The vice-president at Tencent LeXiang (LeXiang), the enterprise social networking platform of Tencent Holdings Limited (Tencent), had been overseeing the development of the platform from its inception. Since its official launch in 2017, LeXiang had been successfully adopted across a wide range of multinational corporations; it was also popular internally at Tencent, with many employees engaging with their fellow co-workers on the forums. The vice-president was preparing for a meeting with Tencent's leadership about the future of LeXiang and how the platform could bring value internally to the company. As part of her preparations, she received a data set that included many posts and replies within Tencent's own LeXiang platform. While she thought there was significant value in the insight the platform provided about Tencent's own employees, she was unsure how to organize the wide-ranging posts and demonstrate their potential value to Tencent's leadership.
In early 2021, an investor had a substantial amount invested in three companies in the Reliance Anil Dhirubhai Ambani Group Reliance Group: Reliance Communications Ltd., Reliance Infrastructure Ltd., and Reliance Capital Ltd. The market price of Reliance Group shares had fallen steeply during the past five years (2016-2020), eroding the wealth of shareholders; consequently, the investor had lost almost all of his investments in the three group companies. Further, in 2019, Reliance Communications Ltd. had filed for bankruptcy. In 2020, the chair of the Reliance Group mentioned that Reliance Capital Ltd. had stopped its lending business and initiated stake sales. The investor decided to sell his shares in Reliance Communication Ltd. and Reliance Capital Ltd. at a huge loss. However, good dividend payments, and positive signals from the Reliance Group chair regarding betterment in the top line, a promotors' stake increase, and his intention to reduce the companies' debt to zero in 2020 made the investor hold their Reliance Infrastructure Ltd. shares. Nevertheless, to understand the possibility of improved fundamentals, the investor had to analyze the financial statements of Reliance Infrastructure Ltd., examining these for potential red flags that could identify significant threats to the future of the company and his investments.
LOGSTOR is a Danish company that is a global supplier of pre-insulated pipe systems. This case focuses on the leadership of Kim Christensen, a former board member who became CEO in 2017. The company was in the throes of a major crisis: it had shifted its focus away from its core business, and bankruptcy loomed. Kim's mandate was to turn LOGSTOR around, bring it back from the brink and restore performance and growth. As an "inside-outsider" CEO, Kim had to focus on the financial, strategic and operational aspects of the turnaround, implementing an initiative known as "back to black." The case describes some of the key actions that Kim took during this period and the drivers of the changes he made, particularly with respect to company culture and getting employees and managers involved in the turnaround process. After two years, the company was solvent. Kim was gearing up to move LOGSTOR into a phase of profitable growth when the COVID-19 pandemic struck. The case explores some of Kim's initial actions. The pandemic-related crisis was very different from the company's previous crisis. The case closes in June 2020 and asks what type of leadership Kim will need to bring to address this crisis. During the case discussion, students will examine leadership, change management and organizational design issues.
Kineer Services Limited (Kineer) was a social marketing startup set up in 2018 by Lakshmi Narayan Tripathi, a prominent Indian transgender, and Manish Jain, an ex-hospitality industry veteran. Their objective in setting up Kineer was to provide a life of dignity to the socially stigmatized third gender community in India. As a startup, Kineer faced several challenges including finding the right business investors and manufacturing facilities, crafting a suitable distribution set-up, and marketing a commodity product with a differentiated branding strategy. Tripathi and Jain had to try to create a recallable and recognizable packaged water brand using a unique value proposition based on gender inclusivity. They also had to choose between pursuing a consumer market and an institutional market route. Could they hope for a future beyond being a niche brand? Was social marketing going to help them? As B2C sales required massive investments, should the brand continue to pursue the more manageable B2B segment? Should it go ahead with the offer of Cyrus Enterprises to sell its product in the B2C markets? Would selling the product through a third party compromise the brand identity?
In 2019, Toyota launched KINTO, its new mobility services brand, in Europe - to address the increasing shift in consumer preferences from ownership to on-demand usership. KINTO was only the third brand to be launched by Toyota in its history (after Toyota and Lexus). This signaled to the market that the world's largest automaker was serious about transforming from a car manufacturer to a mobility company. The case describes how, under the leadership of Tom Fux, the fledgling company grew through market-by-market deployment of KINTO-branded services across Europe. To build a robust foundation and spur progress, KINTO leveraged the strengths of various Toyota enterprises, including Toyota Financial Services, Toyota Insurance Services, and technological partner Toyota Connected Europe. Toyota's retailer network also played a crucial role. KINTO enabled the retailers to go beyond their traditional sales and maintenance role to offer new mobility services to give customers access to their preferred vehicles when and where they want, for as long as they like. Over time, KINTO's services expanded into car subscriptions, car sharing, carpooling and multi-modal solutions tailored to private individuals, businesses and cities. By 2021, KINTO was well placed to address the demand for smart, innovative and flexible mobility services depending on the maturity of different markets. As Tom Fux moved to his next role in Toyota, Miguel Fonseca took charge as the new CEO of KINTO Europe. He pondered how he could launch the company on its next growth trajectory. • How could KINTO become a one-stop-shop for future mobility solutions? • How could the company scale up its services in different countries? • How could the leadership balance organic and inorganic growth to secure new business opportunities?
The case, "AirAsia Malaysia: The IPO Decision", presents the situation faced by Tony Fernandes, founder and CEO of AirAsia Berhad (AAB), when he and his team of senior managers had to decide whether they should raise funds through an initial public offer (IPO) or through private equity. The airline started operations in January 2002 and became debt-free within eight months. It earned a net profit of RM 49 million on a revenue of RM 392.7 million in 2004. The AAB planned to buy planes and augment its fleet of 17 aircraft. Fernandes wanted to replicate his low-cost model in other countries as well. In November 2003, he entered into a collaboration with Shin Corporation of Thailand to start a budget carrier there. The team needed RM 800 million to buy more aircraft to expand its business. Going public would mean greater administrative burden on the small team of managers. Fernandes had the choice of going through private placement and raise funds, which would mean control in the hands of a few as opposed to diffused control in a public offer. In this context, he wondered what could be done.
Victory City International Holdings Ltd. was principally engaged in the textile businesses and had subsidiaries in mainland China that manufactured and sold its own products. The company was founded in 1983 in Hong Kong, and it was listed on the main board of the Hong Kong Stock Exchange (SEHK: 539) in 1996. On 22 February 2021, Victory City announced that, on 22 January 2021, Deloitte had obtained two credit reports as evidence that two of its main subsidiaries in mainland China had outstanding bank loans in the aggregate amount of CNY946m (USD148m). According to the credit reports, Victory City's mainland subsidiary signed bank facilities of CNY994m (USD156m) on 11 December 2020 with mainland banks, and a substantial portion of these loan amounts was not recorded in the consolidated financial statements of the company. If Deloitte's findings were valid, the company's management had possibly committed accounting fraud and embezzled funds by transferring a substantial portion of the unrecorded loan of CNY946m (USD148m) to their own pockets. After 22 January 2021, Deloitte, as the whistleblower, suggested remedial actions that the company should take, but no significant governance response was received and the management in Hong Kong denied any knowledge of the bank loans or the location of the funds. On 11 February 2021, Victory City filed a winding-up petition; it stated as one of the reasons that it had defaulted on a scheduled bank loan repayment of approximately HKD290m (USD37m) to a syndicate of banks in Hong Kong. On 19 March 2021, the Hong Kong government's Financial Reporting Council (FRC) initiated an investigation into Victory City's financial statements to determine the extent of the unrecorded loans. In addition, FRC was investigating whether Deloitte had conducted its work in accordance with the relevant auditing standards. Victory City requested that the trading of its shares be suspended at SEHK, effective 22 March 2021. On 27 April 2021, the
The Flint water crisis, which began in 2014, is widely regarded as a textbook example of structural racism and injustice. This teaching case provides a close examination of the building blocks of the catastrophe, some all-too-familiar in American history and others, more particular to the time, place, and circumstance of Flint in the 2010s. The case begins by tracing the economic and racial history that made Flint especially vulnerable to the crisis, then describes the string of decisions that resulted in the dangerous contamination of city tap water, followed by the battle by residents of Flint (and later, by outside allies and scientific experts) to force official government recognition of the disaster followed by changes to the city water system. The voices of the Flint residents are featured, alongside the decision-makers. The first section of the case summarizes the intertwined events, familiar to students of American racial, urban, and industrial history, that led once-booming Flint to become financially strapped and majority-Black. It describes the nature (and criticisms) of Michigan's evolving Emergency Management system. It explains the Flint water system and the reasons behind the fateful choices both to change the source of Flint's drinking water and to bypass standard safety precautions in making that change. The case then details the battle by local residents to force government officials to recognize and address the contamination of the drinking supply amid a cascade of devastating revelations about bacteria, carcinogens, and high lead levels in the water. The case ends in October 2015, with the announcement by Michigan Gov. Rick Snyder that Flint would be re-connected to its previous safer and pricier water source, Detroit's Lake Huron system.
Incorporated on February 18, 1959, Oil India Ltd. (OIL) was a leading public sector oil and gas company involved in the exploration, development, production and transportation of crude oil and natural gas in India. Since its inception, OIL had committed itself to being a socially responsible organisation in and around operational areas, particularly the north-eastern state of Assam where 90% of company operations were concentrated. Despite many successes, the "People's Company" continued to be a target for disgruntled local and student communities who frequently created operational hazards for the firm-from sit-ins and blockades to pilfering and disrupting production facilities. No less than 400 organisations, of which 50-60 had been consistently active, were currently in the forefront of demanding something from OIL. Many of these demands were beyond the purview of OIL's CSR policy and focus areas. Additionally, being a Public Sector Undertaking (PSU), OIL also faced multiple demands from the government. On February 16, 2019, news arrived that there was yet another blockade in Duliajan, Assam. What should OIL do to address and possibly mitigate operational interruptions?
In July 2013, the chief information officer of the Financial Industry Regulatory Authority (FINRA) was preparing for an upcoming meeting with FINRA’s board of directors. He was building an argument for why the organization should reverse the decision he had advocated just a few months earlier and shift from a model that used on-premises data centres to one that focused on public cloud resources. Some board members were already familiar with the cloud and were using it in their own organizations, whereas others were concerned about taking their most critical data and putting it into the hands of a cloud service provider. This decision would have a profound impact on the technical direction of the regulator moving forward. Choosing to abandon their on-premises resources and shift to the cloud was a fundamental architectural decision that would significantly affect job roles and be difficult to reverse. The chief information officer had to make the case that a cloud-focused approach would meet FINRA’s current needs and serve the organization better in the long term.
Dalian Bio-Chem Co. Ltd. (Bio-Chem) had been deeply involved in the field of industrial fungicides for nearly twenty years and occupied a place in both domestic and overseas markets. Since its establishment in 2003, Bio-Chem had adhered to a strategy of centralization, with industrial fungicides as its main business products. Bio-Chem was successfully listed on the A-share market in China in 2012, and it grew rapidly in the ten years that followed. Although Bio-Chem had become a leader in the field of industrial fungicides, its chairman believed that companies should not be content with the status quo. Some within the company believed Bio-Chem should carry out a diversification strategy because it had sufficient funds to do so; others thought it should carry out an integrated strategy because the downstream industry was very profitable; and others thought it should stick to a centralized strategy because the market demand for industrial fungicides was still very large, and adhering to a centralization strategy meant there would be room for growth. The chairman had to consider the opportunities and challenges of each strategy and determine which direction to take the company.
Aftertaste Foundation (Aftertaste) was an organization that provided livelihood support to women living in the impoverished urban areas of Mumbai, India, who created sustainable handicrafts. Aftertaste was started in 2013 and initially employed three craftswomen. By 2021, the organization had expanded to two locations and had increased the number of craftswomen employed to 40. Aftertaste's business model was focused on creating social impact by generating revenue through the sale of handcrafted items to corporate and retail buyers. For six years, Aftertaste was supported financially by the social impact organization Avanti Foundation. In September 2019, Aftertaste was registered as an independent entity. However, shortly after its transition, in March 2020, the foundation was confronted by the challenges of the COVID-19 pandemic. A nationwide order for temporary lockdowns soon forced Aftertaste to stop all in-person operations. When the country started reopening after pandemic lockdowns, Aftertaste's owner struggled to maintain the financial sustainability of her organization. Surrounded by enduring pandemic uncertainty, she had to decide what strategy to pursue for the future of her organization. How could she overcome her venture's losses and lead Aftertaste on a path of financially sustainable growth?
This note discusses the sources of competitive advantage for firms, including scale economies, network economies, counter positioning, switching costs, branding, cornered resources, and process power. It also introduces the features of sustainable competitive advantage, offers examples, and includes a framework for assessing the sustainability of each source of competitive advantage. This note is taught at Darden in digital marketing and would also be suitable in a module covering competitive marketing strategy.