MOR 562
STRATEGIC CHOICE AND VALUATION
SYLLABUS
SPRING 2008
JULIA PORTER LIEBESKIND
A. COURSE DESCRIPTION
Content
This class teaches you a series of key skills involved in strategic analysis and strategic management. These skills are essential for students intending to pursue careers in consulting, middle and upper echelon management, or startup firms. This course deepens, extends and refines the basic analytical approaches and models you learned in your core strategy class.
The skills taught in this class fall into two broad groups:
q Using microeconomic reasoning to analyze the economics of value creation.
The emphasis here will be on using microeconomic models to analyze the sources of rents at the firm level in both static and dynamic frameworks. This analytical approach will be applied strategic decisions such as market entry, expansion strategy, investing in capabilities, and firm configuration.
q Using valuation methods to analyze competitive advantage and the payoffs to strategic decisions.
The emphases here will be on (a) using cost-benefit analysis in strategic valuation and (b) valuation under uncertainty, using scenario analysis.
Pedagogy
This class will use a combination of readings, lectures, discussions, in-class exercises, and case analyses. The exercises and cases will be used to practice the skills being learned. The class involves a combination of individual and group work, and has a “hands on” emphasis.
Class times
TuTh
Wed
Course Materials
1. Course Reader. This can be obtained from the Bookstore. Look for the reader for MOR 562 with my name on the cover. This reader has both readings from various sources, and the cases that will be analyzed during the class.
2. Text: Value in Strategy: Notes and Exercises. This is a collection of notes and exercises written specially for this class. This can also be obtained from the bookstore.
Most of the readings for this class will be from the Text, with some supplementary readings and cases given in the Course Reader. Homework assignments and case questions will be posted on Blackboard. From time to time, I will also post readings and exercises on Blackboard. Please be aware that the Readings, Text, and materials that I post on Blackboard are subject to copyright law, and may not be reproduced, copied or circulated by you for any purpose other than for your studying for this class. We will be discussing the issue of intellectual property law and strategy during this class.
B. STUDENT EVALUATION
You will be evaluated as follows:
Percentage Points
Surprise quizzes 9.1% 60
6 Group Homeworks 45.5% 300
Long Quiz #1 (in-class) 22.7% 150
Long Quiz #2 (in-class) 22.7% 150
Sub Total 100% 660
Attendance and participation @ 12% 112% 80
Final Total 740
Group Homeworks
We use group homeworks in this class to work through problems in a workshop format. Groups present their approaches to analysis, and we discuss them together in class. Each assignment [as indicated on the syllabus] requires your group to prepare two pages of analysis (and not more), analyzing the assigned problem. Your analysis should show a detailed exposition of how you have approached the assigned problem.
Homeworks should be on paper, ready for the Doc Cam for class discussions. No PowerPoint or other electronic presentations, please – these take too much setup time in class and/or on my part for grading.
Groups
At the beginning of class, please organize yourselves into groups of between four and six students. During the course of the class, you may “re-contract” and change groups, but groups may not exceed six students for any assignment. If you do switch groups, please let me know immediately, so I can adjust your grade assignments accordingly. Thank you.
At the end of the semester, each of you will be asked to assess the performance of the various group members that you have worked with to ensure fairness in grading group work. If a student receives more than one assessment stating that his or her work in a group is unsatisfactory, his or her grade for group work will be reduced.
Attendance and Participation
Participation contributes to the life of the class, and to learning -- this is the kind of class where we can all learn from each other. We will also be doing exercises and brainstorming in class. I do make note of students who are not participating fully for grading purposes, and call on them in class. So please step up to the plate. There are many ways you can participate: Asking questions (which help other students); introducing real life examples from your own experience, or from press reports; and commenting on other teams’ work in workshop sessions all contribute to the liveliness of the class, and to our general understanding.
You are expected to attend all class sessions. You are allowed a maximum of TWO absences during the semester for the daytime class, and ONE absence per semester for the evening class. For each additional absence, I will reduce your participation grade. Please be mindful of this rule in scheduling interviews, trips, and meetings. You are also expected to turn up to class on time and stay to the end of class: repeated late arrivals or early departures will also be noted, and a consistent pattern of late arrival and/or early departure will reduce your participation grade.
Surprise Quizzes
I use surprise quizzes from time to time to test your understanding of the class material, including readings from the Reaer and the Text. Please be sure to keep your reading up to date.
Long Quizzes
There are two long quizzes in this class. Each of these quizzes will be 80 minutes long, covering the material addressed up to that point in the class. The quizzes will be in the form of (i) a series of multiple-choice questions, and (ii) a short "mini-case" calling for a more extended analytical response. The test questions will be based on assigned readings, cases, and exercises. I will provide you with feedback on the distribution of scores of these long quizzes.
Grading standards
The maximum mean GPA for MBA elective classes at the Marshall School is 3.5. Please be aware that, although there are two class sessions for MOR 562, I pool all assignments together when grading. In this way, the standards for all students taking the class are identical, regardless of the class session you participate in.
In grading exams, I follow a quality scale. Here, for illustrative purposes, I use a total grade of 100., although the actual points to be earned by any assignment in the class will vary. Please be aware that on this scale, the numbers do not correlate to letter grades in any way.
The quality scale is as follows:
96 - 100 Outstanding work You covered all the key points, and your analyses were appropriate and accurate.
91 – 95 Excellent work Your work shows a strong grasp of the analytical approaches covered in the class. There are one or two points that you missed or analyzed incorrectly.
86 – 90 Very good work Your work is extremely solid. You have missed more than one key point, and/or made more than one incorrect analysis.
81 – 85 Good Work Your work demonstrates a good understanding of some analytical approaches and methods covered in the class. Your grasp of some other key analytical approaches is weaker.
76 – 80 Fair Work You took a good shot at the analysis. However, your work does not demonstrate a solid understanding of the concepts and/or analytical approaches; you need to practice more.
0 - 75 Unsatisfactory work You are struggling with significant portions of the material. Please come and see me, and we can work together on improving your understanding.
The determinants of quality depend on the homework in question. However, there are some general rules that you should follow:
1. Set your analysis out in a clear way, so others – including your fellow students -- can understand what you did.
2. State clearly what assumptions you have made.
3. Use diagrams or charts where appropriate: This helps to illustrate and demonstrate your understanding.
4. Do not repeat or replicate materials from the case: Refer to them. This way, you save space for your own analysis.
5. Do not exceed the page limit. Any additional pages will be ignored in grading.
C. PROFESSOR’S CONDUCT OF THE CLASS
Professor’s commitments
In conducting this class, I commit to:
1. Treat you with respect and fairness
2. Do my very best to explain the material, concepts, and analytical approaches to you.
3. Return all work to you within a week of its being handed in for grading.
4. Be available to meet with you when you need additional guidance, or if you have other questions you would like to discuss. [See below.]
Office hours and contact information
In my experience, graduate students have very packed schedules. So, rather than keep regular office hours, I prefer to make appointments with you. Please email me (see below) and we will find a time and place to meet that works for both of us.
Office: Bridge Hall 303C
Email:
If you want to contact me, please use email. I check it at least once a day. If you want me to telephone you, be sure to include a telephone number and some possible contact times for me to call in your message. Thank you.
Presentations
I do not use PowerPoint presentations in teaching my classes. Why not? Because my experience is that students base their learning on the overheads, and not on the text and other readings. I also find that students participate less: what I call “the TV effect”. I am interested in having you develop a solid grasp of the material in the class. Hence, I use paper overheads based on key points in the readings, which I present on the Doc-Cam. I do not distribute these overheads: they are merely a guide for our discussion of the issues in class. All the information you need for this class is given in the Text, Readings, and Blackboard postings.
About the Professor
I am Associate Professor in the Department of Management and Organization. Before becoming a teacher, I worked in planning and investment analysis in both the public and private sectors in the UK, USA, Italy, and in a number of other countries in Europe, Africa and the Caribbean. I worked for a UK Government Quango; for a number of economic development consulting firms in Italy and England; and for Tate and Lyle PLC, a large global agribusiness firm.
My research has concerned with the scope of the firm, especially relating to diversification, corporate restructuring, and the organization of intellectual-capital-intensive firms. My work has been published in the RAND Journal of Economics, the Journal of Industrial Economics, the Journal of Finance, the Journal of Economic Behavior and Organization, Organization Science, the Strategic Management Journal, and the Academy of Management Review.
My current interests lie in the area of Eastern Wisdom approaches to strategy, to management, and to life. I am happy to discuss these with you, if you are interested, in office hours.
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SCHEDULE OF CLASSES, TOPICS, AND ASSIGNMENTS
PLEASE NOTE:
ALL CASE ASSIGNMENTS CAN BE FOUND IN THE BLACKBOARD FOLDER FOR THIS CLASS.
For the dates of the weeks of the semester, please see the end of this schedule.
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Week 1A Introduction to the class
Course outline
Student introductions
Introductory lecture/discussion
Readings: Read the assigned readings for Session 1A [Text and/or Reader]
Movie: The Boeing 777
Week 1B Review Session: Strategy in a Nutshell
Lecture and discussion
Readings: Read the assigned readings for Session 1B
Morsel: What is knowledge?
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THEME I: UNDERSTANDING FUNDAMENTAL SOURCES OF VALUE
Week 2A Analyzing Rent Potentials: Monopoly Rents
Readings: Read the assigned readings for Session 2A [Text and/or Reader]
Exercise: The Dobie Industry in Pecan County #1
This exercise will be posted on Blackboard
Work on it before coming to class
Week 2B Practice: Analyzing Rent Potentials: Monopoly Rents
Case: Case: Husky Injection Molding Systems
The case questions will be posted on Blackboard
Work on them before coming to class
Morsel: Modern and Post-Modern thought
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Week 3A NO CLASS
Week 3B Analyzing Rent Potentials: Ricardian Rents
Readings: Read the assigned readings for Session 3A [Text and/or Reader]
Exercise: The Dobie Industry in Pecan County #2
This exercise will be posted on Blackboard
Work on it before coming to class
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Week 4A More Practice: Analyzing Ricardian Rents
Case Du Pont in Titanium Dioxide
The questions for this case will be posted on Blackboard
Work on them before coming to class
Morsel: Eye and Brain
Week 4B More Practice: Analyzing Ricardian Rents
Case Delta Airlines (A)
The questions for this case will be posted on Blackboard
*** Homework #1 ***
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Week 5A Analyzing Rent Potentials and Activity Sets:
Vertical Integration
Readings: Read the assigned readings for Session 5A [Text and/or Reader]
Morsel: Cognitive biases
Week 5B Analyzing Rent Potentials and Activity Sets:
Diversification
Readings: Read the assigned readings for Session 5B [Text and/or Reader]
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Week 6A Analyzing Rent Potentials and Activity Sets:
Intellectual Property
Readings: Read the assigned readings for Session 6A [Text and/or Reader]
Morsel: Strategy: Eastern and Western views
Week 6B Analyzing Rent Potentials and Activity Sets:
Intellectual Property
Exercise: A Sticky Question
This exercise will be posted on Blackboard
*** Homework #2 ***
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Week 7A Review Session
Attendance is not required for this session.
However, attendance is strongly recommended.
Week 7B Long Quiz #1
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THEME II: THINKING INTO THE FUTURE: SCENARIOS
Week 8A Scenarios
Lecture/discussion
Readings: Read the assigned readings for Session 8A [Text and/or Reader]
Week 8B How to Build Scenarios
Lecture/discussion and exercises
Readings: Read the assigned readings for Session 8B [Text and/or Reader]
Exercise: The IPCC 2007 Scenarios
The questions for this exercise will be posted on Blackboard