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Strategy & Leadership - Harriet Green at Thomas Cook Outlines Her Strategy
We've previously highlighted the arrival of Harriet Green as the new CEO of Thomas Cook as a great research example for business students. New CEOs - particularly those recruited externally - tend to dive straight into "strategic reviews" which then result in changes in strategic direction, disposal of non-core businesses etc. Harriet Green is no exception. And in this YouTube clip, she outlines her proposed strategy for the ailing travel industry business.
The clip is almost two hours in length. However, it is the first section (from about 3 minutes 30 in) which is particularly interesting and relevant for business students. You get a strong sense of Harriet Green's personality from the presentation and a clear statement of her strategic objectives for the business.
read more...»Innovation: Will eBikes Power Ahead?
Pedal power has been around for a while. But are turbo-charged eBikes the way forward? The specifications of electric bikes are impressive - but will the price put potential customers off?
read more...»Strategy: Organic Growth Powers Whitbread’s Success
Expect lots of coverage this week about the growth strategy being pursued by Whitbread plc.
Whitbread used to have a pretty diverse product portfolio including the brewing of beer and the operation of David Lloyd health clubs. However, in recent years Whitbread had rationalised its portfolio of businesses to focus on two markets where it believes it can achieve sustainable and high sales and profit growth. And it has backed that strategic focus with heavy investment. If only other UK firms would do that!
read more...»Strategy: Ikea Diversifies into Hotels
Let's face it. Nearly all of us associate Ikea with flatpack, affordable furniture. The Ikea brand has become a global success and, as we reported on the business blog recently, the Ikea format is well-positioned to achieve further success in key emerging markets.
However, Ikea's business portfolio is not just about furniture retailing.
In March 2013, Ikea announced that it is to partner with Marriott International to open a chain of three-star hotels. The chosen brand name for this joint venture between Marriott and Ikea is Moxy Hotels.
read more...»Will Toyota’s I-Road Change How we Travel?
A fascinating example here of product innovation which the world's largest car manufacturer hopes might revolutionise the way we travel (well, short journeys at least).
Toyota's new I-Road concept car was revealed last week. The video below shows it in action. What do you think? Might it take-off?
The three-wheeled i-Road is targeted at urban commuters and has a maximum range of 30 miles. It can be fully charged in just three hours using a domestic socket - which sounds a fully-charged I-Road lasts about as long as my fully-charged i-Phone!
If we all start using the I-Road (or the inevitably similar models that will appear from competitors if demand rises strongly), then one benefit might be less congestion on our roads. Toyota claims that four i-Roads can fit in a single parking bay.
The i-Road features a stability system called 'Active Lean', which allows the i-Road to lean into corners like a motorbike. Driver and passenger are completely enclosed so don't have to wear helmets. The i-Road's turning circle is just three metres. I'm not sure how much luggage the I-Road can carry: probably not a lot!
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A Winning Corporate Culture in the Skies - Herb and His Airline
We've been focusing on Southwest Airlines during our BUSS4 CPD workshops on Section A Organisational Culture - and in particular on Herb Kelleher, the enigmatic CEO of the highly-successful low-cost airline.
Kelleher's obession with building an employee-centred culture provides stunning evidence for students who want an example of how a positive corporate culture can lead to business success.
Can flying be fun? That's the goal of Kelleher, who is determined to offer reliable on-time service at an affordable price. In this classic archived video from CBS, Steve Kroft profiles the airline president and his innovative approach to the business.
Stick with this video - it is quite long and little dated. But the insights for business students are priceless.
read more...»Dreamliner or nightmare
A directive from The US Federal Aviation Administration has stopped flights of the Boeing 787 Dreamliner, until the plane maker has satisfied the regulator that it has resolved problems with the aircraft’s battery systems. Boeing’s shares had dropped by 2% $72.80 (£45.50) after the announcement. The share price of GS Yuasa the Japanese battery maker had fallen 11% since 7 January when an electrical fire broke out on a JAL 787 at Logan International Airport in Boston.
BUSS4 Culture and Leadership: Walsh vs Branson - again
Looking ahead a little to teaching BUSS4 topics next term, the ongoing spats between BA and Virgin Atlantic provide a consistently rich seam of resources for exploring the themes of business culture and leadership. And in the last few weeks, they have done it again. Willie Walsh and Sir Richard Branson have been sniping at each other in an entertaining and characteristic manner.
It started with reports that Branson might sell some of his 51% share of Virgin Atlantic. Walsh suggested that Virgin would not be around as a brand in five years time. Branson was in conciliatory mood; he responded that he would not bother to sue Walsh for his comments on this occasion but instead he would put up £1m, to be distributed to BA staff should Virgin Atlantic cease to exist, if BA agreed to pay Virgin Atlantic staff the same amount should the brand still exist in five years. Rather more aggressively, Walsh's counter-offer is a knee in the groin, on the basis that he considered the loss of £1m would not hurt Branson's personal fortune, whereas the physical assault would be equally painful for either recipient.
Some more background to the altercation is needed for any student wanting to use this example as evidence in an essay; it will only count as anecdote without accompanying analysis. This article will offer that background, along with a brief history of previous bickering and legal challenges between the two airlines - essential detail to strengthen student analysis.
BUSS3 and the Packaged Holiday Market
We're off on our travel this weekend at the start of a three week tour around eight locations for our AQA BUSS3 revision workshops (alongside the teams delivering BUSS1 and AS & A2 Economics of course).
Our exam-style case study is based on the UK packaged holiday market. Students will be getting to grips with SunTravel plc - a large, well-established vertically integrated tour operator that has turned to new management to identify appropriate strategies for success.
As with all BUSS3 exams, the key for students is to identify the key issues and links from the case study and we're looking forward to seeing how over 3,000 BUSS3 students develop their exam answers to the challenges we set them (and practice good BUSS3 exam technique along the way).
Here are a few relevant YouTube videos about the travel industry which will help set the scene for students (and their teachers) attending!
read more...»IAG Takes the Knife to Iberia - A Merger Mistake?
Many students and teachers will be familiar with the merger between British Airways and Iberia - which came together to form International Airlines Group ("IAG"). The merger was a pretty long drawn-out affair but the respective shareholders of the two airlines eventually agreed the deal. Over a year later, it looks as though BA may have taken on much more than they expected in Iberia. So the board of IAG has decided to implement a substantial cost reduction plan at Iberia which looks likely to strain industrial relations with the workforce in Spain.
read more...»Insights into the Leadership Style of SAF
Leaders come and leaders go. But few leaders have enjoyed a longer period at the top of their organisations that SAF - Sir Alex Ferguson.
And now a professor of marketing at Harvard Business School has written a case study which looks at SAF's approach to management, motivation and more beside.
The full case study is not yet available. However, there is a useful Q&A discussion here with Anita Elberse in which she describes the process of her research and some of her initial findings.
Plenty of research evidence here for students who would like to add a slightly different, though still relevant example to their notes. And much too to stimulate a classroom discussion about how leadership and management styles and approaches can transfer between the world of sport and business.
Elberse attributes SAF's success (and longevity in the role) to "his willingness to develop young talent" and to focusing on building a club rather than a team. The importance of adapting to a changing environment is also highlighted. Do you think she had got her analysis right?
Takeovers and Mergers: Nike Kicks Umbro into Row Z
The football business has a history of helping investors to lose money. And now it seems that the shareholders in Nike have been hit hard by an investment that simply hasn't paid off.
read more...»USP humour
Building up market share in a competitive market with mature brands, similar products and large rivals can be difficult, but attracting the attention or interest of potential customers may require innovative approaches to marketing.
read more...»For Sale - One Airport, Used, Price £1bn. All Offers Considered
A great example of competition regulation in action here.
Back in 2009 by the Competition Commission told BAA that it must reduce its stranglehold on the UK aviation market. Part of the instruction was that BAA must dispose of Gatwick Airport (which it sold in December 2009) and Edinburgh Airport (which was sold by BAA in April 2012). However, BAA has been trying to hang onto Stansted, taking the decision through the courts in a long drawn-out process. Now that process is over - it has to sell the airport.
read more...»Manchester United sponsorship deal shows the value of a global brand
The scale of the new shirt sponsorshop deal agreed between Manchester United and General Motors Chevrolet brand is staggering and a great example of the benefits a brand can enjoy when it becomes truly global.
read more...»Olympics security: an unprofitable contract
What a shambles! But what a fantastic case study for business teachers and students for years to come!
One year ago, LOCOG proudly endorsed a short video from G4S which trumpeted their role as the security provider for the 2012 London Olympics. The video is shown further below.
One year on, and just days before the Games begin, G4S has admitted that it is unable to meet the requirements of the contract and the Armed Forces have been required to stand in to provide the desired level of security. You couldn’t make it up.
read more...»Takeovers and Mergers - A Casino Gamble?
Hot on the heels of the Vue takeover of Apollo Cinema Group, here is another significant takeover in the UK leisure sector. This one will certainly attract the attention of the competition regulators. Two of the UK’s largest operators of casinos are being brought together as Rank buys Gala Coral’s casino business for £205m.
read more...»Takeovers and Mergers - Vue on the Growth Trail!
News of a £20m takeover here which will be particularly relevant to colleagues and students who joined us recently for the BUSS4 revision workshops at cinemas around the UK…
read more...»6 Essential M&A Cases: BA & Iberia Merge to Form IAG
This M&A briefing note provides an overview of the merger of British Airways and Iberia which led to the formation of a new firm - International Airlines Group (“IAG”)
read more...»More on “up-selling” (adding value) the budget airline way
So you’re used to the idea of the ‘basic’ price being increased by additional ‘extras’ offered by retailers. Budget airlines are experts at this approach (spoofed brilliantly by David Walliams here), inviting us to pay more for drinks, snacks, priority boarding and the rest.
read more...»Life and leadership at BA after Willie Walsh
This is an interesting article that I came across while looking for updates on how industrial relations and strike threats have been progressing at BA over the last year or so - the article was published last September so apologies if you are already familiar with it, but I think it is well worth reading.
read more...»It’s Time for a Global Luxury Chinese Hotel Chain - for the Chinese
You’ll recognise some of these brands: Crowne Plaza; Holiday Inn, Hotel Indigo. They are all owned by InterContinental Hotels Group and you’ll find them in just about every major city in the world, from Chicago to Munich; from Mumbai to Sydney. IHG is a global hotels group with more guest rooms than any other hotel group in the world – over 645,000 rooms in more than 4,400 hotels in over 100 countries. But have you heard of Hualuxe? You might do soon…
read more...»Pampering - demand booms as consumers seek an affordable treat
Consumers might be feeling the pinch, but despite the downturn, demand for nail treatments is booming. Is having a nail and other spa treatment an affordable luxury what some of us simply can’t do without in times of austerity? This great BBC video looks at the history of products that have boomed in tough economic times.
read more...»Froth on the beer versus froth on the coffee?
A short BBC video on Whitbread’s huge strategic shift from brewing to retailing coffee and budget hotels.
Whitbread abandoned beer brewing and pub retailing and off licence sales, an industry in which had been a significant presence since 1742. By 2001, the sector had low profits growth and declining sales. Capital has been diverted into areas with higher growth coffee shops and budget hotels. Whitbread’s main brands include Costa Coffee, Premier Inns.
read more...»Bullet point 5 and stakeholders again
Competitors and customers are both stakeholders, and can both be significantly impacted by a takeover or merger. Sir Richard Branson can always be relied upon to have a comment to make about anything that British Airways do, and he doesn’t let us down here as Virgin Atlantic have lodged a formal complaint on the proposed merger between IAG (owners of BA) and BMI to the European Commission.
Virgin has said passengers would be left with a “choice of one” on flights between Aberdeen and Edinburgh and Heathrow. There is some great data in this article about the complaint from both sides, about Virgin’s claims of reduction in services and increase in prices for passengers which are likely to result from the merger, and BA’s counter-claims about increases in viability of services between Heathrow and Scotland. There is clear reference here to bullet point 6 - the reasons why governments might support or intervene in takeovers and mergers - as well as Sir Richard calls on “regulatory authorities, in the UK as well as in Europe, give this merger the fullest possible scrutiny and ensure it is stopped.” Definitely one to add to the BUSS4 resources!
The Strategic Challenges Facing International Airlines Group - Interview with Willie Walsh
A superb interview here absolutely packed with relevant topics for all A2 business students. Willie Walsh, CEO of IAG (the merged firm that brought together British Airways and Iberia) provides a wide-ranging overview of the strategic issues facing IAG and the airline industry. He talks at length about the strategic rationale for the BA/Iberia merger and the benefits that the merger (as part of a broader process of airline industry consolidation) is starting to generate.
This interview is perfect for students preparing for AQA BUSS4 2012 on Takeovers and Mergers. Take a look at the section starting at about 5 mins 45 seconds, where Walsh talks about the difference between mergers and acquisitions.
Walsh also explains his view on what is meant by leadership in business and explains something about what is involved in being a CEO. He talks about the need to address stakeholder concerns.
BUSS4 gold dust!
read more...»PEST - IAG and BMI acquisition
International Airlines Group or BA and Iberia are trying to acquire BMI from Lufthansa.
A move which would allow IAG would gain c. 56 additional take-off and landing slots at Heathrow. Lufthansa had bought up most of BMI’s shares in 2008 but has failed to prevent the group losing money.
How to turn threats into an opportunity at Ryanair
Michael O’Leary, quoted in Management Today, describes the situation facing Ryanair towards the end of last year. He highlighted the threats from the EU recession and higher oil prices, but typically O’Leary found the opportunities more compelling: the “unfolding failure of the package tour operator model, significant competitor fare increases and capacity cuts, created enormous growth opportunities for Ryanair, as large and smaller airports across Europe compete aggressively to win Ryanair’s growth” he said.
read more...»Who has what it takes for this job description?
Here is a real job description for a job vacancy currently being handled by head hunters. The job? Head Coach for the England Rugby Team. A great example of how the functional areas of a business (in this case HRM) link through the the corporate (or strategic) objectives of an organisation.
read more...»The Business of Football - Everton explain where the money goes
This is superb - a really useful resource to help explain the concept of an income statement and cash flow too.
read more...»Thomas Cook begins down the long road of retrenchment
Here we go. Embattled tour operator, hotel owner and travel agent Thomas Cook has signalled the start of a prolonged period of retrenchment in a bid to ensure its short-term survival and long-term future. A terrific research case study for students to follow in the months ahead, but an awful lot of pain for stakeholders in the business, not the least thousands of employees who face an uncertain future.
read more...»Thomas Cook opts for a different generic strategy for success
Fans of Porter’s Generic Strategies (yes, that should include all A2 business students) should keep an eye out for an important strategic announcement from troubled tour operator Thomas Cook in the next few days. We’ll post an update to this blog when the details are made public.
read more...»Time for this Dragon to Cut Costs to Keep his Health Clubs Fighting Fit
The downturn in consumer confidence and spending is hitting just about every business in the retail and leisure sector - and even a Dragon like Duncan Bannatyne is not immune.
read more...»Pandanomics - Can Edinburgh Zoo Get a Return on its Cuddly Investment?
It was business class all the way for Tian Tian and Yang Guang on board the suitably-sponsored FedEx Panda Express (as this exclusive snap suggests!). However, will the Pandas prove to be a worthwhile investment for Edinburgh Zoo?
read more...»Optimism and expansion in consumer leisure markets
Consumers are cutting spending, unemployment is expected to rise over the next year and in a week of ever-gloomier forecasts for the economy, business and consumer confidence has been dropping like a stone. So what do Starbucks, Hilton and Marstons know that the rest of us don’t? All three have chosen this week to announce expansion in the UK - Starbucks with a market development move to open 200 drive-through outlets, Hilton with expansion of over 20 new hotels (part of a plan to open 110 across Europe) and Marstons with a market penetration plan to build 19 new pubs this year and a further 25 a year from 2012.
Good news all round - how nice to see some evidence of growth amidst all the dire news about the economy. But it is intriguing to see these plans just now - where do they get their confidence from?
Retrenchment not enough as the lights go out for Luminar
Britain’s leading operator of nightclubs has gone bust - in spectacular style. In the last year of trading, Luminar plc lost £200 million through its network of 75 nightclubs. The banks have finally pulled the plug and have appointed administrators to handle the closure/sale of the remaining business. Eleven clubs have already closed and buyers are being sought for the rest.
read more...»Consolidation on the cards as IAG claims deal to acquire BMI
Willie Walsh is at it again (on the takeover trail) - this time claiming success in IAG’s chase to acquire loss-making BMI (British Midland) from its current owner Lufthansa. Virgin Atlantic, the main competing buyer for BMI, will undoubtedly fight the deal, pointing to concerns that customers will suffer from a loss of competition as IAG (which includes British Airways) take control over even more slots at Heathrow.
read more...»Business studies lessons from Britain’s best pub
Step aside Heston Blumenthal and his pub (The Hinds Head in Bray). The couple who have invested their heart and soul into a pub near Hull have awarded the Michelin Guide’s coveted pub of the year award.
This article in the Telegraph takes us behind the scenes at The Pipe and Glass Inn in South Dalton, and there are some useful lessons for business students to pick up from the success of James and Kate Mackenzie. I jotted down the following (I’m sure your students will pick up some better points):
read more...»The business benefits of Olympic sponsorship
I am taking my A2 students to visit the Olympics site next week, and have just come across an excellent article published by the FT a week ago. Sponsorship of the event is huge, with the International Olympic Committee’s revenue from sponsorship running at around £1bn. What are the corporate and marketing objectives for those sponsors, and how do they ensure that their strategies will mean that it meets those objectives?
Sponsorship deals are arranged in tiers, from the IOC’s worldwide Olympic Partners who contribute around $100,000 each to tier one domestic sponsors of London 2012 who pay £50m on average,and Official Supporters (such as Cadbury’s and Thomas Cook), Official Suppliers (Holiday Inn, Glaxo). In the FT ‘Olympic sponsors seek podium for brands’ examines the objectives of those major Olympic Partners such as Visa and domestic sponsors such as Lloyds TSB, as well as considering why it may not suit some organisations, the danger of ‘ambush marketing’ crowding out the official sponsors, and whether it is as effective as providing backing for the World Cup. There is plenty here for students to analyse as part of their A2 Marketing course.
Movies and money: the top film franchises
OK Harry Potter fans: you love your hero (and friends) so much it’s very likely that you’ll push the Harry Potter ‘franchise’ up the Box Office rankings to the point where the movies’ total takings will rank as the 2nd biggest ever for any series.
So who is top? And why does Hollywood put so much effort into their sequel productions? Some good material in here for end of term quizzes…
A Festival for business
Each year festival season seems to get bigger and better, with this year’s Glastonbury a reminder of the scale of the business enterprise. Before you read on, have a guess at what are some of the biggest jobs for suppliers to the event.
read more...»Whitbread goes for organic growth
Whitbread plc emerged as one of the clear winners during the recent recession in the UK and it appears to be putting its competitive advantages to good use by announcing an acceleration of its internal (or “organic”) growth strategy. This is a terrific case study on growth to use with students - it covers so many specification areas and is especially useful for AQA BUSS4 students who need to gather some evidence-based research data for their Section B essays.
read more...»Horizontal integration in action - Virgin grabs Esporta
A great example of horizontal integration and external growth on the news wires this morning. Virgin Active (which is majority owned by Branson) has agreed to pay £77.6 million in deal to buy 55 Esporta gyms - a move that will nearly double Virgin Active’s size in the UK. The scale of the takeover means that it will need to be cleared by the Competition Commission, but no signs as yet that the competition authorities will block the deal.
This is a good takeover for students to look at. Some of them may be familiar with the UK health club market and the Virgin Active brand in particular. A good starting point would be for students to consider the strategic rationale and direction behind the takeover. Hopefully concepts such as economies of scale and market share / market leadership would feature in their discussions. Virgin Active recently passed the milestone of having 1 million members in its club portfolio, although it did not open any new clubs in 2010, suggesting that it has been able to achieve decent organic growth without expanding the number of locations recently. Virgin Active currently operates a total of 194 clubs, in the UK, South Africa, Italy, Spain and Portugal. The Esporta takeover will double the number of health and racquets clubs that it operates in the UK.
Is the golf business coming out of the bunker?
For those of you grappling with the OCR A2 F297 Strategic Management case study (like us at T2U), the golf business might be on the list of things you’re wondering about. Or maybe you just think about golf anyway. As usual, the BBC is packed full of interesting background on the business of golf.
read more...»CSR - Sport and Business Rediscover the CSR Buzz
I’m indebted to Julie Turner from The Castle School at Thornbury for spotting this excellent BBC article which examines how businesses are returning to the support of local and junior sport as part of their CSR activities. Some great examples in here and links to follow up. Here is the link to the BBC feature.
Sustainability is an objective of the 2012 Games themselves - you can read more about this here.
CSR - Salad Slaves - Supermarkets and Corporate Irresponsibility?
A terrific and detailed video resource here from the Guardian - perfectly timed for students wanting something substantial to discuss as part of their research into corporate social responsibility…
read more...»Business Strategy: next steps for the budget airline industry
It’s amazing to think how over just 15 years, Europe’s budget airlines have soared to account for a third of all air travel in the region. But their growth is slowing. Here are a few ideas and a link to an article which outlines some of the approaches the industry might take in the years ahead.
read more...»Adding value (or “up-selling”) - the FlyLo Way
Another terrific clip from Come Fly With Me - this time featuring low-cost airline entrepreneur Omar Baba. Omar is the owner of the nation’s “eighth favourite low-cost airline” FlyLo. He has worked hard to make his airline the great success it is and knows that the frequent news stories about poor service and dangerous conditions are down to a biased and unfair media. And now Omar has a great idea to add value by providing a new premium service for customers on FlyLo’s flights…
read more...»Can this start-up win with pay-as-you train gym membership?
At our recent AQA BUSS1 revision workshops we had a session looking at the viability of the business concept behind The Gym - a growing chain of low-cost, no frills fitness clubs. According to this article on BBC Scotland it looks like the health club market is set for further challenges from new entrants.
one of the new entrants to the market is payasUgym. The payasUgym programme is due to launch at the start of 2011 and will let customers visit a network of clubs without having to pay membership fees. Gym-goers will “load” cash onto an online account which can then be used at various fitness centres. The easyJet entrepreneur Sir Stelios Haji-Ioannou is also said to planning to launch a budget fitness club in 2011 with monthly-only contracts costing as little as £15-a-month.
The payasUgym concept is an interesting one in that it utilises the existing capacity of the UK health club sector. The business is avoiding the need to raise the significant capital required to build health clubs. It is simply acting as a marketing channel for existing clubs. How sustainable is that business model? if a customer finds and uses a local gym that he/she really likes, what is to stop that gym from trying to recruit the member away from the payasUgym organisation? Students ought to be be able to identify other potential upsides and issues with this business model. A good one to analyse!
Advent stories (3) - Marketing for the super-rich
How would you define a market segment that is attracted to a hotel with an $11mn Christmas tree? The Emirates Palace Hotel in Abu Dhabi is one of the world’s few seven star hotels, with the most expensive suites costing over $10,000 per night. They have every facility you could wish for, from private beach to private cricket ground, and they also have a 43-foot high Christmas tree that cost $10,000.
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