Category Archives: Global/International strategy

Smart Restart for Disrupted Alliances: Razed from the ashes?

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Alliances may be disrupted for reasons beyond partners’ control, ranging from pandemics to cyber attacks. They then look to the contract for a way forward. When obligations are not met, contracts focus attention on blame and penalties for the breach. Force majeure clauses may void a contract without penalties but they are typically applied narrowly, if at all (weather-related events, etc.). So, the parties must assess blame, assign penalties, and void the existing contract before finding a way forward even if a disruption could not have been anticipated or prevented. Economic recovery from the pandemic depends on many firms addressing this difficult challenge.

This negotiation exercise, conducted in a session at the SMS Milan conference, drives that point home. The context is a UK-based office equipment company (SmartTech) and their alliance with an Italian chip manufacturer (ChipComm). Italy was closed down by the pandemic while the UK remained open and the supplier was unable to meet obligations. The parties must determine if ChipComm is culpable and if so, what penalties apply. Then, they need to identify how they might revise the contract to move forward. Of course, building trust to move forward after assessing penalties is no easy task.

The exercise is straightforward in terms of the timing. We describe the setting and assign roles in class. Then they have 5 minutes to read the 2-page roles. We then pair them with someone who has the opposite role and give them 15 minutes to negotiate. They can then enter their contracts into a Google form which summarizes the contracts for class discussion. Here are the materials: SmartTech role, ChipComm role, Sample form for students to enter contracts.

This leads to a rich discussion of when contracts are harder to reboot (degree of trust, fairness/sharing losses, attribution of blame, contract language regarding penalties or bonuses, nature/extent of the disruption, etc.). For example, students may compare the pandemic context to a disruption caused by a less pervasive factor, such as a ransomware attack. Prior specific investments make both parties more committed to continuing the relationship – perhaps even if the specific assets are no longer needed. Then, the question is how to gain trust when the contract has failed, and who to involve in the process (lawyer cat may be less helpful here…).

Contributed by Libby Weber and Russ Coff

Teaching the Zoom Case Online

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ZoomTortureThe Zoom live case is provided in an earlier post. Most instructors are all or partially online now so I’m sharing some online tips for teaching the case. The key task here is to use some asynchronous learning before a synchronous session so you can hit the ground running. One really important tip: Use worksheet assignments and Google docs for group breakouts in synchronous sessions. Here’s how:

Asynchronous Zoom Assignments. I’ve created “worksheets” using essay questions in the Canvas survey/quiz tool. These questions are structured so the answers need not be long and are easy to grade. I have two worksheet assignments.

  • Strategy Diamond Worksheet. I use Hambrick & Fredrickson’s strategy diamond framework to answer the question “what is strategy?” I entered the worksheet as a quiz/survey in canvas but the link is the answer key in MS Word. Specifically, the prompt is: Zoom recently entered conferencing hardware, describe the strategy using the framework (e.g., Arena, Differentiator, Staging/Pacing, Vehicles, Economic Logic). While these are short essay questions, it is easy to see if they are able to understand the framework and allows synchronous sessions to move faster.
  • 5 Forces Worksheet. The 5 forces worksheet is also entered as a canvas survey. For each force, students list 3 actors ordered by their impact on industry profitability. Then they explain their ordering briefly. For buyer power: List several types of buyers in the video conferencing industry (at least 3) where each might be thought of as a market niche. Put them in order reflecting their willingness to pay (high to low). Then indicate a few factors that drive the differences in willingness to pay. Again, it is easy to grade since it is clear whether they understand from the order.

Synchronous Activities. Here, I rely on group breakouts with Google docs. Here are two such activities.

  • Industry evolution. The link goes to a 5 forces worksheet for before, during and after the pandemic (3 tables in the doc). As a breakout exercise, I assigned 2 teams to each page of the worksheet and told them to start at different places in the framework. Then, after 10 minutes, I brought them to the main room, shared the Google Doc and asked the teams to describe their analysis to predict how the industry will develop (post pandemic) – rivalry, growth, willingness to pay, etc. These are used to develop assumptions in the next exercise.
  • Financial Scenario Analysis. This link goes to a Google sheet with 8 Zoom financial models based on: 1) Rival product quality 2) Rival price competition, and 3) Zoom’s continued innovation/quality. Varying these 3 sources of uncertainty (H/L) generates 8 scenarios. I assigned each team to a scenario and at breakout, sent them all to the Google sheet to predict profit margins and revenue growth in that scenario. We then discussed the probabilities associated with each scenario. the bottom line was that the market capitalization was so high that selling the company should probably be considered as a very real alternative (e.g., what problem are you trying to solve?).

Contributed by Russ Coff

Zoom Wars Live Case

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a53d805c5fbe0510926a423c6e184518I like to start the semester with a “ripped from the headlines” case. This is especially helpful if some of one’s cases are older. This semester, Zoom is a great alternative. The current market capitalization is about $80B which puts it well above many more established companies (including the combined value of the 7 largest airlines). I have compiled a short packet of news articles for the case. In addition, I have created a spreadsheet that guides students through key scenarios and how they would affect the value of the company (Do rivals match on quality? Is there a price war, Does Zoom keep innovating?). This highlights how qualitative analysis affects assumptions in quantitative models. It is also an introduction to decision trees as a simple tool for modeling complex sources of uncertainty (this is available in a separate instructor spreadsheet that uses PrecisionTree to model the uncertainty). The Zoom context hits just about every key aspect of a strategy course so you can circle back to it repeatedly:

  • What is Zoom’s strategy? I use the strategy diamond framework (arena, vehicles differentiators, staging/pacing…) but one can use a standard set of questions to explore this.
  • Trends/PEST. The industry was growing at about 10% — what were the drivers of this and how will this change in the future?
  • Industry analysis:
    • Why was the videoconferencing market attractive (pre-COVID)? (e.g., network effects, value produced)
    • How did COVID change the market attractiveness?
    • Rivalry: Competitors like Microsoft and Cisco are putting substantial resources into their products. Will they match the quality? Will there be a price war?
    • Evolution: How will the industry change going forward?
  • Resources and Capabilities:
    • Why has Zoom been so successful even before the COVID pandemic?
    • Why has Zoom been more effective than rivals during the pandemic?
    • Will they be able to keep up the rate of innovation after COVID?
  • Corporate strategies. Do business portfolios confer an advantage to rivals?
    • Consider Microsoft’s complementary assets (e.g., MS Office) – Why might they be important?
    • Consider Cisco’s complementary assets  (e.g., enterprise networks) – Why might they be important?
    • Zoom has entered the hardware industry through multiple alliances with DTEN, Poly, NEAT and others. Evaluate both the strategy to enter the hardware arena and the vehicle (alliances).
  • Zoom’s global strategy? Zoom has operations all over the world. What is their global strategy? Is it sound?
  • Technology/Entrepreneurship. Of course, these are key aspects of the context. Why did Zoom CEO, Eric Yuan, leave WebEx? Why did his nascent company do so well against established, well-resourced, rivals.

There are many videos you can bring into this including (Thanks to Rich Makadok for suggestions):

Contributed by Russ Coff

Bringing COVID into Your Classroom (not literally, please)

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Health-Workers-COVID-19I have taught during numerous crises (various wars, 911, 2008 crash, etc.) and always regretted missing opportunities to bring the events into the classroom. So how can we encourage our students to think strategically about the COVID crisis? Here are a few ideas for discussion or team projects (but please add more ideas in the comments):

  • Dynamic capabilities and Resource Redeployment. How can different types of firms redeploy their resources in this crisis to: 1) help others survive the pandemic, and/or 2) keep the business from going under? How does this redeployment lesson link to other types of challenges? Consider, for example, Eight Oaks’ distillery conversion to produce hand sanitizer.
  • Resource Acquisition & Retention. Many resources (especially Human capital) have been released. This could be an opportunity for some firms to access resources. For others, the challenge is to retain the resources through the crisis so they are able to ramp up once the crisis passes. How should firms respond?
  • Firms’ Ethical Responsibilities. The two issues above raise inherently ethical problems. What are the firm’s responsibilities to its employees? To shareholders? To society? To survive?
  • Generic virus strategies. China opted for extensive testing, isolated those who test positive from their families, and limited travel. The policies are well aligned (like a generic strategy) to limit spread. Is there an alternative aligned strategy involving limited testing? To what extent are countries “stuck in the middle?”
  • Technology strategy. What new technologies can be deployed to fight the virus? For example, Kinsa produces a connected thermometer that allows them to map parts of the US where there are unusual fevers— a week before people need hospitalization. How can this new resource be effectively deployed?
  • Entrepreneurial Strategy. What business opportunities are created by the crisis? How can an entrepreneur pursue them when resources are scarce? What are the implications for social entrepreneurship?
  • Global strategy. How can firms adapt to disrupted supply chains? Are there global opportunities created by the crisis? Along the lines of the first bullet, this could be opportunities to help those in hard hit areas or those that allow the firm to survive.
  • Diversification. Are there portfolios of businesses that are more or less likely to survive COVID? What do firms need to do to leverage those parts of their portfolio? What is the role of the corporate HQ?
  • Rigorous Data Analysis. The media presents data on cases and deaths at the country level. There are so many questions one might raise. Is the country the right level of analysis? Given the limited testing in some countries, does the number of known cases even provide useful data? How do we interpret missing data in countries like China and Russia?

Contributed by Russ Coff

Netflix Sequel: Bidding Wars the Movie

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disney-leaves-netflixAs Netflix’s strategy unfolds it becomes clearer the extent to which it threatens traditional media companies. Initially, Netflix was a welcome partner who paid for access to older entertainment assets – new income streams for studios. More recently they have developed new content and lure top talent away from traditional media companies. Now, by offering a compelling portfolio of options, they compete more directly against traditional media companies. AT&T, Comcast, Fox, and Disney have taken notice of Netflix’s increasingly vertically integrated business model that bypasses traditional distributors (cable, DSL, satellite) and doesn’t rely on advertising revenue. The new model is driving mega mergers & bidding wars as rivals try to build compelling portfolios to offer streaming services. This is a great live case to frame many strategic management course topics including:

  • What is strategy? I use the Strategy Diamond and Netflix is a great case to look at things like staging and pacing, vehicles, and arenas.
  • Market structure – How attractive is the media industry and how has this streaming model affected industry profitability
  • Resources/Capabilities – Rivals lack some resources and some of their substantial existing resources have become “core rigidities” that hinder adaptation
  • Competitive dynamics – What strategic moves can we observe? How will Netflix respond?
  • Disruptive innovation – Netflix started as a limited low-cost alternative but added features that eventually made it a significant threat to incumbents.
  • Corporate strategy – The billions rivals spent on M&A are another critical angle. This also provides a vehicle to discuss when vertical integration creates value.

I have assembled some useful materials to frame a discussion of this case. First, the case can be taught using a series of recent news articles (sample article pack). In addition, I have prepared a spreadsheet to explore scenarios for how various events might affect the value of Netflix. For instance, what would happen to its business model if the market started to value the company  as a traditional media company as opposed to a tech firm? Similarly, what will happen if rivals’ M&A strategies succeed and pose a critical challenge? Finally, here is a link to a sample pre-class survey to help students think about the strategic issues before class.

Contributed by Russ Coff

 

How Shipping Stays Afloat

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As the container shipping industry continues to boom, companies are adopting new technologies to move cargo faster and shifting to crewless ships. But it’s not all been smooth sailing and the future will see fewer players stay above water. This WSJ video takes students through the history and shows how the industry structure has changed with new innovations. Excellent for teaching industry analysis and innovation (architectural/systemic innovation).

Heard through Nicolai Foss

Submarines, Electric Cars and Corporate Scope

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SubIt’s been a red letter week in terms of the business combination scavenger hunt. In addition to Dyson entering electric cars, now we see Aston Martin going into the submarine business. These are both serious ventures. Dyson has had 400 staff members working on this project for over two years and expects to bring a product to market in 2020. One can’t resist wondering if it will really suck (I know, vacuum humor isn’t in vogue — if it ever was)…

More seriously, Dyson is a private company and so won’t face as much market pressure to explain why/how the business portfolio creates value. Also, while most of us are more familiar with their vacuum business, they are a diversified manufacturing company. This includes supplying inputs for the automobile industry among others. One might argue that they have more complementary assets to produce electric cars than Tesla had when they first started. But still…

Aston Martin’s effort is also serious. It’s worth noting that, unlike Dyson, they plan to do this with a partner, Triton Submarines, that is already a player in the luxury submarine market.

Drawing on the Strategy Diamond framework, a vehicle is the mode used to acquire resources needed to enter a new market. In this context, why would Dyson use organic growth to enter electric cars while Aston Martin forms a strategic alliance to enter submarines? In each case, the firm lacks important resources needed to enter. One might apply Capron & Mitchell’s Resource Pathway’s Framework. This could lead one to conclude that Dyson is overestimating the relevance of its internal resources (to go without a partner). In the case of Aston Martin, since their partner has all the capabilities needed to produce the product, the main asset that Aston Martin brings is their brand. This may be useful to court customers who are James Bond fans — Perhaps not the largest market segment among those seeking submarines.

Meanwhile, Ikea just acquired TaskRabbit — presumably a bid to vertically integrate into assembling the furniture they sell in kits.

These efforts do not necessarily restore one’s confidence in managers’ abilities to make reasoned decisions about the scope of the firm.

Contributed by Russ Coff

Hollywood Breaks Into China

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20151017_wbc183.pngHow do firms modify their products so they will be well-received in the most promising global markets? Case in point: Hollywood’s biggest movies are being subtly reworked to appeal to Chinese audiences. Since, that market may soon outstrip the U.S. to become the most lucrative movie audience in the world (see chart). Movies like Warcraft and Now You See Me 2 have been huge successes in China even though their domestic performance has lagged. Why? The Warcraft cast features Daniel Wu, a very bright star in China, who may have been unrecognizable as the orc Gul’dan, but his promotional efforts were important to the film’s success. Similarly, Now You See Me director, Jon M. Chu, cast star Jay Chou and filmed a portion of the movie in the Chinese region of Macau. The movie industry is a great example of product design for market entry. The following video frames it nicely for students interested in addressing barriers to market entry.

Contributed by Russ Coff

Exercise: Lie Detector

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dishonestyAre there cultural norms for telling the truth? Recent research by David Hugh-Jones suggests that this may be the case. In his coin flip experiment, respondents were asked to get a coin ready. On the next screen, they were asked to flip the coin and report the result. They were also informed that they would receive an incentive (either $3 or $5) if they reported “heads.” As such, respondents who flipped “tails” had to choose between telling the truth and receiving the money. This experiment allows honesty to be estimated at an aggregate level, by comparing the proportion reporting heads in any group to the 50% proportion expected. The figure above shows how the results for honest reporting differed by country. You may be able to repeat a version of this in your class. You may note that another coin flip exercise is recommended in the toolbox to explore luck and entrepreneurial success. You might run this in an earlier class with no incentive and record the proportion of people that report heads on each round. Then, in a class on ethics (or global strategy), repeat the exercise with an incentive ($20 should be enough). See if the proportions of heads reported differ. It may be that the class setting affords enough monitoring that cheating is not observed. Also, a large sample (100 or so per group) would generally be required to find significant differences in honesty. Even so, you can still present the results of the study (and, perhaps, argue that your class is more honest than average subjects in their country). You could also try to duplicate the lack of monitoring in the experiment by having students flip a coin at home or online and report the result. As such, there might be reasons to have students do this exercise outside of class and discuss the results in class.

Contributed by Aya Chacar and Russ Coff

Trump’s Taiwan Move: The Strategic Value of “Crazy”

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Most of the media has chalked up President Elect Trump’s phone call with Taiwan’s President, Tsai Ing-wen, as driven by inexperience and/or a willingness to ignore prior policy. Indeed, the call has certainly sparked ire from the China and raised concerns of increasing tension. A recent WSJ article notes that it may have been an intentional and calculated move. However, this move is likely to have a completely different meaning coming from Trump. He has expressed a willingness to consider drastic/risky solutions and it may be more likely that China will ultimately blink. In a game of chicken, his reputation may be a distinct advantage over the more calculating reputations of prior presidents. Consider Thomas Schelling’s concept of the “rationality of irrationality.” In a game of chicken, a driver who appears crazy enough to prefer dying over chickening out will enjoy an advantage. In this context, it may be rational to convince rivals that one is actually irrational. Game theory can seem inaccessible when it is only presented using abstract examples (though Dilbert can help there), this offers a concrete example that may bring it to life for the students. Perhaps ironically, this post mirrors one that was posted here two years ago regarding Vladimir Putin’s strategy. Of course, it is worth noting that the game of chicken can also end very badly…

Contributed by Russ Coff

Trumped up Strategy Class

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This isn’t the first time polls have been wrong. The election of Donald Trump was a shock to many college students (as well as the press) and this may warrant some class time. Some instructors responded by providing space for students to express their feelings and this may be within the scope of the educational objectives for some classes. For a strategy class, a more relevant focus might be to examine the implications of the outcome for business strategies or to examine the campaigns from a strategic perspective. This might be considered as a template for how to discuss other sudden world events in the strategy classroom. Here are some takes on how to bring the election in while still emphasizing the pedagogical objectives of a strategy course:

  • Project case scenario analyses (Aya Chacar). Scenario analysis is designed to unearth factors that affect the efficacy of a given strategy. In a global context, country risk is a central factor in assessing strategic alternatives. In class, students discussed the likely impact of the election on the companies their teams are studying. Can you help the company? What do you think “could” be the impact on the companies under the new American administration -based on stated positions or past behavior? The companies they chose to study in this class are Amazon, Auchan, Didi Chuxing, General Motors, Naver, Uber, Volkswagen, and Walmart. All already have major international presence with some but not all having significant operations in China, Europe, India, Japan, Mexico, South Korea, SouthEast Asia and the US.
  • Entrepreneurship/Opportunity Recognition. The pollsters were all wrong. Often businesses and whole industries miss critical trends in consumer preferences and this probably means that there is unserved market space. Given trends that are now unearthed by the election, what market opportunities might there be for firms in various industries? One could use the project firms, cases you have done or specific firms that you think might be affected.
  • SWOT on campaigns (Peter Klein). While this framework is not preferred by most strategy scholars, it may raise some good points. A few examples from the Clinton campaign: O: demographics (e.g., increased Hispanic population, more socially tolerant electorate), unpopular opponent,chance to make history. T: middle-class concerns about economic inequality, backlash against political correctness, Clinton fatigue, incumbent fatigue, WikiLeaks. S: experience; support from major media, Wall Street, large corporations; ties to Obama and WJ Clinton; large staff of handlers; polish. W: experience; support from major media, Wall Street, large corporations; ties to Obama and WJ Clinton; large staff of handlers; polish.
  • Resources/Capabilities. Many of the campaign strengths turn out to be weaknesses depending on the context (experience, polish, support from corporations, etc.). What resources give a party a sustained advantage? What does “sustained” mean in this context? This might bring in a discussion of core rigidities and how once valuable resources can become critical weaknesses over time.
  • Disruptive Innovation (David Burkus). Clay Christensen described disruptive innovations as an innovation (typically from an outsider) that creates a new market and value network that eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances. The Trump campaign might be viewed in this light as a disruptive strategy that overtook the conventional establishment.
  • PESTEL. Of course, this demonstrates the value/importance of looking outside of the industry for trends that may influence whether a given strategy will be effective or not. The PESTEL framework is a simple tool for bringing this in to the analysis (Political, Economic, Social Technological, Environmental, and Legal).
  • First 100 Days. Trump offered an ambitious list of things he planned to try and accomplish in the first 100 days. One can divide the list among groups and ask them to identify the implications of the policies for business in general or, preferably, for a specific firm/client.

Contributed by Russ Coff

Ethics: Gautam Style

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Gautam Ahuja won the 2016 BPS Irwin Outstanding Educator award. It became clear from student testimonials that the capstone ethics lecture was not just memorable, it was an emotional peak that few students (or teachers) ever reach. What follows is a brief description/outline of the lecture. While it certainly won’t do it justice, it may offer some important ideas for instructors to explore.

I have them debate an actual decision (that varies from year to year). Essentially, I pick some current significant and controversial business decision or event that is legal and ideally, morally ambiguous, or even amoral (not immoral), at least apriori, and then foster a discussion on its pros and cons. This reveals much deeper fundamental issues. To illustrate I have used the following in different years:

  1. The decision by banks to award bonuses to traders for being on the “correct” side of the financial crisis deals in the years following the Lehman collapse
  2. The decision by a chemical company to use local safety standards in its different markets, which is completely legal,
  3. The decision to sell skin whitening creams in countries in India by large multinational companies,
  4. Provision of significantly discounted or couponed milk products for newborns,
  5. The federal reserves decision to keep interest rates low for the last x years
    and so on…

I then try and get them to debate this and, almost invariably, there emerge two sides to the issue. However what is interesting is that three other factors usually emerge: A) the problem is much deeper and more morally ambiguous than you thought, B) reflexive reversion to standard MBA, theories frameworks and concepts often leads to very flawed decisions ( in a good session an amazing large number of people change their initial decision), and C) In fact using the framework is itself part of the problem. Continue reading →

Will Pokémon Keep GOing?

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The augmented reality (AR) game, Pokémon Go, has taken the world by storm as players roam the real world catching Pokémon and battling in Pokémon gyms. The game has set 5 records since its launch in July 2016 — including the most revenue by a mobile game in its first month ($206.5 million). Nintendo’s stock doubled 15 days into the release, adding $7.5B in value, but then settled back into a mere 50% increase when it became clear that Nintendo was a partner with limited ownership in the company that developed the game (Niantic, a Google spinoff). Although the game is free, users can make purchases in the app store to support their Pokémon ‘hunting’. The bewildering success must clearly be keeping Niantic’s CEO, John Hanke, and his crew awake at night. Besides the operational issues related to scaling up, intellectual property (IP) had become a big issue. A slew of imitators were emerging as well as a number of companies trying to steal the game’s data content and algorithm. In addition, the formidable international expansion faces roadblocks in the most populous Asian countries while potential users were impatient. There were many additional potential revenue sources to be tapped and explored such as the recent win-win partnership with McDonalds Japan. Moreover, while getting gamers out and about was good, there were a number of unintended consequences. On the plus side, many entrepreneurs were finding ways to make money from the game — for example restaurants could lure in customers if there was a Pokestop nearby. At the same time, users and non-users worried about possible injuries, trespassing, and invasion of privacy among other things. Naturally, this makes an outstanding ripped-from-the-headlines case for strategy courses. It is a great vehicle to cover key topics such as entrepreneurship, strategic alliances, internal analysis/capabilities, and external analysis. The following are some materials that are useful for the case:

Contributed by Aya Chacar and Russ Coff

K-Cosmetics: Covering the Globe

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Successful strategy is often a combination of luck firm specific skills and favorable conditions. AmorePacfic makes a great ripped-from-the-headlines case since it rose to be the #1 South Korean firm buoyed by a growing and large domestic demand from a growing population. Hallyu – the Korean equivalent of Hollywood was also a driving factor as South Koreans want to look like their favorite stars and use the same cosmetic products and that includes men. In fact, it is estimated that a whopping 20% of South Korean men use cosmetic products on a regular basis. AmorPacific capitalized on this growing trend by building up its brand and investing in R&D and ultimately riding the popularity of K-pop and K-movies to expand internationally. At a time that demand is softening, K-cosmetics are still growing with exports increasingly exceeding imports and Korean cosmetics brands now more popular than European brands in China and increasing their penetration in many countries including China, Hong Kong, Japan, the US, Vietnam, and in a surprising list of other countries such as Poland where their addition to Sephora’s product line and other large retailers will ensure broad distribution. How has a $150 1.7 oz managed to gain global popularity? Some materials for the case might include:

Contributed by Aya Chacar

China’s Comparative Advantage of Low Labor Costs: Think Again

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globalbizComparative advantage is about nations leveraging their unique resource advantages. There was a time when, for China, that referred to cheap labor. There was once a notion that good manufacturing jobs were “shipped” to China because wages were so low. This narrative still bubbles up in today’s political rhetoric. However, today’s news also highlights that Foxconn, the World’s largest contract manufacturing company, is replacing 60,000 workers with robots. Wages in China do remain below those in other countries. However, the comparative advantage is no longer about cheap unskilled labor. In fact, China has produced about 60 million college graduates in the last ten years. At this rate, the World Bank predicts there to be up to 200 million by 2030. This is greater than the entire U.S. workforce. In short, they seek a comparative advantage based on human capital as opposed to generic labor. Cheap labor, in turn, may be replaced by capial investments (Foxconn seems to be on the leading edge in this trend). A question for a global strategy class might be how should other countries respond? Would an education arms race help or hurt comparative advantage?

Contributed by Russ Coff

Research Chatter: Coffee talk for geeks

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Ronnie Chatterji and Charlie Williams have put together an excellent research podcast series. They describe it as “Big ideas from business school professors.” It offers an excellent bridge between cutting edge business research and the world of practice. The podcast is sponsored by the Strategic Management Society (publisher of the Strategic Management Journal, Strategic Entrepreneurship Journal, and Global Strategy Journal). You can find the podcasts at iTunes, Soundcloud, and YouTube among other places. Want a quick taste? Here are some of the topics that this reviewer found especially interesting in the realm of entrepreneurship and innovation:

Contributed by Russ Coff

Dr. Shad Takes you Global

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Here are a couple of great videos from Shad Morris on international strategy. The first focuses on how to evaluate the overall health of a country’s economy. This is important in assessing the business environment for strategic investment. Is a given market attractive? This might also lead into a nice discussion of comparative advantage of nations. If so, this might be another application of the Global Game exercise. The second video offers the distinction between multi-domestic, mega-national, and trans-national.

Contributed by Shad Morris

Not Your 父亲 (Father’s) Buick

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Buick will begin selling the Chinese-made Envision crossover in the U.S. next summer despite resistance from the UAW, which would prefer that it be produced in the U.S. The car is produced through a joint venture with China’s largest auto maker SAIC Motor Corp. Rather than produce the car in the U.S., GM plans to import the Envision from Yantai, China, where the joint venture has produced the vehicle for about a year. Through the first 11 months of 2015 it sold 127,000 of them in China. This example brings out several key points with respect to strategic alliances. Certainly the UAW viewpoint brings in a stakeholder perspective. However, SAIC is also potentially a competitor. It’s home market has sheltered it while it gained capabilities to produce on a very large scale. Recently, growth in the Chinese auto market has slowed which may push SAIC to seek other growth opportunities. This venture with GM may help it gain capabilities that allow it to enter U.S. and other world markets. In sort, this is a nice case to apply the “Four C” alliance framework (or other alliance tools) to identify whether the alliance is likely to create value for both sides (and for how long).

Contributed by Russ Coff

Lego Industry Ecosystem

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Lego profits have more than doubled in the last five years. The company has sold non-core businesses and doubled down on the core building block products. They are the undisputed king of building toys. A recent New York Times article describes the lay of the land brick by brick. Lego has focused on more wholesome building themes (Star Wars, etc.) while rivals have sought space where they don’t have to directly compete. For example, Mattel’s MEGA unit has a series of much more realistic building sets (Sponge Bob, Terminator, and Star Trek). Similarly, McFarlane toys has a very successful series of “Walk Dead” building sets that deviate from the image Lego prefers to maintain. In addition to competitors seeking to differentiate, many complementors have emerged such as Pley which offers Lego set rentals (the “Netlix” of the Lego world) or numerous used Lego trading businesses (here is one in Madison). Interestingly, research suggests that these Lego sets may actually reduce creativity — especially compared to the older version that involved a simple bucket of bricks rather than a kit to build a specific thing. Of course, their move into Lego films brings in an interesting discussion of diversification.

Contributed by Russ Coff

Discussing Terrorism in a Strategy Class

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I started my class last Saturday with words of hope that my students’ friends and family were safe. Since I teach in Madison Wisconsin, it was a fair bet that they were not heavily touched. This first response is probably a good starting point. However, where does the discussion in a strategy class go then? Here are a few brief thoughts:

  • Responding to the humanitarian crisis. From there, one might explore how firms can respond to the humanitarian crisis. Do the Syrian refugees and terror victims all over the world pose an imperative to which businesses must respond? How can they help? What types of businesses can make a real difference?
  • Responsibility to shareholders. Should firms help even if this hurts shareholder returns? Of course, helping people can build a firm’s reputation. When would this come into play and how can firms position such actions to help firm performance (eliminating any conflict with shareholders)? If it does hurt profitability, when is that justifiable? When is it an imperative?
  • Global strategy. How should firms develop and execute international strategies in a more uncertain business environment? How should they balance this type of risk in their portfolio?
  • Employee Welfare. What steps should be taken to assure employee welfare and/or help employees in need?
  • Opportunity. Some firms may see economic opportunities amid the uncertainty. Of course, defense contractors and security-related firms may win. What other types of firms might see opportunity? See, for example, the video below about Ikea’s refugee shelters or bulletproof blankets for kids in response to school shootings.
  • Exploitation & Fraud. One of my students pointed out that some firms may take advantage the situation and play off of people’s fears. This might be considered the unethical side of opportunity and is certainly important to discuss as well.
  • Broader economic impact. Andrew Ross Sorkin offers a brief discussion of this. Conventional wisdom (from studies of the economic impact) is that attacks cause only small blips in GDP and stock markets. However, the political impact and the diversion of resources to agencies like homeland security and defense contractors show up positively in GDP and so understate the impact. Isolationism also may impact global trade well beyond the initial shock.

You may notice that I offer questions rather than answers. I think this topic is fruitful for class discussion and I would hope to learn from the students. I only wish I had answers…

Contributed by Russ Coff