In early 2022, new CEO Jon Moeller had to decide how P&G should navigate the Chinese market, a market that had completely transformed since P&G entered in the 1980s. Rising affluence, changing consumer behavior, changing market segmentation, increasing competition, and the rise of digital channels and marketing had created a dynamic and challenging environment. As a result, P&G's traditional leadership position in many of its product areas in China was under increasing threat. In addition, the US market, which had always been P&G's main focus, was in many respects no longer the touchstone that it once was, particularly in e-commerce, digital marketing, and serving evolving customer tastes in China. P&G had been initially slow to recognise the changes in China, but was now responding to the new challenges and opportunities. The question was whether it would or could move far and fast enough. This case can be used on a standalone basis, but is best used following the "Procter and Gamble in China" case, ACRC reference 12/524C, which focuses on the 1980s through 2010.
The case is set in 2011. P&G has announced that it wishes to serve an additional billion customers globally within the next five years. To do so, it will have to expand its activities in China. P&G is widely considered successful in China, and it is the leader in several product categories in a rapidly growing China market, but Chinese people still buy only a fraction of the value of P&G products as in the US or the rest of the world. The case allows for a detailed discussion of how P&G has built up its business system in China, the challenges it faces in expanding its position in China, and its strategy to focus more on emerging markets around the world. The case can be used as a comprehensive country strategy case.
In June 1997, Thailand's currency became the object of intense speculation as the country's balance of payments was in tatters. Amidst the government's efforts to turn things around, finance minister Dr Amnuay Viravan resigned over policy disagreements and the Thai stock market plunged as investors feared a currency devaluation. As Amnuay's successor, Thanong, tried to pick up the pieces, he uncovered an awful secret: Thailand's central bank had virtually no liquid foreign exchange reserves left to defend its exchange rate. What action should he take? And, more importantly, what action could he take?
Incorporated in 1978 as a joint venture between Biocon Biochemicals Ltd, Ireland and a company led by Ms. Kiran Mazumdar-Shaw, a young Indian entrepreneur, Biocon had long depended on revenues from the production of enzymes and generic drugs. However, competitive pressure from within the country as well as from other developing economies like China was quickly eroding price levels in these lines of business. Moreover, the 2005 adoption of WTO TRIPS in India meant that the generics-based strategy that many of India's pharma and biotech companies had followed might not be viable anymore. To continue on its current growth path, Biocon needed to consider moving from being a producer of biogenerics to becoming a global biopharmaceutical innovator. Concerned with strategy in an emerging industry, sheds light on the effects of clusters on strategy, as well as the effects of national and supranational factors on strategy. Leadership issues and low-cost strategies for diversification are also addressed.
The Japanese banking industry entered a major crisis in the 1990s, as massive nonperforming loans threatened the survival of even the largest banks. This was a far cry from Japan's stellar growth from 1950 and the heady days of spiraling property and stock market prices in the 1980s. Traces the development of the Japanese economy from the end of the Second World War, the role of international trade flows and finance and foreign direct investment as well as the part played by the Japanese banking sector in those developments. By the year 2000, the government had spent trillions of yen in rescue packages, including the nationalization of two of the largest banks, and was attempting to institute banking sector reforms to resolve the crisis.
Chinese companies have recently acquired or attempted to acquire famous firms such as IBM, Unocal, and Maytag in western markets, raising strong interest and sometimes resistance. What are the motivations behind these overseas investments? Will Chinese companies become dominant global players? What types of foreign investments will make sense and what modes of foreign entry should they use? What obstacles will they face?
Explores the interactions between China and its neighbors, and considers how those interactions will change as China emerges on the world economic stage in the coming years.
China's huge population and potential market had attracted foreign companies since its economy began opening in the late 1970s. Although the profit position of some foreign companies improved by 2003, China remained a frustrating and unprofitable market for many. Highlights four major multinationals that were successful in the Chinese market. Allows for a discussion on what it takes to succeed in the Chinese market, how this compares to what it takes to succeed elsewhere, and the challenges and opportunities associated with leadership positions in emerging economies.
China's economic rise became one of the most important stories in the world economy once the Chinese economy began to open to the rest of the world in 1979. However, this rise was not evenly distributed across all of China's regions. By 2003, some regions had emerged as clear leaders in the economic development process, while others lagged far behind. A variety of forces also prevented the People's Republic of China from being a single national market of 1.3 billion people, and the national economy was perhaps better described as a set of coupled regional markets. Politically, China was not a monolith either. Competition between regions and between individual jurisdictions had been played out in the corridors of power in Beijing as well as in the regions themselves, as locations vied for investment and positions in the market. Understanding China's regional economies became virtually a prerequisite for success for economic policy and firms' strategies in China.
Financial crises could happen anywhere, although emerging markets were more seriously afflicted in recent times. Debilitating and massive shocks to bank liquidity, payments systems, and solvency were obvious characteristics of financial crises, as was panic, which was often precipitated by a sudden and dramatic loss of depositor and investor confidence. Companies operating in a region where a financial crisis had broken out could undergo corporate disasters as a result. Provides a general description of financial crises and macroeconomic warning signs of them. Also describes three major financial crises in the late 1990s and early 2000s, how the business sectors of the regions were affected, and how some companies managed to ride out the crises.
The import-export trading industry had long been one of the leading industries in Hong Kong. The sector, with about 500,000 people working for 100,000 companies, accounted for roughly 20% of Hong Kong's employment and GDP in 2002. However, in the early 2000s, the industry was under challenge as there were signs that the Pearl River Delta and Yangtze River Delta regions of mainland China might eventually threaten Hong Kong's position as a major trading center. Could Hong Kong's multitude of small trading companies continue to thrive? What were their major competitive advantages? And how substantial would these advantages be? Serves as an overview of an important industry sector in Hong Kong that is dominated by SMEs and presents important strategic issues at a time of economic changes.
From March to May 2003, Hong Kong's tourism industry underwent a serious downturn during the outbreak of SARS in the territory, which caused 1,755 cases in Hong Kong before July. There was practically no inbound tourism between April 2 and May 23, during which the World Health Organization advised the public to consider postponing all but essential travel to Hong Kong. Then, in a dramatic twist, the industry received a significant boost in late July, when residents of four nearby mainland Chinese cities were allowed to apply to visit Hong Kong on an individual basis as part of the mainland and Hong Kong Closer Economic Partnership Arrangement. Formerly, mainland Chinese tourists could visit Hong Kong only with tour groups. By September, tourists from the major cities of Beijing, Shanghai, Guangzhou, and Shenzhen could also visit Hong Kong on an individual basis. Mainland tourists literally began to flood in as a result, bringing up total visitor arrival figures to a level that even surpassed pre-SARS statistics. Greater easing of travel restrictions was expected in the first half of 2004. How could Hong Kong's SMEs, much battered by the economic woes in recent years that were capped by the SARS attack, capitalize on the new opportunities offered by the liberalization of mainland travel?
In recent years, increasing attention has been paid to buyer-supplier relationships and supply chain management in general. Views of buyer-supplier relationships have evolved from the old school of the 1980s, where buyers and suppliers were viewed as part of a zero-sum game, to the more collaborationist outlook of the 1990s, which claimed that buyers and suppliers could cooperate to the benefit of both, to the more network-oriented view of the 2000s, where buyers and suppliers are parts of organic business ecosystems. One interesting fact is that, empirically, buyer-supplier relationships exist in surprisingly multifarious forms in different geographic regions and business sectors. There is no one dominant mode. This case provides an outline of eight different real-life examples to illustrate a broad range of buyer-supplier relationships.
In the Harvard Business Review article "The Core Competence of the Corporation," authors C. K. Prahalad and Gary Hamel put forth the notion of core competence with a comparison of NEC's focus on core competence and GTE's focus on businesses rather than competencies. The article went on to become the best-selling HBR reprint in history and ushered in a wave of consulting and academic work that said that core competence was the key to company performance. The authors predicted a bright future for NEC and other "competence-based" companies and potential obsolescence for GTE and other "business-based" companies. The present case juxtaposes quotes from the article with a discussion of the evolution of NEC and GTE through 1999. It includes performance data on the two companies that allows for a critical assessment (and counterintuitive evaluation) of the core competence idea for the 10 years preceding the publication of the article and the 10 years following the publication.
China's economic reform program has had many important impacts on business competition in the nation. In many industries, foreign competitors entered, making "strategic investments" that they believed would lose money for a significant period of time and then turn profitable. At the same time, many Chinese companies adapted to the new environment much quicker than many observers expected. Meanwhile, however, a regulatory and administrative system that created substantial uncertainty, links between the state and companies, bank lending that kept money-losing firms in business, and a rapidly changing and reforming economy made business competition in China different from business competition in many other places. This case provides vignettes of four industry sectors in China in which competition was already fierce on the eve of China's WTO accession, including beer, personal computers, steel, and television sets. The class discussion focuses on the nature of competition in the industries and the likely impact of full accession into the WTO on competition. Allows for a discussion of the nature of uncertainty in business and for the development of tools to generate scenarios about future competition in uncertain situations.
On the morning of September 11, 2001, four U.S. passenger planes were hijacked during transcontinental domestic flights. Two of them were crashed into the twin towers of New York's World Trade Center, leading to the collapse of both skyscrapers. Another one hit the Pentagon, the headquarters of the U.S. Department of Defense near Washington, D.C. The fourth hijacked plane crashed in western Pennsylvania after passengers attempted to take control back from the hijackers. The death toll from the unprecedented attacks was estimated at around 3,000. In addition to the human, political, and military impacts, the events of September 11 also would have far-reaching economic impacts. One of the industries most affected was the airline industry, which was already suffering before the attacks. Some airlines closed, some saw massive layoffs, and all were faced with substantially lower profits or higher losses. As the year 2002 began, managers throughout the airline industry wondered which effects would be permanent and which would be transitory. They also wondered how they and their airlines should deal with the fallout from the attacks and the other forces that already had been reshaping the airline industry. The case gives an overview of the global airline industry before September 11, showing it was a tough industry with not a great deal of profits even before the disaster. It then highlights the impact of the events of September 11 on the airline industry.
In August 2001, Credit Suisse First Boston (CSFB), a major international investment bank, was removed from the foreign underwriting team that would handle a pending share offering for China Unicom Group Ltd., the second largest telecommunications company in the Chinese Mainland. Only two months earlier, CSFB was designated to deal with the U.S. portion of that offering. However, after the bank hosted overseas investment "road shows" attended by senior government officials from Taiwan (including the finance minister), it was officially dropped from the China Unicom underwriter list. The incident provoked criticism from governments in the United States and Taiwan and widespread activity in investment banking circles as several other banks dropped plans to host road shows for Taiwan.
In July 2001, Acer, Taiwan's best-known company, was in the midst of an ambitious reorganization. The goal was to reverse flagging sales in Acer's branded computer and peripherals businesses and to address the concerns of major clients of its contract manufacturing business. The reorganization would involve splitting the company into three parts, massive layoffs, a shift in geographic focus, and a complete change in business philosophy. Acer's chairman and cofounder Stan Shih had personally taken charge of the reorganization, signaling the seriousness of Acer's position and his commitment. However, questions remained as to whether the reorganization would be effective in meeting Acer's challenges and turning the company's fortunes around. This case can be used to teach strategy development in volatile environments, the challenges of creating a successful brand, and the links between company strategy and location advantages and disadvantages.
In January 1998, Peregrine Investments Holdings Ltd., once billed as "Asia's only indigenous investment bank," was forced into liquidation after the revelation of huge losses in its fixed-income business and the withdrawal of potential investors from Europe and the United States. Peregrine became the highest profile corporate failure in the Asian financial crisis to date. A firm that seemed to be on top of its world in early 1997 had collapsed under a pile of bad debts less than a year later. Peregrine's demise raised questions about how the firm might have avoided the debacle. This case can be used to teach corporate governance and strategy development in volatile environments.