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MOR 565
Alliances & Cooperative Strategy
SPRING 2014
Instructor: Kyle J. Mayer, Hoffman Hall 702
E-mail:
Phone (Fax): 213-821-1141 (Fax 213-740-3582)
Office Hours: Monday 8:00 – 9:20 and by appointment
Time & Room: MW 9:30 – 10:50, JKP 104
Course Scope and Mission
This course is intended to improve your ability to determine whether, when, and how to execute cooperative strategies as part of your firms’ overall strategy. The last decade has seen an explosion in cooperative activity between firms. As a result, it is likely that, regardless of your chosen career path, you will at some point either work for, help to establish, or compete with cooperative ventures. Managers considering collaborative activity face a range of issues: When should an interaction be structured as a joint venture, a contractual alliance, or simply as an arm’s-length contract? When should I prefer an alliance to doing the project entirely in-house? How can I best structure and manage this alliance - and what do I do to prevent competition between my partner and me within this alliance? How do I evaluate whether a prospective partner is best for me?
A final component of the course goes on to examine the choice between an alliance or M&A. When does in make sense to acquire another firm rather than working with via contract? What are some of the major challenges in trying to integrate an acquired company?
This course introduces students to the issues and analytical arguments behind these questions, drawing on recent advances in competitive strategy, organizational economics, and organizational behavior. Of course, even though it incorporates various theoretical perspectives, the course ultimately is designed to focus on the essential issues and problems of cooperative strategy as experienced by managers. The objectives of the course are to provide analytical frameworks and tools that will sharpen your ability to:
· Recognize and evaluate collaborative opportunities;
· Evaluate potential partners;
· Anticipate problems faced by cooperative ventures and to manage these effectively;
· Develop and assess an overall cooperative strategy;
· Compare the benefits of collaboration to M&A; and
· Prepare a coherent, internally-consistent plan and structure for a given collaborative venture.
Prerequisites
· Core strategy courses.
Required Reading Materials
· Case and readings packet from University Readers. Go to the following web address to order the reader http://www.universityreaders.com/students. The cases and readings for the first few weeks are available electronically for immediate access upon purchase of the readers.
Individual Consultation -- Office Hours, see above.
I am happy to meet with students to discuss progress or problems with the course materials and assignments. If you would like to meet, please contact me in advance to arrange a mutually convenient time. I am also available over the phone or via email most days.
Course FORMAT
this course will involve several different types of class sessions. Specifically, we will discuss cases, engage with guest speakers from industry, and bring in current topics in alliances and joint ventures from the business press. In addition to these activities, however, I will throw in a few other types of sessions as I want to mix up the course and provide a variety of different perspectives and topics to maximize the learning opportunities over a 15-week semester.
To provide a fuller perspective on the course topics, I will utilize some guest speakers and a few guest instructors. I will utilize approximately 4 guest speakers to provide an applied perspective of how these issues are experienced—mainly in the technology (software and medical device) and entertainment industries. I will also use guest instructors to provide different perspectives.
communication
Electronic communication for this course will take place through Blackboard, including lecture notes and information about the group project, etc. Check the Blackboard course page regularly.
Please note that when printing lectures that are posted in Blackboard, please check to see if there is any annotation in the Notes section of Powerpoint—I often use the Notes section to provide additional explanation or examples.
Students with disabilities
Any student requesting academic accommodations based on a disability is required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP. Please be sure the letter is delivered to me early in the semester. DSP is located in STU 301 and is open weekdays 8:30 a.m. - 5:00 p.m. The phone number for DSP is (213) 740-0776.
academic integrity
The following information on academic integrity, dishonesty, and the grading standard are placed here at the recommendation of the Marshall School of Business faculty and are taken from the Faculty Handbook.
“The University, as an instrument of learning, is predicated on the existence of an environment of integrity. As members of the academic community, faculty, students, and administrative officials share the responsibility for maintaining this environment. Faculty have the primary responsibility for establishing and maintaining an atmosphere and attitude of academic integrity such that the enterprise may flourish in an open and honest way. Students share this responsibility for maintaining standards of academic performance and classroom behavior conducive to the learning process. Administrative officials are responsible for the establishment and maintenance of procedures to support and enforce those academic standards. Thus, the entire University community bears the responsibility for maintaining an environment of integrity and for taking appropriate action to sanction individuals involved in any violation. When there is a clear indication that such individuals are unwilling or unable to support these standards, they should not be allowed to remain in the University.” (Faculty Handbook, 1994: 20)
Academic dishonesty includes: (Faculty Handbook, 1994: 21-22)
1. Examination behavior - any use of external assistance during an examination shall be considered academically dishonest unless expressly permitted by the teacher.
2. Fabrication - any intentional falsification or invention of data or citation in an academic exercise will be considered a violation of academic integrity.
3. Plagiarism - the appropriation and subsequent passing off of another’s ideas or words as one’s own. If the words or ideas of another are used, acknowledgment of the original source must be made through recognized referencing practices.
4. Other Types of Academic Dishonesty - submitting a paper written by or obtained from another, using a paper or essay in more than one class without the teacher’s express permission, obtaining a copy of an examination in advance without the knowledge and consent of the teacher, changing academic records outside of normal procedures and/or petitions, using another person to complete homework assignments or take-home exams without the knowledge or consent of the teacher.
Course Requirements and Evaluation
Participation – 25%
Regular attendance and class participation are critical to successfully completing this course. You are expected to participate actively in each class session. You are encouraged to prepare for class with your colleagues (after all, this is a course on cooperation). However, each member of the class should be fully conversant in the material. If for some reason you are not prepared, please let me know before the start of class to save us both the embarrassment of my calling on you.
Given the importance of class discussion, pre-class preparation is crucial. For cases, you should be prepared to set forth the core challenge facing the case protagonist(s), offer a critical assessment of the situation, and lay out cogently and persuasively a course of action. For readings, you should be prepared to outline the topic that each reading addresses, describe its central points, and offer your critical analysis of them. When cases and readings are assigned for the same day, you should be able to draw links between the case and reading in your discussion.
Assignment questions for each session will be posted to the course page in Blackboard at least a week prior to the class for which they are assigned.
It is important to appreciate that class discussion is itself a collaborative activity. Please listen carefully to one another and attempt to build on or constructively critique prior comments. An effective participant:
· Is a good listener
· Makes points relevant to the ongoing discussion
· Makes comments that add to our understanding of the reading or article
· Is willing to challenge ideas that are being expressed
· Integrates material from past classes, other courses
Individual Assignment 1—15 or 25%
Pick a case we will do during the term and prepare a report on what has happened since the end of the case. The report should not exceed three pages double-spaced (excluding any attachments) and should discuss not only what happened but also the lessons learned in light of the concepts discussed in class. The key aspects of this assignment are the takeaways from what has happened since the case and how they generalize to help us understand how to craft and manage alliances more effectively.
Group Project – 35%
Term projects will be completed in teams of 5-6 students. Teams should be finalized (and emailed to me) no later than Friday, January 25. Teams are used in this course because teams play central roles in organizations (and this is a course about alliances and cooperation). Working in teams provides you with an opportunity to learn from your colleagues, and practice (and evaluate your own effectiveness) working, managing, solving problems, and making strategic decisions in a setting that approximates the management teams typically charged with such tasks.
Your group will need to select a class session (four are reserved for this purpose on the class outline) and lead a 20 minute class discussion of an alliance or an alliance-related issue. You need to clear your selected alliance or issue with me in advance and I will meet with each group before their scheduled day to review their plan for the class discussion. In addition, groups must distribute their reading materials (that will be the basis of the class discussion) to their classmates at least one week prior to the day they lead the discussion. Groups should email case materials to me and I can post them to Blackboard.
You can use a current alliance as a vehicle for case discussion (as long as you can collect enough information to have a meaningful class discussion). Alternatively, you could find an article on alliances that you find interesting and want to bring before the class to debate some of the ideas it proposes. Another possibility is to examine some current trend(s) in alliances or a recent change in policy that may impact alliance formation or structure, and see what impact it is likely to have going forward. I am also open to other ideas, but every group must clear their topic with me at least three weeks before their scheduled date to lead the class discussion.
Rather than lumping all these group-led discussions together at the end of the semester, we will spread them over the second half of the semester in order to mix things up.
There will be two components to the first group project:
1. Leadership of the Discussion: I will evaluate how effectively you led the class discussion. Remember that this is NOT a presentation! You are leading a case discussion and need to facilitate the participation of your peers in the room. The entire team needs to be at the front of the room for the case discussion. 25% of the course grade.
2. Written discussion plan. On the day your group is to lead the discussion, you will turn in a 2-5 page write-up of your plan for leading the discussion. Sometimes discussions go off course (not a surprise, I know), and sometimes this can be a good thing, so I want to see what your plan was and how you balanced sticking with the plan and adapting to class comments. Having a plan is a key component of generating a good discussion. 10% of the course grade.
Final Assignment —15 or 25%
TBD
(I flexibly weight either the Individual Assignment or the Final Assignment up to 25%--the higher grade gets 25% and the lower grade gets 15%.)
Weekly Schedule—Subject to Change
Session / Topics / Case / Additional Readings#1 January 13 / Set expectations, explain flow of class, begin discussing alliance concepts we will cover / None / None
Module 1: The Basics of Collaboration: When to Ally and with Whom?
#2 January 15 / The value-logic of collaboration
When is collaboration better than doing it yourself? / Abgenix and the Xeno Mouse / Capron & Mitchell (Contract vs. Ally)
#3 January 22 / What are some of the main challenges that alliances face?
Discuss current alliances
The value logic of cooperation / None / Articles on current alliances to be distributed before class
#4 January 27 / What elements are important to consider when determining whether two firms are a good fit?
How does this vary based on industry context and the mission of the organization?
What are the differences between inter-personal and inter-firm relationships? / Share Our Strength & American Express: Developing Marketing Alliances (A) / Adobor (2006)
Module 2: Alliance Negotiation and Design
#5 January 29 / What role do contracts play in alliances and other inter-organizational relationships? / Discuss Mayer & Argyres article. / Mayer & Argyres (2004)
#6 February 3 / How do we negotiate and structure an alliance?
How do we deal with competition and cooperation, especially in an international context?
Alliances in the auto industry. / Honda Rover (A)
#7 February 5 / Guest lecture/discussion
Partnerships in High Tech Industries
Auste Viesulas,
Module 3: Collaboration & Competition in Alliances
#8 February 10 / Managing a licensing strategy. / Discuss Grindley & Teece article and news reports of Nortel patent auction / Grindley & Teece (1997)
Look up Nortel patent auction online
#9 February 12 / How do we govern alliances over time?
How do we balance incentives that don’t always align? / Wintel (A) / .
#10 February 19 / What is an alliance capability and how can a firm develop it? / Discuss Dyer et al and Kanter articles. / Dyer, Kale and Singh (2001) in SMR
Kanter (1994) in HBR
#11 February 24 / Managing tensions between competition and cooperation in the financial services industry. / Credit Suisse/Gerson Lehrman Group Alliance
Module 4: Corporate Alliances with NGOs & Other Non-Profits
#12 February 26 / How should NGOs and other non-profit groups best influence corporations?
What are some of the main issues facing corporate - non-profit alliances or JVs? / Starbucks and Conservation International / Peloza & Falkenberg (2009)
#13 March 3 / How can NGOs work effectively with corporations?
How can corporations balance NGO goals with their own profit directives? / Power Partnerships: Hybrid Electric Delivery Truck by Eaton, Fed Ex and Environmental Defense
Module 5: Different Types of Collaboration
#14 March 5 / Dividing tasks among partners
Problems of downstream conflict
Designing alliances in the aerospace industry
What does it take to design effective collaboration?
What role does the contract play in collaboration? / General Electric and SNECMA (A) / Mayer & Teece (2008)
#15 March 10 / Guest lecture/discussion
Noble Coker, Dalian Wanda Group (Former with Disney as Head of HK Disneyland)
#16 March 12 / TBD
Spring Break (March 17-21)
#17 March 24 / Crowdsourcing: A different kind of collaboration / TopCoder (A)
#18 March 26 / Student led discussion of selected alliance topics.
(Three groups) / Readings to be distributed the week before.
#19 March 31 / TBD
Module 6: International Collaboration
#20 April 2 / Managing joint ventures with high levels of political risk.
The risks of joint ventures with high fixed investment. / Journey to Sakhalin: Royal Dutch/Shell in Russia (A) / Bamford, Ernst & Fubini (2004)
Henisz & Zelner (2010)
#21 April 7 / Guest lecture/discussion
Global alliances and joint ventures in the entertainment industry
John Stewart, 20th Century Fox
#22 April 9 / Student led discussion of selected alliance topics.
(Three groups) / Readings to be distributed the week before.
#23 April 14 / Joint ventures as a vehicle for foreign expansion: opportunities and challenges / Shanghai General Motors: The Rise of a Late-Comer / Kale & Anand (2006)
#24 April 16 / Guest lecture/discussion
Alliances and collaboration in the medical device industry
Morgan McKeown, Edwards LifeSciences
Module 7: Alliances vs. Mergers & Acquisitions
#25 April 21 / When to acquire versus ally?
Balancing the challenges of cooperation across firm boundaries with post-merger integration issues and the challenges of running multi-business enterprises. / The Walt Disney Company and Pixar: To Acquire or Not to Acquire / Capron & Mitchell (Ally vs. Acquire)
#26 April 23 / Why is post-merger integration so difficult?
A more detailed look at the challenges of determining how much to integrate and how to do it. / Post Merger Integration at Northrop Grumman IT
#27 April 28 / Student led discussion of selected alliance topics.
(Three groups) / Readings to be distributed the week before.
Wrap-up
#28 April 30
Course Review / Putting it all together. / Discussion and course review. / None
Final Exam Date
May 9, 8 – 10 am / Individual Final Paper Due
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