December 2010

Dec 14, 2010

BYD global strategyBy Ajay Viswanathan, Jaseem Pookandy, Luca Rassenti, Pragya Uprety, Tsu-Yu Hsia and Vivek Mehta

Shenzhen: Li is driving a group of passengers in his shiny new BYD E6 to the Bao’an International airport. Heavy traffic has depleted his E6 of all the charge and, to his dismay, he cannot find a single charging station in the 10-mile stretch to the airport. Li soon realizes he will face this problem each day, his business being severely impacted by the lack of infrastructure in his city. He has paid a steep price for an electric vehicle (EV) but now regrets the investment.

San Francisco: Micheal, a Silicon Valley entrepreneur is evaluating options for his new “green car” purchase. At the top on his list is the Prius, but he also is contemplating waiting a little longer for new entrants from Nissan and the new Chinese auto giant, BYD. He is slightly skeptical due to the negative perception in the United States about Chinese automobile manufacturing and BYD’s problems and chooses the Prius hybrid, which works out just fine for the long weekend trips with his girlfriend.

These scenarios sum up the problems for BYD and the electric vehicle (EV) industry at large. While it seems as though the technology is promising, China is not ready for it. China’s income levels and infrastructure cannot yet support the paradigm shift to EVs at this point in time.  While the west is much more ready for the shift to EVs, it seems as though BYD is not prepared for the quality and safety demands Western markets will impose.  The negative perception of “Made in China” will not be changed overnight.

Dec 14, 2010

McDonald's strategy in IndiaBy Alick Gordon, Arvind Deshmukh, Deviki Gupta, Sam Hung and Chul Won Baek

Like many young men his age, Rohan was a bit nervous about his first date with Neha. They had been friends for many years, but this was the first time they had been out on their own together. After ordering their food, the waitress responded with the ubiquitous question, “Would you like fries with that?” “Yes please,” responded Rohan before paying and carrying his and Neha’s trays of food back to their table.

Unlike in the United States, where most young adults would never think of going on a date to McDonald’s, in India it is a widely accepted and welcomed destination. McDonald’s India has carved a niche for itself in an increasingly competitive Indian fast food market by adapting itself in ways uncommon for the company in other parts of the globe. Through the company’s focus on teenagers and young adults as well as a highly specialized menu, McDonald’s has found success in India when many people said it could not be done.

Dec 14, 2010

Ford Motors CEO Alan MulallyBy Han-Li Chang, Juan Carlos Hussong, Karan Singh, Milena Flament, Rohan Ghotage and Torry Schoenfeld

During its early years, Ford earned a good reputation thanks to the T-model, the first affordable, mass-produced car in automotive history. Over time, Ford’s reputation became notorious for its emphasis on affordability at the expense of quality and innovation. The 1970 Ford Pinto is a good example of bad design and low quality. Through a series of low-quality cars, Ford’s reputation deteriorated.

As an editor of Carnews.com, a major car magazine in Taiwan, Han-Li Chang tested all of the new cars sold in the automotive market in order to present fair comments about them to aid in consumer purchasing. At that time, it was difficult to write anything good about Ford. Han-Li discovered rusty car frames and flawed transmissions on brand new Fords. While Japanese competitors were flourishing with their innovative high quality cars, Ford was still not prioritizing quality and technology.

The automobile industry is, and has been, highly competitive. The big three American automakers, General Motors, Ford and Chrysler, have for many years adopted similar strategies. They focused on delivering the American dream car: Roomy, comfortable, big engines, and lots of horsepower.  In recent years the big three shifted many of their resources from small and mid-size cars to satisfy the SUV craze of the domestic market. Very few resources were allocated to innovation or R&D. Fuel efficiency and hybrid technology were largely ignored.

Dec 14, 2010

Dell global strategyWhat do you do when your best friend meets the new kid on the block who happens to be cooler than you and has better toys? You can pick up new toys, find a more loyal friend, or move to a new block. To be safe, you should try all three.

For most kids, where our parents settle down is rarely a function of our popularity, but in this particular case, we’re not talking about Johnny losing Sally to Tommy. We’re talking about Dell. The block is the U.S. market. The best friend is the domestic consumer. And the new kid? Well, kids is more appropriate, but the coolest one on the street is the guitar playing, cigarette smoking, surf board riding Apple, which has resumed its role as a harbinger of counter-culture radicalization of the PC marketplace.

Dec 14, 2010

Boeing 787 DreamlinerBy Shamus Angkrom, Raghu Gopal, Joseph Hake, Jacquelyn Hunter and Matt Williamson

All people with any interest in flight, from the casual passenger to the industry analyst, will no doubt have been exposed to the recent buzz regarding the Airbus A380 and the Boeing 787 Dreamliner. In the United States all eyes have been set firmly on the production of the 787, as both regional and long-haul service providers plan to utilize the 787 in a manner that will create a great deal of competition for the A380. You would be hard-pressed to reference commercial air travel or U.S.-based defense without the inclusion of Boeing or its various subsidiaries.

Several years ago, one could scarcely mention Boeing without alluding to its former claim-to-fame, the 747 “jumbo jet.” Those of us fortunate enough to have traveled overseas for business or pleasure have undoubtedly experienced the enjoyment of being a passenger on one of these airborne behemoths. Nowadays, when discussing the premiere platform for wide-body, long-haul commercial air travel, most would reference the Airbus A380 instead of the “dated” 747.

Dec 14, 2010

Louis Vuitton strategy“The whole problem that we all have, and Louis Vuitton is the leader of the industry – is to manage what I call the ‘paradox of luxury.’ How can you grow year after year, and give the satisfaction to many more customers, in many more countries, and at the same time keep this sort of exclusivity of luxury?” — Yves Carcelle, February 2008

By Swecha Bhavana, Rodrigo Castillo, Sampad Das, Noah Emery, Estella He and Ho Young Kim

In an interview with Yves Carcelle, the president and CEO of Louis Vuitton (LV), he touched on a unique strategic issue faced by LV and other luxury brands equally. The interview was given during LV’s expansion into Turkey in February 2008. He used a phrase, “the paradox of luxury,” to describe the expansion and growth of the luxury market. The paradox, according to Mr. Carcelle is aiming to increase the opportunities for growth while attempting to maintain the exclusivity of the brand. LV’s current strategy is focused on geographic expansion into emerging markets where the levels of disposable income have risen, creating new customers for the luxury goods market. At such a juncture, it becomes paramount for LV to avoid risk of diluted brand image. The fact that LV’s products are sold at only the 390 stores all over the world is one of the strategies around the paradox.

Dec 14, 2010

HP global strategyBy Manish Chhokar, Andres Camacho, Maria Teresa Morazan, Archit Kansal, Aaron Sanchez and Michael A. Sherry

After a long week at his hectic new consulting job in New York, Robert Baron was anticipating a relaxing evening at the new restaurant in town. He was seated quickly upon his arrival and given an amazing table near the front of the establishment. As he settled in to his booth, and opened the massive menu that lay on his table, he quickly realized that something was off, hampering his ability to truly enjoy the experience that he was about to have.

At first, he was unsure of what was bothering him, but something about being a patron of this particular restaurant was causing him to feel overwhelmed and anxious. As he scanned the 60+ different entree and combination choices staring him in the face, he quickly realized that he was suffering from overwhelm, due to more choices than his brain could effectively process.

This phenomenon has been further examined by psychological studies that have directly correlated the number of choices offered and the inability of human beings to be decisive and confident in their decisions. There are only so many options that the human brain can effectively process and decide upon. Too many options can cause the human brain to enter what experts refer to as “paralysis of analysis,” a syndrome that is linked to having an overabundance of choices.

Dec 14, 2010

Disney Cruise LineMaybe Disney has just spoiled me. All I know is that from the moment I make my reservation with Disney to the moment I step off their ship, I am treated like royalty. As I was walking off the [Norwegian] ship this morning,the last thing I heard was a man scream at the top of his lungs, “I will NEVER sail this cruise line EVER again.” I was not surprised when the woman at Guest Services yelled equally as loud back, “Good, I hope you never do!” I think it is fair to say that exchange would have NEVER have happened on a Disney ship. — Nickelodeon Norwegian Cruise passenger

By Rodrigo Quezada, Munish Jhavri, Stephanie Snyder, Nick Ford, Lauren Sanne and Riley Roberts

The family cruise line industry is not an easy one in which to stay afloat, especially the niche market of family cruises. Competition is stiff, as cruise lines are realizing more and more that partnering with a well-known brand and creating a theme cruise can be a great way to capture a specific market, particularly themes that cater to children and families. There has been a recent surge in the introduction of such cruises, including a partnership between Norwegian Cruise Lines and Nickelodeon, mentioned above, DreamWorks and Royal Caribbean, and others. However, as the quote above shows, much can go wrong when expanding into unknown markets if a company loses sight of its key strategic advantages.

Dec 13, 2010

Coach men's lineBy Susannah Ware, Kshitij Shetty, Laura Haslee, Brian Bizjack and Juliana Figueiredo

As Coach Inc. launches its men’s-only shop in New York City, it is taking a big risk by deviating from its established image in affordable women’s luxury goods. However, its efforts seem to be paying off at least in the eyes of one reviewer responding to the new store, “I really like this shop because … it’s perfect for gift-giving purchases. … Who’s gonna argue with a nifty Coach card holder or bucket hat?”[1]

With the launch of a new men’s line, Coach is acknowledging changing market trends within the fashion industry. In the last five years, men’s designer clothing has sold at twice the rate of women’s clothing.[2] Also, sales of men’s designer products are expected to increase by about 35% in developing countries like India and China, which shows the potential for future international growth.[3] There is also research strengthening Coach’s decision to venture into the men’s segment that suggests men plan to spend 3% more on consumer goods than they did in the previous year.[4] In contrast, women intend to spend 1% less than they did previous year.  This year’s Black Friday spending research confirmed an average increase in male spending of $100 compared to female spending.[5]

Dec 13, 2010

Whole Foods global strategyBy Amanda Roberson, Amy Zelezen, Ankush Brahmavar, Boris Pilipenko, Kinjal Gandhi and Matt Werner

Cincinnati resident Roberta Mand is spoiled for choice every time she steps out to buy groceries. Depending on whether she want to buy steaks, sushi, staples or macadamia-encrusted tuna, she heads to Costco, Wal-Mart, Kroger, Whole Foods or the local farmer’s market, all of which are nearby. Roberta’s array of choices illustrates the ever-evolving dynamics of the grocery industry. In this extremely competitive environment, all major players must continuously strategize to maintain a strong presence. A look at Whole Foods Market reveals how this increased competition can leave a company at a strategic crossroads. Since its beginnings in 1980, Whole Foods has been a leader in supplying organic and natural foods, and for years enjoyed its role as the only store catering to this niche market. However, since then other major players have identified this growing segment and now also carry lines of organic and natural foods.

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