Multi-Business Strategy (MBS)

PGP II; 2009-10; Term V elective: 3 credits

Instructor:
Srinivasan R (CSP) [Office: B-202; Phone: 91 80 2699 3143; Email: srini@iimb.ernet.in]

Course objectives
This course on Multi-Business Strategy seeks to build on the core course on Competition & Strategy.
While the Competition & Strategy course focuses on single-business firms, this course has an explicit
focus on strategies in multi-business firms. The course introduces students to issues of corporate
strategy, managing business houses, vertical integration, diversification, strategic alliances & joint
ventures, and mergers & acquisitions strategies. This course does not explicitly focus on
internationalization and globalization by firms, though most sessions deal with international firms/
strategies in the context of other corporate strategy decisions.

Pedagogy
The dominant pedagogy for this course would be the case method. Rigorous analysis of cases
provides opportunities to simulate real world inside the classroom, as well as enabling
participative learning. Lecture-discussions would be used to elucidate and summarize concepts and
theories. Student case projects also provide you with opportunity for deeper analysis and
exploration of multi-business strategies.
The course evaluation would have three components.
1. Meaningful class participation and quizzes: 20%
2. Case projects: 40%
3. Mid-term examination: 40%

Case Projects
As part of the MBS course, you are expected to work in small groups of three members, and study an
Indian multi-business firm. The purpose of the project is to understand the corporate strategy of
the firm, appreciate the challenges posed by the business environment, and analyze how the firm is
responding/ should respond to those.
Please choose an Indian company (a publicly listed company should help you source sufficient data)
that operates in multiple businesses. Document its diversification strategy over time and describe
how it has managed its portfolio of businesses. Elaborate on the dominant means of diversification
by the firm through strategic alliances, joint ventures, mergers & acquisitions, or in-house
development. Critically analyze the value the company has added by leveraging its corporate
resources and advantage.
Your report should highlight how you perceive the changes in the relevant business environment,
and what the company is/ should be doing. Your report should also contain your key learning from
the analysis that has implications for both the company, and corporate strategy, in general.
A mid-term submission of projects would be required around the middle of the term (dates would
be announced subsequently), apart from a final report, and a final class presentation of the project.

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Schedule
Module 1: Introduction to corporate strategy
Readings:

From competitive advantage to corporate strategy

Creating corporate advantage
Corporate strategy: The quest for parenting advantage

Session 1:
Case:

Overview and introduction to corporate strategy

None

Session 2:
Case:
Assignment
questions:

Understanding a firms corporate strategy

General Electric Strategic Position 1981
1. Why did GE experience profitless growth in the 1960?
2. Evaluate the companys response in 1972.
3. Evaluate the appropriateness of changes instituted by Reg Jones in 1977.
4. What challenges did Jack Welch face as GEs new CEO?

Session 3:
Case:
Assignment
questions:

Building corporate advantage

Monsantos March into Biotechnology (A)
1. Why did Monsanto decide to pursue biotechnology?
2. Evaluate the approach taken by Hanley and Schneiderman to build internal
capabilities for biotechnology at Monsanto. What could they have done
differently?
3. Identify and discuss the pros and cons of different ways in which Monsanto
could obtain external knowledge in biotechnology.
4. Why did Monsanto choose BST as the first product to pursue? Do you agree with
this choice? Why / why not?
5. Should Monsanto organize its biotechnology R&D by function or by market?
Why?
6. What direction should Monsantos biotechnology research take in the future?

Module 2: Managing a portfolio of businesses

Readings:

The nature of diversified business groups: A research design and two case studies
Why focused strategies may be wrong for emerging markets
The right way to restructure conglomerates in emerging markets

Session 4:
Case:
Assignment
questions:

Role of the corporate office

RPG Enterprises, 1995/ Wipro
1. Is it advantageous for a company to be part of RPG Enterprises?
2. Does the RPG Enterprises reputation help the group companies in any way?
3. How is this changing after 1991?
4. Evaluate the restructuring plan that Harsh Goenka has put in place.

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Session 5:
Case:
Assignment
questions:

Managing business groups in emerging economies

The House of Tatas, 1995: The next generation (A)
1. Which, if any, of the following initiatives undertaken by Ratan Tata do you think
were good ideas Creation of a group brand, building of equity interlocks
among the Tata companies, Sale of a part of Tata Industries Limited to the Hong
Kong based Jardine Matheson Group, and Revitalization of the Tata
Administrative Services?
2. What do you think of some critics opinion that Ratan Tata was moving the
group companies in exactly the opposite direction from where it should have
been going?

Module 3: Vertical Integration

Readings:

How business corporations grow

Is vertical integration profitable?
Manufacturing: The new case for vertical integration
Skate to where the money will be

Session 6:
Case:

Growth through vertical integration and diversification

None

Session 7:
Case:
Assignment
questions:

Defining the vertical boundaries of the firm

Strategic outsourcing at Bharti Airtel Limited
1. What must Bharti do well to succeed in the Indian mobile phone market? What
are Bharti's core competencies?
2. Do you think Bharti should enter the outsourcing agreements outlined by
Gupta? What do you see as advantages and disadvantages of such agreements?
How do the different outsourcing agreements work towards building these core
competencies?
3. If you were Bharti, what major concerns would you have about entering an
outsourcing agreement with IBM? With Ericsson, Nokia, or Siemens?
4. How would you structure the agreements to address your concerns and capture
any advantages you have identified? What governance mechanisms would you
design for the agreements?
5. Assume the role of IBM or Nokia. What major concerns would you have about
entering an agreement with Bharti? How would you structure the agreement
and the governance mechanisms?

Session 8:
Case:
Assignment
questions:

Managing a vertically integrated firm

Sharp Technology: Technology strategy
1. Why has Sharp been successful for so long?
2. Is Sharp today an end products or a components company?
3. Should Sharp enter into the Intel and Apple joint ventures?
4. How is Sharp able to coordinated and integrate activities across the corporation?
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Module 4: Diversification
Readings:

To diversify or not to diversify?

Why diversify? Four decades of management thinking
How Diversified should Indian Business Houses be?

Session 9:
Case:
Assignment
questions:

Diversification strategy
Asahi Glass Company: Diversification strategy
1. How successful have AGC diversifications been?
2. Did the company need to diversify? Did it choose appropriate businesses? The
correct mode for diversification?
3. What should AGC do with its electronics business today?

Session `10:
Case:
Assignment
questions:

Value creation through diversification

AOL-Time Warner
1. What are the expected benefits due to this merger?
2. How do these benefits fit with the corporate growth strategies of the two firms
involved?
MID TERM EXAMINATION

Module 5: Alliances and joint ventures

Readings:

When to Ally and when to Acquire

Launching a World-class Joint Venture
Competing in Alliance Constellations: A Primer for Managers

Session 11:
Case:

Growth through alliances, joint ventures and mergers & acquisitions

None

Session 12:
Case:
Assignment
questions:

Alliances as organizational forms

Corning: A network of alliances
1. How appropriate is Houghtons use of partnerships as a means of achieving his
strategy? What benefits and risks do you see? What advice would you offer him
in general about establishing alliances?
2. What implications will the concept of Corning as an evolving network have on
the firms management practice?
3. What are the criteria for evaluating the three proposals before the management
committee? How do the proposals meet these criteria?
4. What are your specific recommendations to the management committee about
the three proposals before them?

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Session 13:
Case:
Assignment
questions:

Managing alliances
Handspring Partnerships
1. Rank order the importance of Handsprings various partnerships. What criteria
did you use to rank the partnerships and why? How important were the
relationships of Handsprings founders to their ability to form partnerships?
With respect to the form and use of partnerships, how was Handsprings
position different from other start-ups? What are some of the detrimental
aspects of partnerships? How should a start-up avoid them?
2. What were the pros and cons to Handspring of licensing Palms OS? Should
Handspring have pursued parallel paths by developing their own OS, in addition
to licensing Palms? Were there special risks in the relationship with Palm? If so,
what were they?

Session 14:
Case:
Assignment
questions:

Managing international joint ventures

Xerox and Fuji Xerox
1. What role has Fuji Xerox played in Xerox.s global strategy? How do you expect
this role to change in the future?
2. Is Fuji Xerox a successful joint venture in 1990? How do you measure its
performance? Please be as concrete and specific as possible.
3. What were the key success factors in this alliance in the past? Do you expect
these factors to change in the future?
4. Consider the different options for reorganization listed in Exhibit 11. Select one
option in each functional area and be prepared to explain why you prefer it over
the others.

Module 6: Mergers & Acquisitions strategy

Readings:

The Dubious Logic of Global Megamergers

Building Deals on Bedrock
Why do firms merge/ acquire?
Compatibility in Corporate Marriages
Plan to Integrate your Acquisitions
A CEO Roundtable on Making Mergers Succeed
Integration Managers: Special Leaders for Special Times
Human Due Diligence

Session 15:
Case:
Assignment
questions:

Merger motives
Idea Cellulars acquisition of Spice Telecom
1. Do you think Idea Cellular should go ahead with the acquisition of Spice
Communications? What are the motives for Idea to acquire Spice? What are the
possible benefits for Idea Cellular due to this acquisition?
2. What would be the role of TMI in the merged entity? Should Idea buy out TMIs
stake as well?
3. How should Idea & Spice handle the revised M&A guidelines issued by DOT?
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Session 16:
Case:
Assignment
questions:

Mergers for international expansion and diversification

Hindalcos acquisition of Novelis: The making of a giant
1. Was the merger a good decision? Should it have happened at all?
2. Did Hindalco pay a fair price for Novelis?
3. Now that the deal has happened, how much value addition has been done to
both the parties involved in the acquisition? How much of Novelis turn around
can be attributed to Hindalco? How much value has been added to Hindalco by
Novelis?
4. Has Hindalco eroded the value to its shareholders?

Session 17:
Case:
Assignment
questions:

Capability acquisition M&A

Tata-VSNL: Strategic acquisition or strategic questions?
1. Identify the sources of competitive advantage for Tata-VSNL.
2. Critically evaluate VSNLs strategy of growth through acquisitions.
3. In the light of the competitive scenario described in VSNLs annual report,
describe how VSNLs strategy will help it develop the required competencies.

Session 18:

Presentation of case projects

Session 19:
Case:
Assignment
questions:

Post-merger integration
Asea Brown Boveri
1. What is the sequence of steps taken by ABB to manage the integration?
2. What is the role of the new organizational structure and systems in ensuring
that the organization manages its contradictions big and small; local and
global; and decentralized with central control?

Session 20:
Case:
Assignment
questions:

Post merger integration

Tata Tea Ltd. and Tetley, PLC (A)
1. What are the challenges in reaping the synergies in the merger?
2. What should be the priorities for Khusrokhan amongst the integration
problems? Which ones should he tackle first? Why?

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