Ivey Publishing

Corporate Level Strategy: Theory and Applications

Furrer, O.,2/e (United States, Routledge, 2016)
Prepared By Sergii Nevmerzhytskyi, PhD Canadidate
Chapter and Title Chapter Matches: Case Information
Chapter 1:
What is Corporate-Level Strategy?

FORTIS INC. AND THE $11.8 BILLION ITC DECISION
Rod E. White, W. Glenn Rowe, Selena Shannon Pritchard

Product Number: 9B18M020
Publication Date: 1/31/2018
Revision Date: 2/1/2018
Length: 14 pages

In late 2015, the executive vice-president and chief financial officer of Fortis, Inc., a homegrown energy delivery company based in St. John's, Newfoundland and Labrador, was preparing to meet with the company’s leadership committee. On the agenda was whether Fortis should make an offer to acquire ITC Holdings Corporation, the largest independent transmission utility in the United States. Fortis had a proven track record of acquiring regulated utilities, and if the ITC deal went ahead, it would mark Fortis’s most significant acquisition in its history. Should Fortis move ahead with the acquisition, or was taking on ITC too big a risk?

Teaching Note: 8B18M020 (5 pages)
Industry: Utilities
Issues: electrical transmission, electrical distribution, mergers and acquisitions, value creation, diversification
Difficulty: 5 - MBA/Postgraduate



LEGO GROUP: BUILDING STRATEGY
Darren Meister, Paul Bigus

Product Number: 9B11M086
Publication Date: 9/13/2011
Revision Date: 2/1/2013
Length: 12 pages

The world famous toymaker, The LEGO Group, assembled an internal management team to create a strategic report on LEGO’s different product lines and business operations. In recent years, numerous threats to LEGO had emerged in the toy industry. The acquisition of Marvel Entertainment by The Walt Disney Company created major implications for valuable toy license agreements. LEGO had also recently lost a long legal battle with major competitor MEGA Brands, makers of MEGA Bloks, with a European Union court decision that removed the LEGO brick trademark. Furthermore, the second-largest toymaker in the world, Hasbro, was preparing to launch a new rival product line called Kre-O. It was critical for the management team to identify where to expand LEGO’s product lines and business operations, in order to develop a competitive strategy to continue the organization’s recent years of financial success and dominance in the building toy market.

Teaching Note: 8B11M086 (6 pages)
Industry: Other Services
Issues: Opportunity Recognition; Licensing; Competitive Strategy; Business Growth; Toy Industry; Denmark
Difficulty: 4 - Undergraduate/MBA


Chapter 2:
Why Do Multibusiness Firms Exist?: Theoretical Approaches to Diversification

BROOKS SPORTS: COMPETING AGAINST THE GIANTS
Wiboon Kittilaksanawong, Andrew Jiro Poplawski

Product Number: 9B16M150
Publication Date: 9/27/2016
Revision Date: 9/27/2016
Length: 16 pages

Brooks Sports, Inc. (Brooks) strove to inspire and promote an active lifestyle through its innovative gear, enabling its customers to run longer, farther, and faster. The shoe company had endured a number of growths and declines in its 100 years of operations. Nearly bankrupt by 2000 because of its attempt to compete with diversified athletic brands, Brooks had finally found a strategy to compete in the sports market. Operating as an independent subsidiary of Berkshire Hathaway Inc., Brooks focused entirely on the niche running market, transforming into a brand that generated over $500 million in 2014. Now Brooks had set its sights on becoming a $1 billion brand by 2020. In the past, few companies had focused on the small but growing running industry; however, with the running market becoming increasingly competitive, would Brooks’s runner-focused strategy carry the company to its $1 billion goal by 2020, or would it be forced to shift back to a diversified approach as the running market became more crowded?

Teaching Note: 8B16M150 (25 pages)
Industry: Arts, Entertainment, Sports and Recreation
Issues: diversification strategy, focus strategy, blue ocean strategy, competing with giants
Difficulty: 4 - Undergraduate/MBA



LOUIS VUITTON
Mary M. Crossan, Manu Mahbubani

Product Number: 9B13M022
Publication Date: 2/4/2013
Revision Date: 5/10/2017
Length: 19 pages

Louis Vuitton, the flagship group within Moët Hennessy Louis Vuitton (LVMH), had contributed to the stellar growth of the group in 2010 and 2011. But, there were clouds on the horizon. Was the recent growth sustainable? What steps should Louis Vuitton take to address upcoming challenges? This case takes the student through the challenges a global company faces as it tries to grow a business that is based on one of the most valued high-end brands in the world. The case reveals the fundamental strategic tension between what a firm needs to do, given the competitive environment, what it can do, given its resources and organization, and what leaders want to do, given their fundamental motivations and beliefs, which shape the way they see the issues.

Teaching Note: 8B13M022 (22 pages)
Industry: Retail Trade
Issues: Strategic Management; Managing Global Business, Luxury Industry; Dynamic Capabilities; Global
Difficulty: 4 - Undergraduate/MBA


Chapter 3:
Managing Multibusiness Firm: Theoretical Approaches to Corporate-Level Strategy

BAYER-MONSANTO: THE CHALLENGES OF A MEGA MERGER
Wiboon Kittilaksanawong, Gabrielle Gaté

Product Number: 9B17M182
Publication Date: 12/15/2017
Revision Date: 12/15/2017
Length: 16 pages

In September 2016, German-based Bayer AG (Bayer) and U.S.-based Monsanto Company (Monsanto) agreed to merge entities to create a global leader in agriculture. The combined entity would benefit from Monsanto’s expertise in seeds and traits, and from Bayer’s wide range of crop protection products. Bayer would acquire Monsanto for $128 per share, a high 44 per cent premium in an all-cash transaction. There were issues with the deal, which included antitrust concerns, which could require subsequent divestments, and Monsanto’s brand image, owing to its involvement in controversial business operations. Given these issues, would Bayer’s diversification into agrochemicals by merging with Monsanto be able to create sufficient synergies and deliver economic benefits to shareholders, while meeting expectations from other stakeholders at different levels?

Teaching Note: 8B17M182 (11 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: mergers and acquisitions, industry consolidation, business ethics, stakeholder management, valuation
Difficulty: 4 - Undergraduate/MBA



WHAT BUSINESS IS ZARA IN?
Daniel Doiron

Product Number: 9B15M088
Publication Date: 9/24/2015
Revision Date: 9/24/2015
Length: 16 pages

Zara, a successful fast fashion manufacturer and retailer, noted for its uncommon business process, needs to consider the future of the company and its popular flagship brand. The company produces clothes in the high cost labour market in Europe, spends very little on advertising, ostensibly overspends on positioning high-end stores in chic retail districts, and carries substantially less inventory and charges 15 per cent less than its competitors. Though investors initially viewed this process as a formula for disaster, the company had proven them wrong by establishing itself as a leader in the industry with its hard-to-replicate strategy for success. However, the disruptive business model innovator is now faced with new competitors who are trying to beat the company at its own game by successfully copying key components of its fast fashion approach. The company needs to find a way to continue to differentiate its brand in the evolving industry, while capturing more than its share of the tremendous market growth anticipated in the future.

Teaching Note: 8B15M088 (9 pages)
Industry: Retail Trade
Issues: Disruptive business model; competitive growth; strategic growth; risk; opportunity
Difficulty: 4 - Undergraduate/MBA


Chapter 4:
Defining the Business

YVES SAINT LAURENT: STRATEGIC LEADERSHIP OF CREATIVE DIRECTORS
Wiboon Kittilaksanawong, Léo Guilbert, Andrew Jiro Poplawski

Product Number: 9B17M137
Publication Date: 8/31/2017
Revision Date: 8/31/2017
Length: 16 pages

On April 1, 2016, fashion house Yves Saint Laurent (YSL) announced the departure of its creative director who had been responsible for successfully reviving the struggling YSL brand since 2012. Three days after this surprising departure, the company announced that its next creative director would be a relatively inexperienced, 36-year-old designer. After decades of leadership turmoil and financial instability at YSL, the incoming creative director was facing increasing pressure from stakeholders to build off the success that his predecessor had achieved. The global luxury fashion industry had become increasingly competitive, with multiple brands competing for the industry’s estimated value of €265 billion in 2017. Had YSL made the right decision in selecting this young director? To help YSL remain one of the top brands in the fashion industry, should the new director implement a strategy that builds upon the successful foundation created by his predecessor, or should he develop new strategies?

Teaching Note: 8B17M137 (12 pages)
Industry: Retail Trade
Issues: luxury, diversification, leadership, fashion, creative industries, branding, succession
Difficulty: 4 - Undergraduate/MBA



MEAKIN ENTERPRISES: BALANCING RISKS IN THE AGRICULTURE INDUSTRY
Tyler Case, Doug Kalesnikoff

Product Number: 9B17M061
Publication Date: 5/8/2017
Revision Date: 5/8/2017
Length: 13 pages

In January 2017, a Canadian farmer and entrepreneur faced a challenging decision about the future of his two businesses: a farming operation and a trucking operation. After the hectic 2016 farming and trucking season, he began to compare his 2016 and 2015 financial statements for the farming business, Meakin Farms Inc., and the trucking business, Meakin Industrial Ag Corp. While both organizations remained viable, he wondered what he should do for 2017 and beyond, given the unique structure of the businesses and the vast uncertainty of the agricultural industry. Should he pursue an expansion, a contraction, or should he maintain the current levels of business? He needed to identify a strategic direction that would balance the size and scope of his businesses while accounting for environmental risks.

Teaching Note: 8B17M061 (17 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: agribusiness, risk management, farming
Difficulty: 4 - Undergraduate/MBA


Chapter 5:
Diversification Strategies: Creating Corporate Value

AMAZON GO: VENTURING INTO TRADITIONAL RETAIL
Wiboon Kittilaksanawong, Aurelia Karp

Product Number: 9B17M092
Publication Date: 6/28/2017
Revision Date: 6/28/2017
Length: 11 pages

In December 2016, Amazon.com, Inc. (Amazon), the largest online retailer, entered the offline retailing industry by launching its first Amazon Go store in Seattle. Previously, the company had entered the food, diaper, and housekeeping product manufacturing industries with its Amazon Elements brand. The company had not been profitable until 2001 and was still facing some financial difficulties, but it was named the fourth most valuable public company in the United States in 2016. In 2015, it surpassed Wal-Mart Stores, Inc. (Walmart) as the most valuable online retailer in the country. Given its current competitive advantages in the online retail business, could Amazon reproduce this success in offline markets? Did Amazon’s diversification into offline retailing make sense considering its existing resources and capabilities, the presence of established traditional retailers such as Walmart, and a market trend that was increasingly moving toward online stores?

Teaching Note: 8B17M092 (11 pages)
Industry: Retail Trade
Issues: diversification, first mover advantage, online retail, brick-and-mortar retail, supply chain management
Difficulty: 4 - Undergraduate/MBA



YANCOAL: THE SASKATCHEWAN POTASH QUESTION
George Peng, Paul W. Beamish

Product Number: 9B13M124
Publication Date: 12/5/2013
Revision Date: 10/10/2014
Length: 16 pages

AWARD WINNING CASE: European Foundation for Management Development (EFMD) Case Writing Competition 2014 — Emerging Chinese Global Competitors category.

In 2011, a major coal producer in China — Yancoal — must make several decisions in terms of product and geographic diversification. One option is to retain its focus on the coal business. Here, it can acquire other coal assets in Australia to further increase its coal reserves. Another option is to acquire 19 potash-exploration permits in Saskatchewan, Canada. This represents an opportunity for both product diversification and further geographic diversification. Yancoal has to decide whether it should focus on the coal industry or pursue the potash opportunity as well.


Teaching Note: 8B13M124 (23 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Diversification; value creation; cartel; growth; alternatives; strategic choice; state-owned enterprise; China; Canada; Australia
Difficulty: 4 - Undergraduate/MBA


Chapter 6:
The Issue of Relatedness: Creating Synergies

SUNRISE POWER: CHARTING GROWTH IN UNEXPLORED AREAS
Sanjeev Kumar Prasad

Product Number: 9B17M093
Publication Date: 6/26/2017
Revision Date: 6/26/2017
Length: 14 pages

Sunrise Power, a first-generation mid-sized power and mining company in India, was considering geographical diversification in the African continent. While many African nations were rich in resources, they often lagged in economic indicators, and global companies hesitated to invest in infrastructure due to limited risk appetite. However, this left an opportunity for mid-sized firms such as Sunrise Power, so long as they could attain regulatory support and ensure high returns. Sunrise Power needed to evaluate the complexities in identifying the right market in Southern Africa. This included examining indicators like population, gross domestic product, energy demand forecasts, and electrification capacity. The firm also had to identify the critical success factors and assess the risks in the strategy planning process. Finally, it needed to design an organizational structure for its African venture so as to realize the benefits of diversification.

Teaching Note: 8B17M093 (12 pages)
Industry: Utilities
Issues: emerging market strategy, strategy development, global entrepreneurship, industry analysis
Difficulty: 5 - MBA/Postgraduate



INDIAN OIL CORPORATION: VERTICAL SPECIALIZATION TO VERTICAL INTEGRATION
Sushil Kumar, Satyasiba Das

Product Number: 9B16M155
Publication Date: 9/21/2016
Revision Date: 9/21/2016
Length: 14 pages

Indian Oil Corporation Limited was a large public sector company operating in the downstream segment of the highly regulated oil and natural gas industry in India. It made large investments in the segment-specific assets in refining and distributing petroleum products. In fiscal year 2014/15, the annual turnover of Indian Oil Corporation Limited was ?4,507 billion (US$73.7 billion), and its net profit was ?52 billion. The strategic positioning of the company was heavily influenced by its social agenda and supported by the Indian government. After the liberalization of the Indian economy, the company was faced with serious competition from the private sector, and had limited access to the upstream segment. In 2015, Indian Oil Corporation Limited attempted to vertically integrate in order to become an integrated energy company. The senior management team evaluated the challenges and strategic choices available to Indian Oil Corporation Limited in terms of integration and exploration, brownfield investment in the petrochemicals sector, and modernization of refineries. The key question before the team was how to distribute Indian Oil Corporation Limited's resources among these three strategic choices.

Teaching Note: 8B16M155 (15 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: strategic positioning, vertical specialization, vertical integration, public sector enterprises, oil, gas, energy
Difficulty: 5 - MBA/Postgraduate


Chapter 7:
Diversification and Performance: Limits to the Scope of the Firm

SONY CORPORATION’S AIBO: AN INTELLIGENT DECISION?
Tulsi Jayakumar

Product Number: 9B18M036
Publication Date: 3/9/2018
Revision Date: 3/9/2018
Length: 15 pages

In November 2017, the chief executive officer of Sony Corporation was preparing to announce the company’s release of its rebooted robo-pup, the Aibo—a robot equipped with sensors and actuator technologies, and powered by artificial intelligence that allowed this virtual pet to behave like a real dog. Sony Corporation, the 70-year-old iconic Japanese manufacturing company, had diverse businesses. After significant restructuring since 1999 to address its financial troubles, the company was expected, in March 2018, to post a record operating profit for the first time in two decades. How did a virtual pet business, especially one that had already proved unviable in the past, fit into such a restructuring exercise? Was Sony Corporation's Aibo an intelligent decision?

Teaching Note: 8B18M036 (9 pages)
Industry: Manufacturing
Issues: artificial intelligence, diversification, corporate strategy, competitive advantage
Difficulty: 5 - MBA/Postgraduate



SWISS ARMY: DIVERSIFYING INTO THE FRAGRANCE BUSINESS
Ilan Alon, Marc Fetscherin, Claudia Carvajal

Product Number: 9B14A066
Publication Date: 11/19/2014
Revision Date: 3/4/2016
Length: 10 pages

In 2005, Victorinox, the original producer of the Swiss Army Knife, acquired Wenger, including the fragrance label “Swiss Army Fragrance.” The acquisition of Wenger allowed Victorinox to become the only producer of the famous Swiss Army Knife as well as the key player in Swiss Army watches. Victorinox’s head of marketing was asked to design a business strategy that would successfully allow the company to enter the fragrance industry. How should Victorinox diversify into the fragrance business? Should it aim to transfer its existing brand attributes to fragrance products? Or should it adopt a strategy that would include the use of another brand to market the perfumes? The head of marketing had to present a plan to the CEO of Victorinox on how best to brand and position the product, and how to compete in the fragrance industry.

Teaching Note: 8B14A066 (10 pages)
Industry: Retail Trade
Issues: Branding; new product development; Switzerland
Difficulty: 4 - Undergraduate/MBA


Chapter 8:
The Role of the Parent: Managing the Multibusiness Firm

JINJIANG GROUP: GLOBALIZATION THROUGH STATE OWNERSHIP AND POLITICAL CONNECTION
Wiboon Kittilaksanawong, Qiannan Shi

Product Number: 9B18M019
Publication Date: 1/26/2018
Revision Date: 5/9/2018
Length: 14 pages

Since its founding in 1951, Chinese state-owned Jinjiang International (Group) Company Limited (Jinjiang) had become a leading international company in the travel and hospitality industry with business divisions in hotels, transportation, travel, realty, investments, and finance. The Jinjiang brand was well-known in China, and the group had been pursuing a conservative investment approach. However, in response to the Chinese government’s “Going Global” and “One Belt and One Road” policies, and in order to strengthen the firm’s international competitiveness, Jinjiang made a series of aggressive mergers and acquisitions between 2014 and 2016. The acquisitions—especially those of two large hotel groups—had worsened Jinjiang’s debt position, while integration was proving difficult due to the acquired firms’ different corporate cultures and values. The hospitality market was also becoming mature and highly competitive; host-country governments were increasingly wary of foreign state-owned companies acquiring domestic assets. How could Jinjiang overcome these challenges to achieve its aspiration of building a world-class brand, while fulfilling the Chinese government’s political agendas through a series of aggressive globalization efforts?

Teaching Note: 8B18M019 (10 pages)
Industry: Accommodation & Food Services
Issues: globalization, government relations, emerging market
Difficulty: 4 - Undergraduate/MBA



ALSEA: A NEW CEO COMES ON BOARD
Jose Antonio Davila, Ernesto Bolio, Rod E. White, W. Glenn Rowe, Selena Shannon Pritchard

Product Number: 9B17M112
Publication Date: 7/21/2017
Revision Date: 10/10/2018
Length: 15 pages

Alsea was a Mexican-based, family-founded conglomerate operating in six countries in Latin America and Spain. It was a master franchiser for such well-known brands as Starbucks, Domino’s, and Burger King. In late 2016, after years of dramatic growth, Alsea appointed its first chief executive officer (CEO) who was not a family member or had not been involved with the company’s founding or early development. However, family members continued to occupy senior executive roles, serve on the company’s board, and hold significant shares in the company. In March 2017, the new CEO needed to decide on Alsea’s corporate strategy. He also needed to build trust with the founding family, which held a controlling interest in the firm. How should he engage the current executives in building a world-class senior management team? How could he best demonstrate his value to Alsea's board?

Teaching Note: 8B17M112 (7 pages)
Industry: Accommodation & Food Services
Issues: corporate strategy, family owned, franchising, restaurant,
Difficulty: 4 - Undergraduate/MBA



HEWLETT PACKARD EHEALTH CENTER: HEALTHCARE ACCESS THROUGH TECHNOLOGY CONVERGENCE
Kajari Mukherjee, Michael J. Rouse, Bhuvaneashwar Subramanian

Product Number: 9B17M101
Publication Date: 7/5/2017
Revision Date: 7/5/2017
Length: 17 pages

In 2012, eHealth Centers (eHCs) digitally delivered affordable medical care and diagnostic support for patients in villages and remote areas of India where it was otherwise unavailable. The solution was initially conceived and developed as a mandate from Hewlett Packard India’s corporate social responsibility team under the leadership of the chief technology officer. The eHCs design incorporated a self-contained diagnostic centre in a container, operated by a staff of paramedics. Doctors located in urban health hubs provided consulting care through video conferencing, and patients could experience the feeling of being in a doctor’s office in real-time. These eHCs slowly turned out to be a business opportunity for Hewlett Packard India. By early 2016, there were 55 centres in operation. The challenge before the company was to scale up exponentially.

Teaching Note: 8B17M101 (14 pages)
Industry: Health Care Services
Issues: shared value creation, strategic corporate social responsibility, technology convergence, bottom of pyramid
Difficulty: 5 - MBA/Postgraduate


Chapter 9:
Organizing and Structuring the Multibusiness Firm

FERRERO GROUP: ACHIEVING SUSTAINABILITY THROUGH SUPPLY CHAIN INTEGRATION
Wiboon Kittilaksanawong, Ottavia Curcuraci

Product Number: 9B17M081
Publication Date: 6/19/2017
Revision Date: 6/19/2017
Length: 17 pages

Ferrero Group (Ferrero) operated in the chocolate confectionery industry. The industry was facing challenges with changes in consumer needs, and price volatility and scarcity of raw ingredients. To achieve its ambitious economic goals in this environment, Ferrero integrated various sustainability initiatives in its supply chain and grew the company through vertical and horizontal integration. Advocating a vision of “sharing values to create value,” the company set sustainability goals for 2020, which included controlling and being able to trace the supply of raw ingredients. Could Ferrero maintain its leading position in the industry and achieve its sustainability goals? To what extent could the sustainability goals strengthen the company’s competitive position and move it toward achieving its financial goals?

Teaching Note: 8B17M081 (14 pages)
Industry: Manufacturing
Issues: corporate social responsibility, business ethics, social entrepreneurship, supply chain management, vertical integration, mergers and acquisitions
Difficulty: 4 - Undergraduate/MBA



APPLE INC.: MANAGING A GLOBAL SUPPLY CHAIN
P. Fraser Johnson, Ken Mark

Product Number: 9B14D005
Publication Date: 5/16/2014
Revision Date: 3/13/2017
Length: 21 pages

AWARD WINNING CASE - PRODUCTION AND OPERATIONS MANAGEMENT CATEGORY - THE CASE CENTRE AWARDS AND COMPETITIONS 2016. An analyst for a money management firm is studying Apple Inc. as one of the firm’s key investments. In 2013, Apple had a market capitalization of nearly US$500 billion and sales of US$171 billion. According to the research firm, Gartner Group, it had the world’s best supply chain, ranking ahead of companies such as Walmart, Amazon and Inditex (Zara). As part of the analysis, a full review of Apple’s supply chain is required to look for insight into the future performance of the company in order to decide whether or not the analyst’s firm should continue to hold Apple shares.

Teaching Note: 8B14D005 (12 pages)
Industry: Information, Media & Telecommunications
Issues: Supply chain management; flexibility; strategy; supplier management; technology; innovation; Canada
Difficulty: 4 - Undergraduate/MBA


Chapter 10:
Vertical Integration: Coordinating the Value Chain

ECCO A/S - GLOBAL VALUE CHAIN MANAGEMENT
Bo Bernhard Nielsen, Torben Pedersen, Jacob Pyndt

Product Number: 9B08M014
Publication Date: 5/29/2008
Revision Date: 5/10/2017
Length: 21 pages

ECCO A/S (ECCO) had been very successful in the footwear industry by focusing on production technology and assuring quality by maintaining full control of the entire value chain from cow to shoe. As ECCO grew and faced increased international competition, various value chain activities, primarily production and tanning, were offshored to low-cost countries. The fully integrated value chain tied up significant capital and management attention in tanneries and production facilities, which could have been used to strengthen the branding and marketing of ECCO's shoes. Moreover, an increasingly complex and dispersed global value chain configuration posed organizational and managerial challenges regarding coordination, communication and logistics. This case examines the financial, organizational and managerial challenges of maintaining a highly integrated global value chain and asks students to determine the appropriateness of this set-up in the context of an increasingly market-oriented industry. It is suitable for use in both undergraduate and graduate courses in international corporate strategy, international management, international marketing, supply-chain management, cross-border strategic management and international business studies in general.

Teaching Note: 8B08M14 (15 pages)
Industry: Manufacturing
Issues: Marketing Management; Operations Management; Global Strategy; Vertical Integration; Value Chain; Competitor Analysis
Difficulty: 4 - Undergraduate/MBA



SHER-WOOD HOCKEY STICKS: GLOBAL SOURCING
Paul W. Beamish, Megan (Min) Zhang

Product Number: 9B12M003
Publication Date: 2/13/2012
Revision Date: 11/17/2014
Length: 11 pages

In early 2011, the senior executives of the venerable Canadian hockey stick manufacturer Sher-Wood Hockey were considering whether to move the remainder of the company’s high-end composite hockey and goalie stick production to its suppliers in China. Sher-Wood had been losing market share as retail prices continued to fall. Would outsourcing the production of the iconic, Canadian-made hockey sticks to China help Sher-Wood to boost demand significantly? Was there any other choice?

Teaching Note: 8B12M003 (15 pages)
Industry: Manufacturing
Issues: Offshoring; Outsourcing; Insourcing; Nearshoring; R&D Interface; Labour Costs; Canada
Difficulty: 4 - Undergraduate/MBA


Chapter 11:
The Growth of the Firm: Internal Development, Mergers & Acquisitions, and Strategic Alliances

INFOSYS: THE BUYOUT STRATEGY FOR VISION 2020
Netra Pal Singh, Nakul Gupta

Product Number: 9B18M032
Publication Date: 3/9/2018
Revision Date: 3/9/2018
Length: 10 pages

Infosys Limited, a large Indian information technology (IT) company, had set a target of achieving revenues of US$20 billion by 2020 (known as Vision 2020) and thus needed swift growth. Acquisitions were a possible source of growth, but the problem was where and what to acquire and how to take the post-merger integration factor into account for achieving this growth. Infosys Limited had already made several acquisitions, which improved the company’s client base, knowledge, and geographical expansion, but a few had also been controversial. If Infosys Limited was going to use acquisitions to continue the swift growth it needed to meet its Vision 2020, the company needed the right buyout strategy. Which business and geographical segments should Infosys Limited invest in, and what should be the key determining factors to drive the acquisitions—increased clientele, enhanced technology, or increased geographical reach?

Teaching Note: 8B18M032 (10 pages)
Industry: Information, Media & Telecommunications
Issues: acquisitions, mergers, buyout strategy
Difficulty: 4 - Undergraduate/MBA



VOLKSWAGEN AND TATA MOTORS: A STRATEGIC ALLIANCE IN INDIA
Meeta Dasgupta

Product Number: 9B17M158
Publication Date: 10/20/2017
Revision Date: 10/23/2018
Length: 12 pages

In 2017, Volkswagen Group was not satisfied with its performance in India. Tata Motors Limited, on the other hand, had been dealing with increased competition from new automobile players. In March 2017, both players made the announcement of a potential strategic alliance with one another. However, the alliance talks soon stalled over the potential use of a platform and the practicality of the business model. The question facing both companies was whether to work out their differences and move the alliance forward, or to terminate the negotiation talks and operate independently.

Teaching Note: 8B17M158 (14 pages)
Industry: Manufacturing
Issues: strategic alliance, partner selection, international business environment
Difficulty: 5 - MBA/Postgraduate



MAZDA MOTOR CORPORATION: SURVIVING BY PARTNERING WITH THE GIANTS
Wiboon Kittilaksanawong, Tae Kyung Lee, Andrew Jiro Poplawski

Product Number: 9B17M117
Publication Date: 8/10/2017
Revision Date: 11/20/2017
Length: 15 pages

For 30 years, Mazda Motor Corporation (Mazda) partnered with Ford Motor Company (Ford), helping Ford in small-car engineering and lean manufacturing in exchange for finance and marketing know-how; however, this alliance was terminated due to the global financial crisis in 2008. In 2015, Mazda entered into another long-term partnership to share technologies and cope with cost pressures—this time with Toyota Motor Corporation (Toyota). According to its 2016 Structural Reform Plan, Mazda aimed to achieve a global sales volume of 1.65 million units, an operating income ratio of at least 7 per cent, an equity ratio of at least 45 per cent, and a dividend payout ratio of at least 20 per cent by 2019. Given the highly competitive domestic and global automotive markets, to what extent could the partnership with Toyota and the Structural Reform Plan allow Mazda to achieve these goals? Would Mazda need to make any changes to its competitive strategies to keep the company driving forward?

Teaching Note: 8B17M117 (18 pages)
Industry: Transportation and Warehousing
Issues: industry consolidation, economies of scale, innovativeness, strategic alliance, corporate restructuring, Japanese-style management
Difficulty: 4 - Undergraduate/MBA


Chapter 12:
Restructuring Strategies: Reducing the Scope of the Firm

VARICUT'S STRATEGIC CHOICE
Dezhi Chen, Youping Chen, Paul W. Beamish

Product Number: 9B15M116
Publication Date: 11/13/2015
Revision Date: 3/6/2018
Length: 10 pages

In March 2015, the managing director of VariCut Electronics Component Company in Shanghai, China, was contemplating whether the company should shift its business focus from label printing to label printers. Because of fierce competition and a slowdown in the company’s 12-year-old label manufacturing business, the company was finding its competitive advantage hard to sustain. In contrast, the company’s emerging business of producing label printers had been doing well, with 30 per cent annual growth. Although the label manufacturing business had begun to struggle, it was still the main source of company revenue (80 per cent). It was uncertain whether the company’s survival and growth could be sustained if it decided to give up the label manufacturing business in order to focus on label printers. Should the company give up the label manufacturing business to make way for the label printer business? Or should it consolidate the two businesses and transition to the label printer business gradually?

Teaching Note: 8B15M116 (18 pages)
Industry: Other Services
Issues: Industry analysis, vertical integration, related product diversification, business transformation, China
Difficulty: 4 - Undergraduate/MBA



GM: THE OPEL DECISION
Darren Meister, Ramasastry Chandrasekhar

Product Number: 9B10M022
Publication Date: 3/8/2010
Revision Date: 3/22/2010
Length: 19 pages

In July 2009, General Motors Company (GM),the world's second largest automotive enterprise, has come out of a bankruptcy orchestrated by the U.S. federal government. Leaner and focused after a 40-day exercise, GM is still a long way from a full-fledged financial recovery. The company is under a mandate to concentrate first on its U.S. market. Its European subsidiary, which manufactures the Opel cars, has been struggling for nearly a decade. The business seems fundamentally sound. Opel requires capital infusion and managerial skills for which GM has been talking to potential investors, such as Fiat of Italy, BAIC of China, Magna of Canada and RHJI of Belgium. The board of GM has to decide whether GM should liquidate Opel, retain it within its fold or go for partial divestiture. In the event of a sale of stake, the board has to decide whom, from among those short-listed by the chief executive officer and his team, it should bring aboard. The case provides an opportunity for students to use available data and their judgment to choose a bidder who can drive shareholder value. It helps them deal with issues such as timing and biases in a typical retain/liquidate/divest decision and also whether a company should have, on the lines of a more common M&A strategy, an ongoing divestiture strategy.

Teaching Note: 8B10M22 (6 pages)
Industry: Manufacturing
Issues: Portfolio Analysis; Strategic Management; International Business; Divestitures
Difficulty: 4 - Undergraduate/MBA


Chapter 13:
Multipoint Competition: Managing Market Power

NETFLIX INC.: THE DISRUPTOR FACES DISRUPTION
Chris Kemerer, Brian Dunn

Product Number: 9B17E016
Publication Date: 11/27/2017
Revision Date: 11/27/2017
Length: 12 pages

Netflix Inc. (Netflix) had surpassed Blockbuster, the previous movie rental leader, before making the successful transition to digital delivery of video content. But despite Netflix's success, in 2017, numerous competitors, including both established, mainstream content producers and digital upstarts, were making it difficult for Netflix to recreate its earlier dominance. Critics pointed to Netflix’s slowing acquisition of subscribers and accelerating debt levels. Netflix's chief executive officer was confronted with disruption from a variety of digital rivals. How should he respond? Should Netflix continue to try to be a content producer, competing with Hollywood’s industry leaders? Should it form a partnership with other media companies to align everyone’s incentives? Perhaps it could move into other media content areas outside of traditional entertainment. Further, there remained the question of how to treat its legacy DVD-by-mail business. As the incumbent firm, Netflix needed to respond to competitors and avoid a fate similar to that of Blockbuster.

Teaching Note: 8B17E016 (16 pages)
Industry: Information, Media & Telecommunications
Issues: technology, creative destruction, disruptive innovation
Difficulty: 4 - Undergraduate/MBA



CANON INC.: AMBITIOUS ACQUISITIONS IN THE VIDEO SURVEILLANCE MARKET
Wiboon Kittilaksanawong, Andrew Jiro Poplawski

Product Number: 9B16M101
Publication Date: 6/13/2016
Revision Date: 6/13/2016
Length: 11 pages

Facing a decline in the company’s core camera business as a result of the aggressive entry of smartphones, Canon identified the network security industry as a potential growth market, with expected revenues of US$23 billion by 2020. Canon opted to pursue this kind of growth potential outside its core competency by acquiring Milestone Systems in 2014 and Axis Communications in 2015. Canon paid a 50-per-cent premium to acquire Axis in a cash-only offer, while choosing to allow its two acquired companies to continue operating as independent entities. Should Canon have instead created a strategic alliance with these two companies? Would these acquisitions allow Canon to achieve synergies and secure its goal of $1 billion in sales from the network securities market by 2020?

Teaching Note: 8B16M101 (12 pages)
Industry: Information, Media & Telecommunications
Issues: mergers and acquisitions, diversification, growth strategy, industry evolution
Difficulty: 4 - Undergraduate/MBA


Chapter 14:
International Diversification: Global Integration and Local Responsiveness

L’OREAL INDIA: WHERE BEAUTY MEETS TRADITION
Prem Shamdasani

Product Number: 9B17M146
Publication Date: 9/29/2017
Revision Date: 9/29/2017
Length: 15 pages

In 2013, L’Oréal SA had become the largest cosmetics manufacturer in the world by understanding different markets and offering products to those consumers that met needs they may not have realized they even had. In India, L’Oréal spent more than 20 years studying its target consumers and developing products to cater to their specific needs. However, developing localized products was not the only criterion for success in a new market. L’Oréal needed to also localize every aspect of its operations, from research and development to marketing and outreach. As well, the company needed to deal with intensifying competition as global and local players challenged L’Oréal’s efforts to penetrate and dominate the hair-care, skincare, makeup, and professional hair-care segments in the value-conscious and largely unorganized but fast-growing beauty market in India. What localization and market development strategies should L'Oréal implement?

Teaching Note: 8B17M146 (8 pages)
Industry: Manufacturing
Issues: cosmetics, hair care, skin care, beauty, localization, market entry, emerging markets
Difficulty: 4 - Undergraduate/MBA



THE EDIFÍCIO ESPAÑA: A GLOBAL INVESTOR MEETS LOCAL POLITICS
Klaus Meyer, Alicia Wang, Tomaz Fittipaldi

Product Number: 9B17M108
Publication Date: 7/31/2017
Revision Date: 7/31/2017
Length: 12 pages

The Dalian Wanda Group Co. Ltd. (Wanda) was a fast-growing real estate imperium in China, built by Jianlin Wang, the wealthiest man in China. In 2010, Wang transformed Wanda into an entertainment conglomerate and initiated an ambitious international growth strategy. His ambitions knew few limits; however, one of his acquisitions—the Edificio España in Spain, an iconic historical building in the centre of Madrid—ran into difficulties due to conflicts with the local authorities. Wang’s refurbishment plans for Edificio España envisaged a comprehensive renovation and upgrade of the building’s commercial spaces, which required approvals from the Local Historical Heritage Commission. Initially, politicians expressed their support for Wang’s plan, but the application progressed slowly through the formal process and became entangled in local politics. A local election mid-process resulted in a new party gaining control of the city council—a governing party that was not supportive of Wang’s plans. Should Wang cut his losses and sell the building, or persist and reboot his project management?

Teaching Note: 8B17M108 (13 pages)
Industry: Real Estate and Rental and Leasing
Issues: non-market strategy , political risk , MNE to government relations, managing foreign subsidiaries, international entrepreneurship, urban development, stakeholders of the MNE, protection of cultural heritage
Difficulty: 4 - Undergraduate/MBA



MANAGING A SEVERE CRISIS: PHARMACORP IN UKRAINE
Phillip C. Nell, Renate Kratochvil, Patricia Klopf

Product Number: 9B17M085
Publication Date: 6/5/2017
Revision Date: 6/5/2017
Length: 8 pages

In early 2015, the newly appointed country head of PharmaCorp’s operating unit in Ukraine faced internal and external challenges in managing the global pharmaceutical company’s operations in the crisis-ridden country. Since November 2013, Ukraine had undergone massive disruptions, including riots in Kiev, the annexation of Crimea by Russia, and a war in its easternmost region. Amid these economic and political turbulences, PharmaCorp Ukraine experienced plummeting sales, increased workload, amplified human resources issues, and decreased market share. Furthermore, the multinational corporation’s internal routines became less effective in the context of the crisis. Although the regional headquarters in Lausanne, Switzerland, offered guidance and resources, inefficiencies in responding to local issues emerged during the crisis. Should PharmaCorp exit the market? Or should it stay in Ukraine and revise its local marketing strategy by offering more innovative products? Should it implement cost-saving measures? Should the business model be revised to gain more autonomy for its operations? The country head was scheduled to meet with representatives from the regional headquarters and needed to prepare a comprehensive strategy for improving the local situation.

Teaching Note: 8B17M085 (16 pages)
Industry: Health Care Services
Issues: subsidiary management, emerging market subsidiary, headquarters-subsidiary relations, crisis management, political risk, regional headquarters
Difficulty: 4 - Undergraduate/MBA



MTN AND THE NIGERIAN FINE
Albert Wöcke, Paul W. Beamish

Product Number: 9B17M031
Publication Date: 2/14/2017
Revision Date: 2/14/2017
Length: 16 pages

In late 2015, South African telecommunications giant MTN was fined US$5.2 billion by the Nigerian authorities for a mass of improperly registered subscribers—the largest fine of its kind ever imposed in the industry anywhere in the world. MTN was an emerging-market multinational corporation with a track record of successfully operating in some of the toughest, riskiest emerging markets. Thus, it was surprising that MTN had been unable to avoid a fine of this magnitude. Three factors had preceded the fine and changed the business environment in Nigeria leading up to 2015: the first was the war against the Boko Haram movement in Nigeria, which led security forces to demand the registration of prepaid phone cards; the second was the economic crisis caused by the impact of falling oil prices; and the third factor was a change in government. In light of these political risks and government regulations, how could MTN recover and move forward from this difficult situation?

Teaching Note: 8B17M031 (12 pages)
Industry: Information, Media & Telecommunications
Issues: emerging markets, political risk, government relations, informal banking system, regulatory compliance, corporate responsibility, flexibility
Difficulty: 4 - Undergraduate/MBA


Chapter 15:
Corporate Governance: Controlling Top Managers and Meeting Corporate Social Responsibilities

CANADIAN PACIFIC RAILWAY (A): BORDER SKIRMISH OR NUCLEAR WINTER?
Murray J. Bryant, Karin Koopmans

Product Number: 9B17M134
Publication Date: 9/8/2017
Revision Date: 9/8/2017
Length: 14 pages

In early 2012, the chair of the board of directors of Canadian Pacific Railway (CP) had to determine how to respond to demands made by the company’s largest shareholder, Pershing Square Capital Management (Pershing), an activist hedge fund. Pershing’s chief executive officer (CEO) claimed that CP was underperforming, and expressed his desire to replace two board members and appoint a new CEO. The chair of the board of directors had to determine the best means to fight the proxy battle and serve the interests of shareholders. Pershing was not likely to back down easily. With a shareholders’ meeting expected to occur in the next few months, the chair had to resolve the matter quickly. Because shareholder activism was relatively new in Canada, the outcome of this conflict would send a message to other activists interested in Canadian organizations.

Teaching Note: 8B17M134 (12 pages)
Industry: Transportation and Warehousing
Issues: board of directors, activist hedge funds, board and management duties, shareholder engagement
Difficulty: 4 - Undergraduate/MBA



VIACOM, INC.: CORPORATE GOVERNANCE IN A CONTROLLED COMPANY
Ram Subramanian

Product Number: 9B17M036
Publication Date: 2/24/2017
Revision Date: 2/24/2017
Length: 14 pages

Viacom, Inc., a New York City-based media company, owned Paramount Pictures and popular television channels such as MTV, Comedy Central, and Nickelodeon. Viacom was controlled by Sumner Redstone and run by his hand-picked second in command. In 2016, the 92-year-old Redstone, facing a claim of mental incompetency because of his advanced age, stepped down from his role as executive chair of the board. This led to several issues regarding corporate governance at the company. Viacom’s board of directors faced a lawsuit from a shareholder claiming that a mentally incompetent Redstone was playing a role on the board; an activist investor accused the company of a lack of governance and poor leadership. The newly elected lead independent director needed to address the board of directors’ role in this embattled company.

Teaching Note: 8B17M036 (9 pages)
Industry: Arts, Entertainment, Sports and Recreation
Issues: corporate governance, board of directors, entertainment, mental incompetence, CEO succession
Difficulty: 4 - Undergraduate/MBA



COMPUSOLUCIONES: CORPORATE GOVERNANCE
Luis Manuel Bonner de la Mora, W. Glenn Rowe, Ken Mark

Product Number: 9B17M022
Publication Date: 1/30/2017
Revision Date: 1/25/2017
Length: 11 pages

CompuSoluciones, based in Guadalajara, Mexico, was a value-added distributor of information technology hardware, software, and services that grew from its origins as a reseller for Hewlett-Packard to become the second-largest distributor in Mexico. The company was best described as a collection of team-based businesses. It had 18 independent business units—each of which managed its own supply chain and produced its own profit-and-loss statements—and over 415 employees spread out over three offices. It was also governed by multiple consultative and representative boards. The company relied on the advice, insights, and experiences of these key advisory groups to improve the quality of its decision making and inform strategic decisions. At the same time, it had a policy to achieve consensus on major strategic decisions. In January 2017, the chairman of CompuSoluciones was reviewing his company’s corporate governance policies and practices. Given the independent nature of the individual business units, he wondered whether a consensus-based model of management was still the best way to lead the firm forward and whether the current corporate governance structure was optimal for managing this particular business.

Teaching Note: 8B17M022 (6 pages)
Industry: Information, Media & Telecommunications
Issues: corporate governance, boards, policy, decision making
Difficulty: 4 - Undergraduate/MBA