Schedule for dead week

• Monday (sec 003)/Tuesday (sec 001&002) – Kimpton Hotels – Update on cases – Teaching evaluations • Wednesday/Thursday: we will not meet because Quiz 4 will be on line. (see Quiz 4 instructions) – I will be in my office 9am – 11am Wednesday and Thursday. – Thursday 5 June office hours cancelled.

QUIZ 4 Instructions

• Quiz – Chapters 11, 12, & 13 – 15 multiple choice and 5 short essay questions – Questions are randomly drawn. – 45 minutes • On line (Blackboard) – Available 10am Wed 4 June to 5pm Sun 8 June – We will check: 9am Thursday and 10:00am Friday.

– No make-ups. Length of time available should be sufficient.

Update on Cases

Fig. 4.1: Identifying the Components of a Single Business Company’s Strategy

Strategy Options

Whole Foods

• Focused differentiation in a fragmented industry • Positioned as a retailer of wholesome, natural, organic goods for home consumption • Question: Were owners passionate about the product or did they see an opening?

Whole Foods

• Issue: Ability to manage growth?

• Ranked among the 100 best companies to work for by Fortune (8 th year in a row) • Improved financial performance • Some controversy with acquisition of Wild Oats

Jet Blue

• Focused low cost in a mature industry • Limited routes (new airline) • “bring humanity back to air travel” • Low cost operations • Describes how this was achieved through leadership and management style, human resources, use of technology

Jet Blue

• In 2005, highest ranked airline in quality ratings scores: – denied boarding lowest, customer complaints second best (to Southwest), – on-time performance dropped, – mishandled baggage rate still best but deteriorated (4.06 per 1000 passengers).

• Higher revenue passenger miles but lost money in 2005.

• Slowed expansion as fuel costs rose and encountered string of quarterly losses • Lufthansa acquired 19% stake??

Apple

• Broader differentiation through diversification in high tech sector • Describes launch of the iPod and entry into MP3 business • Complement to the computer business • Example of how a company struggles through ownership, leadership changes, and failed products, as it brings out winners

Apple

• Continues to expand services available in iPod through iTunes, e.g. MTV products, Nikelodeon, etc, • 1gig iPod nano at $149 • iPhone • In 2006, – Unveiled Mac mini with Intel Dual core – Boot Camp – allows Intel-based Macs to run Windows XP

adidas

• Broad differentiation in an industry dominated by few players • “best portfolio of sports brands in the world” • Diversification through acquisition (Salomon) • Restructuring through divestment of Salomon and acquisition of Reebock

adidas

• After restructuring – Net income rose from $80.3 b in 2004 to $80.4b in 2005 primarily due to expected demand for World Cup products – TaylorMade-adidas Golf experienced 12% sales increase – Consolidate Reebock in its financial reporting

Starbucks

• Focused differentiation and chaining in a fragmented industry – Characteristics of a fragmented industry – Advantages as a chain • Vision of owners – Development of idea – Execution through people, e.g. training, incentives and compensation, systems, etc.

Starbucks

• Issue was prospects of continued growth • As at 2006, – record results with revenues up 22% – number of stores 11,225 (up from 10,241 in 2005) • In 2007, started advertising as revenue growth was lackluster.

Monsanto

• Classic ethical case. • This is an example of technology providing opportunities while creating risks to stakeholders that may be difficult to quantify.

• Also an example of complex issues of intellectual property protection.

Monsanto

• Percy Schmeiser continues to be a thorn in Monsanto’s side – Since he is prohibited from growing GMO canola, he requested Monsanto to remove the unwanted plants.

– Since he would not agree to Monsanto’s terms, i.e. release from lawsuits, he did it himself and invoiced Monsanto.

Kimpton Hotels

• Focused differentiation in a fragmented industry.

• Themed properties, owned by the company, providing service to discerning customers • Execution decentralized organizational structure (e.g. autonomous GMs)

Kimpton Hotels

• How does a specific initiative, EarthCare, fit overall strategy – Proceed with Phase II, particularly organic linens?

• As of Oct 2005, implementing Phase II but with challenges, particularly organic linen.

• Considering subsidizing products that cost more with cost savings generated through water, energy, and waste reduction initiatives.

Kimpton Hotels

• Kimpton EarthCare is now organization wide – Cleaning supplies: all rooms – Soy Inks: All corporate communications use soy based ink – Organic beverages: all complimentary lobby coffee is organic – Towel/Linen Reuse – Energy Conservation: back of the house retrofitted and audited

Kimpton Hotels

• EarthCare metrics – Waste reduction – Energy and water usage • Kilowatt hours and gallons – Increase employee retention and morale through this sense of purpose at work