MGT 511E KIM

KAIST Business School

COURSE SYLLABUS
Fall 2011

Course: MGT 511E Strategic Management

1:00pm – 2:20pm, Tuesday & Thursday, Classroom S103

Instructor: Sung Min Kim (Ph.D. University of Illinois, Urbana-Champaign)

Associate Professor of Strategy
Graduate School of Business
Loyola University Chicago
Office: S467
Office Hours: 10:00am – 12:00am (Tuesday & Thursday) and by appointment
Phone: 958-3337
E-mail: strategy@business.kaist.ac.kr

Assistant: Jihee Kim (Ph.D. Candidate, KAIST Business School)

Office: S567
E-mail: jayjay04@business.kaist.ac.kr

Course Description: This is a capstone course that explores the manner in which
companies develop and implement a strategic business plan and
also examines characteristics of effective general managers and
leaders in business organizations. Strategy is concerned with
answering two central questions: “What businesses should we
participate in?” and “How should we compete?” Managing the
business enterprise in a way that facilitates arriving at and
implementing the best answers to these questions is referred to as
strategic management.

Course Materials: There is no required textbook, but I recommend Robert M. Grant

(2010) Contemporary Strategy Analysis, 7th edition (516 pages),
Wiley (ISBN-13: 978-0470747100) or Pankaj Ghemawat (2009)
Strategy and the Business Landscape, 3rd edition, (192 pages),
Prentice Hall (ISBN-13: 978-0136015550).
The required course packet includes reading materials and Harvard
Business School (HBS) cases. Reading materials (journal articles,
handout notes, lecture slides) are available from the Public Folder
on the school website. Students need to purchase the HBS cases.

Please read this syllabus thoroughly. It contains important information that will help you
get the most out of your experience in this course. While I will do my best to help you,
ultimately, you are responsible for knowing what is written here and for your
performance in my course. The course website at Blackboard will play a crucial role in
this course. You must check it regularly to get announcements and course materials.

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Course Objectives: MGT 511E (Strategic Management) is the capstone course of the
KAIST Business School. Strategy is concerned with answering
two central questions: “What businesses should we participate
in?” and “How should we compete?” Managing the business
enterprise in a way that facilitates arriving at and implementing the
best answers to these questions is referred to as strategic
management.

In this course, you will learn concepts and frameworks that will be
useful for analyzing and formulating business-level and corporate-
level strategies. Whereas business-level strategy focuses on the
strategic management of individual businesses by addressing the
question of how the firm competes in a particular product market,
corporate-level strategy focuses on addressing the question of
what businesses the firm should be participate in. As you go
through the course, you will also develop skills for identifying
managerial issues, finding alternative ways to deal with those
issues, and evaluating alternative plans of action. Finally, the
course provides you an opportunity to apply strategy theories to
actual business situations through diagnosis, analysis, and solution
of inter-related business problems.

This is a "big-picture" course in that it integrates much of the

knowledge that you have gained in the core curriculum. Most of
the other courses you take concern specific functional areas, such
as accounting, economics, finance, human resources, marketing,
and information systems. The problems and issues involved in
strategy cover the entire spectrum of business. Accordingly, the
perspective we take is that of the general manager, who may be a
CEO or company president, division head, or manager of an
operating unit. They are responsible for setting the goals,
objectives, and strategies of the organizations they lead as well as
the implementation of such plans.

The course will cover both the content of strategic decisions and
the processes by which general managers position the businesses
and allocate resources in the face of both uncertainty and
competition. By focusing on what makes some strategies strong
and viable, while others remain weak and vulnerable, you will be
able to develop the ability to consider the impact of change and
environmental forces on the opportunities for establishing and
sustaining competitive advantage. The primary objective is to help
you develop a personally useful, explicit way of thinking about the
business enterprise as a total system, and the manner in which it
can gain a sustainable competitive advantage in the marketplace
by drafting a complete business plan for a start-up entity.

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Learning To accomplish these objectives, we will use a variety of learning

Techniques: techniques: readings, lectures, written reports, presentations, and,
most importantly, class discussion of case studies. This course will
be highly interactive and will require a good deal of preparation
in order to actively participate in the class discussions.

Case Analysis
Strategic thinking and analysis is best learned through practice.
The cases we will study are about real world business situations.
Each case is designed to provide you with real-life managerial
problems, and case analysis is very useful as a simulation of actual
managerial activity. How much you get out of a case depends on
your preparation and active participation. Each of you must be fully
prepared for each class and effectively participate in each case
discussion – comment, question, argue, and analyze.

Objectives of case analysis include:

(1) Increase your understanding of what managers should and
should not do in guiding business to success in real world
business situations,
(2) Build your skills in conducting strategic analysis and gain in-
depth experience in a variety of industries, competitive
situations, and company circumstances,
(3) Get valuable practice in diagnosing strategic issues,
evaluating strategic alternatives, and formulating workable
plans of action, and

We will be discussing a number of cases, many of them in the

context of Harvard Business Review articles that are assigned in
conjunction with the case. Effective participation requires the
articulation of your careful analysis of the facts of the case, and
your ability, using the tools described in the articles, to identify
strategic courses of action that might be used to enhance to
competitive position of the company or its future performance.
You should be able to share your analysis of the situation; be
willing to test new ideas or novel approaches; and add to the
class’s overall understanding of the situation.

A list of case study questions has been assigned to each case for
your preparation and participation. The quality of your answers
and class participation in terms of relevance and original analysis
is more important than its quantity. Do not seek any additional or
post-case data on the firm or industry. Employing hindsight or
borrowing someone else’s thinking short-circuits the learning
process and diminishes your learning experience.

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Group Work
During the first class session, you will be asked to form ten groups
of five to six members each. Given the comprehensive nature of
the course, it is critical that individuals give consideration to the
following issues in forming their groups:
(1) All students have very busy schedules, and therefore it is
crucial for the groups as they are forming to make sure that
there is a time when everyone can meet face-to-face each
week. One of the biggest obstacles to group effectiveness is
insufficient time for all the team members to come together and
work in a face-to-face manner.
(2) At least one member of the group must have a sufficient
background in accounting and/or finance so that they can
build a complete set of financial statements for a start-up
business; this is not an easy assignment, and therefore each
group will need to ensure that someone in the group has this
capability and will commit to the task.
(3) It is helpful when groups include students with varied
functional interests. Involving with people with distinct
functional backgrounds will help avoid potential blind spots in
your case analysis For example, it has proven helpful in the
past for groups to be diverse in terms of personal backgrounds,
as well as in concentrations of study, in order to give the group
the widest range of experience as they move through the
business planning process.

Once formed, each group will prepare (1) the Business Concept
and Environment Analysis presentation and (2) the final Business
Plan paper and presentation as described below. It is important that
the members of the group divide the work in an equitable and fair
manner, and treat each other in an appropriate way. Therefore,
each group is encouraged to take some time early on to discuss and
agree upon a set of guidelines regarding when the group is going
to meet, how the work is going to be divided, and what type of
behaviors are expected from one another.

Developing effective group skills is a critical part of the learning

process. In order to assure that each group member is making a
significant and proportional contribution to the group project,
students will evaluate their own team members and other teams
after the final Business Plan presentation and report submission.
It is important that honesty trumps friendship and loyalty, since the
goal of the feedback is the improvement of the individual and the
team. If feedback is not honest and improvement is not made, the
team and its efforts will suffer.

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Course Grade: Your course grade is a function of the following individual and
group assignments.
(1) Class Participation 150 points
(2) Case Study Questions 150 points
(3) Comprehensive Case Report 100 points
(4) In-class Final Exam 200 points
(5) Business Plan Practicum 400 points
---------------
1000 points
(1) Class Participation: 150 Points
Active participation in the class is an essential part of the learning
experience, and the most important group interaction occurs during
our case discussions so that we will learn from each other.

Class Attendance
Your attendance in every class is extremely important. Please be
on time, especially for the case discussion and presentation
sessions. If you miss the roll call, you have missed the class. You
are expected to stay for the entire class. I do keep track of your
attendance and participation and figure it into the final grade.
Each person will be allowed one absence, “no questions asked”;
beyond that absence, 20 points will be deducted from the
participation grade if you are absent or not prepared for the class.

Class Participation
You are required not only to attend classes, but also to carefully
prepare for each class and contribute actively to class discussion.
Meaningful participation means making a contribution to our
discussion, not merely talking, and it does not mean repeating case
facts or simply agreeing with what others have already said.
It is important that the instructor get to know who you are and
keep track of your class participation; you will be asked to submit
your photo and display a name card to help that process.
Please note that attending without making meaningful
contributions scores no participation points. Daily grades will be
recorded on the following scale: 5, said something interesting; 10,
said something that really turned the discussion.

(2) Case Study Questions: 150 (6 Cases x 25) Points

A list of case study questions has been prepared for certain weeks’
case assignments. It is very important for you to be prepared, and
answering the study questions prior to class is a good way to
assure that you have given the materials the requisite amount of
thought before you come to class. Therefore, beginning in the
second week of class, each of you will need to turn in written
answers to the study questions for the following six cases:

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1) Whole Foods Market, 2) Southwest Airlines,3) Starbucks Coffee,

4) Sony’s PlayStation3, 5) Crocs, and 6) Zara.

You assignments are due before class begins on the day of the case
discussion. There is no credit provided for late submissions.
One purpose of the assignment is to enhance class discussion (so,
if necessary, bring an extra copy for yourself).
I expect each student to prepare up to 2-page written answers
(full-sentenced, 12-font typed, and double-spaced).
In grading the answers to the study questions, the integration of
the concepts discussed in the assigned readings into your answers
will be value. Outside research of the case is not required.

(3) Comprehensive Case Report: 100 (2 Cases x 50) Points

You are expected to turn in two individual case reports for the
assigned focal firm of the following HBS cases based on the class
schedule. Again, outside research for the case is not required:
1) The Ready-to-Eat Breakfast Cereal Industry
Group 1 to 5 members: General Mills’ Strategy
Group 6 to 10 members: Kellogg’s Strategy
2) Cola Wars Continue: Coke and Pepsi
Group 1 to 5 members: Coke’s Strategy
Group 6 to 10 members: Pepsi’s Strategy
I expect each student to prepare a 4-page case report (full-
sentenced, 12-font typed, and double-spaced) and unlimited
appendix for figures and tables if necessary.

Evaluation Criteria
Your individual full case report should focus on:
(1) Identifying strategic issues in the case: Define the focal firm
and the nature/scope of the problem in the first paragraph of
your paper. Conclude the first paragraph with the question to
be addressed. Explain why the question is important.
(2) Undertaking an analysis of those issues: Internal and external
analyses remain focused on addressing the question raised.
Indicate the factors that are important for answering your
question and indicate the interrelationships between factors.
(3) Developing alternative strategies: Generate alternative
strategies to solve the problem identified earlier. Use the
results of internal and external analyses to evaluate each option
(pros and cons) and develop your recommendations.
(4) Making recommendations: Suggested strategy and action plans
should follow logically from the analysis. Check whether your
recommendations provide a good answer to the question in the
first paragraph. Be sure to discuss implementation issues.

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(4) In-class Final Exam: 200 Points

There will be one in-class exam which will cover the entire
reading and lecture materials (except HBS cases), and require you
to demonstrate your mastery of the concepts, analytical tools, and
theoretical frameworks covered in this course.
The final exam is closed-book and closed-notes. The format of the
exam will be a combination of multiple choices, short answers,
and quantitative analysis.

(5) Business Plan Practicum: 400 (100 + 150 + 150) Points

Each team will be responsible for developing a business plan for
the start-up business that they wish to launch. This entire project
requires creative and integrative thinking. This process begins with
each team coming up with a business concept that they can then
develop into a start-up company.

A one-page proposal of the company you will be starting is due

at the beginning of the third week. It should briefly define
business concept, target customers, main competitors, and core
competencies. It must also include the group members’ names,
email addresses, and telephone numbers.

A. Business Concept and Analysis Presentation: 100 Points

Each group is responsible for presenting the strategic profiles of
your company, the industry, and current and potential competitors.
Since the presentation is expected to provide your analysis of the
business concept and its industry environment for strategic
positioning, active outside research is encouraged. Gather all the
relevant information and attach references as an exhibit.
Emphasize your judgments and present relevant information and
analysis outcomes, in support of your judgments.

The Business Concept and Analysis slide is due at the

beginning of the mid-term week. It must not exceed 12
PowerPoint slides. Each team must prepare four separate
components: (1) Strategy Statement (including the “tagline” for
your business), (2) Five Forces Industry Analysis, (3) Strategy
Canvas, and (4) Activity Map.

Each group will make a 15-minute presentation of its Business

Concept and Analysis slide; the time limit will be strictly
enforced. At least three members of the group must participate in
the presentation. All members of the team will come to the front of
the classroom for the presentation and be available as members of
the class ask questions about and make comments on the Business
Concept and Analysis presented.

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Other groups will ask questions about and make comments on the
Business Concept itself and on the viability of strategic positioning
plan. You will be graded based on the quality of questions asked.
The presenting team must gather feedback and comments from the
class and the instructor on your presentation, and selectively make
them to your own ideas in your final Business Plan.

B. Final Business Plan Presentation: 150 Points

The final project requires developing and presenting a complete
Business Plan for your company.

During the last two weeks, each group will make a 25-minute
presentation of its final Business Plan. The focus of your final
presentation is to build an effective business model, develop
specific action plans, and describe how you are going to
implement your business plan. Gather feedback and comments
from the class and the instructor on your presentation, and make
them into your own in the final business plan paper.

C. Final Business Plan Report: 150 Points

I will provide instructions, samples, and handouts which we will
discuss in class describing the components of a Business Plan.

The final Business Plan report is due by the final exam date for
all groups. The maximum length of the Business Plan report is 25
pages (double spaced with 12-font typed), excluding any
appendixes or exhibits. Along with the 25-page Business Plan
report, you should attach a 1-page executive summary. Push
yourself to be selective, in order to generate a rigorous and
relevant plan. Papers do not have to be footnoted, but references
should be listed as an exhibit. Each team must submit a final page
signed by each of the group members stating that all of the group
members made a significant contribution to the Business Plan.

Grading Scale: Your final grade will be established based on the following scale.
No curve should be anticipated.
A+ 990 – 1000 points
A 950 – 989
A- 920 – 949
B+ 890 – 919
B 850 – 889
B- 820 – 849
C 750 – 819
D 650 – 749
F Below 650

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Date Readings and Assignments

1 9/1 TH Introduction to the Strategic Management Course
2 9/6 TU Strategic Management and Business Planning
Lafley (2009) What Only the CEO Can Do
Collis and Rukstad (2008) Can You Say What Your Strategy Is?
Handout: Theories and Measures of Superior Performance
3 9/8 TH Porter (1996) What is Strategy?
Kim and Mauborgne (2002) Charting Your Company’s Future
Handout: Strategic Coherence and Sustainable Competitive Advantage
4 9/13 TU No Class: Korean Thanksgivings
5 9/15 TH Case 1: Whole Foods Market (HBS 9-705-476) & Hamel and Breen (2007)
1. What is Whole Foods’ mission and strategic vision?
2. How has Whole Foods’ taken its vision and developed its strategy?
3. What actions has Whole Foods’ taken to implement its strategy?
4. How sustainable is Whole Foods’ strategy in the long run?
5. What advice do you have for John Mackey for the future?
6 9/20 TU External Environment and Industry Analysis
Porter (2008) The Five Competitive Forces that Shape Strategy
Handout: Structure-Conduct-Performance Framework
Handout: Strategic Group Analysis
7 9/22 TH Company Proposal due at the beginning of class
8 9/27 TU Case 2: Southwest Airlines (HBS 9-803-133)
1. Is this an industry that you would want to be in? Why or why not?
2. What are the most important contributors of Southwest Airline’s success?
3. How should management respond to its declined performance in 2002?
4. Do you recommend that it resume its historic growth rate? Why or why not?
5. Should it pursue a greater portion of long-haul flights? Why or why not?
9 9/29 TH Internal Environment and Company Analysis
Collis and Montgomery (1995) Competing on Resources
Harreld, O’Reilly, and Tushman (2007) Dynamic Capabilities at IBM
Handout: Criteria for Sustainable Competitive Advantage
Handout: Value-chain Analysis & Value-added Analysis
10 10/4 TU Case 3: Starbucks (HBS 9-504-016)
1. What factors accounted for the success of Starbucks in the early 1990s?
2. What was so compelling about the Starbucks’ initial value proposition?
3. How does the Starbucks of 2002 differ from the Starbucks of 1992?
4. Why have Starbucks’ customer satisfaction scores declined in 2002?
5. Should Starbucks invest in labor in the stores? Why or why not?
11 10/6 TH Generic Business Strategies and Business Plan
Peteraf (1993) The Cornerstone of Competitive Advantage
Porter (2001) Strategy and the Internet
Handout: Generic Business-level Strategies
12 10/11 TU Case 4: The Ready-to-Eat Breakfast Cereal Industry (HBS 9-795-191)
Groups 1-5 members: General Mills’ Strategy; Groups 6-10 members: Kellogg’s Strategy
13 10/13 TH Sahlman (1997) How to Write a Great Business Plan
Johnson, Christensen, and Kagermann (2008) Reinventing Your Business Model
14 10/18 TU Case 5: Sony PlayStation 3 (HBS 9-508-076)
1. How attractive is the videogame console industry?
2. Should Sony be concerned about the success of the Nintendo Wii? Why or why not?
3. How would you position the new console of PS3 over PS2?
4. Evaluate the profitability of the PS3 with the sale of game titles.
5. What actions should Sony take to improve the performance of its PS3?

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15 10/20 TH Mid-term Business Concept and Analysis Presentation: Groups 1-5 (2 hours)
16 10/25 TU Mid-term Business Concept and Analysis Presentation: Groups 6-10 (2 hours)
17 10/27 TH Competitive Dynamics and Strategy under Uncertainty
Courtney, Kirkland, & Viguerie (1997) Strategy under Uncertainty
Ghemawat & del Sol (1998) Commitment versus Flexibility
Handout: Strategic Commitment and Strategic Flexibility
18 11/1 TU Strategic Commitment and Game Theory
Handout: Game Theory and Strategic Commitment
19 11/3 TH Strategic Flexibility and Real Options Theory
Handout: Real Options Theory and Strategic Flexibility
20 11/8 TU Case 6: Cola Wars Continue: Coke and Pepsi (HBS 9-711-462)
Groups 1-5 members: Coke’s Strategy; Groups 6-10 members: Pepsi’s Strategy
21 11/10 TH Corporate Strategy and Corporate Advantage
Fréry (2006) The Fundamental Dimensions of Strategy
Collis & Montgomery (1998) Creating Corporate Advantage
22 11/15 TU Williamson (1996) Economics and Organization: A Primer
Barney (1999) How a Firm’s Capabilities Affect Boundary Decisions
Handout: Market Failure and Corporate Strategy
Handout: Williamson (2009) Nobel Prize Lecture
23 11/17 TH Vertical Integration Strategy and Firm Boundaries
Osegowitsch & Madhok (2003) Vertical Integration is Dead, or Is It?
Ferdows, Lewis & Machuca (2004) Rapid-Fire Fulfillment
24 11/22 TU Case 7: Crocs (Stanford GS -57)
1. How attractive is the footwear industry (i.e., on-average profitability)?
2. How does Crocs’ corporate strategy differ from traditional shoe companies?
3. What are the sources of Crocs’ competitive advantage (i.e., core competencies)?
4. How sustainable is Crocs’ position and performance in the footwear industry?
5. How can Crocs exploit its core competencies for corporate advantage?
25 11/24 TH Diversification Strategy and Multi-business Structure
Markides (1997) To Diversify or Not to Diversify
Henry (2002) Mergers: Why Most Big Deals Don’t Pay Off
Handout: Diversification Strategy and Corporate Value Creation
26 11/29 TU Mergers and Acquisitions (M&As) and Strategic Alliances
Dyer, Kale & Singh (2004) When to Ally and When to Acquire
27 12/1 TH Global Strategy and the Multinational Corporation
Ghemawat (2007) Managing Differences: The Central Challenge of Global Strategy
Handout: Global Strategy and Multinational Corporation
Stakeholders and Corporate Governance
Pfeffer (2009) Shareholders First? Not So Fast…
Handout: Stakeholders and Strategic Management
Handout: Corporate Governance and Governance Mechanisms
28 12/6 TU Case 8: Zara (HBS 9-703-497)
1. What are Zara’s unique choices which are connected to its core competencies?
2. How does Zara’s business model affect its operating economics?
3. How sustainable is Zara’s competitive advantage? Why Zara might fail?
4. How well does Zara’s advantage travel globally? What are the limits?
5. What is the best way to grow the Zara chain profitably?
29 12/8 TH Final Business Plan Presentation: Groups 1-3
30 12/13 TU Final Business Plan Presentation: Groups 4-6
31 12/15 TH Final Business Plan Presentation: Groups 7-10 (2 hours)
32 12/20 TU Final Exam & Final Business Plan Report due (2 hours)

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