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The Oreo in China: Time to Get it Right or to Get Out
In late 2005 As Shawn Warren the head of biscuits at Kraft for Asia Pacific, surveys the China market for Oreos he knew he had to make changes, and fast. The company's flagship brand was falling far short of expectations in the world's most populous country. This meant that the turnaround had to be quick to avoid the complete disaster of pulling the product from the shelves altogether. Oreos were first launched in China in 1996, yet sales had been flat since then while the rest of China had been setting record growth in the biscuit industry. The Oreo case illustrates the dilemma faced by a successful multinational brand when entering an emerging market, namely China. It covers the complexity of dealing not only with differing consumer tastes, but also the challenges of local competition and distribution systems. The case provides a rich historical account of Oreo's entry into China and the problems facing Kraft and its management as it strives to reach its full potential in a large and fast-growing emerging market. -
Philips-Visicu
Would the advent of global payment models and ACOs create sufficient demand for a telemedicine offering covering the care continuum, from hospitals to the home? This was the decision facing Royal Philips Electronics (Philips), the Netherlands-based producer of lighting, consumer electronics, and health care products, in 2012. Philips already offered several remote monitoring systems for hospitals, including the eICU, which it obtained through the 1998 acquisition of Visicu. In the eICU model, patients in hospital ICUs were monitored using bedside devices, which transmitted patient data to a remote station from which clinicians monitored and directed care as needed. The model aimed to improve care quality by enabling early interventions and reducing adverse events, and to cut costs by allowing clinicians to care for a larger number of patients. Building on this and other offerings in its portfolio, including numerous home care devices, Philips could extend this model to create an integrated remote monitoring offering managed through a centralized clinician-staffed station. In doing so, it could gain a deep and early foothold with ACOs and position itself as a leader in telemedicine-enabled care. However, U.S. telemedicine adoption to date was slow, in part due to insufficient cost-effectiveness evidence, and ACOs-the likely target customer-remained underdeveloped. Philips would also contend with a complex selling process and numerous operational challenges. Was it too early to invest? And, if not, who were the ideal ACO beta sites? -
Digital Microscopy at Carl Zeiss: Managing Disruption
Ulrich Simon, the head of the Microscopy business group at Carl Zeiss AG knew that his unit was facing a disruptive threat, so he chartered a special team to tackle the industrial segment. Given a high degree of autonomy, the project team developed an understanding of the marketplace challenge and proceeded to develop and execute on a new business plan. Simon gave the team ample freedom to develop new processes and priorities appropriate to the market segment needs, but he couldn't help but wonder whether it would continue as a stand-alone unit or he would need to reintegrate it into the mainline business. He also was nervous about the plan itself. The team had established timelines and milestones, but now they had to execute and deliver thjeir first product next year. -
Industrial Metrology: Getting In-Line? (B)
Rainer Ohnheiser, the President of Carl Zeiss's Business Group Industrial Metrology (IMT), was focused on the threat that in-line metrology posed to Carl Zeiss IMT's core business. Historically, coordinate measurement machines (CMMs) that employed tactile measurement had fueled great market success for the division, but alternative non-contact measurement methods that employed optical or x-ray technologies were rapidly gaining ground in the market. This case follows the progress that the IMT division has made since the (A) case, and examines the challenges that lie ahead. -
The Fall of Circuit City Stores, Inc.
On January 16, 2009, after a dismal holiday season, Circuit City was forced into liquidation. Unable to meet creditors' demands, and with no acquirer in sight, Circuit City began the process of liquidating its remaining 567 U.S. stores. Circuit City had been the leader in consumer electronics retailing for nearly twenty years when its profits peaked in 2000. What led to its dramatic decline? Why did three CEOs fail to turn it around? Were these problems present before the 2000 peak? -
San Leon Energy: Hydraulic Fracturing in Poland
This case explores how to manage the political risks of using a controversial energy extraction technology in the European Union. San Leon Energy, an Irish energy firm, was committed to developing large unconventional shale gas reserves in Poland. To reach these reserves, San Leon needed to use a technique called hydraulic fracturing ("fracking"). Pioneered in the United States during the early 2000s, fracking involved pumping a mixture of water, sand, and chemicals into a reservoir at high pressure to crack shale formations, releasing gas to flow up the well. The natural gas produced by this process provided a substantially cleaner energy alternative to coal. Additionally, since large, previously inaccessible shale gas reserves were located in the United States, Canada, China, and parts of Europe, fracking had the potential to revolutionize the geopolitics of the energy industry. However, American and European environmental groups grew concerned that fracking could contaminate local drinking water, generate air pollution, cause minor earthquakes, and crowd out investment in renewable energy alternatives. The Polish government supported fracking as a way to dramatically bolster the country's domestic gas production and reduce its energy dependence on Russia. Yet in 2011 and 2012, environmental protests worldwide grew, causing several countries, including Bulgaria, France, Ireland, Romania, and parts of Germany, Switzerland, and the United Kingdom to issue temporary fracking bans. Since San Leon Energy's management called Poland "the heartbeat of our company," the company faced the challenging tasks of mitigating environmentalists' concerns and preventing a Polish or EU-wide fracking ban. -
Ringier - Building a Digital-Age Media Company
Overview of the strategic re-orientation and diversification of Ringier a Swiss based media company as they confront the challenges of staying competitive and profitable in the new and increasingly digital media landscape. -
Disney Crisis Exercise
The Disney Crisis Exercise is not revealed here because it is entirely an in-class experience; students should not have access to any details prior to the exercise. Complete information is available to instructors in the teaching note. In this real-time exercise, student teams will advise Disney how to respond to a crisis precipitated by vocal and well-organized influence groups that threaten its brand as part of their advocacy on behalf of social causes. The crisis occurs against a backdrop of dynamic industry and company changes, many of which have important consequences for Disney. -
Global product development strategy at Bosch: Selecting a development site for the new low-cost ABS platform
The case is set in February 2008. Stefan Tammler, head of the chassis systems control division (CC) of Robert Bosch GmbH (Bosch), has to make a decision about the location for the development of the new anti-lock braking system (ABS) for the low-price vehicle (LPV) segment. The case begins with a short introduction outlining the situation. It gives a detailed background on Bosch, especially the chassis systems control division. The main part of the case focuses on the global product development strategy, highlighting especially the two development sites in Suzhou, China, and Yokohama, Japan. Furthermore, the Chinese car market is described in detail, with special emphasis on the LPV segment. -
Videogames: Clouds on the Horizon?
Since the creation of the first videogame systems in the 1970s, the videogame industry has undergone numerous transformations as new technologies and market entrants fundamentally changed the gaming experience of customers. In the early 21st century, customers began accessing games without the use of a physical gaming console, either through their mobile devices, or increasingly, through the "cloud" where customers could play videogames through specially enabled devices without the need for a physical game console or game disk. How might the cloud impact the dynamics of the industry? -
Shanghai Pharmaceuticals
Shanghai Pharmaceuticals (SPH), a vertically integrated Chinese pharmaceutical conglomerate, was considering its strategic options in the context of a rapidly evolving industry, policy, and economic environment. The company-essentially a collection of subsidiaries operating under a unified management structure-was formed through the 2009 merger of several state-owned enterprises, part of a broad policy effort in China to streamline state assets, consolidate the fragmented pharmaceutical sector, and enhance the global competitiveness of domestic firms. As it competed with other large domestic firms to become one of the few national champions that the government hoped to create, SPH was also considering an acquisition in the U.S. or Europe. This case allows students to consider the broad trends sweeping China's pharmaceutical industry and health care sector and assess future opportunities there for domestic and foreign businesses. -
Necessary Illusions and Dangerous Delusions
New entrepreneurs are in a tough spot: sixty-five per cent of seed-round startups in North America never make it to the next level of funding, and just 12 per cent end up successfully delivering a product or service. Why even try? "Because my idea is better than all the others, and the numbers don't apply to me." We all have such 'necessary illusions' in our minds, says the author. Dangerous delusions, on the other hand, are just that. The question is, how to distinguish between necessary illusions and dangerous delusions? He argues that the answer is to become an experimentalist about one's own life and business, which forces you to take an outsider's view of it. -
Beyond Great Ideas: A Framework for Scaling Local Innovations
Frugal innovation' is a new style of innovation that is popular in India and other countries in the global south, where citizens face global challenges such as poverty and climate change with limited resources. The solutions it puts forth must be low-cost, robust and easy to use, and have the potential to be targeted at large populations. However, solutions tend to be developed and used locally, and scaling local innovations presents some key challenges. The authors describe how to go about creating a 'hybrid model' for scaling an innovation, which entails attention to five baseline factors: cost, active demand, a sustainable business model, outcome demonstration and effective leadership. -
Hybrid Insights: Where the Quantitative Meets the Qualitative
When it comes to innovative product and service design, quantitative, data-driven methods often lack the design insight and texture that inspires new ways forward. Meanwhile, qualitative behavioral and emotions-based research provides invaluable inspiration for human-centered designers, but the insights unveiled can be fragile if they are not backed by hard numbers. Integrating quantitative research methods with qualitatively methods is a powerful new approach that the author and his colleagues have dubbed 'hybrid insights'. In this article he shows how hybrid insights out-perform conventional market research tools in unveiling significant early-adopter segments -
The Artisan Way: An Alternative Approach to Business as Usual
What could a family-run pig farm in France have to teach mainstream business folk about profit, market share and shareholder value? As it turns out, plenty. The author describes the 'artisan's approach' to value creation and the three ways that it differs from the traditional growth-obsessed firm. For one, instead of pursuing scale, artisans remain at a fixed size - but they exert control over the whole process, from end to end, achieving 'holism' over scale. In the end, she shows that the engine that keeps artisans running has a good chance of outlasting faster-burning models, and as such, it presents a working alternative worth considering. -
Bringing Science to the Art of Strategy
Many managers feel doomed to trade off the futile rigor of ordinary strategic planning for the hit-or-miss creativity of the alternatives. In fact, the two can be reconciled to produce novel but realistic strategies. The key is to recognize that conventional strategic planning, for all its analysis, is not actually scientific--it lacks the careful generation and testing of hypotheses that are at the heart of the scientific method. The authors outline a strategy-making process that combines rigor and creativity. A team begins by formulating options, or possibilities, and asks what must be true for each to succeed. Once it has listed all the conditions, it assesses their likelihood and thereby identifies the barriers to each choice. The team then tests the key barrier conditions to see which hold true. From here, choosing a strategy is simple: The group need only review the test results and choose the possibility with the fewest serious barriers. This is the path P&G took in the late 1990s, when it was looking to become a major global player in skin care. After testing the barrier conditions for several possibilities, it opted for a bold strategy that might never have surfaced in the traditional process: reinventing Olay as a prestigelike product also sold to mass consumers. The new Olay succeeded beyond expectations--showing what can happen when teams shift from asking "What is the right answer" and focus instead on figuring out "What are the right questions?" -
Simple Rules for a Complex World
How do successful companies shape their high-level strategies? A decade ago, London Business School's Sull and Stanford's Eisenhardt looked for the answer by studying the era's leading high-tech firms. They discovered that such firms relied not on complicated frameworks but on simple rules of thumb. Managers translated corporate objectives into a few straightforward guidelines that helped employees make on-the-spot decisions and adapt to constantly shifting environments, while keeping the big picture in mind. This article describes the authors' subsequent research into why simple rules work and how firms develop them. Typically, after setting its priorities, a company will identify a bottleneck preventing it from making progress toward them and then create rules for managing that bottleneck. At America Latina Logistica, for instance, the problem was capital spending: The railway had only a tenth of the funds it needed to invest in growth and infrastructure. So a cross-functional team came up with rules to guide spending: Any proposal had to remove obstacles to growth, minimize up-front costs, provide immediate benefits, and reuse existing resources. The rules allowed employees across departments to make difficult trade-offs and quickly innovate solutions that put the firm on the fast track. Effective rules, the authors say, are specific, not broad; draw from historical experience; and are made by their users, not the CEO. Moreover, as a company evolves, they evolve with it. -
Your Strategy Needs a Strategy
Many executives rely on a process for devising strategy suited to stable, predictable environments even when they know conditions are highly volatile and mutable. Why? Because, the authors contend, they lack a systematic way to match their strategy-making style to the particular circumstances of their industry, business function, or geographic market. These three BCG consultants offer a framework to do just that. It identifies four "strategic styles": classical, adaptive, shaping, and visionary. Which of these is best suited to your situation depends on how far and accurately you can confidently forecast demand, corporate performance, competitive dynamics, and market expectations (predictability) and to what extent you or your competitors can influence those factors (malleability). A classical style, familiar to most managers and business school graduates, is well suited to an industry whose environment is predictable but hard for your company to change. Oil is a good example of this. An adaptive style suits an unpredictable industry, such as fashion, that players can't alter. A shaping style is best when the industry is unpredictable but your company or another has the power to transform it. And a visionary style fits a predictable industry that is nevertheless amenable to change. Too often strategists focus only on how predictable their environment is and not the opportunities they--or others--may have to change it. -
Finding the Profit in Fairness
Contrary to conventional wisdom, banking can be both fair and profitable--in fact, fairness can be a source of competitive advantage. The evidence for this claim comes from a segment of the financial services industry seldom associated with fairness: consumer credit. The reputation of this business--which encompasses credit cards, personal loans, payday advances, and so on--is so questionable that any claims of "fairness" are viewed by customers with extreme skepticism. But TeamBank, a subsidiary of the German Volksbanken Raiffeisenbanken banking group, has successfully developed a brand that transforms the fuzzy concept of fairness into a visible and credible set of product characteristics and operating processes. Overhauling its central offering, easyCredit, involved significant organizational change and the strength of mind to reject profitable products and features inconsistent with the company's core value: "We are an honorable merchant." Product developments included offering a 30-day customer retraction period, making repayment insurance optional rather than mandatory, eliminating the penalty on partial repayments, and even offering a "protection package" that would consider changes in a customer's circumstances, such as illness or loss of a job. TeamBank addressed concerns about the new strategy by providing extensive training to employees and partners and adopted an unusual catalytic device for values-driven innovation--a scale model town symbolizing the brand. -
LinkedIn Corporation, 2012
Since its inception in 2003, LinkedIn had become a leading Silicon Valley institution with a brand name that was recognizable throughout the U.S. and in many countries overseas. As of March 2012, LinkedIn was the world's largest professional network on the Internet with $522.2 million in revenue in 2011 and more than 150 million members in over 200 countries. Unlike other major social networking sites, LinkedIn focused exclusively on fostering connections within the professional market. As LinkedIn's CEO thought about the future, he recognized the challenges in continuing to massively scale the company. At the same time, he focused on how LinkedIn could continue to use its vast amount of data to provide additional products and services for its members and customers.