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GENERAL INFORMATION

Course: SEM 502 — Organization Strategy Department: Strategy, Entrepreneurship, and Management Term: Lecture X01, Fall 2021 Time: Tuesdays, 6:00 pm – 9:00pm Location: BUS 1-05 Professor: Dr. Vern L. Glaser Office: BUS 3-20J Office Hours: Tuesdays after class or other appointment times available on request Phone: 780.248.1788 e-mail: vglaser@ualberta.ca TA: Jennifer Sloan, PhD Student e-mail: jsloan@ualberta.ca 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, skills, and business judgment managers must use to design strategies, position their businesses and assets, and define firm boundaries, to maximize long-term profits in the face of uncertainty and competition. Organization Strategy (SEM 502) is an integrative and interdisciplinary course. The course assumes a broad view of the environment that includes buyers/consumers, suppliers, technology, economics, capital markets, competitors, government, and global forces. It assumes that the external environment is dynamic and characterized by uncertain changes. 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. However, it is much more than a mere integration of the functional specialties within a firm. The course takes a general management perspective that emphasizes the role of individuals making strategic decisions and embarking upon courses of strategic action. It views the firm as a whole, and examines how policies in each functional area are integrated into an overall competitive strategy. We designed this course to develop the “general management point of view” among participants. This point of view is the best vantage point for making decisions that affect long run business performance. 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 long periods. Decisions such as these can only be made effectively by viewing a firm holistically, and over the long term. This course is intended to help you develop skills for formulating and implementing strategy. These skills will help you in whatever job you take after graduation as well as in your personal investing and choice of employment. The practice of strategy demands the mastery of a body of analytical tools and the ability to take an integrative point of view. At the end of the course, you will hopefully develop an appreciation of how to make effective strategic decisions.

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EDUCATIONAL OBJECTIVES

The course is composed of four interrelated modules that build on each other. The learning objectives associated with each module are intended to enable you to develop:

1. Cognitive understanding of terminology and relationships, the purpose of which are to help you develop factual and conceptual knowledge about the field of strategic management, skills in being able to perform specific forms of analysis, the purpose of which is to help you develop procedural knowledge specific to the field of strategic management and metacognitive knowledge in how to go about solving problems in strategic management, and

2. Critical thinking in evaluating the empirical evidence that exists currently concerning the use and misuse of the concepts and analyses covered, the purpose of which is to help you develop knowledge in gathering, categorizing, analyzing, interpreting, and evaluating information.

All of the graded elements of this course are based on assessing your ability to demonstrate specific knowledge in these areas. Module I: The Language of Strategy

1. Be able to describe what strategy is, and what strategy is not. 2. Be able to differentiate between “strategic knowledge” and “strategy as practice.” 3. Be able to identify the five elements of the strategy diamond and understand how to use the

strategy diamond to articulate and develop a firm’s strategy. 4. Be able to understand the different types of strategy practices, and how to effectively apply these

types of strategy practices to particular strategic problems. 5. Be able to understand the basic structure of strategic argument. 6. Be able to understand how analogies are used to generate new ideas for strategies, and be able to

understand how to evaluate the effectiveness of analogies in strategic discourse. Module II: Industry Analysis

1. Understand how industry analysis fits into strategy formulation. 2. Learn Porter’s Five Forces model for industry analysis and be able to apply this model to strategic

decisions. 3. Be able to evaluate industry boundaries and understand how complex industry ecosystems

influence traditional understandings of industry profitability.

Module III: Internal Analysis

1. Be able to define competitive advantage and identify different generic strategies that organizations can use to realize competitive advantage.

2. Be able to identify and recommend strategic choice between cost leadership and differentiation strategies at the business unit level.

3. Be able to identify resources from capabilities and competencies. Be able to identify the sources and causes of sustainable competitive advantage.

4. Be able to use the resource-based view of the firm to diagnose firm competitive advantage and recommend alternative courses of action for improvement.

5. Be able to differentiate between competitive strategy and corporate strategy. 6. Understand the rationale behind multi-business activity and be able to analyze the potential costs

and benefits of extending the horizontal or vertical scope of the organization.

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7. Be able to identify why firms change their boundaries such as diversification, mergers and acquisitions, divestiture, and alliances; be able to assess the costs and benefits of a vertical integration strategy.

Module IV: Competitive Dynamics

1. Be able to conduct basic game-theoretic analysis to predict competitive interactions. 2. Be able to understand how firms can change the rules of the game to capture more value for

themselves. 3. Learn how competitor profiling and strategy mapping can complement game theoretic analysis. 4. Understand basic principles associated with analyzing market entry and the threat of retaliation.

In addition to understanding the content detailed above, students will also be expected to learn how to apply different types of “soft skills” that managers employ in real-world business situations: analytical skills, rhetorical skills, and practical wisdom. 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 further to increase each student’s 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 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 require you to conduct "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 analyzing other points of view. Management is a "verbal sport;" perhaps 90% of a typical manager's day is consumed by oral communication—and strategic argumentation. 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. Practical 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

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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 act forcefully with conviction. REQUIRED MATERIALS

1. Case Package: The reading course package includes readings from the library (posted on eClass) and readings available from Ivey Publishing.

https://www.iveypublishing.ca/s/ivey-coursepack/a1R5c00000FA8UuEAL/smo-502-organization-strategy

2. eClass: I use eClass as my primary method of communicating with you. In addition to direct communications, you will also find additional materials posted to eClass including any course outline updates, an overview of each session including your required preparation, copies of required and supplemental reading, as well as news posts. In particular, it is very important that you refer to eClass for preparatory questions for in-class case discussions.

IMPORTANT:

Since e-mails that I send to the class originate from the eClass system, it is your responsibility for the accuracy of your e-mail address to eClass by insuring that your eClass account settings forward your messages to your preferred e-mail address.

COURSE NOTES

1. 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. Cases provide a natural "test-bed" for theory and provide vivid examples that aid memory of concepts. While nothing can surpass firsthand 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 classic 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. There are other reasons for employing the case discussion method of instruction. 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.

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While I 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.

2. Case Preparation. Because this course relies heavily on case material, extensive before-class

preparation and in-class participation are required to ensure the class' success. 1. Preparation for a case discussion should begin with a rapid reading of the assigned case and

other materials. 2. Then, it is worthwhile to review the discussion questions posted on eClass for clues as to

what issues require special attention. 3. The next step is normally to re-read the case carefully, taking notes which sort information,

facts, and observations under a number of relevant headings. Push yourself to reach definitive conclusions before you come to class.

4. You should 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, a precise description 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.

5. Finally, preparation will ideally include notes that can be used to guide your interventions in class discussions.

You will probably want to, and are strongly encouraged to, form study groups that will meet regularly to share insights and ideas about the assigned cases. While this is, of course, voluntary, past experience has shown that satisfactory performance in this course, and a good grade, depend on it.

NOTE: There is a good chance that you will feel a bit 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 won't have much meaning for you until you've worked through a few cases. As a result, there is no logical way to start off 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 experiencing some case discussions, and old ideas continue to be relevant. This way you will get multiple chances to master the basic concepts of the course. COURSE EVALUATION

Your course grade is based on both an individual and a group portion. In order to pass this course successfully, a passing grade (> 50%) must be achieved in each evaluation component listed below.

EVALUATION CONCEPTS % of Grade Class Participation 20% Midterm Exam 20% Final Exam 30%

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Group Project 30% TOTAL 100%

Final grades represent how you perform in the class relative to other students. Your grade will not be based on a mandated target, but on your performance. Three items are considered when assigning final grades:

1. Your average weighted score as a percentage of the available points for all assignments (the points you receive divided by the number of points possible).

2. The overall average percentage score within the class. 3. Your ranking among all students in the class.

The distribution of grades will closely follow the guidelines of the University of Alberta. Class Participation This part of your grade will be based on effective contributions to class discussions. Contributions to class discussion include dialog during lecture, participating during case discussions, or engaging in in-class activities such as the advising proposals and the measurement exercise. These contributions should include input that is relevant to the course content and the topic of discussion. Case courses work well, and are enjoyable effective learning experiences, if everyone is an active productive participant. Your overall class participation will be closely monitored. In grading in-class participation, I will look at both the quantity and quality of your class contributions and/or interventions. In-class participation is obviously a function of preparation, skills, attitude, and a willingness to actively commit yourself in front of me, and your peers. A classroom is a cost-free environment for experimenting and learning to "play the game." Make use of it. I recognize that some students are far more comfortable than others with in-class participation. However, it is important you make an effort every class to contribute in some meaningful way. Please feel free to come and discuss with me ways to enhance your participation. With regard to quality, the dimensions that I look for 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?

Before each class discussion, it is expected that all students will make brief notes or outlines – identify critical problems, analyze relevant numbers, do the financials, generate alternative recommended courses of action, and generate ideas about how to implement them. You should rely on these notes when contributing to the class discussion.

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Students may be called on, at random, to take the lead in various aspects of class discussions. Typically, I will ask one or more participants to start the class by answering specific questions such as “If you were the person in charge in this situation, what would you do?” The quality of the contributions made during these periods affect a student’s overall participation grade. Factual misstatements, comments that demonstrate a lack of adequate preparation, or comments that come late in a discussion that distract the class and indicate that the student has not been actively listening will be noted as “negative” course participation. Technology Policy. Laptop and Internet usage is not permitted during academic or professional sessions unless otherwise stated by the professor. Use of other personal communication devices, such as cell phones, is considered unprofessional and is not permitted during academic or professional sessions. ANY e-devices (cell phones, PDAs, I-Phones, Blackberries, other texting devices, laptops, I-pods) should be completely turned off during class time. Upon request, you must comply and put your device on the table in off mode and FACE DOWN. Attendance Policy. Class attendance is ABSOLUTELY essential. This course heavily relies on your participation and discussion, unlike an instructor-led lecture. All missed classes will be noted, and require submission of an out-of-class written exercise to obtain credit for class participation. If you miss more than two classes without a very valid reason (e.g., illness, blizzard) you will lose participation marks each time you miss a class. Presence in class means joining the class on-time and staying in class until it ends. Midterm Exam To evaluate your course preparation and your understanding of course materials, a midterm examination will be used. Detailed instructions regarding this component will be posted on eClass. Final Exam To evaluate your course preparation and your understanding of course materials, a final exam will be used. Detailed information regarding this component will be posted on eClass. Group Project For this group project, you will self-select into groups of 3-4 members. It is your responsibility to form teams. The project requires you to examine strategic challenges or an issue of concern at real organizations. The purpose of the project is to give your team an opportunity to apply what has been learned in the course to strategic problems faced by real-world organizations. Detailed instructions regarding this component will be posted on eClass. FORMAL POLICY STATEMENTS

Policy about course outlines can be found in Course Requirements, Evaluation Procedures and Grading of the University Calendar. Missed Assignments. Approval for an excused absence from term work is at the discretion of the instructor as per §23.3(1) of the University Calendar. Any student who is incapacitated because of illness, is suffering from severe domestic affliction, or has other compelling reasons (including religious conviction) may apply for an excused absence for a missed assignment. If you have a conflict please discusses it with me beforehand and I will be happy to find a good solution with you. In fairness to other students, I will rarely accept excuses once an assignment deadline has passed.

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Appropriate Conduct. My goal in this course is to create a supportive environment for learning based on open, constructive debate. This requires all of us to be engaged with the material and with each other in a professional manner, with courtesy and respect for each other’s individuality. Discrimination, malicious criticism, and disruption of class are examples of conduct that are not acceptable. Lecture Recordings. Audio or video recording, digital or otherwise, of lectures, labs, seminars or any other teaching environment by students is allowed only with the prior written consent of the instructor or as a part of an approved accommodation plan. Student or instructor content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study, and is not to be used or distributed for any other purpose without prior written consent from the content author(s). Academic Integrity. The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at this link) and avoid any behaviour that could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University. I will immediately forward any suspicious cases to the Associate Dean of the Undergraduate Program. Plagiarism will lead to the evaluation of assignments as “fail” (0%). Plagiarism can also lead to a student failing the course. Other Resources. If you have any personal concerns, the following support numbers may be helpful resources.

• Support Network, Crisis Support: 780.482.4357 • Community Urgent Services and Stabilization: 780.342.7777

* This course builds on the materials developed from strategy courses taught by Professor Peer Fiss at the University of Southern California, and has been redesigned with the assistance of Jennifer Sloan.

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# Date Day Topic Reading and Assignments Activities Deliverables Module I: The Language of Strategy

1 9/7 Tue Introduction

Porter, “What is Strategy?” (Coursepack) Collins, “Why Do So Many Strategies Fail?” (Coursepack) Mintzberg & Westley, “Decision-Making: It’s Not What You Think”

(Coursepack) Grant, “Kids, Would You Please Start Fighting?” (eClass) Gavetti & Rivkin, “How Strategists Really Think: Tapping the Power of

Analogy” (Coursepack)

Introductions; Lecture;

Discuss Course Outline

2 9/14 Tue Key Strategic Concepts

Chen & Tucker, “The Power of One: The Strategy Diamond Framework” (Coursepack)

Case: Toys “R” Us Canada: Is Playtime Over?

Lecture; Case Discussion

3 9/21 Tue Group Project —

Case Selection and Preparation

No In-Person Class; Mandatory Group Meetings Establish Group Project Plan

Group Project Proposals Due

Module II: Industry Analysis

4 9/28 Tue Porter’s Five Forces Porter, “The Five Competitive Forces that Shape Strategy” (Coursepack) Case: Apple Inc. in 2018 (Coursepack)

Lecture; Case Discussion

5 10/5 Tue Industry Value Chains

Rivkin and Cullen, “Finding Information for Industry Analysis” (Coursepack)

Case: The Global Oil and Gas Industry (Coursepack)

Lecture; Case Discussion

Module III: Internal Analysis

6 10/12 Tue Competitive Advantage

Ghemawat & Rivkin, “Creating Competitive Advantage” (Coursepack) Case: Varied (Internet Research)

Lecture; Case Discussion

7 10/19 Tue ABFI Signature Event

Sponsored Field Trip: The Hay Family and Scandanavian Building Services

Dinner at The Westin Edmonton

8 10/26 Tue Resource-Based View of the Firm

Collis & Montgomery, “Competing on Resources” (Coursepack) Case: Scandanavian Building Services (Internet Research)

Lecture; Case Discussion

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# Date Day Topic Reading and Assignments Activities Deliverables Module III (continued): Internal Analysis

9 11/2 Tue Corporate Strategy Piskorski, “Note on Corporate Strategy” (Coursepack) Case: Pepsico’s Restaurants (Coursepack)

Lecture; Case Discussion

10 11/9 Tue Fall Reading Week No Class

11 11/16 Tue Vertical Integration

Osegowitsch & Madhok, “Vertical Integration is Dead, or Is It?” (Coursepack)

Zambrano, “Winning Globally: Organizing for Global Impact” (eClass) Case: CEMEX (A): Building the Global Framework (1985-2004)

(Coursepack)

Lecture; Case Discussion

Module IV: Competitive Dynamics

12 11/23 Tue Game Theory

Brandenburger & Nalebuff, “The Right Game: Use Game Theory to Shape Strategy” (Coursepack)

Case: Pricing Games: Sony PlayStation and Microsoft Xbox (Coursepack)

Lecture; Case Discussion

Mid-Term Due

13 11/30 Tue Competitor Analysis

Barrows Jr. & Frigo, “Using the Strategy Map for Competitor Analysis” (Coursepack)

Case: Competitor Analysis: Anticipating Competitive Actions (Coursepack)

Lecture; Case Discussion

Group Project Phase 2

Proposals Due

14 12/7 Tue Group Project Group Project —Presentations Presentations Final Given