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BUSINESS MANAGEMENT 499

Strategic Management
Winter Semester, 2005
Instructor: W. Burke Jackson
682 TNRB Ext. 2394, email: burke_jackson@byu.edu

Office Hours: T/TH 2:00-3:00 PM and by appointment

Objectives:

The central objective of this course is to examine how an organization deals with all the complexities and constraints of the
environment and how they impact managerial decisions and action. You will face the task of putting together all of the pieces
of a larger puzzle that are embodied in the functional areas of business.

This course is designed to be the capstone to your management training and should be taken during your last semester of
work. You will be encouraged to draw upon all of your previous educational experiences and to rely upon members of the
class for additional analysis and insight.

During the past decade a body of theory has developed which examines the strategic mission, responses, and actions of
organizations. During the semester, through cases, readings, and “mini-lectures,” you will be exposed to this body of theory.

One of the criticisms we often hear about the BYU graduate is that they are not well read. Thus, it is recommended that you
read Business Week and The Wall Street Journal throughout the semester. Sign-up sheets are in the IBM office (660 TNRB)
if you would like to have a personal subscription.

Grading:

The grading system used in the course is intended to reflect student effort, performance, and accomplishment. Hopefully it
will be fair, objective, and easily understood and administered. Grades will be based on the following criteria. Note that part
of the class will be participation in a computer simulation. Details on this will come later.

Written Case/Written Assignments.............................................30%

Final Examination/Project..........................................................20%
Classroom Participation..............................................................30%
Simulation Performance.............................................................20%

Note that classroom participation is a significant portion of your grade and that you will be expected to be in attendance each
day and be well prepared for each case discussion. You may miss two classes without penalty. Some of you may have to
“force” yourself to become active in the classroom discussion.

Study Groups:

Each student is expected to be an active participant in a study group. Groups should be formed by the end of the third class
period. It is recommended that each group consist of students with varied backgrounds and experiences so that all
dimensions of each case situation can be examined.

Case Method:

Hopefully, many of you have been exposed to the case method in other classes. While this pedagogical approach is usually
less comfortable than the lecture/discussion method, it has many advantages that students sometime overlook. One
advantage is that it assists you in becoming skilled at providing appropriate structure to an unstructured environment. You
will also be expected to make a decision and have ready a plan of action for each case discussion.

In addition, the case method (1) moves you from a receiver of information to a position of identifying, analyzing, and
evaluating alternatives, (2) trains you to work out answers and solutions for yourself (with the help of study group members)
and, (3) provides you with an opportunity to defend those positions.
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Perhaps the most perplexing aspect of the case method is that your performance evaluation is based upon your analysis and
evaluation, not upon your answer. In most cases it does not matter “what happened,” and even if we knew, that does not
mean it was the best answer.

The second most frustrating aspect of the case method is that you would like more information. Welcome to the world of
management!! Most decisions are made with the same limitation. You should not seek outside information about the case
situation or the organization involved--that will only cloud the issue and waste time.

Course Objectives:

The course objectives include:

(1) Development and reinforcement of a general management point of view--the capacity to view the firm from an
overall perspective in the context of its environment.

(2) Development of an understanding of fundamental concepts in strategic management: The levels and components of
strategy; value creation, competitive analysis, the importance of personal and managerial values; and
implementation.

(3) Integration of the knowledge you gained in previous courses and an understanding of what part of that knowledge is
useful to general managers.

(4) Development of those skills and knowledge peculiar to general management and the general manager’s job that have
not been covered in previous functional courses.

(5) Development of an awareness of the various impacts of external environmental forces on business and corporate
strategy.

(6) Practice in distinguishing between basic causes of business problems and attendant symptoms.

(7) Practice and working out business strategies and implementation plans.

(8) Development of habits of orderly, analytical thinking and skill in reporting conclusions effectively in both written
and oral form.

(9) Familiarity with some of the practical realities of running different types of businesses.

(10) Provide all of us a rich learning experience which is achieved with pleasure and high interest.

A number of general criteria or issues are almost always present in any situation:

1. You will almost always be asked to identify, evaluate, and recommend.

2. Some of the issues with regard to the recommendations include:

a. Are they concise, clear, and complete? Do they specify in some detail exactly who should do
what, and in what order?
b. Are they supported by the analysis? Is the supporting analysis balanced in the selection and use of
data (not exhaustive, but not just favorable data)?
c. Are the recommendations reasonable? Do they provide for the long-range actions? Hopefully,
good analysis leads to good recommendations, but sometimes generally good analysis (or analysis
overlooking one important piece of data, incorporating a very poor assumption or a mistake in
arithmetic, etc.) can be followed by recommendations which most reasonable managers would say
are poor.
d. At the most general level: Would a general manager be interested in and benefit from your
analysis?
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Written Assignments/Current Events Assignments:
There will be 1 written assignment and 1-2 group “current event” assignments which will be explained in class.

Texts:

1. Good to Great, James Collins

2. Packet at Bookstore.

3. Simulation Material

Simulation:
During the semester you will form into groups of 4 or 5 to participate in a simulation experience where your team
will compete against other teams from the class in a simulated business environment. Details on this will be announced in
class.

Academic Honesty
The first injunction of the BYU Honor Code is the call to “be honest.” Students come to the university not only to improve
their minds, gain knowledge, and develop skills that will assist them in their life’s work, but also to build character.
“President David O. McKay taught that character is the highest aim of education” (The Aims of a BYU Education, p. 6). It is
the purpose of the BYU Academic Honesty Policy to assist in fulfilling that aim.

BYU students should seek to be totally honest in their dealings with others. They should complete their own work and be
evaluated based upon that work. They should avoid academic dishonesty and misconduct in all its forms, including but not
limited to plagiarism, fabrication or falsification, cheating, and other academic misconduct.

Preventing Sexual Harassment

Title IX of the Education Amendments of 1972 prohibits sex discrimination against any participant in an educational program
or activity that receives federal funds. The act is intended to eliminate sex discrimination in education. Title IX covers
discrimination in programs, admissions, activities, and student-to-student sexual harassment. BYU’s policy against sexual
harassment extends not only to employees of the university, but to students as well. If you encounter unlawful sexual
harassment or gender based discrimination, please talk to your professor; contact the Equal Employment Office at 378-5895
or 367-5689 (24-hours); or contact the Honor Code Office at 378-2847.
Students With Disabilities

Brigham Young University is committed to providing a working and learning atmosphere which reasonably accommodates
qualified persons with disabilities. If you have any disability which may impair your ability to complete this course
successfully, please contact the Services for Students with Disabilities Office (378-2767), Reasonable academic
accommodations are reviewed for all students who have qualified documented disabilities. Services are coordinated with the
student and instructor by the SSD Office. If you need assistance or if you feel you have been unlawfully discriminated
against on the basis of disability, you may seek resolution through established grievance policy and procedures. You should
contact the Equal Employment Office at 422-5895, D-285 ASB.

Ned C. Hill, Dean

Marriott School
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BM 499 – STRATEGIC MANAGEMENT
Tentative Course Outline
Winter 2005

Session Day/Date Topic/Case/GTG Chapters Readings

I. INDUSTRY AND COMPETITIVE ANALYSIS/STRATEGY FORMULATION

1 T 1/4 Introduction
2 Th 1/6 Cola Wars “What Is Strategy”
3 T 1/11 Chinese Fireworks Industry.................. “How Competitive Forces Shape Strategy”
4 Th 1/13 Ch. 1-3 .................................... “Profit Pools: A Fresh Look at Strategy”
5 T 1/18 Simulation Day
6 Th 1/20 Simulation Day
7 T 1/25 JetBlue (not in packet)
8 Th 1/27 Evolution of the Circus Industry
9 T 2/1 Matching Dell/ Ch. 4-5
10 Th 2/3 Simulation Day
11 T 2/8 Ready-to-Eat Breakfast Cereal
12 Th 2/10 Formula One ....................................
13 T 2/15 Innovation/ Ch. 7 “Disruptive Technologies: Catching the
Wave”
14 Th 2/17 Current Event Day

II. STRATEGY IMPLEMENTATION

15 Th 2/24 TBA
16 T 3/1 Lincoln Electric
17 Th 3/3 Alignment/ Ch. 6, 8 “Extended 7-S” (Packet)
18 T 3/8 Pepsi’s Regeneration “Leading Change: Why Transformation
Efforts Fail” (Kotter)
19 Th 3/10 Meg Whitman at eBay (A)
20 T 3/15 TBA
21 Th 3/17 Simulation Day
22 T 3/22 GE’s Two-Decade Transformation

III. STRATEGY AND PERSONAL AND SOCIETAL VALUES AND DECISIONS/SUMMARY

23 Th 3/24 TBA
24 T 3/29 Sabena Airlines
25 Th 3/31 Sabena Airlines (cont’d)
26 T 4/5 Ethics Issues
27 Th 4/7 Board of Directors Presentations
28 T 4/12 Summary .................................... “Managing Oneself”

*An occasional Friday class may be used to make up for a missed class.
**With one exception (“Extended 7-S”), these readings are HBR articles which can be accessed through the BYU license
agreement.
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CLASS SCHEDULE AND ASSIGNMENTS

Session 1:

Introduction to Business Strategy; class overview

Session 2:

Case: Cola Wars

Reading: “What is Strategy” (Porter)

Discussion Questions:
1. Analyze the structure of the soft drink industry in the mid 1980s. Why are Coke and Pepsi so profitable? What
prevents other firms from entering this industry and accessing some of those high profits?
2. Compare the economics (costs and profits) of soft drinks (concentrate) versus bottlers? Explain the relative
attractiveness of these two businesses? Why are Coke & Pepsi in the bottling business?
3. Calculate the size of the barrier to entry into the soft drink (concentrate) industry? What would it cost a new
entrant to build a competitive position (market share) similar to Pepsi or Coke?

Session 3:

Case: Chinese Fireworks Industry

Reading: “How Competitive Forces Shape Strategy”

Discussion Questions:
1. If you were Jerry Yu, would you invest in a Liuyang fireworks factory? Why?
2. Evaluate the attractiveness of the industry (Porter’s model). Is it a “sunset” industry, or one worth being in for
the long run?
3. If you were Jerry Yu and you decided to invest, what would you do to win out over the competition?
4. What advice would you give Jerry Yu?

Session 4:

Readings: “Profit Pools: A Fresh Look at Strategy” (Gadeish & Gilbert).

GTG Ch. 1-3

Discussion Questions:
1. Compare and contrast the views presented in the readings (e.g. the 5 forces model and the model described in
the Profit Pools reading) regarding how industry structure influences firm performance. Also, can you think of
any other industry factors (not included in the Porter model) that may indicate whether an industry is more, or
less attractive?
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Session 5:
Simulation Day

Session 6:
Simulation Day
Session 7:

Case: JetBlue (not in packet)

http://www.jetblue.com/onlineannualrepot/about-main.html
http://www.jetblue.com/onlineannualreport/difference.html

Discussion Questions:
1. This is a real-world current case. Search the web for information about JetBlue (A few shortcuts are included).
In 2003, JetBlue had higher operating margins that any commercial airline
2. Why is JB so profitable?
3. What is their strategy?
4. What is the source of their competitive advantage? Be as specific as possible.

Session 8:

Case: Evolution of the Circus Industry

Discussion Questions:
1. What are the key success factors in the Circus industry?
2. How can a firm differentiate in this industry?

Session 9:

Case: Matching Dell

Reading: GTG Ch. 4-5

Discussion Questions: TBA

Session 10:

Simulation Day

Session 11:

Case: Ready-to-Eat Breakfast Cereal

Discussion Questions:
1. Why has RTE cereal been such a profitable business? What changes have led to the current industry “crisis”?
2. Why have private labels been able to enter this industry successfully? How do the cost structures of private
label and branded cereal manufacturers differ?
3. What does General Mils hope to accomplish with its April 1994 reduction in trade promotions and prices?
4. What are the risks associated with those actions? How do you expect General Mills’ competitors to respond?
5. What should General Mills do?

Session 12:

Case: Formula One

Discussion Questions:
1. What are the key resources and capabilities of the Formula One racing team that your group is assigned to?
2. How have the needed capabilities evolved over time?
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Session 13:

Reading: “Disruptive Technologies: Catching the Wave” (Christensen)

Session 14:

Current Events Day

Session 15:

Case: Lincoln Electric

Discussion Questions:
1. How successful has Lincoln been? Why?
2. Where are the vulnerable? What future challenges could they have?

Session 16:

Case: Lincoln Electric

Discussion Questions:
3. How successful has Lincoln been? Why?
4. Where are the vulnerable? What future challenges could they have?

Session 17:

Readings: “Extended 7-S” (Packet)

GTG Ch. 6, 8

Session 18:

Case: Pepsi’s Regeneration

Reading: “Leading Change: Why transformation Efforts Fail” (Kotter)

Discussion Questions:
1. What challenges did Pepsi face in the early 1990s? How did these challenges shape the agenda and tasks of
Craig Weatherup?
2. How did Weatherup gain buy-in and acceptance of his approach:
a. from his direct reports?
b. from the organization as a whole?
3. What is your evaluation of the reorganization? Would you want the job of Market Unit manager? Why or why
not?
4. What were the major steps in Pepsi’s change process? Do you agree with the way events were sequenced?
Why or why not?
5. How would you describe Weatherup’s approach to leading change?

Session 19:

Case: Meg Whitman at eBay (A)

Discussion Questions:
1. What were and are the challenges facing Meg Whitman at eBay?
2. Evaluate her performance to date.
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Session 20:

TBA

Session 21:

Simulation Day

Session 22:

Case: GE’s Two-Decade Transformation: Jack Welch’s Leadership

Discussion Questions:
1. How difficult a challenge did Welch face in 1981? How effectively did he take charge?
2. What is Welch’s objective in the series of initiatives he launched in the late 1980s and 1990s?
3. How does such a large, complex diversified conglomerate defy the critics and continue to grow so profitably?
4. What is your evaluation of Welch’s management approach? How important is he to GE’s success? What
implications for his replacement?

Session 23:
TBA

Session 24:

Case: Sabena Airlines

Discussion Questions
1. Read the background case in the packet to familiarize yourself with the strategy being implemented at Sabena.
Then read the first case on a new junior level manager at Sabena, Erik Weytjens. What would you do to solve
the first assignment (problem) he is given to address?

Sessions 25:

Case: Sabena Airlines (continued)

Session 26:

Ethics Issues

Session 27:

Board of Directors Presentations

Session 28:

Summary
Reading: “Managing Oneself” (Drucker)