Thursday, December 30, 2004
UNIVERSITY OF CALIFORNIA
Walter A. Haas School of Business
MBA 290G.1, ENG 298A.2, SIMS 290.10: International Trade and Competition in High Technology
Spring 2005 Thursday 2:00 PM – 4:00 PM (Cheit C325)
Professor Charles C. Wu
Direct phone: 415-279-2701
Office hours: By appointment – always available before class on Thursdays
Revision Date: April 11, 2005 (Class Schedule Updated)
Course Contents and Objectives
The rise and fall of the high-technology industries of the 1990s reflect broader changes in markets, production organization, and business models, as well as the operation of government policies. These broader changes, which include but go well beyond the Internet revolution itself, suggest that the industrial economy is being fundamentally transformed by the diffusion of innovations in technology and business models across the industrial and industrializing economies. At the same time, these changes cannot be understood without a deeper examination of the factors that created competitive advantage at the national level in many of these industries during the previous three decades. This course explores the broad changes in "who is winning, who is losing, and why" in global markets for high-technology goods ranging from semiconductors to Internet services.
This course seeks to make sense of the decline and prospective recovery of U.S. high-technology industries, the evolution of innovation and technology strategies and policies in Asia and Europe, the historic and current roles of governments in shaping markets for high-technology goods, and the impact on business strategies of recent developments in early-stage capital markets. Our general approach views technological innovation and competition as dynamic processes that reflect previous choices made by firms and governments. Modern technologies develop in markets that are international in scope, often imperfectly competitive, and subject to influence by a variety of economic and political stakeholders. We will use an eclectic mix of practical, historical, and theoretical perspectives throughout the course in examining these issues. From time to time, we will be joined by venture capitalists, corporate executives, and technologists engaged in global high-technology markets for discussion of these issues.
Class Format and Preparation
The course will use a mix of case discussions, lectures and guest speakers from leading high tech companies, global corporations, and venture capital firms.
Class participation is strongly encouraged. You are invited to highlight insightful linkages between class material and your past experience as a professional and a global observer, to raise challenging questions and issues related to topics in global competition and strategies being reviewed, and to participate actively in discussion of cases and global trends.
The expectation is that the cases and reading materials will be fully prepared for each session. Each student should come to class ready to open the discussion, just as one must be so prepared when attending a business meeting. The instructor will use a call list and any student may be called on at anytime. If for some special reason a student is not so ready for one class, please inform the instructor prior to class. Also, please use your name card throughout the semester.
Many classes will also have an international business executive guest speaker that will comment on the class analysis of the case as well as provide a forum for practical questions and answers. Due to speaker availability, session topics may be changed as the semester progresses.
Attendance and Feedback
Attendance is expected and unexcused absences will affect course grade. Excused absences are those officially sanctioned by the school’s academic regulations. In all cases of absence, professional conduct and courtesy dictate that the instructor be informed prior to class. Failure to do so will cause consternation and disappointment.
As “International Trade and Competition in High Technology” is a broad topic, the instructor will do his best to adapt the course based on current events and student feedback. As a result, mandatory email questionnaires will be sent out following every class with the expectation of responses by Monday at 9am. This weekly questionnaire is not expected to take more than 5-10 minutes to complete, but timely submissions will count towards your final course grade.
Although it happens infrequently, it is possible for a student to “get by” with perfunctory effort — enough effort to maintain some respect of the group members but not enough to achieve the educational objectives prescribed by the course. If a member is clearly shirking, the other members should make an attempt to find out the reason(s) and assist him or her to returning to productive work. If these steps fail, please see the instructor.
The recommended final group project should be selected from one of the following areas:
- Global Industry Analysis on an Approved Technology Industry coupled with Investment Recommendations of the Long Term Winners.
- Detailed analysis of an approved technology company with an emphasis on the global aspects of its operation (market, production, etc.).
- The instructor will also consider other projects pertaining to the class topic.
- Each team should be formed prior to the 2nd week of class and 3 project concepts should be submitted prior to the third week of class.
Required and Recommended Reading (Updated February 15, 2005)
Required cases will be published and purchased through Study.Net. In addition, there are a number of recommended books to be referenced for use in cases. These books can be found in the reference center at the library:
- The Competitive Advantage of Nations by Michael E. Porter
- Inside the Tornado by Geoffrey A. Moore
- The Innovator’s Solution by Clayton Christensen
- The Gorilla Game by Geoffrey A. Moore
Class Schedule (See 4/14 Class for Update)
January 20, 2005: Introduction
- Introduction to international trade and competition
- Course overview and administrative issues
January 27, 2005: Competitive Advantage of Nations
- Submission of Team Project Proposals
- Read case “Finland and Nokia”
- Read “The Competitive Advantage of Nations”
- Please outline the principal global competitive advantages of Finland in cellular phones based on the 4 major components of Porter’s diamond: Factor Conditions, Demand Conditions, Related and Supporting Industries and Firm Strategy, Structure & Rivalry.
- What developments in Finland led to the economic transformation in Finland? What was different about Finland’s telecommunication sector that led to Finland’s emergence as a global telecommunication powerhouse?
- What was the cluster program? How did it stimulate R&D and technology innovations?
- How did Nokia leapfrog Motorola in the early 1990s to become the No. 1 mobile phone company?
- What challenges did Finland face by 2001? What strategy would you recommend the nation to take on?
In addition, there is an article in the January 24, 2005 edition of Fortune (the issue profiling 100 best companies to work for) on page 98 entitled “Has Nokia Lost It?” It’s not mandatory reading but if you have access to the article – it will give you more background information and an update on Nokia’s issues.
February 3, 2005: National Culture and Administrative Heritage
- Read case “Philips versus Matsushita: A New Century, A New Round"
- Please compare and contrast Philips vs. Matsushita based on the 4 major components of Porter’s diamond.
- How did Philips become the leading consumer electronics company in the world in the post war era? What distinctive competence did they build? What distinctive incompetencies?
- How did Matsushita success in displacing Philips as No. 1? What were its distinctive competencies and incompetencies?
- What do you think of the change each company has made to date – the objectives, the implementation, the impact? Why is the change so hard for both of them?
- The major players in the MP3 marketplace are currently Apple (4.6M iPod players in Q4), Creative (2M Zen and MuVo players) and probably Dell. Sony, Panasonic and Philips are starting to address the marketplace. How are they doing it, what should they be doing, will they succeed and why?
February 10, 2005: National Culture and Administrative Heritage
Guest Speaker: Ms. Tahn-Joo Chin, Managing Partner, Cross Border Ventures Partners, former CEO of the Information Technology Institute which is the R&D Arm of the National Computer Board of Singapore
- Read case “Singapore Unlimited: Building the National Information Infrastructure”
- Bring one hard copy of your resume with current/future contact information to class. The hardcopy should be one sided, not two sided (multiple pages are acceptable). Your resumes will be included in a book (with the class seating chart) to be handed out at the end of class to help you better know and keep in touch with your classmates.
- Please compare analyze NII and Singapore based on the 4 major components of Porter’s diamond.
- What was Prime Minister Lee Kuan Yew’s vision for Singapore? What challenges did he face in achieving this vision? How has his vision been extended (or changed) under Prime Minister Goh Chok Tong?
- What is the National Information Infrastructure? How does an IT infrastructure compare with other types of country-level infrastructure (e.g., roads, schools, ports)?
- Evaluate the process used to implement Singapore’s National Information Infrastructure. Would you consider the implementation “successful?” If so, what factors contributed to its success? If not, what factors contributed to its failure?
- What other areas do you think Singapore should target based on your analysis? What are your thoughts on an effort into biotech?
February 17, 2005: Disruptive Technology Strategy and Crossing the Chasm (Lecture and Discussion)
- Submit Executive Summary and Outline for Group Project
- Read chapter 2 of The Gorilla Game
- Read chapter 2 of The Innovator’s Solution by Clayton Christensen
- Name at least one successful technology that has successfully crossed the chasm over the last 3 years. Name at least one exciting technology that has not. Compare and contrast appropriate attributes.
- Both the Internet and Desktop Publishing have been mentioned as disruptive technologies. What large companies failed due to the development of these technologies?
February 24, 2005: Exportation of Technology
- Read case “NTT DoCoMo: Marketing i-mode”
- How is the technology business different in Japan than the US?
- Please outline the principal global competitive advantage of Japan in wireless data services based on the 4 major components of Porter’s diamond.
- What factors account for i-mode’s overwhelming success in Japan?
- Describe the i-mode value proposition from the perspective of the various parties in the value chain.
- The case describes a number of decisions made by DoCoMo in launching the i-mode service, including decisions about initial target market, third-party content, technology standards, hardware, advertising, and pricing. What was the rationale behind each of these decisions? What were the risks?
- Is the i-mode concept exportable to other countries? Why haven’t more overseas carriers adopted the i-mode model? For example, most overseas operations are extremely reluctant to relinquish control over content to third-parties. What accounts for this reluctance?
March 3, 2005: Global Expansion Through Acquisition
Guest Speaker: Kip Knight, VP, International Marketing and Category Management, EBay International
- Read case “Meg Whitman and eBay Germany"
- Read case “Philipp Justus at eBay Germany (A)"
- Read article "The World According to eBay"
- What has made eBay so successful today? What has eBay been able to do that its other competitors couldn’t match?
- What caused eBay Germany’s decline post the acquisition by eBay? How did Justus try to deal with the low morale?
- What made the migration of eBay Germany to the common eBay platform so difficult? What organizational change did Justus implement in response to this crisis?
- Ebay lost to rival Yahoo in the Japanese marketplace. Why?
- Discuss Ebay’s approach to Mainland China. Opinions regarding the best expansion strategy?
March 10, 2005: Outsourcing R&D to Mainland China (Update)
Guest Speaker: Peter “Scotch” Scocimara, VP LiveOps, former VP, Webex
- Read Porter’s Five Forces in the Digital Age
- Read the latest S-1 and Annual Report on Webex
- Print out 1 article on Webex’s outsourced R&D model
- Read at least one research report on Webex
- Read case "Taiwan Semiconductor Manufacturing Company"
- Why did MSFT buy Placeware? Why not Webex or another competitor?
- What kind of company is Webex? Who are it’s competitors? Who are likely acquirors?
- Compare and contrast different software architectures: Mainframe/Minicomputer based, PC based, Client-server based, Web based, P2P based
c) Marketing and Positioning
f) Expansion Strategies
- Be prepared to discuss Webex’s outsourcing strategy. What competitive advantages did it have? What disadvantages does it have? Would you recommend a different strategy? Why or why not?
- If you were Min, what would present to your Board of Directors as to your global expansion strategy? Where would you invest your time, money and efforts to maximize controllable profitable growth? What information would you need to make a more informed decision?
March 17, 2005: How to read a technology company IPO Prospectus (Workshop)
- Find and read the Google IPO Prospectus
- Why do companies have IPOs? Why did Google have an IPO?
- What are the negative impacts of an IPO to a company?
- How was the Google IPO different than most IPOs?
March 24, 2005: Spring Break
March 31, 2005: Computer Industry Evolution and Horizontalization
- Read case “Matching Dell”
- Describe the value chain of the PC industry? How has it changed over time? How did it “cross the chasm”? What were the “headpins” of the industry?
- How did the IT industry transition from IBM/BUNCH to Wintel? Why did the mobile handset industry remain vertical?
- Legend Computer (China’s top PC manufacturer) has vaulted its way to the top through Legend branded retail stores. Why was this strategy successful in China?
- Should Dell expand its model to move into the consumer electronics space? Why or why not? What type of products and services will be the most appropriate for Dell?
April 7, 2005: Dell - Selling Directly, Globally
- Read http://www.quickmba.com/strategy/porter.shtml
- Read case “Dell: Selling Directly, Globally”
- With Porter’s Five Forces, analyze the way Dell expands with special emphasis in the Chinese PC environment. Does Porter’s Diamond have any additional implications in Dell’s expansion decisions? Evaluate the pros and cons of different distribution methods for PCs in both the China market as well as the US market.
- What strengths does Dell bring into the Chinese market? What weaknesses? What are Legends (Lenova)’s competitive advantages?
- Legend Computer (China’s top PC manufacturer) has vaulted its way to the top through Legend branded retail stores. Why was this strategy successful in China? Why has Legend (Lenova) purchased IBM’s PC division?
- Should Dell expand its model to move into the consumer electronics space? Why or why not? What type of products and services will be the most appropriate for Dell?
April 14, 2005: High Definition TV Standards Battle in the US (Updated)
Guest Speaker: Elliot Broadwin, CEO, Phaseon Corporation
- Read case “High-Definition TV: The Grand Alliance”
- Read "Digital TV: The Future of Video Services" by Alan Stillwell (e-mail Lori for PDF)
Think about HDTV standards from 3 different perspectives:
- Geopolitical – What are the government interests and why? How does national security play a role in the development of these standards?
- Economic - Who stands to gain from adoption of standards and why? Who are the major industries involved? What will it take for consumers to adopt the technology?
- Technology – How does technology play a role? Are there key technology drivers that would influence the impact of standards?
We will have the six project groups (2 from wireless) assigned to 3 groups:
- NAB representing the broadcast industry
- FCC representing the national interest and public interest agendas
- Telecommunications representing the wireless industry
These groups will be testifying in front of Congress:
“Currently there are 67 HDTV channels representing 408 MHz of frequency that have been allocated to the broadcast industry. The broadcasters were allocated this spectrum for free. Based on FCC auctions – this spectrum has a value of $470B to the US government. 84% of the US population gets programming from Cable TV or Satellite."
What policies should we be changing and why? Why shouldn’t we take back the spectrum and auction the spectrum off? What is the best use of this spectrum and what are your plans for the spectrum (both for NAB and for Telecommunications)? What powers do you not have that you should have (for the FCC)?
April 21, 2005: Taiwan Semiconductor Group
- Read case “A Silicon Valley of the East: Creating Taiwan’s Semicondutor Industry”
- Read case “Taiwan Semiconductor Manufacturing Co: Building a Platform for Distributed Innovations
- Using Porter’s Five Forces – outline the semiconductor industry before and after the creation of TSMC. What technology and business trends enabled it’s success in changing the industry.
- Using Porter’s Diamond – evaluate why TSMC makes sense or doesn’t make sense in Taiwan.
- After the creation of TSMC, Chartered Semiconductor (Singapore) and Semiconductor Manufacturing International Corporation (SMIC – China) have been created – please google these companies and be prepared to comment on whether they should have been started, why they have been started, how would you define success and whether they’ve been successful.
April 28, 2005: Group Presentations
- Group presentations
May 6, 2005: Presentations and Class Wrap-Up
- Group Presentations
FINAL GROUP PROJECT DUE DATE
PowerPoint Presentation is due on April 28, 2005. Group Project Write-Up (Supporting Documentation) is due on May 6, 2005. I would like to receive both electronic and printed versions for the PowerPoint Presentation as well as the Write-Up. Be prepared to present your project on April 28, 2005.