Exam 1
1. The US beer industry was transformed significantly since 1980s. identify two important variables in this environment. Discuss the different strategy used by Anheuser-Busch’s and Samuel Adams?
Change in environment:
- Demand in US: 1980: 34.0 gallon/person, 2003: 29.1/person, 2010: 1.5% drop from 2009.
- Technology allows production in very high quantity
Anheuser-Busch: SAB-Miller and Molson Coors
- High volume and standard quality
- Economy of scale (production, marketing)
- Commands about 80% of sales, sometimes result from M&A
Micorbrewers: Samuel Adams, Corona and Heineken
- Low volume, crafy, higher quality
- The only segment that experienced growth

2. One of the “excuse” for business executives act unethically is moral relativism. What is it? Describe an example.
Moral relativism is relative to some personal, social, or cultural standard and there is no one method for deciding whether one decision is better than another.
Dennis Kozlowiski, who is the CEO of Tyco in 1990-2002. Tyco financed the acquisitions by taking on significant debt commitments, which by 2002 exceeded $23 billion. As Tyco expanded, some questioned the company’s ability to service its debt commitments. Other claimed that management was engaging in accounting tricks to pad its books and make the company appear significantly audited every year, and the outside accountants had detected no problems. These criticisms, which were ignored for some time, were finally shown to have some validity in 2002 when Kozlowski was forced out by the board and subsequently charged with tax evasion by federal authorities. In addition, Kozlowski used corporate asset as personal treasury, such as pay for an expensive birthday party for his wife, and to purchase an expensive Manhattan apartment and world-class art collection.

3. Between 2002 to 2005, Southwest Airlines was the only profitable airline. What are the decisions that it used? Which building block of competitive advantage did Southwest Airlines rely on?
Southwest used; low ticket prices, fly point- to- point, fly one airplane model, and no movie (entertainment).
Southwest used efficiency because they have competitive advantage through lower cost structure. Also, they used customer responsiveness, because they avoid delay time by using the point- to- point fly.

4. Discuss the relationship between “planned strategy,” “unrealized strategy,” “realized strategy,” and “emergent strategy.” State a strategy (action) by Microsoft that can be classified as unrealized strategy when window95 was introduced.
Planned strategy: strategy selected through careful analysis
Realized strategy: strategy actually adopted in the end.
Emergent strategy: an unplanned strategy that evolved during the course of implementing the intended strategy.
Deliberate strategy: strategy that was rigidly pursued.
Microsoft case: 1. In 1995, in addition to Windows 95, MS introduced MSN as well. 2. Members (paid customers) did not materialized for MNS because of free Internet. 3. MS subsequently substaintially reduce their expectation for MSN (and the strategy faild). Unplanned high-end Chinese buffet (as a business model). Unplanned product: potato chip from French Fries. 4. Lower level employeed have developed dthe IE browser. 5. Lower level managers decided to improve IE’s functionality to meet minimum expectation 6. The Internet Explorer becomes part of the MS’ strategy when higher level managers decide to leverage this “resource”

5. There are various offensive tactics that a company may use (there are five of them). Identify one of these offensive tactics and describe that tactic and illustrate it with an example.
Offensive tactics:
- Frontal assault: the attacking firm goes head-to-head with its competitors from price to promotion to distribution channel. Ex: AT&T and Verizon
- Flanking Maneuver: a firm may attack a part of the market where the competitor is weak. Ex: Intel vs AMD
- Bypass attack: attempts to cut the market out from under the established defender. Ex: Encyclopedia Britannica
- Encirclement: occurs as an attacking company encircles the competitor’s position in term of products or markets or both. Ex: Steinway
- Guerilla Warfare: a firm may choose to hit & run; involves intermittent assaults on a competitor’s different market segments. Ex: Virgin Group/ Jet Blue

Case study
1. Wal-Mart:
- Strategic decision: small southern towns, a leader in IS/T, logistics, HR. leveraged its size.
- Potential problems: international market, competitors: Latin Americas and EU, and online market.

2. Chevy Volt:
- Strategic factors: oil price, global warming, cost of battery, and Toyota Prius.
- What is Volt? Electric car with gasoline as back up power. Volt uses lithium ion that can travel 40 miles when fully charged (in about 6 hours).
Final push? Tesla motor, the Volt in 2009 auto show.

3. John Thain- Merrill Lynch:
- Nov 2007, John Thain became the new CEO of ML. previous CEO Stan O’Neal entered the CDO (collateralized debt obligations) and was fired when real estate market free-falled.
- John Thain was trained by Richard Grassco who was in a scandal over excessive compensation.
- John Thain instituted tight cost control and exited several businesses. Obtained $10 billion from the government, had a positive image in the press when ML was sold to BoA.
- Image started to change due to; tight cost control did not apply to him ($1.2 million on his office). Granting bonus to executives when ML had big losses. Hide the real loss at ML ($15.3 billion) unit after the acquisition. BoA indicated that Mr. Thain would leave three weeks after the completion of the acquisition.
4. US Steel Industry:
- Pre-2204 problems: falling trade barriers (loss of market share o foreign competitors).
- Changing technology: Minimills: challenges US Steel, Bethlehem Steel, etc.
- Substitutes materials: aluminum, plastics, carbon fibers (composites): intense competition: low profits
- Post-2004 the change: emerging economics, exchange rate, and consolidation.

5. Natural Gas industry:
- Change in environment: * Technology: shale gas: more use of LNG * Demand: developing country (China) needs more * Supply: tight gas (shale, coal mines), hydrates * Policy: natural gas policy act 1978 (de-regulation)

6. McDonald:
- McDonald’s strategy from 1955 to about 2000: value, quick, and clean
- McDonald’s tactic: standardization, good supplier relation, and economy of scale
- McDonald under attack: obesity, Supersize Me, etc.
- Response: better interior decoration, menu change (more chicken, coffee), more efficient execution.

7. Sony:
- Early 2000s Sony was able to * Generate 4 new ideas everyday * Pioneered PlayStation, Trinitron TV, Walkman * Was the most profitable electronics company in the world.
- Since 2009, Sony reported a loss every year. How did it lost its position? * Not focusing on competitors * Unable to stay as leaders in tech
- Sony’s new strategy: * Focused on a set of core business * New focus to reduce cost via outsourcing
- New problems on the horizon: earthquake, hacking, economic down turn

8. Holiday Inns:
- The lodging industry in 1950s can be unpredictable
- Holiday Inns started by provide a standard product by the end of 1960s, more than 1,00 hotels was under Holiday Inns with an occupancy rate of about 80%
- By 1970s, customers started to segment. Some wants lower rate; some wants more services. Hotel 6, Super8, Hyatt, 4seasons.
- Holiday Inns responded by provide more brand names: Crowne Plaza, and Hampton Inn
- In 2000s, Holiday Inns started another round of modernization due to a highly competitive environment.
9. War on Dolls:
- $10 billion/year business best seller: Barbie by Matel (50years)
The needs of the customer was changing Bratz targeted the needs of 7 to 11 years old girls. Mattel races to update it line.
Filed a law suit against
2008- Mattel won
2009- Bratz successful in appeal
2011- court settle that Bratz owned by MGA entertainment