Case B presents the choices the company made and the execution issues it confronted. It shows that the CEO put online revenue growth at the center of the strategy. He also used "test and learn" budgeting process to avoid investing too much in stores. The case enables participants to see how the CEO reorganized parts of the organization to drive strategy execution. This case clearly shows how strategic decisions are crafted, executed and modified. It demonstrates the execution challenges a firm might face when transforming in a competitive marketplace and shows the dramatic transformation and improvement in the firm's financials. It also shows the rare success of a retail digital transformation.
This case details the struggles of a traditional retailer (Matas) wrestling with the changing retail landscape. The Matas management team recognizes that the company's offline retail business is under serious pressure. Top-line growth has flattened, and bottom-line profitability has declined. The online market is expanding rapidly but is a tiny portion of the business. The team is aware that the company needs to grow the online business. However, this shift will be financially difficult because the margins for the online business are near zero and it represents less than 3% of total business. As the market leaders, whatever Matas management chooses to do will inevitably affect its core "in-store" business. The company needs the cashflow from the in-store business to pay dividends to investors. In this situation, the new CEO sets out three priorities (i) reignite store growth, (ii) build new growth paths, and (iii) grow online. Investors are unhappy with this direction and the stock has sunk to an all-time low. The question is whether this new strategy will enable Matas to survive or transform?
The Indian Railways (IR), the country's largest transporter, is considering a plan to fully electrify its network. The move will cut its fuel expenditure by a whopping 50%. However, the project will require a capital investment of INR 350 billion (approximately USD 4.9 billion1). The investment is beyond the normal capital that is available for annual investment, as the IR is not run with a profit mindset and has limited retained earnings. Therefore, the IR has to consider potential financing options. The proposed investment also requires the IR management to overcome numerous operational changes in areas such a rolling stock, crew, usage of fueling depots, training, disposal of usable diesel locomotives, etc. The electric-based platform appears to be where the industry is headed worldwide, and potential future cost savings may also be possible if the IR moves to this platform. The project would make India the first country in Asia to move to complete electrification, establishing it as a pioneer in the rail industry and boosting national pride. It would reduce the country's reliance on imported fuels and help with the nation's balance of payments, thereby advancing its economic agenda. A third non-financial but national objective of the project would be a significant reduction in carbon emissions. The board of the IR is tasked with examining various aspects of the proposed electrification project and deciding whether or not to approve the idea. The case requires students to make a decision as to whether or not the savings are worth the investment and resource allocation.