S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

1 www.ibscdc.org Industry Fashion Customer preference; Competitive Reference No. INA0078 environment; US Auto industry Year of Pub. 2009 Fashion Industry: Can Asia Buck Teaching Note Available Struc.Assign. Available the Trend? The US Newspaper Industry at Keywords Crossroads? Well, how does one define fashion going global – When a Gucci or Armani is Asia, Oriental, Fashion, Blue Ocean The print newspaper industry of the US displayed on the fashion streets of Strategy, SWOT Analysis, GAP Analysis , has been witnessing revenue decline since and China or when celebrities like Liz Japan, China, Europe, Retail, Gucci, Global, 2005. Decreasing circulations and Hurley or Will Smith showcase themselves Brand, Apparel, Supply chain consequently decreasing advertising in an Asian outfit? The winds of global revenue, due to the increasing popularity fashion industry are changing their course of digital media, is said to have affected Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis – no more do fashion winds move only CAFE Fuel Rules: Changing Auto the print medium. Many newspaper from west to east but they blow from east companies initiated several cost cutting to west too. Asian fashion, of late, has Industry Dynamics in the US efforts to cope up with the industry made its presence felt on the global ramp. In a move to increase fuel efficiency and downtrend. The increasing online For centuries, western brands like Gucci, to reduce gasoline usage for travel, a bill advertising revenue at the US newspaper Versace, Armani and LVMH maintained was passed by US Federal government websites put forth a notion that the their supremacy in the world of fashion. raising the standards of Corporate Average industry will undergo a paradigm shift from Innovation, rich designing, marketing Fuel Economy (CAFE) standards to 35 the print medium to the online medium. expertise coupled with the presence of miles per gallon (mpg), to be achieved by Many analysts believed that the US excellent fashion connoisseurs, enabled the 2020 from the current standards of 27.5 newspaper organisations will retain their western brands to command a premium mpg for passenger cars and 22.2 mpg for local franchises in print format, as it over the years. In comparison, the Asian trucks. US car manufacturers like GM, Ford contributes significantly to their revenue. fashion industry, which is still in the nascent and were apprehensive of this However, speculation is rife about the stage of growth, has been trying vigorously decision as they were in doubt in achieving future of US print newspaper industry as to position itself among the global players. the proposed standard in 12 years. The the focus shifts to the online medium. Although oriental fashion is pulling huge automakers were left with two options – crowds to its fashion weeks, the Asian either make cars more expensive or make Pedagogical Objectives fashion industry, despite talented designers them smaller and less powerful. By and lean processes, is failing upgrading their manufacturing processes • To analyse the increasing popularity of to build a brand image in the high-end and investing in expensive technology, new media over the traditional media in luxury segment. Factors like low brand they hoped to reach the standards set by the US value, lack of technical know-how, the Act. It was also found that Japanese • To provide an overview of the US infrastructure and distribution networks manufacturers like Honda or Toyota were newspaper industry and the competitive have been hampering their growth closer to the proposed standards as scenario opportunities globally. compared to the 'Detroit 3' and European car manufacturers. On the other hand, • To analyse the various factors that affect This case study dwells upon the dynamics the US print newspaper industry of the global fashion industry and the fearing a rise in oil prices, consumers are comparative position of the Asian fashion looking for fuel efficient and compact cars. • To analyse how the US print newspaper industry. The case study also analyses the Consumers as well as market analysts industry can hold its audience and challenges and threats to Asian fashion presume that new CAFÉ standards can be increase its revenue. designers and brands from global players met by 2020 which is in contradiction to besides providing a scope to identify the the view of the automakers. The case Industry Newspaper Publishing ways in which Asian fashion industry can attempts to profile the needs of consumers Reference No. INA0076B create an uncontested market space and and expertise of auto-manufacturers, in Year of Pub. 2008 make competition irrelevant. the wake of new CAFÉ rules. Teaching Note Available Struc.Assign. Available Pedagogical Objectives Pedagogical Objectives Keywords • To understand and analyse fashion • To comprehend the implications of US Newspaper Industry; NAA; WAN; industry dynamics in a flat world (market environmental regulations on industry Digital Media; Ad spend; Classified ads; share, profit margins, value chain, etc.) dynamics Consumer spectrum; Interactive marketing; New media; Internet • To analyse the critical success factors • To understand the impact of CAFE bill on US customers and auto manufacturers advertising; Crossroads; Newspaper for fashion industry and debate on websites; Business models; Google; Yahoo whether they would change when the • To understand the prospects and companies go global challenges of US auto industry.

• To understand the Asian fashion Industry Auto Industry Indian Animation Industry: industry's capabilities and contrast them Reference No. INA0077C Roadblocks for Global with the global fashion industry's critical Year of Pub. 2008 Competitiveness success factors Teaching Note Available Since 2005, India witnessed an increase in • To debate on the essential requisites for Struc.Assign. Available the amount of work related to animation any Asian fashion house to go global Keywords outsourced to India. Most of the companies and the strategies they should follow to that outsourced such work were from the position themselves so as to successfully CAFÉ rules; Environmental Standards; Europe, US and also Asia. Though there compete with the incumbents. Industry Analysis Case Studies; Big three; Detroit three; Japanese Automakers; has been an increase in the volume of 2 www.ibscdc.org

outsourced projects and co-production (14.4% to 2.17 million units). The demand at much lower prices. Whether Nikon

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S deals, the animation content in the form for such scooters increased in Indian two- would be able to successfully fight grey III – Y G E T A R T S of movies and television content did not wheeler market due to improvement in market issue in India was yet to be seen. seem to entice the Indian audience. This product features, design and style; and was cast doubts on the competitiveness of the targeted to attract young college girls, Pedagogical Objectives Indian animation industry. This case study housewives, and teenagers. Looking for examines the various hurdles that Indian growth, Suzuki launched gearless scooter • Dynamics of compact camera market animation companies need to cross, not 'Access 125' (Access) in the 100cc to 150cc in India only to appeal to the local market but also segment to compete with its competitors • Market entry strategies of Nikon in to become globally competitive. like Honda, Kinetic, and Bajaj. But still, a India segment of customers preferred Pedagogical Objectives motorcycles because of bigger wheels, • Strategic implications of grey markets better road grip, power, higher ground • Nikon's strategies to fight grey markets. The case study helps in understanding clearance, and low maintenance cost • The growth of global animation industry compared to scooters. The case facilitates Industry Compact Camera Market discussion on whether Suzuki would be able Reference No. INA0073A • Growth prospects of the Indian to succeed in capturing these buyers mind Year of Pub. 2008 animation industry in relation to the space. Teaching Note Available worldwide markets Struc.Assign. Available Pedagogical Objectives • Inadequacy of the Indian animation Keywords industry to compete globally. • To examine the growth drivers and Nikon Corporation; Compact Camera Industry Animation Industry demand factors of Indian two-wheeler market Market in India; Grey Market; Compact Reference No. INA0075B Camera; Single Reflex Camera (SLR); Year of Pub. 2008 • To understand the importance of Canon India; Kodak India; Nikon's Teaching Note Available continuous innovation in two-wheeler Coolpix; Industry Analysis Case Study; Grey Struc.Assign. Available market Market; Digital Cameras; Product Keywords cannibalisation; Brand Image; Brand • To study the impact of consumer Building India; Emerging economy; Animation; behaviour in Indian two-wheeler industry Global animation Industry; Indian • To discuss whether the strategies adopted animation Industry; Roadblocks; by Suzuki would help it succeed in Indian Hotel Industry (A): The Developing nations; Financial News; shifting the consumer priorities from Competitive Dynamics Outsourcing; Intermediaries; Industry motorcycles to gearless scooters in Analysis Case Study; MNCs; Animation India. Fuelled by the country's booming economy, outsourcing hub low-cost air carrier introduction and Industry Automobile Industry liberalisation of FDI norms that allow Reference No. INA0074A 100% foreign investment in real estate, Year of Pub. 2008 Suzuki in India: The Growing the Indian hotel industry is currently seeing Teaching Note Available a boom. Demand for hotel accommodation Gearless Segment of Indian Struc.Assign. Available Two-Wheeler Market has increased tremendously across India but Keywords the rooms' supply has seen an insignificant The world's second largest manufacturer growth, causing staggering room rates and of two-wheelers – the Indian two-wheeler Indian Two-Wheeler Market; Industry insufficient room availability. Inbound tour industry is broadly classified into three Analysis Case Study; Transportation; operators blame these as key deterrents product segments – scooters, motorcycles Consumer Behaviour; Motorcycles; that keep tourists from visiting the and mopeds. During 1980, the de-licensing Gearless Scooters; Marketing Strategy; country. Moreover, with poorly facilitated policy of Indian government allowed Joint Venture; Competition; Foreign airports, inadequate road infrastructure, foreign companies to operate in Indian Players; Product Innovation; Suzuki; high taxation levels and a bureaucratic visa two-wheeler market through joint ventures Honda Motorcycle & Scooter India (P) processing system, India's hotel industry (JV). Especially, the entry of Japanese Ltd.; Hero Honda; Bajaj Auto; Kinetic; has serious challenges ahead. Significant companies changed the dynamics of Indian LML investments in tourism infrastructure are two-wheeler market by concentrating on essential for this industry to progress and customer aspirations, and embracing new ultimately achieve its potential. technology. Banking on the opportunity, Compact Camera Grey Market during 1982, Suzuki Motorcycle India Pvt. in India: Nikon's Dilemma Pedagogical Objectives Ltd (Suzuki), a subsidiary of Suzuki Motor Corporation (SMC), entered the Indian Sensing the fast growth in the Indian • To understand Indian hotel industry two-wheeler market through a joint camera market, Nikon Corporation, a dynamics before and after the country's venture partnership with TVS Group, an Japan based camera brand, in 2007, decided economic liberalisation and analyse the Indian company, to manufacture to set up a subsidiary in India. Nikon was a key success factors of the industry motorcycles. Until 2000s, the motorcycles late entrant and players like Sony, Canon, • To examine the Indian hotel industry were more popular in Indian two-wheeler Kodak and Samsung had already established segmentation and contrast it with the market. But the launch of gearless scooter themselves as key players in the Indian country's economic development and 'Honda Activa' – a four-stroke scooter by market. To establish itself in the Indian room prices Honda Motorcycle and Scooter India Pvt market, Nikon had to compete with these Ltd (HMSI) in 2001, changed the demand established players. Apart from this, the • To highlight global hotel chain's growing dynamics of Indian scooter segment. Since presence of grey market was a serious presence in India and the various market 2007, the gearless scooter segment has concern for Nikon. Nikon's own products entry strategies available for them to been growing as compared to motorcycles were widely being sold in the grey market establish their presence in India 3 www.ibscdc.org • To analyse Indian hotel industry's Pedagogical Objectives and how it has changed the meaning of demand-supply mismatch, the reasons business over the decade. Specifically it can for it and the necessary steps to fill the • To understand the dynamics of the be used to: gap. Chinese B2B E-commerce market • To understand the difference between • To analyse the business methodology of Industry Hospitality Industry Internet economy, electronic business the Alibaba group Reference No. INA0072 and electronic commerce Year of Pub. 2008 • To discuss the risks of online business, • To discuss the significance of digital Teaching Note Available especially in global expansion economy vis-a -vis traditional economy Struc.Assign. Available • To understand the importance of Keywords • To understand the constituents of e- efficient and adequate business model in commerce business Indian Hotel Industry; Industry the growth of an online business. Segmentation; India's Economic • To analyse the critical success factors Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry E-Commerce for the growth of e-commerce Liberalisation; Industry Classification; Reference No. INA0071 SWOT Analysis of Indian Hotel Industry; Year of Pub. 2008 • To debate the relevance of e-commerce Critical Success Factors; Challenges in the Teaching Note Available business in China Indian Hotel Industry; Role of Government Struc.Assign. Available in Industry's Development; Industry • To understand the resulting business Analysis Case Study; Taj and Oberoi Group Keywords opportunities and challenges. of Hotels; Market Entry Strategies; Global E-commerce; Dynamics of online business; Industry E-Commerce Hotel Chains in India; Incredible India Alibaba.com; Internet commerce; Chinese Reference No. INA0070 Campaign; Demand Supply Disparity electronic commerce; China in global e- Year of Pub. 2008 eommerce; Digital economy; Critical Teaching Note Available success factors of e-commerce; Industry Struc.Assign. Available Emergence of China in the Analysis Case Study; Strategies of Keywords Global E-Commerce Market (B): Alibaba.com; Internet economy Alibaba.com's Surge E-commerce; Dynamics of online business; Industry Analysis Case Study; Electronic Second in the two case series, this case Emergence of China in the global marketplace; Internet commerce; portrays Alibaba.com, a portal that Global E-Commerce Market (A): Chinese electronic commerce; China in withstood the Chinese and emerged as a global e-eommerce; Digital economy; Dragon Drags on Adaptation leader in a short span of 9 years. Launched Critical success factors of e-commerce; in 1999, the portal targeted SMEs One of the most popular economic stories Opportunities and challenges of e- providing Business to Business (B2B) in the last decade and half was the emergence commerce; Internet economy; Old solutions and aggressively expanded the of China as a formidable force in the global economy and New Economy customer base by tailoring its offerings to economy. With the growth booming at more various SMEs. Alibaba's web presence than 10% per annum, all sectors of the includes an international marketplace, Chinese economy got the required thrust, which focuses on global importers and Luxury Brands in China: Profiting E-commerce being one of them. Internet from Scale exporters, and a China marketplace penetration in the country registered focusing on domestic suppliers and buyers. dramatic surge, as the Chinese establishment China’s 1978 economic reforms helped Alibaba's business and operational patterns eased regulations and foreign multinationals boost its economic growth and in turn, the helped it to become the highest market provided the required know-how along with income levels there. China’s demography valued firm. This enabled the company to necessary hardware. Once the infrastructure too changed - with thousands of be listed on the Stock was in place, the Chinese business millionaires and a growing middle class Exchange in November 2007. And set its community was quick in embracing E- coming up. All this had an impact on the sights on global expansion, also offering commerce. However, the common country’s luxury industry, whose growth is more services to its domestic clients. populace was not quick enough, being pulled expected to jump from 1% in 2000 to 29% Though hailed as a good strategy, as the back by many apprehensions – chief among by 2015, making it the largest market for incremental revenues will out do them were lack of physical feel of the luxury brands. However, China is a incremental costs by miles, it has its own products and security (over privacy and complex cultural market. risks. Company's success of the company payments) – ultimately E-commerce has depends on its ability to tailor itself to not gained expected popularity. Albeit Pedagogical Objectives suite the needs of global diversities – not a slowly, number of people purchasing online mean task by any measure and not many is picking up – much to the liking of Chinese The case study helps students: portals could achieve in the past. This case e-commerce companies. This case study, • Analyse the impact of China’s economic enables analysis on the strategies, which the first in the two case series, enables a reforms the company has adopted in its initial discussion on why e-commerce failed to stages to establish itself facing adverse attract Chinese public, though it had all the • Discuss the growing demand for luxury conditions. How could Alibaba.com install necessary ingredients. Why was Chinese brands faith in its customers in such a short span public averse to online transactions? What of time? What measures did the company strategies did the companies adopt to • Assess Chinese consumer behaviour take to overcome the resistance of the increase the popularity of E-commerce? • Discuss various strategies Chinese? Is the company too ambitious in How China was able to establish itself on its global plans? Can the company handle global E-commerce market place? • Analyse the challenges for players. diverse needs of foreign and domestic customers? What measures should it take Industry Luxury to succeed the complexities involved in Pedagogical Objectives Reference No. INA0069 global expansion? Which regions should it The case study is meant to understand the Year of Pub. 2008 focus on? importance of electronic form of business Teaching Note Available 4 Struc.Assign. Available www.ibscdc.org

Keywords Industry Internet Search & Navigation prompt customers to buy the new product.

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Services Then the growth phase sees rapid market III – Y G E T A R T S Luxury Brands; Counterfeiting; Luxury Reference No. INA0068 expansion and increasing competition, with Retailing; Tourism and Luxury Industry; Year of Pub. 2008 the entry of new players. In these two Brand Image; L’Oreal; LVMH; Teaching Note Available phases, a lot of evolution (both in terms Competition; Critical Success factors; Struc.Assign. Available of products and markets) happens. Products Market Entry Strategies; Consumer undergo many changes with the application Behaviour; Industry Analysis Case Study; Keywords of new technologies, rising demands and Industry Dynamics; Brand Building; varying choices of consumers. This case Challenges for Luxury Goods Companies Google; Baidu.com; China’s Search Engine Market; Business Model; Industry Analysis study sees how Motorola dealt with such Case Study; Globalisation and Localisation; evolution in an emerging market. Motorola CAGE Frame Work; Alliance Strategies; was the first to enter the Chinese mobile Google vs Baidu.com (C): The Acquisitions and Partnerships; Chinese phone market in 1987. So it was blessed Battle for China’s Internet Search Google; Government Business with the First Mover Advantage for nearly Market Environment; Internet Censorship; Online 15 years. However, with the evolution of Advertising; International Business; Legal Chinese telecom industry, improvements From being an emerging economy, China Environment and Regulations in mobile networks there and entry of new is a surging one and the number of its competitors (local and foreign), Motorola Internet users is swelling. With that, the began to lose its market share. But China number of companies offering search became a crucial market for Motorola, as services there is also going up. Google, the Motorola in China (B): From its western markets dried up. preferred search engine in many countries ‘Intended’ to ‘Emergent’ beats its rival Yahoo! by a wide margin. Strategies Pedagogical Objectives Yet, in China - forecast to be the largest Internet market in the world - Google finds This case study is a sequel to Motorola in • To understand the evolution of China’s itself upstaged by a local rival, Baidu.com. China (A): Dealing with an Evolutionary mobile industry and the operating China’s cultural nuances seem to Industry Life Cycle. This case explains how challenges completely elude Google. The company Motorola tuned its strategies to emerging • To discuss and analyse strategy to find a foothold in China, is however, trends. Actually, by January 2003, its going formulation in the evolutionary phase leaving no stone unturned. It has opened was becoming tough in the Chinese market. of an emerging market an office in 2005, hiring a Chinese at the Most of its invented strategies failed. Then it realised that its strategies can no longer helm. The company is working to improve • To discuss whether First Mover neglect the market trends. Viability of these its sales force. Along with this, Google in Advantage can guarantee success in the emergent strategies can be vividly China has launched a censored Chinese long run. version of its site in 2006, which is a first discussed. for the company. This case, the third in Industry Telecommunications the series, Google vs Baidu.com, details the Pedagogical Objectives Reference No. INA0066 Year of Pub. 2008 Chinese online search landscape along with • To analyse and discuss the causes of the major players. The focus is on the Teaching Note Available Motorola’s failure in China’s mobile Struc.Assign. Available ongoing battle between Google and Baidu, phone market, in spite of having the and the reasons for their failure and success First Mover Advantage Keywords respectively. The case facilitates a discussion on the critical success factors • To analyse whether its emergent Motorola; China Handset Market; for search engines and the need for strategies are workable and sustainable. Economic reforms in China; Mobile localisation. The business dilemma of Phones; Motorola and Eastcom; Industry choosing between ethical behaviour and Industry Telecommunications Analysis Case Study; Motorola and Nokia; shareholder wealth creation is also briefly Reference No. INA0067 Centrally planned economy; Industry Life dealt with. The case finally dwells on Year of Pub. 2008 Cycle; Intended Strategies; Emergent whether Google, after making changes to Teaching Note Available Strategies; First Mover Advantage; First its approach, will be able to succeed in Struc.Assign. Available Mover Disadvantages; Chinese Guanxi; China and what should be its plan of action. Keywords Chinese Business Environment

Pedagogical Objectives Motorola; China Handset Market; Economic reforms in China; Mobile China’s Retail Industry (B): • The critical success factors for a search Phones; Motorola and Eastcom; Industry engine and whether these factors need Analysis Case Study; Motorola and Nokia; Consumer Behaviour and to be localised Centrally planned economy; Industry Life Competitive Responses Cycle; Intended Strategies; Emergent • The Chinese Internet search market and While case (A) enables an analysis of Strategies; First Mover Advantage; First China’s retail industry dynamics, case (B) what makes it attractive to Mover Disadvantages; Chinese Guanxi; multinationals provides scope for analysing Chinese Chinese Business Environment consumer behavior (with specific reference • Why Google, otherwise the leading to retailing). Using this analysis, students Internet search provider worldwide, is can decode the variety of competitor’s losing out in the Chinese market to a Motorola in China (A): Dealing responses Each one wants to their slice (a local player that has no presence with an Evolutionary Industry Life bigger one though) of the retail cake. overseas Cycle Whose strategic moves are viable? Which • The business dilemma between ethical company is better poised to tap China’s An industry’s life cycle runs through four behaviour and what may be construed as retail potential? Since economic reforms stages: introduction, growth, maturity and foolishness by exiting a lucrative in the 1980s, China’s production and decline. In the first stage, companies emerging market. productivity rapidly grew, while average 5 www.ibscdc.org consumption growth was slower. No doubt, online music stores and supermarkets. But many more are embedded into this case consumers create a huge retail potential. When the giant retailers are struggling by series that can be unearthed with meticulous But, do they have similar aspirations? So, selling all-things-to-all-people how could analysis. Retail industry is one among the what should companies assume? Do their FOPP survive by selling just CDs, DVDs, many that saw intensified competition assumptions mismatch consumer books and gift items to one consumer during the past decade, in China. aspirations? More so, as the Chinese segment? How long can the patronage in Competition is not yet even because of consumer tends to save more than spend, these dynamic times last? Now, when huge untapped potential; so a discussion how can retailers get them to do the internet is posing the biggest threat to every on Industry Life Cycle can ensue. It is for reverse? other seller, can the company sustain? If the players to strategise their moves and yes, how long? If no, does the company counter-moves, where value chain analysis Pedagogical Objectives need to change its business approach? would prove essential. Market entry strategies of Wal-Mart and Carrefour would • To understand the (ever-) changing Pedagogical Objectives make up for an interesting analysis. consumer behaviour in China and debate Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis its effects on the way retail companies • To understand unique business dynamics Pedagogical Objectives respond of music industry and also music retailing • To give a brief overview of retail • To juxtapose and analyse the obvious • To analyse the critical success factors in industry’s formats and the operational paradoxes in these responses (which can the music retail industry dynamics involved help better in converting adversities into advantages?) • To understand and relate consumer • To understand the potential and behavior in music retail industry to the attractiveness of China’s retail industry Industry Retail target market selection. Reference No. INA0065 • To analyse the challenges of operating Industry Entertainment Year of Pub. 2007 in China’s retail industry because of its Reference No. INA0064 Teaching Note Available value chain Year of Pub. 2007 Struc.Assign. Available Teaching Note Available • To debate on the critical success factors Keywords Struc.Assign. Available in China’s retail industry Wal-Mart; Carrefour; Chinese Consumer Keywords • To analyse the market entry strategies Behaviour; Economic reforms in China; of Wal-Mart and Carrefour and debate Centrally planned economy; Investment- Music Retailing; Customer Segmentation; on their effectiveness. led growth; Industry Analysis Case Study; Customer Targeting; Niche Marketing Consumption-led growth; Organised retail Fopp; Industry Analysis Case Study; Fifty Industry Retail industry; China’s traditional retail industry; Quid Bloke; Music Labels; Music Recorders; Reference No. INA0063 Re-balancing of the economic growth; Universal Music Group; Sony BMG Music Year of Pub. 2007 Saving patterns in China; Consumption Entertainment; HMV; Customer Teaching Note Available patterns in China Community; Music Industry; Positioning; Struc.Assign. Available Differentiation Keywords Wal-Mart; Carrefour; Economic reforms FOPP, UK’s Music Retailer (A): China’s Retail Industry (A): An in China; Retailing in China; Centralised Profiting from Positioning? Assessment of Potential and supply chain system; Logistics and Supply Chain Management; Centrally planned With the current trend of consumers Challenges economy; State-owned department stores; exploring music online and supermarkets Dalian Dashang; China’s traditional retail offering CDs at competitive prices, stand- The first of this three-part case series helps industry; Metro AG; Ito Yokado; Industry alone music retailers face an uphill task to richly and deeply analyse a happening Analysis Case Study; Chinese Guanxi; maintain real differentiation in the industry in China - retailing. Its competitive Retail industry dynamics industry. The Fopp case series (A&B) track dynamics is the fine thread that runs the positioning, the challenges and the through all the three cases. Now that China growth dilemmas of Fopp - a music retailer is on every global (MNC/TNC) company’s with 105 stores spread across UK and growth agenda, the class can debate Global Steel Industry: The Scotland. The company had been selling industry-specific dynamics as well as Country Factor CDs, DVDs, books, and peripherals for about economy-wide factors. So bigger questions 25 years. Started in early 1980s, the retail pop out. What is the “China Factor”? The reconstruction of infrastructure across chain has grown from a small corner shop What does this mean to the companies the world after the Second World War to UK’s third largest music retailer. What operating or willing to operate in China? prompted steel industry rise sharply. differentiates Fopp from its rivals is its What should be their homework before Demand exceeded supply resulting high positioning to reach Fifty Quid Bloke: the entering China? What should be their profitability which translated into capacity marketing name for people aged between strategic moves, while they are in China - augmentation. But since 1970’s the demand 25 and 45, who are cash-rich and time- strategy or tactics? With Chinese economy plummeted down, resulting over capacity poor. A typical Fifty Quid Bloke is seen on integrated into the global economy (since and high cyclicality in the Industry. The a Friday afternoon buying piles of CDs, all 1978 and more so from 2001 when it industry regained from 2002 due to China’s worth £50, thereby giving the company formally joined the WTO), its economic booming economy, higher economic more revenue per visitor. The company is growth rate has hovered around 10%–12%. developments in other BRIC (Brazil, said to have developed strong patronage And that’s very good news for all the major , India) countries, emergence of CEE with these music followers. Case A describes global corporations because there is huge (Central and Easter Europe) countries as the dynamics of the music industry in demand there. However, this good news rapidly developing economies and positive general and UK’s music retail industry in has a flip-side too: China’s business terrain economic developments in Triad (Europe, particular, and will trigger a discussion on is bumpy for a variety of reasons. What USA and Japan) etc. Analysts were Fopp’s positioning strategy against the are those reasons? Hard infrastructure and skeptical about the long term sustainability soft infrastructure are the prime suspects. of the industry. The concern is vital for 6 www.ibscdc.org

the senior managers and the policy makers • To understand the US real estate market • To debate the ethical participation by

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S in the steel industry to understand the developed and developing countries on III – Y G E T A R T S dynamics of this industry and to shape their • To analyse the volatilities in the US real humanitarians ground in carbon trading. strategies accordingly. estate market Industry Carbon market • To debate whether the US real estate Reference No. INA0060A market would recover after the downturn Pedagogical Objectives Year of Pub. 2007 started in 2006. • An outlook of global steel industry Teaching Note Not Available Industry Real Estate Struc.Assign. Not Available • Factors affecting the demand and supply Reference No. INA0061K Keywords of the global steel industry Year of Pub. 2006 • The impact of China, BRIC, TRIAD and Teaching Note Not Available Carbon dioxide; Greenhouse Gases; Industry CEE economies on the global steel Struc.Assign. Not Available Analysis Case Study; Kyoto Protocol; industry Carbon trading; Emission Trading; Global Keywords Warming; Climate Change; Annexure I • Opportunities and challenges for the US real estate; housing bubble; countries; Annexure II countries; Assigned players in the global steel industry. Industry Analysis Case Study; Economic Amount Units; Emission Reduction Units; Industry Steel bubbles; Stock bubble; P/E (price-to- Chicago Climate Exchange(CCX); EU ETS; Reference No. INA0062K earnings) ratios for houses; National UK ETS; New south Wales market (NSW); Year of Pub. 2007 Association of Realtors; Speculation; House Joint Implementation; Clean Development Teaching Note Available price index; Baby boomers; Downtrend in mechanism (CDM) Struc.Assign. Available housing; Foreclosure; US mortgage rates; Stock vs house investment; Collapse in Keywords housing; Housing wealth Chinese Automakers' CEE; TRIAD; Steel Production; BRIC; International Drive Value Chain; Arcelor-Mittal; Baosteel; Fragmentation; Industry Analysis Case Kyoto Protocol and its effects on Following the footsteps of their Asian predecessors Japanese and South Korean Study; Downstream Production; the carbon trading Investment Trap; Global Steel Industry; automakers all major Chinese automakers Regional Champions; Niche Specialists; Carbon Market, the new concept of trading like Geely, Cherry and other leading auto Global Player; Steel Cycle Carbon dioxide (CO2) and other companies aspired to become global Greenhouse gas was much similar to the players. With the advantages of low cost other trading markets of the world. This production and government support, concept came into force with the Chinese automakers primarily targeted US US Housing Market: Waiting for implementation of the international treaty and European market to sell their cars and Recovery called Kyoto Protocol, which envisioned consequently become powerhouse in global automotive industry. After experiencing a boom for a reduction of Greenhouse Gas emission in considerably long period, the US Real Estate the world. The treaty was mainly applicable Nevertheless, Chinese automakers had started declining from early 2006. The to the industrialized and developed many obstacles to overcome before selling number of new housing projects dropped countries of the world. cars in international markets. The image from an annual rate of 1.535 million to The first implementation period was 2007- of poor quality, weak design and lack of 1.486 million. Meanwhile, the mortgage 2012 which enforced many countries and distribution networks hindered the progress. loans had reduced from a peak of 6.8% on industries around the world to maintain their Besides, the world automotive market was average for a 30-year fixed loan in July to level of emissions. This also gave boost to saturating and analysts opined that the 6.24% in October 2006. The Federal rate carbon market around the world. This growth prospects were better in China remained unchanged at 5.25% from the mechanism initiated major carbon itself. month of August. There were speculations exchange and market around the world. that the Federal Reserve could cut rates in Pedagogical Objectives the coming months if inflation remained The case highlights the major carbon under control and the economy flagged. trading markets around the world and the • To discuss the global and Chinese This further slashed down the housing countries which would implement this automotive industry scenario finance loans. All these triggered a recovery treaty. The treaty was rejected by leading industrialized countries like US, Canada and • To discuss international market entry but the market so far had not shown any barriers and strategies to overcome them kind of bounce-back activities. Moreover, Australia. It also faces some challenges, as the once-booming U.S. housing market debate and criticism by environmental • To discuss challenges faced by Chinese came down in 2005-2006, economists activist. Amidst the challenges and automobile manufacturers in their debated whether this was a "soft" or "hard" regulatory hindrances, the treaty promised to go global. landing and the impact this slowing would to provide an initiative to prevent further have on consumers' confidence and on the global warming. The case ends on the Industry Automobile overall economy. This case captures both debate whether Kyoto Protocol will Reference No. INA0059A the up and down trends of the US housing achieve its vision by 2012. Year of Pub. 2007 sector. The case further explores the factors Teaching Note Not Available affecting the housing sector and whether Pedagogical Objectives Struc.Assign. Not Available there will be any recovery in the US housing Keywords market. • To understand the concept of carbon trading and carbon markets Chinese Automakers; China Cars; Industry Pedagogical Objectives • To understand the international treaty , Analysis Case Study; Automobile Industry; Kyoto protocol and its mission and Globalisation; International Markets; • To discuss how the economic factors are vision Expansion Strategies; Shanghai related with the real estate market Automotive (SAIC); First Automobile 7 www.ibscdc.org Works (FAW); Dongfeng Motor outsourcing industry; BPO sector; contrast, the Chinese aviation market had Corporation; Geely Automobile; Chery Offshoring become the second-largest in the world after Automobile; Challenges of globalisation; the US, carrying 138 million passengers in Exports; Low cost production 2005. Apart from that, Chinese Organic Food Market in the US: ordered a large number of new aircrafts in 2005. Analysts felt that government The Wal-Mart Effect Emerging Destinations in interference in matters related operations In the wake of a rapidly growing market for was the main reason behind airlines’ poor Outsourcing: The Indian performance. Though government was dilemma organic products in the US, in March 2006, Wal-Mart, the world’s biggest retail chain, reforming the industry to make the As of 2006, India continued to remain an announced that it would include more Chinese airlines more competitive, experts IT outsourcing powerhouse, with $17.7 organic products in its grocery section. The doubted Air China’s ability to remain billion revenue in software and IT services management of Wal-Mart hoped to attract profitable in the long run. The case discusses Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis exports, compared with $3.6 billion for more and more customers to buy its organic in detail the evolution of China’s aviation China and $1 billion for Russia, according items thereby promoting the consumption industry to its present form as well as to the trade organizations in each country. of organic products. While some analysts government reforms. It also discusses Air Also, India's outsourcing industry was still believed that it would increase China and its operations. The concluding growing at a faster pace than that of Russia's environmental awareness among the section attempts to highlight the and other outsourcing centers. But as labor consumers and prompt the farmers and challenges that the Chinese aviation costs and turnover rates began rising in supplier to adopt green practices, another industry (particularly Air China) faces. It India, companies started looking out for set of analysts felt that Wal-Mart could use also tries to raise a question regarding the cheaper labor. As a result, many alternative its market strength to exert pressure on structure of the industry in future. outsourcing destinations emerged. farmers and suppliers to its own advantage. Countries speaking European languages like Pedagogical Objectives The case starts with a short history of Hungary, Czech Republic, Russia, Poland, organic farming in the US and moves on • To understand the evolution of China’s Bulgaria and Romania were benefiting from to Wal-Mart discussing it business briefly. aviation industry the trend of 'nearshoring'. Moving IT It then highlights Wal-Mart’s business operations into developing countries can practices over the years and finally tries • To understand government reforms that pose big risks, such as language and cultural to raise a question regarding what could be shape the structure of the industry differences, geopolitical instability, and the the possible repercussions of Wal-Mart’s risk of stolen intellectual property. India's • To discuss competitive dynamics of entry into the organics. outsourcing players needed to overcome Chinese aviation industry major challenges to continue their growth Pedagogical Objectives • To analyse the competitive advantages and sustain their competitive advantage of Air China over other emerging outsourcing • To get an understanding of organic • To analyse Air China’s ability to sustain destinations. India needed to improve its farming infrastructure, maintain competitive labor profitability in the long run. costs and tackle the turnover rates of labor • To analyse the impact of Wal-Mart’s Industry Aviation attrition. It had to concentrate more on entry on the organic food market of the Reference No. INA0056K new areas in outsourcing such as E- US Year of Pub. 2006 governance, Retail Services Outsourcing, • To debate whether Wal-Mart’s entry Teaching Note Not Available Pharmaceutical Research, Financial would drive suppliers to adopt organic Struc.Assign. Not Available Services and Healthcare. farming or exert pressure on them for Keywords The case outlines the changing global lower prices. scenario of the outsourcing industry, Air China; Chinese Aviation Industry; Industry Organic Food emerging destinations and challenges faced CAAC; CANC;Shanghai Airlines. Reference No. INA0057K by Indian outsourcing companies towards Year of Pub. 2006 keeping competitive advantage and Teaching Note Not Available retaining business. Struc.Assign. Not Available China’s Auto Industry: The Emerging Trends Pedagogical Objectives Keywords With China’s entry in the WTO in • To introduce the students to the Wal-Mart; Organic food; Retailing; December 2001, the domestic automobile Outsourcing industry Organic farming; National Organic Programme (NOP); Supercentre; Sam’s industry witnessed a plethora of changes. • To highlight the various new destinations Club; Neighbourhood market; Grocery Overall tariff and non-tariff barriers were coming up in outsourcing retailing; Industry Analysis Case Study; US reduced and the sector was opened up for farmers; Organic seal; Supermarket; FDIs. China rapidly emerged as the third- • Factors that constitute a successful largest automobile market behind the US outsourcing destination. Discount store; United Food & Commercial Workers and Japan, with about 3.1 million new cars Industry Business Process Outsourcing being sold in 2005. The Chinese auto Reference No. INA0058C industry was evolving gradually into a mature market with consumers becoming Year of Pub. 2007 Air China and the Chinese Teaching Note Available more aware of the differences between Struc.Assign. Not Available Aviation Industry brands. Keywords By 2005, Air China was the only profitable The case while providing a broad overview carrier among the three major airlines in of the Chinese automobile industry, Outsourcing; Nearshoring; Emerging China. The other two, China Southern and discusses the emerging trends in the destinations; Industry Analysis Case Study; China Eastern, were making losses. The industry as well as in the consumer Indian outsourcing industry; Chinese low cost carriers also were struggling. By behaviour. 8 www.ibscdc.org

Pedagogical Objectives by Mittal Steel, potential • To understand how to make

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S synergies and problems associated with consolidation successful one, problems III – Y G E T A R T S • To understand the dynamics of the the acquisition associated with successful making of a Chinese automobile industry in the pre- consolidation and post-WTO era • To discuss how acquisition as a growth strategy help companies to consolidate • Acquisition as a key growth driver in • To understand the critical factors in fragmented steel industry global steel industry. responsible for the emergence of Chinese automobiles as the leading • To discuss the concept of ‘forward Industry Steel brands, both in the domestic and integration’ and ‘backward integration’ Reference No. INA0053K international market in steel industry Year of Pub. 2006 Teaching Note Not Available • To discuss how alliance with raw material • To discuss the global impact of the Struc.Assig. Not Available increasing export capability of the suppliers and ownership of mines help Chinese automobile manufacturers steel companies to have better control Keywords over the value chain of the industry • To understand the changing dynamics Mittal steel; consolidation; value chain; of consumer psychographics in China. • To discuss value chain of the steel global steel industry. industry and steel making process. Industry Auto Reference No. INA0055K Industry Steel Year of Pub. 2006 Reference No. INA0054K Auto Component Industry: A Teaching Note Not Available Year of Pub. 2006 New Perspective Struc.Assign. Not Available Teaching Note Not Available Struc.Assig. Not Available According to a report by McKinsey and Keywords ACMA in 2004 Indian auto component industry was worth around $5 billion Keywords China; Auto Industry; Cherry; First auto (Rs.25,000 crore) and was growing at the works; GM; Toyota; Volkswagen. Mittal Steel; CVRD; Riotinto; rate of 18% yearly. But industry experts Kryvorizhstal; Backward Integration. felt that in auto component exports, India was far behind other developing countries. Mittal's New Move: Capacity Indian companies did not have the scale of Expansion or Vertical Integration production to beat global companies. The L.N. Mittal: Consolidating Indian auto component industry was highly In October 2005, Mittal Steel, the world’s Presence Globally fragmented as most of the auto makers largest steel company, made a bid for belonged to Tier IV and Tier III category. Lakshmi Niwas Mittal (popularly known KryvorizhStal Steel, the largest steel High fragmentation, low investments in as LNM), also called the “Carnegie of company of Ukraine. In the era, when R&D, low capability in high-end designing, Steel”, built his steel empire by aggressively consolidation and acquisition were manufacturing and development hindered acquiring poorly performing steel plants common practices in the industry, Mittal Indian auto parts maker to move up the at low prices in 14 countries across the Steel’s new move would help it to value chain. Global OEMs and Tier 1 globe, like Trinidad and Tobago, consolidate its presence more aggressively. suppliers were relocating their plants and , Romania, Germany, Poland, The acquisition was a key acquisition for set up R&D centers from US/Europe to Canada and America, and turning them into Mittal Steel in Central Europe, as it India due to its low cost and skilled money-making ventures. He is considered provided the company with a large size manpower. But the majority of Indian auto to be industry visionary, spotting trends low cost platform in a core and fast growing component firms belong to the lower tier much before his contemporaries and market. It also helped Mittal Steel to of Industry value chain. Tier I investing accordingly. In October 2004, exercise control on the large iron ore manufacturers enjoyed advantages over Mittal acquired International Steel Group reserves of the Ukrainian Steel major, Tier II and Tier III suppliers in getting of the US for $4.5 billion and became the which it planned to use in its expansion orders with the help of their designing, largest steel producer in the world, programme. In the steel industry, due to manufacturing and development skills. surpassing the world leader, Arcelor. The raw material shortage, the ownership of Since Tier I suppliers got the order directly case study offers scope for discussion about mines and long-term alliances with the raw from auto makers it helped them to the acquisition strategy, adopted by Mittal material suppliers became a critical success recover the investments quickly and and how it helped him to become the factor for any company. The case study enjoyed better profit margins. Indian market leader. It also provides information offers a scope for discussing the rationale manufacturers, mostly belong to Tier III regarding the current and future levels of of the acquisition in the recent global and Tier IV category, lacked in high end consolidation in the global steel industries, trends, the value chain of the industry and designing, manufacturing and development consolidation as a major strategy in the how Mittal Steel plans to leverage it. skills. The case deals about how Indian auto steel industry, steel industry value chain Students can also discuss how Mittal Steel components industry which is in the un- and the risks that companies like Mittal can leverage the acquisition by organised sector, could exploit its Steel, would encounter. strengthening its position in Central and strengths, nullify its weaknesses and became Eastern Europe and areas close to China. the preferred sourcing partner of global Pedagogical Objectives OEMs ,by moving up the value chain of Pedagogical Objectives • To understand the trends, dynamics of the industry. • To discuss the trends, patterns of global global steel industry Pedagogical Objectives steel industry and consolidation as a • To understand how consolidation act as major strategy in fragmented steel growth strategy in global steel industry • To discuss in details about global and industry globally Indian auto component industry, trends • To understand how consolidation and patterns of the industry • To discuss acquisition of KryvorizhStal transform the globally fragmented steel Steel, the largest steel company of industry into a consolidated one • To discuss the value chain of the auto component industry 9 www.ibscdc.org • To discuss how small players from an Teaching Note Available the likely future progress of the two industry can move up the value chain Struc.Assign. Available companies. and became the key growth driver of the industry Keywords Industry Media Reference No. INA0050C Manufacturing industry; Avtovaz; Russian • To discuss how joint venture, technical Year of Pub. 2006 economy; Russian Political changes; alliance, designing, development and Teaching Note Available Automobile industry; Volkswagen; Russian management skills help small companies Struc.Assign. Not Available to move up the value chain automobiles; Russian Consumer market; Car industry; Economic crisis; Keywords • To understand the structure of the Liberlisation; Globalisation; Automobile industry. manufacturing VIACOM; CBS Corporation; Split; Spin- off; Division; Stock price; Investors; Debt- Industry Auto Component Industry burden; Strategy; Sumner Redstone; MTV; Reference No. INA0052K Networks; Paramount; Digital; Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis Year of Pub. 2006 The Viacom Split: Is it the Right Distribution; Consolidation; Growth. Teaching Note Not Available Solution? Struc.Assig. Not Available Viacom, the media , has had Keywords a history of splitting into two units and Will the Three Pointed Star remerging as one entity. In 1999 they Regain its Lost Sheen OEM; Delphi Corp; Reverse Engineering; became one, but in 2005, the Viacom Board Tier 1; Backward Integration. decided to again divide the company. The Mercedes was dodged by quality problems split was structured in such a way that the that eventually dented the brand’s premium existing company (Viacom) changed its image and eroded its profits. The case Automobile Industry in Russia: name to CBS Corporation, while the new profiles Mercedes’ glorious past and details Viacom was a freshly founded spin-off the reasons that led to the brand’s lost The Growth Potential and the sheen. It further outlines the new make Competitive Pressures company. The new CBS Corporation was actually the same company (Viacom) that over initiatives at Mercedes under the In 1991, the Soviet Union dissolved into was founded in 1986. The 1986 Viacom, leadership of a new chief, Dieter Zetsche different countries and the major country in turn, was the successor to a previous who had a proven turnaround track record. to emerge was Russia. As Russia started to company also known as Viacom and The case provides scope for discussion on liberalise, its economic policies changed founded in 1971. strategies for retaining the premium image and it gradually moved towards a market- of a brand. driven economy. Incomes of Russian Industry watchers wondered about the consumers are rising and they are advantages of the split. Founder Sumner Pedagogical Objectives demanding more choices. Amid this Redstone had justified it stating • Helps the students to understand the makeover, the Russian automobile emphatically that the days of the big concept of Branding industry, which of late was dominated by conglomerates were over. The future would the state-owned players, is now witnessing be interesting to see. Would the two • Traces the turnaround strategies of a change. Automobile manufacturers companies evolve and grow into individual Mercedes. around the globe are keen to set up behemoths? Or would they again come manufacturing facilities in Russia-to serve together and become a single entity? Industry Automobile Reference No. INA0049C the Russian market, and also export to The case traces the history of Viacom from Year of Pub. 2006 different countries. Global players such as 1971 when the television syndication Toyota, Nissan, Renault, and Volkswagen Teaching Note Not Available division of CBS Films was renamed Struc.Assign. Not Available plan to set up massive manufacturing VIACOM, from Video and Audio facilities in Russia. So, as competition Communications. It highlights the Keywords increases, Russian carmakers face numerous acquisitions made over the years to expand challenges to capture the market. State- operations and increase revenues, the entry Mercedes-Benz; DaimlerChrysler; Dieter owned companies like AvtoVaz have to of Sumner Redstone in 1986 when National Zetsche; Jurgen Schrempp; Mitsubishi; gear up to withstand competition from Amusements bought over and Eckhard Cordes; CORE; J.D. Power and foreign carmakers. reincorporated Viacom, the merger with Associates; Revamp. CBS Corporation in 1999, and the Pedagogical Objectives separation into two companies again in January, 2006. US Automotive Supply Industry: • To discuss the evolution of the automobile industry - with special focus The case also discusses investors’ The Chinese Threat on cars apprehensions, the observations of The US automotive supply industry, more analysts and industry watchers, the views • To discuss the political and economic than a century-old, produced vital of the Redstone family, the process of trends since the formation of the components for the auto industry and consolidation and growth, and the future Russian federation employed nearly three times as many of the two companies. people as the auto industry itself. It was • To understand the Russian automobile the backbone of the US auto sector and industry and its growth potential Pedagogical Objectives possessed a much larger machine-tool capacity. Over the years, the US auto • To discuss the challenges and • To study and analyse why the Viacom supply industry went through tough times. competitive pressures in the Russian car group merged and split over the years A number of reasons were attributed to this. industry. especially from 1970 onwards The industry was forced to cut prices by Industry Automobile • To enumerate and understand the pros the US auto makers who were their main Reference No. INA0051 and cons of division and re-merger, and clients and being bound by contracts, the Year of Pub. 2006 auto suppliers were forced to comply. There 10 www.ibscdc.org

was also a rise in raw materials, especially engine market in China was dominated by Keywords

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S steel. The main players were also charged a number of local and international players. III – Y G E T A R T S for accounting manipulations and they had US Automobile Industry; General Motors to spend considerable resources to rectify The case provides scope for discussion on (GM); Ford; DaimlerChrysler; Toyota; the frauds. All this quickened the whether Alibaba would emerge a winner in Hyundai; Japanese automobiles/cars; bankruptcy of a number of leading auto China’s search engine market. It also Korean automobiles/cars; UAW; legacy suppliers in the US. provides scope to discuss if it could sustain costs; The Big Three Automobile industry; its success or if its growth was only due to Chinese cars; labour costs; bankruptcy. In this background, there was a steady the inherent advantages of an emerging increase in the quantum of Chinese imports market. and they posed a threat to the US auto Retailing in China: The Foreign industry. The Chinese had a low wage Pedagogical Objectives advantage but did not possess the Factor • To discuss strategies of a B2B company technological edge. Although industry China had become the economic power- experts said that the Chinese threat was • To discuss whether Alibaba would emerge house of the 21st century. The retail trade exaggerated, if the US auto suppliers did a winner in China’s search engine market. was another high growth area which saw not gear-up to meet competition, it was the entry of many foreign consumer goods feared that they would face almost the Industry B2B manufacturers into the Chinese market. same ills that the US auto sector was facing Reference No. INA0047C China’s retail market growth was first in the face of competition from Japanese Year of Pub. 2005 among the 12 leading countries in Asia. In and Korean auto makers. Teaching Note Not Available 1978, the Chinese Government initiated Struc.Assign. Not Available The case allows for discussion on the future the process of liberalisation which soon of the US auto supply industry in the face Keywords opened the door to globalisation in the of competition from China. It also allows country. The modern retail trade did not for discussion on the strategies that the Alibaba; B2B; Chinese Internet market; emerge until the middle of the 1990s when Chinese should adopt to become a leading Search market; Yahoo! China; ecommerce; China made the transition from a planned Baidu; Google; Jack Ma; value addition; force in the global auto parts market. economic system to a market driven one. subscription; revenue model; Since 2002, after China’s entry into the entrepreneurship. World Trade Organisation, many Pedagogical Objectives governmental restrictions on the retail • To discuss the future of the US auto trade were diluted or removed giving supply industry in the face of US AUTO INDUSTRY: HEADING multinational retailers unprecedented freedom to establish wholly owned foreign competition from China TOWARDS A DEAD END? enterprises (WOFEs) rather than operate • To discuss strategies that the Chinese The Big Three automakers General through joint ventures. By 2006, at least should adopt to become a leading force Motors, Ford and Chrysler 35 of the global top 50 retailers were in the global auto parts market. (DaimlerChrysler AG) of the United States operating in China. In 2005, total retail sales in China touched the US$755 billion Industry Auto Supply Industry (US) dominated the US domestic auto mark. The high population density in the Reference No. INA0048C market accounting for more than 70% of country had lured global retailers to set up Year of Pub. 2006 auto sales in 1998. However their market shop and compete with a growing band of Teaching Note Available share took a nosedive in 2004, when they local operators. These retailers catered to Struc.Assign. Not Available accounted for only 58.6% of sales with the Japanese automakers overtaking an expanding middle-class of consumers Keywords them.Declining market share and high expected to grow from 42 million in 2005 inventories forced the Big Three to reduce to 200 million by 2015. Over 1,000 new Auto parts supply industry; Auto parts assemblies in by 9% during retailers had received approval, of which manufacturers; OEM suppliers; Big Three; the first half of 2005. They were also more than half were foreign investors. By Price cuts; Raw material costs; Accounting affected by an unfavorable operating 2006, there were over 1,000 foreign manipulations; Hedge fund operators; environment caused by the continuous retailers in China compared to just 314 Chinese auto suppliers; Delphi; low-cost price war and some serious cost two years earlier. The case looks at the of labour; replacement market; R&D; competitive issues like increasing legacy retail background in China and discusses: Transplant automakers; bankruptcy. costs and frequent disputes with the UAW. (1) the performance of retailers; (2) pricing and consumer behaviour; (3) the need for Under these circumstances, it was top be mergers and acquisitions which helped Alibaba.com – Will it win China’s seen if the US auto industry was heading retailers expand their networks and search Engine Market? towards a dead end, or if it had a chance of increase bargaining power with suppliers; a turnaround? (4) the importance of proactive strategies Established in 1999, Alibaba.com had to penetrate virgin markets especially in become the biggest online business-to- Pedagogical Objectives the rural areas; and (5) the significance of business (B2B) player in China. Its foray value-for-money retailing. into other ecommerce activities like online • Issues faced by the US Auto Industry auctions and online payments were also • Challenges faced by the industry in Pedagogical Objectives highly successful although they were in entering new markets and new product competition with world leaders like eBay. categories. • To understand the fragmented retail trade In October 2005, Alibaba and Yahoo! China in China and the effect of the entry of signed a deal under which Alibaba would Industry Auto Industry international players into the Chinese market the Yahoo! China brand in China. Reference No. INA0046C market By this deal, Alibaba sought to establish Year of Pub. 2006 • Help students appreciate the buying itself in the search engine market and Teaching Note Not Available power of a growing middle-class of further consolidate its position in the Struc.Assign. Not Available consumers on the Chinese economy and ecommerce scene in China. The search the need for local retailers to analyse 11 www.ibscdc.org and learn from the strategies of the The Maturity in the Indian Wine commanded over 80% of the market share. foreign entrants Industry The case discusses the developments and strategies of the three major players till • Study the need for focused marketing Established in the mid-1980s, the Indian 2005. It also discusses the future scenario efforts by foreign companies to wine industry with a growth rate of 30% of these players in light of several penetrate the rural sector. has been showing immense potential for perspectives. Industry Retail growth. With some Indian brands winning Available at www.ibscdc.orgwww.ecch.com awards at international wine competitions, Pedagogical Objectives Reference No. INA0045C 206-058-1 Indian wines were increasingly being Year of Pub. 2006 appreciated in the global market. However, • The case discusses the developments and Teaching Note Available despite the encouraging growth rate and strategies of the three major players, Struc.Assign. Not Available the assiduous efforts being made by the Maruti Udyog, Hyundai and local players and the government, can the till 2005 Keywords

Industry Analysis Industry Analysis industry live up to the promise of Industry Analysis Industry Analysis Industry Analysis • It also discusses the future scenario of becoming a global entity? China; Retail trade; Consumer; World these players under several perspectives. Trade Organization (WTO); Supermarket The case traces the growth of the Indian Industry Automobiles chains; Value-for-money; Globalisation; wine industry, the various challenges faced Reference No. INA0042P Wholly owned foreign enterprise (WOFE); by the nascent industry, the big players in Year of Pub. 2005 Mergers and acquisitions (M&A); Retail the market and the efforts made by them Teaching Note Not Available sales; Households; Chain stores; Brand; to increase sales in both the domestic and Struc.Assig. Not Available Economic growth. global market. keywords Pedagogical Objectives Car segments; Pricing; Positioning; Market Boeing and Airbus: The Asian • The case outlines the growth of the share; Vendor rationalisation; Cost; Challenge Indian wine industry Competition; Consolidation; Fragmentation; Auto policy; Industry Asia had always been a large, potential • The case discusses the challenges faced structure; Product portfolio; Strategy; Scale market for the two giants in the aviation by the Indian wine industry industry, the American Boeing of operations. Corporation and the European Airbus • It also discusses the efforts made by them Industries. The opening out of the third to increase sales. world to foreign investment with the Industry Food and Beverages Industry Internationalization of advent of globalisation saw competition Reference No. INA0043P Management Education in China intensify between Boeing and Airbus to lead Year of Pub. 2006 the Asian market. Dominating this market The emergence of China’s new managerial Teaching Note Not Available was imperative for both the major players class had positive and negative implications Struc.Assig. Not Available in order to achieve the top rank in the for US companies. On one side, China’s aviation sector. In their bid to become the keywords massive market of 1.3 billion people leading aircraft manufacturer in the world, seemed lucrative enough to be penetrated. both companies had introduced new Viticulture; potential for growth; It was presumed that the graduates of the products on a global scale, Airbus the A380 international wine markets; exports; nation’s new MBA programmes would ‘Double-decker’ and Boeing the 787 imports; ‘Old World’ world wine producing supply a steady stream of local talent with ‘Dreamliner’. countries; ‘New world’ world wine better in-depth knowledge of China, producing countries; major wine growing compared to their Western managers. On The case traces the background of Boeing regions in India; other players; big players; the other side, local companies empowered and Airbus, some of the models flown and marketing; promotional strategies; major with western management ideas could put discusses the scope for penetration and hurdles; future prospects. forward tougher deterrents for the consolidation in the Asia-Pacific region multinational companies. Chinese with special reference to the markets in companies could be in possession of the China, Japan, India and Singapore. Indian Passenger Car Industry – management know-how needed to go head Heading Where? to head with global giants. The concept of Pedagogical Objective efficiency, productivity, profitability, and The Indian passenger car industry has growth held vast potential to flare up • The need to cover and service emerging shown unprecedented growth after the China’s already blistering economy, raise markets in order to attain the number declaration of the new automobile policy living standards, and transform the nation one rank in the aviation industry. by the Indian government in 1993. The from a low-cost manufacturing center to a Industry Aircraft Industry industry has attracted most major global make-or-break battleground for the global Reference No. INA0044C players to India and as a result the market economy. has become fiercely competitive. There Year of Pub. 2006 So the Chinese B-school expansion had its are about forty models with more than one- Teaching Note Not Available positives and negatives for the US and fifty variants of vehicles from thirteen Struc.Assign. Not Available Europe. Had the west thought of this? Were manufacturers. The passenger car market they too fast in creating Chinese Keywords is also undergoing structural changes on competitors? The concept of MBA in US the demand and supply side. Car Boeing; Airbus Industries; 787 Dreamliner; was almost 100 years old so, they were manufacturers are gearing up for capacity A380; Market leadership; Asia-Pacific; much more experienced and competent in expansion, building a strong vendor base Airlines; ; Management strategy; MBA education. But, in 15 years, China and revamping supply chains to face the Singapore Airlines; Air China; Japan had progressed in leaps n bounds as far as future. In 2004-05, three of the thirteen Airlines; Business rivalry; Marketing; management education was concerned. In manufacturers namely, Maruti Udyog, Strategies. the years to come, it would be interesting Hyundai and Tata Motors have 12 www.ibscdc.org

to observe whether China would be keywords years. This deal adds one more controversy

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S successful in creating world-class MBA to a project already marred by numerous III – Y G E T A R T S programmes to challenge the strong holds Film Industry; Indian Film; Bollywood; controversies over vital issues of the Kelloggs, Whartons, and Harvards Industry status; film insurance; film finance; corporatisation; Entertainment of the world. It seemed a long way to go, Pedagogical Objective but it also seemed important for the top- tax; Piracy; Film Exhibition; Film ranked US. B-schools to take a note of the distribution; multiplexes. • To understand the issues relating to new Chinese scenario. public-private partnerships in infrastructure projects.

Pedagogical Objective Independence Air: Industry Infrastructure Transformation from Regional • To understand the implications of Reference No. INA0038B Carrier to a Low Cost Carrier emergence of Chinese management Year of Pub. 2005 Teaching Note Not Available schools on US companies. For 14 years, Independence Air had Struc.Assig. Not Available operated as a regional carrier, under the Industry Education name of Atlantic Coast Airlines (ACA). keywords Reference No. INA0041B However, in June 2004, ACA was re- Year of Pub. 2006 launched as a Low-Cost Carrier (LCC), Infrastructure; BOT(Build/Own/Transfer); Teaching Note Available “Independence Air” under its CEO and Highway; Expressway; Contract; Public Struc.Assig. Not Available chairman Kerry Skeen (Skeen). The case Private Partnership (PPP); Traffic; Road; keywords discusses the steps taken by the Finance; Tolls; MSRDC. management to transform the regional Chinese B-Schools; Chinese MBA; US- carrier to a LCC focusing on the China educational tie-ups; Symbiotic operational, marketing and branding Audi’s Intended Acceleration relationship; CEIBS; Tsinghua University; aspects. The case also focuses on the Executive MBA (EMBA); International competitive landscape in the US airline In late 1986, ‘Audi AG’ was accused by a MBA (IMBA); Management Education. industry. popular television show for a flaw in the Audi 5000 sedan that caused the vehicle to accelerate instead of braking, thereby Pedagogical Objectives Corporatisation of the Indian Film causing fatal accidents. The allegation was Industry • The challenges that the airline might followed by a sharp decline in the sales of face transforming from a regional to a Audi cars in America and the company was The case attempts to explore the efforts low cost carrier nearly wiped out from the market. of the industry and the government to Although subsequent investigations proved • The feasibility of the model being used corporatise the Indian film industry. The that it was drivers’ error that caused the by Independence Air of using both Indian film industry in 2005 was the largest accidents rather than vehicular smaller Regional Jets and larger Airbus producer of films in the world, but its global malfunction, the damage had been inflicted to operate a low cost airline share of revenues accounted to just 1%. It on the company. Faced with the daunting was granted ‘industry’ status in 2000 and • The strategy being employed by the task of rebuilding the company’s image and since then corporatisation had begun in airline to stimulate traffic in the regional re-capture lost market shares, Audi took a the form of banks lending against film and major cities number of steps that revived its sales. By projects, film insurance, and emergence of the end of 2004, Audi re-emerged as a multiplexes. The industry was no doubt set • The competitive challenges it might strong player in the US luxury car market. for growth, but was facing hurdles in the face from the low-cost and legacy form of high entertainment tax, financing, carriers. Pedagogical Objective piracy, poor distribution and lack of Industry Airlines training schools. The government had • To examine the steps taken by the Reference No. INA0039B company to revive its brand image. initiated efforts to curb piracy, encourage Year of Pub. 2004 co-production treaties with other countries Teaching Note Not Available Industry Automobile manufacturing and reduce entertainment tax. In spite of Struc.Assig. Not Available Reference No. INA0037B all this, industry insiders shrugged off Year of Pub. 2005 corporatisation as a fad and suggested that keywords Teaching Note Not Available the industry will continue to work the way Independence Air; Atlantic Coast Airlines; Struc.Assig. Not Available it used to be. Kerry Skeen; Hub; ; Low- keywords Cost Carrier; United Airlines; US Airways; Pedagogical Objectives Low-Cost Business Model; ICLUBS; IJETS; Audi AG; Audi of America; World of Audi; • To understand the structure and the FLYI; Regional Jets; Transformation. New World of Audi; Unintended business model of the Indian film industry Acceleration; Sudden Acceleration; 60 Minutes; NHTSA; Audi 5000; Audi A6; US • To study the changes after luxury car market; Luxury car The Road from Mumbai to Pune corporatisation in the business model manufacturers; Quattro; SUV; Trendsetter Programme. • To analyse whether corporatisation can In April 2004, the Mumbai-Pune increase the revenues of the industry. Expressway, India’s first infrastructure project built to global standards, was sold Industry Entertainment/Film to a private party, along with the Mumbai- Diesel Dilemma in the US Reference No. INA0040B Pune section of NH4, the only other Year of Pub. 2006 existing link between two commercial hubs In 2004, diesel vehicles accounted for only Teaching Note Not Available of India, Mumbai and Pune. The sales deal 2% of the US auto market. In the US, diesel Struc.Assig. Not Available gives the private party the right to toll engines carried a bad image of being a ‘dirty and maintain both the highways for 15 fuel’. Though diesel engines offered better 13 www.ibscdc.org mileage they emitted more smog forming producers’ operations unprofitable. As a Pedagogical Objectives nitrogen oxides than gasoline engine which result steel producers were resorting to caused serious health problems. In order to various strategies, including consolidation, • To analyse whether the luxury industry bring back diesel in the US, several to sustain in the industry. The case describes should enter China initiatives were taken by the federal how POSCO sustained and grew in such • To analyse whether the presence of government and the OEMs. In this regard, conditions, achieved its position of counterfeiting is a threat to the luxury several regulations and standards were leadership and the strategies it adopted on goods industry. passed to reduce the diesel emission and to its way. Specifically, the case talks about improve the quality of the diesel sold in POSCO’s product-market choices, Industry Luxury Goods the US. The case discusses about the technology initiatives, joint ventures, and Reference No. INA0034B difference between gasoline and diesel its organisational structure. The case also Year of Pub. 2005 engines and reasons for the failure of diesel briefly touches upon the challenges faced Teaching Note Not Available vehicles in the US. The case further by POSCO in sustaining its position. Struc.Assig. Not Available Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis highlights on the potential of diesel in the keywords US market. The case also discusses about Pedagogical Objectives clean diesel and its acceptance in the US Luxury Goods; China; Counterfeiting; market. • Discuss POSCO’s advantages and Fake; Pirated; Country of Origin; Luxury disadvantages based on key success Retailing; Market Potential; Tourism and Pedagogical Objectives factors in steel industry in 2004 Luxury Industry; Local Partnerships; • Analyse POSCO’s position vis-à-vis the Brand Image; LVMH. Gucci; Richmont; • The importance of global warming and Yuan. its impact on the automobile industry other players in the industry • The state of the automobile industry in • Discuss if POSCO’s strategies are the US market with specific reference replicable by other players in the industry Future of Hybrid Cars in the US to diesel vehicles • Discuss the strategies for sustaining and In the recent years in the US, the prices of improving POSCO’s position in the • The initiatives taken by the Original gasoline were increasing at an alarming rate industry Equipment Manufacturers (OEMs) in and had reached a record high level of $2 order to bring back diesel in the US • Building competitive advantage in a per gallon in 2004 and the demand for market commoditised industry such as steel. gasoline was projected to average around 20.9 million barrels per day by the end of • Discuss the various regulation passed by Industry Steel 2005. This created a lot of pressure on the federal government to offer clean Reference No. INA0035B the consumers in general, and the diesel Year of Pub. 2005 automobile manufacturers in particular, to • Will diesel be able to shed its dirty image Teaching Note Not Available reduce the dependence on foreign oil. The in the US market? Struc.Assig. Not Available manufacturers were forced to produce fuel keywords efficient cars and advanced diesel and Industry Automobile hybrid technology was considered as an Reference No. INA0036B Steel Industry; Mini-mills; Steel marketing alternative. The case discusses the Year of Pub. 2005 technology; Finex technology; anatomy of the hybrid cars and the issues Teaching Note Not Available Technology innovations; Mass production; for the success of the hybrid cars in the Struc.Assig. Not Available Location; advantage; Joint ventures and US. The case further highlights the keywords strategic partnerships; value added challenges faced by hybrid cars in the US, products; Centralised management; Steel for acceptance Diesel Engine; Global Warming; Gasoline consumers; Steel production; Raw material Engine; Original Equipment Manufacturers; sources of steel; Iron ore; Scrap steel. Pedagogical Objectives Emission; Clean Diesel; Federal Regulations and Standards; Ford; GM; DaimlerChrysler; • This case can discuss where the US automobile industry is heading to. Will Miles per gallon; US car industry; Fuel The Chinese Luxury Goods efficiency; Miles traveled. Hybrids out run the gasoline cars in the Industry in 2005 future? The case highlights the tremendous growth • The increasing oil dependency of US and POSCO in 2004 – The World’s potential for the luxury goods market in its impact on its economy Most Profitable Steel Maker China. The case also focuses on the luxury industry in 2005 and the top 3 players. • How hybrids can mitigate the growing The case is set in the year 2004 and talks The booming economy in China coupled environmental pollution about POSCO, the South Korean steel with increasing disposable incomes of the • The challenges and strategies hybrid car maker that was the leading steel company Chinese is making China a market that makers have to face and pursue to sell in terms of profitability. The case starts cannot be missed out by the luxury goods more hybrids. with the evolution of the world steel players. But the luxury players have to industry, the major technology shift (Basic face the problem of counterfeiting which Industry Automobile Industry Oxygen Method to Electric Arc Furnace has reached to the extent of contributing Reference No. INA0033B (EAF) Method) that changed the industry to China’s GDP and supporting local Year of Pub. 2005 economics, and talks briefly about the economies. The luxury goods firms are in Teaching Note Not Available evolving demand-supply conditions. By a dilemma, whether to enter the Chinese Struc.Assig. Not Available 2004, steel industry was considered old market and face the problem of economy and steel was commoditised. The counterfeiting or play safe by staying away keywords increasing competition from mini-mills from China and let go the opportunity of US automobile industry; Hybrid cars in the (companies using the EAF technology to a strong potential market which is all set US; Hybrid Anatomy; Oil dependance; produce steel) left some of the major steel to be the No.1 in the near future Global Warming; Fuel Efficiency; Toyota 14 www.ibscdc.org

Prius; Zero Emission Vehicles; Advanced to raise a debate on which technology would dispora; globalisation; development;

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S diesel; US auto Manufacturers; CAFÉ come to dominate the US Radio Industry piracy; plagiarism; finance. III – Y G E T A R T S Standards; US environmental Protection in the near future. Agency; Emission Levels; Ford; Honda Insight; DaimlerChrysler. Pedagogical Objectives Are Hybrid Cars the Answer to • To discuss about the terrestrial and Soaring Oil Prices in the US? Gucci in 2005: On the satellite radio Rising Oil prices always raised global Comeback Trail • To discuss about the developments in concern and alarm, both for the the US radio industry. governments and also for the common The Italian company, Gucci was a small man. But it meant something more for the luxury leather goods store when started, in Industry Radio Broadcasting US since they were the biggest importer 1921. But in 2005, it has grown into a Reference No. INA0031B and consumer of oil in the world. multi-brand conglomerate with a colorful Year of Pub. 2005 Economists forewarned that if the US past and a bright future to look forward to. Teaching Note Not Available doesn’t wake up to this, the common man Gucci is the third-largest luxury goods Struc.Assig. Not Available will be left with two options, feed their company in the world after Louis Vuitton cars with oil or feed themselves with food. keywords Moet Hennesy (LVMH) of France and the Nevertheless experts said that, those Swiss group Richemont. US Radio Industry; Terrestrial Radio; vehicles that run on alternate fuels like, Satelite Radio; Sirius Satelite Radio; hybrid cars could save the US from this Owing to an economic slump and a series predicament. Even though the hybrid car Internet Radio Technology; Satelite Radio of other global events, Gucci along with market in the US was in its nascent stage, other luxury goods companies saw a bad Technology; HD Radio Technology; Future the people concerned were very much run in recent years. But since 2004, when of US Radio industry; Sirius vs XM; Hertz. optimistic that the cars of the future would Robert Polet has taken over as the CEO of National Association of Broadcasters; be hybrids. This case discusses the perils the group, things have started looking up Federal Communications Commission; and the panacea, to the problem that for the group. Polet has drawn up ambitious seriously affected the US. plans for the expansion of the company. AM/FM radio. Experts wondered whether the company will be able to bounce back as envisaged by Pedagogical Objective Polet. Or are his plans too ambitious? Globalization of the Indian Film • To discuss the need for hybrid cars in Industry: Reel or Real? the US. Pedagogical Objectives The Indian film industry is one of the Industry Automobile • To discuss about the luxury goods largest industries in the world. Over the Reference No. INA0029B industry years it has witnessed considerable Year of Pub. 2006 improvement in the art of film-making, Teaching Note Not Available • To understand about the Chinese leather distribution and exhibition as a result of Struc.Assig. Not Available market globalisation and recent technological keywords • To discuss about Gucci’s performance innovations. Such changes have led to the under different leaders. industry getting noticed by people in the Hybrid cars; oil; oil dependency; oil imports; west, especially Hollywood. This raises automobile industry; Toyota; OPEC; oil Industry Luxury Goods Sector issues on the future of the industry in the price; Federal Reserve; Trade deficit; green Reference No. INA0032B international circuit and the challenges that house effect; environment pollution; Year of Pub. 2005 are to be confronted to make it a reality. mileage; fuel efficiency. Teaching Note Not Available Struc.Assig. Not Available Pedagogical Objectives keywords • To discuss about the trends in the Indian Drive-in Theaters in the US – On Luxury goods industry; Gucci; LVMH; film industry the comeback trail? Richmont; Robert Polet; Mark Lee; • To understand how globalisation has Once considered obsolete, drive-in theaters Guccio Gucci; PPR; SARS; Fashion influenced a creative industry in the US are seen as a family-friendly accessories; Luxury goods in Asia; Luxury alternative to multiplexes and other forms goods in Asia; Luxury Goods in Europe; • To understand how the growth in of commercialised entertainment. Once at Slump in sales; Cosmetics; Jewelry. Bollywood is challenging Hollywood the brink of extinction in the 1980s, drive- • To understand the growth of India’s in theaters were on the path of revival. entertainment industry in the world They reached their peak in the 1950s. With The US Radio Industry market. the advent of the cable TV and VCR coupled with the rising costs of real estate and a This case study takes a look at the Industry Film growing reputation of drive-ins as ‘passion technological changes that have happened Reference No. INA0030B pits’, the popularity of the drive-ins in the US Radio Industry over the last Year of Pub. 2005 declined in the 1970s and 80s. The 1990s century. It explains various phases of Teaching Note Available saw new flickering of life in the industry. development in radio technology starting Struc.Assig. Not Available Since 1990, about 40 new drive-ins sprung from the traditional AM/FM terrestrial up, and 20 existing ones added new screens. keywords radio to digital technologies like Satellite By 2005, about 400 were in operation. Radio, Internet radios and High Definition Cinema; Film industry; Hollywood; However, the greatest threat seemed to be (HD) Radios. All these technologies had Corporatisation; technical advancement; the US government’s decision to extend certain advantages as well as limitations production collaborations; marketing; daylight savings time by a month each year associated with them. The case endeavours Bollywood; international awards; Indian as part of a sweeping new energy plan, 15 www.ibscdc.org which would mean pushing the clock • To debate whether the advent of Neotel keywords forward by an hour. From 2007, 48 US would bring true choice to South African states would turn their clocks forward one telecom users who were dependant on a Reinsurance; China’s Reinsurance Market; hour in March, instead of April, and turn monopolistic service provider. Business Environment; Market Entry back in November instead of October. This Strategies; Market Development; Risk would force families to head to a multiplex Industry Telecommunications Management; Reinsurance Products; rather than keep their children awake for Reference No. INA0027 Property and Casualty (P&C) Reinsurance; an extra hour. This would mean a huge loss Year of Pub. 2006 Life and Health (L&H) Reinsurance; China for drive-in theaters. Does this spell doom Teaching Note Not Available Re; Swiss Re; Munich Re; Cologne Re. to the drive-in theaters? Struc.Assig. Not Available keywords Pedagogical Objectives The Making of ‘The Da Vinci Telecom industry in South Africa; Telkom; Code’: The Recipe for • To discuss how drive-in theaters in the Telecom Tariffs in South Africa; Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis Blockbuster? US can be an alternative for multiplexes Liberalisation of South African Telecom and other entertainments Industry; Fixed line telephony in South In 2006, The Da Vinci Code registered itself Africa; BPO Industry in South Africa; among those rare genre of films whose • To understand the role of US government Second National Operator; Shareholding popularity have been found to be on par in the success of drive-in theaters. of Neotel; Telecom Tariffs and South with the novels from which they have been Industry Entertainment/Movie African GDP Growth; Competitive adapted. By May 2006, The Da Vinci Code, Reference No. INA0028B Strategies of Neotel. a historical fiction written by Dan Brown, Year of Pub. 2006 had achieved an all-time international best- Teaching Note Not Available seller status with 60.5 million print Struc.Assig. Not Available Reinsurance Industry in China: editions. The extensive research that went Opportunities and Threats for behind writing the book resulted in an keywords absorbing concoction of fact and fiction. Foreign Reinsurers Drive-in theatre; Movie; Baby Boom; The book’s sensational theme that Jesus Films; Daylight saving Time; Camden; In 1998, nine foreign reinsurers together Christ was married to Mary Magdalene and RCA; Concession Stand; AM/FM; did business of RMB 52 billion in China, had sired a bloodline that still exists has Attendence; ticket; Frequency; Family; which was mainly from the placement of been instrumental in its grabbing global Comeback; Intermission ads. the business in the international market readership across faiths. It is opined that by the Chinese insurers. By 2005, these the innovative promotional efforts by the nine foreign reinsurers were doing business publisher and the author have also been a major driving force behind the novel’s South Africa’s Telecom Industry: to the tune of RMB 300 billion. China’s accession to the World Trade Organisation phenomenal success. Neotel’s Foray and the New (WTO), and the subsequent liberalisation Competitive Landscape of the insurance and reinsurance sectors, Pedagogical Objectives The South African telecom market had had ushered in vast business opportunities for foreign reinsurers in a market where • To understand the factors that create a been the monopoly of the state controlled blockbuster out of a fictional novel Telkom, which was the sole provider of China Re was the only major domestic fixed line telecommunication services. player. But the business potential does not • To analyse the basic elements that High tariff rates of Telkom hampered the discount the threats and challenges for contributed to the global success of The nascent BPO industry, which the South reinsurers. Da Vinci Code African government was promoting to • To debate whether controversies and Pedagogical Objectives boost employment in the country. Under criticisms are the perennial add-ons for such circumstances, the telecom market • To understand the concept of reinsurance any blockbuster novel or a movie based in South Africa was deregulated and Neotel and its importance on it. was launched in August 2006 as the Second National Operator (SNO), which is 51% • To understand the dynamics of the Industry Entertainment Industry owned by a consortium headed by India’s reinsurance industry in China Reference No. INA0025 . It is believed that Neotel would Year of Pub. 2006 give stiff competition to Telkom, whose • To discuss the business opportunities for Teaching Note Not Available monopoly was characterised by high tariffs foreign players in the reinsurance market Struc.Assig. Not Available and delayed services. As Neotel is the first in China keywords company to be launched after the • To understand the various reinsurance liberalisation and deregulation of the products developed for the Chinese The Da Vinci Code; Dan Brown; Opus telecom industry in South Africa, other market Dei; Hollywood Blockbusters; Leonardo Da African nations would be monitoring its Vinci; Oscars; Ben-Hur; Google; The progress as a prelude to liberalising their • To discuss the challenges and threats in Vatican; Mary Magdalene Robert Langdon; own telecom markets. operating in the Chinese reinsurance The Vitruvian Man; The Last Supper; industry Louvre; Sony Pictures. Pedagogical Objectives • To discuss what foreign reinsurers are • To understand the major forces shaping doing to mitigate these threats. the telecommunication market in South Industry Reinsurance Low Cost Carriers in India Africa Reference No. INA0026 The aviation industry in India underwent a • To analyse the impact of the launch of Year of Pub. 2006 major change in 1994, after the private Neotel on the South African telecom Teaching Note Not Available operators were allowed to operate on industry Struc.Assig. Not Available scheduled routes. Although seven airlines began their operations soon, but only two 16 www.ibscdc.org

players survived. The case discusses in detail Pedagogical Objectives Switzerland-based Roche Group merged its

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S how the private airlines and the low-cost Japanese operations with one of Japan’s III – Y G E T A R T S carriers are trying to tap the huge potential • To understand the evolution of China’s leading pharma companies, Chugai. Despite available for them in India. Finally, the economic growth the low success rate of cross-border case highlights the challenges faced by these • To debate on the inequalities between alliances, with a Swiss parent company and new entrants. the geographical regions in China a Japanese management team, the Roche- Chugai partnership successfully achieved The case includes a note on the low-cost • To analyse and understand the housing the estimated R&D, revenue and cost airlines of US and UK. reforms in China synergies. The outlook for the company’s future was also very bright. Pedagogical Objectives • To analyse China’s home improvement market industry to understand the • To illustrate the success and growth of opportunities and challenges for home Pedagogical Objectives low-cost carriers in developed countries improvement retailers in China • To identify and discuss the strategic and India • To debate whether Home Depot should inflection points in the pharmaceutical • To discuss and understand ’s 5 enter China or not industry force analysis in LCC industry. • To discuss whether Home Depot’s late • To discuss the underlying reasons, which Industry Aviation entry would be an advantage or a have spawned strategic alliances amongst Reference No. INA0024A disadvantage. competitors in the pharmaceutical Year of Pub. 2006 industry Industry Home improvement Retailing Teaching Note Not Available Reference No. INA0023 • To discuss the critical success factors in Struc.Assig. Not Available Year of Pub. 2006 cross-border alliances keywords Teaching Note Available • To analyse the reasons for the success Struc.Assig. Available Low-Cost Carriers; No frills airlines; of the Roche-Chugai partnership in Aviation Industry; Strategic Management; keywords Japan and the factors that contribute to air travel in India; Core Competence; its sustainability. Competitive tariff; airline market Foreign home improvement retailers in Industry Pharmaceuticals potential; Indian Middle class; China; China’s home improvement Reference No. INA0022 infrastructure; aircraft maintenance; industry; Do-it-yourself (DIY) and buy-it- Year of Pub. 2006 aircraft fuel; ; ; yourself (BIY); Late-mover disadvantage and first-mover advantage; Home Depot, Teaching Note Not Available Air Deccan; ; SpiceJet; Struc.Assig. Not Available GoAir. B&Q and IKEA; China’s housing reforms; China’s economy; real estate; property keywords market; Joint ventures/strategic alliances and partnerships; Market entry strategies; Global pharmaceutical industry; Business China’s Home Improvement China’s urban-rural divide; Orient Home, environment; Generic drug manufacturers; Market: Should Home Depot Homeway and Home Mart; Income Pfizer Merck GSK (GlaxoSmithKline); Enter or Will it Have a Late-mover disparity; GDP (gross domestic product) Patent protection patent expiry; Clinical (Dis)advantage? and purchasing power parity. trials; New drug development process; Research and development investment, Since the mid-1990s, the home research and development productivity; improvement market in China is growing A Successful Cross-border Blockbuster drugs; Consumer behaviour; rapidly. Besides housing reforms, rise in Promotional advertising expenditure; New peoples’ incomes, purchasing power and Partnership in Pharmaceutical chemical entity (NCE); Food and Drug property investment encouraged private Industry: The Case of Roche- Administration (FDA); Cross-border home ownership in China. Homeownership Chugai in Japan alliances; Mergers and acquisitions. in China, which was non-existent two decades ago, has increased to 70% today. After its early stage of development prior New homeowners have to fit up the basics to the 1970s, the global pharmaceutical India’s No-frills Airlines: No-profit like flooring, plumbing and furniture, as industry witnessed an accelerated growth the houses are unfinished ones. This has due to huge investment in R&D, adoption Airlines? of innovative technologies and the encouraged consumers to engage in do-it- Although the private sector laid the yourself (DIY) and home improvement/ discovery of new drugs. Blockbuster drugs created multi-billion dollar companies foundation of India’s aviation industry with decorating activities. Coupled with this huge the setting up of Tata Air Lines in 1932, potential growth and market liberalization, called the Big Pharma that dominated the pharmaceutical industry, which was one of for a substantial period (1953-1994) the China’s home improvement market aviation industry had been highly regulated attracted many domestic and foreign home the most profitable industries in the world. However, at the turn of the 21st century, with abysmal government participation. improvement retailers like IKEA and B&Q. However, subsequent deregulation of the China, with a population of 1.3 billion and falling productivity of R&D investment and tough government regulations had industry in 1994 witnessed the entrance of a rapidly growing economy, has become private players. The Indian aviation an attractive market for many foreign resulted in scarcity of new drugs and spiraling new drug development costs. In industry evolved further with the entry of companies. Atlanta-based Home Depot, the No-frills or low-cost airlines in 2003 the world’s largest home improvement addition, a slew of patent expiries, rising competition from generic drug with the advent of Air Deccan. Other low- retailer, is weighing its China options: cost competitors too joined the fray, not should it enter or not. Some analysts are manufacturers and declining consumer trust had created a difficult business only taking competition to a new level but sceptical about its late-mover also expanding the market as a whole. But disadvantage? Or does this delay help in environment. These conditions precipitated a trend of strategic alliances certain domestic policies like higher shortening its learning curve and rise aviation fuel charges and airport charges rapidly. amidst pharma companies to control costs and ensure market positions. In 2001, were hindering the low-cost airlines from 17 www.ibscdc.org reducing prices or increasing profits. It Pedagogical Objectives Year of Pub. 2006 remains to be seen as to how the Indian Teaching Note Available • To understand the development of low-cost carriers would take on the Struc.Assig. Available challenge. private banking industry in Japan keywords • To discuss the role of Citibank in the Pedagogical Objectives development of private banking in the Foreign carmakers in China; China’s country automobile industry; Chinese automobile • To discuss how the introduction of brands; China as an automobile revolutionary business concepts in an • To discuss the competitive scenario in manufacturing hub; Low-cost industry affect the business prospects of the private banking industry in Japan manufacturing countries; Localisation; traditional players • To discuss the opportunities available High value added activities; Branding of • To discuss the business and revenue to various players present in the ‘Made in China’ products; Expansion model of low-cost airlines Japanese private banking industry, strategies of Chery; Country as brand; Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis especially after the withdrawal of Challenges for Chinese carmakers. • To discuss how the Indian low-cost Citibank from the industry airlines were competing to reduce costs and increase profits • To debate whether various foreign and domestic financial institutions were India's Luxury Car Market: The • To discuss the challenges the Indian low- taking the right step by taking increasing Competition Heats Up cost airlines face and debate on the exposure to the private banking industry The impact of India’s initiatives on possible solutions. in Japan. economic liberalisation and globalisation Industry Indian Aviation Industry Industry Private Banking (post 1991) was most apparent in the Reference No. INA0021 Reference No. INA0020 automotive sector. The economy was Year of Pub. 2006 Year of Pub. 2006 growing at 7% per annum and the Teaching Note Not Available Teaching Note Not Available information technology revolution in Struc.Assig. Not Available Struc.Assig. Not Available India had created a sizable professional class keywords with huge purchasing power. Moreover, the keywords new age Indian was becoming more Low-cost airlines; No frills airlines; Indian Private banking; Japan; Citibank; comfortable with his riches and flagrant aviation industry; Air Deccan; Business Competition; High net worth individuals; display of wealth, which ushered in model of low-cost carriers; Point-to-point; Government financial institutions; Postal opportunities for global luxury carmakers Hub-and-spoke; Full-service airlines; savings system; Foreign banks; Japanese in India. Analysts estimate that the luxury Business design for low-cost airlines; Cost financial system; Reforms; Baby Boomers; car segment would be growing at a rate of structures; Internet-based distribution. Wealth management services. 28% annually. More than 7,000 luxury cars were sold in India every year and nearly 20 global luxury brands were competing for the market share. Japan’s Private Banking Industry: Automobiles: Made in China, The Competition Sold in America? Pedagogical Objectives Although Japan is considered as one of the China, with a vast skilled and low-cost labour fastest growing markets for private • To highlight the strategies adopted by force, has transformed itself into a hotbed banking in Asia, the concept of private global luxury car markers for India of automobile manufacturing for both banking was alien to the Japanese for many multinational and domestic companies. • To discuss the competitive scenario and years. Citibank was the first financial Chery, a state-owned carmaker, is one of the future of the luxury car market in institution that introduced private banking the fastest growing domestic automobile India. to the Japanese and played an important manufacturers. Like a few of its domestic role in the development of private banking Industry Automobile competitors, Chery also plans to export its in the country. Following Citibank's Reference No. INA0018 cars to the developed markets, especially in success, many other financial institutions, Year of Pub. 2005 the US. However, the traditional notion of both domestic and foreign, entered the Teaching Note Available American customers that ‘Made in China’ industry. However, the private banking Struc.Assig. Available goods are of inferior quality, might affect industry in Japan received a blow in the Chery’s prospects in the US. keywords year 2005, when Citibank was issued a notice to close down its private banking operations Indian luxury car market; Premium car in the country, for violating the rules and Pedagogical Objectives manufacturer; Indian economy; Indian car regulations of the Japanese financial • To understand the dynamics of China’s industry; Quantitative restrictions; systems regulator Financial Services automobile market Economic liberalisation and globalisation; Agency [FSA]. After Citibank pulled out De-licensing of automotive sector; of private banking in the country, the • To discuss how the ‘country as a brand’ Consumer behaviour; Marketing strategies; competition among the other financial affects the sales of its products in foreign Brand awareness; Dealer networks; institutions providing private banking markets Customs duty. services intensified. The economic reforms • To discuss Chery’s international undertaken by the Japanese government expansion strategies and how it is making also encouraged many financial institutions efforts to cope with the regulatory and The Advent of Personalised to provide private banking services to their technological challenges to establish its clients. Analysts expect demand for private Medicine: New Business Model brand in the US market. banking services in Japan to increase for Pharmaceutical Companies? manifold in the coming years. Industry Automobile Manufacturing The pharmaceutical industry’s blockbuster Industry business model seems to be fading off. Reference No. INA0019 Innovation is resulting in just a trickle of 18 www.ibscdc.org

new drugs, Big Pharma is losing its patents Mexicana started their own low-cost Big Pharma; Innovation in

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S and lawsuits are shaking up the industry. In airlines. However owing to some concerns pharmaceuticals; Drug marketing; III – Y G E T A R T S August 2005, a Texas jury ordered the US analysts are divided on the prospects of Advertising for drugs; Blockbuster drugs; drug company Merck, to pay US$253 low cost carriers in Mexico. Patent laws for drugs; Cost components of million (£141 million) to the wife of a drug companies; Research and development triathlete who died after taking the firm’s Pedagogical Objectives in drug companies. blockbuster Vioxx. That was only the first of thousands of lawsuits filed against Merck • To discuss the evolution of the Mexican airline industry over the decades, and on the same charge, the situation of Merck Mobile Information Technology can well be extrapolated to the industry. the growth of low-cost carriers in the What went wrong with the Big Pharma? country and Communication Devices: The Energy Crisis Are the problems self-inflicted? For too • To discuss the growth prospects and long the industry relied on a belief that a concerns for the low-cost airlines in Mobile information and communication single drug can cure a particular ailment in Mexico. devices are instrumental in fulfilling the all the affected people across the globe. modern day needs of flexibility, mobility, This belief stands refuted by the genetic Industry Airlines communication and convergence. mapping and the research thereof. New Reference No. INA0016 Conceding to the customer demands for findings suggest that every individual’s Year of Pub. 2005 more sophistication and convenience, the reaction to a particular drug is unique, based Teaching Note Not Available mobile device manufacturers are on their unique genetic setup. Every disease Struc.Assig. Not Available incorporating advanced features resulting has a number of variants, again based on keywords in the emergence of mobile phones with genetic variations, and therefore demands camera, music player and colour screen, unique medication called personalised Mexican airlines; Low-cost carrier; Code- laptops and notebook computers with medicine. Clearly, analysts say that the sharing agreement; Mexicana; powerful microprocessors. But the days of the mass model of drugs have come Restructuring plan; Breakeven; technology of rechargeable batteries, to an end. Aeromexico; Crossair; Loss-making routes; required to power these features, is not Incompetent managers and poor decisions; progressing equally, thus creating a power Pedagogical Objectives Market share; Structural problems; Growth gap. The insufficient power supply is strategies; Mexican airline industry; United gradually emerging as the Achilles' heel in • To highlight the rise of personalised airlines. the progress of the communications medicine industry. The delay in development of • To discuss whether the seasoned players other viable alternatives to meet this power in the pharmaceutical industry should Global Pharma Industry: In Need gap is further worsening the situation, adopt this, and the payoffs therewith. of a New Business Model? posing the threat of an energy crisis for the future that could lead to stagnation of Industry Pharmaceuticals Manufacturers Once celebrated as the engine of modern advancements in mobile devices. Reference No. INA0017 medical innovation, pharmaceutical firms Year of Pub. 2005 are lambasted for the low productivity of Pedagogical Objectives Teaching Note Not Available their research, their wasteful marketing and, Struc.Assig. Not Available above all, for the high prices that their • To highlight the technological advancements in the mobile information keywords products command. The drug companies defend their prices, and their profits, by and communication devices, the Personalised medicine; Business model of citing the high cost of making new drugs, evolution of rechargeable batteries that pharmaceutical companies; Human more than US$800 million. This infuriates power the mobile devices, and the Genome Project; DNA sequences; Big critics, who argue that the firms could easily reasons for an impending energy crisis Pharma companies; Blockbuster drugs; lower prices and find savings on • To discuss the viable measures to deal Innovation in pharmaceutical companies; promotions without touching their precious with the impending energy crisis. Research and development in research and development budgets. To meet pharmaceutical industry; Patents on this end they propose a new business model Industry Mobile Electronic Devices blockbuster drugs; Pharmacology; Merck; for the pharma giants, which will focus on Reference No. INA0014 Drug development process. lowering marketing budgets and embracing Year of Pub. 2005 innovative methods in dealing with high Teaching Note Not Available costs of drug making. Struc.Assig. Not Available Low Cost Carriers in keywords Mexico:Growth Prospects and Pedagogical Objectives Concerns Mobile communication electronic devices; • To discuss the pros and cons of the Mobile information technology devices; Mexico’s flagship air carriers are Mexicana existing business model Energy sources for electronic devices; and Aeromexico. Though the two airlines • To discuss the essence of the proposed Battery technologies; Rechargeable controlled 80% of the Mexican market, business model. batteries; Nickel metal cadmium batteries; since 2000, due to the high prices they Lithium ion polymer batteries; Fuel cell charged, they started losing market share Industry Pharmaceuticals technology; Power-hungry mobile devices; to other domestic and US airlines. In Reference No. INA0015 New generation portable devices; Portable addition, many US low-cost carriers entered Year of Pub. 2005 power sources; 3G (third generation) and the Mexican aviation market and Teaching Note Not Available 4G (fourth generation) communication popularised the concept of low-cost air Struc.Assig. Not Available technologies; Advanced features in travel, which resulted in the rise in air electronics; Power gap and energy crisis; keywords passenger traffic in Mexico. To benefit Battery technology innovation. from this growth, several new companies Global Pharmaceutical Industry; Business and existing Mexican airlines, including model of drug companies; Drug industry; 19 www.ibscdc.org Pharma Majors in Developing last four decades of the 20th century had Teaching Note Not Available Countries: An Extended seen per capita domestic consumption of Struc.Assig. Not Available Corporate Social Responsibility wines reducing from 126 litres in 1960 to just 56 litres by 2000. The import of French keywords The developing countries have always had wines in America and Britain had also Detroit big three; Mass production; Build- a crisis when it came to disease and reduced considerably since the mid-1990s. to-stock; Dell’s mass customisation; Entry medicine. With twelve major infectious With a vast stock of unsold wines, the barrier; Economies of scale; General diseases afflicting them and non-availability French wine industry was plagued by a huge Motors buy-power; Fuel-efficient cars; of drugs, their woes worsened due to financial crisis. Henry Ford; Alfred Sloan General Motors; pharmaceutical neglect of developing End of Detroit; Zero inventory; e- countries. Questions arise as to whether Pedagogical Objectives Commerce; Five-day-car; Lean the pharma giants of developed countries manufacturing. were actually serving the people in such • To highlight the myriad problems faced by the French wine industry Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis poor countries, where diseases like HIV (Human Immunodeficiency Virus)/AIDS • To discuss the initiatives taken by the (Acquired Immune Deficiency Syndrome) The South African Car Industry: French government to bail out the The Resurgence and tuberculosis kill millions each day. industry from the crisis. Meanwhile the pharma majors were The South African car industry has always criticised for their profit-oriented business Industry Wine attracted the major carmakers in the world practices undermining social responsibility. Reference No. INA0012 since the 1920s. Although the industry In an effort to make drugs available, the Year of Pub. 2005 managed to overcome the turmoil of the governments of these countries took some Teaching Note Not Available Great Depression and the Second World War, initiatives, which led to reduction of prices Struc.Assig. Not Available due to the Apartheid policy of its of the patented drugs and the onset of keywords government, there was an international generics in these markets. boycott of South African trade. After the France; French wine industry; Varietals; new democratic government came to power Pedagogical Objectives Appellations; Bordeaux; French wine in 1994, the country started taking export; Appellation d’Origine Controlee • To highlight social responsibility factor initiatives to bring back its past glory as the (AOC); Institut National des Appellations car-manufacturing hub of Africa. By the end of the global giants and how crucial it d’Origine (INAO); New world; Evin Law; can become for their survival in the of 2000, the auto industry was contributing Fermentation; Varietal labelling; Alcohol 5.4% to the GDP of South Africa. future advertising; Industrial distillation of wines. • To discuss significance of the WTO’s Pedagogical Objectives (World Trade Organisation) Doha declaration, which outlined the inclusion Global Automobile Industry: • To highlight the initiatives taken by the democratic South African government of compulsory licensing and parallel From Mass Production to Mass to reclaim the status of Africa’s car- importing to serve the interests of the Customization common man in such developing manufacturing hub countries By the end of the 1990s, the global • To discuss the effects of such initiatives. automobile industry began to see flaws in • To discuss the various drug donation its much acclaimed mass production model. Industry Automobile programmes, private-public partnerships Henry Ford’s mass production model Reference No. INA0010 and the price war initiated by the brought about manufacturing excellence Year of Pub. 2004 introduction of generics in the through economies of scale and cost Teaching Note Not Available developing countries. efficiencies in automobile industry. Struc.Assig. Not Available However, with the changing market Industry Pharmaceuticals keywords Reference No. INA0013 scenario, the ‘Big Three of Detroit’, along Year of Pub. 2005 with other top manufacturers were feeling South Africa; Delta Motor Corporation; Teaching Note Not Available the pressure of meeting the sophisticated General Motors; Volkswagen; Ford; Struc.Assig. Not Available and ever-changing consumer preferences Mercedes Benz; Completely knocked down in the market. Consumers had become versions; Apartheid; United auto workers; keywords choosy about the color and styles of the Democratic Republic of South Africa; Social responsibility; Third World diseases models they purchased. Mass BMW; Nelson Mandela; Toyota; Nissan; and market; Drug patent regime; customisation-making cars to-order and Albert Wessels. Intellectual property rights; Uruguay round operating in niches like environmental of GATT (General Agreement of Trade friendly cars are being considered as a possible solution to the problems that and Tariffs); Pharmaceutical neglect; The Demise of Detroit: Why the besiege the industry. Pursuit of profit maximisation; NGO’s Big Three Lost (Non-governmental organisation) criticism against pharma giants; Doha Agreement; Pedagogical Objectives Detroit’s Big Three - ‘General Motors’, Lawsuits and governments; The social ‘Ford’ and ‘Chrysler’ reigned supreme in • To highlight the shift from the mass front. the US automobile market all through the production model to niche segments in 1960s and 1970s. But the Japanese, the global automobile industry German and Korean car manufacturers, who France’s Wine Industry: In Need • To discuss the initiatives taken by the gradually eroded the Big Three’s US market in the 1980s, challenged their supremacy. of Better Marketing big three of Detroit. The invasion started with the small-car Industry Automobile In the early 21st century, the wine industry segment and by the end of the 1990s, the Reference No. INA0011 in France, an icon of French culture, has SUV and the luxury car segments had also Year of Pub. 2004 been passing through a troubled phase. The been captured. The Big Three had 20 www.ibscdc.org

underestimated their competition and AirAsia; Orient Thai; Tiger Airways; One- Pedagogical Objectives

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S failed to understand the pulse of the market. Two-Go; Anthony Fernandes; Udom III – Y G E T A R T S With its inflexible plants, high legacy costs Tantiprasongchai; Singapore Airlines; Air • To highlight the growth of Indian auto and their looming labour problems, Detroit Deccan. components industry in the context of was in deep waters. liberalisation • To discuss the challenges faced by the Pedagogical Objectives Japan’s Tech Industry: The industry. • To highlight the gradual erosion of the Comeback Trail Industry Automobile and Transport Big Three’s US market Japan’s technology industry, which had Reference No. INA0006 Year of Pub. 2004 • To discuss the reasons for such erosion. been weak since the bursting of the IT bubble, has suddenly been rejuvenated. Teaching Note Not Available Industry Automobile Earlier Japanese companies like Sony, Struc.Assig. Not Available Reference No. INA0009 Sanyo and Matsushita were considered to keywords Year of Pub. 2004 be the benchmark for tech goods Teaching Note Available worldwide. The recent development in Low-cost auto components; Auto Struc.Assig. Available other Asian countries like China, Korea component makers; Maruti Udyog Limited; Mahindra & Mahindra; Phased keywords and Taiwan had brought them at par with Japan. Companies like LG of Korea started manufacturing programme; Automotive General Motors; Ford; DaimlerChrysler; giving tough competition to their Japanese Component Manufacturers Association Toyota; Honda; BMW; Volkswagen; counterparts. But the demand for Japanese (ACMA); Product liability clause; Tier 1 Detroit; Motown; United Automobile, electronics and other goods in recovering suppliers; Original equipment Aerospace and Agricultural Implement world markets had helped lift the economy manufacturers. Workers (UAW); Hyundai; Market share out of a 10-year slump. Digital appliance of Big Three; Big Three; The end of products such as mobile phones and digital Detroit; US automobile industry. versatile disc (DVD) devices were India: An Automobile Hub in the propelling this movement. Making

Low-Cost Carriers in Asia Pedagogical Objective Forty years ago when Peter Drucker phrased the auto industry as the ‘industry The concept of a Low-Cost Carrier (LCC), • To highlight the effect of the of industries’, little did the carmakers know that got instant popularity in the US in technological industry on the Japanese about outsourcing and technology sharing. 1970s, was adopted in Europe in the 1980s. economy. Now, when most of the markets are brimming with competition from across Asia was a little slow in picking up the Industry IT the globe, carmakers had no option but to trend. The first LCC in Asia, the ‘Orient Reference No. INA0007 keep their costs low. In this context, Asia Thai’, started in the mid-1990s in Thailand, Year of Pub. 2004 faced lot of problems as the government Teaching Note Not Available first emerged as a manufacturing hub with of Thailand saw it as a threat to its national Struc.Assig. Not Available countries like India, South Korea and China carrier, ‘Thai Airways International’. becoming outsourcing destinations. The Subsequent deregulation of the domestic keywords Indian context is particularly striking as aviation industry in Thailand came as a the country opened its doors to foreign Japanese tech. industry; Japanese economy; breather for ‘Orient Thai’. Following this automakers only in 1992. After a little South East Asian financial crisis; Japanese example many other LCCs sprang up in more than a decade, Indian automobile exports and imports; Southeast Asian different Asian countries like the ‘Cebu industry stood as a shining example of countries; Lucky Goldstar (LG); Samsung; Pacific Air’ (Philippines), ‘Air Asia’ producing low-cost cars with international Digital appliances; Liquid crystal displays; (Malayasia) and Deccan Air (India). quality norms. From DaimlerChrysler to Yen appreciation; Plasma TV; Sony; Seeking to tap the potential of LCCs, even Ford to Hyundai, most of the global Matsushita; Sanyo; Semiconductor industry. the national carriers jumped into the fray carmakers today see India as the global in 2003. In December 2003, Singapore hub of car manufacturing and component Airlines (SIA) announced the launch of its outsourcing. Even indigenous carmakers forthcoming LCC – ‘Tiger Airways’. Thai Indian Auto Components like Tata Motors and Mahindra & Airways was also planning to launch its Industry Mahindra have made inroads into the global own LCC , ‘Nok Air’, by mid-2004. markets. Recently, Tata Motors reached Contrary to popular perception that an agreement with MG Rover of Britain to liberalisation stifles the growth of domestic Pedagogical Objectives supply 100,000 of its ‘Tata Indica’ to manufacturers, Indian auto components Europe. • To highlight the emergence of low cost industry has evolved to compete with carriers in Asia global companies. During this process of Pedagogical Objectives evolution, the industry produced some of • To discuss the increased competition the world-class component manufacturers • To highlight Asia’s emergence as a from the national carriers. like Sundaram Fasteners and Bharat Forge manufacturing hub in the increasing Industry Airlines Ltd. Not just domestic manufacturers, even competition and the pressure to keep Reference No. INA0008 global giants like Delphi and Visteon have the costs low set up their manufacturing bases in India. Year of Pub. 2004 • To discuss the outsourcing in the Indian But the industry had its own challenges in Teaching Note Available automobile Industry. Struc.Assig. Available terms of meeting quality norms, sound logistics and the like. These problems were Industry Automobile keywords further coupled by the fewer number of Reference No. INA0005 tier 1 suppliers. Analysts attributed the Low-cost carriers (LCC); Asia; Malaysia; Year of Pub. 2004 problems to the nascent state of the Philippines; Thailand; Singapore; India; Teaching Note Available industry. Struc.Assig. Available 21 www.ibscdc.org keywords Pedagogical Objectives aviation industry; First transatlantic alliance, 1993; SkyTeam; Hub and spoke Liberalisation; Foreign direct investment • To understand the low-cost carriers’ system; Deregulations in the airline (FDI); Maruti Udyog Limited; Hyundai business model industry; Strategic alliances between Motor India; Tata Motors; MG Rover; Auto • To discuss the emerging scenarios in the airlines; Open skies; Aviation networks; ancillary industry; Original equipment Aviation industry after September 11, manufacturers (OEMs); Export American airline industry in the light of major carriers’ entry into the low-cost 2001; Consolidation of the aviation destinations; Product liability clause; industry. DaimlerChrysler AG; Economic reforms; arena. Outsourcing strategies; R&D gap; Delphi Industry Airline India Reference No. INA0003 Year of Pub. 2004 Mercedes-Benz: Quality Teaching Note Available Concerns Struc.Assig. Available Industry Analysis Industry Analysis Industry Analysis Industry Analysis Industry Analysis Big Pharma R&D: Is it worth By the end of 1990s, Mercedes-Benz, the spending? keywords car that had been adored by Presidents and Popes for seven decades, was witnessing Big Pharma like Pfizer, Glaxo and Novartis Low-cost carriers in USA; Cost structure rising customer complaints regarding its spend as much as $30 billion a year on in aviation industry; Regular carriers in quality. Mercedes, which ranked No.1 in R&D. But the number of new molecular USA; Losses in the US aviation industry; the first ‘Vehicle Dependability Survey’ of entities resulting from such R&D spend is Deregulations in the aviation industry; Hub J.D. Power and associates in 1990, saw its shrinking. and spoke system; Market share of low- rank slipping to No.3 in 1999 and then to cost carriers; Operating costs in the aviation No.26 in 2003. Pedagogical Objectives industry; Business models of low-cost carriers; ; On-line air • To highlight the decreasing number of ticket reservation; Cost-cutting measures Pedagogical Objectives new molecular entities at Delta Airlines; Cost-cutting measures at • To discuss the reasons for the quality • To discuss the other challenges faced by ; Song and Delta; Big problems of Mercedes A-Class and M- today’s Big Pharma. carriers fighting back. class cars

Industry Pharmaceuticals • To discuss how in turn this affected the overall brand image of Mercedes. Reference No. INA0004 Transnational Alliances in Civil Year of Pub. 2004 Industry Automobile Teaching Note Not Available Aviation Reference No. INA0001 Struc.Assig. Not Available Since its inception as a means of mass Year of Pub. 2003 keywords transport in the 1940s, the civil aviation Teaching Note Not Available industry worldwide has always been under Struc. Assign. Not Available Big pharma; R&D; Pfizer; Novartis; New stringent government regulations. Due to molecular entities; Eli Lilly; Astrazeneca; the fragmentation of the industry, it Keywords Bristol-Myers Squibb; Sanofi-Synthelabo; suffered from operational inefficiencies, Mercedes-Benz; History of Mercedes; Schering-Plough; Merck; Pharmaceutical; financial losses and poor customer services. Trademark of Mercedes; Quality ratings GlaxoSmithKline; USFDA; Drugs. This led to changes in business models of of Mercedes; JD Power; Quality problems the industry from time to time – at Mercedes; Firsts at Mercedes; Quality deregulations in domestic aviation in many concerns at Mercedes; Quality checks at Cost Advantages of Low Cost countries followed by strategic Mercedes; Vehicle dependability study; international alliances between major Carriers in USA Initial quality rankings; Customer airlines of different nations. In September complaints at Mercedes; Suppliers of In the1970s, the deregulation of the US 2003, a new business model emerged when Mercedes in the US; Grievances about domestic aviation gave rise to a new kind KLM (Royal Dutch Airlines) merged with Mercedes; MCG Best. of airlines - the ‘No-frills’ or ‘Low-Cost’ Air France to mark the first merger of two carriers. The low-cost carriers had an national flagship carriers. entirely different business model from the regular or the traditional carriers. The first Pedagogical Objectives low-cost carrier to start operations was Southwest Airlines in 1971. Since the • To highlight the need for change in the 1970s, the low-cost carriers have always business model of the civil aviation industry clocked profits. Even in the aftermath of 'San Lu', The Chinese Milk the September 11 terrorist attacks in the • To discuss the significance and effects Products Manufacturer's Product US, while traditional airlines had together of the new model. lost $10 billion in 2002, Southwest earned Failure: Managing the Crisis? th Industry Airline $418 million for its 30 consecutive year. This case study's primary objective is to Reference No. INA0002 As the traditional airlines suffered from trigger a discussion on how to manage a Year of Pub. 2004 high operational costs for long, they also crisis keeping in mind three very important Teaching Note Not Available decided to enter the low-cost game to facts: a) the crisis emanated from a product Struc.Assig. Not Available sustain their profits and to regain the failure, b) the product is highly sensitive, market share they had ceded to their low i.e. it's a food item and c) when the th keywords cost counterparts. On April 15 2003, Delta company in question comes from China, Airlines launched its low-cost arm, ‘Song’, Aviation alliances; Mergers in aviation which has recorded serial product failures. followed by ‘Ted’ by United Airlines in late industry; Regulations on airlines; Chicago Since the 21st century, China has been 2003. convention, 1944; KLM-Air France known for its food crises ranging from fake merger; Code sharing agreements in milk powder and pet food to duck eggs and 22 www.ibscdc.org

toothpaste. In September 2008, the massive promotional campaigns, (HTIL) offered to sell off its majority stake

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S country witnessed another milk powder infrastructure sharing with other network in Hutchison Essar. With a backdrop of a III – Y G E T A R T S crisis that sickened and killed many babies. operators and others that are exclusively chronology on Indian telecommunications The case delves into the reasons for why focused on reaching the low-end customer industry and Hutchison Essar's presence in the country is so prone to food crises. The segments. However, Sarin decides to quit India, the case study highlights Vodafone's latest crisis involved San Lu, one of the the company leaving his successor, dilemma in joining the race for HTIL bid. largest domestic dairy firms. In spite of Vittorio Colao, with a pile of unfinished Should it wait for increasing its minority being one of the largest and the most trusted businesses. Given the scenario, can stake in India's leading telecom operator, dairy firms, San Lu's milk powder was found Vodafone succeed in the Indian market Bharti AirTel or join the race for HTIL's to be contaminated with an industrial amid stiff competition from large family- bid? Amid this situation, it remains to see chemical, melamine. Unfortunately, there run companies like Bharti, Reliance and whether the Indian-born CEO routes were other 22 firms involved in the crisis. Tata groups? Can its growth in Indian Vodafone's new growth map to his home To manage the crisis, San Lu made a much market compensate for its stalled growth country or find out a new way to flourish delayed product recall and issued a public in Europe? What are the challenges Colao in the market. apology. However, are these measures would face in the future? sufficient to undo the damage and rebuild Pedagogical Objectives customer trust in a country where food Pedagogical Objectives safety is consumer's first priority and • To discuss the intricacies of operating cutting back on dairy purchases is • To justify Vodafone's decision to acquire in an emerging market controlling stake in Hutchison Essar unavoidable? The case delves into the • To examine Vodafone's foray into challenges that San Lu, the dairy industry • To evaluate Vodafone's strategies to win emerging markets and its way of handling and China would face in refurbishing its the Indian customers the challenges tainted image. • To examine Vodafone's rebranding • To discuss the development trends in Pedagogical Objectives strategies in India the Indian telecom industry and its growth potential • To understand and analyse the reasons • To emphasise Vodafone's successful for serial product failures and frequent performance in Indian markets • To examine the growth strategies of Hutch in India food crises in China • To analyse the growing competition and • To analyse the San Lu milk crisis and other challenges to Vodafone in India • To analyse whether Sarin's Indian understand the reasons behind it nativity would help him chart • To examine Sarin's exit from the Vodafone's new growth map in India • To explore the ways and means available company and potential challenges for for San Lu to manage the crisis in the his successor • To resolve Vodafone's dilemma – short term as well as the long term. whether to bid for HTIL offer or to wait • To suggest how Vodafone can gain for further stake in Bharti AirTel. Industry Dairy industry sustainable competitive edge in Reference No. TRT0136 developing countries like India. Industry Telecommunication Year of Pub. 2009 Reference No. TRT0134 Industry Telecommunication Teaching Note Available Year of Pub. 2008 Reference No. TRT0135 Struc.Assign. Available Teaching Note Available Year of Pub. 2008 Struc.Assign. Available Keywords Teaching Note Available Struc.Assign. Available Keywords Food supply chain, Crisis management, logistics, Brand image, Quality control, Keywords Vodafone; Emerging Markets; Cost Reduction; Monopoly; Telecom Circles; Regulatory system, Business ethics, Mobile; Hutchison Essar; Rebranding; Corporate Social Responsibility, Made in Licensing Agreements; BSNL; MTNL; Managing in Troubled Times Case Studies; Managing in Troubled Times Case Studies; china, Corporate image, International Vodafone; Acquisition; Infrastructure; trade VSNL; Bharti AirTel; Reliance; Hutchison; Bundling; 3G; GSM; CDMA; Spectrum; Market Entry; ARPU Tariff; Wars; MVNOs; Vittorio Colao; DoT; COAI; and TRAI Vodafone (C): Sarin 'Follows' Pug Vodafone (A): Sarin Gets Stumped! To quickly recoup from the growth crisis Vodafone (B): Sarin Finds His Desi and capitalise on the fastest growing mobile Routes? Vodafone, one of the leading wireless market in India, Sarin found his desi routes companies was lurching in losses – biggest Stalled growth in major markets amid ever in the European corporate history – through HTIL's bid. Third in the Vodafone declining profitability could no longer case series, this case study presents Sarin's owing to its legacy of expensive buyouts, justify Vodafone's investments in ill-timed exits and its own strategic flaws. signature deal in clinching Hutchison Essar's acquisitions. Hence, the new CEO, Arun majority stake. Not every day that one At a time when rivals were moving towards Sarin's immediate task in hand was to convergence of Information, gets to control a big player in a highly integrate the far-flung empire. A sequel to regulated and competitive environment. Communications and Technology, the case study, Vodafone (A): Sarin Gets Vodafone's mobile-only approach was a Thereby, Vodafone's acquisition of Stumped!, this case study emphasises controlling stake in Hutchison Essar was spectacular failure. Aggressive expansions Vodafone's foray into emerging markets amid growing market saturation, struggling very crucial for its growth in emerging like , Romania, Africa and India. At markets. The case study highlights Sarin's unit and failure to make a mark in the US, a time, when Vodafone was eager to make brought Vodafone's growth engine to a halt. strategic efforts in establishing its presence a mark in India – world's fastest-growing in India like rebranding initiatives to Amid such situations of crisis, Arun Sarin mobile market – Hutchison succeeded Christopher Gent. Given the increase its brand awareness through Telecommunications International Ltd. 23 www.ibscdc.org scenario, is the shine wearing off for competitiveness and stay ahead of its meticulously Goldman has averted the crisis Vodafone? What challenges do Sarin face? competitors? This case study is the first in and reported revenues amidst the massive Can he revive the company back to its a two part series on Nokia and provides a mortgage melt-down. glory days? Where should Vodafone look thorough outlook on the mobile handset for growth now? industry and the changes therein. It details Pedagogical Objectives the changes in the mobile handset value Pedagogical Objectives chain and then enables a discussion on what • To trace out the reasons behind the US do these changes imply for the incumbent mortgage crisis • To discuss the intricacies of intensifying players. The discussion centres on what competition in the telecom industry and • To analyse the impact of the crisis on have been Nokia's strengths and based on Global financial market ways to gain competitive edge over the industry analysis, what are the others opportunities and threats to the company. • To discuss Goldman Sachs' pro-active • To discuss the role of mergers and Based on this, what should be Nokia's strategies in mitigating the market risks acquisitions as an important strategy for strategy and what course of action should and reporting profits. aggressive growth plans, particularly in the company take to maintain its competitiveness? Industry Banking the case of international expansions Reference No. TRT0131C Year of Pub. 2008 • To discuss the success story of Vodafone Pedagogical Objectives in the global telecom industry and Teaching Note Available imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis identify the factors that has stalled its • To understand the telecom industry based Struc.Assign. Available growth in its major European markets on Michael Porter's Five Forces analysis Keywords • To examine the leadership traits of Gent • To analyse the emerging trends in the Goldman Sachs; Investment Banks in the and Sarin during situations of crisis as telecom industry and the critical success US; Mortgage Crisis; Sub-prime crisis; US well as growth opportunities factors for the handset makers housing market; Securitisation; Mortgage- • To identify the various challenges faced • To understand the changes in the mobile backed securities (MBS); Collateralised Debt roubled Troubled T T roubled Troubled roubled Troubled roubled T by Sarin in carving out a successful handset value chain and the evolving Obligation (CDO); Collateralised Mortgage growth path for Vodafone product concept and its significance for Obligation (CMO); Credit Crunch; Special the incumbent players Purpose Vehicle; Troubled Times Case • To suggest different options for Studies; Pass-Through-Certificates (PTCs); Vodafone's sustainable growth in matured • To understand the strategies that Nokia, Poor Credit Rating; Short selling; Credit- markets. the industry leader, should follow to default Swaps maintain its competitiveness. Industry Telecommunication Reference No. TRT0133 Industry Telecom Managing T Managing T

Managing T Reference No. TRT0132 Managing T Managing T Year of Pub. 2008 Will the Red Envelopes at Netflix Teaching Note Available Year of Pub. 2008 get Obsolete? Struc.Assign. Available Teaching Note Available Struc.Assign. Available Since the time it was launhed till the present Keywords (2008), Netflix has been the leading player Keywords in the online video rental market. Its Telecom; Convergence; Europe; revolutionary business model heightened Consolidation; 1G; 2G; 3G; GSM and Mobile; Success; Value Chain; the industry competition. But, with the CDMA; Value Chain; Market Penetration; Segmentation; Total Product; Industry movie download service launched by Competitive Advantage; Expansions; Analysis; Scenario Analysis; Porter; Nokia; powerhouses like Apple and Amazon, Managing in Troubled Times Case Studies; SWOT; Competitive Advantage; Managing industry veterans speculated about the Acquisitions; MVNO; Takeover; in Troubled Times Case Studies; Growth; certainty of Netflix to retain its market Leadership; Arun Sarin Theodore Levitt; Samsung; Motorola position. It was felt that, if Netflix did not experiment with the movie download technology, it might end up losing its Nokia (A): A Stable Player in a How Goldman Sachs Survived position in the industry ladder. Finally, in Turbulent Industry the US Mortgage Crisis late 2007, Netflix entered into the movie download market. It differentiated its With an estimated global market volume The massive financial cataclysm triggered offering through a technology called of 1.15 million units in 2007, the mobile by the US subprime mortgage lending streaming movies. This technology did not handset industry is the largest consumer during the year 2006 forced many leading turnout to be a big hit as it was not feasible electronics market in the world. However, mortgage lenders in the US to close their for offline viewing and on high definition from 2008, growth has slowed down for operations and file for bankruptcy. It also screens. In order to make-up for its the industry that till now has enjoyed a resulted in the investment banks, engaged drawbacks, Netflix partnered with LG double digit growth. Added to the woes is in securitising subprime loans into Electronics in early 2008. Netflix's the increase in demand for low-priced marketable securities, running the risk of founder, Reed Hastings stated that the firm handsets, which means lower margins for insolvency. Hit by the market turbulence, also had similar partnership plans with few the handset manufacturers. Nokia is a leading global investment banks, including other companies in the digital landscape. dominant industry player and has held the Lehman Brothers, Merrill Lynch, Reed expects that the Netflix-LG top position since 1998, after upstaging Citigroup, UBS, Bear Stearns and Morgan partnership will help the firm rectify its Motorola. The company till now has Stanley, registered a total loss of $136 shortcomings in streaming movies managed to stay ahead of rivals. Now, with billion in 2007 for their subprime technology. Analysts on the other hand Samsung challenging Nokia in the low-cost exposures. However, Goldman Sachs Group are skeptical about the success of the handset market, there is impending Inc., one of the world's largest investment technology and feel that in the longrun it saturation as the industry matures and banks, reported net earnings of $11.6 might lead to shrinking of Netflix's core margins are expected to go down. In such a billion in 2007 despite the credit turmoil. service of DVD-by-mail. It remains to be scenario how can Nokia maintain its This case facilitates discussion on how seen if the technology convergence at 24 www.ibscdc.org

Netflix will succeed and render its red unnaturally close relationships between store expansion has wrought many troubles

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S envelopes obsolete. management and employee leaders. Piech, for the company. The company has III – Y G E T A R T S a powerful shareholder with his "Faustian experienced declining customer traffic and Pedagogical Objectives pact" was all out to get his way. Despite slow down in sales in their core domestic having hired groomed and nurtured market. In an effort to cope up with the The case study helps the students to analyse Pischetsrieder (to streamline the company situation, Starbucks announced the return and understand: in the face of withering global competition) of Schultz as the CEO who laid out plans • The importance of innovation to take his place at VW when he himself to transform the company and bring it back (technology convergence) in the success moved up as the Chairman of the to its success path. The case study of Netflix through years supervisory Board, he axed him. Before highlights the problems of Starbucks and being forced to resign Pischetsrieder was facilitates discussion on whether Schultz's • How Netflix gained popularity with its given a five year extension till 2012. return as a leader can take Starbucks towards DVD-by-mail service Volkswagen shares dropped as investors recovery or not. took in the depth of problems facing the • The future of Netflix's idea to partner company. There was unrest at VW. Was Pedagogical Objectives with firms in the digital landscape. there more to be read between the lines of Industry Online DVD rental Industry Pischetsreider's resignation? Was there an • To understand entrepreneurial leadership Reference No. TRT0130B undue union influence at Volkswagen? Who • To analyse the hindrances of rapid Year of Pub. 2008 took the decisions? expansion Teaching Note Available Struc.Assign. Available Pedagogical Objectives • To analyse leadership change in troubled time of the company. Keywords • To understand the dynamics of corporate governance, by evaluating its merits and Industry Specialty Retailing/Beverages Red Envelopes; Netflix; Amazon; Apple; demerits and the impact on managerial Reference No. TRT0128A DVD-by-mail; technology convergence; behaviour in German automobile Year of Pub. 2008 Reed Hastings; Netflix-LG deal; companies Teaching Note Available moviedownload service; streaming movies; Struc.Assign. Not Available innovation; online DVD rentals; • To evaluate the importance of subscription based business model; pay-per shareholder and stakeholder-oriented Keywords rental; late fees governance systems Starbucks Corp., Speciality Coffee • To evaluate the various management Industry; Howard Schultz; Leadership styles adopted in automobile companies Change; Turnaround; Transformation; Unrest at Volkswagen: Who Return of Founder; Managing in Troubled Takes the Decisions? • To discuss and understand the impact of Times Case Study; International executive intelligence on business Expansion; McDonald's; Dunkin’ Donuts; For decades Volkswagen, Europe’s largest leaders. Brand Building; The Starbucks Experience; carmaker, had enjoyed a reputation for Entrepreneurial Leadership; Industry Automobile Industry having one of Germany’s most highly- Transformational Plans; Reference No. TRT0129B developed systems of labor/management Transformational Initiatives co-operation, with managers involving Year of Pub. 2008 employee representatives in crucial Teaching Note Available decisions. Germany’s co-determination law, Struc.Assign. Available Motorola – Losing its 'Razr's' Edge under which VW functioned, started out Keywords conceptually as a law to ensure a balance Motorola, world's second largest player in system of cross-holding;industrial co- between the interests of management and Cellular Industry, gained a significant determination; company-centric labor in the company but had morphed market share in 2004 backed by its management; inflexible workforce; history into an insidious alliance aimed at "keeping successful products and managed to sustain of intransigent leaders; union bureaucracy; appearances", "being the favorite" and "not growth for a while with new versions and co-opted with insiders; state ownership; rocking the boat". CEOs and top managers derivatives of Razr, one of its most dynamics of corporate governance in VW; depended on votes from labor successful cell phone models. However, the managerial behaviour in VW; Ferdinand representatives to be reappointed. Instead company failed to develop innovative Piech; Volkswagen's supervisory board, of making tough decisions on restructuring products that could replicate Razr's success shareholder/stakeholder-oriented or job cuts, VW managers were inclined to and lost out to its competitors who governance; Unrest and organisational delay or avoid change and instead curry developed innovative products. The case instability at VW; impact of executive favor with union bosses sitting on their outlines the dynamics of the global mobile intelligence boards, often to the detriment of the phone/cellular Industry, Motorola's earlier company. And with the resignation of turnaround, its earlier success with Razr Bernd Pischetsrieder, the chief executive phone, causes for its decline in phone/ of VW it seemed that life in Germany for Trouble at Starbucks: Will the cellular industry, its initiatives to stem the corporate bosses seemed to have become Visionary Founder Howard decline and its new growth strategy. treacherous. Pischetsrieder was forced out Schultz be Able to Transform the after lengthy struggles with Ferdinand K Pedagogical Objectives Piech VW's Chairman and chief of the Company? company’s supervisory board and a highly US based Starbucks Corp. (Starbucks), • The dynamics of global cellular industry influential figure (being the grandson of world's largest chain of coffee houses has Ferdinand Porsche). Piech had an agenda • Importance of product innovation in cell become one of the most admired brands phone industry of his own and Pischetsrieder was caught worldwide under the leadership of its between aggressive investors and VW's set visionary founder Howard Schultz • How innovation helped Motorola gain of problem. VW had been hobbled by (Schultz). However, after Schultz's an edge over its competitors anemic sales, deteriorating quality, and departure as CEO, Starbucks' focus on rapid 25 www.ibscdc.org • The reasons behind marketing failures during Christmas season, how would it • To suggest different ways of handling of Motorola's 'Razr' phone. regain its lost consumer trust? With Mattel’s crisis. majority of its toy production coming from Industry Telecom China, how would Eckert revive the tainted Industry Toy Industry Reference No. TRT0127P image of China-made products? Reference No. TRT0124 Year of Pub. 2008 Year of Pub. 2008 Teaching Note Available Teaching Note Available Struc.Assign. Available Pedagogical Objectives Struc.Assign. Available Keywords • To analyse Mattel’s method of crisis- Keywords handling Motorola's Decline; Telecom Industry; Liability Accusations; Consumer Product Motorola Razr; Managing in Troubled • To understand the role of public relations Safety Commission (CPSC); Tainted ‘Made Times Case Study; Handset Market; CEO and media, as an effective tool in in China’ image; Barbie; Fisher Price; Hot Edward Zander; Razr's Rise; Razr's Decline; communicating the recall information Wheels; Age Compression; Shorter Product New strategy of Motorola • To examine the role of leadership in Lifecycles; Supply Chain Issues; managing the crisis Outsourcing Manufacturing Operations; Toy sales in Holiday Shopping Season; • To identify effective ways of handling Image Crisis at BP Robert Eckert; Managing in Troubled such crisis. Times Case Study; Lead Contamination in imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis BP, the London-based oil company is one Industry Toy Industry Surface Paint; Design Flaws; Crisis of the six global energy super majors with Reference No. TRT0125 Management interests in exploration, production Year of Pub. 2008 refining and marketing of oil, gas, power Teaching Note Available and renewables. In 2006, BP suffered a Struc.Assign. Available Microsoft: Struggling in China? series of mishaps that tarnished its image. Among the mishaps were pipeline Keywords Since entering into China, Microsoft roubled Troubled T T roubled Troubled roubled Troubled roubled T corrosion at Prudhoe Bay in Alaska leading struggled for gaining market share and Robert Eckert; Public Apology; Design to oil leakage, a civil complaint filed against make profits in the mainland. The problem Related Recalls; Manufacturing Related BP for manipulating the propane market it seemed was not with its brand, as Recalls; Safety Check and Quality Control and a gas oil leakage in the port of Long everyone was using Microsoft’s Operating Systems; Media and Public Relations in Beach, California. All these mishaps and System (OS). The problem was that of Handling Crisis; Renaissance of ‘Made in scandals had an adverse impact on BP's piracy. Microsoft tried various ways to get USA’; Tainted ‘Made in China’ Image; reputation. Analysts were skeptical if BP the government to crack down on piracy, Crisis Management; Role of Leadership in would resurrect its stained image. but instead the government supported Managing Crisis; Managing in Troubled Linux, the low-cost competitor of Managing T Managing T Managing T Managing T Managing T Times Case Study; Recall Impact on Microsoft’s Windows. Linux’s presence and Pedagogical Objectives Reputation and Performance the lack of Government support left • The dynamics of the oil industry Microsoft in a weak position in China. The • The crisis management strategy at BP case study also highlights various initiatives Mattel’s Product Recalls (A): The taken by Microsoft in China to strengthen • The importance of crisis management Chinese Imbroglio its position in the growing Chinese software on the brand image of companies. market. It also focuses on the measures The case study tracks Mattel’s history of taken by the company to develop strong Industry Energy and Utilities liability accusations and product recalls, for relationships with the Chinese government. Reference No. TRT0126P more than two decades. It was regularly Year of Pub. 2008 clashing with regulatory agencies like CPSC, Pedagogical Objectives Teaching Note Available regarding disclosure of existing or potential Struc.Assign. Available hazards in some of its toys. Amid such The case has been structured to circumstances, Mattel was once again Keywords comprehend and explore: accused of defective toys - owing to design, Energy; BP; crisis management; oil spills; as well as, manufacturing flaws in August • The dynamics of the Chinese market Texas refinery; Managing in Troubled 2007. In fact, industries across the globe • The challenges faced by MNCs in Times Case Study; Helios; green image; witnessed a spate of recalls of China-made developing economies reputation crisis products that included every thing from pet food and toothpaste to clothes and toys. • Analyse strategies adopted by Microsoft What then should Mattel do to handle the in China. crisis? How can it successfully leverage on Mattel’s Product Recalls (B): Industry Software China’s cost-efficient production, without Reference No. TRT0123B Managing the Crisis affecting its reputation and profitability? Year of Pub. 2008 A sequel to Mattel’s Product Recalls (A): Teaching Note Available The Chinese Imbroglio this case study deals Pedagogical Objectives Struc.Assign. Available with Mattel’s series of recalls in August- • To discuss Mattel’s emergence as the September 2007, just before the peak Keywords world’s premier toy-maker holiday-selling season. It highlights the Piracy; MNCs; Linux; Chinese market; media and public onslaught, the initial • To critically examine the reasons behind Gaunxi; local partners; ZTE blame-game between Mattel and the Mattel’s product recalls for more than telecommunication; developing Chinese manufacturers, its CEO, Robert two decades economies; Price; Managing in Troubled Eckert’s public apology and his personal Times Case Study; operating system; Mao handling of the crisis. What is interesting • To identify the problems in outsourcing manufacturing operations to suppliers Zendong; Deng Xeoping; Deregulation; to discuss here is that with a significant integration impact on Mattel’s reputation and sales in low-cost countries 26 www.ibscdc.org

Troubled Carmaker Chrysler (B): and Chrysler turned out to be a complete • To assess whether fund-raising from

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Can Robert Nardelli Resurrect failure. Changing trends of US auto industry, private corporate investor is desirable the Company? huge legacy of health-care cost, shift in at this stage of operation. consumer demand, increasing fuel prices One of the leading private equity firms, and competition from Asian carmakers are Industry Aviation Cerberus Capital Management, L.P. some of the factors saddling down Chrysler. Reference No. TRT0120 (Cerberus), acquired American auto icon At the time of takeover Chrysler was Year of Pub. 2007 Chrysler, amidst its turnaround efforts. already in the midst of a turnaround plan Teaching Note Available Cerberus agreed to keep Chrysler’s that includes the elimination of 13,000 Struc.Assign. Available management intact, but surprisingly, jobs and a huge investment for new Keywords replaced the chairman and CEO, Thomas improved product offering to meet shifting LaSorda with Robert (Bob) Nardelli in consumer demand. Kingfisher Airlines; UB Group; Vijay August 2007. Cerberus’ logic behind hiring Mallya; Anil Dhirubhai Ambani Group Bob Nardelli, a former Pedagogical Objectives (ADAG); Texas Pacific Group (TPG); (GE) high ranking executive and former Irelandia Investments; Equity dilution; CEO of Inc., was that • To analyse the private holding of Fund raising; Financial and strategic he could bring a fresh perspective to Chrysler, its consequences and issues for investor; Vision alignment and cultural fit; privately held Chrysler with his result- its new parent, Cerberus Competition; Premium value carrier; driven aggressive leadership and proven Managing in Troubled Times Case Study; • To discuss on what possible strategies Cash depletion; Low cost model track record of successful turnarounds. can Cerberus adopt for Chrysler and However, Bob Nardelli’s functioning at would this private equity firm be able to Home Depot had been criticised despite turnaround the distressed Chrysler and achieving increase in sales. Nardelli had to be its holy grail? Air Deccan (A): The Captain’s leave Home Depot in the wake of sliding Cocktail stock price, anger over his hefty pay and Industry Automobile problems with employees and shareholders. Reference No. TRT0121A The case study tracks the journey of Air Bob Nardelli’s controversial background, Year of Pub. 2007 Deccan, a pioneer low-cost carrier (LCC) lack of experience in the automobile Teaching Note Available in the Indian skies since 2003. With a business and manage-through-fear style Struc.Assign. Available passion for reaching out to the common could make or break the already troubled man and a vision of making every Indian Keywords Chrysler. fly, Captain G. R. Gopinath built Air Deccan Chrysler; Daimler Benz AG; Automobile - blending his experience in aviation with Pedagogical Objectives Industry; American Auto Industry; Big an emotional connection to reach down Three; Cerebrus Capital Management; into the society. Despite its initial success • To discuss the leadership change at Private Equity; Challenge for Chrysler and in revolutionising Indian civil aviation with Chrysler Cerebrus; Asian Automakers; Private its significantly lower fares, Air Deccan • To analyse whether the highly autocratic Equity Firms; Turnaround; Takeover; was mired in continuous losses - owing to leader Bob Nardelli is the right leader UAW; International Expansion; Mergers technical and operational snags, coupled for Chrysler or not and can he resurrect and cquisitions with aggressive expansions. The expansion Chrysler’s past glory? came in for a scathing attack from various quarters including airline industry experts Industry Automobile in India. Thereby, given the cost Reference No. TRT0122A Air Deccan (B): The Captain, The complexities, industrial constraints and Year of Pub. 2007 Baron and The Unknown competitive scenario in the Indian aviation Teaching Note Available As a sequel to “Air Deccan (A): The industry, can Air Deccan revive its Struc.Assign. Available Captain’s Cocktail”, this case study profitability with relentless low fares and sustain competition in the long run? Keywords explores the options to revive Air Deccan - particularly the fund-raising initiatives. Chrysler; American Auto Industry; It highlights Air Deccan’s search for a Pedagogical Objectives Cerebrus Capital Management; Private financial, as well as a strategic, investor - Equity Firms; Turnaround; Takeover; • To discuss Air Deccan’s business model without diluting its low-cost image and as an LCC in the Indian civil aviation UAW; International Expansion; Robert vision of reaching the common man. (Bob) Nardelli; Thomas (Tom) LaSorda; Given the various international and • To identify the factors that led to Air Leadership Change; General Electric (GE); domestic contenders bidding for a 26% Deccan’s losses and analyse whether they Home Depot Inc.; Managing in Troubled equity stake in Air Deccan, participants are controllable or not Times Case Study; Leadership Styles; can debate on who would make a better Autocratic Leadership investor-partner for Air Deccan - • To critically examine the value chain considering each one’s possible synergies and cost structure of Air Deccan’s and adversities. operations Troubled Carmaker Chrysler (A): • To analyse the options for Air Deccan’s Can Cerberus be its Holy Grail? Pedagogical Objectives survival, amid financial crunch and operational inefficiencies. The decade old merger of German • To identify the right investor-partner automaker Daimler Benz AG and American for Air Deccan’s equity investment - in Industry Aviation auto icon Chrysler Corp. ended in May the light of its vision, cash crunch, cost Reference No. TRT0119 2007, when in an unprecedented auto deal, complexities and operational Year of Pub. 2007 majority stake was acquired by New York inefficiencies Teaching Note Available Struc.Assign. Available based private equity firm Cerberus Capital • To help solve Air Deccan’s dilemma in Management, L.P. Hailed as ‘the merger choosing the right investor-partner made in heaven’, the deal between Daimler 27 www.ibscdc.org Keywords telecom; Structure of the UK telecom • To discuss Kraft's early growth strategy industry; Evolution of UK’s telecom and its following decline Low-cost Carriers (LCCs); No-frills service; industry; Privatisation of British Telecom Managing in Troubled Times Case Study; • To discuss Kraft's revival strategy. Traditional Network Carriers; Global Civil Aviation; Profitability vs Expansions; Industry Food & Beverage Industry Value Chain Analysis; Load factor and Bell and the Ecoli Crisis Reference No. TRT0116P capacity utilisation; Operational Year of Pub. 2007 Taco Bell, a subsidiary of Yum Brands Inc efficiencies; Cost structure analysis; Price Teaching Note Not Available is a leading Mexican style wars; Financial crunch; Competition; Struc.Assign. Not Available restaurant chain and one of the best Business model; Industrial constraints; G.R. performing brands of Yum. An e-coli Keywords Gopinath outbreak has hit Taco Bell restaurants in US food industry; Managing in Troubled November 2006, affecting people in six Times Case Study; Kraft Cheese; Oscar US states. Taco Bell is now left with a major Mayer; Philadephia; Jacobs; Cool Whip; 3 UK's Profitability and Regulation damage control challenge of convincing Orea; Itene Rosenfeld Concerns: Can its CEO, Kevin its customers that its restaurants are safe Russell Pull it off? to eat even as the cause of the outbreak remains a mystery. 3G UK Limited (3 UK), a group company Sony's Battery Recall: Troubled imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis of global conglomerate Hutchison The case outlines the damage control Times at Sony Whampoa Limited, forayed into UK strategies adopted by Taco Bell restaurants mobile telecom market in 2003 - by rolling to regain market share and retain its In August 2006, Dell Inc. and Apple out first 3G services there. However, it customers in the wake of its ecoli outbreak Computer Inc. announced the recall of couldn’t make profits – in spite of having incident. It focuses on the company’s crisis about 6 million lithium-ion batteries fitted no competition in 3G services. Later, management and repercussions of the in their laptop computers and sold Ofcom, UK’s telecom regulatory authority, outbreak. throughout the world. The companies said roubled Troubled T T roubled Troubled roubled Troubled roubled T ordered to cut termination charges by 45%. that the faulty batteries made by Sony But 3 UK was till then a net payer of Pedagogical Objectives Corporation could overheat and, in rare termination charges. This order, company cases, catch fire. Sony acknowledged the • To discuss the dynamics of crisis sources fear, would further worsen the problem and offered to assist the management bottom-line and so they are appealing companies by sharing a part of the recall costs. Later, other notebook manufacturers against the order. Kevin Russell, appointed • To analyse the crisis management also recalled Sony-made batteries taking as the new CEO in early 2007, has his strategy adopted by Taco Bell in the the count to around 9.6 million batteries. hands full – in steering the company wake of ecoli outbreak at its restaurants. through its regulatory battles and staying Analysts expected that the recall would Managing T Managing T Managing T Managing T Managing T closer to its advantages. Can he pull it off Industry Fast Food Industry cost Sony approximately $500 million. or would his plans misfire? Reference No. TRT0117P They also opined that the recall came at a Year of Pub. 2007 time when Sony was busy turning around Debates can rage whether 3 UK can grow Teaching Note Not Available its loss-making consumer electronics on its first mover advantage as the first 3G Struc.Assign. Not Available division. While the investors were operator, or will it languish as a late entrant panicked by the cost burden, analysts raised into the market dominated by 2G Keywords questions about Sony's product quality. operators. Even the role of regulations in Crises Management; Public Relation; Taco The case deals with how Sony responded the company’s profitability can be Bell; Yum; Brands; Managing in Troubled discussed. and handled the massive battery recall. It Times Case Study; Brand Reputation; also highlights the corrective measures Damage control taken by Sony to overcome the problems Pedagogical Objectives and save its reputation. • To discuss the critical success factors in the telecom industry Kraft Foods: Arresting Fall in Pedagogical Objectives Growth Rate • To analyse UK telecom industry’s • To get an idea of the global rechargeable competitive dynamics Kraft is the second largest manufacturer battery market as well as Sony's battery of packaged foods in the US. It has several business • To understand first-mover and late- brands which contribute over $1 billion mover advantages and disadvantages in • To understand what triggered the massive dollar each to revenues of Kraft. Kraft was the telecom sector. battery recall and its implications on registering below the target growth in sales Sony Industry Telecom in 2006. To arrest the fall in the growth Reference No. TRT0118 rate, Kraft's C.E.O. Irene Rosenfeld • To assess the steps taken by Sony to Year of Pub. 2007 (Rosenfeld) was launching several manage the entire recall process Teaching Note Available initiatives. Struc.Assign. Available • To debate whether Sony would be able The case discusses these initiatives and also to overcome the problem and save its Keywords discusses Kraft's earlier problems and reputation. initiatives to overcome these problems, Third generation mobile companies; 3G US food industry, future potential for Industry Consumer Electronics cellular communications; 3G growth of Kraft. Reference No. TRT0115K communications in UK; Hutchison Year of Pub. 2007 Whampoa Limited; 3 UK; Managing in Teaching Note Not Available Pedagogical Objectives Troubled Times Case Study; Cellular Struc.Assign. Not Available operators in UK; Mobile communications • To anlayse the dynamics of the US food in UK; Regulatory authorities in UK industry 28 www.ibscdc.org

Keywords MySpace and Lifestyle Media: designs and manufacturing patterns were

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S identical to the Japanese brands. III – Y G E T A R T S Sony battery recall; Lithium-ion battery; Critical Issues Global battery market; Global battery With 82% of the market share in its The case, while providing an overview of manufacturers; Managing in Troubled category, MySpace was the leading social the Chinese motorcycle industry, discusses Times Case Study; US battery supply and networking website where people could the broad challenges faced by the Japanese demand; Demand for secondary battery; share photos, music, videos and other motorcycle manufacturers in China. Market share of notebook vendors; interests with a growing network of mutual Financial implications on Sony; Battery friends. MySpace helped users create a Pedagogical Objectives overheating; Recall cost; Sony consumer virtual world where people could • To discuss about the China's motor cycle electronics; Playstation3; Global voluntary communicate and socialise through their industry replacement programme membership profiles without actually meeting them in reality. The rise of • To understand the restrictions imposed MySpace exemplified the emergence of on Chinese motorcycle market Apple Computer: Grappling with lifestyle media as the most sought-after • To discuss the challenges faced by Challenges communication medium, particularly among the teenagers. Lifestyle media had Japanese bike manufacturers in the In the second half of 2006, Apple computer evolved as a combination of personalised Chinese market Inc. (Apple) was engulfed in controversies. media experience, empowering consumers • To debate on the survival strategy for At first, some irregularities were revealed to utilise their productive, leisure and social the Japanese manufacturers in the in stock options grants made between time around converged media experiences. Chinese market. 1997 and 2001, creating a furore among Apple shareholders. Secondly, in August, it The case, while providing an overview of Industry Motorcycle announced the recall of 1.8 million MySpace and lifestyle media as a whole, Reference No. TRT0112K batteries fitted in its laptops, saying that underscored the meteoric rise of the social Year of Pub. 2007 the batteries could, in rare cases, overheat networking websites and its impact on the Teaching Note Not Available and burst into fire. Though Apple said that society. Struc.Assign. Not Available the recall would not have any financial Keywords impact on the company, the Pedagogical Objectives announcement panicked the customers as • To discuss the emergence of lifestyle China’s motorcycle industry; Honda; well as shareholders. While the company media and its business perspective Yamaha; Suzuki; Vehicular restriction; was busy settling both the issues, analysts Tariff barriers; Piracy; Modularisation wondered how Apple was going to save its • To understand the evolution of MySpace strategy; Managing in Troubled Times Case reputation with customers and calm the and its pitfalls Study; Open architecture; Joint venture; shareholders. World Trade Organisation (WTO); • To analyse whether MySpace would able Intellectual property rights (IPR) The case deals with the problems that to sustain its popularity in the long run. Apple is facing and the steps taken by the company to overcome them. Industry Internet Content Provider Reference No. TRT0113K Airbus's A380: Stalled on the Year of Pub. 2007 Pedagogical Objectives Runway Teaching Note Not Available • To discuss the problems facing Apple Struc.Assign. Not Available The global civil aviation market was a Computer duopoly between Boeing and Airbus and Keywords the competition was featured by bitter • To analyse the accounting and financial Myspace; Lifestyle media; Social rivalry among these two companies. implications arising out of the problems networking website; Friendster; Though, both the companies predicted • To understand the corrective measures FriendSpace; Convergence; Millennials; almost same growth of the civil aviation taken by Apple Computer to overcome MySpace Music; MySpace Records; Rupert market during 2005-2010, two companies the problems Murdoch; On-line advertising; Viral had contrasting view for the future nature marketing; Video content; Mass media; of the growth. While Boeing was a • To debate whether Apple would be able Managing in Troubled Times Case Study; protagonist of fragmentation in network to win customer as well as shareholder Sexual assault and 'point-to-point traffic' concept and confidence. therefore, supported the development of smaller aircraft, Airbus favored the 'hub- Industry Personal Computers and-spoke' model of operation, network Reference No. TRT0114K Japanese Motorcycles: Facing consolidation and believed in the concept Year of Pub. 2007 Challenges in China of larger aircraft. Airbus projected a Teaching Note Not Available demand of 1144 super jumbos by 2020 Struc.Assign. Not Available Despite controlling over 50% of the global market, with a cumulative world production while Boeing predicted a demand of 320 Keywords of 38.9 million units in 2005, leading super jumbos. In 2000, Airbus announced Japanese motorcycle manufacturers like 'Project A380' to develop the largest Apple Computer; Apple battery recall; commercial aircraft with an investment Stock options; Li-Ion Battery; Backdating; Honda, Yamaha and Suzuki, failed to have a considerable market share in China – the of $13 billion. The aircraft was positioned Managing in Troubled Times Case Study; against Boeing's 747 models in super jumbo CPSC (Consumer Product Safety biggest motorcycle market in the world. Local brands in China controlled over two- category, and the company planned to Commission); Notebook market share; airborne first A380 within 2005. The Dell; Sony; Rechargeable lithium battery; thirds of the market and foreign brands were continuously outdone on price. The model was highly acknowledged by leading Laptop computer; Steve Jobs; iPod; commercial airlines operators, like, Securities and Exchange Commission Japanese bike manufacturers also faced stiff competition from pirated bikes, whose Emirates and Singapore Airlines. But the company failed to deliver the aircraft on

29 www.ibscdc.org the stipulated date and when on 3rd to encourage foreign trade in Japan, a few Vodafone lagged behind its competitors in October 2006, the company announced a players like Carrefour and Costco to enter introducing new technology or services in further delay of six months leading airlines Japan. To encourage more foreign the Japanese market. By 2005, Vodafone operators felt bad about the company. investment, the Japanese government in Japan had lost a substantial number of Leading airline operators like, Singapore abolished the LSRSL in 1998 and a few customers to its competitors, who were Airlines cancelled the order for A380 and companies like Wal-Mart and Tesco offering superior handset features and opted for alternatives. As a consequence started studying the Japanese market to services. Vodafone seemed at a loss to gain of the delay of A380, Boeing marketed make an entry into Japan. In 2002, Wal- a foothold in the Japanese market and aggressively for its 747-8 model, which Mart entered Japan through an alliance finally, in 2005, it sold its Japanese mobile the company planned to launch by 2007. with a local player, Seiyu. In spite of Wal- business Softbank. A few Airlines, like, Emirates, cancelled Mart's efforts, it witnessed loss the order for A380 and opted 747-8 of consecutively from the time it entered the Industry experts attempted to analyse the Boeing. This case gives a glimpse of global Japanese market. It was pointed out that reasons for Vodafone's exit from Japan. In civil aerospace market, the trends, the decline was due to its low pricing this context analysts debated that Vodafone competitive fight between two competing strategy which proved ineffective in Japan. failed to understand the competition and aircraft manufacturers and two competing Seiyu's ineffective management was also the Japanese market and hence made an models from two manufacturers. This case cited as another reason for Wal-Mart's exit which could have been avoided. It was also provides an insight about why Airbus downfall in Japan. To strengthen its felt that Vodafone would have to re- lacked in project management skills, why position as a leading retailer, Wal-Mart evaluate its global strategy. imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis it failed to meet the deadline of the delivery implemented several strategies. It increased of its A380 model, airlines operators its investment in Seiyu to more than 50% Pedagogical Objectives reaction about the delay, how Airbus and made the local player a subsidiary of • To understand Vodafone's global strategy planned to make over the image, strategy Wal-Mart. The retailer also implemented adopted by Boeing to leverage the delay of several inventory management practices • To gain an insight into the competitive Airbus and the future scenario of global and attempted to streamline their supply environment of the Japanese telecom civil aerospace market. chain operations. In 2006, to succeed in market roubled Troubled T T roubled Troubled roubled Troubled roubled T the Japanese retail market, Wal-Mart • To analyse the reasons for Vodafone's Pedagogical Objectives decided to introduce both high and low priced items as its popular selling strategy exit from Japan • To understand the market dynamics of 'Everyday Low Pricing' did not seem to • To consider the strategies that Vodafone civil aerospace industry take off.. Despite Wal-Mart's attempts, it should have adopted to remain in the • To analyse competitive position of remained to be seen whether the giant market. Airbus vis a vis Boeing retailer would succeed in Japan or make an exit like it did in Germany and South Korea. Industry Telecommunications • To discuss the importance of project Reference No. TRT0109B Managing T Managing T Managing T Managing T Managing T management in company's overall Pedagogical Objectives Year of Pub. 2007 strategy. Teaching Note Not Available • Wal-Mart's strategies to enter the Struc.Assign. Not Available Industry Aircraft Manufacturing Japanese retail Industry Reference No. TRT0111K Keywords • Wal-Mart's Inventory management and Year of Pub. 2007 Vodafone; Japan Telecom Company; supply chain management practices Teaching Note Not Available Softbank; Racal Telecom Limited; Struc.Assign. Not Available • Wal-Mart's sales strategies through high DoCoMo; Sarin; KDDI; Ripplewood Keywords priced and low priced products. Holdings; Managing in Troubled Times Case Study; Robin Hearn; Global Strategy; Boeing; Airbus; Hub-and-spoke; Point-to- Industry Retail Ovum; 'bigger is better' strategy; traditional point; Project A380; Global civil aviation Reference No. TRT0110B market; Telecom; Christopher Gent market; Global civil aerospace market; Year of Pub. 2007 Bombardier; Managing in Troubled Times Teaching Note Not Available Case Study; EADS (European Aeronautic Struc.Assign. Not Available Problems Galore at Dell: Signs of Defence and Space Company); Airlines Keywords operators; Boeing Dreamliner; Emirates; a Downfall? Singapore Airlines; BAE Systems plc; Japan; Retail; EDLP; LowPrice; Rollback; Since 2001 Dell had been the undisputable Original Equipment Manufacturers (OEMs) Seiyu; Daiei; Aeon; SMART; Managing in leader in the US PC market. Dell had been Troubled Times Case Study; Supplier; so enamored with its PC business that it Japnese Consumers; Discount; Inventory failed to notice what its competitors Wal-Mart's Struggle in Japan pursued. Dell failed to innovate while IBM and others turned to consulting and In the 1980s, the Japanese retail market Vodafone: Losing Connectivity in development. IBM sold out its PC business was dominated by local players like Daiei, Japan to Lenovo since it realized that PC Aeon and Ito-Yokado. The Japanese manufacturing did not fit into their core government started to encourage foreign Vodafone Group Plc is the world's leading business agenda. Later it seemed that Dell trade and foreign retailers. With the entry mobile telecommunications company with developed a streak of complacency in its of these retailers, the domestic retailers a total market capitalization of attitude. PC market saturation in the US witnessed decline in their sales. To protect approximately UK £72 billion in 2006. and other developed economies, along with the interests of the local players, Large Vodafone entered the Japanese market in investor impatience, fierce competition Scale Retail Store Law (LSRSL) was 1999 through the acquisition of J-Phone and product quality deterioration saw Dell amended by the Japanese government in and went on become the second largest missing its expectations in 2006. Their the late 1980s which restricted the entry wireless telecom company in Japan. But entry into portable music players and PDAs and expansion of foreign retailers in Japan. eventually it could not retain the position did not strike much luck since Apple's iPods In the 1990s, when the LSRSL was amended in the Japanese market. It was felt that outsold every other brands in the US 30 www.ibscdc.org

market. This case discusses the problems remembered all components of the by several analysts. Since its acquisition of

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S that Dell faced and what Dell has to do in products. The recall hence had a longer Kraft Foods in 1988, Altria was accused of III – Y G E T A R T S order to avoid a downfall. lasting negative impact on Dell rather than using its Food division to hide its tobacco Sony. negatives. Pedagogical Objectives Sony though willing to lend a hand Kraft Foods' performance was declining and • To understand the US PC market financially also stated that it did not have Altria announced the possibility of the manufacturing capacity to produce so spinning off Kraft in 2004 and was planning • To understand Dell's strategy of selling many batteries within the time required to restructure its operations since then. PC's for its replacement. This meant that an Kraft Foods was also contemplating to be • To understand problems for Dell's growth outsourced contract was being sub- independent of its tobacco tainted parent in recent times. contracted to yet another supplier. What Altria Group Inc which had 88% of its stake. would happen to the customer? The ALG alike many other tobacco giants faced Industry PC Industry average customer had already lost large amount of tobacco litigations for long Reference No. TRT0108B confidence in Dell, with new batteries not and was waiting for its legal liabilities to be Year of Pub. 2006 necessarily manufactured by Sony but some cleared before proceeding with any Teaching Note Not Available unknown manufacturer how did Dell restructuring. In 2006, ALG had favorable Struc.Assign. Not Available propose to satisfy its customers on quality rulings for its three major tobacco cases and more important how did it propose to and some analysts expected an Keywords attractive new clientele. announcement of Kraft spin-off as the legal environment seemed to be improving. But Personal Computers; Dell; PC Direct How would Dell handle this crisis? What Selling; US PC industry; LINUX; Microsoft; Altria did not proceed with Kraft spin-off would happen to Dell's image and as according to the company still huge legal IBM; Lenovo; Managing in Troubled Times reputation with the recall? And would Dell Case Study; Chinese computer market; risk existed for the company. The case and Sony continue their relationship after talks about the corporate portfolio laptop explosion; AMD; product quality this third fiasco? decline; Product recalls; Michael Dell structure of ALG and the challenges that the conglomerate faced like increasing Pedagogical Objectives health consciousness, government • To discuss about the world PC market regulations, excise taxes and tobacco Dell's Recall of Batteries: Would it litigations. Taint Dell's Image? • To understand Dell Inc as the largest PC Dell, one of the largest PC makers in the makers in the world and its competitive Pedagogical Objectives strategy world, on 14th August, 2006 recalled 4.1 • To discuss Altria as a corporate and its million notebook batteries. The recalled • To analyse the impact of Dell's recall of entities batteries were manufactured by Sony Corp., its batteries on its image and reputation. Japan. The batteries were defective and • To understand the legal liabilities Dell felt it best to recall and replace the Industry Hardware Industry involved for tobacco companies batteries free for all affected customers. Reference No. TRT0107B Dell was a proprietary parts manufacturer. Year of Pub. 2006 • To discuss the importance of corporate This recall which was the third such was Teaching Note Not Available restructuring Dell's nemesis. Dell's customer perceptions Struc.Assign. Not Available • To understand the importance of right and its after sales service had much to be Keywords mix of companies in a corporate desired. Confidence in Dell's notebooks portfolio remained a big question mark when the Dell Inc.; Sony Corp.; Largest Battery third incident occurred and the company recall; Notebooks; Lithium-ion Batteries; • To understand the role of a corporate seemed not to have taken action or the Consumer electronics; Consumer Product parent in managing its portfolio and action that was to be taken of returning Safety Commission; Managing in Troubled restructuring. Times Case Study; Faulty Batteries; the faulty batteries were seen by some as a Industry Tobacco & Food Conglomerate Hardware Industry; Burnt Laptops; Crisis dilute method of appeasing customers as Reference No. TRT0106A they expected a company like Dell to management Year of Pub. 2006 double check their quality especially since Teaching Note Available the batteries were outsourced. Dell with its Struc.Assign. Not Available unique marketing philosophy of not Altria: The American Tobacco retailing their products needed to have Keywords Giant's Troubled Portfolio double insurance as far as winning and Kraft Foods; Altria; Food and Beverage retaining customers were concerned. New York based Altria Group Inc.(ALG), Company; Tobacco Company; Tobacco Dell had recalled batteries in 2001 and in the parent of the world's second largest litigations; Corporate Restructuring; 2005. Dell seemed to know what exactly consumer packaged-food company Kraft Corporate Portfolio Management; was wrong with its batteries, but behaved Foods, was a leading Food and Tobacco Reasons for troubles at Kraft Foods; like an ostrich and buried its head in the Conglomerate. In addition to Kraft Foods, Reasons for Spin-off of Kraft Foods; and continued to market the same ALG's portfolio of operating companies Tobacco Liabilities for Altria; Managing batteries. The recalled batteries were included Philip Morris International, Philip in Troubled Times Case Study; Lawsuits expected to cost at least $246 million to Morris USA-producers of the world's for Altria; Liabilities to Tobacco Dell. Sony agreed to share a part of the popular Marlboro brand of cigarette and Companies; Ethical Issues for Tobacco cost. The financial aspect was one part of also had a financial services division Philip Companies; Philip Morris International; the recall but unquantifiable was the Morris Capital Corporation. Altia Group Philip Morris USA; Philip Morris Capital reputation of the company that went along was known as Philip Morris Companies Corporation; Second Largest Consumer with the recall. While people would buy and changed its name to Altria in the year Packaged-goods Company; Marlboro; products for the brand name and what it 2003, which was considered to be an effort Cigarettes represented it would be rare if one of image change or a mere PR campaign 31 www.ibscdc.org Crisis Management – The Jet at a value of $75.1 billion. Unable to is facing new challenges. People no longer Blue Way commence supply of A380, a futuristic search for hours for greeting cards that double decked jet, it suffered 34 order suit the occasion and the personality of In February, 2007 JetBlue, a leading low- cancellations. With two years behind the recipient, or write warmly worded cost airline of US cancelled around 1096 schedule and $2 billion over budget on the personalised messages on each card and flights in a week leaving hundreds of project, Airbus also faced a revenue loss of post them. People simply send an SMS passengers and aircraft grounded due to an $6.6 billion, which could make the (short message service) from their cell ice storm and enormous operational company financially extinct. The case phones. Or they log onto the Internet, shortcomings. During the ice storm when describes the events which led to the delay. visit greeting cards websites and send e- most other airlines responded by canceling The first was the fuselage wiring issue which greetings to their beloved. The number of more flights earlier, JetBlue did not follow was caused by the different software people who prefer to shop for greeting the same path. It did not cancel the flights versions used by Airbus' German and French cards is declining. To stay relevant, Archies well in advance and as a result, thousands engineers. Wake vortexes, the air has to attract customers and retain them. of passengers ended up trapped at New tornadoes developed by an aircraft behind What can Archies do to reverse this trend York's John F. Kennedy International it, was very powerful in the case of an of declining sales? Airport, the hub of its operations. While A380, because of its huge size and four other airlines took just a day or two to get high thrust engines. The ICAO, Pedagogical Objectives back to the schedule, JetBlue took a week recommendation that additional nautical and affected around 130,000 passengers. miles be used to separate other aircraft and • To discuss the segmentation-targeting- imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis A380, was a blow to Airbus, since already positioning strategy followed in strategic The flight delays, cancellations and strained airports could not offer additional marketing management ambiguity in operations caused customer space to an A380, which cancelled its dissatisfaction and affected its brand image. • To discuss the diversification strategy benefit of carrying passengers almost twice However, JetBlue aggressively put in and strategy of entering into new that of its nearest rival B 747. efforts to mange the crisis and regain segments customers' trust. The Founder and CEO of The case describes the political turmoil • To discuss how innovation plays a key roubled Troubled T T roubled Troubled roubled Troubled roubled T JetBlue, David Neeleman apologized in regarding the Airbus' restructuring plan factor in strategic marketing public and tried to convince people, 'Power8'. 10,000 job cuts, hiving off six management investors and customers that the airline manufacturing plants spread over three would recover. JetBlue announced to countries and cost cutting are few measures • To discuss the trends and patterns of reimburse 130,000 passengers which would which Airbus planned to implement hoping social expression industry in India cost it more than $30 billion. After the to revive its fortunes, amidst stiff • To discuss how technology played a key crisis, to restore is stained reputation the opposition from participating differentiator in the marketing game company introduced "customer bill of governments and labor unions. rights", the first of its kind in the industry. • To discuss the concept of niche Managing T Managing T Managing T Managing T Managing T The case discusses about the crisis Pedagogical Objectives marketing. management and issues highlighting • Project Management and Product Industry Social Expression JetBlue's tactics to manage the crisis and Development Cycle Reference No. TRT0103K restore its corporate image. The case also Year of Pub. 2005 talks about Neeleman's leadership in crisis • Dynamics in Aviation Industry Teaching Note Not Available management. • Political and Social factors in Business Struc.Assign. Not Available environment. Pedagogical Objectives Keywords Industry Aviation – Aircraft • To discuss crisis management at JetBlue Archies; Anil Moolchandani; Greeting card Manufacturing industry; Jagdish Moolchandani; Managing • To understand the role of leadership in Reference No. TRT0104C in Troubled Times Case Study; Archies times of crisis. Year of Pub. 2007 Greetings and Gifts Ltd; Disney character; Teaching Note Available Retail Disney; e-Greetings; Indian social Industry Aviation Struc.Assign. Available expression industry; Heart warmers; Reference No. TRT0105A Distribution network; Brand equity Year of Pub. 2007 Keywords Teaching Note Available Airbus A380; Boeing 787 Dreamliner; Struc.Assign. Available Catia V5 CAD Software; Wake Vortex of Airbus A380 Delay: What Went Keywords A380; Managing in Troubled Times Case Study; ICAO recommendations on A380; Wrong? Managing in Troubled Times Case Study; EADS; A380 order cancellations; Power8 After Airbus announced a delay in the Jet Blue; Low-cost carriers (LCCs); Issues Restructuring plan; Long haul aircraft deliveries of its forthcoming A380, the and crisis at JetBlue; Crisis Management; biggest passenger jet ever made, in June Leadership; David Neeleman; Brand Image; 2006, it raised an alarm for the aviation Brand Building; Regaining Corporate world, especially for the customers of A380. Image; Customer Bill of Rights; Customer Archies - Time to Reinvent Prior to this, in 2005, the European plane Satisfaction; Aviation Industry in US; Greeting cards have become a part of the manufacturer had already extended its Business model of LCCs cultural and social life of people worldwide. delivery schedule by six months. The In India, people send cards on the eve of company cited some production issues as festivals and occasions such as Diwali, Holi, reason for the delay. However, industry Airbus: Flying through Pongal, Durgatsov, Christmas, and New watchers suspected that there was more to Turbulence Year etc. The social expression industry the story than mere production issues. has grown to 12 billion in number and US$ While the panicked customers were In 2006, Airbus booked 824 new orders for 14 billion in revenue worldwide by 2004. considering claiming compensation for the aircraft, representing a 44% market share But currently, the greeting cards industry delay (some even were planning to cancel 32 www.ibscdc.org

the orders), analysts wondered what caused • To discuss the localisation strategy of 825 billion won ($882 million), subject to

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S the crisis and how Airbus was going to Coca-Cola with modifications to its approval from South Korean regulators. III – Y G E T A R T S overcome it. Some also believed that the global marketing-mix variables. Wal-Mart said that its decision to withdraw crisis at Airbus was a golden opportunity from South Korea was in keeping with its for Boeing to regain its leadership position. Industry Carbonated Beverages global growth strategy to expand in Reference No. TRT0101K markets where they could realise the desired The case tries to highlight Airbus’ problems Year of Pub. 2006 economies of scale. Wal-Mart’s and raises a question regarding how it could Teaching Note Not Available performance in the South Korean market sort out its problems. It also discusses about Struc.Assign. Not Available which was considered highly competitive Boeing’s ability to capitalise on the Keywords and demanding had not been encouraging. opportunity. Analysts blamed Wal-Mart’s failure to Coca-Cola; Germany; German Recycling localise as the main reason for its exit. Pedagogical Objectives Law; Store brand; Discounters. They argued that Wal-Mart had not • To understand the reasons that caused tailored its stores and offerings to suit the delay in launching the new aircraft A380 needs of the Korean consumer. Analysts GM in 2005: Facing Challenges wondered why the world’s largest retailer, • To understand the implications of delay in North America with annual total sales of $312.4 billion, in launching new products and the as of January 2006 and serving more than complexities involved therein In the face of intense competition from 175 million customers weekly in 15 its Japanese rivals such as Toyota and countries worldwide decided to pull out of • To know in detail about the development Honda, GM was losing its market share in a growing economy like South Korea. of A380, the world’s largest passenger North America. Analysts pointed out a aircraft number of reasons for the downslide. GM’s While the majority blamed Wal-Mart’s health care benefit costs for existing failure to localise its strategies as the reason • To assess how Airbus planned to deal for the debacle many felt that the with the situation. employees and the legacy costs, in terms of pensions for retirees, were steadily environment in South Korea was not Industry Aviation increasing. Skyrocketing gasoline prices conducive to foreign brands. Hardly a Reference No. TRT0102K caused a decline in the demand for GM's month before Wal-Mart’s announcement, Year of Pub. 2006 gas guzzling Sports Utility Vehicles (SUVs) Carrefour of France, world’s second-largest Teaching Note Not Available and trucks. The share prices, which were retailer quit the South Korean market. Struc.Assign. Not Available more than US$80 even five years back, Many international brands like Nokia, Nestlé and Google, struggled in the South Keywords came down and were hovering around US$28 to US$30 on the New York Stock Korean market. While analysing the reason 747-8; A380; Hub&Spoke; Point to point; Exchange, by March 2005. In April 2005, for its withdrawal, experts felt that Wal- Freighter; Inter continental. GM posted a net loss of US$1.1 billion for Mart should use this failure to its advantage the first quarter, the biggest quarterly loss in other Asian economies like Japan and since 1992, when the company almost China. How it would do this was to be seen. The case offers scope for discussion on Coca-Cola – Struggling in went bankrupt. The Case discussed causes for the problems in detail and analyzed the localisation strategies to be adopted by Germany possibilities of GM’s turnaround. retailers in overseas markets and the impact of failure to localise. In late 2004 and early 2005, Coca Cola Co. (Coke), the leading soft drinks Pedagogical Objectives manufacturer in the world, faced a massive Pedagogical Objectives • To understand the concept of generic decline in sales in Germany due to the • To teach localisation strategies impact of the newly enacted Recycling competitive strategies Law. The company was forced to make • To understand the structure of Auto • To discuss the outcome of a company’s use of recyclable bottles, abandoning its manufacturing industry failure to understand and tailor localised trademark packaging as well as to alter its strategies. distribution system in Germany in order to • To analyse competitive strategies along Industry Retail make a turnaround in the country. with industry life cycle with reference to GM. Reference No. TRT0099C The case, while highlighting the challenges Year of Pub. 2006 faced by Coke in Germany, also focuses on Industry Auto Manufacturing Teaching Note Available the initiatives taken by the company to Reference No. TRT0100K Struc.Assign. Not Available Year of Pub. 2006 restore its former position in the German Keywords market. Teaching Note Not Available Struc.Assig. Not Available Wal-Mart; Localisation strategy; South Pedagogical Objectives Keywords Korea; Asian markets; Consumer behaviour; E-Mart; Shinsegae; Samsung • To understand the structure and GM; Automobile Industry in US; Ford; Tesco HomePlus; Retail Industry; competitive forces in the German soft Toyota; SUV; Cost Competitiveness. Multinational brands; Trade Unions; drinks industry Carrefour Korea; Competitive Markets. • To understand the regulatory framework in Germany and the challenges faced by Wal-Mart’s Withdrawal from soft-drinks manufacturers due to strict South Korea Canon Digital Cameras: Will it German Recycling Law Continue to Click? In May 2006, Wal-Mart, world’s largest • To discuss the turnaround strategies of retailer announced its exit from South The case describes the challenges that the Coca-Cola, with reference to the German Korea selling its 16 stores to Shinsegae Canon digital camera business faces. The market Co., the country’s top discount chain for case aims at providing discussion points

33 www.ibscdc.org regarding Canon’s present strategies and manufacturer, based on the number of PCs faced by the company. Counterfeiting what more can it do to improve its market shipped. became a serious problem for YKK since it position. The case traces the growth of caused financial losses and also adversely the digital camera industry and reasons for While Dell’s competitors struggled to keep affected its brand image. The case focuses retardation of the growth. It also intends up with Dell’s low-cost PCs and efficient on the measures undertaken by YKK to to raise debate on the growing camera supply chain, Dell progressed from prevent counterfeiting and increase the strength to strength. But with the turn of phone industry and its impact on the digital st awareness of its brand. camera business as a whole. It also highlights the 21 century, the fortunes of the industry players seemed to change. Dell’s Canon’s strengths in the digital business Pedagogical Objectives and the areas from where is it facing growth rate started declining. Changing competition. The case is designed to help elements in the business environment like • To discuss the counterfeit problems faced understand the digital camera industry, the maturing US market, resurgence of HP by YKK and the effects it had on the Canon’s position as a camera and Apple Computer, rise of low-cost Asian company’s finances players like Lenovo and Acer, and high manufacturer, competition faced by Canon • To discuss the strategies adopted by YKK and impact of its strategies on its business. growth in the household demand for PCs, a segment where Dell was not focused, led to overcome the problem and spread the company to miss earnings and sales awareness about its brand. Pedagogical Objectives projection several times during 2005-2006. Industry Zipper Manufacturing Dell’s apparent inability to successfully • To help understand the digital camera Reference No. TRT0096P imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis respond to these environmental changes, industry Year of Pub. 2005 led the market experts to doubt whether • To discuss Canon’s position as a camera Teaching Note Not Available Dell’s revered business model was equipped Struc.Assig. Not Available manufacturer to provide Dell with a competitive • To discuss competition faced by Canon advantage in the long-term. keywords and impact of its strategies on its YKK; Zipper manufacturing industry; business. Pedagogical Objectives Counterfeit zippers; Japan; Zipper; roubled Troubled T T roubled Troubled roubled Troubled roubled T Fastening products. Industry Consumer Electronics-Digital • To discuss the evolution of the PC Cameras industry Reference No. TRT0098C • To analyse the traditional business model Year of Pub. 2005 adopted by the PC industry vis-à-vis Maytag: In Need of Repair Teaching Note Not Available Dell’s business model and business Struc.Assign. Not Available Maytag Corporation, a $1.4 billion philosophy company is ranked fifth in the home and Keywords • To discuss Dell’s culture and its effects commercial appliance business. It has a long Managing T Managing T Managing T Managing T Managing T history of producing high quality products Canon; Cameras; Digital cameras; Digital thereof and owned famous brands like Hoover imaging camera phones; Mobile/ • To analyse the internal and external vacuum cleaner, Admiral, Magic Chef, Cellphones; Cellphone cameras; Global factors that affected Dell’s growth in Jenn-Air and Amana. However in 2005, it digital camera market; Canon strategies; the 21st century suffered a loss of $75 million in the fourth Film cameras; Fujio Mitarai Sony; Kodak; quarter and its market share fell by 55%. consumer electronics; Digital Slrs. • To discuss the strategy adopted by Dell The case study discusses the reasons behind in response to its problems and its the fall of Maytag, rising competition in effectiveness. the home appliance market and Maytag’s Dell’s Direct Model: Change of Industry Personal Computers attempts to make a comeback. Direction? Reference No. TRT0097 Year of Pub. 2006 Pedagogical Objectives The launch of IBM’s Personal Computer Teaching Note Available (PC) in 1981, was a boon to the PC industry. Struc.Assig. Available • To discuss the dynamics of the US During the following years, both the PC consumer durable market hardware and software markets flourished. keywords Dell was one of the many start-ups which • To discuss the factors leading to decline Business model innovation; PC industry entered the market during this period of of Maytag evolution; Michael Dell; Kevin Rollins; high growth. Since its inception, Dell Direct to consumer business model; • To discuss Maytag’s strategies to make adopted a business model which was Customer segmentation; Organisation a comeback. contrary to the established norms of the culture; Business philosophy; Strategic industry. The company bypassed Industry Consumer Durable Industry inflection points; IBM; HP; Apple traditional distribution channels and sold Reference No. TRT0095P Computer; Lenovo; Acer; Competitive PCs directly to customers. This helped the Year of Pub. 2006 strategy; Growth strategy. company to save on costs like reseller Teaching Note Not Available margins and high inventories. While the Struc.Assig. Not Available industry followed a ‘build-to-forecast’ keywords approach, Dell followed a ‘build-to-order’ YKK – Countering the Counterfeit model. Established players believed in Dragon Maytag; Maytag’s deadline; US consumer vertical integration whereas Dell ‘virtually’ durable market; Neptune drying centre; integrated itself by building close YKK is the largest manufacturer of zippers Accellis oven; De’Longhi; Dyson; Lowe; relationships with its suppliers and and fastening products in the world. The Try-out stores; Amana appliances; Sport customers. The result was that Dell company though remains almost unknown utility vacuum; Steam Vac; Ripplewood experienced stupendous growth during the because of the nature of its product which holdings; Whirlpool-Maytag tieup; Hoover 1990s. In the year 2001, the company forms a very small part of the final product. vacuum cleaners. became the world’s largest PC This case discusses the brand YKK, its operations, and the counterfeit problem 34 www.ibscdc.org

Kraft: Deromedi’s Dilemma keywords players like GM, Toyota and Chrysler

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S recalled their vehicles to revamp defects, III – Y G E T A R T S When Roger Deromedi (Deromedi) is Swissair; Commercial aviation sector; Ford recalled its vehicles 17 times . brought on board as Kraft’s CEO in Swissair’s bankruptcy; Swissair’s business December 2003, all Kraft’s flagship strategy; Effects of liberalisation on Ford had quality problems in the past years, businesses – cheese, biscuits, cold cuts, and Swissair; Swissair’s turnaround; European but in 2005, it was facing a crisis of coffee – are losing market share and sales economic area; Alcazar project; Hunter confidence. The National Highway Traffic volumes. Kraft, the icon of Oreo and Mac strategy; Qualiflyer alliance; Hub and Safety Administration was grilling Ford for and Cheese innovation, has not launched a spoke; Crossair. details of problems in Ford vehicles that significant new brand since DiGiorno had resulted in fire accidents in the Middle in 1995. Deromedi has introduced a series East, South America, and Southeast Asia. of initiatives hoping to arrest falling Jet Blue: Too much Turbulence In order to regain its position in the US profits. He is reinventing the brand automobile market, Ford planned to portfolio and divesting laggard and Established in 1999, JetBlue was a low cost revitalise its brands and to improve the peripheral product lines that account for start-up airline. After the 9/11 terrorist quality of its vehicles. It also planned to less than 5% of total revenues and attacks while the airline industry suffered introduce low cost models in segments concentrating on blockbuster brands that losses and struggled to survive in the tough where the auto makers had been largely are or can be market leaders in their business environment, JetBlue continued absent. With the entry of automakers like categories worldwide. He has narrowed to grow and gain market share due to its Chery and Geely, into the US automobile Kraft’s thrust to four core areas: coffee, innovative marketing strategies. However, market, apart from local competitors like cheese and dairy. To transform the in 2005 JetBlue’s profits were under GM and Chrysler, would Ford regain its portfolio, Kraft accelerates the shift pressure as it registered its first ever losses credibility in US market in the near future? towards growing categories and geographies in the fourth quarter. This case study, while where it can leverage its sustainable highlighting the formation and growth of Pedagogical Objectives competitive advantages and scale. The JetBlue against the backdrop of the October 2004 launch of the Tassimo is September 9/11 attacks, offers the scope • To understand how Big Three in the US expected to give Kraft a chance to prove to discuss the situation of the US aviation automobile industry dominated the that it can be more than just a commodity industry and JetBlue’s strategy for a market broker. turnaround. • To understand how deterioration in quality affected Ford Pedagogical Objective Pedagogical Objectives • To analyse the turnaround strategies of • The case highlights how once considered • To discuss the dynamics of the low-cost Ford. a ‘category captain’, Kraft’s acquisition airlines in the US strategy, brand extension strategy and Industry Automobile • To understand JetBlue’s low-cost its product portfolio management has Reference No. TRT0091B business model stagnated its growth. Year of Pub. 2006 Teaching Note Not Available • To discuss the market factors affecting Industry Food and Beverage Struc.Assig. Not Available low-cost airlines. Reference No. TRT0094P keywords Year of Pub. 2005 Industry Airline Sector Teaching Note Not Available Reference No. TRT0092P Quality; Big Three; Accident rate; Struc.Assig. Not Available Year of Pub. 2006 Suppliers; Turnaround; Layoff; Closure of Teaching Note Not Available keywords factories; Toyota; Recall of vehicles. Struc.Assig. Not Available Market leadership; Growth; Turn-around. keywords New York in 2004: Recovering JetBlue; Commercial aviation sector; from 9/11? Keeping Swissair in the Air JetBlue’s low-cost business strategy; JetBlue’s losses; Aviation industry scenario; New York, probably the best known city Swissair was an award winning European Increasing fuel costs; JetBlue’s turnaround in the world, was devastated by the terrorist airline owned by SAir group. This case strategy; Fuel hedging; Embraer; TrueBlue attack on its symbol, the World Trade presents the history of Swissair and the frequent flyer programme; Rockwell Center on September 11th 2001. With the issues that resulted in its downfall. The Collins guidance system. city already under recession, the attacks strategies adopted by Swissair have been compounded the misery. Apart from the presented in the case. economic impact, the trauma resulting Ford: Built for the Road Ahead from the attacks caused a severe health Pedagogical Objectives and environmental problems. Questions In 2004, with the entry of Japanese, were raised about the city’s ability to cope • To discuss the dynamics of the Chinese and Asian automakers into the US up with such tragedy. commercial aviation industry automobile market, the Big Three-GM, th Ford and Chrysler experienced a decline in But on the eve of September 11 2004, • To understand the factors leading to things seemed to have turned around. The collapse of Swissair their market share and sales. Their warranty and pension costs had increased economy was picking up. Long standing • To discuss the attempts made by Swissair and consumers complained of low quality problems of New York were being addresses. to make a turnaround. parts used in their vehicles. GM and Ford But question marks remained over issues were downsizing their work force to like disaster preparedness, co-ordination Industry Airlines compensate over their lost sales. The year among agencies, etc. The case highlights Reference No. TRT0093P 2005 turned out to be a major shake-up the journey of New York’s recovery and Year of Pub. 2006 for Ford as it had to recall about 6 million the challenges that are yet to be addressed. Teaching Note Not Available vehicles to rectify defects. Though key Struc.Assig. Not Available 35 www.ibscdc.org Pedagogical Objectives keywords chains. Moreover, the café culture of France was much different from the culture • Disaster management in cities Coca-Cola; Coke; Coca-Cola in Germany; Starbucks was known for. Hence analysts German; Deposit Law; Consolidation of • Consequences arising out of disasters of questioned whether Starbucks was aware of bottlers; Sandy Allen; German Nationwide the risk it was taking by entering into such magnitude and how administration Recycling system; Management in can best respond to it France and challenging the origin of café Germany; Pepsi Co.; Hard discounters in society. • Disaster recovery Germany; Local German beverages; PET bottles; Refillable bottles; Carbonated • Issues relating to urban society drinks; Non-corbonated drinks. Pedagogical Objectives • Management of city economy. • To highlight the need for adapting to the culture of a country to flourish in Industry Urban Management Starbucks: Turbulence in its business Reference No. TRT0090B Year of Pub. 2005 Overseas Market • To understand the coffee culture in France. Teaching Note Not Available Starbucks was a leading coffee giant, Struc.Assig. Not Available expanding the company globally. Since Industry Beverage/Coffee keywords 2003, Starbucks had to face problems due Reference No. TRT0087B to anti-Americanism in its overseas Year of Pub. 2004 imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis Crisis management; Urban economics; market. Moreover stiff competition in the Teaching Note Not Available Disaster management; Urban planning; market posed a big challenge to Starbucks. Struc.Assig. Not Available Disaster recovery; Disaster Impact Starbucks is trying to overcome all of these Assessment; Environmental impact problems Will Starbucks succeed in its keywords assessment; Urban healthcare; Disasters attempts? Starbucks; French coffee culture; Howard; and trauma; Co-ordination among Schultz; Gourment coffee; Expresso bar; government agencies; Urban security; Pedagogical Objectives Cappuccino; Coffee beverage; Seattle; roubled Troubled T T roubled Troubled roubled Troubled roubled T Public Policy; Urban project management; French coffee Market; Starbucks Government response and disasters; • To discuss about the effect of anti- experience; Italain Caffee; Arabica bean; Economy and terrorism. Americanism globally Hear Music; No smoking policy. • To understand the problems faced by Starbucks in the global market. Coca Cola in Germany (Part A) Hong Kong Disneyland: Industry Beverage Challenges due to Deposit Law Reference No. TRT0088B Appeasing the Dragon? The focus of the case is on the German Year of Pub. 2006 In 2005, The Walt Disney Company Managing T Managing T Managing T Managing T Managing T operations of the Coca-Cola Company. Teaching Note Not Available (Disney), the No.2 media and The company had pioneered the Struc.Assig. Not Available entertainment company in the world, carbonated soft drink market in Germany keywords opened its first theme park in China, the and had dominated the market throughout ‘Hong Kong Disneyland’ in Hong Kong. its 70 years of operations. But problems Starbucks; Overseas market; Anti- began to crop up in early 2000. Coca-Cola Americanism; Stiff competition; Strategy; Hong Kong Disneyland is the American had initiated consolidation of its bottlers Future-plan; Mergers; Football; Brands; group’s third international amusement in order to improve its global supply chain Olympic games. park, the other two being Tokyo management. In Germany, the company Disneyland and Disneyland Paris. In 1992, initiated the same by 2001 and planned to when Euro Disney (later Disneyland Paris) was opened in France, the French critics complete the process by the end of 2003. Starbucks In France: Teething But the introduction of the deposit law termed it as an American cultural invasion had a negative impact on the German Problems and the locals stayed away from it. Finally, Disney made the park more culturally Beverages and bottling industry. This also In 2005, Starbucks was the largest specialty acceptable to the local visitors and the park affected Coca-Cola’s German operations. coffee shop chain in the world. In 35 years became Europe’s most visited place. As a result its market share started of its operation, Starbucks emerged as the decreasing. In 2004, the new CEO, Neville world’s leading retailer, roaster, and brand So, in 2005, when the Hong Kong Isdell, took charge and began to evaluate of specialty coffee with coffeehouses in Disneyland came up, Disney made sure that the options available to improve the North America, Middle East, Europe, Latin it would be a feel-like-home experience situation America and the Pacific Rim. The company for the Hong Kong and Mainland China had outlets in more than 10,000 locations visitors. The company wanted to avoid Pedagogical Objectives around the world by the end of 2005. the mistake it made in its European foray. Also, as the Hong Kong Government, • To discuss why sales declined in Coca- The coffee multinational initially operated known to be very conservative, has a Cola’s German subsidiary in various locations of North America, controlling stake, Disney had to make starting its business in the US in 1971. In • To discuss the Deposit Law some modest concessions to local customs. 1996, Starbucks started its international But analysts questioned whether Disney ventures as the US market reached • To discuss the options left before Coca- would be able to transport the magic of saturation by that time. It entered the Asian Cola in increasing the sales and Disneyland brand to Hong Kong market first. After receiving encouraging countering Deposit Law. Disneyland. It tried hard to make the park responses in Asia, Starbucks entered culturally acceptable to the Hong Kong Industry Beverage Europe in 1998. In 2004, the coffee chain and Mainland China population. But in this Reference No. TRT0089B reached Paris in France. France, being the attempt, will the aura and magic of Year of Pub. 2005 birthplace of café society, already had Disneyland be lost? Teaching Note Not Available several well-established and reputed coffee Struc.Assig. Not Available 36 www.ibscdc.org

Pedagogical Objectives Coca-Cola in Japan: From Role the product in a statutory market for its

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S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Model to Role Reversal sustenance. Apart from cheap cameras • To discuss about the specialty of Disney from China, camera phones added more Land The Coca-Cola Company’s Japanese woes to Olympus. In spite of a having a • To understand about Hong Kong operation, Coca-Cola (Japan) Co. Ltd. long history of operating in the camera Disneyland (CCJC), was considered to be a role model industry, Olympus wasn’t able to sustain for the company’s other global operations. the industry and rival pressure. Experts • To highlight the need for adaptability CCJC also contributed to one-fifth of The opined that Olympus should engage in on entering a new market. Coca-Cola Company’s annual profits. contract manufacturing (to China), However, the situation started changing strengthen its R&D rigorous or let down Industry Entertainment Amusement from 2002, with a decline in the sales its business and concentrate on medical Park volume of CCJC. Since the beginning of endoscopes. Reference No. TRT0086B 2006, a number of steps have been initiated Year of Pub. 2006 by the management of CCJC to turn the Teaching Note Not Available Pedagogical Objectives fortunes of the company around. Struc.Assig. Not Available • To study the competitive scenario of keywords Pedagogical Objectives Olympus Disneyland; Hong Kong; DisneyTheme • To discuss why CCJC was considered to • To study the challenges faced by Parks; China; Feng Shui; Robert lger; be a role model for The Coca-Cola Olympus Dragon; Entertainment; Attendance; Rides; Company’s other global operations • To analyse the future prospects of Culture; Amusement Park; Disneyland Olympus. Resort; Mickey Mouse. • To analyse the factors responsible for the decline in the fortunes of CCJC Industry Digital Photography • To understand the strategies undertaken Reference No. TRT0083A Obesity: Fading McDonalds’ by the company management to turn Year of Pub. 2006 the fortunes of CCJC around Teaching Note Not Available Image Struc.Assig. Not Available • To debate whether CCJC would be able Since 2002, McDonalds was targeted for keywords the soaring obesity and other health recover its position as a role model for related issues. Negative propaganda The Coca-Cola Company’s other global Olympus Inc.; Digital photography; highlighting the deterioration in its food operations. Olympus Corp.; Olympus imaging; Digital quality of McDonalds ruined its image as Industry Beverages cameras; Camera phones; Canon; Sony; the most lovable brand in the US. In 2006, Reference No. TRT0084 Eastman Kodak; Digital SLR; industry in order to get away from negative publicity Year of Pub. 2006 decline. and to regain its lost reputation and sales, Teaching Note Not Available McDonalds included nutritional Struc.Assig. Not Available information in all its fast-food packaging Pitney Bowes in 2006 and also started the McDonalds’ Global keywords Moms Panel. It had plans to advertise Coca-Cola (Japan) Co. Ltd.; Role model; Pitney Bowes (Pitney) which controlled aggressively about its high-quality food and Marketing strategies for Japanese; Market; 60% of the worldwide postage-meter also to revamp 100 of its restaurants Japanese beverage market; Market trends; market and 80% of the US market ever according to the changing needs of its Cultural Disparities; Role reversal; since, it was authorised by postal authorities customers. Though McDonalds was marketing campaign; Management in 1920, to rent postage meters, had confident of regaining its image, analysts changes; Population of Baby Boomers; dominated the business. But in 1959, the argued that midst its challenges, it would Japanese culture; Innovative health US Department of Justice challenged take a long time for the company to products; Strengthening Georgia coffee Pitney’s monopoly. And by 1964, Pitney reclaim its lost aura. brand; Expanding tea portfolio. was facing sixteen competitors in the market. It gradually fell apart faced with Pedagogical Objectives competition. Fred Allen’s leadership put Pitney back into business and George • To discuss how the fast food industry in Olympus in 2006 Harvey, who succeeded Allen, consolidated the US was affected by health related adopting new technologies and products. Tokyo based, Olympus was the world’s issues Now Pitney provided office technologies fourth best selling digital camera and services that helped companies gain • To understand how McDonalds managed manufacturer after Canon Inc., Sony Corp. efficiencies and capitalise on opportunities. to achieve growth through its strategies. and Eastman Kodak. Olympus also Pitney’s solutions included a wide range of manufactured medical endoscopes and Industry Fast Food Industry mailing and document technologies, dominated the medical industry with Reference No. TRT0085B efficiency management services and one- market share of 70%. Year of Pub. 2006 to-one management expertise. Teaching Note Not Available The digital camera business suffered from Unlike other businesses the postal industry Struc.Assig. Not Available steep price falls, slow industry growth and was changing dramatically. It was driven the increasing popularity of camera keywords by technological, social and regulatory phones. In March 2005, Olympus suffered changes. The competition intensified with McDonald’s; Obesity; Fast food industry; a net loss of ¥11.8 billion compared to a each passing day and market segments Wendys; Burger King; Market leadership; net income of ¥33.6 billion in 2004, largely began to fragment. As the postal business lack of quality; Eroding image; Plan to win. due to the poor performance of the digital changed, operators responded by reshaping camera segment of the imaging business. their businesses. New technologies altered Olympus faced various challenges to grab the established industry standards and market share, make profits and to innovate market liberalisation opened the way for 37 www.ibscdc.org new competitors. There was a significant Time Warner. Though AOL was the Pedagogical Objectives shift in what was once sent by physical gateway to the Internet for many mail to other media such as financial Americans through the mid 1990s, of late • To analyse the Japanese jewelry market prospectuses were now posted on Internet the rise of high-speed Internet access from and discuss the reasons for Tiffany’s than sent by mail. telecommunication companies and cable troubles in Japan companies had shrunk its user base. Pitney was in the final stage of a major • To suggest strategies that Tiffany should makeover, turning from an old-fashioned Moreover, Carl Icahn, the billionaire formulate to regain its position in Japan US postal meter company into a cutting- investor who had 3% share in the company • To recognise the opportunities and edge global solution provider of integrated had been putting pressure on Time Warner challenges in store for a global jewelry mail and document management systems to split the company. He accused the Time retailer. and services. Michael J. Critelli, a 57 year Warner board of not taking enough steps old Harvard Law School graduate who to enhance shareholder value. Industry Jewelry Retail became CEO in 1996, had grown Pitney Reference No. TRT0080A through quiet effective leadership had a Pedagogical Objectives Year of Pub. 2005 daunting task to put a modern stamp on Teaching Note Not Available Pitney’s 85-year old business. • To discuss the impact of a single share Struc.Assig. Not Available holder on the entire company keywords Pedagogical Objectives • To discuss the future of Time Warner imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis Tiffany; Mitsukoshi; Wholesaling; • To discuss the challenges and • To analyse the growth dilemma faced Retailing; Retailing strategy; Japan opportunities in store for the world by Time Warner. recession; Japanese jewelry market; postage system Japanese consumer; Segmenting; Targeting; Industry Media Conglomerate Positioning; Currency fluctuation; New • To understand the concept of peripheral Reference No. TRT0081A vision of corporate leaders Product introduction; Expansion strategy; Year of Pub. 2006 Competition; Consumer Behavior; Baby Teaching Note Not Available roubled Troubled T T roubled Troubled roubled Troubled roubled T • To illustrate change management, 360 Boomers; Product management. degrees turnaround, re-branding Struc.Assig. Not Available strategies, quiet leadership, restructuring keywords etc. Leadership; Carl Icahn; AOL-Time Warner NBC Universal Inc.: Managing in Industry Business Equipment Merger; Media and entertainment; ISP; Troubled Times Reference No. TRT0082A Internet Business Dick Parson; Online NBC Universal (NBCU) dominated US Year of Pub. 2006 services; Shareholders value; American television from the 1970s till 2004 with its Teaching Note Not Available Online; Time Warner; Strategy. highly popular serials like Friends, Cheers, Managing T Managing T

Managing T Struc.Assig. Not Available Managing T Managing T Seinfeld and Frasier. However, due to its keywords failure to offer new entertaining shows since Trouble at Tiffany in Japan 2005, the company witnessed a decline in Peripheral vision; Postal meters; Franking; its viewership and was ranked fourth behind Stamps; Document technologies; Office The internationally renowned jewelry its competitors like FOX, ABC and CBS solutions; Fax machines; Business company, Tiffany had been facing networks. In December 2005, NBCU made communication; e-mail; Snail mail; Quiet problems in their second largest market, major changes in its top-level management leadership; Mail; Postal reform; Digital Japan, since 2002. After performing and appointed Jeff Zucker as the CEO. It stamps; USPS; 360 degrees; Mail-sorting; commendably even during the times of also planned to market its new shows through Re-branding; Restructuring; World; Global deep economic recession in Japan, digital technology to reclaim its leadership postal systems; Document delivery. Tiffany’s sales in Japan was slipping since position. the last couple of years, while other jewelry retailers were flourishing. Pedagogical Objectives Time Warner: Dick Parson’s The case explores the probable reasons for • To understand the dynamics of the US Dilemma Tiffany not performing as per their television market and the critical success expectation. Tiffany’s core customers had Time Warner had interests in publishing, factors in that market remained the affluent class, but to attract cable systems, filmed entertainment, younger and less affluent customers, it also interactive services and television • To analyse the reasons behind the loss introduced and promoted less expensive networks. It owned a collection of brands of viewership of NBCU products which had tarnished its elite image. like America Online (AOL), Time Inc., Their retailing strategy of opening majority • To debate whether Jeff Zucker’s revival Home Box Office (HBO), New Line stores in department stores through which strategies would help NBCU to reclaim Cinema, Turner Broadcasting System, traffic of their target customers was its leadership in US television. Warner Bros. Entertainment and Time decreasing, had backfired. Tiffany’s Warner Cable all under one roof. Industry Television principal strategy in Japan had been to Reference No. TRT0079 In 2000, Time Warner merged with AOL. focus on their expensive bridal jewelry Year of Pub. 2006 It was called ‘historic’ as it brought together especially traditional engagement rings. Teaching Note Not Available an online service company and a media With changes in the Japanese traditions, Struc.Assig. Not Available and entertainment services provider. With preferences of Japanese consumers and the merger, Time Warner’s stocks went up with the aging of the Japanese population keywords their strategy has turned questionable. by 39%, $25.31 to $90.06 in 2000. The American Television Industry; Nielsen Managing the fluctuation in the Yen-Dollar deal represented a major change in Time Television Ratings; Friends; HANA; exchange rate, also became a matter of Warner’s approach to become a Net player. Ivillage; GE’s Imagination Breakthrough; concern. But the value of AOL had dropped from its Jeff Zucker; Turnaround Strategies; $200 billion high, since its merger with Webisodes; Martha Stewart. 38 www.ibscdc.org

Yahoo!: Challenges in its Online shareholder. Temasek, like the other GLCs • To discuss the limitations associated with

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S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Entertainment Ventures of Singapore, had played a vital role in the Dell's direct selling model country’s spectacular economic With growth in the global entertainment development. Saturation in the local • To analyse the possible reasons behind and media industry, many Internet economy resulted in Temasek to look Dell missing its revenue forecasts companies are making efforts to increase beyond the borders and invest globally. • In the light of impending challenges, to their presence in diversified online However, Temasek’s government-linked debate whether it is time for Dell to businesses like digital entertainment. factor was coming in the way of its reinvent its business model. Yahoo!, one of the leading web portals investment strategy. providing a variety of services like online Industry Personal Computers chat, online music and online sports, also Pedagogical Objectives Reference No. TRT0076 ventured into the online media business by Year of Pub. 2006 forming the Yahoo! Media Group in January • To discuss, the evolution and role of Teaching Note Available 2005. To offer its users different television Government Linked Companies in Struc.Assig. Available programs on the Internet, Yahoo! Media Singapore’s economic development keywords Group partnered with Hollywood and other • To discuss, Temasek’s investment media companies like Mark Burnett strategy Competitive scenario of the global Productions to launch reality shows like personal computer (PC) market; Dell’s The Runner and Wow House. However, • To discuss the problems that Temasek is direct selling model; Dell’s strategies to these programmes had to be shelved due to facing regarding its global investment keep costs low; Dell’s business model vis a declining viewership. Besides, Yahoo! faces strategy and their causes vis other PC makers; Growth of Dell; Dell’s tough competition from AOL, MSN and business challenges; Dell’s logistics Google in online media business. • To discuss, Temasek’s strategy of turning management; Dell’s supplier management; itself around to face the challenge and Dell’s support centres across the globe; possibilities of success. Pedagogical Objectives Dell’s leadership in the global PC industry; Industry Financial Services Dell’s competition with Lenovo; Dell’s • To understand the importance of new Reference No. TRT0077 business strategy for retail customers. technologies in converging traditional Year of Pub. 2006 media like the radio and television with Teaching Note Not Available emerging medium like the Internet Struc.Assig. Available Cendant Corp., the Travel and • To analyse Yahoo!’s gradual expansion keywords Real Estate Conglomerate: into the online media business amidst Troubles and Responses competition from Google, MSN and Temasek Holdings; State supported Time Warner/AOL capitalism in Singapore; Entrepot In 1998, Cendant Corporation, a US-based economy; State supported model of travel and real estate conglomerate was • To discuss the initiatives of Lloyd Braun development; Government linked hit by one of the largest accounting frauds to enable Yahoo! Grab a bigger market corporations; Manufacturing sector’s share in the US history and its stock value share in the global online media business of Gross Domestic Product (GDP); dropped by $14 billion in a day. The • To focus on the inherent challenges an Singapore Inc.; Policy of regionalisation; company was forced to pay $3.2 billion to Internet company has to face when it Temasek’s investment strategy; Strategic its shareholders on account of this fraud. tries to foray into online media business development; Corporate development; The company also faced challenges and competes against well established Capital resources management; Building up ranging from low returns from expensive television companies. corporate behemoths; Divestments; acquisitions and allegations of huge Return on investments. compensation to its CEO, to its being Industry Internet Search and Navigation undervalued and its ineffective share Services buybacks. To resurrect itself from such Reference No. TRT0078 Dell's Business Model: Is it Time to troubles, Cendant realigned its businesses Year of Pub. 2006 and divested its non-core assets and split Teaching Note Not Available Reinvent? up into four separate companies with each Struc.Assig. Not Available Dell Inc. has become the world’s largest company specialising in one of Cendant’s keywords PC manufacturer through its direct selling business lines – hospitality, real estate, business model. Despite criticism and travel booking and car rental. On-line entertainment industry; Yahoo!’s skepticism about its business model, it has business model; Yahoo!’s products and enabled the company to revive and Pedagogical Objectives services; Media companies in the US; reinforce its market leadership on different • To understand the growth strategies of a Brand advertising of Internet companies; occasions. However, during FY 2005-2006, company that has diverse businesses Yahoo!’s diversified growth; Google; Dell missed its own revenue projections under its brand Microsoft; Time Warner; America Online; for two consecutive quarters. This has The US film industry; Turnaround raised concern among analysts about the • To discuss the aftermath of the disclosure strategies of Yahoo! viability of Dell’s business model in the of the accounting fraud on Cendant and maturing PC industry and whether Dell how it underwent a restructuring to would be able to sustain its sales growth. regain its lost ground Temasek Holdings, The • To highlight the core competencies of Singapore Government’s Pedagogical Objectives Cendant and how the company realigned Investment Agency: The • To understand the direct selling model its different businesses based on these Troubled Strategy? of Dell and identify the key drivers of strengths the model that have enabled Dell to Temasek Holdings was a Government • To debate whether the responses are become the leader in the global PC Linked Corporation (GLC), owned directly strategic in nature or are mere reactions. by Singapore’s finance ministry - its sole industry 39 www.ibscdc.org Industry Residential Real Estate Paramount Pictures’ Troubled was arrested on charges of falsifying Brokerage Times: Can Someone Script a financial statements of the company. Reference No. TRT0075 Turnaround? Year of Pub. 2006 Pedagogical Objectives Teaching Note Not Available Paramount Pictures, founded in 1912 as Struc.Assig. Not Available Famous Players Film Company, is the last • To discuss the rise of Takafumi Horie of the major US film studios to be located and his style of operations keywords in Hollywood. The studio has an illustrious • To compare the operations of the CENTURY 21; Coldwell banker; Vehicle history of delivering some of the greatest traditional Japanese companies as rental and mortgage services; Real estate hits in Hollywood like The Ten compared to that of Livedoor services; Hospitality services; Travel Commandments, Roman Holiday, The distribution services; CUC International Godfather series, Mission Impossible and • To discuss whether Horie became a victim Inc.; Hospitality Franchise Systems Inc. Titanic. Since 2000, the absence of because of his flamboyant lifestyle when (HFS); Wright Express Corporation; Hebdo blockbusters has hit its finances. Adding to experts agree that a large number of Mag International; National Leisure its financial woes is the alleged link-up of companies are engaged in similar illegal Group; The Harpur Group Ltd.; ebookers; its chairman and CEO, Brad Grey with activities like Livedoor Anthony Pellicano, a former private Gullivers Travel Associates. • To discuss the impact of Livedoor scandal investigator, who was arrested on charges on the Japanese financial market. of illegal wiretapping and racketeering in imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis early 2006. Despite the acquisition of a Perils of Going Global: WPP’s Industry Information Technology promising film studio like DreamWorks Services Italian Imbroglio SKG, the future of Paramount Pictures is Reference No. TRT0072 Since its inception in 1985 under the still uncertain. Year of Pub. 2006 stewardship of Sir Martin Sorrell, WPP, Teaching Note Not Available the world’s second largest advertising Pedagogical Objectives Struc.Assig. Not Available

roubled Troubled T T roubled Troubled roubled Troubled conglomerate, has rapidly expanded roubled T • To understand the evolution of the movie keywords through acquisitions and partnerships. It business in the US, from the studio era Livedoor; Entrepreneurship; Takafumi has 2,000 offices in 106 countries and to Hollywood in the 21st century employs 100,000 people. However, its Horie; Charismatic leadership; Corporate continuous expansion and globalisation • To discuss the strategic initiatives taken scandal; Financial scandal; Effect of scandal under a centralised management structure by Paramount Pictures to boost its on financial markets; New generation of led to a loss of control over the entire financial health Japanese entrepreneurs; Stock split; group. One such instance was the dismissal Poison pills; Livin’ on the edge. • To debate whether a major studio like of the Italian country head, Marco Benatti, Paramount can survive in the business Managing T Managing T Managing T Managing T Managing T who was fired due to allegations of fraud which is being increasingly characterised and other financial discrepancies, and a by small studios making small-budget PepsiCo’s New Challenge: subsequent investigation was launched in Transformation into a Health WPP's Italian arm. movies to cater to niche audiences. Food Company Industry Motion Picture Production Pedagogical Objectives and Distribution In early 2002, the growing concern about Reference No. TRT0073 health and obesity among Americans was • To understand the growth strategies of Year of Pub. 2006 taking its toll on fast food chains and WPP in the global advertising and Teaching Note Not Available companies. PepsiCo was among the first marketing industry Struc.Assig. Not Available few companies that tried to refurbish its image as a health foods company. PepsiCo • To discuss the managerial problems in a keywords rapidly expanding global company with initiated a series of efforts by partnering a centralised management. Famous players; Adolph Zukor; with reputed physicians and reviewing the MajesticMountain; Paramount antitrust entire product line. Industry Advertising and Marketing case; SIMPP (Society of Independent Reference No. TRT0074 Motion Picture Producers); Viacom Inc.; Pedagogical Objectives Year of Pub. 2006 The Paramount Library; Anthony Teaching Note Not Available Pellicano; Brad Grey; DreamWorks SKG; • To discuss the series of initiatives that Struc.Assig. Not Available CBS Corporation; Mission Impossible III; PepsiCo has undertaken to transform itself into a health foods company keywords George Soros; Tom Cruise. • To discuss how an industry came under Wire and plastic products; Advertising and fire due to the rising concern about marketing services; Global advertising obesity and health. companies; WPP’s problems in ; Sir Takafumi Horie and Livedoor: An Martin Sorrell; Marco Benatti; Mediaclub Opportunist or a Victim? Industry Beverages Italy; Grey Global; Management problems In sharp contrast to the genteel, dark-suit Reference No. TRT0071 in global companies; Ogilvy & Mather; wearing Japanese business elite, Takafumi Year of Pub. 2004 Specialised and interactive communication Horie (Horie), the CEO of Livedoor, was Teaching Note Available services; Investigations into WPP Italy. flamboyant and informal. Horie symbolised Struc.Assig. Available the new generation of Japanese keywords entrepreneurs who dared to challenge the status quo in the conservative business PepsiCo; Health foods; Good for you; community. His rapid rise to fame largely, Better for you; Fun for you; Steve because of his acquisition spree, had shocked Reinemund; Food industry and obesity; Dr. many. Greater was the reaction when he Kenneth Cooper; Dr. Dean Ornish; Trans

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fats; Health food company; Pepsi edge; job cuts, outsourcing and sub-contracting. keywords

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Green dot; Tropicana; The Quaker Oats Finally on October 17th 2005, GM III – Y G E T A R T S Company. announced its deal with the UAW, which Growth strategy; Triple A’s - Acquisition; agreed to reduce its healthcare costs for Activation; Activity; World’s on-line retirees by $15 billion and its annual marketplace; Pierre Omidyar; Meg Whitman; e-Commerce; Reputation Japan Airlines Corporation: employee healthcare expenses by $3 billion a year. Other than reducing costs, GM has management system; Paypal Kijiji; Zero Brand Building Strategies also planned to increase revenue by inventory system; Yahoo!; Microsoft; Google; Competitive strategies; Froogle; Established after the Second World War, refocusing on sales, marketing and development of new models. Alibaba; EachNet; Peer-to-peer networks; Japan Airlines evolved into Japan’s leading Business model. air carrier in a highly regulated environment. After liberalisation of the Pedagogical Objectives Japanese airlines industry in 1987, Japan • To highlight the reasons for the recent Airlines suffered losses due to a tough Nissan in America: The Troubled losses at the North American operations business environment and inherent Strategy inefficiencies. Its merger with Japan Air of GM After a turnaround that is worthy of being System created Japan Airlines Corporation • To discuss the deal entered into by GM called a miracle, Nissan saw its sales slipping (JAL), which became one of the world's and UAM and the effects of the deal. leading air carriers. However, in 2005 a in the very important US market and lost series of safety lapses in JAL planes Industry Automobile Manufacturing a considerable market share. Lack of new severely damaged customer confidence in Reference No. TRT0069 models is said to have hampered the sales the airline and the company received a Year of Pub. 2005 growth. The next model will be released in first-ever operational improvement order Teaching Note Not Available late 2006, by March of that year Nissan from Japan’s Transport Ministry. Struc.Assig. Not Available would have spent a year without releasing a new model – something unusual in the keywords hypercompetitive automobile industry, Pedagogical Objectives General Motors; ; Labour where new models, at best, or variations in • To highlight the formation and growth cost; Legacy cost; Global auto motor the old models, at worst, are common of JAL against the backdrop of the industry; American auto motor industry; place. It is noted that by the time Nissan Japanese airlines industry United Auto Workers (UAW); Healthcare comes out with a new car, its market share costs; Competition; Car models; Sports would have fallen beyond recovery. Chief • To discuss its brand building strategies to executive officer Carlos Ghosn, often win back customer confidence. utility vehicles (SUVs); Ron Gettelfinger; Delphi; Detroit; Low-cost manufacturers referred to as the 'golden boy' of the Industry Airlines automobile industry, is confident and Reference No. TRT0070 advocates that there is no problem that cannot be solved by a good car. He might Year of Pub. 2006 eBay Celebrating Tenth Teaching Note Available be right, indeed he has revived the fortunes Anniversary: The Challenges Struc.Assig. Available of debt ridden Nissan by introducing two Ahead dozen new models since 1999. However, keywords pessimists would say ‘miracles do not work rd On June 23 2005, eBay, the world's largest often’. Japan Airlines; Japan Airlines Corporation; on-line auctioneering company, celebrated Japan Air System; All Nippon Airways; its 10th anniversary. The company, which Pedagogical Objective Toshiyuki Shinmachi; Japanese airlines started its operations with the trade of industry; Civil Aviation Law; Japan Airlines candy dispensers, became a world leader in • To highlight the strategies adopted by Company Limited Law; Brand building on-line business through its innovative Carlos Ghosn to revive Nissan. strategies; Building customer confidence; business model and consistent Deregulation liberalisation; Brand image; performance. While the company’s Industry Automobile Ministry of Land, Infrastructure and management feels it is just the beginning Reference No. TRT0067 Transport. of the success story, many industry experts Year of Pub. 2006 opine that the sector is heating up with Teaching Note Not Available the entry of other Internet heavyweights Struc.Assig. Not Available GM’s Growing Troubles: Labour like Yahoo!, Amazon, and Google, resulting keywords in several challenges for eBay. Driven or Market Driven? Automobile industry in the US; Nissan; General Motors (GM), which maintained Pedagogical Objectives Nissan in America; Carlos Ghosn; Nissan’s its number one position in Fortune strategy in the US; Carlos Ghosn’s strategy. magazine’s annual 500 list over the years, • To trace the evolution of eBay into an is into losses worth $1.6 billion in third on-line business giant quarter of 2005 mainly due to losses at its • To highlight eBay’s business model, its The American Institute of North American operations. The GM competitive advantage and the growth Certified Public Accountants management cited rising healthcare and strategies adopted by eBay (AICPA): A Decade of labour costs as major reasons for losses. But, the United Auto Workers (UAW) feels • To discuss the future opportunities and Challenge and Change that vehicle design, product development challenges for eBay. By the turn of the 21st century, due to a and foreign competition are the major Industry Internet Auctions series of accounting scandals in companies reasons for company’s losses. The Reference No. TRT0068 like Enron and Worldcom in the US, Federal opposing positions between the two (GM Year of Pub. 2005 Public Policy makers felt that the American and UAM) had hindered negotiations Teaching Note Not Available Institute of Certified Public Accountants' concerning reduction of healthcare costs, Struc.Assig. Not Available (AICPA’s) authority to set accounting

41 www.ibscdc.org standards and their enforcement should be Industry Distilleries German and French shareholders failing to transferred to a government empowered Reference No. TRT0065 come to a consensus on the future body. Subsequently, the Sarbanes-Oxley Act Year of Pub. 2005 management structure of EADS, many established the Public Company Accounting Teaching Note Not Available strategic decisions of the company have Oversight Board (PCAOB), which has Struc.Assig. Not Available been put on hold. jurisdiction over every area of CPA practice keywords in relation to public companies. However, Pedagogical Objectives for the majority of practising CPA’s, who Diageo; European economy; US dollar serve privately held business and decline; Consumer taste; Restructuring plan; • To highlight the power struggle within individuals, AICPA retains its authority to Troubled times; Mergers and acquisitions; the EADS board set accounting standards, enforce Pernod Ricard; Competition; Competitive • To discuss how conflicting national professional ethics and monitor the quality advantage; Marketing and innovation; interests in a company with dual of the firm practices. Since 2003, AICPA Diversification; Weak demand; Taxes; command, might hamper its business has begun many initiatives, which include Future of Diageo. prospects. programmes that would help in implementing the Sarbanes-Oxley Act and Industry Commercial Aircraft rebuild investor confidence. Manufacturing Troubled Times at Morgan Reference No. TRT0063 Pedagogical Objectives Stanley: Strategic Missteps of Year of Pub. 2005 imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis Philip J. Purcell? Teaching Note Not Available • To highlight the growth of AICPA Struc.Assig. Not Available Philip J. Purcell took over as the chief • To discuss the institution’s challenges executive officer (CEO) of Morgan Stanley keywords against the backdrop of major in 1997. Dean Witter Discover & Co. was accounting scandals that have rocked merged with Morgan Stanley in the same Global aerospace and defence business; corporate America. year. Although initially the company Global commercial aircraft manufacturers; Strategic partnerships in the defence roubled Troubled T T roubled Troubled roubled Troubled roubled T recorded robust performance, post 2000 Industry Membership Organisations the performance started deteriorating and industry; European aerospace and defence Reference No. TRT0066 the critics accused Purcell’s strategic manufacturers; Ownership structure of Year of Pub. 2006 missteps as the reason. As a result, Purcell European Aeronautic Defence and Space Teaching Note Not Available had to step down as the CEO of the Company NV (EADS); Relationships Struc.Assig. Not Available company on June 13th 2005. But his between principal shareholders of EADS; keywords supporters were of the opinion that his Voting rights at EADS board; Conflicting strategies would have been successful national interests at EADS board; Future American Institute of Certified Public eventually and he was merely a victim of business plans of EADS; Transnational Managing T Managing T Managing T Managing T Managing T Accountants (AICPA); Growth strategies; circumstances. ownerships and mergers; State ownership Sarbanes-Oxley Act; Security laws; in European defence manufacturers; Oversight Board; Financial Accounting Multinational ownership and leadership Pedagogical Objective Standards Board (FASB); Generally struggles; Franco-German alliance in accepted accounting principles (GAAP); • To discuss the challenges faced by Philips aerospace and defence manufacturing; Generally accepted auditing standards J Purcell in turning around the fortunes Dual-command structure at EADS. (GAAS); Public Company Accounting of the company. Oversight Board (PCAOB); Accounting Industry Capital Market Scandals; Enron; Accounting Standards BSkyB: Troubled Times Board; Securities Exchange Commission Reference No. TRT0064 (SEC); Challenges for AICPA. Year of Pub. 2005 In June 2005, the European Commission Teaching Note Not Available (EC) passed a directive that proposed to Struc.Assig. Not Available put an end to British Sky Broadcasting’s Diageo: World’s Largest Spirits keywords (BSkyB) exclusive rights over telecasting Company in Troubled Times of FA Premier League football matches. Morgan Stanley; Philip J. Purcell; Strategic The Commission proposed to split 20%- In 2003, Diageo, the world’s largest missteps; Discover credit card; Investment 50% of the rights with another buyer at producer of alcoholic drinks, was involved bank; Group of 8; Retail brokerage; Asset the next contract renewal due in 2007. in a controversy over its alleged role in management; Spin-off; Cultural Sentanta Sports, a Dublin-based Irish TV ruining the age-old reputation of the global differences; Consumer–corporate group, is vying for a part of the Scotch Whisky Industry. This was followed conglomerate; Dean Witter Discover & broadcasting rights to strengthen its by the decline in the sales of its Ready to Co.; Financial supermarket. portfolio of sport rights in and outside of Drink (RTD) beverages in the US and a Ireland. Analysts believe that the loss of sluggish economic growth in Europe, its exclusive rights of BSkyB will reduce the major market. Besides this it also started EADS: The Boardroom Battle at earnings of the clubs in the FA Premier witnessing stiff competition from other Europe’s Aerospace Giant League and may also lead to the bankruptcy global giants like the Pernod Ricard-Allied of some clubs. On the other hand, some Domecq alliance, William Grant’s and European Aeronautic Defence and Space analysts have opined that loss in exclusivity Chivas Regal. Company NV (EADS), Europe’s largest and by BSkyB would lead to a greater number the world’s second largest aerospace firm, of games being aired on ‘free-to-air’ Pedagogical Objectives has plans to venture into the US defence television benefiting fans across the UK. industry, which is dominated by US • To highlight the business hurdles being companies. Despite doing well on the Pedagogical Objectives faced by Diageo business front, EADS is mired in a boardroom battle, which stems from its • To highlight the different strategies • To discuss the strategies adopted by it to unique organisational structure. With the adopted by BSkyB in the wake of the retain its number 1 position in the world. directive by the EC 42 www.ibscdc.org

• To discuss the challenges that James transparency; Family-owned business to light various factors that CNN

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Murdoch, chief executive of BSkyB faces enterprise; Indian conglomerate; Vimal overlooked in its broadcasting. Biased III – Y G E T A R T S in trying to retain viewership and Hazira Jamnagar Naroda; Diversification reporting, a little-varied portfolio of maintain the company’s position in the strategies; Largest petroleum refinery. programmes and an inclination towards competitive broadcasting market. marketing rather than reporting quality, all made CNN vulnerable to competition. Industry Direct Broadcast Service Providers Walgreen Co.: The US Drugstore Pedagogical Objectives Reference No. TRT0062 Chain's Survival Strategies Year of Pub. 2005 against the Drug Wars • To highlight growth strategies of CNN Teaching Note Not Available over the years and the challenges it faces Founded by Charles Walgreen in 1901, Struc.Assig. Not Available from rival channels Walgreen grew to become the largest keywords drugstore chain of the US, by 2005. Ever • To discuss how CNN is dealing with the since its inception, Walgreen had expanded BSkyB; European Commission; Setanta competition especially from Fox news by opening new retail pharmacy stores and Sports; FA Premier League; UK; Personal channel by initiating changes to its by 2005 it operated over 4,800 stores in video recorder; Competition law; Pay-per- programming and reporting style. the US. Though Walgreen had grown to view; Segmented pricing strategy; become the largest chain of drug stores, it Industry Television Cable, Pay and Customer churn rate; Sky Mobile; IPTV had to face many challenges from the mail Broadcast Networks (TV over Internet protocol); HDTV (High order operators since the mid 1990s. The Reference No. TRT0059 Definition Television); English Cricket competition from the mail order operators Year of Pub. 2005 Board (ECB); Digital television. had almost changed the business model of Teaching Note Not Available the retail pharmacy stores. The customers Struc.Assig. Not Available of Walgreen started purchasing their daily keywords The Reliance Group Split-up: medical requirements, on-line from the What Went Wrong with the Indian Internet sites operated by the mail order Cable News Network (CNN); Competition Conglomerate? pharmacies (also known as the Pharmacy among 24-hour news channels; Ted Turner; Benefit Managers). To retain its customers, Fox Channel; Rupert Murdoch; The Reliance Group, controlled and Walgreen started its own on-line drugstore Conservative and Liberal audience; managed by the Ambani family, is India’s called www.walgreen.com in 2000. Further Innovations in broadcasting; Biased largest business house. Started in 1958, in 2003, Walgreen initiated the programs; Image transformation; CNN’s Reliance grew from a small trading Advantage90 programme providing its competitive strategies. company to a conglomerate with major customers the choice of purchasing from interests in petroleum, petrochemicals, the retail stores as well as from the on-line power, finance and telecom industries, sites. Amtrak: America’s Passenger under the leadership of Dhirubhai Ambani Rail Service Getting out of and his sons Mukesh and Anil. After the Pedagogical Objective death of Dhirubhai, who was believed to Track? have died intestate, the elder son, Mukesh • To discuss the growth strategies of Amtrak was started in 1971 by the US assumed control of the family-owned Walgreen to deal with the challenges government to provide high quality business. Within two years, a major faced by it in adopting its business model intercity railroad passenger transportation ownership battle for the control of according to changing industry trends. at economical rates. Although Amtrak was Reliance between the two brothers came Industry Drug Retailing expected to achieve operational self- to light. With both brothers hurling sufficiency by 1973 without the US accusations at each other the image of Reference No. TRT0060 Year of Pub. 2005 government subsidy, the company Reliance suffered until their mother, continued to receive federal subsidies, Kokilaben Ambani, effected a settlement. Teaching Note Not Available Struc.Assig. Not Available which amounted to $29 billion by 2004. In mid-2005, the US government Pedagogical Objective keywords introduced a bill in the Congress titled the • To highlight the growth of Reliance Walgreen Co.; Charles Walgreen; Organic Passenger Rail Investment Reform Act, group and the impact of split-up of Growth; Largest drugstore chain; which intended to privatise Amtrak. Reliance Group on the financials and Competition from mail order system; On- However, certain lobbies in the US growth. line drugstore; Pharmacy benefit managers; Congress are opposing the bill. Advantage90 programme. Industry Not Applicable Pedagogical Objectives Reference No. TRT0061 Year of Pub. 2005 • To highlight the challenges faced by Teaching Note Not Available CNN, The World’s First 24-hour Amtrak th Struc.Assig. Not Available News Channel’s 25 Year: The • To discuss the implications of privatising Challenging Times keywords a passenger railroad, which has been Cable News Network (CNN) is the world’s losing $1 billion every year since the Reliance group split-up; Dhirubhai Mukesh first ever 24-hour news channel launched early 1990s. Anil Ambani; Reliance Industries Limited by Ted Turner in 1980. Until Rupert (RIL); Indian Petrochemicals Limited Industry Intercity Passenger Railroads Murdoch introduced Fox Channel in 1996, (IPCL); Reliance Energy Limited (REL); Reference No. TRT0058 CNN dominated the cable news market Reliance Capital Limited (RCL); Reliance Year of Pub. 2005 with its around the clock news broadcasting. Infocomm (RIC); Petroleum Teaching Note Not Available Apart from a decline in the viewership, Petrochemicals; Ownership and control Struc.Assig. Not Available the competition from Fox Channel brought issues; Corporate governance and

43 www.ibscdc.org keywords brought a spate of troubles for the keywords company, from which it seemed hard to National Railroad Passenger Corporation; emerge. As the company kept reporting Wal-Mart; Germany; Retail industry; National monopoly; Amtrak’s operational dismal performance year after year since Hypermarket; Kay Hafner; Every Day Low self-sufficiency; Passenger Rail Investment 2002, concurrently the management was Pricing (EDLP); Interspar; Zoning Reform Act; Privatisation of Amtrak; also making efforts to stop the losses and regulations; Culture clashes; Restrictive American aviation industry; American achieve a turnaround. As part of the shopping hours; Supply chain and automobile industry; Interstate Commerce turnaround effort, a new Chief Executive distribution system; German retail laws and Commission; Intercity passenger railroads; Officer, , was appointed to regulations; Wertkauf; Merchandise Passenger network; Federal subsidies; revive the fortunes of the company. But vendors. Fastest mode of transportation; Global before he could completely implement his privatisation of railroads; Railpax strategies, in a sudden move, he was replaced with George Shaheen. The MG Rover: The Fall of an Iconic continuous losses, ongoing turnaround Brand – The Blame Game US Postal Service: Threats and efforts and the sudden change of leadership Continues Challenges at the helm raised questions about the health of the company and its future MG Rover was once Britain’s biggest car By 2004, the United States Postal Service prospects. manufacturer in terms of volume, (USPS) had established a network of 37,000 producing more than half a million cars imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis post offices across the nation. Through Pedagogical Objective annually. Established in 1906, the company various cost cutting initiatives and supply experienced many setbacks in the form of chain improvements, USPS reduced its debt • To highlight turnaround efforts and ownership changes, industrial relation from $11.3 billion (in 2001) to $1.8 billion strategies adopted by Siebel Systems Inc. problems, low production and financial in 2004. However, with increasing usage constraints, which finally led to the Industry Information Technology of the Internet for personal and business downfall of the company. While some Services correspondences, the first class mail analysts held BMW, the owner of MG Reference No. TRT0056 roubled Troubled T T roubled Troubled roubled Troubled roubled T service, which represents more than half Rover between 1994 and 2000, responsible Year of Pub. 2005 of the USPS revenues, has been declining. for the downfall, the others blamed the Teaching Note Not Available Besides, increasing competition from government for not rising to the situation Struc.Assig. Not Available private courier companies accompanied by on time when BMW sold the company to a potential workforce crisis and rise in keywords Phoenix Venture Holdings. The expenses has forced USPS to reduce its costs management of Phoenix Venture Holdings even further by adopting the latest Siebel Systems Inc.; Information headed by ex-chief executive officer of MG technologies to provide faster and more technology services; Business processing Rover, John Towers, faced criticism for cost efficient services. outsourcing services; Turnaround utilising the funds available at MG Rover Managing T Managing T Managing T Managing T Managing T strategies; Restructuring plan; Michael to fulfill their personal financial Lawrie and George Shaheen; Customer Pedagogical Objective requirements. Relationship Management (CRM); Tom • To highlight the challenges faced by Siebel; Sales Force Automation (SFA); Pedagogical Objective USPS to survive and retain its market Incompetent managers and poor decisions; share. Troubled times and leadership change; • To discuss the options available at MG Oracle; SAP; IBM; Salesforce.com; Rover to avoid the fiasco. Industry Postal Services Computer services and software; Reference No. TRT0057 Turnaround specialist; Divestments and Industry Automobile Year of Pub. 2005 spin-offs. Reference No. TRT0054 Teaching Note Not Available Year of Pub. 2005 Struc.Assig. Available Teaching Note Not Available Struc.Assig. Not Available keywords Wal-Mart in Germany: The keywords Postal Service in US; Automation Retailing Challenges techniques in postal service; Customer By the end of 2004, Wal-Mart had a Rover Group; Longbridge factory; Services at USPS (US Postal Service); On- marginal presence in Germany with 2% in Ownership changes; Phoenix Venture line postal services; First class mail; the retail food market. Even with 91 Holdings; Job cuts; The Mini brand; Automated postal centres; Cost control supercentres, Wal-Mart was facing Bankruptcy; Labour problems; John measures at USPS; Federal Express; problems trying to integrate its operations Towers; Tony Blair; Shanghai Automotive Workforce crisis at USPS; Threats from in Germany and was also finding it difficult Industry Corporation. the Internet; Bureaucracy in US to adapt itself to the local culture. Besides, government; US Postal Reorganisation Act strict government regulations in the retail of 1970. sector were hampering its expansion. American Car-parts Firms’ Growing Troubles: Delphi Leads Pedagogical Objective the Way Siebel Systems, Inc.: Troubles and Turnaround Efforts • To highlight the strategies adopted by The world’s largest auto parts maker, Delphi Wal-Mart to overcome the retailing Corporation, announced in March 2005 Siebel Systems Inc. was one of the fastest challenges in Germany. that it had overstated its profits by $166 growing companies in the information million and cash flows by $447 million technology industry. It was known for its Industry Discount and Variety Retail Reference No. TRT0055 over a period of six years since 1999. The ability to provide software solutions for accounting irregularities came to the fore Customer Relationship Management Year of Pub. 2005 Teaching Note Not Available at the time when Delphi was already mired (CRM) and Sales Force Automation (SFA). in other problems related to an increase in But the global economic slowdown in 2000 Struc.Assig. Not Available 44 www.ibscdc.org

commodity prices like steel, a decrease in Structural problems and cultural clashes; Ente Nazionale Idrocarburi

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S production by Ford, DaimlerChrysler and Deutsche Lufthansa AG; Lufthansa-SWISS (ENI): Succession Battle at the GM, as well as increased competition from merger; Future of SWISS. Italian Oil Giant foreign players. Ente Nazionale Idrocarburi (ENI) an Italian Pedagogical Objectives Marsh & McLennan: The state-owned company dealing primarily in oil and natural gas under Enrico Mattei, • To highlight the challenges faced by the Troubled Insurance Broker the founder of ENI, diversified into US car-parts industry Marsh & McLennan (Marsh), the world’s businesses such as electricity, engineering, • To discuss Delphi’s problems and its largest insurance brokerage company was construction and petrochemicals. After his future course of action under difficult mired in an insurance scandal in 2004. It sudden death in 1962, the company was business circumstances. was alleged by New York Attorney General mired in financial and operational struggles Eliot Spitzer, that it had been involved in and in 1992, Franco Bernabe, a strong Industry Auto-Parts Manufacturing unethical and illegal practices to benefit supporter of privatisation was appointed Reference No. TRT0053 its favourite clients through rigging of as chief executive officer. Under his Year of Pub. 2005 insurance bids in their favour, manipulating leadership ENI not only became a joint Teaching Note Not Available prices of their insurance products and that stock company but also showed profits. Struc.Assig. Not Available it received extra commissions for those Vittorio Mincato succeeded Bernabe in 1998 and he turned ENI into the world’s keywords favours. These allegations and the consequent investigation by the attorney sixth biggest oil producer, in terms of Delphi; US car-parts industry; general had a profound impact on the market capitalisation. With his term Autosuppliers; USA; Auto parts; company. It witnessed the erosion of its coming to an end in May 2005, Accounting; Outsourcing; Foreign auto market capitalisation by nearly 50%, a speculations about the succession plans is parts suppliers; Big Three; Ford; General decrease in earnings, downgrading by doing rounds in the industry circles. Owing Motors; Auto parts manufacturers; Steel international rating agencies and to the government’s 30% stake in ENI, price; Commodity price. resignation of the chief executive officer Silvio Berlusconi, Italy’s prime minister (CEO). The entire US insurance industry was also in search for a replacement to came under the scrutiny of investigators Vittorio. Moreover, though Vittorio announced that he was expecting a term Swiss International Airlines: and law enforcers. To protect the company from its falling reputation, the company extension, many within the industry circles Revival Plan to Yield Break appointed a new CEO Michael Cherkasky voted against him. even? who took up the task of reformation by an Swiss International Air Lines (SWISS), the $850 million settlement of the scandal, a Pedagogical Objectives new national carrier of Switzerland was change of business model, elimination of unlawful practices, and measures to • To highlight the impact of political formed in 2002, through the merger of influence on the management as well as bankrupt former national carrier SwissAir maintain transparency and better compliance. But the company still faces the company’s operations that led to and a regional carrier CrossAir. The financial problems at ENI company’s several attempts to reposition several other tougher challenges for the itself failed. In 2004, the airline’s future. • To discuss how privatisation efforts and membership in the Oneworld Alliance and freeing the company from political a partnership agreement with British Pedagogical Objective influence helped the company to emerge Airways went sour aggravating the as one of the leading oil producers in the • To highlight the flaws in the US company’s troubles. Also, the airline is yet world insurance industry, which led to a major to break even since its inception. Hence, scandal, and its impact on the insurance • To discuss the possible impact of in early 2005, SWISS announced a industry. succession plan on the future of ENI. restructuring plan aimed at ending its troubles and posting a net profit by 2006. Industry Insurance Industry Oil and Natural Gas Reference No. TRT0051 Reference No. TRT0050 Pedagogical Objective Year of Pub. 2005 Year of Pub. 2005 Teaching Note Not Available Teaching Note Not Available • To highlight the reasons behind the Struc.Assig. Not Available Struc.Assig. Not Available continuous losses and failure of SWISS International Airlines alliance with keywords keywords British and other airlines. Marsh and McLennan Companies; Succession plans; Privatisation; Industry Commercial Aviation and Insurance brokerage firm; New York Government intervention; Vittorio Airlines attorney general, Eliott Spitzer; Michael Mincato; Political influence. Reference No. TRT0052 Cherkasky and Jeffrey Greenberg; Year of Pub. 2005 American insurance regulatory system; Teaching Note Not Available Insurance bid rigging; Price manipulating Vonage – The Pioneer in VOIP Struc.Assig. Not Available and fixing; US SMART (State Modernisation and Regulatory Telephone Services: Future keywords Transparency) Act; Insurance scandal and Challenges Swiss International Air Lines (SWISS); probe; Corporate transparency; Conflict US-based Vonage is the pioneer in the Voice Oneworld Alliance; Code-sharing of interests and investor confidence; Fraud Over Internet Protocol (VOIP) telephone agreement; British Airways; Restructuring and anti-competitive activities; Secretive services. Through innovative services and plan; Breakeven; Swiss national air carrier; culture; Corporate governance; American promotion, it emerged as the leading player Crossair; Loss-making routes; insurance industry. in the industry. But the increasing Incompetent managers and poor decisions; popularity of Internet services brought High cost airline and low cost airline; major telecom, cable, and Internet

45 www.ibscdc.org companies into the VOIP market, creating Contamination; 35-hour workweek; Pedagogical Objective future growth challenges for Vonage. This French labour laws; Green bottle; Naturally case provides insights into the VOIP sparkling. • To discuss the challenges faced by technology, industry trends and the Vodafone in Japan. competitive strategies of various players Industry Wireless Network Operators in the fast expanding VOIP market. Mobile Phone Industry’s Safety Reference No. TRT0046 Concerns: Managing Troubled Year of Pub. 2005 Pedagogical Objectives Teaching Note Not Available Times Struc.Assig. Not Available • To discuss the future trends in VOIP Since the introduction of mobile phones industry keywords in the early 1980s, there have been • To highlight the challenges faced by concerns regarding the effects of the use Vodafone; Japan; Vodafone KK; 3G mobile Vonage to retain its leading position in of mobile phones on human health. There handsets; Japan Telecom; J-Phone; the VOIP telephone services. were allegations that the microwave Shamail; W-CDMA; NTT DoCoMo; radiation used to transmit conversations KDDI; Bill Morrow; Mobile industry; Anti- Industry Telecom Services between base stations and mobile phone ; High Speed Downlink Packet Access Reference No. TRT0049 handsets could lead to health problems such (HSDPA); Vodafone Live! Year of Pub. 2005 as fatigue, reduced concentration and Teaching Note Not Available imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis

imes/Managing a Crisis imes/Managing a Crisis cataracts among others. Although, there Struc.Assig. Not Available was no concrete evidence that mobile Troubled Times at Unilever keywords phones posed a threat to human health, researchers warned people to take a After the failure of the five-year ‘Path to Vonage; Voice over Internet Protocol cautious approach to the use of mobile Growth’ programme that aimed at 5% to (VOIP); Diversification; AT&T; Comcast; phones. Meanwhile, mobile phone 6% annual growth, Unilever’s pre-tax Cable Vision; US telecom industry; Skype; manufacturers initiated efforts to counter profit declined from £4.5 billion in 2003 Net2Phone and Delta Three; Business and the health fears. roubled Troubled T T roubled Troubled roubled Troubled roubled T to £2.8 billion in 2004. The loss of £255 revenue model; Cable and telecom giants; million in the fourth quarter of 2004 was Telecom and Internet infrastructure; Pedagogical Objective the company’s first quarterly loss since Verizon; Internet phone industry; Wi-Fi 2000. This led to the abandonment of its (wireless fidelity) technology. • To highlight the efforts initiated by 75-year old dual chairmen structure and mobile phone manufacturers to mitigate paved the way for unification of the bi- the fears about the health risks national company. Troubled Times at Perrier associated with the use of mobile phones. Industry Telecommunications Pedagogical Objective Managing T Managing T Managing T Managing T Managing T In the mid-1980s, Perrier was the world’s Equipments best selling mineral water brand. In February • To discuss the challenges faced by Reference No. TRT0047 1990, after the detection of contamination Unilever to retain its market share. Year of Pub. 2005 in its bottled water, the brand was almost Teaching Note Not Available ruined. Nestle bought Perrier in 1992. After Industry Personal Care Products Struc.Assig. Not Available several unsuccessful attempts to restructure Reference No. TRT0045 Year of Pub. 2005 the company, in March 2004, Nestle keywords announced that Perrier was not profitable Teaching Note Not Available enough and proposed voluntary retirement Mobile phone industry; Health issues; Struc.Assig. Not Available Mobile phone industry’s safety concerns; for some of its workers. Perrier’s powerful keywords labour union, CGT (Confederation Generale Microwave radiation; Health risks and du Travail), opposed the proposal and mobile phones; Mobile phone base stations; Unilever; Troubled times; Personal care refused to accept job cuts. Nestle threatened Mobile Manufacturers Forum; products; Path to growth strategy; to sell off Perrier or move production Electromagnetic radiation; Mobile Consumer goods industry; Pricing power; elsewhere. With the Nestle management Operators Association; World Health Bureaucracy; Twin board structure; and the CGT at loggerheads, the French Organisation; Initiatives by mobile phone Management team; Performance targets; finance minister had to intervene to settle manufacturers; Specific absorption rates of Procter and Gamble (P&G); Slim Fast; the dispute. mobile phones; Radiation levels of mobile Restructuring; Cost cutting; Supermarket phones; Mobile Telecommunications chains. Health Research programme. Pedagogical Objective

• To highlight the problems of Perrier and Pfizer: Dearth of New Products possible actions required to revive the Vodafone: Losing Connectivity in and Future Challenges company. Japan? st Industry Water and Ice By the turn of the 21 century, despite By January 2005, Vodafone in Japan had Reference No. TRT0048 investing $7 billion a year on R&D, Pfizer lost 59,000 customers to its competitors, Year of Pub. 2005 has been witnessing constant decline in its who were offering superior handset features Teaching Note Not Available productivity. Since 2001, Pfizer’s shares and services. This prompted Vodafone to Struc.Assig. Not Available have declined by 45% to $25 a share. re-organise its management structure by Analysts estimate flat earnings for Pfizer keywords recruiting a new president who had in-depth in 2005 and 1.5% annual decline in its sales knowledge of the Japanese market and also through 2010. Under such circumstances, Perrier; Nestle; Mineral water; Bottled planned to offer handsets that were tailor- Pfizer has initiated a comprehensive review water; CGT (Confederation Generale du made for the Japanese customers. of its business and the company is expected Travail); Labour relations; Nestle Waters to undergo a major restructuring in 2005. France; French mineral water industry;

46 www.ibscdc.org

Pedagogical Objectives phone services, and Internet access. A failed Industry Telecommunications

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S international venture led to a billion dollar Equipment III – Y G E T A R T S • To highlight the challenges faced by write down resulting in losses and debts for Reference No. TRT0041 Pfizer the company. Rising costs and regulatory Year of Pub. 2005 • To discuss the future strategies Pfizer issues added to its troubles. In order to Teaching Note Not Available would adopt to retain its market reduce its debts and turn the company Struc.Assig. Not Available position. around, the Australian government decided to privatise it. Besides enabling the students keywords Industry Pharmaceuticals Manufacturers to discuss the reasons for Telstra’s troubles, Nortel Networks Corporation; Accounting Reference No. TRT0044 this case also triggers discussion on the pros mis-statements; Financial re-statement; Year of Pub. 2005 and cons of privatising Telstra and the Telecommunications equipment maker; Teaching Note Not Available possible alternatives to turnaround the John Roth; Frank Dunn; Controversial Struc.Assig. Not Available company. bonus plan; Return to profitability; William keywords A ‘Bill’ Owens; Chief of ethics; Audit Pedagogical Objective Committee of the Board of Directors; Bell Pfizer; Pharmaceutical industry; Telephone Canada; Public and private Innovations; Blockbuster drugs; • To highlight the Pros and cons of telecom networks; Regulatory Acquisitions; Licensing; Regulatory privatising Telstra and its impact on the investigations; Securities and Exchange measures; Research and development; company. Commission (SEC). Lipitor; Food and Drug Administration; Industry Telecommunications Patent expiration; Generic competitors; Equipment Ranbaxy Laboratories Limited; Reference No. TRT0042 Restructuring; Decentralisation. General Motors in Europe: The Year of Pub. 2005 Challenging Times Teaching Note Not Available Struc.Assig. Not Available General Motors Europe (GME), the Unocal’s Embattled Strategy: European division of the world’s largest keywords A Soft Takeover Target? automobile manufacturer General Motors, Telstra Corporation; Privatisation; started reporting protracted losses and Until the end of 2004, US-based energy Diversification; Restructuring; Regional declining market share from 1999 due to company, Unocal Corporation, was trailing telecommunications inquiry; REACH; the weak European market. New liberalised behind its peers in share price, production Pacific Century Cyber Works (PCCW); car dealership rules, an unsuccessful and net income per barrel. But, on January Voice over internet protocol (VOIP); restructuring plan, a failed alliance with th 6 2005, its share price jumped by 10% Wholesale voice; Data and internet Fiat Auto and the growing dominance of when rumours spread about its probable connectivity services; Next Generation the Asian carmakers further worsened the acquisition by China National Offshore Oil Cost Reduction phase III (NGCR III); situation. GME’s position slid from second Corporation (CNOOC), a leading energy Australian telecom industry; Management to fifth in the European market. In 2004, company in China. The company had faced turmoil; Sensis – directory business; Rising to save the ailing European division from environmental problems, was accused of debts and operating costs; Telstra mobile further decline, its new chairman Frederick human rights abuses and also failed to meet satellite. Henderson, formulated a restructuring plan its production targets. focusing on reduction of costs, plant capacities, downsizing and integration of Pedagogical Objective functional departments. But according to Nortel Networks: The Canadian the industry analysts the task of • To discuss the problems faced by Unocal Telecommunications Equipment restructuring is likely to be tough and the that makes it a potential takeover target. Giant’s Accounting layoffs expensive, with weak markets for Industry Oil and Gas Refining, Controversies the next two years. Marketing and Distribution The management of Canada-based Nortel Reference No. TRT0043 Pedagogical Objective Networks Corporation, one of the largest Year of Pub. 2005 telecommunications equipment companies Teaching Note Not Available • To discuss the efficacy of the restructuring in the world, was forced to restructure due Struc.Assig. Not Available plans for General Motors in Europe. to the Internet bubble bursting. However keywords when it appeared that the company was Industry Sugar able to come out of the downturn in its Reference No. TRT0040 Unocal; China National Offshore Oil business by 2003, disaster struck the Year of Pub. 2005 Corporation (CNOOC); Takeover; Energy company again in early 2004, when it Teaching Note Not Available companies; Oil and natural gas company; announced that it would be re-stating its Struc.Assig. Not Available Global demand for oil and natural gas; financial statements for the years 1998 to keywords Consolidation in oil industry; 2003. Environmental problems; Human rights General Motors Europe; Fiat Auto SPA; violations; China’s oil imports; Acquisition. Pedagogical Objectives European automotive industry; Frederick Henderson; Layoffs and plant closures; • To discuss the reasons behind re- European automobile makers; Asian Telstra’s Growing Troubles: Is statements of financials between the automakers; European economic years 1998 to 2003 Privatization the Solution? recession; Project Olympia; EU (European Union) automobile dealerships regulations; • To highlight the impact of accounting Telstra, the Australian state-owned Adam Opel AG; Competitive strategies; controversies on the Nortel’s future telecommunications and information Acquisitions and mergers. growth prospects. services company, offers fixed and mobile

47 www.ibscdc.org Chuck Prince’s Biggest only six drugs between 2001 and 2003. Converium: The Swiss Reinsurer’s Challenge: Saving Citi’s The company’s sales have also declined Troubled Times Reputation taking it to number three position in the global pharmaceutical industry. Its net Switzerland based Converium Holdings, the Citigroup, formed in 1999 by a merger of income fell for two consecutive years 2002 ninth largest reinsurance company in the Traveler's Group and Citicorp, is the largest and 2003 and it had to lay off 4,400 world, found itself in financial difficulty financial services conglomerate in the employees in 2003, the biggest ever in its due to the massive losses incurred by its world worth $100 billion in stock equity. 117 year history. North American subsidiary in the aftermath Under the leadership of its erstwhile CEO, of the 9/11 terrorist attacks in 2001. After Sanford I Weill, Citi acquired a reputation Pedagogical Objectives revealing its losses, Converium undertook for emphasising on the bottom-line and a reserve strengthening exercise, the pursuing aggressive sales practices to that • To discuss the reasons behind Merck’s magnitude of which shocked the end. In the process Citi’s reputation took decline reinsurance industry. In response, both Converium’s share price and investor a beating when a series of charges were • To discuss how competitive Merck can ratings tumbled jeopardising its existence. filed against it accusing it of fraudulent be in future. practices. In 200, Weill stepped down as the CEO, paving the way for Citi old-timer Industry Pharmaceutical Manufacturer Pedagogical Objectives Charles Prince, who took upon himself the Reference No. TRT0038 task of delivering profits and growth Year of Pub. 2005 • To discuss the position of Converium imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis ‘responsibly and honestly’. But two Teaching Note Not Available and the various alternatives available to incidents in mid-2004 showed that the task Struc.Assig. Not Available deal with the crisis was incomplete. keywords • To discuss the future of Converium as a viable entity. Pedagogical Objectives Blockbuster drugs; ‘Me-too’ drugs; Contract research organisations; Industry Insurance Services • To examine the nature and causes of Prescription benefits management; In- Reference No. TRT0036 roubled Troubled T T roubled Troubled roubled Troubled roubled T Citi's regulatory and reputation problems house research; Drug development and Year of Pub. 2005 and the efforts made by Weill and Prince clinical trials; Generic manufacturers. Teaching Note Not Available to ensure that Citi’s size and diversity Struc.Assig. Not Available does not influence its business practices keywords • To discuss the dilemmas of businesses to Havas: Troubled Times at French Converium Holdings; Zurich Financial delicately balance the ever-increasing Advertising Giant expectations of Wall Street in terms of Services; Reinsurance; Weak investment financial performance and ensuring high By 2004, the advertising industry worldwide market; Spin-off; IPO; American Depository Share; Underwriting; Green Managing T Managing T Managing T Managing T Managing T ethical standards was in a consolidation phase as was felt that only the integrated global agencies Shoe option; Retrocessional stop-loss • To discuss how companies with diverse would remain profitable, following the policy; Reserves strengthening; Runoff; but related divisions can avoid conflicts economic downturn in the new millenium. Rights issue; Renewals; Securit. of interest. The case also provides For Havas, the largest adverstising agency information to assess Prince’s strategies in France, trouble ensued in 2004 when it to curb unacceptable business practices lost a bid to acquire Grey Global Inc. (the Troubled Times at AT&T at Citi. seventh largest in the world) as its last AT&T, a 125-year-old company that Industry Financial Services effort to stay independent. pioneered telecommunications in the US, Reference No. TRT0039 suddenly seems to have moved away from Year of Pub. 2005 Pedagogical Objectives its core business. After its exit from wireless Teaching Note Not Available business in the US in 2004, the introduction Struc.Assig. Not Available • To discuss the reasons for the weak financial health of Havas of VOIP (Voice Over Internet Protocol) keywords coupled with the deregulation of the US • To discuss the strategies adopted by the telecom industry is threatening to reduce Citigroup; Traveller’s Group; Sandy Weill; company to maintain its position in the the company's revenues from long distance Sanford Weill; Chuck Prince; Citigroup’s global advertising industry. calls by 20% per year. culture; Predatory lending; Associates first capital; Eliot Spitzer; Commercial bribery; Industry Advertising & Marketing Pedagogical Objective Citigroup’s business practices initiatives; Reference No. TRT0037 Year of Pub. 2005 Corporate governance; Citi’s London bond • To discuss the troubles faced by AT&T Teaching Note Not Available desk; Citi troubles in Japan. in a matured industry that is witnessing Struc.Assig. Not Available reduced price margins, increased keywords competition and ever-changing technologies. Merck: A Future Laggard in the Global advertising and communications Global Pharmaceutical business; GreyGlobal Inc.; Young & Industry Telecommunications Industry? Rubicam; History of Havas; Five year Reference No. TRT0035 financial summary of Havas; Year of Pub. 2005 Merck, voted as America’s most admired Organisational structure of Havas; Market Teaching Note Not Available company by Fortune for seven consecutive share of global advertising agencies; Struc.Assig. Not Available years (between 1986 and 1993), was facing Geographical distribution of revenues for a host of problems by 2003. Known for its keywords Havas Group. pioneering research in the pharmaceutical industry in the past, Merck had introduced US telecommunication industry; Telecom industry value chain; Federal

48 www.ibscdc.org

Communication Chain; Baby Bells; Long Eisner’s announcement of his departure council; Imaging and printing;

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S distance carrier; Acquisitions and join from Disney fuelled the uncertainty. Management by walking around; HP and III – Y G E T A R T S ventures of AT&T; Price competition; Compaq merger; Competitive Over capacity and changing technologies; Pedagogical Objectives differentiation; Corporate proxy battle; Financials of AT&T; AT&T Wireless and Decentralisation; Restructuring Cingular; Voice Over Internet Protocol • To discuss the changing dynamics of the programme; Enterprise and storage (VOIP). relationship between Miramax and business; Cost savings; Core competencies. Disney • To discuss the impact of interpersonal Mitsukoshi: The Japanese conflicts between the leaders of the Microsoft’s Biggest Threat: Retailer’s Troubled Times organisations Microsoft’s Success Mitsukoshi, started in 1673, runs around a • To discuss the possible results of the By the end of the 1990s, Microsoft seemed dozen department stores and about 100 renegotiations in 2005. to be experiencing a crisis. As a major part smaller stores in Japan and around 20 Industry Entertainment of its revenues came from Windows and outlets in major European, North American Reference No. TRT0033 Office, Microsoft was busy making and Asian cities. By the 1960s, it had Year of Pub. 2004 incremental improvements and persuading become the best-stocked and prestigious Teaching Note Not Available customers to buy upgrades. As a result, it department store, but since the mid-1970s, Struc.Assig. Not Available missed several opportunities of growth in Mitsukoshi has been marred by decades of other areas. On top of it all, came the management problems and a struggling keywords security threats, antitrust lawsuits and economy. Linux open source software raising Harvey Weinstein; Bob Weinstein; questions about the growth prospects of Miramax Film Corp.; Disney; Michael the company. Pedagogical Objectives Eisner; Dimension films; Independent cinema; Oscar marketing; Fahrenheit 9/ • To discuss how Mitsukoshi lost its share Pedagogical Objectives to other retailers like supermarkets, 11; Interpersonal conflicts between leaders. superstores and discount stores • To discuss the major success factors of Microsoft in the PC software industry • To discuss the strategies adopted by Mitsukoshi to respond to Japan’s sluggish Hewlett-Packard: Losing the HP • To discuss the threats and opportunities economy and consumers’ changing Way for the company in the future behaviour Hewlett-Packard, started in 1938 by two • To discuss how the company’s success • To discuss how the company was electrical engineers Bill Hewlett and Dave and its strong foothold in the operating restructuring to avoid further troubles. Packard, had grown from a small electronic system and office management software, instruments company into one of the global with its flagship Windows and Office Industry Retailing leaders in information technology products suite, was considered to be hindering its Reference No. TRT0034 and services by the end of the 20th century. growth. Year of Pub. 2004 The ‘HP Way’, a unique people-focused, Teaching Note Not Available consensus-driven work culture initiated by • To discuss the growth strategies of the Struc.Assig. Not Available the founders had been the driving force of company after Steve Ballmer took over as CEO. keywords its growth. But the culture had been losing its effectiveness due to the changing profile Industry Software Mitsukoshi; Department store; Retailing; of the company and the dynamics of global Reference No. TRT0031 Restructuring; Economy bubble; Consumer competition. The new CEO (chief Year of Pub. 2004 price index; Supermarket; Superstore; executive officer) Carly Fiorina, who took Teaching Note Not Available Discount store; Japan’s economy; Japanese over the reins of the company in 1999, Struc.Assig. Not Available retail stores. made radical changes in the ‘HP Way’ to rebuild the company, shifting the focus keywords from employees to customers. The merger Microsoft’s monopoly; Steve Ballmer; Miramax: A Victim of with another leading player, Compaq, further diluted the culture. Entry barrier; Windows; Office Suite; Interpersonal Conflict? Patents; The Internet tidal wave; Microsoft’s cash cows; Cost economies; Started in 1979 by the Weinstein brothers Pedagogical Objective Linux threat; Theory of increasing returns; to buy and release foreign and independent Upgrades to Windows; Microsoft films, Miramax Film Corp. was acquired • To discuss the restructuring strategies formulated by the new CEO to save the innovations; Microsoft matures; Saturation by Disney in 1993. Over the years, in PC market. Miramax released hits like Pulp Fiction company, her reasons for deviation from the ‘HP Way’, and the benefits and losses and Shakespeare in Love, but relations of the change as debated by the analysts. between Harvey Weinstein and Disney’s CEO Michael Eisner had been Industry Computer Products and Euro Disney: Failed deteriorating. Miramax’s decision to fund Services Americanism? Fahrenheit 9/11, a controversial Reference No. TRT0032 Euro Disney SCA, the subsidiary of Walt documentary, against Eisner’s wishes Year of Pub. 2004 strained the relationship further. The Disney Co., the No.2 media conglomerate Teaching Note Available in the world, opened its first theme park current contract between the Weinsteins Struc.Assig. Available and Disney is to be renegotiated in 2005, under the name Euro Disney in 1992 in but differences over financial performance, keywords France. Assuming that the success of its universal appeal in , California and control and compensation raised Hewlett-Packard (HP); PC manufacturer; uncertainty over Miramax’s future. Japan would work again, Disney replicated The HP Way; Computer products; Strategy the same formula of fantasy and magic 49 www.ibscdc.org kingdoms in Europe. However, in France • To discuss the competitive scenario that Capital); opportunity; Opportunity asset it faced huge resistance with the French prevailed at the time of Crestor’s management; Kroll; JP Morgan Chase. likening it to an imperialism of American introduction multinationals on the country. Considering • To discuss the promotional and it a threat to their culture, the French press Uniqlo Retail Stores in Japan: and intellectuals strongly opposed its entry marketing initiatives of the companies and called it a ‘cultural Chernobyl’. As Euro involved. Turning Challenges into Opportunities Disney tried to recover from the troubles Industry Pharmaceuticals by reworking on the details inside the park, Reference No. TRT0029 Fast Retailing Co., owner of Uniqlo apparel revamping food, rides and the price Year of Pub. 2004 stores has revolutionised the Japanese structure for the international market, Teaching Note Not Available retailing market through its low price many observers still believed that the Struc.Assig. Not Available strategy. It kept costs low by bypassing cultural inadvertence still remained a threat Japan’s archaic distribution system and keywords for the company’s long-term survival in effectively making use of the low-cost the country. AstraZeneca; Cholesterol-lowering drugs manufacturing facilities in China. However (statins); Blockbuster drugs; Crestor; with competitors replicating its low-cost Pedagogical Objectives Lipitor; Baycol controversy; Negative strategy it was time for Uniqlo to devise ways to remain at the top. The focus began • To discuss how the overlooking of sentiments; Pfizer’s marketing; Merck’s imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis

imes/Managing a Crisis imes/Managing a Crisis to shift from ‘high quality low price’ to cultural differences and language barriers Zocor; Bristol-Myers Squibb’s Pravachol; ‘high quality, low price and more variety’. while pursuing internationalisation, Marketing budgets; FDA approvals (Federal The company also had to deal with hampers business Drug Administration); Merck’s Vytorin; The Lancet; Clinical tests. resistance from Japanese textile industry • To discuss the importance of associations against cheap imports from customisation in internationalisation of Japan. business, especially in the entertainment Telecom Italia: Troubled Times business because of the strong link roubled Troubled T T roubled Troubled roubled Troubled roubled T Pedagogical Objectives between culture of the country and in Brazil • To discuss the complexities of retailing entertainment. The Rome-based telecommunications in Japan, how Uniqlo tasted success by company, Telecom Italia Group had grown Industry Amusement Parks, Arcades and deviating from the traditional way of from a loss-making state-owned telecoms Attractions distribution, and how the company firm to Italy’s largest fixed-line operator Reference No. TRT0030 employed a low cost strategy to succeed and No.1 wireless provider. Although the Year of Pub. 2004 in the price sensitive market, during the company was the market leader in Italy, Teaching Note Not Available economic downturn Struc.Assig. Not Available the revenues of the company had almost Managing T Managing T Managing T Managing T Managing T been flat. After the privatisation of the • To discuss the major challenges that are keywords company in 1997, it experienced problems ahead for Uniqlo and how the company on different fronts. When Marco is turning challenges into opportunities Cultural differences; Globalisation; Euro Tronchetti Provera was appointed as the for its business. Disney SCA; Walt Disney in France; chairman in 2001, his efforts put the American stereotype; McDonalisation in company on the path to profits. Although Industry Retailing France; Cultural Chernobyl; Euro Disney the company posted profits in 2003, the Reference No. TRT0027 parks; Disneyland Paris; Language barriers. company began to face other problems. Year of Pub. 2004 The company pinned its hopes for growth Teaching Note Not Available on the Brazilian market, which was the Struc.Assig. Not Available AstraZeneca’s Crestor: largest market for Telecom Italia outside keywords Challenges in the US Market Italy. However, its long-drawn battle with Brazil Telecom and Kroll Inc. slowed its Fast Retailing Co.; Uniqlo; Retailing in London-based drug maker, AstraZeneca, is expansion plans in Brazil. Japan; Distribution system in Japan; the fourth largest in the world and second Outsourcing to China; Speciality retailer largest in Europe. When the company Pedagogical Objectives of private label apparel; Merchandising; announced its plans to enter the Transitional safeguard; Victim of its own cholesterol-lowering drugs segment (also • To discuss the troubles faced by Telecom success. called statins) with Crestor in the US, it Italia after its privatisation received mixed responses from the industry and analysts. Though a lucrative segment, • To discuss the legal battles that the the sensitivity attached to statins’ safety company faced in Brazil, the stakes for Formula One and Ecclestone: and usage was of particular concern to the company and the challenges it is The Powershift? facing in Brazil. AstraZeneca. The drug faced a further Since its inception in the 1950s, Formula setback after the European regulators Industry Telecommunications Services One is called the soap opera of the sports demanded a labelling change and a reputed Reference No. TRT0028 world; the exotic locations, huge amounts medical journal raised doubts about Year of Pub. 2004 of money, and famous faces made it unique Crestor’s safety. This only complicated Teaching Note Not Available compared to most other world sports. In Crestor’s strategy as the established players, Struc.Assig. Not Available the late 1960s, Bernard Charles Pfizer and Merck, took advantage of the Ecclestone, a used-car dealer sensed a great keywords negative sentiment. opportunity to make money by getting Telecom Italia; Telecom Italia in Brazil; involved in the administration of Formula Pedagogical Objectives Roberto Colaninno; Marco Tronchetti One. Gradually, in the early 1980s, he began acquiring control of the racing series’ • To discuss the challenges faced by Provera; Telecom Italia Mobile; Olivetti; broadcasting and merchandising rights, AstraZeneca in the process of taking Pirelli; Edizione Holding; Benetton Group; which resulted in huge profits for him. In the drug to market Brasil Telecom; CVC (Citibank Venture 50 www.ibscdc.org

due course, Ecclestone emerged as the most Act (1978) of the US; ESOP (Employee Asia. Ho used his advantage to spread his

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S important person in Formula One racing, Stock Ownership Plan); Air Transport sphere of activities to every major industry III – Y G E T A R T S as he owned major stakes in some key Stabilisation Board (ATSB) of the US; Top in Macau. In 2001, when Ho’s gambling subsidiaries of Formula One. However, the ten airlines in the world; Hubs of United monopoly expired and gambling licenses car manufacturers such as Fiat, Mercedes Airlines; Bankruptcy filing of United were awarded to two more companies, Ho and BMW, who financed Formula One Airlines; Restructuring efforts at United faced competition from world-class teams, felt that Ecclestone diverted too Airlines; 401(k) defined contribution plan. adversaries. much revenue to his own holdings while Formula One’s popularity was declining. Pedagogical Objectives Consequently the carmakers decided to Succession Battles at Viacom abandon the Formula One series and • To discuss Ho’s rise to the status of ‘the planned to start a new auto-racing series. Viacom is the of CBS king of gambling’ and the challenges that (Columbia Broadcasting System) networks, confront him and his gambling business Pedagogical Objective Paramount Pictures, MTV (Music • To discuss whether the liberalisation of Television) and other media ventures and • To discuss the financial dominance of Macau’s gambling industry will spell the one of the top three media companies in end for Ho’s empire or enable Ho to Bernard Charles Ecclestone in Formula the world in terms of its $27 billion One, the initiatives taken by car earn more money through diverse turnover and scope of operations. Viacom’s businesses. manufacturers to start a rival auto-racing president and COO (chief operating officer) series and the threat to Ecclestone's Mel Karmazin, who built Infinity Radio Industry Gambling Resorts and Casinos dominance. and CBS, before the CBS mega-merger with Reference No. TRT0023 Year of Pub. 2004 Industry International Sports Viacom, resigned abruptly from his post. Teaching Note Not Available Reference No. TRT0026 The chairman and CEO (chief executive Struc.Assig. Not Available Year of Pub. 2004 officer) of Viacom, 80-year-old media mogul Sumner Redstone, who controlled Teaching Note Not Available keywords Struc.Assig. Not Available 70% of the company’s stock took charge of the company, appointed two executives Stanley Ho; Winnie Ho; Gambling and keywords to share Karmazin’s responsibility and casinos in Macao; Competitive growth designated them as likely successors when Formula One; Bernard Charles Ecclestone; strategy; Government granted monopoly; he stepped down after three years. Formula One Constructors Association; State monopoly or coercive monopoly; Federation Internationale de L’automobile; Money laundering and triads; Sociedade de Max Rufus Mosley; Commission Sportive Pedagogical Objectives Turismo e Diversoes de Macau (STDM); Internationale; Allsopp; Parker & Marsh; Tourism industry in Macau; Las Vegas Sands • To discuss the difference in the and the Sands Macau casino; Business Commercial rights; TV rights; Broadcasting personalities of Redstone and Karmazin rights; Formula One Management Limited; ethics; Las Vegas of the Orient; Henry Fok and the disparity of their vision for the Ying-Tung; Entrepreneurship. Concorde agreement; Formula One company promotions and administration; SLEC (SLavica ECclestone); Grand Prix World • To discuss the dynamics of succession in Championship. companies that have one controlling Mitsubishi Product Recall: A Self- shareholder, and the effect of top made Scandal? management’s personal vision and attitudes In a growing automobile market, Mitsubishi United Airlines’ Growing Motor Corporation was losing ground very Troubles: Looking for Solutions • To discuss the clash between innovation badly. A series of scandals involving the and cost control, between expanding the United Airlines of the US, the second largest company’s attempt to hide customer company and enhancing shareholder complaints on products and subsequent airline company in the world, has been value and a power struggle between two witnessing problems since the early 1990s. product recalls had tarnished Mitsubishi's powerful and successful self-made brand image. A financial crunch, no new Its financial situation deteriorated by the personalities. turn of the 21st century due to rising innovative models and tough competition operational costs against declining Industry Media and Entertainment were pushing Mitsubishi towards revenues, which eventually led to its filing Reference No. TRT0024 bankruptcy. for bankruptcy in December 2002. Year of Pub. 2004 Teaching Note Not Available Pedagogical Objectives Struc.Assig. Not Available Pedagogical Objective • To analyse the impact of quality • To discuss the myriad problems of United keywords problems and the recalls on the company's brand image Airlines and its efforts to emerge from Viacom; Sumner Redstone; Mel Karmazin; its bankruptcy. CBS (Columbia Broadcasting System); • To evaluate the company’s options to turnaround its fortune. Industry Airlines Infinity; Leadership style; Top management succession; Creativity; Available at www.ibscdc.orgwww.ecch.com Industry Automobile Advertising; Television; Radio. Reference No. TRT0025 Reference No. TRT0022 304-424-1 Year of Pub. 2004 Year of Pub. 2004 Teaching Note Not Available Teaching Note Not Available Stanley Ho’s Gambling Empire: Struc.Assig. Not Available Struc.Assig. Not Available End of a Monopoly? keywords keywords Stanley Ho exploited a 40-year gambling Mitsubishi Motor Corporation; Product monopoly in Macau to emerge as one of Domestic airlines in the US; Transpacific recalls; Toyota; Honda; Automobile the wealthiest and most influential men in Route Case (1969); Airline Deregulation industry; DaimlerChrysler; Competitive 51 www.ibscdc.org strategies; Restructuring strategy; Yoichiro bankruptcy owing to pressures from low- announced a 42% decline in its profits and Okazaki; Turnaround; Corporate social cost carriers and unions from then on profits kept on downsliding. responsibility; Growth strategies; Corporate The inward looking culture of the company ethics; Alliances and partnership. • To discuss the new industrial plan jointly and the absence of a strong leadership were developed by the government, Alitalia blamed for its poor performance. and the unions. Regal Entertainment Group: Industry Airlines Pedagogical Objective Reference No. TRT0020 Managing Troubled Times • To discuss the reasons behind the rapid Year of Pub. 2004 decline of Marks and Spencer that has In the 1990s, the movie chains in the US Teaching Note Not Available left it struggling for its existence. had spent billions on the construction of Struc.Assig. Not Available megaplexes. While the costs per screen keywords Industry Department Stores rose fourfold, the audiences in the theatres Reference No. TRT0018 did not increase proportionately. In the Industry-Academia rapport; UCSF Year of Pub. 2004 early 2000, most of the movie theatres fundamental research; Alitalia; Low-cost Teaching Note Available were uneconomical and were on the verge airlines; Ryanair; Alitalia team; Alitalia Struc.Assig. Not Available of bankruptcy. Taking advantage of the Express; European Commission; The situation, Denver-based billionaire Philip bailout; Trade union problems; Industrial keywords Anschutz acquired the three struggling imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis plan; Restructuring; Giancarlo Cimoli; Job Marks and Spencer; British retailers; Retail theatre chains – United Artists Theatres, cuts; Fintecna; Finmeccanica; Business industry in Britain; Sir Richard Greenbury; Regal Cinemas, and Edwards Cinemas at a plan. Philip Green; Leadership in retail industry; very low price. He combined the assets of Troubled times at Marks and Spencer; St. the three companies to form a single Michael; Marks and Spencer apparel stores; entity – Regal Entertainment Group. The Low-carb Trend: Death Knell Marks and Spencer food stores; Floor for American Companies? management in retail stores; Boardroom

roubled Troubled T T roubled Troubled roubled Troubled Pedagogical Objective roubled T battles in Marks and Spencer; Decision making process in departmental stores; • To discuss the strategies taken up by The popularity of low-carb diets has led to Philip Anschutz to refurbish a chain of a decrease in the consumption of certain Conservative culture in retailing; Supply bankrupt theatre chains into the largest food categories like pasta and bread. Pasta chain management in Marks and Spencer. theatre chain in the US. makers in America saw sales decreasing by 7% in the first quarter of 2004. In America, Industry Movie Theatres while some companies like Dakota Growers Krispy Kreme Doughnuts: The Reference No. TRT0021 and American Italian Pasta have taken Troubled Times Year of Pub. 2004 steps towards creating low-carb versions Managing T Managing T Managing T Managing T Managing T Teaching Note Not Available of their pasta brands, others are waiting Krispy Kreme Doughnuts has satisfied US Struc.Assig. Not Available for what they call a ‘fad’ to pass out. consumers with its delicious offerings of keywords doughnuts for over a half a century. But Pedagogical Objective when its customers started becoming health Regal Entertainment Group; United Artists conscious, thanks to the low carbohydrate Theatres; Regal Cinemas; Edwards • To highlight the problems faced by craze, Krispy Kreme was forced to change Cinemas; Philip Anschutz; Bankrupt movie American Pasta companies to invest in its strategies and perform the trick again, chains; Movie chains; Oaktree Capital product development. this time with less sugar. Krispy Kreme’s Management; Digital projection; Regal Industry Food future is now on a very fine balance; even Cinemedia; Kurt Hall; Michael Campbell; Reference No. TRT0019 one grain of sugar can tip the scale against Live concerts; Dividends; Theatre chains. Year of Pub. 2004 it. Teaching Note Available Struc.Assig. Available Pedagogical Objective Alitalia: The Airline in Trouble keywords • To discuss the troubled times at Krispy The long-drawn crisis at Italy’s national Kreme and its strategies for a profitable Pasta makers under attack; The low future. airline, Alitalia, started during the mid- carbohydrate craze; Atkins diet; Impact of 1990s, when the low-cost revolution low carbohydrate foods on pasta makers; Industry Speciality Eateries invaded Europe. Even as the airline was Gearing up for an uncertain future; Outlook Reference No. TRT0017 fending off threats from the low-cost for pasta makers. Year of Pub. 2004 carriers, the September 11 attacks followed Teaching Note Not Available by the SARS outbreak and the war in Iraq Struc.Assig. Not Available was sounding a death-knell to Alitalia. Twice the Italian government ferried the Marks and Spencer: The keywords deteriorating airline out of bankruptcy – Downfall and Leadership Krispy Kreme; Doughnuts; Low in 1997 and in 2002. But, when the Vacuum carbohydrate diet; Troubled times; bankruptcy woes came back in 2004, the st Doughnut theatre; Beatrice Foods European Commission opposed the By the turn of the 21 century, Marks and Company; Montana Mills; Share price; government’s move for a third bailout, Spencer, the iconic British retailer, had Nutrition facts; History of doughnuts; raising serious doubts about the airline’s become vulnerable to hostile takeovers Market for doughnuts in the US; survival. with its ever-falling share prices and low profit margins. Even as recently as 1997- Traditional advertisement of doughnuts; 1998, it was in competition with Wal-Mart Low carbohydrate craze in the US. Pedagogical Objectives to become the most profitable retail chain • To discuss how Alitalia, in spite of two in the world. However, it witnessed reverse bailouts, slipped to the verge of fortune the following year when it 52 www.ibscdc.org

Home Depot: Nardelli’s hard-to-find classics and a wide range of Costco: The Leader's Challenges

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Challenge magazines. Its stores at airports and train stations provide reading material for the Since its inception in 1983, Costco has been During the early 2000s, Home Depot travellers. In recent years, the increase in the leader in the warehouse club category of chairman and CEO, Robert Nardelli competition from supermarkets and retailing. It has been growing steadily under (Nardelli), was under immense pressure as specialist retailers has caused a decline in the leadership of CEO, James Sinegal. the company’s growth rate had dropped WHSmith’s fortunes. According to analysts some of Costco’s below 20%, compared to its historic policies like running no frills stores and selling a limited range of products compound annual growth rate of over 25%. Pedagogical Objectives To that effect, he had chalked out an contributed to its growth. However, its elaborate plan to revive growth in late • To discuss WHSmith’s various problems leadership is being challenged by Sam’s Club, 2001, which, if properly executed, would and the causes of those problems Wal-Mart’s own warehouse club. Costco’s make Home Depot a $100 billion company average annual sales per store are greater • To discuss various strategies for the by 2005 from $45.7 billion in revenues in than that of Sam’s Club. But Sam’s has more reversal in WHSmith’s fortunes. 2000 (this meant a yearly growth rate of stores worldwide. A rejuvenated management about 15%-18%). Following the Industry Retailing team under CEO Kevin Turner is cutting implementation of the plan, the company Reference No. TRT0015 costs and improving the performance of grew by 17% in 2001, 9% in 2002 and Year of Pub. 2004 Sam’s stores. As a division of Wal-Mart, it 11% in 2003. Teaching Note Available is expected to get merchandise at cheaper Struc.Assig. Available prices than Costco. Already weakened by Pedagogical Objectives price wars, Costco faces a formidable keywords competitor in Sam’s Club. • To discuss the problems faced by Home WH Smith PLC.; British retailing industry; Depot chairman, Nardelli News distribution; Publishing; Pension Pedagogical Objective • To discuss Nardelli’s plans to boost liabilities; School book funding crisis; • To discuss the challenges faced by Costco growth and the efficacy of his plans Hodder Headline; Kate Swann; Retailing when competing against Sam’s Club, who and distribution; Retail business; is part of a corporate giant, Wal-Mart. • To discuss the pros and cons of having Turnaround strategy; WH Smith stores; an entrepreneurial style of corporate Travel retail business; Net book agreement; Industry Retailing culture Price controls; Newspaper; Magazine Reference No. TRT0013 • To discuss the importance of customer wholesaler. Year of Pub. 2004 service in creating a competitive edge Teaching Note Not Available in a retail format Struc.Assig. Not Available • To discuss Nardelli’s plan to focus on Hyundai in USA: The Quality keywords Rides services in addition to selling of hardware Costco; Competition from Sam’s Club; and whether this style is similar to that Hyundai, which forayed into the US car James Sinegal; Warehouse clubs; Sol Price; of General Electrics (GE’s) and would it market in the mid-1980s, always had an Jeffrey Brotman; Kirkland Signature; succeed in the retail format. image of a low quality carmaker. From the Discount retailing; Small business buyers; Industry Home Improvement and beginning, it had failed to live up to the Bill Dreher; No frills stores. Hardware Retail quality expectations of the Americans. Reference No. TRT0016 Hyundai’s cars were bought only as a last Year of Pub. 2004 resort and the company used to feature at LSG Sky Chefs: Managing in Teaching Note Not Available the bottom of most of the quality surveys. Troubled Times Struc.Assig. Not Available The situation changed dramatically after Chung Mong Koo took over as the CEO In 2003, LSG Sky Chefs, a wholly-owned keywords of Hyundai in 1999. subsidiary of the German carrier Deutsche Home Depot - Robert Nardelli’s challenge; Lufthansa (AG), was the world leader in Growth strategy; Store formats; Pedagogical Objective the airline catering industry. LSG derived its revenues from the US and international Warehousing; Retailing; Customer service; • To discuss the initiatives taken by Chung Globalisation; Home improvement retail; airlines that have no flight kitchens of their Mong to build break the image of own. However, after the September 11 Maintenance warehouse; Georgia lighting; Hyundai as a low quality car marker. Apex Supply; Home Depot learning terrorist attacks, the airline industry centres; Human resources; National Blinds Industry Auto Manufacturing witnessed a severe financial crisis due to and Wallpaper; Competitive strategy; Reference No. TRT0014 the decrease in the number of passengers. EXPO Design Centre stores; Landscape Year of Pub. 2004 This severely affected LSG Sky Chefs and supply stores. Teaching Note Not Available other airline catering companies as many Struc.Assig. Not Available airlines cancelled complimentary meal services as part of their cost cutting keywords strategies. Adding to the company’s woes, WH Smith Plc.: The British Retailer the Severe Anti-inflammatory Respiratory Hyundai Motor Company; Honda; JD in Trouble syndrome (SARS) disease in Asia and the Powers initial quality study; Toyota; Six wars on Afghanistan and Iraq further Established in 1792, WH Smith PLC sigma campaign in Hyundai; Santa Fe; worsened the situation. (WHSmith) is a leading book retailer in Hyundai’s quality problems in USA; Great Britain. Its main businesses include Hyundai’s quality rating improvement; retailing, news distribution and publishing. Hyundai’s sales in USA; Hyundai’s quality Pedagogical Objectives For over two centuries, book lovers have initiatives; Excel sub-compact. • To discuss LSG’s efforts to recover from thronged its stores in search of bestsellers, the slump in the business post September 11 53 www.ibscdc.org • To discuss whether the new initiatives IDBI: An Ailing Goliath keywords ‘buy-on-board’ and ‘in-flight cafe’ that were considered as a shift from the old Since the late 1990s, the Industrial Diageo; Cardhu; Scotch whisky; Speyside paradigm where the foodservice was Development Bank of India (IDBI), which distillery; Malt whisky; Single malt whisky; dictated by what airlines could afford, was set up in the early 1960s by the Pure malt whisky; Guinness; Vatted malt would yield results. government of India as a development whisky; Scotch whisky association; Finance Institution (DFI), has been finding William Grant and Sons; Smirnoff; Industry Airline Catering it difficult to sustain its core function of Distilleries in Scotland; Aeneas Coffey; Reference No. TRT0012 industrial financing. Despite being the tenth Seagram. Year of Pub. 2004 largest development bank in the world, it Teaching Note Not Available is witnessing eroding profitability, loss of Struc.Assig. Not Available top rated corporate clients and attrition Poland Spring: Managing in of its top management. keywords Troubled Times

LSG Sky Chefs; Lufthansa; Airline catering; Pedagogical Objective Since 1845, Poland Spring had been Buy-on-board; In-flight cafe; In-flight marketing its bottled water as the original management; Chef Solutions; Airport • To discuss the possible options being spring water from ‘the protected and gastronomy; Onex Corporation; Dobbs considered by IDBI and the government pristine sources of Maine’ in the US. After International; LSG Holding. of India to revive the financial being acquired by Nestle Waters North imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis behemoth. America Inc. (NWNA) in 1992, Poland Industry Development Finance Spring continued to contribute significantly Infrastructure Development Institution to NWNA’s revenues in North America despite facing controversies regarding the Finance Corporation: The Reference No. TRT0010 authenticity of its spring water. Class action Controlling Battles Year of Pub. 2004 Teaching Note Not Available lawsuits were filed against it in 2002 based Infrastructure Development Finance Struc.Assig. Not Available on allegations that Poland Spring had been roubled Troubled T T roubled Troubled roubled Troubled roubled T Corporation (IDFC) is the largest private deceiving its customers by marketing its keywords sector development financial institution bottled water as spring water, when the original spring, from where the company (DFI) in India. Post liberalisation of the Development finance institution; Non- claimed to tap its water, had dried up 35 banking sector, IDFC was created as a performing assets of the Industrial years ago. vehicle to channel private sector capital Development Bank of India (IDBI); into commercially viable infrastructure Universal banking; Industrial projects. Since its inception it had many Development Bank of India (IDBI); Pedagogical Objective credits, including that of being a DFI with Industrial Credit and Investment • To enable readers to understand how the Managing T Managing T

Managing T zero non-performing assets (NPAs). Managing T Managing T Corporation of India; Liberalisation of the company, with its long-standing history, However, there was wide spread criticism Indian economy; Banking sector reforms is battling its way through the allegations. that its lending operations had been too in India; Banking companies; Non-banking conservative and thus had failed to fulfill financial institutions; Reverse Merger; Industry Beverages the infrastructure needs of the country. Commercial banks in India; Unit Trust of Reference No. TRT0008 This raised curtains to the series of India (UTI); IDBI bank; Stock Holding Year of Pub. 2004 controlling battles made by the pro and Corporation of India; Federation of Indian Teaching Note Not Available anti nationalist activists to gain control Chambers of Commerce and Industry. Struc.Assig. Not Available over the new-age development bank. keywords

Pedagogical Objective Troubled Times at Diageo Nestle; Spring water; Maine; USA; Nestle Waters North America Incorporated • To discuss the various reasons that Diageo was formed in December 1997 (NWNA); Beverages; Poland Spring; compel IDFC to be nationalised. through the merger of Guinness and Grand Mineral water; Borehole; Ricker family; Industry Banking and Financial Metropolitan, the then leaders in the global Food and Drug Administration; Major Services liquor business. By 2003, Diageo had players in the US bottled water industry; Reference No. TRT0011 become the world’s largest scotch whisky Jan Schlichtmann; Natural catchment; Year of Pub. 2004 manufacturer with its world famous brands Bottlers. Teaching Note Not Available like Smirnoff, Johnie Walker, Guinness and Struc.Assig. Not Available Bailey’s. It had operations in 180 countries with a global workforce of 62,000 Challenging Times of Japan keywords employees. However by late 2003, it was Tobacco Nationalisation; Private capital; alleged that Diageo was misleading Development financial institutions; Non- consumers by marketing vatted malt under By 2003, Japan Tobacco (JT), the largest performing assets; Infrastructure the Cardhu label, which was supposed to be tobacco company in Japan and the world’s Development Finance Corporation a single malt whisky. third largest, had been facing challenging (IDFC); Long-term finance; Reserve Bank times. Since the late 1990s, due to a of India; Long-term operational funds; Pedagogical Objective decrease in the number of smokers in Japan Statutory liquidity ratio; Reverse merger; over rising health concerns, toughened • To understand the intricacies and Privatisation; Indian commercial banking tobacco regulations and economic dynamics of the scotch whisky industry. structure; New-age development bank; recession in Japan, the company saw a dip Refinancing; Flexi-bonds. Industry Distillers in its domestic sales revenue. Its domestic Reference No. TRT0009 market share also declined from 77.1% in Year of Pub. 2004 1998 to 72.7% in 2003. Another major Teaching Note Not Available concern for the company was the Struc.Assig. Not Available forthcoming expiry of its license 54 www.ibscdc.org

agreement with Philip Morris in 2005. As (BSE); Prions; vCJD; McDonald’s; company’s products attained a cult status

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S the agreement had allowed JT to Australian beef; Japanese beef imports; among pre-teens. However, the company III – Y G E T A R T S manufacture and market 'Marlboro', one Major exporters of beef in the world; Foot that heralded the gaming revolution in the of the most famous brands of Phillip and mouth disease; Sukivaki; Kyotaru sushi 1980s and 1990s, had to face severe Morris in Japan, the expiry of the shops. competition from Sony and Microsoft. In agreement was believed to adversely affect spite of being an early entrant, Nintendo JT's domestic sales and revenue. To sustain struggled to maintain its leadership at the its market share and fend off foreign Kodak: Fading Moments in turn of the millennium and hoped to competitors in its domestic market, JT combat the competition with the release went ahead to launch many new cigarette Digital Photography of GameCube. brands in Japan in 2003 and early 2004. In conventional photography, Eastman Kodak Company is synonymous with Pedagogical Objectives Pedagogical Objective photo-films and development. The • To discuss how Nintendo can combat company, which was a market leader, lost • To discuss whether the initiatives taken the competition it encountered in the its command over the market due to the by JT would keep it ahead of its rise of digital cameras in 1997. While on video games market, especially from competitors or not. one hand, Kodak had to deal with new Sony’s PlayStation and Microsoft’s Xbox Industry Cigarettes and Tobacco competitors like Sony, Hewlett-Packard Products and Canon who emerged as strong • To understand how the gaming market Reference No. TRT0007 contenders for leadership in digital assumed prominence in the 1990s and Year of Pub. 2004 photographic equipment, on the other how dominance of the established Teaching Note Not Available hand, it had to protect its turf in traditional players like Nintendo came under threat Struc.Assig. Not Available photography where Fuji Photo Film Co., with the entry of new competitors that waged a price war. To win back its lost sensed a big opportunity in the growing keywords market share, Kodak’s the then chairman, market for video games. Japan Tobacco Incorporated; Japan George M.C. Fisher, came out with a string Industry Electronic Gaming Products Tobacco and Salt Public Corporation; of initiatives to meet the requirements of digital photography market. Reference No. TRT0004 Japan Tobacco International; Marlboro; Year of Pub. 2004 Tobacco business law; Japan tobacco law; Pedagogical Objectives Teaching Note Not Available Global flagship brand; Japan tobacco’s Struc.Assig. Not Available domestic business; Phillip Morris; RJR • To discuss how large-scale changes in Nabisco; Mild Seven; Lucia; Katshunhiko keywords the technology can catch even the Honda; Japan tobacco’s challenges; Japan market leaders unawares and result in a tobacco’s brands. Nintendo; Sony; Microsoft; GameCube; downward spiral GameBoy; GameBoy Advance; • To analyse Kodak’s initiatives to regain PlayStation; XBox; Gaming market; Nintendo’s struggles in gaming market; Yoshinoya: Managing in its supremacy in the photography industry against the backdrop of Video games; Technology; Genre trends in gaming market; Satoru Iwata. Troubled Times digitisation of photography By 2003, ‘Yoshinoya D&C Co. Ltd.’, • To discuss whether the initiatives of (Yoshinoya), which started as a small Kodak’s former chairman, George M.C. Motorola’s Lost Opportunities restaurant in Tokyo in 1899, had Fisher, and his successor Daniel A. Carp transformed into a global fast food chain. would lead the company out of trouble. Motorola that was once a dominant force It was famous for its beef bowl and had in the communication equipment market 1,156 restaurants in the US, Japan, Industry Photographic Equipment seems more like a laggard than a leader. Singapore, Taiwan, Hong Kong and China. Manufacturer The company blew up some golden It was also planning to expand into Asia Reference No. TRT0005 opportunities when it misread consumer and Australia. However, due to the report Year of Pub. 2004 tastes, alienated telecom companies and of mad cow disease in the US in December Teaching Note Available faltered in bringing new products to the 2003, Yoshinoya faced a major crisis, as Struc.Assig. Available market at the right time. Troubles escalated 99% of its beef was imported from the US. for the company in recent years and it lost Despite the ban, Yoshinoya announced keywords its lead in the handset business to Finland- that it would continue to use US beef for Nintendo; Sony; Microsoft; GameCube; based Nokia. Christopher Galvin, the its products till the stocks lasted. GameBoy; GameBoy Advance; grandson of Motorola’s founder Paul V. PlayStation; XBox; Gaming market; Galvin was criticised for his hands-off Pedagogical Objective Nintendo’s struggles in gaming market; approach and not taking timely action to Video games; Technology; Genre trends in put the company back on track. The • To discuss the strategy adopted by gaming market; Satoru Iwata. Yoshinoya to tide over the crisis of mad company’s constant struggle led to the cow disease in the US. resignation of Chris Galvin in late 2003. Edward J. Zander, former president of Sun Industry Food Retailing Gaming Market: Nintendo’s Microsystems replaced Chris Galvin amidst Reference No. TRT0006 Struggles investors’ expectation to regain the Year of Pub. 2004 company’s past glory. Teaching Note Available Nintendo Co. Ltd., a pioneer and one of Struc.Assig. Available the leading producers of video games in Pedagogical Objectives the world, rose to fame in 1989 after it keywords introduced the first-ever portable handheld • To discuss reasons for Motorola's slide Yoshinoya; Mad cow disease; US beef; Beef gaming device called GameBoy. After from leadership position in the handset bowl; Bovine Spongiform Encephalopathy producing a series of video games, the market and to understand how, in spite of pioneering technologies in the 55 www.ibscdc.org handset market, the company lost so in deep financial trouble with an income emerging markets. The company, has since many opportunities of growth loss of $828 million in 2002. Events like a long time not only been chasing the SARS outbreak in late 2002, coupled opportunities in emerging markets but also • To discuss the need for companies to with the Iraq war in 2003, aggravated the started separate reporting divisions to understand the fast paced changes in the financial difficulties of the cash starved better concentrate on the opportunities market and change the course of action airline. On April 1st 2003, with an there. Cisco has been following a strategy to suit the changing market dynamics. outstanding debt of $12 billion, that enables it to expand in these markets Industry Wireless Telephone Handsets announced that it had filed for protection and ensures developing relationships with Reference No. TRT0003 under the ‘Companies’ Creditors the government, businesses and also its Year of Pub. 2004 Arrangement Act’ (CCAA) to facilitate its competitors. Cisco has been witnessing Teaching Note Not Available operational, commercial, financial and significant increase in its revenues from Struc.Assig. Not Available corporate restructuring. In late 2003, when emerging markets. However, now, the Air Canada was in desperate need of cash company is feeling the pressure of the keywords inflow to come out of its bankruptcy, Victor global slowdown because of the US Motorola’s lost opportunities; Competition Li, a wealthy businessman from Hong Kong Financial Crisis (2008) as the demand in handset market; Chris Galvin’s bought a 31% stake in the airline through orders from emerging markets started management style; Nokia; Spinoff of his company, Trinity Time Investments, declining. Adding to its woes, the number semiconductor product segment; Chris for $650 million. Although Victor Li’s of competitors are also increasing and involvement in Air Canada was looked encroaching upon its turf. imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis imes/Managing a Crisis Galvin's resignation; Edward J. Zander. upon with suspicion by many, Air Canada welcomed it as a necessary step to Pedagogical Objectives rejuvenate its beleaguered business. Bailout of LG Card Company • To examine the potential of emerging markets for Cisco's core business Since 1999, South Korea had been Pedagogical Objective encouraging the usage of credit cards in • To discuss how Air Canada transformed • To elucidate and analyse Cisco's market entry strategies in emerging markets roubled Troubled T T roubled Troubled roubled Troubled roubled T order to improve tax collections and also from being Canada’s dominant airline to achieve a rapid economic growth. LG to become a cash-starved and beleagured • To identify the challenges ahead for Card Company took advantage of the business. Cisco. favourable environment and pursued aggressive marketing and financing policies. Industry Airlines Industry Networking Hardware However, financial leverage turned out to Reference No. TRT0001 Equipments be a double-edged sword – good in good Year of Pub. 2004 Reference No. MES0101 times and very bad in bad times. Rising Teaching Note Not Available Year of Pub. 2009 credit card delinquencies coupled with a Struc.Assig. Not Available Teaching Note Available Managing T Managing T Managing T Managing T Managing T slowdown in economic growth did the keywords Struc.Assign. Available undoing for credit card companies in general and LG Card company in particular. Canadian Airways; Trans-Canada Air Keywords The company had a shy with bankruptcy (TCA); Canadian Airlines; The National Cisco System Inc., India, Networking twice but was saved due to government Research Council of Canada (CNR); Air equipment, Expansion, Low-cost intervention. Canada; Onex Corporation; PWA; Free engineering resources, Internet market, market problem; Deregulation of Canada’s Market Entry Strategies, Going Global, Pedagogical Objective aviation sector; Companies’ Creditors Emerging Markets, Deregulation of Arrangement Act (CCAA); Canadian Auto telecom industry, Small and Medium • To discuss whether the Korean Workers (CAW); Canadian Union of Public Businesses (SMB’s) government’s action was justified and Employees (CUPE); GE Capital; Victor Li; whether the LG Card bailout is a Trinity Time Investments. financially prudent decision. Cisco in Emerging Markets (A): Industry Financial Services Market Entry Strategies in China Reference No. TRT0002 and India Year of Pub. 2004 Teaching Note Not Available The first case in the series on Cisco Struc.Assig. Not Available Cisco in Emerging Markets (B): Systems' (Cisco's) growth strategies in emerging markets, it details Cisco's entry keywords Looking Beyond China and India strategies and its subsequent growth in Bailout of LG (Lucky Goldstar) credit card A sequel to the case study 'Cisco in China and India. In 2008, the Asia-Pacific company; Financial leverage; Lucky Emerging Markets (A): Market Entry region emerged as an important destination Goldstar (LG) company; Bankruptcy; Strategies in China and India'. This case for many foreign companies, especially for Credit card market; Asset backed securities; study delves into Cisco Systems' (Cisco's) Cisco, a maker of networking equipment Financial supervisory service; Net interest market entry strategies in emerging for the Internet and Telecom, due to the spread; Household debt; BC card; Kookmin markets, other then India and China. rapid growth of China and India. card; Samsung card; Delinquency; Korean The company, after initially focusing on Development Bank, Woori Bank; Kim Jin Cisco, the major beneficiary of the Internet the US and Western European markets, Pyo and Lee Duk Hoon. revolution and telecom deregulation in emerging markets in the 1990s, provided had started tapping the emerging markets most of the equipment needed to create for further growth avenues. China and India networks. The company stayed ahead of were identified as important markets by Troubled Times at Air Canada its time by acquiring companies to enter Cisco. As these countries were witnessing into new product markets and even before an increase in the number of Internet users, Air Canada, which had remained Canada's mobile phone subscribers and demand for dominant airline since 1930s, found itself the demand in the developed markets saturated, it realised the importance of the networking equipment in different sectors, 56 www.ibscdc.org

Cisco started investing heavily. However, proposed launch of a new Hindi GEC 'Real' Cooperation and the European

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Cisco had to change its strategy and adapt in March 2009. The case study debates on Commission emerged to become Asia's top III – Y G E T A R T S to the diverse and local conditions of these various issues concerning the launch of this B-school and world's 11th best B-school in markets to succeed. channel: the timing of Real's launch vis- a span of 14 years. The only other B- a -vis the prevailing economic downturn school that could make it to the FT Global- New rivals that could upstage Cisco by and industry lifecycle. Does niche 20 B-schools within a much shorter time providing cheaper or more technologically positioning work for a GEC? How Real is Hyderabad-based Indian School of advanced equipment posed as a threat to can win over established players like STAR Business. What factors contributed to Cisco, which had initially enjoyed Plus and emerging ones like Colors and CEIBS reckoning in global best B-schools? unhindered growth. Coupled with this, the NDTV Imagine? What did it do differently that catapulted company also faced the looming threat of it to the Ivy league of B-schools? The case a decline in demand caused by a slowdown Pedagogical Objectives study also explores, why after establishing in the global economy. itself as a sought after B-school in China, • To examine the nature of business for a CEIBS is going global, when very few of Pedagogical Objectives GEC and identify its critical success the top B-schools are doing so? Why factors • To examine Cisco's growth through among all other countries, CEIBS set up acquisitions and innovations • To discuss the need for a unique value its first overseas campus in Ghana? And proposition and right Segmentation, above all, whether CEIBS, which established • To compare and contrast Cisco's market Targeting and Positioning (STP) itself as a China-centric B-school with an entry strategies in India and China strategies to win over entrenched players international flavour, can replicate its success in a foreign land? • To debate on the sustainability of Cisco's in the GEC market position in the networking equipment • To examine Real's launch in the GEC Pedagogical Objectives market and identify the challenges market and its strategies to compete with ahead.Media and Entertainment established players as well as new entrants • To understand what are the critical success factors of a B-school in the light Industry Networking Hardware • To compare and contrast Real's Equipments of challenges that B-schools are positioning and marketing strategies constantly facing Reference No. MES0100 with those of other GECs in the Indian Year of Pub. 2009 entertainment and media industry • To understand the factors that helped Teaching Note Available CEIBS in becoming one of the top-20 Struc.Assign. Available • To debate on the possibilities of success global B-schools in a short span for Real in the cluttered Hindi GEC Keywords market and to identify the challenges • To explore why CEIBS is going global, Cisco System Inc., India, Networking ahead. when very few of the top B-schools have equipment, Expansion, Low-cost done so Industry Media and Entertainment engineering resources, Internet market, Reference No. MES0099 • To analyse whether CEIBS would be able Market Entry Strategies, Going Global, Year of Pub. 2009 to replicate its success in a foreign land. Emerging Markets, Deregulation of Teaching Note Available Industry Education telecom industry, Small and Medium Struc.Assign. Available Businesses (SMB’s) Reference No. MES0098 Keywords Year of Pub. 2008 Teaching Note Available Product Launch, Market Entry Strategy, Struc.Assign. Available Turner-Miditech's Planned Entertainment and Media industry in India, Launch of 'Real' Channel in Alva Brothers, Sunil Lulla, General Keywords India: Will it Succeed? Entertainment Channels (GECs), Lifestyle MBA; B-Schools; China; Emerging; Channels – NDTV Good Times, STAR Plus, Success; Globalisation; Market Entry In the backdrop of Indian entertainment Zee, Sony, 9x, NDTV Imagine and Colors, and media industry, the case study delves Strategies Case Studies; Ghana; Managers; Reality shows, Gross Rating Points (GRPs), Executive; Ranking; Positioning; Branding into the intricacies of Indian television Distinct positioning, Competitive clutter, market, particularly the General Target group – 'neo Indians', Differentiated Entertainment Channels (GECs). While content, Real Global Broadcasting (RGB) many factors changed the market dynamics McDonald's in China of the industry, increase in the number of GECs redefined the role of competition. McDonald’s, the leading US fast food Each channel vied for more viewership, China Europe International retailer, entered China in 1990 by opening offering a variety of content to include Business School (CEIBS): Going its first restaurant in . As of everything from fiction and mythology Global March 2008, there were more than 800 to reality shows, music and movies. McDonald’s restaurants across China. However, inability to change according to Following the economic boom in the Yum! Brands, the main competitor for changing consumer psyche made GECs lose 1990s, China demanded its business McDonald's had already established its their market dominance to other emerging managers to lead its economic growth. presence in China before McDonald's and genres of specific content – news, lifestyle Many Chinese B-schools offering MBA and was the leader in the Chinese fast food channels, and 'only music and movie' EMBA programmes have mushroomed market. McDonald's had launched several channels. during the years. However, many of them initiatives in China to adapt to local needs simply copied western styles and failed to and tastes in order to overtake Yum Brands. Amid this competitive and challenging produce skilled business managers who can It plans to open more than 1000 scenario, on January 21st 2009, Real understand the local market, its needs and restaurants in China before the Global Broadcasting (RGB), a 50:50 joint problems. The void was filled when China 2008 Olympic Games. It is also focusing venture between Alva Brothers' Miditech Europe International Business School on opening more drive-thru restaurants in and Turner International announced the (CEIBS), a joint venture between Chinese China. As one of the top official sponsors Ministry of Foreign Trade and Economic 57 www.ibscdc.org for the 2008 Beijing XXVIX Olympics, • To analyse the mass brand image of Keywords McDonald's is counting on a high-profile Pond's presence in Beijing to build its brands in Mattel; Barbie; Fisher-Price; Outsourcing; the mainland and to win favor among the • To analyse Pond's entry into the Value Chain Management; Toy industry; Chinese consumers. McDonald's hopes that premium product range Crisis management; Market Entry the Olympics will bring in new customers Strategies; Case Studies; Production • To analyse the issues and challenges for capabilities and will give it a competitive edge over Pond's to succeed in the premium Yum! Brands. How the fast food scenario segment. in China will evolve, remains to be seen. Industry FMCG Reliance Branded Jewellery Pedagogical Objectives Reference No. MES0096C Retail Outlets: Will it Succeed? Year of Pub. 2008 • To analyse the fast food industry in Teaching Note Available Reliance Retail, one of the biggest retail China Struc.Assign. Available industries in India forayed into branded jewellery and introduced its brand 'Reliance • To analyse the market entry strategies Keywords Jewel'. The main objective of the company of McDonald's in China Hindustan Unilever Limited; HUL; Market is to compete with the established branded • To analyse the competitive advantage Entry Strategies Case Studies; Ponds; Mass jewellery players, especially Tata's Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies of Yum! Brands over McDonald's in Market; Premium Skincare Segment; Ponds . To reach the No.1 position in China Age miracle Range; P&G Olay Total the branded jewellery market, the Effects; masstige; Price Sensitive Indian company plans to promote jewellery • To analyse consolidation strategies Market; Anti-ageing retailing in a big way by establishing more adopted by McDonald's to take on the branded jewellery retail outlets within 2 to leaders Yum! brands in China. 3 years. Industry Fast Food Industry Mattel in China: ‘The Outsourcing Pedagogical Objectives Reference No. MES0097C and the Recall’ Year of Pub. 2008 • To understand the dynamics of Indian Teaching Note Available Mattel Inc, USA is the world's biggest toy retail jewellery market Struc.Assign. Available maker and is ranked 406th in the Fortune 500 in 2007. Some of the renowned brands • To study the critical success factors of Keywords like Barbie, Hot Wheels, Matchbox and Indian branded jewellery market McDonald's; Market saturation; Yum! Fisher-Price are from the house of Mattel. • To discuss the challenges faced by Brands; First drive-thru restaurant; China Mattel used outsourcing as a major tool in Reliance from the competitors, Petroleum &Chemical Corporation; its value chain management with China especially Tata's Tanishq Beijing Olympics; McDonald's Champion becoming a favoured destination. However, Kids; Chinese Fast Food industry; Market on August 14th 2007, Mattel recalled • To analyse the future prospects of Entry Strategies Case Studies; Franchising nearly 4,36,000 toys that were Reliance. Model; long-term strategy manufactured in China. This was the second major recall by Mattel of its toys that Industry Branded Jewelry contained impermissible levels of lead. Reference No. MES0094B Mattel recalled 20 million toys Year of Pub. 2008 Pond's Foray into the Premium manufactured in China twice in a span of Teaching Note Available Segment – Will the 'Miracle' two weeks. Mattel was criticized for not Struc.Assign. Available Work? having tight quality control procedures in Keywords its supply chain of subcontractors. HUL’s Talc brand – Pond's - has moved up Although Mattel was known for having in Gems and Jewellery in India; Branded on premium imagery. In March 2007, it place a sophisticated inspection and testing Jewellery Market in India; Reliance entry launched its Age Miracle range in the system at many of its factories in China, it into Jewellery Business; Reliance forayed premium skin care anti-ageing category. could not avoid a quality scam. Mattel into Jewellery stores; History of India's Earlier, HUL had tried to enter the undertook many measures to undo the leading jewellery brand; Tata Tanishq premium skin care segment by extending damage and it remained to be seen if it achievement; Marketing Strategy of Tata its Fair & Lovely (FAL) franchise, without could regain the trust of its consumers. The Tanishq; Reliance jewels to compete much success. The Indian skincare market case details Mattel's recall of its toys and Tanishq; Future plans of Tata Tanishq; has been growing at around 16% a year, the impact of the same on its brand image. Timex entry into jewellery; Reliance out of which the anti-ageing products jewels plans to reach No.1 position; market accounts for close to INR 1 billion Market Entry Strategies Case Study; in sales. Anti-ageing skin care market is Pedagogical Objectives Tanishq as a first mover; Reliance as a late growing at a rate of 40% in India. As it • To understand the concept of mover now felt that the market is ripe enough, outsourcing and its rationale Pond's entered the premium skin segment. It had to bear large promotional costs to • To analyse the importance of succeed against the stiff competition from outsourcing in value chain management Porsche's Expansion in India: A other players in this segment. Whether • To analyse the significance of quality Catch 22 Situation? Pond's can overcome its 'mass' image and maintenance and supervision during make a mark in the premium segment The automobile industry of India was at a outsourcing. remains to be seen. tipping point with the emergence of the Industry Toy Industry small car segment in 2007. The domestic and international car makers eyed India Pedagogical Objectives Reference No. MES0095C Year of Pub. 2008 whose economy had reported a consistent • To analyse the market for premium skin Teaching Note Available growth of 9% in the past three years. The care products in India Struc.Assign. Available middle class market attracted many but 58 www.ibscdc.org

according to future estimates, the strongest people to offer collaterals and lack of Pedagogical Objectives

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S growth would come from the 'Top of the details of credit history. The case facilitates III – Y G E T A R T S Pyramid'. The super luxury car segment discussion on whether ICICI Bank will able • To understand Corporate presented excellent opportunities for to sustain its partnership model as the Entrepreneurship marketers. Porsche AG with global sales of Indian microfinance sector becomes • New Venture Development : ¤7,367.9 million for the year 2006-2007, lucrative. Opportunities and Challenges for an planned to expand its subsidiary, Porsche Entrepreneur Cars India Private Limited's (Porsche) Pedagogical Objectives presence in the luxury car segment. But in • To analyse Strategies for New Venture the wake of the expansion plans would it • To assess the opportunities and Development. lose exclusivity, and how would Porsche challenges in Indian microfinance sector Industry Airline Industry maintain its exclusivity in the emerging • To understand evolution of 'SHGs-Bank Reference No. MES0091A Indian economy remained to be seen. The Linkage' programme in Indian Year of Pub. 2008 case thus helps to understand how Indians microfinance sector Teaching Note Available look at luxury and facilitates the discussion Struc.Assign. Available about how Iconic brands can maintain • To evaluate growth and feasibility ICICI exclusivity in an emerging economy like Bank's "Partnership Model" Keywords India. • To assess competitive scenario shaping David Neeleman; JetBlue; up for ICICI Bank and it impacts. Entrepreneurship; Azul; TAM; GOL; Pedagogical Objectives Brazilian Airline Industry; Low-cost Carrier Industry Financial Services (LCC); Entrepreneurial Leadership; Brand • To understand the dynamics of the Reference No. MES0092A Indian automobile industry Building; New Venture Development; Year of Pub. 2008 Duopoly; Five Forces Analysis; Market • To understand how Indians look at luxury Teaching Note Available Entry Strategies Case Study; SWOT Struc.Assign. Available • To analyse how brands become Icons analysis Keywords • To analyse whether a trade off is possible Microfinance; Microfinance in India; between exclusivity and profitability in Google’s Orkut in Brazil: What’s the luxury segment. Market Entry Strategies Case Study; ICICI Bank; SHGs-Bank Linkage Program; So Social About It? Industry Automobile Industry IRDP; NABARD; Regional Rural Banks; Social network advertising is forecasted to Reference No. MES0093A Entry Level Strategy; Bank of Madura reach $3.6 billion by 2011. There are a Year of Pub. 2008 (BoM); Partnership Model; Microfinance number of companies cashing in on this Teaching Note Available Institution in India; SHARE Microfin Ltd; trend. Google, the biggest search engine Struc.Assign. Available Grameen Foundation; Centre for company, launched its social networking Microfinance Research; Institute for Keywords site Orkut in 2004. The site was not Financial Management Research successful in the US. However, became Automobile industry India; Auto immensely popular in Latin America, ; Experiential marketing; particularly Brazil, where almost 70% of Emotional branding; India's affluent space; JetBlue Founder David Internet users were Orkut users. Soon, Luxury market India; Super luxury cars Google was plagued by allegations that India; Brand Icons; Exclusivity; Porsche Neeleman's LCC in Brazil: The Orkut communities of neo-Nazis, anti- AG; Indian auto consumer; Market Entry Conundrum of New Venture socials and racists were being formed. It Strategies Case Study; Luxury marquee's Development was being used to spread child pornography, India Entrepreneur David Neeleman paedophilia and for Internet trafficking. (Neeleman), founder of the US based Google was asked to hand over user data to successful low-cost carrier (LCC), JetBlue Brazilian authorities for identifying the Microfinance in India: The Case Airways Corp. (JetBlue), after stepping perpetrators. Google refused to do so. As a of ICICI Bank down as JetBlue's chief executive officer result, criminal charges were filed against in February 2008, announced the creation Google’s head of Brazilian operations and Since its entry into Indian microfinance of a low-cost carrier in Brazil to tap the a fine was levied on Google for each day of sector in 2001, ICICI Bank, one of the nation's expanding appetite for flying. non-compliance. Google eventually largest private sector banks in India Neeleman planned the carrier to start flying cooperated with the authorities. Its woes achieved remarkable progress in its by early 2009. Neeleman saw plenty of however did not end here. When Google portfolio. Instead of the conventional opportunities in the booming Brazilian introduced advertising on Orkut, there were branch-banking model, it opted to economy where air travel had been reports that ads were appearing alongside differentiate it operational model, to foray expanding annually at a double-digit pace. illegal content. With no way to monetise into rural markets to tap lucrative However, the Brazilian market, having Orkut and the never-ending controversies, opportunities in the Indian microfinance infrastructural issues and being dominated will Google be tempted to cut its losses and sector. Apart from basic microfinance by two airlines; Transportes Aereas shut down Orkut in Brazil? This case study services, it planned to offer various Meridional (TAM) and GOL Linhas Areas talks about the growth of social networking financial products like weather insurance, Inteligentes S.A. (GOL), that together sites, particularly on Orkut’s operations in health insurance, remittance services and commanded more than 90% of domestic Brazil. The issue of whether user commodity derivatives to rural masses. But, airline market, presented a tough situation information should be shared with the legal it faced stiff competition from commercial for the entrepreneur. The case, highlighting authorities forms the core of the discussion. and other foreign banks, which were the Brazilian airline industry scenario, in Should Internet companies hand over user determined to boost their presence in the view of Neeleman's new LCC, provides a data when demanded? Does their Indian microfinance sector. Apart from scope to analyse the strategies, compliance mean breach of user trust? If that, the bank faced major challenges like opportunities, and challenges of a new they refuse, termination of services is information irregularity, inability of poor venture development for an entrepreneur. likely, then how do companies achieve the 59 www.ibscdc.org goal of wealth maximisation? How can there is a serious challenge or is it only a • To understand and compare McDonald’s Internet companies best combine the passing phase in the search giant’s growth. business model, both globally and in interests of their users, advertisers and Russia authorities, while ensuring that revenues Pedagogical Objectives keep flowing in? • To examine the food consumption trends The case is structured to let the students and consumer behaviour in the Russian fast food segment Pedagogical Objectives analyse and understand: • To analyse the reasons behind The case is structured to let the students • A search engine’s business model in general and that of Google in particular McDonald’s cautious growth in Russia analyse and understand: and suggest ways to gain sizeable market • The characteristics of social networking • Should a business model be adapted, when share there. sites and the reasons behind their entering a foreign market? Industry Fast Food Retailing popularity • How should Google respond to Reference No. MES0088 • Importance of scrutinising a country competition from the governments in Year of Pub. 2008 before offering a product there France, Germany and Japan? Teaching Note Available Struc.Assign. Available • Social networking sites’ dilemma - Industry Internet Search & Navigation Services Keywords

Market Entry Strategies Market Entry Strategies whether to share user information with Market Entry Strategies Market Entry Strategies Market Entry Strategies Reference No. MES0089 the legal authorities or refuse and risk Fast food; Russian economy; Collapse of getting shut down? Year of Pub. 2008 Teaching Note Available the Soviet Union; Economic reforms; Industry Internet Search & Navigation Struc.Assign. Available Liberalisation; privatisation & Services globalisation; Ruble inconvertibility; Keywords Reference No. MES0090 George Cohon; Khamzat Khasbulatov; Year of Pub. 2008 Google; Baidu.com; China’s Search Engine Russian financial crisis and its impact; Teaching Note Available Market; Business Model; Globalisation and Russian bureaucracy and communism; Struc.Assign. Available Localisation; CAGE Frame Work; Alliance Market Entry Strategies Case Study; McDonald’s flawed expansion strategy; Keywords Strategies; Acquisitions and Partnerships; Chinese Google; Government Business McComplex; Competition from local and Google; Baidu.com; China’s Search Engine Environment; Internet Censorship; Online global rivals; Growth plans for McDonald’s Market; Business Model; Globalisation and Advertising; Market Entry Strategies Case in Russia; McDonaldl’s at Pushkin Square Localisation; CAGE Frame Work; Alliance Study; International Business; Legal Strategies; Acquisitions and Partnerships; Environment and Regulations Chinese Google; Government Business Wal-Mart in India: Can it be the Environment; Internet Censorship; Online Messiah of Indian Farmers? Advertising; Market Entry Strategies Case McDonald’s in Russia Study; International Business; Legal ndia was among the top producers of Environment and Regulations McDonald’s - a name easily digested by vegetables and fruits, but 30%-40% of the commons and celebrities alike, in the produce was wasted due to poor storage developed nations - has been trying hard and handling facilities. The potential of to serve developing nations. It would be a agri-business in India attracted many Google vs Baidu.com (B): domestic and multinational players. Wal- Google’s Country Experiences mistake if one assumes it is out to better the living standards in the second world. Mart, the American retailer with net sales At the heart of Google’s worldwide success Rather, McDonald’s stalled growth in of $344,992 million in 2007 planned to is its PageRank technology and its online developed nations led its foray into start its operations in India and formed a advertising model. After success in its home emerging markets. The case study joint venture with Bharti Enterprises country, the US, Google has expanded to chronicles McDonald’s entry into Russia (Bharti). Bharti was one of the leading international markets including countries and how it set up its outlets, leaping over business groups in India with interests in in Europe and the Asia-Pacific. Has Google Russian brand of communism. After its first telecom, agribusiness, insurance, and retail been successful in all the countries it Russian outlet opened in 1990, McDonald’s with market capitalisation of INR 1519 entered? What has been Google’s leveraged the Russian’s love for American billion. Wal-Mart planned to invest in back experience in these countries? What are food and gradually strengthened its end technology and replicate its global the key insights? This case, the second in presence. But its growth was restrained - supply chain model in India. But analysts the series, Google vs Baidu.com, looks at due to Russian bureaucracy as well as a were skeptical about Wal-Mart’s entry into Google’s meteoric rise worldwide and the behavioural shift from bigger-in-size to India, as the company was known for its reasons for its global success. The focus is better-in-customer-reach. How should aggressive attitude towards its suppliers. on Google’s operations in France, Germany McDonald’s deal with its dilemmas in Anti MNC activists were concerned about and Japan. Google’s foray into these Russia? What are its growth options there? the social disruptions that the company countries though successful is also marked Should it be wary of store expansions or would cause in the retail sector. The case by the threat of impending competition spread across Russia? details the controversies and challenges from a new adversary - the government that Wal-Mart might face and facilitates discussion on whether Wal-Mart can sponsored national search engines. The Pedagogical Objectives case details the reasons for and the establish itself in India. initiatives of the respective governments • To examine the characteristic features to challenge Google’s stronghold and of emerging markets, particularly Russia Pedagogical Objectives market dominance. What are the • To analyse the political, economic and • To understand the dynamics of ramifications of the government social conditions in Russia and identify agriculture produce and food retailing in initiatives succeeding for Google and what areas in which the nation differs from emerging countries like India does it need to do to ensure its continued other developed countries dominance? The case questions whether 60 www.ibscdc.org

• To discuss the possible factors of agrarian Year of Pub. 2008 Barclays’ Entry into India:

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S crisis in India Teaching Note Available Strategies and Prospects Struc.Assign. Available • To analyse the food supply chain in India Barclays Bank PLC (Barclays) had been Keywords • To analyse the logistics and supply chain providing financial services to the global management strengths of Wal-Mart Nokia; Branding; Cellular Phone Market; community for 300 years. It was operating Marketing Strategy; Market Leadership; in India since the late 1970s as an • To analyse opportunities and challenges Localisation Strategy; Advertising Strategy; investment banker. In 2006-2007, Barclays for a multi national retailer in an Brand Image; Market Entry Strategies Case chose to enter the retail banking sector in emerging economy like India. Study; Competition India.The Indian banking sector was on a high due to the increased purchasing power Industry Retailing of Indians coupled with higher interest Reference No. MES0087A rates. Many foreign bankers were willing Year of Pub. 2008 Harley-Davidson: Market Entry to expand in India as the economy was Teaching Note Available Strategies in India growing at a rate of over 8% per annum. Struc.Assign. Available India offered ample opportunities in Global automobile companies have lined Keywords corporate banking, small-and-medium size up Indian roads taking advantage of the enterprises, retail banking, consumer economic prosperity of the country. Agrarian Crisis; Supply Chain; Food finance and micro finance. A large number Harley-Davidson, the most iconic US Retailing India; Agribusiness of foreign banks focused only on corporate motorcycle manufacturer is a prospective Opportunities; Agriculture produce; banking whereas analysts opined that the entrant into the Indian market. Earlier, Agriculture Marketing; Consumer real opportunity lay in retail banking and Harley-Davidson bikes were restrained Behaviour; Agriculture Credit; Wal-Mart; consumer finance. In this context it would from entering India due to stringent Wal-Mart in China; RFID; Rural Supply be relevant to analyse Barclays’ entry emission norms and high import duties. Chain in India; Indo-US Initiative; Market strategies into India as also the growth The emission norms were relaxed as part Entry Strategies Case Study; Food prospects of foreign banks in developing of a trade agreement between the US and Processing in India; Consumer Spending in countries. India India on April 13th 2007. However, the large bikes are haunted by high import tariffs in India that double the original price Pedagogical Objectives of the bikes. Further Harley-Davidson bikes • Banking operations by a global bank Nokia: The Brand and its Future in also face competition from its Japanese India counterparts who already have businesses • Regulatory framework for foreign banks in India The cellular phone market in India has in India. Although the Indian government offers different market entry options for been recording significant growth since the • Operational strategies used by Barclays foreign firms, Harley-Davidson has late 1990s and is the fastest growing in the bank to expand in India world. Nokia, the world leader in cellular announced that it will enter India only phone communications entered India in through the import route. How and when • To study the challenges and prospects 1995. Since then the Nokia brand has been Harley-Davidson will enter India is to be of foreign banks in India. seen. steadily growing and has gained wide Industry Banking acceptance in the Indian market. India is Reference No. MES0084C Pedagogical Objectives the third largest market for Nokia, in terms Year of Pub. 2008 of its net sales as of 2006. Nokia is one of • To understand the motorcycle market Teaching Note Available the most trusted brands in India and leads in India Struc.Assign. Available other cellular phone brands in terms of market share, advertising and customer • To discuss Harley-Davidson’s brand Keywords service. The innovative technologies, user- identity and its scope in the Indian Global Bank; Barclays Bank; Foreign banks friendly features and affordable prices market in India; Entry strategies; Market Entry contributed to Nokia’s success in India. The Strategies Case Study; M&A in Banking case facilitates discussion on Nokia’s brand • To understand different market entry sector; Future challenges building strategies in India. It also allows strategies allowed in India for discussion on the future of the Nokia • To discuss the market entry strategies brand and the cellular market in India. to be adopted by Harley-Davidson in India. Walt Disney Co. (B): Disney in Pedagogical Objectives India Industry Motorcycle • To analyse the role of brand image in Reference No. MES0085C Although Disney entered India much sustaining market leadership Year of Pub. 2008 before any other player in 1993, it failed Teaching Note Available to capitalise on its First Mover Advantage. • To analyse the competitive scenario in Struc.Assign. Available This was mainly because of its failed the cellular market in India partnership with K. K. Modi Group. After Keywords • To discuss the strategies of Nokia in India its partnership ended, it reentered India in Harley-Davidson; Motorcycle Industry in 2004 with television business. Within 3 • To analyse the localisation strategy of India; Cult Brand; Market Entry Strategies years, the company was successful in Nokia as a major tool for gaining market Case Study; Consumer Behaviour; Business establishing its presence in the country. It leadership Strategy; Developing Economy; Business later on introduced its other divisions, excluding theme parks. However, with the • To analyse the future of the Nokia brand Environment; Localisation Strategies presence of strong competition, it has not in India. been able to derive what it expected. Industry Mobile Phone However, Disney plans to become the Reference No. MES0086C leading entertainment brand in India 61 www.ibscdc.org through localising its products. To what • Disney’s market entry strategies L’Oreal in India: Marketing extent would it be successful? - is the • Lessons from Disney’s success and Middle Class Consumers with question that can be answered only in the Premium Prices? coming years. failures. Industry Media and Entertainment India, in recent years, has emerged as one Pedagogical Objectives Reference No. MES0082 of the hot destinations for global cosmetics Year of Pub. 2007 players. Overseas players like Unilever, • To analyse the factors forcing Teaching Note Available Procter & Gamble and L'Oreal dominate globalisation and the need to globalise, Struc.Assign. Available the industry through targeting the growing especially for entertainment companies middle class. Players like Hindustan Keywords • To know the importance of emerging Unilever Limited (Unilever's Indian markets and the need for MNCs to Walt Disney; Mickey and Mini Mouse; subsidiary), Procter & Gamble target their rethink their marketing models for these Market Entry Strategies Case Study; customers with mid prices; while L'Oreal markets Donald Duck and Goofy; Animation; Indiais targeting them with premium prices. Theme Parks and Resorts; Growth This strategy helped L'Oreal to breakeven • To discuss the initial problems Disney Strategies; Michael D. Eisner; Robert A. the sales and then record a huge increase in faced after re-entering India and the Iger; Emerging Markets; Globalisation and its profits. But considering the increasing strategies it adopted to tackle this Localisation; Disneyland competition and price sensitiveness among Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies the Indians, it has to be seen how long can • To discuss the challenges for Disney in L'Oreal continue this success? the coming years.

Industry Media and Entertainment ’s Entry Strategies for the US Pedagogical Objectives Reference No. MES0083 Market • To analyse the opportunities and Year of Pub. 2007 The Group, one of the world's top Teaching Note Available challenges for cosmetics players in two-wheeler manufacturers introduced its emerging markets Struc.Assign. Available brand, Vespa, in the US market during 1950. Keywords But Vespa had to be pulled out of the market • To understand and analyse the Indian because of stringent emission standards. In cosmetics industry and the changing Walt Disney; Mickey and Mini Mouse; 2000, Piaggio re-launched Vespa in the US consumer behaviour Donald Duck and Goofy; Animation; market which was better and fuel-efficient. • To discuss the business model adopted Theme Parks and Resorts; Growth As scooters were gaining popularity around Strategies; Michael D. Eisner; Robert A. by the players, particularly the this time in the US and sales rising, Piaggio multinationals Iger; Emerging Markets; Globalisation and felt that it was not an opportunity to be Localisation; Disneyland; Toon Disney vs missed. It went ahead implementing several • To analyse the reasons for L’Oreal’s POGO; Market Entry Strategies Case strategies to strengthen its presence in the initial strategy failure in India Study; Animax market but faced a big challenge in • To discuss L’Oreal’s revised strategy of combating rising safety concerns regarding scooters. targeting middle-class with premium price and its success. Walt Disney Co. (A): The Emerging Markets Strategy Pedagogical Objectives Industry Cosmetics Reference No. MES0080 With little opportunities left in its domestic • To study the market for scooters in the Year of Pub. 2007 media and entertainment market, Walt US Teaching Note Available Disney began looking outside for new • To examine the reasons of Vespa behind Struc.Assign. Available growth avenues. After Robert Iger (Iger) reentering the US market became CEO in 2005, Disney’s global focus Keywords increased. The plan is now to derive half • To study the market entry strategies of Emerging markets; Indian cosmetics of its profits from overseas markets. For Vespa industry; Cosmetics players; Customer this, Iger has been emphasising mostly on • To elucidate the safety concerns segmentation; Indian middle-class emerging markets particularly China and consumers; Consumer behaviour; Market India. There are equal opportunities and regarding scooters and understand Vespa's measures to respond to them Entry Strategies Case Study; MNCs business challenges in emerging markets for the model; L'Oreal India and strategies; Moving global players. Understanding and • To study the branding challenges that a away from brand image; Mass vs premium overcoming the challenges would help multinational company faces on entering product strategy in emerging markets players to extract most from the diverse cultures. opportunities. Even Disney, which initially stumbled, is now making the most from Industry Automobile-Two Wheeler the opportunities that exist in the emerging Reference No. MES0081B Standard Chartered Bank in markets like China, Russia and India by Year of Pub. 2007 South Korea adopting various strategies. Teaching Note Available Struc.Assign. Available The case discusses the mega-merger of one of the leading banks in the world - London Pedagogical Objectives Keywords based Standard Chartered Bank, with South The case study helps to analyse and Vespa; Piaggio; US market; Two Wheeler; Korea's seventh largest bank - Korea First understand: Vespanomics; Aprilia; Moto Guzzi; Bank. The merger resulted in the creation of one of the largest banks in South Korea- • Importance of emerging markets Lifestyle Brand; Scooter; Market Entry Strategies Case Study; ET2; ET4; Safety; SC Jeil Eun Haeng (SC First Bank). After • Opportunities and challenges for the Utility Vehicle; Economy providing a brief note on the structure and players in emerging markets recent trends in the South Korean banking industry, this case also provides a detailed 62 www.ibscdc.org

commentary on the two banks. The case Pedagogical Objectives Keywords

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S discusses the rationale behind the merger III – Y G E T A R T S and the benefits which the two companies • To discuss about the history and growth IKEA; Japanese home furnishing industry; were expecting from it. The case then goes of Dell Market Entry Strategies Case Study; on to explain the merger deal in detail. It Product; Price; Place; Promotion; • To discuss about Dell's unique business Distribution; Positioning; Targeting; finally discusses the possible challenges model which the merger could face in the near Segmentation; Otsuka Kagu; Localisation future. • To discuss the major players in the strategy; The IKEA concept; Home gaming PC market furnishing retailing Pedagogical Objectives • To assess how Dell targeted the niche segment of the gaming PC industry • To discuss the Korean banking industry United Parcel Service: • To understand the core competence of • To argue whether Dell would succeed in Expanding in China both the banks this new initiative. United Parcel Service (UPS), an American • To analyse the possible synergies of the Industry Personal Computers based express delivery service provider, was merger. Reference No. MES0078K one of the worlds largest. It planned to Year of Pub. 2006 expand aggressively into China particularly Industry Banking Teaching Note Not Available after the latter's entry into the World Trade Reference No. MES0079K Struc.Assign. Not Available Organization (WTO) in the year 2001. Year of Pub. 2005 Keywords UPS increased its flights to and from Teaching Note Not Available Chinese cities, built more infrastructure and Struc.Assign. Not Available Dell; Personal computer (PC); Consumer established stronger brand presence in the Keywords PC segment; Gaming PC; US PC market; country. It also opened UPS Express Repositioning; Market Entry Strategies centers in several Chinese cities to Standard Chartered; Korea First Bank; SC Case Study; Direct sales model; strengthen its package drop-off and pickup Jeil Eun Haeng (SC First Bank); Acquisition Customisation; Product strategy; Pricing services. UPS had started its operations in was largest foreign direct investment; Asian strategy; Promotional strategy; Branding; China in 1988. However, FedEx had Financial Crisis (1997); Market Entry Value proposition; Cannibalisation; Target entered China in 1984 and DHL had Strategies Case Study; The Korean Banking market commenced business in China even earlier Industry; Standard Chartered Bank in South in 1980. Both these companies had a Korea; Forex Management; Merger significant lead over UPS. Among global synergies; Commercial banking; Priority IKEA: Re-entering The Land of integrators, UPS had a market share of banking; Retail banking; Mervyn Davis only 11% in China as against DHL's 51% Rising Sun and FedEx's 28%. Nonetheless, UPS IKEA, the Swedish home furnishing decided to invest heavily in China, in view Dell's Entry into Gaming PC: The company entered into Japanese home of the potential that it offered. The Chinese economy was growing at a rapid pace and Decision Dilemma furnishing industry during the decade of 80s. However, during that time, the company there was also phenomenal increase in the Dell, the world's leader in PC industry, failed to mark its presence in Japanese home country's international trade, thereby reaped the benefits of its unique business furnishing industry. Analysts commented providing huge business opportunity for a model of customization and direct sales. that, since the company failed to adapt the logistics company. In spite of stiff The company registered double digit localization strategy it failed. In 2006, the competition from FedEx and DHL, UPS growth in its two-and-half decades of company again plans to make an entry in aimed to strengthen its hold on the logistics existence. During 2004-05, the company Japan. Though, this time the company plans market there. At the same time, UPS was failed to maintain its expected growth and to stress upon the localization strategy. The losing market share in its home base in the the sales declined. The company faced company modified its furniture and other US. Can the business growth in China make challenges due to the saturation of the US home furnishing items to suite the taste and up for the decline faced in the home consumer PC market, increasing preference of the Japanese audience. This market? competition and declining price of PCs. case discusses in details about the marketing The company identified a niche market of strategy adopted by IKEA to make a Pedagogical Objectives gaming PC with prospective growth successful entry in Japan. It also covers the potential. There were very few and small 4Ps of marketing and segmentation- • To discuss about the courier industry in players in the market of gaming PC. The targeting-positioning strategy adopted by China company was in a decision dilemma the company. • To understand the competition in the whether to enter into the gaming PC Chinese courier and parcel industry market or not. If it enters, then what would Pedagogical Objectives be its branding and marketing strategy? • To discuss about the entry and expansion The case discusses in details the about Dell's • To understand the importance of of UPS in China. inception, its growth and challenges. It also localisation strategy in the context of Industry Courier/Parcel Industry gives a detailed outlook about the US PC IKEA's failure venture in Japan Reference No. MES0076B market. Then the case provides description • To discuss the market dynamics of Year of Pub. 2006 of the gaming PC market with respect to furniture Industry in Japan during 2006 Teaching Note Not Available players in the market and their positioning, Struc.Assign. Not Available consumer behaviour, recent trends and • To analyse IKEA's STP strategy. future prospect. The students can discuss Keywords whether Dell will enter into the gaming Industry Home Furnishing PC market or not and if the company Reference No. MES0077K Courier industry; Competition; United enters, what will be its value proposition, Year of Pub. 2006 Parcel Service; Courier Service; Express branding strategy and marketing strategies? Teaching Note Not Available Parcel Service; Geographic Expansion; Struc.Assign. Not Available Expansion into China; Market Entry 63 www.ibscdc.org Strategies Case Study; Fedex in China; DHL versatile vans and heavy duty trucks to UK. Led by its maverick Chief Executive in China; Courier Business in China; comfortable coaches. DaimlerChrysler AG Sir Bill Gammell, the company sold its Multinational courier companies in China; was formed in 1998 by the merger of holdings in the North Sea and focused on UPS in China; UPS Express Stores 'Daimler-Benz AG' (Germany) and 'Chrysler buying and developing oil acreages in South Corporation' (USA). Thus, Asia. Cairn shot into the limelight when DaimlerChrysler had a tradition of more after a decade of drilling and exploring it Success of IBM in India than one hundred years, featuring the hit big in Rajasthan, India in 2006. What pioneering achievements in automotive would Cairn's strategy in India be? In 1991, the Indian government started engineering by both of its predecessor relaxing the foreign investment norms and companies. Pedagogical Objectives this encouraged foreign IT companies like On 28th June, 2006, DaimlerChrysler Electronic Data System (EDS), Hewlett- • To understand oil exploration industry announced that its unique and urban- Packard (HP) and International Business in UK friendly, fuel-efficient, subcompact 'Smart Machines Corporation (IBM) to enter brand (Smart)' would enter the U.S. market. • To understand oil exploration industry India. Among these, IBM, a multinational The company redesigned its original model in South Asia computer technology corporation had 'Smart Fortwo' and informed that the new shown keen interest in establishing itself • Cairn Energy's oil exploration strategies generation Fortwo would be available in in the Indian market. Till 2001, IBM in India. Market Entry Strategies Market Entry Strategies

Market Entry Strategies the U.S. in three models from 2007. Market Entry Strategies Market Entry Strategies witnessed slow growth and started Americans, in general, did not like small Industry Oil and gas experiencing gain since 2002. In 2005, to cars as they were doubtful about the safety Reference No. MES0073B compete with the Indian software giants features of such cars. However, since 2003- Year of Pub. 2006 like Wipro, Infosys and Tata Consultancy 2004, due to a continuous hike in US Teaching Note Not Available Services, IBM adopted the Global Delivery gasoline prices, there was a declining sale Struc.Assign. Not Available Model and with other foreign companies of the large SUVs and pickups. Hence, the like Accenture, Intel and AMD planning company felt that it was the right time to Keywords to invest heavily in India, IBM decided to bring its Smart cars to the United States. invest $6 million to start several initiatives Cairn Energy; Petroleum sector; Energy But, the US market was already flooded that would serve to fulfill its vision of sector; Energy in Bangladesh; Oil in with fuel-efficient subcompact cars like becoming a globally integrated company. Rajasthan; Sir Bill Gammell; NELP; UK Toyota Scion and BMW Mini Cooper. With the Indian software giants dominating based Independent Oil Company; Sangu Some of them also had their US dealer the IT sector and with the entry of other reserves; Rajasthan oil reserves; Market network in place. Further, three Japanese foreign software companies, analysts were Entry Strategies Case Study; Edinburgh; subcompact cars were expected to enter skeptical about IBM's success. Would IBM Scotland based-i&P Company the US market by 2006-2007. They were succeed in its endeavors? low-priced compared to the Smart brand cars. Therefore industry observers were Pedagogical Objectives skeptical about Smart's success in the US. BenQ Corporation: Entering the Branded Cell Phone Market in • To understand the impact of relaxing of FDI norms by the Indian Government Pedagogical Objectives China • IBM's experience in the Indian markets • To understand the global automotive The case focuses on BenQ Corporation, a industry US$3.2 billion Taiwan-based company. By • Adoption of Global Delivery model by 2001 BenQ had become the largest contract IBM • To understand the US automotive manufacturer of mobile handsets. However, industry in 2002 the company decided to move away • IBM's strategies to succeed in the Indian from contract manufacturing and launched markets. • To understand the challenges in the US branded products. As part of this strategy, automotive industry Industry IT Industry in 2004 the company launched branded Reference No. MES0075B • To analyse whether 'Smart' will be a mobile handsets in China, which was the Year of Pub. 2006 success in US. fastest growing and the most competitive Teaching Note Not Available handset market globally. The case gives Industry Automotive Industry Struc.Assign. Not Available in-depth information on the Reference No. MES0074B characteristics and nature of the Chinese Keywords Year of Pub. 2006 handset market, the various competitors Teaching Note Not Available and their strategies. The case IBM; Global Delivery Services; Global Struc.Assign. Not Available Delivery Model; e-governance; simultaneously highlights the market entry competition; Market Entry Strategies Case Keywords strategies used by BenQ. Study; On Demand Model; growth strategy; Daimler Chrysler; Smart Fortwo; Mercedes Intel; TSIL; entry of MNCs Pedagogical Objectives Car Group; Market Entry Strategies Case Study; Automotive Industry; Swatch; • The steps taken by BenQ to move from Subcompact car; NAIAS; US car market; being a contract manufacturer to a brand Smart Fortwo's Entry into the US.: Daimler-Benz AG; Chrysler Corporation; manufacturer Smart Move? Fuel-efficeint car; Small car; Eco-friendly • A comparison of BenQ’s strategy with car; Two-seater car; Gasoline price in USA In 2005, DaimlerChrysler was the world's Samsung’s fifth largest automotive group. • The nature and characteristics of the DaimlerChrysler was a unique and Chinese handset market prominent company in the global Cairn Energy – What Would automotive industry. It had a product Cairn's Strategy in India be? • The segmentation, targeting and portfolio that ranged from small cars to positioning strategy used by the various Cairn Energy was an independent oil sports cars and luxury sedans, and from mobile handset vendors exploration and Production Company in 64 www.ibscdc.org

• The strategy employed by BenQ to enter Japan; Dual Branding Strategy; Branding Regulatory Authority of India (TRAI);

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S the mobile handsets market in China. dilemma Bharti Televentures Ltd. (BTVL); Cheung III – Y G E T A R T S Kong (Holdings) Limited; 2G and 3G Industry Mobile Handset Services Reference No. MES0072B Year of Pub. 2005 Vodafone's Strategic Move in Teaching Note Not Available Indian Telecom Market Struc.Assign. Not Available Starbucks Coffee Company: The Vodafone was one of the world's leading Indian Dilemma Keywords mobile telecommunication companies with interest in voice and data communications. In 2006, the US based Starbucks Coffee BenQ Corporation; Branded cell phone Seeing an opportunity in India, where Company, with over 11,000 stores in 36 market in China; KY Lee; Contract telecom sector was rated as the fastest- countries was the No. 1 specialty coffee manufacturer; Branded players; Chinese growing wireless market in the world, company in the world. Every week over handset market; Market entry strategies; Vodafone acquired a 10% stake in Bharti 40 million customers visited Starbucks Market Entry Strategies Case Study; Acer Televentures Ltd (BTVL) in 2005. When coffeehouses. After phenomenal success in Peripherals; Motorola; Nokia; Ningbo Hutchison Whampoa Ltd (HWL), a Hong the US, and revolutionizing specialty coffee Bird; Samsung; Global system for mobile Kong based Telecommunication company culture, Starbucks undertook international communication (GSM) segment; Code declared its intentions to sell its stake in expansion and popularized its specialty division multiple access (CDMA) segment; Hutchison Essar, a leading telecom player coffee worldwide. In the 1990s, Starbucks Original equipment manufacturer; original only Vodafone had publicly shown its concentrated its expansion efforts mainly design manufacturer interest in acquiring the stake. In February in Asia. The initial pages of the case 2007, it acquired 67% stake in Hutchison delineate the origin and growth of Starbucks Essar Ltd. According to analysts, the as a company and a super brand and the Vodafone's Branding Dilemma in acquisition of HWL's stake would give strategies adopted by it. India Vodafone a considerable access to rapidly growing Indian telecom market. But, In 2002, Starbucks announced that it was In mid February 2007, Vodafone Group Plc. Vodafone faced many challenges in planning to enter India. Later it postponed (Vodafone), one of the leading global acquiring stake in HWL. The major its entry as it had entered China recently telecommunication companies acquired concern was the valuation aspect of and was facing problems in Japan. In 2003, 67% stake in Hutchison Essar, one of the Hutchison Essar Ltd. In the recent past, there was news again that Starbucks was leading telecom operator in India, which Vodafone had spent nearly $300 billion in reviving its plans to enter India. In 2004, provided its services under the brand name, acquisitions which had led to decline in the Starbucks officials visited India but Hutch. Speculation mounted whether shareholder's confidence. It also faced stiff according to sources they returned Vodafone would retain the existing brand competition to acquire stake in Hutchison unconvinced as they could not crystallize or re-brand it. Many analysts opined that Essar Ltd. from other bidders like Reliance on an appropriate partner for its entry. In if Vodafone replaces the Hutch brand with Communications, Hinduja Group and Essar mid 2006, Starbucks announced that they its own, the move could backfire, because Group. Vodafone approached Essar to were all set to offer the 'Starbucks 'Hutch' was well established and most remain its local partner on which Essar's experience' to Indians in the next 18 admired brand in the Indian telecom sector. decision was pending. months. The case explores India as the next destination for Starbucks and provides The case details about corporate The case details about the shifting strategy an industry analysis of the Indian coffee rebranding dilemma faced by Vodafone in of Vodafone to target emerging markets industry. It attempts at initiating a debate Indian telecom market. like India. It also details about the that whether Starbucks should enter India opportunities and challenges in the Indian or not. If it should, then its entry strategy, Pedagogical Objectives telecom market. differentiation strategy and long term strategy for India may be identified. The • To understand corporate rebranding Pedagogical Objectives challenges that India may present for strategies Starbucks and how should it cope up with, • To study the brand transition strategies • To understand the Indian telecom market can also be discussed. The case is targeted adopted by Vodafone globally • To understand the market entry strategy at management students and can be taken adopted by Vodafone up in their Strategic and General • To understand brand positioning of Management curriculum. Hutch in India • To study the merger and acquisition as • To study the challenges involved in growth strategy Pedagogical Objectives rebranding in merger or an acquisition. • To understand the competitive scenario • To analyse Starbucks as a company in Indian telecom market. Industry Telecommunication • To analyse the Indian coffee industry Reference No. MES0071A Industry Telecommunication and India as a potential destination for Year of Pub. 2007 Reference No. MES0070A Starbucks Teaching Note Available Year of Pub. 2007 Struc.Assign. Available Teaching Note Available • To discuss the entry strategies for Starbucks in India Keywords Struc.Assign. Available Keywords • To discuss the opportunities and Vodafone; India; Hutch; Market Entry challenges that Starbucks could face in Strategies Case Study; Brand Transition; Vodafone; Vodafone in India; Inorganic India. Brand Promotional Strategies; Brand Growth strategy; Competitive Scenario; Dilution; Indian Telecom Sector; Brand New Product Segment; Market Entry Industry Specialty Retailing/Beverages Differentiation; Vodafone's Global Strategies Case Study; Government Policy; Reference No. MES0069A Branding Strategy; Brand Attributes; Hutchison Whampoa Ltd.; Hutchison Year of Pub. 2006 Vodafone in Czech Republic; Vodafone in Essar Ltd.; Valuation Aspects; Indian Teaching Note Not Available Turkey; Vodafone in Italy; Vodafone in Telecom Sector; GSM Players; Telecom Struc.Assign. Not Available 65 www.ibscdc.org Keywords India. These areas were touted to be Pedagogical Objectives prospective areas for McDonald's Starbucks; Howard Schultz; Seattle; Japan; expansion in the decade ahead. McDonald's • The case study will familiarize the China; India; specialty coffee instant had tried to localise its strategies in these students with coffee; coffee culture; third place concept; areas with reasonable success. However, to differentiation; spoke and hub strategy; • US retail industry and the concept of achieve increased returns from these areas, convenience stores Market Entry Strategies Case Study; word- it had to overcome challenges like of-mouth promotions; emerging economy; competition, menu innovations etc. In this • Tescoâ•™s customer retention and retail environment; Foreign Direct background, it was to be seen if McDonald's market entry strategies Investment; industry analysis; beverage could increase its share in the Asian market • Factors which lead to the success of a market; tea; market entry strategy; and what it should do to achieve this. differentiation strategy; second mover retailer. The case brings out the strategies adopted advantage; entry dilemma; joint venture; Industry Consumer Electronics Industry by McDonald's in its markets in China, competitive scenario; market structure; Reference No. MES0066C market development; Starbucks Japan and India and the challenges in each Year of Pub. 2007 experience; lifestyle marketing of these markets. The case allows the Teaching Note Available student to appreciate the localisation Struc.Assign. Not Available strategies adopted by McDonald's and also Market Entry Strategies Market Entry Strategies

Market Entry Strategies to discuss the future of McDonald's in Asia. Keywords Market Entry Strategies Market Entry Strategies Bharti Wal-Mart Tie-up: The case would be suitable to teach modules Opportunities and Challenges in International marketing with specific Tesco; Wal-Mart; 7-Eleven; Food Retail; reference to localisation strategies. Market Entry Strategies Case Study; The Indian retail scene was abuzz with Convenience Store; Territorial radio; Terry activity. With A T Kearney listing India as Leahy; Famima; Fresh & Easy; ASDA; the topmost in market attractiveness, Pedagogical Objectives Tesco Metro; Warren Buffet; Tesco' many foreign retailers were looking to enter • To understand the globalisation of an Steering Wheel; Tesco Express; tesco.com India. Wal-Mart, the world renowned international fast food brand retailer had tied-up with Bharti Enterprises Ltd. a leading telecom company in India. • Localisation issues in Asian markets. While many synergies were expected out Retail market in Vietnam- of the deal, the Indian retail scene had its Industry Fast Food Industry Challenges and Opportunities share of challenges. Reference No. MES0067C Year of Pub. 2007 Vietnam was considered to be a potential The case outlines the areas of opportunities Teaching Note Available retail market and one of the leading markets and challenges that the Indian retail scene Struc.Assign. Not Available in Asia. According to A.T. Kearney's Global offered. It provides scope for the student Retail Development Index (GRDI) 2006, to understand the dynamics of the Indian Keywords the Vietnamese retail market was found to retail scene and facilitates debate on the McDonald’s; Strategy; Fast food outlets; be attractive for the foreign players to future of Indian retail. It also allows for Market Entry Strategies Case Study; invest in the country. The Vietnamese retail discussion on whether the Bharti Wal-Mart Branding; Redesigning; Menu change; market already had some foreign retailers combine would win the race in the Indian Drive thrust in their market. Despite the attractiveness, Retail market. the market posed a number of challenges to the foreign retailers entering the Pedagogical Objectives Vietnamese market. The regulations on Tesco's Entry Strategies in US foreign direct investment (FDI) in Vietnam • To discuss the challenges faced by foreign acted as barriers for the foreign retailers to The London based retailer giant, Tesco retailers in emerging markets like India enter the Vietnamese market. The made its entry into US, by opening "Fresh domestic retailers were also threatened by • To discuss the issues and opportunities & Easy" format convenience stores at the entry of the global players. The in the Indian Retail Scene. Arizona. Anticipating this move, Warren Vietnamese government had taken a Buffet, the second richest person in the Industry Retailing number of initiatives to help the domestic world, bought shares of the company in Reference No. MES0068C players. 2006 and its market value went up. Year of Pub. 2007 Berkshire Hathaway invested $1419.59 In this background it was to be seen how Teaching Note Not Available million in Tesco's expansion projects. It the Vietnamese retailer market would Struc.Assign. Not Available had the ability to roll out multiple formats evolve. The case study gives scope for Keywords and adapt to the local tastes of consumers. discussion on the challenges facing the It was able to maintain its leadership in foreign retailers and their chances for Bharti; Wal-Mart; Indian Retail; Retail UK, by pushing Wal-Mart ASDA to third succeeding in the market. The case study Industry; Competition in Indian Retail position, in terms of market share. Tesco also gives emphasis on the challenges facing Sector; Market Entry Strategies Case had undertaken meticulous research about the domestic retailers and the strategies Study; Tie-up; Store formats; FDI in Retail; US retail market and preemptively adopted by them to compete with the global Real Estate; Supply Chain and Sourcing; acquired real estate for its retail operations retailers. Consumer Behavior; Synergies; Market at important locations. For independent attractiveness; mom-and-pop shops; and niche retailers, the growth of Tesco Pedagogical Objectives Buying behavior would be a great challenge and they would eventually need innovation and customer • Retail market environment in Vietnam segmentation strategies to survive. But for • Challenges facing the foreign retailers Tesco, US was new turf where there were McDonald’s in Asia: in entering the new market Incubator- more than 50 convenience store chains. Opportunities and Challenges incubatee relationship 7-eleven and Famima,, which have already McDonald’s was concentrating on its established convenience store chains in • Competitive measures taken by the business in Asia mainly- Japan, China and US. domestic retailers along with the 66 www.ibscdc.org

Vietnamese government to succeed in Yahoo! China sold its China operations to • To discuss the impact of WTO on the

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S the market. Alibaba, the leading B2B Chinese portal. Chinese motorcycle industry. III – Y G E T A R T S Although Alibaba had achieved significant Industry Retail success in the Chinese e-commerce market, Industry Motorcyle Manufacturing Reference No. MES0065C the deal did not yield significant increase Reference No. MES0063K Year of Pub. 2007 in traffic. The main issue the case tries to Year of Pub. 2006 Teaching Note Available highlight is how Yahoo! China will face Teaching Note Not Available Struc.Assign. Not Available increasing competition in the search Struc.Assign. Not Available Keywords engine market in China. Keywords

Retail Market; Supermarkets; Vietnam; Pedagogical Objectives Harley Davidson; Chinese motorcycle Consumer Behaviour; FDI in Vietnamese market; Honda; Yamaha. Retail; Market attractiveness; Competition • To introduce the students to the Internet in Vietnamese retail industry; Retailers in industry in China Vietnam; Retailers Strategies; Market Entry Dr. Reddy’s Laboratories, the Strategies Case Study; Strategies in retail • To highlight the various stages of Yahoo market; Foreign retailers in Vietnam; and challenges faced in China Leading Indian Pharmaceutical Company, in Europe: The Challenges in Vietnamese retail industry; • To throw light on the various players in Entry strategies of Foreign retailers; Chinese Internet market. Inorganic Growth Strategy Growth prospects in Vietnam Industry Internet and Online Business In February 2006, the Indian Reference No. MES0064C pharmaceutical company, Dr. Reddy's Year of Pub. 2007 Laboratories Limited (DRL), announced Yahoo! China: Challenges Teaching Note Available that it would acquire the Germany's fourth Struc.Assign. Not Available largest generic pharmaceutical, betapharm. Yahoo! China released a statement that The deal was settled at US$570 million. their President Xie Wen, (Xie) had resigned, Keywords After the US, Europe was the second largest only 42 days after he joined the company. pharma market with Germany as its largest Yahoo!; Yahoo! China; Internet in China; This development was just the latest in a constituent. Moreover, worldwide it was Market Entry Strategies Case Study; series of problems that Yahoo! had faced the third-largest generic market. The Alibaba Baidu.com; Competition; in China. In the past, Yahoo! China had market trends showed that generics had a Marketing; Strategy; Emerging markets; encountered many hurdles- from regulatory better market potential over their branded Jack Ma; Jerry Yang; Google; search market troubles to problems in localization. counterparts. In addition, the European in China Yahoo! China was struggling in the Chinese generic market proved to be more lucrative search market. Xie wanted to try a Web than the US market because it had less of 2.0 strategy of addressing the huge demand governmental rules directed towards drug for user-generated content but Jerry Yang, Harley-Davidson’s Foray in approvals and marketing. cofounder Yahoo!, wanted to stick to the China company’s portal model and was The case analyses the synergies and possible unimpressed by Xie’s strategy. This led to In the first half of 2006, Harley-Davidson challenges of such an acquisition and a divide in top management and ended in (H-D), an icon of the motorcycle industry, discusses the inorganic growth strategy of Xie's resignation. decided to set up its first outlet in China, DRL that was aimed at penetration into one of the largest manufacturers in the the German and subsequently the European Yahoo! China had tried management world. With this decision, H-D aimed to generic market. It also provides a brief changes, outsourcing, and local tie-ups to establish its presence in the country, amidst overview of the two companies. establish itself in China, but none of them various tariff and non-tariff barriers. The yielded any results.Yahoo! was one of the advent of the dealership was also set to first U.S. Internet companies to move into Pedagogical Objectives discourage illicit smuggling of bikes and China. In 1999, it entered China by protect the brand identity of the products • To discuss DRL’s inorganic strategies by launching a Chinese website, cn.yahoo.com from piracy. which it aimed to penetrate into the and tied up with a local company through world's fourth largest generic market, a strategic partnership with Beijing The case, while providing an overview of Germany and subsequently the European Founder Electronics Co Ltd, a leading the Chinese motorcycle industry and its generic market information products maker in China, to various roadblocks, discusses the entry tap the emerging on-line advertisement strategies of H-D. • To discuss the possible synergies and market. Yahoo! China faced immense challenges of the acquisition. competition from local portals like Pedagogical Objectives Industry Pharmaceutical Sina.com, Sohu.com and Netease.com, who Reference No. MES0062K had already won the loyalty of Chinese • To understand the competitive forces Year of Pub. 2006 in the Chinese motorcycle industry Net users. By 2003, these three players Teaching Note Not Available were thriving while Yahoo! China was • To discuss the various tariff, non-tariff Struc.Assig. Not Available struggling to come up. Yahoo! China could and other government restrictions that not make an impact on the Chinese Keywords reduced foreign competition in China internet market as it did not localize its Dr Reddy’s Lab; Drug market in Europe; strategies. So the company changed • To discuss the entry strategy of Harley- Generics; Patent policy; R&D. directions and purchased a popular local Davidson in the Chinese market search company, 3721.com, for $120 million. This move did not yield much result • To critically analyse the effects of and so Yahoo! China tried the new strategy piracy and counterfeit goods on Harley- Virgin: Entering the Indian Skies of outsourcing that promised to solve its Davidson’s brand image and its strategy problem. It decided to team up with a local to counter it The low-cost airline was a phenomenon player who could understand China better. world wide and was increasing steadily. In 67 www.ibscdc.org the mature aviation market of the US and miss match. Thus, while setting up the New South Wales; Chardonnay; Merlot; Europe, the low cost airlines business model Hong Kong Disneyland, the company gave Cabernet Sauvignon; W.J.Deutsch&Sons; was successful. But in the country like India, proper emphasis on localisation strategy. Distribution. where aviation market was still at the The case gives a proper description about nascent stage, the success of the low-cost the entry strategy adopted by Disney and business model was a debatable issue. After offers a scope for discussing its success and Viacom in China the liberalisation in 1991, the Indian sky failure. The case will also help the students experienced the entry of a few private as to discuss about the success and failure of Viacom Inc., currently split as Viacom Inc., well as foreign players in the low-cost the growth strategy adopted by the and CBS Corp. forayed into China in 1995. aviation business. Virgin Blue, which was a company and how it has planned to By 2005, the company brought to the part of Richard Branson’s Virgin group, was leverage its localisation strategy. Chinese audience, its world-class successful in the low-cost aviation business entertainment programmes meant for kids in the skies of Australia, New Zealand and Pedagogical Objectives and youth. However, the company, like South Africa and entered the Indian sky. other foreign companies, had to face the The case discussed in detail the low-cost • To discuss the market entry strategy in government regulations that kept changing business model of the aviation industry its entertainment industry from time to time. The case chronicles target markets and challenges. Finally, the • To discuss the concept of localisation the company background, the diverse case highlighted the challenges faced by strategy channels it used to make progress and the Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies Virgin Blue in the fiercely competitive challenges it had to face in China in the Indian aviation industry. Besides, it • To discuss the key success factors into wake of fresh regulations and cultural examined whether the company could the success and failure in entering into a hurdles. replicate its successful business model in new market India. The case included a detailed note on Pedagogical Objectives the Indian civil aviation industry, covering • To discuss the success and failure of the profile of the major players, low-cost growth strategy To understand: business model followed by other low-cost • To discuss how companies plan to • The media business in China airlines in the Indian aviation industry. It leverage its localisation strategy and can also elaborated on India’s civil aviation integrate it with entry strategy and • Challenges faced by Viacom in China due policy and the statutory requirements to growth strategy. to regulations and cultural hurdles. be fulfilled by a company, to enter and operate in the industry. Industry Entertainment Industry Media Reference No. MES0060K Available at www.ibscdc.orgwww.ecch.com Reference No. MES0058C 306-212-1 Pedagogical Objectives Year of Pub. 2006 Teaching Note Not Available Year of Pub. 2006 • To give a glimpse about the Indian Struc.Assig. Not Available Teaching Note Not Available aviation industry Struc.Assign. Not Available Keywords • To discuss in details how Low Cost Keywords Airlines (LCA) act as a key China, Disney; Entertainment park. Viacom; MTV; Nickelodeon; Paramount; differentiator in Indian aviation industry Sumner Redstone; China; SARFT; SMG; Regulations. • To discuss the segmentation-targeting- Yellow Tail: The Aussie positioning aspect in aviation industry. Champion in the US Wine Market • The 4Ps of marketing and its application in Indian aviation industry Yellow Tail, an Australian wine brand Hollywood’s Foray into China became a top seller in a short span of five • The market entry strategy adopted by a years in the competitive US wine market. China was seen as a potential movie new player to enter into a competitive With an innovative label and competitive market. Yet the Government’s restrictions market, problems associated with entry pricing, Yellow Tail created a niche of its on the release of foreign films hampered into new market and how to overcome own in the market. The case provides a their prospects in the Chinese movie the problems. background note on the US and the market. However, the growing popularity Australian wine markets and the strategy of Chinese films in the international Industry Airlines that Yellow Tail adopted to reach its present market, China’s liberalised foreign Reference No. MES0061K status in the wine market. investment policies post its WTO entry Year of Pub. 2006 and low production costs attracted the Teaching Note Not Available attention of Hollywood studios. The case Pedagogical Objectives Struc.Assig. Not Available details the background of the Chinese film industry and the impact made by the Keywords To understand: Government’s foreign investment policies Virgin; Indian aviation Industry; Indian • Strategy of success of a new brand in an on the Chinese film exhibition industry Airlines; Jet Airlines; Sahara Airlines. established market and the movie market. It also covers the • Niche marketing. strategies adopted by the Hollywood studios to capitalise on the Chinese movie market. Industry Food and Beverages China: Disney’s New Destination Reference No. MES0059C Pedagogical Objectives In 2000, the Walt Disney Corporation Year of Pub. 2005 opened its Disneyland in Hong Kong, Teaching Note Available To understand Struc.Assign. Not Available which, within a few years, became the most • Movie Market business in China popular tourist destination. Earlier, the Keywords company had opened a Disneyland in Paris • Foreign investment policies of Chinese (France), but it was not successful. The Yellow Tail; US; Australia; Wine; John Govt regarding film industry in China analysts attributed this failure to the cultural Casella; John Soutter; Carramar Estate; 68 www.ibscdc.org

• Strategies adopted by Hollywood studios Behaviour; Trademark; Intellectual Economy cars; International Auto shows;

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S to capitalise the Chinese market. Property Rights; Chinese Coffee Sedans; US venture; Global Strategies; III – Y G E T A R T S Consumption; Tea industry in China; Global entry; business expansion; Korean Industry Entertainment Expansion strategy. automakers; US Testing standards. Reference No. MES0057C Year of Pub. 2005 Teaching Note Not Available Struc.Assign. Not Available Geely: The Chinese Car’s Reliance Infocomm’s Teething American Venture Troubles – A Keywords Geely Automobile Holding Co. Ltd. This is the first of a two-case series. China, Foreign films; Cultural Revolution; (Geely), the Chinese automaker decided to Considering the boom in the mobile United States; Hollywood; WTO; Warner enter the US auto market by 2008. In telephony market in India, Reliance Bros; Wanda Group; Sony and China Film pursuit of this ambition and to make a mark Industries, India’s biggest business house Group. internationally, Geely participated in two makes a foray into the Telecom and of the five major international auto shows, Information Technology sector. Reliance namely, the Frankfurt International Motor launches its services as Reliance Infocomm Achieving Success in China: Show in September 2005, followed by the and offers a bouquet of services like mobile Starbucks’ Strategies and North American International Auto Show and fixed line telephony, broadband, Challenges in January 2006 at Detroit. national and international long distance services, data services and a wide range of Starbucks, the world’s leading retailer, Automobile industry analysts felt that the value-added services. Reliance Infocomm’s roaster and brand of specialty coffee opened major challenge for Geely would be to launch is widely awaited by the public as it its first store in China in 1999. Despite conform to the quality standards of the is expected to bring about a revolution in initial scepticism about the entry of a coffee American market. Geely said that it was the mobile telephony market. The service brand in a traditional tea drinking nation, aware of the high-quality, safety and looks promising with its innovative Starbucks was well-received in China and emission standards of the US market and technology, features and low prices. As had established its presence there. It was reported that it was taking the necessary Reliance Infocomm is launched across the rapidly expanding and announced that it steps in this regard. Geely would also have country, top officials are confident of its looked to China as the largest market to compete with the established players in success. The market reality though is outside the US. Although Starbucks was the US Auto industry. The US Auto industry something different. The company faces confident of its growth there, it faced some was itself under threat from the foreign teething troubles and market response is challenges. Following its entry, a number automakers, as the Japanese and Korean disappointing. Infocomm management of imitators which tried to replicate all the brands had eaten into the market share of wonders if they can turn the features of the Starbucks stores had opened. Ford and GM. Under these circumstances, disappointment in to a success. A number of international players also it was to be seen if Geely with relatively low-priced cars would succeed in its US operated and planned to expand their Pedagogical Objectives presence in China. Revenues from its venture. Chinese operations were not significant The case allows for discussion on the • To discuss the launch of Reliance group since Starbucks operated mainly through challenges faced by the Chinese car to enter in the telecom sector and the initial partnerships and licensees. Marketing the US market and the strategies adopted problems that it faced analysts wondered if the initial success of by them to compete with the established • To briefly discuss the Indian cellular Starbucks in China could be sustained. players there. It also offers scope for telephony market scenario and existing The case facilitates discussion on (1) Entry discussion on issues faced by the Chinese players. strategies adopted by an established brand car relating to the low-quality perception Industry Telecom while entering an emerging market (2) that the American consumers had towards Reference No. MES0054P Localisation strategies of Starbucks (3) Chinese cars. Year of Pub. 2006 Sustaining and increasing profits from its Teaching Note Not Available Chinese operations. Pedagogical Objectives Struc.Assig. Not Available To discuss: Pedagogical Objectives keywords • Entry strategies of a new foreign player • Entry strategies adopted by an in a mature market Reliance Infocomm; Telecom sector; established brand while entering an Infocomm Rollout; Teething Troubles; emerging market • Strategies for successful market launch Dhirubhai Ambani Entrepreneurs; CDMA; Cellular Telephony. • Localisation strategies of Starbucks • Strategies to counter negative consumer perceptions • Sustaining and increasing profits from its Chinese operations. • Counter measures to be adopted by Chinese Flavoured KFC existing established players in the Industry Coffee Chain market. Kentucky Corp. (KFC) is a Reference No. MES0056C division of the Kentucky (Louisville) based Year of Pub. 2006 Industry Auto Industry global fast food franchiser YUM! Brands Teaching Note Available Reference No. MES0055C Inc. In 2005, KFC was America’s No.1 fast Struc.Assign. Not Available Year of Pub. 2006 food chicken chain and world’s most Teaching Note Available popular chicken restaurant chain. KFC had Keywords Struc.Assign. Not Available expanded globally but in China the company Starbucks; China; Speciality Coffee Retailer; Keywords had been a pioneer in the foreign fast food Entry Strategy; Localisation Strategy; sector. KFC adapted itself to China and Partnerships; Store Location; Store Geely; China; Automobile Industry; Li became China’s largest quick-service Operations; Store Design; Consumer Shufu; Chinese cars; US Auto Market; restaurant brand. Rivals like McDonald’s 69 www.ibscdc.org were following KFC’s strategies. The case the internet population started rising Pedagogical Objectives discusses KFC’s strategies in China. across various countries of Asia. Online auction giant eBay, after its successful • The state of the Chinese wholesale and retail setup before and after liberalisation Pedagogical Objectives business execution in US and European countries eyed opportunities in Asian • Impact of WTO on the local and global • To discuss the fast food market scenario markets. This case talks about how eBay retailers operating in China in China initiated its business in Asian countries. First, it started its operations in Japanese • Metro’s entry strategy in foreign • To discuss KFC’s localisation strategy markets of tailoring its menu, décor and market where it failed and quickly shifted appearance in China and its success. focus on other upcoming Asian markets, • Metro Cash and Carry’s operations in mainly on China. Before entering into China Industry Food Industry China, it tested various Asian online auction Reference No. MES0053P markets and zeroed in on specific strategy • Metro’s expansion strategies in China Year of Pub. 2006 to tap China’s online auction market. The • Challenges faced by Metro Cash and Teaching Note Not Available company also expected to expand its reach Carry with the entry of other global Struc.Assig. Not Available in many other Asian countries. players in China. keywords Pedagogical Objectives Industry Wholesale Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies KFC; Yum! Brands Inc.; KFC in China; Reference No. MES0050B • eBay’s growth and expansion strategies Localisation Strategy; Fast Food in China; Year of Pub. 2004 KFC’s Strategies. • Emerging trend of online auction market Teaching Note Not Available in Asia Struc.Assig. Not Available • The online auction market scenarios in keywords Geely: The Tyro in the US market various Asian countries Metro Cash and Carry; German Distributor In 2005, the US automobile market was • Facts and Fallacies of Asian online in India; Foreign Investment Promotion dominated by the ‘Big Seven’. These auction market Board; Foreign Direct Investment; Indian major players in were ramping up Distribution Set-up; Indian Wholesale production, and were developing • Future of eBay in Asia. Industry; Indian Retail Industry; Organised innovative models to claim their market Retailing; Global Players in India; Industry Online auction Industry positions. Toyota, one among the Big Membership Cards; Government of India; Reference No. MES0051B Seven, experienced a steady increase in its Year of Pub. 2005 Wal-Mart. market share. Witnessing the success of Teaching Note Not Available Toyota, a few Chinese automakers had Struc.Assig. Not Available plans of entering the US automobile Amazon’s foray into e-grocery market. Geely, a private Chinese keywords automaker had exported its cars to almost market: Successful Venture? 30 countries in Asia, the Middle East and eBay’s Asian Adventures; Online Auction market; Internet Population of Amazon.com is a leading online book Eastern Europe. To expand further, Geely selling retailer. It has diversified into expected to market its cars in the US by Asia;Internet usage in Asia; eBay Business model; Pierre Omidyar; Margaret Meg different products lines. It witnessed its first 2008. As Geely was a greenhorn in the US profit in 2002 and continued to do so till automobile market, analysts were sceptical Whitman; Stephanie Tilenius Bo Shao; Each Net; Internet Auction Co. Ltd (IAC); 2004. In 2005, Amazon.com profit whether Geely would sustain and achieve slumped. In 2006, to overcome its loss success in the US automobile market. Neocom Technology; Yahoo!; Google; Taobao.com; lpai.com. and to expand further, it has entered into the online grocery business. But analysts Pedagogical Objectives have mixed opinions about its success. Will Amazon.com witness the same success as • To understand about the US automobile METRO Cash and Carry – in book selling business? market Exploring the Chinese Markets • To discuss about the problems which a In 2004, China, with a population of 1.3 Pedagogical Objectives new entrant into the US automobile billion was one of the world’s largest retail market will face. • To understand how Amazon witnessed markets. With the liberalisation of the growth as an online retailer Industry Automotive Chinese economy in 1992 and its Reference No. MES0052B subsequent entry into WTO in 2001, the • To discuss the fate of Amazon in the e- Year of Pub. 2006 Chinese retail market saw the entry of grocery market. many global retailers. Metro Cash and Carry Teaching Note Available Industry Retail was the third-largest retailer in Europe and Struc.Assig. Not Available Reference No. MES0049B the fourth largest in the world, with annual keywords Year of Pub. 2006 sales of •56.4 billion (US$68.9 billion) in Teaching Note Not Available Geely; US automobile market; Big Three; 2004 with around 2,300 outlets in 28 Struc.Assig. Not Available Big Seven; Chery; virtual gorilla strategy; countries. It entered the Chinese market CK-7151; John Harmer; US Safety in 1996 and faced competition from other keywords Standards; confined test market. global retailers like Wal-Mart and Carrefour. This case discusses in detail the Amazon.com; Online selling; e-grocery; Chinese retail and wholesale market after Books; Competitors; Business model; liberalisation. Further the case discusses the Internet Book Shop; Customers; Products; eBay’s Asian Adventures operations, distribution and merchandizing Barnes & Noble; Book store; Walmart; strategies of Metro Cash and Carry in China Dot-com bubble; Webvan; internet The online internet market in Asia started retailers. taking shape by the turn of 21st century as along with its growth strategies. 70 www.ibscdc.org

Intel’s Foray into Rural India Indian market. Indian retail Industry is employ local engineers and engage in

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S covered in-depth. The case ends on the production of customised products for the III – Y G E T A R T S In March 2006, Intel, the world’s largest discussion of what strategies Wal-Mart lower end segment customers. chipmaker and leading computer should use to enter India and whether once manufacturer, officially launched an entered it would be successful? Pedagogical Objectives innovative PC platform known as “Community PC”, exclusively designed to Pedagogical Objectives • To study the entry strategies undertaken meet the needs of the people in rural India. by Danfoss in China For the effective implementation of this • To understand the political, legal, social community PC programme, Intel started and economical environment of India • To discuss the challenges ahead of Danfoss another programme called “Jaagruti” and its regulation for FDI in its strategy to tap low-end segments (Awakening) under which the community • To understand the nature and structure • To discuss the growth strategies followed PCs were deployed in internet kiosks by Danfoss in China common in Indian villages with the support of retail industry in India of businesses, government, educational • To know the functional and operational • To analyse the future prospects of institutions, online services and ISP. The aspects of a giant retail organisation like Danfoss in China. “community PC” and “Jaagruti” were part Wal-Mart Industry Industrial Components of Intel’s World Ahead Program, an Reference No. MES0046A initiative that aimed at enhancing lives by • To discuss the country experiences of Year of Pub. 2006 accelerating access to technology for Wal-Mart particularly in Asia (Japan and Teaching Note Not Available everyone, anywhere in the world. The China) and the implications of entering Struc.Assig. Not Available program also aimed at tapping other one more Asian country India emerging markets like China, Brazil, • To derive a best fir between Wal-Mart keywords Russia, South America and African and India countries. Danfoss, Industrial components; Market • To discuss the entry strategies available expansion; International venture; Though Intel was positive, analysts to Wal-Mart and followed by Wal-Mart Refrigeration industry; Motion Controls; wondered whether, Intel’s strategy of rural in different countries Wuqing; Jorgen Clausen; Low-end penetration through such endeavours would products; cultural integration; be successful. • To debate on the right entry strategy customisation of technology. for Wal-Mart for entering India. Pedagogical Objective Industry Global Retail • To help appreciate the role of creativity, Reference No. MES0047A Wal-Mart’s China Experience Year of Pub. 2006 both and in terms of product innovation Wal-Mart evolved as the retailing giant of Teaching Note Available and marketing. the world in the 21st century. The strategy Struc.Assig. Not Available Industry Information of “Every Day Low Price” has been its Reference No. MES0048B keywords core competence in beating the Year of Pub. 2006 competition. It grew at a consistently Retailing; Indian Retail; Entry strategies; higher rate through out its existence, until Teaching Note Not Available Foreign Direct Investment in India; Struc.Assig. Not Available in mid 1990s, when it faced growth crises. Regulatory environment; Political; Legal Wal-Mart decided to look for newer keywords and Social environment; Globalisation; markets and Wal-Mart International Growth Strategy; Competition; Market division evolved. Today it operates in 10 Intel; Community PC; World Ahead leader; Wal-Mart; India; localisation. countries including United States. Program; Jaagruti; India; Internet; Kiosks; Rural; Ethnography; Literacy; Village; In 1996, it entered China, which was Language; Weather; Technology; Discover. becoming the powerhouse of Asia. The Will China emerge as the strategic partnership between China and Wal- second home for Danfoss? Mart created a gamut of opportunity for Wal-Mart in India Danfoss Inc. was one of the largest growth for China as well as for Wal-Mart. industrial components manufacturing Wal-Mart Stores Inc. (Wal-Mart) was the The case talks about the localisation companies in . It engaged in strategy of Wal-Mart by penetrating in world’s largest retailer. It had ventured into manufacturing of refrigeration controls, international operations in mid-1990s. China and adapting to its local culture. The motion controls, compressors, issues faced by Wal-Mart related to the Hailing from a developed country like the thermostats for household appliances. It US it had to struggle in Asia’s developing Distribution, Unions, Technology and had manufacturing facilities in four Financial systems in China, and how it markets to maintain its corporate continents, branches and distributors in philosophy of ‘every day low prices’. There worked to convert these hurdles into more than 100 countries and employed opportunities. China opened its retailing were other cultural and local adaptations 17,000 employees across the world and that it made to capture the market. industry for foreign investors fully in reached global sales figures of •2.2 billion December 2004. Even after nine years of India being the second-largest populous in 2004. existence in the China market, among country in the world was emerging as the After attaining the market leadership in foreign retail chains Wal-Mart ranked hottest destination for retail ndustry. But Denmark, Danfoss ventured into Chinese second and in domestic market it did not India had still not opened its retail sector market in 1995 and by 2005 it invested even rank amongst the top ten. The experts for Foreign Direct Investment. Wal-Mart around $100 million. Initially Danfoss have predicted that the Chinese middle class was eyeing this market for some time now. catered to high and medium end segments who drives the retailing market is going to expand to 400 to 500 million people by The case describes Wal-Mart’s Asian in China. Gradually Danfoss identified the 2015. In order to capture this massive experiences in China and Japan and how immense opportunity available in the market potential Wal-Mart is gearing up Wal-Mart can apply its learning’s to the lower end segments and in 2006 decided to to understand and adapt to Chinese market. 71 www.ibscdc.org Pedagogical Objectives and disadvantage; Purchasing power; Gross BBH: The Russian Venture of the Domestic Product (GDP) and • To discuss and understand the UK Brewer, Scottish and consumption; Competition; Cosmetics and Newcastle international expansion strategies personal care products; Joint venture, • To understand retail industry structure partnership and alliance; Roosevelt China Maturity, stagnation and decline in beer of China Investments Corporation; Proctor & consumption in and North Gamble (P&G); Giorgios Armani; L’Oreal; America forced Scottish & Newcastle, an • To discuss the entry strategies to China Shiseido; Department stores UK Brewer, to foray into the emerging • To analyse the operating strategies and Russian market by forming Baltic Beverage growth strategies followed by Wal-Mart Holding (BBH), a 50:50 joint venture with in China IKEA in Japan: The Market Re- Carlsberg Breweries, a prominent Danish brewer. BBH rode on the wave of rising • To understand the ‘glocalisation’ entry Strategies disposable income of the Russians, coupled strategy and its impact in Chinese In April 2006, IKEA, the world’s largest with a shift from vodka to beer drinking, to market furniture retailer, forayed into Japan by become the leader in the Russian brewing opening its second-largest store outside industry with a market share of 36%. • To discuss the issues like cultural However, it is opined that the company adaptation, localisation and operating Sweden. The opening of the store marked the re-entry of IKEA into the Japanese would be facing a challenging future given

Market Entry Strategies Market Entry Strategies in a fragmented retail market. Market Entry Strategies Market Entry Strategies Market Entry Strategies market after an unsuccessful 12 years stint the forecasted decrease in beer consumption Industry Retailing between 1974 and 1986. Although the in Russia after 2008 and government Reference No. MES0045A company has planned to ‘act local’ by regulations like ban on TV advertisements Year of Pub. 2005 customising its offerings according to of beer to contain juvenile alcoholism. Teaching Note Not Available Japanese preferences, it still expects to face Struc.Assig. Not Available several challenges from the Japanese Pedagogical Objectives customers who are known to be keywords inconsistent and unpredictable, and have • To discuss the emergence, growth and forecasted maturity of the Russian beer Penetration Strategy; Globalisation; Out forced many a foreign retailer to exit from market Sourcing; Retailing; Supply Chain Japan. Management; Distribution; Localisation; • To discuss the market entry and growth Cultural Adaptation; Glocalisation. Pedagogical Objectives strategies adopted by BBH in the Russian beer market. • To discuss the need for global companies to understand consumer needs and Industry Brewers China’s Luxury Retailing Industry: preferences in each of their markets and Reference No. MES0042 Saks Inc.’s Market Entry adapt their offerings accordingly Year of Pub. 2006 Strategies Teaching Note Not Available • To understand the dynamics of the Struc.Assig. Available Since its economic reforms in 1978, Japanese retail and home improvement increasing purchasing power in China market keywords coupled with growth in private • To analyse the reasons behind IKEA’s Russian beer market; Consolidation of consumption and growing awareness of failure in Japan in its first entry (1974- Russian beer market; Scottish & Newcastle; luxury goods have fuelled the growth of 1986) and the factors that encouraged Carlsberg Breweries; Baltika Breweries; the market for luxury products in the it to re-enter the Japanese market with Market entry strategies; Growth strategies; country. It is estimated that by 2015, China the ensuing challenges Inorganic growth strategies; Statistics on would surpass the US and Japan as the largest consumption of beer in world; luxury market in the world. To cash in on • To debate whether IKEA, which is Arsenalnoye; Baltika; Baltika No.7; such growth potential, Saks, one of the known for its standard offerings across Baltika No.5. leading high-end luxury department chains the globe at the lowest price, would be from the US is planning to foray into China. able to win fastidious Japanese customers through customised offerings. Pedagogical Objectives Walt Disney Company in China Industry Home Furnishings & • To discuss and debate the impact of Housewares Retail The Chinese film industry was a highly economic reforms in China on luxury Reference No. MES0043 regulated industry until China’s entry into retailing in the country Year of Pub. 2006 the World Trade Organisation in 2001. Teaching Note Available China, with a population of 1.3 billion and • To understand the success factors in Struc.Assig. Available a rapidly growing economy, has become China’s luxury retailing industry an attractive market for all global media keywords and entertainment companies. Walt Disney • To discuss the market entry strategy of Company, the second-largest media and Saks in China. Japanese retail market; Japanese home improvement market; IKEA’s first time entertainment company in the world, Industry Luxury Retailing failure in Japan; Consumer behaviour in forayed into China following the maturity Reference No. MES0044 Japan; Foreign retailers in Japan; Japanese of its American and European markets. In Year of Pub. 2006 furniture retailers; Japanese real estate addition to marketing its consumer Teaching Note Not Available market; IKEA as a cult brand; Low price products, Walt Disney plans to introduce Struc.Assig. Not Available strategies of IKEA; IKEA’s growth theme parks, and live shows, as well as producing and distributing movies. keywords strategies in Japan; Japan’s economic growth. China’s luxury retailing industry; China’s Pedagogical Objectives consumer behaviour; Saks Inc.; Market • To highlight Walt Disney’s market entry entry strategies; Late movers’ advantage strategies in China 72 www.ibscdc.org

• To discuss the company’s ability to international coffee chain to start keywords

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S succeed in a country where its brand has operations in India. Costa Coffee also plans III – Y G E T A R T S little presence and where bureaucracy and to enter the wholesale coffee business in Cisco System Inc.; India; Networking red-tapism are rampant. India and aims to open 300 outlets, through equipment; Cisco Systems India Pvt. Ltd.; its franchises by 2008. The changing Expansion; Low-cost engineering Industry Media lifestyle patterns of the Indian middle class resources; Internet market in India; Global Reference No. MES0041 families and an increase in their disposable engineering development centre; Research Year of Pub. 2006 income has also attracted other foreign and development; Deregulation of telecom Teaching Note Not Available players such as Barnie, Starbucks and Gloria industry; Outsourcing industry; Small and Struc.Assig. Not Available Jean. Costa Coffee is also expected to face Medium Businesses (SMB’s). keywords stiff competition from domestic players including Cafe Coffee Day and Barista, who Time Warner; Warner China film; Sony are embarking on a rapid expansion plan Burger King in China Pictures Entertainment; Columbia. TriStar across the country. Motion Picture Group; News Corp’s Inc.; The rapidly developing fast food market in China resulted in Burger King opening Viacom Inc; Entertainment business in Pedagogical Objectives China; Hong Kong Disneyland; Shanghai its first outlet in the country in June 2005. Disneyland; Growth strategies; Expansion • To understand the competitive landscape The company was planning to expand its strategies; Market entry strategies; MTV in which coffee retail chains in India operations in China and was confident that (Music Television); ESPN (Entertainment operate it would be able to make its China venture and Sports Programming Network); Film a success. However, critics were of the industry in China. • To discuss the rationale behind Costa opinion that Burger King would not find Coffee’s entry into India and the the going easy because of a large number strategies adopted by it to strengthen its of competitors in the Chinese fast food presence in the Indian coffee chain industry. Starbucks in Ireland market.

In 1996, Starbucks Corporation, world’s Industry Coffee Pedagogical Objectives No.1 speciality coffee retailer from the Reference No. MES0039 • To provide an insight into the fast food US, started expanding into international Year of Pub. 2006 industry in China markets due to saturation in its domestic Teaching Note Not Available market. After entering into Asia, in 1998, Struc.Assig. Not Available • To discuss the market entry strategies Starbucks forayed into Europe and steadily of Burger King in China and whether it keywords captured major markets like Spain, Greece, would make its venture in China a Germany, Austria and the UK. Following Costa Coffee; Starbucks; Market entry success. its success in the key markets of Europe, strategy; Competitive strategy; Coffee Industry Fast Food in 2005, Starbucks ventured into Ireland retail chains; Cafe coffee day; Barista; Reference No. MES0037 to gain a sizeable market share by Gloria Jean; Asia; Barnie; Call centres in Year of Pub. 2006 simultaneously opening a number of India; Coffee consumption in India; Teaching Note Not Available outlets. Whitbread plc.; Nestle; . Struc.Assig. Not Available Pedagogical Objectives keywords • To discuss the possibility of success of Cisco in India: India as a Burger King; Fast food industry in China; Starbuck’s business model in a highly Resource to India as a Market Kentucky Fried Chicken; McDonald’s; competitive market like Ireland Expansion; Globalisation; Transformation Cisco Systems Inc., the worldwide leader of society; Disposable income; Fragmented • To analyse the reasons underlying in networking equipment, entered India to market; Franchise model; Competitive Starbuck’s success in three different take advantage of the low-cost engineering challenges. continents. resources available in the country. However, the company realised the Industry Speciality Eateries tremendous potential of India as a market Reference No. MES0040 for its products and started incorporating Toyota in France Year of Pub. 2006 strategies to become the No.1 supplier of Teaching Note Not Available The Japanese carmaker Toyota, the networking equipments there. Struc.Assig. Not Available second-largest car manufacturing company, entered France in 1971 as part of its global keywords Pedagogical Objectives expansion strategy. Initially, it imported International expansion strategies; • To provide an insight as to how Cisco cars from Japan. After the lifting of import International management; Competition; started viewing India as a market for its restrictions in 1998, it set up a Competitive strategies; Market entry products rather than as a source of low- manufacturing unit at Valenciennes, in strategies; Acquisitions; Global coffee cost resources Northern France, and generated 2,000 jobs. markets; Growth strategies; Brand building; The company implemented 'just-in-time' Costa Coffee. • To discuss whether Cisco was following techniques and kaizen to improve its plant the right strategies for its operations in efficiency. Toyota became successful in India. France with the increase in sales of its cars like Yaris, Corolla, Avensis and Prius. But Costa Coffee in India Industry Telecom Networking as demand for the cars increased, it started Reference No. MES0038 facing competition from Mercedes, BMW, In September 2005, British coffee retail Year of Pub. 2006 and Audi. chain Costa Coffee, as part of its Teaching Note Not Available international expansion, launched its outlet Struc.Assig. Not Available in New Delhi, India. Costa became the first

73 www.ibscdc.org Pedagogical Objective Agency (FSA); Tax evasion; Finncially Trade Organisation obligations), the weak companies; Economic downturn; government allowed greater access to select • To discuss entry strategies of Toyota in Restructuring of business; Private equity foreign players through the mechanism of France and the strategies adopted by the firm; Vulture investor. Qualified Foreign Institutional Investors company to compete with big local (QFII). In 2003, Switzerland-based UBS AG players like Renault, Volkswagen, and became the first QFII. In 2005, UBS BMW in order to gain a substantial FedEx in China became the first foreign company to market share. acquire management control of a Chinese Industry Automobile and Transport In July 2005 Federal Express Corporation securities brokerage. Reference No. MES0036 (FedEx) announced the closure of its Asian Year of Pub. 2006 hub at Subic Bay, in the Philippines and Pedagogical Objectives Teaching Note Not Available the creation of its Asian hub at Guangzhou, • To study the evolution of Chinese Struc.Assig. Not Available in southern China. This new hub would provide FedEx with easy access to the Pearl financial markets and the growth of UBS keywords Delta River, which is the manufacturing as a leading foreign player in these markets Toyota; France; Growth strategies; and economic centre of China. This Acquisitions; Car industry; Compaq; proposal came at a time when China had • To discuss whether UBS would prove to Expansion; Europe; Competition; SUV’s signed a historic aviation deal with the US, be the impetus needed to accelerate the Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies (Sport Utility Vehicles); Japanese car that provided 11 weekly flights between growth of China’s underdeveloped companies; Market shares. the two countries. In addition, airfreight financial sector. from China is expected to grow by 10% annually until around 2025. However, the Industry Banking and Financial high growth in the airfreight market in Services Goldman Sachs in Japan China has also attracted other major Reference No. MES0033 players like United Parcel Services (UPS) Year of Pub. 2005 Goldman Sachs, the leading investment and DHL. FedEx also faces competition Teaching Note Not Available bank in the world, entered Japan in 1969. from the state-owned postal services, China Struc.Assig. Not Available The economic reforms initiated by the Post, which is vying for a share of the government of Japan in 1996, following keywords airfreight market by revamping its the collapse of the bubble economy, helped overnight express and second day delivery foreign investment banks to establish UBS; China; Accession World Trade services. Further still, despite China's entry themselves in the country. Goldman Sachs Organisation; Financial markets; Banking into the World Trade Organisation in took the opportunity and quickly became sector; Capital markets; Securities; People’s December 2001, China has some complex the leading foreign investment bank in the Bank of China (PBC); Non-Performing customs procedures. Inadequate country. In spite of criticism from various Loans (NPL’s); Shanghai Stock Exchange; transportation infrastructure is another groups in Japan for its role in some China Securities Regulatory Commission; major concern. controversial deals, the investment bank Qualified Foreign Institutional Investors continued with its expansion activities in (QFII); Beijing securities; State owned the country and has been an active buyer Pedagogical Objective enterprise. and seller of loss-making Japanese • To discuss the market entry strategies companies. However, Goldman Sachs’ of FedEx in China and the challenges activities in the country were criticised by faced by the company to grow and Renault in Romania:Prospects various quarters in Japan. They alleged that compete in China’s complex business and Challenges the investment bank was functioning more environment. like a private-equity firm rather than as an Sluggish growth in the Western European investment bank. Industry Express Delivery Services automobile market forced the French Reference No. MES0034 carmaker Renault to enter the growing Pedagogical Objectives Year of Pub. 2005 market of Central and Eastern Europe. As Teaching Note Not Available part of its strategy for the Central and • To provide an insight into: (1) the Struc.Assig. Not Available Eastern European regions, Renault decided investment-banking scenario in Japan; to launch its low-cost car, the Logan. To (2) the growth of Goldman Sachs in keywords leverage on low costs, Romania was selected Japan; and (3) the strategies being Federal Express Corporation (FedEx); as the manufacturing base for the adopted by the investment bank China; Market entry strategy; Growth production of the Logan. The success of the Logan prompted Renault to launch the • To discuss whether Goldman Sachs was strategy; DHL;United Parcel Services car in other markets by expanding its adopting the right strategies for growing (UPS); World Trade Organisation; Asia; operations in Romania. However, critics its business in Japan. Express-delivery companies; Airfreight market in Asia; China post. were of the opinion that Renault would Industry Investment Banking not be able to continue producing the Reference No. MES0035 Logan model at low costs for long. Year of Pub. 2006 UBS in China: The Renaissance Teaching Note Not Available Pedagogical Objectives Struc.Assig. Not Available In the early 21st century, China’s banking • To analyse the advantages that Romania sector was affected by large incidents of keywords provides as a manufacturing base for non-performing loans, and a prolonged bear automobile companies and Renault’s Goldman Sachs; Investment banking in market had sapped the profits of a majority operations in Romania Japan; Bubble economy; Deregulation; of its securities brokerages. To revitalise Mergers and acquisitions; Principal the country’s financial markets and • To discuss whether Renault would be able underwriter; Government of Japan; prepare them for the opening up of the to sustain its low-cost manufacturing Conflict of interests; Financial Services economy in 2006 (as per China’s World advantage in the future.

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Industry Automobile most profitable vehicle segments in Japan keywords

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Reference No. MES0032 by launching four new Lexus models. III – Y G E T A R T S Warburg Pincus; Private equity Year of Pub. 2005 Although Toyota projects sales of 100,000 investments; Indian capital markets; Teaching Note Not Available Lexus models in Japan by 2010, analysts Bharti Televentures; Investment analyses; Struc.Assig. Not Available expect fierce competition from formidable foreign players, BMW, Mercedes and India; Foreign investments; Bottlenecks keywords Volkswagen. for investments; Venture capital. Renault SA; Automobile Dacia SA; Central and Eastern Europe; Logan; Low-cost Pedagogical Objectives operations; Automobile industry in Hyundai in the US: Prospects and Romania; Highly skilled cheap labour; • To highlight the competitive landscape Perils Manufacturing base; Low-cost car; Export of the Japanese luxury car market Hyundai Motor Company, one of the top strategy. • To discuss the competitive strategies car manufacturers of South Korea, had adopted by Toyota to establish Lexus as entered the US market in the mid-1980s its luxury car brand in Japan. through the establishment of a subsidiary Honda in China Industry Automobile and Transport named Hyundai Motor America. The company launched several successive Since the establishment of its first Reference No. MES0030 models in the 1990s, namely Excel, Sonata automobile manufacturing unit in 1998, Year of Pub. 2005 and Elantra, as part of its marketing Honda became the third-largest foreign Teaching Note Not Available strategy along with lower prices and good passenger carmaker in China by 2004. Struc.Assig. Not Available customer service. These cars were very When it started exporting its Jazz cars to keywords popular and largely contributed towards Europe in June 2005, Honda also became Hyundai's success in the US. However, in the first automaker to export cars Toyota; Luxury car market; Lexus; 1992, a great number of Excel models were manufactured in China to European Mercedes; BMW; Audi; Japan; Automobile; recalled due to a fault in its service breaks, countries. Despite the traditional outlook Market entry; US; Strategy; Branding; hydraulic pedals and linkages, which led to of Europeans who considered ‘Made in Japan automobile market; Automobile a decline in sales and loss in credibility for China’ goods as low-quality products, manufacturing. the company. To revive its popularity, Honda has set up a 100% export-oriented Hyundai reinforced its mission statement auto manufacturing plant in China. of ‘Pursuing Happiness Through Cars’ and Warburg Pincus in India: Can concentrated efforts to improve the Pedagogical Objective Indian Capital Markets Continue design, quality, manufacturing and • To discuss the growth strategies of Honda to Entice? marketing of Hyundai cars in the US. It in China and Honda’s initiatives to make introduced several new models each year Private-equity firm Warburg Pincus’ sale China an export base for its European and priced them lower than its competitors. of its 12% stake in the Indian market. It also implemented marketing strategies telecommunications service operator like ‘America's Best Warranty’. By 2005, Industry Automobile and Transport Bharti Televentures, for US$560 million it became the 4th largest foreign automaker th Reference No. MES0031 on March 14 2004, created flutter among in the US market, the world’s biggest car Year of Pub. 2005 the private-equity firms around the world. market. Hyundai also aims to become one Teaching Note Not Available The deal was the largest private equity deal of the top five car manufacturers in the Struc.Assig. Not Available in the history of the Indian capital market. world by 2010. 2004 also witnessed the highest private- keywords equity investment of $1.3 billion in India. Pedagogical Objective Honda Motor Company Ltd.; Chinese Over 90% of the investment came from automobile industry; Competitive overseas investors, showcasing India as an • To discuss the marketing strategies advantages in China; Sales and distribution attractive investment destination. But implemented by Hyundai in the US and network of Honda; Joint venture related some critics were apprehensive about this the challenges faced by the company in inefficiencies in China; Honda Accord in trend. the matured US car market. China; Honda’s joint ventures in China; Industry Automobile and Transport Pedagogical Objectives Jazz cars; Cost optimisation techniques of Reference No. MES0028 Honda; 40% local content rule in China; • To analyse the investment philosophy Year of Pub. 2005 Chinese tariff system; Guangzhou Honda followed by Warburg Pincus globally and Teaching Note Not Available Automobile Company; Sundiro Honda India’s growing attraction as an Struc.Assig. Not Available Motorcycle Company; Weak supplier base investment destination for foreign in China; Peugeot. keywords private equity firms Global car manufacturing industry; South • To discuss whether Indian capital Korean car industry; Hyundai’s marketing markets will continue to attract foreign Introduction of Toyota’s Lexus in strategy; America’s best warranty; private-equity investments in the future. Japan: The Competitive Hyundai’s management systems; JD Power Dynamics of Japan’s Luxury Car Industry Capital Market and associates; Dealer recognition Market Reference No. MES0029 programme; Product line extension; Year of Pub. 2005 Customer service; Automotive supply th On August 30 2005, Toyota launched its Teaching Note Not Available chain; Global export hub; Full-line Lexus brand of luxury cars in Japan. Struc.Assig. Not Available automotive distributor; Fuel-cell Encouraged by the success of Lexus in the technology; Customer retention survey; US, which was launched there in 1989, Learning curve and product life cycles. Toyota decided to enter into one of the

75 www.ibscdc.org Wal-Mart in India: Opportunities • To discuss the critical success factors in in a foreign market brought a shift in its vs Threats the highly competitive and vastly policy, from producing goods in China to complex Chinese fast food market. producing goods for China. However, its In early 2005, Wal-Mart, the world’s largest focus still remained on tapping China's retailer proposed to make its foray into Industry Fast food potential market for traditional imaging India, the fourth-largest retail market in Reference No. MES0026 products as well as the growing demand for the world. While Wal-Mart viewed India’s Year of Pub. 2005 digital products. $180 billion retail market as a potential Teaching Note Not Available Struc.Assig. Not Available opportunity for global expansion, the Pedagogical Objective retailer’s challenges before its entry into keywords India include strict foreign direct • To discuss the strategies adopted by investment regulations, competition from sandwiches; Chinese fast food Kodak to increase its presence in China, the unorganised retail sector, constituting industry; Jim Bryant; Bread culture; Entry which has grown to be one of its most 98% of India’s retail sector, and the and expansion strategies; Competition important markets. growing organised retail sector. from McDonald’s; Franchising in China; China’s growing middle class; Menu Industry Photography customisation; Obesity concerns. Reference No. MES0024 Pedagogical Objectives Year of Pub. 2005 Teaching Note Not Available Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies • To study the evolution and growth of India's organised retail sector Struc.Assig. Not Available UBS: The Swiss Bank in China • To discuss the opportunities and keywords UBS AG, which was formed in 1998 as a challenges that Wal-Mart faces in India Eastman Kodak; George Fisher; Economies against the backdrop of the country’s result of a merger between Union Bank of Switzerland (Zurich) and Swiss Bank of scale; Kodak China; Kodak Wuxi; political environment and competition Xiamen Fuda Photomaterials Co; Fuji Film; in the retail sector. Corporation (Basel), started its association with China investment research activities. Lucky Films; Joint ventures; Legend; Industry Discount and Variety Retail With continued reforms in the Chinese Nokia; Kodak Express; Goldman Sachs; Reference No. MES0027 capital markets, it increased its exposure Digital photography; Corporate social Year of Pub. 2005 by actively participating in corporate responsibility. Teaching Note Not Available investment banking and investing in the Struc.Assig. Not Available capital markets through the scheme of Qualified Foreign Institutional Investor keywords Intel in China (QFII). UBS has the highest investment Growth of Indian retail; Organised retailing quota among all QFIIs of $800 million and Present in China since the mid-1980s, Intel in India; Foreign direct investment has asked for a further increase. It has also has gained a strong foothold in the regulations for retailing in India; Wal- planned to enter the derivatives sector country’s chip market with considerable Mart’s market entry strategy; which has been opened to foreign and investments in manufacturing facilities and International retailers in India; private participation. research centres. However, of late, China Competition in India’s organised retail has bred competition for Intel with many sector; Consumer expenditure in India; Pedagogical Objective of its domestic companies venturing into Wal-Mart’s sourcing strategies; Boom in chip manufacturing led by the Shanghai- Indian retail industry; India’s economic and • To discuss the Chinese capital market based Semiconductor Manufacturing political risk; Wal-Mart’s challenges in reforms, UBS’ operations in China and International Corporation (SMIC). With India; Metro AG in India; Shoprite in India. its strategies for future operations in the a vast intellectual talent pool, Chinese country. chips are expected to be on par with those of Intel in future. Industry Banking and Financial Services Subway in China Pedagogical Objectives Reference No. MES0025 Subway, the world’s largest sandwich chain Year of Pub. 2005 • To discuss the growth strategies of Intel entered China when the fast food business Teaching Note Available in China in the country was witnessing a huge Struc.Assig. Not Available growth. But Subway learned that • To analyse the competitive challenges establishing a strong presence in China was keywords that Intel faces in the growing Chinese not an easy task. The Chinese were alien UBS AG; Chinese capital markets; China chip market. to the American way of ordering and eating Securities Regulatory Commission (CSRC); Industry Microprocessor, Micro a sandwich and at the same time were aware Qualified Foreign Institutional Investor Controllers & DSPs of the rising obesity concerns in the country (QFII); A-listed securities; Shenyin and Reference No. MES0023 due to high calorie Western fast foods. To Wanguo Securities Co; Swiss bank in China; Year of Pub. 2005 familiarise the Chinese to sandwiches, Investment banking; Initial Public Offering Teaching Note Not Available Subway had to provide printed signs to (IPO); Mergers and acquisitions; Investment Struc.Assig. Not Available explain the processes of ordering a Subway research; Foreign financial institutions sandwich. Also. Subway faced formidable keywords challenges establishing and managing the franchises. Intel; Intel in China; Chinese chip market; Kodak in China Intel’s threat to China; Intel’s growth strategies in China; Intel's presence in China; Pedagogical Objectives Eastman Kodak Co. (Kodak) forayed into Chinese Silicon Valley; Microprocessor th • To study entry and expansion strategies China in the early 20 century. Kodak’s market of China; Semiconductor followed by Subway in China, and prolonged investments in building Manufacturing International Corporation problems associated with the fast food manufacturing units, massive promotions (SMIC); AMD (Advanced Micro Devices); business in China coupled with its strategy to localise its brand China semiconductor industry; Intel China 76 www.ibscdc.org

Research Centre (ICRC); International • To discuss the future plans for L’Oreal up a representative office in Shenzhen. It

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Science and Engineering Fair (ISEF); China. began to expand its operations in China III – Y G E T A R T S Dragon chip; Memory chips. from the late-1990s after the Chinese Industry Cosmetics government relaxed regulations pertaining Reference No. MES0021 to the entry of foreign financial Year of Pub. 2004 H&M: The Swedish Fashion institutions in China. By 2004, Hang Seng Teaching Note Not Available had branches in Shanghai, Fuzhou, Discounter in USA Struc.Assig. Not Available Guangzhou and Nanjing. Hennes & Mauritz (H&M), the Swedish keywords fashion retailer, had been popular in Europe Pedagogical Objective as the ‘fast food of fashion’ for its standard L’Oreal; China; Lindsay Owen-Jones; offering of latest fashions at low prices. Chinese cosmetic industry; Understanding • To discuss the expansion strategies With about 1,000 stores in 20 countries Chinese consumers; Maybelline watershine implemented by the Hang Seng Bank to diamonds; Mininurse; Yue-Sai; Mary Kay; establish itself in China before the across Europe, the company made an P&G (Procter & Gamble); Counterfeit Chinese banking sector is opened up in ambitious venture outside Europe in 2000 by entering the US market. But after an products 2006 as per the World Trade encouraging start, the company failed to Organisation norms. live up to expectations as well as its claims Industry Banking and Financial in terms of growth and profits. Carrefour in China Services Reference No. MES0019 For marketers around the world, China Pedagogical Objective Year of Pub. 2004 presents a vast demography in terms of Teaching Note Not Available consumer habits and preferences. After the • To discuss the issues that limited H&M’s Struc.Assig. Not Available growth, and the new strategies it country embarked on an ‘open door’ undertook to address those issues. policy, many multinationals thrived on the keywords country's diversity and consumer spending Industry Fashion Retail power. In the retailing sector, the arrival Hang Seng Bank; Hang Seng Bank’s Reference No. MES0022 of multinationals changed the way the expansion in China; HSBC; Banking Year of Pub. 2004 Chinese shopped, owing to the emergence industry in China; HSBC’s major stake Teaching Note Not Available of different types of retail formats. In this acquisition in Hang Seng; Hang Seng Bank; Struc.Assig. Not Available arena, France-based Carrefour successfully Cost to Income Ratio; How Chinese banking industry has been opened up; keywords pioneered the hypermarket format by establishing 50 stores in just 10 years. Other History of Hang Seng Bank; Financial Hennes & Mauritz (H&M); Fashion giants that followed were the US-based services of Hang Seng Bank. retailer; European fashion retailing; Fast Wal-Mart and Germany-based Metro AG. food of fashion; Swedish fashion discounter; However, the domestic hypermarket New design turnaround time; Effective operators countered the threat from Metro in India: Fighting against retail globalisation; Expansion strategy; foreign giants by merging their operations Odds Competitive differentiation; Entry into and expanding their presence. new markets; US retailing; Card check By 2003, Metro AG was the third-largest process; Low price image; Cost control; Pedagogical Objectives trading and retailing group in Europe and Turnover development. the fifth largest in the world, with a • To discuss Carrefour’s successful entry presence in 28 countries. Metro forayed into China and how it positioned itself into the Indian market in 2003 with its to attract the Chinese shopper China’s Beauty Industry: L’Oreal’s cash and carry concept of Business-to- Business (B2B) wholesaling. Its entry into • To discuss the competitive forces that Foray India was accompanied by widespread typically affect the retail giants. L’Oreal, the world’s largest cosmetics protests by the local trading communities company, entered the booming Chinese Industry Grocery Retail and allegations of violation of the licensing beauty-care market in 1997. Since then, it Reference No. MES0020 agreement with the Government of India. has been trying to understand its Chinese Year of Pub. 2004 consumers, fight competition from local Teaching Note Not Available Pedagogical Objectives and international companies and expand Struc.Assig. Not Available • To discuss the reasons underlying Metro’s from cities to the two and three-tier towns keywords of China. Its acquisition of two Chinese market entry problems in India brands, Mininurse and Yue-Sai in 2003- Carrefour; China’s retail industry; • To discuss its expansion strategies in the 2004, moved its position up from 11th to Hypermarkets; Restrictions on foreign Indian market through its innovative second. retailers; The reform process; Wal-Mart; supply chain system. Metro AG; Procurement centres; WTO Pedagogical Objectives (World Trade Organisation) ascension; Industry Grocery Retail Joint ventures; Lianhua supermarkets. Reference No. MES0018 • To discuss the beauty-care industry in Year of Pub. 2004 China and the current competitive Teaching Note Not Available scenario Struc.Assig. Not Available Hang Seng Bank in China: The • To discuss L’Oreal’s entry and marketing Growth Strategies keywords strategies, and the current and future Metro AG; Metro Cash and Carry; The cash hurdles it has to overcome in China The Hang Seng Bank, a part of the HSBC group, is one of the largest banks in Hong and carry concept; Wholesale distribution; • To discuss L’Oreal’s competitive Kong. Hang Seng forayed into the Chinese Metro in India; FDI (Foreign Direct position and the problems it faces due market during the mid-1980s by opening Investment) regulations on retailing in to the business environment in China India; Indian supply chain; Global retail 77 www.ibscdc.org companies; Indian retailing market; Metro’s Year of Pub. 2004 • To discuss Yahoo! China’s plans to entry hurdles in India; Cross-divisional Teaching Note Not Available increase its penetration in China service companies of Metro Group. Struc.Assig. Not Available • To discuss the opportunities and pitfalls keywords presented by the bourgeoning e- commerce and on-line advertisement Carrefour in Japan Organic foods; Natural foods; Whole foods; market in China, to the International John Mackey; Organic farming; Wal-Mart; Internet firms. With the deregulation of the Japanese retail Competition in the UK grocery market; industry, many foreign companies like Toys Organic foods in the UK; UK retailing; Industry Internet Searching Services ‘R’ Us and Costco forayed into Japan in the British supermarkets; Tesco Plc.; ASDA; Reference No. MES0014 late-1990s. Europe’s No.1 French retailer WM Morrisons; J Sainsburys. Year of Pub. 2004 Carrefour, forayed into the Japanese market Teaching Note Not Available in 2000 by setting up its first retail store in Struc.Assig. Not Available the suburbs of Tokyo, and planned to expand aggressively by opening 13 stores Starbucks in Germany keywords by the end of 2003. However, until mid- Starbucks, the multinational chain of Yahoo! in China; Beijing Founders 2004, the company was able to set up only gourmet coffee shops, entered the number Electronics Co.; Competitive growth eight stores and was still finding it difficult one coffee drinking country in Europe – strategy; China Internet Network Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies to run them profitably. Germany, through a joint venture with the Information Centre; Partnerships and German retail chain, KarstadtQuelle. It acquisitions; Chinese Internet industry; Pedagogical Objective faced stiff competition from retailers who Chinese Ministry of Information; emulated Starbucks’ business model, often Sina.com; sohu.com; netease.com; Short • To discuss the market entry strategies adding a local taste. Its German partner Messaging Service (SMS); 3721 Network of Carrefour in Japan. was battling its own poor financial Software Co. Ltd.; Zhou Hongyi; e- Industry Retail performance because of sluggish consumer Commerce; e-Trade; Yahoo! Asia. Reference No. MES0017 spending. Two years into its operation, Year of Pub. 2004 KarstadtQuelle was reviewing the joint venture contract. Teaching Note Not Available Wal-Mart’s Foray into Japan: Struc.Assig. Not Available Heading towards Success or Pedagogical Objectives keywords Hara-Kiri? • To understand the reasons for the failure Carrefour; Japanese retail market; of Starbucks’ business model in Germany For MNC (Multinational corporation) Deregulation in the Japanese retail market; retailers, the Japanese retailing market is Large Scale Retail Store Law; Carrefour in • To discuss Starbucks’ efforts to considered to be one of the toughest to Japan; Hypermarkets in Japan; Foreign overcome various operational hurdles enter. In 2002, when Wal-Mart announced retailers in Japan; Retail competition in faced in Germany. that it was buying a stake in Seiyu, a domestic Japan; Japanese consumer buying retailer, as a first step to enter Japan, there Industry Speciality Eateries behaviour; Carrefour’s distribution strategy was widespread scepticism among analysts. Reference No. MES0015 in Japan. Since its entry, Wal-Mart has been doing all Year of Pub. 2004 it can to understand and woo the Japanese Teaching Note Not Available consumers into Seiyu stores, where it is Struc.Assig. Not Available Whole Foods in UK: The Growth implementing its own standard systems and processes. Wal-Mart’s challenges include Challenges keywords dealing with Japan’s traditional multi-tier Starbucks in Germany; Restaurant and cafe Whole Foods Markets Inc. (Whole Foods) distribution system, understanding the trends industry; KarstadtQuelle (Karstadt); started in 1980 in Texas, US, successfully in Japanese buying habits and creating the tapped the growing interest of American Departmental stores; Growth strategies; right product assortment. It also faces consumers in ‘organic foods’, and emerged Coffee house; Competitive strategy; Global competition from domestic players like as the world’s largest organic foods retailing expansion strategy; Cappucchino; Howard Aeon and Ito-Yokado and international chain by 2000. It spread its operations Schultz. players like Carrefour. across the US and Canada, gaining the admiration of both the market analysts Pedagogical Objectives and consumers for its products, philosophy Yahoo! in China and growth. In its pursuit to expand beyond • To discuss the critical success factors in US and Canada, the company acquired Yahoo!, the most visited website in the the Japanese retail industry “Fresh & Wild Market” stores in the UK. world launched Yahoo! China in 1999. It failed to make much of an impact on the • To discuss the strategies adopted by Wal- Chinese Internet users who were Mart in Japan Pedagogical Objectives enamoured with local sites. In 2003, • To discuss the possible future scenarios • To discuss the strategies that Whole Yahoo! China made a renewed effort to in the retailing industry of Japan. Foods can devise to penetrate into the expand its presence in China. It aimed to UK market and achieve its growth concentrate on search services, on-line Industry Grocery Retail targets auctions and web-based communications to Reference No. MES0013 further its presence in China. Year of Pub. 2004 • To discuss the ways in which Whole Teaching Note Not Available Foods can win consumers from the Pedagogical Objectives Struc.Assig. Not Available existing competition. • To discuss the opportunities presented keywords Industry Grocery Retail by China’s rapidly increasing Internet Reference No. MES0016 Wal-Mart; Japanese retailing; Numazu; population Seiyu; Ito-Yokado; Trends in Japanese 78 www.ibscdc.org

retailing; Foreign retailers in Japan; Year of Pub. 2004 with its strategies well in place, looks

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Distribution in Japan; Wal-Mart’s Teaching Note Not Available forward to a brighter future. III – Y G E T A R T S international business; Greg Penner; Wal- Struc.Assig. Not Available Mart's competitors in Japan. keywords Pedagogical Objective ; Dominos Pizza; Pizza Corner; • To discuss the strategies LGEIL followed in India with regard to its employees Samsung in India Amul; Dine-ins; Home delivery model; Menu customisation; Local sourcing. and distribution network in the backdrop Samsung India Electronics Ltd. (Samsung) of its Korean origin and the Korean began its operations in India in December philosophy. 1995 and within a span of eight years, GM in China Industry Consumer Electronics became one of the most prominent players Reference No. MES0009 in the high-tech consumer electronics and In July 1994, when the Chinese authorities Year of Pub. 2004 home appliances sector in India. By 2003, began the task of making China’s Teaching Note Available Samsung had seized a significant share of automotive sector one of the country’s Struc.Assig. Available the Indian market in colour televisions, strongest industries, the automobile frost-free refrigerators, washing machines, market was opened to the foreign keywords air conditioners and microwave ovens. companies. But the access to the market South Korean chaebols; LG Electronics Analysts attributed Samsung’s success in came with a rider – technology transfer to Corporation; Korean management India to its emphasis on the mix of product the local companies. General Motors (GM) philosophy; Sahoon; Confucian values; features, technology and aggressive entered the Chinese automotive market Employee training and development; The marketing. through joint ventures with seven Chinese pull factor of LG (LG Electronics); companies. Eventually GM got the Paternalistic management culture of Korea; Pedagogical Objective permission to set up a manufacturing unit Corporate ideologies; Consumer investing between $1 billion and $2 billion • To discuss how Samsung managed its electronics companies in India; Regional to manufacture mid-sized cars in China. distribution model; Customer satisfaction marketing mix in India to strengthen its But the company’s Chinese odyssey has position in the consumer electronics model; Direct-dealer channel; Brand recall; not been very smooth. It not only had to LG AC (air conditioners) academy. market. deal with fluctuating car demand but also Industry Consumer Electronics with its joint venture partners who proved Reference No. MES0012 to be tough negotiators. Despite the Market Entry Strategies of Gmail Year of Pub. 2004 problems, GM continued to focus on China Teaching Note Not Available and the perseverance seemed to pay off Google, the biggest Internet search engine, Struc.Assig. Not Available with the company tripling its sales in 2003. has come up with a new offer for e-mail st keywords users. On April 1 2004, Google announced Pedagogical Objectives the launch of ‘Gmail’, in which offered a Samsung in India; Marketing mix; Sub- • To discuss GM’s operations in china and storage space of one gigabyte to its users branding; Unique selling proposition; how the company managed its joint that was enough for a normal e-mail user Customisation; Promotions; Cricket ventures in China to store his mails for a decade. This sponsorship; Digital Natural Image engine announcement sent mild tremors through (DNIe) • To discuss the competition in the the existing players, Yahoo! and MSN, who Chinese car market. offered a free space of just four and two megabytes respectively. Furthermore, Industry Automobile Pizza Hut in India Google announced that it would tag its mails Reference No. MES0010 with only those advertisements that are Year of Pub. 2004 Pizza Hut entered India in 1996 and relevant to the contents of the mail, which Teaching Note Available introduced to the Indian customers. is also known as ‘contextual advertising’. Struc.Assig. Available But it was not a smooth sail for the However, scepticism arose about the international giant. Its large dine-ins, high keywords privacy of the e-mails. prices and positioning of pizza as meal put- off customers. Meanwhile. Dominos Pizza GM (General Motors); China; Automobiles; Pedagogical Objectives that entered India in the same year was Chinese car market; Competition; able to gain ground by positioning Pizza as Volkswagen; Toyota; Shanghai GM; Jinbei • To discuss the entry strategy of Google a and supporting it with its efficient GM; Joint ventures in China; Mini in the global e-mail business and the pros home delivery system. Even homegrown vehicles. and cons of its offer pizza chains like Pizza Corner and Smokin • To analyse the effects of Gmail on Joe ate into Pizza Hut’s market share. Yahoo! and MSN and their possible Business in India: The LG Way competitive responses. Pedagogical Objectives Since its entry into India in 1997, LG Industry Internet Services • To discuss how Pizza Hut, after initial Electronics India Pvt. Ltd. (LGEIL), the Reference No. MES0008 set backs and loss of market share made wholly-owned subsidiary of LG Electronics Year of Pub. 2004 amends and overcame its short comings Incorporated (South Korea) in India, has Teaching Note Not Available been successful in contributing 5% of the Struc.Assig. Not Available • To highlight the different strategies global operations of its parent LG. LGEIL’s adopted by the pizza chains in India. products speak the language, which the keywords Industry Fast Food & Quick Service Indian consumers understand. Further, the Google; Gmail; e-mail; Yahoo!; Hotmail; Restaurants people who manage its business are chosen America Online (AOL); Contextual Reference No. MES0011 locally and the distribution network is advertising; e-mail business; ARPANET; customised to Indian conditions. LGEIL, 79 www.ibscdc.org MSN; Microsoft; Market entry strategies; heavy competition from Western Harley-Davidson in China Roy Tomlinson; Mailcity; PayPal. counterparts like McDonalds and Subway, and China’s domestic food chains like The Harley-Davidson Motor Company Ronghua Chicken, KFC maintains its lead (H-D) completed one hundred years in 2003. As of August 2003, H-D held a 46% Indica’s Foreign Foray in the fast food market worth RMB 67.6 (US$8.1 billion) as of 2002. share of the North American heavyweight In the 1990s, when India Inc. was struggling bike market. However, the company was not successful in selling its legendary bikes with the implications of liberalisation Pedagogical Objectives policy, nobody expected India’s products in China. As of August 2003, the company to go global. Traditionally, the Indian • To discuss the strategies that enabled KFC didn’t have a single authorised dealer in industry was considered a follower of the to become a dominant fast food retailer China. H-D’s roadblocks in China included, West owing to its low-quality products and in China amongst other things, concerns about a nascent manufacturing industry. This was piracy in China, Beijing’s restrictions on • To discuss the critical success factors of motorcycle use and the preferences of particularly true for the automobile the Chinese fast food industry. industry, which was in its initial stages of China’s bikers for low displacement bikes. growth. But when Tata Motors signed an Industry Fast Food and Quick Service agreement with MG Rover Group of UK in Restaurants Pedagogical Objective 2002 to export Indica, India’s first Reference No. MES0006 • To discuss the roadblocks for Harley- Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies Market Entry Strategies indigenous car, it attracted attention of Year of Pub. 2004 Davidson in the Chinese bike market. many automakers who realised the Teaching Note Not Available potential that India held. Tata Motors Struc.Assig. Not Available Industry Automotive and Transport launched Indica in 1998, although the car Reference No. MES0004 keywords did not succeed initially, the sales picked Year of Pub. 2004 up with the re-launch of Indica. Kentucky Fried Chicken (KFC); Chinese Teaching Note Not Available food culture; Customisation; Franchising; Struc.Assig. Not Available Pedagogical Objectives Harkland D Sanders; Fast food revolution keywords in China; KFC’s initial years in China; • To discuss the reasons behind the success KFC’s promotional activities. Harley-Davidson in China; Harley- of Tata Motors’ Indica in the passenger Davidson Motor Company; Harley Owners car segment Group (HOG); Just-in-time; Displacement • To discuss Indica’s remarkable debut in Promoting Prius in US models; Richard Teerlink; Jeffrey L the European market. Bleustein; Buell motorcycle; Piracy; Oil-burning cars were becoming Harley-Davidson in Japan; Harley- Industry Automobile increasingly unacceptable in the US, given Davidson in Taiwan; Trade barriers; Reference No. MES0007 the tough environmental regulations Chongqing; Zongshen motorcycle; Price Year of Pub. 2004 prevailing there. Consequently, the US was wars. Teaching Note Not Available expected to be the biggest market for hybrid Struc.Assig. Not Available vehicles, even bigger than the Japanese hybrid market by 2004. Prius (pronounced keywords McDonald’s In China ‘pree-us’), Toyota’s hybrid car, which Tata Motors; Indica; Indica V2; MG Rover; appeared for the first time in 1997, hit the McDonald’s Corporation is the world’s CityRover; Idea; Institut Francais Du Petrol US market in 2000. By October 2003, leading food retailer with 31,108 of France; Engineering Research Centre; Toyota had sold 50,000 of these cars in restaurants in 119 countries serving 46 China Brilliance Industrial Holdings; the US. Meanwhile in 2003, the Prius million customers a day. McDonald’s has Phoenix consortium; European Union; second generation appeared in the US. always been a franchising company. About Block exemption; Small car segment; Toyota sought to further polish its image three quarters of its stores worldwide are British car industry; Supermini cars. of engineering competence by advertising franchises and franchisees have always its Prius to a wide range of buyers. played a significant role in McDonald’s success. However, in China it is a different KFC in China Pedagogical Objective story. Barring a pilot franchise in Northern China’s Tianjin Municipality, all 566 Western fast food giants like McDonald’s • To discuss Toyota's promotional strategy McDonald’s restaurants are either wholly- and Subway, with Kentucky Fried Chicken in the US for its Prius hybrid car. owned by the company or jointly-owned (KFC) in the lead, dominate the fast food Industry Automobile and Transport with Hualian or Beijing Sanyuan foods. market in China. KFC is able to please the Reference No. MES0005 Although franchising has been a fast Chinese palate with its ‘finger licking good’ Year of Pub. 2004 growing business in China since 2002, chicken that is part of the well-established Teaching Note Not Available challenges exist. dietary habits of the Chinese. The Chinese, Struc.Assig. Available who until the1980s, were used to untidy Pedagogical Objective restaurants and unfriendly service, have keywords embraced the ambience, rich decors and • To discuss McDonald’s franchising Toyota; Pruis; Hybrid cars; Saatchi and friendly service of KFC. As of 2003, KFC model, its business, strategy and the Saatchi; Oasis; Strategic integration had more than 900 outlets, with its roadblocks to its franchising efforts in capability; Civic Hybrid; Corporate presence in 12 out of 13 provinces of China. China. campaign; Creativity; Dentsu; Honda KFC, apart from its popular products, also Insight; Promotional strategy; Industry Fast Food and Quick Service customised its offerings to suit the Chinese Environment; Philanthropic activities; Restaurants palate such as Peking duck, bamboo soup Toyota Way. Reference No. MES0003 etc, that helped to win over loyal patrons. Year of Pub. 2003 It is also the first food chain to introduce a Teaching Note Available drive-through restaurant in China. Despite Struc.Assig. Not Available 80 www.ibscdc.org

keywords Microsoft had dominated every software • To analyse the ideal growth options for

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S market it entered. FedEx, given nature of its business and III – Y G E T A R T S McDonald’s; McDonald’s outlets; evaluate the strategic fit between FedEx McDonald’s China Development Pedagogical Objectives and its acquired companies, especially Corporation; McDonald’s in China; the strategic fit between FedEx and Kentucky Fried Chicken; Fast food; • To discuss why Microsoft entered into Kinko’s Strategy; Chinese fast food industry; China; the antivirus market, and also the likely Franchising in China; Franchising; impact of its entry on the antivirus • To analyse the reasons for Kinko’s poor Franchising model; Global branding; industry financial performance during 2004– Logistics; Supplier networks. 2008 and debate on FedEx’s decision to • To discuss why Microsoft’s entry into drop Kinko’s from its name and going the antivirus market was perceived as a in for a new name FedEx Office threat to Linux. Wal-Mart in Japan • To debate on the efficacy and feasibility Industry Computer Software of continuing with the brand identity of In 1991, Wal-Mart, US’s No.1 retailer since Reference No. MES0001 acquired company – in this case, the 1990, forayed into the international Year of Pub. 2003 Kinko’s brand – or does it make sense to market for the first time by entering Teaching Note Not Available integrate the brand of acquired Mexico. By 1999, besides US, Wal-Mart Struc.Assig. Not Available companies with the brand of acquiring had its presence in nine countries. Since company. 2000, Wal-Mart started witnessing keywords significant growth in its international sales Microsoft; Antivirus market; Threat to Industry Express Delivery Services against flattened domestic sales. Being fed antivirus vendors; Symantec; Network Reference No. MAA0186 on double-digit sales and profit gains, Wal- Associates; Microsoft security initiatives; Year of Pub. 2009 Mart decided to expand rapidly into Linux; GeCAD; Flaws in Microsoft Teaching Note Available international markets to avoid products; Antitrust laws; Microsoft Struc.Assign. Available concentrating only on its home market. monopoly; Future of antivirus industry; Japan, the second-largest consumer market Keywords Microsoft bundling tactics; Netscape in the world after US, was its next Mergers and Acquisitions, Cultural th Navigator; Antivirus vendors concerns. destination. On March 14 2002, when Integration, Brand Integration, Wal-Mart announced its decision to enter Diversification, Innovation, FedEx, Japan, the country’s economy was mired Kinko's, Hub and spoke, Logistics and in recession with spiralling deflation, supply chain, Freight Services, Brian Philips shrinking consumer spending and cutthroat competition. Daiichi’s Acquisition of Ranbaxy Pedagogical Objective FedEx Kinko’s to FedEx Office: Brand Management and Cultural • The case discusses the challenges that On June 11th 2008 Japan’s third largest Wal-Mart faced during its entry into the Integration Challenges drug maker Daiichi Sankyo announced, its strategic deal to acquire majority stake in Japanese retail market and how it This case enables an interesting discussion the Indian generic drug major, Ranbaxy planned to overcome them. on FedEx’s decision to drop one of its Laboratories Limited. Daiichi agreed to acquired brands, Kinko’s, from its name. Industry Retail pay around US$4.2 billion for acquiring Having acquired Kinko’s in 2004, FedEx Reference No. MES0002 51% stake (including promoter stake of named it as FedEx Kinko’s and operated Year of Pub. 2003 34.83%) in Ranbaxy, putting the total under the same brand name till June 2008. Teaching Note Not Available enterprise value of Ranbaxy at US$8.5 Struc.Assig. Not Available In 2004, FedEx acquired Kinko’s, a chain billion. Daiichi-Ranbaxy deal was the largest of copying stores to increase its ground acquisition in the Indian pharmaceutical keywords shipping market through Kinko’s store industry and was viewed by analysts as a Wal-Mart; History of Wal-Mart; Sam locations. Reportedly, during this time step towards the consolidation in the world Walton and Wal-Mart; Wal-Mart’s (2004–2008), the profits of the acquired generic drug market. The deal made international operations; Retailing unit have fallen from $100 million in 2004 Daiichi-Ranbaxy, the combined entity the strategies of Wal-Mart; Wal-Mart’s to $45 million in 2007. In 2008, FedEx 15th largest pharmaceutical company in inventory management systems; Wal- announced an $890 million write-off on the world with a market capitalization of Mart in Europe; Wal-Mart in Germany; the purchase of Kinko’s and named third around US$30 billion. It helped Daiichi Wal-Mart in Japan; Retailers in Japan; CEO to head Kinko’s in four years. The leverage its innovative drug making Retail business in Japan; Consumer buying company also developed an ill reputation capabilities and R&D expertise with behaviour in Japan; Retailing problems in for poor customer service, during the 4 Ranbaxy’s low cost manufacturing abilities Japan; Retail competition in Japan; Wal- years of its operations. To avoid further to achieve a competitive position in the Mart's financial results. damage, in 2008, FedEx decided to drop world generic drug market. Some industry Kinko’s name from its brand and continue experts’ claimed that the price Daiichi paid operations under a new brand name, FedEx for acquisition was quite high compared to the present pricing of other Indian generic Microsoft's Entry into Antivirus Office. Will the new brand name help FedEx improve its performance in copying drug making companies. Industry and business services segment or will it call In September 2003, Microsoft entered the for new problems? Pedagogical Objectives antivirus industry by acquiring the antivirus • An in-depth knowledge about DCF solution provider, GeCAD. This move of Pedagogical Objectives valuation techniques Microsoft left many a analyst to speculate • To understand the nature of FedEx about the future of the antivirus industry, • The rationale behind the acquisition of business and discuss the Key Success given that, throughout its history Ranbaxy by Daiichi Factors (KSFs) for its business 81 www.ibscdc.org • Long-term synergies arising for Ranbaxy Ranbaxy’s sell-out to Daiichi on both particularly in a cross-border acquisition after Daiichi acquired it the companies and the industry as a like InBev and A-B. whole. • The advantages and disadvantages of Industry Beer M&A deals Industry Pharmaceutical Industry Reference No. MAA0183 Reference No. MAA0184 Year of Pub. 2009 • The need for growth through Year of Pub. 2009 Teaching Note Available acquisitions in foreign countries Teaching Note Available Struc.Assign. Available akeoversakeovers akeoversakeovers akeovers Struc.Assign. Available • The consolidation trends in the Indian Keywords and Global Pharma Industries. Keywords Global Beer Industry, SABMiller, Interbrew, Industry Pharmaceuticals Ranbaxy, International Patent, Daiichi, AmBev, Budweiser, Bud Light, Carlos Brito, Reference No. MAA0185 Business Model, Pharmaceutical, Grupo Modelo, Adolphus Busch IV, Global Year of Pub. 2009 Acquisition, Generic drugs, Research and Brewers, Brand Positioning, Stella Artois, Teaching Note Available development, Blockbuster drugs, clinical Category Wars, Beer Consumption Struc.Assign. Available trials Patterns, Consolidation and globalisation Keywords Mergers and Acquisitions, DCf Valuation, Pharmaceuticals Industries, Generic Drugs, InBev’s Acquisition of Anheuser- Coca-Cola’s Acquisition of Synergies, Strategy, Industry value Chain, Busch: American Beer with China’s Huiyuan Juice: A Juicy Daiichi Sankyo, Ranbaxy, Competitive Belgian Spirit? Deal? Anaysis, Open Offer, Financial Forecasting The race was on for an unassailable lead in What is the best way for a company to the global beer industry as Belgian-Brazilian attain stable revenue and command a larger InBev made an unsolicited takeover bid market share – especially in an industry, Ranbaxy’s Sell-off to Daiichi – for the American Anheuser-Busch. With where the life cycle of a product shrinks Rise of a New Business Model in the fear of losing its 150 years of fast? How does a company manage its Global Pharma? independence, Busch family initially product portfolio in a way that continues Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T rebuffed the offer and tried all means to to meet the customer demand and extend The fast-growing emerging markets have scuttle the deal. After a month long battle its validity? Among options galore, gained considerable significance with the during June–July 2008, with contentious companies opt for either organic or Big Pharma losing out on their global market wrangling amid lawsuits and Securities and inorganic growth. In today’s era of share. India, the growing hub of R&D in Exchange Commission filings, InBev marketing where ‘Consumer is the King’, global pharma, is fast catching up as an sweetened the offer by increasing the bid companies compete with one another to alternative for sustaining competitive from $65 per share to $70 per share. lure the consumers. This motto is equally advantage. In 2008, the sell-out decision Holding less than 4% controlling stake in relevant to the beverage industry, where by Ranbaxy, the largest pharmaceutical in the company and diverse opinions among the tastes of consumers matter a lot. India, is seen as a sign of the changing the family about the deal, Anheuser-Busch Beverage companies constantly chart out dimensions of faster consolidation in global had little or no chances of avoiding the new strategies to launch their products that pharma. Ranbaxy, a generic firm, sold its deal. Finally on July 12th 2008, Bud was suit the changing tastes and preferences of majority stake to Daiichi-Sankyo, a top ready to wear a foreign crown. Could the consumers. Similarly, Coca-Cola, Japanese innovation company, setting a anything reflect American loss of which believes in ‘glocal’ approach has new trend. The cross-border acquisition is economic supremacy more visibly than for launched products that matches with the perceived as a growing tendency of its iconic beer to fall into foreign hands? likes and dislikes of the Chinese consumers companies to focus on future sustainability Though the deal would create the world’s and as a result is embraced as a local brand than on mere profit margins. Both leading beer giant ahead of SABMiller, by the Chinese. However, carbonated companies are complimenting each other, doubts loom large regarding realising the beverages started losing their fizz with the with Ranbaxy foregoing national interests anticipated synergies, amid diverse cultures outbreak of Severe Acute Respiratory for stronger global competitiveness. This and other complexities. Further, will the Syndrome (SARS) in China in 2003. This hybrid model has triggered a new phase of Bud give InBev a global competitive edge? triggered health consciousness among the M&A in global pharma, as Big Pharma start people in China, which, in turn, has desperate measures of new mutual Pedagogical Objectives increased the demand for fruit juices than collaborations and alliances to risk losing carbonated drinks. In order to fall in line their market share from their generic The case study can be used: with the changing preferences of the players. • To examine the growing competition in people, retain its market share and also to the beer industry and conduct save itself from the declining stage of the Pedagogical Objectives competitive analysis on major players Product Life Cycle (PLC), on September 3rd 2008, Coke offered to acquire Huiyuan • To examine the changing market • To discuss the (changing) critical success Juice Ltd., a leading fresh fruit juice maker dynamics amidst competition to factors of the global beer industry of China, for a premium price. Through traditional pharma companies from this acquisition, Coke plans to diversify its generic drug makers • To identify the factors that are driving product portfolio to cater beverages to consolidation and globalisation in the different segments of Chinese consumers, • To evaluate the value chain of pharma global beer industry industry and examine the different the country in which the huge size of business models that evolved • To examine the desirability and viability consumer base provides a great potential. of InBev’s hostile takeover bid for However, the fickle-mindedness of the • To analyse the growth drivers of pharma Anheuser-Busch Chinese is a cause of concern for the companies company, as the life span of the beverages • To analyse the problems in integrating quickly gets shorter in China. Nevertheless, • To identify the need for a hybrid business corporate and national cultures, model and analyse the effects of the success of the deal ultimately depends 82 www.ibscdc.org

on Coke’s mettle to go through the anti- • To analyse and debate on the possible Bottling; Chocolate; Cost; Investment;

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S monopoly law of China. Even if the deal synergies between and Mergers, Acquisitions, Alliances Case III – Y G E T A R T S goes through the law, Coke has to face the Studies; Growth; Loss litmus test of its capability in not just retaining the consumers, but in proving its • In a consolidating and troubled industry, market leadership as well. which is the ideal company to be taken over – a strong player or a weak player? The Cerberus Deal – The Beginning of a New Era for Pedagogical Objectives Industry Civil Aviation Chrysler Reference No. MAA0181 • To examine the changing landscape of Year of Pub. 2008 US automobile giant, Chrysler had joined the soft beverage industry in China Teaching Note Available hands with German automaker, Daimler – • To understand the business dynamics of Struc.Assign. Available Benz in a much touted ‘Merger of Equals’ in 1998. Shortly after, Chrysler suffered Coke in China keeping in view the Keywords various stages in the life cycle of different severe financial crisis and eventually both beverages Global Civil Aviation; US Airlines; the companies opted for a divorce. American Airlines; US Airways; United Daimler had been looking to offload • To assess Coke’s strategy in acquiring Airlines; Mergers,Acquisitions,Alliances Chrysler to a suitable proposer and in Huiyuan and the expected synergies of Case Studies; Continental Airlines; August 2007, sold 80.1% of its stock in the deal. Southwest Airlines; JetBlue; Low-cost Chrysler to an American Private Equity Industry Beverages Carriers (LCCs); Consolidation; Fleet firm, Cerberus. Will Cerberus be able to Reference No. MAA0182 inefficiencies; Fuel prices; Open Skies bail Chrysler out of troubled waters? Year of Pub. 2009 treaty; Competition; European carriers Teaching Note Available like Air France-KLM Pedagogical Objectives Struc.Assign. Available • To study the dynamics of the US auto Keywords industry Cadbury Schweppes: Coca-Cola, China, Beverages, Mergers and Demerging its US Beverages • To analyse the causes for the fall out of Acquisitions, Competitors, Synergies, Company Merger of equals Carbonated Drinks, Huiyuan Juice, Anti- • To study the challenges faced by a monopoly law, Bottling, Joint Ventures, London-based Cadbury Schweppes Plc. Private firm in acquiring a Public Product Life Cycle, Logistics, Distribution (Cadbury), a confectionery and beverages company. channels, Pepsi company, has planned to demerge its US beverages arm in the second quarter of Industry Auto Industry 2008. The decision of the company comes Reference No. MAA0179C Delta-Northwest Airlines after its investors expressed concern about Year of Pub. 2008 the company’s financial performance Proposed Merger: Withering Teaching Note Available despite loads of restructuring since 2003. Struc.Assign. Available Industry Turbulence? While the top management and investors Keywords Capping months of negotiations, US’ major are optimistic about the company’s move, airlines – Delta Air Lines and Northwest the success of the strategy remains to be US auto Industry; Daimler Chrysler Merger; Airlines inched closer by finalising the seen. mergers of Unequals; unhappy marriage; merger deal. Battling against soaring fuel Cereberus; Mergers, Acquisitions, Alliances costs and looming demand for air travel, Pedagogical Objectives Case Studies; Chrysler; new Era; Prospects the world’s largest carrier intends to The case study will help the students to and challenges generate substantial revenues from scale understand: benefits and significantly reduce duplicate costs. While their complementary routes • This case study is aimed at MBA/PGDBA msnbc.com Acquires Newsvine: help them gain a global footprint, sailing students and is intended to be a part of through antitrust approval amid labour and the business strategy curriculum A New Direction pilot unrest remains a challenge for both • The case study is so structured as to help msnbc.com is a leader in breaking news the airlines. Further, the case also delves and in promoting original journalism. deep into issues such as – the trigger that students understand about a demerger and its ideal timing Started by Microsoft and NBC in the year led to the merger drive between the two. 1996 the website has functioned In a consolidating and troubled industry, • Students are also expected to understand independently and has been growing should mergers and acquisitions be dictated the need of demerger for Cadbury profitably. msnbc.com was most popular by short-term interests or long-term for its coverage of political news. The • This case study gives scope to discuss interests? popularity of online news has continued whether the timing is right for Cadbury to expand, as readers, particularly the to demerge. Pedagogical Objectives younger generation is increasingly turning Industry Confectionery & Beverages to the Internet for news. As competition • To examine the nature, business and the increases, news sites like NYTimes.com, competitive dynamics of airline industry Reference No. MAA0180 Year of Pub. 2008 USAToday.com, ABCNews.com, • To identify the factors that led to Teaching Note Available msnbc.com and CNN.com are trying to troubled times in the US airline industry Struc.Assign. Available distinguish themselves from others. These sites are competing against news • To debate on the need for Delta Air Keywords aggregators like Yahoo News and Google. Lines to merge with Northwest Airlines Cadbury; Beverages; Confectionery; With a view to expand its services in the and the need for Northwest Airlines to background of these changes, msnbc.com be acquired by Delta Corporate image; Demerger; Decision; Spin-off; Diversification Strategies; acquired Newsvine, a participatory news 83 www.ibscdc.org site, on October 2007. It is msnbc.com’s Acquisition; Integration; Synergies; Online or $31 per share in a cash and stock offer. first acquisition in its 11-year history. Business But Yahoo rejected the offer terming it as Newsvine’s acquisition is a new direction inadequate. Microsoft later raised the bid for msnbc.com. How this acquisition would to $33 per share, but Yahoo! rejected this help improve the company’s competitive ’s Acquisition of Corus: raised bid also. Subsequently, Microsoft edge remains to be seen. withdrew its bid. The case facilitates Was it Worth the Price? discussion on the fair value of a share of Yahoo! The case also attempts to employ akeoversakeovers akeoversakeovers akeovers Pedagogical Objectives During 2006–2007, the Indian steel industry witnessed one of the biggest various methods of financial valuation of • To analyse the nature of news acquisitions. Tata Steel offered to buy the a firm. Apart from this, the case also points broadcasting industry services UK steel giant Corus. Finally, after out the difference between the value of a • To analyse the nature of competition in numerous rounds of bidding, Tata Steel firm as ‘a going concern’ and as ‘a target the industry bought Corus for $12.9 billion. The Corus for acquisition’. acquisition moved Tata Steel’s position to • To analyse the strategy and the sixth place among the world’s largest Pedagogical Objectives competitiveness of msnbc.com steel producers. While the Indian industry lauded Tata Steel’s move, there was national • To understand the concept of Business • To analyse msnbc.com’s acquisition of Valuation Newsvine and how this acquisition helps debate whether Tata Steel over paid for in improving its competitive edge. the Corus acquisition. The supporters of • To understand the difference between the acquisition mentioned that there were value of a firm as an independent Industry News Broadcasting Industry clear synergies between the two companies. business, and as a target of acquisition. Reference No. MAA0178C Tata Steel also seemed to have long run Year of Pub. 2008 benefits from this acquisition. Industry Online Services Teaching Note Available Reference No. MAA0175A Struc.Assign. Available Pedagogical Objectives Year of Pub. 2008 Teaching Note Available Keywords The case study helps the students Struc.Assign. Available understand and analyse: msnbc.com; Newsvine; News Broadcasting; Keywords Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Online News sites; Yahoo; Google; AOL; • The growth history and the market Mergers, Acquisitions, Alliances Case spread of Tata Steel and Corus Microsoft Corp.; Yahoo!; Steve Ballmer; Studies; Competition Jerry Yang; Mergers, Acquisitions, Alliances • The reasons that promoted Tata Steel Case Study; Valuation; Google; Online to acquire Corus Services; Merger; Acquisition; AOL; Internet Advertisement; Free Cash Flow eBay: Rethinking Skype • The synergistic value between the two to Firm; FCFF companies eBay, the online auction giant as part of its expansion strategy, acquired Skype; a • The long term benefits of the Tata- popular communication platform for $2.6 Corus deal Jaguar and Land Rover billion. eBay’s CEO Meg Whitman had • Whether Tata overpaid for the Corus Acquisition: Will the Deal expected the acquisition to enhance their acquisition. Improve Tata Motors Balance business. However eBay found itself facing Sheet? a phase of diminishing returns and had to Industry Steel Industry write down Skype by $900 million. The Reference No. MAA0176B Ford Motors Limited (Ford), one of the case explores the rationale behind eBay’s Year of Pub. 2008 world’s leading automobile manufacturers purchase of Skype. It also analyses why Teaching Note Available had put its luxury brands Jaguar and Land the synergies of the deal did not materialize Struc.Assign. Available Rover, on the block. Tata Group as expected. The case study highlights the company’s automotive major Tata Motors Keywords unrealised synergies of the acquisition. Limited (TML) was one of the top bidders. Tata Steel; Corus, Steel Manufacturing; In March 2008, TML won the bid for $2.3 Pedagogical Objectives Acquisition; Bid; Price; Expansion; Stake; billion. As per the deal, Ford committed to Europe; Takeover; Mergers, Acquisitions, provide Jaguar and Land Rover with • To comprehend the dynamics of online Alliances Case Study; Low-cost producer; vehicle components and access to business Tata Group; ; Synergy; engineering and technological support to • To grasp the concept of unrelated Combined Entity TML. Apart from funding aspects of the product diversification acquisition, analysts wondered how TML would manage these luxury brands as it was • To analyse how an integration strategy a well-known player in low to mid-end Microsoft’s Bid for Yahoo! Inc: is vital for online businesses. segments. The deal pushed TML in the Corporate Valuation Dilemma Industry Online Auctioneering segment where it had less experience. The Reference No. MAA0177C Yahoo! one of the leading internet portals, case helps in discussing financial Year of Pub. 2008 provided online services like news, implications of the deal on the balance Teaching Note Available information, and entertainment content. sheet of TML and opportunities and Struc.Assign. Available It also offered email, instant messaging and challenges for it, post acquisition. personalised web pages to its registered Keywords members. Yahoo was experiencing low Pedagogical Objectives growth in revenues for quite a number of eBay; Skype; PayPal; Mergers, • Offshore expansion through acquisition Acquisitions, Alliances Case Studies; years in a row. In February 2008, Microsoft, Unrelated product diversification; the world’s largest software company • Financial impact on balance sheet of Positioning; Internet based businesses; offered to buy Yahoo! Inc. for $44.6 billion, TML 84 www.ibscdc.org

• Post acquisition opportunities and Industry Aircraft Manufacturing Strategic Alliances in the

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S challenges for TML after JLR deal. Industry Automobile Industry (C): The Reference No. MAA0173A Industry Automobile Industry Fiat-GM Alliance Year of Pub. 2008 Reference No. MAA0174A Teaching Note Available Last in the 3 part case series on strategic Year of Pub. 2008 Struc.Assign. Available alliances in the automobile industry, this Teaching Note Available case study dwells on the Fiat’s and GM’s Struc.Assign. Available Keywords life after the alliance. While normalcy Keywords Aircraft Manufacturing Industry; Very returned with ease at GM, as the US Light Jets (VLJs); Mergers, Acquisitions, behemoth continued with its customary Tata Motors Limited; Jaguar; Land Rover; Alliances Case Study; Small Aircraft; Epic operations, Fiat exhibited vivacity by Ford Motors, Mergers and Acquisitions; Aircraft; Indian Aviation Market; entering into a number of collaborative Product-line Synergies; Competitive Kingfisher Airlines; Strategic Partnership; ventures - termed as ‘targeted alliances’ – Scenario; Luxury Car Segment; Indian Car Vijay Mallya; Demand for Small Aircraft; with automakers from various countries, Market; Financial Statement Analysis; Business Jets; Innovation in Aircraft especially from the developing countries. Ratio Analysis; Tata Group; India’s Affluent Technology; Low Cost Carriers (LCCs); Though the company tried to project the Middle Class; Auto Affordability in India; Competition alliances as ‘business-as-usual’, experts say Mergers, Acquisitions, Alliances Case Study; that it manifests its wretched condition Financial Performance of Tata Motors and need for support of other companies to survive. This case helps analyse how Delta-Northwest Merger: US such deals would help the company Indian Billionaire Vijay Mallya Airlines’ Consolidation Moves sustaining the fierce competition and and Epic Aircraft – A Strategic The airlines in the US were facing withstand its financial losses. Could the Partnership tremendous pressure on their profit margins company find an apt partner in any of its due to a rapid rise in fuel prices. Apart new allies? Can any alliance tick for long? Post September 11th 2001 terrorist attacks from the fuel prices, the airlines had to How far can Fiat stand on the support of in US, the demand of Very Light Jets (VLJs) combat changing industry structure because other companies? has been growing steadily, as business of rising dominance of low-cost airlines travellers did not prefer wasting time behind and entry of new foreign airlines into the Pedagogical Objective strict check in formalities. Worldwide, the US market. Delta Air Lines, the third largest • The case study is meant to help debate demand for small aircraft was also airline in the US in terms of revenue in increasing because of increase in corporate how far new alliances formed at the wake 2006, and Northwest Airlines, the 6th of the collapse of one alliance would profits, personal wealth, booming in stock largest airline, announced their intention markets and innovation in aircraft help the company's cause. The case also to merge in order to combat this situation. helps discuss hat necessary steps for a technology. US-based Epic Aircraft (Epic), However, the pilot union at Northwest a subsidiary of Aircraft Investor Resource company to ensure that its desperateness opposed the move. The case highlights the should not engulf business logic. LLC – manufactures small private and rationale of the merger in the given business jet aircraft. With India emerging situation, and the challenges that the Industry Automobile Industry as one of the potential markets in the combined entity would have to face in the Reference No. MAA0171 aviation business, on September 28th post merger integration in the wake of the Year of Pub. 2008 2007, Epic entered into strategic dynamic competitive scenario in the US Teaching Note Available partnership with Indian billionare, Vijay airline industry. Struc.Assign. Available Mallya (Mallya). Mallya acquired 50% stake in Epic Aircraft with a personal Keywords Pedagogical Objectives investment worth $200 million. Despite Alliances in global automobile industry; the aircraft manufacturing industry • To understand the dynamics of airline Fiat-GM Alliance; Cross-border indicating a boom for the manufacturing industry consolidation; Ford-Fiat alliance; Tata-Fiat of small jet aircraft, it still remained a Alliance; Fiat and targeted alliances; Fiat question if it will be able to fuel the demand • To understand the competitive in Europe; Negotiations in automotive in this segment. challenges for the combined entity in post-merger integration. industry; Mergers, Acquisitions, Alliances Case Study; Fiat in Italy Pedagogical Objectives Industry Airline Industry Reference No. MAA0172A • To understand the concept of strategic Year of Pub. 2008 partnerships as a key to business Teaching Note Available Strategic Alliances in the expansion Struc.Assign. Available Automobile Industry (B): The • To analyse the potential for small Fiat-GM Alliance Keywords aircraft manufacturing industry in This is the second in the 3 part case series developing markets like India Delta Aitlines, Northwest Airlines, Industry on strategic alliances in automobile Consolidation, Merger, Post-merger • To discuss the growth drivers and demand industry. This case exemplifies how Integration, Mergers, Acquisitions, factors of VLJs in India alliances can break up even when they are Alliances Case Study; US Airline Industry, achieving the desired objectives. The Fiat- • To understand the pros and cons of Richard Anderson, Douglas Steenland, Fuel GM alliance was focused on cost strategic alliances Price, Competitive Dynamics, Low-cost minimization, by reducing redundancies in Airlines • To deliberate the discussion on who gains primary cost components vis-à-vis in such strategic alliances and their purchases and manufacturing processes. feasibility in the long run. The alliance was doing well to this end and it resulted in more-than-perceived savings

85 www.ibscdc.org for both the companies. However, collaborations are by choice while others strategies. It sums up with leaving the negative developments in both the are by force like the Fiat-GM Alliance. This readers to discuss who has gained in the companies – independent to the alliance - case study, first in the series of 3 cases, ongoing battle. Has Google managed to find have unfortunately resulted in a situation, enables a discussion over the conditions a place in China or are there issues that where neither Fiat nor GM was willing to that led to the formation of the alliance. still need to be addressed? carry forward the alliance. This case study It helps analyse the nature of the alliance helps a debate if the companies were correct and debate whether it was rneeded, in the Pedagogical Objectives in terminating the properly functioning first place, and how far it could endure. akeoversakeovers akeoversakeovers akeovers alliance. Did the companies end up taking Does the alliance have the required steam The case is structured to let the students an emotional call over a business decision? to reward the partners? Was the analyse and understand: Was there no way that the companies partnership a result of mutual respect not • The search engine market scene in China could keep the alliance alive? If that was sacrificing one side for the other? and why the international companies are the case, was entering into the alliance finding it difficult to crack itself a mistake? If so, who was at fault – Pedagogical Objective GM or Fiat? • What strategies can companies follow • The case is meant to provoke analyses for growth Pedagogical Objective among students to understand the process of forming an alliance and the critical • Advantages and disadvantages of • The case study is meant to help analyse success factors for doing so. alliances as a growth strategy in the the developments in the partnering Chinese Internet search space. Industry Automobile Industry companies that could result in calling Industry Internet Search & Navigation off even the well-working alliances, Reference No. MAA0169 Year of Pub. 2008 Services even when such developments have Reference No. MAA0168 nothing to do with the functioning of Teaching Note Available Struc.Assign. Available Year of Pub. 2008 the alliance. Teaching Note Available Industry Automobile Industry Keywords Struc.Assign. Available Reference No. MAA0170 Alliances in global automobile industry; Keywords Year of Pub. 2008 Fiat-GM Alliance; Cross-border Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Teaching Note Available consolidation; Price wars; Mergers, Google; Baidu.com; China's Search Engine Struc.Assign. Available Acquisitions, Alliances Case Study; over Market; Business Model; Globalisation and Localisation; CAGE Frame Work; Alliance Keywords capacity; GM in global car industry; Emerging trends in automobile industry; Strategies; Acquisitions and Partnerships; Alliances in global automobile industry; Big Three of Detroit; US automobile Chinese Google; Government Business Fiat-GM Alliance; Cross-border industry; Strategic Inflection Points in Environment; Internet Censorship; consolidation; Agnelli Family; Mergers, automotive industry; Critical Success Mergers, Acquisitions, Alliances Case Study; Acquisitions, Alliances Case Study; Fiat Factors in automotive industry Online Advertising; International Business; restructuring; put option; GM in Europe; Legal Environment and Regulations Fiat in Europe; Big Three of Detroit; US automobile industry; Strategic Inflection Google vs Baidu.com (D): Points in automotive industry; Philip Morris USA and Philip Negotiations in automotive industry Google's Alliance Strategy in China Morris International: The Spin-off Decision Google after an unsuccessful stint in China Strategic Alliances in the has changed its approach by opening an The world's largest tobacco giant, Altria, Automobile Industry (A): The office there, hiring a local to head plans to spin off its international tobacco division, Philip Morris International Fiat-GM Alliance operations and offering a censored version of its site in January 2006. The company, (PMI) by March 2008. The company will ‘Nothing is permanent but for change.’ to increase market share, is taking the route thereby operate from its headquarters in This adage holds good even for the industry of alliances with the major telecom and Switzerland. The spin-off was planned – responsible for umpteen number of socio- Internet operators in China and is also because of tobacco litigations and anti- economic changes in the modern societies adding new services to its Chinese portfolio. tobacco groups in US, and dwindling – called industry of industries, the Meanwhile, Google's nemesis in China – smoking population there. While the automobile industry. But, the changing Baidu.com – is also not lying low and is company is optimistic about the growth times forced the global auto-industry to becoming stronger. The company on the opportunities after the spin-off, health master newer tips for its survival. During strength of its market share in China, ranks groups all over the world are concerned the 1980s and early 1990s, the auto- third worldwide. It too is forming alliances over the company's public health industry shrunk, from a horde of with multinationals struggling to find a commitments. independent companies, into a handful of foothold in China. The company has added global consortiums fiercely competing with a whole gamut of products to its offering. Pedagogical Objectives each other. Immediate need to cut costs This case, the fourth in the series, Google and intensifying price wars made vs Baidu.com, takes off from when Google The case study can help the students carmakers align with each other (instead starts its censored Chinese language site. understand: of competing) – for gaining access to The reasons for this are discussed briefly. • Spin-off, its significance, merits and technology and markets and to achieve Focus is on the strategies of the top two demerits economies of scale. In this milieu, the players, Baidu and Google, to win a larger importance has shifted from capital market share in China. The case • Why PMI is going for a spin-off? intensive and risky mergers and exhaustively details each player's strategy • The sustainability of an independent acquisitions, to strategic alliances like the and the reasons for it. It facilitates a PMI. one formed by Fiat and GM. Some of these discussion on the results of their respective

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Industry Tobacco data industry enjoys a global presence. opportunities as well as the challenges these

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Reference No. MAA0167 Catering mainly to the needs of mergers bring to the aviation industry is to III – Y G E T A R T S Year of Pub. 2008 institutional and retail brokers, the industry be seen. And the question that needs to be Teaching Note Available is dominated by a few major players – addressed is - Will the growth of the Indian Struc.Assign. Available Bloomberg L.P., Reuters Group Plc and Aviation Industry sustain? Thomson Corporation. The new entrants Keywords into the industry are stock exchanges – a Pedagogical Objectives Philip Morris; Marlboro; Mergers, major source of direct data. Since the Acquisitions, Alliances Case Study; tobacco 1980s, the market data industry has been • To understand the dynamics of Indian industry; Anti-smoking campaigns; experiencing a wave of mergers and aviation industry Corporate image; The Altria Group; acquisitions. The major breakthrough is the • To analyse the impact of rise of LCC's Tobacco lawsuits; Spin-off; Diversification proposed acquisition of Reuters Group Plc in aviation industry Strategies by Thomson Corporation worth $17.2 billion, on May 15th 2007. The deal is • To analyse the consolidation initiatives expected to displace the market leader, within the Indian aviation industry to Bloomberg L.P. The case, while enabling combat unhealthy competition Whole Foods Market's an understanding of the market data Acquisition of 'Wild Oats' – A industry, facilitates discussion on how the • To analyse the synergies that can be Strategy to Reduce acquisition would impact the business gained through consolidation Competition? dynamics of this industry. • To analyse the challenges that the industry may face in the future. Whole Foods Market (WFM) and Wild Pedagogical Objectives Oats were major players in the highly Industry Aviation competitive US organic food industry. In a • The business dynamics of the market Reference No. MAA0164C much-speculated move, WFM acquired data industry Year of Pub. 2008 Wild Oats in September 2007. Many voiced Teaching Note Available the opinion that the acquisition may result • The competitiveness and business Struc.Assign. Available in a monopolistic situation wherein WFM lifecycle of a market data provider. Keywords would control majority of the market. The Industry Market Data Industry acquisition was, however, seen by experts Reference No. MAA0165C Indian Aviation; Consolidation; Mergers & as an expansion strategy of WFM rather Year of Pub. 2008 Acquisitions; Competitive strategies; Low than one to reduce competition in the Teaching Note Available cost carriers; Civil Aviation; Airline organic foods industry. The case focuses Struc.Assign. Available companies; Indian airlines; Deregulation; on the competition prevalent in the Mergers, Acquisitions, Alliances Case Study; organic food industry, the trends and Keywords Jet Airways; AirDeccan; Kingfisher customer preferences of the same. The case Thomson Corporation; Reuters; Airlines; Air Sahara also looks at the synergy and prospects of Bloomberg; Mergers, Acquisitions, the acquisition. Alliances Case Study; Consolidation Phase; Industry Dynamics; Business Dynamics; Blockbuster Acquires Movielink: Pedagogical Objectives Business Strategy; Business Environment A Growth Strategy? • To comprehend the strategies of global players in the organic food industry Blockbuster Inc. is a leading global provider M&A's in Indian Aviation Industry of in-home movie and game • Acquisition as a strategy to reduce entertainment. The video rental market competition – Strategies for Healthy has had a transition from store-based video Competition rentals to online video rentals. To tackle • Prospects and challenges in Merger of the changes, Blockbuster implemented Equals (MoE). Since 2000 Indian aviation industry has been recording steady growth. The role of various initiatives to regenerate the Industry Organic Food the private airline sector has become very activities of the company and enhanced Reference No. MAA0166C significant with the increase in domestic the organisational structure so as to Year of Pub. 2008 air traffic and the increased purchasing improve profitability. In August 2004, Teaching Note Available power of the growing middle-class. The Blockbuster introduced an online DVD Struc.Assign. Available arrival of LCCs (Low Cost Carriers) rental service in the US to compete with the established market leader, Netflix. In a Keywords revolutionised Indian aviation industry and air travel hit an all-time-high. As more move to further provide customers with Organic food; Whole Foods Market; Wild and more players arrived at the aviation even more convenient access to home Oats; Acquisition Strategy; Future of scene the competition grew. Heavy price- entertainment, in August 2007, Blockbuster Organic food Industry; Market cuts and discount offers against a background acquired Movielink – one of the leading Segmentation; Pricing Strategy; Mergers, of rising operational costs proved movie downloading services. Blockbuster Acquisitions, Alliances Case Study; detrimental, with almost every airliner acknowledged that the acquisition was a Distribution strategy reporting huge losses. The industry, taking defensive move to keep up with Netflix in cue from the global developments, moved the competitive online video rental towards consolidation of stakes so as to market. The case allows for discussion on how this acquisition will give a competitive Thomson Corp., Acquires scale down excess competition. Many mergers and acquisitions took place which edge to Blockbuster. Reuters: Is it in the Consolidation may result in significant synergies in the Phase? industry. This strategy to tie-up with the Pedagogical Objectives competitor rather than bleed millions by Market data plays an indispensable role in • To understand the potential market for way of losses is seen as an exemplary move successful business activities and the market video rentals towards healthy competition. The 87 www.ibscdc.org • To analyse the market position of Digitalisation; Win-Win Strategy; Mergers,Acquisitions,Alliances Case Study; Blockbuster in the video rental market Mergers, Acquisitions, Alliances Case Study; Co-founders; Acquisitions; Mergers; Broadcasting; Social Networking innovation via absorption; HP Way; • To analyse the rationale behind the Tabblo; Voodoo; HP-Compaq merger; acquisition of Movielink by Blockbuster Compaq; Employee Satisfaction; • To analyse whether the acquisition would Hewlett-Packard: Culture Management By Objectives help Blockbuster to improve its revenues Change through Acquisitions akeoversakeovers akeoversakeovers akeovers in the market. Hewlett-Packard (HP) grew to be a leading Industry Movie Rental Service Microsoft in China: The technology solutions provider in the Partnering Success Reference No. MAA0163C 1990s. It attributed its growth to the unique Year of Pub. 2008 culture that the company had fostered – Chinese people are more price sensitive Teaching Note Available 'The HP Way'. Analysts and employees at and using illegal software on a large scale. Struc.Assign. Available HP strongly felt that the firm evolved to The country had huge plants that churned Keywords be one of the best performing companies out some 54 million illegal software in the Silicon Valley due to the management packages each year. This treacherous Blockbuster; Video Rental; Online DVD stance that the HP Way reflected. environment was an obstacle for Rental; Movie Download; Mergers, However, with changing rationale of its Microsoft's success. After stumbling for Acquisitions, Alliances Case Study; Growth operating market, marketers and managers years in its earlier approaches to the Strategy; Movielink; Video Rental Market; began to be skeptical about HP's efficiency Chinese market, Microsoft hired Tim Chen Acquisition ; Business Model to retain its market position. They as head of Microsoft's Chinese business for anticipated that the HP Way might be a the revival. Chen initiated several efforts misfit to tackle aspects like, increasing like building good relation with BBC – YouTube Pact: A Win-Win competition in Silicon Valley and the Government, partnership with local Strategy expected downturn in the software industry companies, slashing the price of its during the late 1990s. Managers at HP felt Operating System (OS), educating and New trends have appeared in the media that there is a need to alter the HP's training people. However industry analysts industry and it has been inundated with new engineer focused R&D strategy. This led doubted Microsoft's success in China. This Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T technologies catering mainly to the young to a different growth approach through case study explores strategies used to audience. The media and entertainment mergers and acquisitions. The approach overcome the challenges faced by an MNC industry is characterised by the growth of gradually led to a culture change within in China. variety of edufotainment (education, HP. Its inherent culture was slowly but information, entertainment) programmes. surely getting infused into the culture of Pedagogical Objectives This led to the synergy of video sharing the acquired companies. HP embraced the websites and international broadcasters. dominant features of the acquired • The importance of developing BBC, one of the leading, credible companies. But HP's existing employees economies to MNCs international broadcasters, struck a deal on and ex-employees resented the culture • The challenges in bureaucratic March 2nd 2007 with YouTube, the change. Employees did not want the HP developing economies Google-owned video sharing portal. Way to change as it was considered According to the deal, three channels were religious by them. However it remains to • Analyse strategies adopted by Microsoft created 'BBC Worldwide', 'BBC', and 'BBC be seen if HP will convince its employees in China. News' to showcase short clips of the BBC about the benefits of the new culture. On programmes content on the YouTube site. the other hand, time will tell, if the HP's Industry Software The deal was expected to benefit both BBC strategy to learn through acquisitions and Reference No. MAA0160B and YouTube. The case provides room for mergers will succeed in the long-term. Year of Pub. 2008 discussion on the impact of the deal and Teaching Note Available Struc.Assign. Available the opportunities and threats faced by Pedagogical Objectives video sharing websites. Keywords The case study provides insights to Pedagogical Objectives understand and analyse: Illegal software; Tim Chen; Linux; China; 54 million illegal software; Joint venture; • To understand the changing scenario in • The significance of organisational Training; open source code; price; Mergers, the media industry culture Acquisitions, Alliances Case Study; counter • Impact of organisational culture on the strategy; R&D; Vista; Lenovo; • To discuss the evolution in shareholders; turnaround edufotainment programmes performance of a company • To analyse the challenges and • Effect of mergers and acquisitions on the organisational culture of a firm opportunities of the BBC-YouTube deal China Eastern Airlines: • To discuss the scope and future of web • Whether mergers and acquisitions will Shanghai's Last Samurai? 2.0 companies. work for HP in long run. With a backdrop of regulatory economic Industry Software Industry Media conditions in China, the case study presents Reference No. MAA0161B Reference No. MAA0162C the restructuring initiatives of its civil Year of Pub. 2008 Year of Pub. 2008 aviation industry in different phases. Teaching Note Available Teaching Note Available Growing liberalisation and deregulation in Struc.Assign. Available Struc.Assign. Available the global airline industry, coupled with Keywords China's entry into WTO opened the gates Keywords to foreign competition. Entry of foreign BBC; YouTube; Entertainment and Media HP; Hewlett Packard; Organisation carriers intensified competition in the Industry; strategy; Convergence; Culture; Silicon Valley; industry and domestic carriers began to lose 88 www.ibscdc.org

their market share to foreign rivals. Boeing vs Northrop Grumman- come out of its losses and pursue global

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Infrastructural and industrial constraints Airbus Bid for USAF: Is it a Battle expansion. But, the relationship between added to the existing woes and restricted over Refuelling Tankers? the two went sour due to differences in the growth and profitability of the domestic managerial decision-making and carriers. One such carrier rattled by the In March 2007, Boeing and an alliance of organisational culture. Apart from highly protected and regulated conditions US’ Northrop Grumman and Europe’s difficulties in achieving synergies, Chrysler was China Eastern Airlines (CEA). Saddled Airbus bid to secure a $40 billion contract suffered further loss in 2000. Chrysler again with debt and restructuring problems, CEA to replace United States Air Forces’ (USAF) incurred losses in 2003 and in 2006. In the was bleeding cash and was looking for air refuelling tankers. The bid raised various wake of losing market share and stock private investment, which would not only concerns which included sentiments like prices, Daimler started looking for a provide financial assistance but also US taxpayer’s money flowing to Airbus, strategic partner or a probable buyer to improve operational efficiencies. Two arming it to compete more aggressively turnaround Chrysler units in America. important contenders competing for a with Boeing in the US and other significant stake in CEA were – Singapore commercial airplane markets. American Pedagogical Objectives Airlines (SIA) – Temasek and Air China- political supporters of Airbus, mostly from Cathay Pacific. While SIA would benefit the state of Alabama, where Airbus had • To analyse Merger dynamics from the booming aviation market in promised to build two aircraft • To analyse Factors influencing successful China, SIA's proven success may help manufacturing plants, said that the Airbus’ mergers CEA's revival. However, Air China tries to tanker aircrafts should be encouraged since trump the deal. Given this scenario, should an international competitor would bring • To discuss Global trends in automobile CEA invite foreign investment to improve more value to the bid. Anticipating that industry (US in particular). its efficiencies or should it restructure its Airbus would bring more jobs and expertise capital and operational base by merging to the state, the state extended incentive Industry Automobile Industry with the domestic Air China? support to Airbus Reference No. MAA0157C Year of Pub. 2007 Observers felt that the fight for the total Teaching Note Available Pedagogical Objectives bid between Boeing and Airbus is much Struc.Assign. Available more complex than supplying the refuelling • To discuss the developments in China's Keywords civil aviation industry and their tankers. implications on domestic and foreign Daimler Chrysler Merger; US Automobile carriers Pedagogical Objectives Industry; Transplant Operations; Toyota; Big 3; Mercedes Benz; Management • To assess the competitive dynamics of • To analyse Boeing as a national pride of Culture; Cerberus Capital; Mergers, China's civil aviation industry, amid US Acquisitions, Alliances Case Study; increasing liberalisation • To analyse the role of governments in Crossover vehicles; SUVs; Dieter Zetsche; • To evaluate CEA's business model and defense bidding Juergen Scrempp; Toyota Prius; John the possible factors that contributed to Snow; United Automobile Workers its failure to sustain growth • To analyse issues like national sentiments on foreign participation in defense deals. • To analyse the critical aspects – like cost controls, profitability and growth Industry Aviation Industry Renault-Nissan-Mahindra: The – of companies operating in a protected Reference No. MAA0158C Strategic Partnership for Growth and restricted economy Year of Pub. 2007 Teaching Note Available In the late 1990's, the global automakers • To assess CEA's growth options amid Struc.Assign. Available were motivated by the synergies acquired intense competition from domestic and through alliances to form partnerships foreign rivals.Players and structure of Keywords across the world. India became renowned the US subprime mortgage industry Refuelling Tanker Bid for US Air Force; for its low-cost, qualified, skilled workforce Boeing KC 767; Airbus KC 30 MRTT; and overall infrastructure facilities. Many • Benefits and issues surrounding the multinational auto giants like Fiat, Honda, subprime mortgage market. Northrop Grumman; EADS North America; Mergers, Acquisitions, Alliances Case Study; Suzuki, Renault, etc formed alliances with Industry Civil Aviation KC 135 Stratotanker; Druyun Scandal on Indian companies. On February 26th 2007, the first three-way alliance in the Reference No. MAA0159 Tanker Procurement; Boom and Year of Pub. 2007 Receptacle Fuelling; Hose and Drogue automobile industry was formed by France’s Teaching Note Available Fuelling; Launch Aid; USAF’s Request for Renault, Japan’s Nissan and Mahindra and Struc.Assign. Available Proposals; Load and Fuel carrying capability Mahindra of India. The purpose of the of Tankers; Incentive Funds; Lobbying in alliance was to facilitate the establishment Keywords US Defense Contracts; Airbus’ Plants in of a $902 million greenfield automobile plant in Chennai, India. The uniqueness of Air China; China Southern Airlines; Alabama this alliance is that it will set up the Dragonair; Cathay Pacific; Singapore manufacturing facility at a single location Airlines; Civil Aviation Administration of to manufacture utility vehicles and cars China (CAAC); Load Factor and Capacity Why Daimler Sold Chrysler? for all the three partners under their Utilisation; Code-sharing Agreements; respective brand names. It would be India's Mergers, Acquisitions, Alliances Case Study; Daimler Benz AG, one of the leading biggest vehicle manufacturing facility. Foreign Strategic Investment; Competition German automobile manufacturers and in Chinese Aviation Industry; Financial Chrysler Corporation of US joined hands This case facilitates discussion on the Crunch, Industrial Constraints; Aircraft in a transnational merger in 1998 for $36 opportunities and challenges that the unique Manufacturing; Airline Inefficiencies; billion. Daimler Benz, expected to gain three-way alliance will face in the emerging Beijing; Shanghai and Guangzhou access to North American markets through auto market of India. this deal while Chrysler hoped that it can

89 www.ibscdc.org Pedagogical Objectives Pedagogical Objectives P&G and Gillette’s Merger: Oral • To understand the dynamics of the • An outlook of global steel industry Care Products (Brands) Indian automobile industry Integration Challenges • Mergers and acquisitions in the global • To discuss the uniqueness of the Renault- steel industry Acquiring Gillette for $57 billion helped Nissan-Mahindra alliance P&G become world's biggest consumer • The factors behind consolidation. goods company. However, this milled P&G • To analyse the opportunities and into problems. Prominent among them was akeoversakeovers akeoversakeovers akeovers Industry Steel challenges of the three-way alliance in integrating the oral care divisions of both the emerging auto market of India. Reference No. MAA0155K Year of Pub. 2007 companies – particularly its Crest toothpaste brand with Gillette's Oral-B Industry Indian Automobile Industry Teaching Note Available Reference No. MAA0156C Struc.Assign. Available toothbrush brand. To complete the Year of Pub. 2007 transition successfully, and also resolve all Teaching Note Available Keywords brand integration problems, P&G Struc.Assign. Available appointed Gilette's oral care president Consolidation; Steel Industry Bruce Cleverly as integration manager. Keywords development; steel Production; Total This case study helps discuss integration Shareholder Return; Value Chain; Arcelor- problems and possible solutions; most Three-way Auto Alliance; International Mittal; Baosteel; Mergers, Acquisitions, helpful in a Mergers and Acquisitions course, Consortium; Renault-Nissan-M&M; Alliances Case Study; Fragmentation; to understand the post-merger integration Synergies of Auto Alliances; Indian Cyclicality; Investment Trap; Global Steel challenges. Automobile Industry; Global auto alliances; Industry; Regional Champions; Niche India's biggest vehicle manufacturing Specialists; Global Player; Steel Cycle centre; Mahindra Renault; Mergers, Pedagogical Objectives Acquisitions, Alliances Case Study; • The case is structured to help students Passenger cars/ Tractors; Strategic Will the Merger Between understand: Alliance/ Joint Venture; The Strategic Alliance: Opportunities; The Strategic MyTravel and Thomas Cook • Critical success factors in a successful Alliance; Global automakers; Greenfield Payoff? merger Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T automobile Plant; Auto Alliances in India On February 12th 2007, Thomas Cook • Integration challenges in mergers AG, a tourism subsidiary of German retailer KarstadtQuelle announced a merger with • Brand integration challenges Consolidation in Global Steel MyTravel Group plc. The merger was in • Successful merger story of P&G and Industry: What Lies Ahead response to a decline in the European Gillette. vacation travel business growth. The Since the mid-1990s, the global steel merger intended to arrest the decline and Industry FMCG industry had exhibited a brisk and impressive gain over the top company in the business, Reference No. MAA0153 pace of restructuring and consolidation. A Touristik Union International (TUI). But, Year of Pub. 2007 spate of mergers and acquisitions had TUI in reply announced a merger with First Teaching Note Available characterised the steel sector. It was Choice Holidays of UK, to defend its Struc.Assign. Available estimated that by the end of 2006, the top position as the leading European travel Keywords ten steel producers represented about 28% firm. of the global production. The share was Personal care products; Mergers and expected to rise up to 35% in 2010, Pedagogical Objectives acquisitions; Integration challenges; Brand implying only three-four players producing Integration; Branding; Branding challenges; more than 80 million tons, and five-six • The strategic rationale behind merger Procter and Gamble; Mergers, Acquisitions, players producing between 40-50 million and acquisitions Alliances Case Study; Gillette; Brand tons. The key drivers behind the • The competitive landscape of the building in consumer goods; Oral care consolidation of steel industry included European Tour Operating Industry market in the US; Starbucks in Ireland reduced overcapacity, cost control, better negotiation, and better management of the • Thomas Cook’s market capturing balance between demand and supply as the strategies larger the producers were, the more they DaimlerChrysler: Time for a Spin- were able to adapt production fluctuations • Whether the merger will pay-off for off? Thomas Cook. in demand. It was further believed that the The case study is about the US based global consolidation would continue to be Industry Tour Operating Industry operations of the auto company a factor shaping the steel industry resulting Reference No. MAA0154B DaimlerChrysler. in greater discipline in it. However, some Year of Pub. 2007 analysts were skeptical about the overall Teaching Note Available DaimlerChrysler group is one of the largest implications of the consolidation on the Struc.Assign. Available vehicle manufacturers in the world. It is a steel industry. Many concerns were raised leading supplier of passenger cars, sport- about the consolidation wave such as “Is Keywords utility vehicles (SUVs), minivans and pick- bigger necessarily better?” ups and commercial vehicles. The Thomas Cook AG; MyTravel; TUI; First company came into existence with the Choice; Mergers,Acquisitions,Alliances The case discusses the consolidation in the merger of Germany based Daimler-Benz Case Study; European Tour Operating global steel industry, major trends of and the US based Chrysler Corporation (in Industry; Merger; KarstadtQuelle; Tourism; consolidation and the key drivers behind 1998) was finding it difficult to integrate Travel Business; Regional Diversification; it. The case also highlights issues such as, German and American cultures and to Aircrafts; Germany; UK; Europe; Debt-for- is bigger necessarily better? What are the leverage each other’s strengths fully and equity likely future trends in the steel industry? go-to-market as a cohesive unit.

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In 2006, the Chrysler Group division of exploring the operation structure and The case would explore whether Univision

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S DaimlerChrysler was facing a difficult revenue streams of the music industry, took the decision of a buyout only to raise III – Y G E T A R T S market environment in the United States analyses the expected synergy between the the value of its share as analysts pointed with excess inventory, non-competitive two companies and its possible challenges. out, in particular and the increasing trend costs for employees and retirees, of merger and acquisition in the media continuing high fuel prices and a stronger Pedagogical Objectives industry in general. shift in demand toward smaller vehicles. It recorded a loss of $1.4 billion for the third • To understand the US music industry Pedagogical Objectives quarter of 2006. • To understand the business models of • The Spanish broadcasting industry in The case discusses reasons behind BMG Music Publishing Group and America DaimlerChrysler’s problems in the US and Vivendi, the world’s largest music the turnaround initiatives launched by its recording company • To understand the business model and parent company in 2006. operation of Univision, the largest • To analyse the factors propelling the Spanish-language media company in the acquisition of BMG by Vivendi Pedagogical Objectives United States • To discuss and debate the future prospects • To understand the business model and • The case focuses on the and challenges of the deal. DaimlerChrysler Company, a merged operation of the private equity entity of Germany based Daimler-Benz Industry Music companies, the Saban Capital, Madison and the US based Chrysler Corporation Reference No. MAA0151K Dearborn Partners, Providence Equity Year of Pub. 2006 Partners, Texas Pacific Group, Thomas • It evaluates the difficulties faced by the Teaching Note Not Available H. Lee Partners parent company in integrating the two Struc.Assign. Not Available companies • To debate and analyse the potential Keywords synergies and challenges arising out of • The case also evaluates the strategies the deal. and the new business models adopted by Mergers, Acquisitions, Alliances Case Study; company. Music industry; Big four music companies Industry Media (Warner Music Group (WMG), EMI, Sony Reference No. MAA0150K Industry Automobile Music, Bertelsmann Music Group (BMG); Year of Pub. 2006 Reference No. MAA0152P Warner/Chappel Music; Sony-BMG merger; Teaching Note Not Available Year of Pub. 2007 AOL-Time Warner; Vivendi Universal; Struc.Assign. Not Available Teaching Note Not Available Performing right societies; Music Keywords Struc.Assign. Not Available publishing; Record companies Keywords Mergers, Acquisitions, Alliances Case Study; Univision Communications Inc; Televisa; Mergers, Acquisitions, Alliances Case Study; Univision: Making the Right Madison Dearborn Partners; Providence Auto cos.Daimler and Chrysler's mergerin Equity Partners; Texas Pacific Group; 1998; synergies in the merger; problems Choice? Thomas H Lee Partners; Haim Saban; faced by the company after merger; US On September 27, 2006, the United Private equity; Bain Capital; KKR auti industry; US big three:GM Ford Daimler Nation’s largest Spanish-language (Kohlberg Kravis Roberts); Spanish Chrysler; japanese competiton in US; broadcaster, Univision Communications broadcasting in America; NBC; ABC; CBS; recession in US economy and auto Inc. announced a buyout offer by a Leveraged buyout industry; turnaround initiative by chairman consortium of investors including Madison Dieter Zetsche; reduction in inventorie; Dearborn Partners, Providence Equity chrysler group optimization programme; Partners, Texas Pacific Group, Thomas H. The Rise of Private Equity Firms: new environmentally friendly vehicle Lee Partners and media mogul Haim Saban. launches by the company The Case of Clear Channel The deal was priced at $36.25 a share in Communications Inc. cash or a total of approximately $13.7b including the assumption of $1.4b in debt. On November 16, 2006, Clear Channel Vivendi’s Acquisition of The deal was expected to close in the spring Communications Inc., the biggest US radio Bertelsmann’s BMG of 2007, subject to regulatory approvals station owner agreed to be acquired for and customary closing conditions. $18.7 billion by an investor group led by On September 7, 2006, Universal Music Televisa, the world’s largest Spanish- Thomas H. Lee Partners LP and Bain Group of Vivendi, a French conglomerate, language broadcaster had also shown its Capital Partners LLC. The media giant won the deal to acquire German media interest in Univision and had placed an planned to sell 448 of its radio stations, all company Bertelsmann AG’s BMG Music offer of $35.75 per share. The Televisa located outside the top 100 markets as well Publishing Group for $2.09 billion, beating group was backed by Venezuelan media as its 42-station television group, located the other majors such as Warner Music investor Gustavos Cisneros, Bain Capital, in smaller markets. Collectively, the Group Corporation, Viacom Inc. and EMI Blackstone Group, Carlyle Group, Cascade properties made up less than 10% of the Group PLC. Vivendi SA’s Universal Music Investment and Kohlberg Kravis Roberts. company’s revenues in 2005. Clear Group was already the biggest recorded Analysts were expecting Televisa as the Channel owned and operated 1150 radio music company and the fourth largest winner because Televisa was providing stations and also retained a majority stake music publishing company in the world. Univision’s top programming through a in Clear Channel Outdoor, the worldwide The acquisition is expected to make the licensing agreement, which generated outdoor advertising specialists. Under the Universal Music group the largest music about 40% of Univision’s revenue. The terms of the deal Thomas H. Lee Partners publisher by catalogue size. Analysts have agreement was expected to go through LP and Bain Capital Partners LLC would predicted that the share of Universal Music 2017. Moreover, Televisa had a 12.5% assume $8 billion of Clear Channel Group in the music publishing market stake in Univision. But the deal turned Communication’s debt, taking the overall would rise from 12% to 20% with the BMG towards the consortium led by private takeover price to $26.7 billion. The Publishing purchase. The case, while equity firms and media mogul Haim Saban. investment group had competition from 91 www.ibscdc.org another consortium made up of worth more than $40 a share. Analysts consolidation where CME would buy Providence Equity Partners, Blackstone had perceived some big potential CBOT for about $8b in stocks and cash. Group and Kohlberg Kravis Roberts (KKR). regulatory hurdles for the bidders in dealing The combined company would be called According to some analysts, the with the Federal Communications CME Group Inc. The combined company tremendous long-term growth Commissions foreign ownership and was valued at $25b and was expected to opportunities of Clear Channel overlapping asset restrictions. Analysts have average daily volume of 9m contracts, Communications in both the radio and were divided in their opinion whether resulting in the world’s largest derivatives outdoor business would create value for the Univision would accept the offer or try to market by volume. According to analysts, akeoversakeovers akeoversakeovers akeovers private equity groups. The case will present push the bids higher or decide against selling the deal would result into greater scale, the buyout history and the synergies arising the company entirely. further diversification of the product set from the acquisition for both the groups. and potentially conservative cost saving The case further deals with the emergence The case deals with the strategic reasons assumptions. However, there are certain of private equity firms as the ‘maverick why different companies prefer to acquire challenges for both the exchanges including investors’ and the recent flush of mergers Univision, the deal offer by various the large volume or ‘laws of large numbers’ and acquisitions by them. companies and bidding and counter bidding and a CME shift to focus on execution process to acquire Univision. This case also rather than growth. This case explores how highlights the various synergies and Pedagogical Objectives the move taken by the two future problems associated with the Univision exchanges is going to help them to grab • To understand the US radio industry acquisition. the opportunities in global market, strategic benefits they are likely to get out • To understand the business model of Pedagogical Objectives Clear Channel Communications Inc., the of it and the problems perceived by the largest radio station company in United • The Spanish broadcasting industry in analysts. States America Pedagogical Objectives • To understand the rise and dominance • To understand the business model and of the private equity companies globally operation of Univision, the largest • To understand the world derivatives Spanish-language media company in the market • To discuss and analyse the potential United States synergies and challenges arising out of • To understand the business models of Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T the deal. • To understand the business model and the two largest American future operation of the private equity exchanges, Chicago Mercantile Industry Diversified Investment companies, the Saban Capital, Madison Exchange (CME) and Chicago Board of Reference No. MAA0149K Dearborn Partners, Providence Equity Trade (CBOT) Year of Pub. 2006 Partners, Texas Pacific Group, Thomas • To analyse the prospective synergies Teaching Note Not Available H. Lee Partners Struc.Assign. Not Available from the merger of the CME and CBOT • To understand the business model and Keywords • To debate the future challenges that the operation of the other bidding group, two exchanges would face as a result of Mergers, Acquisitions, Alliances Case Study; the Televisa the merger. Clear Channel Communications Inc; • To discuss which one among the two Industry Derivatives Private equity; Bain Capital Partners LP; biding groups would fit well with the Reference No. MAA0147K Thomas H Lee Partners LP; HCA Spanish media company Univision (Hospital Corporation of America); Year of Pub. 2006 Sungard Data System; US radio industry; • To analyse the future prospects and perils Teaching Note Not Available Podcast; Digital broadcasting; High arising out of the deal. Struc.Assign. Not Available definition; Snapple Beverage Group; Keywords Mezzanine capital; Leveraged buyout; Industry Media Telecommunications Act 1996; CBS Reference No. MAA0148K Mergers, Acquisitions, Alliances Case Study; Outdoor Year of Pub. 2006 Chicago Mercantile Exchange (CME); Teaching Note Not Available Chicago Board of Trade (CBOT); Struc.Assign. Not Available Derivatives; Over-the-counter market; The Battle for Univision Keywords Open outcry; Boot strap; Futures; Options; New York Stock Exchange; Euronet NV; Televisa, the Spanish-language media giant Mergers, Acquisitions, Alliances Case Study; Demutualisation; CME Globex; Life and Mexico’s biggest media company had Televisa; Univision; Bain Capital; Connect; Application programming made a bid for $13 billion or $36.25 a Kohlberg Kravis Roberts & Co; Cascade interface (API); NASDAQ (National share for Univision Communication, the investments; Carlyle Group; Blackstone Association of Securities Dealers third largest Spanish language broadcaster. Group; TV Azteca; American Broadcasting Automated Quotation system) The Televisa group was backed by Company (ABC); CATV (Community Venezuelan media investor Gustavos Antenna Television); Time Warner; News Cisneros, Bain Capital, Blackstone Group, Corporation; Hispanic market; Madison Dearborn Partners Inc; Saban Capital KKR’s Bid for Vivendi: The Carlyle Group, Cascade Investment and Challenges Ahead Kohlberg Kravis Roberts. The other bidding group consisting Madison Dearborn On November 5, 2006, Kohlberg Kravis Partners Inc., Providence equity Partners, MERC and CBOT Merger: Roberts (KKR), the New York based private Texas Pacific group, Thomas H. Lee Building One Roof Trading equity firm offered $50.8 billion to take Partners and billionaire Haim Saban’s Saban over the French music and Capital Group had placed their bid of $12.3 On October 17, 2006, the two largest telecommunications group Vivendi in a deal billion or $35.5 a share. The deals were American futures exchanges, Chicago that would have been the world’s biggest facing hurdles for price and governance Mercantile Exchange (CME) and Chicago buyout. The deal demonstrates the growing issues as Univision was expecting bids Board of Trade (CBOT) had announced a prowess of private equity on the global 92 www.ibscdc.org

stage. KKR had been in discussions with JP Pacific Group (TPG). Combined with NYSE–Euronext Merger: A Cross-

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S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Morgan Chase and Citigroup about HET’s long-term debt of nearly $10.7 border Merger of Equals financing the transaction. Back in October billion as of June 30, 2006, the buyout 2006, Vivendi paid $1.6 billion for proposal carried a value of $25.75 billion In June 2006, NYSE decided to merge with Bertelsmann’s music publishing business, making it the fifth largest leveraged buyout Euronext NV, a cross-border stock making it the industry’s largest recording ever. The proposed deal signaled new exchange organisation in Europe and create company and music publisher. KKR interest in the gambling sector for private the largest exchange in the world with a primarily focuses on late stage leveraged equity groups. Until the 1990s, casino market capitalisation of $21 billion and buyouts. According to analysts, Vivendi is companies were not able to attract private an average daily turnover of $100 billion. trying to reap the benefits of cross- equity or other firms for a buyout because The transatlantic merger was set to create promoting its content among various of regulatory requirements. But from the the world’s most liquid and global financial platforms. Analysts were divided in their acquisition of Harvey’s Casino Resorts by marketplace and intended to offer opinion regarding the deal. French Colony Capital in 1998, private equity unmatched benefits for investors and regulations prevent foreign concerns from players had shown their increasing interest issuers across the globe. The strategic owning majority stakes in broadcasters. in the casino industry. partnership also aimed to bring together Moreover some analysts raised doubts over two industry leaders on a common the justification of the marriage between The case will cover whether the casino platform and establish market leadership music and private equity. This case explores giant would prove to be an intelligent position in diverse businesses like cash the prospective synergies of this deal in choice for the private equity firms. equities, derivatives and futures, listings, particular and the scale of power, buyout Subsequently, the case would cover some bond and market data. firms now hold in the global merger and more issues such as (a) Prospective The case, while providing a broad overview acquisition market in general synergies and risks for both the acquirer and the target company, and (b) Increasing of the two stock exchange companies, appeal of gaming companies. offers scope to discuss the synergies of the Pedagogical Objectives merger and the probable pay offs. A casino was a facility that accommodates • To understand the US music industry certain types of gambling activities. Pedagogical Objectives • To understand the increasing dominance Casinos were often placed near or combined of the private equity firms as global with hotels, restaurants, retail shopping, • To analyse the rationale behind the acquirers cruise ships and other vacation attractions. merger of two leading stock exchanges • To understand the business model of the Colony Capital was a private international • To discuss the expected synergies of the private equity firms real estate investment firm in Los Angeles, merger California. • To understand the business model of • To debate whether the deal would be mutually beneficial for both the parties. Vivendi, the largest recording company Pedagogical Objectives and music publisher in the world Industry Stock Exchange • To understand the US casino industry • To debate the potential synergies and Reference No. MAA0144K challenges of the acquisition of Vivendi • To discuss why the private equity firms Year of Pub. 2006 by the private equity firm Kohlberg are increasingly making the gaming Teaching Note Not Available Kravis Roberts & Co (KKR). companies their takeover target Struc.Assign. Not Available

Industry Diversified Investment • To understand the business model of the Keywords Reference No. MAA0146K private equity firms Mergers, Acquisitions, Alliances Case Study; Year of Pub. 2006 • To understand the business model of NYSE (New York Stock Exchange); Teaching Note Not Available Harrah’s Entertainment Inc. (HET), the Euronext; Cross-border merger; Regulation Struc.Assign. Not Available world’s biggest casino operator national market system; The Arcaedge; Keywords John Thain; Revenue synergies; Sarbanes- • To analyse the prospects and perils of Oxley Act; Electronic communication Mergers, Acquisitions, Alliances Case Study; the acquisition of the HET by the network; Stock exchange; Horizontal Kohlberg Kravis Roberts & Company private equity firms. market model; Derivatives trading; Federal (KKR); Vivendi; HCA (Hospital cash market system; NASDAQ (National Corporation of America); Private equity; Industry Gaming Reference No. MAA0145K Association of Securities Dealers Music industry; MER Capital; BMG Automated Quotation) (Bertelsmann Music Group); Performing Year of Pub. 2006 right societies; Mechanical right societies; Teaching Note Not Available Recording industry; Warburg Pincus; Struc.Assign. Not Available Google’s Bid for YouTube: The Leveraged buyouts; RJRN Nabisco; Junk Keywords bonds; Bear Stearns Next Step for Internet Mergers, Acquisitions, Alliances Case Study; Revolution? Gaming companies; HET (Harrah's Entertainment Incorporated); Texas In late 2006, Google, a leading online Casinos Blue Ocean for Private Pacific Group (TPG); UBS Securities; search company, decided to acquire Equity-after Change Caesars Palace; Apollo Management; YouTube, a video-sharing website portal, Casino industry; Private equity; Gross for $1.65 billion and establish itself as a On October 3, 2006, Las Vegas based annual revenue (GAR); Las Vegas Strip; leading player in the online video market. Harrah’s Entertainment Inc. (HET), the Leverage buyout; Hurricane Katrina; The acquisition aimed to combine Google’s world’s biggest casino operator, announced Hurricane Rita; Warburg Pincus; Burger technical know-how with one of the fastest it was considering a $15.05 billion or $81 King growing online video communities and per share buyout offer from private equity create new models for advertising in the firms Apollo Management and Texas Internet. With online advertising market

93 www.ibscdc.org forecasted to grow to $26.4 billion by 2010 Year of Pub. 2007 Novartis: Consolidation in from $17.4 billion by the first half of 2006, Teaching Note Not Available Generics the deal marked a strategic move by the Struc.Assign. Not Available companies to create targeted marketing The case discusses the mega acquisition of vehicles for advertisers. Keywords two big generic pharmaceutical companies, Hexal AG of Germany and Eon Labs of the The case offers scope to discuss the Mergers, Acquisitions, Alliances Case Study; Stock exchange consolidation; Electronic United States (US), by the world’s second emerging avenues in the Internet in the largest generic pharmaceutical company – akeoversakeovers akeoversakeovers akeovers communication network; Algorithmic backdrop of the deal and the probable pay- Swiss based Novartis (Sandoz, the generic offs. trading; Order routing; Demutualisation; Share trading; Integrated financial market; business division of Novartis). The Liquidity; Sarbanes-Oxley Act; Clearing acquisitions created the largest generic Pedagogical Objectives system; Settlement system; NYSE (New pharmaceutical company in the world, in terms of revenue. The case provides a • To discuss about the online advertising York Stock Exchange); Euronext; Economies of scale detailed note on the global generic • To analyse the deal with its implication pharmaceutical industry, with a focus on its recent trends. After giving a brief note • To debate on the acquisition and the on Sandoz and the two acquired companies, probable pay-offs. Alcatel’s Acquisition of Nortel: the case discusses the rationale behind the Industry Internet The Strategic Fit acquisition and the benefits, which Novartis expected from it. It also explains the Reference No. MAA0143K In order to strengthen its presence in the acquisition deal in detail and finally, Year of Pub. 2007 global market and expand its leadership in discusses the possible challenges, which Teaching Note Not Available broadband access, Alcatel, one of the leading Novartis could face in the near future. Struc.Assign. Not Available global suppliers of high-tech equipment for Keywords telecommunications networks, decided to acquire the UMTS radio access business of Pedagogical Objectives Mergers, Acquisitions, Alliances Case Study; Nortel Networks Corporation (Nortel) for • To discuss the global Pharma industry Google; YouTube; Acquisition; Social $320 million in September 2006. With the networking website; On-line video; sale of the UMTS business, Nortel also • To understand the reasons for growth of Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Adwords; Adsense; Participatory video aimed to simplify its business and focus on Generics advertisements (PVA); Brand channels; On- other key businesses where it anticipated • To discuss about the acquisitions and the line advertising; Millennial generation; higher return on investments. expected synergies Copyrighted content; MySpace; Cost-per- The case offers scope to discuss the click (CPC) • To debate on the challenges that synergies of the merger and the probable Novartis could face in the generic pay offs. business.

Global Consolidation of Stock Pedagogical Objectives Industry Pharmaceutical Exchanges: The Potential Reference No. MAA0140K Synergies • To understand the telecommunication Year of Pub. 2005 market Teaching Note Not Available During the late 1990s, demutualisation Struc.Assign. Not Available took place in most of the global stock • To analyse the rising importance of exchanges and the erstwhile mutual Broadband access Keywords ownership structure was changed to • To discuss the core competence of Mergers, Acquisitions, Alliances Case Study; publicly-owned shareholding ownership. At Alcatel and Nortel Novartis; Sandoz; Hexal AG; Eon Labs; the same time, with rapid advancements Pharmaceutical (pharma) industry; Generic in technology, automated trading gradually • To analyse the probable synergies drugs; Patented drugs; Acquisition; took the centre stage and various mergers between Alcatel and Nortel. Intellectual property rights; Blockbuster and acquisitions took place to improve Industry Telecommunication Equipment drug; Big pharma; Cost competitiveness; business efficiency for efficient clearing Reference No. MAA0141K Extended product portfolio; Vertical and trading settlements and reduce Year of Pub. 2007 integration; Daniel Vasella operating costs. The consolidation in stock Teaching Note Not Available exchanges created an integrated financial Struc.Assign. Not Available market, with worldwide operating facilities and removed the barriers of time and space. Keywords Genzyme’s Acquisition Proposal for AnorMED, Inc. The case, while providing an overview of Mergers, Acquisitions, Alliances Case Study; the global consolidation in stock exchanges, Alcatel; Nortel; Acquisition; UMTS US based biotechnology company Genzyme discusses the potential benefits and barriers (Universal Mobile Telecommunications made an offer to acquire AnorMED, a to the consolidation. System); GSM (Global System for Mobile Canadian chemistry-based research Communications); CDMA (Code Division organization with an offer price of $7.75 Pedagogical Objectives Multiple Access); 3G (Third Generation); per AnorMED’s share, a 14% premium VoIP (Voice over Internet Protocol); over the closing price. The acquisition of • To understand the business dynamics of Broadband; UTRAN (UMTS Terrestrial AnorMED would provide Genzyme the stock exchange Radio Access Network); access to ‘Mozobil’, a rapid stem cell • To discuss the importance of Telecommunications network; Win-win mobilizer. Moreover, the former also had consolidation of stock exchanges. deal; Big initiative; Six Sigma a strong pipeline of drugs in anti-retroviral and oncology therapeutic segments. The Industry Stock Exchange phase III clinical study of Mozobil was Reference No. MAA0142K successful and the product was expected to

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be a blockbuster in the area of stem cell Bank of America's eagerness to enter the Amgen's Acquisition of Abgenix:

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S transplant. Genzyme wanted to mainland market by partnering with CCB. The Expected Synergies commercialize Mozobil, based on its global The Asia unit of the US banking giant held infrastructure and sales network. In that 8.5% stake in CCB, and the foreign Amgen, the world's largest biotechnology respect, the company started discussions ownership rules would allow it to increase company, completed the acquisition of with AnorMED regarding Mozobil in its interest up to a ceiling of 19.9%. The Abgenix, Inc., for $22.50 in cash per share October 2005. Genzyme could have got deal had enormous merits for BOA (Asia), of common stock, a 54 percent premium access to Mozobil either through in considering the fact that the best bank of over Abgenix's last closing price. The licensing, or by acquiring AnorMED. But, China had been enhancing its operating acquisition of Abgenix provided Amgen AnorMED did not agree to the in licensing efficiencies in recent years, with healthy with full ownership of one of its most proposal as the company was looking for development in its international presence important pipeline products, licensing opportunities only in Japan and and rapid growth in its foreign exchange “Panitumumab”. Panitumumab was their decided to launch Mozobil in the North businesses. On the other hand, Hong Kong most advanced cancer therapeutic and was America and Europe independently by was an important platform to CCB for its a natural extension from Amgen's existing developing its own marketing and overseas developmental strategies, with an oncology supportive care franchise. The distribution network. Genzyme was left aim to drive its overseas operations. The acquisition also eliminated a royalty that with the option to acquire AnorMED, to acquisition would enable CCB to double its Amgen would have paid to Abgenix on strengthen its existing transplant product Hong Kong market share to 1.4%, boosting future sales of Denosumab. Some analysts portfolio. This case deals with the proposed its ranking among the city's 24 licensed believed it to be a right move, as of the end acquisition of AnorMED by Genzyme. It banks from 18th to ninth, with total assets of September, Amgen had over $5.5 billion provides a brief overview about the two of HK$96 billion. Going forward, CCB in cash and was generating over $1 billion companies and highlights the reasons for would be looking to acquire other overseas in free cash flow per quarter, but others acquisition. This is followed by a brief investment banking units, with targets were skeptical about the high expected sales overview of the transplant market and the including Hong Kong-based Gold bond figure of panitumumab. This case deals with importance of mozobil for Genzyme. The Capital and Taiwan's Core Pacific the acquisition of Abgenix by Amgen. It case also deals with the expected synergies International. However, CCB was not away provides a brief overview about the two and possible challenges that will result in from controversies and corruption charges. companies and highlights Amgen’s focus the process of the acquisition. Zhang Enzhao, the Ex-Chairman of the on oncology segment. This is followed by bank, resigned on March 16, 2005, citing a brief overview of biotechnology sector Pedagogical Objectives "personal reasons". However, a lawsuit in and the global cancer drug market. The the US alleged that he received a bribe of case also deals with the expected synergies • To have a brief idea about the stem cell $1 million from Alltel Information and possible challenges that will result from transplant Services, for securing a contract. The NPL the acquisition. • To understand how can stem cell ratio still stood high at 4%, compared to transplant change our way of living the international average range of 0.5 to Pedagogical Objectives 2.5%. Moreover, the reduction of NPL • To analyze the reasons, why Genzyme was made possible due to huge capital • To understand, why pharmaceutical is concentrating on the transplant injection by the PRC government in the companies become aggressive over a product segment form of Hujin Investments, which may not particular drug happen in future. In such a scenario, the • To understand the different modes of • To conceptualize ‘Hostile Bid’ and valuation of BOA (Asia) seemed to be at a ‘Poison Pill’ strategies commercializing a new drug developed lower than expected level. by a pharmaceutical company Industry Biotechnology Reference No. MAA0139K Pedagogical Objectives • Evaluation of the possible future strategic Year of Pub. 2006 options for Merck • To understand the role of mergers and Teaching Note Not Available • To understand the synergies of a merger Struc.Assign. Not Available acquisitions in the growth strategy of banking companies of two pharmaceutical companies. Keywords • To have a brief understanding of the Industry Biotechnology Acquisition; Mergers, Acquisitions, Chinese banking Industry Reference No. MAA0137K Alliances Case Study; Synergy; Genzyme; Year of Pub. 2006 AnorMED; Biotechnology; Stem cell; • To study the impact of banking reform Teaching Note Not Available Struc.Assign. Not Available Transplant; Mozobil; Clinical trial; • To understand the potential synergies Oncology; Anti-retroviral; Leukaemia; of a merger of two complementary Keywords Chemotherapy; Orphan drug; Bought out banks. deal Acquisition; Synergy; Amgen; Abgenix; Industry Banking Biotechnology; Oncology; Cancer; Reference No. MAA0138K Panitumumab; Metabolic disorder; Year of Pub. 2006 Inflammation; Licensing; Clinical trial; CCB’s Acquisition of BOA (Asia): Teaching Note Not Available Pipeline; Xenomouse; Venture capital Merger of Two Complementary Struc.Assign. Not Available Banks Keywords On October 20, 2006, China Construction Google and Ebay’s AD Deal: Will Bank’s shareholders approved the Bank’s Mergers, Acquisitions, Alliances Case Study; It Work? proposal to acquire 100% of Bank of Bank; China; Reform; Acquisition; Non America (Asia) Ltd for $1.24 billion. CCB's performing loan (NPL); Loan; Deposit; The online auction and shopping purchase price (1.32 prices to book) was Basel; Capital adequacy; Gross domestic organization eBay signed up Google to lower than the market average of two times product (GDP); Hong Kong; Book value; provide Web search advertising outside US. price-to-book ratio. The low price showed Huijin; Net interest; Valuation The two companies would start “click to call” advertising across Google and eBay. 95 www.ibscdc.org The new feature would enable the online has its own challenges. Considering the situation, it not only provides a brief outline buyers to click on an advertisement and steep decline in total revenue and net of the global and the US generic injectable talk directly to an advertiser or eBay seller margin of Serono between 2001 and 2005, drug market, but also the profile of the using Google’s Talk software or eBay’s critics were skeptical about the success of two companies. Skype.This deal may generate revenue for such an acquisition. Therefore, the case eBay through its Skype. Google could also also raises a debate between the possible Pedagogical Objectives be benefited by expanding more into local synergies and challenges of the acquisition. advertising. The case discusses about Google • How product development life cycle of akeoversakeovers akeoversakeovers akeovers and eBay and its alliance with a brief Pedagogical Objectives a pharmaceutical company differs from overview of online advertising. that of a manufacturing industry • To understand the Drug development life cycle of a pharmaceutical company • To analyse the prospects of a particular Pedagogical Objectives drug in terms of efficiency and • To discuss the impacts of ad deal between • To have a brief idea of the recent trends penetration in Biotechnology industry Google and eBay • To analyse the product portfolio and • To discuss how Google worked as a search • To understand the problems associated pipeline drugs of a pharmaceutical engine with the commercialisation of a drug company • To understand the company background • To understand the synergies of a merger • To understand the synergies of a merger of eBay of two pharmaceutical companies. of two pharmaceutical companies. • To get an overview of online advertising, Industry Pharmaceutical Industry Pharmaceutical globally Reference No. MAA0135K Reference No. MAA0134K Year of Pub. 2007 Year of Pub. 2007 • To see whether this alliance leads to a Teaching Note Not Available Teaching Note Not Available win-win situation for both the companies Struc.Assign. Not Available Struc.Assign. Not Available or not. Keywords Keywords Industry Search Network Mergers, Acquisitions, Alliances Case Study; Mergers, Acquisitions, Alliances Case Study; Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Reference No. MAA0136K Year of Pub. 2006 Merck KgaA; Serono SA; Biotechnology; Hospira; Mayne Pharma; Acquisition; Teaching Note Not Available Inorganic growth; Pharmaceutical Pharmaceuticals; Generic; Generic Struc.Assign. Not Available company; Multiple sclerosis; Product injectable drug; Drug delivery system; portfolio; Drug development; Acquisition; Abbott Laboratories; Global generic Keywords Moody's; Biological medicines; Generics; market; Product synergy; Cost efficiency; Patented drugs; Recombinant generic Integration of work culture; Homogenous Mergers, Acquisitions, Alliances Case Study; engineering work force Google; eBay; Advertising; Search engine; Yahoo; On-line auctioneer; Internet advertisement; Microsoft; Google Talk; PayPal; Adwords; Business strategy; Hospira’s Acquisition of Mayne Wal-Mart’s Bid for Trust-Mart: Alliance; Dell; Skype Pharma: Creation of World’s Consolidating Presence in China Leading Generic Injectable Wal-Mart Stores Inc. was bidding $1 billion Pharmaceutical Company for a chain of 100 hypermarkets owned by Merck's Acquisition of Serono: In September 2006, the Illinois (US) based Trust-mart, a Taiwanese retailer operating Creation of the Largest specialty pharmaceuticals and medication in China. The deal had the potential to Biotechnology Company of delivery company, Hospira Inc. announced make Wal-Mart ahead of its competitors Europe its decision to acquire the Austalian in China to become the country’s biggest speciality injectable pharmaceutical drug food and department store network. Wal- Germany based pharmaceutical company company, Mayne Pharma for US$2 billion Mart cited the reason of familiarity of Merck KgaA was set to acquire the (AU$2.6 billion). While Hospira was the Chinese people with the transaction of Switzerland based biotechnology company, market leader in the US generic injectable these hypermarkets, to support the Serono SA (Serono) in September 23, 2006 drug market, Mayne held a major share of acquisition. With China’s economy growing at US$13.3 billion (10.4 billion euros). The the same market in Australia and Europe. more than 10% a year, the retail market acquisition proved to be of strategic The deal would provide important strategic was booming in 2006. Retail sales surged advantage to Merck. Until the recent past, advantages to Hospira. The acquisition, 12.9 percent in 2005 over the year before, Merck was only into the branded and while on one hand, was expected to increase to 6.7 trillion Yuan ($847 billion). By generic pharmaceutical business with very Hospira’s international sales by two fold, 2020, industry forecasts said the market little focus on biotechnology. The on the other hand, it would enable the could expand to about $2.4 trillion. In this acquisition of the world’s third largest combined company to reduce the cost by juncture analysts thought that such a deal biotechnology company provided it with about US$50 million, effective from 2007. would certainly help Wal-Mart to an avenue to enter into the segment of consolidate in China. It also helped the biological medicines. With a strong The case deals with the possible product company to being ahead of other presence in the US, Serono also provided and financial synergies of the acquisition companies like, Carrefour SA of France, Merck an opportunity to fortify its market details, Hospira’s rationales and the which earlier had more number of position in the country. corresponding strategies of capturing the hypermarkets in China. lucrative global generic injectable drug The case discusses Merck’s inorganic market. However, the success of the deal This case will focus on why world’s largest growth strategies by which it tries to enter depended on an important factor, such as retailer is so keen to make the deal into a the new business segment of biological the integration of the varied work cultures reality and how Wal-Mart could get strategic medicines and strengthens its position in of the US and Australia. In order to have a advantages from this deal, what are the the US market. However, the acquisition better understanding of the business problems associated with the deal and how 96 www.ibscdc.org

Wal-Mart plans to over come it. • To discuss the probable synergies of the Keywords

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S acquisition. III – Y G E T A R T S Mergers, Acquisitions, Alliances Case Study; Pedagogical Objectives Industry Aviation Nike; Apple; Nike and iPod; Sport kit; • To discuss about the Chinese retail Reference No. MAA0132K Footwear; Steve Jobs; Mark Parker; market Year of Pub. 2007 Receiver; Nike+Experience; Nike Plus; Teaching Note Not Available iPod; iTune; Basic workout; iPod Nano; • To discuss about Wal-Mart’s bid for Trust Struc.Assign. Not Available Tour de France Mart Keywords • To analyse the probable synergies between Wal-Mart and Trust Mart. Mergers,Acquisitions,Alliances Case GM Ford Alliance: An Innovative Study;US Airways; Delta Airlines; America Trend in Global Auto Industry Industry Retail West; Merger; Acquisition; Synergies; Reference No. MAA0133K Citibank; Consolidation; Airline market; Analysts viewed that the probable GM-Ford Year of Pub. 2007 Strategic advantage; Southwest; JetBlue; Alliance would be the biggest news to rock Teaching Note Not Available Anti-trust; Fare war; LCC (Low Cost the global automobile industry since the Struc.Assign. Not Available Carriers) invention of the automobile. GM and Ford Keywords tie-up was a distinct possibility that reflected in talks occurred between GM Mergers, Acquisitions, Alliances Case Study; “Nike and Apple: A Successful CFO Fritz Henderson and Ford CFO Don Wal-Mart; Trust-Mart; China; Retail Leclair. As the report came as GM and Ford Partnership?” chain; Hypermarkets; Acquisition; had been slashing their work forces and Carrefour; Chinese retail market; Sam's On May23, 2006 Nike and Apple closing plants in efforts to reverse Club; Strategic rationale; Reputation crisis; announced about their new joint venture multibillion-dollar losses. Their sales also Food and department store; Deal; which could bring the worlds of sports and had been affected by competition from Consolidation; State Economic and Trade music together like never before. They more fuel-efficient models from Asian Commission (SETC) were about to launch the innovative automakers, like Toyota. This new Nike+iPod, the product of their initiatives became almost inevitable in this partnership. Both the companies juncture, as opined by the management of US Airways Bid for Delta Air Lines: announced that their first product would both the companies. As both the companies were the industry leaders, analysts were Potential Synergies and be Nike+iPod Sport Kit, which was a skeptical whether this alliance would take Challenges wireless system that would allow the Nike footwear user to communicate with their place or not. Therefore, the challenges in On 15th November, 2006 US Airways iPod nano. This would provide the user a front of both the companies were to make Group made a surprise bid to buy Delta Air unique personal running experience and the the alliance happen and thereafter to make Lines for $8 billion. Once Delta Air Lines user could workout their experience. Mark the alliance work. This case deals with the was a troubled carrier and emerged from Parker and Steve jobs the CEOs of Nike challenges of forming such alliance, how bankruptcy. As a part of their business plan and Apple respectively unveiled their new Ford and GM strategies to make the alliance, US Airways was known for purchasing the product Nike+iPod at an event in New overcome the challenges and can leverage ailing airways. York (US). The event was attended two of the alliance as a part of their turnaround the world’s most famous sports persons, exercises. For instance, it purchased American West seven time Tour de France champion Lance in 2005; which was near bankruptcy during Armstrong and marathon record-holder Pedagogical Objectives the time of acquisition. Analysts perceived Paul Radcliffe. They were quite hopeful of that the recent acquisition would help US their partnership would elevate the music • To understand the rationale behind a Airways to consolidate its presence in and sports to a new level. Nike footwear possible alliance between the two global fiercely competitive US aviation market. was to be connected to iPod nano through auto giants They also pointed out that its core the Nike+iPod Sport Kit. Users could get • To get an overview of the global competence of acquiring ailing airlines and the information on time, about the automobile industry making them airborne again helped the distance, calories burned and pace. company to consolidate its presence. It Footwear users could also get to listen to • To discuss how an alliance would help was opined that the combined company the Nike Sport Music section on the iTunes the companies strengthen their positions would be more effective and profitable and management perceived that it would competitor in the current fragmented US • To debate whether such an alliance, if help to maximize the Nike+iPod formed, would work. airlines market. experience. This case deals with the detail analysis of Industry Automobile the deal and the expertise of US Airways Pedagogical Objectives Reference No. MAA0130K to make such deal happen, especially in Year of Pub. 2007 • To discuss about the strategic alliance taking the bankrupt companies. It also Teaching Note Not Available between Nike and Apple unfolds the potential synergies and Struc.Assign. Not Available challenges associated with the deal. The • To analyse the marketing mix Keywords case also discusses the detail about US airlines Industries and the importance of • To debate on the success of the new Mergers, Acquisitions, Alliances Case Study; the consolidation in gaining the strategic product. GM (General Motors); Ford; Alliance; Global auto industry; Innovative trend; advantages. Industry Sports Apparel Detroit; Fordism; Auto manufacturer; Rick Reference No. MAA0131K Pedagogical Objectives Year of Pub. 2006 Wagoner; Automotive News; Lay-off; Teaching Note Not Available Rationale of alliance; Merger; Toyota; • To discuss the US aviation market Struc.Assign. Not Available Honda • To analyse the bid for acquisition 97 www.ibscdc.org Ferrovial’s Acquisition of BAA: ($1.2 billion) which would go down in the comprising of two European lenders and High Profile British Assets history books as Standard Chartered’s three Arab groups in order to purchase 80% Changes Hand second biggest acquisition, after it acquired of Egypt’s fourth biggest commercial bank, SC First Bank in Korea for $3.3 billion in Bank of Alexandria. The sale of BoA BAA Plc, (formerly British Airports 2005. The deal would allow Standard represented the first phase of privatization Authority) the world's largest commercial Chartered to realize its 10-year hunt to of the fourth largest Egyptian bank, which operator of airports, agreed a sweetened acquire a big target in Taiwan. It was the would be soon followed by the big three offer of US $19.3 billion (£10.3billion) first application from an international bank state-owned banks in Egypt. The akeoversakeovers akeoversakeovers akeovers takeover bid from Spanish construction to directly acquire 51-100% of a Taiwanese privatisation of BoA was in tune with the giant Ferrovial on Monday, 5th June, 2006. bank. Taiwan was the Asia’s fifth-largest policies undertaken by the Egyptian BAA, which had rebuffed Ferrovial’s earlier economy and the island’s $ 700 billion Government to restructure its banking offer of 810 pence (US$15.16) per share, banking industry had also earned the sector to reduce the public sector stake in which had a worth of US$16.38 billion reputation of being the fourth biggest the banking arena from 75% to 40%. The (£8.78 billion) four months ago (in banking market in Asia. Taiwan had been transaction had been regarded as part of February, 2006), then agreed to the revised in favour of promoting foreign Sanpaolo’s development strategy to offer of 950.25 pence (US$17.79) per investments in its banking sector and the establish its footprint in the emerging share. US’s investment bank Goldman deal to acquire Taiwan’s seventh-biggest markets such as Hungary, Romania, Sachs Inc. the major rival of the bid private-sector bank by Standard Chartered Slovenia, Egypt and Albania with however urged BAA shareholder for not was the latest manifestation of that. The representative offices likely to be taking any hasty decisions as they offered deal would allow Standard Chartered not established in Serbia, Mediterranean in 955.25 pence (US$17.86), which was more only to augment its earnings but also to Tunisia (BIAT) and Morocco. The deal than the Ferrovial’s offer. BAA’s achieve a two-digit Return On Investment was considered to be a subset of a management said that Ferrovial’s bid had (ROI) percentage figure by 2007. Analysts privatisation programme undertaken to better strategic rationale, compare to perceived that the deal would enable rejuvenate the country’s economic reforms. Goldman Sach’s. BAA’s board opted for Standard Chartered to have one of the Ferrovial because its bid was more advanced largest branch networks of any overseas Pedagogical Objectives in terms of regulatory clearances and also bank on the island and make Taiwan its it would allow BAA’s shareholder to opt fourth biggest market in terms of income. • To understand the role of mergers and Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T for shares instead of cash. Madrid based acquisitions in the growth strategy of Ferrovial which diversified from Pedagogical Objectives the banking companies infrastructure services to offset cyclical • To analyse the benefits and drawbacks construction operations, BAA takeover bid • To understand the role of mergers and acquisitions in the growth strategy of of mergers and acquisitions associated by far was the strongest move for them. with banking companies This case discusses about the acquisition banking companies strategy of Ferrovial and it’s impact on • To analyse the benefits and drawbacks • To study the impact of the acquisition British Aviation industry. of acquisitions associated with banking on the Egyptian banking sector companies • To understand the potential synergies Pedagogical Objectives • To study the impact of liberalisation on of the acquisition • To understand the commercial airport the Taiwanese banking sector • To learn the impact of reforms in the operation Industry • To understand the potential synergies Egyptian Banking sector • To discuss the rationale of diversification of an acquisition. • To understand the pros and cons of the beyond the core business. Egyptian Banking sector reforms. Industry Banking Industry Aviation Reference No. MAA0128K Industry Banking Reference No. MAA0129K Year of Pub. 2006 Reference No. MAA0127K Year of Pub. 2006 Teaching Note Not Available Year of Pub. 2006 Teaching Note Not Available Struc.Assign. Not Available Teaching Note Not Available Struc.Assign. Not Available Keywords Struc.Assign. Not Available Keywords Mergers, Acquisitions, Alliances Case Study; Keywords Mergers, Acquisitions, Alliances Case Study; Bank; Taiwan; London; Standard Chartered; Mergers,Acquisitions,Alliances Case BAA Plc (formally known as British Hsinchu; SC First Bank; ROI (return on Study;Bank of Alexandria (BOA); Egyptian Airport Authority); Ferrovial; Goldman investment); Assets; Dividend per share; Bank; Auction; Initial public offering Sachs; Heathrow; Acquisition; Takeover; SME (small and medium-sized enterprises); (IPO); Sanpaolo; Italy; American Aviation; Construction; Controversy; Taiwan's banking industry; Deal; Net depositary receipt (ADR); Ratings; Strategic initiative; Sweetened offer; profit; Hibank; Asia Egyptian Pound (EGP); Capital; Airport Development and Investment Privatisation; Non-performing loans; Limited (ADI); Madrid; Civial Aviation Foreign direct investment; Central Bank Authority (CAA); Office of Fair Trading Sanpaolo: Consolidating its of Egypt (CBE); Law Presence in the Egyptian Market

Standard Chartered: Viewed as the country’s biggest auction of Sanpaolo: Consolidating its state assets, the Egyptian Government on Consolidating its Presence in Presence in Albania Taiwan October 17, 2006 decided to sell off 80% stake of Bank of Alexandria (BoA) SAE The Turin-based Italian bank, Sanpaolo The London-based Standard Chartered Plc. for $1.6 billion at $12.6 per share IMI S.p.A agreed in 2006 to acquire 80% had announced on September29, 2006 that Following a three-round auction Italian stake of the Tirana-based American Bank it would purchase Taiwan-based Hsinchu Sanpaolo IMI Bank emerged the winner of Albania in a deal that would value the International Bank for NT$ 40.5 billion after it outbid five other contenders Albanian vendor at $156.9 million 98 www.ibscdc.org

(EUR124.91 million). The US-based $30 product (GDP); Italian Albanian Bank Phelps 's U$40 bn Deal for

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S million (EUR24 million) Albanian (IAB); Return on assets (ROA); Return on INCO and Falconbridge: American Enterprise Fund (AAEF), which equity (ROE); Albanian banking market; Blockbuster Mining Takeover was the sole shareholder of the American Italy; Tax Deal bank had already confirmed the preliminary agreement between the banks. The On June 2006, US based copper miner transaction, subject to regulatory Banca Intesa – Sanpaolo Phelps Dodge Corporation announced its approvals, would be officially through after Merger: Set to Create Italy’s plan to acquire Canada's INCO Ltd and it gets the nod from the supervisory Falconbridge Ltd for US$ 40 bn. The deal authorities of Italy and Albania. The US Largest Bank would be the biggest corporate takeover in Corporation had even agreed to offer the On October 12, 2006, Milan based Banca the Canadian corporate history. The new Italian bank the remaining 20% stake of Intesa S.p.A and Turin based Sanpaolo IMI entity would be named Phelps Dodge INCO the American Bank of Albania to fulfill S.p.A agreed to merge to create Italy’s Corporation. Analysts predicted that the the acquisition process in toto. Analysts largest bank that would surpass UniCredit new company would be globally the largest believed that the deal would enable the S.p.A., the dominant local lender in Italy. nickel producer, world's largest publicly Italian bank to reinforce its presence in Banca Intesa S.p.A. (formerly known as traded copper producer and a leading Albania. Together with Banca Italo IntesaBci) and Sanpaolo IMI S.p.A. were producer of molybdenum and cobalt. The Albanese and the American Bank of the second and third largest banks in Italy corporate office and the copper division Albania, the Italian bank would capture a with each having more than 3000 branches of the new company would be headquartered market share of 20.6% in loans and 15.3% in and around Italy. The merged entity in Phoenix (Arizona, US), while the new in deposits that would make the combined would be legally based in Turin in northern company's nickel division, INCO Nickel, entity the second-largest bank in Albania. Italy with its operating headquarters in would be headquartered in Toronto With a total distribution network of 24 Milan. It would have EUR 507.5 billion (Canada). However, after the branches and a multi-specialist bank set- ($650 billion) in combined assets and a announcement of the mega-merger, both up, the new entity could develop a strong market capitalisation of around EUR 70 the analysts and global mining industry retail network in Albania. The transaction billion ($87.85 billion), which would rank were skeptical about the success of the deal with Sanpaolo would effectively enhance the merged entity sixth among the since the industry had experience of similar the development of the Albanian economy European banks and the largest in Italy. big deal that often caused disappointment through providing regional growth The merged entity would have 13 million and crushed small time investors. Analysts opportunities in Kosovo, Macedonia and customers in Italy which would be twice as opined that it was certainly possible that Montenegro. The capital generated large to what UniCredit S.p.A had. In terms the merger of INCO Ltd and Falconbridge through this high-profile transaction would of assets, the merged entity would have Ltd. with Phelps Dodge Corporation benefit the Albanian bank in particular to 540.9 billion euros that would surpass became a 'marriage made in heaven' but a enable it to strengthen its position in the Unicredit S.p.A by a wide margin. The deal portfolio strategy study of eleven largest country. Together with Sanpaolo IMI was supposed to be the effect of a transactions proved an unhappy history Group, the Albanian lender would be consolidation wave that had been looming of transactions that could be better termed uniquely positioned to share the strengths around the fragmented banking sector in as 'marriage made in hell'. The case deals and financial knowledge in direct financing Italy. Domestic banks were uniting in detail about the potential synergy and for major projects as well as in the specific themselves to match their potential with strategic advantage behind the deal, how expertise of Bonds issues. their foreign partners apart from the companies plan to leverage the deal competing with Italy’s dominant local and how this mega deal could overcome Pedagogical Objectives lender, UniCredit S.p.A. the problems associated with big deals. • To understand the role of mergers and Pedagogical Objectives acquisitions in the growth strategy of Pedagogical Objectives Sanpaolo • To understand the role of mergers in the • To understand the global mining industry • To analyse the benefits and drawbacks growth strategy of the banking • To discuss about the acquisition of mergers and acquisitions associated companies with banking companies • To analyse the potential synergies of • To analyse the benefits and drawbacks the merger • To study the impact of the acquisition of mergers associated with banking on the Albanian banking sector companies • To debate on whether the merger would be successful or not. • To understand the potential synergies • To study the impact of the Banca Intesa- of the acquisition Sanpaolo merger on the Italian banking Industry Commodity sector Reference No. MAA0124K • To understand the pros and cons of the Year of Pub. 2006 Albanian Banking sector reforms. • To understand the potential synergies Teaching Note Not Available of the merger. Struc.Assign. Not Available Industry Banking Reference No. MAA0126K Industry Banking Keywords Year of Pub. 2006 Reference No. MAA0125K Teaching Note Not Available Year of Pub. 2007 Mergers, Acquisitions, Alliances Case Study; Struc.Assign. Not Available Teaching Note Not Available Phelps Dodge Corporation; Inco Limited; Struc.Assign. Not Available Falconbridge Limited; Phelps Dodge Inco Keywords Corporation; BHP Billiton; Rio Tinto; Keywords Anglo American; Companhia Vale do Rio Mergers, Acquisitions, Alliances Case Study; Doce (CVRD); Global mining industry; Turin; Albanian American Enterprise Fund Mergers, Acquisitions, Alliances Case Study; Sudbury Basin; Metal bulletin; Teck (AAEF); Albania; Banca Italo Albanese; Milan; Turin; Banca Intesa; Sanpaolo; Cominco; Roger Angnelli; Alcan Aluminium Sanpaolo; Tirana; American Bank of Unicredit; Italy; American depositary Ltd; Noranda Inc Albania (ABA); Compounded annual receipt (ADR); Entity; Bank; Euros; Assets; growth rate (CAGR); Gross domestic Rating; Market; European; Merger 99 www.ibscdc.org GM-Renault-Nissan: An Alliance the second-largest aluminium producer in it tried to gain a good reputation in the to Dominate Global Auto Russia and sixth-largest globally in terms burgeoning consumer markets of China Industry of aluminium output.GLENCORE through selling its PCs there. IBM was International AG was a Swiss-based expected to sell its servers and services, on In 2006, global auto industry came to know commodities trader founded by Marc Rich. which the company wanted to concentrate about the alliance between the three giants In 2005, RUSAL and SUAL individually after the acquisition, in China in the near of automobile industry, General Motor, produced 2.7 and 1.05 million tonnes future. Renault and Nissan. Though General Motor respectively. With GLENCORE added into akeoversakeovers akeoversakeovers akeovers was able to retain its superiority in global the mix, the merged entity would set to After the acquisition, during 2005-2006, automobile industry, the company recorded become the world's largest aluminium Lenovo continued its significant profitable huge loss. The success of Renault-Nissan producer with output of 4 million tones growth in the Chinese PC market and alliance inspired General Motor per year. The merged entity would surpass reached new heights in the global market. management to make an alliance with it. the likes of Alcoa Inc. of USA and Alcan With IBM's 'Think' products and self-brand This alliance will help three companies in Inc. of Canada in terms of global aluminium 'Lenovo 3000 series PCs', Lenovo targeted cost rationalization and will help in output and would have 100% monopoly in the Small and Medium-sized Businesses expanding geographical reach. But, since the Russian aluminium market. Analysts (SMBs), along with IBM's typical large the three companies belong to different were skeptical whether, the merged entity enterprise market. On August 3, 2006, country with different management within a few years, could rise to become Lenovo reported results for the first fiscal culture, analysts were skeptical about the one of the main mining companies globally quarter of 2006-2007 which ended on June success of the alliance. The case discusses touching the standards set by Australia's 30, 2006. It showed in the report that its about the potential synergies in the BHP Billiton and Britain's Rio Tinto. revenue of $3.5 billion jumped 38% from alliance and the problems associated with the same period in 2005. However, analysts claimed it as misleading. They stated that it. It also raises the question whether Carlos Pedagogical Objectives Ghosn would be able to replicate his the first quarter figure of 2006 added IBM's successful business model to help General • To understand the role of mergers and three months of revenue, whereas the same Motor to turnaround. acquisitions in the growth strategy of period previous year included the global the aluminium companies giant's two months of revenue. The fact was, based on IBM and Lenovo's 2003 sales Pedagogical Objectives • To analyse the benefits and drawbacks figure, it was clear that 75% of the joint Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T • To discuss the logic behind an alliance of mergers and acquisitions associated venture's revenue would come from IBM's between GM and Renault-Nissan with aluminium companies PC business. Further, it was also known that Lenovo had to rip the IBM-Think • To analyse if such an alliance would help • To study the impact of consolidation in the Russian aluminium sector brand name after 5 years from the the companies to strengthen their completion of the agreement. Hence, respective positions • To understand the potential synergies analysts seemed skeptical about Lenovo's • To gain an insight into the global of the consolidation in the Russian success in the international scene in the automobile market aluminium sector. future. They questioned whether Lenovo would be able to maintain its 'new' revenue • To debate whether the alliance, if Industry Commodity figure and hence would gain from the formed, would work. Reference No. MAA0122K acquisition after 5 years, as the global PC Year of Pub. 2006 buyers were likely to refuse the IBM Industry Automobile Teaching Note Not Available products without the ThinkPad tag. Reference No. MAA0123K Struc.Assign. Not Available Year of Pub. 2006 Keywords Teaching Note Not Available Pedagogical Objectives Struc.Assign. Not Available Mergers, Acquisitions, Alliances Case Study; • To understand the global PC market Keywords RUSAL; SUAL; GLENCORE International AG; Alcan; Alcoa; BHP Billiton; Rio Tinto; • To understand Lenovo's acquisition Mergers, Acquisitions, Alliances Case Study; Global aluminium industry; Russian strategies General Motors (GM); Nissan; Renault; aluminium industry; Falconbridge; Xstrata • To understand advantages of acquisition Alliance; Global auto industry; US auto to Lenovo industry; Ford Motor Company; Daimler • To analyse whether the acquisition will Chrysler AG; Hyundai Motor Corporation; Lenovo Acquires IBM's PC Volkswagen; Honda Motor; Carlos Ghosn; payoff. Rick Wagoner; Chevrolet; Suzuki Division - Will Lenovo Gain? Industry PC Industry On December 8, 2004, Lenovo, China's Reference No. MAA0121B largest and Asia's leading Personal Year of Pub. 2005 RUSAL-Sual Merger: Computer (PC) vendor, announced that it Teaching Note Not Available Consolidation in the Global would acquire global giant IBM's PC Struc.Assign. Not Available Aluminium Industry division. Lenovo was reported to pay IBM, $1.25 billion, to get a foothold in Keywords A proposed triumvirate between RUSAL, the market of the global leading brand, and Mergers, Acquisitions, Alliances Case Study; SUAL and GLENCORE had been in the thus a gateway to other international Acquisition; IBM-Brand name; Global PC offing that would create a new aluminium markets. Further, the deal made Lenovo market; Chinese PC market; Thinkpad; giant in Russia.RUSAL (known as Russian the world's third largest producer of PCs Intellectual Property; Agreement; Aluminium company), owned by after Dell and Hewlett Packard (HP), with expansion plan; IBMs Servers and services; Oleg.V.Deripaska was the largest aluminium around 8% of the global market share. IBMs PC Division; entry strategy; joint producer in Russia and globally the third- IBM, in turn, acquired 18.9% stake in venture; small and medium based business; largest in terms of aluminium output. SUAL Lenovo, though it took its operations off integration plan; low price; tough (known as Siberian-Urals Aluminium its books after the acquisition. The deal competition company), owned by Viktor Vekselberg was was judged as a significant one for IBM as 100 www.ibscdc.org

XM and Sirius Merger : Potential probably give Seagate a steady revenue Pedagogical Objectives

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S vs Pitfalls stream from enterprise products and more strength to battle in other emerging and • To understand the weight loss industry The US Satellite Radio industry in 2006 promising storage market segments. in US was defined by XM Satellite Radio Holdings Maxtor on the other hand was going • To understand the problems of Nestle Inc. and Sirius Satellite Radio Inc. with through a financial crisis since 2004. subscriber base of about 7 million and 5 Seagate seized the opportunity and took • To understand Nestle's turnaround plans. million respectively. During the same year, over Maxtor. The acquisition to be Industry Dairy and Food Products Sirius initiated a merger proposal with XM completed in 6 months by May, 2006 Industry quoting "significant benefits" out of a intended to strategically place Seagate to Reference No. MAA0118B combined entity. But, XM turned down the take advantage of Maxtor's presence in Year of Pub. 2006 idea of merger stating that both the segments where it performed better. Will Teaching Note Available companies could co-exist in the market as Seagate's acquisition of Maxtor pay off? Struc.Assign. Available the industry was still in the nascent stage. Will it be able to strengthen its storage leadership with this acquisition? Was it Keywords The refusal of merger move by XM evoked inescapable that Seagate had no other mixed responses from industry analysts. choice than to expand, and that acquiring Mergers, Acquisitions, Alliances Case Study; There were many exchanges of ideas Maxtor, probably its most closely matched Nestle; US Food and Dairy Industry; Weight regarding the likelihood of a merger. It was contender, was a matter of competitive Loss Industry; Jenny Craig; Product also debated whether the potential merger necessity? Could this “necessity” translate Portfolio; Nestle’s Acquisition of Jenny would benefit both the companies. Industry into an advantage for Seagate? Craig; Fair Trade Movement; Child Slavery experts made an attempt to project the in Business; Business Portfolio; Diet/Health post-merger scenario. Analysts were also Foods; FMCG; Inorganic Growth Strategy; trying to grasp whether XM was justified Pedagogical Objectives Mergers and Acquisitions in refusing to merge with Sirius. • To understand Seagate's strategy to emerge as global leader in hard disk drive Pedagogical Objectives industry Citigroup's Acquisition of • To study the dynamics of the US satellite • To understand Seagate's expansion Guangdong Development Bank: radio industry strategy A Strategic Move in China? • To understand the advantages of a • To understand the features of the hard Citigroup, a leading global financial potential merger disk drive industry company with 200 million customers in more than 100 countries had total revenues • To analyse the reasons spelt out by XM • To understand M&A strategy in the Hard of $83.6 billion in 2005. Citigroup Radio for not supporting the idea of a Disk Drive Industry. operated in four major business groups: merger Industry Hard Drive Industry Global Consumer, Corporate and • To comprehend the post-merger Reference No. MAA0119B Investment Banking, Global Wealth scenario and the pros and cons for the Year of Pub. 2006 Management and Citigroup Alternative industry and the market. Teaching Note Available Investments. Struc.Assign. Available Industry Entertainment-Satellite Radio Citigroup was the first American bank to Reference No. MAA0120B Keywords establish its operation in China in 1902. Year of Pub. 2007 Gradually, it became one of China's largest Teaching Note Not Available Seagate; Mergers, Acquisitions, Alliances and most important banks. But due to Struc.Assign. Not Available Case Study; Maxtor; Bill Watkins; C S Park; Chinese banking regulations, Citigroup was Acquisition; Hard drive Industry; Storage not able to offer many of its services. To Keywords Industry; Storage Leadership; Market strengthen its operations in China, share; Global presence; Financial crisis Mergers, Acquisitions, Alliances Case Study; Citigroup acquired 5% stake in Shanghai Merger; satellite radio; XM; Sirius; FCC; Pudong Development Bank for $67 Broadcast; Entertainment; Music; million in December 2002, and Citigroup Subscriber; Monopoly; UBS; DirecTV; Wall Nestlé's Acquisition of Jenny led consortium acquired 85.6% stake in Street; EchoStar; Dish Network Craig: Health Conscious Effort? Guangdong Development Bank (GDB) for 24.267 billion Yuan (US $3.06 billion) in Nestle, the world's largest chocolate and November 2006. Citigroup retained the food manufacturer announced in 2006, its majority stake in the acquisition. GDB, a Seagate's Acquisition of Maxtor: purchase of Jenny Craig, a weight-loss mid-size national bank with assets of US Strengthening Storage management company based in California, $47.9 billion and 12 million customers had leadership? US. The term 'Obesity' and 'Weight-Loss' extensive network of 500 branches were literal oxymorons and how could a throughout China. It also had significant Seagate Technology planned to maintain company like Nestle combine these two in Small and Medium Enterprise cardholders. and possibly expand its leadership in the its business? ask analysts. Industry But, GDB faced weak capitalization and disk drive segment by the acquisition of observers were highly cynical about high level of non performing loans. Its Maxtor Corporation in 2005. The identity Nestlé's move into weight-loss business, capital adequacy ratio was also below of the disk drive business was centered on a since its traditional business of high-fat and regulatory requirement. squeeze between thin margins and a sugary food manufacturing totally The case leads the discussion on Whether voracious appetite for R&D dollars. contravened with its new venture. This case Citigroup at the face of competition Seagate's additional purchasing potential details the possible assumptions that would having strong presence in China for over from Maxtor's customers would bring in a have prompted Nestle to enter into this 140 years would be able to capitalize on larger revenue flow to support its vision of new business stream. R & D.The deal worth US$1.9 billion would the acquisition of GDB and strengthen its presence in the Chinese banking sector?

101 www.ibscdc.org Pedagogical Objectives Keywords China Merchants Bank: • To understand inorganic growth strategy Mergers, Acquisitions, Alliances Case Study; Challenging Times Ahead Walt Disney; McDonald's; Marketing China Merchants Bank (CMB) was sixth • To understand government policy and Alliance; Biggest exclusive marketing pact; its impacts in Chinese banking sector largest share-holding commercial bank Happy Meals; Disney character toys; Cross owned by corporate legal entities. It offered • To discuss the competitive scenario. Promotional Strategies; Entertainment wide range of product and services to Conglomerate; Fast Food Chain; Happy individual and corporate customers through akeoversakeovers akeoversakeovers akeovers Industry Banking and Financial Meal Promotion; Marketing Partnership; extensive network of more than 463 Services Break-up of marketing partnership; branches, 747 self-service counters and Reference No. MAA0117A Obesity; Corporate Social Responsibility 2,288 ATMs located in 39 cities. CMB was Year of Pub. 2006 the leading issuer of credit cards in China. Teaching Note Available It had 42% of the market share in China's Struc.Assign. Available Citigroup's Acquisition of Egg dual-currency credit card segment in 2005. Keywords Bank: The Spin-Offs Also, CMB was pioneer amongst other commercial bank to launch a series of e- Mergers, Acquisitions, Alliances Case Study; Egg Banking plc (Egg), a UK based online banking distribution channels like on-line Citigroup; Citigroup in China; Merger and financial service provider was part of banking, phone banking, mobile banking Acquisition; Expansion Strategy; Growth Prudential plc, leading insurer globally. Egg and self service banking in China. Strategy; Guangdong Development Bank had created strong brand name in UK (GDB); Foreign Banks in China; Self market by providing innovative products But, China's accession to WTO in 2001 Service Banks in China; Minibanks in in banking, investment and insurance. It promised opening up of finance sector by China; Local Currency Business; The had 5% share in UK's credit card market. end of 2006. The foreign institutions would People's Bank of China; China Banking But, France operation of Egg bank remained be allowed to offer services in local currency Regulation Commission (CBRC); Non unprofitable and in 2004 it existed from to all retail and corporate customers across Performing Loans; Big-Four Banks in French market to focus on UK business. the country. In China, CMB faced stiff China; Competitive Banks; Joint Venture; Meanwhile, condition in UK unsecured competition from Citigroup and Hong Guangdong Province; Shenzhen; HSBC market badly affected to Egg's performance Kong and Shanghai Banking Corporation (HSBC) in the credit card segment. Also, Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T and in 2006 it reported loss reported loss of £145 million. CMB faced tough competition from the "Big-four" Chinese banks in terms of their Disney-McDonald’s: On the In 2007, Citigroup acquired Egg bank for total assets base and extensive branch Parting Ways £575 million ($1.13 billion) in cash from network. The entertainment giant Walt Disney and Prudential. Citigroup expected to have synergies in terms of Egg's customer base The case details about with the opening of the largest fast food chain McDonald's the China's banking industry and Corporation had announced the biggest and brand name that it had created in UK market. strengthening of competition, the times marketing deal in 1996. For 10 years, ahead for CMB were challenging. Disney and McDonald's appeared to have The case details about Citigroupâ•™s the perfect alliance where Happy Meals of inorganic growth strategies in UK market. Pedagogical Objectives McDonald's accompanied Disney's movie Also, it details about how Citigroup be able based toys. The exclusive marketing pact to capitalize the acquisition and able to • To understand Chinese bankcard market fetched good benefits to both Disney and create leadership position UK's financial • To study the market development McDonald's. However, In May, 2006 market. Disney and McDonald's announced to strategy adopted CMB discontinue with the marketing alliance, Pedagogical Objectives • To understand the competitive scenario which expired on January 1, 2007. The of Chinese bankcard sector decision to discontinue the exclusive • To understand business spin-offs alliance posed many questions. • To understand the impact of government • To study the online banking scenario in policy. The case discusses the exclusive marketing UK market alliance between the two companies in Industry Banking detail and highlights the consequences of • To understand inorganic growth strategy Reference No. MAA0114A the same. It highlights the reasons for the • To understand competitive scenario in Year of Pub. 2007 break-up of Disney-McDonald's decade old online banking market. Teaching Note Available marketing pact and dilemmas regarding Struc.Assign. Not Available cross-promotional marketing future. Industry Banking Reference No. MAA0115A Keywords Pedagogical Objectives Year of Pub. 2007 Mergers, Acquisitions, Alliances Case Study; Teaching Note Not Available China Merchants Bank (CMB); Chinese • To discuss cross-promotional marketing Struc.Assign. Not Available Bankcard Market; SWOT Analysis; strategy of McDonald's and Walt Disney Keywords Competitive Scenario; Foreign Banks in • To understand the genesis of the China; Entry Level strategies; Joint marketing deal and the reasons leading Mergers, Acquisitions, Alliances Case Study; Ventures; Strategic Alliance; Banking to its break-up. Online Banking Sector; Egg Bank; Sector Reform in China; China UnionPay Prudential Plc.; Market Development (CUP); "Big-four" Chinese Banks; Industry Leisure and Entertainment Strategies; Targeting New Product Citigroup in China; HSBC in China Reference No. MAA0116A Segment; Competitive Scenario; Wealth Year of Pub. 2007 Maximization; Citigroup; Citigroup in Teaching Note Available Britain; Unsecured Lending Market; Egg Struc.Assign. Available Bank in France; Citigroup's Acquisition of Egg Bank 102 www.ibscdc.org

Cedar Fair-Paramount Parks: the merged unit - Bank of America N.A. - The case ends with a debate whether the

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Would the Acquisition payoff? to become the country’s largest issuer of merger of OneSteel and Smorgon would credit. Bank of America adopted inorganic generate enough synergies for them to Amidst the growing global amusement park route to grow. The merger was opposed by sustain competition. The merger would industry, the US industry had a great role some consumer advocacy groups. The case reduce the number of leading steel industry to play. Cedar Fair L.P., one of the key study highlights issues related to the merger players and help eliminate competition players of the US amusement park industry and its repercussions on the credit card from the Australian steel industry. Whether acquired Paramount Parks, subsidiary of industry. the merger would provide value or prove CBS Corporation in June 2006 for $1.24 costly for the industry as a whole? billion in cash. The acquisition was Pedagogical Objectives expected to increase the geographical Pedagogical Objectives diversity and attain cash flow synergy of • Analyse the American Credit card $20 - $30 million over the next 3-5 years. industry and share of Bank of America • To understand the dynamics of the The combined entity of Cedar Fair – Australian steel industry • To understand the growth strategies of Paramount Parks was expected to attract Bank Of America thorough in organic • The impact of the merger of two industry attendance of 25 million and generate growth route giants on the industry revenues of $1 billion by 2007-09. In order to finance the acquisition, repay earlier • To Analyse the effect of mergers and • The post merger synergies to withstand debt and pay shareholder dividends, Cedar acquisition in the credit card industry. the competition Fair planned to raise debt of $2 billion. As Cedar Fair already faced debt burden, Industry Credit Card • To discuss the rationale behind mergers. Reference No. MAA0112A financing the acquisition through debt was Industry Steel Year of Pub. 2006 a concern. Reference No. MAA0111A Teaching Note Not Available Year of Pub. 2007 The case discusses the expected benefits, Struc.Assign. Not Available opportunities of acquisition and highlights Teaching Note Available the financial and product integration Keywords Struc.Assign. Available challenges of Cedar Fair. Mergers, Acquisitions, Alliances Case Study; Keywords Credit Card Industry; Bank of America; Pedagogical Objectives MBNA; banking; investment banking; Mergers, Acquisitions, Alliances Case Study; merger, acquisition; competition; Steel industry; Restructuring; Technological • To analyse the US amusement park competitive strategy; monopoly; leadership; Core Competency; Reinventing industry and factors affecting on it consumer action; synergy; United States vision; Merger & Acquisitions; Strategic Alliances; OneSteel; Smorgon • To understand Market penetration and of America (USA) Product-line integration strategies through acquisition OneSteel – Smorgon Steel Liverpool Football Club: • To understand fund management Takeover by American Tycoons strategies to build cash flow synergies in Merger: The Challenges Ahead case of acquisition. OneSteel was a major steel player in Liverpool Football Club was a leading sports club in England. It had won 18 titles Industry Amusement Park Industry Australian domestic market with an in first division football, the highest for Reference No. MAA0113A estimated market share of 30%. Smorgon any football club in England. Year of Pub. 2006 Steel was also a major player in the Teaching Note Not Available Australian steel industry and a key In December 2006, Dubai's Dubai Struc.Assign. Not Available contributor to the Australian economy. International Capital (DIC) approached Their financial operation showed that it the club with a takeover bid. DIC took its Keywords was a well defined group with emerging time to study the club's books and offered Mergers, Acquisitions, Alliances Case Study; economic growth. £450 million for the club. At the same Cedar Fair L.P.; Paramount Parks; The merger of OneSteel and Smorgon was time, two American businessmen George Amusement Park Industry; Acquisition; expected to create successful leadership Gillett and Tom Hicks launched their bid Theme park; Walt Disney; Six Flags Inc.; position in Australian steel industry. The for the club worth £438 million. DIC Product line integration; CBS Corporation; proposed merger was small on a global scale withdrew its offer, and Liverpool accepted Anheuser Busch Entertainment; but accountable for about 35% of the offer from the two American Geographical diversity; Cash flow synergy; Australia's production. The merger was businessmen. Public offering; International Association consistent with the global trend of The case compares and contrasts the pros of Amusement Parks and Attractions; consolidation in the international steel and cons of the two offers, and ends in a Attendance; Market share; Revenue; sector. debate over the club's future success rate Interest expense; Dick Kinzel; Debt; Public with the new ownership. bonds; Dividend; Innovativeness; The case discusses about OneSteel and Creativity Smorgon Steel's plans to combat competition from their main rival Pedagogical Objectives BlueScope. BlueScope Steel's key potency • To understand the football sports The Bank of America-MBNA included low-cost operations, strong industry and the valuation of a sports brands, leading domestic market positions, club Merger: Creating a Giant in the and a growing presence in the markets of American Credit Card Industry Asia. The brands of BlueScope Steel were • To understand the revenue model of a Bank of America, the second largest bank market leaders in Australia and New Zealand football club along with strong presence in Asia. in the US, acquired MBNA, the third largest • To debate on the Liverpool Football issuer of credit cards in the US, enabling BlueScope had spent more than $350 million to acquire 20% stake in Smorgon. Club's future success rate with the new ownership. 103 www.ibscdc.org Industry Sports Club Industry IT (Information Technology) Industry Oil & Gas Industry Reference No. MAA0110A Reference No. MAA0109P Reference No. MAA0108C Year of Pub. 2007 Year of Pub. 2006 Year of Pub. 2007 Teaching Note Available Teaching Note Available Teaching Note Available Struc.Assign. Not Available Struc.Assign. Not Available Struc.Assign. Not Available Keywords Keywords Keywords akeoversakeovers akeoversakeovers akeovers Mergers, Acquisitions, Alliances Case Study; Mergers, Acquisitions, Alliances Case Study; Mergers, Acquisitions, Alliances Case Study; Liverpool Football Club; Sports Club; Hewlett-Packard; HP open view; HP Gazprom; Rosneft; Yukos; Sibneft; Unified Takeover; Valuation; bid comparison; adaptive enterprise; Mercury portfolio Gas Transportation System ( UGS); Volga Finances of a football club; revenue models; management; ERP Ural Region; Western Siberia; Russian England football clubs; Montreal Government; Alexei.B.Miller; Sergei.M. Canadiens; National Hockey League; Bogdanchikov; Russian oil Industry; Oil Fédération Internationale de Football Gazprom and Rosneft Alliance: Reserves; Natural gas; Nationalisation; Association (FIFA); International Football Petrtroleum and Natural gas exploration Association Board; Business Strategy; A Win-Win Strategy George Gillett; Tom Hicks; Manchester From 2002 onwards, Russian companies United; Malcolm Glazer were outperforming Saudi counterparts in Sirius and XM: Should They oil and gas production. Gazprom, a Merge to Perform Better? behemoth Russian company was the biggest Hewlett Packard's acquisition of natural gas supplier in the world with a The Federal Communication Commission Mercury: Strengthening market capitalisation of US$ 270 billion allowed use of "S" band for satellite radio Presence in Corporate as of May 2006. Instead of cooperating broadcast in 1997. Out of 8 companies with foreign companies, which were ready which applied in 1997, only XM and Sirius Applications Software to invest in oil and gas exploration were granted permission. XM was launched Hewlett Packard (HP) was a US based programs in Russia, it signed an agreement on September 25th 2001, in San Diego computer and printer giant. The computer of cooperation with Rosneft. Gazprom had and Dallas. Sirius, headquartered in New locked horns with Rosneft regarding York, began its operations officially in Mergers, Acquisitions and T Mergers, Acquisitions and T

Mergers, Acquisitions and T and printing divisions contributed to more Mergers, Acquisitions and T Mergers, Acquisitions and T than half of HP's revenues in 2005.HP acquisition of Yukos, a company which was 2002. Both of these services had more than was considered a small player in the facing bankruptcy charges in 2000s. 130 channels which hosted programs margin-rich software business. HP had Eventually, major assets of Yukos were varying from music, talk shows, sports and software called Open View for corporate acquired by Rosneft in 2004, which gave weather. More than 200 million US citizens applications. HP had an aim of the company access to more oil and gas still listened to territorial radio, where as strengthening its software business and had resources. A merger negotiation between combine subscriber base of the satellite made a slew of acquisitions of software Gazprom and Rosneft was also postponed radio companies was just 14 million as of companies in the past. in 2005. On November 29, 2006, 2006. In order to attract more subscribers, Aleksei.B.Miller and Sirius agreed to pay $100 million a year to In July 2006, HP acquired Mercury, a US Sergei.M.Bogdanchikov, the chief Howard Stern for hosting shows. XM made based software company specializing in executives of Gazprom and Rosneft, agreed agreements with celebrity talk show hosts Business Technology Optimisation (BTO), to form joint ventures for exploration of like Oprah Winfrey and Ellen DeGeneres. software which helped companies to ensure new oil reserves, building petrochemical As of 2006, the content spending and that their information technology (IT) plants, and to bid on field licenses outside other expenses resulted in huge loss for systems were working on business priorities Russia. But there were many challenges too. both the companies. In the wake of internet and delivering maximum value. Analysts The major stakeholder in both the radio, HD radio and alternate digital expected BTO business to exceed $1.9 companies was the Russian government services becoming popular in US, according billion in the coming years. HP believed and changes in political administration to them, merger option was a tool for that the acquisition would help it in could affect corporate decisions. The UGS survival. On February 19th 2007, the strengthening its presence in the corporate pipeline of Gazprom passed through many companies agreed to merge together to applications software. The case discusses countries in Europe and was prone to avoid losses and to differentiate their radio the business model of HP and the possible attacks of terrorism. There were incidents services from other budding technologies. synergies of the acquisition. of corruption and sleaze, and both the FCC in the US, which gave licences, was companies had debts to the tune of 10-12 not forthcoming in approving the merger Pedagogical Objectives billions. This move was also considered a because they were doubtful of formation shift towards nationalization as it meant a of monopoly, even though they had many • The concepts associated with business confluence of two companies for alternate competitors. models of the computer companies cooperation which had large state holdings. • The issues related to the different The case allows for discussion on the future Pedagogical Objectives business segments in the software market of the alliance, the synergies and challenges that would emerge. • To discuss US Radio Industry and changes • The issues related to shift in the business in radio entertainment model by a computer company to Pedagogical Objectives • Different forms of radio services in US concentrate on the margin rich and booming business segments • To discuss Russian oil and gas industry • Role of XM and Sirius in the satellite radio industry • The issues related to inorganic growth • Gazprom & Rosneft- Two leading oil through acquisitions and gas producing companies in the world • A duopoly looking for consolidation for survival. • The possible synergies of acquisition • Alliance between the two companies and synergies possible. Industry Radio Industry • The challenges in store for the merged Reference No. MAA0107C entity after acquisition. Year of Pub. 2007 104 www.ibscdc.org

Teaching Note Available Keywords • To discuss how companies can handle

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Struc.Assign. Not Available post acquisition challenges. III – Y G E T A R T S Mergers, Acquisitions, Alliances Case Study; Keywords YouTube; Google; Web 2.0 companies; Industry Outsourcing Industry Social Networking sites; Acquisition; Video Reference No. MAA0105C Mergers,Acquisitions,Alliances Case sharing websites; Chad Hurley; Eric Schmidt; Year of Pub. 2007 Study;Sirius; XM; satellite Radio; HD Radio; MySpace; Google Video; YouTube’s Teaching Note Available Howard Stern; Oprah Winfrey; Sports copyright issues Web Traffic; Struc.Assign. Not Available Channels; Music Channels; Mel Karmazin; Competition; User generated content; Viral Gary Parsons; Federal Communications video sites Keywords Commission; Consumer Federation of America Mergers, Acquisitions, Alliances Case Study; Capgemini; Kanbay; Global Consulting Capgemini's acquisition of Companies; Global IT Services Industry; Kanbay International: The Road Acquisition; Ernst and Young; Paul YouTube's acquisition by Hermelin; Raymond Spencer; BFSI Space; Ahead Google – Issues and Challenges Financial Services Market; I Cubed Strategy Capgemini was one of the world's leading Baru S Rao; Competition; Inorganic YouTube, the most popular video sharing providers of Consulting, Technology, Growth; Outsourcing market website boasted of a viewership of 34 Outsourcing and Local Professional Services million visitors each month and its users with regional operations in North America, watched more than 100 million videos per Northern Europe, Asia Pacific and Central day. Started as a viral video site it had grown Disney & Pixar: On the Road to & Southern Europe. On October 26, 2006 to a Web phenomenon within a span of Merge Capgemini announced its acquisition of one year and remained one of the key Kanbay International, a global IT services instances of success in Web 2.0. Though In January 2006, various Wall Street firm that offered management consulting, the content on YouTube was entirely user- analysts speculated that Disney, one of the technology integration, application generated some people posted music and largest motion picture studios in the world, development and outsourcing solutions videos they did not have the right to post was planning to acquire Pixar Animation mainly in the financial services vertical. thereby violating copyright laws. However, Studios, the producer of hit animation Kanbay was a US based company with a YouTube immediately removed the clips movies, such as Toy Story, Finding Nemo, strong presence in the American and Indian once a copyright violation was brought to The Incredibles, etc. With its traditional market. The acquisition, valued at $1.25 its notice. To avoid potential lawsuits the hand-drawn animation business declining, billion and scheduled to be completed by company had signed agreements with Disney was looking for ways to preserve early 2007 was an all cash deal that sought various music companies and was in the its animation business. The company had to address Capgemini's shortcoming in the process of creating technology that would an agreement with Pixar to distribute and financial services market and its beleaguered help identify and prevent copyrighted market animation movies produced by the presence in the U.S. market. The transaction material from being uploaded. latter which was scheduled to end in June was also intended to help Capgemini 2006. As the agreement came closer to an Despite the fact that user generated video consolidate its presence in the Indian market end, Disney considered various options, websites were a great success, YouTube did by adding up Kanbay's employees to its including a takeover, a stake in Pixar or an not have a proven business model and was Indian workforce thereby making it the third extended agreement. While the first option unclear about how it would generate revenue biggest non Indian player in terms of the was most likely, analysts debated whether in the future. On October 9, 2006, Google, total headcount in the country next only to the two should merge or not. The case the world leader in Internet Search IBM and Accenture. study outlines a brief history of the announced that it would acquire YouTube animation industry as well as the evolution The case outlines the establishment of for US$1.65 billion in stock which was of the computer animation. It also Capgemini, its growth and the spate of considered the most expensive deal made attempts to give a short description of both acquisitions over the years. It provides by Google during its eight-year history. the companies. Finally, it tries to give a insight into the rationale for its acquisition This case gives an overview of the brief account of the present situation and of Kanbay by highlighting the potential inception of YouTube, its growth and the how a takeover would affect both the benefits of enhancing its presence in the reasons for its prime success on the web. It companies. US financial services market, augmenting also depicts the possible synergies and its business process outsourcing offerings challenges that would emerge following and gaining an edge over its European Pedagogical Objectives Google's acquisition of YouTube and how counterparts in the offshore region by it would facilitate YouTube deal with its • To discuss the pros and cons of a possible scaling up its Indian operations. The main copyright infringement troubles and adopt merger between Disney and Pixar issue the case tries to highlight is the a profitable business model. concern raised by industry analysts about • To get a brief idea of the history of the Kanbay acquisition in the backdrop of animation Pedagogical Objectives Capgemini's troubled acquisition of Ernst • To understand the emergence of and Young which had not yielded the • To discuss success strategies for web 2.0 computer animation companies desired synergies. This was mainly attributed to differences in the cultures of • To get a detailed account of the two • To discuss how companies can integrate both the entities. It was to be seen if companies – Walt Disney Company and acquired companies into their business Capgemini would successfully integrate Pixar Animation Studios. model. Kanbay into its portfolio. Industry Entertainment Industry Internet (Web 2.0) Reference No. MAA0104K Pedagogical Objectives Reference No. MAA0106C Year of Pub. 2006 Year of Pub. 2007 • To discuss acquisition strategies followed Teaching Note Not Available Teaching Note Not Available by companies for inorganic growth Struc.Assign. Not Available Struc.Assign. Not Available

105 www.ibscdc.org Keywords network-based technologies. At the same • To discuss the viability of Alcatel-Lucent time, the merger intended to simplify the merger and its impact on the business Disney; Pixar; Merger; Entertainment ownership structure of Cingular Wireless, portfolio in the long run. Industry; Animation. the largest mobile phone company in the US, which was jointly owned by both Industry Telecommunication AT&T (60%) and BellSouth (40%). Reference No. MAA0101K Origin Energy’s Merger with Year of Pub. 2006 The case, while providing a broad overview Teaching Note Not Available akeoversakeovers akeoversakeovers akeovers Contact Energy: In Quest Of of the two telecom companies, offers Struc.Assign. Not Available Greater Scale and Diversity scope to discuss the synergies of the merger Keywords In February 2006, the energy industry in and the probable pay offs. Australia witnessed a sea change when Telecom; Landline; Cellular; AT&T; Origin Energy Ltd., the leading Australian Pedagogical Objective Alcatel; Lucent; Merger; Acquisition. energy company, decided to merge with • To understand the synergies associated Contact Energy Ltd., New Zealand’s second with a merger and the probable pay-offs Novartis’ Acquisition of Chiron: largest electricity generator. The cross- border merger created Australia’s largest • To understand the competitive forces Access to vaccine market integrated energy group with a market of the US telecommunications industry Novartis AG (Novartis) was a leading global capitalisation of A$7 billion. The merger • To discuss the strategic shift of telecom pharmaceutical (pharma) company. In the took place by way of dual-listed company recent times, the company had not structure and aimed to benefit both the companies from traditional services to bundled offering of video, data and voice achieved much success in developing new shareholders by creating grater scale and drugs. Moreover, many of its drugs had diversity. services through broadband Internet access and network expansion either lost patent protection or were going The case, while providing a broad overview to face the same in the next few years. of the two energy companies, offers scope • To discuss the viability of AT&T – The company was facing tough to discuss the synergies of the merger and BellSouth merger and its impact on the competition from generic drug makers, the probable pay offs. business portfolio in the long run. which had adversely affected its future growth prospect. In order to retain its Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Industry Telecommunication leading position in the pharma industry, Pedagogical Objective Reference No. MAA0102K the company diversified into other Year of Pub. 2006 • To understand the dynamics of a cross- segments, thereby expanding its product Teaching Note Not Available border merger portfolio and geographic reach. In 2005, Struc.Assign. Not Available Novartis acquired the Chiron Corporation • To discuss the synergies associated with Keywords (Chiron), a leading pharma company a merger with specific reference to having strong presence in vaccines, blood Ansoff’s Product/Market Mix AT&T; BellSouth; Economics of scale; testing and biopharmaceuticals. This case Economics of scope. • To understand the dynamics of the deals with Novartis’ acquisition of Chiron, energy sector in Australia and New which would help the former to enter into Zealand vaccine and blood testing businesses for Alcatel And Lucent Merger: the first time and strengthen its • To understand the dynamics of a Dual Creating A Telecom Titan biopharmaceuticals business segment. The Listed Company (DLC) structure case has provided background notes on the In the first half of 2006, Alcatel decided to two companies and a detailed description • To discuss the convergence in the energy merge with Lucent and create the largest of the pre-merger scenario of Novartis. It market and its impact on the global and most experienced global services and also discusses the acquisition deal in details. business environment. support organisation in the industry. The The case puts forth the rationale behind Industry Energy merger was set to generate combined the acquisition and the expected benefits Reference No. MAA0103K revenues of about •21 billion ($25 billion) for Novartis. It finally discusses the Year of Pub. 2006 based on 2005 calendar results and create a possible challenges which Novartis can face Teaching Note Not Available global leader in converged network and in the near future. The case also provides a Struc.Assign. Not Available services. The merger further aimed to detailed note on the structure and future capitalise on the emerging market demands trends of the global vaccine market. Keywords for high-end technologies, including Origin energy; Natural resource; Energy; critical safety and security applications. Pedagogical Objectives Merger. The case, while providing a broad overview • To understand global vaccine market of the two telecom companies, offers scope to discuss the synergies of the merger • To understand the growth strategy At&T’s Merger with Bellsouth: and the probable pay offs. through acquisitions. Creating a One-Stop Shop • To analyse the rational behind any M&A Pedagogical Objective deal. In March 2006, AT&T Inc. (AT&T), the largest telecommunications company in • To understand the dynamics of a cross- •· To analyse framework for successful the US, announced a $67 billion merger border merger merger, blueprint for integrating agreement with BellSouth Corporation • To critically analyse the impact of global acquisitions (BellSouth), a leading telecommunications consolidation of the company in the US. The merger was aimed • To discuss strategic reasons for M&A telecommunications industry to create a nimble and efficient company value creation. that would be better equipped to embrace • To understand the synergies associated Industry Pharmaceutical Industry the industry’s shift to Internet Protocol with a merger Reference No. MAA0100K

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Year of Pub. 2006 with the background of both companies • To discuss the possible synergies and

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Teaching Note Not Available AMD and ATI. It also gives an insight into challenges of the acquisition. III – Y G E T A R T S Struc.Assign. Not Available the PC and chip industry overview with the expected potential synergies of the Industry Pharmaceutical Keywords acquisition. Reference No. MAA0097K Year of Pub. 2006 Novartis; Chiron; Vaccines; HIV; NAT Teaching Note Not Available Technology. Pedagogical Objectives Struc.Assig. Not Available • To understand the PC and chip industry Keywords Lenevo’s Acquisition of IBM’s PC • To discuss the competition between the Ranbaxy; Terapia; Drug market in CEE; Division – The Making of a processor companies Generic Drug Market. Legend? • To analyse the competitive advantages of the acquisition. The case discusses the mega acquisition of the world’s third-largest Personal Industry Microprocessor & DSP Dell’s Acquisition of Alienware Computers (PC) manufacturer – IBM, by Reference No. MAA0098K On March 22nd 2006, Dell Incorporation, the world’s ninth largest, PC manufacturer Year of Pub. 2006 the world's largest PC (personal computer) – the China based Lenovo, creating one of Teaching Note Not Available manufacturer, officially announced that it largest PC manufacturers in the world. After Struc.Assign. Not Available had acquired Alienware Corporation for an providing a brief note on Lenovo, the case Keywords undisclosed sum. The US-based private discusses the details of the IBM PC business company, Alienware, was a branded leader – its entry, rise and decline. The case AMD; ATI; Intel; Semiconductor; in the high-end gaming PC segment in the discusses the rationale behind the Processor; Chip. US. Dell entered the gaming PC market in acquisition and the benefits which Lenovo August 2005 with its XPS range of PCs. was expecting from it. The case then With the acquisition of the leader explains the acquisition deal in detail. It (Alienware), Dell expected to have a finally discusses the possible challenges Ranbaxy’s Acquisition of Terapia: Creation of the Largest greater share of the gaming PC market. which Lenovo could face in the near future. Dell would also gain knowledge in industrial The case also provides a detailed note on Generic Company of Romania designing and marketing of gaming PCs, the structure of the global PC industry, its th which it could successfully implement for major players and the recent trends. In March 29 2006, Ranbaxy Laboratories Limited, the leading pharmaceutical and its own XPS range. On the other hand, the generic drug company of India, announced acquisition helped Alienware to venture Pedagogical Objectives that it would acquire Terapia, the largest into newer product lines and newer countries with Dell’s financial backing. It would also • To understand the growth strategy independent generic company of Romania. gain out of Dell’s strong logistic support through acquisitions Ranbaxy announced that it would acquire 96.7% of Terapia at USD 324 million from system. Analysts were skeptical about the • To analyse the rational behind any M&A its parent investing company, Advent acquisition as Dell’s previous acquisitions deal International. The deal, expected to be were not very successful. There was a chance of cannibalisation of Dell’s XPS • To analyse framework for successful completed within the second quarter of 2006, was valuable for Ranbaxy. With the range by Alienware’s gaming PCs. The case merger, blueprint for integrating deals with the synergies and challenges of acquisitions US generic market gradually shrinking, a number of governmental regulations to be the acquisition of Alienware by Dell. It also • To discuss strategic reasons for M&A adhered to, and the price erosion in the provides a brief overview of the two value creation. market, Ranbaxy had to shift its focus to companies. Europe. With a considerable foothold over Industry Personal Computers the country’s generic market, Ranbaxy Pedagogical Objectives Reference No. MAA0099K intended to cross the threshold of the other • To discuss Dell’s strategy of entering into Year of Pub. 2006 high growth generics markets of Europe. Teaching Note Not Available a newer market-the gaming PC market Struc.Assign. Not Available The case focuses on Ranbaxy’s inorganic • To discuss the possible synergies and growth strategies and the various market challenges of the acquisition Keywords factors that it considered while entering Lenevo; IBM; M&A; Global PC market. the lucrative generic market of Romania. • To discuss the global gaming PC market. It also provides a brief description of the US, European and the Romanian generic Industry PC market. Such information, coupled with Reference No. MAA0096K AMD’s Acquisition of ATI: Should the company backgrounds of the two Year of Pub. 2006 Intel Worry? companies, would help in analysing Teaching Note Not Available Struc.Assig. Not Available In 2006, AMD planned to acquire graphics Ranbaxy’s chances of establishing a strong chip maker ATI in a deal of $5.4 billion. foothold over the Romanian and Keywords The merger posed a threat and challenge subsequently the European generic market. Dell; Alienware; Acquisition; XPS Range; to Intel, the world’s largest chip maker. Cannibalisation; Gaming PC This acquisition would broaden AMD’s Pedagogical Objectives (personalcomputer); Nelson Gonzalez; product portfolio and would get rid of its • To discuss the European Generic Voodoo PC; Falcon Northwest; Organic image as a seller of microprocessors only. pharmaceutical market growth; Product development; Supply The new entity would synergies both chain; Michael Dell; Mark Vena; OEM AMD’s strength of fast computing power • To discuss Ranbaxy’s inorganic growth (original equipment manufacturer). with ATI’s specialty in delivering detailed strategies and the various market factors graphics onto a single chip. The case deals that it considered while entering the lucrative generic market of Romania 107 www.ibscdc.org The Adobe-Macromedia issued by Sun, underlined the Tech Cement Co. Ltd. (Ultra Tech.), the Merger complementary product and service profiles new identity for the de-merged cement of the two companies. This case provides a business of Larsen & Toubro (L&T). With Adobe Systems was a leading developer of holistic understanding of Sun’s product this, Ultra Tech has become a subsidiary of various graphics and publishing suites, like profiles, the difficulties it faced in the post Grasim. The acquisition which took two Acrobat, Photoshop, and Illustrator etc. dotcom era and the rationale behind the years to complete, is the biggest ever in On April 18th 2005, it announced the acquisition of Storagetek. the Indian cement industry. Grasim believes acquisition of Macromedia (a popular name the merger will help it to attain economies akeoversakeovers akeoversakeovers akeovers in multimedia authoring and web Pedagogical Objectives of scale and enjoy a pricing advantage. On development) for US$3.4 billion. The the other hand, L&T hopes the de-merger future prospects of the newly merged • To discuss the product portfolio of Sun will sharpen its focus on its core business entity became a significant issue as analysts Microsystems areas such as hi-tech engineering and high- gave divergent opinions on the merger. • To discuss the difficulties the company end construction. Will Grasim be able to Some felt that through acquisition the two faced in the post dotcom era exploit the full potential of the deal? companies could offer better products and solutions. While few others feared that the • To discuss the synergies and challenges Pedagogical Objectives combination would lead to greater control behind the acquisition of Storagetek. of the two companies in the publishing • To discuss the trends and patterns in and multimedia business. The case intends Industry Servers and Mainframes building material industry to provide a broad profile of the two Reference No. MAA0094K • To discuss the merger and acquisition companies, the competitive scenario in the Year of Pub. 2006 process in building material industry market, and the various factors that led to Teaching Note Not Available the acquisition. The case also discusses the Struc.Assig. Not Available • To discuss the process of acquisition and synergies the two companies could draw Keywords problems of acquisition. upon for leverage in the new, emerging markets. Sun; Storagetek; Server; Solaris; Sparc; Industry Cement Tapes; Hard disks. Reference No. MAA0092K Year of Pub. 2006 Pedagogical Objectives Teaching Note Not Available Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T • To discuss the broad profiles of the two Struc.Assig. Not Available Seagate’s Acquisition of Maxtor companies before merger Keywords st • To discuss scenario in the market, and On December 21 2005, Seagate acquired Ultratech; L&T; Grasim; Building material the various factors that led to the Maxtor for US$1.9 billion. Owing to the industry; M&A; ACC. acquisition rising competition and falling prices of personal computer hardware, Seagate was • To discuss the synergies the two finding it increasingly difficult to leverage companies could draw upon for leverage its market leadership in hard disk storage. ThyssenKrupp AG: Consolidating in the new, emerging markets. Many analysts felt that the acquisition of Presence in the US Maxtor was a visibly planned move by Industry Application Software Seagate to consolidate its position in the ThyssenKrupp AG, the largest steel Reference No. MAA0095K hard drive business and stop a further fall company of Germany, offered to acquire Year of Pub. 2006 in prices. This case provides the reader the largest steel company of Canada, Teaching Note Not Available with a broad overview of the two Dofasco Inc. Luxembourg-based Arcelor Struc.Assig. Not Available companies, the hard disk storage market SA, the world’s second largest steel Keywords scenario, the synergies of acquisition and company, also intended to acquire the the road ahead. Canadian company. Dofasco Inc. is a Adobe; Macromedia; PDF; Flash; leading automotive steel manufacturer and PostScript. Pedagogical Objectives supplies to the leading automobile manufacturers of the US. Both Arcelor and • To provide a broad overview of the two ThyssenKrupp are the suppliers of Sun’s Acquisition of Storagetek companies and the hard disk storage automotive steel to the European market scenario automobile industry, intending to make a Sun Microsystems had been struggling hard • To discuss the possible synergies and foray in the US automotive steel industry. to manage its operations, ever since it was challenges of the acquisition. Being a major supplier to the leading struck by the dotcom bust. By the end of carmakers in the US, Dofasco Inc. is the fiscal year June 2004, Sun had revenues of Industry Data Storage Devices obvious choice for both the companies. $11.2 billion. Its hardware business was Reference No. MAA0093K However, the analysts are skeptical stumbling due to intense competitive Year of Pub. 2006 whether the high price for Dofasco will be pressures from IBM, Hewlett-Packard and Teaching Note Not Available a prudent decision in the long run. The Dell. Further, its Solaris operating system Struc.Assig. Not Available case provides a scope for discussing the struggled against Linux, Windows and UNIX. recent trends in the global steel industry. It Keywords In the new business scenario, storage emerged also analyses how ThyssenKrupp plans to as one prominent area where an increasing Seagate; Maxtor; Storage. leverage its investment and overcome the number of companies consolidated challenges. themselves to seek competitive leverage. The rapid digitisation of information, the Pedagogical Objectives expansion of the Internet, the increasing Ultra Tech – Acquisition of L&T business needs for data storage and security, Cement by Grasim • To discuss the trends, patterns of global along with the new regulatory steel industry and consolidation as a Grasim, a leading Indian business group, environments, collectively pushed the major strategy in fragmented steel has acquired the majority stake in Ultra demand for storage. The merger statement industry globally 108 www.ibscdc.org

• To discuss acquisition process of Dofasco management style and were afraid that the to lay a strong foothold in a number of

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Inc. by ThyssenKrupp AG, potential acquisition would result in job loss. The lucrative acreages, against stiff III – Y G E T A R T S synergies and problems associated with case study offers a scope for discussing the competition from international oil the acquisition rationale of the acquisition in the recent companies, in the Middle East, Central Asia global trends, the value chain of the industry and East European countries. For the LNM • To discuss how acquisition as a growth and how Mittal Steel plans to leverage it. group, which had capitalised on the steel strategy help companies to consolidate The case study also allows the discussion boom, it was a move onto yet another in fragmented steel industry of how Mittal Steel can leverage the ‘hot’ commodity, oil and gas. But, its first • To discuss the key factors which make acquisition by strengthening its position futile bid for PetroKazakhstan proved that an acquisition a successful one across the globe. LNM’s business influence would not work wonders all the time and it was not also at • To discuss in details about the problems Pedagogical Objectives par with global oil majors like Chevron, of acquisition and how the maximum BP and Exxon-Mobil. ONGC-Mittal leverage can be gained • To discuss the trends, patterns of global Energy Ltd would bid for Kurmangazy steel industry and consolidation as a oilfield in late 2005. Industry analysts, • To discuss, the bidding process and major strategy in fragmented steel funding of an acquisition across the globe and major oil companies industry globally were keeping a close watch to see how • To discuss the value chain of the steel • To discuss acquisition process of Arcelor, successful the joint venture would turn out industry and primary steel making the largest steel company of Europe and to be over time. process and secondary steel making second largest globally by Mittal Steel, Pedagogical Objectives process. potential synergies and problems • To discuss the concept of ‘White associated with the acquisition • To understand the changing dynamics Knight’, ‘Black knight’ and ‘Poison of global steel industry and oil and gas • To discuss how acquisition as a growth industry Pill’. strategy help companies to consolidate Industry Steel in fragmented steel industry • To understand the concept of Special Purpose Vehicle (SPV) Reference No. MAA0091K • To discuss the key factors which make Year of Pub. 2006 an acquisition a successful one • To understand when a company opt for Teaching Note Not Available diversification strategy Struc.Assig. Not Available • To discuss in details about the problems of acquisition and how the maximum • To understand how to integrate two Keywords leverage can be gained different company from two different industry ThysenKrupp; Value chain; Steel Industry • To discuss, the bidding process and Dynamics. funding of an acquisition. • To understand how to make an alliance a successful one Industry Steel • To understand the problems of making Mittal’s Biggest Gamble: Bid for Reference No. MAA0090K Year of Pub. 2006 an alliance work Arcelor Teaching Note Not Available • To understand the upstream and down On January 26th 2006, Laxmi Niwas Mittal Struc.Assig. Not Available stream activities of global energy (popularly known as LNM), chairman and Keywords industry. CEO of Mittal Steel, the world’s largest steel company, made a bid for Arcelor SA, Mittal Steel; Arcelor; Xenophobia; Industry Petrochemical (the world’s second largest steel company). Consolidation. Reference No. MAA0089K In the era, when consolidations and Year of Pub. 2006 acquisitions were common practices in the Teaching Note Not Available Struc.Assig. Not Available industry, Mittal Steel’s new move was LNM and ONGC: Creating expected to help it in consolidating its Keywords presence more aggressively. The proposed Global Energy Powerhouse acquisition price of US$ 23 billion, was the In July 2005, Laxmi Niwas Mittal, Mittal Steel; ONGC; SPV; LNM-ONGC biggest in the global steel industry. The chairman of world’s largest steel company, Energy Services Limited; OVL. proposal was, however, strongly opposed LNM group and Subir Raha, chairman of by Arcelor’s management and the entire India’s largest oil producing company, Europe was divided on the issue. Since ONGC signed an agreement to float two MTV-Google Alliance: Sharing Mittal Steel produced cologne, Arcelor, Cyprus based companies (ONGC-Mittal Video Across The Online Media being the producer of perfumes only, Energy Ltd and ONGC-Mittal Energy claimed that the merger between the two Services Ltd) in order to acquire overseas In August 2006, MTV Networks formed a companies was not possible. Even the oil and gas assets and energy-related strategic agreement with Google to share French Government and Luxembourg businesses. The deal would help the two its video content across Google’s network. Government strongly opposed Mittal companies to set up an energy consortium The innovative video distribution model Steel’s move. The concept of corporate globally. The two new entities would take enabled Google to distribute ad-supported xenophobia followed the move. While up projects related to exploration, video content to niche websites and blogs LNM defended the move from the point development, production, evacuation and targeted at teens and young adults. With of view of the benefit of the global steel related consequential processing of online advertising market forecasted to industry and identified in it the geographic, hydrocarbons, in the form of oil, grow to $26.4 billion by 2010, the deal commercial, manufacturing and condensates and gas (including LNG). aimed to generate interests among content operational synergies, Arcelor denied it. These activities would be carried out in 25 owners, web publishers and advertisers, and The French and Luxembourg governments, countries where LNM group had strong create new revenue opportunities for both moreover, accused LNM for poor presence. For ONGC, the new strategy was Google and MTV.

109 www.ibscdc.org The case offers scope to discuss the Pedagogical Objectives • To perform a comparative analysis of emerging avenues in the Internet in the Tata Steel and CSN, for determining who backdrop of the video distribution deal of • To understand the generic motives of makes a better partner for Corus MTV and Google. strategic alliance • To identify the alternative options • To discuss how to develop strategy for available to Tata Steel, if the deal does Pedagogical Objective successful JV with reference to Nokia not go through. and Siemens • To understand the changing dynamics akeoversakeovers akeoversakeovers akeovers Industry Steel Industry of video content in the Internet • To analyse critical issues of JV. Reference No. MAA0086 • To discuss the growing significance of Industry Telecommunication Year of Pub. 2006 online advertising as a leading Reference No. MAA0087K Teaching Note Available advertising vehicle for companies Year of Pub. 2006 Struc.Assign. Available Teaching Note Not Available • To discuss the business model of Google Keywords Struc.Assig. Not Available and its sustainability in the long-run Mergers, Acquisitions, Alliances Case Study; Keywords • To discuss how brand awareness could be Steel Industry; critical success factors; increased by innovative marketing Nokia; Siemens; Mobile Phone; 3G. Industry Structure and competitive campaigns dynamics; Arcelor-Mittal; Nippon Steel; POSCO; Baosteel; JFE Steel; CSN; Corus; • To critically analyse the competitive Industry Trends; China Factor; Key Result forces shaping the video content industry Tata Steel’s Globalisation Areas; Game Theory; Vicious cycle of in the Internet. Strategies - The Acquisition Bid demand and supply imbalance; World Steel for Corus and the Strategic Fit Industry Entertainment production and Consumption; Consolidation – Acquisitions and Mergers; Reference No. MAA0088K On October 17th 2006, India’s largest Tata Steel; Ratan Tata; Globalisation Year of Pub. 2006 private steel-maker, Tata Steel, bared its Strategies; Organic and Inorganic growth; Teaching Note Not Available bold bid to acquire Anglo-Dutch steel- Rationale for Bid, Economies of Scale; Struc.Assign. Not Available maker, Corus, almost five times the size access to raw materials; R&D; Strategic Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T of the bidder. The proposed takeover Keywords Fit; Financial Analysis; Cultural fit; created an uproar in business circles because Integration issues; Bidding war MTV; Google; Online media; Lifestyle of the audacity of the proposed deal. If the media; Distribution strategy; Adwords. takeover bid was to be approved by Corus’ shareholders, Tata Steel would be the world’s fifth largest steel producer. Various Telefonica’s Strategy for Growth Nokia and Siemens: Creating a synergies – like economies of scale, strong in Europe: Acquisition of O2? downstream business operations, enhanced Telecom Alliance R&D, and a wide distribution network – In 2005, the Spanish telecom giant, were expected to emerge out of the deal. Telefonica made a bid for O2, a British Nokia, the world’s largest manufacturer of wireless carrier. The bid created headlines mobile phones and Siemens Information However, there were also many concerning for being the second largest ever all cash and Communications, the information and issues that needed to be addressed. offer in telecom history. With communication divisions of Siemens AG As Tata Steel was preparing for the consolidation taking place on a major scale were to merge their mobile and fixed-line Extraordinary General Meeting scheduled in the European telecom sector, Telefonica phone network equipment business in order on December 4th 2006 for presenting its too looked for a channel for expansion in to create one of the world’s largest network bid to the Corus shareholders, there was an the booming sector. The case chronicles firms. On June 19th, 2006 Nokia and unexpected twist in the tale. On November the expansion strategies of Telefonica and Siemens had announced their intention to 17th 2006, Brazilian steel-maker, CSN the reasons behind its bid for O2. merge the Network Business Group of entered the fray. The synergies that it Nokia and the carrier related operations expected from the deal were similar to that Pedagogical Objectives of Siemens into a new company, which of Tata Steel and its bid amount was larger was named as Nokia Siemens Networks. than Tata Steel’s. While Tata Steel bid • To make students understand The 50-50 joint venture was to be based in Corus for $8.1 billion, CSN jacked the bid telecommunications industry worldwide Nokia’s home country of Finland. It was price with a ‘potential offer’ of $8.3 billion. • Spanish telecom giants acquisition of O2, headed by Simon Beresford-Wylie; he was A gripping scenario seemed to be in the its strategies behind it. to run the company. Nokia Siemens offing, whose suspense could be solved by Networks had predicted annual sales of Corus’ shareholders when they decide Industry Telecom US$20.2 billion. The joint venture which company can be a better partner for Reference No. MAA0085C positioned itself to develop and implement growth in the long run. Year of Pub. 2006 the revenue generating and cost saving Teaching Note Not Available products and services, which also expected Pedagogical Objectives Struc.Assign. Not Available to be benefited by their global reach. In this regard they had also planned to save • To analyse the competitive dynamics Keywords up to US$2.75 billion by the year 2010. in the global steel industry and determine Telefonica; O2; Europe; Latin America; They were quite hopeful of creating one its critical success factors and the key Telecommunication; Spain; Acquisition; of the world best Research and result areas Development teams, which would have the Telefonica Moviles; Cesar Alierta; Peter ability and competency to provide the • To analyse the competitive advantages Erskine. innovative skill to produce the next of Tata Steel and its globalisation strategy generation fixed and mobile product • To analyse the strategic rationale for platform and services. the acquisition of Corus by Tata Steel

110 www.ibscdc.org

Fiat Auto SpA – Tata Motors’ Joint to take it into next generation digital Advertising revenues from BBC sites; News

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Venture presentation of its content. Falling content in BBC; BBC Jam and Cbeebies. viewership for conventional news Fiat Auto SpA and Tata Motors had presentation in television had resulted in announced their joint venture to BBC’s Board of Governors to announce ONGC’s Overseas Merger & manufacture passenger vehicles, engines new media initiatives which assessed BBC’s and transmissions for Indian and overseas current stature and its need to cater to Acquisition Strategies markets. Fiat India’s Ranjangaon plant younger audiences who are on the move. Over the years, India had become heavily would be used for this venture and its plant BBC had Channels offering 24x7 dependent on imported crude oil. For the in Cordoba, Argentina was to be used for presentations which were increasingly put growing Indian population and developing the manufacture of Tata’s commercial on internet and interactive channels for Indian industry, the rising cost of crude vehicles which were to be distributed in specific groups were also floated. Uploading was becoming a burden. Oil and Natural Latin American and European markets and downloading images were made possible Gas Corporation Ltd (ONGC) was one of through Fiat’s network. and search on BBC’s exhaustive archive the leading Exploration & Production content was also open. BBC felt that these Fiat India, with no significant sales and no (E&P) company in India. The domestic measures were not enough and looked for new successful car launches in India, was competition to ONGC grew after alliance partners who could radically alter looking for Tata’s established dealer liberalisation policy of Indian government its presentation platform to suit next network and would also get vehicle in 1991. The government prepared a plan generation requirements. After scouting financing for its customers.. Tata Motors, called ‘India Hydrocarbon Vision 2025’ and RealNetworks, IBM and Linden in turn, was gaining technology, the suggested ONGC to go global. The Laboratories, BBC tied up with Microsoft. unutilised plant capacity of Fiat and most competition in domestic business and hike importantly a reliable and cost effective As its director general, Mark Thompson, in oil prices motivated ONGC to create engine for its proposed INR one lakh car. had quoted that BBC needed a creative ONGC Videsh Ltd (OVL) for overseas response to the amazing, bewildering, operations. By 2006, ONGC is present in The case outlines the backdrop of the exciting and inspiring changes happening 14 countries and has 24 ongoing projects. Automobile industry in India, the in both technology and expectations, the background of these companies, their OVL had set a target of producing 60 MoU outlined its emphasis that BBC’s performances and the need for them to Million Metric Tonnes Per Annum content delivery and consumption will be forge a venture taking the Indian, Latin (MMTPA) in 2025, but its output in 2006 explored for the next generation platform. American, Chinese and European markets was only 6.34 MMTPA. Its strategy for Potential areas of collaboration will include into consideration. It also looks into the expansion was based on three entry search and navigation, distribution and various strategies adopted by the partners methods: (a) wholly-owned projects content enablement, the MoU said. to get the best out of the joint venture. acquired during bidding of oil blocks in different countries, (b) production sharing Pedagogical Objectives contracts and (c) participation interests. Pedagogical Objectives It had established presence in major oil The case anticipates familiarising the • To make students realise the strategies producing countries like Russia, Qatar, students on behind global joint ventures Libya, Iraq and Iran. Even then, the output • The changing scenario in presentation from major projects was insufficient to • To evaluate the actual cost-benefit of news and other programmes in support Indian crude requirements. To analysis of Tata Motors and Fiat Auto television overcome the limitations, OVL had on this venture initiated expansion through acquisition of • Evolution in conventional news and • To understand the joint promotion and new projects during 2006. infotainment media distribution network of automotive industry. • Threat posed by internet to the Pedagogical Objectives conventional media Industry Automobile Industry in India • To study the challenges faced by the Reference No. MAA0084C • BBC’s worldwide standing on multi- Indian oil and gas industry and India’s Year of Pub. 2006 channel broadcasting and its efforts to energy requirements Teaching Note Available be modernised • To discuss ONGC and its role in the Struc.Assign. Not Available • Various divisions and channels in BBC Indian crude oil sector Keywords and their functions • Merger and Acquisition strategies of Tata Motors; Fiat Auto SpA; Tata Motors’ • Contribution of Microsoft in developing OVL. One lakh car; Strategic partnership; BBC’s next generation presentation. Industry Oil & Gas Industry Automobile marketing network in India; Reference No. MAA0082C Automobile financing in India; Plant Industry News & Infotainment Year of Pub. 2006 utilisation; New car launches; Reengineered Reference No. MAA0083C plastic components for cars; Joint venture; Year of Pub. 2006 Teaching Note Available Automobile marketing in Europe; Truck Teaching Note Available Struc.Assign. Not Available Market in Latin America; Technology and Struc.Assign. Not Available Keywords design transfer; Cross branding; Small car Keywords manufacturing. ONGC; OVL; Oil & Gas Industry in India; BBC-Microsoft Tieup; Next generation Participation Interest; Sakhalin – I project; digital presentation; Evolving digital GNOP; Chinese National Petroleum technology in news channels; Creative Corporation; Shell and Petrobras; OMEL; BBC-Microsoft Tie-up: Strategy Media; New Media initiatives in BBC; Block 35 and 36 in ; Crude oil and for Next Generation Digital Challenges to traditional newscast; Sharing natural gas; Exploration and production; Presentation BBC Archives; Multi device newscast; Million Metric Tonne Per Annum of Crude. Digital TV in UK; BBC News 24; British Broadcasting Corporation, BBC had entered into tie up with Microsoft in 2006 111 www.ibscdc.org Adidas-Reebok Merger: airline a success. Prior to the merger, US range for the middle class consumers. Sprinting behind Nike Airways was the dominant carrier on Threat from competitors such as Unilever, America’s East coast with hubs in P&G, Beiersdorf and Henkel as well as On August 3rd 2005 Adidas, the German Philadelphia, Pittsburg and Charlotte, complacency within the organisation since sports shoes and apparel company North Carolina. But the airline was it has reached number one position are the announced its decision to buy Reebok, an suffering from financial problems and had major hurdles faced by the company in the American rival for $3.8 billion and create sought bankruptcy protection for a second twenty-first century. a $10 billion footprint in global athletic time in 2004, since the 2001 crisis. akeoversakeovers akeoversakeovers akeovers footwear, apparel and hardware markets. America West was concentrated in the When news of this take over got out, the The deal was expected to improve Adidas’s Western region and was a full-service carrier Body Shop faced severe criticism and public position in the North American market offering services at discount prices. In early outrage on having sold out to a company on the one hand and Reebok’s position in 2005, prior to the merger, the airline was which conducted animal testing and had the European and Asian markets on the nearing bankruptcy. not shown commitment to any ethical other. However, most industry watchers issues. Body Shop’s ethical rating by the were skeptical about the deal being a Criticism over the merger started when the Ethical Consumer Magazine dipped from challenge to Nike, the market leader. code name for the merger talks leaked out 11 out of 20 to 2.5. 24% of L’Oréal was in April, 2005. The merger named Project controlled by Nestlé. Consumers felt that This case examines the challenges that lay Barbell (for the airlines’ strengths on the this was a case of selling to the devil and a ahead for Adidas in terms of positioning of opposite coasts of the country), quickly farewell to the values that the Body Shop products, price and brand. Despite the earned the nickname Project Dumbbell. had espoused thus far. synergies available as claimed in the deal Critics questioned the wisdom of America the industry experts believed that the two West’s decision to link up with a bankrupt The deep pockets and global reach of big brands might duplicate efforts rather partner. In Parker’s opinion there were L’Oréal were expected to improve the than complement each other. distinct advantages in merging with an Body Shop’s performance in terms of more airline under bankruptcy. Labour issues efficient manufacturing and marketing know how. The Body Shop was to provide Pedagogical Objectives dominated the post-merger scenario. Parker had anticipated these problems, as the giant a new perspective into retailing, • To discuss the challenges of Adidas in it was true for any merger, especially a foothold in the masstige markets and an positioning after the merger with Reebok between culturally diverse organisations. ethical platform. Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T • To discuss the synergy that would be Was Anita’s decision right for her developed after merger. Pedagogical Objectives company? Will the takeover result in the expected synergies? Industry Sports Wear • To study Industry Life Cycle Model Reference No. MAA0081C • To discuss about consolidation as a way Pedagogical Objectives Year of Pub. 2005 out of the negative financial trend. Teaching Note Not Available • To discuss about L’Oréal’s intentions in Struc.Assign. Not Available Industry Airline Industry taking over the Body Shop Reference No. MAA0080C Keywords • To highlight the ways in which L’Oreal Year of Pub. 2006 and Body Shop dealt with ethical issues. Adidas; Reebok; Nike; Merger; Sport Shoe; Teaching Note Available Footwear; Sports Apparel; Adidas- Struc.Assign. Not Available Industry Personal Care Market Salomon; Deal. Keywords Reference No. MAA0079C Year of Pub. 2006 US Airways; America West; Merger; US Teaching Note Available US Airways – America West Airline Industry; 2001 attacks; Legacy Struc.Assign. Not Available Merger: Flight to Success? carriers; Low-cost carriers; Low-cost business model; Price wars; Oligopolistic Keywords On May 19th 2005, US Airways Group market; Airlines deregulation; Project L’Oreal; Ethical marketing; Corporate announced that it would be acquired by Barbell; William Douglas Parker; Social Responsibility; Lindsay Owen Jones; Phoenix-based Corporate Culture; Labour Integration. The Body Shop; Personal care products; Corporation, parent company of America Masstige brand; Community trade; Ethical West Airlines. The combined airline named cosmetic retailer; Beauty care market; US Airways positioned itself as the ‘World’s The Body Shop (Part B): L’Oréal Acquisitions; Global branding; Animal Largest Low-Fare Airline’. The newly Turning Green? testing; Emerging markets; Market leader. formed US Airways Group finalised all transactions enabling America West and On March 17th 2006, L’Oréal the world’s US Airways to begin operations as one largest and most successful cosmetic L’Oreal in 2006: The Body Shop carrier – US Airways in September 2005. company, announced its take over of the Acquisition Both the airlines merged to create the fifth Body Shop, the ethical cosmetic retailer largest domestic airline in the US, which in the UK, founded by Anita Roddick. In 2005, the $18.89 billion L’Oreal group was positioned as the largest full-service, Under the leadership of CEO, Lindsay is the largest and the most successful Low-Cost Carrier in the country. William cosmetics company in the world, with over Douglas Parker, CEO of America West, Owen-Jones, since 1988, L’Oréal grew at a phenomenal growth rate and by 2004 19 international brands. Whether it sells became the chairman, president and CEO Italian elegance, New York chic or French of the merged airline. achieved 19 years of consecutive double digit growth. By 2005, most of its brands beauty through its brands, L’Oreal has Parker in his early forties was the youngest are facing stagnating sales in its major reached out to a wide range of customers CEO of a large US airline. He was the person markets. The Asian markets, Brazil, China across different income groups and cultures. behind the revival of America West after and Russia are the only drivers of growth. Over the years L’Oreal has acquired many the 9/11 terrorist attacks. In 2005, it was In most of these emerging markets brands and successfully integrated them in his responsibility to make the merged L’Oréal’s brands are not in the affordable its brand architecture, sometimes retaining 112 www.ibscdc.org

their brand origins and at other times giving Pedagogical Objectives keywords

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S them a ‘makeover’. The case discusses III – Y G E T A R T S L’Oreal’s brand architecture, its retail • The case discusses Dabur’s product AOL; Yahoo; Google; Comcast; Microsoft; strategy, promotion strategy, corporate portfolio, Balsara’s product portfolio and MSN; acquisition; deal; primary gateway structure and competition. The Body Shop their respective strengths and to internet; internet advertising; portal; is known for selling natural products and weaknesses. The case traces the web traffic. supporting environmental and human- successful merger of the two companies rights causes. and discusses how Dabur handles the various marketing and HR challenges that eBay: Bidding Big on Start-up In March 2006, L’Oreal has acquired The come its way Body Shop International a UK-based retail Skype cosmetic brand revered for its ethical values • It discusses how Dabur has financed the acquisition San Jose, California based ‘eBay Inc.’ was for $1.1 billion. The development has the world’s most popular online auction surprised many as on the surface there • The case also discusses Dabur’s strategy website with over 150 million users seemed to be little in common between to rejuvenate the stagnant Balsara brand. worldwide in 2005. Over the years, eBay L’Oreal, which cultivates an image of had built its massive global presence French chic, and The Body Shop known Industry FMCG through acquisitions of regional auction for selling natural products and supporting Reference No. MAA0077P sites, payment facilitators and sites that environmental and human-rights causes. Year of Pub. 2005 provided auxiliary services to its main Moreover, L’Oreal is a manufacturer of Teaching Note Not Available business like classifieds and personals. But beauty products and not a retailer. The case Struc.Assig. Not Available in September 2005, eBay shocked discusses the strategic fit, the benefits and keywords investors and analysts alike with its $2.6 the ramifications of the acquisition and billion take-over of Luxembourg based the future possibilities of the association Acquisition; Marketing; Turn-around; ‘Skype Technologies’, an Internet between the two companies. FMCG. telephony (VoIP) provider. Although Skype was the most popular VoIP provider Pedagogical Objectives due to its free and high quality service, many felt that the acquisition’s success was • The case discusses L’Oreal’s brand AOL: The Prize in the Battle of doubtful since the business models of both architecture, its retail strategy, Portals eBay and Skype were unrelated. Concerns promotion strategy, corporate structure In October 2005, the battle of the portals were also raised about the different sphere and competition is heating up with three internet companies of operations and the successful integration • The case discusses the strategic fit, the – Google, Microsoft and Yahoo! (Yahoo) of the two. Despite such concerns, eBay benefits and the ramifications of the trying to strike some sort of a deal with and Skype were determined to establish acquisition and the future possibilities America Online (AOL) – the fourth player their synergies and prove that they had of the association between the two to become the primary gateway to the the potential to be an excellent team. companies. internet. The struggle will decide which company is the world’s leading internet This case delves into the business models Industry Consumer Goods portal – the site that most internet users of both the companies, brings out their Reference No. MAA0078P rely on for everything, from searching the inherent differences and sheds light on the Year of Pub. 2006 web to sending e-mails and catching up on purported synergies of the deal. It also Teaching Note Not Available the news. The case outlines how the deal is endeavors to compare the acquisition of Struc.Assig. Not Available important to all the players, and what is at Skype with eBay’s other acquisitions and raises the debate on the future of the deal. keywords stake for them. AOL decides to enter into a deal with Google. The case also discusses L’oreal; The body shop; Lindsay Owen the ramifications of the actual deal, the Pedagogical Objectives Jones; Anita Roddick; Brand architecture; gains for both the parties, and how could it • To discuss why eBay acquires companies Brand positioning; Reposition strategy; have been better for both of them. outside its core business domain Retail strategy; Strategic brand fit; Promotion strategy; Corporate structure; Pedagogical Objectives • How to create synergies through Social branding; International cosmetic acquisition industry; Franchising; Acquisition; • The case outlines why the deal is Environment and human rights cause. important to all the players, and what is • The future of e-commerce. at stake for them Industry Internet Auctions • AOL decides to enter into a deal with Reference No. MAA0075B Dabur – The Balsara Acquisition Google Year of Pub. 2005 Teaching Note Not Available In January 2005, Dabur has announced its • The case also discusses the ramifications Struc.Assig. Not Available decision to acquire an Indian FMCG – of the actual deal, the gains for both the Balsara India, a loss-making company. parties, and the means to increase the keywords Dabur believes that Balsara’s product basket mutual benefits eBay; Skype; Skypein; SkypeOut; eBay- fits well with Dabur’s own portfolio. • The case also discusses the businesses of Skype Acquisition; Meg Whitman; Niklas Balsara’s HR division possesses skills that the three players, their areas of interest Zennstorm; Janus Friis; PierreOmidyar. complement Dabur’s own team. The and their growth prospects. Balsara brands – which have been stagnating since the late 1990s are Industry Internet Companies rejuvenated by Dabur. Dabur has overhauls Reference No. MAA0076P Oracle PeopleSoft Saga it operations and purchasing strategy Year of Pub. 2006 Oracle’s acquisition of PeopleSoft in operations. Contrary to expectations, Teaching Note Not Available December was culmination of a 18 month Dabur is successful in turning Balsara around Struc.Assig. Not Available saga that started in June 2003. To many, in eight months. 113 www.ibscdc.org Oracle’s bid was seen as its response to the Pedagogical Objectives Managed/leased hotels; Franchise Fee; PeopleSoft – JD Edwards’s merger that put Cross-selling Business Model Hilton PeopleSoft above Oracle as a number two • To discuss the objectives of NAFTA and Reservation Franchise development player in the market behind SAP. Oracle similar Free Trade Agreements process; UFOC. Worldwide; Principles of had to overcome a number of hurdles in its • How Cemex forward integrated and franchising; Franchise development path. Not many seemed convinces about provided end to end building solutions Worldwide; Principles of franchising; the rationale behind the merger and felt Franchise development. that it may not be workable. Speculations • How a company can benefit the society akeoversakeovers akeoversakeovers akeovers abound on how the acquisition would take and at the same time make profit. shape and the resulting impact on the Industry Cement General Motors & Fiat – software industry. Reference No. MAA0073B Destination Splits Ville? Year of Pub. 2005 Pedagogical Objectives Teaching Note Not Available The latter half of the 1990s saw the share of companies like US based ‘General • Oracle’s strategy of acquisitions with Struc.Assig. Not Available Motors Corp’ (GM) and Italian auto particular reference to PeopleSoft keywords manufacturer ‘Fiat’ (Fiat), eroding in the • Mergers and acquisition in the software Cemex; Patrimonio Hoy; Low-cost European markets. While GM recorded industry housing; Housing in Mexico; Construction; losses of $403 million, Fiat saw their Acquisition; Construmex; Dolex; Socios; market share decline from 42.65% (in • The impact of the acquisition on Oracle 1997) to 35.4% in 2000. Concerned about and PeopleSoft Cement; Services; Distribution network; Mexico; Tanda system; Mexican economic declining sales and eroding bottom lines, • The future of products developed by crisis. Fiat and GM entered into an agreement in PeopleSoft and JD Edwards early 2000, under which GM acquired a 20% stake in Fiat and Fiat purchased 6% • Oracles’ future strategies. of GM’s stock. But the rapid decline in Franchising at Hilton Hotels Fiat’s sales and market share continued Industry Software Corporation into the 2000s thereby resulting in huge Reference No. MAA0074B losses. To control this decline, Fiat went Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Year of Pub. 2005 Hilton Hotels Corporation (HHC) was into in for a recapitalisation drive and sold off Teaching Note Not Available ownership, management and development, its more profitable businesses. Struc.Assig. Not Available and franchising of hotels, resorts and timeshare properties. As of 2003, HHC keywords consisted of 2,173 properties, totaling over Pedagogical Objectives Oracle PeopleSoft; Business strategy; 348,000 rooms. Of these, HHC owned an • To discuss the merging of Fiat and GM Software Industry; Mergers and interest in and operated 122 hotels, leased Acquisitions; Product Strategy; Switching seven hotels, managed 206 hotels owned • To discuss the possible synergy that Costs; HR Issues in Mergers and by others and franchised 1,808 hotels. would arise from the deal Acquisitions; Enterprise Application Besides this, HHC also managed or • What GM and Fiat should do to stop the Software; Oracle vs SAP; Regulatory issues franchised 30 timeshare properties. This sales decline. in mergers and acquisitions; JD Edwards; case talks about the business of HHC and Larry Ellison; Organisational culture; its franchising mode. It also discusses in Industry Automobile Manufacturing Software upgrades. detail the principles of franchising laid down Reference No. MAA0071B by HHC and the step-by-step process of Year of Pub. 2005 the franchising development. Teaching Note Not Available Struc.Assig. Not Available Cemex, Mexico— Pedagogical Objectives Revolutionizing Low-cost keywords Housing • Pros and cons of the business model of General Motors; Fiat Auto SpA; Put the Hilton Hotel Corporation Cemex was one of the leading cement Option; GM-Fiat alliance; Fiat companies of the world. During early • Could the franchise development restructuring; Gianni Agnelli; Opel; Fiat- 1990’s, it experienced problems in its home process be simplified? GM Powert rain BV GM-Fiat Worldwide country, Mexico . To revive its sales in Purchasing BV; European Car Market; • Fairness of the Hilton’s principles of Mexico, Cemex ventured into low-cost Automobiles; Alfa Romeo; Saab; Lanica; franchising housing by launching an innovative savings Fiat Group. and credit scheme, ‘Patrimonio Hoy’. • Does the support programme of Hilton Patrimonio Hoy provided the poor people add value to its system and attract new cement, raw materials and a host of allied owners? Can any other programmes be L&T: Attempts on Public-Private services so as to enable them build their initiated? Partnership own homes. It was a huge success in Mexico and Cemex planned to extend the scheme Industry Hotel In September 2004, the engineering and to other developing countries. Reference No. MAA0072B construction giant L&T, had sent a Year of Pub. 2005 proposal to the Joint Secretary, Shipping This case explores the concept of Teaching Note Not Available for a joint venture (JV) with the loss Patrimonio Hoy and provides scope for Struc.Assig. Not Available making HSL. Under the proposed scheme, discussing the innovative marketing keywords L&T wanted to form a 60:40 JV as an programme of Cemex. It also provides associate company of HSL with majority scope for the discussion of low- cost housing Hotels & Resorts; Hospitality Industry; stake held with L&T. It envisaged a strong in Cemex. Luxury Hotels; Hotel Management; Hilton collaboration between the engineering and HOnors-the guest loyalty programme; One design expertise of L&T and the domain Services – CRM; Franchised hotels; expertise of HSL would herald a new area 114 www.ibscdc.org

of growth. L&T wanted HSL to transfer merger would form the biggest telecom supposed to reimburse. Guidant needed to

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S assets (minus liabilities) as a portion of equipment company in the world surpassing get the investigations and lawsuits behind III – Y G E T A R T S equity. The company proposed to infuse the market leader, Cisco, and offer a it and rebuild its image. Boston Scientific funds and utilisation of HSL assets via the complete portfolio in the telecom needed to fix the problems of Guidant along JV to bring about a turnaround of the loss equipment industry, from equipments to with its own problems. Had Boston making Public Sector Undertaking. L&T service solutions for the networks. Scientific, lost by winning the deal? wanted the Government to remain the However, analysts are skeptical about the owner of HSL. synergistic benefits due to concerns about Pedagogical Objectives cultural integration and product overlaps. The Joint Secretary, Shipping sent a • To discuss the suitability of the merger welcome response and the preliminary approval to initiate talks between L&T Pedagogical Objectives • To highlight the issues and challenges and HSL. Accordingly, the Joint Secretary • To understand the new trends in the faced by each of the two merged asked L&T to broadly elucidate the global telecom industry after the companies proposed shape of the JV and communicate telecom bubble burst in 2000 • To discuss the synergies created by the the same to the CMD, HSL. In early 2005, acquisition. L&T’s top management presented the JV • To analyse the factors that prompted plan to the Joint Secretary, Shipping, the merger, the potential synergies and Industry Medical Equipment Industry Ministry of Finance and Planning pitfalls the merger might witness Reference No. MAA0068A commission. In this meeting a decision was • To discuss the effect of this mega merger Year of Pub. 2006 taken to evaluate HSL’s worth. The on the global telecom industry and the Teaching Note Not Available valuation was conducted in March-April possible consolidations that it might Struc.Assig. Not Available 2005. After that the picture became vague. trigger among telecom equipment keywords The pace of the process slowed down and manufacturers and service providers. that left Mr. Naik confused. Though 15 Boston Scientific; Guidant Corp.; Johnson months had elapsed after the process was Industry Wireline Telecommunications & Johnson; Medical equipment industry; initiated, he was hopeful that the venture Equipment Medical Device Maker; Acquisition; would materialise in the days to come. He Reference No. MAA0069 Strategy; Implantable Cardioverter thought that L&T could move ahead with Year of Pub. 2006 Defibrillators (ICDs); Cardiac Rhythm the public-private partnership (PPP) Teaching Note Not Available Management (CRM); Pacemakers; Stents; model, the concept of co-investment would Struc.Assig. Not Available Product recall. be a feasible alternative to disinvestment of public sector undertakings in India. keywords Analysts and industry observers debated on Cisco; Telecom bubble; Telecom industry; Oracle’s acquisition of Siebel whether L&T’s attempt of PPP was a right ZTE; Huwaei; Patricia Russo; Serge move or not. What did L&T envision to Tchuruk; Failed merger; Merger of equals; In 2005, Oracle Corporation (Oracle), the achieve through the deal? Where could it Bell Labs; IPTV; CDMA; DSL; Optical world’s largest enterprise software take L&T, if the PPP deal was successful? fiber; Consolidation. company, with offices in more than 145 Was PPP trustworthy, when it came to countries, employed over 50,000 people. projects related to defense? In fiscal 2005, its revenues were Boston Scientifics’ Guidant US$11,799 million. Siebel Systems Inc. (Siebel), marketed CRM applications Pedagogical Objectives acquisition tailored for various industries. In early • To understand how Joint venture can be Boston Scientific, with a market 2001, Siebel faced a financial crisis as many instrumental in the turnaround of a public capitalisation of about $20 billion, was the of its customers switched to companies sector largest life science company in which offered an integrated suite instead Massachusetts (ranked by market of specialised applications at a lesser cost. • To discuss the problems faced in private- capitalisation). After the merger with In September 2005, Oracle decided to public partnership. Guidant, it could be the largest public acquire Siebel for US$5.8 billion. The Industry Heavy Industries company in the state by market acquisition completed in early 2006, added Reference No. MAA0070B capitalisation. Boston Scientific expected 4,000 customers, 3.4 million CRM users Year of Pub. 2005 the deal would boost its growth and profit and front end enterprise applications into Teaching Note Available in coming years. Since June 2005, Guidant its portfolio. had recalled or issued safety advisories for Struc.Assig. Not Available Oracle competed with SAP AG for the about 88,000 defibrillators and more than number one player in the global enterprise keywords 200,000 pacemakers. The company faced software business. However, Oracle faced regulatory investigations as well as multiple Public Private Partnership(PPP); L&T; competition from niche players like lawsuits from the recalls. In December Joint Venture (JV); Hindustan Shipyard Salesforce.com and RightNow 2005, Guidant received a warning letter Limited (HSL); Mazagon Docks (MDL); Technologies which provided business from the FDA about quality control at its Hindustan Aeronautics Limited (HAL); software services to its customers at lower plants, this meant the company could not Public Sector Undertaking (PSU). prices. The case study highlights the introduce any new products until regulators acquisition of Siebel, synergies attained and are satisfied and issued at the plants had impact of the acquisition on the global been addressed. Lucent Technologies-Alcatel software market. Merger: The Potential Synergies Like Guidant, Boston Scientific was also under a warning that restricted it from Pedagogical Objectives On April 2nd 2006, Alcatel, the French introducing products until the problems telecom equipment major and Lucent were fixed. Guidant owed Johnson & • To discuss the pros and cons of Oracle’s Technologies from the US announced a Johnson $705 million for breaking its prior Siebel Acquisition mega merger worth $13.4 billion. The agreement, which Boston Scientific was • To understand the IT industry structure 115 www.ibscdc.org • To debate on the synergies and liabilities Justice Department; Consolidation; advertising; Television; Studio; created by the acquisition. Mergers and acquisitions; Market growth; Consolidation; Horizontal integration; Globalisation; Duopoly; Price inflation; Vertical integration; Economies of scope; Industry Global Software Service Competitive advantage; Market share. Economies of scale; Cross promotion; Industry Strategy; Regulation; Succession planning; Reference No. MAA0067A Competition; Synergies Year of Pub. 2006 Teaching Note Not Available Viacom: Is Divorce Better Than akeoversakeovers akeoversakeovers akeovers Struc.Assig. Not Available Marriage? FedEx: The acquisition of Kinko’s keywords This case traces the origin, development and growth of Viacom from a subsidiary FedEx incorporated operations in early Global Business applications Industry; company to becoming the world’s third 1970s. During this period the US package Oracle growth; Siebel acquisition; Oracle’s largest media conglomerate. The main delivery business was dominated by two big Competitive advantage; Acquisition focus of the case is its merger with its parent organisations, the United States Postal synergies; Oracle’s competitors; Customer company CBS in 2000 and then the Service (USPS) and United Parcel Services relationship management; Oracle’s e- decision made in 2005 to split Viacom back (UPS). USPS had postal monopoly and no Business suite; Software market; Project into two companies; Viacom and CBS. The strong incentive to provide good services. fusion; Software services industry. case describes the industry situation in 2000 FedEx saw the gap provided through and 2005, and the rationale which led to negligence of service providence to high the decisions. The operating business end postal delivery market. It exploited Mega Mergers in US Telecomm segments of Viacom before the split and the situation and organised to deliver Industry the businesses Viacom and CBS would packages overnight using its own aircrafts. operate after the split have been explained As a strategic move to build on the strength Until 1984, AT&T enjoyed a government in detail. of its now famous express delivery service regulated monopoly in the US and create more diversified company telecommunication industry. In 1984, The case describes the media landscape and through various different acquisitions of AT&T was divested into Baby Bells and the trend of consolidation and mergers in related businesses, it acquired the retail the industry was opened for private player 1990s that led to the formation of huge focused Kinko’s. FedEx Kinko’s, the Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T participation. By 1996, both the local and media conglomerates operating in all combined entity made sense from a long distance industry was deregulated for possible media and entertainment competitive landscape. In 2005, the the players. However, in 2005 two mergers properties. With the passage of time, company generated $2.07 billion in were approved by Federal Communications achieving synergies between such large and revenues, four times higher on y-o-y basis. Commission (FCC). SBC merged with its sometimes disparate assets became questionable, leading to the conglomerates parent company AT&T for $16 billion and Pedagogical Objectives Verizon merged with MCI for $8.5 billion. pruning their businesses by focusing on the core businesses and spinning off the non • To discuss the importance of peripheral This case discusses how the merged entities core ones. This case on Viacom is a classic vision with the help of their synergies would example of the same phenomenon. The control the industry. It also discusses about succession planning undertaken by the • To discuss the synergy created by the proposed effects of mergers on price, Viacom’s CEO, Sumner Redstone, and the vertical integration quality and technological upgradation of opportunities and challenges in front of • To derive a cost benefit analysis of the services. The case ends with a question the newly appointed CEOs of the two acquisition of Kinko’s whether the merged entities would serve companies Viacom and CBS and their the customers as before. vision in taking their respective companies • To illustrate the growth strategies forward has been described. adopted to become Industry leader from Pedagogical Objectives a follower. • To discuss the effect of mergers and Pedagogical Objectives Industry Express Delivery Industry, acquisitions • To discuss and debate on the decision to Stationery and Printing Industry • To analyse the effect of merger on split a media conglomerate into two separate companies Reference No. MAA0064A various factors such as price, quality and Year of Pub. 2005 future technological upgradations of • To identify the challenges and Teaching Note Not Available services opportunities lying ahead for the Struc.Assig. Not Available separate entities • To understand the synergies created by keywords mergers and acquisitions. • To analyse the mergers and acquisitions strategy adopted by media Business Strategy; Mergers and Acquisitions; Industry Telecommunication conglomerates. Strategic Management; Core Competence; Reference No. MAA0066A Synergy through Acquisition; Peripheral Year of Pub. 2006 Industry Media vision. Teaching Note Not Available Reference No. MAA0065A Struc.Assig. Not Available Year of Pub. 2005 keywords Teaching Note Not Available Mittal Steel-Building the Steel Struc.Assig. Not Available Mega mergers; US telecommunication Giant keywords industry; AT&T; SBC; Verizon; MCI; In the era of concentration of power in Government regulated monopoly; AcTel; Viacom; CBS; Media conglomerate; few hands, consolidation in old industries FCC; Local calls; Toll calls; LATAs; Cellular Merger; Split; Acquisition; Advertising; has gained momentum. The case study is and wireless services; Long distance Programming; Broadcasting; Syndication; about building a global empire through the markets; Internet services; Baby Bells; Network; Cable television; Radio; Outdoor strategy of turning around sick units. Edward Whitacre; Ivan Seidenberg; US 116 www.ibscdc.org

Lakshmi Niwas Mittal (LNM) with his company was expected to make Year of Pub. 2006

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S vision of consolidation of steel industry acquisitions diligently to avoid such write- Teaching Note Available III – Y G E T A R T S banked on geographical reach and product offs in future and also focus on ways to Struc.Assig. Not Available line expansion for success in the 21st counter the effects of emerging century. It also highlights the core technologies on the revenues of the keywords competence of identifying the right plants company. Toshiba; Westinghouse; Nuclear power; for acquisition and investing the right Acquisition; British Nuclear Fuels Ltd; amount of money and people in it and Pedagogical Objectives Hurdles; Synergies; Atsutoshi Nishida; turning them into profitable ventures. General Electric Corporation; Strategic fit. • To discuss the impact of changing LNM went into vertical integration to have telecommunications landscape on cost advantage. The case discusses LNM’s telecom operators major acquisitions which were considered Mittal Steel’s Bid for Arcelor: the riskiest rust buckets by the industry • To discuss the strategy adopted by Coming together of Equals or Vodafone to remain competitive in the experts, one of them being in Kazakhstan, Making of an Unequal? which is located 400 Kilometers away from telecom industry Mittal Steel became the world’s largest now steel hungry China. With the creation • To discuss the effects of those strategies manufacturer of steel with operations in of world’s largest steel company, Mittal on the revenues of the company Steel, only 23% of the global production is North America, Africa, Central and East dominated by handful of steelmakers, • To discuss the reasons behind the Europe, by buying a network of loss-making providing scope for more acquisitions and alteration of the company’s strategy to state-owned steel mills in former consolidation to follow. remain a formidable player in the communist countries including telecom industry. Kazakhstan, Romania and Ukraine and Pedagogical Objectives turning them around. In January 2006, Industry Telecommunications Mittal Steel made •18.6 billion ($22 • To understand the core competency of Reference No. MAA0062 billion) hostile takeover bid for Arcelor, Laxmi Mittal in acquiring and turning Year of Pub. 2006 the No. 2 steel producer in the world, with around the sick steel units Teaching Note Available an aim to create a steel giant with a capacity Struc.Assig. Available of 115 million tonnes, larger than the next • To analyze the string of acquisitions three largest steel makers – JFE Holdings, undertaken by LNM and the vision to keywords Nippon Steel and Posco’s capacity put consolidate the steel industry Vodafone; Global strategy; Christopher together. The deal was rejected outright by • To debate whether this strategy of Gent; Arun Sarin; ‘Bigger is Better’ strategy; the Arcelor Board and there were mixed acquisitions have been a successful ‘Mobile-only’ strategy; 3G technology; reactions from the industry and strategy for Mittal Steel. Asset write-offs; Verizon; Softbank; One governments of various countries as well Vodafone; Mannesmann. regarding the takeover bid. Industry Steel Industry Reference No. MAA0063A Pedagogical Objectives Year of Pub. 2005 The Battle for Westinghouse – Teaching Note Not Available • To chart the making of Mittal Steel, Struc.Assig. Not Available Toshiba Wins: The Strategic Fit highlighting its course of action to become the biggest steel producer in the keywords Increasing fuel prices led many countries (like China and US) to look for other world Business Strategy; Mergers and Acquisitions; alternatives like nuclear power. To • To discuss the reasons and rationale Strategic Management; Consolidation; capitalise on the increasing demand for behind Mittal’s bid for Arcelor Core Competence. nuclear power, Toshiba decided to bid for Westinghouse, one of the leaders in nuclear • To discuss whether the merger of the technology in the world, when it was put two companies, would bring an end to Vodafone’s Global Strategy: up for sale. In February 2006, Toshiba the deep cyclical peaks and troughs in Paying Price for ‘Going for acquired Westinghouse outbidding other steel supply and prices companies like GE and Mitsubishi. Toshiba Growth at any Price’? • To discuss the role and influence of anticipates that the acquisition would help various governments in this deal. Vodafone became one of the largest it to win contracts in China, one of the telecommunications operators in the fastest growing markets for nuclear power, Industry Steel industry by adopting its global strategy. and would also help the company to Reference No. MAA0060 Under the global strategy the company become the global leader in the nuclear Year of Pub. 2006 relentlessly acquired stakes in businesses power business. Teaching Note Not Available spanning across 27 countries. The strategy Struc.Assig. Not Available bore fruit during the telecom boom in the Pedagogical Objectives late 1990s, which witnessed increased keywords • To discuss the reasons behind consolidation across the world. But the Westinghouse’s failure in the nuclear Lakshmi Mittal; Mergers and acquisitions; acquisitions made later were questioned as business before its acquisition by BNFL Hostile takeover; Consolidation; Steel the already acquired stakes across the world industry; Economies of scale; Merger proved difficult to manage. Although the • To analyse and understand the synergies synergies; Thwart acquisition bid; Cultural new CEO, Arun Sarin, made acquisitions in for Toshiba out of this acquisition differences in merger; Political emerging markets to offset market intervention in business; Consolidation of • To debate on the critical success factors saturation in existing markets, a write-off industry and its effect on prices. of £28 billion of its overseas assets in in this industry. February 2006 raised questions regarding Industry Nuclear Power the global strategy of the company. The Reference No. MAA0061

117 www.ibscdc.org ConocoPhillips’ Acquisition of • To discuss the challenges facing the Alliances in Automobile Industry: Burlington Resources: The successful integration of Travelers with From Fiat-GM to Fiat-Ford Strategic Fit MetLife. Technological advances and process In late 2005, ConocoPhillips (the number Industry Life Insurance improvements in the automobile industry three integrated US oil company) has Reference No. MAA0058 have made a few company leaders and acquired Burlington Resources (one of the Year of Pub. 2005 laggards and left many clueless. prominent independent oil companies of Teaching Note Not Available Competitive pressures pushed the akeoversakeovers akeoversakeovers akeovers the US) for $35.6 billion. This is one of Struc.Assig. Not Available automobile companies into the triple the major deals in the wave of keywords threat of cost pressures, cutthroat pricing consolidation that is sweeping the US oil and overcapacity. In order to counter such industry since the 1970s. Analysts Citigroup; MetLife; Acquisition synergies; pressures, consolidation was the need of rationalise that as finding new sources and Life and health insurance; Financial the hour in the industry. Consolidation setting up facilities have become expensive, supermarket; Citicorp; Glass-Steagall Act; took different forms namely, mergers and acquiring assets would save capital Gramm-Leach-Bliley Act; Robert acquisitions, joint ventures and strategic investment for major companies. The Benmosche; Distribution network; Joint alliances. Strategic alliances, which offer current consolidation is nothing new for venture; Smith Barney; Primerica; all the advantages of mergers and the US oil industry which has witnessed Strategic fit; Cross selling; Consumer acquisitions at a lower capital and resource benefits of consolidation during John D. banking investment; Travelers group. commitment, appeared a better alternative Rockefeller’s time. While executives of to bolster their positions. Amidst these ConocoPhillips say that acquisition would circumstances, Fiat entered into an alliance help them in saving operational costs, Sony-BMG Joint Venture: Lessons with General Motors in 2000 and come experts opine that the deal is overpriced. from a Dis-jointed Venture February 2005, rather surprisingly, General Motors withdrew by paying $1.99 billion. Pedagogical Objective Sony and BMG Music Entertainment, the Eight months later Fiat aligned with Ford. second-largest music record company in • To discuss the acquisition made by the world, was formed as a 50:50 joint Pedagogical Objectives ConocoPhilips as to whether it is over venture between Sony Music and

Mergers, Acquisitions and T Mergers, Acquisitions and T • To discuss whether consolidation (in Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T priced and to discuss whether the Bertelsmann Music Group in August 2004, acquisition would reap the benefits of with both the companies having equal whatever form) is warranted in the consolidation. representation in its board. Soon, the automobile industry and to discuss how company’s sales declined and Michael the strategic alliances make good such a Industry Oil and Gas Exploration & requirement Production Smellie, Sony and BMG’s chief operating Reference No. MAA0059 officer from Bertelsmann, tendered his • To discuss whether Fiat’s swinging Year of Pub. 2006 resignation. Following this, the fortunes can be bettered by switching Teaching Note Not Available Bertelsmann group opposed the renewal partners. Struc.Assig. Not Available of contract for Andrew Lack, who was from Sony and was the CEO of the joint venture, Industry Automobiles keywords on the grounds that he was responsible for Reference No. MAA0056 the lackluster performance of the Year of Pub. 2006 Oil companies in the US; Consolidation in company. Teaching Note Not Available the US oil industry; The history of the US Struc.Assig. Not Available oil industry; Standard oil; Expansion strategy of ConocoPhillips; Global oil Pedagogical Objectives keywords prices; Investments in Russian oil industry; • To discuss the ongoing consolidation in Fiat; Ford; Automobiles; Strategic alliances; Mega-mergers in the US oil industry; the global music industry Alliances in automobiles; Fiat-Ford Economies of scale in the oil industry. • To discuss the reasons that led to the alliance; Fiat-GM alliance; Synergies from Sony-BMG joint venture alliances; Advantages over mergers and acquisitions. MetLife’s Acquisition of • To discuss the opposition of the Citigroup’s Insurance Arm, Bertelsmann group to the renewal of the contract for Andrew Lack to remain CEO Travelers Inc.: The Synergies US Airways and America West of the joint venture. Citigroup is the world’s most profitable Merger: The Corporate Culture financial services organisation. During the Industry Musical Entertainment Integration 1990s, to become a financial ‘supermarket’ Reference No. MAA0057 In September 2005, US Airways and that offered all financial services under one Year of Pub. 2005 America West, the seventh and the eighth- umbrella, Citigroup diversified into Teaching Note Not Available largest airlines in the US, merged to create insurance, mortgage and investment banking Struc.Assig. Not Available the sixth-largest airline in the country. The businesses. However, the company was keywords merger was expected to help US Airways unable to reap the estimated synergies from to emerge successfully from bankruptcy this kind of business model. In 2005, Sony BMG; Sony Music; Bertelsmann protection and help America West to Citigroup announced the sale of its insurance Music Group; Global music industry; On- expand its operations. However, there were business, Travelers Inc., to MetLife, the line music piracy; Internet and file swapping several issues concerning the success of the US’ largest life insurer. technology; Joint venture; Synergies of a merger; Pay for play scandal; Andrew merger. The principal among them was the integration of the vastly different Pedagogical Objectives Lack; Restructuring strategies; Executive tension; Personality clashes; Sony-BMG corporate cultures of the two airlines. • To highlight the potential synergies that labels; Costs cutting strategies. MetLife stands to gain from the acquisition 118 www.ibscdc.org

Pedagogical Objective Gazprom’s Takeover of Sibneft: • To discuss whether Zetsche would be

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S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S From a Local Monopoly to a successful in turning the company around • To provide an insight into the merger and saving the merger. between US Airways and America West Global Energy Company? and the steps being undertaken by the In September 2005, the Russian state- Industry Automobile companies to make the merger a success, owned natural gas behemoth, Gazprom, Reference No. MAA0052 especially regarding integration of their acquired Sibneft for $13.1 billion from Year of Pub. 2005 vastly different corporate cultures. Roman Abramovich, its biggest Teaching Note Not Available Struc.Assig. Not Available Industry Airlines stakeholder. The acquisition is regarded as Reference No. MAA0055 a strategic move by Gazprom to become a keywords Year of Pub. 2005 global energy company with interests in DaimlerChrysler; Merger; Global Teaching Note Not Available oil, oil processing and petrochemistry. automaker; Boom-and-bust cycles; Struc.Assig. Not Available However, scepticism prevails on the potential benefits to be accrued through Restructuring plan; European small car keywords the renationalisation of Sibneft, as these segment; Ultra luxury car segment; kinds of initiatives, after the collapse of Mitsubishi Motors; Jurgen E. Schrempp; US Airways; America West; Corporate Dieter Zetsche. culture integration; Merger; Low-cost the USSR, have traditionally led to airline; US airline industry; Customer operational inefficiency and decreased service; Employee relations; Seniority productivity. integration process; Financial viability; UniCredit’s Takeover of HVB Chapter 11 bankruptcy. Pedagogical Objectives Group, Europe’s Biggest Cross- • To highlight the rationale behind the Border Takeover: The Synergies acquisition Italy’s largest bank, UniCredito Italiano eBay’s Takeover of Skype: The • To discuss the potential challenges that SpA, popularly known as UniCredit, Strategic Fit Gazprom might have to overcome to announced the takeover of HVB (Bayerische Hypo-und Vereinsbank AG), Niklas Zennstrom and Janus Friis emerged become a global energy company. the second biggest bank in Germany, in from obscurity and became Internet legends Industry Oil and Gas Exploration and June 2005. The takeover is valued at •15.4 after creating KaZaA, an illegal on-line Production billion (approximately US$18.7 billion), file-sharing programme. After selling Reference No. MAA0053 making it the largest cross-border bank deal KaZaA, Zennstrom and Friis, embarked on Year of Pub. 2005 in European banking industry. The merged their next project, an Internet telephony Teaching Note Not Available entity will be the fourth largest bank in the programme called Skype. Unlike KaZaA, Struc.Assig. Not Available European Union and eighth largest in the Skype was legal, but as KaZaA had rattled European continent. With this takeover, the music industry, Skype’s revolutionary keywords UniCredit aims to expand its operations in business model was expected to threaten Gazprom; Sibneft; Hostile takeovers; central and eastern Europe, while HVB the traditional models of the giant telecom Global oil industry; Natural gas production; Group is looking at ways to regain profits companies. Internet heavyweights, and consolidate its business operations in Microsoft, Yahoo! and Google, were said Global energy companies; Renationalisation in Russia; Yukos; Lukoil; Germany and in other parts of Europe. to be negotiating with Zennstrom and Friis BP (British Petroleum); Globalisation However, many experts and banking to acquire Skype. On September 12th 2005, strategy. industry analysts are sceptical about the eBay acquired Skype for $2.6 billion. survival of this takeover as consolidations and cross-border deals in the banking Pedagogical Objectives DaimlerChrysler’s New industry in Europe were unsuccessful. Added • To highlight the evolution of Skype and to this, HVB Group has accumulated losses Challenge: Saving the Merger st its acquisition by eBay worth •1,992 million as of March 1 2004, DaimlerChrysler came into existence in leaving UniCredit with the challenge to • To discuss the potential synergies that 1998 through the merger of Daimler-Benz turnaround HVB Group. eBay might gain from the acquisition of Germany and Chrysler Corporation of and the problems it might encounter in the US, and was plagued with problems Pedagogical Objective the course of a successful integration from its inception. In addition to declining • To discuss whether the takeover will with Skype. profitability in the Chrysler division, the survive in the light of various Mercedes brand got hit by quality problems. Industry Internet Auctions unsuccessful consolidations and cross– Additionally, its small car unit ‘Smart’ and Reference No. MAA0054 border deals in the European banking its luxury car division, ‘Maybach’, both Year of Pub. 2005 industry. Teaching Note Not Available failed to take off. It is reported that Jurgen Struc.Assig. Not Available E Schrempp, the chief executive officer Industry Banking and Financial of DaimlerChrysler, who had been held Services keywords responsible for the problems, would be Reference No. MAA0051 st Niklas Zennstrom; Janus Friis; KaZaA; stepping down on January 1 2006 and Year of Pub. 2005 Skype; Low-cost business model; eBay; would be succeeded by Dieter Zetsche. Teaching Note Not Available PayPal wallet; Strategic fit; Competitive Struc.Assig. Not Available Pedagogical Objectives advantage; Competition; Synergies; keywords Copyrights; Lead generation; Word-of- • To highlight the problems faced by UniCredit Group; HVB Group; Takeover; mouth marketing; On-line file sharing. DaimlerChrysler after the merger acquisition; Synergies; Competition; German banking industry; Italian banking industry; Consolidation.

119 www.ibscdc.org Oracle’s Takeover of Siebel: and the expected synergies from Chevron's Foster’s Takeover of Southcorp: Reshaping the CRM Software acquisition of Unocal. Strategic Fit or an Overpaid Market? Deal? Pedagogical Objective Since the 1990s, Oracle Corporation has In January 2005, Foster’s, a leading been expanding its application software • To discuss whether the acquisition would Australian beer company, announced the business through acquisitions. With the be beneficial to Chevron in the long run takeover bid of Southcorp, Australia’s acquisition of Siebel Systems, the leading and how this acquisition might change largest wine manufacturer, to enhance its akeoversakeovers akeoversakeovers akeovers CRM (Customer Relationship the competitive dynamics of the foothold in the global wine industry, which Management) software provider, in industry. is going through a phase of consolidation. September 2005, Oracle replaced SAP AG In order to lure Southcorp shareholders to Industry Energy as the number one player in the global Reference No. MAA0049 accept the offer, Foster’s had to revise its enterprise software business. However, Year of Pub. 2005 initial bid of $4.17 to $4.26 per share. Oracle has to compete with niche players Teaching Note Not Available The deal, which some analysts felt was like Salesforce.com and Netsuite, which Struc.Assig. Not Available overpaid, was completed in late May 2005. provide on-line, subscription-based business The analysts argued that the price paid for software services to its customers at lower keywords the takeover overshadowed the benefits prices. of the merger. However, Trevor O’Hoy, Chevron; Unocal; China National Offshore president and chief executive officer of Oil Corporation (CNOOC); Mergers and Pedagogical Objectives Foster’s, maintained that he has not acquisitions; Inorganic growth; Takeover overpaid for the deal and apart from the • To highlight the acquisition of Siebel as battles; Merger synergies; David J. O’Reilly; synergy benefits of the merged entity, they a part of Oracle’s business consolidation Political environment; Political risks; would be able to deliver a superior customer strategy Legal and regulatory environment; Oil service and a better portfolio to the production and exploration; Corporate customers. • To discuss the impact of Oracle’s governance; Peak oil theory. acquisition on the commoditised global software market. Pedagogical Objectives Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Industry Information Technology HVB’s Merger with UniCredito: • To highlight why Foster’s thought it Reference No. MAA0050 The Strategic Fit would be lucrative to invest heavily into Year of Pub. 2005 the wine segment UniCredito Italiano was formed in 1998 Teaching Note Not Available • To discuss the company’s strategies to Struc.Assig. Not Available through the merger of seven local banks when the Italian banking sector was become the world’s largest wine maker keywords struggling to cut costs through in 2005. Global software industry; Global enterprise consolidations. Having decided to expand Industry Brewers software industry; US enterprise software into the Central and Eastern European Reference No. MAA0047 industry; Growth of Oracle through markets, in June 2005, UniCredito acquired Year of Pub. 2005 acquisitions; Competitive advantage of a German bank, HVB, marking the largest Teaching Note Not Available Oracle; Competitors of Oracle; Enterprise cross-border deal in European banking. Struc.Assig. Not Available After the acquisition, UniCredito’s resource planning; Customer relationship keywords management; Supply chain management; operations spanned across Europe with a e-Business suite of Oracle; market capitalisation of $51 billion. Consolidation of global wine industry; Commoditisation of the software market; However, analysts opine that as Bayerische Global beer market; Australian wine Project fusion; Software services industry; Hypo- und Vereinsbank AG (HVB) has a industry; World’s largest wine maker; Web enabled services; Salesforce.com. track record of bad debts and corporate Reduction in profit margins of Foster’s; loans, the future of the merged bank is Foster’s growth through acquisitions; unpredictable. Cannibalisation of wine brands; Cost Chevron’s Acquisition of Unocal: savings through synergies; Mildara Blass; Pedagogical Objective Penfolds; Rosemount; Foster’s lager. A Hard Won Battle and the Business Prospects • To discuss the outcome of the merger of the two banking behemoths in Europe. The takeover battle between Chevron and Apple and Intel’s Alliance: From Industry Banking and Financial China National Offshore Oil Corporation Competition to Cooperation (CNOOC) for Unocal, the seventh largest Services independent oil company in the US, was a Reference No. MAA0048 During the 1970s, the computer industry highly politicised event in US corporate Year of Pub. 2005 had a large number of start-up history. With CNOOC backing out of the Teaching Note Not Available manufacturers offering various computer deal due to political pressures, Chevron Struc.Assig. Not Available parts that could be assembled to construct acquired Unocal, thus becoming the fourth keywords computer kits. Due to the advancement in biggest oil company in the world. technology in different components of Chevron’s management was confident that Consolidation of the European banking; computers, at regular intervals, one the acquisition was a perfect fit for the Italian banking sector; German banking manufacturer concentrating on all the company. Several industry experts also sector; Cross-border mergers; Amato law; components has become impossibility. acknowledged the synergies between the Anti-usury law; Banking law; Alessandro This forced different players, with expertise two companies. However, some were of Profumo; Central and Eastern European in their respective arenas to come together the opinion that the acquisition would fail banking; S3 Project of UniCredito; Bad through alliances to offer better products to deliver for Chevron. The case study debts of Bayerische Hypo- und Vereinsbank to the customers. One such example is the offers an insight into the takeover battle (HVB); Expansion through acquisitions; alliance between IBM and Apple, where for Unocal between Chevron and CNOOC Bank Austria; Bank Pekao. IBM supplied microprocessors to the 120 www.ibscdc.org

products of Apple. As of 2005, IBM has technology services; Software services Inc.; Business model legacy innovation;

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S almost 1% of its revenue flow from Apple. industry; Merger of equals and industry Failed synergies of content and devices; III – Y G E T A R T S In the same year Apple has replaced IBM consolidation; John W. Thomson and Gary Video tape format war Betamax vs VHS; with Intel. L. Bloom; Takeover cost synergies and Sony Ericsson; Aiwa; MGM; Cineplex; CBS; strategic fit; Microsoft Corporation; Innovative alternative technological Pedagogical Objectives Security and data storage software; Network threat; Walkman; Trinitron TV; management products; EMC; CA; HP; Cybershot; Playstation; World’s smallest, • To discuss how far this move of Apple IBM; Sun; McAfee; Cisco; Risk of largest, first, best; Sony Pictures, Music and Intel would help them in adding execution failure; Cross-cultural Television; Restructuring and turnaround value to the existing technology and competence; Common management strategies. provide better services to the customers interface; Norton and VERITAS brands. in the era of commoditisation of computer hardware NYSE’s Planned Merger with • To discuss the effects thereof on the Sony’s Failed Synergies: Bad Archipelago Holdings: The industry that has entered into a post Strategy or Bad Management? Synergies technology period of applications and service. When Masaru Ibuka and Akio Morita Breaking the age-old tradition of operating established the Sony Corporation, their only through the floor-based trading Industry Information Technology dream was to create a world-class company system, New York Stock Exchange Reference No. MAA0046 capable of the ‘World’s First’, (NYSE), in April 2005, announced its Year of Pub. 2005 the ‘World’s Smallest’, the ‘World’s merger with Archipelago Holdings, an Teaching Note Not Available Biggest’, or the ‘World’s Best’ consumer electronic trading company, to compete Struc.Assig. Not Available electronic products. During the second half with other electronic exchanges of the keywords of the twentieth century, Sony introduced world. While NYSE aims to increase its the world to revolutionary technology in market share by tapping new business Global information technology industry; the form of the Walkman (personal opportunities in the options and Commodotisation of computer hardware; stereo), Trinitron TV (high resolution derivatives market, Archipelago plans to Digital networking; Computer kits; Single colour television), and the PlayStation capitalise on the brand recognition of chip microprocessors; Thirdparty (video game console), thereby setting NYSE to increase its market presence. developers; Multitasking; Power global industry standards. However, Macintosh computers; Cloning strategy; although Sony was the first company to Pedagogical Objectives Post-technology period for computers; introduce a videocassette recorder Hardware and software platforms; (Betamax), it was the rival VHS technology • To provide an overview of the stock Converging technologies; Intel Inside; that prevailed in the market after the major exchanges in the US Virtualisation technology; Longhorn. videotape format war of the 1980s. Sony’s • To discuss the synergies of the merger conclusion that ownership of content and the probable payoffs. would enhance its ability to set industry Symantec’s Takeover of standards led to the company’s Industry Stock Exchanges diversification into the fields of music, VERITAS: A Strategic Success? Reference No. MAA0043 motion pictures, and financial services. Year of Pub. 2005 On December 16th 2004, leading security Teaching Note Not Available software maker Symantec Corporation Pedagogical Objectives Struc.Assig. Not Available announced the takeover of data storage keywords solutions company VERITAS Corporation. • To highlight the growth of Sony from a small, unknown Japanese company to Both the companies were confident about NYSE (New York Stock Exchange); one of the world’s best-known the success of the deal and expected it to be Archipelago Holdings; Potential synergies; companies mutually beneficial. However, competitors Nasdaq; US stock exchanges; Electronic and software industry analysts were sceptical • To provide an insight into Sony’s Communication Network (ECN); Securities regarding the success of the deal. strategy of foraying into businesses and exchange commission of US; Instinet; unrelated to its core electronics business, Consolidation in Europe stock markets; Pedagogical Objectives and the apparent failure in successfully London stock exchange; ArcaEdge; merging the company’s diverse Regulation National Market System; John • To highlight the reasons behind the operations and extracting operational Thain; Jerry Putnam. takeover synergies • To provide insights into the possible • To discuss whether bad strategy or bad advantages and challenges for the management was the reason for Sony’s Japan’s Livedoor Co. Ltd.: combined entity failed synergies. Growing through Unrelated • To discuss whether the takeover would Acquisitions Industry Electronics and Entertainment be a strategic success. Reference No. MAA0044 Livedoor Co. Ltd., the third largest Industry Information Technology Year of Pub. 2005 Internet solutions provider in Japan, had Services Teaching Note Not Available started as a website designing and consulting Reference No. MAA0045 Struc.Assig. Not Available firm in Tokyo in 1996. By 2004, the company had a profit of $54 million and Year of Pub. 2005 keywords Teaching Note Not Available it acquired 20 companies ranging from an Struc.Assig. Not Available Sony Corporation (Sony); Masaru Ibuka accounting software firm, an on-line travel and Akio Morita; Tokyo Tsushin Kogyo agency to a Chinese Internet portal. As of keywords Totsuko; Global consumer electronics 2005, the company has 31 subsidiaries with Symantec Corporation; VERITAS industry; Audio and video electronic a market capitalisation of ¥200 billion and Software Corporation; Information devices; Sony Computer Entertainment intends to buy a horse track after an 121 www.ibscdc.org unsuccessful attempt to acquire a baseball FMCG (Fast Moving Consumer Goods) Although Deutsche Borse’s bid of 530p team. company; Cost synergies; Billion dollar (pence) per share was rejected by LSE, brands; Wal-Mart effect; Strategic fit; Seifert came up with his next bid that Pedagogical Objectives Industry consolidation; Risk of execution offered a better deal to LSE. failure; Cross-cultural competence; Colgate • To highlight the rapid growth of Palmolive; Unilever. Pedagogical Objectives Livodoor Co. Ltd. • To highlight the challenges faced by akeoversakeovers akeoversakeovers akeovers • To discuss its philosophy of growing Deutsche Borse in its attempt to strike through unrelated acquisitions. The Reverse Merger of SBC and a deal with LSE AT&T: The Payoffs Industry Internet and On-line Services • To discuss the strategic fit between Provider Though American Telephone and Deutsche Borse and LSE and the Reference No. MAA0042 Telegraph Company (AT&T) had strong synergistic advantages that are expected Year of Pub. 2005 product innovations in its early days, to accrue to the combined entity. Teaching Note Not Available AT&T failed to adopt new technologies Struc.Assig. Not Available towards the late 20th century. Due to Industry Stock Exchanges Reference No. MAA0039 keywords increased competition, it had lost its market leadership and incurred losses. Year of Pub. 2005 Livedoor Co. Ltd.; Takafumi Horie; Despite two major restructurings, it Teaching Note Not Available Internet solutions provider; Unrelated continued to incur losses. In January 2005, Struc.Assig. Not Available acquisitions; Eudora; Web communities; SBC Communications Inc., one of the keywords Digital subscriber line; Management ‘baby bells’ that was spun out from the services provider; Rakuten; Softbank; company, acquired it in a reverse merge. Deutsche Borse; London Stock Exchange Nippon Broadcasting Systems Inc. (LSE); Consolidation in European stock Pedagogical Objectives exchange market; Merger of stock exchanges; Strategic alliance; Euronext; • To provide insights into the troubles Gillette’s Merger with P&G: The Strategic fit; Synergy; Deutsche Borse – faced by AT&T over the decades and its LSE deal; Europe’s stock exchanges. Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Strategic Fit? restructuring activities to overcome Procter & Gamble (P&G), the number one them US consumer goods company, and Gillette, • To discuss the possible reasons for failure Breaking Alliance With Fiat: Gain the world’s largest manufacturer of shaving of AT&T’s restructurings, the payoffs for GM? products, announced the merger of their of the reverse merger of SBC and AT&T, operations in January 2005. The $57 and the future of the US telecom industry. In 2000, General Motors’ (GM) rival, billion merger was the ninth largest in the DaimlerChrysler, was planning to takeover US corporate history. Post-merger, the new Industry Telecommunication Services Fiat. To keep its rival at bay, GM entered company would dethrone Unilever as the Reference No. MAA0040 into an alliance with Fiat. The agreement world’s largest producer of consumer goods Year of Pub. 2005 included a put option clause for Fiat that and is expected to have bargaining power Teaching Note Not Available could force GM to buy out Fiat, irrespective rivaling that of global retailers like Wal- Struc.Assig. Not Available of GM’s interests, any time between 2004 Mart and Carrefour. The merger, scheduled keywords and 2009. In January 2005, when Fiat to be completed in late 2005, is expected wanted to exercise its put option, GM to reap cost synergies of up to $22 billion American Telephone and Telegraph refused to buy Fiat. Under such for the new company. But the problems Company (AT&T); Restructuring; circumstances, the alliance was broken and encountered by Daimler-Chrysler and Diversification; Southwestern Bell GM had to pay Fiat $2 billion as an exit Hewlett Packard-Compaq’s mergers showed Communications (SBC); Regional Bell fee. that size could be a potential hindrance to Operating Companies (RBOC); Global the success of a merger. telecom industry; Nobel Prize; Bell Labs; Pedagogical Objective Transistor; Telephone; Alexander Graham Pedagogical Objectives Bell; Reverse merger; Acquisition and • To discuss the benefits that GM derived merger; Verizon and Sprint Nextel; Ma Bell out of the episode that cost the company • To discuss the potential synergies that and Baby Bell. a total of $4 billion – initial investment P&G can gain from the merger plus the price to pull itself out of the put option. • To analyse the problems it is likely to face in the course of the merger’s Deutsche Borse’s Bid for London Industry Automobiles successful execution. Stock Exchange: What’s the Reference No. MAA0038 Year of Pub. 2005 Industry Fast Moving Consumer Goods Strategic Fit? Teaching Note Not Available and Consumer Products Deutsche Borse had made attempts to form Struc.Assig. Not Available Reference No. MAA0041 an alliance with London Stock Exchange Year of Pub. 2005 (LSE), the biggest stock exchange in keywords Teaching Note Available Europe, since 1999. After a failed attempt Struc.Assig. Available Fiat; General Motors (GM); Put option; of merger in 2000, Werner Seifert, the GM in Europe; Ford Motor Company; keywords CEO (Chief Executive Officer) of DaimlerChrysler merger; Global alliances; Deutsche Borse has been making attempts Mergers and acquisitions; Synergies in Procter & Gamble Company (P&G); again since late 2004 to strike a deal with alliances; Breaking-up of alliances; Global Gillette Company (Gillette); Consumer LSE to reap synergistic benefits that were automotive industry. product companies; Consumer goods expected to accrue from decreased industry; Merger of equals; World’s largest operational costs and increased profits.

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Sprint and Nextel Merger: The Pedagogical Objective Martini; Turnaround and growth prospects;

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Strategic Fit? The bank in the heart of Europe; • To discuss whether the Lenovo – IBM Investment and capital management Sprint Corporation and Nextel deal would be able to prove its strategic services; Retail banking services; Tenth Communication, the third largest and fifth fit in the global PC industry. largest private bank in the world; Merger largest wireless operators respectively in Industry Personal Computers synergies; Bad loans scandal; Management the US, announced the merger of their Reference No. MAA0036 restructuring; Focus on international operations in December 2004. The merger Year of Pub. 2005 business and operations; Innovative results in the formation of a new company Teaching Note Not Available investment products. called Sprint Nextel thus creating the third Struc.Assig. Not Available largest wireless operator in the US. The $36 billion merger to be finalised by mid- keywords 2005 is expected to provide synergies such Sony’s Film Studios’ Acquisitions: Lenovo Group Limited; China’s PC as an enhanced customer base of 35.4 The Strategic Fit (personal computer) industry; Lenovo’s million, cost savings of $12 billion, and competitors; Market share of PC Sony forayed into the entertainment stronger market position. Post merger, the companies in China; IBM’s PC division; business in the late 1980s by acquiring CBS company would have a large spectrum Lenovo’s acquisition of IBM’s PC division; records and Columbia Pictures. To further holding to make a head start in the advanced IBM’s transformation strategy; Customer strengthen its motion pictures business that 4G technology area moving ahead of its service from new Lenovo; Synergies from became profitable only after the mid- competitors. Meanwhile, to make the IBM Lenovo deal; Mergers in technology 1990s, Sony went ahead to acquire a leading merger a success the new company has to industry; Corporate culture; Global PC film studio in the US – Metro-Goldwyn- deal with challenges posed by incompatible market. Mayer. Investing $300 million in the technologies, cultural differences, and acquisition, Sony planned to ensure the initial high-integration costs. long-term growth and profitability of its motion pictures business with the help of Pedagogical Objective Hypobank and Vereinsbank MGM’s vast library of movies and Merger: Troubles Outweigh the television episodes, besides creating • To discuss the potential synergies, Synergies synergies between its technology and opportunities and challenges arising out entertainment businesses. of the merger for the new combined The merger of Hypobank and Vereinsbank entity. in 1998 created HypoVereinsbank (HVB), one of the largest private banks in Pedagogical Objectives Industry Wireless Telecom Services Germany. When the two similar sized banks Reference No. MAA0037 • To discuss Sony’s strategy to sustain the decided to merge, it was considered as the Year of Pub. 2005 competitive edge in its entertainment ‘merger of equals’ and the ‘merger of the Teaching Note Not Available and consumer electronics businesses best’. It received the full support of the Struc.Assig. Not Available German government, which welcomed the • To discuss the integration issues entailed keywords prospect of having a local bank as a therewith its acquisitions. dominant player. But soon after the Industry Motion Picture Production Sprint Corporation; Nextel completion of the much-hyped merger, the and Distribution Communications Inc.; US wireless telecom hidden motives of the two banks and the Reference No. MAA0034 industry; Largest wireless operator; Merger deception of one of the banks were Year of Pub. 2005 of the equals; Average Revenue Per User exposed. The new bank incurred losses Teaching Note Not Available (ARPU); Code Division Multiple Access continuously as a result of the deception Struc.Assig. Not Available (CDMA) technology; Integrated Digital coupled with a weak European economy. Enhanced Network (iDEN); Push-to-talk In spite of its efforts for revival, the bank keywords technology; Third generation (3G) has only been partly successful in communications technology; Fourth eliminating its troubles and has turned into Sony; Sony pictures entertainment; Metro- generation (4G) communications a potential takeover target. Goldwyn-Mayer; Sony MGM; Columbia technology; Evolution-Data Only (EVDO) Pictures; Tristar; Film studios in US; network; Customer loyalty; Competitive Strategic fit; Sony’s film studio acquisitions; Pedagogical Objectives strategies; Merger synergies and challenges. Comcast; Peter Guber; Synergy; Michael • To discuss perceived synergies behind the Schulhof. merger, the financial impact of the Lenovo's Big Opportunity: IBM? deception and the revival efforts of the bank Sears-Kmart Merger: The In late 2004, Lenovo Group Limited Potential Synergies (Lenovo), China’s leading PC (personal • To provide an insight into the consequences of a hasty merger. computer) maker, acquired the Personal Kmart demonstrated a remarkable Computing Division of IBM. While Industry Banking and Financial emergence from bankruptcy when it Lenovo views this acquisition as an Services announced its acquisition of another big opportunity to take on the global PC Reference No. MAA0035 US retailer, Sears for $11 billion in 2004. market, IBM hopes to enhance its foothold Year of Pub. 2005 The merger deal was structured by its in China. However, before reaping the Teaching Note Not Available chairman Edward Lampert, a 53% synergistic benefits from the acquisition, Struc.Assig. Not Available stakeholder in Kmart with 15% stake in Lenovo has to deal with competitors like Sears. The merger was expected to make Hewlett Packard and Dell and also deal with keywords Sears Holdings the third largest retail corporate cultural differences and fear, HypoVereinsbank (HVB) Group; company in the US – after Wal-Mart and uncertainty and doubt among its customers. Hypobank; Vereinsbank; Super regional Home Depot apart from synergistic bank; Albrecht Schmidt and Eberhard benefits worth $500 million in the form

123 www.ibscdc.org of cost savings and additional profits. KB Home: The Homebuilder’s keywords However, analysts were skeptical about the Growth Strategies potential benefits from the merger as both Cendant; Orbitz; US travel and real-estate companies were struggling amidst fierce Started in the late 1950s, KB Home, the industry; Travel companies in US; Sabre competition in the US retail industry, faced fifth largest homebuilder in the US has holdings; Expedia; Travelocity.com; Inter with declining sales and profitability. grown through acquisitions of large Active Corp. (IAC); Cheap tickets; Galileo homebuilders based in fast growing cities Inc; Travel industry’s vertical integration; in states like Florida, Arizona and Consolidation in US travel industry; akeoversakeovers akeoversakeovers akeovers Pedagogical Objective California. Besides strategic acquisitions, Cendant’s vertical growth strategy; • To discuss the expected synergies and KB Home grew by concentrating on Computerised travel reservation company; the probable challenges to be faced by building high-quality customised homes. On-line travel industry. the combined entity, Sears Holdings. With 27,331 homes built in 2003, KB Home plans to further increase its market Industry Retailing share by focusing on certification Reference No. MAA0033 Barclays Plc.: Growth Strategies programmes for improved quality home Year of Pub. 2005 building and efficient handling of customer Barclays, the UK-based financial services Teaching Note Not Available complaints through its ‘Say Yes’s initiative. group operates in more than 60 countries Struc.Assig. Not Available employing over 76,200 people. In terms keywords Pedagogical Objectives of market capitalisation, Barclays Bank is one among the top ten in the world. The Sears; Kmart; Sears Holdings; Lampert; • To discuss KB Home’s planned company’s troubles began in 1997 due to Cross selling of brands; US retail industry; acquisitions and certification its failed attempt in merging itself with Mergers in retail industry; Sears-Kmart programmes for its growth another bank, the loss in the Russian bond merger; Synergy; Strategic fit; Wal-Mart; market and other business failures. The Target; Competition in US retail industry; • To discuss KB Home’s attempt to company’s profits as well as market value become one of the biggest homebuilders Kmart bankruptcy. dropped, which was followed by the CEO's in the US. resignation. There was no stable leadership Industry Residential Construction for a period of one year. After Matthew Mergers, Acquisitions and T Mergers, Acquisitions and T

Mergers, Acquisitions and T Barrett took over as the CEO in 1999, the Mergers, Acquisitions and T Mergers, Acquisitions and T Fiat and GM: The Troubled Reference No. MAA0031 Alliance Year of Pub. 2005 company entered into mergers, Teaching Note Not Available acquisitions and strategic alliances with The auto division of the Italian Struc.Assig. Not Available several other banks and financial conglomerate, Fiat has been incurring losses institutions like Legal and General, Charles since the mid-1990s. Fiat’s attempt to save keywords Schwab and Juniper Financials. its ailing auto division resulted in a strategic KB Home; KB Home’s diversified market; alliance with General Motors Corp. (GM) KB Home’s acquisitions; KB Home’s Pedagogical Objectives in 2000 under which GM obtained 20% expansion; KB Home’s business practices; stake in Fiat Auto while Fiat obtained 5.1% • To discuss the mergers and acquisitions KBnxt business model; KB Home studio; pursued by Barclays’ since 1999. in GM. Fiat also enjoyed a put option in National Association of Home Builders which it had the right to sell the remaining (NAHB); KB Home’s quality assurance • To discuss the growth strategies that the stake to GM after four years. However, as practices; Homebuilders in the US. company undertook to regain its profits. Fiat’s losses increased in 2003 and the company sought a recapitalisation, GM’s Industry Financial Services stake in Fiat was reduced to 10% as it refused Reference No. MAA0029 to be a part of the recapitalisation process. Cendant: The US Travel Year of Pub. 2004 In 2004, with GM’s refusal to buy the Conglomerate’s Growth Teaching Note Not Available remaining 90% stake in Fiat auto under Strategies Struc.Assig. Not Available Fiat’s put option, the alliance turned keywords hostile. Cendant, the travel and real estate conglomerate in the US, marked another Barclays Plc.; Matthew Barrett; British consolidation in the travel industry by bank; Growth strategies; Financial services; Pedagogical Objectives acquiring an Internet travel site, Orbitz in Acquisitions; Strategic alliances; Woolwich; October 2004. Coupled with the • To discuss the reasons for the break-up Total shareholder return; Barclaycard; acquisitions of other major travel-related of the Fiat – GM strategic alliance Barclays private clients; Gerrard companies like Galileo Inc., Cheap Tickets management services. • To discuss the future of strategic alliances and Lodging.com, the Orbitz deal is in the global automobile industry. expected to make Cendant the second largest online travel reservation company Industry Automobile Industry Oracle’s Bid for PeopleSoft: The Reference No. MAA0032 in the world after Inter Active Corp. (IAC). Year of Pub. 2005 Strategic Fit Pedagogical Objective Teaching Note Not Available Since mid-2003, Oracle Corporation has Struc.Assig. Not Available • To discuss the growth strategies adopted been trying its best to acquire its rival keywords by Cendant to become a leading vertically PeopleSoft Inc. Despite bidding for four integrated player in the global travel times, Oracle had remained unsuccessful Fiat Group; General Motors (GM); Fiat industry. until mid-2004. Oracle received a major Auto’s losses; Fiat’s restructuring plan; boost in September 2004 when the US Fiat's strategic alliance with GM; Fiat’s put Industry Travel District Court in San Francisco rejected a option; GM’s Europe operations; GM’s Reference No. MAA0030 petition, which had been filed by the US strategy for alliances; Powertrain; Year of Pub. 2004 Department of Justice in February 2004 European car market. Teaching Note Not Available against Oracle’s acquisition efforts of Struc.Assig. Not Available 124 www.ibscdc.org

PeopleSoft. The petition was filed on the News Corporation’s Acquisition Industry Wireless Network Operators

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S T R A T E G Y – III – Y G E T A R T S

S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S grounds that the acquisition would curb of DirecTV: A Strategic Fit Reference No. MAA0025 competition in the enterprise softwae Year of Pub. 2004 segment. Rupert Murdoch’s News Corporation Teaching Note Available Limited acquired DirecTV, America’s Struc.Assig. Available Pedagogical Objectives leading satellite television provider in December 2003. DirecTV, launched in keywords • To discuss the probable reasons behind America in 1994 as a provider of Direct Vodafone; Airtouch; Mannesmann; Oracle's acquisition bids for PeopleSoft Broadcast Service, became the world’s Christopher Gent; Arun Sarin; Acquisitions; largest satellite television provider with • To discuss as to whether Oracle is 3G (third generation) technology; Japan profits of $6.5 billion in 2003 and a strategically correct in its endeavours Telecom; China Mobile; Vodafone Live!; customer base of about 12.6 million in the to acquire PeopleSoft. Verizon Wireless; Dividends; Shareholders; United States. Share buybacks; AT&T Wireless. Industry Database and Enterprise Software Pedagogical Objectives Reference No. MAA0028 Year of Pub. 2004 • To discuss the reasons for News Merger of MTFG and UFJ Teaching Note Not Available Corporation’s acquisition of DirecTV Holdings: The Potential Synergies and the strategic fit for News Corp. Struc.Assig. Not Available Since the mid-1990s, the Japanese banking keywords • To discuss the factors that led to the industry has been mired in the problem of popularity of DirecTV and how News high non-performing loans. In tune with Oracle Corporation; PeopleSoft Inc.; J.D. Corp stands to benefit from the the consolidation process in the industry Edwards; Enterprise software providers; acquisition since the late 1990s, Mitsubishi Tokyo Takeover bid; Consolidation in software Financial Group (MTFG) and United • To discuss the benefits for DirecTV industry; Lawrence J. Ellison; Software Financial of Japan (UFJ) have initiated resulting from the acquisition and how market; Craig Conway; Anti-takeover discussions for their proposed merger that the acquisition is expected to bridge the defence. is to be completed by September 2005. gap in News Corp’s worldwide satellite The merger is expected to create the distribution system. world’s biggest bank in terms of total assets. WPP Group Plc.: Inorganic Industry Media Growth Strategies Reference No. MAA0026 Pedagogical Objective Year of Pub. 2004 Under the leadership of its CEO, Sir Martin Teaching Note Not Available • To discuss the potential synergies that P. Sorrell, the UK-based WPP Group Plc. Struc.Assig. Not Available will accrue to the combined entity that has transformed itself from a small basket can probably help the entire Japanese manufacturing company to one of the keywords banking sector in its recovery process. leading advertising conglomerates in the News Corporation; Rupert Murdoch; Industry Banking and Financial world. The growth has been mainly through DirecTV; Cable networks; Satellite Services acquisitions. The acquisition of big distribution system; Vertical integration; Reference No. MAA0024 companies like J. Walter Thompson, National reach; Strategic fit. Year of Pub. 2004 Ogilvy and Mather and Young and Rubicam Teaching Note Not Available has enabled WPP to win clients like Ford Struc.Assig. Not Available and IBM. For the year ending December 31st 2003, WPP Group Plc., the world’s Vodafone’s Inorganic Growth keywords second largest marketing communications Strategies: The Payoffs services company, had revenues of £4,106 Japanese banks; Mitsubishi Tokyo After two multibillion acquisitions in the million. Financial Group (MTFG); UFJ holdings late 1990s, one each in the US and Europe, (United Financial of Japan); Synergy; Vodafone poised itself to become a major Merger; Jusen crisis; Daiwa Bank scandal; Pedagogical Objective wireless phone services provider in the Japanese big bang; Financial Services • To discuss the inorganic growth strategies world. However, the company’s inability Agency; Non-performing loans; Japanese of WPP by ‘developing networks in to integrate its acquisitions resulted in a mega-banks; Consolidation of Japanese important markets and sectors’. saga of losses since 2000. In 2003, CEO banks; Japan Premium; Financial (Chief Executive Officer) Christopher Reconstruction Commission; Financial Industry Advertising and Marketing Gent, who led the company through the System Reform Law. Reference No. MAA0027 acquisitions and the losses alike, stepped Year of Pub. 2004 down and handed over the debt-ridden Teaching Note Not Available company to Arun Sarin. Even the new CEO Struc.Assig. Not Available continued the acquisition spree, much Growth Strategies of Telefonica against the wishes of the disgruntled keywords Telefonica was the second largest shareholders, and a $16 billion loss was telecommunication company in Europe WPP Group; Global marketing recorded in 2003. and the sixth largest in the world with 101.7 communication services companies; J. million customers in 16 countries. Walter Thompson; Martin P. Sorrell; Pedagogical Objective Although Telefonica had been cautious in Ogilvy and Rubicam; WPP inorganic its investments of late, the company has • To discuss Vodafone’s acquisition growth strategy; WPP international been on an investment spree to increase strategy in the volatile mobile expansion; Tempus Group; Global its market coverage. advertising business; The acquisitions of telecommunication industry and its WPP Group; Core services of WPP Group; payoffs. Top ten global advertisers.

125 www.ibscdc.org Pedagogical Objective The Royal Bank of Scotland’s • To discuss the initiatives taken for growth • To discuss Telefonica’s strategies to Growth Strategies become a global telecom leader through In 2004, the Royal Bank of Scotland (RBS) • To discuss the future challenges and greater market penetration and customer was ranked as the second largest bank in strategies ahead. focus. the UK and Europe, and the fifth largest in Industry Pharmaceutical Industry Industry Telecommunications Services the world. Among the leading financial Reference No. MAA0020 service providers in the world, RBS akeoversakeovers akeoversakeovers akeovers Reference No. MAA0023 Year of Pub. 2004 Year of Pub. 2004 aggressively followed its expansion policy Teaching Note Not Available Teaching Note Not Available to diversify. It ventured into the US and Struc.Assig. Not Available Struc.Assig. Not Available Hong Kong markets in the latter half of the 20th century. keywords keywords GlaxoSmithKline Incorporated; Glaxo Telecommunication companies in Europe; Pedagogical Objectives Wellcome and SmithKline Beecham; Mobile operators; Telefonica in Latin • To discuss the realisation of ‘inorganic American pharmaceutical industry; America; Telefonica mobiles; Unisource; growth’ besides ‘organic growth’ by RBS Consumer healthcare; Jean-Pierre Garnier; British Telecom; Microwave to create a global presence Product pipeline; Nutritional healthcare Communications Incorporated (MCI); products; Centres of Excellence for Drug Companhia Riograndense de • To discuss the need to diversify and Discovery (CEDD); Therapeutic areas; Telecomunicacoes (CTR); Terra Lycos; innovate, and how acquisitions could be Generic competition; Over the counter Asymmetric digital subscriber lines used to reap benefits products; Wellbutrin; Growth strategy; (ADSL); Telefonica’s competitors. Patented products; US Food and Drug • To discuss the competitive pressures and Administration. stubborn cost structures, which could heighten the incentives for, risk taking. EADS: The Evolution and Growth Industry Banking and Financial of the European Aircraft Microsoft and Sun Microsystems: Services Sleeping with the Enemy? Manufacturing Alliance Reference No. MAA0021 Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T The European Aeronautic Defence and Year of Pub. 2004 Microsoft and Sun had an antagonistic Space Company (EADS), the largest in Teaching Note Not Available relationship for almost two decades. But European aerospace and defence sector and Struc.Assig. Not Available in a desperate attempt to leave past hostilities behind and build new bridges of the second largest in the world, was keywords established in 2000. By 2004, the friendship, the two sides signed an company rose from number 443 to number Royal Banks of Scotland’s growth agreement in early April 2004. As per the 251 in the ‘Business Week Global 1000’ strategies; Inorganic and organic growth; deal, Microsoft agreed to pay Sun nearly rankings which can be attributed to the Mergers and acquisitions; Citizens; Charter $2 billion to settle Sun’s pending antitrust success of its airbus division in the global One; Competitive strategy; Credit card lawsuit against it, resolve patent issues and commercial aircraft manufacturing provider; National Bank of Scotland; as advance payment towards certain business. EADS expects to maintain its Investment and retail banking; licensing royalties. However, while the leadership through its double-decker jumbo Restructuring; Cost saving; Change settlement had been inspired by several jet A380, which is scheduled for management; British banking industry; common problems faced by the two commercial launch in 2006. Merchant banking; NatWest Bank companies and aimed at peace, some takeover; Interest rates; Bank of England; believed that the truce would be short lived. Pedagogical Objectives Alliances and joint ventures. Pedagogical Objective • To discuss the rationale behind the formation of the EADS • To discuss the issues that led to the GlaxoSmithKline (GSK): Post coming together of the two rivals and • To discuss EADS’ strategies to transform Merger Growth Strategies the potential issues that might break the itself into the largest commercial truce. aircraft manufacturer in the world. GlaxoSmithKline (GSK) is one of the largest pharmaceutical companies in the world. It Industry Computer Software Industry Commercial Aircraft operates in two segments – pharmaceuticals Reference No. MAA0019 Manufacturing and consumer healthcare. Since the merger Year of Pub. 2004 Reference No. MAA0022 of Glaxo Wellcome and SmithKline Teaching Note Not Available Year of Pub. 2004 Beecham in 2000, the company has been Struc.Assig. Not Available Teaching Note Not Available reporting increasing financial returns. On Struc.Assig. Not Available one hand, the company is entering into keywords collaborations, agreements and partnerships, keywords Microsoft, Inc; Sun Microsystems; Scott restructuring its R&D (research and McNealy; Steven Ballmer; Java 2 development) and expanding its product Global aerospace and defence business; Enterprise Edition (J2EE); Application portfolio. On the other hand the company Airbus; Boeing; Lockheed Martin; Global development environment; Open source is facing stiff competition from its rivals commercial aircraft manufacturers; A380 revolution; Sun’s Java virtual machine; C#, and generic firms. programme of airbus; Fly-by-wire .net, visual C++; Web services development technology; East Jet; Products from airbus; platform; Department of Justice; Bundling Shareholding structure of airbus; Pedagogical Objectives software; Monopoly; Internet browser; Competitors of airbus. • To discuss GlaxoSmithKline’s financial Strategy. performance post-merger and the performance of its core products

126 www.ibscdc.org

Novartis’ Acquisition of Aventis: Mergers and acquisitions; Immunex than a decade, Diller’s IAC transformed

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S The Potential Synergies Corporation; Joint ventures; Epogen, itself into one of the most prospective Enbrel, Aranesp, Erythropoietin, Johnson on-line companies in the world. With $3.3 After Aventis rejected the hostile takeover and Johnson. billion in cash and marketable securities by bid of Sanofi-Synthelabo on the grounds the end of 2003, Diller had been looking of financial inadequacy in January 2004, it to extend IAC’s line-up of operating approached Novartis, the Swiss drug businesses. manufacturer, to acquire it and save it from America Online – Time Warner Merger: Why it Failed the potential acquisition. Although the Pedagogical Objective Novartis-Aventis combination had the America Online (AOL) and Time Warner potential to form the second largest announced their merger on January 10th • To highlight IAC’s success story, pharmaceutical company in the world with 2000 to create the world's first fully detailing the merits of well-timed combined revenues of $47 billion, the integrated media and communications strategic acquisitions in building a successful conglomerate. French government was against the company with a market capitalisation of takeover of Aventis by a foreign company. $350 billion. While AOL would have access Industry On-line Retailing and Services to the high-speed broadband cable network Reference No. MAA0015 Pedagogical Objective of Time Warner, Time Warner expected Year of Pub. 2004 itself to be catapulted into the ‘Internet • To discuss the probable synergies in case Teaching Note Not Available big league’ by virtue of the merger. The Aventis is acquired by Novartis. Struc.Assig. Not Available merger faced stiff resistance, largely from Industry Pharmaceutical Manufacturers the consumer groups and its competitors, keywords Reference No. MAA0018 who wanted the combined firm to open up InterActiveCorp (IAC); Barry Diller; USA Year of Pub. 2004 its cable networks and allow rival Interactive; Expedia; Hotels.com; Teaching Note Not Available entertainment companies to stand on an Lendingtree.com; Home Shopping Struc.Assig. Not Available equal footing. Even as the merger was Network (HSN); Ticketmaster.com; finally allowed to proceed by the Federal Match.com; Hotwire.com; On-line travel keywords th Trade Commission on January 11 2001, booking; On-line local directory services; Ciba-Geigy; Sandoz; Global pharmaceutical the market capitalisation was already On-line personals; UDate.com. companies; Mergers and acquisitions; sliding downwards with falling share prices Sanofi-Synthelabo; Aventis; Novartis AG; due to investor confusion over the fate of Hostile takeovers; Hoechst AG; the merger and the Internet bubble burst Prescription drugs; Rhone-Poulenc SA; that saw Internet stocks plummeting. Business Objects – Crystal Pfizer; Merk & Company; Anti-diabetic Decisions: The Synergies drugs; Anti-cancerous drugs. Pedagogical Objective When Business Objects acquired California- • To discuss the reasons and events that based Crystal Decisions for $1.2 billion in led to the failure of the merger and the December 2003, it was all set to become Amgen’s Growth Strategies alternate strategies that could have been the leader in the global booming market of adopted. data analysis software or business Amgen, one of the world’s leading intelligence. Due to excellent synergies with biotechnology companies, had sales of $8.4 Industry Media and Entertainment the products and services of Crystal billion in 2003. Though the sales and Industry Decisions, Business Objects was optimistic profits of the company were higher than Reference No. MAA0016 to reach the $1 billion mark by 2004. its competitors, it was lagging behind on Year of Pub. 2004 the innovation front. Over the years the Teaching Note Available Pedagogical Objectives company grew with several mergers and Struc.Assig. Available acquisitions. It expected to achieve a • To understand the non-technical turnover of $10 billion in 2004 and keywords overview of the concept of business promised investors a 20% growth rate untill America Online (AOL); Time Warner; intelligence 2005. Mergers and acquisitions; Internet service • To discuss the synergies between Business provider; Federal Communication Objects and Crystal Decisions. Pedagogical Objective Commission; Clicks and mortar company; Traditional media business; Software Industry Business Intelligence Software • To discuss Amgen’s growth strategies and industry; Federal Trade Commission; Reference No. MAA0014 the way it intends to achieve its Proprietary networks; Common carriers; Year of Pub. 2004 promised growth. Integrated consumer space; Entertainment Teaching Note Not Available Industry Biotechnology industry; Pathfinder network; e- Struc.Assig. Not Available Reference No. MAA0017 commerce; Information technology. keywords Year of Pub. 2004 Teaching Note Not Available Business intelligence; Business Objects; Struc.Assig. Not Available InterActiveCorp: Growing Strong Crystal Decisions; Query and reporting; On-line analytical processing (OLAP); keywords After resigning as Chairman and CEO of Decision support systems; Enterprise Amgen’s growth strategies; Biotechnology Fox Inc., Barry Diller started establishing reporting; Synergies; Cognos; Hyperion industry; Research and development; his own empire of interactive commerce Solutions Corp; BusinessObjects Enterprise Genentech, Chiron Corporation, Biogen; companies. Under the banner of 6.1; MicroStrategy; SAP; PeopleSoft Inc; Patent expiries; American pharmaceutical InterActiveCorp (IAC), Diller acquired Oracle. industry; Roger M Perlmutter; Kevin W. some highly profitable on-line services like Sharer; United States Food and Drug Expedia.com, Ticketmaster.com and Administration; Generic competition; Lendingtree.com, among others. In less

127 www.ibscdc.org Sanofi-Synthelabo’s Growth entire profit and pay Disney, only the IBM’s Acquisition of PWCC: The Strategies distribution fees. After several months of Synergies negotiations, Disney and Pixar decided to Most of the leading pharma companies cancel their twelve-year partnership in IBM had forayed into the IT services with declining research and development January 2004. business with the formation of IBM Global productivity and patent expirations, chose Services in the early 1990s, under its former the path of mergers and acquisitions as a Pedagogical Objective Chief Executive, Louis V. Gerstner Jr. growth strategy. These companies, under Although the revenues of IBM Global akeoversakeovers akeoversakeovers akeovers pressure to grow and maintain their • This case study throws light on the Services rose consistently and it was an competitive edges followed the paradigm reasons for the breakup of potentially expert technology solutions provider, it set by Pfizer, which acquired Pharmacia in profitable partnerships in the film lacked the expertise to deal with real time 2002 to become the world’s leading pharma making industry. business operations and practical problems company. With most of their best selling faced by its clients. In its quest for a partner Industry Media drugs on the verge of patent expiry, Sanofi- with deep business expertise, IBM acquired Reference No. MAA0012 Synthelabo’s (Sanofi) looked at merging PWCC in mid-2002 for $3.5 million, to Year of Pub. 2004 or acquiring companies to grow and share further strengthen its commitment to its Teaching Note Not Available the risks associated with its future product IT services business. Struc.Assig. Not Available challenges. Such a deal was on the cards between Aventis and Sanofi and the merger keywords Pedagogical Objective was expected to give birth to the world's second largest drug company. Walt Disney Company; Pixar Animation • To evaluate the potential benefits of Studios; Steve Jobs; Michael Eisner; 3D IBM after acquiring PWCC. animation; Lucas films; Finding Nemo; Star Pedagogical Objective Wars; Toy Story; Buena Vista; Disney Industry Information Technology • To understand the growth strategies of World; Disney Land; Bob Iger; Cartoon Services Sanofi, which was set up with an objective network; Mickey Mouse. Reference No. MAA0010 of being a discovery-led global Year of Pub. 2004 pharmaceutical company. Teaching Note Not Available Struc.Assig. Not Available Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Industry Pharmaceutical P&G’s Takeover of Wella: The keywords Reference No. MAA0013 Stumbling Blocks Year of Pub. 2004 When Procter and Gamble (P&G) acquired IBM Consultancy; IBM Global Services; Teaching Note Not Available Wella, the German beauty products giant, IBM Business Consultancy Services; Struc.Assig. Not Available the synergies painted a rosy picture. But Consolidation in consultancy industry; keywords the company is having its own share of PwCC; PricewaterhouseCoopers woes with unrelenting minority Consultancy; On-demand computing; IT Sanofi-Synthelabo’s (Sanofi) growth shareholders refusing to sell the preference services; IT consultancy services; Business strategies; Aventis Pharma; Research and shares, expressing their dissatisfaction over transformation; Outsourcing services; IT development (R&D); Mergers and P&G’s offer. They demanded that the services and business consultancy; acquistions; French pharmaceutical industry; preference shares should also receive the Management consultancy services; Sam Bristol-Myers Squibb; Generics business; same price as that of voting shares. Even a Palmisano; Acquisition of PwCC by IBM. Patents expiry; United States Food and Drug year after the acquisition, the stalemate Administration; Plavix; Arixtra; Apotex; continues. L'Oreal Group; Total Oil Company; Growth Strategies of Rexam Plc. Blockbuster drugs; Jean-Francois Dehecq; Pedagogical Objectives Alliances and joint ventures. Rexam was formed in 1995 when WV • The case delves into the synergies that Bowater and Sons, a London-based P&G sought through Wella’s acquisition, conglomerate, incorporated in 1881, Pixar-Disney: Parting Ways and how the differential offer that the adopted a single brand to transform itself company made is stopping it from taking from a diversified business group to a leading In 1991, Walt Disney Company (Disney) full control of Wella packaging company in the world. Under its and Pixar Animation Studios (Pixar) joined CEO Rolf Borjesson, Rexam carried on its hands to produce three full-length • The case offers scope to discuss the acquisition programme in the mid and late animated movies. Under the agreement, cross-border takeovers in the light of 1990s by acquiring several companies like Disney had the control of marketing and country-specific regulations. The case PLM, American National Can Group Inc. licensing of the movies, while Pixar was to in point being the German Takeover Act. and Latasa, all leading consumer-packaging be paid a share of the profits towards the Industry Personal Care Products companies in the world. By 2004, Rexam development costs. After four years, they Reference No. MAA0011 was the fourth largest company in the global released their first movie, Toy Story, that Year of Pub. 2004 consumer packaging industry and also the turned out to be a hit. After the success of Teaching Note Not Available world's leading beverage can producer with Toy Story, Pixar re-negotiated the terms Struc.Assig. Not Available annual sales of $5.6 billion. of the agreement in which it was agreed that both the partners would share the keywords Pedagogical Objective profits equally, after Disney was paid a Procter and Gamble (P&G); Wella; German distribution fee of 12%. In 1998, a year • To understand how Rexam, by leveraging takeover act; Preference shareholders; after the new deal was struck, A Bug’s Life on its core business, consolidated its Voting shares; Two-tiered offer; Elliott was released that turned out to be a major growth and leadership position in the Associates; AG Lafley; Heiner Gurtler; hit. In 2003, after the release of their global consumer packaging industry. BaFin; Domination agreement. biggest hit, Finding Nemo, Pixar wanted Industry Packaging and Container to further re-negotiate its terms with Manufacturing Disney under which it wanted to retain the Reference No. MAA0009 128 www.ibscdc.org

Year of Pub. 2004 presence. Bank of America felt that the acquisitions; Research and development;

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S T R A T E G Y – III – Y G E T A R T S S T R A T E G Y – III – Y G E T A R T S Teaching Note Not Available deal provided it an opportunity to emerge Growth strategy; Indian pharmaceutical III – Y G E T A R T S Struc.Assig. Not Available stronger. Analysts however, felt that the industry; Blockbuster drugs; benefits the bank would derive would not GlaxoSmithKline; Rhone Poulenc; Generic keywords justify the 42% premium Bank of America competition; Big pharma; Patents and Rexam Plc; Coca-Cola; Rexam Beverage paid to FleetBoston shareholders. patented drugs; Food and Drug Packaging; American National Can Group Administration; 1970 Indian Patent Act. Incorporated; Rolf Borjesson; Rexam Pedagogical Objectives Beverage Can South America; Industrial packaging; WV Bowater and Sons; PLM; • To discuss whether Bank of America would be able to realise the synergies of Sony Ericsson’s Alliance: The Collins-Aikman; Amcor Flexibles; Rexam Synergies Beauty and Closures; Bulk packaging; the merger Gearing ratio; Stefan Angwald. • To understand the growth strategies of Sony Ericsson Mobile Communications, Bank of America and FleetBoston AB was formed as a 50-50 joint venture between Japan’s Sony Corporation and • To know how mergers and acquisitions Bank One and JP Morgan Sweden’s Ericsson in August 2001. The are changing the face of the US banking company, with its headquarters in London, Merger: Building an Empire or industry. commenced its operations in October Adding Value? Industry Banking 2001. With Sony’s experience in consumer Deregulation of the banking industry in Reference No. MAA0007 electronics and Ericsson’s expertise in the US brought in a wave of consolidations, Year of Pub. 2004 mobile handset manufacturing, the creating some of the largest banks in the Teaching Note Not Available company envisaged dominating the global world. On January 14th 2004, JP Morgan Struc.Assig. Not Available mobile handset market. However, since its Chase announced its merger with Bank inception, Sony Ericsson had been making One, a deal, which was valued at $58 billion. keywords losses and could grab only a meagre 5.5% global market share by mid-2003. In the The merger created the second largest bank Bank of America; FleetBoston; Merger; third quarter of 2003, with the introduction in the US with assets worth $1.1 trillion. Synergies; Impact on industry; Geographical of camera phones, Sony Ericsson clocked The combined company, JP Morgan Chase reach; Consolidation. and Co., had a balanced mix of consumer the first ever profit in its history, of 62 and wholesale business, synergies in retail million euros. Still, Sony Ericsson was th banking as well as investment banking, ranked 5 in the mobile market worldwide. consistency in earnings and increased Nicholas Piramal India Limited: By then, with the saturation of the customer base. The success of the merger Mergers and Acquisitions European and the American mobile depended on the ability of the companies markets, the focus of the global handset As India moves towards 2005 product to blend their cultures, achieve cost cuts manufacturers had shifted to the emerging patent regime, many Indian firms are and attain growth in revenues. markets of Asia where the second hand scouting for buyouts and acquisitions of phone market had hit the market for new the US and European companies. While phones hard. Under such circumstances, Pedagogical Objective Ranbaxy, Dr. Reddy’s, Wockhardt and Sony Ericsson reconsidered its initial • To understand the changing scenario in others are in the forefront for acquiring strategy of targeting the high-end, low- the US banking industry due to such companies, Nicholas Piramal India volume segment by announcing its foray consolidation and to discuss the possible Ltd. (NPIL), is doing just the opposite. into the low-end, high-volume segment in outcomes of the big mergers in the industry. The company is acquiring more Indian the fourth quarter of 2003. than western firms. In the Indian pharma Industry Banking Industry industry, NPIL has made more acquisitions Pedagogical Objectives Reference No. MAA0008 than any other firm. In 2003, NPIL ranked Year of Pub. 2004 third in the Indian pharmaceutical industry • To discuss the expected synergies that Teaching Note Not Available with a market share of 4.4%, next only to prompted Sony and Ericsson to strike a Struc.Assig. Not Available market leader GlaxoSmithKline (5.7%) 50-50 joint venture in 2001 and Ranbaxy (4.7%). By adopting the keywords strategy of mergers and acquisitions • The reason behind the alliance’s troubled beginning and how it bounced back to Bank One and JP Morgan merger; Mergers (M&As), it intends to become the top profitability. and acquisitions; Growth strategies; player in the Indian pharma industry. American banking industry; Commercial Industry Wireless Telephone Handsets and investment banking; William B Pedagogical Objective Reference No. MAA0005 Harrison; Private equity and banking; Glass- Year of Pub. 2004 • To discuss NPIL’s business strategy of Steagall Act 1933; Gramm-Leach-Bliley Teaching Note Available acquiring firms and analyse whether the (GLB) Act; Critical mass; Value creation; Struc.Assig. Available Credit card business; JP Morgan Chase and company’s M&A strategy would help it Co; Consolidation of technology emerge as a leader in the Indian keywords pharmaceutical industry. platforms; Alliances and joint ventures. Sony; Ericsson; Sony Ericsson; History of Industry Pharmaceutical Industry Sony; History of Ericsson; Sony Ericsson Reference No. MAA0006 joint venture; Sony Ericsson’s losses; Global Bank of America: Fleetboston Year of Pub. 2004 mobile market; Sony Ericsson T68I; 3G Merger Teaching Note Not Available technology; Low priced handsets; Sony Struc.Assig. Not Available Ericsson’s restructuring; Profits of Sony When Bank of America bought FleetBoston Ericsson; Business performance of Sony in a $47 billion deal, in November 2003, it keywords Ericsson; Global imaging phone market. expanded its presence to the markets in Nicholas Piramal India Limited; Ajay northeastern America where it had lacked Piramal; Joint venture; Mergers and 129 www.ibscdc.org Ahold Merger and Acquisition Industry Travel Industry Corporation of India Ltd. (ICICI), which Strategy: Cees Van Der Hoeven’s Reference No. MAA0003 was set up as a DFI in 1955, underwent Approach Year of Pub. 2003 significant changes to meet these Teaching Note Not Available challenges. To exploit the synergies Ahold, the largest food retailer in the Struc.Assig. Not Available brought by universal banking, it went in Netherlands, under Cees van der Hoeven for mergers and acquisitions and finally (Hoeven) became the third largest food keywords reverse merged with its subsidiary ICICI retailer in the world through acquisitions. Bank. akeoversakeovers akeoversakeovers akeovers eBookers; Dinesh Dhamija; On-line travel Initially, Hoeven was prudent in his strategy agency; Acquisitions; Tecnovate; by adhering to Ahold’s six golden principles Flightbookers; Phocus-Wright; Merchant Pedagogical Objectives on acquisition. But as the company became fares; Travel; Dabin Travel; Expedia; bigger he over-promised investors and in Lastminute.com; America OnLine; AOL; • To discuss how the banking sector order to deliver his promise, he overlooked British Airways. reforms affected the Development the company’s rules and implemented his Financial Institutions (DFIs) in India acquisition strategy too swiftly. This • To discuss the benefits that a universal ultimately led to many problems including Pfizer: Mergers and Acquisitions bank offers and the reasons behind the that of integrating the various acquired merger of ICICI with ICICI Bank. entities to function as one organisation. In the 1990s, the global pharmaceutical Finally he, along with some of his key industry saw a spurt of mergers and Industry Banking and Financial executives, were forced to resign when the acquisitions. Companies across the world Services problems at Ahold went public. were merging to achieve critical mass and Reference No. MAA0001 economies of scale in all departments but Year of Pub. 2003 Pedagogical Objective more specifically in research and Teaching Note Not Available development. Pfizer, which had always Struc.Assig. Not Available • To discuss the perils that companies adopted a strategy of ‘organic’ growth, might come across in trying to keywords suddenly changed its policy and turned implement an acquisition strategy too towards ‘inorganic’ growth. It acquired Industrial Credit and Investment swiftly. Warner Lambert and Pharmacia to become Corporation of India Ltd; ICICI Bank; Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Mergers, Acquisitions and T Industry Retail Services the biggest pharmaceutical company in the Universal banking; Low cost deposits; Cost Reference No. MAA0004 world. The major driver for these of funds; Development financial Year of Pub. 2004 acquisitions was the portfolio of institutions; Statutory liquid and cash Teaching Note Available blockbuster drugs of the two acquired reserve ratios; Reverse merger; Long term Struc.Assig. Available companies. operational fund; Deregulation of Indian banking sector; Non-performing assets; keywords Pedagogical Objectives Indian banking industry; Financial sector Ahold; Cees van der Hoeven; Mergers and reforms; Reserve Bank of India; Long-term • To discuss why Pfizer changed its acquisitions; Six golden rules of acquisitions; funding. trajectory from organic to inorganic US Foodservice; Velox Retail Holdings; growth Disco Ahold International; Vendor allowances; Pierre Everaert; Anders • To discuss the key elements in Pfizer’s Moberg; Giant food stores; Autonomous acquisition of the two companies. growth; US mass retailer of the year; Acquisition strategy; Albert Heijn. Industry Pharmaceuticals Reference No. MAA0002 Year of Pub. 2003 Teaching Note Not Available Acquire and Ascend: The Struc.Assig. Not Available ebookers Way keywords ebookers.com is one of the earliest European on-line travel agencies to have Pfizer; Mergers and acquisitions; Warner successfully generated revenues on the web. Lambert; American pharmaceutical In transforming itself from the traditional industry; Patented drugs; Lipitor; off-line business, the company weathered Pharmacia; Value chain; Celebrex; several downturns. In spite of the Research and development; Economies of widespread doubts and anxiety that scale; Food and Drug Administration; Co- prevailed among the investing community, promotions; Generic compeition; the company raised funds from the Inorganic growth. American and German stock markets. During the downturn, ebookers went on acquiring many on-line travel agents ICICI into Universal Banking across Europe. Just when the company was about to break even, the September 11 The banking sector deregulation that took attacks shook the entire travel industry of place in India during the early 1990s posed world. Still, the company did not cease its a threat to the survival of Development acquisition strategies. financial institutions (DFIs). They were cut off from the concessional funding extended by the government and were Pedagogical Objective exposed to intense competition from local • To discuss the strategies that underlies and foreign banks. Over a period of time, the success of ebookers.com. Industrial Credit and Investment 130 www.ibscdc.org