The Dutch "Verenigde Bloemenveiling Aalsmeer Cooperative" (VBA) was on of the world's largest flower exchanges. Around 6,300 flower growers, one half of them located in the Netherlands, used the auction to sell cut flowers and plants to more than 1,000 wholesalers. In 2004, the value of the flowers and plants traded at Aalsmeer exceeded 1.6 billion euros, representing 36% of the world's trade in cut flowers. Every morning, VBA held 55,000 Dutch auctions to match buyers and suppliers. While formidable in size, VBA management worried about the future of the exchange because direct sales between growers and buyers had started to bypass the auction. Kenyan growers, for instance, often shipped roses directly to wholesalers. VBA's management considered a number of strategic initiatives and tactical moves in response to the growth in direct sales. Should the exchange allow non-Dutch growers to become members? Would it make sense to have the wholesalers bear a larger fraction of the trading cost? Philip Smits, CEO of VBA, knew that expanding VBA membership and adjusting trading commissions were guaranteed to be hotly contested topics at the upcoming general meeting.
Amgen Inc.'s Epogen was the first biotech blockbuster drug. Epogen helped prevent anemia, a condition that leads to severe fatigue, increased risk of cardiovascular disease, and even death. At the time, the market for Epogen, which included dialysis patients and persons with cancer undergoing chemotherapy, was estimated to be a $1 billion opportunity. After a critical scientific breakthrough, which allowed Amgen to identify the EPO gene, the company applied for a number of patents to protect its achievement. However, much to its surprise, Amgen learned that EPO had already been patented. Genetics Institute, the holder of the patent, demanded a royalty-free cross-license. Amgen's manager needed to decide how best to compete with its rival.
Convenience is a key competitive benefit retailers can offer: ways to save customers time and effort. Retailers employ various strategies, including location, layout, merchandise arrangement, transaction processing, hours and delivery, to differentiate themselves from competitors. This note explains each of these strategies, and explore the growing importance of shopping convenience.
This note is intended to elaborate on the many dimensions of retail location analysis and decisions. Location is a retail marketing decision that is typically difficult to change frequently, yet it determines access to customers, investments in building and equipment, and many operating costs such as rent, utilities and taxes. In short, it deserves careful attention. This note may be used with product 9B05A031, Note on Retail Convenience.
Every retailer faces competition, either directly or indirectly. This note examines how a retailer can systematically conceptualize and analyze his or her competition in order to make better retail marketing decisions. The two key topic areas are retail formats (a way to classify retail competitors) and competitive analysis. Every retailer needs to find some reason why customers should buy from him or her rather than from a competitor - in short, a competitive advantage. Gaining competitive advantage requires not only customer understanding, but also competitive understanding.
Assortment is generally the major element of the retail marketing offer and is central to any effective retail marketing strategy. A well-defined and executed assortment strategy can be powerful in differentiating the total retail offering from other retailers. This note is about the assortment choices that retailers face. Assortment is what the retailer manages; selection is what the customer perceives to be offered by the assortment provided. This note explores assortment strategies, ways of making assortment decisions, category management and more.
Value means much more than simply price, more than the money the customer pays and the money the retailer gets. Value is the perception that customers have (or may be convinced to have) of the total package of benefits received at a price from the retailer. Price from the customer's perspective then becomes an indicator, a measure of the promised value. If the benefits appear to be substantially higher than the cost (the price being asked), the customer perceives the retailer to be offering good value and a sale is likely. On the other hand, if the cost is perceived as higher than the benefits, the value is note there for the customer. When customers say the price is too high they also mean the value is too low. This note explores value and price from the retailer's perspective, including ways retailers set and change price.
A retail marketing strategy is intended to accomplish performance objectives. This note examines what performance dimensions retailers typically use, how one might assess retail performance, and most importantly, how a focus on performance can assist in making decisions about retail marketing strategy.
The chief executive officer of Western Union had just begun implementing a new organization structure. Changing the structure sent a clear message about Gold's desire to change the company's mindset to a new more global one. Already the CEO was finding that leaders in the United States were reluctant to give up control of product lines. At the regional level, she had good leaders in place who wanted to push out the responsibility within their own regions and move toward a decentralized plan. Although the CEO supported this notion in principle, she wanted to ensure that the right leaders could be placed in decentralized offices to execute on the six strategic pillars that she had laid out for the organization. One thing was certain--the CEO had made it clear that no revenue decreases would be forgiven amidst the change. Many considerations had arisen: What pace of change should she take? How would she deal with resistance to change? How could she ensure that the new structure would support Western Union's global expansion?
Los Grobo, a grain farming company based in Argentina, must decide whether to expand internationally to neighboring Paraguay and Uruguay. Los Grobo has built an IT-facilitated network with hundreds of participants who work together to produce corn and soybeans. Los Grobo controls this network while owning very few elements of it.
Focuses on the leadership lessons drawn from the events precipitating the Animator's Strike of 1941, depicting the growing pains of a company that was as much formed and changed by American culture as American culture was formed and changed by it. The tale of Walt Disney's roller-coaster journey from small-town paperboy to underage ambulance-driving serviceman to amateur animator and thrice-failed businessman to iconic leader is told against the backdrop of swift and seeping change in the beginning of the 20th century. An ambitious creative genius, he masterfully pursued emerging technological advantage and uniquely grasped and personified American social mores, but was reckless and naive about strategic business issues, especially concerning intellectual property and human resources management. A rewritten version of an earlier case.
Demand for low-cost housing after World War II far exceeded supply. Was this a profitable new market? New York developer William Levitt had to decide. During World War II, Levitt was eager to build basic housing for the working class--otherwise, Levitt & Sons would have been idle due to the federal government ban on all nonessential construction, like the luxury homes that Levitt & Sons typically built on Long Island, New York. Under a contract with the U.S. Navy, Levitt & Sons erected 2,000 homes in a year's time, an effort that gave Levitt & Sons the opportunity to perfect rapid home construction techniques. Levitt had to decide if he would apply those techniques to meet the post-war housing demand. Levitt & Sons had the manufacturing know-how. Would sizable profits follow? Levitt needed to understand the implications of the home improvement loans and mortgages the government guaranteed to returning servicemen as part of their veterans benefits. Levitt had the opportunity to parlay his own World War II experience as a Navy Seabee to market these homes by appealing to the sentiments of veterans like himself who were eager to return home and settle down after the fighting stopped. Levitt's decision would have profound social, economic, and political impact on the lives of returning veterans, their spouses, and their children--the Baby Boomers.
The first of four module notes for students who are taking an advanced course on competitive strategy. Presents concepts and techniques to help students analyze the parts of a firm's strategy and understand how the parts fit together to form a coherent whole.
In November 2004 Saurer Twisting Systems launched a new twisting machine called Focus in China under the Volkmann brand. The (B) case describes the launch strategy for the new product in China and India, the competitive response, and the early results Saurer achieved. By June 2005 it was clear that Saurer Twisting Systems would easily achieve its objectives in India and Pakistan, but China was proving to be more challenging. The CEO of Saurer Twisting Systems was trying to decide what additional steps he might take to accelerate Volkmann's progress in China and to deal with the competitive threat posed by a major Chinese competitor.
Basketball star Earvin "Magic" Johnson and K. Robert Turner, managing partner of Canyon Johnson Urban Fund (CJUF), raised $271.7 million for investments in urban real estate. The fund considered two projects, both located in Hollywood, CA. The first was located on Hollywood and Highland. Proposed by a reputable developer who wanted to restore Hollywood and Highland to its former glory, the development included a 640,000 square-foot retail complex, a hotel, and the Kodak Theatre, the future home of the Academy Awards. The second project was a mixed-use development, located on Sunset and Vine. This property had suffered a bad run of previous development attempts, and the community had been highly critical of past projects, feeling high rental prices would lock local residents and businesses out of the market. Hollywood and Highland or Sunset and Vine? Turner planned to make his decision soon. Details the economics of both projects.
The cofounder of Compass Records, a small, independent music-recording company, must decide whether to "produce and own" the next album of an up-and-coming folk musician or simply "license" her finished recording. This case presents information sufficient to build cash-flow forecasts for either investment alternative. Discounted cash flow (DCF) analysis reveals that licensing will be the more attractive alternative unless the student assesses the value of the options for follow-on albums included in the "produce-and-own" contract.
On March 1, 2001, Jessica Gallinelli, managing director of Bancroft Capital Management, heard surprising and somewhat disturbing news about the proposed bid by General Electric Company (GE) for Honeywell International Inc. Despite recent public assurances about the deal from GE's chairman and chief executive officer (CEO), John F. "Jack" Welch Jr., the antitrust regulatory authority of the European Commission (EC) announced it had initiated a review of the proposed merger. Gallinelli, whose fund owned a large stake in Honeywell, considered this major development and wondered whether Bancroft should alter its investment. Immediately, Gallinelli instructed her associate to provide background material on the merger, an assessment of the probability the merger would be approved by antitrust regulators in the U.S. and Europe, and valuation analyses to assist Gallinelli in assessing Bancroft's investment in Honeywell. She would need to decide quickly whether to hold or sell her fund's 10 million shares in Honeywell and short position of 10 million shares in GE. As a risk arbitrageur, she thought prices would respond rapidly to the EC's announcement. She remembered Jack Welch's confidence of five months earlier that this was the "cleanest deal you'll ever see," and she wondered whether that was still the case.
In November 2003, a vice president of Deutsche Bank Securities received a request from a client to finance the acquisition of a large hospital-supply distributor. The client needed to present to the seller an offering price and indication of financial commitment within two weeks. The contemplated transaction entailed a highly leveraged acquisition of the target. The tasks for the student are to value the target firm and projected synergies, assess the creditworthiness of the target (i.e., the ability to bear the high debt), and critically evaluate the general design of the transaction.