Transcript Strategic Management in Action: The Appendixes

Strategic Management in Action: The
Appendixes
Lauren Sterna, Jennifer Eccles, Scott Addison, Clint
Chapman, Craig Crowell, and Collin Gillaspie
Appendix 1: How to do a
Comprehensive Case Analysis
What is a Case?
 Simply a short story of a company and the strategic issues its
strategic decision makers are facing.
What Should a Case Analysis Include?
 A case analysis usually includes 6 parts: external analysis,
internal analysis, strategic issues, strategic alternatives,
recommendations, and implementation.
How to do a Comprehensive Case
Analysis: External Analysis
 Includes a description of the opportunities and threats found
in the specific and general external environmental sectors.
 General sectors include economic, demographic,
sociocultural, political-legal, and technological forces.
 Based on the analysis of these sectors you should describe
what opportunities and threats you see in each area, and why
you see them.
How to do a Comprehensive Case
Analysis: Internal Analysis
 Includes strengths and weaknesses found in the internal
functional areas that include production-operations,
marketing, HR management, R&D, information systems, and
financial-accounting. Also, an assessment of top managers,
and culture and structure of the organization.
 Do not leave out a through financial analysis, because this is
how strategic managers base their decisions. This should
cover 4 parts: ratio analysis and comparison to industry
trends, graphs and charts of sales, profits, and other financial
measures, financial strengths and weaknesses, and a
statement of the overall financial condition.
How to do a Comprehensive Case
Analysis: Strategic Issues
 Issues are weaknesses that need to be corrected,
opportunities that need to be taken advantage of based on
strengths and distinctive competencies, or possible threats
that need to be avoided or buffered against.
 Focus on what the issue is and why it is a problem, these need
to come from the information that was included in your
previous analysis.
How to do a Comprehensive Case
Analysis: Strategic Alternatives
 You need to develop at least 2 alternatives to the current
situation when addressing strategic issues.
 Describe who, what, when, and where to the question “What
is the alternative being proposed?”
How to do a Comprehensive Case
Analysis: Recommendations
 Once the alternatives have been developed, you are ready to
make choices about what alternatives you are choosing and
why, also which are being rejected and why.
 Do not forget to explain how your alternatives will resolve
the strategic issue.
How to do a Comprehensive Case
Analysis: Implementation
 Implementation of course is always the decision of the
organization, so you need to include descriptions of how
things would have to take place, and where the funding
would come from to put those changes into place.
How to do a Comprehensive Case
Analysis: Written and Oral Presentation
 The written analysis should cover all 6 parts described and
include anything that is required for the analysis.
 Oral presentations need to be easy to follow and sometimes
requirements are included with the oral presentation, so
follow them exactly.
Appendix 3: Southwest Airlines
 Simple, fun, and profitable
 36 consecutive years of profitability
 Began service in 1971 with 3 planes flying to Houston,
Dallas, and San Antonio
 Herb Kelleher, cofounder said, “A lot of people figured us
road kill at that time.”
Background
 The strategic approach that Southwest took was unlike any
other airline company at the time
 In the early 1970’s the airline industry was characterized by:
 High fares
 Inconvenient flight schedules
 Complicated ticketing
 Long and inconvenient flying experiences
Southwest’s Strategy
 They wanted something to be simple
 Get customers to their destinations
 When they want to get there, on time
 Lowest fare
 Have a good time while doing it
 Fly short-haul routes where the fares are comparable to driving
Current Operations
 Southwest is known for the nation’s low-fare and high
customer satisfaction
 Serves as short and medium haul routes with single-class
service for mostly business and leisure travel
 Point-to-point service
 79% of customers fly non-stop with an average trip length of
846 miles
Low-Cost Advantage
 Use a single type of aircraft- Boeing 737
 More than 530 aircrafts with an average age of 9 years
 Fuel Hedging- where they pay for gas upfront for the right to
buy fuel at certain prices
 Use of technology- automated processes
 southwest.com- first airline to establish website
 Downtown and conveniently located airports
Legendary Customer Service
 Great service at low prices
 The American Customer Satisfaction Index ranked Southwest
first among airlines for highest customer satisfaction for 14
years
 Customer Service Commitment
 Southwest’s mission statement establishes a foundation for its
commitment to servicing customers
A Black Eye for the Company- Plane
Maintenance and Inspection Trouble
 In early 2008, two FAA officials had noticed problems with
some of the planes
 Southwest had failed to do required inspections because
Southwest officials tried to keep the problems hidden
 8% of the fleet was grounded until inspections were
completed
 In March 2009, SW announced that they resolved all issues
and are now working with the FAA to ensure safety for the
public
Southwest’s Culture and People
 High-spirited, irrelevant culture
 At the company headquarters there are over 10,000 pictures




of employees
Their focus is the customers
Southwest went where no other airline had gone beforeblogging- Nuts about Southwest
Southwest’s people are their most valuable asset
More than 4 out of 5 employees are union members
Financial Highlights
 36 consecutive years of profitability
 In 2008, revenues were up 11.8% to over $11 billion even
though net income was down 72.4%
 A testament of Southwest’s strategies is to post a net income
Company Awards and Reognitions
 One of the most admired companies- Fortune Magazine
 Business Week’s Customer Service Champs
 America’s Most Shareholder Friendly Companies-
Institutional Investor Magazine
 Airline of the Year- for excellent air cargo delivery service
*from 2007-2009
The Airline Industry and Major
Competitors
 The airline industry is extremely competitive
 One major uncertainty is fuel costs
 There are many things that make the industry vulnerable:
 Capital intensive
 Fixed costs
 Fuel and labor intensive
 Heavily regulated and taxed
The Future
 Keeping costs under control and keeping its culture alive
 No longer paying commissions on flights booked by travel
agents
 Motivating employees to continue to look for innovative
ways to better run the business
McDonald’s
On the Downward slope
 By 2000 known for poor service and quality
 Came in last in survey of fast food restaurants in 2001
 First time in 15 years more people disliked than liked
McDonalds
 2002 first quarterly loss
On the Mend
 2003 old CEO fired and replaced by Jim Cantalupo
 Cantalupo obsessed over the basics(fast service, hot food, and




clean restaurants)
“Plan to Win”
Operational Excellence
Retake the lead in Marketing(I’m Loving It)
Innovation
McDonalds Today
 Company employees and suppliers aligning fully
 Ranked 8th by BusinessWeek in best global brands
 Investment in different restaurant formats including
Chipotle
 Since first quarterly loss in 2002 they have increased profits
every quarter since
Ford
 Car manufacturer based in Detroit, MI
 CEO and President: Alan Mulally
 2008- suffered worst loss ever ($14.8 billion)
Ford History
 108 year old company
 First to manufacture products using a mass production assembly line.
 Hits:





Model T
Mustang (Sold 1 Million in 24 months)
Explorer (First SUV)
Taurus
F-Series Pickups
 Failures
 Pinto (exploding gas tanks)
 Edsel (unusual design that never caught on)
 Firestone Tires/Ford Explorer
 1998- CEO Jacques Nasser tried to diversify the company away from
their core competencies and he was ultimately fired because of the
failures.
Ford Industry and Competitors
 Industry
 Technology driven
 Fierce competition
 Fickle customers
 Manufacturing overcapacity worldwide
 Declining demand for certain car models
 Competitors
 GM
 Toyota
 Chrysler
 Honda
 2007- beginning of recession and decline in car sales
 Early 2008- Ford sells Land Rover and Jaguar to Tata
 Late 2008- GM and Chrysler took bailout money from the US Government
Ford Motor Company Today
 CEO Alan Mulally
 Came to Ford from Boeing
 Way Forward Plan







Bold leadership
Customer focus
Strong brands
Bold, innovative products
Great quality
Clear pricing
Competitive costs and capacity
 Four Key Priorities
 Aggressively restructure the cmpant to operate profitably at the current demand and changing
model mix
 Accelerate product development with new products that customers really want and value while
achieving manufacturing excellence by reducing complexity and improving quality
 Obtain financing to do these things and improve the balance sheet
 Work together with accountability with all partners
Manufacturing and Product Design
 1st and foremost and manufacturing company
 Japanese and Korean car companies out earn Ford on each car made
by delivering more feature at a lower cost.
 Ford will close 16 plants and eliminate 44,000 jobs by 2012.
 Remaining plants will be as efficient and effective as possible.
 Reduce costs by $6 billion by 2010
 Mulally demanded that engineers create uniform parts that could
be use on most models.
 Created a single global product development organization
 “…work together more effectively to continuously improve quality,
productivity, and speed of product development.”
Marketing
 “ONE FORD” Marketing Vision
 The plan is to have common Ford vehicles competing in global
segments.
 2010 Ford Focus global car was introduced
 “The Ford Challenge”
 Asks consumers to compare their current car to a Ford car.
 Values statement- “The customer is Job 1.”
 Working closer with dealers.
Employees
 Laying off employees and offering early retirements as part of
the Way Forward plan.
 44,000 by 2012
 Increasing healthcare costs
 $3.1 billion in 2006
 The increasing healthcare costs will continue to affect the
companies ability to meet it’s profitability goals.
Corporate Culture
 Not a drive for perfection, instead they focus on continuous
improvement.
 Weekly meeting with no distractions.
 Use of data and data sharing between divisions.
 Change in approach to grooming managers.
 Commitment to environmental responsibility.
Financial
 Ford should break even by the end of this year.
Ford Motor Company-The Future
 Commitment to ONE FORD
 “In a global market, success flows from having ONE TEAM
working on ONE PLAN with ONE GOAL in mind.”
 ONE TEAM- Including everyone with a stake in the outcome in
the decision-making process.
 ONE PLAN- Changing the way the company has been run.
 ONE GOAL- Build more of the products that people want and
value.