FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDIES

UNIVERSITI TEKNOLOGI MARA

ADM650: CORPORATE STRATEGIC MANAGEMENT

COURSE DESCRIPTION

1. Lectures and Tutorials

Lectures and tutorial will be held two hours each every week. Students are
expected to attend lectures and tutorials. The university ruling on 80% attendance
will be observed. Students are encouraged to participate during lectures/tutorials
by asking questions, give comments, opinions and equally responsible that the
class will be interactive and informative hours.

2. Course Evaluation
a. Test 20%
b. Case Study 10%
c. Organizational Profile 10%
d. Final Examination 60%

3. Group Assignment (10 marks)

Instruction: Select one of the following assignment below.
1. Low Cost (Air Asia: Southeast Asia’s Most Successful Low Cost Airlines)
2. Competitive Advantage (Sony: Corporation: Losing Competitive
Advantage)
3. Corporate Social Responsibility (CSR Initiative at HSBC: Making Good
Business Sense)
4. Market Development (Carrefour’s Strategies in China)
5. Merger (Adidas Reebok Merger)
6. Acquisition (Disney Acquisition of Pixar)
7. Organizational Transformation (Organizational Transformation at the BBC)
8. Competitiveness (The Kodak-Fuji Rivalry)
9. Product development (PORSHE- Reviving Up)
10. Business Transformation (MAS On A Clear Route to Become Five-Star
Airline)

Assignment requirement/ face to face meetings:

a. Students are required to select one of the topics listed above and to look
into the relationship between the strategies adopted with the overall
strategic management concept. The cases are provided to assist student
understanding on the topic before the lectures start and for the
preparation of written work that need to be submitted on the
presentation day.
b. Contents of the assignment; Introduction/ Historical background of the
company (10 marks), evaluation on the vision, mission statements and the
organizational objectives (20 marks), implementation of the strategies
functions/program (40 marks), evaluation and recommendations/
suggestion and conclusion (20 marks), format and references (5 marks)

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 c. Written work: 10 – 15 pages, Font 12, Times New Roman/ Arial (6000 -9000
words)
d. The presentation and written work will be evaluated based on the rubrics
identified. Students should make early preparation before the
presentation started.
e. Group members: 3 – 4 students
f. Presentation: 20 minutes presentation, 10 minutes for Q&A session
g. Presentation week: Commence from Week 3

Activities/ non-face to face meetings:

a. Form a group, identify group leader and jobs to be delegated

b. Discuss with lecturers on problem for further analysis
c. Identify sources of information and knowledge
d. Obtain letter of permission from the faculty if interviews and meetings with
the company are requires before decided to visit certain company for the
purpose of data collection
e. Contact the company and identify the responsible individual
f. Discuss with the lecturer on the topic selected and identify questions to be
posted to the organization
g. Prepare written assignment by obtaining information either through
primary data collection (interview, observation) or secondary data
collection (books, newspapers)
h. Gather all information and brainstorm group members for final analysis
and submission
i. Prepare power-point presentation

4. Case Study (10 marks)

Instruction: Select one of the cases listed in the text book, evaluate the
organizational mission and vision, prepare matrices at different stages and discuss
the findings.
1. The input stage (EFE Matrix, IFE Matrix, CPM), 2. The Matching stage (SWOT
Matrix @ SPACE Matrix @ BCG Matrix @ IE Matrix @ Grand Strategy Matrix), 3.
Decision Stage (The Quantitative Strategic Planning Matrix; QSPM)

Requirements/ Face to face meetings:

a. Written work: 10 – 15 pages, Font 12, Times New Roman/ Arial (6000 -9000
words)
b. Group members: 3 – 4 students
c. Presentation: 20 minutes presentation, 10 minutes for Q&A session
d. Presentation week: Commence from Week 8
e. Written work: Prepare power point and handouts

Activities/ Non face to face meetings:

a. Identify the topic and group members
b. Read the case study and prepare the matrices
c. Refer from other sources to answer the question/s
d. Prepare power point presentation and handouts to be distributed during
presentation

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5. Mid-Term Test/ Final Examination
a. Mid-Term Test:
i. Composition of test paper: The test paper is divided into two (2)
parts; Part A: Short essay questions / Short case study questions
(Answer 3 Questions; 10 marks each: 30 marks) and Part B: Long
Essay Questions (Answer 1 question only; 20 marks). Students are
expected to answer one question only.

ii. Test schedule: Mid-term exam is tentatively on the 10th week of the
semester. The time table will be provided by the faculty.

b. Final examination – the faculty uses formal final examinations as a reliable

and equitable form of evaluation:
i. Composition of final examination: The final exam is a 3 hours paper
and consists of two parts; Part A (Case Study). In Part A (40 marks),
a case study is provided and students are expected to answer all
questions. Part B (Essay). For Part B (60 marks: 20 marks each),
students will be offered five (5) questions and are expected to
answer three (3) questions only. Part A is compulsory whereas in
Part B students are required to answer any three questions.
ii. Final examination schedule: The timetable is prepared by
Bahagian Hal Ehwal Peperiksaan UiTM. All students can refer the
timetable in the student portal and will be exhibited at the
students’ board at the end of the semester or before the final
examination started.

c. Activities/non face to face meetings:

i. Make early preparation for mid-term test and final examination.
ii. Refer to suggested text book and other required materials to assist
self-learning initiatives.
iii. Identify group members and plan for group discussion on topics
highlighted or required for further discussion and clarification.
iv. Search for past final examination/ test paper.
v. Allocate some time to answer past final examination and test
paper
vi. Seek assistance from lecturers on answering techniques and notes
taking.

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ASSESSMENT FORM
ORGANIZATIONAL PROFILE/STRATEGIES (10 marks)

Name: Date:

Name of Organization:
Content Ratings (circle the appropriate numbers)
Poor Below Average Above Superior
Average Average
1 Organizational Background 1 2 3 4 5
(10%)

2 Vision, Mission, Objectives 1 2 3 4 5

(20%)

3 Implementation of the 1 2 3 4 5
strategies functions/program
(40 %)

4 Evaluation and 1 2 3 4 5
recommendations/ suggestion
and conclusion (20 %)

5 Format and References 1 2 3 4 5

(5%)

Delivery
1 Organization of presentation 1 2 3 4 5
(1 mark)

2 Professionalism of presentation 1 2 3 4 5
(1 mark)

3 Communication skills 1 2 3 4 5
(1 mark)

4 Use of time 1 2 3 4 5
(1 mark)

5 Handling of questions 1 2 3 4 5
(1 mark)
Total = 100 %

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ASSESSMENT FORM
CASE STUDY (10 marks)

Name: Date:

Name of Organization:
Content Ratings (circle the appropriate numbers)
Poor Below Average Above Superior
Average Average
1 Vision and Mission Statements 1 2 3 4 5
(5 %)

2 Thoroughness, accuracy and 1 2 3 4 5

depth of external analysis
(20%)

3 Thoroughness, accuracy and 1 2 3 4 5

depth of internal analysis (10%)

4 Identification and evaluation 1 2 3 4 5

of alternative strategies using
matrices
(30%)

5 Quality, quantity, feasibility 1 2 3 4 5

and relevance of
recommendations
(20%)

6 Justification and support for 1 2 3 4 5

recommendations
(10 %)

Delivery
1 Organization of presentation 1 2 3 4 5
(1 %)

2 Professionalism of presentation 1 2 3 4 5
(1 %)

3 Communication skills 1 2 3 4 5
(1 %)

4 Use of time 1 2 3 4 5
(1 %)

5 Handling of questions 1 2 3 4 5
(1 %)

5
 UNIVERSITI TEKNOLOGI MARA
FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDIES
ADM650 CORPORATE STRATEGIC MANAGEMENT
SEMESTER JAN – APRIL 2011

ASSIGNMENT 1:

CSR Initiatives at HSBC: Making Good Business Sense

Group Structure and Holding

HSBC Holdings is a public limited company incorporated in England and Wales.
Headquartered in London, the HSBC group operates in five regions: Europe, Hong Kong,
the rest of Asia-Pacific including the Middle East and Africa, North America, and South
America.

To more easily promote the group as a whole, HSBC was established as a uniform,
international brand name in 1999. In 2002, HSBC launched a campaign to differentiate its
brand from those of its competitors by summarizing its unique characteristics with the
words, 'The world's local bank'.

CSR - A Strategic Thrust

HSBC had formally put forward their commitment to sustainability as early as 1992 by
being a signatory to the UN Environment Program Statement by Financial Institutions on
Environment and Sustainable Development.

After having published their first Environmental Policy in 1997 and statement of business
principles and values in 1998, the group appointed Lord Butler as non-executive director
to oversee the 'HSBC in Community' philanthropic program in 1999. The HSBC education
trust was later set up in the UK and starting 2001, the group regularly reported their
progress in CSR activities through yearly CSR reports. In the Corporate Social
Responsibility (CSR) 2003 report released by HSBC, CSR was defined as addressing the
expectations of customers, shareholders, employees, and other stake-holders in
managing business responsibly and sensitively for long-term success.

HSBC believed that multinational enterprises had a greater responsibility toward social,
ethical, and environmental causes as they were in direct interface with people,
businesses, and communities across the globe. In this report, HSBC Group Chairman, Sir
John Bond, spelt out the current priorities of the group in clear terms.

Translating CSR into Action within the Organization

To translate these policies into action, the organization laid a lot of emphasis on having
robust internal systems and procedures.

These internal policies, standards, and procedures applied across business units
worldwide. They were communicated internally through the Group Standards Manual, a
160-page internal publication that covered the roles and functions of key departments.
It also had detailed instructions for individual HSBC businesses, which took into account
the local circumstances, relevant laws, and regulations.

Employees were expected to take personal responsibility and accountability in adhering

to these policies and standards. These systems enabled HSBC to conduct their businesses
in a responsible manner.

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Investing in Education, Nature and People
HSBC realized that a successful group of their size and scope could make a significant
impact on the world by ensuring the flow of social and economic benefits through their
business.

The bank therefore, began supporting a large number of local community projects.
Employees at HSBC actively involved themselves in volunteer work for various community
programs. These efforts were supplemented by contributions and fund-raising efforts from
corporate houses. Employees were also encouraged to donate from their salaries to
charity. In 2003, employees of Household pledged more than US$ 4.6 million, resulting in
the American Cancer Society naming it as one of the top contributors through the
'workplace giving' campaign. HSBC's fund-raising efforts in 2003 resulted in donations of
US$ 47.4 million that were used to fund numerous projects in education, environment,
and other areas.

HSBC - A Socially Responsible Corporate?

All these initiatives notwithstanding, the HSBC group faced considerable criticism in
October 2003 due to its decision to shift 4000 jobs to less developed nations as part of its
global resource restructuring drive. The trade unions were outraged and slammed the
group's claims of being a model CSR company. HSBC responded by saying that this
move was necessary to remain cost competitive in the global scenario. The company
also said that creation of jobs in emerging market economies definitely made a positive
contribution to society.

Questions

1. Identify the incorporation of corporate social responsibility issues in strategic

planning and execution by HSBC.
2. Explain how CSR can project good image of HSBC.
3. Discuss on how HSBC can remain competitive through CSR and gain market
share.

7
ASSIGNMENT 2:

AirAsia - Southeast Asia's Most Successful Low-cost Airline

What Made Airasia Click?

AirAsia was not the first budget carrier in Asia (although it was the first in the Southeast
Asian region). The low cost trend actually started in Asia in the 1990s, when two budget
airlines - Air Do and Skymark Airlines were launched in Japan. However, neither of the
airlines succeeded as their operational model was weak and they were soon 'out
discounted' by Japan's major airlines - Japan Airlines, All Nippon Airways and Japan Air
System. Another budget airline, Cebu Pacific Air, operated flights between Hong Kong
and Seoul to the Cebu Islands in the Philippines, but its operations were limited.
Otherwise, it was the national flag carriers that dominated the region.

Can Success be Sustained in the Long Run?

According to analysts, AirAsia's main appeal was its low fares. By offering fares that were
a fraction of what major airlines charged, AirAsia created a new market in the Southeast
Asian region. People who could otherwise not have afforded air travel began to fly
AirAsia.

The Outlook for Airasia

Analysts generally agreed that AirAsia's success had significantly changed the dynamics
of the Southeast Asian aviation industry. However, they said it would be premature to call
the airline an unqualified success. AirAsia was set up in 2001, which was a bad time for
the global aviation industry. Despite this, it managed to develop a successful business
model. However, the airline industry had witnessed a number of cases where airlines
started off well but later experienced a downturn.

Questions
1. Discuss the reasons for the success of a low cost airline in Southeast Asian Region.
2. Explain the Porter’s Generic Strategy using the case study.
3. Identify Air Asia Strength and weaknesses.
4. Suggest strategies that can be adopted by Air Asia to remain competitive in the
market.

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ASSIGNMENT 3

Sony Corporation - Losing Competitive Advantage

Transformation 60

Transformation 60 was a three year restructuring plan, which required Sony to lay off 13%
of its workforce or about 20,000 people by March 2006. The plan aimed at optimizing
manufacturing infrastructure and reducing fixed costs, by combining the operating
divisions and shifting component sourcing to low cost markets like China. Sony planned
to reduce costs by downsizing and consolidating manufacturing, distribution, customer
service facilities and also by streamlining procurement. Through these efforts, Sony aimed
to achieve cost savings of ¥300 billion by March 2006.

Clarifying Operational Structure and Concentrating on Technology and Resources for

Growth
Convergence of Electronics Business: As of 2003, the electronics business accounted for
revenues of ¥ 4940 billion and recorded a profit of ¥41 billion. Plans for the home
electronics group under Transformation 60 included developing next generation
televisions, creating new markets through convergence of electronics and game
technology, and moving towards 'High Definition' (HD) products. Sony allocated ¥280
billion for restructuring the electronics segment. As part of Sony's plan to introduce next
generation televisions, the company launched flat panel televisions. Other elements of
the plan were to bring out high quality picture using high resolution large screen,
manufacture products that were compatible to broadband, and introduce next
generation television and a media processor called CELL.

Reforming Operational Profit Structure

In order to revise the profit structure, Sony planned to implement its second phase of
structural reforms in its electronics and entertainment sectors from 2005. Sony planned to
focus resources on the important categories like flat panel televisions, home servers and
mobile products. Sony EMCS (Engineering, Manufacturing and Customer Services) was
revamped to strengthen products like Trinitron CRT televisions, analog video and
personal audio systems. The engineering and production technology function was
strengthened and the distribution function was integrated with the production,
engineering and customer service functions.

The Implications

The above plans were not successful mainly due to the significant drop in sales of
conventional televisions and portable audio products. Sony's electronics business
witnessed losses for two consecutive years. The decline in sales of Sony's electronics
products was prominent in Japan, where the demand for Vaio personal computers and
cathode ray tube televisions reduced significantly. The games division also did not fare
well with the sales of Playstation 2 consoles falling rapidly. At the same time, competitors
like Matsushita and Sharp were able to increase their sales of digital cameras, DVD
recorders and other popular items.

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Stringer Becomes CEO

At this juncture, in March 2005, Stringer became the first non-Japanese CEO to lead Sony
in its six decade history. During the five years before Stringer assumed charge as a CEO &
President, Sony's stock price had eroded by 75%. Stringer was head of Sony's North
American business and was known for drastic cost cutting measures; he had reduced
Sony's workforce by 9000 in Sony US. Stringer played a major role in a group of private
equity investors led by Sony which had acquired MGM in September 2004.

After the deal Sony planned to make films like James Bond and Pink Panther and also
have a hold over MGM's vast library. Though Stringer wished Sony to have higher share in
the company, he could not convince Sony's top management in Tokyo, and for this
reason Sony's share was limited to US$ 300 million of the US$ 1.6 billion. The flip side of
Sony's limited participation was that the other investors had a lot of power, and they
even had the right to replace Sony with another studio after one year. Stringer identified
five main challenges for Sony. These were: getting rid of the 'silo' culture in Sony,
obtaining profitability across businesses, making products in line with industry standard
technologies, improving the competencies in software & services, and divesting non-
strategic assets.

Restructuring in 2005

On September 22, 2005, Sony adopted a new strategy in order to revive its dwindling
fortunes. The strategy concentrated mainly on three sectors - electronics, games and
entertainment. The electronics business of Sony, which generated maximum revenues of
¥4786.2 billion out of total sales of ¥7159.6 billion, was to be revitalized through a series of
structural reforms coupled with a growth strategy aimed at achieving group sales of ¥8
trillion by 2008. Sony aimed at achieving a profit margin of 5% and cost reduction
amounting to ¥200 billion by the end of fiscal 2007-08.

Looking Ahead

Sony is likely to concentrate on products like digital camcorders, mobile phones,

Walkman and Playstation. The company was planning to launch a new TV lineup.
According to Stringer, "These products are a few of our weapons against
commoditization." Under the new strategy, Sony aimed at reviving the brand 'Sony'. With
the new products that Sony was planning to introduce, a person with a Sony Walkman,
mobile phone or portable Playstation could watch movies, listen to music and play video
games anywhere, anytime. In 2004-05, Sony planned to sell 2.5 million LCD televisions as
against 1 million sold the previous year. The sales of rear projection LCD TVs was
estimated at 1.4 million in 2004-05 as against 650000 sold during 2003-04.

Questions
1. Discuss Strategies adopted by Sony to regain its lost market share.
2. Explain the external factors that affecting Sony’s operation.
3. Identify Sony strength and weaknesses and suggest ways to overcome.

10
ASSIGNMENT 4

Carrefour's Strategies in China

Background Note

In the early 1950s, the grocery industry in France consisted mostly of family-owned stores.
Though there were some big department stores, these charged exorbitant prices. At that
time, the concept of free service was gaining popularity and there were very few stores
in France that were providing such services. In 1959, two entrepreneurs, Marcel Fournier
(Fournier) and Louis Defforey (Defforey) from Annecy in Eastern France decided to
establish a large discount supermarket. Initially, they offered 7,000 shares to 10
stockholders and purchased a facility that was under construction.

Going Global
Carrefour started making efforts to enter international markets after a law was passed in
France in 1963 to restrict the development of large stores. For international expansion,
Carrefour adopted the route of forming alliances with local partners. Its first international
venture was in Belgium, where it opened an outlet in association with Delhaize Fréres-Le-
Lion , in 1969. Carrefour expanded its operations outside Europe by opening a
hypermarket in Brazil in 1975. In 1978, Carrefour developed a hard discount store format,
under the banner Ed in France.

Carrefour in Asia

During the late 1980s, the economy of several Asian countries like Taiwan, Singapore,
South Korea, Thailand etc. was rapidly growing. In order to reap the benefits of this
growth, Carrefour started its Asian operations by entering Taiwan in 1989. It established a
joint venture with Uni President Enterprises Corporation.

Entry and Expansion in China

Carrefour identified China as one of the most important foreign markets, after the
country partially opened its retail sector for foreign investments in 1992. Carrefour
entered China in 1995 by forming a joint venture with the Chinese management
consulting firm Zhong Chuang, and established a firm called 'Jia Chuang', in which it
held the majority of shares.

The Strategies

While most of the global retailers and consumer product companies considered China to
be a single huge market, Carrefour adopted a different approach. It considered the
country to be comprised of several small markets.

Opening New Stores

Carrefour planned the expansion of its operations in China in a systematic manner by

establishing regional offices. For instance, the headquarters of the East China region in
Shanghai took care of expansion activities in that region. The headquarters of the
Northwestern region was located in Xinjiang and it was responsible for expanding
business in that region.

11
Store Management

As a part of its global strategy, Carrefour had decentralized its operations, giving full
freedom to store managers to operate their stores. Decentralization was one of the
important factors for Carrefour's success in international markets, with store managers
being empowered to take decisions according to the local traditions and customs.

Supply Chain Management

The supply chain system that Carrefour had in China was quite flexible. According to
Christophe De Nays Candau, In-charge of Organization, Systems and Supply Chain in
Carrefour, China, "It's (supply chain system) highly fragmented, so we have to keep our
flexibility. We still use the bike if it's the lowest cost and most efficient." Carrefour procured
most of the goods from within China to cater to its local operations. Since its initial years
of operation in China, about 85% of the stock sold was procured locally. This helped
Carrefour maintain lower prices compared to other foreign retailers, who sold imported
products.

Localization Strategies

Carrefour believed that its stores should reflect the local environment and complement
the local culture. The western style hypermarket was customized by Carrefour to
effectively cater to the needs and preferences of Chinese consumers.

The HR Practices

Though Carrefour had expanded its operations all over the world, the organization
remained lean as several of its key functions were decentralized. The headquarters had
a staff of only about 20, with around 10 people involved in the HR function.

The Challenges

Industry analysts opined that customizing its store formats to suit local needs had been
Carrefour's main strength and this had helped the company penetrate large and tier II
cities in China. Despite rapid growth, Carrefour's share in China was only at around 1.5%
of the organized retail market

Questions
1. Study and analyze the entry and expansion strategies of Carrefour in China
2. Explain why the top managements of Carrefour need to use a strategic
management approach in their decision making.
3. Identify problems faced by Carrefour business operation in China.

12
ASSIGNMENT 5

The Adidas - Reebok Merger

The Sporting Goods Industry

Mergers and Acquisitions (M&As) had become quite common in the sporting goods
industry during the late 1990s and the early 2000s. Adidas acquired the Salomon Group
for $1.4 billion in 1997. Nike acquired Converse in 2003 for $305 million, while Reebok
acquired The Hockey Company in 2004 for $330 million. These mergers were prompted
by the increasing competition and growth in the industry.

The US market is the largest market for sporting goods. Experts estimate that the US
sporting goods market will grow at a rate of approximately 8.9% between 2004 and 2008
to reach a value of $51 billion, forming 47.6% of the world market. It is estimated that 33%
of the athletic footwear purchased by the US consumers is used for sports and fitness
activities and bought on the basis of price, comfortability and fashion. In 2004, 40% of the
consumers of sports apparel lay in the age group 12-24. T-shirts and running shoes were
considered as the top selected categories. In 2004, sports apparel retail sales in the US
were worth $38.8 billion - compared with $37 billion in 2003. Athletic footwear retail sales
were $16.4 billion in 2004, compared with $15.9 billion in 2003.

The Merger

According to the merger deal, Adidas would buy all the outstanding shares of Reebok at
$59 per share in cash. This price represented a premium of 34.2%, as per the closing share
price of $43.95 on August 02, 2005. Adidas proposed to fund the purchase through an
arrangement of debt and equity. The deal price was equal to the latest twelve month
sales of Reebok and 11.7 times its EBITDA . Some analysts felt that the deal was priced too
high. As Uwe Weinrich, an analyst at HVB Group remarked, "The price Adidas will pay for
Reebok is ambitious." He added that acquisitions in the sporting goods industry rarely
brought in good returns.

The Synergies

Both the companies claimed that their missions were complementary. As Fireman
remarked, "Adidas is a perfect partner for Reebok. Reebok's mission is to enroll global
youth inclining towards the music-and-lifestyle image that it promotes through sports,
music and technology. This complements Adidas's mission to be the leading sports brand
in the world, with a focus on performance and international presence".

Integration Issues

Adidas said the companies would grow as a combined entity but would retain separate
management. The companies also ruled out any workforce reductions. The new entity
would continue to have separate headquarters and their individual sales forces. The
companies would also keep most of the distribution centers independent and would
have separate advertising programs for their brands. Hainer said, "The brands will be kept
separate because each brand has a lot of value and it would be stupid to bring them
together.

13
The companies would continue selling products under respective brand names and
labels." Adidas declared that the deal would involve investment in both Adidas and
Reebok. These investments would guide the companies towards effective consolidation.

The Track Ahead

Analysts had varied opinions about the deal. Some analysts felt that Adidas could beat
Nike to become the industry leader. Al Ries said that, "The biggest benefit is that it
removes a competitor. Now, all they need to do is to focus all their efforts on competing
with Nike." However, a few analysts opined that it was impossible to dislodge Nike from its
No. 1 position.

Nike was a preferred brand because of its fashion status, colors, and combinations.
Although Adidas was perceived to have good quality products that offered comfort and
Reebok was perceived as a 'cool' brand, Nike was perceived as having both 'hipness'
and quality.

Questions
1. Discuss the rationale behind the Adidas and Reebok merger.
2. Explain strategies that suitable to be use with the recent merging exercise of
Adidas and Reebok.
3. Evaluate the pros and cons of merger.

14
ASSIGNMENT 6

The Kodak - Fuji Rivalry

Fuji in the US

Founded in 1934, Fuji Photo Film had its headquarters in Tokyo, Japan. The company first
entered the US market in 1964 as a supplier of private label film and established its first
subsidiary in 1965.

Since the beginning, Fuji focused on providing quality and innovative products to its US
consumers. The company spent millions of dollars to design a new 8-mm home movie
system. In 1967, when Fuji planned to introduce the movie system, Kodak introduced its
Super 8 movie camera, which had a larger film format that could not use Fuji film. Since
Kodak had introduced its new system ahead of Fuji, Fuji shelved the plan of introducing
its system in the US. After this, Fuji felt that it made more strategic sense to follow Kodak's
lead, avoid attracting Kodak's attention, and not take any steps that would provoke
Kodak's retaliation. The company focused on building its marketshare in the US by
adopting strategies to get the share of weaker US competitors rather than that of Kodak.

Kodak in Japan

Though Kodak entered the Japanese market in 1905, the company never took the
Japanese market seriously. In the early 1980s, Japan emerged as the second largest
market in photographic products.

Due to the rising competition from Fuji in the US, Kodak decided to strengthen its
competitive position in Japan. In 1977, Kodak strengthened its control over the
distribution and marketing efforts of its Japanese arm Nagase & Co. In the following year,
the company formed a joint venture company named Kodak-Nagase. Later, Kodak
converted the import division of Nagase into its own subsidiary and was renamed as
Kodak-Japan. After setting up a subsidiary, Kodak increased its workforce to 4500 from a
mere 12. Tying up with the Japanese partner helped Kodak to have access to 60,000
camera stores up from the initial 30,000 stores in Japan. It gave Kodak access to more
shelf space to display its products. However, Kodak could not get into the stores, which
marketed Fuji products exclusively.

The Dispute

In 1995, Fuji had 18.8% market share in the US whereas Kodak had a mere 7-9% market
share in Japan. Defending its poor performance, Kodak alleged that the Japanese
government had imposed trade barriers, which had prevented it from competing
effectively in Japan.

The company claimed that this had cost Kodak $5.6 billion in lost revenues during the
period 1985-95. In May 1995, the rivalry between Kodak and Fuji intensified when Kodak
filed a petition under section 301 stating that its poor performance in the Japanese
market was a direct result of unfair practices adopted by Fuji. Kodak alleged Fuji of price
fixing in trade associations, bribing retailers and wholesalers so that they do not sell film
produced by other competitors. However, some analysts felt that the reason for Kodak's
failure in Japan was due to the significant difference between the distribution networks in
Japanese and the US markets. In the US, film manufacturers sold directly to retailers and

15
photofinishers whereas in Japan, distributors mediated between the two parties (the
manufacturers and the retailers/wholesalers).

Questions
1. Discuss the objectives and methods and strategies adopted by a multinational
corporation while trying to enter and expand in an international market.
2. Evaluate the pros and cons of the strategies adopted by Kodak.
3. Describe the important factors that need to be taken into account by Kodak to
successfully penetrate Japan market.

16
ASSIGNMENT 7

Organizational Transformation at the BBC

Need For Restructuring

Until 1982, there were only four television channels in the UK - BBC1, BBC2, ITV, and
Channel 4 - all of which used the terrestrial television broadcasting method to air their
programs. The early 1980s saw the rise of satellite television in the UK. Launched in 1982,
Satellite Television was the first of such channels. It was purchased by News Corporation
in 1984 and re-launched as Sky Channel, a pan European network.

In February 1989, Sky Channel was again launched as a four-channel network for the UK -
Sky Channel (later Sky One), Sky News, Sky Movies, and Eurosport. After a lot of delay, the
British Satellite Broadcasting (BSB) was launched in March 1990, to compete with Sky
Channel. Both companies lost huge amounts and in December 1990, they merged to
form BSkyB. BSkyB slowly rose to become a major competitor of BBC.

Greg Dyke Becomes Director General

In January 2000, Birt was replaced by Dyke, CEO of Pearson Television. Dyke, who took
over as Director General on February 01, 2000, found the BBC's organizational structure
extremely complex. There were far too many layers and the organization was much too
bureaucratic. He immediately announced the creation of the 'One BBC' program where
various departments and their employees would cooperate with each other and work
toward achieving common goals.

Thompson Takes Charge

The committee submitted its report on June 23, 2004, a day after Thompson took charge
as the Director General of the BBC. The Neil Report called for a vast improvement in the
training process of the journalists. It suggested establishment of a college of journalism
and a greater role for editors and lawyers in the BBC's editorial process. The committee
wanted the BBC to continue to broadcast reports based on a single source but only after
proper examination. It emphasized that only the most accurate information should be
given to the public.

Charter Manifesto

Since the early 2000s, the license fee charged by the BBC had come under severe
criticism. In August 2003, the Conservative Party, the second largest political party in the
UK, charged that the viewers were paying for programs that had been copied from
commercial channels and demanded that the fee be cut. It said that the BBC was
getting an unfair advantage by receiving £2.7 billion as annual fee.

On June 29, 2004, the BBC announced its Charter manifesto called 'Building Public Value'
aimed at providing value to its customers in the wake of changing customer preferences
and the competition. The Charter manifesto, which consisted of BBC's proposals for the
coming years, would be sent to the government to peruse while reviewing the Royal
Charter. The manifesto justified the continuance of the license fee and the Charter for
the next ten years. In the wake of criticism over the license fee, Thompson announced
sweeping measures in the nine-point manifesto.

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Implementing Change at BBC

In the first week of December 2004, Thompson began implementing the manifesto by
announcing a new vision aimed at making the BBC a more creative and efficient digital
broadcaster. He announced that his vision had three aspects - 'a bold new program and
content strategy based above all around the idea of excellence,' 'a transformation of
the BBC into a state-of-the art digital broadcaster,' and 'an irreversible shift in the culture
of the BBC toward simplicity, opportunity, and creativity.

The BBC Journalism College

In the last week of June 2005, the BBC launched the BBC Journalism College at an
investment of £5 million to train journalists working in various divisions of the BBC such as
news, the World Service, etc. As opposed to the concept of classroom training, the
instructions were imparted through interactive e-learning sessions, seminars, and
workshops (conducted by Neil) at various locations across the globe.

The Road Ahead

Though the BBC had been cutting costs, the compensation paid to the top executives
remained the same, and for a few executives, it was actually rising every year. The
bonuses paid to them were criticized severely by many industry analysts and BECTU as
they came at a time when television viewership was falling. For 2004-05, Thompson
received a bonus of £64,000 on a £210,000 basic pay and Byford received £92,000 on his
salary of £351,000.

Questions
1. Discuss how a public broadcaster has failed to transform itself in the light of
rapidly changing business environment in the media industry.
2. From a strategic point of view, what are the challenges facing BBC in retaining its
position in the market?
3. Explain the benefits of doing an external and internal analysis in the broadcasting
and media industry..

ASSIGNMENT 8

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 Disney's Acquisition of Pixar

The Disney-Pixar Partnership

In May 1991, Disney entered into an agreement with Pixar for developing and producing
three computer animated feature films. According to the agreement, Disney agreed to
produce movies to be developed and directed by Pixar's John Lasseter. Disney agreed
to market and distributes these movies.

Pixar was to receive compensation based on the revenue obtained from distributing
these films and related products. Including distribution fees, Disney was to get 87% of the
distribution proceeds. Analysts felt that the agreement gave Pixar an expert partner in
the film business with great marketing capabilities. The first film under the agreement was
Toy Story which was released in November 1995. It was the first computer animated
feature film that was of one hour and twenty one minutes duration. The film was a huge
success and generated over US$ 360 million in worldwide revenues. After the release of
Toy Story, Disney extended its partnership with Pixar to a co-production agreement in
1997, under which Pixar agreed to produce five original computer-animated feature
films, in a span of ten years.

The Acquisition

In March 2005, the Disney Board elected Iger as the company's CEO to succeed Eisner
on September 30, 2005. Iger got a call from Jobs who hinted at a possible discussion on
working together again. Analysts felt that Iger would find it difficult to strike a new deal as
proposed by Jobs as it was heavily loaded in favor of Pixar.

However, Iger adapted the proposal his own way. He asked for Disney's content to be
distributed over the Internet through Apple's online store - iTunes. In October 2005, Iger
and Jobs signed a deal to sell the past and current episodes of television shows of its ABC
and Disney channels through iTunes. It started with five shows which included the popular
shows Desperate Housewives and Lost. Jobs was pleased with the Iger's suggestion of
linking up to offer videos through iTunes. Iger said that the deal with Apple was finalized
in just three days. Meanwhile, Jobs also started re-negotiating on the Disney-Pixar
agreement. With this rapprochement, there was speculation that Disney might acquire
Pixar.

Questions
1. Discuss the rationale behind Disney's acquisition of Pixar C
2. Discuss the benefits of strategy adopted by Disney and relate your discussion with
the case study.
3. Identify any other strategies that may help Disney to be more competitive in the
market. Support your answer by explaining the pros and cons of those strategies.
Case Intro 2

ASSIGNMENT 9

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PORSHE- Reviving Up

Porsche. A name that brings to mind the image of the world’s best sports cars. The
company’s website (www.porsche.com) describes Porsche as pure innovation, emotion
and fascination. Yet, the German company has had its fair share of problems. Wendelin
Wiedeking, the current Porcshe chairman, is said to have the ‘automotive world’s
toughest managerial job”. He says, “A company’s goal is to make money. If it doesn’t
make money, it has no reason to exist”. However, during the mid-1990’s, Porsche wasn’t
meeting that goal. The daunting task of turning the company around and bringing it
back to profitability was given to Wiedeking.

When Wiedeking first took over the production and materials management division in
1991, he found a company saddled with traditional management, a bloated production
process, and an ill-conceived plan to add a sedan to its line of high performance sports
cars. His reaction-benchmark every aspect of production to find out how much time,
effort and money was being spent on Porsche. What his team discovered was that
Porsche’s production process was bloated and wasteful. This evaluation was just a first
step, though. Wiedeking’s strategic capabilities and sense soon led to his being named
chairman of the company. Then he went to work reshaping all aspects of the business
from the factory floor to the executive offices to the marketing department.

Concepts such as lean production, just in time manufacturing, and one-piece flow were
implemented. These changes led to the playoff of nearly one-third of its workforce and
reduction in management layers from six to four. The result? Manufacturing productivity
rose sharply. Where it used to take 120 man-hours to produce a Porsche, it now takes 80.
In the marketing area, new advertising campaigns were designed to transform Porsche’s
image of cool, arrogant speed and power into something more friendly, approachable,
and fun. One of the company’s ads for its Porsche Boxster carried the tag line “Kills Bugs
Fast.” This amusing advertising reflects the amazing transformation of an old-line
company into something better. Another component of Wiedeking’s management
philosophy is keeping everyone busy. Since he took over, the company has completely
overhauled its processes, simultaneously designed and built the Boxster and retooled the
911, and produced a new 911 Turbo. Now, the company is focusing on development of
an SUV. Once that’s done, Wiedeking promises that there will be another project. He
says. “I just started to talk about visions for 2005 and 2010. Where will company be in 2005
and 2010? This is again, my job, because a company must grow. If a company is not
able to grow, it is not able to survive. If you stagnate, I think, that’s the beginning of the
end’.

Questions
1. Strategies adopted by Porsche to regain its lost market share
2. Discuss an opportunity and threat faced by Porsche.
3. Identify the various distinctive capability of Porsche.
4. Give the meaning of internal analysis and identify strengths and weaknesses of
Porsche.

ASSIGNMENT 10

MAS On A Clear Route to Become Five-Star Airline

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Bangkok: Malaysia Airlines (MAS) managing director and chief executive officer Datuk
Seri Idris Jala says he will unveil a five-year business transformation plan for the airline in
January. His mission: to transform MAS into a five-star airline at low-cost carrier (LCC) cost.
Idris said the plan would provide a clear direction for the national carrier, which is facing
intense competition from LCCs and challenges, such as high jet oil prices. "We want to
provide five star services at LCC cost. We want to reduce costs but maintain our quality
service," he said in an interview on the sidelines of the 51st Assembly of Presidents of the
Asia Pacific Airlines Association here. He said MAS could look ahead with a new strategic
plan following the successful implementation of the business turnaround plan that he
introduced after taking over the country's hottest corporate seat on Dec 1, 2005.

MAS, which had been in the red since the Asian financial crisis of the late 1990s,
registered a net profit of RM245.5 million in the first half-year ended June 30, against a loss
of RM498.2 million a year earlier, with revenue rising to RM7.18 billion from RM6.05 billion
previously. Idris, who was recruited from Shell Malaysia following his involvement in the
remarkable turnaround of the Sri Lankan petroleum industry a few years ago, declined to
reveal the details of the plan but hinted that it would also involve the purchase of new
planes to beef up MAS' fleet of 89 jets. "Obviously it will involve the purchase of new
planes and replacement of older ones. We are in the midst of finalizing our requirement
for both narrow and wide-body aircraft. We have received bids from Airbus and Boeing
and we have asked them to provide us with delivery schedules."

Under the new business plan, the airline would be in a better position to serve its
destinations and clients. On its wholly-owned subsidiary Firefly, seen by many as MAS'
answer to the region's top LCC, Air Asia, Idris said he was surprised by the customer
support it had received. He also commended the speed at which the staff were able to
operate the new entity, which started operations in Penang in April. "We were cautious
when we first started Firefly and wanted to go slow first. We have ordered 10 ATR, which
seat 74. One is coming soon and three more will arrive in 2008." He said Firefly was waiting
for government approval for its request to fly to Singapore, following the decision to allow
LCCs to operate the profitable route. Asked about his twoyear stint helming the airline,
Idris said he had no regrets. "I am happy. But there is a lot to do and we have a long way
to go."

Idris, who was once described by Second Finance Minister Tan Sri Nor Mohamed Yakcop
as the best CEO that money could buy, attributed MAS' strong comeback to the
tremendous support he received from the staff and union. "They are good people and
stayed focus and united in my two years here. I am impressed with their team work and
calibre." Idris said MAS' employees were its biggest asset and that he knew it from the
beginning as the airline had been winning international awards for many years, including
the World's Best Cabin Staff award at the World Airlines Award 2007 and Asia's Leading
Business Class Airline. - Bernama
(Adapted from NEW SUNDAY TIMES, Saturday 18 November 2007, Prime News)

Questions
1. Identify and elaborate what are the strengths of MAS.
2. Suggest THREE (3) strategies (ways) on how MAS can become the 'five-star' airline.
3. Explain how MAS competes with Air Asia.
END OF QUESTIONS

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