Private equity buyouts - Sunday Times supplement
Private Equity hasn’t really featured very strongly in the Business Studies syllabus before, but may come more to the fore this year in the study of mergers and takeovers. A supplement in yesterday’s Sunday Times which examines ‘private equity backed firms with the fastest growing profits’ is worth getting hold of, as it gives some help on the role of private equity in the M&A market.
read more...»Glenstrata - Glencore proposes merger with Xstrata
Yesterday morning’s business news has been dominated by the proposed merger of Glencore and Xstrata. Glencore’s 34% holding of Xstrata shares had made a third party approach for Xstrata very difficult if not impossible.
read more...»Integration, integration, integration
HP is an example of a firm which is struggling to integrate acquisitions, and the perils of diversification.
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...»Leadership in a multinational business - what leadership style works best?
This is an interesting blog entry from Pekka Viljakainen, an entrepreneur from Finland who sold his IT consulting business to a multinational Tieto. Some useful insights here for students wanting to develop their understanding of how the challenge of leadership changes as a leader’s responsibilities become more complex and cross-border.
read more...»Manufacturing strategy: Is China losing its competitiveness?
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...»External influences: the threat that is China
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...»What’s gone wrong for Kodak?
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...»Tesco’s Big Price Drop - on the Stock Market, or, Porter and Ansoff in action
Such is the importance of Tesco’s and their dominance of the retail market that the effect of a 2.3% drop in their like-for-like sales knocked almost 16% off their share price yesterday. Perhaps not so much a reflection of the figures themselves - although they compare poorly with Morrison’s and Sainsbury’s both of whom managed to increase their sales over the same period - as the admission by the new CEO Philip Clarke that Tesco’s got their strategy wrong, both in the short and the long term.
read more...»Tesco takes it ‘easy’, controlling costs in its US operations
You may already know about Tesco’s overseas expansion strategy, and its Fresh & Easy venture in the States. The US expansion is taking place in challenging economic conditions and according to The Guardian, the business is ‘mothballing’ a second wave of Fresh & Easy stores, suggesting that the supermarket group’s loss-making US start-up has hit another bump in the road.
read more...»Revision Presentation - Business Location
This new revision presentation provides an overview of the factors that a business considers in choosing its business location. The presentation also considers issues such as multi-site location, industrial inertia and locating a business overseas (offshoring).
read more...»German works councils enforce VW’s work-life balance!
Germany has long been noted for the strength of its trade unions, and the power of the works councils in manufacturing industries. Concerned about the blurring of the divide between work and home life, Volkswagen’s powerful works council has struck an agreement with management that most employees who use a company BlackBerry will be subject to new email restrictions. The company’s email server will cease routing messages 30 minutes after the end of an employee’s shift and will only begin sending mails again half an hour before the next working day begins.
read more...»The Boston Matrix, whisky and booming exports
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...»International operations decisions - Adidas trainers for $1?
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...»Olympus Epic Fail
The scale of the failings in corporate governance at Olympus is breathtaking. The company has misled, shareholders, banks, auditors, stock markets, Japan’s government, and staff about the true state of its finances over a 20 year period. It is Corporate Social Irresponsibility on the grandest of scales.
read more...»Corporate Irresponsibility at Olympus
Recent problems at Japan’s Olympus Corporation highlight the importance of corporate culture, ethics, Corporate Social Responsibility and management responsibility to shareholders and other stakeholders.
Location Location Location
Where to locate? A crucial decision taken by organisations both at the start of a business venture and when considering expansion.
A level playing field for football on TV
Pubs and clubs that want to show live football, cricket or rugby on Sky TV have to be extremely confident that it will raise their profits - the monthly cost of subscription runs to over £500 per month. For many, showing live sport is a way to keep customers coming to the pub rather than drinking at home, so may be the only strategy available to stay in business.You can easily see the benefit of finding a cheaper source of satellite broadcasts if possible, and this is the background to the well-publicised case in which Karen Murphy, landlady of a pub in Portsmouth, was taken to court by Sky and the Premier League for using a cheaper Greek decoder to bypass controls over match screening. The European Court of Justice has ruled that national laws which prohibit the import, sale or use of foreign decoder cards are contrary to the freedom to provide services.
read more...»Lesson activity - the Dyson Debate
Here is a resource that I use with my AS Business groups when we are covering stakeholders. A debate format is used with students considering the issues raised by Dyson’s decision to relocate production from Malmesbury to Malaysia.
Download Dyson Debate:
Dyson_Case_Study_-_Debate_Material.docx
Who is Britain’s biggest manufacturer? The answer may surprise…
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...»Strategies for success on the beleaguered high street
This is a gem! A terrific article that is packed full of materials which students can use to develop their understanding of the strategic options open to high street retailers who are struggling with a significant downturn (once again) in consumer spending.
read more...»Skype CEO on Aims, Growth, Risks and Motivation
A very useful interview here with Tony Bates, the UK-born CEO of Skype which is in the process of being acquired by Microsoft. Technology firms and brands continue to be a superb source of business lesson case studies and examples. There is much in the interview which students ought to add to their notes - particularly A2 students wanting some research-based evidence for their exam essays.
read more...»Tesco pulls out of Japan
Even the might of Tesco cannot overcome the cultural differences between the UK market and the Japanese market for groceries. They moved into the Japanese market in 2003, as part of their objective of global growth, but have now decided that they cannot grow big enough there to generate the economies of scale that they need to make the business profitable - and with the change of focus in their objectives away from growth and towards greater profitability, this no longer fits with their strategy.
The reasons for the difficulty of gaining the growth that they need seem to be due to big differences in the way that people do their grocery shopping in Japan. Gavin Rothwell, research manager at groceries analyst IGD, is quoted as saying “The retail market is fragmented and there are many strong regional players, often family-owned. Convenience stores dominate, particularly in the city centres, and a culture of ‘immediacy’ supports large numbers of vending machines/kiosks.”. Tescos are not the only major western retailer to have failed to break these habits, as Carrefour and Boots have also tried to break into the market but pulled out, and Wal-Mart are reportedly struggling. So this story emphasises the risks that businesses take when they try to use the market development sector of Ansoff’s matrix to sell a well-established product into a new and unfamiliar market - and suggests that some markets are more impervious to globalisation than others,
The world’s biggest car market
You guessed it. The rise of the emerging markets continues apace, with the US car market now in 2nd place behind China.
read more...»Taking Italian to the Chinese - Pizza Express Expansion Strategy
With the success of Pizza Hut, Dominos and Papa Johns, it seems that consumers in China have an appetite for Italian fast food. But is there enough demand to make the market opportunity sufficiently attractive for a more mid-market brand such as Pizza Express? This superb article in the Telegraph features an interview with Justin Kennedy, the owner of the Pizza Express franchise in Hong Kong and Shanghai.
An opportunity for Kenndy to open the first Pizza Express in Shanghai arose five years ago when a suitable retail location became available. But growth since then has been slow - just one more outlet opened. Is now the time that that the rate of organic growth can be accelerated as the rising incomes of a Chinese middle class make the Pizza Express product more affordable? The growth objective seems to be pretty modest - up to about 10 restaurants in the next few years.
Lots of interesting material in the article. The trading format has essentially been imported directly from the UK - there seems to be little reflection of local tastes and preferences.
Growing the brand in China also seems to have its fair share of headaches - not the least finding suitable trading locations and also recruiting staff with suitable skills and experience.
Marketing to the elderly
Not all marketing is aimed at the young and ultra hip (like T2U readers). It’s worth remembering that there are other market segments (groups of consumers with the same buying habits) well worth the attention of companies keen to meet the wants and needs of a particular target group in society. Japan is perhaps the best example of a rich country with a relatively large group of affluent older people. The Economist has an article about the Ueshima coffee shop chain who have geared their marketing strategy to this target market.
read more...»Tesco adapts to the South Korean market
We all know about the success and dominance of Tesco in the UK where it has a market share of around 30%. Globally it is one of the biggest retailers in the world and it now has stores in 14 countries. This clip is a great example of how Tesco have adapted to the South Korean market where it is the market’s number two, with fewer stores than the number one company.
read more...»Fresh doubts about outsourcing
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...»The Irresistible (?) Rise of the Super Rich
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...»British manufacturer exploiting a niche
A topical story for Wimbledon fortnight - here is Europe’s only remaining manufacturer of tennis balls, doing well by being imaginative about how to develop their competitive advantage. This is a great story for introducing niche markets and specialisation, with a video showing the manufacturing process which includes attaching two figure-eight-shaped pieces of cloth to the rubber balls by hand, not machine, as owner Derek Price insists this is still the most accurate way.
read more...»
