Free Essay

Education

In:

Submitted By xmlovek
Words 5922
Pages 24
Walmart around the World

1. Evaluate Walmart’s globalization strategy over the last two decades. Where did the retailer struggle? Where did it do well? Can location characteristics explain the differences in Walmart performance

2. Walmart entered in some countries through acquisitions and in some countries through greenfield investment. What entry mode do you think was best? Did location characteristics drive the mode of entry? Why?

3. In 2013, Walmart decided to enter the Indian market in a joint-venture with Bharti Enterprises. Based on your analysis of Walmart’s global expansion up to that point, do you think it was a good idea to go to India? To select joint-venture as the mode of entry?

4. In general, what do you think is the best way to enter a new market: acquisition, joint venture, or greenfield investment? What are the location characteristics that affect this decision? What are the firm characteristics that affect this decision? What industry characteristics affect this decision?

Zara – Fast Fashion

Please assume you are a competent consultant of a very famous consulting company, such as Boston Consulting Company (BCG), McKenzie, or Monitor. And you are assigned to diagnose/evaluate the current strategy and to give recommendation(s) for the future growth of ZARA (or Inditex). You should submit your report to your boss on the day of the discussion.

1. Describe the characteristics of the industry in which ZARA compete.

2. What are the value(s) that ZARA?

3. What are the core features of the ZARA business model? And how do they affect its operating economics (or costs)?

4. How might ZARA fail? How sustainable would ZARA with its competitive advantage relative to other apparel retailers?

5. What are the key features of organizational form of ZARA? And what are the key features of the global structure(s) of Inditex?

6. Was Galicia/Spain fertile for the emergence of an apparel retailing powerhouse?

7. How well does ZARA’s advantage travel globally?

8. What do you think of ZARA’s international strategy? Evaluate, in particular, its strategy for (product) market selection, its mode of entry, and its standardization of its marketing approach?

9. What is the best way to grow the ZARA chain? How, specifically, do you see prospects in the Italian market? And more broadly, what do you think about the strategy of focusing on Europe versus making a major commitment to a second region?

10. What other strategic recommendations would you make to Inditex CEO Jose Maria Castello?
Zara Roundtable Discussion

|00:00:03.0 >> |PANKAJ GHEMAWAT: What are the core features of the ZARA business model and when were they |
| |established? |
| |JOSÉ MARÍA CASTELLANO: The original idea of combining distribution with manufacturing began with the |
| |founder. |
| |This model, which was intuitively seen to have some advantages, was perfected by introducing |
| |technology and especially human resources. |
| |It's not the same to have ten stores as 1,300 stores or one country vs. 40 countries. |
| |But the model has been the same since the beginning. |
| |It improved over time, through the incorporation of technology and the fact that the company is |
| |larger and more complex than it had been. |

|00:00:43.0 >> |JUAN CARLOS R. CEBRIÁN: I would add only one key word, which is: innovation. |
| |This company is in a state of constant innovation. What Jose María said is true, and the last thing |
| |is: when they [the competition] get to where we are, we will have invented something new. |
| |What we cannot do is stop. This is the key [to this company], to not stop, to be constantly |
| |introducing new things. |
| |DIEGO COPADO: If we draw a diagram of our marketing mix from the standpoint of public relations, we |
| |have the best creative agency in the world, which is our real estate department. |
| |They choose windows in the best sites in the best and largest cities in the world. |
| |We have some designers and sales people who create designs and the most attractive products for our |
| |customers. |
| |And we have store designers and people who design the window displays who put together the layouts or|
| |the most fantastic creations that an advertising department could imagine. |
| |All this combined allows us to project a very powerful message. |
| |Which is that, based on the customer's experience, and [the subsequent] word-of-mouth, every time you|
| |open a store, the trajectory of your growth is improved and the awareness of the product increases. |

|00:02:10.0 >> |JESÚS VEGA: When you grow from a small thing into something bigger, the tendency is for a relaxation |
| |of the very values that existed with the start of the company. |
| |JOSÉ LUIS NUENO: What are those values? |
| |JESÚS VEGA : Freedom, perfectionism, responsibility, to respond quickly, to be flexible, and above |
| |all, respect for others and the need to be consistent when acting with this freedom. |
| |Whenever there is a part of the equation that is unresolved—where freedom is failing or where |
| |responsibility is lacking—the company will stop working. |
| |Until now this equation has worked perfectly because the chairman demands that we adhere to these |
| |values. He is the first one to practice what he preaches, which is another of the fundamental values.|
| |Here deeds are more important than words; one must lead by example. |

|00:03:10.0 >> |JACQUES SALLUN: It is a company where you work hard. Someone who comes from the outside might have |
| |the impression that we don't work very hard, but this is not true. It's a good environment, but you |
| |work hard. |
| |That's why if there is a problem, you can contact anyone 24 hours a day. This is very important. |
| |The other thing that's very important is open communication. In a normal company there is a strong |
| |hierarchy, but not in this company. |
| |I think this manner of working is key to why this company is growing so fast. |

|00:04:01.0 >> |JOSÉ MARÍA CASTELLANO: Our whole organization is used to responding quickly to the changes in demand.|
| |We have a flat organization; we have responsible people, dedicated people, and people who have |
| |understood this type of work from the outset. |
| |For those who want to adapt to our business model, they will have to do all of this as well as change|
| |their method of applying human resources, which is the most costly. This is where Inditex's |
| |competitive advantage lies. |

|00:04:28.0 >> |PANKAJ GHEMAWAT: How have you implemented your business model so quickly and effectively in so many |
| |different countries, given the difficulties that many retailers have experienced in globalizing their|
| |store networks? |
| |JUAN CARLOS R. CEBRIÁN: There used to be a greater difference in fashion... when media communication |
| |was not as immediate as it is today the variation in fashion between countries was quite large. |
| |Where was fashion previously? In France. And when it crossed into Spain, it started in the north and |
| |it took a few months for it to get to the south of Spain. |
| |Today, this has changed. Not only in Spain, but all over the world. And so there are no great |
| |differences in fashion now. |

|00:05:04.0 >> |JOSÉ MARÍA CASTELLANO: When we started in France, around the year 1989, we opened two stores in |
| |Paris. The French market was very different from what it is today, [in that] it was a designer market|
| |with very high prices. Later there was a market for cheaper clothing, which [in our jargon] was |
| |called 'rags.' |
| |That is, the industry had relocated; it was now manufacturing goods in Vietnam or China or Japan and |
| |sold them at very low prices. But in the middle segment of the market, where someone might offer good|
| |quality fashion at a reasonable price, this was a segment of the market that no one served. |
| |We took advantage of the situation and inserted ourselves in this market niche, and it worked. It |
| |took a while to adapt; we spent three years in France with two stores - without opening any others - |
| |preparing our organization, and getting oriented. |
| |From there, we began to expand. Here we have the director of the French operation. France is today a |
| |very important market for us; it's the second largest market for Zara after Spain. It's a very |
| |profitable market, one in which we've had great success. And that is what we have developed in |
| |France. |
| |At first, we were centered in Paris, which is still the most important city in France for us. |
| |Afterwards we spread out to other cities such as Marseilles, Lyon, Bordeaux, etc. By the end of last |
| |year we had 67 Zara stores in France. |

|00:06:22.0 >> |JACQUES SALLUN: The example of France is not so different from the Spanish example. Because there is |
| |no difference in culture, the clients are the same. I agree with Juan Carlos; there is not a lot of |
| |difference between European countries. Yes, France is different with regards to legal problems with |
| |the 35-hour labor agreement; there was a very big change in the mindset of the staff resulting in the|
| |fact that we don't have as many sales clerks as we would like. |
| |But I don't think there is a big difference in the clients, they are the same as in Spain. What the |
| |client expects is the same for both France and Spain. |
| |As mentioned before, on the day the truck arrives, there are many people lining up to buy the latest |
| |styles. This is true. I think it's the same in all the countries in the world. |
| |It's for this reason that France is different regarding the sizes and numbers of stores, but all the |
| |other factors are the same. |

|00:07:37.0 >> |DIEGO COPADO: I think there are two keys regarding your question about globalization, focusing on the|
| |company standpoint. The first is that when Inditex positions its chains, or in the case of Zara, |
| |[looking more at the past] we were looking for a target without analyzing ages or lifestyles, which |
| |simplifies things a lot. |
| |And this is part of the culture of the company. We want to target buyers who like fashion and who are|
| |receptive to it. It's true that in the '80's and '90's this target or consumer was bigger or smaller |
| |depending on the country. But at the time, media and various new technologies began to instill new |
| |habits in society, and the number of consumers whom we are targeting today is growing. |
| |What occurs is that various tastes in fashion that were different in different countries become more |
| |similar, such as France and Spain, or Portugal and England. But nowadays, it's not that clients are |
| |becoming more uniform in taste but just that while other companies aim to sell casual clothing and a |
| |huge number of garments, we are looking for a target which is uniform and that is not limited by |
| |international borders, that is, people who appreciate fashion. |

|00:09:12.0 >> |RAMÓN REÑÓN: We sell fashion; 60% of our products are intended for women. And to sell fashion, well, |
| |fashion is common in different capitals of the world. When a very popular product is sold in Mexico |
| |or New York, it is also sold in Paris and in a Barcelona store or in a Lebanese or Kuwaiti store. |
| |That is, there is a uniformity of demand on the part of the fashion-conscious public. |
| |I remember when I started in this company, there was a unique concept that went: "that girl is a Zara|
| |girl," which coincides with our market surveys of the types of consumers in each country. That is, |
| |finding a 'Zara girl' in a market is one of the things that influences our decision whether or not to|
| |go to a particular country. Evidently, this is the type of customer we're looking for. |

|00:10:25.0 >> |BORJA DE LA CIERVA: Investors often ask us, "Why are you in so many countries rather than being more |
| |concentrated in fewer countries?" "Why have you broken the traditional barriers to being in so many |
| |countries?" We explain that there are two basic barriers or costs that we don't incur when entering a|
| |new market. One is advertising, since we don't advertise, when we open a new store in Poland for |
| |example, we don't have this extraordinary advertising expense to create brand recognition. |
| |And the second thing is local logistics. We don't have to do this. When other chains enter a new |
| |country, or come to Spain, the first thing they undertake is an ad campaign and [the building of] |
| |logistical facilities. For us it's the same whether we open a new store in Spain or the Czech |
| |Republic. Because we aren't going to advertise or set-up logistics in that country. This is what |
| |allows us to take better advantage of the real estate opportunities regardless of the market we're |
| |in. |

|00:11:29.0 >> |JOSÉ MARÍA CASTELLANO: Because we organize production here in Spain we compete effectively in terms |
| |of response time. Our competition, in terms of costs, corresponds to the products we don't produce |
| |internally. Our presence in other countries consists of stores, but to compete in manufacturing, we |
| |have to reduce our response times, which is done by producing mostly in Spain, about 50% of our |
| |volume. Europe [including Spain] accounts for 80%. |
| |Therefore, all we have in France are stores; in Germany we have stores, in Austria we have stores; we|
| |don't have the rest of the organization. So we see the differences in terms of stores in each |
| |country. But the business model is the same everywhere. |

|00:12:12.0 >> |PANKAJ GHEMAWAT: What are the differences between the stores, if any, from one country to the next? |
| |JUAN CARLOS R. CEBRIÁN |
| |The culture of each country. But this decreases over time and in the end you're left with a single |
| |culture, which is Inditex. In principle, if you go to Japan you'll find a serious cultural |
| |difference. The rhythm of work, productivity, in one store you might need five people, whereas in |
| |another maybe seven or three. The customs: in certain stores they'd need to have a cup of coffee, but|
| |not in a different country. Basically it's customs, and these converge little by little into a single|
| |set of customs, which is Inditex. |

|00:12:57.0 >> |JESÚS VEGA: The philosophy is fundamentally the same. The values that are valid here in Arteixo are |
| |also valid in the stores. It's clear the type of work is different and many business dynamics are |
| |different. But this is precisely one of the things that has made this company big: that it has been |
| |able to impart these values, not only to the people working here in Arteixo where it's easier because|
| |of proximity, but also to the stores. And not just the stores in Spain, but also the stores in |
| |various countries and of various chains. |
| |One of the things that Juan Carlos and Casti [Castellano] ask of us constantly is to be close to |
| |people. To truly see what is happening in order to identify two things: one, to convey these values, |
| |and two, to be quick and effective at resolving problems precisely because those are where the values|
| |are not being practiced. And this means having international teams, store management teams, human |
| |resource teams that are in the stores, window display teams that constantly travel to various |
| |countries, specifically to remain aware of the dynamics inside the stores. |
| |We are not a company that manages from here; we are a company that operates from Arteixo but has a |
| |mission to be more reality-based and for us the reality is in the stores?they are the center of the |
| |company. |

|00:14:33.0 >> |PANKAJ GHEMAWAT: Can you summarize your future growth plans and the challenges that they entail? |
| |JOSÉ MARÍA CASTELLANO: We have a plan for the next five years, more specifically until the year 2006.|
| |But this plan is only assured until a certain point. We project the company will grow at an annual |
| |rate of 20%, of which 15% will be new floor space and 5% 'like for like' growth from existing floor |
| |space. |
| |Of this 15% growth, 80% is committed for 2002; 40% for the year 2003; 10% for the year 2004, and the |
| |rest is still theoretical. |
| |What happens is that our yearly experience shows that on average we are capable of opening between |
| |200 and 250 stores [per year]. |
| |Now, that's for the year 2002, 2003, and 2004... if you ask us where these stores are going to be in |
| |2006 we couldn't say. But we think that this will be our growth rate unless something exceptional |
| |happens. So there is a degree of certainty in planning that decreases over time. |

|00:15:51.0 >> |LORENA ALBA: Logistics, in the end, involves three or four very important variables. Without going |
| |into the details too far, because for logistics, five years is not a lot of time. We always have to |
| |be ahead of the curve. We always have to think about volume and how much product we're going to move |
| |over the next five years. The SKUs (stock keeping units) also influence the variety we're going to |
| |handle in existing and future chains, and the delivery points—clearly it's different to expand into a|
| |country where you already have stores than to grow continuously each year in different countries |
| |where you have to establish the entire distribution system from the start. Taking all this into |
| |account, if we think of the future and also the day-to-day, we can accomplish our short-term |
| |planning. |

|00:16:39.0 >> |JOSÉ MARÍA CASTELLANO: The future is so uncertain that I, for one, am unable to predict it. But for |
| |the next five-year period we don't anticipate any great changes. Production here is more expensive |
| |than in Morocco, but in the fashion industry, while it is always fundamental to control costs, the |
| |most important thing is not to attain the lowest costs, but the shortest response times. Why? Because|
| |if a customer wants a flowered outfit, and we have to get it from Asia, it'll take four months. By |
| |then they'll want a black outfit. |

|00:17:08.0 >> |JOSÉ LUIS NUENO: What degree of coordination exists between chains in the same group and different |
| |countries within the same chain? |
| |JUAN CARLOS R. CEBRIÁN: I see more growth throughout the entire company within the same chains, and |
| |with future chains... and with other segments of the market, maybe other types of products... the |
| |company cannot stop. |

|00:17:29.0 >> |JOSÉ MARÍA CASTELLANO: The company has a five-year plan, and aside from any acquisition—which is not |
| |in the plans, nor anticipated—the growth will be through existing chains and new chains developed |
| |internally, organically. |
| |Zara dominates the six in the group we now have. Over the next five years Zara may lose market share |
| |at two points per year because the other chains are growing faster, as they are newer and younger, |
| |among other reasons. |
| |We will continue being an essentially European company; we will have 80% of our volume in Europe. We |
| |don't have very big plans for growth in the Americas or Asia, although that is where the rest of the |
| |volume will come from. |
| |And as for the development of new chains, we are thinking about developing a line of children's |
| |clothing and this would be all. But essentially, we'll grow the lines we have and add one other |
| |chain. |

|00:18:33.0 >> |BORJA DE LA CIERVA: Last year the company had 3,200 million Euros in sales. Any new concept or chain,|
| |no matter how aggressive its growth plan is, will have difficulty generating more than 2 or 3% of the|
| |sales of the company in the limited time of four or five years. So future growth can't be based on |
| |this. The new chains contribute a bit more growth, but it is only a marginal growth, above what is |
| |already being produced. |

|00:19:04.0 >> |JOSÉ LUIS NUENO: When one opens a store in a country other than Spain, or opens a new chain, what |
| |degree of autonomy do they have? What systems exist for control, centralization or decentralization |
| |of services, strategy coordination, store opening decisions, coordination of expansion with respect |
| |to the landlords? What variables are behind these actions? |

|00:19:19.0 >> |JOSÉ MARÍA CASTELLANO: The company has a five-year plan for all its businesses arranged by chains and|
| |by countries for every product line you can imagine. We don't have six chains, rather we have six |
| |companies that act independently in certain respects. In these six companies, we prepare plans with |
| |all the departments for the next five years. |
| |Inditex, as the holding company, decides centrally where to invest, not based solely on financial |
| |criteria, but also on commercial criteria. For example, when we open a new store in a country it's |
| |not always based on financial profit; this might be a 'flagship' store. We are seeking company |
| |'presence' in the country. The first store we opened in Hamburg didn't have to be profitable at |
| |first. We wanted a flagship store in Germany. |
| |From there we decide how to expand each of the chains over the next few years. Zara, which has the |
| |most international exposure of the group, serves as an important example for the others. |
| |In Germany, there are now 18 Zara stores. We also have Massimo Dutti and Oysho. So Zara's experience |
| |regarding real estate, personnel costs, hiring or other contract negotiating, is valid for Massimo |
| |Dutti, or if we go with Pull & Bear or Bershka subsequently. |
| |Because Zara is the most international of all the companies, its experience is shared with the |
| |others. This doesn't mean the information is shared on a day-to-day basis. [For example] Massimo |
| |Dutti in Germany doesn't know what a Zara store is selling per square meter (which we keep track of |
| |here at Inditex centrally), but yes, they do know if street "X" is a good street for Massimo Dutti |
| |because of Zara's experience. |

|00:21:17.0 >> |JOSÉ LUIS NUENO: How does Inditex function in Germany, for example? |
| |JOSÉ MARÍA CASTELLANO: There is a Zara office that shares resources with Massimo Dutti and Oysho. In |
| |Mexico, all six chains are present but one of them is franchised, so the central office monitors the |
| |other five chains. Venezuela is the same. France has a Stradivarius store, but the central Zara |
| |office monitors all the information for Stradivarius in France and so on. |

|00:21:47.0 >> |JUAN CARLOS R. CEBRIÁN: The resources that are shared are not the only resources. Zara has its |
| |commercial part, as does Massimo Dutti; they are independent. Zara's financial part is shared with |
| |other chains. [That is] the business portion is independent; it is not shared with the other |
| |companies. None of them has authority over any of the rest of them; this is specific to the chain. |

|00:22:11.0 >> |JOSÉ LUIS NUENO: Ramón is negotiating with the malls for five chains [for example], correct? |
| |JOSÉ MARÍA CASTELLANO : Yes, but it's not the same for Oysho to go and negotiate 250 square meters at|
| |a mall, as it is for Ramón Reñón to negotiate 3,500 square meters for six chains [where a per square |
| |meter volume advantage can be gained at the mall]. But in reference to placement, every chain has a |
| |team that finds the locations in the cities. |
| |JUAN CARLOS R. CEBRIÁN: Regarding what is shared; since the smaller chains can't contribute as much |
| |and the chain that contributes the most is Zara, the rest of them have to take advantage of this |
| |'engine' which is Zara. |
| |In the mall, the engine is Zara, not Massimo Dutti. Therefore, even though Ramon negotiates on behalf|
| |of all of them, he negotiates for Massimo Dutti, Oysho... yet the director of each chain has the |
| |final say [can say yes or no]. |
| |LORENA ALBA: On the theme of transport, they can also take advantage of routes that are shared. |
| |Without obligation, of course, they can make use of the volume [of goods] that Zara moves. |

|00:23:34.0 >> |RAMÓN REÑÓN: There is a very important issue at the international level. There are a number of |
| |players common to each country. For them it is necessary to have a single policy and strategy, |
| |otherwise they would end up doing things differently [in each country] and creating inefficiencies. |
| |So these are the operations we are managing at a global level; for the others, what we have is a |
| |business template, which we follow because the actions of one country can impact the other countries.|

|00:24:07.0 >> |JESÚS VEGA: In the area of human resources, each chain has its own structure which both serves as the|
| |executive and operations department. In the corporate human resources department we're trying to |
| |provide the tools, like we discussed with transport and locations that can be used so as to avoid |
| |duplicating the efforts with respect to employment, hiring, public relations tools. The chains use |
| |the designs that are produced here so that we don't have to repeat the same process multiple times. |
| |But it is each department of each chain that has the initiative and autonomy to handle the day-to-day|
| |tasks with respect to human resources. |

|00:24:59.0 >> |JOSÉ LUIS NUENO: Companies tell you that the capital markets themselves limit the innovation you |
| |discussed, because it requires you to improve performance each quarter. So will a capital market |
| |allow you to continue to be so innovative, given that it demands cash flow and sometimes 'milking' of|
| |the business rather than laying the foundation for future business profits? |
| |JOSÉ MARÍA CASTELLANO: In our case, this limitation doesn't apply for several reasons. First, we're |
| |in contact with our investors; we pay attention to the additional information they give us, which is |
| |important to analyze, just as is the information we get from our customers, from analysts, mass |
| |media, the professionals and universities, etc. But what was said at the start is that this company |
| |does what it believes it must do. In light of all this, we are not limited by the capital markets. |
| |What's more, another important difference is that we continue to have a controlling shareholder. That|
| |is to say, in the capital markets we have 30% of 'free float' but not the 70%. And the rest is |
| |dispersed. We still have a controlling shareholder who, fortunately, continues to make the company's |
| |strategic decisions. |
| |So what the investors tell us is another source of information to consider but it doesn't mean that |
| |we have to do what they say. This doesn't mean we have to think exclusively short-term over the next |
| |quarter. The company has to continue to think long-term and to think about what it must do. |

|00:26:38.0 >> |JUAN CARLOS R. CEBRIÁN: When we were about to go public, that was the question we asked ourselves. |
| |But we also knew we couldn't divert the company from its successes or failures up to that point. |
| |Neither the stock market nor the capital markets can change us. If they change us, we would become a |
| |different company, and who knows where we'd end up? We continue thinking the same, buying the same |
| |things, making the same mistakes and achieving the same successes, without thinking about being |
| |publicly traded. |
| |I think this is another of the reasons why many other companies are more concerned about being |
| |publicly traded. We have changed practically nothing [since going public] except maybe for these two |
| |people here who have to meet with the investors and analysts every so often, but the rest of the |
| |company functions the same as before. |

|00:27:39.0 >> |BORJA DE LA CIERVA: We've only been traded publicly a short time; this week will mark one year. The |
| |investors are free to say whether or not they like the things we do, and to buy or sell the stock |
| |when they want. In this sense, there is sufficient liquidity. I don't think investors show a lot of |
| |emotion about what they do or do not do. If they don't like something, they sell the stock. Time will|
| |tell. We think the company has never been run according to financial parameters, nor has it been |
| |governed by financiers, and therefore it should never be governed by financial investors such as |
| |stock market investors. |

|00:28:11.0 >> |PANKAJ GHEMAWAT: Continuing on the subject of sustainability and barriers to imitation, what are the |
| |barriers for a new company in China for instance to set up the same business model as Zara to serve a|
| |market like Japan? |
| |JUAN CARLOS R. CEBRIÁN: The main barrier is cultural. We have to put ourselves in the position of the|
| |Japanese, or the Chinese when we go to China, and bit by bit introduce our philosophy. We can't go as|
| |colonizers, as if, here we are, the Spaniards from Inditex arriving to transform everything; not |
| |that. We have to adapt to the market that exists in that country, changing our ideas as we go. Many |
| |barriers do exist: the language, culture, [clothing] sizes, etc., but our task is to overcome these |
| |so that we can expand. If we are in 40 countries, getting into 40 more is a question of getting |
| |organized. We haven't yet encountered serious problems. Problems, yes, but not serious ones. |

|00:29:14.0 >> |RAMÓN REÑÓN: There is a fundamental barrier, which is location. Actually, there are two basic |
| |barriers beyond what Juan Carlos brought up. On the one hand, the [fashion] products that come out of|
| |Asia: these aren't looked upon very favorably in Europe, so that would be considered a handicap. |
| |Next, it's very difficult to establish stores in the best sites of the biggest capital cities. |
| |Because it's not a question of money; the markets are very tight. Right now, there are three or four |
| |companies in the markets fighting over every square inch of real estate in the major capitals, so a |
| |new company would have a hard time coming in. |

|00:29:55.0 >> |JOSÉ MARÍA CASTELLANO: I understood the question as having to do with whether a company in Japan |
| |could replicate the Zara model in Japan, and expand as we have done. |
| |JOSÉ LUIS NUENO: Such as Uniqlo [a fast-cycle Japanese competitor]? |
| |JOSÉ MARÍA CASTELLANO: Uniqlo is a different company; it has nothing in common with us. In any case, |
| |first, a company would have a team of people that would have a learning curve and an experience |
| |curve. Like Lorena Alba said, there are many logistics and computer software packages available on |
| |the market, but since our company is unusual, most of the available software or hardware doesn't suit|
| |us. We ourselves have developed about 95% of the software we use, because the standard in the market |
| |is not the standard for us. So there are the matters of teams, of learning, of experience, of real |
| |estate opportunities, of capital, etc. I think the main thing is related to teams, philosophy, |
| |operating methods. |

|00:30:56.0 >> |JOSÉ LUIS NUENO: This week, the CEO of The Gap stepped down from that company, a company that had |
| |presented horrible results, but that was admired by everyone for the last ten years? How might a |
| |company like Inditex - which is perhaps at its golden moment or maybe this moment is still to come - |
| |how can you prevent this from happening to you? |
| |JOSÉ MARÍA CASTELLANO : I don't think there is an infallible formula in business economics. Everyone |
| |thinks you can add two and two to get four, but I don't think that's possible. There is no certainty |
| |that what happened to others won't happen to us. I think we have to go back to the beginning; all of |
| |us firmly believe that as long as the company continues to maintain the philosophy of adapting to the|
| |market, having motivated personnel, having people who think about the company 24 hours a day, every |
| |day of the week, every week of the year, as long as the company responds to the needs of the public, |
| |and is capable of adapting to the demands and changes of the market, I don't think this will happen. |
| |If the company becomes rigid, if it operates from the top down rather than the bottom up, if it |
| |changes its structure, or chooses not to pay attention to the changes in the market, then this |
| |breakdown could happen. |

|00:32:15.0 >> |JUAN CARLOS R. CEBRIÁN: To find the most critical issues, I wouldn't look to the product. I would |
| |look to the people, as we said at the beginning of the conversation. The job of the Chairman was to |
| |put together a great team. When this company was founded, it didn't have this team and all the people|
| |behind it. The most important thing now is to maintain this team and to renew it constantly. The |
| |challenge that's on the table for the next 15 years is to be able to duplicate important job |
| |assignments, to promote those within the company to fill future positions, and to keep the company |
| |moving forward, with the current philosophy or whatever philosophy is needed at the time. |

|00:32:58.0 >> |BORJA DE LA CIERVA: One of the few things that could sink this company is self-complacency. I imagine|
| |that someone watching this edited program might think that everything's going fine in this company, |
| |that it's a business model for many things. I think that each of us knows of many things that aren't |
| |going so well and that even tomorrow, might have to change. The day that this company thinks that it |
| |is doing everything just right will probably be the beginning of the end. |

P&G’s Acquisition of Gillette

1. What were the possible synergies and forces propelling the merger between P&G and Gillette—as well as the history of other takeover attempts for Gillette?

2. In light of Gillette’s large increase in value during James Kilts’s tenure, was his compensation reasonable? Was his pay package in the best interest of shareholders?

3. Evaluate the P&G offer. Ask students to make a list of the positive and negative aspects of receiving shares or cash from both the perspective of P&G and Gillette shareholders.

4. Compare the valuation analyses in Case Exhibits 6 and 7. Why are they different?
Support and defend the validity of using each valuation method.
There are so many methods of valuating firms by formulation and analyst’s will.

5. Discuss the conflicts of interest for the investment bank in an M&A transaction where the same firm that writes the fairness opinion in support of the deal stands to be paid a large fee if the transaction is completed.

6. Should investment bankers and companies spend their time appeasing politicians worried about the effects of possible mergers? Are politicians representing the interests of the American public when they question the merits of a deal? Also evaluate the role played by federal and international regulators. Is there any better solution to the complicated regulatory process?

7. Evaluate the role played by Warren Buffett in the merger. Should the support of one investor be a deciding factor in the completion of an M&A transaction?

Similar Documents

Premium Essay

Education

...Gordon Reynolds \ Against Education; How Public Education Cripples our Kids, and Why “Against Education: How Public Education Cripples our Kids and Why” by John Gatto talks about the education system, how students need to get a different and better education. Gatto’s argument is ineffective due to the reference that is mentioned from people from a different time period and a lot of things change. Our education system is effective how it is right now. The author discusses in his text about how our educational system needs to change into a better “education” by changing how education is providing. The author compares our educational system to the Prussian education system to draw concern to people which a use of pathos due to the controversy involved with that system. Gatto uses ethos when using well-known people’s opinions about the education system to help their case with the disagreement about the educational systems. The article mentions people who are successful that did not go to school but the thing is that the people that are mentioned are people from a long time ago which doesn’t mean anything because everything has changed “social[ly], economy [ically], financial[ly]” since that time period. Gatto uses ethos quite often to draw the readers to controversial events to get his points across more directly to get the most reactions he wants but they’re nothing backing those statements up. Gatto talks how to school turns people into bad things like addicts, he uses children’s...

Words: 825 - Pages: 4

Premium Essay

Education

...EDUCATION REFORMS Socio-economic changes, rapid changes in the political areas and in Science and Technology impelled the government to recognize and strengthen further the national system of education to suit the education needs of the future along the line of education for all and to produce a work force that has the quality, capability and skill to handle more complex challenges. Cabinet committee of educational reforms was chaired by Dr. Mahathir Mohamad and was formed in 1974. The purpose of forming this committee was study the implementation of the National Education policy. Educational reforms released its findings in the Mahathir Report in 1979. The report suggested that education should meet the country’s manpower needs, especially in the development of science and technology and education should foster development of noble values. Objectives of Educational Reforms The government set the objectives as guideposts along the road that make the implement of Educational Reforms more smoothly. The main objective of Educational Reforms is to improve the conditions and quality of the educational system so that the development of country in science and technology can be improved. Furthermore, Ministry of Education wished to create an updated system of education that is of universal standard so that the student can always receive the latest information. Moreover, another objective is to fix a system of education that is “flexible” to current development to avoid being...

Words: 1276 - Pages: 6

Premium Essay

Education

...Education and Equity Student’s Name Institution Education and Equity In the case Education and Equity: Closing the Achievement Gap, the arguments presented include the need to offer equal chance for all students, despite of color and class, the apparent education achievement gap and possible solutions to closing the gap. Arguments A, B and C note that there is an apparent achievement gap in education. The gap is more noticeable in learners from multipart urban settings, where there are many minority inhabitants. The current education requirements, of ensuring students pass benchmark tests; fail to promote equity because they do not put into deliberation the desires of students that are not academically inclined. However, it appears that learners termed as not academically inclined are students of color; hence, the need to set a standard curriculum, which is both thorough and culturally relevant as suggested by speaker A (Case). Speaker A provides a better argument when compared to B and C. The speaker begins by noting that instructing students on how to excel in benchmark tests fails to prepare their participation in a global economy. The speaker also notes the lack of equity especially for students of color termed as not academically inclined. In conclusion, A provides a solution to closing the achievement gap by setting a rigorous and applicable curriculum. Though speaker B provides a solution, which involves setting the standard, the arguments do not seems to realize...

Words: 608 - Pages: 3

Premium Essay

Education

...CHAPTER 1 THE PROBLEM AND LITERATURE REVIEW 1.1 Background of the Study The current era places big emphasis on the role of instructional supervision in the development of the education and improvement of student learning outcomes. It’s not the sole responsibility of the teachers to bear the tasks of delivering basic education services to the clienteles but rather a two-way process between them and the instructional leaders. As Ekyaw (2004) states it, it’s an interactive process that depends on the source supervisor and the teacher. Instructional Supervision (IS) is the phase of school administration which focusesprimarily upon the achievement of the appropriate expectations of educational system (Peretomode, 2004). Zepeda (2012) added that supervision fosters the internal and external motivation that leads to teachers’ professional growth. One recent definition is given by Glickman, Gordon & Ross-Gordon (2013) where they reiterate that instructional supervision is an assistance for the improvement of instruction and should be viewed as a function of process. Further, Marzano, Frontier &Livingston (2011) noted that the purpose of IS should be the enhancement of teachers’ pedagogical skills, with the ultimate goal of enhancing student achievement. In the Philippines, various reforms and educational movements have decentralized the context of educational management. It gives much emphasis on school empowerment and instructional supervision. Likewise, RA 9155 stressed...

Words: 2518 - Pages: 11

Premium Essay

Education

...Brooke Boyle Professor Kilgore English 10803 22 September 2013 Education: Expectations through Technology Changes Have you ever stopped to think about how our environment shapes a certain expectation? The world is constantly changing around us with new technologies and ideas. The differences in education have dramatically changed from my generation to a generation 10-20 years ago regarding how teachers teach and in the ways we decide to learn. The biggest factor in this dramatic change in education is the new technology that we decide to incorporate in schools. After talking to Sarah Liles, a Writing Specialist from the Athletic Academic Services Office, the contrast on technology from her generation to mine is so much more evident. Figure 1: Sarah Liles, Writng Specialist Figure 1: Sarah Liles, Writng Specialist Sarah Liles says, “Education was more difficult in my generation because fewer resources were available,” while the computer was invented, the Internet wasn’t. This caused her to have to delve deeper into hardcover books and not be able to “Google” things with one click of a button. The extent of technology used in the classroom in her generation was the projector that they would take notes from. Sarah’s greatest resource as she put it was books. A point Sarah brings up is, “Because of the greater influence of books, then I was personally more self-driven where now people read a lot less and depend more on others to lecture them.” In contrast, though...

Words: 943 - Pages: 4

Premium Essay

Education

...0643873 A Rightful Owner of Our Education I Believe the overall argument the author is trying to get across is that many women just expect their teacher and faculty to take them seriously and treat them as they would anyone else, but that we must prove to them we are serious about our education and we are serious about ourselves as responsible, determined students. The three points the author was trying to guide us to is first, that we must take responsibility to ourselves as students, second we must engage and fully participate in the classroom and with our professors, and lastly that we as woman, must demand to be taken seriously so that we can go on taking ourselves seriously. I agree with most of the authors argument made, that we as students must take responsibility for ourselves. Taking responsibility for ourselves is essential for us to succeed. Adrienne Rich stated “Responsibility to yourself means that you don’t fall for shallow and easy solutions—predigested books and ideas, weekends encounters gaureneed to change your life, taking “gut” courses instead of the ones you know will challenge you.” I agree with his statement 100 percent, the courses that challenge you are the courses you will learn the most from. It’s okay if you fail, you just can’t give up and you have to push yourself to work harder. I also agree with the author that we must as students engage with her teachers in an active and ongoing struggle for a real education. I briefly stated that I agree...

Words: 413 - Pages: 2

Premium Essay

Education

...Education The purpose of this title is to ensure that all children have a fair, equal, and significant opportunity to obtain a high-quality education and reach, at a minimum, proficiency on challenging State academic achievement standards and state academic assessments. There is growing consensus that the educational system in America is falling short when it comes to preparing our children for the future. As to the method for improving our current system today, the general focus centers upon increased accountability and a need for higher academic standards. Closing and achievement gap between high- and low-performing children, especially the achievement gaps between minority and nonminority students, between disadvantaged children and their more advantaged peers. Improving and strengthening accountability, teaching, and learning by using State assessment systems designed to ensure that students are meeting challenging State academic achievement and content standards and increasing achievement overall, but especially for the disadvantaged Meeting the educational needs of low-achieving children in our Nation's highest-poverty schools, limited English proficient children, migratory children, children with disabilities, Indian children, neglected or delinquent children, and young children in need of reading assistance. Ensuring that high-quality academic assessments, accountability systems, teacher preparation and training, curriculum, and instructional materials are aligned...

Words: 637 - Pages: 3

Premium Essay

Education

...Achieving Our Potential The majority of individuals recognize that education allows us to analyze, understand and appreciate our environment while giving us the life skills to survive in this globalized world. According to Merriam’s Dictionary, the definition of education is “any act or experience that has a formative effect on the mind, character, or physical ability of an individual.” Although most people have similar ideas as to what education is to them, I learned that not everyone’s opinion is comparable. As a student changes over from middle school to high school, they are given more of a voice because they are able to choose classes, although it is only a select amount. Allowing high school students to select a class gives them the opportunity to explore and learn a different subject. Also, students begin to discover their hidden talents. Tied together, required core classes and the classes students may choose from, help expand their prospect. Also, classes join into each other and benefit one another, sparking student interests and understanding of the classes themselves. I wondered what a high school student’s outlook on education would be and senior, Esther Herrera, gave me her opinion. “I am 17 and I think education is extremely important. I will admit that I do not always find school the most fascinating way to spend my time, but it is necessary.” The students begin to define themselves by the subjects and areas they are most interested in and their desire to expand...

Words: 1809 - Pages: 8

Premium Essay

Education

...Education is culture, and different educations show different societies’ culture. Americans regard education as the means by which the inequalities among individuals are to be erased and by which every desirable end is to be achieved. While Chinese education is for foundation education, but students may be not learn much. But all in all, different education systems account for the different phenomenon, because different society backgrounds and different culture helps human create a different country in the world. The different society structure plays an important part in the education system. In China, all those who can enter the University have received an elite education and before enrollment they have devoted themselves to hard studying. Therefore, they are good at getting high marks on mathematics, psychics and so on. However, they are lack of chances to practice skills in real world thus having no social experiences. In that case, after graduation, most students find it difficult to find a satisfactory job though many of them get a job through the relationship net. While in America, the education system pays more attention to social skills than to marks .Students have developed the ability to be independence in life and work. After university, they show great capability of thinking, innovation and creation which make them keep pace with the modern world. They are competent for the challenging work and can gain a good job in America with ease. There is a huge gap...

Words: 973 - Pages: 4

Premium Essay

Education

...Technological Advancement In Education Education Essay Contents Introduction – Thesis statement: Advances in the technology are very helpful in transforming the way people are educated. From the abacus which made teaching math easy millennia back, to word processor which changed the way research paper are being written and presented. The technological progress of humans has a positive impact on education. Technological change has given shape to education from the very beginning, but with the addition of digital revolution it has popularly increased the speed at which education is transforming. From the past 20 years, there have been changes in technological education that few people ever dreamed. . Many colleges and universities have started offering distance learning programs before the discovery of internet where these programs were difficult to find at that time. Due to this reason, many people who lived in villages and towns lack access to these universities and colleges. There is no doubt that technology has greatly involved in our daily lives and mainly when we are talking about education field. There is almost no escaping from the fact which is produced by the researchers. Education has been widely affected by the integration of technologies as it is a fast way to reach mass number of students. Literature Review – There are basically three main theoretical frameworks presented in the educational technology literature which are Behaviorism, Constructivism and Cognitivism...

Words: 1990 - Pages: 8

Premium Essay

Education

...that the education you are receiving is positive or negative?” First of all, a school system education is easier to determine whether it is positive or negative. How good or bad a school is, is usually decided by two things; history and word of mouth. If the school has good records of alumni, then the next generations of the school are hoped to be as good and if the school has bad records of students, then the other generations of the school are believed to be as bad, even though not everyone is the same way as others. Word of mouth is quite similar. If more than one group of people talk about how good the school is or how bad the school is, a lot of other people will most likely trust the different sources of the same opinion. Another thing that would go into consideration are how the school represents itself and how the teachers teach. A good building of a school means that it consists of good materials to study with and professional teachers mean that the students are learning decently. Therefore, good schools mean good education. For example, I go to school in SPH. Learning materials are provided perfectly in SPH and all the teachers, students, and staffs are supportive in a way that I cannot explain in words. I am a better person every day since I came to the school. The teachers guide me and I don’t see any tension among the students. SPH also brings me to do good things, such as service outside of school to respect others. Apart from that, I think education is also...

Words: 549 - Pages: 3

Premium Essay

Education

...Education is as important as the air we breathe. It is the most important possession a person must have. Education is beneficial in many aspect of life especially, personal and social it is the only possession that cannot be taken away from you. Education is important because it will open up the windows of opportunities. In this competitive world having a good education is as important as the air we breathe because it is our weapon to conquer the world.  Education will help you grow as an individual because the more knowledge you have the better understanding you will have in any given problem that will come your way. It will give you self satisfaction and will boost your self confidence. As an individual I know it will help me in a lot of aspects in my life. It will give me a financial stability because I will be able to land a good job and a high paying salary. I will learn how to spend my money and will learn how to invest it wisely. The more education I have the more respect and acknowledgement I will get from people. Knowledge is really important that is why we need to take it seriously. It is the strong weapon you can have to conquer this complex world. If you have a good education nobody can fool you and you will not tolerate any mistreatment from people. It will give you a better views in life if you are well educated.  In the social aspect of my life education will give me a better understanding on how to communicate to people effectively. I will understand what is...

Words: 442 - Pages: 2

Premium Essay

Education

...Introduction: Entering the education field has been a very motivated decision for me. This particular decision is completely based on the former experience I had had all the way to the moment I decided I will connect my future with it. Nowadays, when parents are very busy the workers of the educational field are the people, who teach the young generation what is beautiful and what is ugly, what is right and what is wrong and million other things. Every person some day used to be an ordinary pupil that had teachers. The schooling experience of every person may develop either positive or negative attitude towards education in general. It is a fact of common knowledge that one of the most important parts in the educational process is the teacher. Choosing the education field has to be connected with a “calling” of a person, because it requires a lot of professional and personal qualities and constant self-perfection. My personal experience in school taught me that a teacher could really make a difference in the process of education. A teacher may develop respect to the subject, to the teacher’s personality and to the education in general. A pupil may even see the difference in the manner of explaining and presenting the material teaching the same subject. I discovered this difference when I had a substitute teacher coming to class and making my most hated subject one of the most interesting in the whole school program. I decided that I do want to make children love teaching and...

Words: 517 - Pages: 3

Free Essay

Education

..."Education makes people easy to lead but difficult to drive, easy to govern but impossible to enslave" Discuss This is a statement based on the values of education but it refers to one aspect of education, namely, the citizenship value. Education has of course many aims like earning bread and butter, shelter . clothing and a good life. The last concerns man as a member of a society. Except in a dictatorial society, the ordinary citizen is, theoretically at least, equal to every other citizen and enjoys equal rights. This equality enjoins equality of justice and equality of opportunity. No position in the public life can be said to be far from his reach because of his birth or creed provided of course he deserves it by education and qualification. In every enlightened modem government, emphasis is laid on the education of its citizens. Up to a certain age education is made compulsory so that boys and girls get the benefit of it. They get enlightened and they are willing to obey and, given the chance, are ready to rule. Since almost every government in the world is governed by the representatives of the people, these representatives must be educated enough to shoulder the responsibility that falls on them. That is why one British Minister said, `Let us educate our masters' meaning that the people who vote their representatives for the highest legislative body of the country must be educated. Education helps them realize their responsibilities while they appreciate their rights...

Words: 877 - Pages: 4

Free Essay

Education

...Education in South Carolina Education in South Carolina public schools has always been a proverbial thorn in the side of the pride of the state. Consistently, the state has ranked near the bottom of rankings in average Scholastic Aptitude Test (SAT) scores, low salaries for teachers, and curriculums that were at best below satisfactory. The primary reason for such dismal statistics is the lack of funding available to improve educational resources within the state. Furthermore, the inequities between public schools located in more affluent areas and those in poorer school districts created a statewide need for funding to give every child within South Carolina an equal opportunity to obtain a useful education. Several legislative initiatives spurred on by a report from Moody’s, securities from located in Manhattan, attempted these financial imbalances among the various school districts. The findings of the report led to the implementation of The Education Finance Act of 1977 (EFA) by Governor James B. Edwards. Basically, this law required state funds to be divvied out in larger portions to regions that suffered from low income resources. In addition to more funding for education, EFA created programs that improved the proficiency of teachers and required students to pass a basic skills exam before being able to progress and be promoted to the next grade level. Moreover, high school seniors were required to pass an exit exam to receive their high school diplomas. After...

Words: 337 - Pages: 2