Students looking for a great example of how a UK business can transform its fortunes by focusing on the opportunities in emerging markets need look no further than JCB.read more...»
It is now six years since the global financial crisis triggered a prolonged downturn in economic activity. The UK economy, like other developed economies, has struggled to escape from a period of stagnant economic growth.
However, despite the weak economy, many UK firms have succeeded in significantly growing their revenues and profits.
Here are three examples of such businesses. Their strategies for success are different – but there are also some similarities.
Can you compare and contrast these three – and also identify some other businesses that have enjoyed similar success despite the tough economic environment?
You might also consider:
- What factors have driven revenue growth at each of the three
- Has their growth strategy been based on organic or external
- To what extent has their growth been driven by international
- Do you think their recent success can be sustained?
- What factors might that continued success depend on?
The horrific Bangladesh factory disaster has highlighted a number of business issues and proved a stark reminder of the global effects our purchasing decisions may or may not have on people halfway around the world. Tom White has already put up a blog with some initial thoughts; I thought I’d pose some further questions and examine some of the issues raised in that post.
A great starting point would be to listen to the ever-reliable Business Daily, from the BBC World Service. Their programme In the Balance invites guests to debate a topical business issue, and this week, the Rana Plaza disaster was under discussion.
One of the first questions to ask is to examine the extent to which firms which are supplied by such factories are responsible. There were more immediate causes, of course, such as the owner’s actions and the culpability of local regulation and enforcement (or lack of). But this is not the first time there have been such disasters, nor are the poor conditions in such factories surprising. So is it right that chains such as Primark continue to use such suppliers? Isn’t it their fault, with their demands for low prices and increased flexibility to meet the needs of the fast fashion market? Do they have a responsibility to ensure fair and safe working practices in factories they don’t own and which they are merely customers of? A lot of people would argue that yes, they do. But isn’t that the same as arguing we as consumers should audit the supply chains of the shops which we buy from? Primark is as much a customer as we are.
You may not want to dwell on this topic, which is so terrible that I am sure your first reaction to what has happened will have been highly emotionally charged. The scale of the tragedy only seems to grow, with the situation perhaps made worse by the realisation that these events are very typical of working conditions in many countries.
I've been putting together some links to encourage a bit of reflection on what, if anything, we can learn.read more...»
A simply stunning video here from the FT which is perfect for students wishing to gather some evidence on industries, firms and brands that have thrived despite the prolonged economic downturn in developed economies.read more...»
"We have no idea where these products will go" says one of the production line workers at a factory in China operated by Zhejiang Hongyu Medical Commodity Co. Ltd
Thousands of miles away, the final destination for those products are the shelves of retailers in developed economies, particularly the discount and/or single-price retailers who have enjoyed such rapid growth in recent years.
In this fascinating article, Tom Phillips reports for the Telegraph from Yiwu - a landlocked trade hub in China's eastern Zhejiang province - which conducts over £5bn of trade exporting low-cost consumer products around the globe. The article is a real eye-opener.read more...»
Perhaps we’re all guilty of picking up on ideas or stories that support a particular view that you feel is right. Ever since I began reading about doubts over the benefits of outsourcing and offshoring I’ve seen more stories on the same theme. There was Bob, who had outsourced his own IT job to China. Then came a special report in The Economist that asked some searching and detailed questions too (you can read more here).
And now the definitive proof - the "Nation's Noodle" is coming home. Golden Wonder's pot noodles are currently made in China and shipped 10,000 miles to the UK, but the 191-year-old British company that makes the product has cancelled its Chinese contracts in favour of making its own noodles in Leeds.read more...»
Sometimes students get a bit stuck on the politics part of PEST analysis. How are businesses affected by politics? Lots of examples come up on the T2U Business blog. Firstly, politics is the law, and business legislation has a dramatic impact on firms. Then comes a bewildering array of regulations and tax implications. If you think that's complicated, consider the difficulties of making international location decisions. (I was wondering what might have brought BMW to the UK last year).read more...»
I've been researching the rapid growth of Chinese technology firm Huawei this week and came across a feature of Hauwei#s leadership structure which stopped me dead in my tracks. Most big companies have one CEO (Chief Executive Officer). But, Huawei has decided to do things differently. It has decide to have three!read more...»
The central thrust of their argument is that the advantages of offshoring work (outsourcing overseas) are falling, fast. The logic of returning work to the developed economies looks fairly convincing.read more...»
This is a really important development for business students who need to appreciate the dynamics of the global economy to understand. The OECD has forecast that, within four years, China will overtake the USA to become the largest economy in the world. The value of China's GDP in 2013 alone is forecast by the OECD to be bigger than all the Eurozone economies put together. China has arrived - and it has hugely significant implications for business.read more...»
You might find this small and very simple website an interest if you are teaching about how the big software and e-business businesses make their money. If you or your students want to know how companies like Google or LinkedIn make their revenue (or in Instagram's case, don't make their money!) - try this intuitive and icon-based website which tells you which methods each uses to generate revenue.
This is particularly relevant if you are teaching unit 12 (Internet Marketing in Business) on the BTEC National in Business. Each individual 'pop-up' summary per company also gives you a link to sites containing further information. It's a bit US-centric but many of the firms are relevant to UK internet markets.
This concise case study looks at the growth strategy currently being pursued by one of Europe's largest brewers, Heineken International. It deals with many strategic issues relevant to the A2 syllabus and can be a useful case study or discussion topic.
With the launch of Rovio Entertainment's new game Bad Piggies this interview looks back on the early days of the technology and marketing phenomena that is Angry Birds. This case study provides a good discussion topic for entrepreneurism and business start ups with a business the students have a good understanding of.
South Korean car makers Kia and Hyundai have both decided to stop night shifts in their factories, in response to demands from local trade unions. Yet just the opposite is happening in Europe and North America. What does this tell us?read more...»
Read on about a couple of new shows ideal for business studentsread more...»
The car industry is such a good place to go for examples of Business Studies in action. Here, the problem under discussion is capacity utilisation. This concept is very closely linked to the idea of a breakeven point.read more...»
Yet more evidence of success at Jaguar Land Rover (“JLR”) which has reported very strong sales growth for the last quarter, driven by rapid expansion in emerging markets - particularly China.
The introduction of new models, together with full-stocking of cars in showrooms seems to have helped JLR outperform its competitors. JLR’s factories in the UK are running at high capacity utilisation and longer shifts are being introduced.
This BBC video looks at how JLR is achieving its sales growth and questions whether the growth is sustainable.
A useful piece here in Forbes India Magazine about the impending launch of Starbucks in India. Looks like the first Starbucks outlets will open in Autumn 2012, a little behind schedule - but a significant event nonetheless.
We reported earlier on Starbucks’ chosen method of market entry in India - a joint venture with Tata Beverages.
In January 2012, Starbucks announced its objective to open 50 outlets in India by the end of 2012, through a 50-50 joint venture with Tata Global Beverages. The two partners will initially invest a total of $80million to establish the business.
The Forbes article emphasises the role of choosing the right locations for the first stores. Mumbai looks like the first choice and it sounds like prominent positions in mainly business districts are being sought, as well as in well-established shopping malls, alongside other well-known brands such as Hermes, Calvin Klein and Zara.
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 Tata acquisition of Jaguar Land Rover is a superb example to include in research notes on takeovers and mergers. At the time (early 2008), Tata’s investment in JLR seemed to be poorly timed and there were many critics who questioned the strategic logic of the move as well as its timing. Shortly after the takeover, demand in the global market for luxury cars collapsed as a result of the financial crisis and Tata was forced to refinance to support its investment.
Several years later, however, the takeover appears to be a compelling example of a successful acquisition which is generating substantial shareholder value for Tata as well as continued support from JLR’s many stakeholder groups in the UK.read more...»
The topic of emerging markets is hugely important for BUSS4 students. The economic growth and large populations of the ‘BRIC’ nations (amongst others) has meant many businesses, including some of the tutor2u twelve: have been targeting these countries as part of their strategies for growth. Examples include Starbucks who plan to have 1,500 coffee shops in China by 2015, and Apple as their Shanghai store sells more iPhones per square foot than any other Apple store in the world.read more...»
Those of you who are looking at business production, or operations management, (especially in A2 courses) will certainly want to read this week’s Economist either in the library, or by getting their own copy from the newsstand.
They are predicting a new industrial revolution, with a potentially enormous impact on all industries.
On the face of it, the findings of the Independent newspaper’s investigations into the sourcing of the official London Olympics GB team kit are very damaging for both LOCOG and the supplier - Adidas. You can read the full report here.read more...»
France boasts some of the most famous fashion houses in the world, but there are few items of clothing more synonymous with the country than the beret. However, the nation’s last surviving factory that produces the item is now facing closure due to financial problems. With cheaper production costs, the iconic hat may in the future be made in Asia. A great example of the impact of emerging markets on the competitiveness of firms in developed economies. Some nice comments too in the video about the type of cash flow problems experienced by small manufacturers.read more...»
This revision presentation provides an overview of the topic of emerging markets. It highlights some examples of how businesses have pursued a growth strategy in emerging markets and also how developed economies have seen investment coming in the opposite direction. A brief overview of the methods and benefits/drawbacks of international expansion is also provided.read more...»
Chinese companies have historically been characterised as low-cost, low-quality producers of manufactured goods. However, there is growing evidence of a new breed of Chinese company emerging that is able to compete on the world stage.read more...»
A great article here for students researching the competitive environment in the consumer electronics industry. Students should certainly be familiar with the strategies of Apple, Samsung, Nokia, Sony and others. But have they heard of Huawei? It looks like they might soon, if Huawei is successful in its objective of grabbing a significant share of the smartphone and tablet markets.read more...»
It’s been a diffcult time in China for global retail giant Walmart recently, However, as the BBC’s Sharanjit Leyl reports in this short video, Walmart hopes to capitalise on the growing number of Chinese who do their shopping online, as the ‘bricks and mortar’ competition between foreign supermarket operators in Chinese cities becomes more intense.read more...»
My first car was a Datsun Cherry. It was an amazing vehicle that seemed to defy its age and mileage. It just went on and on - and probably still is. I wasn’t alone in owning one - for decades, Nissan continued using the Datsun brand everywhere but in Japan. Then, in 1981, the company resolved to rebrand all Datsuns as Nissans, as part of a global strategy to strengthen the company name, Datsun seemed to be gone for good - until now!read more...»
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...»
A significant example here of strategic choice when it comes to evaluating the options for growth. Starbucks has opted to enter into a strategic alliance with Tata Group as it attempts to establish a position in the Indian market.read more...»
For any colleagues and students researching the Tata Group takeover of Jaguar Land Rover in 2008 - this is a must-watch video interview. In fact, it has broader relevance to anyone wanting a concrete example of how to respect the culture of a takeover target as part of a long-term plan to increase shareholder value.read more...»
The importance of understanding and adapting to the business culture in international markets is illustrated well in this new short video from the Telegraph. Some great insights packed into this short piece, including issues that you might find surprising!
A fantastic piece here in the Economist on the rapid globalisation of Indian firms such as Tata Group - a key case study for A2 students looking at takeovers and mergers…read more...»
A quick heads up for business students and teachers who have no reason to follow the Economics blog - Geoff Riley has posted an item about VW’s growth and profits. There is a one-minute video which would be an excellent lesson starter, with hints about the acquisitions and competitive strategy which have led to a 15% growth in sales and doubling of profits, and their focus on emerging markets - plenty here which could lead into an investigation of the company for BUSS4 students.
Operating a business in a developing economy is cheap, right? That’s why the BRIC economies have a comparative advantage, right? Wrong! At least, not in Brazil. The FT report the high costs of setting up in such a booming economy, highlighted by the fact that it is cheaper now to get your shoes shined by a Brazilian in New York than by a Brazilian in São Paulo. So businesses wanting to expand to Brazil and get the benefits of its high growth rate need to be aware of the low margins they will make, at least at first.read more...»
Is China still a competitive location for overseas manufacturing? Certainly the nature of manufacturing in China is chaining rapidly, as this 4 minute video from the Financial Times explains. It features European firms that moved their production to China several years ago. However, as wages in China have risen rapidly in recent years, it becomes less cost-effective to make low value-added products in China.read more...»
Most A2 Business students have their sights firmly set on BUSS3 this week, which is very much as it should be. However, next week their attention will turn to the wider world of BUSS4. In planning for that, it looks as if the three-part series of reports about China that Newsnight will be running this week would be very useful, and worth recording or at least picking up on i-player.read more...»
Ever heard of Coca-Cola? How about Google, Microsoft or IBM? What about McDonald’s? They sound familiar, and the amazing thing (to me) is that even in the 1990s, you would have heard Kodak mentioned in a list of the world’s five most valuable brands. Kodak was the Google of its day and by 1976 it accounted for 90% of film and 85% of camera sales in America. How the mighty have fallen, with the announcement that Kodak files for bankruptcy protection.
I was reading about Kodak’s decline and here are some of the key points that made an impression:read more...»
Don’t know why I keep using alcoholic beverages as examples in my lessons, but a recent discussion of the famous Boston Matrix got us all thinking which drinks belong in which Boston Box category. We decided that Guinness probably represents a cash cow for its producer, Diageo. In Europe, the market for beers is stable, or shrinking. But Guinness is a popular brand, with a large market share. It’s a good earner for the drinks giant.
But the Boston Matrix hints that there are better marketing opportunities out there: like grabbing a large share of fast growing markets – and developing star products. And that’s what Diageo have done, with whisky exports to China of popular brands like Johnnie Walker rising so fast the industry is struggling to meet demand.read more...»
This makes an ideal example for students considering the challenges of international location in operations management for which they must consider global
markets, cost reduction and avoidance of trade barriers. Here is my plan for the case study and questions which could be set on it:
Could Adidas make a profit from selling branded trainers for $1? Certainly not in any of their developed markets – but since 2008 they have been working on a market development (Ansoff!) strategy which would give them access to the vast market in rural India with a social enterprise venture at a price that local people can afford. The goal of the project, the firm says, is not to maximise profits but to “tackle social issues” by creating jobs.read more...»
The impact of the turbocharged emerging economies continues to grow and I was certainly surprised by the answer to this question. Having spent a long time thinking and reading about outsourcing and offshoring it’s easy to forget how the process runs in two directions. It’s not just that British firms have massive overseas investments – over the last few years foreign multinationals, many from the developing world, have been building up their bases here.read more...»
You guessed it. The rise of the emerging markets continues apace, with the US car market now in 2nd place behind China.read more...»
For the second time in just a few months, The Economist gives several column inches to debating the merits of outsourcing: the idea that there are big benefits to be had from passing work, once completed by a firm, to a subcontractor who takes on that role.read more...»
Most manufacturers of expensive branded goods are aware of and manage the risks of having their brands imitated by counterfeiters. But has a firm ever found a fake store being opened by these unscrupulous people?read more...»
I wasn’t surprised to pick up on the news that the world’s wealthiest people are now richer than before the credit crunch. A striking feature of the last thirty years has been the emergence of a tiny group of people capturing a relatively enormous slice of national income. You may be astonished to learn that in the UK, the wealthiest 1000 people have assets worth more than £330 billion (that figure alone represents a sum equivalent to almost 40% of the entire debts of the UK government).
This raises a number of issues in Business. Firstly, you might focus on the marketing opportunities this offers to some firms. Equally, you might reflect on the CSR and ethical implications of this state of affairs. And finally: will it last? Might the tide be turning, with the next thirty years seeing attitudes change and tolerance for this situation coming under attack from electorates and their governments?read more...»
I am cross-posting this item from the Economics blog because it should be of great value to A2 Business students as well as those studying Economics.
The first episode of a 3-part series, Made in Britain, was shown on BBC 2 last night, and was a really useful hour for business students. It examined how and why Britain has lost thousands of manufacturing jobs over the last two or three decades in the low-value part of the sector, with some film of outsourcing shot in China as well as plenty of archive material from this country, but argued that the move to high-end, low scale manufacturing has become Britain’s area of comparative advantage in industrial manufacturing. This included Evan being taken for a test drive in the new McLaren sports car, which was clearly an amazing experience - watch the clip to see his reaction! And this surely emphasises the Economic Importance of Manufacturing to the UK economy - see this link to Geoff’s blog on this topic! Sadly this episode is not to be broadcast again, but is available on i-player for another 21 days and is thoroughly worth watching. I will certainly be setting the recording machine for the next two programmes, on Mondays at 9.00 on BBC2 - episode 2 is to focus on how innovation can help keep Britain ahead in the global economy.read more...»
Students who can point to some overriding trends which help shape strategic direction and choices are much more likely to write interesting, persuasive and evaluative essays. This new report by consultants Ernst & Young is a pinch of gold dust for such students, as it examines in a reasonably accessible way six broad, long-term developments which shape business around the globe.read more...»
Preparation for BUSS4 includes some study of emerging markets, and students could take a break from textbooks to play with this graphic from the BBC. It allows you to compare countries in terms of wealth, health, life expectancy, education and energy consumption, between 1970 and 2006.There is an explanation of each of the sets of data and where it came from, and you can select two factors and up to 10 countries to compare.
For example you can examine questions like “As Asia’s wealth increases, how much longer are people living?” or “Is increasing wealth leading to better education?” in order to get a picture of how development and markets in the Asian countries compare with the UK and USA. Worth a look to get a feel for the potential for UK businesses to invest in expansion into these developing markets, and some of the limitations for them there.