LONDON BUSINESS SCHOOL
ELECTIVE
STRATEGY 2
CORPORATE STRATEGY
Spring 2008
Professor Phanish Puranam
Course Overview
Most large companies, and many quite small ones, are not single businesses but ‘groups’, comprising a portfolio of more or less separate business units and one or more levels of ‘corporate’ management. This elective addresses the topic of strategy at the corporate or group level. It starts by examining the main issues involved in corporate strategy, and then focuses on three topics in particular:
- 1. Portfolio composition: what businesses should be brought together within the company? For each business, how much of the value chain should the company participate in?
- 2. Portfolio change: how should the company add/divest businesses through partnerships/acquisitions/internal development?
- 3. Organization: How should the company be organizationally structured, to leverage synergies across businesses? What sorts of things can and should the parent do, and how should these tasks be split between different levels or groups of corporate management?
Course Objectives
The prime aims of this course is to help students assess corporate strategies and develop superior ones. The course is particularly useful for those intending to become strategy consultants or investment bankers as well as those who plan to work in, and eventually lead, multi-business groups. It builds on many concepts covered in the core Strategy I course and links to other courses such as Finance and Organizational Behaviour.
Learning Methods
The course will be taught primarily through cases and participative ‘lectures’, with some external speakers.
Course materials
1. There will be NO prescribed textbook.
2. Readings and cases are provided in course-pack
3. Electronic copies of slides are posted on Portal AFTER each class. I have experimented with handing these out before class as well, but after class distribution works best for my teaching style.
4. Detailed class notes for each session, summarising main points from discussion are posted on Portal AFTER each class
Assessment and Assignment Details
This is primarily a case discussion based course -attendance is important not only for yourself, but in enriching the experience of your colleagues. This is reflected in the 20% weight given to class participation. This is also a “content rich” course, in the sense that the evaluation also depends on your demonstration of mastery over a set of concepts and ideas through your individual end-course exam (50%). Finally, I am also interested in your being able to apply these concepts in a collaborative way- hence the group project (30%). Details follow:
1. Class participation & presentations (20%). Participation will be judged more on quality than quantity, but failure to participate actively will be marked down. If you feel you are having problems participating, due to shyness, language or other issues, PLEASE CONTACT ME as soon as possible, and I will try to ensure you have adequate opportunity to contribute more fully. Contributions that are pointless or time wasting will be scored down, but questions based on a genuine desire for clarification will always be treated positively.
2. Individual exam (60%). This should be completed individually, but with an “open book” approach.
3. Group project (20%). A group assignment will be outlined during the first day. I suggest you start work on it as early as possible. Some groups may also be asked to present their intermediate outputs in class. The projects will be done in groups of 5-6 students. Since the same groups will also work on various short in-class presentations, it is critical that you form your groups by the end of the first day.
Contact Details
1. By e-mail at
2. Directly, or by leaving a message, on x 8742 at LBS
My secretary is Sharon Wilson, whose office is on the third floor of Sainsbury’s (S346). My own office is S318.
Detailed Course Timetable
Day 1: Monday
AM session: What is Corporate Strategy about?
-
Preparation:
Case: Grand Metropolitan
1. What was the ‘group level strategy’ under Maxwell Joseph? What was good and bad about this?
2. What was the ‘group level strategy’ under Stanley Grinstead? What was good and bad about this?
3. What was the ‘group level strategy’ under Allen Sheppard? What was good and bad about this?
Follow-up:
Chapter 15 from Robert Grant, Contemporary Strategic Analysis
PM Session: The Role of the Corporate Parent
Preparation:
Case: WPP – Integrating Icons to Leverage Knowledge
1. By late 1998, what had actually been done to add value to WPP’s various acquisitions? What were the main parenting roles in each of the ‘5 Divisions’ and at Head Office?
2. What new or different roles might the parent play in future, and how should Sorrell approach these potential changes?
Follow-up:
Corporate Strategy: The Quest for Parenting Advantage, Campbell, Goold and Alexander, Harvard Business Review, March-April 1995 (reprint 95202)
GROUP PROJECT WORK
Day 2: Tuesday
AM Session: Diversification: Managing customer and market reactions
Preparation:
Case: Monsanto’s March into Biotechnology (A)
1. As an analyst, how would you react to a) Monsanto’s diversification from commodity chemicals to biotechnology? b) The manner in which Monsanto pursued this diversification?
Follow-up:
Does diversification cause the diversification discount? By Belen Villalonga, Financial Management.
PM Session: Corporate Strategy in the shadow of Private Equity
Preparation:
1. From Competitive Advantage to Corporate Strategy, Michael Porter, Harvard Business Review May-June, 1987
2. Creating Corporate Advantage, Collis and Montgomery, Harvard Business Review May-June 1998 (reprint 98303)
3. Value acceleration: Lessons from PE Masters (Rogers, Holland and Haas)
Each group to prepare a short (2-3 slide presentation) in response to the following proposition: “Corporate HQ’s could improve their performance by closely modelling themselves on PE firms”. Either attack or defend this proposition.
Follow-up:
Does Corporate Strategy Matter? By Ed Bowman and Connie Helfat, Strategic Management Journal, 2001
GROUP PROJECT WORK
Day 3: Wednesday
AM Session: Inorganic Growth
Preparation:
Case: Cisco Systems: The acquisition of technology is the acquisition of people
1. Why did Cisco rely to such a large extent on M&A?
2. What accounted for Cisco’s successful acquisition strategy? What factors is their success sensitive to?
3. Give what you have learnt about M&A in this case, what can we say about successful divestment?
Follow-up:
What they know vs. What they do: How acquirers leverage technology acquisitions by Phanish Puranam and Kannan Srikanth, Strategic Management Journal, 2007
PM Session: Corporate-Level Organization
Preparation:
Reorganization at Cisco Systems-A
& Analysts reactions to Cisco’s reorganization
1. Why did Cisco re-organize away from customer-focused segments to technology focused segments?
2. What problems do you anticipate that could arise from this change?
Follow-up:
Renewal through reorganization: The value of inconsistencies between formal and informal organization by Ranjay Gulati and Phanish Puranam, Organization Science
GROUP PROJECT WORK
Day 4: Thursday
AM Session: Outsourcing
Preparation:
Case: Xerox: Outsourcing the global information technology resources (HBS)
1. Why did Xerox want to outsource its IT services to EDS?
2. Why would EDS take on this work?
3. Why did the top management of EDS and Xerox make such visible efforts at building a relationship beyond the contract?
Follow-up:
When is virtual virtuous? (Teece and Chesbrough, HBR)
PM Session: Group project presentations
Preparation
Prepare presentation of group assignment
GROUP PROJECT WORK
Day 5: Friday
AM Session: Flat worlds, Virtual corporations….
Preparation
Case: Li & Fung
& Tom Friedman’s “The World is Flat”; Chapter 10 only
1. What is Li & Fung’s business model?
2. What draws clients and suppliers to Li & Fung?
3. How do you evaluate the proposed re-organization at Li & Fung in the soft goods divisions?
Follow-up:
“Is the world flat, really?” By Phanish Puranam
PM Session: Review & In-class Exam
Preparation: Class materials
We will spend some time reviewing core concepts from the course, followed by an in-class exam.