Entrepreneurial
Strategy (PLCY/ENTP 427)
Fall 2008
Wednesday, 6pm-8pm
Room PLB 501
Assistant Professor Nicola
Lacetera
Email: nicola.lacetera@case.edu
Office Phone: 216-368-2197
Office 280
Office hours
Mondays, 2-4:30pm at Starbucks in E115
Introduction: Creating and managing a new venture inside or
outside a corporation is a task that few individuals are able to accomplish,
even though many profess the desire. The
primary goal of this course is to provide an understanding of entrepreneurship
and the entrepreneurial process. The
course will broaden a basic understanding obtained in the functional areas as
they apply to new venture creation and growth.
While most of the examples in class will be drawn from
new venture formations, the principles also apply to new business development
in corporate settings and to non-profit entrepreneurship.
Audience: The
class is of relevance to students interested in starting new businesses, as
well as to students thinking about working in consulting or finance.
Teaching method: this course takes the form of a case-based
seminar. By the end of the first class (which will be run by me), three
teams will be formed. The teams will alternate, from class 2, in leading the discussion
of that class’ assigned case(s). The team in charge will prepare a
presentation, based on the case and the other readings, where the case is first
described, the major entrepreneurial challenges are highlighted, prescriptions
are proposed, and an attempt to generalize beyond the specific case is made.
The other team will propose additional thoughts, different opinions on the
course of actions, other examples and business cases of relevance, and so on.
For this teaching method to work, you are
expected to come to class well prepared to discuss the case studies and reading
materials. Read the cases in advance.
The articles listed among the
required readings will help you to give some background to the cases and to analyze them with greater details. You
should read at least some of them. The discussion questions at the end of each
section (see below) will guide you preparation and our in-class discussion.
Final project: Each of the two teams will
elaborate a business plan. The team will work on a business plan throughout the
course, will meet with me at least once to discuss the progress of the work and
any other related issue, and will send me, fortnightly, 10-line progress
reports. The last 2 class meetings will be dedicated to the presentation of the
business plans by all teams. In fact, each team will have a double role. In
addition to working on and present its own plan, each team will be called to
discuss and evaluate this other team’s business plan. Each team will therefore
play the entrepreneurs with respect to its own plan, and, say, the venture
capitalist (or more generally the financing party) with respect to that team it
is matched to.
Grading: Class attendance and
participation will count for 50% of the grade. The final project/business plan
(and discussion of the other team’s plan) will make up for the remaining 50% of
the final grade. Note that no single component of the grade is base on strictly
individual performance. This is how things work in most real-life, work
environment: it is important to be able to work in team, exert pressure (and
respect) each other, and to be able to clarify things if contribution is
uneven. Each of you should also feel free to contact me if he/she feels the
distribution of work in a team is unfair, and I will try to resolve matters if
possible.
Course material Most of the readings will
be available in an online reading pack though www.xanedu.com. Some readings are freely available online. In
the detailed syllabus below I provide links to these readings.
Academic Integrity University policy on plagiarism and academic integrity will be
rigorously enforced. The University does not tolerate cheating or plagiarism in
any form. Cheating or plagiarism will result in a failing grade. Ignorance is
not considered an excuse. If you are not sure whether or not something you plan
to submit would be considered either cheating or plagiarism, please do not
hesitate to ask me, or your other faculty.
Students with Disabilities I will be happy to meet with students with
disabilities and who may need individual arrangements. Please inform me of any of these issues at the beginning of the course.
The Coordinator of Disability Services can be contacted at 216-368-5230.
Detailed Program
The class will meet once a
week. Cases are indicated with a [C].
|
Class 1 |
Introduction. Spotting (creating?) and exploiting
opportunities ·
Why do we care
about entrepreneurship? ·
Common pitfalls
facing new start-up firms ·
Does
entrepreneurship (always) pay? ·
Entrepreneurship
as an engine of economic development and growth ·
Spotting and
exploiting entrepreneurial opportunities
[C]
“R&R,” HBS Case 9-386-019. [Course pack] Economist,
2006: “Searching for the invisible man”, March 9th. [Blackboard] Bhide,
1996: “The questions every entrepreneur must answer”, Harvard Business Review
(12 pages) [Course Pack] Stern,
S., 2005: “Economic Experiments – The role of Entrepreneurship in
Economic Prosperity”, Kauffman Foundation, pages 16-21. “What
it Takes to Start a Startup” by. B. O’Reilly, Fortune, June 7,
1999, pp. 135-140. Questions
for discussion Ø
Do you think
that O’Reilly’s and Bhide’s analyses are
contrasting? Why or why not? How do they apply to 3M? Ø
Is Bhide
leaving out some important questions? If so, which ones? Ø
How are
entrepreneurial opportunities identified? What are the criteria you would use
to assess the viability of an entrepreneurial opportunity? What leads to
opportunity windows? Ø
What is the
business Bob Reiss is considering to enter? Ø
Are there
entrepreneurial opportunities in this business? Is this a new product? o
Analyze the
demand conditions (will people buy the product? What evidence do we have?) and the supply conditions (are there other competitors?
What are their characteristics? Are they doing well in the business?) o
Does Bob Reiss
have the characteristics to be successful in this business? Which ones? Ø
How did Bob
Reiss organize the production and distribution of the product? Did this differ from the competitors? o
How many people
did Trivia, Inc. employ? Ø
Was Reiss
successful? How do you assess this? Ø Ø Should Reiss go for “Whoozit”?
Why or why not? Ø
Ø
Comment the
following claim: “Entrepreneurial opportunities are not found: they are created.” Suggestion
for further reading: B. Nalebuff and I. Ayres, Why Not?, Harvard Business School Press. |
Aug. 25 |
|
Class 2 |
Entrepreneurial strategy: how to compete against
established firms? [C] “Ikea
Invades America”, HBS case. [Course pack] [C] “Judo in Action” HBS 9-703-454. [Course pack] “Creating New Market Space” by W.C. Kim and R. Mauborgne, Harvard Business Review, January-February
1999, pp. 83-93 (reprint 99105). [Course pack] Yoffie, D. and Kwak, M., 2002: “Judo Strategy: 10 Techniques for Beating a Stronger
Opponent”, Business Strategy Review, 13, 1, 20-30. Ian C. MacMillan, Rita Gunther
McGrath, 1997: “Discovering new points of differentiation”, Harvard Business
Review, 1997. [Course pack] Questions for discussion Ø What made IKEA successful, abroad and in the US? How
could they make it, against a solid and established “local” competition? Ø What was the competitors’ reaction, if any? Or, do
you expect incumbent to react more forcefully? Ø Is IKEA a case of “clever” differentiation? In what
sense? Ø Is a differentiation strategy a form of Judo
Strategy? Ø How can new ventures compete against established
firms, which have both more resources and an established reputation? Ø Is the “Judo strategy” approach applicable to any
firm, industry, and technology? How would you apply the approach, for
example, to the case of low cost airlines like RyanAir? Ø What did you learn about the “vignettes” of “Judo in
Action”? Do you have knowledge/experience of further, related examples? Suggestions
for further readings R.G. McGrath and I. MacMillan, The Entrepreneurial
Mindset, HBS Press, 2000 Adner, R., 2006: “Match your Innovation Strategy to your
Innovation Ecosystem”, Harvard Business Review "How do Entrepreneurs craft Strategies that
Work?" by Amar Bhide
HBR March-April 1994 Yoffie and Kwak, Judo Strategy,
HBS Press, 2001 Brandeburger-Nalebuff, Coopetition. |
Sept. 8 |
|
Class 3 |
Strategy and Organization: Incentives in
organizations. Alliances, licensing, joint ventures [C]
Ghemawat, P. 1995: “Competitive advantage and
internal organization: Nucor revisited”, Journal of Economics and Management
Strategy [Blackboard] [C]
Kerr, Steven. 1975: “On the Folly of Rewarding A, While Hoping for B”, Academy
of Management Journal 18:769-83 [Blackboard] [C] “Abgenix
and the Xenomouse”, HBS Case [Course Pack] Questions
for discussion Ø What made Nucor so successful? Ø Is the company working in a profitable industry or
niche? Ø How are the competitors doing? Ø What incentives does Nucor provide to its workers? o
Is Nucor’s incentive
system an example of the ‘folly to reward A while
hoping for B”? Why or why not? Ø What are the upsides and downsides of these three
alternatives for Abgenix? [Look both at financial
and organizational issues!] o
Licensing the
technology to Pharmacol o
Teaming up and
co-develop the technology with Biopart o
Go it alone
with clinical trials? o
Something else? What option would you choose, and why? |
Sept. 15 |
|
Class 4 |
Business plans and business models: creating and
capturing value “How to Write a Great Business Plan” by W.A. Sahlman, Harvard Business Review, July-August
1997, pp.98-108 (reprint 97409). [Course pack] [C] “Zipcar: Refining the
Business Model,” HBS Case 9-803-096. [Course pack] Zweidler, A. et al., 2005: “The
Real Option approach to capital decisions” Questions for
discussion: Ø What is Zipcar’s Business
Plan? o
Characteristics
of the Business o
The People
involved o
The Context –
industry and environmental characteristics Ø What is Zipcar’s Busines Model? o
Major drivers
of revenues, costs economic performance: play with some numbers!
(Revenues/costs per car, subscribers...) o
How has the
business model changed from Dec. 1999 to May 2000? o
Are the preliminary
results encouraging? o
What would you
tell an investor, in two minutes, to convince him/her to invest in Zipcar? o
As an investor,
what would you ask to Zipcar? o
As a consultant
for Mycitywheels here in Cleveland, and given the
experience of Zipcar, what would you prescribe? Ø Are the Zipcar founders
somewhat following a “real option approach”? Suggestion for further reading R.G. McGrath and I. MacMillan, The Entrepreneurial
Mindset, HBS Press, 2000 |
Sept. 22 |
|
Class 5 |
Financing issues:
banks, venture capital, and government initiatives [C] Walnut Venture Associates (A), HBS case
9-899-062. [Course pack] [C] Walnut Venture Associates (D), HBS case
9-899-097. [Course pack] Gompers, P. and Lerner, J.,
2001: “The venture capital Revolution”, Journal of Economic Perspectives, 15,
2, 145-168. [Jstor] (Read only pages 145 to 152) Zider, B., 1998: “How venture capital works”, Harvard
Business Review. [Course pack] Background reading Sahlman, W., 1992: “Note on the Financial Perspective: What
Should Entrepreneurs Know?”, HBS Note. [Course pack] Questions
for discussion
|
Sept. 29 |
|
Class 6 |
Guest speaker – Kate Kerr,
Small Business Administration specialist Challenges in financing new ventures (6-8pm, room TBA) |
Oct. 6 |
|
Class 7 |
Guest speaker:
Glenn Mercer, McKinsey “The evolution of the automobile
industry and how to make money around it” (6-8pm, room TBA) |
Oct. 13 |
|
Class 8 |
Managing growth [C] Anasazi Exclusive Salon Products, Inc.,” HBS
case 9-295-111. [Course pack] “Note on Building the Self-Sustaining Firm” by A.
Bhide, HBS Note 9-395-200. [Course pack] Questions for discussion Ø Do you agree with Anasazi’s
new strategic plan to meet its milestones? Why or why not? What specific
managerial actions should be taken to implement the recommendations? Ø What does Bhide have to say on this
matter? Do you agree? Why or why not? Ø Have you experienced “growth problems”
in your business career? If so, did they look like the ones described in the Asanazi case? |
Oct. 27 |
|
Class 9 |
Exit: success or failure? [C] Nantucket Nectars,” HBS case 9-898-171. [Course
pack] The Harvest and Beyond by J.A. Timmons, Chapter 18
in New Venture Creation, Irwin McGraw-Hill, 1999, pp. 573-580. [Blackboard] Questions for discussion Ø Should Nantucket Nectars undergo an IPO or sell a
part of the company? Why? If you recommend the latter, who should it sell to
and why? Ø Have you ever “failed” in you
business experience? Do you agree that it can be a good thing, for you and
for society? Why or why not? |
Nov. 3 |
|
Class 10 |
Intrapreneurship: can you be entrepreneurial within
an established company? [C] “3M Optical Systems:
Managing Corporate Entrepreneurship” HBS case 9-395-017. [Course pack] [C] Tripsas, M. and
Gavetti, G., 2000: “Capabilities, Cognition, Inertia: Evidence from Digital
Imaging”, Strategic Management Journal, 21, 10, 1147-1161. [Jstor] Govindarajan-Trimble, 2005 HBR: “Building breakthrough
businesses within established organizations”. [coursepack] Questions for discussion Ø As Andy Wong in the 3M case, how would you handle
the authorization for expenditure (AFE) for the relaunch
of the privacy screen? Ø As Paul Gehler in the 3M
case, would you approve the AFE if Wong sent it to you? Ø In what ways is entrepreneurship different in the
context of an established firm relative to an independent start-up? Ø Have you ever tried to advance a new idea within an
established company, or have you seen anybody trying to do that? How did it
go, and why? Ø Is Tripsas and Gavetti’s analysis of Polaroid’s difficulty in entering
the digital camera market convincing? Do you have knowledge/experience of
similar examples? |
Nov. 10 |
|
Class 11 |
Family businesses ·
Nepotism vs.
professionalism. The management and the family ·
Succession and
continuity [C] “Hancock Land Company
and Hancock Lumber Company”, HBS case. [Course pack] [C] “Precista
Tools Ag, A and B”, HBS Case. [Course pack] [C] Bridge, R., 2006: “Son
overtake stationary dad”, The Sunday Times, July 9th. Questions
for discussion Ø
How would you
handle the situation at Precista? What went wrong?
Are the things that went wrong related to Precista
being a family Business? Ø
Why would you
ever leave your company to a family member rather than going “the market” to
find the best available owner and manager? What is the benefit to keep a
company within the family? Ø
Have you ever
had direct or indirect experience of family businesses that went very well or
very bad? In either case, can you attribute the results to the business being
family-run? |
Nov. 17 |
|
Class 12 |
Guest speaker – Frank Nagorney (Cowden,
Humphrey, Nagorney and Lovett Co., LPA Legal issues in new business creation |
Nov. 24 |
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Class 13 |
Team projects presentations |
Dec. 1 |
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