BIC Pens “For Her”

Posted on January 3, 2014 by RussCoff

This is an actual product. However, customers have thought it rather odd to market a pen specifically for women. This has led to an array of hilarious product reviews. Here is an article about the reviews (try not to fall off your chair while reading). It is an interesting case of differentiation and segmentation gone awry — definitely worthy of class discussion. Below is a segment that Ellen Degeneres did on the product (including her proposed commercial). In the end, I’m guessing that the publicity has led to some unanticipated sales…

Contributed by Phil Bromiley

A Modular Smartphone?

Posted on October 29, 2013 by RussCoff

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

Oligopoly in the Classroom

Posted on September 8, 2013 by RussCoff

Another 3-E Learning exercise explores market structure through an extra credit scheme. Michael Ryan’s Oligopoly Classroom Experiment allows students to get extra credit for suggesting questions for the next test based on how many questions are submitted. Each student must choose to whether to submit a question related to the topics covered. At the beginning of each class, the instructor informs the students how many total questions have been submitted but does not mention who submitted them. Here is the schedule for extra credit points:

If one student submits a question before the deadline, he/she gets 10 points. If two students submit, both get 9 points. If three students submit questions, each get 8 points and so on.
If 11 or more students submit questions, none of them receive points.
However, if no students submit questions, then every student in the class receives five bonus points.
The instructor may also add conditions to this exercise which make collusion more likely or less likely by simulating an increased number of ‘firms’ and an inability to detect when other ‘firms’ change their strategy.

Here is a more detailed writeup from Classroom Expernomics.

Contributed by Michael Ryan

A 5 Forces Happy Meal

Posted on September 2, 2013 by RussCoff

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

Posted on September 1, 2013 by RussCoff

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

Samsung owns the Android ecosystem?

Posted on July 12, 2013 by RussCoff

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

A Drinking Problem: Pepsi Challenge

Posted on June 14, 2013 by RussCoff

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 →

Starbucks’ Dual Advantage

Posted on April 12, 2013 by RussCoff

BusinessWeek offers a nice analysis of Starbucks’ decision to lower prices on its premium coffee. Rita McGrath describes the “hourglass economy” as thick markets for low cost and highly differentiated products. Accordingly, Starbucks is keeping prices high for premium drinks in its stores but dropping the price of coffee by 10% to draw in more price conscious consumers. This strategy leverages Starbucks’ lean supply chain operations that give it a very low cost structure despite offering premium products. Ultimately, this puts higher cost rivals at a disadvantage because Starbucks can offer a better value proposition.

Contributed by Russ Coff

Chinese Dilemma: 170 Auto Makers

Posted on April 12, 2013 by RussCoff

Rose Yu of the WSJ has a nice recent article on the fragmented nature of the Chinese auto market and how this is leading to over capacity in the industry. Mark Lehrer identifies some nice classroom uses for this article in the WSJ WeeklyReview service. Here is what he suggests:

SUMMARY: The US auto industry has long had three big domestic car makers. China has more than 170. Optimistic Chinese auto executives send shudders through the rest of the global auto sector. Industry watchers worry that the world’s No. 1 auto market could soon be awash in overcapacity. That would rev up competition in China and pressure companies here to export more of their cars.
CLASSROOM APPLICATION: As a case in industry analysis, excess capacity seems to be an endemic feature of the car industry (related article). As a study in foresight, the question for class discussion is, first, how to deal with the problem in the US, and second, how to brace for the problem furling over from China in a few years.

QUESTIONS: Continue reading →

Groupon: The Next MySpace?

Posted on January 22, 2013 by RussCoff

You could easily fill an hour by just playing the videos below, saying “discuss,” and then stepping out of the way. I use the videos (all 3) along with the available case study — Ivey case W12674, which already has its own teaching note. As preparation for the Groupon discussion, you could also ask students to explore the web site where Groupon makes its sales pitch to merchants, at https://www.grouponworks.com/. Here are the videos:

Part 1: CBS 60 Minutes Intro (12:42 min)
Part 2: Why isn’t Groupon Profitable? (2 min)
Part 3: Another MySpace? (4.30 min)

Groupon would fit best as a closing exercise at the end of a module on sustainability of competitive advantage. To add a humorous interlude to your discussion, you might include this Brazilian video or this ONN TED talk on Social Media.

Contributed by Rich Makadok

Ryanair: New heights from low costs

Posted on January 7, 2013 by RussCoff

In this interview (9:44), Deputy CEO, Michael Cawley, explains Ryanair’s relentless pursuit of cost reduction and the resulting value created. High demand elasticity contributes to their advantage since the increase in total demand arising from lower prices gives them added volume on routes that might not be profitable for other carriers. The interview is conducted by Juan Jose Guemes from IE Business School. Of course, there are several nice cases written about the company that go well with this.

Contributed by Birgul Arslan

Situation in Nigeria is … Complex

Posted on October 28, 2012 by RussCoff

This ONN report features a news panel that has literally nothing to add. How do firms deal with information challenges when they enter new markets?

Contributed by Russ Coff

Alaska Gold Mine Exercise

Posted on October 27, 2012 by RussCoff

The Alaska Gold Mine case is my (Mason’s) favorite starter case for undergraduate, MBA, and executive MBA strategy courses. Reprinted here with permission of author Jeffrey Barach along with my PointPoint slides I use to administer the case.

Click to get the:

The video below provides a lot of good fodder to reference back to when doing the exercise. Start the class session by showing the video before doing anything else. Continue reading →