December 2010

Dec 15, 2010

The Economist global strategyA few years ago, BusinessWeek was valued at more than $1 billion and in October 2010 it was sold for a mere $5 million. When buying Newsweek in August 2010, the buyer Sydney Harman confessed, “Break-even is a serious accomplishment, especially in this world, the world of journalism. I’m not here to make money, I’m here to make joy.” Print media is considered a dying business now but even in this environment The Economist, one of the oldest magazines in political, economic and academic news, is growing steadily. While most of the industry players have lost readership, The Economist has increased circulation 95% over the past ten years. Its circulation has risen another 3.3% from 2008 to 2009 while the largest news magazines lost more than 25% of their circulation, with Business Week losing 2% circulation and Forbes remaining steady with a 0.1% gain.

Dec 14, 2010

Circuit City global strategyBy Dan Benton, Dave Davidson, Kyle Larsen, Dan Olver and Jong Chul Park

Innovation is a buzzword thrown into corporate missions as evidence of how a company creates and differentiates; it’s a keystone for any business, a prerequisite for any manager, and a selling point for any investor.  But what is innovation? And why do we desperately seek it? The way we look at it, innovation is the creativity of a few put into action by many, offering quantitative and qualitative advantages over the competition.  However, any single act of corporate innovation is not enough to create sustainable value; legacies are created through continual value creation.

Imagine a company that created an industry, pioneering enormous growth and innovation in a consumer demand market that had never before existed.  Picture the company riding decades of success into the preeminent spot of its industry, rising to 160th in Fortune 500’s most successful companies, peaking at $10 billion in sales.  Now, envision this giant lying in ruins only two years later.  Circuit City is a case study in how not to run a business.

Dec 14, 2010

Redbox global strategyBy Jones Dias, Abhinav Kant, Vamsi Kothapalli, Kristal Nicholson, Filippo Sclafani and Pankaj Tamrakar

As recently as four years ago, almost no one would have been aware of what the word Redbox meant. Today, Americans have become devoted customers of this rising star of the impulse DVD rental industry. But will the fun and ease of Redbox’s unique impulse proposition last through the next decade? Do advances in technology, with an ever-changing array of readily available options, such as downloads or streaming, mean that the days of the Redbox are numbered?

The discussion seems to vary as to which strategy Redbox needs to take in order to continue to thrive in the rental business. Coinstar (Redbox’ parent) CEO Paul Davis, expressing his ideas in a recent conference call, considers streaming a “significant opportunity” while maintaining that he foresees a “long, profitable life ahead” for Redbox’s movie-machine kiosk business.

Dec 14, 2010

Sempra Energy global strategyBy Helen Akanisi, Sam Brien, Fikre Gurja, Christian Lorentzen and Jonathan Norberg

In 2006 a popular documentary asked, “Who killed the electric car?” A few years from now when documentaries are asking, “Who brought the electric car back to life?” one of the names tossed around might very well be Southern California’s Sempra Energy. Sempra, a Fortune 500 company and parent to the major electric and natural gas utilities in San Diego and Southern Orange County and a major utilities player throughout the Southwest, has strategically positioned itself in recent months to potentially be a leader in the rolling out of the “smart grid” and electric vehicle (EV) charging station infrastructure which are key to giving new life to a technological dream pronounced dead only a few years ago. Whether or not Sempra is remembered as a savior of the electric car or just another failed attempt in that direction will depend on whether they are able to overcome the technical and financial hurdles that have made the electric car an elusive goal.

Dec 14, 2010

BlackBerry smartphoneBy Benjawan Thanachotipan, Jesse Randall, Peter Graham, Sriram Sridharan, Timothy Webb and Tyler McElhaney

Research in Motion [RIMM: $60.81], known for its private data security and e-mail addicts, may be on the verge of disappearing. Drawing this conclusion may seem strange in light of its recent stock price increases, its 27 percent market share, and the pending release of its iPad competitor, the Playbook. However, RIM’s demise isn’t apparent on the surface. Its misaligned long-term strategy is what will ultimately bring RIM to its knees.

Technology and innovation in the smart phone industry have developed at an extremely fast pace.  This has caused consumers to upgrade their devices on an annual basis if not sooner. As these devices increasingly become an extension of the life of today’s consumers, supplying innovative, advanced devices is more important than ever. This shifting consumer preference towards iPhone and Android devices (even in the business user segment) is causing RIM to lose market share at an exponential rate.

Dec 14, 2010

Tiffany & Co. global strategyBy Jeremy Snyder, Sara Dallaire, Patty Vukanovich, Matt Gottesman, Travis Goulding and Brad Hunter

With the holiday retail season currently upon us, we recently did some research about a well-known jewelry retailer, Tiffany & Co.  When the average consumer hits the streets to look for gifts of jewels or new adornments for themselves, there are a wide variety of choices in the market.  From low to high end, each dealer has its own story, and will offer the shopper a unique experience tailored to what the dealer’s particular pitch entails.  In the case of Tiffany & Co., we received a healthy back-story about the company’s concerns of being a sustainable retailer.  The company’s goals ranged from sourcing gems and precious metals from conflict-free areas, to the use of recycled paper from responsible sources in the paper industry.  Our goal was to go a little deeper and investigate how far Tiffany & Co. was willing to press its concerns, or if the organization’s veil of corporate social responsibility was really a case of public relations spin to appeal to the mass market and make consumers feel good enough to make a purchase.

Dec 14, 2010

Embraer global strategyBy Aarohan Singh, Abhijit Chakrabarti, Alok Shah, Divy Jaisingh, Karn Dhandhania and Rishin Patel

The first credit for human flight in history is given to the Wright brothers, who took their first flight in 1903. However, for commercial air travel, that honor is given to the British Overseas Aircraft Corporation, which in 1952, provided the world’s first commercial jet service. Within commercial jets, there has been a constant innovation taking place throughout the industry. Whether aspiring to create faster, safer, or more luxurious planes, this highly competitive industry is always looking for the next big thing.

Everyone has a lot to thank for the advent of flying.  We can be in California at one moment, board a plane, have a drink, take a nap, and end up in Arizona at the next. But what price do we pay for this? The luxurious Boeing jets, which on Dec. 13 raised airline prices by 5.2 percent, are generally fast, quiet, and comfortable to fly in. However, with a lack of options prior to the advent of regional jets, passengers were forced to board commercial airliners, known as larger gas guzzling aircrafts.  In fact, these inefficient airliners also contribute enormously to air pollution that leads directly to negative environmental impacts.

Dec 14, 2010

High Price tag: The F-35 Joint Strike Fighter, unveiled at a ceremony in Washington, is part of the most expensive weapon program in history. Photo: APBy Dawn Swearingin, Rohan Verma, Jameson Neuhoff, Travis Wattles, Priyanka Jain and Wei Zheng

One of the few positive outcomes of the current financial crisis is the emergence of taxpayers as informed stakeholders in the activities of government. The U.S government, mindful of this development, is conceivably more cautious when allocating funds to its different departments. One exception is the Department of Defense, which has consistently seen on average a rise of 5 percent in its budget allocation throughout the last decade, whereas most other departments have faced major reductions.

This is partly understandable due to the geo-political scenarios in Iraq, Afghanistan and North Korea. As this is a matter of national security, it does provide a plausible explanation of why it has not attracted the wrath of taxpayers and media activists yet. But, have you ever wondered whether this increased allocation is justified on the basis of national security alone, or are there glaring inefficiencies in the Department of Defense that drive up project costs and timelines?

Dec 14, 2010

Embraer global strategyBy Saurabh Aphale, John Briscoe, Ankit Dwivedi, Megan Groves and Tosha Sorenson

Just south of San Francisco sits DreamWorks Animation (DWA), a business environment more akin to a Tuscan village than a traditional animation studio. At the time of founding, current CEO Jeffrey Katzenberg and cofounders Geffen and Spielberg may not have thought the animation film industry would bear this level of competition. Rivals’ strategic alliances, technology, diversification, and company culture have contributed to the profound impact of box office returns.  To compete in this intense environment, DWA has developed a core set of capabilities which include pioneering technology, creativity incubation, and an exceptional company culture which foster growth and innovation.  Leaping 41 spots to number six on Fortune 100’s Best Employers to Work For survey has further catapulted DWA into the spotlight.

Dec 14, 2010

Under Armour global strategyBy Gael Marchal, Hardy Drackett, Kali Poza, Robert Bigot, Venkat Srinivasan and Veronica Borrowdale

“We must protect this house” is Under Armour’s rally cry; however, in broadening its brand the company has failed to protect the market it created. Under Armour recently has made several strategic missteps compromising its unique position. Its failure to make difficult trade-offs and CEO Kevin Plank’s inability to articulate a clear strategic focus will ultimately dilute the Under Armour brand and hurt the bottom line.

Since its inception in 1996, Under Armour has been seen as an improbable success story in an extremely developed and competitive industry.  It effectively created the performance apparel market, a blue ocean within the sports apparel industry.  In this market, Under Armour’s focus was centered on compression fit and moisture wicking fabrics, a product that filled the needs of many athletes unhappy with the standard cotton t-shirt.  This blue ocean allowed for tremendous company growth, expanding from $17,000 in sales in 1996 to $856.4 million in revenues in 2009. (2009 Annual Report)  Along with this growth came a very strong and recognizable brand.  In fact, according to a survey of teenagers, Under Armour “is now the #2 brand among teens, behind Nike”.  (Lefton) Naturally, this success has bred imitation and, together with Under Armour’s failure to protect their position, the blue ocean has turned red.