Ethan Frome
Los Angeles EMBA Arvind Bhambri Theme 4 2017
Competitive Strategy
The strategy module has the following goals:
1. Tools of strategy and industry analysis,
2. Sustainable competitive advantage,
3. Frameworks for a company to create and capture value.
Our discussion of strategy will be spread over two themes: 4 and 8. In theme 4, we will begin with a basic overview of strategy, industry structure, activity systems and business models. We will build on these basic concepts in theme 8 with a deeper discussion of industry mapping, competitive advantage, competitor dynamics, corporate scope, and renewal.
The strategy readings and cases in theme 4 are listed below.
Readings:
What is Strategy? Michael Porter, Harvard Business Review (HBR 4134)
The Five Competitive Forces that Shape Strategy, Michael Porter, (HBR R0801E)
Blue Ocean Strategy, W. Chan Kim and R. Mauborgne (HBR R0410D)
Cases:
Dogfight over Europe: RyanAir (A) (9-700-015)
Amgen, Inc.: Pursuing Innovation and Imitation? (A) (9-714-424)
Textbook:
Contemporary Strategy Analysis (Text Only) by Robert Grant, 9th edition, 2016, paperback edition, ISBN: 978-1-119-12083-4
Friday, April 7, 2017 8:50 am – 12:10 pm
Elements of Strategy
This case, set in 1986, is a business school classic. It describes Ryanair’s initial launch strategy. Ryanair must compete with established companies like Aer Lingus and British Airways that will likely retaliate against Ryanair. This case gives us a chance to explore Ryanair’s strategy, positioning, and sustainability through a series of cases that we will discuss over two days.
Discussion Questions
1. What is your assessment of Ryanair’s launch strategy?
2. How do you expect Aer Lingus and British Airways to respond? Why?
3. How costly would it be for Aer Lingus and British Airways to retaliate against Ryanair’s launch rather than to accommodate it?
4. Can the Ryan brothers make money at the fare they propose?
Readings:
Dogfight Over Europe: Ryanair (A) (9-700-015)
What is Strategy? Michael Porter, Harvard Business Review (HBR 4134)
Saturday, April 8, 2017 8:50 am – 12:10 pm
Elements of Strategy (2)
RyanAir’s transformation from a company on the verge of bankruptcy to a thriving profitable airline offers a textbook case in strategy development. As you read about Ryanair’s transformation, ask whether the strategic planning process in your company would enable a transformation similar to what happened at Ryanair.
Discussion Questions
1. How did RyanAir go from the brink of bankruptcy to become one of the most profitable airlines in the world?
2. What are the most serious threats faced by RyanAir at the end of the case?
3. How serious is the threat posed by Go?
4. If you were in Michael O’Leary’s position, what would you do?
5. Why is it that airlines have difficulty in sustaining profitability?
Readings:
Dogfight Over Europe: Ryanair (C) (9-700-017) (case will be distributed in class at the end of discussion on Friday)
Blue Ocean Strategy, W. Chan Kim and R. Mauborgne (HBR R0410D)
Quiz or in-class worksheet
Friday, April 21, 2017
Industry Structure, Positioning, and Strategic Choice
Some of the earliest frameworks for systematic strategic analysis were introduced in 1980 by Michael Porter in the now classic Competitive Strategy: Techniques for Analyzing Companies and Industries. Central to Porter’s approach is the classic 5-Forces framework for assessing industry attractiveness by looking from the outside-in. The 5-Forces framework is a powerful framework but it is a starting point not an end in itself. One must gain sufficient insight from 5-Forces to choose value chains and activity systems that will enable a company to take full advantage of the industry’s dynamics. We will understand these fundamental and complementary approaches to strategy by looking at Amgen as they consider whether or not they should enter the business of biosimilars.
Key Topics
Industry Structure
Competitive advantage
Case: Amgen, Inc.: Pursuing Innovation and Imitation? (A) (9-714-424)
Questions:
1. What are the main factors that determine the profitability of competitors in:
a. The R&D based pharmaceutical business (both, small and large molecules)
b. The small molecule generics business?
2. Would you advise Kevin Sharer to enter biosimilars or to stay out?
3. In preparing your recommendation to Kevin Sharer, please consider the following:
a. What are the upsides and downsides for Amgen if they enter the biosimilar business? And if they do not enter the biosimilar business?
b. What revenue can Amgen expect to generate from biosimilars?
c. What are the factors that you think would affect profitability in biosimilars?
d. How do you think different functions in Amgen might respond to this decision?
Quiz or in-class worksheet
Readings:
Amgen, Inc.: Pursuing Innovation and Imitation? (A) (9-714-424)
The Five Competitive Forces that Shape Strategy, Michael Porter, (HBR R0801E)
Saturday, April 22, 2017
Strategic Innovation and Competitive Advantage
Strategy is a deceptively simple subject – successful strategies are always “obvious” in retrospect and yet frustratingly difficult to develop consistently. Research indicates that a majority of strategic actions, 70 – 80% by some estimates, result in failure. In this session, we will reflect on some of the elements, issues, frameworks, and questions that are essential components of strategic thinking. We will continue our discussion from yesterday, review the cases and articles that have already been assigned in theme 4 strategy and look ahead to what we will do in theme 6 and theme 8.
Key topics:
a. Business Models
b. Strategy Assumptions
c. Competitive Advantage
d. Value Creation and Capture
Take home case exam will be distributed. Written analyses are to be submitted before 10 am, Monday, May 1, 2017.
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