University of California San Diego Management Questions please use the reading material and course handout to complete the questions. page limit: approxima

University of California San Diego Management Questions please use the reading material and course handout to complete the questions. page limit: approximately 5-7 pages (approximately 1 page per question). please let me know if you have any questions. FINAL: MGT 112
-Please answer all questions
-5 short essay questions (5 points each)
-Total points that can be achieved (25 points)
-Please upload the finished document to TritonEd by Jun 12, 10pm.
-Average time to finish the assignment: approximately 180 mins
-The exam is open book/open notes
-page limit: approximately 5-7 pages (approximately 1 page per question)
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1. Building on the case study “General Motors and The Chevy Cobalt Ignition
Switch Crisis,” what would be your recommendations to the CEO for an
appropriate communication response (crisis communication)? Please analyze
how the company can try to avoid similar crises in the future?
2. Using a company of your choice, how would you build up and implement a
successful value proposition around ‘reverse innovation,’ building on the article
on “Engineering Reverse Innovations.” Which companies/industries could be less
suitable for reverse innovation and why?
3. Building on the article on “Embracing Agile” (Rigby et al., 2016, Harvard
Business Review), please critically analyze the conditions that are favorable and
unfavorable for agile. Also, please describe and analyze two recent industry
examples, where companies successfully implemented agile approaches.
4. Please analyze some of the key synergies that Hyundai could try to materialize
by acquiring Kia Motors, building on your reading of the case “The Acquisition
and Restructuring of Kia Motors by Hyundai Motors.” Which cultural aspects
need to be evaluated and carefully assessed when acquiring Kia?
5. Please develop and analyze a Business Model canvas (see next page) for one of
the below examples:
-A new food truck on campus (you can choose any food truck you like)
-A company of your choice.
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Strategy
Session 6
Game Theory, Strategic Restructuring,
and Turnarounds
San Diego, CA
AGENDA
§ Game Theory and Strategic Management
§ Strategic Restructuring and Turnarounds
§ Managing Adaptations
§ Strategy Tools
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1
Game Theory
History and Overview
Overview:
-Decision Making especially
regarding cooperation and
conflict
-Logical Decision Making in
Human Behavior
History:
John von Neumann (1928,
1944) Theories of Games
and Economic Behavior
John Nash (1950) on NonCo-operative Games
Applications:
Economics (11 Nobel
Laureates), Political
Science (Decision Making),
Biology (Signaling Theory)
Simultaneous Games – Matrix
Sequential Games – Game Tree
Repeated Games
Adapted from Besanko et al. Economics of Strategy. Wiley.
Game Theory
Simultaneous Games – Matrix
Company B
Don’t
Expand
Expand
Don’t
Expand
17, 17
15, 21
Expand
21, 15
16, 16
Company A
-simultaneous and independent decision making
-all decision makers rational decisions
-anticipation of likely actions of competitors
Adapted from Besanko et al. Economics of Strategy. Wiley.
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Game Theory
Simultaneous Games – Matrix
Company B
Don’t
Expand
Expand
Don’t
Expand
17, 17
15, 21
Expand
21, 15
16, 16
Company A
Adapted from Besanko et al. Economics of Strategy. Wiley.
Game Theory
Simultaneous Games – Dominant Strategy
Company B
Don’t
Expand
Expand
Don’t
Expand
17, 17
15, 21
Expand
21, 15
16, 16
Company A
Dominant Strategy: Expand
-Take the position of company A:
-If company B does not expand, your choice is between 17 and 21, so company A expands
-If company B expands, your choice is between 15 and 16, so company A expands
-so, no matter what company B does, company A expands
-this is a dominant stratregy
Adapted from Besanko et al. Economics of Strategy. Wiley.
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Game Theory
Simultaneous Games – Matrix
Company B
Don’t
Expand
Expand
Don’t
Expand
17, 17
15, 21
Expand
21, 15
16, 16
Company A
Adapted from Besanko et al. Economics of Strategy. Wiley.
Simultaneous Games – Dominant Strategy
Company B
Don’t
Expand
Expand
Don’t
Expand
17, 17
15, 21
Expand
21, 15
16, 16
Dominant Strategy: Expand
Game Theory
Company A
-Take the position of company B:
-If company A does not expand, your choice is between 17 and 21, so company B expands
-If company B expands, your choice is between 15 and 16, so company B expands
-so, no matter what company A does, company B expands
-this is a dominant strategy
Adapted from Besanko et al. Economics of Strategy. Wiley.
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Game Theory
Simultaneous Games – Nash Equilibrium
Company B
Don’t
Expand
Expand
Don’t
Expand
17, 17
15, 21
Expand
21, 15
Company A
Nash Equilibrium
16, 16
-Nash Equilibrium:
-simultaneous and independent decision, one shot
-no company is able to benefit by changing strategies while the other company keep theirs unchanged
-Company A maximizes profit Counting in company B’s strategy
-Company B maximizes profit Counting in company A’s strategy
Adapted from Besanko et al. Economics of Strategy. Wiley.
Game Theory
Sequential Games – Game Tree
Company B
Small
Company A
Small
Small
Small
-sequential decision making
-all decision makers rational decisions
-anticipation of likely actions of competitors
Adapted from Besanko et al. Economics of Strategy. Wiley.
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Game Theory
Sequential Games – Subgame Perfect Nash Equilibrium (SPNE)
Company B
(18, 18)
Small
(15, 19)
(9, 18)
(19, 15)
Company A
Small
Small
(16, 16)
(8, 12)
(18, 9)
Small
-backward induction (foldback method)
-each decision node is represented by green squares
-1. What is company B’s optimal decision for each of company A’s choices
(12, 8)
(0, 0)
Adapted from Besanko et al. Economics of Strategy. Wiley.
Game Theory
Sequential Games – Subgame Perfect Nash Equilibrium (SPNE)
Company B
(18, 18)
Small
(15, 19)
(9, 18)
(19, 15)
Company A
Small
Small
(16, 16)
(8, 12)
(18, 9)
Small
-backward induction (foldback method)
-each decision node is represented by green squares
(12, 8)
(0, 0)
Adapted from Besanko et al. Economics of Strategy. Wiley.
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Game Theory
Sequential Games – Subgame Perfect Nash Equilibrium (SPNE)
Company B
(18, 18)
Small
(15, 19)
(9, 18)
(19, 15)
Company A
Small
Small
(16, 16)
(8, 12)
(18, 9)
Small
(12, 8)
(0, 0)
-backward induction (foldback method)
-each decision node is represented by green squares
Adapted from Besanko et al. Economics of Strategy. Wiley.
Game Theory
Sequential Games – Subgame Perfect Nash Equilibrium (SPNE)
Company B
(18, 18)
Small
(15, 19)
(9, 18)
(19, 15)
Company A
Small
Small
(16, 16)
(8, 12)
(18, 9)
Small
-backward induction (foldback method)
-each decision node is represented by green squares
-Best outcomes for company B are highlighted in Red Fond
(12, 8)
(0, 0)
Adapted from Besanko et al. Economics of Strategy. Wiley.
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Game Theory
Sequential Games – Subgame Perfect Nash Equilibrium (SPNE)
Company B
(18, 18)
Small
(15, 19)
(9, 18)
(19, 15)
Company A
Small
Small
(16, 16)
(8, 12)
(18, 9)
Small
(12, 8)
-backward induction (foldback method)
-each decision node is represented by green squares
-Best outcomes for company B are highlighted in Red Fond
-Company A’s choices are now highlighted in
(0, 0)
-foldback tells us that if company A chooses “Large”, given company B’s optimal reaction, the profit of company A
will be 18
-The SPNE is for company A to choose “Large” and for company B to respond with “Don ’t expand”
Adapted from Besanko et al. Economics of Strategy. Wiley.
Game Theory
Simultaneous Games – Prisoner’s Dilemma
Prisoner B
Stays Silent
(Cooperate)
Betrays
(Defect)
Stays Silent
(Cooperate)
-1, -1
-3, 0
Betrays
(Defect)
0, -3
Prisoner A
Nash Equilibrium
-2, -2
-Prisoner’s Dilemma:
-simultaneous, independent decision, no later retributions
-Defecting is the dominant strategy for prisoners A and B
-The “Dilemma” is that mutual cooperation would yield a better outcome
-however, the choice to cooperate on an individual level is not rational
Adapted from Besanko et al. Economics of Strategy. Wiley.
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Game Theory
Repeated Games – Grim Trigger Strategy
Prisoner B
Stays Silent
(Cooperate)
Betrays
(Defect)
Stays Silent
(Cooperate)
-1, -1
-3, 0
Betrays
(Defect)
0, -3
-2, -2
Prisoner A
-Grim Trigger Strategy:
-repeated game scenario
-grim trigger is a trigger strategy
-Initial choice is co-operate
-as soon as opponent defects (trigger), you defect forever
-most strictly unforgiving strategy in a repeated game
Adapted from Besanko et al. Economics of Strategy. Wiley.
Game Theory
Repeated Games – Discount Rate
Future payoffs are discounted (less valuable)
-interest rates
-value of potential future consumption is < current consumption Prisoner B Example Prisoner A Stays Silent (Cooperate) Betrays (Defect) Stays Silent (Cooperate) 1, 1 -1, 2 Betrays (Defect) 2, -1 0, 0 Adapted from Besanko et al. Economics of Strategy. Wiley. 9 Game Theory Repeated Games – Grim Trigger and Discount Rate Prisoner B Prisoner A Stays Silent (Cooperate) Betrays (Defect) Stays Silent (Cooperate) 1, 1 -1, 2 Betrays (Defect) 2, -1 0, 0 Adapted from Besanko et al. Economics of Strategy. Wiley., Levin, J. Bargaining and Repeated Games. 2002. Stanford University AGENDA § Game Theory and Strategic Management § Strategic Restructuring and Turnarounds § Managing Adaptations § Strategy Tools 21 10 Defining the current and future core of a business is essential for strategic endeavors. Adjusted Ansoff Growth Model New Products/ Services Core Products/Se rvices Expansion outside Core Products/Services Products and Services Adjacent Products/Se rvices •The Core as an Onion: •Getting to the inner layers EXPLORATION •The Core as a Tree: •Getting to the roots Adjacencies along Core Products/ Services Expansion outside Core Segments and Adjacencies alongMarkets Core Segments and Markets Core Core •Balancing Exploration and Exploitation: •Organizational challenges Segments and Markets Core segments/ Adjacent markets Segments/Markets EXPLOITATION New Segments and Markets Sources: Ansoff, I. (1965). Corporate strategy: An analytic approach to business policy for growth and expansion. New York: McGraw Hill., Schoemaker, P., (1992), "How to Link Straregic Vision to Core Capabilities," Sloan Management Review, 67-81. 2 2 “Most companies don’t die of starvation, but die of indigestion…” Jorgen Knudstorp (CEO, LEGO). Adjacencies of LEGO Legoland Billund (DK) Adjacent Products/Se rvices Core Products/Se rvices Products and Services New Products/ Services Lego Media (Movies) Lego Lego Mindstorms (Robotic Bricks) Stores Duplo (PreSchool) Lego Bricks Core EXPLORATION Licensing (Star Wars) Legoland Legoland Malaysia Windsor & California Segments and Markets EXPLOITATION Core segments/ Adjacent markets Segments/Markets •LEGO: •“…most companies don’t die of starvation, but die of indigestion,” Jorgen Knudstorp (CEO, LEGO). •One of the rules I stick to is that you can really only build an adjacency to your core business every three to five years, because it’s such a major undertaking in terms of culture and in terms of capability.” Jorgen Knudstorp (CEO, LEGO). New Segments and Markets Sources: Company Websites, http://www.meettheboss.tv/blog/lego-the-building-blocks-to-success 2 3 11 Generally, we speak of three levels of crises. Please Find Examples. Rising Effect of Crisis Impact External Factors Organizational Factors Business Model Crisis Bottom-Line Crisis Liquidity Crisis Innovation Factors 2 4 Generally, we speak of three levels of crises. Please Find Examples. Rising Effect of Crisis Impact External Factors Organizational Factors Business Model Crisis Bottom-Line Crisis Liquidity Crisis Innovation Factors • Business Model does not sustain revenues and profitability • Digital Strategies have out paced business model • Fixed cost are unsustainable • Utilization of assets and employee base is difficult • Heavy profitability impact • Liquidity and cash flow structure threatens the survival of the firm • Falling through covenants Please Find Examples 2 5 12 Liquidity Initiatives Liquidity Initiatives Low Low Medium Medium High High Liquidity Initiatives Factoring Selective Out- Divesting sourcing Inventory Adjusted Sell and Manage Supplier Lease ment back Credit New Loan Refinan- Credit lines cing Loan and Asset Modifications Liquidity Sources: Adapted from Rhodes, D. and Stelter, D. (2009). Seize Advantage in A Downturn. Harvard Business Review. 2 6 Investing in the Core and Revenue Initiatives Investing in the Core and Revenue Initiatives Revenue Initiatives and Investing in the Core Low Medium High Low Sales Incentives and Discounts Bundling Investing in the Core Revenue Upselling Cross selling Medium High Partnering and Investing Acquisitions Strength ening R&D Agile Innovation Sources: Adapted from Rhodes, D. and Stelter, D. (2009). Seize Advantage in A Downturn. Harvard Business Review. 2 7 13 Turnaround optimization levers can be structured around a variety of areas. Optimization levers Capex Impact Opex Impact Cash Flow Impact CrossSelling and Upselling Revenues Process Optimization (Lean) Other Initiative 1 Initiative 2 Initiative 3 Initiative 4 Initiative 5 Low - High 28 Signals Assumptions Decisions Implementation of large restructuring needs can be achieved by developing and emphasizing specific signals. Values, Honesty Boldness (risk taking) Innovativeness Assumptions Assumptions on Risk on Assumptions on Values Power Structures Promotions (Power Structures) Success Incentives (monetary/ non monetary) Incentives to Take Risk Assumptions on Collaborations Assumptions on Output orientation Flexibility and Outcome orientation Behavior in meetings, in front of suppliers, in front of customers 29 14 Signals Assumptions Decisions Implementation of large restructuring projects can be achieved by developing and emphasizing specific signals. Values, Honesty Boldness (risk taking) Innovativeness Assumptions Assumptions on Risk on Assumptions on Values Power Structures Organizations, Member/ Non member, Power Structures Behavior in meetings, Integration of suppliers, customers Incentives to Take Risk Assumptions on Collaborations Assumptions on Output and Implementation Flexibility and Outcome Orientation Learning, Sharing, Success Incentives. 2 Implementation Focus 30 Assumptions Assumptions on Risk on Assumptions on Values Power Structures Assumptions on Collaborations Assumptions on Output orientation Signals Assumptions Decisions Which signals would you send at Ducati to facilitate change and which would be the decisions you want to encourage. 31 15 Article: Sidney Finkelstein: Secrets of the Superbosses Key Success Factors Unconventional Hiring: Retention and Job Positioning -Intelligence -Creativity -Flexibility Bill Sanders (real estate guru): -hiring people “four times smarter than him” “If you can’t find somenone great you should not hire at all” Find Unlikely Winners: Hiring runway model because she really “got the clothes” Sanders: Hiking for finding different insights -Shape job around talent -(backup quarterback can excel with shorter reach but more precision, hence short pass strategy, Bill Walsh-Cincinnati Bengals) Accept Churn -Talented people will have fast-paced careers -Succeed inside and outside the organization makes a firm attractive (e.g., Consulting, Law, Innovation Companies, etc.) Ralph Lauren: Reason for what people are wearing” Hands-On Leadership -Set high expectations “perfect is good enough” -Instill sense of exceptionalism in people -Be a master -Effective Delegators -Hands-One-Experience -Mentoring and offer instruction -Intense feedback -Can extend to Live lessons (exercising, etc.) -Customized carreer paths -Beyond time in organizations àDeveloping Business Partnerships 32 AGENDA § Competitive Advantage and Market Entry § International Strategy § Case: Leading International Adaptations § Strategy Tools 33 16 The five stages of grief (Kuebler-Ross Model, 1969). High Denial Acceptance Morale Anger Bargaining Depression Low Time 34 Sources: Adapted from E. Kuebler-Ross (1969), On Death and Dying, Touchstone, New York, NY. The five stages of grief (Kuebler-Ross, 1969) can be adapted to change management. High Changes/ Integration Denial Acceptance Morale Anger Bargaining Testing/ Experimenting Depression Low Time Sources: Adapted from E. Kuebler-Ross (1969), On Death and Dying, Touchstone, New York, NY. 35 17 Change management includes new structures and capability management. High Change Denial Acceptance Morale Anger Experiment Bargaining Depression Low Time 36 Sources: Adapted from E. Kuebler-Ross (1969), On Death and Dying, Touchstone, New York, NY. Strategies can be implemented along a matrix that captures impact of an initiative and difficulty level of execution Early (Quick) Wins High A Impact C B D Low High Difficulty Level Low 18 Stakeholder Analysis (Interest Groups): https://www.youtube.com/watch?v=8zGFvzMMO9w (starting at 8 mins) Stakeholder Identification Stakeholders (int. & ext.) Example 38 Stakeholder Analysis and Management Stakeholder Prioritization Stakeholders Example in Video Power (1-5) 39 19 Stakeholder Analysis and Management Stakeholder Rating Stakeholders Negative -10 Neutral 0 Positive Power +10 (1-5) 40 Stakeholder Analysis and Management Stakeholder Movements Stakeholders Negative -10 Neutral 0 Positive Power +10 (1-5) 41 20 Strategy Session 7 Crisis Strategies San Diego, CA AGENDA § Principles of Crisis Strategies § Case Analysis: Strategy Approaches During a Crisis § Scenario Example 2 1 Crisis Leadership Crisis Leadership External Crisis Leadership And Team Decisions Resources and Capabilities Internal Crisis • Right team • Right people in right positions (Jim Collins) • Mixed Team (Experts) • Empowering • Right decision processes • Right Escalation Processes • Prioritizations • Resource Allocation Systems • Resource Utilization • Capability configurations 3 Crisis Leadership Crisis Leadrship- Examples Leadership And Team Examples • Leadership • Mixed Teams • Drilling experts • Measuring (GPS) experts • Doctors, Psychologists • Prioritization of Problems Decisions • Triage in a Hospital (from red to blue) • No wait to long wait Resources and Capabilities • Free iPhone 4 cases • Wireless testing lab • New (recalibrated) version of iOS 4 2 Crisis Management has three stages Stages Ex-Ante: Crisis Plan Ex ante: Crisis Plan Step 1: Ex-Ante Team and Responsibilities -Selection of complementary skillset -Hierarchies -Information flow Scenario Planning -Internal and external Scenarios -practice from examples -Solving mechanisms -Implementations Communication Strategies -Internal and external communications -Channel mix -Unconventional channels Risk Management and Prevention Techniques -Matrix -Contingencies -Mitigations 6 Step 2: Immediate Response Step 3: Ex-post 5 Ex-Ante: Crisis Plan Ex ante: Crisis Plan Team and Responsibilities -Selection of complementary skillset -Hierarchies -Information flow Scenario Planning -Internal and external Scenarios -practice from examples -Solving mechanisms -Implementations Communication Strategies -Internal and external communications -Channel mix -Unconventional channels Risk Management and Prevention Techniques -Matrix -Contingencies -Mitigations 6 3 Risk Matrix Development Risk Matrix Risk Outcomes/Consequences Low Probability Medium Major Severe High Medium Low Risk Mitigation and Contingency Development Risk mitigation and contingencies Risk Scenario Color Code on Matrix Mitigation Contingency Responsible 8 4 Risk after Mitigation and Contingency development Risk after Mitigation and Contingencies Risk Outcomes/Consequences Low Probability... 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