EAE Business School

The Godfather
“I don't trust society to protect us, I have no intention of placing my fate in the hands of men whose only qualification is that they managed to con a block of people to vote for them.” ― Mario Puzo, The Godfather

Charlotte Ham; Rian Ordoñez; Sara Hernando

14

Global scenario in the 1940s Before we get into any kind of analysis to a new business plan, we must have an overview of the scenario in which we are going to play:  Environment: At the time that M. Corleone assumes power, at the end of the 1940s, we are facing a period of economic stability, the game had legalized and this was a business/product with a great potential for the future. We could therefore say that we have a new product that generates great uncertainty in a very turbulent environment with high competition. M. Corleone has the network of contacts but he is not especially empathetic or loyal. Resources:  The organization: Consigliere or CEO. Caporegine directors of various business units.  Associated resources: external services, social and political favors. Politic control.  Material resources, “soldiers”: they running orders.  Financial resources.

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If we maintain the clear target of the family: take the family and business to the most high power, we can create new different scenarios:     Adaptive Strategy: Get into a new business (new product), independent of what it was. Merger with one of the other five families: winning market share and new industries. Be the leadership in the sector by eliminating the rest of the competition, the three remaining families. Renewal strategy: redirect all to a new and different markets, legal markets. It is possible to enter this new market but with a high risk. Stability strategy: keep and grow without introducing new products in the same market. The problem resulting from this is that your competitors could see new opportunities, would grow and you would leave out. There is this possibility.

We are at a point in which the New York mafia has a key player, Don Vito Corleone. This situation changes when her son Michael takes the reins of the family business with a different view and an environment that has evolved. In addition, during the decade of the forties is marked by an unprecedented historical event: the World War II. As in 1914, the war spread to different continents, although this conflict was far bloodier and changed the world in a more radical way. In successive years to postwar are triggered numerous civil wars around the world, but is worth mentioning that two super powers (USA and URS) commencing an arms race against the clock, where is demand all kinds of weapons, in particular, nuclear armament. Why we create this scenario? The world need weapons, in particular the world's super powers, so it seems a good opportunity to expand our business in that way.. The war, always war, forms an intrinsic part of human nature. Since the time immemorial the wars have been part of our daily lives. The philosopher, writer and American historian Will Durant, who lived almost a century between 1885 and 1981, ensured that only 29 years there has been in the entire history of mankind without wars. The own Durant stated that "the war is between the constant factors of history, and neither civilization nor democracy have been eliminated". Chart 1 Exports and expenditure on armament: industrialized countries vs. non-industrialized

Chart 2 The twentieth century arms production

Our target If we take as premises, which thanks to the legacy of Don Vito, we have political protection and police New York it seems it will be very difficult to get into the world of weapons if we have already succeeded in the drugs and the play. To this we add that Don Vito has a network of contacts, we could call them grateful customers, which cooperate in the business. Although the competitive advantage of business was the Corleone himself, and he has died, continue having this advantage in his own person as it is assumed that business will remain equal, another thing is that then is that not but to start have that support. So, we have a clear target: be suppliers of weapons, in an apparently pretty good scenario. But, Is this option viable? It is an SMART idea? So, we have a clear target: be suppliers of weapons, in an apparently pretty good scenario. But, Is this option viable? It is an SMART idea?     Specific. In a world war scenario, it was creating a new need: the world needs weapons. Measurable. Later we will consolidate the number of possible sales with the corresponding benefit, so it is a measurable objective Attainable. We had a network of contacts loyal and infinite thanks to Don Vito Corleone, so that we can have different distribution channels and purchase Relevant. We were talking about an idea realistic and relevant, we were in a panorama plunged into war, with two of the major powers in a nuclear arms race unprecedented. It is the perfect setting.

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Timely. It is an idea in the long run, since as we have said previously the world over the years has plunged into wars. Besides, we play with the advantage that our four competing families do not have the monopoly of the business. That Yes, we must see that mafias play in the rest of the world

Is the strength Valuable from a customer perspective? VIRO analysis (we need 4 YES):   Is the strength valuable for a costumer perspective? Of course, countries at war need weapons, wanted to be stronger than their rivals. So the product had a great value to our future consumers. Is the strength Rare from a competitive perspective? If we use the word rarity for the sale of weapons itself, the truth that is not uncommon, is a trade that is working till nowadays. Which is rare was the power that had the Corleone family on the police and the USA Government and the many contacts that he had to make the business viable. So we can talk about rarity. Is the strength difficult to Imitate? It is clear that is imitable, the Russian mafia and the Jamaican mafia are already in this business. But in New York the market was controlling by 5 families and none of them has a monopoly and is has to fund entering this business, so we have a period of time in which our idea is inimitable, that we do not know how much. Is the strength efficiently organized? Roman style is its structure: Don Vito Corleone decided to restructure his family giving Clemenza and Tessio title "caporegime" or captain and his subordinates of "soldiers"; his was also the idea of creating the post of "consigliere"; Office who was actually devised by Lucky Luciano, who later would end with Maranzano. And as well as Luciano took advantage of the brute force of Vito Genovese to their purposes, the Godfather used the strength of the only man he feared in this world, from the terrible Luca Brasi.

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At this point we can say that we had a new business idea viable given by the environmental of the entire world. But we need to continue analyzing our idea to develop a new business plan for the family based on our target: distribute weapons. SWOT Analysis So, we can say that, at the beginning, we have good business plan: little competition with other mafias in our country, is working all over the years, they had a good professional, we control the government and the politicians and we were moving in the perfect scenario, II World Warn. After all this analysis, and taking into account the need created on the costumer: need weapons to be the leaders in front other countries in case that another warn stars, we can say that this business plan can be defined, somehow, in the following chart:

Need to satisfy

Assests (value chain)
Need weapons to be the leaders in front other countries in case that another warn stars Revenues Godd contacts and resources Sales weapons to: Control goverment Final users and politics for the Companies ilegal comerce

This idea is to provide for the company an organic growth. This idea is feasible because the family had enough capital due to the profitability of their other businesses: game, prostitution, drugs, oil, etc therefore, we have enough capital to get into another business without having to merge with another family or, worse yet, having to sell the family business. Before we get into the new business plan, we will analyze our current business value chain and SWOT. What is the business in which the company is present? Let's review the before M. Corleone took the business control, when Don Vito Corleoni was the CEO:

STRENGHTS Enough capital coming from the old lines of business All the heads of household are death Casino to laundering money Good contacts Lollalty workers Well known name Good relationships created by don Vito in exchange for protection

OPPORTUNITIES Start in new markets Create new contacts Michael can become better than don Vito He can also consolidate the old business plan

WEAKNESS Lack of knowledge about the family business Don Vito´s power isn't the same as Michael´s The business has a total dependence on other people (politics, lawyers, judges, journalists)

THREATS Uncertainty about legal situation Need to find new ways of revenues Being worse than don Vito Other families trying to do similar business and get reorganized in few months

Content. (sale of oil monopoly business) extorting police:

SVA.: extortion to the shops in the area

sales: Put an end to competitors so they can only go to him

sale to the end user: The creation of strategic alliances is essential in a business context such as the present. He demostrates Loyality

END USER

INFRAESTRUCTURE (contacts; Police: goverment)
According with all of this information, What are the challenges of the new business? We need to perform a preliminary analysis of the business and value our competitive position on the illegal traffic of weapons. To keep moving we are doing a SWOT analysis, to know our real situation:

STRENGTHS Allied political and police enforcement (we have bought to the police and Government) Protection from the Corleone family and its partners for our customers Good contacts Enough capital coming from the others lines of business Corleone´s brand: Loyalty and compromise WEAKNESESS Illegal business, so our staff could imitate our idea with our contacts International competitors

OPORTUNITIES Market expansion, Emerging and growing market New business opportunity

THREATS Fast and dynamic environment (new weapons development) Imitations Market with high risk Illegal business International financial crisis (post war)

And it is at this point where our competitive advantage goes from being the image of the own Corleone to involving the self-image of the Corleone family: faithfulness to our clients before any adversity and both political and police protection. Why it is a competitive advantage? Because this protection and fidelity of us distancing itself from the rest of the families. Mostly because we are talking about an illegal market, which obviously clients want protection, have no legal problems. Therefore, we have created a new and scarce value.

Purchasing componers and material (location of supplier, average value of purchasing, location of supplier)

Operations (product quality, order fulfillment, costumer visits)

Outbound Logistic ( Ordering, order fulfillment, on time delivery,costumer pick up, inventory and transaction magnament)

Sales and Marketing (occount magnament and pricing)

Distribution (number of dealers /sales per dealer)

End User

The value chain is here to show all different steps of the process. Due to the fact that it is illegal, all those processes will be to operate in a secret way. It is essential that the company becomes overtake the market. In order to do that satisfaction and discrete are the main aspects of this value chain. The first and the last part, which means the purchasing of the components and materials and the distribution part, are the most important in terms of illegality.

The profit will be made out of the difference between the purchasing components and the distribution. Due to the fact that the products will be ready to be sold when the family purchases it, no extra revenue will be added. The family is not going to expend, so the salaries will stay the same. Cost of transactions and shipment will be added.

Finally, we need to understand our position in the new market and how we are going to develop our competitive advantage. To analysis this we are going to use de five Porter’s forcers: Our business is aimed at two types of customers: end users and companies involved in the weapons or who need them. The class of suppliers that we have is people like Sarkis Soghanalian and Victor Boup, major arms dealers in the United States during that time, which obviously we will buy them through a huge number of extortion as we have done with the rest of the business through influences. As for substitute products, they could be the development of new weapons. Finally, our current competition in the U.S. is virtually zero since other families at the moment do not do this, if it is truth that we face European mafias, but at the beginning we are focus on in the USA.

Potential competitors the others families

Suppliers Sarkis

Soghanalian and Victor Boup

Actual competitors ( the other 4 families not play in this sector in EEUU)

Buyers end users in USA or companies

Subtitutives products. New wepons?

Conclusion We had an idea and we had all chances to be viable if it performs well, we have the best scenario and best influences to develop it on the black market.

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