In early 2019, the executive leadership of Chipotle Mexican Grill, Inc. (Chipotle), gathered to discuss the company's 2018 performance and align the company's capital structure policy and its growth aspirations going forward. Over the previous year, the company had enjoyed a lot of success. Its same-store sales had increased 6.1%, fueled by a 2% rise in traffic, and margins that had risen to nearly 19%, reaching gourmet restaurant levels. Chipotle's mission to deliver "Food with Integrity" resonated with its customers-primarily millennials, they valued quality over price and were constantly on the go with limited time to spare for eating. The company capitalized on healthy eating trends. Its recipes relied on just 53 ingredients that people could both recognize and pronounce and did not include any artificial colors or flavors. Chipotle successfully marketed its brand by utilizing digital channels and social media alongside traditional television events and sponsorships. Yet in the long term, the company still underperformed. Chipotle stock was $431 per share-about half of the $757 per share it had reached in August 2015. The company's roughly 7% margin was a far cry from its historical 18% levels. Only 83 new locations had opened in 2018, considerably fewer than the historical average of around 200 per year. Despite all the accomplishments over the last 12 months, the executive team continued to face pressure to increase the value Chipotle delivered to company shareholders.
Riccardo Cortese and Federico Pinna were the CEOs of Briscola-Pizza Society, a restaurant chain they had founded in 2014 with a clear ambition: create a distinctive international pizza chain that would combine a fast-casual format with the devotion to quality that characterized family-run Italian restaurants. In 2017, Francesco Trapani, the former CEO of luxury jewelry company Bulgari, had taken a majority stake in the chain, which had switched to a format of "affordable luxury." At the end of 2019, Briscola counted six restaurants in the northern regions of Italy and its founders were grappling with a series of questions: Should they consolidate their position in other Italian regions or expand directly abroad? In which countries would their concept work best? Should they change their direct ownership model? If so, what kinds of partnerships, licensing agreements, and franchise models should they use? Finally, what was the right degree of standardization across their restaurants? Allowing some variations in the menu at the restaurant level would be attractive to target specific segments of their clientele, but would this complicate their operations and potentially hinder their growth?
The case examines the focus of an early stage company, and how an unexpected external incidence can threaten or void the business model. It encompasses issues such as defining and pivoting a business model, organizational requirements for a pivot, investor relations, disruptive business models, as well as business conduct in continental Europe. In 2017, Dr. Torben Antretter, a former competitive tennis player and academic researcher, founded RightNow with his two co-founders. RightNow was set out to provide consumers with "Justice-as-a-Service" by purchasing their legal claims that they would not pursue otherwise. Just one year after its inception, the company had closed a €25 million financing to increase its market share and leverage further growth opportunities. Upon closing of this financing round, matters took a sudden and unexpected turn when the National Supreme Court announced a ruling that airlines were no longer required to refund flight tickets. This decision wiped out RightNow's profit margins. Antretter and his co-founders had to decide what they should do with the business. How should the founders approach investors? Should they quit and walk away from their entrepreneurial dream or try to reinvent the business with a different focus? What would be the strategy going forward?
The case examines issues such as cascading problems within the organization, changing founder roles, founder success criteria, as well as company exit consideration. In 2017, Dr. Torben Antretter, a former competitive tennis player and academic researcher, founded RightNow with his two co-founders. RightNow was set out to provide consumers with "Justice-as-a-Service" by purchasing their legal claims that they would not pursue otherwise. Three years after inception and after overcoming numerous consecutive hurdles, the company was entering its next stage of its lifecycle. The selection of an investor type would be instrumental to the next few years of the company and the lives of the founders. With success, considerations around company exit and defining success criteria became inevitable. Different investors types had different investment criteria with regards to target returns, growth ambitions, decision rights, and ownership stakes. Antretter and his co-founders had to decide, jointly as well as individually, what they want to do. Discussions among the founding team showed that they needed to develop an 'exit strategy' in the same way that they had developed a growth strategy. When should they consider an exit and take some chips off the table? Was it more important to become rich or to remain kings of their kingdom?
The We Company (WeWork) rented office spaces for long-term leases, turned them into hip offices, and then offered them for short-term leases. Its charismatic cofounder and CEO Adam Neumann, explosive growth funded by significant cash injections from SoftBank and its USD100bn Vision Fund, and a pre-IPO valuation of USD47bn ensured the company was one of the most talked-about unicorns in August 2019. WeWork's valuation was similar to that of a high-tech stock with high price multiples. From FY 2016 to FY2018, its losses totalled USD3.3bn, outstripping revenue at USD3.1bn. After release of Form S-1 pre-IPO filing documents, numerous financial analysts and the press scrutinized WeWork. In addition to its lower than expected financial performance, some questioned WeWork's business model, its governance model, and its valuation. In the weeks that followed, the IPO was withdrawn, WeWork announced plans to lay off 2,000 staff, Neuman was removed as CEO, and Softbank doubled down on its bet in order to keep the company going. This latest share purchase by Softbank valued the company at USD8bn, compared to USD49bn two months earlier.
&Pizza is a pizza chain that in the spring of 2020 finds its business completely up-ended by the COVID-19 crisis and shut-down. Many companies in the restaurant and hospitality sector responded to the crisis by shutting down their operations and laying off employees. &Pizza's leader took a different approach: as the company pivoted mainly to a delivery model, he realized there would be added strain on his employees, and so he decided to not only avoid lay-offs, but to increase wages and provide other benefits to its Tribe (i.e., the employees).
The General Electric Company's (GE's) iconic Appliances division enjoyed a significant role at the company throughout the 20th century, representing one of the most recognized engines of the GE brand. By the 21st century, GE had changed its focus to technology and infrastructure businesses, and GE Appliances' contribution represented less than 5% of GE's revenue and profit. This case examines GE Appliances' journey through a failed sale/spin process into a decision to invest in new products, renovated factories, and people to run the business better. The focus is the unavoidable interconnection of business strategy and organizational capability, and the three teaching notes included with the case offer exploration from business strategy, new product introduction (NPI), and industrial engineering and supply chain management perspectives. Discussion points also include optimization, making versus buying, human resources, change management, and workforce development.
During the COVID-19 pandemic, Dr. David Ansell, Darlene Hightower, and Ayesho Jaco, leaders of West Side United (WSU), a coalition of Chicago hospitals, community residents, banks, and small businesses conceived in 2016, reviewed progress toward WSU's goal of ending systemic racism, particularly racial disparities in health, longevity, and economic prosperity. WSU was also the focal point for Chicago's Racial Equity Rapid Response team in the coronavirus crisis. The key leaders pondered next steps including renewing commitments from hospital partners and making it a stand-alone non-profit organization.
Georgia State University had developed a reputation for driving student success by nearly doubling its graduation rate for students of all racial, ethnic, and socioeconomic backgrounds. It did so while growing its student body and the proportion of Black/African American, low-income, and first-generation students-groups with historically lower postsecondary graduation rates compared to national averages. Georgia State's Student Success team, led by Tim Renick and Allison Calhoun-Brown, used a data-based approach to deploy micro-grant programs to retain students, implemented predictive analytics to improve student advising, and optimized course sequencing to help students graduate before they exhausted their financial aid. In 2016, they faced a growing "summer melt" problem where nearly 20% of incoming students who committed to attend never actually enrolled at Georgia State-and many never enrolled at any college. At the same time, they wondered how to balance continuing to incrementally improve student success at Georgia State and scaling their efforts to help the many other universities facing similar problems who sought to learn from their experience.
In summer 2020, Stephane Bancel, CEO of biotech firm Moderna, faces several challenges as his company races to develop a vaccine for COVID-19. The case explores how a company builds a digital organization, and leverages artificial intelligence and other digital resources to speed its operations, manage its processes and ensure quality across research, testing and manufacturing. Built from the ground up as such a digital organization, Moderna was able to respond to the challenge of developing a vaccine as soon as the gene sequence for the virus was posted to the Web on January 11, 2020. As the vaccine enters Phase III clinical trials, Bancel considers several issues: How should Bancel and his team balance the demands of developing a vaccine for a virus creating a global pandemic alongside the other important vaccines and therapies in Moderna's pipeline? How should Moderna communicate its goals and vision to investors in this unprecedented time? Should Moderna be concerned it will be pegged as "a COVID-19 company?"
This is a supplement to the Student Success at Georgia State University (A) case. The (B) case includes the results of a randomized control trial that Georgia State conducted to test education technology start-up AdmitHub's chatbot solution as a strategy for improving "summer melt" (i.e., applicants confirming that they planned to enroll but then not enrolling).
This technical note discusses competitive dynamics: the various and evolving actions and reactions of two firms engaged in a rivalrous relationship. By allowing us to analyze interactions at this dyadic level, the competitive dynamics perspective provides valuable insights into a firm's behavior in a variety of competitive situations and contexts.
On November 3, 2016, Jacobs Douwe Egberts (JDE) launched a bid for Singapore-based food and beverage company Super Group Ltd. (Super). JDE had already acquired 60 per cent of the shares but needed another 30 per cent in order to delist the company and take it private. The minority shareholders of Super faced the task of evaluating whether the offer from JDE was reasonable and whether they should tender or hold on to their shares. Their decisions would depend on the valuation of Super's shares, based on financial and other relevant and available market information.
Companies that sell shippable goods have grappled with spikes in demand since COVID-19 hit. Robots seem like an obvious fix, but putting them into production is a complex undertaking. Still, we can learn from the rare successes: Plug-and-play systems offer far greater returns than large-scale, custom installations. They can be rapidly set up to meet surging demand and rapidly reconfigured when needs change.
Prashant Parameswaran was confounded by the behavior of consumers. On the one hand, there was a growing awareness on health foods and on the other hand, the diffusion of healthy snacks was not as fast as the indulgent snacks. The consumer mindscape, with respect to healthy snacking was cluttered with healthy cookies, bars, fruit juices, low-diet offerings, baked savories, milk additives and yoghurts (to name a few categories). Parameswaran had also found, that several of the healthy snacks had a sizable percentage of sugar and saturated fat that may make the claims on health benefits questionable. In addition to the claimed health benefits, there was glitz and glamor associated with the ads of most of these brands that featured attractive ultra-thin models, celebrities, and models. Such models used by the brand, portrayed unattainable fitness and looks that were stunningly aspirational in nature. Were consumers really interested in healthy snacking or was it just a passing fad? How were these offerings associated with healthy snacking judged by consumers? Do glamorous ads change the focus of the consumers, who may otherwise be inclined to prefer health to indulgence, when it comes to snacking? Were consumers aware of the labeling used by brands? Were there differences between consumer segments that were deeply interested, in healthy snacking and other segments that were interested in health but were unable to change their behavior? How do consumers consider different unrelated offerings that promise health? How should a new offering be launched? The case is about the usage of attitudinal aspects to understand the attitude of consumers towards the snacking domain and their impact on branding in the Indian context.