Wal-Mart - the world's biggest retailer - has struggled to establish itself in China. However, the world's second-largest economy must still remain an attractive and strategically important opportunity for Wal-Mart, particularly given its need to find better growth and returns to offset maturing performance in the US.
This FT article (and accompanying video below) describes how Wal-Mart is is refocusing its growth strategy in China by using its Sam's Club chain to target affluent Chinese consumers in the main Tier 1 and Tier 2 cities.read more...»
A terrific example here of how a return to core, basic retailing skills has enabled fashion retailer Bonmarche to turn around its performance and future.read more...»
It has been along time coming (a six year negotiation), but Apple has finally signed the deal that enables it to connect to hundreds of millions of increasingly affluent consumers in China.
Apple has agreed a deal with China Mobile - the world's biggest network of mobile phone users - to sell iPhones to the network. China Mobile, which has about 760 million customers, will begin registering orders for iPhone from December 25 2013 in a deal that is likely to add many billions of dollars of annual revenues for Apple.read more...»
A fascinating survey has been released by the UK's Manufacturing Advisory Service ("MAS"). It reports that a growing number of manufacturing SMEs are bringing production back to the UK from overseas. This is a process called "onshoring" which, of course, is the reverse process to "offshoring".read more...»
Tucked away in a dark corner of the #buss3 syllabus is a topic entitled ‘Competitive Organisational Structures’. It is my experience that there is a temptation for students to be fooled into thinking that this is simply a re-hash of the content they considered during #buss2. For most it probably is, but for those wishing to buy a ticket to ‘Success Ville’ and ride the A-train all the way to June 2014 the topic is, in fact, completely different.read more...»
Last week The Queen and the Duke of Edinburgh visited One Angel Square in Manchester to open the world's "greenest" office, the new £100 m 14-storey headquarters of The Co-Operative Group. Yet within 72 hours, celebrations turned to dismay when The Mail on Sunday printed a story linking The Reverend Paul Flowers, a former Co-Op Bank Chairman with illicit drug use.read more...»
This revision presentation highlights the key opportunities and threats faced by firms outside China looking to do business in and with China. It also provides examples of businesses that have succeeded in China and those that have struggled!
A fully editable and printable version of this presentation is included in our AQA BUSS4 2014 Toolkit on China which is being published on 8 November 2013.read more...»
This revision presentation provides an overview of the key considerations and options facing businesses outside China looking to enter the Chinese market.
A fully editable and printable version of this presentation is included in our AQA BUSS4 2014 Toolkit on China which is being published on 8 November 2013.read more...»
A superb short video here from the business team at Reuters which highlights a strategic challenge facing camera manufacturers in Japan.
Top-end cameras for professional use are almost all Japanese - Japan made 81% of all digital cameras in 2012.
However, the emergence of high quality photography features on smartphones has slowed down demand for mid-range digital cameras.
Camera makers are moving away from compact digital cameras and moving towards the high-end market segments where sales might be lower but profit margins are higher.read more...»
Ansoff's Matrixis a key part of most business studies courses and on the face of it is an easy model for students to understand.
The model was created by Igor Ansoff and was first published in 'Strategies for diversification' in 1957.
The basic premise of the matrix is that there are 4 different strategies that a business can adopt with each one carrying a different degree of risk. At first glance this is simple to apply. For example, a business launching new products into new markets is a high risk strategy because it consists of both product and market development and the business may be operating outside of its comfort zone.
Where Ansoff can become tricky is correctly classifying which strategy the firm is adopting.read more...»
Entrepreneurship, finance, research, corporate culture, marketing, product development, changing management structures are all part of the ingredients in this BBC entrepreneurship feature about the development of Charlie Bingham's Foods.read more...»
Students looking at international expansion strategies of multinationals will soon come across the term "glocalisation". It sounds similar to the idea of diversification and both are concerned with choices that businesses make about which products and services are offered and into which markets. Such choices are often analysed using the Ansoff Matrix. But is glocalisation the same as diversification? Or is it really a kind of market development?read more...»
A fascinating and useful profile here from The Economist of Zhang Ruimin, the Chinese entrepreneur who has guided Haier through a successful strategy of international expansion.
Ruimin challenged the preconception that Chinese manufactured goods could be produced very cheaply but to a poor quality. His relentless focus on higher production quality has enabled Haier to become the world's largest producer of "white goods" such as washing machines, fridges and freezers.read more...»
Innovation turns business markets upside down, it alters the price and use of resources, it creates and destroys revenue flows and profitability as well as the way we work.
Peter Day a former BBC presenter considers a significant changes in a BBC Radio 4 series this weekend. Consider how the internet, search engines and 3D printing or additive manufacturing might alter market production processes, job opportunities marketing and economies.
There is much to discover and discuss in his superb introductory article linked above. The broadcasts are linked here.
A strong sign here of the increasing competitive strength of businesses based in China that wish to expand into other markets around the world. US-based venture capitalist KKR has invested around $550m for a 10% stake in Qingdao Haier, China's largest refrigerator and washing machine maker.
We have mentioned Haier before on the Business Blog as a good example of an emerging markets multinational corporation (EMMC) and Haier is also recommended as a case study for students researching China & Emerging Markets for AQA BUSS4.read more...»
More than half of U.S.-based manufacturing executives at companies with sales greater than $1 billion are planning to bring back production to the U.S. from China or are actively considering it, according to a new survey by The Boston Consulting Group.
The share of executives who are planning to "onshore" or “reshore” or are considering it rose to 54 percent, compared with 37 percent of executives who responded to a similar BCG survey in February 2012.read more...»
Here's Lei Jun (on the left). Notice something familiar about him? The blue jeans; dark top and introducing a shiny new smartphone to present to the world's media. Uncanny.
Lei Jun is the founder and CEo of a firm called Xiaomi which the Chinese media have nicknamed the “Apple of the East."
Lei Jun himself is also increasingly being called the "Steve Jobs of China" - and not just for his dress sense and presentational style!read more...»
It looks to me like the last throw of the dice. A final attempt to cut costs, stem rising losses and rationlise a business so that a buyer can be found - even in its current distressed state. But will the announcement of 4,500 job losses be enough to save Blackberry?read more...»
Just why have so many Western retail giants struggled to succeed in China? If global retailers like Walmart, Tesco, Carrefour and Best Buy have struggled, what hope is there for the rest?read more...»
Say the word e-commerce in the US, UK and many other developed economies and one word usually comes to mind – Amazon. The Seattle-based multinational claims to be the world's largest online retailer. It has highly diversified operations that have taken the business well beyond the original proposition - selling books online. CEO and Founder Jeff Bezos launched Amazon.com in 1995 and over the next two decades Amazon has expanded its retail websites to dominate the market in Canada, the UK, France, Germany and elsewhere.
However, in China, say e-commerce and a different "A" word is on everyone's lips. Alibaba is a private Chinese company that is now the largest business-to-business and consumer-to-consumer company in the world. Amazon might dominate global business-to-consumer online retailing. But, in China, Amazon has a very small market share and it is Alibaba that dominates.
In fact, Alibaba can legitimately claim to be the world’s leading e-commerce business. Reports suggest that Alibaba handled total sales of $170 billion in 2012 – which is more than the transaction value handled by Amazon ($96bn) and eBay ($75bn) combined!
After more than eight years of effort, Amazon has less than 1 per cent of China’s $196bn e-commerce market. Alibaba is estimated to have a market share of nearer 75 per cent.
To put this into perspective, China’s e-commerce market is already the largest in the world and by 2020 is forecast to be bigger than the existing markets in the USA, UK, Japan, Germany and France combined. So Alibaba’s market share of over 70% makes it a very big player indeed.read more...»
Businesses from outside China trying to sell in China face a critical question as they try to enter China. How far should they go to adapt or redesign (“localise”) their products and services to meet the needs and wants of customers in China? Should they adapt existing products just enough to appeal to consumers in China? Or should they look to start again – rethinking the product or service from the ground up – in order to established a position in the market and then gain market share?
Yum! Brands is a multinational that operates or licenses Kentucky Fried Chicken ("KFC"), Pizza Hut, Taco Bell and other small restaurant brands worldwide. Yum! is the world's largest fast food restaurant company in terms of outlets with more than 39,000 restaurants around the world in over 125 countries and global sales of over $12bn.
For the last decade, Yum! Brands has relied upon international expansion as the main driver of revenue and profit growth. China in particular has proved to be a significant source of growth. For example, KFC has opened an average of one new outlet per day in China and has an objective of reaching 15,000 outlets.
KFC has achieved this high rate of growth by adopting the concept of localisation. It has largely ignored the traditional model of KFC outlets in the US and other developed economies - that of a franchise operation with a limited menu, low prices and an emphasis on customers taking-out their food and drink to consume. Instead, the KFC model in China was redesigned to meet local needs.read more...»
In early 2013 the BBC asked global brand research company Millward Brown to identify the 20 most powerful foreign brands in China: the ones that have gone in and succeeded where many others have failed.
When the results came back one noticeable feature was that one company - Procter and Gamble ("P&G") - had three of the top 5 brands!
Of course you might expect P&G to be successful in China. After all, P&G is the world's largest maker of household and personal-care products. At the start of this decade P&G had set itself an ambitious corporate objective. It aimed to add 1 billion customers by 2015 (a 25% increase) and P&G were clear that emerging markets would be crucial in achieving that goal. Of all the emerging markets, P&G is strongest in China, which by 2012 had become its second-biggest national market with around 6% of the firm's worldwide sales.
So how has P&G managed to achieve such a strong position in China? Why had P&G succeeded when so many other Western brands had struggled to establish a leading position there?
To understand the achievement, you need to go right back to when foreign firms were first allowed to enter China. Here are some key features of the P&G approach to building its business in China.read more...»
If they want to grow, multinationals based in developed economies have to make emerging markets their number 1 strategic priority.
That's the view of the CEO of Tupperware - Rick Goings.
"Customers that want growth simply must be where the growth is" said Rick Goings in his contribution to a major survey about multinational strategy in emerging markets.read more...»
A useful article here in BusinessWeek for business teachers and students - particularly those interested in the sports wear market. The article analyses recent comments by the CEO of Under Arnour, a fast-growing and increasingly global sports wear brand.
Under Armour is a great example of a business that has been able to sustain high levels of revenue growth using an organic growth strategy. But can it sustain this growth?read more...»
As the new term welcome and induction activities draw to an end this week, our focus turns to 'chalk and talk'. I've just completed my first topic of teaching A2 (on the AQA spec) and the mix of research and discussion led to a group creation of the first essay for Upper Sixth.read more...»
It's all over for Nokia CEO Stephen Elop and his 32,000 employees in the core of Nokia - their mobile phones (handset) business. After several years of struggling to turn the business around in the face of intensive competition from Apple, Samsung, Google, Huawei and others, Elop has decided the best option is to sell the business to Microsoft.read more...»
This looks like a must-watch and must-record series from Robert Peston. Robert's new three-part series takes us behind the scenes of some of Britain's most successful retailers and also explores their history, heritage and organisational culture. Robert Peston Goes Shopping is on at 9 p.m. on Monday nights starting 2 September. Fantasticread more...»
CK Prahalad once wrote of the "fortune at the bottom of the pyramid" - reflecting the commercial opportunities for businesses that can successfully connect and bring products to markets inhabited by low income consumers whose living standards are on the rise. China's fast-growing economy provides an enormous opportunity, but how can companies win sales in the Chinese interior, hundreds of miles away from the coastal centres of commerce?
As wealth and consumerism reach China's most remote cities, foreign brands are venturing far from Shanghai and Beijing hoping to win over millions of new consumers. The FT's Patti Waldmeir visits two lower tier cities in central China and looks at how Adidas is expanding in the far outposts of the Middle Kingdom.read more...»
For years, BSKYB has dominated the market for subscription-based television using the rights to broadcast high-profile sports to attract and retain household subscribers. However, the markets for consumer media consumption are converging and this has led to the emergence of a new, powerful competitor for BSkyB - BT Sports.read more...»
An excellent case study here in how to grow a business through expansion into faster-growing international markets.read more...»
Harriet Green's strategy for Thomas Cook looks like it might become a classic case study in how to achieve a successful turnaround for a business with a strong brand and customer base but a weak balance sheet (gearing too high).
Before Green could get the balance sheet right through a refinancing, she had to get the business right first. She needed to change the organisational structure and improve profitability and medium-term cash flow through a strategy of retrenchment. This has been a painful process but it made it much easier when Thomas Cook approached the stock market to raise new share capital (equity) and reduce the amount of debt.
This short interview with Harriet Green is packed full with great A2 business studies materials as she explains the basics of her turnaround strategy.read more...»
We've featured Blackberry CEO Thorsten Heins and the plight of smartphone brand Blackberry several times here on the Business Studies Blog and in our BUSS4 exam workshops. Over the summer of 2013, things have not gone well for Blackberry despite the launch of two crucial new products in March 2013 and now the future of Blackberry's parent company - RIM - is in doubt.read more...»
Microsoft has announced that its CEO Steve Ballmer will retire from the business within the next 12 months. The Microsoft share price rose 9% on news of the announcement which might tell you something about how investors feel about how Ballmer has performed as CEO in recent years!
Lots will be written about Ballmer's time at Microsoft and the resulting strategic review which the business will inevitably conduct when a new CEO is appointed.
However, for now, enjoy a selection of videos which show Steve Ballmer in action! He has certainly attracted lots of attention for his unusual leadership style!read more...»
Collaboration and innovation are often fast-tracked by creating the right spaces for people and ideas to mingle.
This seven minute video from the Economist is deeply interesting - it looks at the Artisan's Asylum near Boston, Massachusetts in the USA which is host to a number of new hardware businesses. They are built around cheap work space, high-tech tools and crowd-sourced funding. The project has spawned some notable success stories many built around digital 3D printing - is there anything like an equivalent Maker Movement in the UK?read more...»
I've been updating my records of large takeovers and mergers in recent years and looking at whether shareholder value was created or destroyed by each deal.
One takeover which strikes me as being highly successful is that of YouTube by Google. Here is some evidence that supports that view.read more...»
Here’s a nice summer concept to consider. Suppose the future is much brighter than we commonly imagine. In fact, so good that within a few years the common problems we associate with scarcity will be a thing of the past.
My holiday reading has taken me in this direction, and it’s a fantastic idea to grapple with. How will business and the economy adapt to deliver this Promised Land? And what will it mean when we get there?read more...»
I finished my academic year with a discussion of innovation, and new ideas. On an optimistic note, I've just seen that the UK comes second in a new ranking of global innovation.read more...»
Hopefully as summer approaches you are looking optimistically into the future, and planning a fun (and not-so-fun) programme to help you achieve your goals. But how far ahead should you plan? Weeks? Months? Years? What about decades?
Firms face the same dilemma, and it’s worth asking if the best plan is to carefully focus on the next 2-3 years - or some more distant point in the future. Should directors focus on quick results, or on making really big riches for their shareholders several years, or even decades, down the line?read more...»
John Lewis are opening a store at Heathrow terminal 2, which will be the Partnership's smallest store, the first away from town and city centres and an important step in their international strategy. For a while I’ve been looking at the idea of place in the John Lewis marketing mix, and the business has clearly identified deeper trends in retail location.read more...»
It’s three years now since we got excited at T2U by the budget hotel concept (there’s a reminder link here) and the format seems to have been a success. Imitation by Whitbread, with their new 'hub by Premier Inn' format suggests this is a successful innovation.read more...»
Excellent BBC2 business documentary last night on the growth of low cost airlines 'Flights and Fights: Inside the Low Cost Airlines'. The programme explores how Ryanair and Easyjet have transformed the European airline industry.
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...»
A good visual way of analysing your BUSS4 research organisations for both Section A and B is to relate them to different concepts or models. (apologies for the drawings in the picture above) To go even further could be to link elements of some of these models and concepts together which can give a more in-depth, holistic view of the organisations in relation to some key BUSS4 topics. I have started to get my students to relate them to the following 6:
The link between Leadership, Values and Organisational Culture will be a familiar one for BUSS4 students. This video “Simon Sinek: How Great Leaders Inspire Action” from TED talks is a simple and really interesting way to make these links. It’s summed up by a “Golden Circle” and 3 words: What, How and Whyread more...»
At what stage does organisational culture need to fundamentally change?
A great example here of a European manufacturing business that is attempting to compete based on product differentiation compared with the cost leadership approach adopted by competitors relying on mass production techniques.read more...»
A fascinating, short interview here with Tim Cook, CEO of Apple.
Cook compares Apple's performance to its competitors, and explains his product strategy in an onstage interview.
His argument is clear. Apple's strategy is one of differentiation, not cost leadership based on market-leading scale. For Apple, it is not about making the most of each of the product categories in which it has a presence - it is about making the best in the market.
So, Samsung is now the clear global market leader in mobile phones (including the fast-growing smartphone segment). But Cook argues that Apple makes the best phone. Compare the iPhone 5 with the Samsung Galaxy S4 - is he right?
For students, an important question to consider is this - what the key advantages that a successful strategy of product differentiation can bring? And can it be sustained against the intensive competition that Apple is facing from the likes of Samsung, Google and Huawei?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.
Do you have a set a core values? What deeply held beliefs shape the way you see the world and how you act?
Your core values underpin the way in which you behave, act, and how you live your life. So, if someone asked you to list your two most important values, what would they be?
I ask the question because the concept of core values is essential to understanding organisational culture.
Indeed I would hope that the role of core values would feature in many high-scoring BUSS4 essays for students answering questions about organisational culture – they are important!read more...»
“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...»