Business Profiles (Buss4)

The Four W's

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Royal Mail

  • Who?  Moya Greene- CEO of Royal Mail                 

                                                                 

  • What? Strategic overhaul of the service's business model, Reverse in declines in revenue and profit, built goodwill with regulators and postal unions, retrenchment

 

  • Why?  It faced a rapid decline in revenue from letters (e-mail), outdated organisational structure; a huge pension deficit; union opposition to government plans for privatisation; and an unworkable regulatory framework that discouraged the business from introducing new products and prevented it from setting its own prices

 

  • Which shows? Her appointment has been a successful leadership change and is proof that hiring managers from outside the company can be more beneficial in order to modernise an outdated system.

                                                                    

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Barclays

  •  Who?  Antony Jenkins- CEO of Barclays Banking Group                  

                                                                 

  •  What? He has taken the lead in the development of Barclays' Transform Programme, including the introduction of a new purpose and values, with the aim of making Barclays the 'Go-To'Bank for customers and clients.

 

  • Why?  Appointment with immediate effect following Bob Diamond's involvement with the Libor Fixing Scandal  (fixing benchmark price of loans to favour Barclays) and mis-selling of PPI.  

 

  • Which shows? We are yet to know whether his appointment will have been an efficient leadership change for Barclays. Can he really change Barclays given the bonus culture and record of unethical practices?
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Xiaomi

  • Who?  Lei Jun- Founder, Chairman and Ceo of Xiaomi Tech.                 

                                                                 

  • What? Set up rival smartphone company and released first phone (Xiaomi Mi- One). They accapt razor thin margins and price it's smartphone slughtly above cost (USP). Sold 100,000 units of newest model (Mi-3) within 86 seconds of launch.  
  • Why?  Attempts to break into smartphone market with competitive low prices offering customers a cheap but relatively quality handset and bring profits back to mainland China.

 

  • Which shows? Even in a saturated international market like the smartphone one, there is still room for competition and supports market research suggesting that consumers always look for the competitively priced, high quality handsets.
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Alibaba

  • Who?  Jack Ma- Internet Entrepreneur and CEO of Alibaba Group                 

                                                                 

  • What? Investing large amounts of money to acquire new companies ($1.5 bn in 20% stake of Chinese Internet company Wasu Media) Diversifying its  product portfolio to increase competitiveness and increase market share.  

 

  • Why?   He wants to solidify Alibaba's position as a conglomerate  with broad reach in China's booming entrepreneurial economy.

 

  • Which shows? He is a good example of an entrepreneurial who refuses to become complacent and re-invests profits to further improve the business.
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Zappos

  • Who?  Tony Hsieh- CEO of Zappos (clothing and shoes)            

                                                                 

  • What? Was bought out by Amazon for approximately $1.2 billion in November 2009

 

  • Why?  The state of the economy at the time of the acquisition meant that Zappos was in a very precarious position financially. The board of directors wanted to maximise profits in a down economy and believed that selling the company would be the best way  to do this.

 

  • Which shows? Selling out is not always a negative thing. For a while Zappos was able to continue as an independent entity to Amazon thereby maintaining its corporate culture (important to Hsieh) . The business has continued to thrive and Hseih is still using his HR ideas like paying employees to quit which Amazon has now incorporated in their own organisational culture.  
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Yahoo

  • Who?  Marissa Mayer- CEO of Yahoo                

                                                                 

  • What? Strategic overhaul of the company's personnel policy. The policy required all remote-workers to convert to in-office workers then changing the maternity leave policy: lengthening the allotted time off and offering parents cash bonuses thereby following in the footsteps of other silicon valley companies like Facebook and Google.

 

  • Why?  She wanted to improve the company's culture of innovation and collaboration. The company needed to be re-vitalised after a loss of morale and motivation missing out on the two big trends of 2013:  social networking and mobile.  

 

  • Which shows? It is not clear yet whether Mayer will be able to turn Yahoo around but yet again it demonstrates that sometimes an outside leader is more beneficial in order to get a fresh eye on the business in order to make radical changes.
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Starbucks

  • Who?  Howard Schultz- CEO of Starbucks corporation                                                             
  • What? Returned to his role as CEO in  2008 after the company went through a period of loss
  • Why?  After his departure in 2000, Starbucks began to worsen: employees lost morale and became cynical and motivation was at an all time low. Schultz returned and injected all the passion he had after his trip to Italy where he discovered the immense coffee culture. The company underwent some retrenchment as Starbucks closed over 600 stores in order to go back to basics and discover what it really was that customers loved about coffee.  
  • Which shows? Schultz's strength as a leader meant that he was the best man to be brought in to recover the business in turmoil. April 2014 saw Starbucks' revenue increase to $3.87 billion even after recovering from the recent tax scandal. They are company to look at for customer loyalty and reputation.
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Thomas Cook

  • Who?  Harriet Green- CEO of Thomas Cook                                                           
  • What? Led extensive research both externally (industry analysts and shareholders) and internally (employees and management) to discover exactly what it was that had gone wrong in the organisational culture of Thomas Cook. She then initiated a period of retrenchment by axing hotels from brochures, reducing winter flights and closing travel agents.
  • Why?  When Green took over as CEO, Thomas Cook's share price was £0.13. Something needed to be done to get the organisation out of debt and able to compete with more modernised organisations like Virgin Holidays etc. Following Green's strategy, share price has soared and Green received Leader of the Year award for 2013 after her success in saving the business.
  • Which shows? She was able to rescue a business on the brink of collapse by simplifying the business and undergoing a period of retrenchment. Retrenchment is not necessarily a defeat but time to really analyse a business.
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Amazon

  • Who?  Jeff Bezos- Founder and CEO of Amazon.com (1994)

                                                                 

  • What? 

 

  • Why?  It faced a rapid decline in revenue from letters (e-mail), outdated organisational structure; a huge pension deficit; union opposition to government plans for privatisation; and an unworkable regulatory framework that discouraged the business from introducing new products and prevented it from setting its own prices

 

  • Which shows? Her appointment has been a successful leadership change and is proof that hiring managers from outside the company can be more beneficial in order to modernise an outdated system.
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Blackberry

  • Who?  Thorsten Heins- Ex CEO of Blackberry Corporation           

 

  •  What? Was fired from his role as Chief Executive of the business following major unit shipping losses in 2012 and 2013. Attempted to revive a business facing high competition with smartphone manufacturers (Apple and Samsung) but was unable to fully execute as plan was curtailed in phase 2.

 

  • Why?  Critics have argued that Blackberry were simply unable to adapt to the everchanging mobile market and left it too late to break into the touchscreen market with Apple and Samsung releasing strong models with high market share.
  • Which shows? Heins failed to prioritise his core consumers (business people) and instead tried too hard to diversify Blackberry's product portfolio which led to a massive drop in sales.
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Nokia

  • Who?  Stephen Elop- CEO of Nokia Oyj                                                   
  • What? Was acquired by Microsoft for £4.47 billion on the 29th April 2014 after
  • Why?  After his departure in 2000, Starbucks began to worsen: employees lost morale and became cynical and motivation was at an all time low. Schultz returned and injected all the passion he had after his trip to Italy where he discovered the immense coffee culture. The company underwent some retrenchment as Starbucks closed over 600 stores in order to go back to basics and discover what it really was that customers loved about coffee.  
  • Which shows? Schultz's strength as a leader meant that he was the best man to be brought in to recover the business in turmoil. April 2014 saw Starbucks' revenue increase to $3.87 billion even after recovering from the recent tax scandal. They are company to look at for customer loyalty and reputation.
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Sony

  • Who?: Kazuo Hirai - President and CEO of Sony Corporation
  • What?: Diversified its products too much and losing its key consumers and are branching out into the real estate brokerage business in Japan.
  •  Why?: He was hired in order to stem the falling profits of Sony which was mostly due to changes in consumer behaviour (sales of digital cameras were down 20%). However, this trend continued during Hirai’s control as they struggled to manage an overly diversified product portfolio.
  • Which shows?: It’s important to focus on the core of the company or else it loses focus and therefore loses their loyal customer base. Retrenchment would have been a good strategy to implement such as focussing on the PS which was Hirai’s division (Therefore as a lot of knowledge) and has sold 7million units since November 2013.
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Tesco

  • Who?: Philip Clarke - Chief Executive Officer of Tesco plc
  • What?: Sharper prices and revamped stores. Clarke boasted that sales in the stores refurbished so far were up 3%-5%.
  • Why?: Profits are down for the second year in a row. The UK business – which hauls in 65% of total profits – is down for the third consecutive year. Tesco took a loss of £540m on the Chinese business it once had such lofty ambitions for as well as strong competition from discount retailers like Aldi.
  • Which shows?: It is difficult to attract new consumers in a market that is oligopolistic and so by allowing aesthetic changes, it shows consumers that Tesco can change and modernise. However, in the long term this may not be an effective strategy as it depends on how competitively they can price their products and if they can compete with the rise of the discount supermarkets.
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Nestlé

  • Who?: Paul Bulcke CEO of Nestlé S.A.
  • What?: Invested more sharply in new ventures and analysed their current product portfolio. This included selling the bulk of their ‘Jenny Craig weight loss’ management business.
  • Why?: Nestlé SA reported a 5.1% drop in first-quarter sales as weakness in two key regions and a strong Swiss franc hit the company's performance. Unfavourable exchange rates also weighed on the company's performance, cutting 8.6% from Nestlé's sales in the quarter.
  • Which shows?: Efficiency can lead to greater agility when an external factor, such as the exchange rate, creates a poor result for the business. By focussing on their most important brands, Nestle can therefore have a strong product portfolio and hence more profitable.
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