Lesson-6

Discussion Questions(DQs) 

6. 1. Corporate strategy is primarily about the choice of direction for a firm as a whole and management of its business or product portfolio. Corporate strategy includes decision regarding the flow of financial and other resources to and from a company's product lines and business units. Through a series of coordinating devices, a company transfers skills and capabilities in one unit to other units that need resources. In this way, it attempts to obtain synergy among numerous product lines and business units so that the corporate whole is greater than the sum of its parts. All corporations, from the smallest company to multinationals, must at one time or another consider these issues.

                    

a.       Why is it important to evaluate corporate strategies and what are 4 ways to evaluate corporate strategies?

a.       Briefly describe each of the portfolio analysis matrices including how it is used, the cells in the matrix, and its advantages and drawbacks.

b.      Why might an organization's' corporate strategy need to be changed? How might it be changed?

c.       After readings "Strategic Managers in Action: Judson C. Green, Navteq Corporation,” do you agree with Green's decision? Can you suggest other ways Navteq could either backwardly or vertically integrate?

Be sure to support your work with specific citations from this week's Learning Resources and any additional sources.

This paper attempts to highlight about corporate strategies, portfolio analysis, reasons for changing corporate strategies, and finally discuss the case regarding to Navteq Corporation.

a.      The Corporate strategies and four ways to evaluate these strategies

Corporate strategies refer to such strategic choices or actions available for a company that direct its businesses strategically no matter whether it is single business or multi-business organizations. The corporate strategies would be helpful for establishing its overall strategic direction so that these must be evaluated to get the company where it hopes to be in (Coulter, 2013). In addition to this, evaluating these corporate strategies provides a clue to strategic managers about the progress of implemented strategies and takes corrective actions if necessary. The four major ways of evaluating the corporate strategies are as follows:

1.      Corporate goals: Are corporate and organizational goals achieved?

2.      Efficiency, effectiveness, productivity: Are organizational resources optimally used? Or is an organization able to achieve its goals? Or has organization’s productivity improved?

3.      Benchmarking: Is a company able to use the best practices in relations to its competitors?

4.      Portfolio analysis: How does a company assess its portfolio of businesses?

b.      The brief description of each of the portfolio matrices

Portfolio analysis can be done when a company has multiple brands or business units to be examined. In order to do a portfolio analysis, one of the following difference metrics can be used:

1.      BCG (growth-share) matrix: It is a four-cell matrix created as a way to determine whether a business unit was a cash producer or a cash user. It helps to analyze business unit or product lines by using four matrixes showing market share in X-axis and market growth in Y-axis. Its four cells reflects that the stars as a high growth and high market share, the cash cows as products in low growth market with high market share, the dog as products in low growth market with low market share, and the question mark as products in high growth market with low market share. Its simplicity is both advantage and drawback of BCG matrix.

2.      McKinsey-GE stoplight matrix: It is a nine-cell matrix that provides a more comprehensive analysis of a business unit’s internal and external factors. The McKinsey matrix overcame the problem of simplistic analysis that plagued the BCG matrix tool. However, its main drawback is the subjectivity of the analysis.

3.      Product-Market evolution matrix: It is a 15-cell matrix that is based on the product life cycle. The product-market evolution matrix suffers from the same subjectivity biases that the McKinsey matrix does. In addition, there are many products that do not fit nicely and neatly into the industry life cycle, so this particular evaluation tool also has drawbacks that limit its usefulness (Coulter, 2013).

c.       Necessity of changing an organization’s corporate strategy

It is true that a company’s corporate goals only can be achieved when corporate strategies are successfully applied and managed by aligning with other organizational strategies-competitive and functional. These organizational strategies help the company to make sure it can reach and achieve what it hopes to do so. Furthermore, the evaluation of corporate strategies entails that whether these strategies are working or not, and if it’s not working then these must be changed. However, strategic managers first need to change its functional and competitive strategies so it might be easy to take more drastic actions to change the corporate direction of the company.

d.      Strategic Management in Action: Judson C. Green, Navteq Corporation

I agree with Green’s decision about his strategic move towards new direction, using navigation systems in cars and other new handheld devices such as mobiles, iPods, and games (Coulter, 2013). This was not bad idea to test company’s products to determine where it could fit the best. However, when it is known that revenues from navigation-equipped vehicles lowered the profit then it would be better off leaving this part, and focus on profitable part-handheld devices proactively.

Navteq, I think, should vertically integrate with its mobile or camera companies to increase its sales volumes so that its overall profit margin will boost up. When a company does so, it will be benefited in many cases. First, as mobile industry is growing rapidly, navigation system in the mobile is also inclined to grow so that sales revenue goes up. Second, it helps the company to build a profitable partnership with its growing businesses which ultimately not only increases its customers but also Navteq’s customers.

References                             

Coulter, M. (2013). Strategic Management in Action (6 ed.). New Jersey, USA: Pearson Education, Inc.

Pearce II, J.A.,& Robinson, R.B. (2014(14th Edition)). Strategic Management: Competing for Domestic and International planning. New York: McGraw-Hill Irwin.

(n.d.) Retrieved from https://hbr.org/1963/07/how-to-evaluate-corporate-strategy/

6. 2. Read: Strategic Management in Action Cases: Case #4 "Changing the Menu.”

a. Post Describe Kraft's competitive strategies.

b. What strategic challenges does CEO Rosenfeld face?

c. Which evaluation measures should Kraft use? Explain your rationale.

d. Go to Kraft's website and evaluate revenues, profits, and strategic initiatives.

Strategic Management in Action Case: "Changing the Menu.”

Kraft Foods Inc, located in Northfield, USA. is the world’s second largest food company in terms of the revenue it generates. This paper will highlight some of the strategic challenges, opportunities faced by the company.

a.      Kraft’s Competitive strategies

It seems that Kraft has been using a lot of competitive strategies such as new products development, diversification of its businesses, acquisition by Philip Morris, merger with General Foods. In addition to these, it went public and sold a few business divisions, product brands that did not fit with its portfolio, and discontinued its almost 300 food items (Coulter, 2013). During its time, it reduced the fat and sugar content and portion sizes of its products, and ultimately Kraft being spun-off as a complete spin-off.

b.      Strategic Challenges faced by CEO, Rosenfeld

It is true that CEO, Rosenfeld has faced several strategic challenges. One of the strategic challenges includes crafting a corporate direction for the company by changing its food industry structure, and leveraging its assets to improve its growth for achieving a competitive advantage. Furthermore, CEO, Rosenfeld dealt with other challenges such as decreased product quality, workers’ fear to communicate, eroding strengths of some brands causing the company to lose market share (Coulter, 2013).

c.       Evaluation Measures recommended to use for Kraft

While there are several evaluation measures available for Kraft to use,  I recommend the following four evaluation measures such as Corporate goals, efficiency, effectiveness, and productivity measure, benchmarking and portfolio analysis to be used in order to improve the Kraft’s performance.

1.      Corporate goals: As corporate goals indicate, it should be able to determine its strategic desired results so that it can be known where it has reached so far. It also helps the company to measure the deviation between the standard and actual results and take corrective actions accordingly.

2.      Efficiency, Effectiveness and Productivity Measures: This measure evaluates its performance by analyzing its efficiency, effectiveness and productivity.  Efficiency represents the organizations capacity to maximize output from given resources; effectiveness shows its ability to achieve the goals/targets set and productivity measures the ratio of input and output.

3.      Benchmarking: Benchmarking can be used to measure the process by which the best practices inside or outside the organization are used as standards for measuring the organizational performance against which the actual performance are measured and found out the areas where the improvements are required (Coulter, 2013).

4.      Portfolio Analysis:  Last but not the least, portfolio analysis could be better off to use as it has multiple lines of products or businesses.  It basically includes 2 dimensional matrices such as internal and external factors. Portfolio analysis can be done by using BCG matrix, McKinsey-GE stoplight matrix, and Product-market evolution matrix. This analysis could be helpful for Kraft to use because it entails that whether its performances are working as expected or not, and if not happening so, there needs to be made some strategic changes to fit the situation.

d.      Evaluation of Kraft’s revenues, profits, and strategic initiatives

By visiting Kraft’s website, it is known that its revenues, profits and strategic initiatives have changed lots as time passed.

Kraft Revenue and Profit: The net sales revenue of Kraft at the end of 2013 was $ 18,218 million which slightly decreased to $18,205 at the end of year 2014. On the same way, its profit was $ 2,715 million in 2013 which reduced significantly to $1,043 in 2014. It seems that Kraft’s sales revenues and profits went ups and downs based on its performance.

Kraft Strategic Initiative: The company has an exceptional portfolio of global Snacks power brands - led by Milka and Cadbury chocolates, Oreo and LU biscuits and Trident gum - with leading market shares in every major region, a full pipeline of innovation and a clear opportunity to grow its presence in the point-of-purchase "hot zone."Kraft Foods now offers dozens of brands of chocolate, gum, candy, and snack-size cookies, crackers and nuts through multiple distribution channels, from traditional groceries to convenience stores. It has been looking to expand its businesses into developing countries in the future.

References

Coulter, M. (2013). Strategic Management in Action (6 ed.). New Jersey, USA: Pearson Education, Inc.

Pearce II, J.A.,& Robinson, R.B. (2014(14th Edition)). Strategic Management: Competing for Domestic and International planning. New York: McGraw-Hill Irwin.

(n.d.) Retrieved from http://www.kraftrecipes.com/

(n.d.) Retrieved from https://www.stock-analysis-on.net/NASDAQ/Company/Kraft-Foods-Group-Inc/Financial-Statement/Income-Statement

The Case Study of "Ford Motor Company" 

 Overview of the Case-“Ford Motor Company”

While it is true that Ford Motor Company had $ 20.2 billion net income in 2011, it started to face economic troubles in Europe, intensifying competition in the US, and increasing pains in Asia (Coulter, 2013). This paper will discuss the automobile industry’s characteristics, Ford’s domestic and global corporate strategies, Ford in terms of product design, manufacturing, marketing, corporate culture, and finally its global presence in the global automobile market.

Strategic Issues

The key strategic issues the Ford currently facing are growing number of competitors, frenetically changing customers’ taste and preferences, economic downturn, and increasing customers’ and suppliers’ power. These things have become the most critical because they are more likely to affect its strategic decisions and its survival in the marketplace.

Analysis & Evaluation

In this part of case analysis and evaluation, I would like to discuss some of the important strategic factors the company currently making in order to achieve a sustainable competitive advantage in the automobile industry.

1.      The characteristics of global Car Industry

The global car industry has been changing due to many factors. Some of the major factors or characteristics of global car industry are, fierce Competition among car companies, fickle customers, manufacturing overcapacity all over the world, demands of car is positively correlated with customers’ income level, technological advances in car productions and systems, maturity phase of Car industry’s life cycle, and increasing usages of flexible manufacturing systems in the car companies (Coulter, 2013).

2.      Ford’s domestic and global corporate strategies

As Alan Mulally’s was appointed as ECO in 2006, he strived to change its domestic and global strategies to revive the automaker. As soon as he noticed some of the strategic issues the company facing, he determined to take the dramatic and painful steps and to “plow through gut-wrenching change” to transform the company and back its global prominence. In order to improve its overall systems, the company developed the comprehensive plan such as strong brands, customer focus, strong leadership, innovative products, clear pricing, great quality, and competitive costs and capacity.

As Ford’s domestic strategies, it aggressively restructures the company for operating profitably by managing its demands and model mix. Furthermore, it develops the products that are highly desired by its customers along with high quality excellence products. It also focuses on improving its finical statement such as income statement, balance sheet and cash flow statement. Lastly it strives to work with all accountable partners.

As global corporate strategies, Ford used ONE FORD strategy as it attempts to leverage all its resources tremendously all over the world. In order to gain a profitable growth, it tried to make the best use of human resources through economics of scale and scope. In other words, it simply strived to operate ONE TEAM all around the world with ONE PLAN and ONE GOAL all over its operations in the world.

3.      Ford in terms of product design, manufacturing, marketing, and corporate culture

The Ford’s manufacturing and product design, marketing and corporate culture can be explained separately as follows:

Manufacturing and product design: Ford focuses on its manufacturing competitive products and capacity to maximize the operational quality and efficiency. It also used some strategies to reduce its costs. For example, during 2003m it had reduced the cost of $3.2 billion worldwide by using quality improvement and waste elimination method, also called consumer-driven six-sigma. In addition to this, Ford is working on improving its safety ratings as it was industry safety leader in its safety ratings (Coulter, 2013). Furthermore, it continuously strived to cut its costs by reducing manufacturing complexity and to improve quality in products and in processes. Not only this much, it also created a single global product development organization to work together more effectively to improve its quality, productivity, and speed of product development (Coulter, 2013).  

Marketing: Ford always tried to produce its great products as most desired by its valuable customers, and eliminate those which were less desired.  It focused on the company’s brands and wide range of options to its customers such as Sedans, and SUV (Coulter, 2013). In addition, it enhanced the global marketing efforts by integrating ONE FORD plan all over the world’s operations. Furthermore, it became the most admiring and leading company in terms of fuel, quality, safety, efficiency and smart technologies. Another marketing strategy used by Ford is that challenging advertising campaign in which consumers were asked to compare Ford vehicles against its toughest competitors. Not only this much, it also believes that the customer is job 1 so that it made a strong customer relations, innovation, high-quality and highly valued products in order to gain its ultimate success (Coulter, 2013). Lastly, it was highly committed to work together with its partners and dealers by providing outstanding products and trucks to make a win-win benefit for all.

Co-operate culture: Ford’s cooperate culture is made of speed and healthy operation all over its operation in the world. It also created the company’s norms, values and beliefs that were highly focused on continuous improvement rather than one time improvement. It had a new message of “the bigger-is-better” which was later replaced by “less is more” in order to change its employee’s mental mapping (Coulter, 2013). The co-corporate culture at Ford is wonderful and friendliness .They always give credit for other and they accept the mistake themselves .They always believe on team like as one company as one team. As a part of culture, Ford organized every Thursday’s meeting to discuss about the progress of the company’s performance. It is also true that Ford’s has open and true fact seeking culture so that no one can hide nothing and everything becomes transparent and clear to all. Ford’s had a culture of grooming its managers or successor that could be potentially made them to handle and lead the strategic jobs as needed. Lastly, it is also well-known for its strong and unwavering commitment to environmental responsibility.

4.      Increasing Ford’s presence in the global automobile market

Ford Motor Company has reiterated its commitment to deliver the key aspects of the One Ford plan. In order to gain a global presence, Ford believes that success only can be achieved when ONE TEAM works on ONE PLAN with ONE GOAL in mind (Coulter, 2013). This concept means that it has to align its different business units and globally integrate the organizational capabilities, skills, knowledge and resources. Ford, indeed, is attempting to produce these sorts of products or services which are highly perceived or valued by their customers. In addition, the Company is also trying to leverage the full potential of the global scale operations by improving consistently along with great products, global growth, and a strong association with its key partners (Coulter, 2013).

Summary, Conclusions & Recommendations

In a nutshell, Ford has been continuously focusing on delivering its key aspects of one Ford plan i.e. ONE TEAM working together on ONE PLAN with ONE GOAL in mind. Ford’s success depends on how well it utilizes and integrates its organizational resources, skills, abilities and knowledge worldwide. Some of the important recommendations are as follows:

·         It should focus on continuous improvement as it was doing since long time ago because it helps to reduce the costs and eliminate the unwanted systems and techniques.

·         Ford should increase on R&D so that customers’ needs and demands can be addressed timely so as to satisfy them as quickly as possible. It also helps the company to bring something new innovative products that may provide the premium benefits to the company.

·         Since building a good relationship with its partners, dealers and valuable customers are important, Ford should give more emphasis on this to attract new customers and retain existing ones for lifetime. This, indeed, helps to build a sustainable competitive edge in the marketplace.

·         Ford should always strive to use art-of-the state technologies and modern systems such as flexible manufacturing system, automation, continuous improvement, just-in-time delivery, waste management techniques and six-sigma to improve its quality. This in effect provides the company to be the leader in terms of quality, safety, efficiency and productive over its rivals.

References

Coulter, M. (2013). Strategic Management in Action (6 ed.). New Jersey, USA: Pearson Education, Inc.

David, F. R. (2011 (13th ed.). Strategic Management: CONCEPTS AND CASES. New Jersey: Pearson Education,Inc.

Pearce II, J.A.,& Robinson, R.B. (2014(14th Edition)). Strategic Management: Competing for Domestic and International planning. New York: McGraw-Hill Irwin.