- Launching devices with advanced multimedia capabilities and that stimulate consumers’ imagination.
- Using the Internet, adding value to devices with innovative services like the Music Store and Comes with Music. These services offer the best possible mobile music experience to the customer.
- Providing the customer with the best updated/dynamic local content with suitable partnerships.
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McDonald’s Pricing Strategy in India
McDonald’s in India
McDonald’s began operations in India in 1996. The fast-food chain started making profits after it broke even in 2008. Reports suggest that McDonald’s two subsidiaries in India, Connought Plaza Restaurants based in New Delhi and Hard Castle Restaurants in based in Mumbai posted accumulated losses of Rs 189.19 crore and Rs 119 crore in fiscal 2008. A total of Rs 211.41 crore of accumulated losses for fiscal 2008 for the company. India and China continue to be high-growth markets for McDonald’s. The top management felt that McDonald’s had achieved tremendous brand success in India and there was nothing extraordinary about accumulating losses and that McDonald’s India was not a unique case as the company was making losses similarly in many other markets.
Download management case study (PDF file) on McDonald’s Business Strategy in India
What McDonald’s is doing to increase the footfalls and increase the store utilisation?
McDonald’s menu is recognized world over for its affordability. A McDonald’s store gets an average of 3,000 walk-ins every day in each of its 165 restaurants in India. Typically, a customer visits a McDonald’s store twice. The key is to make that customer visit the McDonald’s store a third time so that the existing store space and rent can be leveraged further. Earlier attempts by McDonald’s to do so included adding breakfast to its menu, longer hours of service, setting up of kiosks etc. Eventhough breakfast was on its menu globally, it was on launched on a trial basis in India.
However, McDonald’s had a ‘snack joint’ tag in India. To overcome this McDonald’s added a lunch and dinner menu.
McDonald’s Pricing Strategy in India
In September 2009, McDonald’s announced reduction in prices by almost 25% for its lunch and dinner menus. Prices for its extra-value meals like McVeggie and McChicken were reduced to Rs. 85 and 95 respectively from Rs. 110 and 120 respectively. Typically a meal consists of burger, French fries and soft drinks. This strategy was surprising as it came at a time when food prices were increasing by the day. Cutting prices in such times did not make sense. But the management in India was convinced that tweaking the prices of it combo meal offering would help customers prefer McDonald’s as a lunch and dining destination as well.
P&G’s Leadership Case Study – ‘Build From Within’
Succession Planning at P&G
“If I get on a plane next week and it goes down, there will be somebody in this seat the next morning,” – A.G. Lafley, P&G’s CEO as quoted in Fortune magazine.
Lafley took over Procter & Gamble (P&G) as CEO in 2000 and since then has been very successful in increasing sales by 110% and tripling profits. Does he have a succession plan? If he does he has not disclosed it yet and is certainly not overly concerned judging by his above statement. What is the reason? Does P&G have a strong leadership development program
P&G’s Leadership Program and Proctoids
P&G’s leadership program is called “Build From Within”. The program helps track the performance of each manager in a very detailed manner. The program ensures a manager is ready for the next level. According to CEO Lafley, “Each of the top 50 jobs already has three replacement candidates lined up.” Lafley himself oversees the development of the top 150 employees.
At P&G, a business school graduate is recruited at an entry level position. This position offers him/her a major window of opportunity for becoming what’s known in the company as a Proctoid (less than 5% of hires come from the outside at a later stage). Proctoids discuss their business goals, their ideal next job, and what they’ve done to train others during monthly and annual talent review sessions. The recruits select a career track depending on his/her goals and P&G’s needs. They are then trained to work in different countries and businesses. This helps build deep bench strength. So when a position is open, P&G has a pool of employees who are ready to move in to the new position in a particular country or region. According to Lafley, “We can fill a spot in an hour, that’s the beauty of the system.“
Training and Internal Reputation
P&G has a training center near to the CEO Lafley’s office where all executives teach and hold weeklong “colleges” for employees entering new levels. An executive’s willingness to train others ultimately determines who advances. Moheet Nagrath, head of human resources at P&G believes, “If your direct reports aren’t ready, neither are you. A manager who isn’t good at developing others doesn’t attract the best talent [to be on his team]. Internal reputation is crucial.”
Advantages and Success Factors for the program
- Loyalty
- P&G rarely hires from outside, promoting talent from the inside
- At P&G, less than 5% of hires come from the outside at a later stage
- P&G maintains a comprehensive database of its 138,000 employees. An employees’ performance (stars) are tracked carefully through monthly and annual talent reviews.
Disadvantages
- Promoting from within can build well oiled teams that act quickly but at the same time builds an insular culture where most people think in similar ways. This can hinder innovation.
Related Case Study:
Download Business Strategy Case Study on Restructuring at Unilever – Path to Growth Strategy (PDF)
Corporate Social Responsibility (CSR) and McDonald’s
The chief electoral office of Delhi, India decided to launch a series of advertisements in April 2009 at McDonald’s retail outlets to encourage young voters for the Lok Sabha elections – the largest ever democratic process in the world. McDonald’s which has around 155 restaurants in India (including 35 in Delhi) is keen on the idea and considers it as its social responsibility to make people aware and encourage to participate the democratic process.
McDonald’s in India
McDonald’s was launched in 1996 in India and has established itself as the family’s favorite quick-service restaurant. According to estimates, McDonald’s stores have an average of 2,750 walk-ins in each of the 155 stores. India counts itself amongst the top 10 per cent of the busiest markets for McDonald’s anywhere in the world. In India, McDonald’s had decided not to launch its beef-based core product – the hamburger – so that it didn’t hurt religious sentiments of the Hindus.
The Strategy – Building awareness among citizens
The strategy is simple. Delhi has approximately 40 lakh electors between the age group of 18-29. McDonald’s is popular among the younsters and catchy slogans and messages will encourage them. McDonald’s India wants to support the task of building awareness amongst citizens and remind them of exercising their right to vote.
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Download management case study (PDF file) on McDonald’s Business Strategy in India
Restructuring challenges at electronics giant Sony
In December 2008, Japan’s Sony Corp. – the world’s second-largest consumer electronics maker – announced a few restructuring measures primarily aimed at changes in management and manufacturing. These include:
- A $1.1 billion savings plan in its electronics division
- Cutting 16,000 jobs
- Pulling out of businesses and limiting investment for savings of almost 100 billion a year
Analysts believe the company needs more and bigger restructuring measures to improve its slowing sales and inventory pile-ups. Another challenge Sony has been facing are cultural clashes between its Japanese, US, and European operations. Restructuring moves would imply changing many of its long-established business practices (the Japanese business culture which is so deeply connected to its social culture). The restructuring plans include shutting down of some of its major divisions in its Japanese domestic operations. How Sony would go about facing these challenges and are more restructuring moves imminent amidst the financial crisis and lower consumer demand? Sony’s first non-Japanese CEO, Sir Howard Stringer sure has his task cut out.
Nokia’s new Brand campaign and Manufacturing in India
Nokia in India – New Brand campaign
In October 2008, Nokia, the world’s largest mobile phone maker launched a brand new campaign with the tagline ‘It’s not just a phone, it’s who we are’.
Nokia selected Priyanka Chopra, former Miss World and current Bollywood actor, as the Brand Ambassador. The company believes the young actor’s brand association will create a deeper connection with its young and style-savvy consumers and the new ad capmpaign featuring her will represent style, modernity and individuality. The TV campaign would be integrated with other consumer touch points like print, outdoor, radio, online and digital media.
Nokia’s other brand ambassadors include Bollywood’s leading actor – Shahrukh Khan. The company has already planned to bundle exclusive content featuring the actor for handsets sold in India. His movie ‘Om Shanti Om’ movie was recently bundled in Nokia N96.
New Indian factory
In October 2008, Nokia Siemens Networks, the second-largest network gear provider in India after Ericsson, announced that over three years it will invest $70 million in a new Indian factory in Chennai (south of India). The unit will make and distribute mobile communication equipment. Nokia Siemens already has a manufacturing facility in Kolkata in eastern India, where it makes fixed network equipment.
Also, in October 2008, Nokia’s handset manufacturing unit in Tamil Nadu (with over 8,000 workers) reached production volume of 200 million handsets within just three years of starting operations. Around 50 per cent of the production is sold domestically and the rest is exported. Nokia has two manufacturing units in China.
Nokia has a 62.5% market share in India while Samsung, the second major player with Aamir Khan (lead Bollywood actor) as the brand ambassador, has a 8% share.
Download PDF file on Nokia’s Business Strategy in India
Article on Nokia’s Strategy in the Emerging Markets
Michael Dell’s Turnaround plan working
Dell posts higher-than-expected quarterly profit
Michael Dell’s return and turnaround plans were paying off as the world’s No. 2 personal computer maker, posted higher-than-expected quarterly profit aided by strong demand from consumers and foreign markets and cost cuts. Last year, Dell had lost its spot as top PC maker to Hewlett-Packard (HP) and was struggling to regain momentum. In January 2007, Michael Dell had returned to the chief executive post. In May 2008, Michael Dell selected Brian T. Gladden (working with General Electric, GE), to take over as chief financial officer (CFO) at the troubled PC maker. Dell aims to shave $3 billion of its operational costs. Dell also announced plans to cut 8,900 jobs to reduce costs, but Asia would see more job growth as it formed a large part of it’s supply chain. Meanwhile, Dell’s supply chain ranked third in the fifth-annual “Supply Chain Top 25” list released by AMR Research in May 2008 behind Apple and Nokia. Dell’s supply chain was acknowledged for its outstanding inventory turns and high marks from peers.
Dell’s strong International Growth
Dell believes that in around five years time its sales outside the U.S. could account for two-thirds of total revenues. Its sales in international regions topped U.S. revenues as corporate customers in the United States were uncertain about buying given the current and future economic outlook. Brazil, Russia, India and China (BRIC) led the way with 73 percent shipment growth in the quarter ended May 2008. Americas revenue rose 1 percent in the quarter.
Related Reading
Download Pdf file of management case study on Dell’s Supply Chain Management Practices
Home Depot and other retail chains slow down expansion plans
Home Depot, the largest home improvement chain in the United States has shelved plans to open 50 new stores as it battles hard with the housing slowdown and economic downturn. (The chain will still open the 55 stores it planned for 2008. But it will not build 50 stores it has had in the works for up to 10 years) For the first time in its 30 year history, Home Depot will open new stores at the slowest rate as it permanently scales back plans for expansion after 2008. Additionally, 15 poorly performing locations will also be closed.
However, Home Depot is not the only one scaling back expansion plans or shutting down stores. Other major retail chains like Starbucks, Foot Locker, Pacific Sunwear, Charming Shoppes, J. C. Penney, Kohl’s, Wal-Mart and Ann Taylor have announced plans to slow their expansion or delay store openings. Trade group, The International Council of Shopping Centers, predicts 5,770 store closings in 2008 – an increase of 25 percent from last year.
This has prompted analysts to comment that these retails chains made overly ambitious expansion plans when consumer spending was unusually robust and that America is over-stored.
Retail Chain – Number of stores for close/delay
Ann Taylor – 117
Charming Shoppes – 150 stores
Foot Locker – 140 stores
J. C. Penney will open 36 stores instead of 50 planned
Kohl’s will open 75 instead of 100 planned in 2008
Starbucks – 100
Wilsons – 158
Zales – 100
Sony Ericsson Mobile Music Strategy not working
Sony Ericsson and low profit expectations in 2008
On March 19, 2008, Sony Ericsson warned of a sharp decline in profit expectations. The No.4 player in the cell phone industry cut its current-quarter profit forecast ($276 million) to less than half the year-ago level ($571 million). Reasons given were a slowdown in consumer spending on its mid-priced and high-end phones. The growth in the mobile phone industry is expected to be at 15% in 2008, about half when compared to a high of 31% in 2004. Sony Ericsson expects to ship about 22 million phones in the first quarter. It shipped 30 million units in the fourth quarter and 21.8 million in the first quarter of 2007.
Sony Ericsson’s announcement was expected when Texas Instruments cited fewer mobile phone chip orders for its lower guidance. Its key customer Nokia possibly has a inventory pileup. Sony Ericsson also said that certain component shortages for popular midprice phones had also contributed to modest unit-sales growth in the first quarter.
A low profit expectation is common in the first quarter – the slowest time of year for phone sales after the Christmas shopping season. However, the concern is the magnitude of Sony Ericsson’s shortfall. The same can be expected from Nokia and Motorola might even lose its third place position as a mobile phone maker.
The Sony Ericsson joint venture
In 2001, Sony Ericsson was formed as a joint venture between Telefonaktiebolaget LM Ericsson of Sweden, and Sony Corporation of Japan. Both partners had 50% ownership in the company.
Ericsson was established in 1876 and was a major player in the telecommunications equipment and related services to mobile and fixed network operators worldwide with presence in 140 countries. Sony on the other hand was established by Masaru Ibuka and Akio Morita in 1946 in Japan. At the time Sony was the world’s second largest consumer electronics company and famous for its innovative products like the Walkman, Playstation, and Aibo, the robot dog.
In the last quarter of 2000 and the first quarter of 2001, Ericsson made a loss of US$ 1 billion and US$ 558 million respectively. Shareholders of Ericsson wanted a sell-off. Sony was also making losses in its mobile phone business. Ericsson’s board decided to form a joint venture with Sony instead of exiting the business. In 2001, this decision was rated as the fifth best management decision by Sunday Business.
Walkman phones are no longer popular?
In February 2005, at the 3GSM World Congress in France, Sony Ericsson had announced its mobile music strategy. It looked to integrate of high quality digital music players into stylish mobile phones under Sony’s world famous Walkman brand. The strategy was to target a specific product portfolio and not look at providing various types of mobile phones across various price points.
In the third quarter of 2005, the Walkman phones were launched. The impact was visible in the subsequent quarter itself in terms of increased volumes, sales, and net income for the company. Similar to its success with its camera phones in 2004, Sony Ericsson reported a 36.4 per cent increase over its third quarter figures and 47.1 per cent higher than the figures for the same period in 2004. It even revived Sony’s Walkman music player which had lost market share drastically after the launch of iPod by Apple in 2001.
However, mobile phone users are known to be quite finicky and generally choose the most popular or the next cool mobile phone in the market. Earlier, users replaced handsets every three years, but with the economy slowing down this is no longer the trend. And with the popularity of Apple’s iPhone growing, Sony Ericsson may have reached the end of its good run with the popular Walkman phones. The general higher price of its phones than its rivals’ devices does not help either.
Quote
Be Number 1 or Number 2. “When you’re number four or five in a market, when number one sneezes, you get pneumonia. When you’re number one, you control your destiny.“ – Jack Welch
Unquote
“Sony Ericsson will continue to try to reduce its dependence for growth on the European high-end sector and develop its presence in new markets. This strategy will continue, and our objective remains to become a top-three player globally by 2011” – Sony Ericsson President Dick Komiyama
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Case Study on Nokia in India [Pdf file]
Nokia and its growth strategy in China
Nokia increases market share, Motorola Struggles
Nokia to exit expensive Germany, move production to low cost countries
Jamie Dimon – The man behind JPMorgan’s Turnaround
Jamie Dimon (Dimon), president of JPMorgan is referred to as one of the best numbers men around, a Wall Street legend or the right-hand man to Sandy Weill – the titan of banking behind Citigroup. He is also known as an aggressive banker, savage cost-cutter, direct boss who eschews excessive wealth ($44.4 million or £22.2 million annual salary) and invests heavily in philanthropy. In 2007, he was ranked 15 on the 25 most powerful people in business by Fortune.
Dimon was born in New York to second-generation Greek immigrants. He has a degree in biology and economics from Tufts, and a MBA from Harvard. At Harvard he met Sandy Weill. Both went on to create the banking major Citigroup and emerged as a powerful force on Wall Street. In 1998, both separated after having worked together for 16 years. Rumor mills suggested that Dimon was fired by Weill for not promoting his daughter in the company.
After leaving Citigroup, Dimon became the chief executive of Bank One. In 2001, Dimon played a key role in the turnaround of Bank One. In January 2004, he negotiated the acquisition of Bank One by JP Morgan Chase & Company. After the merger, Dimon was appointed President and Chief Operating Officer of JP Morgan Chase. The merger was the third largest acquisition (at the time) in the US history at US$ 58 billion.
Dimon, since then has been aggressively involved with JPMorgan and aims to turn it into the biggest and best banking group in the US. So far, he has been successful in his endeavor and is emerging as one of the most successful navigators of the credit crunch. Over the last few years, he has focused strongly on cutting costs, improving technology and integrating JPMorgan’s disparate operations. But he also has been resolute about preparing the company for an economic downturn. While other investment banks are struggling, Dimon managed several accomplishments one after the other. He co-chaired the summit of world and business leaders in Davos, Switzerland. He even persuaded former Prime Minister Tony Blair to sign on as an adviser and ambassador for JPMorgan. And in what is being regarded as his biggest coup, he has plans to prop up Bear Stearns to avoid a full-blown banking crisis. This draws similar reference to John Pierpoint Morgan (JPMorgan’s founder). JP Morgan financed the US government and other large corporations during the Great Depression and the two world wars. In 1907 during the panic, his organization and personal funding for rescuing of the banking system was representative of the end of a long recession.
Similarly Dimon has played a key role in JPMorgan and the Federal Reserve guaranteeing the huge trading obligations of the troubled firm Bear Stearns. JPMorgan agreed to pay only about $270 million in stock for Bear’s big losses on investments linked to mortgages. Dimon negotiated the deal with Bear and government officials, sleeping only for a few hours over the weekend. Though Dimon had his doubts about the deal and has not been an aggressive acquirer since his joining the company, the quick decision making to buy Bear is outstanding.
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