1. The biggest opportunity, which was realized, was to open the mass market fast-f ood business. Kroc did this through a balanced expansion of owned and franchise o perations while maintaining quality control and not outstripping requirements for add itional capital. He could have chosen to own all of the outlets or to restrict operatio ns to certain regions. The threats were and still are alternate foods and alternate st ores.
2. McDonald’s was not without luck. At the time they expanded intoEurope, America n goods and styles were in fashion. In addition, McDonald’s maintained rigid quality and cost control. For example, while they were trying to develop a potato strain t hat could be grown in Europe they imported all of the potatoes from their suppliers in theU.S.This maintained their reputation for the “best fries,” one of the selling po ints for McDonald’s. The cultural differences between Asia and Europe are considera ble and the trick was to find the commonalty between the two and theU.S.InJapan, for instance, heavy pre-opening advertising and large-scale locations, combined wit h contributions to the local community (similar toToyotapublic relations in Asia and t heU.S.), as well as inclusion of l ocal specialties successfully launched McDonald’s na me and products inAsia.
3. The basic philosophy is expressed in the case: QSC&V. When he was alive, Ray Kroc personally visited locations and inspected the outside premises, inside food pre paration areas and personnel. This set a tone for the corporation at the top. Its su ccess is measured by the fact that you can get a Big Mac almost anywhere in the world.
4. McDonald’s is expanding its menu in order to meet competition. It has expanded into competito rs’ areas such as chicken and Mexican foods and in some European l ocations offers wine with meals. In theU.S., new low-carbohydrate diets emulate the Atkins model while low-fat menus were developed to appeal to that phase of Amer ican eating habits.
5. Planning and attention to detail, combined with a thorough understanding of the local customs, have all contributed to McDonald’s success. The opening of McDonal d’s inMoscowin 1990 illustrates some of the factors in operation:
It offered products not available elsewhere in a setting that was both interesting an d conducive to a gathering of friends and family.
The initial Canadian managers paid attention to training and the details of a fast-fo od operation before opening the restaurant. The cleanliness and sharp appearance were essential.
The company engaged one of the fewU.S.attorneys licensed to practice law inRussia to draw up the absolutely necessary contracts and agreements. The attorney, an Afr o-American, was also a Don atOxfordat the time of opening.
They located in a city where consumers had a huge pent-up demand and sufficient disposable income to act on it.
1.Relating to, consisting of, or affecting the spirit; concerned with religious values; concerned with the soul; of, from, or pertaining to God.
2.A code of ethics is often the outcome of spirituality.
3.Recent scandals such as Parmalat, WorldCom, Adelphia, Enron and Global Crossing point out the need for better ethical standards and corporate governance as a fidu ciary responsibility.
4.Against: If the business of business is business, then spirituality has no place.
For: Since spirituality is part of the ecology in which businesses operate, it would b e remiss not to take it into account.
1. It created a friendly environment and initially provided “specialty” coffee drinks a nd a place to access the Internet.
2. Standardization and theme.
3. It is doing that through expanding its non-coffee drinks and snack selections.
4. The challenges are already here, which requires reorganization and regrouping, a s illustrated in the press release above.
1.A division manager can develop verifiable goals, as illustrated in the case. The pr oblem here is that the division head does not know if these are the same goals th at the president would have for the division. It is always a good idea to test reality by closing the loop with the boss.
2.The division manager seems to have been swept away by the lecture. Even thoug h he has articulated some objectives, we do not know if they were attainable. Clear ly, the subordinates have to be given guidelines and premises. The resources of ca pital and manpower are always limited and to prioritize them takes a lot of skill an d participation, something not apparent in the case.
1. The real answer to this question is not portrayed in the case. It is implied, howe ver, as being due to careful steps and slowly building a controlled quality operation. Since the automobile industry was a protected one, forming a joint venture inChina was the first important step. Shutting out the competition is probably grounded in t he sophisticated politics of the joint venture, reinforcing the interests ofChinaand Vol kswagen. However, the industry is now in an expansion phase and transitioning fro m decentralized small manufacturers to large, integrated ones. VW was insightful to
be up and running at the right time. An excellent reference for the automobile ind ustry inChinais China Car Times.
2. Now approaching production of 1.6 million cars, Volkswagen’s share of the curren t 7.2 million cars and commercial vehicles produced inChinain 2006 represents 22% of the market. Honda closed a joint venture with Dongfeng Motor Corp in late 2003 for initial production of 30,000 units annually. It has since grown substantially and currently Honda has a total annual capacity of 480,000 units in China: Dongfeng H onda, where Honda CR-V and Honda Civic are made, has total capacity of 120,000 units and Guangzhou Honda, where Honda Accord, Fit are made, has a total capaci ty of 360,000 units. As the competition increases, prices will fall and demand will ri se.
3. If it is truly a joint venture, then the risk was minimized. The technology is avail able worldwide by hiring the right experienced people.
1. His target markets are already identified and his new concept stores are successf ul. The powerful image of Carrefours is his most important asset.
2. Copying Wal-Mart’s strategy would imitate, not distinguish, and probably work ag ainst his progress to date.
3. By focusing on choice, innovation, freshness, and own label as well as maintainin g local price leadership.
4. The characteristics of people in a shared place and time are largely dependent o n generational influences and vary according to the country and its socio-economic environment. The eating and buying habits of each country are available through go vernment agencies such as the U.S. Department of Agriculture, Department of Com merce and research groups such as A. C. Nielsen, which track consumer spending p atterns.
1. Since the restructuring involved changes in authorities and responsibilities of spec ific personnel, the human system and policies had to be covered.
2. If they did not become product line (group) managers, they were probably disgr untled, unless there were compensating factors such as increase in pay, visibility or opportunity for advancement.
1. A restructuring such as P&G’s has to come from the top, with active p articipation and approval by the Board of Directors, the CEO and COO. It im pacts too many people and redeploys assets at too high a cost to be other wise. However, since organizational changes naturally create uncertainty, and uncertainty in turn produces anxiety, both can be eased through careful def inition of the new structure and solicitation of input from the bottom up.
1. The performance is reflected in the stock price of the company, which had fallen drastically when compared to competitors such as BMW and Renault. The aerospac e buy-in was done at a time when there was obvious over capacity in the industry and when the giants such as Boeing and Airbus were struggling to maintain market share.
2. The problem in this particular case is that the potential targeted companies such as Chrysler and Mitsubishi were in trouble before the merger or acquisition. One m ight question the wisdom of going ahead with an acquisition or merger, but once t here, executing a turnaround plan calls for very close controls rather than autonom ous operations.
3. To answer this question, one needs to examine the background and psychologica l makeup of the principal drivers such as Schrempp. It can’t be done on leveraging the acquired co mpany’s earnings. Daimler has now reduced its stake in EADS by a third and Schrempp has been replaced.
4. He’s gone and Zetsche has increased EBIT from € .873 million in 2005 to €8.710 in2007.
1. There are great advantages in commonality as distinct from centralization or de-c entralization in the automotive business. Modern technology has enabled designers a nd engineers to collaborate across borders as designs are discussed and approved i n joint international conferences, and overnight transmissions of data and details to working groups at Ford. However, local tastes prevail both theUnited Statesand in o ther areas of the world. The cars that sell well in the Midwest may not be the cars of choice in Southern California and the peculiarities of theLondonmarket are distin ct from those inHamburg. The significant cost of an automobile assembly line mand ates some centralization of production facilities, but the dealer networks and service centers argue for regional de-centralized territories.
2. The rationale was to reduce costs, but the execution didn’t work.
3. The vision was to rely on technology to bring about a new way of making and s elling cars, but the infrastructure was not in place to sustain that vision. Ford allow ed its costs to get out of control by focusing on the Internet instead of building go od cars and trucks. Ford is re-centralizing to improve quality and reduce the costs of new products.
4. The Premier Automotive Group was founded in part to help save Ford Motor by focusing on the cars with the highest margins. However, relocation costs toIrvine,Ca lifornia, and product problems contributed to significant losses and in 2008, Mulally reached definitive agreement with Tata Motors of India to sell the Jaguar Land Rov er segments for $2.3 billion, substantially less than Ford had paid for the brands un derNasser.
5. Ford is competing well in Europe, with new Mondeo and Kuga models, but trails GM inChina. By concentrating on the Ford marque and reducing capacity in theU.S., Mulally is bringing new potential to the company and hopes that its new campaign Ford. Drive One! Can return customers to the showrooms and experience the impr ovements firsthand.
1. Obviously the divisions got out of control and were not contributing to the welfar e of the parent company. The advantages are motivation and flexibility to meet cus tomer demands.
2. The company’s reputation is so damaged, it is uncertain whether it can be comp etitive without government support.
3. Kim should respond by holding the managers responsible for making a profit. Th e controllable factors are providing a common sense of purpose and direction. The uncontrollable factors are economic conditions and competition.
4. The Commission of European Communities in its declaration did not view GM’s ac quisition of Daewoo’s automotive assets as a competitive threat. The success depen ds on how GM develops the dealer networks and which models are carried forward. GM has rebadged its cars and dropped the Daewoo marque.
5. Ford was struggling with its turnaround plan and GM acquired only parts of the company that it wanted.
6. It is difficult to say if the automotive successor company will grow, in light of th e competition and other problems at GM.
1. Barrett is presently Chairman of the Board. He was replaced by Paul Otellini as CEO in 2005 and Otellini is presently running the organization, competing with AMD and focusing on 45nm technology, while expanding into WiMax and cellular product s. The semiconductor industry is known for its roller coaster pattern in bill-to-book r atios.
2. Frequent reorganizations create uncertainty and anxiety. Some of the reorganizing was in the interest of cost-cutting and improving margins and it continues into the present.
3. All capital investments in the microprocessor lines are most substantial. They hav e risen from $100 million in 1985 to $2.0 billion today for a complete manufacturin g facility. In high technology, one must focus on preparing now for the distant futu re, especially with research and development expenditures and capital expenditures, in order to remain competitive. The investments are so large that their return has t o be calculated in years in the future.
1. We know from the results, especially turning around a company, that she must have been a strong, analytical leader. In turning a company around, one has to be very convincing to many constituencies and have a clear idea about what needs to be done. Her career path was grounded in high-tech and multinational companies.
2. One can surmise that the problems that women encounter in theU.S.are compou nded inItaly.
1. It depends on what is meant by “managing by the textbook.” We und erstand that management’s underlying principles and theory are universal, bu t many managers want to think that they are the ones with “something spe cial,” implying that it can’t be taught and must be learned “the hard way.” Experience is, of course, very valuable, but it can be enhanced with a good understanding of the theory involved.
1. This is really a case specific question because of the massive layoffs of over 100,000 employees. Some authors focus on the social consequences of restructuring and others detail the innovations and self-actualization process es that Welch initiated and which led to the rise of GE in corporate value.
1. Personal feelings vary, but identifying issues and alternatives are univer sal.
1. To enhance a company’s corporate image and to become visible in ord er to benefit shareholder value.
1. Welch made sure that GE’s value system was published and disseminat ed through the ranks. Values are difficult to appraise in performance, but sin ce they were well known, some standard criteria were probably developed to measure both results and attitudes.
1. Stretch objectives do make executives push, whether it is to exceed fo recast or increase the rewards. They exist in all dynamic, growing companies, whether or not they are identified as such.
1. Since rigorous succession planning was one of the key elements of Wel ch’s tenure, it would imply ranking as a matter of course. As long as everyo ne knows the ground rules, ranking should be accepted as a practice, even i f the specific results are questioned. The second part of the case question r aises the issues of what makes one division “far superior?” It might be due to proprietary technology or other market factors, rather than the manageme nt team.
1. The reorganization, which included divestitures as well as acquisitions, was dramatic. If the criterion is shareholder value, there is no question that the objective was achieved. If the criterion departs from that measure to in clude economic impact and social or ethical considerations, then the answer is arguable.
1. Much of the old HP spirit has been restored by Mr. Hurd.
2. The old managerial style was a direct reflection of the personalities of Hewlett a nd Packard. You would need similar managerial profiles for it to work elsewhere.
3. Ms Fiorina was not successful at HP and was removed after conflict with HP heir s.
1. Both leaders brought their companies up from nothing to be leaders in the field. Microsoft dominates in PCs with over 90% of their operating systems market share and Jobs was responsible for the introduction of the iPod and iPhone, as well as f or new models of its Mac Book (Mac Book Air) and graphics desktops. Their styles were charismatic, which was what was needed in the beginning. And Jobs’ vision re stored Apple after Scully’s disappointing ten ure as CEO. Gates style was probably m ore directed to crushing competitors while Jobs was focused on hardware and
innovations like the iTunes and iPod. Both were known for their excessive confidenc e, bordering on egomania and Jobs was known for his denigration of subordinates, which has moderated since his return. Gates has left Microsoft operations to Ballmer in order to devote more time to his Foundation.
2. Jobs was described in Inc Magazine as being one of the most aggressive egotist s inSilicon Valley, while the Justice Department pictured Gates as a monopolistic co mpetitor. Gates had the good sense to back himself with good managers. Jobs got a CEO from PepsiCo who did not make the transition, and had to retake the reins of the company.
3. Microsoft OS dominates, while Macintosh OS is a favorite with graphics intensive applications. Both have competitors around the corner, such as Linux, which is gaini ng on Microsoft at the server level as well as Google with its on line free applicatio ns. The question is alternately framed by asking: what is the future of Information Technology and how will it change the way we do things?