Contents
Real Life Examples Wk1 ........................................................................................................... 3
Business Strategy ................................................................................................................... 3
Breakout Strategy................................................................................................................... 4
M&A, Strategic Alliances, Joint Ventures ............................................................................ 5
Ethics and Sustainability ........................................................................................................ 6
Real Life Examples Wk2 ........................................................................................................... 8
Business Strategy ................................................................................................................... 8
M&A, Joint Ventures, Bid Premiums and the Sort ............................................................... 9
Corporate Social Responsibility .......................................................................................... 10
Interesting Stories ................................................................................................................ 10
Future Actions (Not yet happened) ...................................................................................... 10
Business Strategy Real Life Examples Wk3 ........................................................................... 11
Business Strategy ................................................................................................................. 11
Breakout Strategy................................................................................................................. 11
Corporate Social Responsibility .......................................................................................... 12
Examples from Colin Love’s Lectures 2011 ........................................................................... 13
Unsustainable business – milk production........................................................................... 13
Sustainable business – competitive advantage .................................................................... 13
Vision ................................................................................................................................... 13
Being unique ........................................................................................................................ 13
Inventing new rules .............................................................................................................. 13
Strategic Position ................................................................................................................. 14
Strategic Choices – business level ....................................................................................... 14
Strategy in Action – resourcing ........................................................................................... 14
Strategy in Action – processes ............................................................................................. 14
Mahi Gill Notes: Dell, Google, M&S, GSK, Unilever ............................................................ 15
SWOT Google ..................................................................................................................... 15
SWOT Dell .......................................................................................................................... 15
M&A – GlaxoSmithKline .................................................................................................... 16
CSR – M&S ......................................................................................................................... 16
CSR - Unilever..................................................................................................................... 17
Further GSK/Pharma Example ............................................................................................ 18
Krishan Patel: Renault-Nissan, BMW ..................................................................................... 20
Summary of Renault – Nissan: ............................................................................................ 20
BMW – SWOT .................................................................................................................... 22
5 Forces BMW: .................................................................................................................... 22
Strategic Group Analysis: .................................................................................................... 23
Background information: ..................................................................................................... 23
Real Life Examples Wk1
Business Strategy
1. VW – Chairman of VW, Mr Piëch has vision of creating the biggest car company in
the world. CEO Mr Winterkorn set the target to achieve this by 2018, but due to a
disaster-weakened Toyota in Japan, VW is now the world’s largest carmaker.
‘An avid collector of new brands, Mr Piëch has overseen a significant expansion of
VW’s operations, which now stretch from low-cost Czech producer Skoda to the
premium marques Porsche, Lamborghini, Bentley, and Bugatti. With the acquisition
of control of truckmakers Scania and MAN, VW’s chairman is angling to build a
trucking empire to rival Daimler and Volvo.
VW has allowed each brand to keep its own ethos and autonomy in areas such as
design and pricing, but leverages them to great effect in areas such as
procurement. As the group grows, Mr Piëch has kept a ruthless focus on quality
and products; he expects top managers to road-test all of VW’s cars at regular driving
events.
VW is poised to take the industry’s longstanding push for platform sharing and
economies of scale to another level. Under a “modular toolkit” approach pioneered
by Mr Winterkorn at the now highly profitable Audi, VW is pursuing common
underpinnings on a scale, and with a flexibility, not yet seen in the car industry.
Even as the group expands its model line-up, VW is whittling the underlying
architecture of most of the vehicles it builds to two variants: one with the engine
in a transversal position, the other longitudinal. (Additional vehicle families will be
built for sports cars and very small models around the Up!, VW’s new city car.) Using
the new system, VW expects to cut the cost of producing cars by about 20 per cent
and the time it needs by up to 30 per cent.’
‘When Mr Piëch, 74, and Mr Winterkorn retire, VW must also ensure their eventual
successors are able to master such huge complexity.’
http://www.ft.com/cms/s/0/4caebe4c-27f4-11e1-943300144feabdc0.html#axzz1gyArHisX
VW’s path to the top lies to both East and West as business strategy considers both
sides of the world. Its image confused the US market as to whether it was premium or
mass-market but recent marketing initiatives are pushing a modified Passat as an
affordable but quality car. VW pioneers western carmakers in building local
production capacity in China and is now market leader there. ‘Still, VW lacks a model
to compete in the increasingly important ultra-low cost segment in emerging markets
such as China and India. Although such cars tend not be to very profitable, they are
set to become a significant source of industry volume growth in the coming years.’
Hence VW pursued a SA with Suzuki, but this has since failed.
http://www.ft.com/cms/s/0/25ac3f6c-27fa-11e1-943300144feabdc0.html#axzz1gyArHisX
Avoid Toyota’s failures by ensuring checks are in place. These challenges arise in
proportion to the producer’s size.
VW also faces difficulties in maintaining differentiation between their brands,
particularly if they are made of the same components and platforms (e.g. Audi and
VW). However, it combats this using its sizeable marketing budget. VW manages its
disparate brands independently, allowing them to keep their culture and identity but
requiring them to compete for resources, thus keeping costs under control.
VW has ensured sustainability by showing itself adept at promoting executives
internally while also remaining open to new blood in the company, consolidating a
strong future. Two biggest overseas regions, China and Brazil, are empowered to
write their own business plans and develop their own major projects.
http://www.ft.com/cms/s/0/b588b6d4-27f4-11e1-943300144feabdc0.html#axzz1gyArHisX
2. Power of consumers – caught between a rock and a hard place – Bonne Maman jams,
at the higher end of the consumer scale saw 50% rise in sugar prices year on year and
fruit prices rose 40 to 100%. It therefore increased its prices 10% and got stripped off
the shelves of Tesco, UK’s biggest retailer http://www.ft.com/cms/s/0/5ed58df42a37-11e1-8f04-00144feabdc0.html#axzz1gyArHisX
3. Company image – as Wendy’s is set to takeover no.2 spot from Burger King, BK
looks at why it has declining market share from 20% to 13.3%. Its emphasis by
liaising itself with a quirky advertising agency gained it recognition, including a
cologne, a character known as ‘the King’ and an app to attract customers. Its emphasis
on young men frequenting fast-food chains is no longer sustainable. Wendy’s has
shifted towards higher quality ingredients and BK is now realigning itself with
Wendy’s and McDonalds strategies. http://www.ft.com/cms/s/0/e27cf814-27fc-11e1a4c4-00144feabdc0.html#axzz1gyArHisX
Breakout Strategy
1. Waveriders – Apple and Google in Christmas Showdown, December – “The iPhone
has clearly revolutionised the handset market. On its tail, Android has flourished and
we now have a strong conviction that the two ecosystems won’t leave much room for
any alternative.” http://www.ft.com/cms/s/2/6ecd4a0a-280a-11e1-a4c400144feabdc0.html#axzz1gyArHisX
2. Revolutionary – Google announces its Google Wallet as a first for mobile payment
platform. In response, Everything Everywhere, O2 and Vodafone come together for a
Joint Venture to try and release a platform before Google.
http://www.ft.com/cms/s/0/81b6fd04-266c-11e1-9ed300144feabdc0.html#axzz1gyArHisX
3. Rule makers – beginning of December, Pfizer changed the way drug companies
would deal with drugs which are about to lose their patents. Rather than giving up,
they are squeezing revenue from Lipitor, a cholesterol lowering drug, by pursuing
deals with health insurers and pharmacy benefits managers, undercutting generic
prices and selling Lipitor direct to customers. It has had some success with this
aggressive strategy and will breed imitators. Took a page out of Merck’s book, when
Merck slashed prices of Zocor when its patent expired in 2006. Move is seen as
anticompetitive squeezing out generics companies. May distribute a generic through
another company http://www.ft.com/cms/s/0/7219cb50-1d3f-11e1-a13400144feabdc0.html#axzz1gyArHisX
M&A, Strategic Alliances, Joint Ventures
1. Failed bid – AT&T bid for Deutsche Telekom’s T-Mobile USA is finally binned –
cost AT&T $4bn in break clauses for the deal and leaves them having wasted 4
months. T-Mobile USA is a failing business which requires heavy investment in the
near future and AT&T needed to acquire wireless spectrum, in short supply in the
USA, in order to meet its customers’ increasing data needs, whilst also propelling
AT&T to top dog. The deal was blocked by USA regulators and Obama
Administration. Stakeholders: shareholders relieved more time and effort were not
wasted against an initiative that faced strong regulatory opposition, investment banks
advising the two parties were set to pocket $153m on closing of the deal but missed
out, customers will suffer the consequences of rising prices for data packages as
spectrum is in short supply and US regulators prevent new spectrum being established
http://www.ft.com/cms/s/0/8903d302-2a8b-11e1-8f04-00144feabdc0.html
2. Bid Premium – Blacks Leisure, which owns Blacks and Millets brands, put itself up
for sale. Sports Direct have decided not to bid for the heavily indebted group: shares
have lost 95 percent of their value in the last 12 months.
3. Joint Venture – Sports Direct, with a 21 percent stake in Blacks, has proposed a Joint
Venture agreement with Blacks under which they would share warehouse space,
supply chain and IT capability to reduce operating costs.
http://www.ft.com/cms/s/0/7890b9d0-2023-11e1-846200144feabdc0.html#axzz1gyArHisX
4. Strategic Alliance – VW and Suzuki fell apart in September – VW wished to
strengthen expertise in very small cars, Suzuki’s speciality, and to expand its presence
in India where Suzuki is a market leader. Suzuki wanted access to expensive VW
technology such as its petrol-electric hybrid drives. As a result VW bought 20% of
Suzuki shares 2 years ago. Mr Suzuki claimed VW shared only part of its technology
and Suzuki would have been better off developing its own, whilst also infringing on
Suzuki’s autonomy http://www.ft.com/cms/s/0/1ed60db4-dd11-11e0-b4f200144feabdc0.html#axzz1gyArHisX
5. Strategic Alliance – Etihad takes 29% stake in Air Berlin – Air Berlin received well
needed funding and Etihad will aim to return it to profitability. Etihad will gain a
stake in Germany’s 2nd largest airline and allows it a strong foothold in Europe. A
code-sharing partnership will enable both airlines to offer more destinations to
respective passengers. Allows Etihad to compete against larger Gulf rivals Emirates
and Qatar and allows Air Berlin to compete against Lufthansa
http://www.ft.com/cms/s/0/2a6945f0-2a24-11e1-8f0400144feabdc0.html#axzz1gyArHisX
6. Spin-off company – Saab declared bankruptcy after GM blocked moves to finance
itself through Chinese investors looking to sell Saab in the Chinese markets, claiming
they did not want to see their intellectual property transferred to China. GM cut the
brand loose in 2009, holding preference shares, after it failed to turn profits for two
decades. Saab models are based on GM technology and built at GM plant in Mexico
http://www.ft.com/cms/s/0/11efd28e-2a22-11e1-8f0400144feabdc0.html#axzz1gyArHisX
7. GSK sell off consumer products to Prestige Brands – GSK wishes to focus on its
priority healthcare brands and release cash by selling off others. Prestige wanted to
acquire brand equity and accelerate their growth with their strong marketing division,
a decision consistent with Prestige’s strategy of acquiring well-known OTC brands
http://www.ft.com/cms/s/0/048829ee-2b34-11e1-9fd000144feabdc0.html#axzz1gyArHisX
Ethics and Sustainability
1. Gilead – planning on selling Truvada, key component Tenofovir, as a pre-exposure
prophylactic HIV drug. It currently forms the backbone of HIV treatment. Issues are
arising on ability of HIV to become resistant to the pill with greater exposure, trigger
legal action by those without HIV who get side-effects, people will be disinhibited
and take greater sexual risks and may contribute to the epidemic, tensions may arise
in developing countries between patients with HIV and those without both seeking
access to medication http://www.ft.com/cms/s/0/1f40c3b0-2808-11e1-91c700144feabdc0.html#axzz1gyArHisX
2. AstraZeneca – beginning of December announced it would open doors to research. It
will hand over free of charge to external scientists more than 20 experimental drugs.
‘Crowdsourcing’ the compounds to top scientists could lead to development of new
treatments, offering AZ the prospect of commercial gain without investing directly in
them itself. Not all have had the value drained, some projects were seen as
commercially unviable or not within the focus of the group and so discarded. Allows
scientists access to immense stores of expensive data whilst being funded by the MRC
http://www.ft.com/cms/s/0/24c053dc-1e80-11e1-bae400144feabdc0.html#axzz1gyArHisX
Real Life Examples Wk2
Business Strategy
1. Changing environment and political/legislation – US prisons target India for
execution drugs – EU has now clamping down on the export of drugs for lethal
injections. US had already disallowed execution drugs to be manufactured in the
country. Therefore US prisons are turning towards India with looser regulations
http://www.ft.com/cms/s/0/451b649a-2bfb-11e1-b19400144feabdc0.html#axzz1hFjKRdHL
2. Regulators – FDA banned Atorvastatin from Indian plants owned by Ranbaxy,
preventing them from grabbing projected 45% market share when Pfizer’s Lipitor
came off patent in the US. It therefore had to set aside $500m to cover liabilities,
causing parent company Daiichi Sankyo of Japan to half forecasted earnings. Over 30
medicines made by Ranbaxy are banned over concerns of manufacture
http://www.ft.com/cms/s/0/b41535fe-2bb7-11e1-b19400144feabdc0.html#axzz1hFjKRdHL
3. [Revolutionary – Sterecycle – pioneered the reuse of waste typically going to landfill
to generate power. It diverts 65% of waste from landfill by steam processing using
fast-spinning autoclaves to separate recyclable materials and turn food and paper
waste into biomass-rich soil-like substance used for non-agricultural applications
http://www.ft.com/cms/s/0/9ee81c44-2b0f-11e1-8a3800144feabdc0.html#axzz1hFjKRdHL ]
4. Supply chain disruption – Toyota’s production and parts supply was disrupted for
several months by an earthquake whilst 3 of their plants in Thailand were affected by
flooding. This led to Toyota losing market share and no longer being the world’s
biggest car manufacturer. It is expected to resume production rapidly and regain its
crown in 2013 http://www.ft.com/cms/s/0/f9fb4e06-2c88-11e1-aaf500144feabdc0.html#axzz1hFjKRdHL
5. Wave riders and Five Forces (barriers to entry) – Games start-ups lose ground –
entrepreneurial companies wishing to enter the online gaming industry via portals
such as Facebook are finding it increasingly hard as better-resourced firms corner
more of the maturing market. Scale has played an increasing role, giving developers a
springboard for new releases, creating a virtuous cycle. The market matured rapidly
with Zynga riding the Facebook business model
http://www.ft.com/cms/s/0/e377e90a-2cbf-11e1-b48500144feabdc0.html#axzz1hFjKRdHL
6. Changing environment – web changes music industry – cheap digital technology and
the internet have put production and distribution into the hands of singers and writers
so they have no need of big labels such as Sony or Universal, which once controlled
access to expensive recording studios http://www.ft.com/cms/s/0/5a37a0a6-2bdc11e1-98bc-00144feabdc0.html#axzz1hFjKRdHL
M&A, Joint Ventures, Bid Premiums and the Sort
1. Acquisition – International Airline’s Group, owner of British Airways and Spain’s
Iberia, offered £172.5m in cash for Lufthansa’s British arm BMI (inc. BMI baby), the
low-cost arm – this will secure IAG BMI’s additional slots at Heathrow. BMI will
need to be restructured as it currently has an operating loss of £154m in the 9 months
of this year, hence it’s actual net price to Lufthansa is negative. Virgin Atlantic also
made a counter offer that was lower than IAG but likely to be completed earlier. On
announcement of this news, IAG’s share price topped FTSE100
http://www.ft.com/cms/s/0/df3ef7f2-2c74-11e1-aaf500144feabdc0.html#axzz1hFjKRdHL
Virgin called EU regulators to block the deal as IAG would own 54% of slots at
Heathrow, up from 45% http://www.ft.com/cms/s/0/df3ef7f2-2c74-11e1-aaf500144feabdc0.html#axzz1hFjKRdHL
2. Joint Venture – between Sony Music Entertainment and Universal Music (and Abu
Dhabi Media Company) – traditional rivals set up Vevo as a JV. Music videos turned
from being a promotional expense to a source of digital income on par with Spotify.
YouTube at the time was struggling to recoup music licensing costs as advertisers
didn’t want their brands alongside random user content. Google has still been getting
flack from music lobby groups regarding anti-piracy but Vevo supports their ally
saying it has the same interest alignment in that it wants to discourage privacy.
Warner Music remains a holdout from Vevo whilst EMI had provided its music
without a stake in Vevo (but EMI then got taken over by Sony and Universal
consortium) http://www.ft.com/cms/s/0/7a26870a-2bb5-11e1-98bc00144feabdc0.html#axzz1hFjKRdHL
3. Dissolving of Sony Samsung Joint Venture – Sony and Samsung pursued a JV in
LCD screens in 2004. Samsung will buy out Sony’s 50% stake for $845m. Samsung
hope to gain Y50bn savings annually, unclear what Sony gets, apart from the money
http://www.ft.com/cms/s/0/ea650ef6-2fac-11e1-8ad000144feabdc0.html#axzz1hduEn7ll
4. [SA – 2 of the 3 big alliances of container shipping lines are to join forces to offer
joint services in Asia to Europe route as a result of industry overcapacity and fierce
competition, thus consolidating the industry. A6 Alliance will join the Grand Alliance
http://www.ft.com/cms/s/0/bc219524-2b1e-11e1-8a3800144feabdc0.html#axzz1hFjKRdHL Article gives lots of alliances but doubt we’ll
find this field of particular interest]
5. Ocado for sale – Ocado, which sells Waitrose food online, collapsed in value from
£800m to £317m in 18 months. It is a potential target for many companies inc. M&S,
J Sainsburys and Amazon according to analysts. But it is heavily laden with debt and
the buyer will have to fork out an additional £40m to Waitrose if they buy it
http://www.ft.com/cms/s/0/fd487a90-2d8f-11e1-b5bf00144feabdc0.html#axzz1hduEn7ll
Corporate Social Responsibility
1. NOTE: I think this fits into CSR but am not entirely sure because I haven’t done the
lectures on CSR yet. Johnson & Joshnson opts out of HIV sharing pool – J&J refused
to offer patent rights to generics companies for its HIV drugs. The pool has been
made to boost research and allow affordable access to patients, in particular the
developing world. Backed by government donors and HIV lobbyists it is a
‘mechanism designed to promote lower-cost sales in poorer countries and the
development of new combinations of drugs and reformulations suitable for children or
hotter and more humid climates’. J&J stands with Merck and Abbott in not entering the
Medicines Patent Pool and the condemnation has risked damaging its public image
http://www.ft.com/cms/s/0/d6ca3afa-2cbf-11e1-b48500144feabdc0.html#axzz1hduEn7ll
Interesting Stories
1. Cowell and Sony JV from 2010 has come to light again after the details were released
http://www.ft.com/cms/s/0/45c54f32-2d81-11e1-b5bf00144feabdc0.html#axzz1hduEn7ll
2. Capita, an outsourcing group, acquired ALS (Applied Language Solutions) to add to
its portfolio. ALS is a computer translator service. This sort of acquisition is similar to
the one in our Business Strategy Simulation. Having already added quite a few M&A,
am not going to elaborate much, but here is the link
http://www.ft.com/cms/s/0/21108e70-2d6f-11e1-b98500144feabdc0.html#axzz1hduEn7ll
Future Actions (Not yet happened)
1. RIM may be bought by any one of Amazon, Microsoft and Nokia, Samsung or HTC,
but no one really knows. Need to develop laggard to leader strategy
http://www.ft.com/cms/s/2/661393b4-2c02-11e1-b19400144feabdc0.html#axzz1hFjKRdHL
2. Yahoo is considering selling off its $17bn portfolio of Asia investments including
Yahoo Japan and AliBaba http://www.ft.com/cms/s/2/9f6213ca-2c25-11e1-b7df00144feabdc0.html#axzz1hFjKRdHL
Business Strategy Real Life Examples Wk3
Short overview of year ahead, mentioning some notable things from this year:
http://www.ft.com/cms/s/0/8d1f0e94-32dc-11e1-a51e-00144feabdc0.html#axzz1i2gV24Ve
Business Strategy
1. Facebook – pushes advertising agencies to be more transparent about how they charge
for their services. Facebook advertising is still new and companies wishing to
advertise have no clue on how to measure metrics on social advertising. As a result
advertising agencies are either charging fixed rates per ‘Like’ or a percentage. The
margins are sometimes as high as 50% and FB is pushing agencies to disclose their
margins for clients by forcing them to establish individual accounts. This reduces
their buying power as consumers because 1. They cannot buy advertising space in
bulk as easily 2. Increases the amount of money FB receives because cutting the
margins will benefit the advertising companies who will ultimately purchase more
space 3. FB is seen as an honest company (Five Forces (Buyers); and CSR perhaps)
http://www.ft.com/cms/s/0/bbf8d058-1430-11e1-85c700144feabdc0.html#axzz1i2gV24Ve
2. Changing environment and unexpected source of competition – trade in illicit
(untaxed) tobacco has become the fourth largest global tobacco business by volume,
behind BAT, Phillip Morris International and Japan Tabacco. Companies are
unwilling to say how much their trade is suffering but it cuts their margins
substantially when the same pack costs 1euro in Ukraine and £8 in the UK.
http://www.ft.com/cms/s/0/3d6c0676-2bd5-11e1-b19400144feabdc0.html#axzz1i2gV24Ve
3. Google realises potential of TV ads to spread its name – already a major in searching,
it is now trying to promote its ChromeBook, Google Chrome, Google+ and
YouTube’s movie rentails, purchasing advertising at the Superbowl and The X Factor
USA. http://www.ft.com/cms/s/0/16bb94ae-3177-11e1-aeec00144feabdc0.html#axzz1i2gV24Ve
4. [Supermarkets continue to slash prices – competition in business environment. All the
supermarkets are trying to match each other http://www.ft.com/cms/s/0/942c55d8330a-11e1-8e0d-00144feabdc0.html]
Breakout Strategy
1. Apple must try retaining its leader position – the future of Apple is being questioned
post Steve Jobs. Industry analysts say Apple needs to do much more in 2012 than its
recent move to simply change the colour of the iPad, iPhone and iPod to white. It did
release new software to maintain its lead. The market has proved to be a fast follower
with the new Android system occupying 52.5% of the mobile market and there being
competition for the iPad from the touch-friendly Microsoft8 release which will boost
Microsoft’s Ultrabook, the competitor to the MacBook Air. ‘when the competition
starts catching up, you just run faster and do something different and that’s what Apple
has always done’ http://www.ft.com/cms/s/2/6a7cac22-31db-11e1-9be2-
00144feabdc0.html#axzz1i2gV24Ve
Corporate Social Responsibility
1. Lack of CSR for Chinese steel plants – Chinese steelmakers refuse to participate in
the industry-led project to cut CO2 emissions from steel plants. China accounts for
40% of the world production of steel and the steel industry is among the largest
producers of CO2 in the world. Chinese steelmakers fear their technical data would
provide useful details to rival companies, helping them. This is all despite the
appointment of the chief executive of one of China’s largest steelmakers, Anshan, as
chairman of the World Steel Association, a manoeuvre designed to increase
collaboration of the Chinese steel industry with the CO2 reduction initiative. WSA
wanted to form a database of CO2 emissions correlated with the type of technology to
use in each of the plants to find the least damaging to the environment. This has been
reflected across other industries http://www.ft.com/cms/s/0/6e0b700a-3238-11e1b4ba-00144feabdc0.html#axzz1i2gV24Ve
2. Pharma CSR – in 1980s Merck discovered ivermectin (a drug they initially developed
for veterinary use) could be tweaked and used to treat river blindness, a parasitical
disease afflicting Africa and South America. They could not get the cost down
whatever they tried. In 1987, chief executive Dr Vagelos, a biochemist and surgeon,
announced without telling his board that Merck would supply the drug Mectizan
(trade name) free of charge for as long as necessary. It has lasted a quarter of a
century and cost 100s of millions of dollars a year but treats 100m people a year.
Principle means of treatment was a costly spraying of the banks of rivers with
insecticides using helicopters to kill the blackfly. Not only has this produced very
reputable CSR reputation but it ‘increased Merck’s allure for budding talent’ – every
scientist they went after, they got. Also in keeping with Merck’s founder’s belief that
‘drugs are for people not profits’. GSK subsequently donated albendazole which in
conjuction with ivermectin can treat lymphatic filariasis (elephantiasis)
http://www.ft.com/cms/s/2/07bdeeb4-3075-11e1-b96f00144feabdc0.html#axzz1i2gV24Ve
Examples from Colin Love’s Lectures 2011
Unsustainable business – milk production
90% of milk is bought by 3 purchasers: Tesco, Sainsbury’s and Asda. Therefore, their prices
have to be accepted; otherwise they will outsource their production to Hungary and undercut
you, importing the milk in refrigerated lorries. Only sustainable part of your business is your
land on which the grass grows
Sustainable business – competitive advantage
Market leaders: Apple or Sony
Cost Advantage: Dell is a follower in terms of business, deriving its competitive advantage
from efficient, low-cost production of laptops. Purchasing guys go to the manufacturers and
copy components, sourcing in the Far East, manufacturing in Malaysia and have a telephone
and web-ordering system, stripping out many steps of the supply chain and their relevant
costs. No technology advantage but consequently almost no R&D costs
Vision
Ryanair or EasyJet – become Europe’s no1 low-cost carrier. Ryanair is now Europe’s no1
low-cost carrier but has to switch strategy. Perhaps transpose it to South-East Asia, by
replicating Europe actions in Asia. Look at ASEAN countries (Malaysia, Thailand,
Phillipines, Vietnam, Singapore) to replicate the hub used in Europe at Stanstead and
implement it in Singapore. China may prove difficult as need to compete against state carrier.
Whilst Ryanair and EasyJet compete, there are many casualties in terms of other airlines. The
model these companies implement for competitive advantage through cost leadership: thin
margins but fill the planes up. Ryanair cannot extract advantage from ground crews, buying
of planes, etc, therefore have maintained model through ‘extras’ such as extra luggage
Being unique
Apple has a point of difference in terms of its product. Actual manufacture costs are very low
but can charge high prices for the groundbreaking products it introduces. However, it has
extremely high R&D costs
Inventing new rules
Dell – new distribution system direct to the consumer as it is all quick and online
Ikea – have given the manufacturing costs to the consumer and also reduced transportation
costs. Convinced the customer to build it themselves, and dramatically increased the margin
considerably by stripping out overheads
Strategic Position
Environment – Unilever – has mature markets for Europe and US in FMCG without any real
growth. Want to look at Indian and Chinese environments and their potential customers. 300
million middle class of India is equal to the key 12 member of the EU
Purpose – Unilever – involved in the manufacturing and distribution of FMCG in personal
care products, food products and detergent products.
Purpose – BP – extractor and refiner of energy products, whilst also being one of the leading
organisations developing non-carbon fuel sources
Strategic Choices – business level
Tesco – dominance based on coverage of 5,000 outlets. One day inventory in stores and one
or two days of inventory in regional hubs, calling on manufacturers to supply goods just-intime minimises working capital, storage and wastage costs. Overlay this with distribution
system, can understand their business strategy is based on supply chain. They have 35% of
market share which is relatively flat, therefore have branched out into an international
strategy to branch to India and China whilst already in Poland. This incremental growth is
because CEO wants to drive the share price at the corporate level (not just business level)
Avon Cosmetics – 250,000 Avon ladies who knock on doors and put catalogues through
doors – direct selling
Strategy in Action – resourcing
British Airways and Quantas – share ground crews in London and Sydney so do not have to
duplicate them
Tesco and M&S – share lorries as it stops wastage of fuel and time as empty lorries go back
and forth
Strategy in Action – processes
BMW – want to run plants 24/7 to amortise their overheads
Mahi Gill Notes: Dell, Google, M&S, GSK, Unilever
SWOT Google
Strengths
 Strong Cash Position – Quarterly Balance sheet for Sept 2011 shows cash of $10.6bn
 Dominates the search engine market with strong brand value – ‘Google it’
 User friendly system – speed and simplicity and available in many different languages
 Innovative capability – Engineers have a day per week to work on creative ideas
Weaknesses
 Majority of revenues from advertising
 Lack of ability to establish themselves in China – poor working relationship with
Chinese govt
 Inability to monetise services
 Lack of entry into Social Networking
Opportunities
 Enter Social Networking
 Further solidify entrance into mobile technology market – acquired android in 2005
and Motorola in Aug 2011
 Improve presence in China
Threats
 Increasing competition from Yahoo, Microsoft, Bing
 Facebook are taking advertising revenue from Google, their main means of income
 Siri – voice search on iPhone 4s bypasses Google to search – substitute
 Legal issues with copyrights of books
SWOT Dell
Strengths
 Globally known and well recognised brand – strong reputation
 Cuts out the retailer with its ‘Direct Model’ – distribution directly to the customer
 Tailor made to customer’s specifications
 Low costs by cutting out section of the value chain
Weaknesses
 Computer maker not manufacturer – suppliers have power as reliant on few large
suppliers
 Only 5% of Dell’s total sales are from educational institutions – lacks relationships
with them
 Many customers prefer retailers since they can see the product before buying and
have somewhere to go if there is a problem post-sale
Opportunities
 Expand into government and education markets for sales
 Broaden scopes in Europe, China and India

Diversification into fast growing related segments e.g. software, broadband, security
devices
Threats
 High competitive rivalry from major brands e.g. Sony, Apple
 Strong price war – competitors are successfully getting their price closer to that of
Dell’s, which is their competitive advantage, a key component to a successful strategy
 Competitors have strong relationships with retailers should Dell need to change the
structure of their value chain.
M&A – GlaxoSmithKline

Initially formed in 2000 from the merger between GlaxoWellcome and SmithKline
Beecham.
o Aim was to achieve economies of scale and first reports showed success in
heading towards saving £250m alone by combining R&
o Also improved dominance in market in its route to becoming a major player
 Aimed to become a world leader in consumer healthcare – did this through
subsequent acquisitions
o Leader in Oral Healthcare through acquiring Block Drug – integration was fast
and successful
o Expand into Latin America through acquiring Laboratorious Phoenix which
had existing products with brand value to consumers in Argentina
o Leader in Skincare through acquiring Stiefel
 CEO Andrew Witty outlined strategy to obtain businesses which are growing in areas
such as vaccines or consumer products or those in new emerging markets
o Acquired vaccine company Corixa in 2006 in its aim to become a leader in this
field
o Looking at expanding into India in 2011/12 since it is considered the fastest
growing drug market however Indian Govt restrictions could harm this
Benefits from acquisitions and merger
 Resource sharing – cut overheads through the merger, particularly in R&D
 Skills transfer through acquiring companies who were able to manufacture drugs
GSK either hadn’t targeted or were unable to do so rapidly such as in vaccines
 Combination benefits – Economies of scale in the R&D department and became
a dominant player in the market through acquiring, increasing their market share.
Based on 2009 and 2010 revenues earned, GSK is in the top 5 pharmaceutical
companies in the world.
 Successfully entered new markets and new products
 GSK have been successful do to their ability to overcome the issue of integration
with acquisitions. Poor integration can cause failing subsidies with large number
of acquisitions.
CSR – M&S

Trust is a core value for M&S and they consider CSR to be key to building trust in the
company.
 M&S’s CSR consists of 2 aspects
1. A focus on
a. Product – sustainable resources, decreasing waste
b. People – training, health and safety
c. Places – community, energy+waste reduction, decrease water use
2. Plan A – introduced in 07 and recently extended to include 180 commitments to
achieve by 2015 with the ultimate goal of being the world most sustainable major
retailer (BHAG?)
a. Focus on customers, climate, waste, natural resources etc
b. 95 objectives were achieved by 2010/11
 M&S clearly follow Carroll’s school of thought. They extend their legal responsibility
into their ethical responsibility in the pyramid by applying the legal rules for the UK
in the age of their workers to their offices/plants abroad.
 Maintaining the capitals of the 5 capitals model through their CSR plans
o Natural capital – sustainable resources
o Human capital – training and health & safety
o Social Capital – supporting the community through philanthropic projects
o Manufactured Capital – reducing waste and water use
Sustainability Portfolio
 Clean technology – investments in new technology to achieve energy efficiency
 Pollution prevention – aiming to make operations carbon neutral by 2012
 Product stewardship – reduced delivery packaging and used sustainable materials
 Sustainability vision – large focus on improving the environment
M&S can generate wealth through this via
 increase in shareholders investing in the company who have a ‘green’ focus. This can
increase the share price.
 Improve their brand therefore increase sales
 Improve HR reputation through training and health and safety measures and therefore
help attract and retain quality, productive staff
CSR - Unilever

Over 2/3 of their raw materials are from agriculture
o Introduced guidelines for sustainable agriculture imitative for key crops they
use
o This helped secure raw materials for the future and improved their reputation
o Philanthropic projects through investment in community projects
o Aim to reduce greenhouse gas production, water use and ensure employee
safety.
5 capitals model
o Natural capital – sustainable raw materials
o Human capital – health and safety
o Social Capital – supporting the community through philanthropic projects
o Manufactured Capital – reducing greenhouse gas production
Sustainability Portfolio
 Pollution prevention – Aim to halve environmental footprint of their products by 2020


Product stewardship – aim to have 100% of its paper packaging from sustainable
sources by 2020
Sustainability vision – Investing beyond in community projects (89mill euros in 2009)
Further GSK/Pharma Example
GlaxoSmithKline & Shenzhen Neptunus Interlong Bio-Technique Co. Ltd (Shenzhen
Neptunus) Strategic Alliance
GSK
Global pharmaceutical company with headquarters in London. Research-based company with
a share of around 5% of the world's pharmaceutical market
Was formed in 2000 by the merger of GlaxoWellcome plc and SmithKline Beecham plc
Many of our consumer brands are household names: alli, Ribena, Horlicks, Lucozade,
Aquafresh, Sensodyne, Panadol, Tums
The Alliance (9thJune 2009)
 GlaxoSmithKline plc (GSK) to form a new Joint Venture with Shenzhen Neptunus
Interlong Bio-Technique Co. Ltd (Shenzhen Neptunus)
 The alliance will develop and manufacture influenza vaccines for China, Hong Kong
and Macau. This will include vaccines for seasonal, pre-pandemic and pandemic
influenza
 GSK will take a 40% stake in the Joint Venture for a contribution of cash and assets
equivalent to £21m.
 Shenzhen Neptunus will take a 60% stake in the Joint Venture for a contribution of
cash and assets equivalent to £31m. Profits attributable to these assets are negligible.
Why? Market Potential in China
In the past, medication expenditure and vaccination rate in China lagged far behind
developed countries.
Chinese economic boom has improved people's livelihood, and thus a higher awareness of
healthcare, along with the population aging, has increased rapidly the demand for medication.
Furthermore, the standard of biological products in China is progressed close to the
international one, indicative of a beneficial and promising outlook for future development.
Why it worked?
GSK’s adjuvant technology and expertise in vaccine development
GSK will provide access to its proprietary adjuvant system which helps to improve
efficiency and optimise production by increasing the number of vaccine doses that can
be produced using a smaller amount of antigen
 Extensive experience of Shenzhen Neptunus in the Chinese vaccines market.
 Shenzhen Neptunus will provide additional local manufacturing capacity and R&D
expertise.

Both companies will provide further investment in manufacturing.
It also provided a pathway for GSK to easily enter the Chinese market without
worrying about regulations. From the beginning it was thought GSK would increase
its share later on (see below)
Further Outcome: (14th June 2011)
GSK to buy out Shenzhen Neptunus to further expand its presence in that lucrative emerging
market.
It will pay GBP24 million for the outstanding 51% held by Shenzhen Neptunus in the joint
venture company
The move reflects the strategy of Glaxo CEO Andrew Witty to push strongly into emerging
markets and establish presences there.
"GSK has licensed more vaccines in China than any other global manufacturer and has
packaged more than 100 million vaccines at our Shanghai facility," said John Lepore, vice
president and general manager, biologicals and corporate of GSK China.
Krishan Patel: Renault-Nissan, BMW
Summary of Renault – Nissan:
In 1999 Renault invested $5.4 billion into Nissan and gained a 36.8% share, which later increased to
44.4%.
It was a strategic alliance which worked mainly because both parties had ongoing commitment to
making the relationship work.
Renault needed Nissan’s highly efficient Japanese work ethic and production techniques.
Nissan needed Renault’s cash and management skills to turn their business around and start making
profits.
Cross-company teams were created and the cultures of each company were respected. Both
companies encouraged their workers to be proactive and take an interest in how things worked at
the other company. They used English as a common language – it kept communication simple and
thoughts were simplified down to their core issues which improved efficiency.
Rationale was both asset seeking (transfer of skills production and management techniques) and
market positioning (both companies could benefit from the other’s current positioning). Also,
Nissan was in a lot of debt and Renault had the cash to reduce this.
Features of the strategic alliance:
 Sharing of skills – both manufacturing (from Nissan) and entrepreneurial (from Renault) led
to better quality cars by Renault and a higher output of cars by Nissan.
 Entering new markets – e.g. Nissan’s relationship with the Mexican government allowed
Renault to get around a lot of red tape and start selling cars in Mexico.
 Sharing distribution channels – Renault selling Nissan cars and vice versa
 Cross manufacturing - Sharing production capacity and building both makes of cars in the
same factories around the world.
 Collaborative R&D – both companies now use just 10 base platforms for the entire range of
their cars. This allows more shared components to be used.
Outcomes of the strategic alliance:
 Increased market power due to economies of scale – number of cars produced by each
company increased as a result of the alliance. Together, the alliance had a global market
share of 9.2%.
 Lower purchasing costs due to economies of scale (both companies buying their materials
together in bulk) – cost savings.
 Change of culture in Renault towards standardisation and higher bureaucracy.
 Change of culture in Nissan towards setting better efficiency goals and feedback
mechanisms.
 Formation of a combined “commitment culture” to allow future synergies to be realised.
They avoided failure by:
 Paying attention to detail – e.g. the Nissan engineers would go to the Renault factory and
teach them how to hold drills more efficiently and give classes to improve manual dexterity.




The top executives had a high level of commitment with the CEO’s having a highly trusting
relationship.
Culture differences were accepted. Importantly, the two cultures were not atttempted to be
merged, instead they established common goals. They struck a balance between Nissan’s
bottom-up management and Renault’s top-down management.
Objectives were kept simple and maintained throughout – they were always on course and
achieved all their targets.
They were realistic and only sought to learn from each other and not change each other.
BMW – SWOT
Strengths:
 Brand Identity – quality German engineering & benchmark for premium family cars.
 Product Range – wide range of cars and motorbikes. It owns Mini and Rolls Royce.
 Technology and Innovation – recognised for its environmental stewardship. Efficient
Dynamics initiative makes its cars more eco friendly and it known for investing in alternative
fuel technologies.
 Global network – Produces and sells in Europe, USA, India, China, Egypt, South Africa.
Weaknesses:
 Limited consumer base as a premium brand – does not produce for the masses.
 Brand awareness is limited in developing countries.
 High labour costs due to 14 out of 17 manufacturing plants being in Europe.
 Rivals Mercedes and VW are in the commercial vehicles market whilst BMW is not.
Opportunities:
 Enter the commercial vehicles market.
 Expand motorcycle market in developing countries – possible joint venture.
 Improve marketing and awareness in developing countries.
 Expand on R&D into renewable energy resources – catch up to Toyota. (It is already sharing
some technologies with Toyota, Peugeot & Citroen http://www.ft.com/cms/s/0/99c4b74e1bfc-11e1-af09-00144feabdc0.html#axzz1hkgOABGA)
Threats:
 Products are easily substitutable for cheaper, smaller cars. It offers nothing unique other
than its level of quality and premium brand image.
 High levels of competition – Mercedes, Audi and VW.
 Uncertain future of the industry due increasing price of oil.
 Government regulations on emissions and demand for more fuel efficient engines are
making BMW’s premium cars less viable – possible need for strategic change
5 Forces BMW:





Potential Entrants: Relatively high barriers to entry – a lot of capital required to produce
luxury cars. However, it is very possible that BMW can find new rivals if currently established
companies start to produce similar cars. E.g. Ford, Citroen, Renault, Nissan, Toyota, Honda.
2/5
Buyers: high buyer power. People can easily switch to other products in times of financial
difficulty. However, brand image allows BMW to dictate prices to a certain extent. 3/5
Suppliers: it is a large multinational corporation with global sourcing. BMW will have a lot of
power over its suppliers as parts are specifically tailored. BMW can source parts elsewhere
but suppliers may have limited choice of car manufacturers. 4/5
Substitutes: relatively few substitutes that can replace the car. Trains/air travel can overlap
into the market but may only be a viable option for a limited range of people. 4/5
Competitive Rivalry: Very high. Mercedes, Audi and VW all produce cars of similar
specifications and price so there is fierce rivalry between even the German car
manufacturers. 1/5
Total: 14/25 – BMW has relatively good profit potential and market power. It has a solid
brand and loyal customer base, however rivalry from competitors and consumer demands
force it to relinquish some of that power.
Strategic Group Analysis:
Like Colin used the example of Morgan cars in his lecture, BMW has its own strategic group.
 It has a diverse range of products, although the cars it produces are intended for middleupper class income ranges.
 It has an international geographic coverage, but it is still a very much western brand.
 It has global distribution channels and therefore is competing with global car manufacturers.
 It employs mass marketing with its slogan “The Ultimate Driving Machine” in all forms of
media.
 It has a powerful and well known brand, although less so in the east. It has success in
Motorsport and is a prominent sponsor in Golf.
 BMW manufactures and assembles its own products. It produces its own engines etc.
 It is second to none in terms of the quality of its products
 It is one of the leaders in automotive innovations with successful hybrid and hydrogen car
campaigns.
 BMW has many stakeholders including governments and environmental agencies.
 It is one of the larger car manufacturers in the world, currently ranked 14th largest.
Background information:
What is the BMW Group strategy?
At the end of September 2007, BMW Group took on a new strategic direction. Up to the year 2020, BMW Group intends to
strengthen its position within the global motor vehicle market by increasing sales to more than two million automobiles
per year.
In addition to striving to grow its existing business, the BMW Group will develop new and profitable areas of activity. At the
same time, the BMW Group will invest in future technologies, new vehicle concepts and pioneering drive systems.
The new strategy has been given the name Number ONE, standing for 'New Opportunities' and 'New Efficiency'. This
means making the best use of new opportunities and becoming more efficient in order to ensure BMW Group's lead over
competitors and to actively shape the company's future.
“The strategic objective is clearly defined: The BMW Group is the leading provider of premium products
and premium services for individual mobility.”
Product Range:
Automobiles.
With BMW, MINI and Rolls-Royce Motor Cars, the BMW Group is the world's only car maker to pursue a purely
premium strategy for all market sectors covered by its brands, from exclusive smaller cars to top-of-the-range
luxury limousines.
Motorcycles.
Premium is the key word for BMW Group motorcycles as well. We have enjoyed great success with our strategy:
to develop and build the best motorcycles, set standards with regard to technology, environmental protection and
safety, and provide outstanding customer service in the pre- and after-sales phases.
Financial services.
We see financial services as a key factor for success in today's mobile world. We have established an extensive
product portfolio which supplies expert information and advice for situations and questions relating to the finance
sector. We provide the following services: financing and leasing, asset management, dealer financing and
company car pools.