# Strategy Course Guide: [Programme and course] > A course guide for the core MBA course in competitive and corporate strategy: what the course is for, the > competencies it builds, a 12-session roadmap, the key concepts with links to concept cards, an original mini-case on > Corvane Robotics with exhibits and a teaching note, how assignments are graded, an exam preparation plan and a > self-test. It covers industry analysis, competitive advantage, resources and capabilities, corporate strategy and > diversification, vertical integration, platforms and network effects, global strategy and strategy execution. It is > for admitted students preparing for the core, first-year students during the course and managers who want a > structured self-study path. Source basis: the primary works of Porter (1979, 1980, 1985, 1996), Barney (1991), > Prahalad and Hamel (1990), Teece, Pisano and Shuen (1997), Rumelt (2011) and others named under further reading, all > written up in original words and examples. Replace every [bracketed] value and every row marked *Example*. ## Document control | Field | Value | |---|---| | Learner | [Your name] | | Programme and course | [Programme], [course code and name] | | Term | [Term and year] | | Instructor and syllabus version | [Name], [syllabus date] | | Learning team | [Team name or number, members] | | Course policy on AI tools and collaboration | [Summary and link to the syllabus or honour code] | | Reviewed by | [Learning-team member, mentor or coach] | | Version | [0.1] | | Last updated | YYYY-MM-DD | ## Contents - [1. What the course is for](#1-what-the-course-is-for) - [2. Competencies it builds](#2-competencies-it-builds) - [3. Prerequisites](#3-prerequisites) - [4. Session roadmap](#4-session-roadmap) - [5. Key concepts](#5-key-concepts) - [6. The course in eight topics](#6-the-course-in-eight-topics) - [7. Mini-case: Corvane Robotics and the drive module](#7-mini-case-corvane-robotics-and-the-drive-module) - [8. Typical assignments and how they are graded](#8-typical-assignments-and-how-they-are-graded) - [9. Exam preparation plan](#9-exam-preparation-plan) - [10. Common struggles](#10-common-struggles) - [11. Self-test questions](#11-self-test-questions) - [12. My notes and next steps](#12-my-notes-and-next-steps) - [13. Teaching note for the mini-case](#13-teaching-note-for-the-mini-case) ## 1. What the course is for The core strategy course asks one question in many forms: **why do some firms earn persistently higher returns than others, and what can managers do about it?** Answering it takes two levels of analysis. At the **business level** (competitive strategy), the question is how a firm should compete in one industry: where profits sit (industry structure), and how the firm can capture more of them than rivals (competitive advantage built from activities, resources and capabilities). At the **corporate level**, the question is which businesses a firm should be in: diversification, vertical integration, acquisitions, alliances and international expansion, and whether the parent adds more value than it costs. The course is integrative. It draws on microeconomics (market structure, game theory), accounting and finance (cost structure, return on capital, valuation of strategic options), marketing (customer value) and organisational behaviour (execution and change). Expect cases where the "right answer" depends on evidence and judgement, and where a clear recommendation with stated assumptions scores better than a balanced list of considerations. By the end of the course you should be able to: 1. Define an industry and explain its average profitability with the five forces. 2. Explain a firm's performance relative to rivals through its activities, resources and capabilities. 3. Distinguish operational effectiveness from strategic positioning, and test a strategy for coherence and trade-offs. 4. Evaluate corporate scope decisions (diversify, integrate, outsource, acquire, enter a country) with both strategic logic and numbers. 5. Analyse platform markets and network effects. 6. Write a strategy as a diagnosis, a guiding policy and coherent actions, and say how it will be executed and measured. ## 2. Competencies it builds The table maps the course to the broad competency areas that accreditation standards and leading programmes use for graduate business learning goals (analytical and quantitative reasoning, ethical decision making, communication, leadership and teamwork, global perspective, technology, data and AI). The exact wording of your school's learning goals will differ; check the programme handbook. | Competency area | How the strategy course builds it | Evidence you can collect | |---|---|---| | Analytical and quantitative reasoning | Industry economics, concentration measures, make-or-buy and option valuation, scenario analysis | Case write-ups with exhibits; the mini-case NPV | | Ethical decision making | Stakeholder effects of scope decisions (layoffs after integration, supplier dependence, market power) | A paragraph on stakeholders in each recommendation | | Communication | Cold calls, case write-ups, team presentations with a clear recommendation | Feedback on participation and write-ups | | Leadership and teamwork | Learning-team case preparation, team projects | Team charter and peer feedback (`mba/mba-learning-team-charter`, `mba/mba-peer-feedback`) | | Global perspective | Global strategy session: distance, integration and responsiveness | Country-entry analysis | | Technology, data and AI | Platforms, network effects, data as a resource, AI and competitive advantage (`mba/mba-ai-strategy-card`) | Platform case analysis | ## 3. Prerequisites - **Microeconomics basics:** demand, cost curves, elasticity, market structure (`mba/pre-mba-economics-primer`, `mba/mba-microeconomics-guide`). - **Finance basics:** time value of money, NPV and IRR, cost of capital (`mba/pre-mba-finance-primer`, `mba/mba-npv-irr-card`). - **Accounting basics:** income statement, gross and operating margin, return on invested capital (`mba/pre-mba-accounting-primer`). - **Spreadsheet skills:** `SUMPRODUCT`, `SUMSQ`, `NPV`, `IRR`, `PMT`, data tables (`mba/pre-mba-excel-modeling-drills`). - **Case method:** how to read and prepare a case (`mba/mba-case-reading-guide`, `mba/mba-case-prep-sheet`). ## 4. Session roadmap | Session | Topic | Card to read | Case or exercise | Deliverable | |---|---|---|---|---| | 1 | What strategy is: positioning, trade-offs, fit | `mba/mba-competitive-advantage-card` | A firm you know: write its strategy in three sentences | Three-sentence strategy statement | | 2 | Industry analysis I: the five forces | `mba/mba-five-forces-card` | Worked example A, then a course case | Five-forces table with "Why" column | | 3 | Industry analysis II: market structure and rivalry | `mba/mba-market-structure-card`, `mba/mba-game-theory-card` | Entry deterrence or price-war case | HHI and a payoff matrix | | 4 | Competitive advantage: cost and differentiation | `mba/mba-competitive-advantage-card` | Value-based analysis of two rivals | Willingness-to-pay and cost comparison | | 5 | The value chain and activity systems | `mba/mba-value-chain-card` | Northfield activity-cost exhibit | Activity map and fit diagram | | 6 | Resources and capabilities | `mba/mba-resource-based-view-card` | VRIO of a firm's key resources | VRIO table | | 7 | Dynamic capabilities and disruption | `mba/mba-resource-based-view-card`, `mba/mba-growth-strategy-card` | An incumbent facing a new technology | One-page memo | | 8 | Vertical integration and outsourcing | `mba/mba-value-chain-card`, `mba/mba-relevant-costs-card` | Mini-case in section 7 | Make-or-buy recommendation with NPV | | 9 | Corporate strategy and diversification | `mba/mba-growth-strategy-card` | A diversified group | Parenting and synergy test | | 10 | Platforms and network effects | `mba/mba-ai-strategy-card`, this guide section 6 | A two-sided market case | Chicken-and-egg launch plan | | 11 | Global strategy | `mba/mba-global-immersion-plan`, `mba/mba-fx-interest-parity-card` | Country-entry decision | Distance analysis and entry-mode choice | | 12 | Strategy execution and review | `mba/mba-change-management-card` | Integrative case | Diagnosis, guiding policy, coherent actions, measures | ```mermaid flowchart LR A["Industry: where profits sit (sessions 2 to 3)"] --> B["Firm: how to capture them (sessions 4 to 7)"] B --> C["Scope: which activities and businesses (sessions 8 to 9)"] C --> D["New contexts: platforms and global (sessions 10 to 11)"] D --> E["Execution: from choice to action (session 12)"] E -.->|"feedback"| A ``` ## 5. Key concepts | Concept | Originator | One-line meaning | Card | |---|---|---|---| | Five competitive forces | Porter (1979, 1980, 2008) | Entry, suppliers, buyers, substitutes and rivalry determine industry profitability | `mba/mba-five-forces-card` | | Market structure and concentration | Industrial organisation; HHI | Concentration and conduct shape prices and margins | `mba/mba-market-structure-card` | | Strategic interaction | Nash (1950) and game theory | Rivals' best responses to each other's moves | `mba/mba-game-theory-card` | | Generic strategies: cost leadership, differentiation, focus | Porter (1980, 1985) | Ways to earn above-average returns within an industry | `mba/mba-competitive-advantage-card` | | Value creation and capture | Brandenburger and Stuart (1996) | Value created is willingness to pay minus supplier opportunity cost | `mba/mba-competitive-advantage-card` | | Value chain | Porter (1985) | The firm as a set of activities that create cost and value | `mba/mba-value-chain-card` | | Strategic positioning and fit | Porter (1996) | Strategy as different activities, trade-offs and fit, not operational effectiveness | `mba/mba-value-chain-card` | | Resource-based view and VRIO | Wernerfelt (1984), Barney (1991) | Valuable, rare, hard-to-imitate resources, exploited by the organisation, sustain advantage | `mba/mba-resource-based-view-card` | | Core competence | Prahalad and Hamel (1990) | Collective learning that spans businesses and yields new products | `mba/mba-resource-based-view-card` | | Dynamic capabilities | Teece, Pisano and Shuen (1997) | The ability to integrate, build and reconfigure competences as the environment changes | `mba/mba-resource-based-view-card` | | Disruptive innovation | Christensen (1997) | Simpler, cheaper offerings that start in overlooked segments and move up | `mba/mba-growth-strategy-card` | | Product-market growth | Ansoff (1957) | Penetration, market development, product development, diversification | `mba/mba-growth-strategy-card` | | Transaction cost economics | Coase (1937), Williamson (1975) | Make or buy depends on the costs of using markets versus hierarchy | `mba/mba-value-chain-card` | | Network effects and two-sided markets | Katz and Shapiro (1985), Rochet and Tirole (2003) | Value to a user rises with the number of users, on the same or the other side | This guide, section 6 | | Global distance | Ghemawat (2001) | Cultural, administrative, geographic and economic distance between countries | `mba/mba-global-immersion-plan` | | Good strategy kernel | Rumelt (2011) | Diagnosis, guiding policy, coherent action | This guide, section 6 | | AI and competitive advantage | Current research and practice | When data and models create advantage that rivals cannot buy | `mba/mba-ai-strategy-card` | | Valuation of strategic choices | Discounted cash flow | Strategic options compared by NPV with explicit assumptions | `mba/mba-npv-irr-card`, `mba/mba-dcf-valuation-card` | ## 6. The course in eight topics **Industry analysis.** Industries differ widely in average profitability, and the difference is structural. Porter's five forces (1979, 1980, restated in 2008) explain how much of the value an industry creates is kept by its firms rather than passed to buyers, suppliers and entrants. The work starts with a careful definition of the industry and ends with a choice of where to compete and how to shape structure. *Typical question: is this an attractive industry, and for whom?* **Competitive advantage.** Within an industry, a firm earns above-average returns when it creates more value than rivals: a wider gap between buyers' willingness to pay and its costs. Porter (1980, 1985) described cost leadership, differentiation and focus; the value-based view (Brandenburger and Stuart 1996) makes the logic quantitative. Porter (1996) added that strategy requires trade-offs and fit among activities; operational effectiveness alone is quickly copied. *Typical question: what is this firm's advantage, and is it a position or just good execution?* **Resources and capabilities.** The resource-based view (Wernerfelt 1984, Barney 1991) explains persistent differences between firms by their resources: an advantage is sustainable when the resource is valuable, rare, costly to imitate and the organisation is set up to exploit it (the VRIO test as commonly taught). Prahalad and Hamel (1990) focused on core competences that span businesses, and Teece, Pisano and Shuen (1997) on dynamic capabilities, the capacity to renew competences when markets change. *Typical question: what can this firm do that rivals cannot buy or copy?* **Corporate strategy and diversification.** A multi-business firm must justify why its businesses are worth more together than apart. Porter (1987) proposed three tests: is the target industry attractive, is the cost of entry below the future profits, and will the business gain a competitive advantage from the parent, or the parent from it? Related diversification shares resources or capabilities; unrelated diversification needs a strong parenting advantage (capital allocation, management systems). Rumelt (1974) showed that related diversifiers tended to outperform unrelated ones in his sample. *Typical question: is the parent adding value, or would shareholders do better diversifying themselves?* **Vertical integration.** Integration (making rather than buying) is justified when markets work poorly: specific assets, uncertainty, frequent transactions and few suppliers create hold-up risk and transaction costs (Coase 1937, Williamson 1975). It also has costs: lost supplier scale, weaker incentives, reduced flexibility. Partial or tapered integration, long-term contracts and joint ventures sit between the extremes. The credible threat to integrate can itself lower supplier prices. *Typical question: should the firm make this input, and what happens to the supplier's pricing if it can?* **Platforms and network effects.** In markets with network effects, each user's value rises with the number of other users (direct effects) or with users on the other side of a platform (indirect effects) (Katz and Shapiro 1985; Rochet and Tirole 2003). Such markets can tip towards one or a few winners, prices on one side may be subsidised, and the launch problem (attracting the first users on each side) dominates early strategy. Multi-homing (users joining several platforms) and differentiation limit tipping. *Typical question: which side do you subsidise, and how do you solve the chicken-and-egg problem?* **Global strategy.** International expansion trades the benefits of scale and arbitrage against the costs of distance. Ghemawat (2001) described cultural, administrative, geographic and economic distance; Bartlett and Ghoshal (1989) the tension between global integration and local responsiveness. Entry modes range from export and licensing to joint ventures and wholly owned subsidiaries. *Typical question: which country first, and how do you enter?* **Strategy execution.** Rumelt (2011) argued that a good strategy has a kernel: a diagnosis of the critical challenge, a guiding policy, and coherent actions. Strategies also emerge from action as much as from plans (Mintzberg and Waters 1985). Execution tools translate the choice into measures and resource allocation, such as the balanced scorecard (Kaplan and Norton 1992) and objectives and key results (`business/okr`). *Typical question: what will the firm stop doing, and how will we know the strategy is working?* ## 7. Mini-case: Corvane Robotics and the drive module ### 7.1 Situation Priya Raman, chief executive of Corvane Robotics (fictional), had two weeks before the board meeting at which she would ask for USD 14.0m. Corvane, founded seven years earlier and backed by three venture funds, sold autonomous mobile robots and fleet-management software to mid-market warehouses: sites that run 20 to 200 robots for picking and moving goods. Revenue had grown from USD 38.0m in 2023 to USD 92.0m in 2025 (Exhibit 1), and gross margin had improved each year, but the company still lost money at the operating level. The segment was crowded. One leader held about a quarter of the market, a handful of mid-sized rivals followed, and a long tail of start-ups competed for pilots (Exhibit 2). Customers, mostly third-party logistics providers and retailers, ran paid pilots with two or three vendors before choosing, and the largest ten customers made up 38% of Corvane's revenue. "Our customers stay once the fleet is live," said Tomás Ekwueme, head of sales. "The integration with their warehouse system and the retraining make switching painful. Winning the pilot is the hard part, and that is mostly a price conversation." Corvane's engineers believed the company's advantage lay in its fleet software: traffic management that let mixed fleets of robots share aisles with people, and analytics that predicted congestion before it happened. Two rivals had tried to license similar software and one had hired away a Corvane team lead, without visible results. The robots themselves were increasingly similar across vendors. The proposal on the table concerned the **drive module**, the motor, gearbox and controller unit that moves each robot. Corvane bought it for USD 6,400 per unit from two suppliers, one of which supplied about 80% of the volume and had raised prices twice in two years. Mei-Ling Novak, vice president of operations, proposed building a small assembly line to make the module in-house from purchased motors and controllers (Exhibit 3). "We would control our roadmap and our margin," she argued. "Every robot we sell today pays a supplier for something we could make better." The chief financial officer, Daniel Achterberg, was cautious. "Fourteen million dollars is a large share of our cash. Our volume forecast assumes we keep growing above 25% a year. If we are wrong, we own a factory running half empty. And the moment we announce this, our supplier will cut prices, maybe enough to make the plan pointless." He also noted that two board members wanted the company to focus on software: one had proposed opening the fleet software to third-party robots and to developers of picking applications, to build "the operating system of the warehouse". Priya had to decide what to recommend: make the drive module, keep buying it, or use the option to make it as leverage with suppliers while investing elsewhere. She also wanted a view on whether the software platform idea belonged in the same strategy, or was a distraction. ### 7.2 Exhibits **Exhibit 1. Corvane Robotics income statement, USD m (fictional).** | Item | 2023 | 2024 | 2025 | |---|---|---|---| | Revenue | 38.00 | 61.00 | 92.00 | | Gross margin | 34% | 36% | 39% | | Gross profit | 12.92 | 21.96 | 35.88 | | Research and development | 14.00 | 18.50 | 23.00 | | Sales and marketing | 11.00 | 15.50 | 21.00 | | General and administrative | 5.00 | 6.50 | 8.00 | | Operating profit (EBIT) | -17.08 | -18.54 | -16.12 | | EBIT margin | -44.9% | -30.4% | -17.5% | Revenue grew 60.5% in 2024 and 50.8% in 2025, a compound annual growth rate of 55.6% (`=(D2/B2)^(1/2)-1`). **Exhibit 2. Mid-market AMR segment, North America and Europe, 2025 (fictional).** Segment revenue about USD 1.02bn, growing about 25% a year. | Firm | Share | |---|---| | Competitor A | 24% | | Competitor B | 17% | | Competitor C | 12% | | Corvane Robotics | 9% | | Competitor D | 8% | | Competitor E | 6% | | Twelve other firms | 2% each, 24% in total | HHI 1,238 (`=SUMSQ(B2:B19)`), four-firm concentration ratio 62%. The same segment is analysed force by force in `mba/mba-five-forces-card`, Worked example A. **Exhibit 3. Drive module make-or-buy proposal (fictional).** | Item | Value | |---|---| | Purchase price per module today | USD 6,400 | | In-house variable cost per module (purchased motor, controller, labour) | USD 4,100 | | Fixed cost of the assembly line per year (staff, quality, space) | USD 2.2m | | Capital expenditure, year 0 | USD 14.0m | | Planning horizon and discount rate | 5 years, 12% | | Forecast robot (and module) volume, 2026 to 2030 | 2,600, 3,400, 4,300, 5,200, 6,000 | ### 7.3 Discussion questions 1. Is the mid-market warehouse robotics segment an attractive industry? Which forces matter most for Corvane's profitability? 2. What, if anything, is Corvane's source of competitive advantage? Apply the VRIO test to its fleet software and to its robot hardware. 3. Compute the NPV and IRR of making the drive module. Which assumptions drive the result? 4. How would the supplier respond, and how does that change the decision? 5. Does vertical integration into drive modules fit the strategy implied by your answer to question 2? Where does the platform proposal fit? 6. What should Priya recommend to the board, and what would she need to see in a year to know it was right? ## 8. Typical assignments and how they are graded Core strategy courses commonly combine class participation, individual or team case write-ups, a team project and a final exam (often a case exam). Weights vary; typical ranges are participation 20 to 40%, written cases 20 to 30%, team project 15 to 30% and final exam 25 to 40%. Your syllabus is the authority. | Criterion | Excellent | Adequate | Weak | |---|---|---|---| | Diagnosis | Names the critical issue and why it matters now, with evidence from the exhibits | Describes the situation accurately | Summarises the case | | Framework use | Frameworks chosen for the question, adapted, with limits named | Frameworks applied correctly but mechanically | Frameworks listed without conclusions | | Quantitative analysis | Correct, sourced, tested with sensitivity; numbers drive the argument | Correct numbers, little interpretation | Errors or numbers without purpose | | Recommendation | Clear choice, trade-offs stated, what the firm will stop doing | A choice with weak justification | Hedged or no choice | | Implementation and risks | Sequenced actions, measures, triggers to revisit | Some actions listed | Missing | | Communication | Pyramid structure, exhibits readable, within length | Readable | Hard to follow, over length | For each write-up, use `mba/mba-case-write-up`; for participation, track contributions with `mba/mba-class-participation-log`. ## 9. Exam preparation plan | When | Activity | Output | |---|---|---| | Exam minus 14 days | Rebuild the key concept table (section 5) from memory; mark gaps | Flashcards for every gap (`mba/mba-concept-flashcards`) | | Exam minus 12 days | Re-solve the numerical exhibits of three course cases in Excel | Clean workbook with formulas | | Exam minus 10 days | Timed practice: one unseen case, full write-up in exam time | Graded by your learning team with the rubric | | Exam minus 7 days | Review errors (`mba/mba-error-log`); redo the weakest framework | Corrected analysis | | Exam minus 5 days | Second timed case, different topic (corporate or platform) | Write-up and self-grade | | Exam minus 3 days | One-page framework sheet: when to use each, the question each answers | One page | | Exam minus 1 day | Light review of flashcards; prepare materials allowed in the exam | Sleep | More detail on spacing and retrieval practice is in `mba/mba-exam-prep`. ## 10. Common struggles 1. **Framework without a conclusion.** Five forces or VRIO tables with no "so what". Every table ends with a sentence that answers the question. 2. **Industry and firm confused.** Using the five forces to explain why one firm beats a rival in the same industry. 3. **Operational effectiveness mistaken for strategy.** "Better customer service" is not a strategy unless it rests on different activities and trade-offs. 4. **No trade-offs.** Recommendations that do everything. Say what the firm will not do. 5. **Numbers avoided.** Strategy cases contain exhibits for a reason; at least one quantitative test should support the recommendation. 6. **Ignoring competitor responses.** A move that works only if rivals stay still is not a strategy (`mba/mba-game-theory-card`). 7. **Static thinking.** Forces, resources and technologies change over the decision horizon. 8. **Hedging in class.** Instructors reward a clear position with reasons, then a willingness to update it. ## 11. Self-test questions 1. Distinguish business-level from corporate-level strategy, with one decision of each kind. 2. Why can a growing industry still be unattractive? Give two forces that could explain it. 3. What is the difference between operational effectiveness and strategic positioning? 4. State the four VRIO questions and explain why "rare" alone does not create sustained advantage. 5. Name three conditions under which transaction cost economics favours vertical integration. 6. What are direct and indirect network effects? Give an example of each. 7. List Ghemawat's four dimensions of distance. 8. What are the three elements of Rumelt's kernel of good strategy? 9. In the mini-case, what is the break-even volume per year for making the drive module once the capital cost is spread over five years at 12%? Show the Excel formula. 10. Why might announcing the make option change the supplier's price, and what is this strategy called in practice? ## 12. My notes and next steps | Item | My answer | |---|---| | My question for this course (section 1) | [Question] | | Framework I find hardest | [Framework and why] | | Cases I want to redo before the exam | [Cases] | | Team project topic and owner | [Topic], [owner] | | Link to recruiting stories (consulting or strategy roles) | [Story idea] | | Review dates | [Two days], [one week] | ## 13. Teaching note for the mini-case **Question 1: industry attractiveness.** The segment grows about 25% a year, but growth does not make it attractive. The scored analysis in `mba/mba-five-forces-card` (Worked example A) puts supplier power (3.60) and buyer power (3.50) highest: concentrated sensor and drive-module suppliers and large buyers running multi-vendor pilots take much of the value. Threat of entry is the weakest force (2.90: integration switching costs deter entrants, although venture capital keeps the threat real), and rivalry is moderate now but likely to intensify when growth slows, because venture-funded firms have high exit barriers. The HHI of 1,238 is well below the 1,800 level that the 2023 US Merger Guidelines call highly concentrated: a fragmented market with one leader and no dominant player. Corvane's losses (EBIT margin -17.5% in 2025) are consistent with an industry where few firms yet earn their cost of capital. **Question 2: competitive advantage.** Apply VRIO. | Resource | Valuable? | Rare? | Costly to imitate? | Organised to exploit? | Implication | |---|---|---|---|---|---| | Robot hardware | Yes | No: hardware converging across vendors | No | Yes | Competitive parity | | Fleet software (mixed traffic, congestion analytics) | Yes: reduces downtime, raises throughput | Yes for the analytics: rivals failed to license or copy them | Partly: basic orchestration features are copied within about a year, but the congestion analytics rest on accumulated fleet data and team know-how | Partly: sold only bundled with Corvane robots | Potential sustained advantage in the data-driven analytics, not fully exploited; the base software alone is a temporary advantage | | Customer integrations | Yes: create switching costs | Partly | Partly | Yes | Temporary advantage | The advantage is in software and data, not in the drive module. Gross margin rising from 34% to 39% fits a growing software share. **Question 3: the numbers.** Annual savings from making the module are $(6{,}400 - 4{,}100) \times \text{volume} - 2.2\text{m}$, giving USD 3.78m, 5.62m, 7.69m, 9.76m and 11.60m in 2026 to 2030 (`=(6400-4100)*B2/1e6-2.2`). At 12%, NPV is USD 12.114m (`=NPV(12%,C2:C6)-14`) and IRR is 36.7% (`=IRR(C1:C6)` with -14 in C1). On these assumptions the project is attractive. Three sensitivities matter more than the base case: | Scenario | NPV, USD m | Excel | |---|---|---| | Base case | 12.114 | `=NPV(12%,C2:C6)-14` | | Volume 30% below forecast | 1.900 | savings recomputed with 70% of volume | | Supplier cuts its price to USD 6,400 minus 800 = USD 5,600 | 0.272 | savings with `=(5600-4100)*B2/1e6-2.2` | Spreading the capital over five years at 12% gives an annual capital charge of USD 3.884m (`=PMT(12%,5,-14)`), so the break-even volume is $(2.2\text{m} + 3.884\text{m}) / 2{,}300 = 2{,}645$ modules a year (`=(2.2+PMT(12%,5,-14))*1e6/(6400-4100)`), just above the 2026 forecast of 2,600. The project depends on growth continuing. **Question 4: supplier response.** The supplier's alternative to cutting prices is losing about 80% of a growing customer's volume. A price cut to about USD 5,600 would leave making the module almost worthless (NPV USD 0.272m) while saving Corvane USD 800 a module without any capital: on 2026 volume of 2,600, USD 2.08m a year. The credible option to integrate is itself a bargaining lever against a powerful supplier. Practical forms: qualify the second supplier for more volume, co-design a module with that supplier, or build a small pilot line (tapered integration) that proves capability without full capacity. **Question 5: fit and the platform idea.** Making drive modules puts USD 14.0m of scarce capital into an activity that is not the source of advantage and that rivals can buy. It fits a hardware-cost strategy, while the evidence points to a software-and-data advantage. The platform proposal fits that advantage better: opening the fleet software to third-party robots could create indirect network effects (more robot types attract more sites; more sites attract application developers) and turn the software into the product. Its risks are cannibalising Corvane's own robot sales and the launch problem: the first third-party robots and applications must be attracted before network effects work. **Question 6: recommendation.** A strong answer: do not build the module now. Use the option to negotiate a lower price and a second-source agreement, and redirect capital to the software, with a staged platform pilot (two third-party robot makers, a small set of application partners) measured by sites using mixed fleets, software revenue share and retention. Revisit the make decision if volume exceeds about 2,650 modules a year with the supplier still unwilling to move on price. In Rumelt's terms: diagnosis (value in the segment goes to suppliers and buyers, while Corvane's real edge is software), guiding policy (compete on the fleet software and data, keep hardware asset-light), coherent actions (renegotiate, second-source, platform pilot, software pricing). ## Sources and further reading **Primary works.** - Porter, M. E. (1979). How competitive forces shape strategy. *Harvard Business Review*, 57(2), 137-145. - Porter, M. E. (1980). *Competitive Strategy: Techniques for Analyzing Industries and Competitors*. New York: Free Press. - Porter, M. E. (1985). *Competitive Advantage: Creating and Sustaining Superior Performance*. New York: Free Press. - Porter, M. E. (1996). What is strategy? *Harvard Business Review*, 74(6), 61-78. - Porter, M. E. (2008). The five competitive forces that shape strategy. *Harvard Business Review*, 86(1), 78-93. - Wernerfelt, B. (1984). A resource-based view of the firm. *Strategic Management Journal*, 5(2), 171-180. - Barney, J. (1991). Firm resources and sustained competitive advantage. *Journal of Management*, 17(1), 99-120. - Prahalad, C. K., and Hamel, G. (1990). The core competence of the corporation. *Harvard Business Review*, 68(3), 79-91. - Teece, D. J., Pisano, G., and Shuen, A. (1997). Dynamic capabilities and strategic management. *Strategic Management Journal*, 18(7), 509-533. - Porter, M. E. (1987). From competitive advantage to corporate strategy. *Harvard Business Review*, 65(3), 43-59. - Brandenburger, A. M., and Stuart, H. W. (1996). Value-based business strategy. *Journal of Economics & Management Strategy*, 5(1), 5-24. - Coase, R. H. (1937). The nature of the firm. *Economica*, 4(16), 386-405. - Williamson, O. E. (1975). *Markets and Hierarchies: Analysis and Antitrust Implications*. New York: Free Press. - Rumelt, R. P. (1974). *Strategy, Structure, and Economic Performance*. Boston: Division of Research, Graduate School of Business Administration, Harvard University. - Katz, M. L., and Shapiro, C. (1985). Network externalities, competition, and compatibility. *American Economic Review*, 75(3), 424-440. - Rochet, J.-C., and Tirole, J. (2003). Platform competition in two-sided markets. *Journal of the European Economic Association*, 1(4), 990-1029. - Ghemawat, P. (2001). Distance still matters: The hard reality of global expansion. *Harvard Business Review*, 79(8). - Bartlett, C. A., and Ghoshal, S. (1989). *Managing Across Borders: The Transnational Solution*. Boston: Harvard Business School Press. - Mintzberg, H., and Waters, J. A. (1985). Of strategies, deliberate and emergent. *Strategic Management Journal*, 6(3), 257-272. - Kaplan, R. S., and Norton, D. P. (1992). The balanced scorecard: Measures that drive performance. *Harvard Business Review*, 70(1), 71-79. - Rumelt, R. P. (2011). *Good Strategy Bad Strategy: The Difference and Why It Matters*. New York: Crown Business. - Christensen, C. M. (1997). *The Innovator's Dilemma*. Boston: Harvard Business School Press. - Ansoff, H. I. (1957). Strategies for diversification. *Harvard Business Review*, 35(5), 113-124. - Nash, J. F. (1950). Equilibrium points in n-person games. *Proceedings of the National Academy of Sciences*, 36(1), 48-49. **Textbooks (further reading only).** Grant, *Contemporary Strategy Analysis* (Wiley); Besanko, Dranove, Shanley and Schaefer, *Economics of Strategy* (Wiley); Saloner, Shepard and Podolny, *Strategic Management* (Wiley); Ghemawat, *Strategy and the Business Landscape* (Pearson); Parker, Van Alstyne and Choudary, *Platform Revolution* (W. W. Norton, 2016). **Open resource.** OpenStax, *Principles of Management* (CC BY-NC-SA 4.0), chapters on strategy. ## Answer key 1. Business level: how to compete in one industry (for example, whether to compete on cost or differentiation in warehouse robots). Corporate level: which businesses to be in (for example, whether to enter drive-module manufacturing or a new country). 2. Growth attracts entrants and can strengthen suppliers; buyers may be powerful. Example: easy entry and concentrated suppliers, as in the Corvane segment. 3. Operational effectiveness is performing similar activities better than rivals; positioning is performing different activities, or similar ones differently, with trade-offs (Porter 1996). 4. Valuable, rare, costly to imitate, organised to exploit. A rare resource that rivals can copy or substitute gives only a temporary advantage; one the firm cannot exploit gives none. 5. Asset specificity, uncertainty and frequency of transactions (plus few alternative suppliers, which raises hold-up risk). 6. Direct: a messaging network is more valuable the more people use it. Indirect: a game console is more valuable to players when more developers write games for it, and more attractive to developers when more players own it. 7. Cultural, administrative (political), geographic and economic distance. 8. Diagnosis, guiding policy, coherent actions. 9. Annual capital charge `=PMT(12%,5,-14)` = USD 3.884m. Break-even volume $(2.2 + 3.884)\text{m} / 2{,}300 = 2{,}645$ modules a year: `=(2.2+PMT(12%,5,-14))*1e6/(6400-4100)`. 10. A credible threat to make the input raises the buyer's bargaining power, because the supplier risks losing the volume; the supplier may cut prices to prevent it. Firms often use partial (tapered) integration or a qualified second source to keep the threat credible. ## Revision history | Version | Date | Author | Change summary | |---|---|---|---| | 0.1 | YYYY-MM-DD | [Your name] | First copy for [course and term] | | 0.2 | YYYY-MM-DD | [Your name] | *Example:* Replaced roadmap with syllabus, added two cases to session 9 | ## Standard and licence note Structure aligned with the core MBA strategy curriculum as described in the primary literature named above (Porter, Barney, Prahalad and Hamel, Teece, Pisano and Shuen, Rumelt and others) and with the broad competency areas used in graduate business education. The roadmap, explanations, mini-case, exhibits, teaching note, rubric and answers are original; no published case, teaching note or textbook text is copied or paraphrased, and Corvane Robotics and every person and competitor in the case are fictional. This template is independent and not affiliated with or endorsed by any school, author or publisher. Check your own syllabus for session topics, grading and the rules on collaboration and AI tools. Template licence: MIT.