Office: 55 Hillhouse Room 307, 2-5968
Office Hours: Lunchtime on Mondays

Course material

Textbooks:    Sharon Oster: Modern Competitive Analysis, 2nd Ed., available at Yale Bookstore.

                      Seeing Differently: Insights on Innovation, John Seely Brown (ed.),
                      Harvard  Business School Press, 1997, available at Yale Bookstore.

                       Adam Brandenburger and Barry Nalebuff: Co-opetition, available in Hall of
                       Mirrors.

COURSE OUTLINE
1. Aug. 31
Topics:            Course Overview
                       The Digital Economy
                       War and Peace
                       Rationality
                       Game Theory
                       Changing the Game

Readings:    "Competitor Orientation: Effects of Objectives and Information on Managerial
                            Decisions and Profitability," J. Scott Armstrong and Fred Collopy, Journal
                            of Marketing Research, May 1996, 188--199.

                    Adam Brandenburger and Barry Nalebuff, Co-opetition, Ch. 1

Tools

2. Sept. 2
Topics            Game Theory -- Added Value
                       Sources of added value, Big Picture. Monopoly and commodity

 Readings:        Adam Brandenburger and Barry Nalebuff, Co-opetition, Ch. 3, Ch. 5

                        Gary Hamel and C. K. Prahalad, Competing for the Future, Ch. 9--10

No class Monday, September 7, Labor Day

3. Sept. 9
Topics:            Five Forces, Sustainability, How to prepare a case

  Readings:       Sharon Oster, Modern Competitive Analysis,, Ch. 1--3
                        (or Michael Porter, Competitive Strategy,, Ch. 2)

                        Captain Marvel, Inc., January 1992

Case:                Southwest Airlines

4. Sept. 14
Topics:              The Value Net
                         Complements
Readings:          Adam Brandenburger and Barry Nalebuff, Co-opetition, Ch. 2

5. Sept. 16
Topics: Architecture

Readings:           Gary Hamel and C. K. Prahalad, Competing for the Future, Ch. 2

                          All the Chips, Wall Street Journal, June 7, 1995

                          (Additional newspaper articles)

                           Charles Morris and Charles Fergusen: How Architecture determines Winners
                            HBR, 1993 **

Case:                   Intel Corporation: 1968—1997 (HBS 9-797-137)

Applying the Tools: Added Value and Competitive Advantage

6. Sept. 21
Topic:            New Business Models      (De Beers is now November 2.)

Case:             Lonely Planet

7. Sept. 23
Topics:                 A second look at airlines.

Readings:             Bennett, R. D., Craun, J. M., and "Low Cost Airline Service Revolution
                            Technical Report," Department of Transportation, Washington, DC., Office
                            of Aviation and International Economics, Apr 96.

                            Kevin and Jackie Freiberg: Nuts! Southwest Airlines' Crazy Recipe for
                            Business and Personal Success, 1996.

                            http://www.go-fly.com; http://www.easyjet.com; http://www.virgin-express.com

                            Kiwi Airlines

Case:                    Go Airlines

 8. Sept. 28
Topics:           Added Value: Relationships, Loyalty, and Imitation

 Readings:       Paul Klemperer: "Markets with Consumer Switching Costs," Quarterly Journal of
                      Economics, May 1987, pp. 375—380.

                      Paul Klemperer and Ivan Png: "Frequent-Flyer Plans: Marketing Device with
                      Insidious Effects—Employers, Price Competition and the IRS Come Up Losers"
                      Los Angeles Times, June 8, 1986, Part IV.

                      Grahame Dowling and Mark Uncles: "Do Customer Loyalty Programs Really
                      Work?," Sloan Management Review, Summer 1997, 71—82.

Case:              Fly-Buys

9. Sept. 30
Readings:       Michael Porter, The Competitive Advantage of Firms in Global Industries, The
                      Competitive Advantage of Nations, Ch. 2

 Case:            Wal*Mart Stores, Inc. (HBS 9-794-024)

10. Oct. 5
Topics:           What to do if you don’t have little or no added value 

Readings:        Brandenburger and Nalebuff, Co-opetition, Ch. 4.

                      Michael Porter, Competitive Strategy, Ch. 6.

The Boundary of the Firm

11. Oct. 7
Topic:           Vertical Linkages, Mergers, Acquisitions, Diversification, and Strategic Alliances

Readings:       Sharon Oster, Modern Competitive Analysis, Chapters 10--11

                      John Stukey and David White: "When and When Not to Vertically Integrate," Sloan
                      Management Review, Spring 1993.

                      Felix Bruck, "Make versus Buy: The Wrong Decision," McKinsey Quarterly, 1995

                      James Brian Quinn, Fredrick Hilmer, "Strategic Outsourcing," McKinseyQuarterly,
                      1995

                      David Teece, "Cooperation, Competition, and Innovation," Journal of Economic
                      Behavior and Organization, 1992.

                      David Teece, Profiting from Technological Innovation, Research Policy, 1986.

12. Oct. 12
Readings:       Sharon Oster, Modern Competitive Analysis, Chapter 12.

Case:            Merck – Medco: Vertical Integration in the Pharmaceutical Industry
                    (HBS 9-598-091)

October 13: Special session: Boeing

13. Oct. 14

Case:             AAA

Oct. 19 (midterm break)

14. Oct. 21
Topics:           Scope and Diversification
Readings:       Competing on Resources: Strategy in the 1990s, David Collis and Cynthia
                      Montgomery **
 
 Cases:           The Walt Disney Company (A) (HBS 1-388-147)
                      The Walt Disney Company (B) (HBS 1-794-129)
                      The Walt Disney Company (D) (HBS N9-796-149)
                      EPE (Elvis Presley Enterprises)

Readings:        http://www.virgin.com

15. Oct. 26
Topics:           Entry Barriers

Readings:        Sharon Oster, Modern Competitive Analysis, Chapters 4, 7

 Case:             The USA Today Decision: Making Headlines Across the Nation (A)
                      (HBS 9-792-030)

16. Oct. 28
Topics:           Entry and Exit, Rationality, and Commitment

 Case:            British Satellite Broadcasting versus Sky Television  (HBS 9-794-031)

 Adapting to the Digital Economy

17. Nov. 2
Topics:                Creating demand, sustainability, water--diamond paradox

Case:                   De Beers Consolidated Mines Ltd. (A) (HBS 9-391-076)

18. Nov. 4
Topic:            Attacking and defending added value

Readings:       Kevin Kelly, The New Rules of the New Economy, Wired, September, 1997
 
                     W. Brian Arthur, Complexity in Economic and Financial Markets, Complexity,
                      1995.

                      W. Brian Arthur, Increasing returns to Scale and the New World of Business,
                      Harvard Business Review, July--August, 1996 **

                     Arthur’s Ball game

Case:             Barnes & Noble versus Amazon

19. Nov. 9
Topics:          Using and creating market power

Readings:       Adam Brandenburger and Barry Nalebuff, Co-opetition, Ch. 8

 Case: Bundling

Coordination and Antitrust

20. Nov. 11
Topics:           Contracts and customs

 Readings:       Adam Brandenburger and Barry Nalebuff, Co-opetition, Ch. 6

                      Notes on MCCs, MFNs, Take-or Pay

                       Michael Weiner, "Facilitating Practices: Distinguishing the Legitimate from the
                       Unlawful," Antitrust Magazine, Summer, 1993.

                       Dennis Yao and Susan DeSanti: "Game Theory and the Legal Analysis of Tacit
                       Collusion," The Antitrust Bulletin, Spring, 1993.

                       Selections from Phillip Areeda, Antitrust Law, Vol. 6., 1993

                       Rich Karlgaard "Silicon Valley’s Politics of Envy," WSJ 10/20/97

   Denise Caruso, "Technology," NYT, 12/1/97                       Stan Liebowitz and Stephen Margolis "Don't Handcuff Technology" Upside
                      Magazine, September, 1995, pages 64-73.

                      "Why Microsoft (mostly) shouldn't be stopped,"Upside Magazine, April 1995.

                      G. Pascal Zachary "The Once and Future Microsoft," April 1995.

21. Nov. 16

Case:              Ready-to-eat Breakfast Cereal Industry in 1994 (A) (HBS 9-795-191)

Information and Incentives

22. Nov. 18
Topics:           Compensation

Readings:       Sharon Oster, Modern Competitive Analysis, Ch. 8.

                      Paul Milgrom and John Roberts, Economics, Organization, & Management,
                      Ch. 13.

Case:             Westinghouse Uranium
 

Nov. 23--27 Thanksgiving Break

23. Nov. 30
Topics:           Creating and using information, signaling

Case:             Car Leasing / Auto-by-Tel

                      American Automobiles: A New Lease on Life?

Readings:       Adam Brandenburger and Barry Nalebuff, Co-opetition, Ch. 7

International Perspectives

24. Dec. 2
Readings:        Michael Porter, The Competitive Advantage of Nations, Harvard Business Review,
                       March--April, 1990
25. Dec. 7
Case:               Tata Tea

26. Dec. 9
Topics:            Student Projects
 

Case List