How to Build a Network Advantage

Network Advantage: How to Unlock Value from Your Alliances and Partnerships” is written for MBA, Masters of management, and Executive Education programs. It can be used in core strategy courses or electives on corporate strategy innovation, or strategic alliances. The book offers a step-by-step guide for how to build network advantages.

  • The impact of individual alliances, partnerships and their portfolios on the firms’ competitive advantage (Introduction, Chapters 1 & 2).
  • The role of complementarity and compatibility between partners for the formation of successful alliances and partnerships (Chapter 3)
  • Differential impact of the “hub and spoke” alliance portfolios and “integrated” portfolios on competitive advantage. These represent inter-organizational networks rich in structural holes and dense ties, respectively (Chapters 4 & 5).
  • The role of organizational status in competitive advantage (Chapters 6 & 7)
  • Should the firm build its own alliance portfolio or join another firm’s network (Chapter 8)
  • How to improve information flows inside the firm to attain competitive advantage from alliances and partnerships (Chapter 10).

Most chapters introduce tools for how to develop a collaboration strategy. These are compiled at the end of the book. A short introductory video is available on youtube:

Contributed by Andrew Shipilov

Crabby Teamwork

Here is another demonstration of the power of teamwork and organization to defeat a bigger foe. The message is simple but how many firms can really coordinate effectively? This can be used to focus on coordination of any type (alliances, etc.)

Contributed by Russ Coff

Turning Around Chrysler … Again

This clip is an interview to Sergio Marchionne, CEO of FIAT and Chrysler, from “60 minutes.” Marchionne explains the process of transforming the struggling company into a profitable contender in the world market. This helps to introduce topics such as merger integration, alliances, strategy implementation, and turnaround strategy. There has been some buzz about Chrysler having an IPO. This adds an important stakeholder component since the main barrier to the IPO is disagreement on the purchase price for shares owned by the autoworker healthcare trust (42% of outstanding shares).

Contributed by Elisa Operti

Diversification into Heroin?

This clip from the Godfather shows the mafia bosses discussing pros and cons of entering the heroine business. They talk about it as a portfolio move (to go with gambling) and as a growth industry. This is a nice starter for a discussion of corporate diversification and entry choices.

Contributed by Elisa Operti

A Modular Smartphone?

There has recently been some buzz about the possibility of making modular smartphones — hopefully to reduce waste as people upgrade modules instead of the whole phone. Now Motorola has joined the movement with Project Ara. This poses many interesting issues for discussion. As suggested in the WSJ, might Google really be interested in destroying profitability in smartphones to grow the market and enhance ad revenue? For that matter, is this technologically feasible? It implies that components are not strongly co-specialized and can be swapped out easily. Even if so, would the compromises to achieve modularity be acceptable? Articles by Melissa Schilling and Etheraj & Levinthal paper adds an interesting theoretical perspective. Lots to talk about in class…

Contributed by Russ Coff

Apple’s Addiction to Samsung

Apple is famous for being secretive about it’s proprietary knowledge. One would think that they would love to stop handing over their most strategic technical knowledge to Samsung, their biggest rival in smartphones. Nevertheless, all existing iOS core processors have been manufactured by Samsung. They just can’t stop themselves — the A7 chip continues the multi-year pattern of outsourcing production of the heart of the iPhone to their chief competitor. Rumors have been flying that Apple is going to switch to a new supplier, TSMC (Taiwan Semiconductor Manufacturing Co). That may still happen in the near future but the fact that Apple could not shake it’s dependence on Samsung quickly despite large investments in TSMC speaks to the extent of Samsung’s manufacturing advantage. This would seem to prompt a nice discussion of capabilities, rivalry, and alliances…

Contributed by Russ Coff

Social Network Bingo

social20networkWe often try to convey to students how value can be created in social networks as actors gain access to more resources and knowledge. This exercise is a simple game of bingo where players have a list of resources they need to find to win the game (4 boxes in a row). To play, they simply find people in the room with specific attributes or knowledge and have them sign their card. I have added a simple twist that they can complete one box using an indirect tie (e.g., a friend of a friend). This teaches the very basics of social networks and serves as a nice ice breaker as well. Here are two Bingo card created for: 1) an exec ed program and 2) for a PhD Student Orientation. This gives you an idea of how to customize the exercise for the group. This can be useful to explore alliance networks at the organizational level or the role of individual networks in strategy formulation and implementation.

Contributed by Michael Sacks

ONN: Outsource Your Own Job

ONN (Onion News Network) spoof on outsourcing — in the end all work is outsourced to one person. Very funny and explores the limits of outsourcing.

Sometimes the truth is stranger than fiction. Here is a real news story about a programmer who outsourced his own job to a developer in China. He continued to get great performance reviews while he watched cat videos on YouTube.

Contributed by Aya Chacar

Quiznos Business Model: Exploit?

This video describes the business model (musically) by which franchise owners were encouraged to open stores that they knew would be unprofitable. The business model was more about selling franchises than selling sub sandwiches. Very profitable for Quiznos but not so much for their partners. Here is a CBS news story on the resulting class action lawsuit.

Contributed by Aya Chacar

Merging Cultures: BaFa BaFa

Cultural differences can undermine M&A, alliances, or entry into foreign markets. As such, it may be important to show students how difficult it is to comprehend and coordinate with a different culture. The BaFa BaFa exercise accomplishes this beautifully. This exercise was originally developed for the U.S. Navy to train personnel on how to interact when being exposed to new cultures (see the extended history in this Simulation & Gaming article). The web site describes it as useful in diversity training. That’s true but it is also useful for strategy courses where cultural differences are relevant. The exercise requires about 2 – 3 hours to run so it is more useful for evening or executive courses where you have larger blocks of time. Here is an overview of how the exercise unfolds:

  • Separate the class into two groups that will be trained in the two cultures (you will need two classrooms and assistance in bringing both cultures up to speed).  Continue reading

Wal-Mart as a Partner for Sustainability

Yvon Chouinard, the enterprising founder of Patagonia explains why Wal-Mart is his biggest and unlikeliest ally.


Contributed by Sharon Livesey

Airlines Try to Cut out Middlemen

This article in the economist explores the strategic moves airlines made as they entered the internet era (online reservations, etc.). Thinking that travel agents would go the way of the dinosaur, the stopped paying commissions and built their reservation web pages. However, this ultimately created powerful online reservation systems that the airlines now must pay commissions to. The article provides a road map on how NOT to use the 5 forces in developing a strategy…

Alliance: Save the Antelope!

This is a very short/funny clip depicting a man who outruns a Cheetah to save an antelope. There are lots of possible uses. Perhaps the man is the antelope’s strong alliance partner. It could demonstrate unusual (dynamic/global/human capital) capabilities. Please comment if you see other uses…

Contributed by Russ Coff

Outsourcing Childcare to India

This is an ONN (Onion News Network) report on U.S. parents outsourcing childcare to India by boxing up their kids and sending them via FedEx. Very funny but might be useful in spurring a discussion of what can be outsourced overseas.

 

Contributed by Russ Coff

Google’s $12.5B Acquisition of Motorola

Google’s recent $12.5B acquisition of Motorola mobility is a great “ripped from the headlines” case. Here are a series of news articles that one can distribute (not all are really needed). In order to assess Google’s prospects for creating value, one must evaluate the following key sources of uncertainty:

  • Intellectual property as a resource. Will the patents help Google beat Apple in court (or reach a favorable settlement)? The litigation is a critical part of Apple’s global strategy to limit the threat that Android poses to the iPhone.
  • Vertical integration. Apple has created a great product that works very well. Part of the reason may be that the operating system and hardware are better integrated. Can Google produce a better product that commands a higher willingness to pay?
  • Alliance partners. Will Google lose partners who are now direct rivals (to Windows or new operating systems)? Continue reading

Outsourcing Human Capital

Increasingly suppliers of staffing services make specific investments in their clients. What, then, is the role of firm-specificity in determining firm boundaries? This video pushes us to ask these questions with a humorous twist.

Contributed by Russ Coff

Global Alliance Game

GlobalGameIn the Global Game exercise students are placed in groups with asymmetric resources with a task to maximize “points” produced. In order to maximize output, they need to trade resources (e.g., alliances) with other teams. The resources include raw materials (e.g., paper), technology (e.g., scissors and templates), knowledge (of the point system), and even people. They can also merge teams.

The following is a brief overview of the exercise: Continue reading

Bird/Dog Alliance Defeats the Cat

Funny DHL commercial to illustrate the value of alliances. One might wonder if the alliance is stable over time though…

Contributed by Russ Coff

Planning vs. Luck

Here the lions wait for their food to deliver itself. Did they know to wait under that tree? It is very funny but also explores why planning is necessary…

Click Here to download a video of lions “hunting”

Contributed by Russ Coff

Thai Chempest: International JV Negotiation Exercise

“I have the students do an international JV negotiation exercise with the case “Thai Chempest” (available through Prentice Hall’s database of cases).  One team plays the role of the U.S. company, one team is the local Thai company, and the rest of the class are individual Thai government agencies (their job is to hash out an incentive package to entice the foreign investment–not as easy as it sounds, as each gov’t agency has its own set of priorities).  This exercise takes 2 hours and the students really get into it.”

Contributed by Mason CarpenterMason Carpenter