A 5 Forces Happy Meal

Fast food workers all over the U.S. are striking in hopes of doubling the minimum wage (from $7.25 to $15 per hour). However, a a recent AP news story states: “No group along the food chain, from the customers to the companies, wants to foot the bill for higher wages for workers.” The tactic is a classic move to change the structure of the 5 forces to grant more bargaining power to the workers. However, overwhelmingly, these workers are not unionized so the prospects of sustaining a prolonged, organized strike are quite limited. Furthermore, there are many unemployed workers who might step into their jobs if given the opportunity. All of this suggests that the structure of the industry will hinder their attempt to garner bargaining power. This seems like a good “ripped from the headlines” case to discuss with students to drive home the application of 5 forces analysis.

Contributed by Russ Coff

Switching Costs and Apple’s Pie

Of course firms  try to do what they can to increase the switching costs for customers who might consider rivals’ products. Apple has been a master of this — all in the name of customer service. A recent article by Geoffrey Goetz describes why the Apple “ecosystem” is so hard to move away from. While this analysis suggests that the cost of switching isn’t nearly what people might imagine (less than $10), if people perceive the costs to be high, that may be all that matters. A recent study indicated that Apple has taken three times as many customers from Samsung as Samsung has taken from Apple. In this sense, the perceived switching costs would seem to run in Apple’s favor. While this analysis can be done on any industry, asking people in the classroom about switching smartphones is likely to unearth a rich discussion. This can be used to introduce five forces analysis and also illustrate how switching costs can be asymmetric in an industry and contribute to a favorable position for a given firm.

Contributed by Russ Coff

The Peter (not Paula) Principle

The Peter Principle states that people will rise in an organization to their level of incompetence. A recent HBR blog by Tomas Chamorro-Premuzic explains why this might apply to men but not women. In essence, the attributes often associated with many high profile leaders (Steve Jobs, Richard Branson, etc.) are, much more frequently associated with failure than success but the failures are not as well publicized. In contrast, research suggests that women are more often linked to leadership styles that may be less flashy but are, on average more effective. However, in looking for the male archetypes, many incompetent men are promoted leaving few opportunities for effective women. This article would likely prime some rich class discussion on the topic. The following TED talk by Sheryl Sandberg will also spur discussion:

Contributed by Aya Chacar

CATME Teamwork System

Many strategy faculty use teams in their classes. The CATME.org website has multiple tools to support the effective use of teams in higher education. Team-Maker is a tool for assigning students to teams based on instructor-specified criteria. Instructors can choose from a library of questions, such as students’ schedules or majors, or write their own questions. Team-Maker collects the information from students and allows the instructor to assign use that information to assign students to teams based on the criteria and weighting that they choose. CATME Peer Evaluation is a tool for self- and peer evaluations of students’ contributions to their teams that is based on research. The system automates the data collection and analysis and allows instructors to release feedback to students. There are many optional follow-up questions about team processes that are taken from published research. CATME Rater Calibration allows instructors to assign students to practice using the CATME behaviorally anchored rating scale by rating fictitious team members. CATME Meeting Support provides templates for team charters, meeting agendas and minutes. Teamwork training modules are in development. The website shows research and other information about these tools.

Contributed by Misty Loughry

Apple’s Rotten Core Competency?

Apple’s board is growing impatient and is calling for increased innovation as they try to put the loss of Steve Jobs behind them. At the same time, projections indicate that their anticipated product changes will be incremental at best. A recent article coins the term “frosted glass effect” to describe the incremental innovations that signal a fast moving challenger will soon leapfrog over a stodgy slow moving incumbent (like Apple). Not to be left out, the Onion has entered the fray as well. In short, stakeholders are wondering how critical Jobs was to Apple’s “organizational” capabilities — Has the core competence really rotted away? Some discussions of dynamic capabilities place great emphasis on organizational routines as the key elements that drive the ability to acquire, integrate, recombine and release resources and capabilities (e.g., see Winter). The importance of Jobs, in this case, shifts our attention to key individuals who may be essential components in harnessing and directing routines. Without a rudder, the routines may lose much of their value. Of course, this steers us solidly into a micro-foundations perspective (e.g., see Barney and Felin or Foss)…

Contributed by Russ Coff

Samsung owns the Android ecosystem?

Google may have its back against the wall and needs the new Moto X phone to be a big success. They are planning to invest $500M just in marketing the new phone (more than Apple or Samsung). This may be motivated by the fact that Samsung is capturing up to 95% of the profits from the Android ecosystem since it owns the “last mile” where consumers lay down cash for devices. Samsung has recently invested further in their Tizen mobile operating system to keep their options open and solidify their bargaining power against Google (a nice 5 forces example of tapered integration). Google’s battle to remain relevant in the Android ecosystem is a nice update to the mini case posted earlier here on Google’s $12.5B acquisition of Motorola Mobility. Also, based on this review, it appears that they may have created some of the vertical integration value. Here is a demo video for the Moto X.

Contributed by Russ Coff

Madonna vs. The Stones?

A longstanding debate has compared the “static” resource-based view to dynamic capabilities. When does competitive advantage stem from staying the same and when does it demand constant change? This article in the Financial Times explores how the Rolling Stones have maintained their advantage by avoiding change. The article discusses how change may be bad for goods that have emotional appeal. In contrast, Madonna has reinvented herself multiple times. This is most apparent in her reinvention tour (below). The musical legends may help to bring this discussion to life.

Contributed by Aya Chacar

A Cut at Vertical Integration

Firms have sometimes had a tendency to vertically integrate tasks that can be more efficiently outsourced. This humorous video examines the problem in the context a haircut that ultimately costs twice as much (because they tried to do it themselves).

Contributed by Russ Coff

An Agency Problem at the club…

When making decisions on behalf of others, managers may not have their objectives aligned. This humorous video points out some of the challenges of trusting a party in this context. It is especially useful in exploring agency theory and corporate governance issues.

Contributed by Russ Coff

Cross Cultural Craziness

Cultural differences certainly present an important barrier to expansion in new markets. This sequence of 3 commercials get at a few of these differences in a funny way. You can probably show any one of them to spark further discussion on how to manage these problems (mode of entry, routines, etc.).

Contributed by Russ Coff

Google Graveyard: An optional story

Google has brought many products and ideas to market that have been unsuccessful and ultimately pulled back.GoogleGraveyard Forbes recently published an infographic that illustrates many of these. This is valuable to point out the uncertainty surrounding new products and services and how a real option portfolio might be an appropriate tool for making investment decisions. Ultimately, the process may look a bit like a venture capital portfolio. Given Google’s successes, we may forget their many ideas that have not worked well in the marketplace. There are a number of other resources here that help to focus on real options as a strategic tool.

Contributed by Russ Coff

You’re Gonna Like My Company

After firing the founder and CEO (George Zimmer), the board has now released the reason: the CEO wanted to sell to a group of private equity investors. Here the board didn’t want to take the company private “for the sake of the employees.” While the CEO was fired, the news has apparently fired up investors who may be interested in buying the company — now it may be in play regardless of what the board wanted.This seems like it might be helpful to drive home the different goals and objectives for different stakeholders, While the board accused Zimmer of being opportunistic, he made the case for his actions in an open letter. This should make for enough drama to dress up your class…This video may lighten the discussion. At the same time, It highlights the company’s biggest strategic challenge: appealing to a younger audience…

Contributed by Russ Coff

A Drinking Problem: Pepsi Challenge

The 3E Learning site discussed in another post includes a nice writeup on using the classic Pepsi challenge but including generic soda. Here is an excerpt: “In this exercise, student volunteers blindly taste three different soft drinks: Coke, Pepsi, and a store brand. The student then tries to assess which one each drink is. Across several years of performing this, in every semester a majority cannot identify their preferred drink, nor can many identify any of them correctly. After several volunteers make the attempt, the class engages in meaningful conversation about how and why Coke and Pepsi capture so much market share, when their products cost 50% more than store brands.” What, then, is the basis for competitive advantage when imitation is so evident? It’s worth noting that Pepsi did not include generics in the original challenge — why might that be?

Feedback about the exercise (from 3E-Learning)
  • “The soda taste test definitely opened my eyes to realize the importance of branding, marketing, and customer brand loyalty in a business.” Continue reading

New Prius Designed to Kill Owner

Clearly the problem in green strategies is to reduce consumption. What could do this more effectively than reducing the owners carbon footprint to zero? This ONN story explores the new Prius that has this special feature. A nice introduction to green strategies…

 Contributed by Russ Coff

Keystone Cops in a Detroit Robbery

Competitive advantage is not visible to all stakeholders at the same time. This is why entrepreneurs can have an advantage in negotiating with stakeholders who come late to the game. The bank robbery below illustrates how even a small advantage in awareness can change the game.

Contributed by Karl Wennberg

Schmidt on Disruptive Technologies

McKinsey has put together a video of Google’s Eric Schmidt discussing disruptive technologies. It is divided into four segments: 1) Biology goes digital, 2) Materials and manufacturing, 3) My computer my friend, and 4) Man vs. machine. They also have a transcript of his comments available.

Contributed by Russ Coff

Developer Releases Pirated Game

Greenheart Games developed a game (Game Dev Tycoon) where the objective is to manage a video game company. However, they did something a little different. They simultaneously released a “cracked” version of the game that was identical except that player’s new products would be pirated. Eventually, the player’s company goes broke since they can’t make any money. Here is their blog post (or pdf in case the site goes dark) describing what happened (e.g., how users of the cracked version complained that they couldn’t win). This is a great vehicle for discussions of ethics, intellectual property, and even game theory. This short video report describes the ploy:

Contributed by Rich Makadok

Teens Enriching Uranium (ONN)

The Onion offers another entertaining report about teens enriching and selling uranium. While the discussion of “Toping” is a bit silly, the question about stemming the diffusion of some innovations is central to technology strategy. More seriously, why don’t we see wider diffusion of this 75 year old technology?

Contributed by Russ Coff

Failing … to Succeed

Peter Klein writes, “To illustrate the importance of experimentation and learning, I showed my students the Michael Jordan ‘Failure’ commercial. Inexplicably, they were not moved to tears, as I was.” J.K Rowling’s 2008 graduation address at Harvard is also a nice example though it may be a bit long to play in class.

Contributed by Peter Klein

Fish Story: A common tragedy

The  tragedy of the commons refers to the inefficient use of a shared resource when individual actors have incentives that are misaligned with the larger community. Classic examples might be a shared pastures or common waters for fishing. Dennis Meadows and John Sterman offer a computer based game that simulates this problem in a fishing setting (Fishbanks: A Renewable Resource Management Simulation). Below is a short video that describes the problem.

Contributed by Russ Coff