The Logic Behind The Management of Strategy in The Marketplace

Ernest R. Cadotte (professor of marketing at the University of Tennessee) and Harry Bruce (former CEO of the Illinois Central Railroad) joined forces with a multidisciplinary team to create an integrated textbook and simulation entitled The Management of Strategy in the Marketplace. The exercise is a spin-off of the integrated MBA program pioneered at the University of Tennessee and of Dr. Cadotte's Marketplace series.

The contributions made by ten faculty members and business people, and by a team of courseware developers were drawn together into a strategy exercise filled with tactical detail. The contributors represent all of the functional areas of business, and most have worked together for the past several years in designing and delivering integrated programs at the MBA, executive MBA, and managerial levels. This exercise represents a new generation because it takes advantage of technology that was not available just two years ago. Participants can now be placed into a very realistic business setting in which they virtually run a company for two to four years in compressed time (eight to twelve rounds of decision making).

Learning Strategy

The pedagogy or learning strategy of the textbook and simulation exercise closely follows our experience in setting up an integrated MBA program at the University of Tennessee.

The fundamental principles which guided the design of The Management of Strategy in the Marketplace are:

a heavy emphasis on the interconnectedness of the business disciplines;
the linking of the disciplinary content to business decision making;
the use of an extended case to tie together a series of related decisions; and
the just-in-time delivery of the subject matter to coincide with decisions being faced within the extended case.

Thus, the delivery of the learning material is not organized by discipline, rather by its relationship to decisions being faced by the class.

The fundamental principles which guide the delivery of The Management of Strategy in the Marketplace are:

the continuous application of strategic planning and execution skills within a rapidly changing environment;
a persistent focus on bottom line profitability while simultaneously delivering customer value;
the repetitive practice of budgeting and cash-flow management,
a heavy emphasis on marketing, accounting, finance and manufacturing fundamentals; and
a strong emphasis on leadership, teamwork and interpersonal skills,

Note: The final hallmark of the exercise is a strong emphasis on leadership, teamwork and interpersonal skills. Thus, team management skills overlay this series of demanding decisions. In a sense, the teams themselves become one of the case studies of the program.

Learning Sequence

Table 1 contains a chronological listing of the simulation activities which a team will encounter while competing in this exercise. Each quarter or decision period has a dominant activity and a set of decisions which are linked to it. These dominant activities take the team through the business life cycle from start-up, to development, to growth, to near maturity. As the managers work through the business life cycle, the instructors will phase in the disciplinary material as it becomes relevant to the current decisions of the team. In addition, there is reading material which lays out the nature of each new decision being faced, the issues to be dealt with, its linkages with other decisions, and the trade-offs to be considered.

Each quarter's activities not only result in new material being introduced, but also build upon the prior content so that there is considerable repetition. We have found that business activities such as leadership, team management, pro forma cash flow analysis, value creation in product design, production scheduling, activity-based costing, and strategic planning and management are not easily absorbed. They require repetitive exercise in order for them to become second nature to students.

Role of the Instructors

The instructor can use class time to further explore the decisions being faced by the team or invite specialists from other disciplines to guest lecture. For the most part, the sequencing of decisions is flexible so that the instructor can introduce material earlier, later, or not at all depending upon the time available, prior training, and level of difficulty desired. In a sense, the instructor orchestrates the movement of decisions, text material, and lectures to suit the needs of the participants as they run their companies and face an evolving set of circumstances.

Throughout the exercise, the instructor serves as a coach and interacts with each team to review the analysis and strategic thinking of the team. As coach, the instructor's role is to help the participants develop their critical thinking skills. The instructors can offer mini-tutorials or back-of-the-envelope chalk talks in order to help the managers understand and expand their options. Even frustrations can be used to lead into discussions of the relevant points and issues -- lessons learned the hard way.

This instructional assistance comes at a highly relevant time and within a context which is germane and unique to each manager. It is focused on the team's current decisions and the difficulties the member might be having as he or she tries to sort out what to do. Techniques which are clearly understood do not require elaboration by the instructors. Rather, the discussions are focused on what is not known or properly mastered.

Alternate Course Formats

Over the years, we have used several different formats in executing simulation exercises. In our regular MBA program, we set up an intensive, six-day "business war game" at the end of the first year. This simulation serves as an integrated, capstone experience in which the students can practice what they have learned all year long. There are no content lectures, and the exercise is played out in a large computer-training center. There are two four-hour decision periods each day, with two days set aside for the preparation of a two-year business plan and its presentation to venture capitalists, who negotiate an equity position with the company.

We run a similar exercise of five days’ duration with our Executive MBA class, at the end of their training. A major difference here is that we set up a dedicated strategy room for each team, complete with computers, flip charts, and writing boards. We include large activity charts, cash-flow templates, and performance charts so that everyone can see the team’s strategy and performance as it evolves. By eight decision periods, the walls are covered with the team’s running analyses of markets, competitors, and their own strategy.

In our Undergraduate program, we run a fifteen-week exercise. A single instructor gives one content lecture each week and meets with the teams for biweekly executive briefings. Each week corresponds to one decision period, with two weeks dedicated to the preparation of a business plan.

For our Management Training program, we scale down the activities and lectures to the most important learning points. We organize programs of 3 or 4 days, depending upon the learning objectives and time constraints. We also set up a dedicated strategy room for each team, complete with computers, flip charts, tactical planning charts, cash-flow templates, and performance charts. This format facilitates strategic and tactical planning and enhances the understanding of marketing, manufacturing, finance, and accounting fundamentals. These programs are very effective in creating a competitive mindset, a bottom line orientation and an understanding of how the decisions in one area of the firm can affect other areas.

Finally, the simulation is delivered to life over the internet so that teams from all over the world can participate in the exercise. As these participants encounter different mindsets, they learn a great deal about competition on a global basis.

Instructor Materials to review

The Management of Strategy in The Marketplace, textbook outline

Introduction to the Marketplace, Using technology to enhance learning, a slide show

Marketplace Tutorial, Downloading and Installing the Software, a slide show

A Tour of Marketplace software, Sample screens and the types types types of decisions that will be made in the exercise, a slide show

Instructor Materials for Marketplace, Syllabus, Outline of Business Plan, Venture Capital Plan, etc.

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