University of California, Davis Graduate School of Management. Course Description

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1 University of California, Davis Graduate School of Management Professor Anand Swaminathan Winter 2003 Class time and location: Wed, 6 pm - 9 pm, OCM2 157 AOB 4; Ph: (530) Office Hours: Wed, 5-6 pm MGP 201B Organization Strategy and Structure Course Description Corporations, public agencies, and not-for-profit organizations are social structures consciously arranged to achieve goals. How successful they are at reaching their goals is influenced by such factors as the ways in which they are structured, the character of their competitive and regulatory environment, their technology, and the unspoken assumptions that guide social action in the organization. These factors will be explored through the use of readings, cases, lectures, and discussion. An important part of this class will be the analysis of an actual organization's structural and strategic adaptation to its environment. These organizations will serve the purpose of ongoing cases that we will use to understand theories and concepts. We will talk about all of the cases from time to time in class, giving everyone an opportunity to share in the understanding of a variety of local firms and types of organizations. The class has a modest amount of reading material and no midterm examination because I expect much of the learning to come from your generating information and questions from the study of real organizations. The class will be divided into groups of 4-5 students, each of which will select a public or private organization to study, preferably one facing a crisis or opportunity and having at least 25 members. Each group will analyze the organization's current structure, environment, and strategic position, suggesting, where appropriate, alternative arrangements that might better suit its situation. In addition, the groups will analyze such intraorganizational processes as the organization's decision making and socialization practices, organizational culture, and control strategies to determine how well they support the organization's stated strategic posture. I recommend that the groups break into two subgroups, one looking at the organization's strategy and external environment, the other examining the structure and internal processes. Analyses and recommendations will be presented in class meetings. Students will write two 2-4 page Briefing Papers in which they explore weekly topics with respect to any organization of their choice. Students will write one of two papers about organizational strategy and one paper about organization design. The purpose of the Briefing Paper assignment is to encourage you to make connections between the readings and your own observations of a real organization. Briefings need not be formal, but may be written as an informative memo or letter to an outsider or new employee. However, the concepts and theories we cover in the class or readings should inform the briefings and the writing should be clear and 1

2 correct. Therefore, it will be necessary to do the readings, and gather interview or other data about the organization, in order to write the briefings. The best briefings will be analytical and include examples of incidents, policies, procedures, or practices, not just abstractions of the way the organization works. For example, rather than writing, Smith Food Processing, Inc. is very hierarchical and bureaucratic give me concrete evidence of this assessment e.g. Smith Food Processing s hierarchy and bureaucracy slow their ability to process orders. In order for a new customer to receive a shipment, three people using ten forms must complete the procurement process. I want you to become a practiced observer of organizational routines and processes. Each briefing paper should be about 2-4 pages long, double-spaced. Please do not put plastic or other covers on the papers. I evaluate the quality of writing and presentation, the use of examples, and correctness of spelling and usage in assigning a grade. I expect that students writing on the topic of the week will contribute their findings to class discussion of the topic. In addition to the final project, each group will lead the discussion of at least one case. Matching of groups to cases will be done by drawing lots. Groups will present their analyses of the case in roughly thirty minutes. This presentation will serve as the launching pad for class discussion. I encourage a professional presentation, but the emphasis ought to be on the content. There is no final examination for this course. Required Reading Supplemental reading packet. Grading Group Project 50% Individual Briefing Papers 20% Class Participation 30% 2

3 Class 1a (Wed, January 8): Course Introduction Course Outline Class 1b (Wed, January 8): Business-level Strategy Read: Note on Industry Analysis Competing on Resources: Strategy in the 1990s Class 2a (Wed, January 15): Strategy in a Changing Environment Case: Apple Computer 1999 Case Questions: Historically, what were Apple s competitive advantages? Analyze the structure of the PC industry over the last 10 years. How have the dynamics of the PC industry changed? Evaluate Apple s strategies since What should Steve Jobs do today? Class 2b (Wed, January 15): Competitive Positioning Read: Note on competitive positioning (HBS note ) Resource partitioning Case: Material on Anchor Brewing Company Case Questions: Why do many small companies fail? What capabilities do you need to follow a specialist strategy in the brewing industry? What constraints do specialist firms face? How should major brewers such as Anheuser-Busch, Miller, Coors, and Strohs react to the growth in the specialist segment of the brewing industry? What steps would you take to improve your competitive position if you were Fritz Maytag? Class 3a (Wed, January 22): Managing the Growth of the Firm Read: Profiting from Technological Innovation From Competitive Advantage to Corporate Strategy The Scope of the Corporation Class 3b (Wed, January 22): Growth through Innovation Case: Remora and the Sharks: Imatron and CT Scanner Competition in the 1980s. Case Questions: Why do many new companies fail? What problems did Imatron encounter as it became established? What is the major threat to Imatron's survival? Should Imatron distribute its scanner directly? If it chooses to use an established firm in the imaging industry as a distributor, how much should it pay for the service? What should Imatron's managers do to help the company survive? Briefing Paper: What an application of the Five Forces Model to my organization reveals. or My organization s capabilities/resources are... These capabilities are/are not a source of competitive advantage because... 3

4 Class 4a (Wed, January 29): Growth Through Acquisition and Diversification Case: Cooper Industries Corporate Strategy. Case Questions: Should Cooper acquire Champion Spark Plugs? Be prepared to use the results of your quantitative and qualitative analysis to defend your recommendation. What is Cooper's corporate strategy? How does it create value? What are its key resources? Does it have a core competence? Is Cooper a conglomerate? Is there a difference? What are the limits to Cooper's corporate strategy? Class 4b (Wed, January 29): Growth through Vertical Integration Case: Microsoft in the People's Republic of China Case Questions: Is this the right time for Microsoft to enter the PRC? What happens if Microsoft does not enter the PRC now? Should Microsoft integrate into the localization process? If not, how should an arrangement with one or more software vendors be structured? How much localization should Microsoft do? Class 5a (Mon, February 5): Growth through International Expansion Read: New Organizational Challenge: Beyond Structural Fit Case: Domino's Pizza Case Questions: Evaluate Domino's plans for global expansion. What recommendations would you make? Class 5b (Wed, February 5): Implementation issues in strategy Case: The Rose Company Case Questions: You are James Pierce. Your new appointment as G.M. of the Jackson plant has just been announced. You meet with the Senior Vice President tomorrow morning. What questions do you have for him concerning the job? Class 6a (Wed, February 12): Strategy, Structure, and Systems Read: Note on Organization Structure Organizational Alignment: The 7-S Model Perspectives on Strategy: The Real Story Behind Honda's Success Class 6b (Wed, February 12): Strategy and Organizational Systems Case: PC&D, Inc. Case Questions: What was PC&D s strategy in 1975? Assess Martell s performance as President? Assess the entrepreneurial subsidiary concept. Has it been a success? What would you have done differently over ? What would you do in 1975? Class 7a (Wed, February 19): Building a Matrix Organization Read: Matrix Management: Not a Structure, but a State of Mind Case: ABB s Relays Business: Building and Managing a Global Business Case Questions: What is your assessment of the balance sheet prepared by Jans? How should he go about dealing with the liabilities? 4

5 Class 7b (Wed, February 19): Hybrid Organizations Read: Hybrid Organizational Arrangements: New Form or Transitional Development? Causes of Failure in Network Organizations The Way to Win in Cross-Border Alliances Is Your Strategic Alliance Really a Sale? Briefing Paper: My organization s structure and systems are consistent/inconsistent with its strategy because... Class 8a (Wed, February 26): Designing Network Organizations Case: Li & Fung Trading Ltd Case Questions: How does Li Fung create value for customers and suppliers? What should Ho do about Classique s order? Should William Fung follow Danny Lau s recommendation and extend restructuring to all soft goods divisions? Class 8b (Wed, February 26): Designing Strategic Alliances Case: Swissair s Alliances (A) and (B) Case Questions: Which airlines are best positioned in the international airline industry in the early 1990s? How well is Swissair positioned? Evaluate Swissair s strategy of alliances. What should Swissair do? Class 9a (Wed, March 5): Presentations of Group Projects Topic: Organizational Strategy and Design Class 9b (Wed, March 5): Presentations of Group Projects Topic: Organizational Strategy and Design Class 10a (Wed, March 12): Managing Organizational Change Case: Modern India; RPG Enterprises, 1995 Case Questions: What advantages does membership in the RPG group provide to member companies? How are the advantages changing at the time of the case? Evaluate Harsh Goenka's restructuring plan. Class 10b (Wed, March 12): Course Wrap-up Read: The Strategy Concept I: Five Ps for Strategy The Strategy Concept II: Another Look at Why Organizations Need Strategies Friday, March 15: Term papers due by 5 p.m. 5

6 Group Analysis of Organizations Your assignment is to analyze the relationship between an organization s business strategy (what it is trying to do), its structure (the way it is organized to do it) and its environment (the context in which it operates). Is its strategy aligned with its structure? Is it structured in order to meet competitive demands? What other relationships can you observe? Select an organization for study that is sufficiently large (no fewer than 25 employees, more is better) for you to see organization routines at work, not just the effects of powerful personalities. Select an organization that is a strategic business unit (SBU), one that has an independent strategy and is a profit center. A division of a large organization, or a small or medium-sized organization works best. It is certainly possible to study not-for-profit organizations, too. Organizations that face a crisis or an opportunity are the easiest to study they are very self-conscious about themselves as organizations. They're also interesting. Try to select an organization that has the time and willingness to be cooperative; I m available to call and reassure your contacts. Remember, your purpose is to learn from them, not to critique their performance. Please be sensitive to any confidential matters you may learn about, and be sure to acknowledge their contribution to your education. Most organizations that have been the subject of group analyses learn a great deal from the exercise, so please be willing to share your observations at the end of the project. You will be simultaneously learning organizational concepts, and analyzing a particular organization. There may be times when you are ahead in learning concepts or ahead in learning about the organization. You might find it useful to preview the readings to get some insights, and you might want to hold onto some observations about the organization that you can analyze later. This is fine and to be expected. It will all come together in the end I promise. Real organizations, of course, are not divided into topics such as structure, technology, and strategy. These are terms we use to highlight particular elements of the organized processes we observe. Something you learn about the organization one week may give you a different level of understanding another week, as we shift topics. Organizations are complex social systems and we will be pulling them apart analytically in order to understand them better, and to make them function better. This ability to step back from individuals to see the structures and processes they are embedded in is a crucial management skill, one that is at the foundation of consulting practice and senior level management. The team project will give you an opportunity to try out these skills with fellow students. I expect that a lot of the learning for this class will be done outside of class as you investigate a real organization together and discuss your findings. I expect to be part of your learning, too, both by introducing ideas in class and acting as a resource to your group. Please come to my office hours and use me as a consultant. I m very happy to work with you to discuss ideas and help you to understand what you are seeing. See me! 6

7 Suggested Work Schedule A successful project demands a team effort and good planning. The following is a suggested schedule of work: Weeks 1-2: Get to know each other, share schedules, talk about the process for completing the assignment, and come up with ground rules for participation and dealing with disagreements. Do you want a task leader? Should there be a process leader? A schedule of work? Consider possible organizations for study, make phone calls. Tentative selection of organization, and get their approval. Clear proposed project with me in person or via . Give me names of organization and group members. Study design: What do we want to know? How can we get that information? To whom do we want to talk? Who will investigate what? Weeks 2-4: Collect data on the industry that your organization is part of. Try to understand the past and present characteristics of the industry. Then, use these analyses to predict future trends of the industry. For your chosen industry you might consider elements such as demand, growth rates, technological innovation, environment, Porter's five forces model, strategic groups, major players, potential players, social responsibility, and organization. Analyze the international aspects of the industry as well as the domestic aspects. Collect data on the historical evolution of your organization in terms of its capabilities and characteristics such as the range of products and countries, vertical integration and plant location. Week 5: Prepare draft of industry analysis and organizational capabilities. Submit draft to me for comments. Weeks 5-7: Collect data on structure of organization, culture, structure of industry, environment. What crucial factors led them to their current situation (technological breakthrough, a new competitor, charismatic founder, financial crisis?). Are they organized strategically to move forward? Meet to discuss findings and share ideas. You may want to circulate briefs that become the foundation of the report. Weeks 7-8: Draft report. Weeks 8-9: Polish report and give presentation of organization design 7

8 Dimensions of Organization Usually it is best to begin by asking about the history of the organization how and why it was founded, the critical events, the current status of the organization and industry. You should tailor your questions to your interests and to the character of the organization, as well as to the position of the person you are interviewing. By the end of your investigation you should be able to answer the following questions (these are not phrased for interviews, but are questions you should ask yourselves). 1. Strategy: What business is it in? What is the structure of the industry? Who are the major competitors? What is the organization s position in the industry? What are its core competencies? 2. Life-cycle: What stage is this organization in(nascent, growth, mature, decline)? Does it experience life-cycle transition problems 3. Formalization: Are there many, or few rules? How is work controlled? 4. Specialization: Are tasks and roles separate, or do they overlap? 5. Hierarchy: Are there many or few levels of authority? Is the organization flat or tall? 6. Technology: Is it a product or service technology? Is the structure appropriate for the technology? 7. Environment: Is it stable or dynamic? Is the structure responsive to the environment? 8. Culture: Are norms clear or ambiguous? What are they? 9. Professionalism: Are many workers professionals or are there few with professional training? Does the management reflect the character of the workers? 10. Size: Is the organization large or small? Is it growing or stagnating? Is it too large, or could it benefit from outsourcing some activities? 11. Paradigm: Is it a fordist (functional or divisional) or post-fordist (matrix, network, or boundaryless) organization? Is it in transition? 8