...Global Insurance. Further posting, copying, or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886. FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG PROFITS AT THE BOTTOM OF THE PYRAMID A TOOL FOR ASSESSING YOUR OPPORTUNITIES BY ERIK SIMANIS AND DUNCAN DUKE During the past decade, many multinationals have come up short trying to make a profit by solving the pressing needs of low-income communities. Preoccupied with their social missions, companies have optimistically taken on challenging projects, only to be surprised when weak consumer demand and obstacles such as bad roads October 2014 Harvard Business Review 3 This article is made available to you with compliments of FM Global Insurance. Further posting, copying, or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886. PROFITS AT THE BOTTOM OF THE PYRAMID keep revenues low and costs high. Over tretched s and disillusioned, many switch gears and reconstitute their ventures as break-even social investments that are destined to remain small. Profits are critically important for ventures targeting the bottom of the economic pyramid—the more than 4 billion people who individually earn less than $1,500 per year. Compared with a social responsibility project, a profitable business stands a better chance of...
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...Health, Safety, Environmental & Operational Excellence Be Extended to a Major Acquisition? By Dr. Brooks Holtom McDonough School of Business Georgetown University With Assistance from Michael Amante, Georgetown University Mike Cadigan, Noble Drilling Services Inc. Noble Corporation Noble Corporation’s International Expansion Introduction As Jim Day, the CEO of Noble Corporation for 12 years, looked at the reports before him, he made a list of the many uncertainties inherent in the potential acquisition of Neddrill—the oil and gas drilling services subsidiary of Royal Nedlloyd N.V., a Dutch shipping company. First was the quality of the drilling assets. As far as his people could tell, the rigs would all require significant investment to bring them up to Noble standards. But the exact amount was unknown. Second was the industry’s inability to accurately forecast future dayrates (daily revenue for drilling on behalf of clients) for the rigs. Many insiders expected rates to rise but they had been wrong before with major consequences. Acquiring costly drilling assets could prove very risky if the dayrates went down instead. Third was the complexity introduced by buying a large international firm whose employees were not overly enthusiastic about joining a U.S. based driller. An inability to efficiently integrate the Neddrill assets and people into Noble would reduce the value of the acquisition as well as put Noble’s reputation at risk. A number of factors, however, argued...
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...employees, these leaders create a sense of social mission that is central to company culture, encourage openness by developing and personally modeling systems that provide transparency, empower employees by enabling communication and pushing decision making down through the ranks, and invest heavily in training. These individual practices aren’t new, but Indian leaders combine them in a coherent package and give them consistent emphasis. The authors advise that Western leaders adapt this managerial approach to their own circumstances, pursuing in particular two readily achievable goals: investing in training, and strengthening social mission. COPYRIGHT © 2010 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. page 1 How the best Indian companies drive performance by investing in people. Leadership Lessons from India by Peter Cappelli, Harbir Singh, Jitendra V. Singh, and Michael Useem COPYRIGHT © 2010 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. Vineet Nayar, CEO of the Indian IT services giant HCL, likes to rock the boat. Asked what he wished his greatest legacy to be in five years, Nayar responded without missing a beat: “That I have destroyed the office of the CEO.” He led the charge that...
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...a. What type of organization is Australian Beverages Limited (ABL)? ABL is an Australian public listed company operating in multi-beverage business. It commenced operation in 1937 with its first manufacturing plant opened in Sydney in 1938. After a series of market expansions, ABL is currently the second largest company in Australia non-alcoholic beverage industry. The company is run by Tom Dwyer, the current managing director, who has been appointed since 2005. b. What industry, product segments/markets does ABL operate in? ABL is currently the second largest company in Australian non-alcoholic beverage industry. With the exception of bottled water, ABL operates in almost all product segments of non-alcoholic beverage market, that is, carbonated soft drinks (CSD), fruit and milk-based drinks, etc. It has also moved into snack food market through acquisition of several small businesses. Its core activities include manufacturing, distribution and marketing. c. What is the current life-cycle position of the industry? Non-alcoholic industry ➢ The non-alcoholic beverage industry is at the growth stage of its life cycle. This is evidenced by: (1) Consumption of non-alcoholic beverage in Australia increased form 179.7 liters per capita in 2005 to 228.5 liters per capita in 2009, representing a 27% increase. (2) As Australian per capita consumption follows US pattern, Australian’s current level of 63% of US per capita consumption indicates significant opportunities for growth...
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...Abstract As one of the largest and most successful automakers in the world, Toyota Motor Corporation, set multiple benchmarks for quality and improvement, but faulted tremendously and faced financial crisis. In the year 2009, this company reported an annual net loss of approximately US$ 4.2 billion. In the same year, the Toyota Company was reported to have recalled more than eight million cars and trucks in the whole world. Had the company lost sight of its long-term philosophy, a key principle behind the Toyota Way? Had Toyota sacrificed quality and their historic customer focus at the expense of extreme cost reductions? Were non-family managers truly to blame for “hijacking” Toyota? This Process Identification and Improvement plan will examine process areas for improvement: Toyota Production System (TPS) integration, the company’s decision making management centralized systems, and quality of the products. Executive Summary With the global expansion occurring, the organization’s core principles became diluted. By the year 2010, Toyota faced an unprecedented crisis with both its reputation and plummeting stock prices from the effects of recalling over 10 million vehicles worldwide. Toyota put their customers at risk by failing to immediately notify the proper authorities regarding the potentially defective acceleration situation. Toyota failed to comply with the federal law in the foreign subsidiary and failed to report such safety defects to the proper government regulators...
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...and advantage of their business in a simple statement. If they can’t, neither can anyone else. Can you summarize your company’s strategy in 35 words or less? If so, would your colleagues put it the same way? It is our experience that very few executives can honestly answer these simple questions in the affirmative. And the companies that those executives work for are often the most successful in their industry. One is Edward Jones, a St. Louis–based brokerage firm with which one of us has been involved for more than 10 years. The fourth-largest brokerage in the United States, Jones has quadrupled its market share during the past two decades, has consistently outperformed its rivals in terms of ROI through bull and bear markets, and has been a fixture on Fortune’s list of the top companies to work for. It’s a safe bet that just about every one of its 37,000 employees could express the company’s succinct strategy statement: Jones aims to “grow to 17,000 financial advisers by 2012 [from about 10,000 today] by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions, through a national network of onefinancial-adviser offices.” Conversely, companies that don’t have a simple and clear statement of strategy are likely to fall into the sorry category of those that have failed to execute their strategy or, worse, those that never even had one. In an astonishing number of organizations, executives...
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...organizations want to grow and prosper. To obtain that growth and prosperity, organizations set longterm goals and use numerous tools such as metrics and analytics to measure the effectiveness of their goals. If the performance measures (metrics, for example, revenue per employee or percentage of orders shipped on time) and the analysis tools (analytics) applied against the outcomes are appropriate, they will help the organization to determine the best course of action to achieve its goals. The role of all managers is to help develop organizational strategies that encourage and achieve those goals. Information systems (IS) is the top-level term that refers to computer systems used within organizations that help them collect, store, retrieve, and analyze data for the purpose of supporting and extending the business side of an organization; information technology (IT) is the term that refers to the technology side of IS, responsible for the hardware, software, and networks of computer systems. At one time it was commonplace to link strategy with IS. Statements about information systems were taken as true and at face value, simply because they sounded so right. What an IS department wanted, it usually got, because what was wanted often seemed strategically important to the organization. The bursting of the ―tech bubble‖ in 2001 changed the way that companies regarded their investment in information systems. The effective management and use of information systems is essential to the future...
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...Table of Contents Executive Summary (JS) 5 Introduction 6 Background / History of the Company(CD) 6 Mission Statement(CD) 7 Business(CD) 7 Major Goals(CD) 7 Corporate Philosophy(CD) 7 Strategic Evolution (KH) 8 Intended Strategies (KH) 8 Emergent Strategies (KH) 8 Stakeholders (AB) 9 Internal (AB) 9 External (AB) 9 General Growth Properties Organizational Structure (KM) 9 Purpose of the Report (CD) 10 External Analysis (KM) 11 Basic Industry Information (AB/KM) 11 Industry Growth (KM) 12 Industry Profits 12 Industry Segments (AB/KM) 13 External/ General (Macro) Environment (AB/CD) 13 General Economic Conditions and Global (CD) 13 Population Demographics(CD) 14 Societal Values and Lifestyles (Sociocultural) (CD) 14 Political, Regulatory and Legal (AB) 15 Technological (AB/CD) 15 Summary of Analysis and Impact (AB/CD) 16 Industry Analysis/Porter’s Five Forces (CD) 16 Threat of New Entrants (CD) 16 Current Rivalry Among Existing Firms (CD) 17 Supplier Power (CD) 17 Bargaining Power of Buyers (CD) 18 Threat of Substitute Services (CD) 18 Industry Attractiveness/Profitability (CD) 18 porters five forces model (JS) 19 Strategic Groups (KH) 19 Internal Analysis (AB) 20 Value Chain Analysis (AB 20 Primary Activities (AB) 20 Inbound Logistics (AB) 20 Strength: 20 Weakness: 20 Operations (AB) 20 Strength: 20 Weakness: 21 Outbound Logistics (AB) 21 Strength: 21 Weakness: 21 Marketing & Sales...
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...The Strategic Situation of the Harley Davidson Harley Davidson is a 105 year-old company that was originally established by neighbours Arthur Davidson and William Harley; it is obvious that the name of the company was derived from the name of the two founders. Harley Davidson is into the industry of motorcycle. The growth of the said industry started from different developed countries such as the United States, France, Germany, Spain, France as well as the Great Britain. It was further developed after the World War II. Harley Davidson is one of those companies that have a long history as well as have been through several ups and downs throughout their operation. During the past operation of the company there have been many factors that have affected their image, performance, position in the market and the global industry, relationship to their customer, and their overall sales. Figure 1 PEST Analysis of Motorcycle Industry’s Past Development Figure 1 shows the four main factors that have affected the past condition of the motorcycle industry. There are four main political factors that have affected the performance of the overall industry. First is the agreement that will be implemented in order to reduce gas. It requires all the producers as well as manufacturer of different motorcycle companies to reduce pollutants by 60% and it was implemented in February 24, 2003. Another important law that is directly connected to the industry of motorcycle is the process of acquiring...
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...Strategy Is? by David J. Collis and Michael G. Rukstad COPYRIGHT © 2008 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. Can you summarize your company’s strategy in 35 words or less? If so, would your colleagues put it the same way? It is our experience that very few executives can honestly answer these simple questions in the affirmative. And the companies that those executives work for are often the most successful in their industry. One is Edward Jones, a St. Louis–based brokerage firm with which one of us has been involved for more than 10 years. The fourth-largest brokerage in the United States, Jones has quadrupled its market share during the past two decades, has consistently outperformed its rivals in terms of ROI through bull and bear markets, and has been a fixture on Fortune’s list of the top companies to work for. It’s a safe bet that just about every one of its 37,000 employees could express the company’s succinct strategy statement: Jones aims to “grow to 17,000 financial advisers by 2012 [from about 10,000 today] by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their finanharvard business review • april 2008 cial decisions, through a national network of one-financial-adviser offices.” Conversely, companies that don’t have a simple and clear statement of strategy are likely...
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...may face. The executive management team has asked me to submit a report of my findings. In the global competitiveness market the McDonald’s in China as one of the most renowned western style fast food trademarks on the continent of China. Previous studies have shown that its performance of their environmental analysis, and organization in terms of both Internal and external environments with the help of Michal Porter’s “five forces of competitive position.” A model of its internal analysis in regards to the organization’s core resources and competences equally well as the current strategic choices adopted by the company in the Chinese market sector. But in terms of its strategic capabilities, I have identified six general strategic capabilities which includes production, resources, revenue, design, delivery and shareholder value Seeing the company’s business objective in the Chinese market means that the expansion of its business scale and coverage are in a fast pace setting. I will then focus on the strategic preparation and strategic operation as well as the assessment of McDonald’s China’s strategic planning processes while providing the fast food chain with some recommendations in improving the effectiveness of its strategic planning processes (Porter, 1985). McDonald’s assessable...
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...2008 A business case for women The gender gap isn’t just an image problem: our research suggests that it can have real implications for company performance. Some companies have taken effective steps to achieve greater parity. Georges Desvaux, Sandrine Devillard-Hoellinger, and Mary C. Meaney Article at a glance Companies that hire and retain more women not only are doing the right thing but can also gain a competitive edge. They can take several basic steps to achieve even greater parity. These companies will be able to draw from a broader pool of talent in an era of talent shortages. What’s more, research shows a correlation between high numbers of female senior executives and stronger financial performance. Women in developed economies have made substantial gains in the workplace during recent decades. Nevertheless, it’s still true that the higher up in a company you look, the lower the percentage of women. But some companies have moved successfully to increase the hiring, retention, and promotion of female executives. Their initiatives have included efforts to ensure that HR policies aren’t inadvertently biased against women or part-time workers, to encourage mentoring and networking, to establish (and consistently monitor at a senior level) targets for diversity, and to find ways of creating a better work–life balance. Changes like these have a price, but there are business advantages to making them—above and beyond the branding benefit that might accrue...
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...The Crucial Roles of Professional Accountants in Business in Mid-Sized Enterprises Professional Accountants in Business Committee International Federation of Accountants 545 Fifth Avenue, 14th Floor New York, New York 10017 USA The mission of the International Federation of Accountants (IFAC) is to serve the public interest, strengthen the worldwide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high-quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the profession’s expertise is most relevant. This publication was prepared by IFAC’s Professional Accountants in Business (PAIB) Committee. The PAIB Committee serves IFAC member bodies and the more than one million professional accountants worldwide who work in commerce, industry, the public sector, education, and the not-for-profit sector. Its aim is to enhance the role of professional accountants in business by encouraging and facilitating the global development and exchange of knowledge and best practices. This publication may be downloaded free-of-charge from the IFAC Web site at http://www.ifac.org. The approved text is published in the English language. Copyright © September 2008 by the International Federation of Accountants (IFAC). All rights reserved. Permission is granted to make copies of this work provided that such copies are for use in...
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...soft drink. And the services segment is general public. The stage of the industry Industry – Fast Food industry (Globally, based in USA) 1. Key product – 2. identifying the key service segment- Geographic – US, Europe, APMEA and Other countries (119 countries) Product segment- Hamburger, 3. What type of Organisation is McDonald McDonald is the world leading global food service retailer with more than 33500 restaurants in 119 countries. 4. Stage of industry Life cycle * Maturity – McDonald growth rates reduce towards more normal rates. Although it achieves a nine consecutive year of same store sales growth by 5.6%, McDonald focus on efficiency, cost control (Specific menu pricing actions, utilize a strategic pricing tool that balances prices, product mix and...
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...other non-alcoholic beverage categories, such as fruit and milk-based drinks. Entry into the snack food market was recently undertaken in response to declining consumption of carbonated soft drinks (CSDs), the company’s traditional area of business strength. This move also enabled ABL to leverage its strong distribution capabilities to supermarkets, convenience stores and hospitality channels by adding adding such complementary food products to non-alcoholic beverages. Nevertheless, CSDs still accounted for 90 per cent of company revenue in 2004. Tom Dwyer, the current managing director, has been with the company since 2005. He joined the company at a time when CSD growth was stagnating and shareholder confidence in the company was waning. This had resulted in the share price declining by 15 per cent in the two years prior to his appointment. In order to restore shareholder confidence, Dwyer established a strategic planning team within the company to assess the current product portfolio and identify organic and acquisition growth opportunities. From this review the importance of operational excellence was identified and strong investment was made in world class manufacturing facilities and systems. Process re-engineering was implemented to reduce costs of manufacture and time to market. Having finalised the integration of a snack food business acquisition just over 12 months ago, Dwyer is now aware that he needs to identify further growth options given predicted continuing decline...
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