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Supplements the (A) case.

The case focuses on a joint venture between Honda Motor Company (HMC) of Japan and the Hero Group, a conglomerate of Indian companies held by the Munjal family. Hero is the largest manufacturer of bicycles in the world, and at that time had already dabbled in the motorized two-wheeler market with its mopeds. HMC entered into a 50/50 alliance with Hero to manufacture motorcycles for the Indian market. It assumed product design and technology transfer responsibilities while Hero was in charge of manufacturing and marketing. The venture performed very well until the contract renewal period, when Hero felt that HMC was slowing down its technology transfers. The agreement was extended for another ten years after protracted negotiations. Just as the relationship appeared to get better, HMC announced the setting up of a subsidiary in India to manufacture scooters. It said that the subsidiary would enter the motorcycle market in 2004. This grew from a split between Honda and its Indian partner in a venture that was manufacturing scooters. Having exited the venture, HMC wanted to go it alone. This caused serious concerns for Hero, since HMC's entry into the motorcycle market would threaten its very survival. The case closes with a set of issues that face Hero and sets the stage for exploring alternative paths that Hero could take in managing it future. .

This is an MIT Sloan Management Review article. People often talk about business competition as if it's a short race: Get to market first and you are bound to win. Indeed, the importance of first-mover advantage has been drummed into the heads of many business executives, and some have almost been brainwashed to think that speed is everything. But when a new technology like the Internet threatens to transform an industry, the companies that are quickest to respond aren't necessarily the ones that reap the greatest benefits. In fact, choosing a fast strategy can lock them into a set of decisions that actually hurt them in the long run. Instead, organizations that choose the right strategy for the entire race--both for the early and late stages--will come out ahead. The authors have found that companies that respond quickly by launching a spin-off usually have difficulty achieving true staying power in the market. For enduring success, incumbent companies are better off creating a group that is--or will eventually be--integrated within their organizations. Only then will they be able to tap fully into their numerous strengths and assets, leveraging their incumbent's advantage.

Most companies believe that successful entry into lower income, emerging markets requires price slashing by subtracting product features. Moreover, companies generally believe that it is appropriate to appeal to potential customers strictly as consumers who want their needs satisfied. Demonstrates that companies can appeal to customers as productive agents who want to build and transform their lives. Offering customers productivity-enhancing systems coupled with culturally appropriate offerings allows companies to charge appropriately and succeed in lower income, emerging markets. Provides examples of such successful competitive differentiation in the global marketplace.

Harvard professor Henry Chesbrough takes a look at leading-edge companies' latest moves to harvest ideas from outside and to benefit from sharing their own R&D with others--even with competitors.

In the fall of 1998, Dan Frye, member of IBM's emerging technologies and business team, is trying to decide whether to forge a strategic alliance with the Linux Development Community (LDC). Just two years earlier, IBM had its first exposure to an "open source" software program when it selected Apache as the web server program for the web site of the Atlanta Summer Olympic Games. Based on its success with Apache, and Frye's intuition that Linux could be a critical, strategic step in the new "network-centric" computing environment, Frye and his colleagues are trying to decide whether an alliance between IBM and LDC would serve their interests--and, if so, how IBM could manage the alliance with a loosely affiliated group of software developers.

Describes the evolution of the handheld operating system market. Describes the rise to dominance of Palm's operating system and the significant challenge to that dominance posed by Microsoft's Windows CE.

The case discusses the key elements of corporate and business strategy employed by LVMH. It first develops the context of the luxury business, providing an in-depth look at the performance drivers, key players and their strategies. Set in the landscape, it then examines the specific strategies adopted by the biggest player-LVMH. The company wants to double its current sales ($10 billion in an $80 billion industry) and profits by 2005. In marching towards this goal, LVMH has entered into multiple business lines ranging from leather goods to wines, and spirits to art auctions. Many of these acquisitions have come at steep premiums and none have turned a profit yet. Investors and analysts feel that the company should divest some of its holdings and get back to its roots in leather goods and wines. Mr. Arnault, the CEO of the company, however, feels that there are significant synergies that emerge when operating a portfolio of global brands across the entire landscape of luxury businesses. This sets the stage for a good evaluation of its value chain and value-adding activities, the promised synergies and their potential impact on revenues and profits. It also raises questions on how LVMH can grow in this business, which geographic regions it should invest in, and which product-market it should retain.

In 2003, Lee Stuart, who had successfully used the Nehemiah Strategy to create thousands of units of affordable housing in the South Bronx, was working with the Greater Boston Interfaith Organization to implement the strategy in Boston. She and her colleagues faced a number of challenges in transferring the strategy, with some questioning whether the strategy was appropriate for the Boston marketplace. The project was at a critical point, and key decisions had to be made regarding project direction. Teaching Purpose: To explore a model of building affordable housing and the challenge of implementing it in different communities.

ACCION International is a major nonprofit player in microfinance. Reviews the organization's history and evolution, details current activities and relationships within its network, and assesses the organization's challenges moving forward.

Contains four short stories about small firms challenging large firms. Illustrates some of the ideas that have been termed "judo strategy." In each case, one can argue that the small firm attempts to use the large firm's size and incumbency to constrain the large firm and provide an opportunity for the small firm. The four vignettes are: (1) Softsoap pioneers the liquid soap market with little competition, at least initially, from the incumbent bar soap manufacturers; (2) Red Bull creates and dominates the energy drink market with little early competition from incumbent beverage companies; (3) U.K. supermarket chains attempt to enter the retail gasoline market but trigger an aggressive price response from the integrated majors; and (4) Freeserve makes large inroads in the U.K. ISP market against dominant incumbent AOL. Each occurrence demonstrates ideas considered "judo strategy"--situations in which small competitors exploit the size and incumbency of a larger firm to find opportunities to make inroads against the large firm without effective retaliation or defense (just as, some authors argue, a small person can throw a large person with judo techniques by using the larger person's weight and inertia against him).

Recounts the history of the evolution of browser market shares from 1994 forward. Netscape's Navigator establishes a huge early lead, but is then displaced by an equally dominant offering from Microsoft. Highlights the role of Microsoft's dominance in desktop operating systems and Microsoft's bundling of the browser with the operating system.

Examines the challenges and opportunities that entertainment conglomerate Disney faces as it tries to commit itself to embarking on a "Digital Decade" in 2003. The company has built its business models largely around analog distribution technologies. Although the company has had a difficult time in the past few years, it still generates a tremendous amount of cash.

Three out of four acquisitions fail; they destroy wealth for the buyer's shareholders, who end up worse off than they would have been had the deal not been done. But it doesn't have to be that way, argue the authors. In evaluating acquisitions, companies must look beyond the lure of profits the income statement promises and examine the balance sheet, where the company keeps track of capital. It's ignoring the balance sheet that causes so many acquisitions to destroy shareholders' wealth. Unfortunately, most executives focus only on sales and profits going up, never realizing that they've put in motion a plan to destroy their company's true profitability--its return on invested capital. M&A, like other aspects of running a company, works best when seen as a way to create shareholder value through customers. Most deals are about customers and should start with an analysis of customer profitability. Some customers are profitable; others are money losers. The better an acquirer understands the profitability of its own customers, the better positioned it will be to perform such analyses on other companies. In this article, the authors show that customer profitability varies far more dramatically than most managers suspect. They also describe how to measure the profitability of customers. By understanding the economics of customer profitability, companies can avoid making deals that hurt their shareholders, identify surprising deals that create wealth, and salvage deals that would otherwise be losers.

If you run a midsize manufacturing business, you may be familiar with that anxious sense of being left behind. At every turn, someone is pushing you to jump onto the latest strategic bandwagon before it's too late. But no matter how great the hot, new strategy might be, it can't replace an approach that helps you get the most out of your existing businesses. Such an approach offers a tremendous potential payback--annual revenue and earnings growth as high as 15% to 20%. And it poses few of the risks associated with pursuing chancy acquisitions, untested ventures, or radical strategies. For this article, the authors largely draw on their experience at Fiberite, which made advanced composite materials for military and commercial airplanes, among other things. Fiberite was a healthy business, but its incumbent management--with its ambitious plans for introducing new products and tapping new markets--ignored the unrealized value remaining in what they already had. Like so many companies, Fiberite didn't really understand what had made it successful in the first place. The authors offer a method for setting strategic priorities--a strategic pathway--that focuses on a company's existing businesses. The pathway has four stages. First, protect your existing business. Next, penetrate further into existing market segments with existing products or upgrades. Then, extend the business by developing new products for existing segments or by entering new segments with existing products. Finally, diversify into new markets with new products. This sequence of priorities is not new, but formalizing it helps people resist the siren call of new products and markets, which can do as much damage as good.

Electrosteel Castings Ltd., based in India, had been the largest domestic manufacturer of iron pipes for over four decades. Although it had achieved solid growth in recent years, the market was under increasing pressure as overall growth slowed and new competitors entered the market. The CEO saw international expansion as critical to future growth. It would also provide additional currency for further investment in new process technologies. After extensive study, management narrowed the options to Europe or Southeast Asia. Given limited resources, Electrosteel could enter only one market, either with a new marketing office or a new manufacturing plant. Building an overseas plant was particularly attractive, as it would effectively translate into Electrosteel being considered a local competitor in that market, reducing costs and improving customer service. Awareness of foreign competitors investigating similar international expansion options significantly increased the need for a decision.

Jindi Enterprises is a manufacturer of heat exchanger units for residential and commercial markets in China. Recently, the company's top sales representative, who is also the sales manager for one of the company's provincial offices, quit and joined a competitor. A replacement must be found, but a delay in choosing a strategic direction is seriously complicating the hiring decision. The CEO must determine the corporate strategy and ensure that the hiring strategy reflects these changes.

Examines the challenges and opportunities facing Charles Schwab in 2003. The company is a leading brokerage, but the entire industry has been in a severe downturn over the past few years. Schwab made its name as a discount brokerage and grew tremendously in the 1990s, largely as a result of its successful embrace of Internet technologies and efficient customer service and transaction processing. Now competing with the likes of established brokerage houses such as Merrill Lynch, and amid a severe downturn in trading volume, the company is looking for other avenues of growth. Focuses on Schwab's efforts to extend its business model to financial advisers.

Designed as an overview of all aspects of the strategy process: industry analysis, positioning, dynamics and sustainability, and scope issues of corporate strategy, including vertical integration, horizontal diversification, and location issues. Ice-Fili is the largest ice cream producer in Russia in 2002, but is facing strong competition from Nestle despite its success over other multinational competitors. Contains detailed exhibits, allowing deeper analyses.

Philips is a major science-based multinational that has been restructuring since the early 1970s. This case provides an historical perspective on earlier efforts as well as a detailed description of the one pursued under Cor Boonstra, CEO from 1996 to 2001, that reorganized Philips from a product-country matrix structure into global product divisions. Closes with Boonstra's successor, Gerard Kleisterlee, facing the challenge of defining his own agenda for the company.