April 2012

Apr 23, 2012

angola2A research paper by Thunderbird students Christian Lorentzen and Anthony Petrunin

Executive Summary: To determine whether Angola is at risk of falling victim to the resource curse we chose to implement a framework developed by Paul Stevens and Evelyn Dietsche (Stevens and Dietsche, 2008) based on their careful study of leading academic writings on causes of the resource curse. The framework employs three main factors to determine whether a country is likely to experience the resource curse:
1) Is there the existence of historic well-functioning institutions already in place?•Considering that Angola’s present leadership came to power through a civil war in which the institutions left by the Portuguese were destroyed and new centralized systems were created, there is risk that Angola’s leadership is not dependent on a system that would lead them to make decisions in the best interest of the country.
2) Is the relative value of the resource rent high or low?•Angola is dependent on high-rent oil exports. The oil royalties are high enough to satisfy the national budget without the necessity of additional revenue streams. As a result the leaders lack motivation and incentive to develop other sectors of the economy.
3) Is the natural resource harvested across large or small geographic areas?•Oil has a small geographical footprint that does not require local support systems or labor. Therefore Angola’s dependence on oil is unlikely to create cluster economies.
By analyzing these three questions in the context of modern day Angola, we came to the conclusion that Angola is at a high risk of becoming a resource cursed country.

Apr 18, 2012

okcupid-matchA corporate marketing article by Thunderbird students Noah Emery, Kate Gillette, Megan Groves, Roger Li, Christian Lorentzen, Ullas Rameshappa and Amanda Roberson

Executive Summary: In this paper, we will provide an overview of the existing and growing online dating market as it pertains to the United States. Focusing on two brands, Match.com (Match) and OkCupid, we will explore options for Interactive Corporation, the holding company for both dating sites, to simultaneously grow the online dating market and increase visibility and profitability of newly acquired OkCupid, a much younger brand. After analysis of product, promotion, placement and pricing as well as segmentation, targeting and positioning of each brand, we recommend the following: a dual-branding strategy that capitalizes on Match’s industry experience in order to grow the market and maximize OkCupid’s potential value.

Apr 16, 2012

China counterfeitsA corporate strategy article by Thunderbird students David Curtis, Merissa Gordon, Kori Joneson, Emily Mahoney, and Robert Thompson

The luxury goods market in China is a must-enter space for global companies in this industry. Research indicates that multinational corporations (MNCs) need to assess their current strategies and take advantage of challenging, yet rewarding opportunities in emerging markets1.  By 2015, China will represent 20% ($27B) of the market in luxury goods, and MNCs like Marc Jacobs cannot afford to hesitate in penetrating this emerging market2.  The Chinese view these high-end products as “trophies of success” and are worn as such3.  Labels and visible brand symbols are critically important for show in public, but rarely of value in the home. While this new market opportunity presents promising avenues, the Chinese market is known for its battles with infringement through counterfeiting, parallel importing, or unauthorized selling of goods.  Companies like Marc Jacobs are forced to address this issue head on and seek ways within their global strategy to develop solutions.

Apr 16, 2012

AppleA corporate strategy article by Thunderbird students.

With $100 billion in cash and closing in on the richest market cap in history, many feel that Apple is at the top of its game.[i] Nevertheless, at some point, Apple’s products will reach saturation levels at the high-end of the market in developed countries.  To keep the top spot, Apple will need to direct its growth efforts to emerging markets and find ways to make its products both relevant and widely available to customers outside of its traditional target markets.

In spite of its strong worldwide sales, Apple has long ignored an underserved market segment that, if tapped, could enrich its coffers even more.  Far away from high end markets in developed countries, lay the “poor” representing 65% the world’s population.[ii] On average, individuals in this “bottom of the pyramid” (BOP) group earn $2,000 per year or less; however, because of the large number of consumers in this group, their aggregate purchasing power is immense.[iii] This BOP segment represents a tremendous opportunity for Apple to serve a market that currently relies on second-tier technology for mobile devices and media platforms, yet is eager for lower-priced, high-quality goods and services.  In spite of their low incomes, those in the BOP segment often spend 10% to 500% more than those in higher-end segments on similar goods.[iv] By offering a high end brand at a price competitive with second-tier products, Apple could drive tremendous sales volumes and acquire a large share of the BOP market.

Apr 16, 2012

GrouponA corporate strategy article by Thunderbird students.

In 1887, Mr. Asa Candler was faced with a distribution dilemma. [1] The Atlanta druggist had spent $2,500 on a formula for a sweet-tasting drink and was looking for a way to promote the sale of this little-known beverage named Coca-Cola. [2] His solution: handwritten tickets offering customers a free sample. To Mr. Candler’s surprise, the offer was a huge success. So was born the coupon. By 1913, an estimated 11% or roughly 8.5 million Americans had received a free coke. [1] One could argue that Mr. Candler’s invention of the coupon is the reason Coca-Cola started on its path to becoming one of the most iconic global brands - ever.

Fast forward to 2008, when an internet start up based in Chicago, IL created one of the largest shake ups in the marketing world since Mr. Candler’s first hand written ticket; that company - Groupon. The novelty of Groupon was this: through the power of the internet, select “daily deal” coupons could be offered and if a big enough “group” agreed to purchase the deal, then the deal would become valid. [3] The program was used by participating companies as a way to reduce the risk of losses, increase customer traffic, and drive promotions. Now four years since its launch, the Groupon business model has come under attack and faces many strategic obstacles, including competition from lookalike websites.

Apr 16, 2012

IkeaA corporate strategy article by Thunderbird students Marquita Blanding, Ankush Brahmavar, Tim Clarke, Jennifer Garcia, Stephanie Sharma and Jason Teague

With approximately 500 million young adult consumers in India[1] and an affluent growth rate of 13% equaling USD 203 billion,[2] it would appear that Sweden-based IKEA can’t afford to delay its entrance into India any longer. A country that is accustomed to paying a higher price for the niceties that are afforded around the world, India has an educated, innovative, resource-rich base ready to ‘spend.’

In January 2012, the Indian government amended FDI restrictions to allow foreign companies to own 100% of their retail ventures in the country.  This was a welcome change from the earlier ownership cap of 51%, as it paved the way for global retail chains like IKEA, Wal-Mart, and others to have full control of their Indian operations. But the market opening came with new restrictions that many retailers view as obstacles to its investment, including a requirement that foreign companies obtain at least 30% of their products from domestic small companies and cottage industries. In light of this rule, IKEA has expressed that local sourcing requirements were “concerning” and more easily met by food retailers such as Carrefour than a single-brand company like IKEA with global product ranges.[3]

Apr 16, 2012

TataA corporate strategy article by Thunderbird students.

Tata has their sights on global expansion, but can they replicate their domestic success in advanced markets? Tata’s recent success with Jaguar Land Rover (JLR) certainly is a start. Acquiring JLR during the global economic recession was a big risk for Tata. The acquisition strained Tata’s cash supply and required Tata to raise billions in debt to finance the purchase. Through a series of cost cutting measures, Tata led JLR to recovery which now contributes handsomely to Tata’s healthy profits.  JLR gave Tata direct access to the luxury car market in developed countries like Europe and the U.S.

In parallel to Tata’s effort in advanced markets, Tata has historically aggressively penetrated markets similar to India, where they are more comfortable and experienced. By focusing its international expansion on countries with markets similar to India, Tata has been able to leverage its market expertise in these emerging markets.

Apr 15, 2012

SamsungA corporate strategy article by Thunderbird students Patricia Breceda, Mandukhai Hansen, Nick Mohin, Ajay Mungara, and Aleksey Vlasov

In May 2010, Ajay Mungara (Thunderbird ’12) was visiting the headquarters of one of the fastest growing companies in the world, Samsung Electronics Corporation (Samsung) in Suwon, South Korea for the first time. As he passed through the high security visitor center, he looked forward to the exciting and challenging opportunity to get to work with the “Jewel[1]” of the Samsung Group. Over the past two years and many more visits, and meetings with Samsung representatives, Ajay has seen Samsungs success to forge full speed ahead, and its brand value rise to #17 on Interbrand’s 100 Best Global Brands of 2011 list.[2]

Ajay knew there’s more to Samsung than its focus on Research and Development, and was curious about knowing more. As coincidence would have it, he came upon a group of fellow Thunderbirds who have also been watching Samsung’s rise, and interested in exploring more in to how Samsung is taking lead in the global smartphone competition. Together they pondered about Samsung’s global strategy, and wanted find out how it was able to displace Apple as the world’s top selling smartphone maker by volume, and how it continued to take market share away from world’s top handset manufacturers such as Nokia and Motorola in most emerging markets. They also wondered about the challenges it could be facing as the collaboration of world’s leading software and mobile handset manufacturers continues, such as mergers of Google-Motorola, Windows-Nokia. Can Samsung sustain its success for the long term? Can it survive the battle for the most valued component, the operating “eco” system in the smartphone?

Apr 15, 2012

medical tourismAs medical tourism for elective procedures gains momentum, could going global provide a cure for ailing American health institutions? A corporate strategy article by Thunderbird students.

Like many vibrant, athletic men, retired U.S. Air Force General Steve Dotson has a bum knee. Seventy years old, and an avid skier, Steve is simply not ready to sit in the lodge. Nor does he like the sound of a knee replacement’s long and painful recovery period, even though his insurance policy would cover the cost. Lucky for him there is a third option: travel to the Cayman Islands for a quasi-experimental (and non-FDA approved) stem cell procedure. A sophisticated marketing effort from a Colorado-based group of doctors operating an offshore clinic has convinced Steve that a simple procedure might negate the need for a surgical knee replacement, while accomplishing the same objective of keeping him active. All said, the procedure will cost Steve around $20,000 cash—a cost he believes is worth it if the results are positive. Steve is far from unique.

Apr 15, 2012

China counterfeitsUPS acquires TNT and the global big four logistics companies are down to the big three. A corporate strategy article by Thunderbird students Jeffrey Karlsson, Lauren Liberto, Gregory Pijal, Hugo Riquelme and Kenneth Wallace

The largest express-parcel company in the world, UPS, recently announced the intent to purchase Dutch company TNT Express on March 19, 2012 in order to expand its reach, resources, and customer base primarily in Europe where TNT already has a significant ground business.  The transaction is expected to close in the third quarter of 2012.[i] TNT Express started in Australia in 1946 with meager beginnings having only one truck in its fleet[ii], however, since then the company has expanded worldwide. In 1996 Dutch company KPN acquired TNT, and in 2005 TNT became the official merged company name. Although TNT operates around the world, UPS’s main focus in the merger was to boost its European presence. Today TNT Express UK & Ireland employs 11,000 workers, delivers 100 million items a year for its UK customers, operates in 70 hubs, and has a fleet of 3,500 delivery vehicles, which will aid UPS in gaining greater access to European businesses.[iii]