Assignment
Subject: Behavioural Science
Q.1 Case study
Four years ago, the Texas Office of the Attorney
General (OAG), which is the state’s child support enforcement agency, began
mailing letters to a small number of incarcerated noncustodial parents (NCPs)
with information on how to apply for a modification of their child support
order. NCPs often become unable to make their monthly child support payments
when they are incarcerated, and, if they do not request and obtain a downward
order modification, they may leave prison with significant child support arrearages
that follow them for years. Despite the clear benefits of this pilot program
for NCPs, only a small percentage of incarcerated NCPs who were contacted by
OAG applied for a modification. The BIAS team has partnered with OAG to
determine whether the tools of behavioral economics can be used to increase the
overall response rate of incarcerated NCPs, as well as the accuracy and
timeliness of their application materials.
BIAS and OAG analyzed every step in the
modification request process fromthe wording of the outreach letter and
application to the actions the NCP must take within the prison to get an
application notarized by a law librarian and returned to OAG by mail. The team
identified several potential “bottleneck” points at which NCPs may not follow
through with the process, a few of which are discussed below:
The NCP may receive the letter but decide not to
open it. Because the NCP likely associates OAG with child support enforcement,
seeing a letter from this agency may stimulate a negative affective response
and the ostrich effect1 (the tendency to “put one’s head in the sand” and avoid
undesirable information). Or, the NCP may perceive the deliberation costs in
time and mental effort to be too high to fully examine the letter.
The NCP may not decide to act on the letter. The
letter mentions the NCP’s incarceration several times, identifying him as a
prisoner rather than a parent. This increases the saliency of their prisoner
identity,2 which may reduce their motivation to act.
The NCP may not follow through. Even if the NCP is
interested in applying for a modification, he may procrastinate3 in completing
the application or forget to request an appointment with the law librarian
because this is not part of his everyday routine.
The NCP may not successfully
submit the application. After the NCP attends the appointment, the law
librarian may find that the application is incomplete and the NCP will need to
complete the application and return it at another time. The NCP may forget to
request notarization or even forget to drop the completed application in the
mail.
The NCP may see the future when they are released
from prison as too distant to plan for. NCPs may exhibit some degree of present
bias — overweighing the present with respect to the future. When the projected
release date is psychologically distant, the NCP may think about it abstractly,
and neglect to consider the negative effects of accrued arrears. The team has
redesigned the materials that are sent to incarcerated NCPs to address these bottlenecks
in ways that are informed by behavioral economics.
1. What are the changes according to you that
should be include in itinclude
2. How should an email to be managed?
Assignment
Subject: Behavioural
Science
Q.2 Case study
A new report released by AIM
Research and Hansa Cequity studies how and to what extent organisations in
India leverage behavioural science and data science to analyse consumer
behaviour across different industries and functions.
The report titled “Impact of
Behavioural Science and Data Science on Consumer Behaviour” also dives into the
connection between behavioural and data science in comprehending consumer
behaviour and makes a case for their use in collaboration.
Data science has seen increasing popularity in the
last couple of years and is used extensively by most organisations to identify
growth drivers. While data is a critical input to improve customer satisfaction
and increase revenues, Behavioural Science plays a crucial role in studying and
analysing customer experiences, brand loyalty, and overall consumer
journey.
According to the study, there
is limited use of Behavioural Science techniques by Indian organisations to
study buying behaviour. Around one in five respondents said they had none or rare
utilisation, indicating a significant scope for improvements across certain
industries and functions, some more than others. This includes studying
consumers’ implicit attitudes towards the brand or analysing the impact of
celebrity endorsements, ethnocentrism, the social image of inclusion or
exclusivity, etc.
The report provides detailed
insights through a comprehensive analysis of the survey. The study highlights
cases where the utilisation of Behavioural Science could see improved outcomes
if two functions within the same
company worked together. Along with this, the study
identifies areas in which Behavioural Science and Data Science can be used in
conjunction.
The study can be used by
leaders or decision-makers to get insight into where their companies stand in
utilising Behavioural Sciences compared to others and realise areas where they
are falling behind. The study also helps its readers identify future roadmaps
in terms of using Behavioural Science along with Data Science to their advantage.
Overall, almost every
Behavioural Science technique (surveyed) had more than two in five respondents
(40%) agreeing to its high/very high utilisation.
Although, almost every technique also had more than
20% who said they had none or rare utilisation. Respondents in the marketing
function had higher utilisation of most Behavioural Science techniques surveyed
than all the other functions. Almost every technique had more than/around two
in three (66%) Marketing respondents, saying that they have a high/very high
utilisation.
In terms of industry, different sectors had the
highest share of respondents claiming they have a high/very high utilisation of
different Behavioural Science techniques. However, Telecom & Media
consistently performed well—almost every technique had more than 50% of Telecom
& Media respondents saying yes to utilising it to a high/very high
extent.
1. Write the factors that influence the behavior of
an individual.
2. Discuss about the situation how behaviour
science deals with consumer behavior.
Assignment
Subject: Behavioural
Science
Q.3 Case study
Organizational behavior in this coca cola case
study refers to the study of activities or behavior of the employees inside a
commercial enterprise. The reflective case study has been made depending on the
issues faced the famous soft drink company Coca Cola. The aim of this coca cola
case study is to figure out the strategies with which the company can utilize
it human capital in order to make the organization a better place to work. At
the same time, I have described the opportunities through which the company can
continue its growth in the local market.
Coco Cola has been serving the world for more than
130 years however, the organization is facing extreme problem in the market of
the island country like Sri Lanka. The company is facing a downtrend regarding
its brand value. In the year 2014 the brand value of Coca Cola a around 34
billion dollar whereas it has decreased to nearly 32billion dollar in the year
2018. It means the company has faced an acute loss of around 5.4 percent. In
this coca cola case study discovered certain factors that have caused such an
acute downfall of the branded organization. One of the factors is the
mismanagement inside the organization. In the following coca cola case study, I
have highlighted how the improper workforce management of Coca Cola has leaded
the company to such an adverse situation.
Reasons of the downfall of Coca Cola Company
Communication: In order to identify problem lied
behind the downfall of the Coca Cola Company discussed in this coca cola case
study, I found certain issues and communication is one of such issues. The
entire set up of the organization is so much corporate like that the employees
hardly get time as well as scope to share their opinion or thought with other.
It has affected the growth of the company in two different ways. First of all
the staffs has could not get chance to share their problem with their leader.
As a result, they could not develop their skill in order to improve their
performance. On th contrary, the company lost the opportunities of utilizing
the innovative ideas of the workers that could have been fruitful for the Coca
Cola Company.
Feedback sharing: The HR of
the team leader did not pay proper attention on sharing the feedback with the
staffs of the. As a result, the employees did not get the chance to improve
their skill. Sometimes, they lacked of the proper knowledge of using the latest
technology while producing the various
products. This situation had a negative
repercussion on the company’s growth as a lot of employee left the firm out of
lack of dissatisfaction. As an irreversible effect, the company had to face an
acute shortage of labour that has hindered the production rate. In my opinion
the shortage of the human capital is one of the most important factors that has
affect the growth of
Coca Cola Company in a profound way.
Motivation: I think motivation is one of the
factors that are responsible for the shortage of the staffs inside the
organization. It is true that Sri Lanka is one of the densely populated area in
South Asia. As per the recent report held on 8th May, in the year 2019, which
is refered in this coca cola case study the entire population of the country is
21,008,582 (Chandrajith et al., 2019, pp-12, pp-37) which is approximately 0.27
percent of the entire population of the world (Wijesuriya et al., 2019). As a
result of such huge population the country enjoys the facility of plenty human
capital. May be that is the reason that the company treated its staff as a
factor that caneasily be replaced by some other employ. The management of the
company did not pay attention in order to motivate the employees. For instance
in this coca cola case study, they did not arrange proper compensation or
increment which was quite demotivating for the staffs. As a result, theemployee
showed less interest in order to enhance their performance.
Absence of proper training: I found in this coca
cola case study that one of the reasons of the downfall of Coca Cola Company is
the lack of training the needed to be provided to the employee in order to
enhance their performance. Like other country like Australia, UK and many more
the company did not have proper training facility for their employees. I think,
that is the reason why the staffs that were unable to perform well were easily
demotivated. In addition, the management did not take any measure in order to
increase the efficiency of their workers. This situation had a adverse effect
on their work performance which consequently followed by the decrease in
products’ quality.
Improper human resource management: Before writing
this coca cola case study, I had gone through certain researches, which
illustrate the error of the human resource management of Coca Cola Company. For
instance, the company has collaborated with four bottling firms that created a
big issue as the organization brought around ten thousand workers (Chiu, Fischer
and Friedman, 2019, pp-109). It was actually double of the entire work force.
As a result of such collaboration the company had to encounter with the problem
of complexity of the unnecessary staffs as well as resignation of termination
of employees (Chiu, Fischer and Friedman, 2019, pp-98). It
created an unstable situation inside the
organization that had a negative impact on the reputation of the company. In
addition, the human resource managers did not show proper interest in order to
attract or retain the quality employee who could play significant role in
betterment of the company.
Attitude of team leader: The team leader failed to
motivate their team members. Most of the time they could not encourage their
subordinate staffs and thus they could take proper initiative in order to
achieve the company’s target. In addition, the team leader r the supervisors
did not perform the proper monitoring of the tasks of their subordinate team
members. Even they showed reluctant to share proper feedback which could
improve the quality of the performance of their team members. The
irresponsibility of the team member or the management of the Coca Cola Company
has increased the uncertainty among the subordinate staffs of the organization.
In my opinion this kind of attitude of the higher authority was quite
responsible for the loss of status of the world famous Coca Cola Company.
Relation between the management and the staffs: I
discovered that the company management was failed to build a lateral relation
between the employees as well as the team leader inside the company premises. I
have discussed earlier in this report that the workers hardly got chance to
talk about their problems whatever they faced at the time of performing their
task. The management of Coca Cola Company hardly arranged meetings in order to
discuss the problems of their staffs as well as the possible remedies to
resolve those problems.
Proper working environment: The management failed
to create the proper working environment that can encourage or motivate the
employees to give their best performance (Jones and Comfort, 2018, pp-43). As I
have earlier mentioned that Coca Cola Company provided a strict corporate
environment to its employees. This situation created obstruction in building an
emotional attachment between the workers as well as the management of the
organization. As a result, the employees failed to understand that their
improvement was closely related to the success of the company (Jones and
Comfort, 2018). That was the reason in this coca cola case study why the
workers of the Coca Cola Company did not take enough enthusiasm in order to
provide their best performance for the organization’s upliftment.
1. What are the factors that 1.
What are the factors that are responsible for the downfall of the Coca Cola Company in Sri Lanka?
2. Suggest some possible
remedies through which the company can overcome such situation?
3. Justify’ Coca Cola targets
middle class people in rural areas”. 4. Discuss the attitude and related
beliefs towards Coca-Cola of intensely brand-loyal consumers.
5. What are the key success factors for Coca-Cola?
Assignment
Subject: Behavioural Science
Q.4 Case study
Pepsi Next was launched by
PepsiCo into the US market in February 2012, and has since been rolled out to
various international markets (for instance, it was launched in Australia in
September 2012).
The new product is described
as a mid-calorie cola beverage, having a mix of sugar and artificial
sweeteners, designed to deliver a full cola taste with reduced calories. While
filling the market gap between full sugar and diet soft drinks, PepsiCo has indicated
that its prime target market is lapsed cola drinkers (giving them a reason to
return to the product category). PepsiCo, which owns range of high profile
beverage brands in addition to its flagship brand Pepsi, appear to be highly
committed to Pepsi Next providing it with strong launch and management support.
In fact, according to PepsiCo themselves, this is their most significant
product launch for several years.
PepsiCo is the second largest
food and beverage company in the world, with revenues now in excess of $60
billion. The corporation has 22 brands that achieve retail sales in excess of
$1 billion each. As a result of their brand diversification, around half of
PepsiCo’s revenue is generated from their food lines, such as Frito-Lay (snack
food) and Quaker Oats.
In addition, they have
progressively expanded internationally and now access over 80% of the world’s
population. Their international (non-US) markets account for almost 50% of
their total revenues and they still see significant growth potential from these
markets, on the basis that per capita consumption of snacks and beverages in
other countries is well below US market levels.
As a result, PepsiCo has
achieved solid growth is many international markets. While their US beverage
sales fell by 2% in 2011, this has beenmore than offset by double-digit sales
increases in Europe, Asia, the Middle
East and Africa.
In terms of their overall
strategic approach, PepsiCo (as highlighted on their website) see themselves as
innovative and adaptive, as stated in the following website quote: “Pepsi is
constantly on the lookout for ways to ensure their consumers get the products
they want, when they want them and where they want them.”
“Pepsi is constantly on the
lookout for ways to ensure their consumers get the products they want, when
they want them and where they want them.”
In their Annual Report, PepsiCo has structured
their brands around three related themes, as highlighted in the following
table. This brand structure gives some insight into the role of their brands
and how they see their brand portfolio developing in the future.
|
Emphasis of Brand |
Key Brands |
|
Fun-for-you |
Pepsi, Mountain Dew, 7-Up, Lays, Doritos,
Cheetos,Red Rock |
|
Better-for-you |
Pepsi Max, Diet Pepsi, Lays (oven baked), Quakerbars |
|
Good-for-you |
Tropicana, Quaker Oats, Gatorade, Nut
Harvest |
As you can see from PepsiCo’s
classification of their brands, it appears that the firm has the dual goals of
supporting and leveraging its existing ‘fun’ brands, while moving towards a
broader range of healthier offerings. While this second goal may appear to be
mainly related to improving their corporate image, it does have commercial
intent, as explained on the PepsiCo website: “Because a healthier future for
all people and our planet means a more successful future for PepsiCo.”
To help implement this
corporate goal, across their various brands, PepsiCo has focused on providing a
wider range of healthier choices, introducing more natural ingredients,
reducing fat content, reducing the environmental impact of their packaging, and
so on.
Recent Product Innovations
PepsiCo has a history of developing and launching a
number of mid-calorie beverages and Pepsi Next is by no means their first
attempt with this style of product. In addition to various Pepsi variations
(described in the ‘Before Pepsi Next’ section below), they have had some recent
success with reduced calorie versions within their Tropicana and Gatorade
brands.
One very successful
mid-calorie product initiate is Trop50, which was launched in 2010. Trop50, as
implied by its name, is a version of Tropicana with 50% less sugar and
calories. This new product was ranked as the 6th most successful new
food/beverage product in its launch year with retail sales in excess of $70
million. Its initial success has continued over the last two years, with the
Trop50 product line now generating over $150 million in sales. And even more
successful was Pepsi’s launch of Gatorade G2 in 2007. (Note: Pepsi acquired the
Gatorade brand with their purchase of the Quaker Company in 2001.) This
low-calorie version of Gatorade was identified as the most successful new
food/beverage product in 2008 in the US market, achieving sales over $150
million in its first year.
Clearly, these fairly recent
product successes with reduced calorie offerings under strong brands would have
had the effect of buoying Pepsi’s confidence regarding the viability of this
style of product. Hence, they believed that it was the right time to revisit a
reduced calorie Pepsi variation.
However, as some commentators
have pointed out, it should be noted that their success (with Trop50 and G2)
has occurred in their ‘good-for-you’ brand range, where consumers are already
quite health-conscious and probably more responsive to healthier options.
Therefore, whether this perceived benefit (of less sugar) will carry to
‘fun-for-you’ brands, like Pepsi, is less certain for the firm.
Before Pepsi Next
Perhaps surprisingly, Pepsi
Next is PepsiCo’s fifth attempt at a mid-calorie beverage. In the 1970’s they
introduced Pepsi Light, which was lemon flavored and contained 70 calories (as
opposed to a normal Pepsi can at 150 calories). (Not to be confused with the
current Pepsi Light brand marketed in various countries, which is a version of
Diet Pepsi.)
Then in the late 1980’s the
firm introduced Jake’s Diet Cola, which came in at a mere 15 calories, but did
not leverage the Pepsi brand name. At the time, Pepsi stated that the beverage
had the potential to “revolutionize” the diet segment of the cola market. Prior
to launch, Jake’s was extensively taste-tested against Diet Coke and the firm
had strong hopes for its success.
According to one of their vice
presidents at the time (Edward E. Jenkins), “Jake’s represents a new taste
concept in diet beverages and will provide consumers in the booming diet soft
drink category with a better-tasting, lowcalorie cola”.
In the mid-1990’s, they then
introduced Pepsi XL, another 70 calorie formula. In their promotions, they
indicated that X stood for ‘excellent taste’
and the L stood for ‘less sugar’. According to
reports at the time, Pepsi XL was a year in development at a cost of $1.5
million and was supported by an $8 million advertising budget.
More recently, in 2004,
PepsiCo released a 70-calorie beverage branded as Pepsi Edge. Around the same
time, Coca-Cola brought out a similar product under the brand Coca-Cola C2.
Coke supported C2 quite aggressively, with an estimated launch promotional budget
of somewhere around $40 million, making it their most significant launch since
Diet Coke. Both of these brands only lasted around 18 months or so in the
market before being withdrawn.
About the Soft Drink (Soda) Market
The US soft drink market
generates over $70 billion in sales. Volumes (units) have weakened slightly
since 2005, indicating that the market is in late maturity-early decline stage
of the product life cycle. Retail dollar sales have been supported somewhat by
price increases.
One of the biggest impacts on
soft drink consumption has come from bottled water, which now accounts for over
10% of beverage consumption. This is up from just 2% in 2000. And the soft
drink market has also been slightly challenged by sports drinks and energy drinks
that have seen a minor increase in market share.
The trend towards diet soft
drinks continues, with these offerings now representing 30% of the carbonated
soft drink (CSD) market, up from 25% just 10 years ago. Overall, these
movements indicate changing tastes of consumers as a result of a stronger
health focus. One of the brands most impacted by these market changes has been
the flagship Pepsi brand. In the most recent market share figures
available,
Pepsi now has less than 10%
share of the US CSD market (which ranks the brand 3rd behind Coke and Diet
Coke). While still well positioned, keep in mind that they were sitting at over
13% market share ahead of Diet Coke 10 years ago, at a time when the CSD market
was still growing at 3% per year.
Their Diet Pepsi product
enjoys a solid 5% market share. That product, along with Pepsi’s other soft
drink offerings (Mountain Dew in particular), gives Pepsi an almost 30% share
of the US CSD market, behind Coca-Cola at 42% (with Coke at 17% and Diet Coke
at 10%) and ahead of Dr Pepper Snapple at 17%.
Competitor Offerings
Pepsi isn’t the only player
seeking to tap into the perceived demand for reduced sugar beverages. Dr Pepper
Snapple (who has two products in the top 10 in the US CSD market) has also
introduced a low-sugar offering.
Their new product, Dr Pepper
Ten (with 10 calories), is squeezed between their normal Dr Pepper and their
Diet Dr Pepper, much in the same way the Pepsi Next product. Reportedly, Dr
Pepper Snapple is pleased with the performance of this new product to date.
Independent to the Pepsi Next offering, Coca-Cola is currently (mid-late 2012)
in the process of test marketing (in four American cities) mid-calorie versions
of their Fanta and Sprite brands. Carrying the sub-brand ‘Select’ (to make
Fanta Select) the concept is quite similar to Pepsi Next in that it uses a mix
of sugar and artificial sweeteners to cut the calorie count by half.
Obviously if these tests are
successful and these products are fully rolledout to the market as a standard
product, it appears that there could be a third sub-category of soft drinks;
traditional, diet, and now mid-calorie beverages. It would then be interesting
to see how and if this sub-category develops, particularly with more offerings
and overall promotional support. But on the other hand, it might be possible
that Coke might be test marketing the mid- calorie Sprite and Fanta options as
a form of market research only.
1. As per the above situation
what would be the impact of substituteproducts.
2. What will be benefit if Pepsi compromise to the
competitor offerings?
3. How do companies protect themselves against the
nonstop allegation of special interest group that have made them a
target?
4. Identify the ongoing issues in this case with
respect to issue management crisis management, global business ethics, and
stakeholder management.
Assignment
Subject: Behavioural
Science
Q.5 Case study
Amway’s Relationship with Stakeholders
Amway is one of the largest direct sales companies
in the world. It continues to be a family owned business which was founded in
1959. Today, it employs 14,000 people worldwide and markets over 450 product
lines. Its vision is to help people lead better lifes. Its success islargely
due to its three million ABOS Amway Business Owners) spread across 80
countries. Thanks to Amway, these people have a business of their own. The only
shareholders of Amway are the families that own Amway. The communication channels
used by Amway to communicate regularly with its internal and external
stakeholders are websites, email, events, publications and membership of trade
bodies.
Amway sells directly to consumers, without the
presence of retail outlets. It has its own supply chain through the ABOs. Amway
seeks regular feedback from ABOs and customers to find out how well it is doing
and to improve services. The ABOs are independent small businesses, but depend
on Amway suppliers to produce quality products.
Amway’s involvement with communities is a part of
its vision to help people lead better lives’. It promotes its corporates social
responsibilities (CSR) all over the world. Corporate social responsibilities at
Amway involve supporting social causes, acting in an ethical manner by making
good product and supporting its stakeholders in a number of ways. For example,
Amway has partnered with the children’s charity UNICEF. It helps provide
vaccination to fight the world’s six most deadly diseases. It has chosen this
charity because of its ABOs’ concern about families.
Ethical businesses get actively involved in
improving the communities where they work. Amway’s business ethics not only
provides a clear framework within which to work, but also gives it a positive
business advantage. Its ‘One by One’ program is good for both the environment
and for business.
This program supports organic farming, seeks to
reduce waste but this can be balanced against the benefits derived by both the
business and the community. Amway has to balance the needs of its many
different stakeholders. It sets high standards of ethics and codes of conduct,
in order to make sure that these are upheld. Its CRS program helps the
environment, its own employees and underprivileged children all around the world.
1. Who are the external stakeholders that Amway
communicates with?
2. What communication channels would you recommend
to Amway, a partfrom what is mentioned in the case and why?
3. Stakeholders are the
consumer of Amway. Comment. 4. Who are the external stakeholders that Amway
communicates with?
Assignment
Subject: Marketing Management
Q.1 Case study
American Tourister
re-positioning itself as a hip travel brand leveraging Sports Partnership
American Tourister,
Samsonite’s mass market label, is re-positioning itself as a hip international travel
brand; targeting the cool, young traveller.
In December 2016, as part of
their India campaign, Virat Kohli was brought onboard as a brand ambassador.
Kohli is – for India - the ideal face for the brand as he is the
personification of American Tourister’s re-positioning.
Following the success in
India, American Tourister took things to the next level and in February 2018
appointed football star Cristiano Ronaldo, the most followed male on social
media, as their brand ambassador.
Anushree Tainwala, Executive Director,
Marketing at Samsonite, said, “There couldn’t be a better time to bring
Cristiano on-board. His lively and vivacious personality, on and off the field,
resonates perfectly with our
funloving, vibrant brand
personality. His presence will help bring American Tourister to a whole new
audience, allowing us to stand out from the competition, and
enabling us to take the Brand to the next level.”
In Kohli and Ronaldo, it has
found two iconic sports personalities who have strong personal brands &
massive following in emerging markets. This helps American Tourister win
asymmetrically and leave competition in the dust. In addition to transferring
the sports stars' attributes to the brand, the partnerships:
Elevate the brand from Samsonite's low end product
to a contemporary, practical international travel brand; targeting the
aspiring, young international traveller. Explode the reach: Getting the reach
in India via Kohli (81m social media followers) and globally through Ronaldo
(315m followers) -especially with the FIFA World Cup around the corner.
Engage audiences: Kohli with
“I’m ready” & "Swagbag", Ronaldo with “Bring back more” are
examples of sharply positioning the brand leveraging the ambassadors to provide
differentiated, exciting engagement.
Top of Mind: Standing out in a
commoditised travel accessary category, American Tourister is positioning
itself as closer to the hearts of young travellers and in their purchase
consideration. In February & March this
year it has activated both
players - Ronaldo (here) & Kohli (here & here), Let's see where the
brand takes such partnerships as we get closer to the Russia World Cup. It has
achieved a strong cut-through even before the world gets gripped by the World
Cup fever.
Question:
(10 × 2 = 20)
1. How can your brand
differentiate & asymmetrically win in a commoditised category through
sports?
2. What other, more effective ways can brands use
to reposition themselves?
Assignment
Subject: Marketing Management
Q.2 Case study
In August 2004, a leading
business newspaper reported that Hyundai Motors India Limited (HMIL), an Indian
subsidiary of the South Koreabased Hyundai Motors Company (HMC)3 was expected
to reduce the price of its flagship car - Santro - by as much as Rs 40,000.
Industry experts were expecting a reduction in Santro's price in response to
the price war being waged by the market leader in India - Maruti Udyog Limited
(MUL),4 which had reduced the price of its largest selling car in the B segment
– Alto - by Rs 58,000 in two price cuts starting from September 2003. This move
had resulted in Alto replacing Santro as the largest selling car in the B
segment in the period January to June 2004 (Refer Exhibit I for the market
segmentation of the Indian car industry).
Marketing Management Case Studies | Case Study in
Management,
Operations, Strategies,
Marketing Management, Case Studies Rebutting the report on price cuts, HMIL's
managing director, BVR Subbu (Subbu) said, "We are not cutting prices on
the Santro. We have allowed our competitors the prerogative of cutting
prices."5 Several dealers of HMIL also felt that the company would not
reduce Santro's price as it had not adopted such tactics earlier.
Santro had been the most successful product of HMIL
and was also the largest selling car in the B segment till the fiscal year
2003-04. Introduced in late 1998, Santro had emerged as the second largest
selling car in India after MUL's M800 and had retained its position till March
2004
(Refer Exhibit II for the
total units and value sales of the top eleven car models in India).
In mid 2004, HMIL with its
four models, Santro, Accent, Sonata and Elantra, was the second largest car
company in India with 19% market share in the industry. The company was
planning to launch another model, 'Getz', in September 2004.
Analysts attributed HMIL's
success to its ability to launch technologically superior products and its
innovative marketing strategies. However, they expressed concerns that the
company relied heavily on Santro and any fall in demand for that model would
hit the company.
It was felt that the introduction of new cars by
the competitors and pgrading & price reduction of existing cars in the B
segment would affect Santro's sales. This would lead to a loss in Santro's
market share. (Refer Exhibit III for the comparison of features of various
models in the B segment).
For a long time after India became independent in
1947, the car market had just two models to offer - the sturdy 'Ambassador'
from Hindustan Motors (HM) and the sleek 'Fiat' from Premier Automobiles (PA).
This was the result of Government of India's (GOI) decision to keep the car
industry tightly protected.
For HM and PA, the GOI
dictated as to what type of vehicle the two companies should manufacture. No
other domestic or foreign car manufacturer was allowed to enter the Indian car
industry. The restriction on foreign collaboration led to poor technological
improvements in Indian cars. As a result, car prices remained high while
quality was inferior. This affected the growth of the industry. The demand for
cars in 1960 was 15,714 units and in the next two decades, this rose to 30,989
units, which meant that the Compound Annual Growth Rate (AGR) was just 3.5 per
cent.
In the 1980s, the GOI felt the
need to introduce an affordable small car, targeting the Indian middle class.
As manufacturing a small and affordable car required better technology than was
available indigenously, the government tied up with the noted Japanese company,
Suzuki. The government formed a joint venture with Suzuki and founded Maruti
Udyog Limited (MUL). It held 74% and Suzuki got 26% equity stake in MUL. In
1983, MUL launched the 'Maruti 800', priced at Rs 40,000 Hyundai's Entry in
India
One of the major players that
entered the Indian car market was HMC through its subsidiary HMIL. Before
making its move, the company closely studied the industry for a year. The
company's officials talked to vendors, dealers and customers to get a thorough
knowledge of the industry...
Marketing Santro: Santro
received an encouraging feedback from customers who appreciated its unique
design that gave more headroom and facilitated easy entry and exit... Launch of
Accent: By mid 1999, the major players realized that the 'B' segment would be
the fastest growing in the car industry. To cash in, Telco re-launched its
'Indica' by introducing several new features and solving the glitches in the
original model...
Marketing Management Case Studies | Case Study in
Management,
Operations, Strategies,
Marketing Management, Case Studies Repositioning Santro By late 2002, the
competition in the B segment had increased
significantly. MUL's Alto which was launched in
October 2000 had received a good response. Although HMIL's Santro remained the
largest selling car in the B segment, MUL commanded the largest market share in
this segment due to the combined sale of its three cars - Zen, Wagon R and
Alto... Status in 2004: The financial year 2003-04 ended on a positive note for
HMIL. The company achieved revenues of Rs 50 bn and profit after tax (PAT) of
Rs. 1.90 bn in the financial year 2003-04 compared to Rs 43 bn revenues and PAT
of Rs 1.65 bn in the fiscal 2002-03...
Question:
(10 × 2 = 20)
1. Examine and analyze the
marketing mix of Hyundai Motors in the Indian passenger car industry.
2. Compare and contrast the
marketing strategy of Hyundai with other leading players in the Indian
passenger car industry.?
Assignment
Subject: Marketing Management
Q.3 Case study
The British Company, Woolworths is normally
categorized as a variety store dealing in retailing of a range of varying
products. Historically it was established as a subsidiary of an American
Company F.W. Woolworth &Co, in 1879 by Frank Winfield Woolworth It was
incorporated in England on 23rd July, 1909 as private limited company with
initial capital of 50,250 pound sterling. It, first time floated a new idea of
selling all the products at a cost not more than five cents. This idea gained
popularity amongst the customers resulting in fast growth of the subsidiary.
Its first shop at Liverpool attracted about 60,000 people in first two days
because of attractive one penny, three penny and six penny products put at
sale. It continued to open new shops at various cities that attracted heavy
rush of customers and visitors. It was company’s policy to purchase the
products directly from manufacturers, who also were very happy due to momentum
in their business as well. Some of the manufacturers started doing business
solely with the Woolworths and labeled their products with the company’s name.
Company’s business grew day by day and it had 31 shops in United Kingdoms by
the year, 1914. Due to inflationary trends after the World War II, the company
had to do away with its three pence and six pence price limits. It introduced
self service first time in its retail side in the year 1955. Woolworth opened
about 190 self-service stores by the year 1970. It created new division in the
stores by establishing Woolco departmental stores in the year 1966. These
stores had full range of quality products like, clothes, groceries, car service
and restaurants etc. available at affordable prices.
The Company continued to flourish very fast because
of its stated aim to remain at the customer’s heart and best kid’s retailer
till 1966. But thereafter its sales as well as profits started falling because
of its competitors, Marks & Spencer who overtook its sales as well as
profits. The results of the company were the worst in the year 1969, because it
failed to chalk out suitable strategies necessary to take on its competitors in
the market. Sales at Woolworth began to decline. Consumers were reportedly not
satisfied with the quality of customer services of the company. Many of the
business sites were not at prime locations. Its new products could not attract
the customers because of lack of well trained staff and availability of ‘A
class service’. The company tried to improve its services in the year 1971 by
introducing new system of centralized payments besides closing its 23
unprofitable shops, as an attempt to trade up. The profits of the company
increased to some extent as a result of these
measures but it failed to boost up its profits at the desired level. The
competitors of Woolworth like Wal- Mart, Argos and Next very soon became more
prevalent in the market because of low prices, better service and vast range of
their products. The Management of the company ultimately decided to sell out
the Woolco stores in 1977. In the year 1981 it sold-out some of its valuable
prime located properties to cover-up the losses suffered by the shops situated
at these locations. Even then its profits went down in the said year and the
company was forced to cut the dividends first time since its establishment. In
the normal restructuring process during the year 1985, the company decided to
abandon the sale of food and adult clothing that was contributing about 30% of
its overall sales. The Management of the company sold out its 200 unprofitable
shops out of about 990, during the years 1982-1991. During this decade company
made a number of acquisitions in order to become more diversified in retail
business. It launched Music and Video Club that specialized in CDs, videos and
other entertainment products. The company succeeded in boosting its sales and
turnover during 1990s and gave impressive results despite the fact that some of
major chains like Wilkinson expanded their business in the Woolworth
areas.
Woolworth reviewed its entire business in the year
2002. It reconsidered its further expansion and realignment and merger of its
overall management structure. It strengthened infrastructure and planned
accurate management of its stocks so as to maintain them at their optimum
levels. It introduced new till system in order to ensure its stock holding
capacity besides provision of improved and efficient services to the customers.
The management decided to cut the number of suppliers and enhance the use of
their own branded products. These improvements contributed a little in the
sales as well as profits. One of main money spinners of the company was its
music business that collapsed. The financial results for the year 2004 showed
just 4.5% increase in the profits of the company. It had to compete strongly
with Argos in the sales of toys and gifts. In the year 2006, the company
introduced an in-store collection service for items ordered through website.
Company continued its business mainly in entertainment and electronics till the
year 2008. It expanded its chains and set up out of town stores that were known
as ‘Big W’. It announced considerable loss in its half yearly statement of
affairs as on 2nd August, 2008.
The management, therefore decide to sell out about
120 stores, cut jobs and reduce web operations. At this stage reportedly the
company rejected an offer to buy its 815 stores. From September onwards the
entire World entered into worst ever economic and financial crises that
resulted in decrease in availability of necessary credit from the banks and financial
institutions besides decrease in consumer spending.
The lending banks of the company not only refused to give further credits, they
also demanded repayment of their existing loans towards the company. As a
result of this crisis the retail business badly suffered. Media also reported
possible price crashes, increased personal debts, unemployment, pension
shortfalls, stock market crashes and decrease in availability of disposable
income.
Under these circumstances as well as in wake of
market saturations, coupled with economic downturn, it was highly difficult for
the Woolworth to maintain competitive pricing. Woolworth’s financial results
for the first half of the year 2008 showed 99.7 million pounds pretax loss.
Decreased credit availability, decreased public spending and pressure of
creditors to pay off debts of about 385 million pounds, forced the company to
sell out its 120 shops that were going in loss besides reducing the web
operations, cutting the products and axing the employees. These measures could
not help the company to survive and ultimately it suspended trading of its
shares on the 26th 0f November, 2009 and at last decided to close down its all
819 stores and axe its 27000 highly dedicated employees. The parent company of
Woolworth also announced its intention to go into administration on the 19th of
January, 2009.
Question:
(4 × 5 = 20)
1. Why Woolworths Failed as a Business?
2. What is the main focus or purpose of
Woolworths?
3. What challenges are Woolworths facing now a day?
4. What are the advantages of Global Expansion in
Retailing?
Assignment
Subject: Marketing Management
Q.4 Case study
Its Global Marketing Plans In the 1940’s itself
PepsiCo started branching out into the international arena. At first it was
into Latin America, the Middle East and the Philippines. Here too Coke had the
early bird advantage. Yet the product soon gained popularity. With the Arab
countries boycotting Coke, Pepsi enjoyed a monopoly for many years in the
Middle East. In the 1950’s Pepsi went to Europe and this included Russia, with
whom there existed a Cold War by USA. Though there were initial difficulties,
getting into Russia was a major breakthrough which the company exploited. The
company posted pictures of the then leaders of the United States and Russia
sipping the drink. Its arch rival, Coca Cola, was able to enter the Russian
markets only after more than 25 years after Pepsi’s entry.
In many of the countries that Pepsi ventured into
comparative advertising was prohibited and in many countries it was not an
accepted concept. For example, Pepsi tried its “Pepsi challenge” promotional
gimmick in Japan. However, the country and its people were not aware of
comparative advertising and as such the campaign did more harm than good. Hence
in Japan they had to break their tradition of running with the global campaign
and come up with a campaign that the Japanese would identify with and was more
Japanese. The “Pepsiman” was a superhero like figure that was devised by a
Japanese person for the Japanese market. The commercial was an instant hit and
helped improve Pepsi’s share in the Japanese market by as much as 14%. From
Japan Pepsi learned a valuable lesson – the same ad will not have the same
effect everywhere. When it comes to cross national advertising, there is always
the inherent risk of alienating the people.
Question:
(20 × 1 = 20)
1. What challenges Pepsi had to face, If Pepsi
would not follow the cultural factors in international marketing environment?
What is the good marketing way for pepsi?
Assignment
Subject: Marketing Management
Q.5 Case study
In 1980, Peter A, Horekens, marketing director for
Kellog company, was faced with the problem of developing a market for
ready-to-eat cereals in the Latin American region. Although Kellog had no
competition in the ready-to eat cereal market in this region, they also had no
market. Latin Americans did not eat breakfast as the Americans did. The problem
was especially prominent in Brazil. To create a market and increase sales in
this region, Horekens had to create a nutritious breakfast habit.
Kellog Company, which headquartered in Battlecreek,
Michigan, was founded in 1906 by W.K. Kellog. The company continued to operate
successfully with sales in 1980 amounting to 2,150.9 million U.S. Dollars. The
Kellog Company manufactured and marketed a wide variety of convenience foods
with ready-to-eat cereals topping the list. The company’s products were
manufactured in 18 countries and distributed in 130 countries. The ready-to-eat
cereals sales made up the majority of international sales.
In 1980, Kellog International operations accounted
for 38 percent of Kellog Company’s sales of more than $ 2.0 billion. The United
Kingdom was by far Kellog’s largest market. Internationally, sales in the ready-to-eat
cereal market continued to increase, although in the past few years the
competition also had increased. But in Latin America, consumption of
ready-to-eat cereals was negligible.
The Latin American Market
The Latin American Market, mainly Mexico and
Brazil, showed great potential as a Kellog’s ready-to-eat cereal market. The
demographics fit the ready-to-eat market, the only problem was that Latin
Americans did not eat the traditional American-style breakfast.
The Latin American market
included a growing number of families with children. The population mix was
becoming younger. The developing economy enabled consumers to spend more of
their income on food. Kellog wanted to increase sales in this Latin American
region, especially Brazil, but consumers had turned their backs on the American
style breakfast. How was Kellog to create a nutritious breakfast habit among
the Brazilians?
The company asked J. Walter
Thompson, Kellog’s advertising agency, to help instill the breakfast habit in
Brazil. According to Horekens, “In general, Brazilians do what people in
novellas do”. Novellas are Brazilian soap operas. J. Walters Thompsons tried to
advertise Kellog ready-to-eat cereal and instill the breakfast habit by
advertising within a soap opera. The first experience of advertising within a
soap opera failed; the advertisement portrayed a boy eating the cereal out of a
package. Kellog wanted to teach the Brazilians how to eat a complete,
nutritious breakfast, not just Kelloy’s cereal. The commercial did not work,
because it made Kellog ready-to-eat cereal seem more like a snack than a major
part of a complete breakfast. Kellog wanted to portray ready-to-eat cereal as a
part of a complete, well- balanced nutritious breakfast. Thus, they needed the
cereal to be eaten in a bowl with milk alongwith other foods to make a complete
breakfast.
The company believed that the
growing population in this region would reinforce the importance of grains as a
basic food source. The 1980 population in Brazil was 119 million, which made it
the sixth most populated country in the world and the population was expected
to grow to 165 million in the next few years. Within this population growth was
an increase in the number of women of childbearing age, which further supported
Kellog’s potential for a successful cereal market. The structure of the
population in Brazil in 1980 was:
∙ Thirty seven percent of
population under age 15.
∙ Forty-eight percent of
population under age 20.
∙ Twelve percent population over age 50.
∙ Six percent of population over age 60.
∙
These figures
showed that the population of Brazil better fit the market for a ready-to-eat
cereal, with the increasing number of children and elderly people as the two
largest cereal consuming segments.
The “cult of the family”
continued to be the most important institution in the formation of the
Brazilian society. This culture ideal was reflected in the ways they
conceptualized and evaluated the range of personal and social relations. This
seemed to be the way Kellog would have to demonstrate the importance of a
nutritional breakfast – by playing up the family and its importance. Through
the use of the novellas, Kellog made a second attempt to teach the Brazilians
the importance of breakfast. Most Brazilian families watched these soap operas,
composed mostly of family scenes. In their commercials, Kellog opted for scenes
that showed the family at the breakfast table. One member of the family,
usually the father, took the cereal box, poured the cereal, and then added milk.
This scene represented a complete
“Kellog” breakfast in a way that Brazilians could
relate to. The advertisement focused first on nutrition, then on flavor, and
finally on ease of preparation.
As a result of this campaign,
sales in Brazil increased. Kellog controlled 99.5 percent of the ready-to-eat
cereal market in Brazil; however, per capita cereal consumption was less than
one ounce or several spoonfuls per Brazilian annually, even after advertising.
Although Kellog controlled the market, there was not much of a market to
control. Brazilians had begun to eat breakfast, but Horekens was not sure
whether sales would continue to increase. His problem was – how could Kellog
further convince the Brazilians of the importance of eating a nutritional breakfast
in order to establish a long-term market?
Question:
(10 × 2 = 20)
1. Analyse the case to enable
you to prepare a report about the given situation.
2. What would be your advice – to continue or quit
– to the board of Directors of Kellog? Explain with reasons the factors which
you would consider essential in framing your report?
Assignment
Subject: Strategy
Execution
Q.1 Case study
Discourse Analysis
Bill Corwin was employed by a
large bank for several years. He started as a messenger, and then was assigned
to a branch. He progressed in this branch from a bookkeeping clerk to a
platform assistant. In this position he had a variety of duties largely
centring on administrative assistance to the officers of the branch
The bank’s many branches were divided regionally,
each region having a group of officers responsible for the branches in that
region. Bill was transferred from the branch in which he had worked for 12
years to a branch in another region. At the time of his transfer he was told
that the branch was completely “run down” as to operational procedures and
systems. The branch had a normal complement of 4 officers and 35 staff members.
One month prior to Bill’s transfer, one of the four officers had retired, and
two weeks after this retirement the branch manager was hospitalized with
serious illness. When Bill arrived at his new assignment, he found a rather
demoralized situation. Complete lack of interest was shown by two remaining
officers and the rest of the staff was not properly trained or disciplined. The
two officers did not know Bill, and they were informed by the regional office
that he was being assigned to the branch as a platform replacement for only two
weeks.
During his first week at the branch Bill discovered
that the senior clerks were not qualified to train other staff members,
customer complaints were rampant, there was both a record of excessive
absenteeism and excessive overtime, and the branch had received very poor audit
report by the bank’s internal auditors with the same major exception reported
on the previous four audits.
After two weeks Bill was called to the regional
office and offered the job of operations officer. He was told that he would
receive the official title in two months. He was also told that the present
operations officer, who had held the job at this branch for seven years, was to
be relieved of all operational responsibilities and that he would be instructed
to work with Bill until the branch was functioning effectively. Bill returned
to the branch and started on his assignment. He found the former operations
officer cooperative for about one week. Bill then decided to go ahead without
the help of the former operations officer. Over the next three months he worked
almost every night
until 8:00 or 9:00p.m. He tried to correct the
problem that had developed over several years. The training of employees
involved considerable time, and he found it necessary to release 12 clerks who
were causing trouble in various ways. The remaining staff and replacements
started to function smoothly. He received his title as promised. Then the
branch manager returned to work after his prolonged illness. A week after his
returned, he called Bill to his office and questioned his efforts in this
branch. He told Bill that the former operations officer had mentioned that he
was an upsetting influence in the branch, had fired several good people, did
not know his job, and that he left his job early several days a week.
1. If you were
Bill, how would you answer the branch manager? 2. Did the regional office
handle Bill’s transfer properly? 3. What should be done by the regional office
now?
4. Do you believe that Bill
can function effectively as a manager in this branch?
Assignment
Subject: Strategy
Execution
Q.2 Case study
Successful execution of the strategy for developing
markets requires a degree of flexibility, an ability to adapt in often
unforeseen ways to local conditions, and a long-term perspective that puts
building a sustainable business before short-term profitability. In Nigeria,
for example, a crumbling road system, aging trucks, and the danger of violence
forced the company to re-think its traditional distribution methods. Instead of
operating a central warehouse, as is its preference in most nations, the
country. For safety reasons, trucks carrying Nestle goods are allowed to travel
only during the day and frequently under-armed guard. Marketing also poses
challenges in Nigeria. With little opportunity for typical Western-style
advertising on television of billboards, the company hired local singers to go
to towns and villages offering a mix of entertainment and product
demonstrations.
China provides another interesting example of local
adaptation and long term focus. After 13 years of talks, Nestle was formally
invited into China in 1987, by the Government of Heilongjiang province. Nestle opened
a plant to produce powdered milk and infant formula there in 1990, but quickly
realized that the local rail and road infrastructure was inadequate and
inhibited the collection of milk and delivery of finished products. Rather than
make do with the local infrastructure, Nestle embarked on an ambitious plan to
establish its own distribution network, known as milk roads, between 27
villages in the region and factory collection points, called chilling centres.
Farmers brought their milk – often on bicycles or carts – to the centres where
it was weighed and analysed. Unlike the government, Nestle paid the farmers
promptly. Suddenly the farmers had an incentive to produce milk and many bought
a second cow, increasing the cow population in the district by 3,000 to 9,000
in 18 months.
Area managers then organized a delivery system that
used dedicated vans to deliver the milk to Nestle’s factory. Although at first
glance this might seemto be a very costly solution, Nestle calculated that the
long-term benefits would be substantial. Nestle’s strategy is similar to that
undertaken by many European and American companies during the first waves of
industrialization in those countries. Companies often had to invest in
infrastructure that we now take for granted to get production off the ground.
Once the infrastructure was in place, in China, Nestle’s production took off.
In 1990, 316 tons of powdered milk and infant formula were produced. By 1994,
output exceeded 10,000 tons and the company decided to triple
capacity. Based on this experience, Nestle decided
to build another two powdered milk factories in China and was aiming to
generate sales of $700 million by 2000.
Nestle is pursuing a similar long-term bet in the
Middle East, an area in which most multinational food companies have little
presence. Collectively, the Middle East accounts for only about 2 percent of
Nestle’s worldwide sales and the individual markets are very small. However,
Nestle’s long-termstrategy is based on the assumption that regional conflicts
will subside and intra-regional trade will expand as trade barriers between
countries in the region come down. Once that happens, Nestle’s factories in the
Middle
East should be able to sell
throughout the region, thereby realizing scale economies. In anticipation of
this development, Nestle has established a network of factories in five
countries, in the hope that each will, someday, supply the entire region with
different products. The company currently makes ice-cream in Dubai, soups and
cereals in Saudi Arabia, yogurt and bouillon in Egypt, chocolate in Turkey, and
ketchup and instant noodles in Syria. For the present, Nestle can survive in
these markets by using local materials and focusing on local demand. The Syrian
factory, for example, relies on products that use tomatoes, a major local
agricultural product. Syria also produces wheat, which is the main ingredient
in instant noodles. Even if trade barriers don’t come down soon, Nestle has
indicated it will remain committed to the region. By using local inputs and
focussing on local consumer needs, it has earned a good rate of return in the
region, even though the individual markets are small.
Despite its successes in places such as China and
parts of the Middle East, not all of Nestle’s moves have worked out so well.
Like several other Western companies, Nestle has had its problems in Japan,
where a failure to adapt its coffee brand to local conditions meant the loss of
a significant market opportunity to another Western company, Coca Cola. For years,
Nestle’s instant coffee brand was the dominant coffee product in Japan.
In the 1960s, cold canned coffee (which can be
purchased from soda vending machines) started to gain a following in Japan.
Nestle dismissed the product as just a coffee-flavoured drink rather than the
real thing and declined to enter the market. Nestle’s local partner at the
time, Kirin Beer, was so incensed at Nestle’s refusal to enter the canned
coffee market that it broke off its relationship with the company. In contrast,
Coca Cola entered the market with Georgia, a product developed specifically for
this segment of the Japanese market. By leveraging its existing distribution
channel, Coca Cola captured a 40 percent share of the $4 billion a year, market
for canned
coffee in Japan. Nestle, which failed to enter the
market until the 1980s, has only a 4 percent share.
While Nestle has built businesses from the ground
up, in many emerging markets, such as Nigeria and China, in others it will
purchase local companies if suitable candidates can be found. The company
pursued such a strategy in Poland, which it entered in 1994, by purchasing
Goplana, the country’s second largest chocolate manufacturer. With the collapse
of communism and the opening of the Polish market, income levels in Poland have
started to rise and so has chocolate consumption. Once a scarce item, the
market grew by 8 percent a year, throughout the 1990s. To take advantage of
this opportunity, Nestle has pursued a strategy of evolution, rather than
revolution. It has kept the top management of the company staffed with locals –
as it does in most of its operations around the world – and carefully adjusted
Goplana’s product line to better match local opportunities. At the same time,
it has pumped money into Goplana’s marketing, which has enabled the unit to
gain share from several other chocolate makers in the country. Still,
competition in the market is intense. Eight companies, including several
foreign-owned enterprises, such as the market leader, Wedel, which is owned by
PepsiCo, are vying for market share, and this has depressed prices and profit
margins, despite the healthy volume growth.
1. Does it make sense for Nestle to focus its
growth efforts on emerging markets? Why?
2. What is the company’s
strategy with regard to business development in emerging markets? Does this
strategy make sense? From an organizational perspective, what is required for
this strategy to work effectively?
3. Through your own research on NESTLE, identify
appropriate performance indicators. Once you have gathered relevant data on
these, undertake a performance analysis of the company over the last five
years. What does the analysis tell you about the success or otherwise of the
strategy adopted by the company?
4. How would you describe Nestle’s strategic
posture at the corporate level; is it pursuing a global strategy, a
multidomestic strategy an international strategy or a transnational
strategy?
5. Does this overall strategic posture make sense
given the markets and countries that Nestle participates in? Why?
Assignment
Subject: Strategy
Execution
Q.3 Case study
Starbucks Growth Strategy
In 1971, three academics, English Teacher Jerry
Baldwin, History Teacher Zel Siegel and writer Gordon Bowker opened Starbucks
Coffee, Tea and Spice in Touristy Pikes Place Market in Seattle. The three were
inspired by entrepreneur Alfred Peet (whom they knew personally) to sell
high-quality coffee beans and equipment. The store did not offer fresh brewed
coffee by the cup, but tasting samples were sometimes available. Siegel will
wore a grocers apron, scooped out beans for customers while the other two kept
their day jobs but came by at lunch or after work to help out. The store was an
immediate success, with sales exceeding expectations, partly because of
interest stirred by the favorable article in Seattle Times.
Starbucks ordered its coffee-bean from Alfred Peet
but later on the three partners bought their own used roaster setting up
roasting operations in a nearby ramshackle building and developed their own
blends and flavors. By the year 1980s the company had four Starbucks Stores in
Seattle area and had been profitable every year. Later on, Siegel left the
company and
Jerry Baldwin took over day-to-day management of
the company. Gordon Bowker remained as an owner but devoted most of his time in
his Design Firm. In 1981, Howard Schultz, the vice president of U.S operations
for Swedish Maker of stylish kitchen equipment and coffeemakers decided to pay
Starbucks a visit. He was curious about why Starbucks was selling so many of
his company products. He was impressed with the company management and the quality
products the make. Schultz asked Baldwin whether there was any way he could fit
into Starbucks and it took long time to decide his request. He tried many times
till one day he was given a job of heading marketing and overseeing the retail
stores.
Howard Schultz spent most of his working hours in
the four stores learning the retail aspects of the company business; Schultz
was overflowing with ideas for the company. His biggest inspiration and vision
for Starbucks future came during 1983 when the company sent him for an
international house wares show to Milan, Italy. There he spotted an espresso
bar and went to take a coffee. He was impressed with the coffeehouse services
and decided to stay at Milan for a week to explore all coffee bars and learned
as much as he could about the Italian passion for coffee drinks. He made a
decision to serve fresh brewed coffee, espressos, and cappuccinos in its
stores and try to create an American version of
Italian coffee bar culture. He shared his idea with Baldwin and it took nearly
a year to convince Jerry Baldwin to let him test an espresso bar. In April
1984, the first espresso bar was opened and it was a successful too. Yet
Baldwin felt something is wrong. After Schultz failed to convince Baldwin for
the expansion of business, he left Starbucks in 1985. Schultz started the “Il
Giornale” coffee bar chain in 1985 and the coffeehouse was very successful. In
1987 Starbucks owner Jerry Baldwin and Bowker decide to sell the whole
Starbucks chain to Schultz’s Il Giornale, which rebranded the Il Giornale
outlets as Starbucks and quickly began to expand. Starbucks opened it’s first
locations outside Seattle at Waterfront Station in Vancouver, British Columbia,
and Chicago, Illinois, that same year. At the time of its initial public
offering on the stock market in 1992, Starbucks had grown to 165 outlets. In
2009 The Company plans to open a net of 900 new stores outside of the United
States.
Today, Starbucks coffee shops
and Kiosks can be found in a variety of shopping centers, office buildings,
bookstores, and other outlets. Starbucks is capitalizing on taste changes that
predate the company’s founding. In the early 1960’s, American adults consumed
on an average ofthree cups of coffee each day. Today, consumption has declined to
less than two cups, with only half of American adults as coffee drinkers.
During this time, decaffeinated coffee sales soared. In addition, a new
category of intensely loyal coffee drinkers was born. This group of adults
consumes “specialty” or “premium” coffees, including regular and decaffeinated
versions with a variety of origins and flavors. Sales of specialty coffee have
climbed from about $45 million annually to more than $2 billion today,
accounting, for about 20 percent of all coffee sales.
Because Starbucks markets whole beans and coffee
beverages, its competition comes from two distinct groups of firms. A number of
regional coffee manufacturers distribute premium coffees in local markets,
while several large national coffee manufacturers such as Nestle, Proctor &
Gamble, and Kraft General Foods market and distribution specialty coffees in
supermarkets. Coffee beverages are distributes by restaurants, grocery stores,
and coffee retailers. Seattle’s Best Coffee is a fierce competitor. Chairman
Howard Schultz projects that Starbucks will grow from its present 6,000 stores
to more than 20,000, 75 percent of which are in the Unites States. The company
added 280 intentional locations in 2001 and is targeting an additional 650
stores in Europe by 2004 and 900 locations in Latin America predominantly
Mexico by 2005, Starbucks is also moving into China. Retail stores account for
more than 80 percent of revenues, with specialty operations accounting for the
remainder.
1. What are some of the challenges associated with
Starbucks aggressive growth strategy?
2. Could an unanticipated change in coffee
consumption patterns disrupt Starbucks in the same way that it paved the way
for the company’s growth in the 1980s?
3. What problems might arise
from Starbucks’ efforts to expand rapidly into nations such as India?
4. Comment on the pricing strategies of
Starbucks.
5. How would you see the competition of Starbucks
in India, with players like Costa Coffee?
Assignment
Subject: Strategy Execution
Q.4 Case study
In July 2013, Yasumori Ihara
(Ihara), Executive Vice President of Toyota Motor Corporation was readying
plans to bolster Toyota's position in the emerging markets by expanding
operations into Cambodia, Myanmar, and Kenya. According to Ihara, who was in
charge of the company's emerging markets business, "Compared with North
America, Europe, or Japan, where buyers are mostly replacement buyers, it's
mostly first-time buyers in emerging markets. It's where the future growth
is."
The Japan-based Toyota was the world's largest
automaker with a presence in more than 170 countries. In March 2011, Toyota
announced its ‘Global Vision' in which emerging markets were given particular
importance as part of its strategy. The company wanted to get 50% of its global
sales from the rapidly growing emerging markets by 2015. The company considered
China, Southeast Asia, India, and Brazil as its key emerging markets. In 2012,
Toyota's consolidated vehicle sales was 8.7 million units, out of which 3.7
million were sold in emerging countries.
But in the second half of 2013, Toyota was facing
intense competition from its rivals both in the developed as well as the
emerging markets. The company had invested a huge amount in emerging markets,
but key emerging markets were facing a lot of volatility and sluggish growth.
There were concerns that these markets were no longer attractive enough. In
addition to getting Toyota's emerging markets strategy right, Ihara's main
responsibility was to reverse the disastrous sales decline in China, where
consumers were boycotting Japanese-built cars due to diplomatic tensions over
some disputed islands.
The global automotive market was highly competitive
and competition was likely to intensify further with continuing globalization.
The factors affecting competition included product quality and features,
safety, reliability, fuel economy, the amount of time required for innovation
and development, pricing, customer service, and financing terms. With growing
economies and a low vehicle penetration rate, emerging markets were considered
as the key source of growth for the global automobile industry.
According to the International Monetary Fund,
between 1988 and 2011, while the developed markets' of global GDP declined from
61% to 49%. Toyota's presence in the emerging markets dated back to the 1960s
when it used to sell vehicles in markets like Taiwan, Brazil, South Africa,
Thailand,
the Philippines, Malaysia, Russia, and China. In
the initial years, Toyota was mostly exporting vehicles from Japan to these
countries as it only had production facilities in Brazil, South Africa, and
Thailand.
During the 1970s, Toyota started producing
multipurpose vehicles in the Philippines and Indonesia as families in these two
countries tended to be large and therefore vehicles that could be used both for
business and family were preferred. In 1976, Toyota launched the Tamaraw in the
Philippines followed by the Kijang in Indonesia in 1977. In the 1980s, Toyota
started producing vehicles in Taiwan and Malaysia followed by India in the 1990s.
By the 2000s, Toyota had production facilities in all these emerging markets.
In an effort to increase its presence in the emerging markets, Toyota began
strengthening its supply system in the emerging markets and increasing
localization. During the 2000s, the company set up a local parts distribution
network and a supply chain to provide greater autonomy to affiliates in the
emerging markets.
Toyota's presence in South East Asia dated back to
the 1950s. By 2012,
Toyota had 14 production companies in Thailand,
Indonesia, the Philippines, Malaysia, and other Southeast Asian countries.
Under the Innovative International Multi-purpose Vehicle (IMV) project launched
in 2004, Thailand and Indonesia became Toyota's global production centers. By
2012, Toyota was the market leader in Thailand, Indonesia, the Philippines,
Taiwan, Brunei, and Vietnam. The IMV Project was intended to create an
efficient production and distribution structure for pick-up trucks and
multipurpose vehicles to meet the needs of consumers globally. Toyota applied
the ‘genchi genbutsu' approach to observe and analyze the needs of each region
and the types of vehicles used in those regions to develop and introduce
IMVs.
The IMV project included manufacturing diesel
engines in Thailand, gasoline engines in Indonesia, and manual transmissions in
the Philippines and India. The IMV project adopted a leaner development process
based on a common platform, and developed five vehicles: three pickup trucks, a
minivan, and an SUV, especially developed in 2004 for launch in over 140
countries. Though Toyota was still the #1 automaker in mid-2013, its position
was coming under threat from a resurgent GM and Ford in the US market.
Competition was catching up in the hybrid car
market too. In its home market, the company was hit hard in late 2012, after
government incentives for consumers to buy fuel-efficient models expired. In
2013, the Yen declined more than 12% against the dollar. In emerging markets,
Toyota had to contend with intense competition from other Japanese companies
such as
Nissan, Honda, and Suzuki, some of which had
managed to entrench themselves in key emerging markets. Companies such as GM
and Germany- based Volkwagen were also pushing ahead with their own emerging
strategies.
In 2008 and 2009, analysts were expecting emerging
markets to become a safe haven for investors, considering the recession in the
US and Europe post the global financial crisis. But as of 2013, while developed
economies seemed to be strengthening, the emerging markets had underperformed
in the previous couple of years. Analysts were also concerned about the
vulnerability of the emerging markets which reacted strongly to modest changes
in the world economy. In mid-2013, many emerging markets were struggling with rapid
depreciation of their currencies. Countries such as Brazil, India, South
Africa, and Indonesia were among the worst affected.
Between May and September of 2013, while the Indian
Rupee fell by 21%, the Brazilian Real fell by 17%, followed by the Indonesian
Rupiah (15%), the Thailand Baht (8%), and the Russian Ruble (6%). Central banks
in key markets like Brazil and India were working frantically to prop up their
currencies.
As of mid-2013, Toyota pursued
the emerging market strategy with Asia as its ‘second mother base'. According
to Toyota's Global Vision, the company aimed to implement its IMV Project
strategy in the emerging markets by continuing to fortify its core models along
with new hybrid models. It would also strengthen its production and supply
bases, and enhance its cost competitiveness by 100% localized
procurement.
1. Analyze the automobile industry in emerging
markets and discuss and debate whether automakers should focus on these
markets.
2. Evaluate the strategies adopted by Toyota to
increase its presence in emerging markets.
3. Discuss ways in which Toyota could get its
emerging markets strategy right and bolster its position further in emerging
markets.
4. Give your suggestion for better marketing
strategy.
Assignment
Subject: Strategy Execution
Q.5 Case study
On December 14, 2012, French-Dutch airline, Air
France KLM SA (Air France-KLM), announced an addition of €500 million (USD654
million) to its savings target for 2013-14, in an effort to match the margins
of its competitors. Earlier in 2012, the airline had announced a plan for a
€1.4 billion investment in 2013, followed by a further €1.6 billion investment
in 2014 as part of its "Transform 2015" plan. However, with the new
savings target, investment would be cut by €500 million, out of which Air
France would contribute €300 million while the remaining €200 million would be
cut from KLM's budget.
After the changes, Air France-KLM's capital
expenditure would be €1.1 billion in 2013 and €1.4 billion in 2014. "This
is a necessary reduction, but given the group's younger fleet age versus
competitors they have the flexibility to do it. The Transform plan is gathering
pace and should be well on track to deliver," said analyst Donal O'Neill
at Goodbody Stockbrokers.
Air France-KLM was formed through a merger of
French and Dutch carriers in 2004. With sound financials in the initial years,
the merged entity became an example of how a cross border merger could prove a
success. However, from 2009, the company was struggling to remain competitive
in the changing global aviation industry. In 2011, the company's net debt was
at €6.5 billion, €2 billion more than it had been the previous year. The
company also incurred a substantial operating loss for the fourth consecutive
year in 2011. It attributed its deepening indebtedness to increasing fuel
costs, competition from low-cost airlines, and the aftereffects of the
financial crisis. "We have been incapable of financing our investments for
the past three years, as we don't generate enough cash flow," said
Alexandre de Juniac (Juniac), CEO of Air France.
The company had announced the "Transform
2015" plan in January 2012. This included reducing unit costs by 10
percent and slashing €2 billion fromits net debt by the end of 2014. The
company also planned to cut some 5,000 odd jobs to turn around its short- and
medium-haul business.
Aviation experts welcomed the restructuring
initiatives of Air France-KLM. However, they were worried about whether the
company would be able to achieve the targets mentioned in "Transform
2015". According to a Bank of America report published in March 2012,
"the core structural longer-term issue of value destruction in this
business remains unresolved".
On September 30, 2003, Air France and KLM announced
their intention to merge through a public exchange offer. In May 2004, the two
merged to formthe largest European airline group, Air France-KLM. On May 5,
2004, Air France-KLM shares were listed for trading on the Euronext Paris and
Amsterdam markets as well as on the New York Stock Exchange. Two days later,
Air France was privatized following a transfer of the majority of its shares to
the private sector, thus diluting the French government shareholding. On
September 15, 2004, the group's organizational structure was finalized with the
creation of the Air France-KLM holding company, regrouping the two airline
subsidiaries, Air France and KLM. The merger between Air France and KLM was a
unique example, not only because it was a cross border merger, but also because
two airlines with different cultures formed one company where both companies
kept their brands alive by flying their planes under their respective names. In
the initial years, the merger was considered a success story, because of early
anticipation of the needs of consolidation in the European aviation
industry.
In 2007, the company completed its first phase of
integration and became the best performing airline globally in terms of
profitability. It was a global leader covering 240 destinations in 105
countries with its 900 aircraft. In the financial year 2006-07 ended March 31,
2007, Air France-KLM generated revenues of € 23.1 billion, an increase of 7.6
percent year on year. However, the company started facing problems from 2008.
The global financial crisis of 2008-09 affected the airline industry very
badly. The industry responded by reducing capacity and cutting costs. In the financial
year 2008-09, Air France-KLM reported revenues of €23.97 billion and an
operating loss of €129 million. From then onward, the airline started
struggling to improve its financials. In the financial year 2009-10, Air
France-KLM reported a 15 percent decline in revenues to €21 billion, and an
operating loss of €1.28 billion.
In 2012, Air France-KLM continued to counter the
effects of downturns in its domestic market as well as in several of its
foreign markets: Japan, the Middle East, and North Africa. In France, the
company was grappling with high costs due to increasing fuel prices. Moreover,
weak economic growth due to Europe's financial crisis aggravated the problems
for the airline. On October 8, 2012, Air France-KLM and Etihad Airways signed
an agreement to codeshare on flights across the airlines' networks. The
codeshare agreement would allow both airlines to offer joint codes on
destinations in Europe, the Middle East, Asia, and Australia. At the same time,
Air France- KLM also announced another codeshare agreement with Air Berlin , in
which Etihad Airways held a 29.21 percent stake
1. Analyze the problems faced
by Air France-KLM 2. Evaluate the turnaround strategies adopted by the
airline
3. Analyze the issues and challenges in
transcontinental and cross-cultural alliances.
4. Analyze the future challenges of the airline and
how these can be overcome.
Assignment - 1
Subject: Art of Leadership
Q.1 Case study
Laura is the associate director of a non-profit
agency that provides assistance to children and families. She is the head of a
department that focuses on evaluating the skill-building programs the agency
provides to families. She reports directly to the agency leadership. As a
whole, the agency has been cautious in hiring this year because of increased
competition for federal grant funding. However, they have also suffered high
staff turnover. Two directors, three key research staff, and one staff person
from the finance department have left. Laura has a demanding schedule that
requires frequent travel; however, she supervises two managers who in turn are
responsible for five staff members each. Both managers have been appointed
within the last six months.
Manager 1: Kelly has a specific background in
research. She manages staff who provide research support to another department
that delivers behavioral health services to youth. Kelly supports her staff and
is very organized; however, she often takes a very black and white view of
issues. Upper level leadership values Kelly’s latest research on the
therapeutic division’s services. Kelly is very motivated and driven and expects
the same from her staff.
Manager 2: Linda has a strong background in social
science research and evaluation. She manages staff that work on different
projects within the agency. She is known as a problem solver and is extremely
supportive of her staff. She is very organized and has a wealth of experience
in evaluation of family services. Linda is very capable and can sometimes take
on too much. The managers are sensing that staffs are becoming overworked as
everyone takes on increased responsibilities due to high staff turnover. Staffs
have also mentioned that Laura’s "glass half-empty" conversation
style leaves them feeling dejected. In addition, Laura has not shared budgets
with her managers, so they are having difficulty appropriately allocating work
to staff. Laura said she has not received sufficient information from the
finance department to complete the budgets. The finance department said they
have sent her all the information they have available. As staff becomes
distressed, the managers are becoming frustrated. They feel like they are
unable to advocate for their staff or solve problems without key information
like the departmental budget.
1.Skills in her role as associate director? What
combination of the two do you
think
would work best in this setting?
2. What steps could be taken to build staff
confidence?
3. What advice would you give Laura on improving
her leadership skills and
to the managers on improving their management
skills?
4. Which leadership style do you think a leader
would need
Assignment – 2
Subject: Art of
Leadership
Q.2 Case study
In
a small community with a long tradition of art appreciation, a board managed
the policies of the local arts council. Over the course of many years, the
reputation of the community’s appreciation of the arts grew state- wide. For
decades, the arts council thrived and the community benefitted greatly from the
business, industry, and education that developed through local pride in the
arts. One year a new member of the board became disenfranchised with the
director of the arts council because he did not include the board member’s art
piece in the annual art exhibit. The director assured the board member t at the
artwork was judged to be good by the advisory committee that selected art for
the art exhibit, but many other art pieces were superior to that piece of
artwork. For decades, the selection of art for the annual exhibits by the
advisory committee was sacrosanct. The thought of interference in the selection
process by a board member of the arts council was unthinkable. The new board
member was selected by his peers primarily because of his financial standing in
the community, not because he had a history of supporting the arts. In fact, he
had shown very little interest in the community’s arts endeavours and exhibits
before joining the board. This was widely known by many others on the board and
by the director; yet, he was added to the board. It became obvious soon after
his appointment that the board and the director had sacrificed its purpose and
commitment to the arts for the status of and possible financial contributions
from the new board member. It was also obvious that the new board member was
not committed to the arts and he had no respect for the long-standing process
of selecting art for the annual exhibit. After the director explained the
process of selecting art for the exhibit and the critical role of the advisory
committee, the new board member was unmoved. He insisted that his artwork is
included in the exhibit. The director informally and formally addressed the
issue with the other board members. Rather than maintaining its integrity and
focus on the traditional process of artwork selection; instead of standing
strong against one board member’s inappropriate demands; instead of
appreciating and respecting the authority and responsibility of the director’s
position and key role in the council and community; instead of standing on its
own principles, all of that was compromised and the questionable artwork was
included in the exhibit. This unfortunate and ill-advised decision by the board
and director created chaos. Other board members began to question the art show
selections by the advisory committee and each one began to name their own
favorite art pieces. Over a brief period, the selection process broke down
completely; the quality of the art exhibit declined; the trust of the director
diminished, and the once broad community support of the arts council started to
erode. The director was removed and without a succession plan for the
leadership position, a director was selected that was unqualified for the
position and who was told by the board that he was not to operate independently
of the board. In other words, the board made it clear that they would run the
organization.34 Years later that once proud and prestigious arts council became
a shell of its former existence, and its decline started with one board member
who put himself over the best interests of the organization and was supported
by a board and leader that failed to carry out its duties and responsibilities
when they abandoned the organization’s purpose and traditions. Once the trust
was eroded and the focus of the organization shifted from its mission to
individual self-interests, the core of the organization was damaged from the
inside out. The purpose of leadership was lost. But more importantly,
sustainability of the effectiveness of the organization suffered.
1.
How do you manage a conflict situation?
2.
Which supporting skills do you think are more important for a leader?
3.
Tell me/us about the time you demonstrated leadership skills at work?
4.
What is your leadership style?
Assignment 3
Subject: Art of
Leadership
Q.3 Case study
ESMT Case Study Leadership styles Konstantin
Korotov
Vignette 1: Fire alarm in Bucharest An engineer
from the Bucharest office of a global company describes a recently experienced
situation. We were sitting at an extraordinary staff meeting in a windowless
office in our company’s building in Bucharest. Almost all of the Romanian
office people were invited to listen to a big boss from Munich. One could
clearly see that our local managers were trying to do everything possible to
leave a positive impression with the guest from headquarters. Our local top
brass people were smiling and nodding all the time when the visitor spoke, and
the Romanian general manager was even taking notes on his tablet computer,
something that he never does.
The visitor from Munich was talking about the
responsibility each of us had for cutting costs. Suddenly the meeting room went
completely dark and a fire alarm sounded. Everyone stayed sitting at their
places, waiting for instructions. The visitor from Munich went silent, but our
local bosses for some reason were silent too. Finally someone from the audience
lost patience and shouted: “For how much longer are we going to sit here? Do
you want to burn here? It’s time to get out.” People jumped from their seats
and started making their way to the exit. They were stepping on each other’s
feet and bumping against the furniture. When we were finally out of the
building it became clear that a fire had started in one of office’s electric
rooms, and fire-fighters were already handling it.
Luckily, nobody was injured. When the situation
cleared, the engineer found himself thinking about the behavior of the managers
in this situation: This case study was prepared by Konstantin Korotov of ESMT
European School of Management and Technology. Sole responsibility for the
content rests with the author. It is intended to be used as the basis for class
discussion rather than to illustrate either effective or ineffective handling
of a management situation.
1.
Which Goleman
Style? Justify
Cont…
2. Since this
incident, I have often thought about why our managers remained silent when the
fire alarm went off. Usually they have no problemgiving orders or telling us
how to do things. This time, however, they were quiet and indecisive. Could it
be that the presence of the higher-ranking boss from Munich had an impact on
their behavior?
Assignment 4
Subject: Art of Leadership
Case study
Just 2 months out of training you were assigned to
the Logistics Readiness Squadron in Minot, North Dakota. After in-processing
with the unit, you sit down with your squadron commander, Major Carnage, and
relay your lack of experience and uncertainty about the job. “Sir, I was open
to anything the Air Force handed me,” you said to the commander, “but logistics
in North Dakota wasn’t even close to being on my dream sheet. How am I going to
lead if I don’t even have the skills to tell people how and what to do?” The
commander replied, “As an officer you should be ready to lead anywhere and
anytime you are put into a position, no matter what training you’ve had. Don’t
worry about it though--you’re going to be the assistant flight commander for
Bravo Flight under the eyes of Captain Vogel, the Bravo Flight
Commander.”
After 7 months on the job, Captain Vogel tells you
he is leaving in 2 weeks for Columbus AFB MS for Undergraduate Pilot Training
(UPT) and will be handing the Bravo Flight reigns over to you permanently. You
shudder at the thought but quickly remember what your commander had said about
officers leading anytime and anywhere. You take the job head-on, using the same
techniques Capt Vogel applied to lead the flight. For some reason, the 15
personnel under your supervision randomly disregard your orders and quickly
fall behind on the vehicle maintenance schedule. The commander calls you into
his office one day to discuss the decline in flight morale and unit
effectiveness. You begin to think about the situation and the variables at hand
and say, “I’m a second lieutenant with some job knowledge, I’ve already sat
down with the members of Bravo Flight and told them what I expect from
them--just to let them know who’s boss. I take care of tasks they should be
doing to show I care about them, I give each member as much ‘down time’ as
needed; I don’t nag them about accomplishing their jobs because that would be
considered micromanagement, and I even give them leeway with mistakes by not
reprimanding or correcting them. I thought they would like me for being down to
earth and joking around with them. What the heck am I doing wrong?”
1. Given this scenario, what have
you been doing wrong as a leader? If you were the commander of this
organization, what would you do with the Lt?
Assignment 5
Subject: Art of
Leadership
Case study
Being a new leader
is quite difficult because organizations often face tough problems and
challenges that need quick responses. For a new leader, this is challenging
since the atmosphere of crisis provides no time or patience for learning.
Secondly, most organizations are rigid and sticks to the old belief that “old
is gold”.They do not allow room for raw talent, training, making mistakes and
experimentation. Most organizations believe that an effective leader is that
who has long years of service.
A leader as
defined by some scholars refers to someone with commanding authority and
influence. Others define it as a person’s ability to influence people and
groups within the organization and hence helping them set up their goals and
guide them towards achieving those goals set by the organization (Afsenah,
2012).
Jack Hartnett’s leadership
skills encompasses all the above. Though he appears bossy and autocratic, he
puts into consideration the welfare of his employees and listens to them. He
adopts the no-nonsense attitude and develops it into a culture in the
organization. An organization can develop a culture where the employees share
common values and beliefs on work- related issues. This is what jack does and
it indeed produces results and leads to the success of the company.
He allows his employees to
balance their family life with work and when they face problems he acts as
their counselor and helps them resolve their issues. His autocratic and
intolerance enabled him to succeed. He sets the rules which his employees must
follow. He ensures that his employees are happy because he believes that
unhappy people do not produce results. As a result, he has managed to create an
organization that is dynamic and successful.
In choosing the
person to represent them, a leader needs to understand the cultural context of
the host country. Discrimination is one of the factors influencing the leader’s
choice of the person to go to Saudi Arabia. In countries like Saudi Arabia,
defined by Edward Hall’s model as high context countries (Hall, 1976), cultural
nuances communicate more and determines the kind of response received and if
not handled well, this can lead to the loss of a business deal. It determines
whether a business deal will succeed or not.
Women in the country are the
most discriminated and disadvantaged and this is not based on their abilities
or actions, but based on cultural factors. Women face obstacles and barriers of
becoming leaders and men prevent them from moving to the highest levels of
organizations. In Saudi Arabia, women experience gender segregation and are
barred from participating in public life including work places. Choosing a
woman to go on this mission would seem disrespectful for the culture adopted by
the Saudi Arabian government and automatically lead to the failure of this
enterprise. Thus, leaders are to know the culture of the people in question to
enable them to make the necessary decisions.
In an
organization, what determines high compensation packages usually is the place
that one holds. Top executives in any organization, both public and private,
wield large amount of power. The legitimacy of their positions enables them to
get high compensation packages. Compared to other employees, they enjoy many
privileges because of their power.This is because they are usually the ones
responsible for allocation of resources to themselves and to those in lower
positions. Furthermore, these executives are usually in high demand and
organizations compete with each other to acquire them.
Understanding the
impact of culture is important to a leader since leadership is a social and an
interpersonal process. The leader needs to research and understand the
different cultures so that he can make more informed decisions. As a leader,
choosing this man to represent his company would be the most favorable thing to
do as it will enable him to attain his set goals and succeed in closing
profitable deals. Since the man in question does not have experience, this can
offer a perfect opportunity for him to develop his skills and experience hence
benefiting the organization.
For the woman who
is more experienced and more qualified, the leader can explain to her the
cultural obstacles involved hence not hurting her feelings. The leader can send
her to go on missions in other countries that are low- contexts and that
encourages women taking leadership roles. Training and education can help
people be aware of their biases, understand their own
and others’ cultural point of
view and accept their differences. By having diverse people in leadership
positions, an organization “walks and walk” and
1. What are the challenges you
are likely to face as the new leader?
can prove its
commitment to diversity.
2. What are some of the
actions you would take to help smooth the transition?
3. What cultural
factors do you need to consider?
4. What are the implications
of your decision for your business and the message you send as a leader?
Assignment
Subject: Global Business Environment
Q.1 Case study
L’Oreal International Marketing Strategy
L’Oreal is the world’s biggest cosmetics and beauty
Products Company. Basically it’s a French based company and its headquartered
in Paris. It is focus engaged in the field of production and marketing of
concentrating on hair colours, skin care, perfumes and fragrances, make up and
styling products. L’Oreal products also based on dermatological and
pharmaceutical fields. Their products are made for Individual and professional
customers. This company operates over 130 countries like Asia, America, East
and West
Europe through 25 international brands.
The success of L’Oreal lies in
the fact that the company succeeded in reaching out to the customers of
different countries of the world, across different income ranges and cultural
patterns, giving them the appropriate product they are worthy of. The area of
expertise of L’Oreal being that it succeeded almost in every country that it
entered. The strategies of L’Oreal was varied enough to help it and stop itself
from restricting itself in a single country. L’Oreal sold its product on the
basis of customer demand and country want rather than keeping the product
identical across the globe. It built ample number of brands or mammoth brands
entrenched to the restricted culture and which appealed to a variety of segment
of the universal market instead of generalising the brand and edible in
innumerable culture. L’Oreal went on to being a local product in every
international market. The brand extension of L’Oreal also came in the same
sector or the same segment of market. L’Oreal believed in growing its expertise
in the segment it is conscious of rather than going into a completely new
sector of market.
International marketing strategy is more in-depth
and broadened in one sense of the term. It is simply a principle of marketing
however on a global scale. Setup of global marketing strategy has a lot to do
with understanding the nature of global market itself, and most importantly the
environment.
Business environment across the globe has different
economic, social and political influence. Thus, it is believed that selecting a
global market target for examples when strategizing is a good idea.
International marketing strategy of L’Oreal is concentrated on a cross cultural
arena spanning four
market destinations. They are
namely, 1.) Asian Market, 2.) European Market, 3.) North America Market and 4.)
The African, Orient and Pacific Region.
Asia
At present L’Oreal is one of the best company in
the whole world in the field of cosmetic products. The cosmetic products of the
L’Oreal are widely used and specially the hair colour which was introduced by
L’Oreal few years ago. L’Oreal is very famous in Asia and their products in
Asia are very cheaper than the other companies and are used by majority of
people in china, Thailand, Japan etc. L’Oreal is famous and very successful
because of their global marketing strategies which are very helpful and also
distinct from the strategies used by other companies in this field. L’Oreal in
Asia uses the sustainable strategy that is of growing the company as the
demands of cosmetic products in the countries like china, Thailand etc is in
great amount. This company uses the strategy of suspicious brand management and
they also brought the strategy of more suspicious acquisitions. The main
problem that a company like L’Oreal faces in Asia is of competition given by
the other companies dealing with the cosmetic products. To overcome this
problem in Asia these companies use the strategy of selling good quality
products at the cheaper rates than the other companies. One of the best
strategies of L’Oreal in Asia is of diversification of the brand and the main
reason behind this strategy by L’Oreal is to make them palatable in the local
cultures. L’Oreal in Asia aims at the management of the global brands with the
local variations and this means that their main aim is of becoming a local and
not the foreign company in Asia. For example L’Oreal in Thailand has given
local names to their stores and most of the employees present in this company,
are local people of Thailand. It is because of all these strategies; L’Oreal is
very successful in whole Asia.
European Market
L’Oreal is the only company which uses the
strategies which also supports the people in many ways and not only in
providing good quality products at cheaper rates. L’Oreal used different
strategies of marketing in the European market like they used the strategy of
nurturing self-esteem of the people with beauty. In France, L’Oreal created the
programs like “Beauty from the heart” for helping the people made helpless by
illness or any kind of negative life experiences. In the countries like UK and
Germany, many of the women and also the young people regain their confidence
and their self-image gradually by using the cosmetics which are provided by L’Oreal.
In European countries L’Oreal also used the
marketing strategies like taking calculated amount of risk etc. but most of the
strategies are related to the
growth of the people mentally
and not only for the beauty or the fashion purpose. Various innovative
treatment programs are launched by L’Oreal for the young people of European
countries and this company also launches the free skincare and make-up
workshops for the women suffering from cancer.
For example in France a programme named as “La Vie,
de Plus Belle” offers the free skincare and makeup for the cancer suffering
women in all over the France. This helps them to cope with the treatment’s side
effects and it also
helps them to retain their self-esteem which is
very important for a patient. In the European countries L’Oreal generally uses
the strategy of the management of brand by which L’Oreal had made a large
amount of brands which are rooted in the local culture and which all appeals to
the various segments of the global market. By using these social types of
strategies for the people of Europe has helped L’Oreal in expanding their
business in the whole Europe.
1. What is L Oreal's
international strategy?
2. What strategies make L Oreal an unbeatable
beauty company? 3. How does L Oreal promote their products?
4. Why the crowd go for L Oreal product?
5. What is the unique selling proposition of
loreal?
Assignment
Subject: Global Business
Environment
Q.2 Case study
Apple Inc is a multinational American company that
design and sells
computer software, consumer gadgets and personal
computers. It was
cofounded by Steve Jobs, Steve Wozniak and Ronald
Wayne. Apple Inc is
wellknown for being innovative as they kept on
producing new innovations
from the first Apple computer Macintosh to the more
recent iPhone and iPad
series.
Today Apple Inc. is very well known in the world
because of their advanced
technology in products such as iPods, iPhone,
Macbooks, Apple TV and
other professional software. All the high tech
products provide consumers
with a better living standard in many different
ways. Moreover, Apple Inc’s
dominant position in the global market has changed
the trend of consumer
usage of electronic appliances such as in virtual
communication. People will
never need to carry multiple devices where each one
only offers a handful of
functions. Furthermore, Apple also created a
substantial value in highly
competitive market and industry which help them to
achieve competitive
advantages in an industry with stiff competition.
In addition, it resolves the
other external factors that present difficulty
challenges to Apple Inc.
Therefore, now Apple Inc is known as a strong
company and the market
leader in industry. Now, let us discuss about the
current expansion strategy
that used by Apple that make the company has
greater success in
marketplace.
The first strategy that use by Apple Inc for their
current expansion strategy
is creating innovative idea that slightly different
from the competitors that
already exists in market and industry. In order to
make the company more
innovative, Steve Jobs focused innovation on
competitive pressure and value
proposition by stressing his management style on
customer center
innovation and customer experience. As CEO in
Apple, Steve Jobs carefully
evaluated competitive pressure and opportunity in
market place by
continuously pursuit customer experience
innovation. He also focused their
business and IT strategy on customer center
experience. It means that Apple
will be more focused on looking outwards, market
and business drivers
rather than at the products or services that
already exist. Steve Jobs
focused on this strategy because the customers can
help the company to
understand what customers need and scarcity of the
people so that he can
use the feedbacks as inspiration to deeply
investigate and then to create
more innovative, creative and highly advanced
technological product or
services that can fulfill the needs of the
customers. Therefore, Apple
products design is always attractive and elegant
compared to those existing
competitors. Apple products like iPods and iPhones
are good examples that
show the innovation of Apple Company by creating
digital lifestyle.
The second strategy applied by Apple is
differentiation. Apple is using
Macintosh as operating software whereas other
personal computer’s
producers are using Windows. The differentiation in
operating software gives
Apple a competitive advantage in the personal
computer industry. Macbook
users are satisfied with Macintosh performance
because it is very energy
saving where the processor will automatically
“close” those programs which
are not in use when it is in standby mode. On the
other hand, Windows
does not have such technology. Thus, Windows’ users
might have to charge
the laptop more often due to the battery
consumption is higher than
Macintosh.
In terms of design, Apple came out with an
ultra-thin Macbook Air which is
extremely thin compared to those existing laptops.
To those consumers who
prefer lighter and thinner laptops will definitely
be attracted to the Macbook
Air. Apple does not produce laptops in various
colors like Dell or Hewlett
Packard to increase the choices for consumers.
However, to those
consumers who are concerned about technology and
high performance,
Apple is still the preferable choice.
In terms of applications and software, Appstore
provides a platform for
customers to download software and applications
according to categories. It
is easy to search for any application or software
by using Appstore. iTunes
allow consumers to categorize and download songs
easily. By using iTunes,
consumers can choose their preferable album cover
for their songs. They
can also “synchronize” and update the songs in
their iPhone with a laptop.
Besides that, iTunes also allow consumers to
transfer photos from iPhones
to PCs.
As for pricing, Apple is using skimming pricing
strategy where they set high
selling price for their products. However, there
are still a lot of loyal
customers who prefer to spend more money on Apple
products. This is due
to the self-esteem where consumers feel good by
carrying Apple products
because it somehow shows their status as being
up-to-date and their taste
is better than others. Some customers think that
Apple products are not
cheap but also not high-priced products because the
value of Apple
products bring to them is never disappointing.
Other than that, Apple is using specialization
strategy where they
customized customer’s laptop according to their
requirements. Customers
are required to add in features into the laptop
which can serve them better.
Beside this, Apple also emphasizes customizability
on the part of
entertainment that offer computer-build for high
performance such as
gaming. Gaming plays important roles to help Apple
to customize in features
and specification to make the products more
attractiveness and creativity.
made? What choices must be faced?)?
1. What is the summary of Apple case study?
2. How does strategy match the macro environment?
3. How does strategy match the industry
environment?
4. What is the company’s major problem (e.g., what
decisions must
Assignment
Subject: Global Business Environment
Q.3 Case study
Dell Social Business Strategy
Dell Inc. is one of world’
largest multinational technology corporation that manufactures sells and
supports personal computer and other computer related. Dell was founded as PC’s
Limited in 1984 by Michael Dell, with a start-up money totaling $1,000, when he
was attending the University of Texas. Michael Dell started his business with a
simple concept that selling computer systems directly to customer would be the
best way to understand their needs and give them the most computing solutions.
The first product of the company is a self-designed computer called Turbo PC
which had lower prices than major brands. PC’s Limited was not a first company
to do this but was the first to succeed, grossing $73 million in its first year
trading. The company changed its name to Dell Computer Corporation in 1988.
They tried to sell computer through stores in 1990 but was unsuccessful and
they returned to sell directly to customers. Dell was included in Fortune
Magazine as one of the world’s 500 largest companies in 1992. Four years later,
Dell began to sell computer through its website. In 1999, Dell beat Compaq and
became the biggest seller PCs in the US with $25 billion in revenue. In 2003,
the company’s name was changed to Dell Inc.
In June of 2005, Jeff Jarvis bought a Dell Lemon
and paid a premium for four year in home service plan. He started to face
problems with the machine immediately and he contacted Dell for fixing the
problems, but there was no proper response from Dell. Dell did not provide good
service to Jarvis and with no other option he posted his angry bust on poor
Dell Service on his blog Buzz Machine titled “Dell lies. dell sucks”. His blog
post generated severe criticism of Dell and other unhappy customers joined and
the whole blogosphere started a critical discussion of poor quality of products
and how bad is Dell Technical Support service. Dell which was already
struggling with poor revenues and blogosphere criticism added fuel to the poor
financial performance and hurt Dell reputation badly. The problem of poor
customer service and quality of products was not new as Dell was not listening
to the customer complaints for long and the blogs had just publicized and gave
an opportunity for the aggrieved customers to vent their anger. Dell had the
first-hand experience how social media can impact the business and how critical
it is to listen to customer complaints and fix them fast.
It took one year for Dell to
realize the extent of damage caused by the blogs and forced the company to
announce a new business plan, called Dell 2.0 in 2006 that included an
additional $150m investment in their customer service. The investment included
sales channels, both in sales contacts & its online presence, in its
website front and back end and expand the scope of Dell Connect, which enables
a Dell technician to take control of a customer’s system should they be
encountering problems. In March 2006 a community outreach team was formed that
included group of technical support experts with good interpersonal skills that
listens, monitors and reaches out to bloggers around the world who have
questions or may require assistance.
Direct2Dell was launched in
July, 2006 and in August Dell expanded blog outreach to include any
conversations about Dell. Initially Direct2Dell blog was received with negative
skepticism, but chief blogger Lionel Menchaca convinced bloggers that Dell was
seriously listening to the bloggers and he
diligently responded and
linked to critics. Dell’s team staunched flow of bad buzz and by Dell’s measure
negative blog posts about it have dropped from 49% to 22%. Dell even engaged
external agency to monitors online conversations about Dell.
In February 2007 Dell launched
IdeaStorm that allowed Dell users to provide feedback & valuable insights
about the company and its products and vote for those they find most relevant.
The Linux community used this platform and suggested Dell brought back XP as an
option for customers who wanted it, reduced trialware and listen to customers
discuss ideas in real time. StudioDell (January 07) is a place where Dell users
could share videos about Dell-related topics and videos and podcasts were used
to educate users on various emerging technologies and also offers tips, tricks
and support to get the best out of a Dell product. Dell operated blogs and
forums for dedicated customer engagement topics, joined Twitter (June 07) with
a number of ids. Dell set up a centralized team, appointed a separate
leadership and resources were taken from multiple teams (IT, online) to test
and launch social engagement tools and websites quickly. This team had
developed formal social media strategy and set of social media policies and
governance were set in place.
In 2008 Dell social media
presence started to yield results in terms of ROI and social media has become
part of the business strategy and the various business units were provided
specific targets for the social media. Employees were trained and encouraged to
actively participate in various social media channels, provide customer support
through blogs, twitter, etc and community managers who were responsible for
listening and resolution, content planning, technology testing, planning, and
measurement were named for various business units. Dell even went further with
its social
media initiatives a blog for the channel community
was launched, online communities were launched for Dell’s environmental efforts
called Regeneration and technophiles called Digital Nomads and social content
appeared on Dell.com (homepage navigation, product pages with ratings &
reviews). The Dell outlet, small business and home offers available on Twitter
had $500,000 in revenues. Dell started a page focusing on SMBs and fan pages on
Facebook.
In 2009, due to the recession pressure social media
team had to reduce headcount which led to the departure of key people in the
social media facing teams within the Dell. The departures had an impact on the
Dell social media presence had seen consolidation in number of blogs &
twitter accounts, slow down in response and lack of experience had further
worsened the situation. But Dell managed to keep up and worldwide community has
grown tomore than 3.5 million people across the social web, including places
like Twitter, Facebook, Direct2Dell and IdeaStorm. @DellOutlet had close to 1.5
million followers on Twitter with $3 million in revenue and in total Twitter
has resulted in more than $6.5 million in revenue.
Dell launched the Dell Tech
Center in 2009 to revitalize the brand and increase awareness of Dell’s
solutions capabilities as customers valued a trusted advisor relationship. Dell
consolidated its social media strategy in 2010 with appointment of new
leadership to the social media division and together with the old members of
dell social media team Dell tried to regain its focus. Another effort from Dell
to maintain its focus on social media was to open up a Social Media Listening
Command Center in Austin Texas under the leadership of Chief Listening Officer
where real-time data is collected and visualized by Radian6 and displayed
across rows of monitors that show a unique dashboard, offering instant insights
into things like customer sentiment, share of voice and geography. Dell also
started on Customer Advisory Panel events with a goal to bring key customers
and key advocates to Dell HQ in June 2010 to understand their delights and
frustrations. Other Dell CAP events were held in China in November 2010, in
Germany in January 2011 and again in Round Rock in March 2011, focused on
Sustainability topics.
Dell continued to improve its social media presence
in 2011 and Social Media Listening Command center is playing a critical role in
these efforts. Dell is tracking 25,000 online mentions both posts and tweets
about Dell every day and understand this information based on topics,
sentiment, share of voice, geography, and trends and use it answer customer
questions, address their concerns, build better products, and improve the
overall Media professionals and turned them into frontline social marketers who
engage in Twitter, Facebook,
LinkedIn, blogs, and more on the company’s behalf. Dell views employees’ social
media participation as an asset rather than a liability and accordingly doesn’t
restrict team members from utilizing mobile devices, apps or social media. Dell
is using social media as a platform to support various campaigns and used it in
the promotion of its first Customer Event Dell World and launched
website,
Techpageone.dell.com (Formerly
EnterpriseEfficiency.com) which is a micro site featured daily, topical blogs
written by InformationWeek editors and writers as well as Dell executives to
gain insights. Social media has provided an opportunity for Dell not only to
interact with customers, understand their opinions and needs but also provided
a marketing platform where in they can advertise their products, improve the
brand image and loyalty and improve their revenues with rise in sales. Dell
initially entered into social media not to sell its products but to respond to
its customer complaints and feedback but customers wanted to access to special
deals from its social feeds that link to products, reviews or discounts. Dell
is committed to improving overall level of customer service continuously which
is 24×7 “always-on” customer service philosophy through social media and has
made it a critical part of business strategy with clearly defined policy and is
considered as on of the top companies in the world that is significantly
profiting through the use of Social media.
1. How to manage the social
media presence and what strategy the companyshould adopt for its social media
presence?
2. How to engage employees and
other stakeholders in the social media platforms and how to use the information
in organizational decision making?
3. How to generate good ROI from the social media
marketing initiatives and profit from social media presence?
4. What technologies and
platforms are to be used for social media and how to measure ROI?
Assignment
Subject: Global Business Environment
Q.4 Case study
In January 2004, leading global automobile company
and Japan's number one automaker, Toyota Motor Corporation (Toyota), replaced
Ford Motors (Ford), as the world's second largest automobile manufacturer; Ford
had
been in that spot for over seven decades. In 2003,
Toyota sold 6.78 million vehicles worldwide while Ford's worldwide sales
amounted to 6.72 million vehicles (General Motors, the world's largest car
manufacturer sold 8.60 million vehicles).
According to reports, while Toyota's market share
in the US increased from 10.4% in 2002 to 11.2% in 2003, Ford's declined from
21.5% to 20.8% during the same period. Reaching the No.2 slot was a major
achievement for Toyota, which had begun as a spinning and weaving company in
1918. Ford was reportedly plagued by high labor costs, quality-control
problems, lack of new designs and innovations, and a weak economy during the
early 21st century, which made it
vulnerable to competition. Toyota, aided by its new product offerings and
strong financial muscle had successfully used this scenario to surpass Ford and
affect a dramatic increase in its sales figures.
In November 2003, Toyota announced its financial
results for the half-year ended September 30, 2003. Business Strategy | Case
Study in Management, Operations, Strategies,
Business Strategy, Case Studies
The company reported a 23% increase in net income
(as compared to the corresponding period of the previous year) to $4.4 billion
on revenues of $69.7 billion. This took Toyota way ahead of World's top three
automobile makers (at that time) by sales, General Motors (GM), Ford Motors
(Ford) and
Daimler Chrysler. Its market capitalization of $110
billion (on November 05, 2003) was more than the combined market capitalization
of these three players. (See Table I).
Given the fact that in 2003, these top three
companies were struggling to maintain their sales and profitability targets,
Toyota's performance was termed remarkable by industry observers (See Exhibit I
for the company's financials). Toyota had emerged as a formidable player in
almost all the major automobile markets in the world. Interestingly, one of its
strongest markets was the US, the world's largest automobile market and the
home
turf of Ford and GM. Toyota
had emerged as a strong foreign player in Europe as well, with a 4.4% market
share. In China, which the company had identified as a strategic market for
growth in the early 21st century, it had a 1.5% market share.
The other major markets in which the company was
fast strengthening its presence were South America, Southwest Asia, Southeast
Asia and Africa.3 Back home in Japan, it enjoyed a market share of over 43%.
Analysts attributed Toyota's growing sales across the world to its aggressive
globalization efforts that began in the mid-1990s.
The company constantly strived
to ensure that each of its market segments - Japan, North America, and Europe
and other markets - generated onethird of the annual sales (See Exhibits II and
III for revenues and revenue growth data in its core markets). This goal was at
the heart of Toyota's three globalization programs - New Global Business Plan
(1995-1998), Global
Vision 2005 (1996-2005) and Global Vision 2010
(2002-2010). In the light of Toyota's intensifying globalization efforts,
Toyota's competitors themselves stated that Toyota could not be taken lightly.
GM's Chairman, John F. Smith Jr., said, "I would not say they will not
make it. Toyota is an excellent company. They are very focused on what they do
and they do it well, and that is what makes them great."4
Business Strategy | Case Study in Management,
Operations, Strategies, Business Strategy, Case Studies
Background Note
Toyota's history dates back to 1897, when Japan's
Sakichi Toyoda (Sakichi) diversified from his traditional family business of
carpentry into handloom machinery. He founded Toyoda Automatic Loom Works
(TALW) in 1926 for manufacturing automatic looms. Sakichi invented a loom that
stopped automatically when any of the threads snapped. This concept (designing
equipment to stop so that defects could be fixed immediately) formed the basis
of the Toyota Production System (TPS) and later became a major factor in the
company's success. In 1933, Sakichi established an automobile department within
TALW and the first passenger car prototype was developed in 1935. Sakichi's
son, Kiichiro Toyod (Kiichiro), convinced him to enter the automobile business,
and this led to the establishment of Toyota in 1937. During a visit to Ford to
study the US automotive industry, Kiichiro saw that an average US worker's
production was nine times that of an average Japanese worker. He realized that
to compete globally, the Japanese automobile industry's productivity had to be
increased...
The Second Phase
of Globalization
Cho decided to focus more on localization - he
believed that by doing so, Toyota would be able to provide its customers with
the products they needed, where they needed them. This was expected to help
build mutually benefiting, long-term relationships with local suppliers and
fulfill Toyota's commitments to local labor and communities. Cho defined
globalization as 'global localization.' Therefore, besides focusing on
increasing the number of manufacturing centers and expanding the sales networks
worldwide, Toyota also focused on localizing design, development and purchasing
in every region and country...
The 2010 Global Vision
In April 2002, Toyota
announced another corporate strategy to boost its globalization efforts. This initiative,
termed the '2010 Global Vision' was aimed at achieving a 15% market share (from
the prevailing 10%) of the global automobile market by early 2010, exceeding
the 14.2% market share
held by the leader GM.
The theme of the new vision was 'Innovation into
the Future,' which focused on four key components: Recycling Based Society; Age
of Information Technology; Development of Motorization on a Global Sale; and
Diverse
Society (See Table III)...
Business Strategy | Case Study in Management, Operations,
Strategies, Business Strategy, Case Studies
The Globalization Pay-Off
By mid-2003, Toyota was present in almost all the
major segments of the automobile market that included small cars, luxury
sedans, full-sized pickup trucks, SUVs, small trucks and crossover vehicles.
According to reports, while global vehicle production increased by 3.3 times
since the early 1960s, Toyota's production had increased by 38 times. As a
result of its localization initiatives, Toyota had 45 manufacturing plants in
26 countries and regions by this time, and sold vehicles in 160 countries
(See
Exhibit IV and V for Toyota's worldwide
manufacturing operations and production details)...
Which Way to Drive From Here?
By the end of 2003, Toyota seemed to be well on its
way to achieving its globalization goals - worldwide sales of 6.57 million
units in fiscal 2004;
sales of 2.12 million units in North America by
2004; a 5% market share (800,000 units sales) in Europe by 2004; a 15% market
share in the global market and a 10% market share in China by 2010.
Analysts felt that the
following factors were helping the company in its quest to become a truly
global automobile major: strong financial condition, globally efficient
production system, unique corporate culture, and the ability to develop a
product range that met the unique needs and desires of customers in different
regions.
1. What was the end result of
Toyota's crisis management situation?
2. What marketing strategies does Toyota use?
3. What are the problems faced by Toyota?
4. Why Toyota is so successful in the market?
Assignment
Subject: Global Business Environment
Q.5 Case study
The company is involved in the serving of over 179
million people in one year and it also possesses over 2 million associates all
over the world. The number of stores possessed by Wal-Mart numbers to over 7,
343 and its Sam’s Clubs are also present in over 14 markets. Hence it is not
surprising that it is the biggest retailer in the whole of United States. From
the year 2002 the company has been topping the list of fortune 500 list and in
the year 2006 it was pushed to the second place, next only to Exxon- Mobil due
the rise in the price of oil in that year. In the year 2008, the annual revenue
generated by Wal-Mart was over 378 billion dollars. Hence the company continues
to be successful in many nations exploiting the human resources as well as the
other resources in the nations. Its idea is to capitalise on the strategy set
by the company for global expansions and the present targets of Wal-Mart are
the big nations with huge human resources like Russia and India.
The strategy used by Wal-Mart
at the multinational level is being modified in such a way that it becomes the
transnational strategy and the key aspects of this strategy includes response
at the national level, operations at the international level and also taking
lessons from the operations that are being conducted on a global scale. The aim
of the company in following such an approach is that it should become the best
choice for goods that are low cost in the United States as well as the whole
world. As the company is basically a retail company it stresses on the concept
of orientation of the consumers by acquisition as well as distribution of goods
at a low cost and at the same time facilitating learning on a global scale by
the process of decentralization, tackling competition over the borders and by
sharing its acquired knowledge. But still in the global business arena, the
company is relatively new and on its way to become a leading player. The stress
placed by the company on the concept of national response has to an extent,
brought about reductions in the operational efficiency of the company because
it was not able to accomplish economy of scale which is enjoyed by the
customers when it comes to the products that are standardized.
The company is involved in the formulation of
blueprints for the managers when it comes to the strategies which they are
supposed to follow. According to the needs as well as the culture of the people
there is a high level of adaptation and the company has its location which is
proximal to its market. The company also shows a lot of sensitivity when it
comes to
individual needs of every nation and also responds
in an appropriate manner to these needs. There is also close contact and
co-operative working shown by the company with the respective government so
that every rule or legislation that has been passed by the government could
also be taken into account while designing the strategies. The company is also
involved in a lot of community works by provision of sponsors for the student
community and contributes its share to the welfare of the people in the nations
where it has its operations.
Each of the stores operated by Wal-Mart is from
that of the product being stocked by the company which would move towards the
equipment at the front end and this would go a long way in helping checkouts in
a rapid manner with the philosophy set by the company in place- provision of
goods at low prices every day and at the same time providing customer services
that are of top quality. Hence the added advantage of the low costs is that the
expenses incurred in organisation of promotions for sales could be cut down to
a large extent. Moreover the predictability of sales also increases. The
company firmly believes in the system of “cross docking inventory system” and
hence has invested a lot in the same. The process of cross docking has led the
Wal-Mart to attain economies of scale and this has in turn brought about
considerable reductions in the costs that are incurred for sales. In the system
followed by Wal-Mart, there is a continuous delivery of the goods to the stores
in a time of maximum two days and at times there are no requirements even to
inventory them. Hence the shelves of Wal-Mart are refilled faster than four
times of the existing competition in the market.
This is a particular advantage
possessed by the company when it comes to competition. The power of buying of
Wal-Mart is leveraged by means of purchasing in bulk quantities and also the
company takes care of its own distribution. Hence every day low prices are
guaranteed by the company and hence it has become a one stop shop. Hence at
present the company owns stores in a variety of companies like Argentina,
Mexico, Brazil, Canada, UK, Korea china and also in Germany.
The major reason behind the
success of Wal-Mart lies in the fact that the company believes and concentrates
on the strategy of single business. This is the strategy that has been
providing the company with success over a period of over 30 years. In the three
decades the company has never believed in the concept of diversification for
the sustenance of its growth and also its advantages at the competitive level.
Hence the services provided by the company and the low prices offered are the
major reasons behinds its success. The concentration on one particular strategy
also poses a threat to the company because it is equivalent to place all the
eggs in one single bucket.
1. Explain
Wal-Mart’s global expansion strategy.
2. What is single business strategy? Comment your
view on the strategy.
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