a time line, individual/depts. responsible, quantifiable targets, and control mechanisms and force yourself to make reasonable quantifiable estimates. (Optional: you may include very simple 5 year financial projections under the three scenarios).

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3.

Source of Information

When selecting a company, keep in mind that you need to interview someone from the company. Preferably you will interview the top management of the company, but you can also interview middle management or store managers if it is a large franchise chain. You should record and transcribe your interview, and use it as part of your data. You cannot rely exclusively on interviews. Instead, you should treat it as one of the many data you use to conduct your analysis. There are many sources from which you can obtain information about industries and firms. Simply do a Google search, however, does not give you sufficient materials. In fact, it may only give you 10% of what you will need. You should use many excellent online databases available at McGills library. Follow the link below, you will find the list of databases available for Desautels Faculty of Management. Among them, ABI/Inform, Lexis-Nexis, and Factiva are particularly useful in locating articles and press releases about companies. http://www.mcgill.ca/library/library-findinfo/subjects/management/company/

4.

Format

Length: 17 pages maximum. 15 pages for written analysis and 2 pages for exhibits. First page: Cover page with title, course title, number, and section, and each team members name with email address. Second page: Table of Contents Page 1-15: Content of your analysis. Exhibits: 2 pages to include supporting analyses such as spreadsheet models, diagrams of value chain, 5forces, etc. Please do not include materials prepared by others outside your group (e.g., newspaper articles, internet downloads). References should include books, academic articles, newspaper clippings, on-line sources, and interviews in proper academic format of either MLA or APA. These references are not counted as part of your 17-page maximum. This section is very important because it indicates how broadly you searched for information, how well you were able to synthesize the materials you found, and how much insight or depth of analysis you were able to develop. Margins: 1 margins (left, right, top, bottom) Size paper: 8.5 x 11.0 Font: Times New Roman, 12-point type Line spacing: double-spaced for all text (not for tables, analyses, references, or block quotations) Page numbers: pages numbered in the upper right corner (no page number on first page). Submit a hard copy AND an electronic version to your instructor.

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Appendix C: Peer Evaluation

Please allocate 100 points across all the members of your team apart from yourself to reflect your assessment of their individual contributions to the team effort. I will treat your assessments as confidential. Your name: ___________________ Team-member name: 1. _____________________ 2. _____________________ 3. _____________________ 4. _____________________ Total: Contribution: _____ _____ _____ _____ 100

In the space below, provide some summary comments that can be fed back to each of your team members: Greatest Strength 1. ________________________________________________________________ ________________________________________________________________ 2. ________________________________________________________________ ________________________________________________________________ 3. ________________________________________________________________ ________________________________________________________________ 4. ________________________________________________________________ ________________________________________________________________ Areas for Improvement: 1. ________________________________________________________________ ________________________________________________________________ 2. ________________________________________________________________ ________________________________________________________________ 3. ________________________________________________________________ ________________________________________________________________ 4. ________________________________________________________________ ________________________________________________________________
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