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Communication and Global Competition

COMM 545

Spring 2000

Organizations increasingly use information and communication resources to secure or maintain a competitive edge. Researchers and practitioners are directing considerable attention to the changes being wrought within and across industries through advanced communication systems. This course reviews this literature and presents a synthesis of the major ways in which information and communication processes and technologies can energize these changes.

The course focuses initially on the basic elements of industry structure and competition and shows how communication technologies have impacted these in a variety of different industries. Competitive strategy involves crafting goals, policies and plans that identify how an organization positions itself in its competitive environment. These policies are under the purview of top management, yet all parts of the organization at all levels have the opportunity contribute to their development. Middle managers can best contribute to this important process from a base that includes a thorough understanding of business policy-making goals and processes. There are five key concerns in the process of strategy formulation. The first is the structural features of the industry or industries in which the organization locates itself and how they are changing. Industry structure may be more or less favorable for competition. The second is the firm’s position within the industry. Proper positioning can assist an organization in successfully negotiating even less structurally attractive industries. Conversely, poor positioning can impair competitive performance of an organization even in structurally favorable industries. The third is the resources that firms can leverage to secure a unique advantage, and the associated core competencies. The fourth is the ability to sustain a competitive advantage over the long term. This concern is particularly important because industries and resources are dynamic and an organization must constantly improve its sources of competitive advantage if it is to sustain a superior position. The fifth is the national infrastructure that can support or inhibit global competitive advantage for firms. Communication and information technologies have been very instrumental in helping firms to identify and implement innovations that keep an organization one step ahead of the competition. When carefully envisioned and implemented, programs for innovation through communication and information technologies and processes can be a source of dynamic competitive advantage.

The course reviews rationales and techniques employed by firms to alter strategy through communication and information systems to obtain and sustain strategic advantage. The course employs cases to illustrate how firms have used communication systems to accomplish these goals, and to highlight issues in the structure and competition of communications and related industries in the global context. The course is designed to help the middle manager to become an astute observer and analyzer of the role of communication in competition. This outcome requires development of a perspective on communication and competition at the industry level and mastery of analytical skills needed to understand strategic choices. Sources of competitive advantage through communication are everywhere in an organization. All employees can contribute to assisting organizations in employing information and communication process and technologies in the service of obtaining and sustaining competitive advantage through communication.

Class sessions will include a combination of lecture, film, discussion of reading assignments, discussion of scanning reports and case discussion. This is a graduate seminar. Each of us needs to be prepared to contribute to the discussion in the classroom.

Brown, S. L. & Eisenhardt, K. M. (1999). Competing on the Edge: Strategy as Structured Chaos. Boston, Mass.: Harvard Business School Press. ISBN 0-87584-754-4

A reading packet should be purchased at the Bookstore. All cases and several of the readings are in the packet. Other readings are on reserve in the Annenberg Resource Center located on the first floor of the Annenberg School. Additional readings may be added..

Each of you will be asked to be alert to developments in key industries and communication technologies on an everyday basis. You should scan relevant general business periodicals such as the Wall Street Journal, New York Times, Los Angeles Times, Forbes, Fortune, Business Week, and industry-specific periodicals such as Variety, Communication News, Advertising Age, etc. Electronic media, of course, are also available for scanning. Each week you should come to class with a summary of a development related to communication and competition that you uncovered in your scanning. You should be prepared to share a brief summary of it with the rest of the class.

You will be asked to complete a major case project. The case will present your own research and analysis of either (1) competitive strategy for a communications firm and/or industry, or (2) the recent or planned use of a communication technology or process for competitive advantage. The case will be presented in both oral and written form. You are encouraged to work in teams, but you may complete the project individually if you prefer.

The class as a whole will prepare a resource set derived from current books on course-related topics. Each class member is asked to select a current book and prepare a short abstract of its main ideas. These abstracts will be presented in class and also compiled and distributed to everyone in the class.

The relative weights of the components are: class participation and scanning reports - 20%; case project - 45%; abstract - 35% .

This module introduces (a) the traditional concepts of industry structure and competitive positioning, (b) basic rationale that underlies the alternative perspective, Strategy as Structured Chaos.

This module reviews the five forces model of industry structure and describes how industries can be analyzed using this model. The issue of convergence of communication and information-related industries is described to show the increasing blurring of industry boundaries, with direct implications for using industry as a unit of analysis. This segment also overviews four generic competitive strategies: broad differentiation, focus differentiation, broad cost, and focused cost. African Communications Group illustrates the traditional use of industry analysis.

Merrill, Lynch, Pierce, Fenner & Smith: How to Read a Financial Report; sections on the balance sheet and income statement (Hand-out)

A major alternative to traditional industry analysis is discussed: the core competence perspective. The case illustrates how Sharp Corporation invested considerable effort in identifying, developing and employing its technologies to develop innovative products in a competitive environment. Eastman Kodak exemplifies how organizations make choices regarding which competencies to develop internally versus which to outsource. The case illustrates how core competencies are identified, how outsourcing decisions are made, and how to best manage the relationships thus created with suppliers.

Prahalad, C.K. & Hamel, G. (1990). "The Core Competence of the Corporation." Harvard Business Review, 68, 79-91.

Quinn, J.B. & Hilmer, F.G. (1994). "Strategic Outsourcing". Sloan Management Review, 35 (4), 43-55.

The value chain is a key concept for understanding the scope of an organization and how organizational activities can create value for the customer--the key to success in an enterprise. The virtual value chain considers the virtual world of information, in which managers can create value through information-gathering, production, and distribution. The Otisline case is particularly instructive about how communication and information technology can be deployed so as to impact all aspects of the value activities of organizations.

Norman, R., & Ramirez, R. (1993). "From Value Chain to Value Constellation: Designing Interactive Strategy." Harvard Business Review, July- August, pp. 65-77.

Rayport, J.F. & Sviokla, J.J. (1995). "Exploiting the Virtual Value Chain". Harvard Business Review, 73 (6), 75-86.

This segment introduces models and techniques for analyzing the behavior of competitors in an industry, based on existing analysis of industry structure. The segment also describes communication mechanisms that can be used to send signals to the market and to key constituencies. A final view is presented through an analysis from game theory. The Polaroid-Kodak case introduces analysis of competitor moves and game theory, and leads students through a series of 10 sequential decisions as the battle between Polaroid and Kodak develops in the instant photography business.

Porter, M. (1980). "Market Signals" and "Competitive Moves", Chapters 4 & 5 in Competitive Strategy. New York: Free Press.

Few organizations today are truly national in scope. To effectively compete, most organizations must confront the international market landscape. This involves different types of regulation across nations, different consumer demands, national sources of advantages through advanced and specialized factors, and cultural considerations. The readings present a manifesto for global scope. Microsoft must decide how to design a new product for the global market and to position the product around the world. Disney Consumer Products must decide whether and how to introduce its products into the Lebanese market.

Porter, M. (1990). "The Competitive Advantage of Nations." Harvard Business Review, March-April, pp. 73-93.

Emerging industries and uncertain environments present special challenges that require careful strategic analysis. The strategies that are effective in established industries may backfire in the emerging context. There are many challenges in determining how to best influence the development of the industry, as well as deciding when is most advantageous to enter.

Porter, M. (1980) "Competitive Strategy in Emerging Industries". Chapter 10 in Competitive Strategy. New York: Free press.

Brown, S. & Eisenhardt, K. (1999). "Strategic Challenge of Change" and "Playing the Improvisational Edge". Chapters 1 & 2 in Competing on the Edge: Strategy as Structured Chaos. Cambridge, Mass: Harvard Business Press.

This segment focuses on how organizations use communication and information technology to create linkages with other firms and thus create a competitive edge. The Partners case highlights the effect of national policy on industry and how even non-profit firms must consider careful strategic positioning. Five Boston hospitals have too much overlap of services and decide to develop a concerted strategic response. Mips Computer Systems examines the employment of alliance clusters.

Brown, S. & Eisenhardt, K. (1999). Chapter 3 "Capturing Cross-Business Synergies" in Competing on the Edge: Strategy as Structured Chaos. Cambridge, Mass: Harvard Business Press.

Gomes-Casseres, B. & Leonard-Barton, D. (1997). "Alliance Clusters in Multimedia." In D. B. Yoffie (Ed.), Competing in the Age of Digital Convergence (pp. 325-369). Boston: Harvard Business School Press.

In today's uncertain markets strategy must evolve. Strategy makers can engineer this evolution so as to build the future in ways that capitalize on the advantages of the past, say Brown and Eisenhardt. They argue that competencies should be viewed as a "genetic sequence" rather than as a few fixed "core" capabilities. They draw on evolutionary theory to propose strategies based on mutation and recombination. The Dell Computer Corporation case focuses on the strategic issues facing Dell in 1994. How should Dell's strategy evolve? Should they diversify into laptops (where they have failed before), diversify into the server market (potentially high growth), or globalize?

Brown, S. & Eisenhardt, K. (1999). "Gaining the Advantages of the Past". Chapter 4 in Competing on the Edge: Strategy as Structured Chaos. Cambridge, Mass: Harvard Business Press.

Magretta, J. (1998). "The Power of Virtual Integration: An Interview with Dell Computer's Michael Dell." Harvard Business Review, March-April.

Planning for the future is tremendously challenging in uncertain markets. How does one probe the uncertain future and still conduct appropriate strategic planning? And, once a plan is crafted, how can it be implemented?

Brown, S. & Eisenhardt, K. (1999). "Winning Tomorrow Today" and "Growing the Strategy". Chapters 5 & 7 in Competing on the Edge: Strategy as Structured Chaos. Cambridge, Mass: Harvard Business Press.

How often should organizations make strategic changes such as introducing new products? A time-paced strategic view argues that change should be made at selected time intervals (e.g., introduce a new product every 9 months) rather than in response to events (e.g., respond to a move by a competitor). In rapidly changing markets, time pacing is becoming an important strategic weapon. 3M uses a time pacing strategy, as evidenced by its mandating that 25% of revenue must derive from new products. Why is 3M so innovative? In the case, 3M's Optical Systems unit must decide whether it is time to abandon a project (development of a computer privacy screen) that has failed so far, or whether more resources should be invested in it.

Eisenhardt, K. & Brown, S. (1998). "Time Pacing: Competing in Markets that Won't Stand Still." Harvard Business Review, March-April.

The Singapore case explores how nations can exploit a diamond of national advantage as a context for its national firms, but also how a country positioned itself strategically to be the information and communication capital of southeast Asia. The case describes the historical context beginning with independence in the late 1960. It describes President Lee Kuan Yew’s vision and its implementation over several decades through the TradeNet Information technology system. TradeNet is an interorganizational strategic application with important impacts on trade, but also an information and communication infrastructure that serves as a platform for launching additional applications. The case also introduces the concept of a national information infrastructure (NII) and the Singaporean concept of the "Intelligent Island". Hong Kong’s Tradelink provides a second country’s perspective on EDI implementations.