Strategy and Organization

a.y. 2020 - 2021

Syllabus
Prof. Alessandra Colombelli, Emilio Paolucci, Paolo Neirotti

1. Course Description

1.1 Learning goals

Strategic Management and Organization are deeply intertwined disciplinary areas in management. In this
course their perspectives are integrated in order to show how firms are able to create superior economic
value through appropriate strategic decisions and organization design.

In so doing, the course aims at equipping students in management with the fundamentals of strategic
thinking that is needed to firms to undertake appropriate competitive actions. The foundations of strategic
thinking lie in an array of concepts, frameworks and techniques that is needed by managers and business
analysts to conduct strategic analysis and to take appropriate decisions accordingly. As such, the course
illustrates the fundamentals of strategic analyses, giving a high emphasis on the role that technological
change has in shaping competitive dynamics and in offering new ways to develop valuable products for
customers. In so doing, the course explores the interdependencies that strategic management has with the
main issues that managers have to deal with when they design the firm’s organizational structure and
business processes. In this regard, the course discusses the fit between the firm’s strategy, its organization
structure and its competitive environment that is at the origin of a firm’s high competitiveness.

At the end of the course, students should be able to think according to a strategic perspective in dealing
with the traditional tools of strategic analysis in order to assess how in a given industry firms should take
decisions by considering the threats and opportunities related to global competition and demand,
technological change, and other competitive forces existing in their relevant market.

1.2 Importance of Strategy and Organization Design in the professional background of the Managerial
Engineer

In the curriculum of a student in Management and Engineering, Strategic Management and Organization
design have a central importance irrespective of the choices and the chances that students will have in the
job market. For example, a graduate in Engineering and Management may work as a strategic analyst in the
Strategic Planning department or a in a consulting company and can be thus involved in making analysis
whose outcomes are inputs to the strategic actions/decisions made by the top management team. For
graduates working in other functional departments (e.g. Manufacturing, Logistics, Sales, Management of
Information Systems) studying Strategic management will be important to understand how the firm’s
business strategy and the trends in its competitive environment (technology evolution, global competition
and demand, etc.) influence strategy and operations within each function and require an alignment
between the business strategy and functional strategies/operations. In all cases, progress in career always
means being required more managerial skills and not only competencies that are specific of the task and
the functional department (a «T-shaped» competence profile).

2. Learning Method

The learning method will combine two types of lectures centred on two different and complementary
approaches. Traditional frontal lectures will illustrate relevant theories and concepts from prominent
scholars in strategic management and their application in tools for strategic analysis.

On the other side, laboratories will discuss case study in which students will be required to apply the tools
and the concepts learned during the theoretical lectures. Case study discussion will require that students
will read material provided by the instructors. Finally, the talks of some invited speakers from the business
community (e.g. managers with an international experience) will provide an important complement to
frontal lectures and laboratories. These talks will take place outside the normal course schedule.

When students are presented with a case, they place themselves in the role of the decision maker that
have to go through the situation, identify the problem they are facing, define and evaluate alternative
actions.

To get the most out of cases, students read and reflect on the case individually, and then meet in learning
teams before class to "warm up" and discuss their findings with other classmates. In class—under the
questioning and guidance of the professor—students probe underlying issues, compare different
alternatives, and suggest courses of action in light of the organization's objectives.

3. Teaching Materials

A. Grant, R. Contemporary Strategic analysis: only Text, John Wiley

B. Besanko, Dranove, Economics of Strategy, John Wiley (materials provided by the instructor)

C. Excerpt of Organization Design (delivered by the instructors)

D. Collection of articles provided by the instructors and made available on the course web platform
(Portale della Didattica)

E. Collection of case studies, available on a web page of Harvard Business Publishing.

F. Slides, made available on the course web platform

4. Grading Policy

The final grade is the sum of two components.

a. A written Exam (26 points). Minimum threshold to pass the written exam: 15 points.
b. A mandatory team work regarding the strategic analysis of a company and the definition of strategic
recommendations for successfully competing within the automotive industry (from 0 to 7 points)
Oral Exams (from -3 to +3 points) can be decided by the instructors in special cases.

To pass the exam the total grade must be equal or higher than 18 on a 0-30 scale.

5. Structure of the written exam

Books and personal notes will not be allowed during the exam. The written questions will include:

- Discussion of theoretical aspects: students will have to demonstrate their ability to discuss basic
concepts learnt during the course, link concepts presented in different chapters, understand areas
of applications and limits, etc.
- Discussion of case studies. The case studies that will be object of questions will be brand new cases
prepared by the instructors using excerpts from financial and management press (e.g. the Financial
Times, The Economist, WSJ, etc.)

6. Structure of the team work

The team work will be organized on the basis of the following rules.

- Period: second part of May / beginning of June.

- Team formation and composition: professors will illustrate the procedure for team formation
during the course. Each team must be composed of six students. The team must define a team
leader who will be responsible for coordination with professors.
- Content: the team-work regards a case from Harvard Business School. It is an online simulation /
game based on a real case. It will help student apply concepts from the course and make them
familiar with strategy design, financial performance and communication.
- More information regarding deliverables, key dates, goals and evaluation of the project work will
follow.
-
- Length. The maximum length of the report is 10 page plus annexes without any page limit that the
team may add to report the findings of their quantitative analysis.

L1. Introduction (3 hours).

Course objectives and structure. Structure of the course and the teaching material. Rules for the
exam.

Part I – The tools of Strategy Analysis (27 hours)

L2. Strategy and the Strategic Management Process (6 hours)

o Program: 1. Strategy definition, Strategic Management and Competitive Advantage; 2.

Strategic fit; properties of successful strategies 3. What is a competitive advantage and how
 you measure it. 4. Competitive positioning and market segment. 5. Introduction to
Generic Competitive Strategies and to value creation mechanisms. 6. The strategic
management process; deliberate and emergent strategies. The strategic management
process in the organization. What are “strategic decisions”?
o References:
 Grant. Chapters 1 and 2.
 Porter, M. What is Strategy, HBR

L3. The external environment and Industry analysis: the fundamentals (9 hours)

o Program: 1. The Five Forces Model. 2. Internet and industry structure. 3. Segmentation and
Defining Relevant Markets. 4. Critical Success factors in a market segment
o References:
 Grant. Chapters 3 and 4.
o Case Studies:
 The US Airline Industry in 2012 (from Grant, R.M.)
 Genzyme (provided online by the instructors)

L4. The Analysis of the Firm: Evaluating the Firm’s Resources and Capabilities (12 hours)

o Program: 1.Resource and Capabilities: what they are, VRIO Framework, and assessment;
the core competence view 3. Barriers to Imitation and Development Dynamics of
Capabilities (e.g. acquiring or developing capabilities; knowledge processes that promote
capability development).4. Capabilities and Diversification (BCG matrix). 5. the geographical
distribution of resources and capabilities : the Porter’s Diamond model
o References:
 Grant: Chapters 5
o Case studies:
 Lands’ End (available online). Topics: VRIO framework, sustainability of
competitive advantages in Internet-related markets, unbundling of the value chain.
 KODAK AND THE DIGITAL REVOLUTION, Harvard Business Online n° 705448. Topics:
strategies based on resources and capabilities; strategic decisions under
technological discontinuities. role of analogy, conflict and cognitive biases in
strategy thinking.

Part II. The organization of the firm (21 hours)

L5. The Vertical Integration of the Firm (9 hours)

o Program: 1) make versus buy: reasons to make and to buy; 2) Transaction Costs Economics; 3)
vertical integration and outsourcing : real-world evidence.
o References
 Grant: Chapters 11 and 13
 Besanko & Dranove: Chapters 2 and 3.
o Case studies:
  THE WALT DISNEY COMPANY AND PIXAR INC: TO ACQUIRE OR NOT TO
ACQUIRE?, Harvard Business Online n° 9709462. Topics: vertical integration,
transaction costs.
 VENDOR PARTNERING, Harvard Business Online. Topics: decision-making
related partnerships with vendors, contract design, IT services models.
 PLATFORMS vs. MARKETS and ORGANIZATION: The case of food delivery

L6. Fundamentals of Organization Design (12 hours)

Program: 1) Work specialization, Control and Coordination. 2) how the organization

functions: The five fundamental coordination mechanisms and the five basic parts of
the organization; 3) design of structures and grouping; 4) design of lateral linkages; 5)
design of decision-making systems: horizontal and vertical decentralization.;
contingency approach; 6) bureaucratic vs. organic organizations and the environment;
7) technology and the organization
o References:
 excerpt from H. Mintzberg. The Structuring of the Organization (provided by
the instructors)
 Grant: Chapters 6
o Case Studies: (3 hours + 3 hours)
 PROCTER & GAMBLE A AND B, Harvard Business Online n° 9707519, 9707402.
Topic: organizational design.

Part III. The strategy in the firm’s context (21 hours)

L7. Business Strategies: Cost Leadership and Product Differentiation (9 hours)

o Program:1. source of cost advantages. Value of cost leadership.2. Value of Differentiation

Advantages. Design-Driven Strategies. 3. Organizing to implement Cost leadership and
Product Differentiation Strategies.
o References:
 Grant: Chapter 7. Besanko Chapters: 9
o Case studies:
 IKEA INVADES AMERICA, Harvard Business Online n° 9504094. Topic:
reverse positioning strategy.
 ZARA: IT FOR FAST FASHION, Harvard Business Online n° 9604081. Topics:
IT capabilities, IT’s organizational complements, IT selection.

L8. Strategies in technology-based industries and the management of innovation (12 hours)

Program: 1. Industry Life cycle, Technology Diffusion and Technological

Discontinuities (Abernathy and Utterback Model) ; Industry architecture; Life cycle
of the organization: ambidexterity; Issues in Management of Innovation ;
Appropriation of Value; appropriability regimes: patents, industrial secrets.
o References:
 Grant: Chapter 8 and 9.
o Case studies:
 Abgenix, Harvard Business Online n°9501061. topics: industry architecture,
strategic decisions, dynamic capabilities (3 hours)