Corporate Strategy has the responsibility of setting the direction of the company and insuring that direction is implemented effectively. This challenge has recently become greater due to the advent of new business models that add considerable complexity to the task of selecting the right business model for any situation. In response to this increased competitive complexity, this course looks at a number of different business models, and compares and contrasts how each operates within an organization and the marketplace to create competitive advantage differently, depending on the goals of the strategist.
This course focuses on strategy as the search for rents among opportunities that are entrepreneurial, evolutionary and dynamic. The course presents strategy as progress as a series of decisions intended to generate new sources of value in a world where advantage arises continuously, and is dynamic and inherently temporary. Thus, strategy reflects a mix of traditional competitive models, designed to sustain advantage through economies of scale, and newer models, designed to gain advantage through intellectual property, network effects, and speed. Thus, the goal of strategy is to create and capture the ebb and flow of these increasingly-complex sources of value over time.
The approach used in this course is to delineate the best practices, organizational features, and risk-return tradeoffs through the lens of economic time, which organizes business models and their associated products according to their profit half-life, which can vary widely, from a year or less (fashion) to ten years or more (software operating systems). Drawing from theory and evidence across a range of markets, the course looks at: (1) Oligopolistic business models, where economies of scale dominate through extended rivalry. Examples studied include Wal-Mart, Federal Express, Starbucks, McDonalds, Las Vegas Casinos, Dell, Toyota, VebVan, Barnes & Noble, and Accenture; (2) Schumpeterian business models, where short-lived product advantage creates the need for frequent and intense renewal. Examples studied include Pulsar, Intel, Johnson & Johnson Coronary Stent, Callaway Golf, Pulse Engineering, and Yves St. Laurent; and (3) Monopolistic business models, where the company has exclusive ownership of some factor of production necessary for the functioning of its market. Examples studied include Microsoft, eBay, Facebook, Honeywell, and McKinsey, and, from the entertainment industry, examples Disney, Barbie Doll, Martha Stewart, and Madonna. The course is recommended for all graduating students, and in particular, students interested in consulting, investment banking, venture capital, new business formation (entrepreneurship), as well as the more traditional strategic planning and executive-level, business-wide functions.
The book for the course is RENEWABLE ADVANTAGE: CRAFTING STRATEGY THROUGH ECONOMIC TIME, by Jeffrey R. Williams, c1998 the Free Press. A package of course materials that includes additional readings is available from the Copy Center. The requirement for the course is a paper, written individually or as part of a team, on a topic incorporating course principle.