Tesco's share price slid again today, although the firm has announced that the new Finance Director Alan Stewart started work three months earlier than expected.read more...»
News about Tesco's troubles comes thick and fast, today's bad news about overstating profits has wiped off 11.59% of the share price. It fell by 26 pence to £2.03.read more...»
Which airline boss has said for many years that “an airplane is nothing more than a bus with wings on”?
Of course, the answer is Michael O'Leary, the CEO of Ryanair - Europe's biggest budget airline.
But, as Ryanair's passenger figures show that 25% of their customers are actually travelling on business, they have decided that now is the time to introduce a 'Business Class' service.read more...»
If business students are looking for a different example of how effective leadership can drive successful change, then they should add Sergio Marchionne to their research.
Sergio Marchionne was initially best-known for leading the turnaround of the Italian automotive group Fiat. More recently, Marchionne has led the transformation of US automotive group Chrysler, taking Chrysler from the brink of bankruptcy at the lowest point of the financial crisis in 2008/9 to profitability.
Marchionne took over as CEO of Fiat in 2004 and was able to return the struggling Italian car manufacturer to profitability with two years. He first connected with Chrysler when a strategic alliance was formed between Chrysler and Fiat (who took a 20% shareholding) as part of a US government-backed rescue of Chrysler as it tried to avoid bankruptcy. When Chrysler was able to pay off various US government loans in 2011, Fiat was left with a stake of over 50%. Since then, Fiat have been negotiating with a Chrysler employee trust in the US (which holds a substantial remainder of the shares in Chrysler) to complete a full takeover. A deal was finally agreed in early 2014 with the formalities now being completed.read more...»
2 perfectly contrasting and counter-intuitive articles that show how “the markets” can favour retrenchment over growth.
Barclays announced it was slashing 19,000 jobs and reducing the size of its Investment bank. The immediate result? Share price surged 8%.
Carphone Warehouse announce a £3.8bn merger with Dixons that will “create a seamless experience” for their customers. The result? Dixons share price closed 10% down and Carphone Warehouse’s dropped by 8%.
By comparing and contrasting the 2 strategies (and the reasons for the resultant change in share price) students can show good analysis of the benefits of retrenchment.
Anthony Jenkins, in an interview in the Sunday Times, said it best by echoing/paraphrasing/plagiarising Howard Schultz after he closed almost 1000 Starbucks stores in the US - “Growth is not a strategy, it’s the by-product of good strategy”.
I hope the revision is going well!
So it seems two great passions - football and Business Studies - can be combined for Unit 4...at least something good came out of Moyes' reign!
No doubt like many of you, the bulk of this week (and last) has been spent attempting to get on top of my workload and capitalise upon the opportunity the Easter break has presented. Having said that, work and revision for the June papers is only optimised when effectively combined with an appropriate amount of rest and relaxation. For me that has mainly consisted of over-dosing on the hit TV series Breaking Bad.read more...»
This article about Mothercare asks whether it can be reborn, following a series of errors and decisions which have gone wrong. So it makes a very good case study from which students can identify decisions which were made, and turned out to be mistakes, and also actions which were not taken, and probably should have been. Their sales have been falling for years, they have restructured and reduced staffing, they issued a profits warning in January which led to £112mn being knocked off their share value, and now their Chief Executive has resigned - and yet they have a well-respected brand and the nature of their market means that their products are in constant demand.read more...»
My students were particularly interested in Facebook’s acquisition of WhatsApp for the ridiculously high $19billion. We used the previous blog, then delved deeper and found a few great related articles; one explaining why it was a good price ($42 dollars for each of the 450m customers) but bad strategy and the other predicting that WhatsApp will not help them succeed in China. To summarise the two:
- WhatsApp is pro-privacy and data-free
- WhatsApp CEO Jan Kuom is sticking to his “ad-ban”
- WeChat – China’s domestic messenger service already has 300m customers and better functionality
- WeChat helps China’s economy and is subject to Chinese law (meaning “they” can keep tabs on the content).
- Chinese government banned Facebook, linked them with an act of terrorism and state media claimed that “80 percent of China’s net users felt Facebook should be punished”
- The government don’t want Facebook siphoning money and talent away from China’s domestic social media industry, most notably Weibo (China’s Twitter), whose profits have just jumped from $2.4m to $44.5m!
Segueing seamlessly to a social networking firm that seems to have secured a way into China; LinkedIn is trialing it’s Chinese language site via joint ventures with Sequoia China, China Broadband Capital and the aforementioned Weibo and WeChat!
Chief Executive Jeff Weiner said the deal has raised “difficult questions” for him, and has been forced to make various concessions in order to adhere to the Chinese Government’s censorship requirements, but believes that “LinkedIn's absence in China would deny Chinese professionals a means to connect with others on our global platform,"
Overall, these combined articles give students relevant ammunition for each of the research “bullets” as it covers success, failure, methods of operation and ethical implications of entering the Chinese market.
It would appear that social network firms need to network with Chinese social network firms if they want to become social network firms that operate in China. Simple really.
Does the combination of Apple’s falling sharing price and market share, their perceived lack of innovation post-Jobs and Samsung’s cross-licensing deal with Google spell trouble for Apple?
Attached is a 10 slide PowerPoint (Apple_V_Samsung_Research.ppt ) with infographics, hyperlinks, videos and questions that can be used to help students research the two tech giants.
As with the “Will Google rule the world” post, the lesson covers most of the following BUSS4 topics:
- Mission statements & corporate objectives
- Globalisation and emerging markets
- Technological change
Hope it helps!
Google’s $3.2 billion purchase of Nest and current shopping spree into all things futuristic has made for an excellent BUSS4 case study. Attached is a 10 slide PowerPoint (Google_mergers_and_acquisitions.pptx) with videos, articles, hyper links and questions that can either be used as a homework task to start students on the road of research, a lesson in which students work independently and focus on the sections they find most interesting, or a catalyst for discussion about the similarities of Google, 1984 and Brave New World.
Whilst it focuses on acquisitions, by the end of the lesson all students were able to analyse Google in relation to the following BUSS4 topics:
- Mission statements, corporate aims and strategy
- Government intervention (or Google’s intervention with the government)
- Managing change
Most amusing is the Daily Mash's vision of a world run by Google... as if we have a choice!
Retailing is a dynamic market, and firms which have been slow to adapt to changing technologies, falling real incomes, and different patterns of consumer behaviour have been losers rather than winners.read more...»
Here's a great Guardian article to bring you up-to-date: Seasonal trading news from Britain's biggest retailers have underlined the many radical changes that are taking place in the way we shop and buy.read more...»
The recent trouble at the Co-Op Bank Group highlight numerous weaknesses amongst the management which have damaged its ethical reputation and USP. “Friendly” banks – that is, a wide variety of types owned by members and customers rather than shareholders – are hugely popular around the world, with an estimated 20 per cent of the market for deposits and loans in Europe alone.read more...»
"The 20th Century was about dozens of markets of millions of consumers. The 21st Century is about millions of markets of dozens of consumers."
So said Joe Kraus, founder of a search engine called Excite in the middle of the 1990s. Never heard of it? That's not surprising; in 1999 it was a $6.7bn enterprise with hundreds of employees, but a year later the dot-com bubble burst and it disappeared from the market place. But this quote is one of in an article about Peter Day's Radio 4 Archive programme to be broadcast tonight, and already recommended by Michael Owen in his blog below; forgive me for this repetition, but this is such a brilliant article that it really merits a second look, and hopefully between us we will convince you of that!read more...»
This is a long running story, in which Royal Mail is (probably) preparing to leave the public sector and become a private company - a process known as privatisation. Recently, rising profits at the business had made its privatisation seem more likely, but Royal Mail workers have just voted overwhelmingly against the government's controversial plan to sell off the 497-year-old postal service.read more...»
The Co-Op has keen to highlight their ethical credentials as a key part of its marketing and positioning strategies. Supporters claimed that its mutuality was a more desirable form of ownership than PLCs.
The Banking Division has run into difficulties, and there have been significant changes in personnel within the last few weeks, in part as a response to major financial problems. On Friday there were reports that it had stopped offering loans to new business customers, and today The Independent on Sunday reported that The Co-Op Group's Finance Director Steve Humes had resigned. This followed the recent resignation of Brian Tootell after Moody's downgraded the Bank's bonds.
Mr Humes The Group Finance Director for the last two years, had been involved in managing the Co-Ops food operations, and may have had insufficient experience of its banking operations. Euan Sutherland the Co-Op's new CEO who was appointed in May, could be about to make significant changes in other key management positions.
The decision to stop lending to new business customer may imply that the there may be insufficient capital to support current obligations let alone new loans. The ethical bank may be about to meet its most serious crisis.
“Our strategy is delivering. The transformation of Royal Mail is well underway”.
That’s the view of Moya Greene, CEO of Royal Mail, as she announced the full year results for Royal Mail to 31 March 2013 today.
As students who attended our BUSS4 Exam Coaching Workshops will recall, I think that Royal Mail is one of the very best research case studies to use for both Section A (organisational culture) and Section B essays in the BUSS4 exam.
The latest financial results of Royal Mail Group are packed full with useful insights and data which could be used effectively to support paragraph points in a BUSS4 essay.
Here are just a few examples:read more...»
How far did the management style of Roberto Mancini contribute to his removal after the FA Cup defeat?
Mancini was the most successful manager of Manchester City's 23 managers hired after the retirement of Joe Mercer in 1971. He took the club to 2 FA Cup Finals, and City thrashed Manchester United 6-1 on the way to winning the Premier League with almost the last kick of the 2011-12 season.read more...»
For Sony's CEO Kazou Hirai - a promise is a promise.
Back in April 2012, when Kazou Hirai took over as CEO from Sir Howard Stringer, he pledged to restore Sony's troubled Consumer Electronics division to profitability within one year.
In a significant programme of retrenchment, Sony has shed over 10,000 jobs (about 6% of the workforce), sold off major property assets and substantially cut production at the heavily loss-making Sony Television business (which is a significant part of the Consumer Electronics division). The result is expected to be Sony's first corporate profit for five years when it reports final result for the year to 31 March 2013 in May. However, the Consumer Electronics division remains unprofitable - Sony has not met its objective.
The reaction by Hirai? It is reported that forty of Sony’s top executives, including Hirai, are to give up bonuses worth between 30 and 50 per cent of their pay. The decision will save Sony around $10m, which is not particularly significant in financial terms.read more...»
This week's edition of The Bottom Line, hosted by Evan Davis on Radio 4, is about business turnarounds. The three guests this week have all been involved in rescuing companies and they share
their experiences, in which the culture of the organisation feature heavily. For those who are picking up on the tutor2u 10 companies to study, it is particularly useful as the first of these is Adam Crozier, Chief Executive of ITV
(and former CEO of Royal Mail). Different scale is offered by James Eden, Chief Executive and owner of
clothing brand Private White VC, and Nick Sanders, Head of Portfolio at
private equity firm Better Capital. Well worth getting students to listen and to write some compare-and-contrast notes.
Royal Mail is fast becoming a must-cover case study for advanced business students. Royal Mail is now well into a significant transformation programme under the leadership of CEO Moya Green. The business is preparing for and approaching privatisation and faces intense competition in the profitable parcels business.
So I thought I'd dig out a few links which might help students get started with exploring the Royal Mail case study.read more...»
A good update here from the ever-excellent Andrew Hill at the FT on the strategic progress being made by Stephen Elop at Nokia.
Is it really two years since Stephen Elop issued his infamous "burning platform" memo to the employees and management of Nokia which explained the dire strategic position the business was in?
Days later Elop announced his decision to partner with Steve Ballmer's Microsoft to use the Windows mobile operating platform. Tens of thousands of Nokia employees have lost their jobs since as Elop has pursued a dual strategy of aggressive operational retrenchment, closing 200 of its 500 locations worldwide.
The Nokia organisation structure has been significantly streamlined to encourage more effective teamwork and collaboration. The share price has risen strongly in the last 6-9 months (after sharp falls in early 2012) and Nokia's new product ranges seem to be better received.
I sense a turning of the tide for Nokia - and for business students it remains one to watch closely.
A brief interview here with Stephen Elop in January 2013 which will be useful for teachers & students following the progress of Elop's turnaround strategy for Nokia.
Nokia is currently going through a significant change programme. Elop explains how the firm has focused Nokia employees on three key behaviours that are expected to drive the change in culture that Nokia needs: accountability (taking responsibility), urgency (doing things quicker) and empathy (being less arrogant).
Elop also explains briefly how the external environment is providing increasing threats to Nokia which needs increased planning and thinking.read more...»
If you had lasagne last night you might be wondering if it was the last remains of the non-running hurdler "100% Pure Beef". Findus have a major problem to resolve after tests showed that their lasagne had been made from horsemeat.
I had been guilty of listening to radio 1 in the past on my cycle in, very useful to get starter ideas or discussion points for GCSE business-Recent changes in the radio 1 product strategy has meant I have switched back to radio 4 (I wish 5 live was on FM!) so good news for my economics class, not so good for my GCSE class! In the Daily mirror today, was a very accessible rport on audience figures- I plan to use it for GCSE to consider segmentation and product extension, for As to support marketing and A2 to support strategy -In the document which I have had put onto TES I have also included some questions on the data to give A level students (and the quicker GCSE students) a chance to number crunch.
Answer are on the final page- Please check before use!
Koninklijke Philips Electronics N.V appointed Frans van Houten as Chief Executive in April 2011. The new CEO has reviewed the group's operations, and has taken decisions to reshape the firm.
My students know that I love the radio. Many a spare half an hour can be whiled away with a podcast of The Bottom Line (which returns on Thursday/Saturday this week), or More or Less, or Peter Day’s World of Business. And the great thing about this form of learning is that it can overlap with other tasks – there’s no opportunity cost! Listen to a business/economics podcast whilst at the gym, going for a run, doing the washing-up, whatever…
But whilst Radio 4 is well-scouted territory, but one students might not be so familiar with is NPR’s Planet Money. This show, from America’s public radio, is quite close in style to R4’s More or Less with a more of a business focus. 2 fifteen minute shows are podcasted a week.
This edition is a great place to start.
Is it possible for a new CEO to achieve significant change in the culture of an organisation? Managers and employees at Barclays are about to find out!read more...»
I adapted the title for this blog from an article and video clip I came across in the Telegraph, which contains the observation that "consumers forgot that Blockbusters still existed". I don't really think its demise was very hard to predict, and I think most of you will have seen this coming for some time.
But with the decline of Blockbusters - and so much other bad news on the High Street - I've decided to bundle together a lot of ideas and links to encourage students to work independently on this topic, to see if they can understand some of the forces putting pressure on our High Streets at the moment.read more...»
A lot of people will be saddened - but probably not shocked - by the news that HMV looks like it may be the latest casualty amongst big-name retailers. There's a lot of coverage of this story, so I've put together several links and questions to encourage you to consider some independent research on what's gone wrong, and what may be the way forwards from here.
I'm enjoying using Storify at the moment, and the links and suggestions for the HMV story are all posted here.
Do I sense a few green shoots emerging from Finland - the home of Nokia which recently lost its position as the world's largest maker of mobile phones (a position it had held for 14 years).
Readers of the business blog will be familiar with the story of Nokia in recent times. The arrival of a new CEO Stephen Elop and his famous "burning platform" speech which set out this new strategic direction for Nokia. We've documented the resulting strategy of retrenchment which led to the loss of 000's of jobs at Nokia around the world and Elop's decision to enter into a strategic partnership with Microsoft as he chose Windows 8 as the mobile operating system ("ecosystem") for Nokia's new range of smartphones.
2012 was a pretty bad year for Nokia in total. However, there is is some evidence that the launch of the Lumia smartphones may have heralded a change in fortunes for the business. The Guardian reports here about very strong sales for the Lumia phone over the crucial Christmas trading period. And in the short video interview with Stephen Elop below, you can sense the emergence of a quiet confidence that things might be getting better.read more...»
This afternoon The High Court appointed PricewaterhouseCoopers as Administrators of Jessops the high street camera retailer. The company has debts of £80m.read more...»
Royal Mail has reported a huge increase in half-year profits as growth in parcel deliveries made up for a continued fall in the number of letters being sent. This is something of a surprise to many as the business had looked to be in long term decline. The chief executive has summed up the way in which the firm has found success: "Royal Mail has experienced the negative impact of e-substitution, which is driving the structural decline in the traditional letters market. Conversely, we are seeing the positive impact that online retailing is having on our parcel volumes”.
Now that operations are in profit, this might speed up the business’ move from the public sector and into the private sector – a move referred to as privatisation. A future for the Royal Mail in the private sector was referred to in a previous blog. Here’s an update, and a reminder of some of the strategic issues at stake.read more...»
As the October 10th deadline approaches, the board of BAE face significant difficulties to
complete the proposed merger with EADS.
This article from todays technology pages on the BBC make for excellent reading about leadership by looking at Apple a year on from Steve Jobs' death..read more...»
This isn't meant to be depressing, just a possible stimulus for a discussion about businesses that have failed already this year.read more...»
The BAE EADS merger proposal ought to help pupils attempt develop analytical skills using PESTLE, SWOT or stakeholder models. Can you use these management tools to develop your analysis and evaluation and go beyond application and understanding?
If you're looking to use the new iPhone 5 as a good example of an extension strategy for a product life-cycle, it's worth remembering that another technology heavyweight is about to launch a re-imagining of a classic product. In November 2012, Nintendo are launching their new version of the Wii games console - imaginatively named the Wii U. However, whilst iPhone 4 users are looking to dust-down their eBay accounts to help subsidise the latest must-have gadget, the Wii U brings an extension strategy with a difference.....
British Aerospace (BAE Systems) and EADS announced that they are discussing a merger.
This new revision quiz provides 10 questions on change management each time it is launched. The questions will change each time.
An interesting evaluation point here for students who need to consider the potential for new leadership to achieve strategic change. Will a new CEO be given enough time to develop a successful, sustainable long-term strategy?read more...»
The allegations of price fixing of Barclay’s LIBOR rates have led to the resignation of The Chairman Marcus Aegis on Sunday night, politicians, and journalists wondered if Bob Diamond, The Chief Executive ought to be on his way out instead.read more...»
There have been some real difficulties handling transactions at RBS, with warnings that disruption to normal banking services may last for several weeks. This is a real headache – not just for RBS who stand to lose millions because of the problem, but for their customers who face a host of difficulties.
Here’s a good opportunity to think through what some of the issues might be.read more...»
The business news is full of stories covering the retrenchment strategies of various private sector firms such as Nokia, Sony, Thorntons, HP and others.The large job losses involved generate lots of headlines and in-depth analysis of whether the retrenchment strategy will work. We’ve been tracking some of these stories for students using our ResearchBuster on Retrenchment.
However, students need to be aware that retrenchment strategies are not just reserved for the private sector. Public sector organisations have been affected just as much by decisions to reduce and change the scope of operations and activities. Here are a few useful research examples to add to student notes.read more...»
Our BUSS4 blog has a series of streamed revision presentations which students may find helpful in supporting their studies ahead of the exam. They are listed below:read more...»
The problems facing Stephen Elop at Nokia just seem to get worse. His retrenchment strategy has been notched up another level with the announcement this morning of 10,000 further job losses (that’s about one fifth of the total at Nokia, excluding those who work at the joint venture with Siemens AG). Will this latest, dramatic move be enough to ensure Nokia’s survival?read more...»
I can’t think of a better case study than Nokia for students to research as an essential part of their advanced business studies. Nokia is a global brand, a market leader and a firm rich in heritage. But it is now battling for survival in a strategic crisis caused by a range of external and internal factors that are core to A2 and similar business strategy specifications. In this note, we’ve outlined some of the main strategic issues facing Nokia and linked to recent supporting resources which students should examine. A well-prepared student getting ready to wow the examiner with relevant evidence-based research in an essay should be ready to include Nokia in an answer!read more...»
BUSS4 students really need to read this one - it offers good, strong evidence of the problems of takeovers and mergers including difficulties integrating businesses successfully. Last year Hewlett Packard bought Autonomy, a Cambridge software company, for $10bn. This year they have a 31% fall in profits and plan to cut 27,000 jobs (about 8% of their workforce) by end of 2014 in order to reduce costs by up to $3.5bn (£2.2bn) a year. As many business reports say, the move was part of a “productivity initiative designed to simplify business processes” and is down to their inability to keep up with products such as the iPad which eats into HP’s laptop sales.
HP haven’t announced where those staff cuts will be made yet, but a key news announcement yesterday was that Mike Lynch, who founded Autonomy and built it from a small start up founded with a loan of £2,000 from a man in a pub to the UK’s leading technology company, is to be replaced. HP seems to offer a classic case of Charles Handy’s Role culture with layers of bureaucracy which, critics say, has stifled the entrepreneurial spirit of Autonomy’s Power culture which focused on Mike Lynch who was used to making his own decisions and still based on a simple start-up structure. A BBC Business Correspondent reports that
“His drive and entrepreneurial flair was fundamental to the growth of the firm. Although many people found him difficult and demanding to work for, he was held in awe by rank-and-file staff. (compare Steve Jobs - similar comments are made about him.) That’s why Autonomy’s 300 Cambridge staff are worried about the future. One man, who declined to be identified, said: “Without Mike, we have a grim outlook. He was the reason many people work here. A brain drain of senior people is already under way.”
In that brain drain 20% of Autonomy’s staff have recently left including the President and Chief Finance Officer. The Independent reports on the culture clash saying that
“Autonomy hasn’t been performing the way the computer giant had hoped. HP wants big deals, sealed quickly, and the Autonomy style of working just hasn’t fitted in” - this article is really worth reading for its analysis of the problems in this takeover and others in which the entrepreneurial flair which brought small businesses to the attention of large ones has caused difficulties in achieving the business growth and synergies which were dreamed of.
Other useful resources on this story - a BBC video report examining the reasons for HP’s diffuculties and the management style at Autonomy, and a profile of Mike Lynch from The Telegraph. As Lord Sutch would say, business studies gold dust!
In the 1980s and 1990s, Ford embarked on a series of takeovers Jaguar, Volvo, Land Rover, all of which were sold off to meet the firm’s liabilities. It also had built up a substantial stake in the Japanese Mazda company, holding almost 1/3 of the share capital, making a successful bid by rival multinational car makers less likely.
Today’s business news included an announcement that Mazda was forming an alliance with Alfa Romeo develop a new two-seater rear-wheel-drive sports car.read more...»