Strategic Management in Action: The Appendixes

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Strategic Management in Action: The

Appendixes

Lauren Sterna, Jennifer Eccles, Scott Addison, Clint

Chapman, Craig Crowell, and Collin Gillaspie

Appendix 1: How to do a

Comprehensive Case Analysis

What is a Case?

 Simply a short story of a company and the strategic issues its strategic decision makers are facing.

What Should a Case Analysis Include?

 A case analysis usually includes 6 parts: external analysis, internal analysis, strategic issues, strategic alternatives, recommendations, and implementation.

How to do a Comprehensive Case

Analysis: External Analysis

Includes a description of the opportunities and threats found in the specific and general external environmental sectors.

General sectors include economic, demographic, sociocultural, political-legal, and technological forces.

Based on the analysis of these sectors you should describe what opportunities and threats you see in each area, and why you see them.

How to do a Comprehensive Case

Analysis: Internal Analysis

Includes strengths and weaknesses found in the internal functional areas that include production-operations, marketing, HR management, R&D, information systems, and financial-accounting. Also, an assessment of top managers, and culture and structure of the organization.

Do not leave out a through financial analysis, because this is how strategic managers base their decisions. This should cover 4 parts: ratio analysis and comparison to industry trends, graphs and charts of sales, profits, and other financial measures, financial strengths and weaknesses, and a statement of the overall financial condition.

How to do a Comprehensive Case

Analysis: Strategic Issues

Issues are weaknesses that need to be corrected, opportunities that need to be taken advantage of based on strengths and distinctive competencies, or possible threats that need to be avoided or buffered against.

Focus on what the issue is and why it is a problem, these need to come from the information that was included in your previous analysis.

How to do a Comprehensive Case

Analysis: Strategic Alternatives

You need to develop at least 2 alternatives to the current situation when addressing strategic issues.

Describe who, what, when, and where to the question “What is the alternative being proposed?”

How to do a Comprehensive Case

Analysis: Recommendations

Once the alternatives have been developed, you are ready to make choices about what alternatives you are choosing and why, also which are being rejected and why.

Do not forget to explain how your alternatives will resolve the strategic issue.

How to do a Comprehensive Case

Analysis: Implementation

 Implementation of course is always the decision of the organization, so you need to include descriptions of how things would have to take place, and where the funding would come from to put those changes into place.

How to do a Comprehensive Case

Analysis: Written and Oral Presentation

The written analysis should cover all 6 parts described and include anything that is required for the analysis.

Oral presentations need to be easy to follow and sometimes requirements are included with the oral presentation, so follow them exactly.

Appendix 3: Southwest Airlines

Simple, fun, and profitable

36 consecutive years of profitability

Began service in 1971 with 3 planes flying to Houston,

Dallas, and San Antonio

Herb Kelleher, cofounder said, “A lot of people figured us road kill at that time.”

Background

The strategic approach that Southwest took was unlike any other airline company at the time

In the early 1970’s the airline industry was characterized by:

 High fares

 Inconvenient flight schedules

Complicated ticketing

Long and inconvenient flying experiences

Southwest’s Strategy

 They wanted something to be simple

Get customers to their destinations

When they want to get there, on time

Lowest fare

Have a good time while doing it

Fly short-haul routes where the fares are comparable to driving

Current Operations

Southwest is known for the nation’s low-fare and high customer satisfaction

Serves as short and medium haul routes with single-class service for mostly business and leisure travel

Point-to-point service

79% of customers fly non-stop with an average trip length of

846 miles

Low-Cost Advantage

Use a single type of aircraft- Boeing 737

More than 530 aircrafts with an average age of 9 years

Fuel Hedging- where they pay for gas upfront for the right to buy fuel at certain prices

Use of technology- automated processes southwest.com- first airline to establish website

Downtown and conveniently located airports

Legendary Customer Service

Great service at low prices

The American Customer Satisfaction Index ranked Southwest first among airlines for highest customer satisfaction for 14 years

Customer Service Commitment

Southwest’s mission statement establishes a foundation for its commitment to servicing customers

A Black Eye for the Company- Plane

Maintenance and Inspection Trouble

In early 2008, two FAA officials had noticed problems with some of the planes

Southwest had failed to do required inspections because

Southwest officials tried to keep the problems hidden

8% of the fleet was grounded until inspections were completed

In March 2009, SW announced that they resolved all issues and are now working with the FAA to ensure safety for the public

Southwest’s Culture and People

High-spirited, irrelevant culture

At the company headquarters there are over 10,000 pictures of employees

Their focus is the customers

Southwest went where no other airline had gone beforeblogging- Nuts about Southwest

Southwest’s people are their most valuable asset

More than 4 out of 5 employees are union members

Financial Highlights

36 consecutive years of profitability

In 2008, revenues were up 11.8% to over $11 billion even though net income was down 72.4%

A testament of Southwest’s strategies is to post a net income

Company Awards and Reognitions

One of the most admired companies- Fortune Magazine

Business Week’s Customer Service Champs

America’s Most Shareholder Friendly Companies-

Institutional Investor Magazine

 Airline of the Year- for excellent air cargo delivery service

*from 2007-2009

The Airline Industry and Major

Competitors

The airline industry is extremely competitive

One major uncertainty is fuel costs

There are many things that make the industry vulnerable:

 Capital intensive

 Fixed costs

Fuel and labor intensive

Heavily regulated and taxed

The Future

Keeping costs under control and keeping its culture alive

No longer paying commissions on flights booked by travel agents

Motivating employees to continue to look for innovative ways to better run the business

McDonald’s

On the Downward slope

By 2000 known for poor service and quality

Came in last in survey of fast food restaurants in 2001

First time in 15 years more people disliked than liked

McDonalds

2002 first quarterly loss

On the Mend

2003 old CEO fired and replaced by Jim Cantalupo

Cantalupo obsessed over the basics(fast service, hot food, and clean restaurants)

“Plan to Win”

Operational Excellence

Retake the lead in Marketing(I’m Loving It)

Innovation

McDonalds Today

Company employees and suppliers aligning fully

Ranked 8 th by BusinessWeek in best global brands

Investment in different restaurant formats including

Chipotle

Since first quarterly loss in 2002 they have increased profits every quarter since

Ford

Car manufacturer based in Detroit, MI

CEO and President: Alan Mulally

2008- suffered worst loss ever ($14.8 billion)

Ford History

108 year old company

First to manufacture products using a mass production assembly line.

Hits:

Model T

Mustang (Sold 1 Million in 24 months)

Explorer (First SUV)

Taurus

F-Series Pickups

Failures

Pinto (exploding gas tanks)

Edsel (unusual design that never caught on)

Firestone Tires/Ford Explorer

1998- CEO Jacques Nasser tried to diversify the company away from their core competencies and he was ultimately fired because of the failures.

Ford Industry and Competitors

Industry

 Technology driven

Fierce competition

Fickle customers

Manufacturing overcapacity worldwide

Declining demand for certain car models

Competitors

GM

Toyota

Chrysler

Honda

2007- beginning of recession and decline in car sales

Early 2008- Ford sells Land Rover and Jaguar to Tata

Late 2008- GM and Chrysler took bailout money from the US Government

Ford Motor Company Today

CEO Alan Mulally

 Came to Ford from Boeing

Way Forward Plan

Bold leadership

Customer focus

Strong brands

Bold, innovative products

Great quality

Clear pricing

Competitive costs and capacity

Four Key Priorities

Aggressively restructure the cmpant to operate profitably at the current demand and changing model mix

Accelerate product development with new products that customers really want and value while achieving manufacturing excellence by reducing complexity and improving quality

Obtain financing to do these things and improve the balance sheet

Work together with accountability with all partners

Manufacturing and Product Design

1 st and foremost and manufacturing company

 Japanese and Korean car companies out earn Ford on each car made by delivering more feature at a lower cost.

Ford will close 16 plants and eliminate 44,000 jobs by 2012.

 Remaining plants will be as efficient and effective as possible.

Reduce costs by $6 billion by 2010

Mulally demanded that engineers create uniform parts that could be use on most models.

 Created a single global product development organization

 “…work together more effectively to continuously improve quality, productivity, and speed of product development.”

Marketing

“ONE FORD” Marketing Vision

 The plan is to have common Ford vehicles competing in global segments.

 2010 Ford Focus global car was introduced

“The Ford Challenge”

 Asks consumers to compare their current car to a Ford car.

Values statement- “The customer is Job 1.”

Working closer with dealers.

Employees

Laying off employees and offering early retirements as part of the Way Forward plan.

 44,000 by 2012

Increasing healthcare costs

 $3.1 billion in 2006

The increasing healthcare costs will continue to affect the companies ability to meet it’s profitability goals.

Corporate Culture

Not a drive for perfection, instead they focus on continuous improvement.

Weekly meeting with no distractions.

 Use of data and data sharing between divisions.

Change in approach to grooming managers.

Commitment to environmental responsibility.

Financial

 Ford should break even by the end of this year.

Ford Motor Company-The Future

 Commitment to ONE FORD

“In a global market, success flows from having ONE TEAM working on ONE PLAN with ONE GOAL in mind.”

ONE TEAM- Including everyone with a stake in the outcome in the decision-making process.

ONE PLAN- Changing the way the company has been run.

ONE GOAL- Build more of the products that people want and value.

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