This case examines the fundamental transformation challenges facing Volkswagen Group as it navigates the intersection of deglobalization and industry disruption. Through chief executive officer Oliver Blume’s perspective, we see how traditionally successful global strategies can become vulnerable when the underlying assumptions of globalization are challenged. The automotive industry was transforming due to technological changes, new consumer preferences, and environmental regulations, while the rise of electric vehicles (EVs), particularly from Chinese competitors, reshaped the market. Geopolitics complicated this transition, including the US–China and European Union–Russia decoupling tensions and the Ukraine War, which disrupted supply chains.
<div style="font-size: 0.95em; line-height: 1.4;"><p align="justify">The Climate Change Conference is a five-party, multi-issue, in-class negotiation simulation that requires no software or other digital means. The exercise develops an understanding of the complex landscape of global climate change mitigation and adaptation measures across various constituencies. At the core of the simulation, students take the roles of representatives from Developed Countries, Developing Countries, the Organization of the Petroleum Exporting Countries (OPEC), Fossil Fuel Companies, and Electric Vehicle (EV) Firms, with each stakeholder having distinct priorities and interests. In a highly interactive small- and large-group negotiation process, participants navigate through three critical issues: (1) securing global net-zero emissions by mid-century by keeping the goal of a maximum 1.5℃ average global temperature rise within reach through (a) meeting emissions reduction targets, (b) coal phase-out, (c) methane reduction, and (d) halting deforestation; (2) protecting communities and natural habitats; and (3) mobilizing climate finance.
The Case describes how Penny Wise, the newly appointed managing director of 3M Canada, drew on her personal leadership style, experience and character to keep the Canadian organization strategically relevant through a significant restructuring and the COVID-19 pandemic.
In early June 2020, the owner of BYKlyn, an exercise bike fitness studio in New York, was considering her response to the business disruption that the outbreak of the COVID-19 pandemic had caused the health and fitness industry. BYKlyn had recorded consistent annual growth since its launch in 2014. The fitness studio owner had been confirming her business expansion plans by moving into a larger space in the city when the pandemic struck in early 2019. Consequently, she was forced to shut down the business in mid-March 2019, in compliance with COVID-19 regulations. After a two-month lockdown, the New York state government announced phased-in reopening plans, and the fitness studio owner was considering three options for restarting her business: reopen at the existing premises; move to a virtual environment with a new business model; or set up an outdoor fitness club, which would offer fitness club members a completely new workout format.
In April 2020, the interim president of the 3D printing and digital manufacturing business of HP Inc. was weighing his options in resolving three managerial dilemmas: (1) How should HP promote technology awareness among industrial customers? (2) How should HP scale up its production of 3D printers? (3) How could HP promote shorter technology adoption cycles among industrial customers?
In March 2020, the founder of an auto mechanic shop in a Toronto suburb was contemplating a five-year growth strategy. Given the disruptions in both the auto mechanic sector and the automotive industry at large, she wondered whether her plan was realistic. Should the founder execute the growth strategy according to plan or change the plan and lead the business in a completely different direction?
In May 2017, the recently appointed chief executive officer of Sobeys, the second-largest grocer in Canada, was considering the company’s financial difficulties. He was tasked with saving Sobeys from near insolvency and planning strategically for the company’s core grocery business. Sobeys had posted a loss of CA$2.1 billion for the fiscal year ending May 2016, compared to a profit of $419 million just a year earlier, partially due to a high-profile acquisition that had gone sour. In addition, a ratings agency had downgraded Sobeys’s debt to junk level, citing underperformance and lost market share as the reasons. The new chief executive officer devised an interim three-year growth plan called Project Sunrise, which had two main objectives: quickly relieve Sobeys of its troubled financial situation, and prepare for the long-term industry disruption that was becoming prevalent, both locally and globally.
When a company is looking to expand, it is natural for the managers involved—including the CEO—to have location preferences. Ivey Professors Andreas Schotter and Paul Beamish investigated how location hassles influence foreign investment decisions and sales. They found that these hassles significantly affected individuals or small groups of employees tasked with assessing potential opportunities. Firms must overcome managerial biases and identify champions willing to tackle location hassles in difficult markets that have the potential to generate a high return on investment—especially if the hassle factors of those markets are keeping the competition away. Many characteristics that are perceived hassles for managers of firms from traditional industrialized locations like Europe, the United States, Canada, and Japan are not seen as such by managers from rapidly internationalizing emerging-market firms. The authors recommend three actions to take to utilize and build on the hassle factor: 1) raise awareness of managerial biases and on-the-ground location factors, 2) raise global strategic capacity, and 3) leverage a more diverse talent pool. Firms should hire for a global mindset and not just for technical job competencies or single-location knowledge. They should also recognize that some otherwise high-performing managers may be ill-suited for roles involving high-hassle locations.
In 2018, Volkswagen Group’s newly appointed chief executive officer renewed the company’s commitment to Strategy 2025, an ongoing plan intended to radically transform the German automaker. Volkswagen was being challenged by tectonic changes in the automotive industry, including the phasing out of the long-standing internal combustion engine, ongoing digitization, the entry of new competition from technology companies, the introduction of electric vehicles, and the launch of ride-sharing applications. Strategy 2025 was designed to reshuffle the company’s existing formal and informal structures and restructure the automaker into a nimble, agile, and innovative corporation ready to face the realities of mobility in the digital age. The new chief executive officer faced huge expectations concerning the effectiveness and sustainability of Strategy 2025. Was the automaker doing enough to transform into a competitive mobility company?
Shanghai Toex Trading Co., Ltd. (TOEX) was a Chinese pet grooming equipment maker. In 2014, after years of operating internationally solely through third-party distribution channels, TOEX opened a new sales and logistics centre in Dallas, Texas to boost TOEX’s business in the United States. The new centre was also meant to be a model for future expansions to other countries. With more than a decade of industry experience, TOEX's founder believed that succeeding in the United States was critically important for the company’s future. However, he was not sure how to execute a successful international growth strategy and how to best leverage the new U.S. logistics centre.
On January 4, 2016, the co-founders of Forked River Brewing Company (Forked River), a small brewery in London, Ontario, revisited the company’s original business plan from 2012. Over the course of only four years, the founders went from home brewing enthusiasts to owners of a striving, award-winning craft brewery. Forked River beers were now offered in pubs, restaurants, and retail stores across the province of Ontario. In the past year alone, Forked River had expanded its production capacity by 50 per cent, hired an additional full-time brewmaster, and added a retail outlet to the brewing facility. However, business had recently become more complicated due to changes to Ontario retail liquor laws, increasing non-brewing administrative work, and looming decisions about the product portfolio and distribution strategy. Now, the three founders wondered whether Forked River was still on the right track or if a new strategic plan was needed to ensure its long-term success in the fast-changing craft beer industry.
Following the surprise Brexit vote, business leaders need to stop worrying about the occasional Black Swan and understand that dealing with unexpected world-changing events is the new normal. Despite some opinions that Britain’s exit from the European Union could be good for Canadian business, nobody knows yet whether the Brexit vote will be good over the long term for Canadian exports, not to mention the loonie. Heightened uncertainty is where the lessons from the Brexit vote can be found for both the public and private sectors. For corporate leaders, the lessons of Brexit are about planning for unexpected events—a prevailing characteristic of the “new normal” caused by more robust mega-trends created by social, economic and political forces. Brexit should drive business leaders to review existing strategy in this much larger context. Winning firms will pay extra attention to agility when planning overall business models, including a portfolio approach to asset configurations and the particular locations of value creation and value extraction. The rise of socio-economic and political mega-trends will trigger the growth of “no-equity” corporations—businesses that are extremely agile and capable in managing across existing and emerging networks and boundaries, thanks to reduced reliance on equity-based business models. Instead of developing contingencies, leading firms will disrupt themselves to come up with new business models that allow them to stay ahead of the competition.
On December 28, 2014, contact with Indonesia AirAsia flight QZ8501, carrying 162 people, was lost after it left Surabaya, Indonesia bound for Singapore. All passengers were believed dead. Until this horrific incident, AirAsia and its various affiliated airlines, which included AirAsia X and Indonesia AirAsia, along with several other airlines organized in joint ventures throughout Southeast Asia, had recorded rising profits, rapid expansion and, until this incident, a solid safety record. The company was buoyed by a savvy marketing strategy and the leadership of its flamboyant founder. He was concerned now about how this tragedy would affect AirAsia’s business in the short and long term. Should he delay or even stop some of his aggressive growth initiatives? Supplement to 9B12M013.
Set in 2013, this case describes the expansion of car2go, a popular car sharing service developed by Daimler AG. The case addresses the changing commuting preferences among urban residents, the evolution of urban transportation and new service developments in the automotive products market. Unlike traditional models of car sharing or renting, which required advance bookings, hourly billing and returns to the originating location, car2go’s business model offered minute-based rates and a free-floating selection of cars that allowed customers to pick up or leave vehicles wherever they liked.
International Services Group (ISG) serves global and local clients with accounting solutions. ISG has grown substantially over the last few decades, thanks to a very pro-active management culture at the local subsidiary level. While this growth has been good, it has also introduced certain inefficiencies. ISG’s chief executive officer now wants to change the organization from a locally responsive structure to a globally integrated one by introducing a global accounting software program. The case describes how the implementation meeting, which was conducted in a video-conferencing format, failed. The case deals with boundary-spanning leadership issues across functional, cultural, hierarchical and geographic domains, and it highlights the managerial side of change.
In January 2013, the CEO of the Russian automotive company Gorky Automobile Plant (GAZ) was pleased with the results of the recently implemented changes to the company’s product-market strategy and the related organizational processes. He believed that this series of radical changes could help GAZ further cement its domestic market leadership position and at the same time allow it to complete a dramatic turnaround that had resulted in the company's most profitable year ever. He was now planning the launch of the third generation all-new Gazelle Next light transport truck, which he believed would take the company to a new level of competitiveness and revenue growth in Russia, and even more importantly, in other emerging markets.
By 2007, AirAsia had become one of the most successful budget airlines in the world. Having dominated Southeast Asia and entered China and India, AirAsia was poised to solidify its place as a top budget airline and one of the most consistently profitable globally. But company founder Tony Fernandes had bigger plans. From the outset in 2001, Fernandes had intended to offer long-haul service, competing against the largest and most established airlines in the world. However, his advisors had urged him to focus on regional, short- to medium-distance service. With many previous successes, Fernandes was once again ready to attempt long-haul service. Despite warnings from industry insiders, Fernandes pushed forward with the expansion. <br><br>Hiring 36-year-old Azran Osman-Rani as the CEO for the new long-haul venture, nicknamed X, was a critical step in this process. By early 2010, X had received its eleventh aircraft and was flying to 15 destinations on three continents. However, over time the substantial differences between long-haul and short-haul operating requirements became more apparent. Consequently, the management decided to formally separate X from AirAsia. This separation, and the inherent challenges for X and its recently appointed head of commercial operations, included: (1) how best to leverage the extensive network of the regional sister company AirAsia in selecting new and profitable destinations for X, (2) how to increase revenues without raising ticket prices, (3) how best to globally position the airline’s brand in non-Asian markets, (4) how to shift his marketing team’s mentality away from a start-up mindset, and (5) how to prepare for a global initial public offering within the next year. See supplement 9B15M018.
Carrefour, the second largest retailer in the world, had just announced that it would open its first Green Store in Beijing before the 2008 Olympic Games. David Monaco, asset and construction director of Carrefour China, had little experience with green building, and was struggling with how to translate that announcement into specifications for store design and operations. Monaco has to evaluate the situation carefully both from ecological and economic perspectives. In addition, he must take the regulatory and infrastructure situation in China into account, where no official green building standard exists and only few suppliers of energy saving equipment operate. He had already collected energy and cost data from several suppliers, and wondered how this could be used to decide among environmental technology options. Given that at least 150 additional company stores were scheduled for opening or renovation during the next three years in China, the project would have long term implications for Carrefour.
The owner of a small scuba diving operation in the Bahamas is reassessing his strategic direction in the light of declining revenues. Among the changes being considered are shark diving, family diving, exit, and shifting operations to another Caribbean location. These options are not easily combined, nor are they subtle. The case is intended to provide a work-out on the relationship between strategy, organization and performance, and how changes in strategy will dramatically affect the organization. The case also highlights the importance of understanding demographic changes as part of an environmental analysis. (A nine-minute video can be purchased with this case, video 7B08M041.)
The new chief executive officer (CEO) of ING Insurance Asia/Pacific wants to improve the regional operation of the company. ING Group was a global financial services company of Dutch origin with more than 150 years of experience. As part of ING International, ING Insurance Asia/Pacific was responsible for life insurance and asset/wealth management activities throughout the region. The company was doing well, but the new CEO believed that there were still important strategic and operational improvements possible. This case can be used to discuss the local versus regional or global management issue and will yield best results if the class has already been introduced to different strategic and organizational alternatives in the international business context.