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Espionage expert H. Keith Melton shows how executives can best guard their company secrets.

General Motors (GM) had a history of bold strategies in a wide variety of areas, including the creation of Saturn, the development of global operations, and the formation of strategic alliances with Fiat, SAIC, and Daewoo. Nonmarket strategies included pursuing government financial assistance, coping with new environmental regulations, and agreeing to very expensive health care and pension schemes. Meanwhile, GM had failed to create strategies to compete effectively with foreign automakers. By 2005, many of GM's strategic decisions seemed to have been inappropriate. Some that were undertaken for short-term gain had disastrous long-term consequences, and GM performed poorly compared with other global automakers. Many strategies had seemed disconnected, lacking an overall vision or purpose: GM was facing a serious crisis. In 2005-2006, GM introduced several new strategies. Whether these strategies could achieve sustainable profitability, or whether they would also bring undesirable consequences, was a subject of importance to employees, shareholders, and governments throughout the world.

The entire pharmaceutical industry faced uncertain times in 2005. Many of the industry's most pressing issues-patent expirations, new drug pipeline development, price pressures, regulatory issues, and political pressures-were long standing. Fundamentally new technologies were changing the way drugs were discovered, developed, and tested, allowing smaller, specialized competitors to enter the industry, compete in new ways, and grow to challenge the majors. Some observers were even questioning whether the blockbuster model on which the industry was based could continue. Blockbuster drugs, with sales of more than $1 billion a year, were becoming increasingly difficult and costly to develop. In this context, and with stock prices depressed, the industry majors were reflecting on their strategies.

In 2005, just five years after its formal launch, Beijing-based Red Flag Software was the world's second-largest distributor of the Linux operating system and was expecting its first annual profit. On a unit basis, Red Flag led the world in desktops (PCs) shipped with Linux and was No. 4 in installed servers. On a revenue basis, Red Flag was fourth overall. Within China, Red Flag held just over half of the Linux market and ran key applications for the postal system, large state-owned enterprises, and more than a million PCs. The Chinese government supported Linux as an alternative to Microsoft's Windows operating system to avoid royalty payments to foreign firms and dependence on foreign technology. Even so, Red Flag President Chris Zhao felt the same pressure many start-ups faced: How could Red Flag compete against a giant like Microsoft? And what competitive advantages could Zhao bring to bear against an experienced Linux veteran like Red Hat, a U.S.-based software company that had just announced its plan to invest to capture market share in China? Zhao worried that government support would evaporate if Red Flag performed poorly.

The New Business Development unit is part of DSM, a Dutch globally operated chemical company. The unit looks for promising new ideas to develop into start-up businesses. Stamypor is a new project that the New Business Development unit is working on and the team leader of the project must decide whether it should be developed into a start-up company.

Describes the way in which General Dwight D. Eisenhower worked with his commanders, as well as political leaders, to plan the June 1944 D-Day invasion.

In the late 1990s, TiVo pioneered the digital video recorder (DVR), a new consumer electronics category. By 2005, the company was the clear leader in technology and installed base. It had also built extraordinary loyalty among its customers. However, TiVo lost a half billion dollars since its founding and was now facing new, fierce competition from satellite and cable providers. Explores the strategic challenges facing TiVo and the potential strategic options for fending off its competitive threats and reversing its financial fortunes.

In 2005, Haier, China's leading appliance manufacturer, had over $12 billion in worldwide sales and was the third-ranked global appliance brand behind Whirlpool and GE. Describes Haier's rise from a defunct refrigerator factory in China's Qingdao province to an international player with nearly $4 billion in overseas sales. Haier had followed a nontraditional expansion strategy of entering the developed markets of Europe and the United States as a niche player before venturing into neighboring Asian markets. Facing intense competition and price wars in the domestic market, in 2005 Haier was redoubling its efforts to build a globally recognized brand. Could Haier complete with the likes of Whirlpool and GE in their home market? Could Haier successfully defend against Chinese and multinational challengers in China while building a brand overseas?

Spreadsheet supplement for case 706-401.

Buoyed by strong recent sales growth but humbled by failed strategic bets and other missteps, Intel in 2005 initiated a major reorganization. Under its new CEO, Paul Otellini, the company shifted toward a "platform" model, inspired by the success of its Centrino mobile-computing product. That model led Intel toward development of not just faster computer chips--the historic source of its dominance of the microprocessor industry--but also of products that bundled ingredients in ways that served specific usability needs. To support such products, Intel continued to invest heavily both in manufacturing capacity and new chip technologies. Meanwhile, the company faced strong challenges from competing chip makers, particularly Advanced Micro Devices. Outlines Intel's strategic reorientation, its competitive environment, and several of its key new initiatives. Covers Intel's Itanium server product, its new Viiv platform, its investment in WiMax, and its recent deal with Apple Computer.

Mother and son tandem Toby and Greg Waldorf started Destination-U, an online college matching service, in April 2004. Greg had a deep background in start-ups and technology companies, most notably as an early investor in eHarmony, an online dating service. Toby had 15 years of experience as a college counselor. With Destination-U's social mission and family ties, the pair was able to raise start-up capital with ease. Although the company had been successful in building a useful matching service and getting visitors to the site by July 2005, it had yet to earn a significant volume of sales from its subscription-based business model. With the busy fall college selection season approaching, Destination-U had to rethink its business model.

The Apollo Hospitals Group, one of Asia's premier health care organizations, had come to rival the best health care organizations on the globe. Apollo offered advanced medical procedures, such as cardiac surgery using the beating heart technique, at very high levels of quality but at a fraction of the cost of hospitals in the West. Apollo's managers must decide how best to capitalize on the group's remarkable medical capabilities. One option was to bet on global medical tourism by trying to attract patients from Asia and worldwide needing advanced medical procedures. Thailand had set the example for medical tourism and attracted more than one million patients a year, most of them undergoing plastic surgery. Another option Apollo considered was to build and manage hospitals abroad.

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There is a disconnect in most companies between strategy formulation and strategy execution. On average, 95% of a company's employees are unaware of, or do not understand, its strategy. If employees are unaware of the strategy, they surely cannot help the organization implement it effectively. It doesn't have to be like this. For the past 15 years, the authors have studied companies that achieved performance breakthroughs by adopting the Balanced Scorecard (BSC) and its associated tools to help them better communicate strategy to their employees and to guide and monitor the execution of that strategy. Some companies, of course, have achieved better, longer lasting improvements than others. The organizations that have managed to sustain their strategic focus have typically established a new corporate-level unit to oversee all activities related to strategy: an office of strategy management (OSM). The OSM, in effect, acts as the CEO's chief of staff. It coordinates an array of tasks: communicating corporate strategy; ensuring that enterprise-level plans are translated into the plans of the various units and departments; executing strategic initiatives to deliver on the grand design; aligning employees' plans for competency development with strategic objectives; and testing and adapting the strategy to stay abreast of the competition. The OSM does not do all the work, but it facilitates the processes so that strategy is executed in an integrated fashion across the enterprise. Although the companies that Robert S. Kaplan and David P. Norton studied use the BSC as the framework for their strategy management systems, the authors say the lessons of the OSM are applicable even to companies that do not use it.

Most industrial manufacturers realize that the real money isn't in products but in services. Companies such as General Electric and IBM have famously made the transition: A large proportion of their revenues and margins come from providing value-added services to customers. But other companies attempting to do the same might miss the boat. It is not enough, the authors say, just to provide services. Businesses must now provide "smart services"--building intelligence (awareness and connectivity) into the products themselves. Citing examples such as Heidelberger Druckmaschinen's Internet-connected printing presses and Eaton Electrical's home-monitoring service, the authors demonstrate how a product that can report its status back to its maker represents an opportunity for the manufacturer to cultivate richer, longer term relationships with customers. Four business models will emerge in this new, networked world. If you go it alone, it may be as an embedded innovator--that is, your networked product sends back information that can help you optimize service delivery, eliminate waste and inefficiency, and raise service margins. Or, you may pursue a more aggressive solutionist business model--that is, you position your networked product as a "complete solution provider," able to deliver a broader scope of high-value services than those provided by the embedded innovator's product. In the case of a system that aggregates and processes data from multiple products in a building or home, you may be either an aggregator or a synergist, partnering with others to pursue a smart-services opportunity. An aggregator's product is the hub, collecting and processing usage information--and creating a high-value body of data. A synergist's product is the spoke, contributing valuable data or functionality. Woe to the company that takes none of these paths; it'll soon find its former customers locked in--and happily--to other smart service providers.

To exploit your product's platform potential, say consultants John Sviokla and Anthony J. Paoni, you need creativity--and good intellectual property protection.

Across the S&P 500, companies' sustainable growth rates exceed analyst growth forecasts, which means companies are not optimizing shareholder value, say consultants Rekha Sampath and Ajit Kambil.

Suh Kyung-Bae, the President and CEO of AmorePacific, a South Korean cosmetics company, was an ardent globalizer. In its home market, AmorePacific had held off major multinational players such as L'Oreal and Estee Lauder and had engaged them in markets around the world, from France to China. The case discusses the company's position and options in the Korean, French, U.S., and Chinese markets. To reach their aim to run one of the top 10 cosmetics companies in the world, with 4 billion in sales by 2015 (1.2 billion from outside Korea), company managers had to ensure that as a global company, AmorePacific amounted to more than the sum of its country parts--a challenge compounded by deep differences across countries. Related questions included: in which countries should AmorePacific focus invest resources and managerial emphasis and attention? How concerned should they be about the diversity of approaches being taken in the three major countries/regions? And what role did non-organic options--aquisitions or joint ventures--plan as a way of boosting international growth rates?

Looks at the challenges and opportunities faced by Electronic Arts (EA) as it seeks to reinforce its leadership position in game making and digital entertainment. While a leader in PC and console games, EA is also interested in creating content derived from traditional media companies, such as film studios, as well as distributing its digital content through new channels, such as cell phones.

The case is a continuation of Lesser Antilles Lines (UV0351 and UV3879), which describes the price competition between two duopolistic shipping companies facing inelastic demand for cargo volume. Customers have inelastic and time-sensitive demands, restricting their strategic possibilities. The case extends this setting to multiple competitors using a multinomial logit model of customer demand.