Black&Decker Corporation Essay

Black&Decker Corporation Essay.

Black & Decker was incorporated in 1910. Begun by Duncan Black and Alonzo Decker, Black & Decker’s first power tool was an electric drill in 1916. They went on to develop and offer the first portable screwdriver, electric hammer, as well as finishing sanders and jigsaws all the way up to the hugely successful dust buster in 1978. Over the next 70 years, the company established itself as dominant name in power tool and accessories, first in the United States and then accros a broad global front but particularly in europe.

Growth was achieved by adding to its lineup of power tools and accessories and by increasing its penetration of more and more foreign markets

Symptons, Issues and Problems

Issues in this case is diversification strategy runned by Black & Decker corporation. As a diversified global manufacturer and marketer of household, commercial, and industrial product, Black & Decker need to develop and choose the right strategy for diversification.

This case particularly discuss diversification of Black & Decker corporation during late 1980’s to early 1990’s, where Black & Decker which is established as dominant name in power tools and accessories, began to pursue diversification.

It is because the continuing maturity of its core power tools business.

During the 1980’s Black and Decker had established themselves as a leader in the power tool industry. However, they were feels that the market for such tools was maturing to the point where expansion within the industry would provide little or no additional revenues so they decided to diversify.

Black and Decker began their expansion operation by acquiring General Electric’s housewares business, the leader in the industry, for $300 million in 1984. The success of the GE deal, and the reorganization efforts of their new CEO Nolan Archibald, led Black and Decker to continue on this path of acquisitions and diversification in other areas. Then, various acquisitions and acquisition attemp made by Black & Decker in their strategy to diversified. But the biggest and most noticed was the acquisition of Emrat Corporation, a diversified manufacturer of industrial product, for a $2.8 billion in March 1988. This steps is considered to be very bad decisions made by Black & Decker.

Analysis

Change in strategy

In the mid 1980s, Black & Decker feels that the power tool market had matured to the point where there is no much room for further growth. Black & Decker then decided to change their corporate strategy from single business firm into diversified company.

In 1984 they began to diversify. First they tried to get into the small household appliance market. Rather than create their own line, Black & Decker decided to acquire General Electric’s unit of household appliances for $300 million. Although it was a small part of GE’s company, it held more market share than other houseware distributors (25 percent of the market and the leadership position). That acquisition gives an additional $500 million a year in revenue for Black & Decker because it was able to offer products like irons, coffee makers and toasterswhich.

This began a trend of acquisitions by Black and Decker expanding into various related and unrelated markets with varying levels of success. This various acquisitions allowed Black & Decker to offer even more new products such as portable woodworking tools and stronger drill bits. After all the new changes, Black & Decker Manufacturing Company also changed its name to Black & Decker Corporation to help market those changes

The successful story of GE’s household appliance division acquisition in 1988, has triggered Black & Decker to tried again. Only this time the company of interest was American Standard Inc. American Standard had an impressive $127 million profit in 1987, which towered above the mere $70 million for Black & Decker. But then, the acquisition was unsuccessful.

The Emhart acquisitions

The failed attempts by Black & Decker in 1988 did not stop Black & Decker moves to acquiring other company. In 1989, Black & Decker acquiring Emhart for the price of $2.8 billion, a price that 33% premium over Emhart’s preannouncement value. This acquisition may not have been the best move for Black & Decker because its stock price dropped 15 points after the announcement of the acquisition. After difficult negotiation of exactly how the acquisition would occur, Black & Decker decided to pay for Emhart for the next 48 years.

The deal put over $2 billion in goodwill on Black & Decker’s books and increased debt to over $4 billion just before the credit markets were about to contract severely. With the exception of a few businesses like Price Pfister faucets and Kwikset locks, which represented just $600 million in sales, Emhart made no sense for Black & Decker. Several of its subsidiaries were quickly placed on the block.

But then suddenly the economy became sluggish and the market slowed down, Black & Decker stock slumped from a pre-acquisition $25 to $8 per share. Archibald (Black & Decker’s CEO at that time) had to scramble to keep the company solvent. Archibald’s plan was to sell off about $1.8 billion of Emhart assets to pay down debt while merging the company’s line of Kwikset locks and Price Pfister Inc. plumbing fixtures with Black & Decker’s offerings. According to Archibald, the plan would have been successful enough under normal economic conditions. However, he failed to sell the Emhart businesses for the set prices leaving a long term debt of a hefty $3 billon and annual interest payments of more than $300 million.

Black & Decker initially sold $1 billion in Emhart assets to reduce the interest costs. It met this demand by selling whole divisions of Emhart and also by selling equipment and other assets. By 1991, Black & Decker reduced the debt acquired by more than 25%. From 1993 to 1996, Black & Decker sold off three segments of Emhart that did not prove to be strategic parts of the acquisition. By 1997, Black & Decker was able to meet its liquidity requirements and management chose to amortize the costs on a straight-line basis for the next 40 years.

This shows that the acquisition of Emhart Corporation is a Black & Decker’s bad move. Black & Decker’s decision to acquire a company that was larger than $2.3 billion (revenues) Black & Decker itself, (the Emhart Corporation were $2.7 billion in revenues), was too risky and apparently Archibald didn’t too aware about it.

The purchase and acquisition of Emhart had proven a lack in the synergy required to make such purchases profitable. Also the company had not been able to reduce its amount of debt (primarily from the purchase of Emhart) over the subsequent 10 years. Archibald made poor decisions in the Emhart acquisition, which impacted its profit margin, lowered its competitive advantage, and killed any chance of creating above-average returns.

There are things that has to be done in order to ascertain whether the acquisition may create value for the shareholders, which is the CEO’s primary responsibility. Effort should have concentrated on three essential tests:

· The attractiveness test.
The industries chosen for diversification must be structurally attractive or capable of being made attractive.
· The cost-of-entry test.
The cost of entry must not capitalize all the future profits.
· The better-off test.
Either the new unit must gain competitive advantage from its link with the corporation or vice-versa. Conceding the point that the purchase provided some benefits, such as increased market share and well-known consumer brands, the cost-ofentry and better-off tests provide evidence that the Emhart purchase was very risky.

Black & Decker SWOT Analysis
Strengths
· Brand recognition is a strong attribute for Black and Decker. Black and Decker has a reputation for producing electrical engines, power tools and appliances.
· Black and Decker produce a variety of products in its respected industry, and it is involved in constant research and development (e.g., developing cordless appliances and tools, rechargeable batteries that are compatible with both tools and small appliances). · Black and Decker have penetrated the market causing it to dominate market share in the industry.

Weaknesses
· Black and Decker’s reputation for quality tools and appliances has been decreasing. This was likely due to the fact that Black and Decker was busy dealing with its non-strategic businesses.
Opportunities
· Opportunities to gain more market share by sponsoring home improvement shows.
· Gain more market share with industrial market, by offering quantity-based deals and advertising the quality of its products.
Threats
· Sears is the strongest competitor in the power tools division with 13.4 percent of the US market share.
· Black and Decker needs to be aware of new items that the
consumer can use and develop them before their competitors.

Conclusion and Recommendation

When an industry became mature and not offered enough room for further growth, it is important for a company to change their strategy to keep growing continuously. This is what Black & Decker did, although being a dominant player in power tools and accessories for many years, Black & Decker realized the industry is being mature, so they decided to change their strategy into a diversified company.

To be successful, a diversified company should have a portfolio of product with different growth rates and different market shares. The portfolio composition is a function of the balance between cash flows. High-growth product, that important for company to keep growth in the future, need lot of cash inputs. Low-growth product, product that already in maturity growth, should generate cash. How to balance between this two is the most important things in managing multi-business (diversified) company.

The Emhart acquisitions is an example of bad acquisitions from Black & Decker in their strategy to diversified. There can be many reasons that an acquisition strategy fails to earn its cost of capital. An acquirer may have no real strategy to begin with and thus pay an unjustified acquisition premium right from the beginning. Or there may be a complete failure in executing a fundamentally sound strategy. One major risk in acquisitions is the failure to close the gap that may exist between the strategic objectives and organizational design of the new organization and those of the old. Issues such as new information systems and channels, management succession, new decision rights, and incentive systems must be planned carefully in light of where competitive performance gains are expected to result.

This case is also an example of the problems where mismanaged growth can bring diversification away from core businesses and core competencies rarely creates value for the shareholders. High leveraged acquisitions put the firm at higher financial risks, particularly when the firm’s products depend on business cycles. Shocks to the economy may result in insolvency and possible bankruptcy. The company may have to sell assets at low prices to meet debt obligations. As financial markets become more and more sophisticated, investors may diversify more easily, thereby making corporate diversification less attractive. Firms must continue to strengthen their core competencies and sustain their competitive advantages.

In conclusion, the fundamental reason for the failed acquisition is due to lack of long term planning, forecasting and predicting of the return on investment relative to cost. The highly leveraged acquisition of Emhart placed Black & Decker at higher financial risks, primarily when the firm’s products depended on business cycles. As result of the inherited debt and the unanticipated market fluctuations and weak economy may result in collapse or possible bankruptcy of the corporation. Black & Decker Executives’ lack of strategic direction and poor application of funds may lead the corporation to sell of assets at low prices or lay off employee to meet debt obligations.

Our recommendation for this case is, Black & Decker should stick with its original vision that includes the consolidation of their portfolio. The company should continue in investing in, and strengthening, its core products within its existing portfolio, so that these products will generate cash flow that will enable the company to embark upon expansion opportunities.

In the future, Black & Decker should consider international companies with strong recognition in the countries that they plan on expanding into, considering either acquisition, merger, or creating a joint venture. The affiliation between Black & Decker and these companies must create synergy in order to justify such deliberate moves and expansions. These planned executive decisions and actions will help Black & Decker to obtain competitive advantages which will result in aboveaverage returns, leading to greater investor wealth and value to its employees.

Black&Decker Corporation Essay

The 4 Basic Models of the BGS Relationship Essay

The 4 Basic Models of the BGS Relationship Essay.

1. What is the business-government-society (BGS) field and what is its importance? 2. Explain the Four basic models of the BGS relationship

Introduction:

Business, government and society are fundamental in this world. Business satisfies human’s needs by providing them products and services in exchange for profit. Government is a structure and process in society that with authority makes and applies policies and rules. Society is a network of human relations composed of ideas, institutions, and material things (Steiner, 2011). They all work together to create better solutions in all three elements.

Forces in BGS have shaped our world.

Content Analysis:

Business, government and society are subdivisions of economic, political and social activities. The BGS field is the study of the interrelationships among business, government and society and its importance to managers. These interrelationships change over time. Businesses operate in the environment created by the interrelationships between business, government and society. To make good business decisions it is crucial for manager to understand the interaction between BGS.

Managers have to do what’s right according to all three elements (Steiner, 2011).

BGS has a great importance. The importance of the business-government-society field is to understand the relationship between the three elements. Understanding those help managers make better business decision to run a business or to stop (make a business fail) a business. Businesses should be responsive to forces for its economic and noneconomic environment (pg 7). Businesses have a social contract. It is important to understand that there are several different ways to run businesses and if they don’t comply with society it will fail. All three elements work together to make better business decisions.

There are four basic models of the BGS relationship: the market capitalism model, the dominance model, the countervailing forces model and the stakeholder model.

According to “Business, Government and Society” capitalism is an economic ideology with bundle of values including private ownership of means of production, the profit motive, free competition, and limited government retrains in markets (pg 9). In the Market Capitalism Model it is easier for any individual to enter the market. Any new business that enters the market is in to make profit and to create competition. Competition creates and offers better value to customers and opponent firms. Businesses in this model focus on creative work and profitability. The creative work is well done therefore people are happy with the products, services etc. In the Market Capitalism Model management’s goal is to increase shareholders interests (investments). Government regulations are limited.

The dominance model represents the perspective of business critics. Society is in a pyramid but only a small group of privileged (corporations, government and business leaders) control society. Power and wealth are mostly concentrated in a selected group. In this model society does not have any control and it would probability experience difficulties. The corporations and the government take advantage of society. Business have too much power, changes in the systems is crucial.

The countervailing Forces Model consists of four forces: environmental catalysts, business, government and the public. None of the forces dominate; the countervailing forces model implies exchange of power and influence among all of them (check and balance). In this model the power of business is checked and controlled. The USA and other countries use this model.

In The Stakeholder Model the corporation is the centerpiece that holds several relationships with persons, groups and stakeholders. Stakeholders are critical to the corporation and it is believed that corporations have ethical duties and social responsibility toward stakeholders because the impact those stakeholders have on them. A corporation can benefit or burden stakeholders by its actions. Corporations have primary stakeholders and secondary stakeholders.

Conclusion:

BGS are fundamental for Business decisions. it started to shape humanity since the beginning of the civilization and BGS would definitively continue to make changes in this world. The expectations are to have business, government and society to continue to change our world in a positive way, but for that managers have to understand the interrelationships among business, government, and society. The four basic models of the BGS relationship are interesting, but I believe that the countervailing forces work better because it is more democratic. It’s not just one group (government), person (society), or corporation (business) deciding for everyone, it’s everyone making decisions that would have an effect on everyone.

Reference:

Steiner, S. (2011). Business, government, and society. (13 ed., pp. 4-20). New York: McGraw Hill.

The 4 Basic Models of the BGS Relationship Essay

Zappos Case Essay

Zappos Case Essay.

In 1999, Nick Swinmurn found himself walking through the mall, unable to find the right pair of shoes after visiting a variety of stores. Empty-handed, he went home to search online and found that there was no major online shoe retailer. A few months later, Swinmurn quit his job and started Zappos.com, an online store that carried the latest shoe styles, brands and colors. Over the past decade, Zappos has evolved to become one of the leading online clothing retailers centered on providing superior customer service.

1. Why was Zappos so successful in its first 10 years from 1999-2009? What evidence is presented in the case of the company’s success? What general, highlevel strategies can you identify that lead to their success?

Since it’s inception, Zappos has grown from a shoe-only retailer to grossing over $1 billion in sales from a variety of clothing items (Zeithaml, 2013, Exhibit 6). Initially called ShoeSite.com in 1999, Swinmurn later changed the name to Zappos, a play on the Spanish word for shoe, zapatos.

The company initially purchased its inventory from independent retailers, but soon after, created lasting relationships with footwear manufacturers. This allowed Zappos to refrain from carrying inventory by having the manufactures ship directly to the customers (Zeithaml, 2013). By the end of 1999, Zappos instituted a free shipping policy that fostered immediate growth, which fueled the company towards a very prosperous decade. At the start of the millennium, Zappos consisted of 150 brands and nearly 400,000 pairs of shoes. One of the main causes of Zappos early success was a $1.1 million investment of venture capital funding from Venture Frogs, “an investment and incubation firm that specialized in early-stage Internet, e-commerce, information and telecommunications technology” (Zeithaml, 2013, p. 500).

This introduced Tony Hsieh to Zappos, where he later became the co-CEO in 2001. Over the next four years, Swinmurn and Hsieh set their goals towards growth opportunities rather than profits. They understood that Zappos’ growth, and in turn, value, had to be built upon strong core cultures and values that infiltrated all levels of the business. These values included delivering ‘WOW’ through service, embracing and driving change, building a positive team and family spirit, and various others (Zeithaml, 2013, Exhibit 7). By 2005, Zappos had outgrown its San Francisco headquarters and was forced to relocate to Las Vegas after receiving a $35 million investment from Sequoia Capital. Three years later, the company reached their goal of $1 billion in sales (2 years ahead of schedule) and employed roughly 700 “team members” (Zeithaml, 2013). In addition to Zappos’ core values, the company focused on the three C’s: company culture, customer service, and clothing.

These fundamental aspects of the Zappos’ business model gave the company the ability to build a strong corporate personality and gain consumer backing quickly. Zappos management considered the company culture as the differentiating factor that ultimately advanced its competitive advantage. Hsieh explained, “Our belief is that if you get the culture right, then most of the other stuff – like great customer service or building a long-lasting, enduring brand – will happen naturally” (Zeithaml, 2013, p. 501). The basis of Zappos’ success stemmed from managements capacity to treat their employees with mutual respect and trust. When designing the company’s core values, Hsieh gathered feedback from the employees on what those values should be and, from their feedback, created a list that was distributed to all levels of the company. This not only strengthened Zappos team-oriented culture, but also established guidelines for employee behavior. Job applicants were screened and assessed based on their ‘fit’ within the Zappos culture. All candidates went through two levels of interviews: a skill based interview from hiring managers and a ‘culture’ interview from the HR department (Zeithaml, 2013).

This duel level process ensured that only the right employees were selected, which is especially important for a company that differentiates themselves by providing superior customer service from friendly, reliable employees. Additionally, the training and orientation processes, coupled with the implementation of an employee development pipeline, furthered Zappos superior treatment of its employees, leading to satisfied/loyal customers and sustained profits. Customer service, the arguably most important ‘C’, separated Zappos from most other online retailers. The company’s obsession with providing customers with the best possible experience differentiated itself from the competition. The call center employees were not limited by call time, nor solely measured using traditional metrics (Zeithaml, 2013). Employees were urged to become ‘friends’ with the customer and provide an experience that was “as easy and as close to a visit to a retail store as possible” (Zeithaml, 2013, p. 500). In some instances, employees sent bouquets of flowers or candy to customers in sympathy or in celebration.

These small gestures allowed Zappos to quickly further their customers along from customers as strangers to customers as partners. Among consumers, Zappos quickly became known as one of the best customer support providers in the retail industry, both on and offline. This increased customer expectations of the service, leading Zappos to establish a multifaceted and rigorous training program. After opening a fulfillment center in Kentucky in 2002, Zappos increased their shipment speeds by establishing a variety of filling processes (static racks, carousel and Kiva) (Zeithaml, 2013). This only increased Zappos’ customer service because consumers were able to have their products delivered faster and more efficiently. By tapping into the clothing market in 2006 (the third ‘C’), Zappos gained an entirely new source of sales. The U.S. clothing market was four times the size of the shoe market at the time, and Zappos took full advantage of the new market segment (Zeithaml, 2013).

Zappos partnered with many clothing brands that they had previously done business with, including North Face and Asics. In addition to clothing, Zappos acquired multiple new lines of business: Powered by Zappos, 6pm.com, Private Labels, and Zappos Insight. After the economic recession in 2009, Zappos was forced to lay off 8 percent of its workforce, while relying on a $100 million line of credit. In light of Zappos’ need for new opportunities, on July 22, 2009 Amazon announced that it would buy Zappos for slightly over $900 million including stock options for Zappos employees (Maestri, 2009). Ultimately, Zappos attention to customer service and the superior treatment/training of its employees fueled their growth and success over the past decade, leading to the merger.

2. Analyze Zappos’ success from a Services Marketing Mix Perspective. What specific things did the company do to achieve its success in external marketing, interactive marketing, and internal marketing? Where do you see potential threats going forward?

One of the fundamental concepts in service marketing is the marketing mix, which is “the elements an organization controls that can be used to satisfy or communicate with customers” (Zeithaml, 2013, p.25). Rather than consisting of simply product, price, place and promotion, the marketing mix includes people, physical evidence and process, suggesting that marketing a service entails more considerations than marketing a good. With regards to Zappos, their product consists of shoes, clothing, handbags, and accessories that are conveniently split up between men’s, women’s, and kid’s. Zappos’ multiple product lines give the company the ability to target multiple markets and remain competitive against the competition. Since Zappos’ is an online-only retailer, the place of its business is through their website and call center. Zappos does not have any outlet locations, other than their headquarters in Las Vegas and ships the majority of their inventory from warehouses in Kentucky.

Zappos prides itself on promotion, mostly through extremely friendly and helpful staff. Zappos sales people are rigorously trained, focusing largely on call center skills and are given incentives of up to $2,000 to leave the company if he/she does not ‘fit’ the corporate values (Zeithaml, 2013). Zappos does engage in paid advertising, however most of the brand awareness comes from word-of-mouth. “We actually take a lot of the money that we would have normally spent on paid advertising and put it back into customer experience,” says Tony Hsieh, Zappos’ CEO. “We’ve always stuck with customer service, even when it was not a sexy thing to do” (Zumda, 2008). Additionally, Zappos pricing has become less flexible over recent years as the company no longer price matches. This allows the company to afford free shipping both ways, 24/7 support and many other features. Many customers have reacted to this policy, resulting in a loss of a portion of its customer base. This pricing strategy may threaten future profits if consumers are not willing to pay more for customer service.

People are arguable one of the most important corporate elements for Zappos. The company has an extensive interview process, where candidates are questioned both on skill and personality/fit within the company. In 2008, Zappos instituted a pipeline program “to develop employees from entry level to ‘the highest level of management” (Zeithaml, 2013, p.504). Zappos employees are the foundation of the company’s competitive advantage and thus, are treated equally and honorably. The acquisition with Amazon may threaten the employee base and company culture as the company continues to operate as a subsidiary. Zappos’ physical evidence comes in the form of a state of the art corporate headquarters in Las Vegas as well as a user-friendly website. Zappos relaxed dress code emphasizes the company’s desire for a relaxed work environment where employees feel comfortable and happy. This translates into satisfied employees that will deliver the high-quality customer service that the company promises.

Untimely, Zappos’ process of service, which refers to the procedures and flow of activities that contribute to the delivery of a service, separates the company from the competition. From Zappos order fulfillment methods to its call center processes, the company acts as a well-oiled machine that delivers on its promise to customers. Zappos chooses to involve the customer as much as possible and encourages them to give feedback to the company in order to better serve their needs. Grouped together, these seven marketing mix factors highlight Zappos’ desire to put the customer first and use its employees as the differentiating factor that sustains customer loyalty.

3. What challenges or changes in strategy would you anticipate for Zappos following its acquisition by Amazon? Can the company continue with the same strategy – why or why not?

After the acquisition by Amazon in 2009, Zappos may face many challenges that can alter its business strategy and corporate culture. Both companies pride itself on providing high quality customer service while fostering innovative and lasting ideas. The most pressing concern for Zappos is whether or not it can maintain its unique company culture. For visitors, Zappos resembles a three-ring circus ambience, including popcorn machines, jungle themed executive offices and even parades epitomizing their value of “creating fun and a little weirdness” (Zeithaml, 2013). For employees, Zappos feels like a corporate family, where each employee has a voice that can contribute to the greater good. It is extremely important for Zappos to maintain this culture and continue treating customers like friends rather than dollars and cents.

Zappos prides itself on being a part of Fortune’s Best Places to Work, while Amazon has never appeared on the list. This incongruity in employee satisfaction may cause issues between the two companies. With most publicly traded companies, the disclosure of financial information to employees becomes very limited. Up to the merger, Zappos has been rather open regarding financial topics. The company is extremely transparent, updating employees about operating profits and other performance factors. On the other hand, Amazon has continuously preferred protecting their financials from competitors (Frauenheim, 2009). This may present a conflict between the relationship of Zappos’ employees with Amazon management. Another major conflict that may appear from the acquisition is regarding the transfer of warehouse operations to Amazon (Lacey, 2012). Up to the point of the acquisition, Zappos has operated using two warehouses in Kentucky, both of which were working at capacity.

When faced with the decision to open a third, management ultimately decided that the smartest decision was to transfer the operations to Amazon, one of the best warehousing distribution companies in the world. This could present issues regarding speed of delivery, communication between various departments and management levels, and further Amazon infiltration into Zappos’ corporate structure. Ultimately, Zappos can continue with their corporate strategy, however various aspects of their operations will undoubtedly change. The values that Zappos prides itself on have not been altered and thus, the employees are still working in the same environment with the same fun, upbeat, and quirky employee base. However, since Amazon has a much larger infrastructure, many factors of the company’s everyday operations could change (warehouses, financial transparency). Only time will tell if the Zappos company culture is strong enough to withstand Amazon’s corporate power.

4. Go the Zappos website and check it out. What are some “cool things” on the website that you think reinforce a concept or strategy connected directly with service marketing and management fundamentals (name at least three)?

One interesting aspect that I found on the Zappos website was the section where consumers are able to write to Zappos if they do not carry a product they are looking for. For instance, if a consumer is in search of a specific color/style of shoe that the company does not have in their catalog, he/she can write/call in to Zappos to either find a similar product within their stock or search through competitors. This closes the listening gap, where employees and management can fully understand what the consumer needs and fully deliver on their promise of superior customer service.

Another service marketing fundamental that is apparent on the Zappos website is the importance of the service encounter. This interaction between Zappos employees and the consumer is critical in determining the customer’s future loyalty. On the website, consumers can contact Zappos in a variety of ways (phone, email, live online chat). This encounter is in essence “the moment of truth” between the company and the consumer. Zappos does an excellent job making the customer feel comfortable asking for assistance in a friendly, welcoming way. The company understands the importance of first impressions which is apparent in their simple to use interface as well as comedic phrases scattered through out the website.

The Service Performance Gap deals with the difference in the “development of customer-driven service standards and actual service performance by company employees” (Zeithaml, 2013, p. 40). Zappos understands that in order to provide customers with the best possible service, they have to hire employees that are compatible with the company’s values. Under the ‘Jobs’ section of their website, Zappos invites candidates to learn more about life at the company through various learning tools. This attracts only the individuals who display superior social abilities as well as a team-oriented attitude. Thus, Zappos can weed out those individuals who are not comfortable “creating fun and a little weirdness” in the office.

Work Cited

Frauenheim, E. (2009, September 25). Can Zappos’ Corporate Culture Survive the Amazon Jungle. Retrieved February 18, 2015, from http://www.workforce.com/articles/can-zappos-corporate-culture-survive-the-amazon-jungle

Lacey, S. (2012, June 6). Zappos Hands Over Warehousing to Amazon, Focusing All Attention on the Great Downtown Vegas Experiment. Retrieved February 18, 2015, from http://pando.com/2012/06/06/zappos-hands-over-warehousing-to-amazon-focusing-all-attention-on-the-great-downtown-vegas-experiment/

Maestri, N., & Sage, A. (2009, July 22). Amazon.com buying shoe seller Zappos for $928 million. Retrieved February 19, 2015, from http://www.reuters.com/article/2009/07/23/us-amazon-zappos-idUSTRE56L6TQ20090723

Zeithaml, V., Bitner, M., & Gremler, D. (2013). Services Marketing: Integrating Customer Focus Across the Firm (6th ed.). Boston: Irwin/McGraw-Hill.

Zumda, N. (2008, October 17). Zappos: Customer Service First — and a Daily Obsession. Retrieved February 18, 2015, from http://adage.com/article/moy-2008/zappos/131759/

Zappos Case Essay

Struktura Inc Essay

Struktura Inc Essay.

* Struktura, Inc. (SI) is a corporation owned by ALCO Group of Companies. * SI is practically a machine shop that manufactures car air-conditioners for Karkon & others, steel frames for PGSEP and die casting needs of electronic companies. * 1987 Sales amounted P1. 32M of which roughly 72% are derived from other companies of ALCO. * PGSEP is also testing the solar home system (SHS), a stand-alone photovoltaic energy generation unit suited for a single household. SHS unit come in two variants: the 28 watt-peak (wp) and the other is 50wp.

The components of SHS, except for the solar panels, were locally available.

* PGSEP will be terminated by the year-end and is worried that their efforts in propagating the technology would be useless unless it identified a group to commercialize the project. * PGSEP invited Antionio Co, SI owner to inspect SHS and examine the possibility of commercializing SHS. PGSEP’s contract with the Philippine government disallowed PGSEP from commercializing the venture.

* PGSEP Director offered Mr. Co the services of PGSEP staff if the latter will agree to making Burias community as the pilot phase.

In 1987 there were 3. 3 million un-electrified households of which around 387,000 “un-electrified” households were living in Region V. * Mr. Co told his consultant that SHS is categorized as SI project and requested him to come up with recommendation Statement of the problem The company is considering whether or not to diversify its operations by venturing to assemble and market SHS units to un-electrified households of the country starting in Burias, Masbate wherein 120 customers are already on the waiting list.

Objective * SI should analyze well the viability of the SHS project to Burias community and its potential acceptance to other un-electrified rural areas in the country considering that SHS is an emerging product. SI should come up with a thorough and objective project feasibility study.

Struktura Inc Essay

Capital Mortgage Insurance Corporation Essay

Capital Mortgage Insurance Corporation Essay.

1. Find appropriate place with a good environment to conduct negotiations. 2. Talk to both parties to identify their specific issues that need solving, identify what is going to be needed to find solutions in the short and long term. Take note of each parties information related to issue at hand which can be used to corroborate information during the negotiating process. 3. Make a thorough assessment of the situation in order to be able have an easier transition into the negotiation process. 4. Pick a good alternative that will accommodate the stipulations of the joint agreement policy.

IDENTIFY AND DESCRIBE THE STEPS OF THE NEGOTIATION PROCESS

1. First thing it should be done, is that parties involved in the negotiating process will share their case. An agreement should be reached on what is the purpose of the negotiating process, which will help to come to a solution of the issue at hand. 2. Parties should say what is that needs to be changed.

3. Parties should try to come to a consensus about what will be a good settlement package.

Parties should be giving an updated estimate which includes all the changes made. And last parties should be willing to trade off concessions with the goal of reaching an agreement 4. And last the negotiating parties agree to the end result of their negotiations, and also agree to abide by the agreement.

IDENTIFY GUIDELINES TO FACILITATE COMMUNICATION DURING THE NEGOTIATION

Motivate negotiating parties to become open minded to facilitate communication. Should encourage parties to open up about themselves, listen attentively and empathize with them to make them feel that your purpose as to find a solution that best fits their wants. Pay attention to detail and how the conversation is conducted, you want to get to a personal level, in order to have good interactions which can go a long way. In this phase it will be a good idea that the negotiating parties offer the shareholders alternatives which clearly define expectations and time lines.

IDENTIFY QUESTIONS THAT SHOULD BE ASKED DURING THE NEGOTIATION

At the beginning of the negotiating process questions be in such a way do not have a fixed answer, example what is your opinion about this company? What these type of questions do is that help the negotiating parties to make an assessment of what the other party wants to achieve. At no time ether party should make any concrete resolutions until there is a clear path to be taken. When the negotiating process begin either path is going to bring their buying agreements, an effort should be made in order for them to come to a consensus on a price, once this reached an agreement should be made that parties understand that it will be the final offer and they could not go below it.

IDENTIFY THE CHARESTIRISTICS OF THE NEGOTIATION STYLES

1. Adjust your behavior to empathize with fellow negotiating party in order to foster a productive negotiating environment. 2. As a negotiator understand expectations from parties in the negotiating process to produce solutions that makes them feel like they had a fair negotiating process outcome. 3. be proactive in the acquisition of information.

IDENTIFY AND APPLY GUIDELINES THAT YOU SHOULD FOLLOW WHEN THIS NEGOTIATION BECOMES CHALLENGING

You can identify when a negotiation is about to have a negative turn by observing peoples nonverbal language, this should be taken as a sign that a change of strategy merits change this can accomplished as follows. 1. Share information that will help present your case better in which the other person can see an opportunity to be able to also gain in the negotiating bargaining process. 2. Also a strategy to use when the process takes a negative tone, the best will be to keep a posture of silence listen and observe. 3. And last when closing the negotiating process, wrap it up in such a manner that if not accepted by the other party it will give a sense that the alternative will be no deal at all.

Capital Mortgage Insurance Corporation Essay

Financial Analysis of Honest Tea Essay

Financial Analysis of Honest Tea Essay.

Through Honest Tea’s three years of business, their business shows some positive signs of a promising company. Since Honest Tea is a start-up company, it is understandable that their net income is in the negatives since their expenses will outweigh their sales, but as the three years have gone on, their net income has improved, and even increased by 74% from 1999 to 2000 from -$882,359 to -$228,879, which shows a positive sign of growth. Honest Tea is also very capable to pay back their short term liabilities since their current ratio is a high 5.

92. Their profit margin has also increased over the three year period from -71.7% to -36.3% showing positive signs of profit and ability to grow. Honest Tea is able to generate $0.50 for every dollar of assets they have, which isn’t a huge amount, but being in the positive for a start-up company is important.

Unfortunately, Honest Tea isn’t very efficient in turning over its inventory since this turnover ratio is less than one, but, for a start up, they are doing well.

Revenues increased tremendously from 1998 to 1999, but fell by almost 50% in 2000, so that is worrisome. The debt to equity ratio in 1999 was .241 and it decreased in 2000 to .142. A lower debt to equity ratio usually implies a more financially stable business, so it’s great that the debt to equity decreased from 1999 to 2000.

Companies with a higher debt to equity ratio are considered more risky to creditors and investors than companies with a lower ratio. Unlike equity financing, debt must be repaid to the lender and requires debt servicing or regular interest payments. In other words, debt can be a far more expensive form of financing than equity financing. Companies leveraging large amounts of debt might not be able to make the payments. Creditors view a higher debt to equity ratio as risky because it shows that the investors haven’t funded the operations as much as creditors have, so it’s good to see that Honest Tea has been getting more money from investors so they don’t have a large amount of debt.

Compared to some other companies in their industry (Triarc Cos Inc, Saratoga Beverage, National Beverage Corp., Clearly Canadian Beverage, etc.), Honest Tea is far behind. Most of this is due to the fact that Honest Tea is a start-up company and all of these other companies are well established, but these competitors are turning out positive profit margins and positive net incomes which makes it very hard for Honest Tea to compete in the market.

1.) Honest Tea’s sales dropped in 2000, so they are trying to find more capital to keep the company running. The success of the company, before the cold spell in 2000, had drawn a lot of media attention which caused Honest Tea to be featured in Fortune, Entrepreneur, and Beverage World, which definitely helps the company’s reputation, but Honest Tea really needs to get their sales back going in order to stay relevant in the market.

2.) First of all, in the future, Honest Tea need to raise more financing to be successful. They need to find more venture capitalists or angel group in order to support the continuation of the company. Honest Tea also needs to start expanding distribution of their product, but that can only happen if they get the financing to pay for the distribution. They need more distribution so they can pick up more customers that will demand their product, in hopes that either they can grow Honest Tea as its own company, or that it will get picked up as part of another big brand such as Pepsi or Coca Cola.

3.) In order to continue its distribution and growing the company, Honest Tea believes a $2 million round of financing would carry Honest Tea to profitability.

4.) Honest Tea has received financing from many different places. The first financing had come from Goldman and Nalebuff, they would be decent investors but they only have so much money to give to the company. Next, they approached family and friends, they raised around $200,000 for Honest Tea but they wouldn’t be considered the ideal investor because they don’t have enough money to support Honest Tea past their seed stage.

Customers of their product have also contributed capital to the company, but these investors have not been the right investors because they are not as sophisticated as venture capitalists and angels, and don’t necessarily have the experience with interpreting financial statements which means they require a lot of extra time and attention and that takes away from Goldman and Nalebuff’s ability to focus on growing Honest Tea. They also received financing from venture capital groups, which would be a better fit for Honest Tea since the venture groups don’t need as much attention as Honest Tea’s other unexperienced investors but they also demand more control of the company than Honest Tea’s other investors.

5.) Right away with the financing from the family and friends, there wasn’t really a specific structure, but in 1998 Honest Tea established a financing structure. The financings have been structured so that when an investor purchased common stock, the founders were given warrants for creating the company. Honest Tea structured them in this way because Nalebuff though that by including warrants for the founders with exercise prices staged at multiples of the initial price at which family and friends brought in would avoid such disagreements. If the company did well, then they would be able to exercise their warrants and they would own a greater fraction of the company, but if they didn’t, then the original investors would own a larger piece of the firm.

6.) Honest Tea should look for angel investors or venture capitalists, this is because the investors that Honest Tea currently has are very inexperienced when it comes to financial statements, so to have financiers that have experience and knowledge when it comes to investing and finance. Angel investors and venture capitalists also have more access to large amounts of capital and have connections that the current investors do not.

7.) The proposed financing and valuation do make sense because it gives Honest Tea the best chance of the founders maintaining 50% of the equity of the company. Honest Tea is using a warrant based structure, which seems complex, but really it’s a smart way to structure their financing. This type of financing allows Honest Tea to keep founder equity, as long as they meet their goals and targets. If they don’t, more of the equity goes to their investors because they will be issued more shares of the company.

This is a good set-up because it gives Honest Tea’s owners a reason to work hard to meet their goals, and if they don’t the founders will lose their 50% share of the company. The valuation of the company makes sense because it’s based on Honest Tea’s sales of their two products and the value of their bottling plant. If they sell a lot of their products, the valuation of their company goes up. However, if they don’t sell enough of their product, the valuation of the company goes down. If the valuation goes below $15.1 million, then shareholders will be issued more shares and they would get more control over the company.

8.) The ready to drink tea market is looking very promising for Honest Tea. In 1999, the ready to drink tea market totaled $2.67 billion, which was an increase by 9% from 1998. Although this doesn’t seem like a huge market, because the wholesale and retail sales have increased by 9% in just one year, I believe that the market will grow. Experts even projected that the read to drink tea market would more than double in size over the next 10 years, meaning the $2.67 billion market will be an over $5 billion market in a short 10 years.

Distribution channels have also been growing, ready to drink tea sales and loose tea bag sales have been growing in other channels such as drug stores, and growing by 21.2% growth in volume sales in mass merchandise, which is outgrowing other forms of drinks such as coffee and bottled juice. Honest Tea’s competitors are national brands; Snapple controls 14.6% of the market, Arizona Iced Tea holds 10.6% of the market, and Lipton represents 9.5% of the market.

Honest Tea’s competition/ brand loyalty would be considered one of the barriers to entry; all of Honest Tea’s competition is well established national companies, which means that it would be very hard to compete with them since they have already mastered their distribution around the country and they all have significant control of the ready to drink tea market. Economies of scale is another barrier to entry for Honest Tea, since other companies in the market has a lot of production their average costs fall, but since Honest Tea is a small company their average costs are still large, so they need to work to increase their production to get their average costs down.

9.) Rapid growth is not that important, especially if it causes Honest Tea to compromise some of their convictions. It would be more beneficial for the company to grow slowly and organically to keep the mission of their company. If a venture capitalist pushes Honest Tea to grow too fast, this may cause Honest Tea to take shortcuts when it comes to being organic and environmentally and economically responsible, which could cause customers to not value the Honest Tea brand as they did when they were growing slowly.

So I would say that rapid growth is not important to Honest Tea. However, going national is very important for Honest Tea. Honest Tea needs to go national in order to get brand loyalty, so grocery stores, gas stations, dining establishments, etc., would demand to have Honest Tea in their establishment. Going national would also mean that Honest Tea would have better access to investments or a chance to be acquired by a strategic partner, which is part of Honest Tea’s exit strategy. So going national is a huge part of what Honest Tea wants to accomplish with its company, which means it’s very important to go national.

10.) Honest Tea needs the money for investing in new distribution channels, hiring a nation sales force, purchasing marketing and merchandising materials, gaining capital to support the launch of Honest Tea in new super market chains, and gaining capital to get the Three Rivers Bottling plant to profitability. They need the money as soon as possible because it need to cover operating losses for the next several quarters to keep Honest Tea functioning.

11.) The pro forma projections of Honest Tea do make sense. The pro forma projections take into account the months that ready to drink tea sales may decline due to seasonal preferences, for example since January and February aren’t a time where the market would demand a cold, refreshing drink, Honest Tea has projected those months to have the smallest amount of cases sold. Conversely, the projections also show that the tea bag sales will increase when ready to drink tea decreases.

Honest Tea’s projections make sense in the aspect that they take into account the coolers, marketing, travel expenses, etc., that will come with expanding their business. The projections also show how the expenses per month decrease showing that the company is taking economies of scale into consideration, meaning that the more production they have the average cost will decrease. One aspect of the projections that don’t make sense is how the end of 2001 the company’s net income is in the positive, but once January of 2002 begins, Honest Tea is projecting a huge drop in net income to -$286.1, but besides that, Honest Tea’s projections make sense.

12.) Honest Tea’s financing strategies thus far have not been ideal. They have depended on family, friends, and customers to provide them with capital, and this has caused Seth and Barry to spend much of their time explaining financial statements, searching for more capital, and holding the hands of their inexperienced investors. The current financing has caused Seth and Barry to spend too much time worrying about investments, and not enough time to figure out how to grow the business. Seth and Barry really need to start looking for more professional sources of financing such as angels and venture capitalists.The valuation and financing structure that Seth and Barry have set up for the offering of their shares have provided Honest Tea with a much more organized and reliable financial structure that allows them to not have to spend so much time explaining themselves, which gives them more time to grow their business.

13.) This deal is very attractive to venture capitalists. Honest Tea has a huge market opportunity since they have created a new beverage category that has been on the rise the past couple of years, which would be very attractive to an investor. Honest Tea has also proved that customers are willing to buy their product and even invest in it, which shows they have a following. Another reason this deal is very attractive, is that Honest Tea has received much media attention and received different awards for sustainable practices and packaging, so the product is well known and has the potential to have brand loyalty in the future.

Honest Tea also has great management teams that have expertise in the tea industry, and have even worked for companies, such as Sobe, who have rapidly expanded in the past. A great management team is very appealing for a venture capitalist because it means that the VC has to spend less time watching over the company since they already have the expertise that they need to grow. Lastly, Honest Tea is a great venture capital investment because it already has access to its own bottling plant, so they have no barriers when it comes to mass production. Their bottling plant has the opportunity to provide Honest Tea with approximately $30 million in sales, which is very attractive for an investor.

14.) The deal with the venture capitalist is not attractive for Seth and Barry. First of all, the deal wanted the pre-money valuation of the company to be $5-$7 million, which means that the founders have to give up their proposed 50% control of the company. Secondly, the rapid growth that the venture capitalist is pushing may require Honest Tea to compromise on some of its more socially conscious principles. Currently, Honest Tea is structured so that the founders have the control of the company, so they can do what they like, but giving up half of their control would most likely mean compromising their principles.

Even though the $5 million investment would help Honest Tea tremendously, it isn’t worth sacrificing their principles to grow quickly. Honest Tea should consider the Investors’ Circle investment over the venture capitalists. Even though Investors’ Circle isn’t offering as much money as the VC, their principles match Honest Tea’s principles. Investors’ Circle invests in socially responsible start-ups, so they won’t push Honest Tea to compromise their principles, instead, they would support their principles. Investors’ Circle is even willing to invest up to $6.5 million depending on the company’s needs, so Honest Tea should really consider getting an investment from Investors’ Circle over the venture capitalist.

15.) The deal structure and valuation make sense, but it’s hard to know what they based the pre money valuation on since it’s very low compared to Honest Tea’s valuation. The deal structure does make sense, since the venture capitalist is giving Honest Tea so much in financing it makes sense that they would require significant control over the company.

Financial Analysis of Honest Tea Essay

Innovation at 3M Corporation Essay

Innovation at 3M Corporation Essay.

3M was and still is a worldwide leader in innovation. After a rough start in 1902, over decades, 3M enjoyed national and global growth as well as a reputation for remaining a hothouse of innovation.

In the 1990’s, 3M was trying to move away from the incrementalism and it sought to change the mix of new products to truly create something new to the world, instead of line extensions, which typically had provided two out of three new-product sales dollars.

By 1996, the 3M Medical-Surgical Markets Division, a world leader in surgical drapes market, had gone almost a decade with only one successful product.

At this point, Senior Product Specialist Rita Shor has been charged with the mandate of developing a breakthrough product within existing business strategy. She was selected not only because her seniority but also because she was thought of as being creative and consensus builder.

Rita and the Medical-Surgical Market Division experiences with the traditional market research were disappointing. Traditional tools presented an abundance of data but contained little useful information for conceptualizing a breakthrough product as the current strategy of the company was desperate to find.

In an in house lecture, Rita had heard about a new methodology for product development called “Lead User Research.” In an in house lecture, Rita had heard about a new methodology for product development called “Lead  User Research.” The premise of this novel methodology was that certain consumers experienced needs ahead of other consumers and some of the former would seek to innovate on their own. Shor decided to try since this might provide the key to the breakthrough product.

The Medical-Surgical Division focused largely on reducing infections from skin through surgical drapes and surgical prepping. The team decided to center their interest in a new product that should reduce infections, conform to the body, prove more effective than current products and be easy to apply and remove.

Shor and her consultants follow the “Lead User Research” methodology stage by stage. The first two stages run as planned. However, the diversity in lead users and fields of expertise was adding complexity to the third and fourth phase. Along the way, after a change of the division manager, Shor experienced a big barrier of skepticism from her superiors. They had reduction on the team and clear opposition. The third stage took six months instead of six weeks. Shor and her team had to sell the program starting from scratch, reminding the new managers the expected benefits and the old problems.

Finally, after one year and with the help of a dozen of lead users gather from backgrounds as diverse as cosmetics to surgery, the team ended up with three innovative product recommendations. Two of them represented a straightforward linear extension of 3M product lines. One more, the team though, might open the door to new business opportunities. However, the team had a fourth recommendation but it divided the team.

The fourth idea would change the business unit strategy, in fact could mean to associate and combine technology from more than one core area of the company.

Shor should decide if take the four recommendations to the senior management and revolutionize the company or just play safe and keep doing business as always.

Case analysis

There is no doubt of the excellence of 3M’s products. It is also known per decades that the company is a leader in innovation. However, this case represents the need for change in a moment where innovation was just predictable and the “new products” were the result of the same old ideas.

It is understandable, up to a certain point, the level of comfort in employees and management had within the company. When the company has a steady income and year after year and the results show growth, small but growth, it is hard to sell a change in the organization. Rita Shor’s dilemma about presenting or not the fourth recommendation was not just about numbers. It was about business strategy, changes in the organization and cultural change management. After all, depending on how that kind of changes are implemented, the numbers could go either direction, faster and bigger by itself. Eventually, 3M should realize that the times where the innovation called for “it’s better to seek forgiveness than ask for permission” were behind. That there was no more “get-out-of-the-way” attitude. To put it in perspective, the employees’ comfort zone made the company transform itself in a short-term thinking, incapable of being radical anymore.

In addition to the cultural aspect of the organization, another reason for the actual situation was the product developing process and the product teams that perform it. Those teams were composed primarily of technical individuals with zero room for an empirical behavior, making the company a secluded environment. The proportions of logic and predictability in contrast with creativity and “free” innovation were overwhelming.

In summary, Rita Shor’s decision was not an easy one. She never imagined how far her assignment was going to go. The truth was that it went beyond the point of just finding a breakthrough product. The results of applying the “Lead User Research” methodolog y, opened bigger doors to radical change inside the company. That is what the case is all about.

Alternatives

Rita Shor had two clear alternatives. On the one hand, she could deliver to senior management only the three products they clearly defined. On the contrary, she could face the opposition of some of her own team members and introduce to 3M the “Lead User Research” methodology. Explaining the findings and telling the company that the legendary innovation process needed a refresh.

The first option would help the team to present a safe and conservative idea, aligned with the 3M traditional methods. In fact, two of the three products were a linear progression of other products, which would please the “old” school of the management. Likewise, the third product accomplished the goal of the new company strategy. It was the  breakthrough product that the Senior Management charged Rita to find. This option was the best in terms of having everybody happy within the team and everybody in th e organization.

The second option was a bigger risk. It was a personal risk for Rita and her results to the company. It was also a business risk for the Health Care Unit and the Medical -Surgical Division. The recommendation of evolution or revolution was a big challenge for all the levels of the organization. It would start with the Health Care Unit’s business strategy statement but it would not stop there. The new recommendation would imply to collaborate with other units. It would means probably to create and destroy business units along the company. Not to mention that the recommendation would touch the core of the innovation principles in 3M.

However, all those risks could be the answer that 3M was eager to find. The 30% goal of sales from products that did not exist four years earlier was not an easy target. The answer could be the change in the innovation process as a whole and not just one product at a time.

Recommendations

Definitely, the recommendation is to deliver the fourth idea to the Senior Management team. However, in order to assure the success of the new “Lead Users Research” methodology, it must be clear that 3M needs to commit all levels of the organization to the changes that “reinventing” themselves will bring.

Change Management is a painful process. Even though it could involve complex activities, changes in organizational structure, downsizing and cultural mentality change, all will benefit the company, in the long run. The new initiative will bring back the bright ideas 3M was known for and it will restore the respect that other businesses in the industry always have had for them.

It is important though, be aware of the long process, the challenges that implement new methodologies and new ways of thinking implies. In 1995, John Kotter published research that revealed only 30 percent of change programs are successful1. There are not too many changes since then. In fact, fig.1 shows how 9% completely failed, 49% failed and just 21% had a complete and successful implementation of changes in the organizations 2.

Innovation at 3M Corporation Essay

Balanced Scorecards at BIOCO Essay

Balanced Scorecards at BIOCO Essay.

An Analysis of, “Case Study 7-2: Balanced Scorecards at BIOCO” BIOCO has realized from its use of balanced scorecards that the company has been able to open communication channels, where common goals are established throughout the whole company. Employees are able to view the company’s value drivers, such as financial performance. The Chief Intelligence Officer (CIO) believed that that balanced scorecards helped employees to not only look at their own departments operations, but the overall operations within the company. The Vice President believed that the scorecards helped all employees understand the overall goals of the company within their own departments.

Balanced scorecards also helped the IT department interpret the other business areas within the company. The scorecards helped create an internal perspective that outlined the goals and the measures of the company. Balanced Scorecards allowed every employee at BIOCO to know what the company was excelling at, and where the company demanded resources be integrated in order to excel.

The BIOCO way was effective in aiding the IT department to coordinate its goals with that of the company, because every employee through balanced scorecards were able to see the operations and key driver goals of the IT department.

Employees could see whether the IT projects were effective and on track. Also, the IT department could see the operations and goals of other business areas within the company. If IT was working on a project to implement information systems (IS) in a certain business area/department, they could review the balanced scorecards to see the kind of goals and operations utilized within that department. IT can then align the IS with the business strategy of a certain department by viewing these scorecards. The BIOCO approach could be successfully integrated into large organizations, and considered a useful communication tool. This tool would be utilized by management to integrate the business strategy with the organizational structure.

Creating goals based on customer perspective, internal business perspective, innovating and learning perspective, and financial perspective would be the first step (Pearlson & Saunders, 2013). The next step will include making adjustments to gauge performance goals accurately. For example, a large firm may gauge how customers perspective by monitoring their reputation within the market, or they will review the impact of projects on its’ users (Pearlson & Saunders, 2013). After a large organization finds a way to measure goals, they will have to create a corporate strategy map. The map will have balanced scorecards that descend throughout the whole company. The map will have to include company, division, region, district, store, and department balanced scorecards.

The only way the BIONCO approach will be useful with a new CEO is if that CEO does not see any change needed within the organization or very little change is needed. If changes should occur goal perspectives will have to be adjusted, and how they are measured will have to be adjusted as well. In order to implement new values, they must change the whole BIONCO way approach to mirror those values. If the values differ immensely from the past CEO, a new approach may be needed all together. The new CEO may want to change the whole business strategy all together to emphasize the IS system. In this case the new CEO may utilize an IT dashboard instead. The BIONCO way will have to be altered to some length in order to be successful, because the CEO will most likely want to change some perspectives of the business.

References
Pearlson, Keri and Saunders, Carol. Managing & Using Information Systems. New Jersey: John
Wiley & Sons, 2013. Print.

Balanced Scorecards at BIOCO Essay

Case Writeups : Sealed Air Corporation Essay

Case Writeups : Sealed Air Corporation Essay.

1) What has been happening in this market? How has Sealed Air (SA) been doing? To what do you attribute SA’s success? Sealed Air had achieved 25% annual growth in net sales and net earnings from 1971 to 1980. The company has been keeping a technical leadership position in the market. During 10 years, the company built on its development of the first-cell, lightweight cushioning material, introduced the first foam-in-place packaging system, and engineered the first complete solar heating system for swimming pools. Regarding the protective packaging market, the Sealed Air’s product AirCap has the feature that differentiated called “barrier-coating”.

Barrier-coatng and its customer benefits had been the major driving force of Sealed Air’s AirCap cushioning sales for 10 years. Thus, Sealed Air created value to its customers by building high technical product quality in its coated bubbles and by informing the customers about the benefits of coated bubbles through the efforts of its salespeople. Sealed Air’s salespeople also did “consultative selling approach” to increase its market share and profits.

Moreover, the company created value for its distributors by the strength of its brand equity and the strong demand for its products. The company also used selective distribution policy with less competition among distributors and thus this policy makes the distributors’ profit margins maximized.

2) Should SA introduce an uncoated bubble in the U.S market to compete with GAFCEL? Why or why not? – SA should introduce an uncoated bubble for the following reasons Introducing uncoated bubbles can allow Sealed Air to retain these customers whose needs are met with uncoated bubbles. It seems that GAFCEL’s ability to get sales at the rate of $1 Million/year with only 1.5 salespeople from only the New York market is a strong indication that the uncoated bubble is going to be a strong competitor for Sealed Air’s coated bubble business. Introducing uncoated bubbles would require no additional capital or R&D investment on this case. This cost saving could be a competitive advantage over GAFCEL.

Distributors need to stock uncoated bubbles for their sales. If Sealed Air does not have uncoated bubbles, distributors can end up selling other companies’ (such as GAFCEL) uncoated bubbles. This would hurt Sealed Air’s relationship with these distributors.

– SA should NOT introduce an uncoated bubble for the following reasons Distributors sometimes complained about the level of AirCap selling effort. Since distributor’s margins on AirCap cushioning were generally higher than the 10% to 12% for Instapak, distributors were not happy. Also, their margins for uncoated products make them not happy compared to AirCap product. Sealed Air in the market is a technology leader. It has had a history of innovations. Introducing uncoated bubbles would mean introducing a me-too product. This could hurt the company’s reputation and brand equity in the market place. For years, Sealed Air has told the customers that coated bubbles are better than uncoated bubbles.

It is impossible for the company to tell the market that the uncoated bubble is as good as coated bubbles. The company would definitely lose its credibility as the technology expert in the marketplace. This is not about confusion, but about the trustworthiness of the company in the customers’ perspectives. A similar situation can happen with respect to the salespeople. If the company now tells the salespeople that uncoated bubbles equally good for some applications, the company would lose its credibility among the sales people. There can a problem on getting the salespeople motivated for the new product. If the salespeople have to sell the lower priced bubbles, then their commission income will get reduced.

3) Assuming an uncoated bubble is introduced, propose a marketing plan for the product, including: positioning & targeting, pricing, branding, direct sales strategy and channel policy

I would propose a marketing plan for differentiation between a coated and an uncoated bubble. First of all, Sealed Air should keep the current brand equity status not affected by an uncoated bubble launched especially in the U.S market. It is important to develop intensive salespeople directed at distributors focusing on their high profit margin because the distributors don’t want well-trained salespeople to be allocated to an uncoated product which leads to lower margin. Regarding consumer perspectives, the company should keep its brand status of the coated as it participates in exhibition shows. Regarding customers, the company should provide additional services to the coated customers and different packaging for the different grades product to offset the effects of lower prices of competing uncoated bubbles. Different product usage can be applied. For the important and fragile products such as laptops to be protected, a coated bubble should be used. For the comparatively less fragile products, a coated bubble can be used. This differentiation will be able to make different market value positioning for consumers under uncoated bubble launched.

In the European market where packaging supplies are viewed as “expendable commodities”, Sealed Air should cut prices of the products affected by the uncoated bubble. Additionally, the company should focus on uncoated because the European consumes are so price sensitive. Instead of focusing on salespeople, the company should be aligned with some hyper and mass merchants for volume sales on an uncoated bubble. Also, the company expands channel pipeline to use direct mail and trade shows to target smaller businesses.

4) Assuming an uncoated bubble is introduced, what changes would you make to the marketing plan for the existing, coated bubble? Given how successful the product line has been, would you just leave it to be? Although, marketing cost rises up, I would recommend use different brand name. If the company stays with the current name, there would be some confusion about Sealed Air’s products and some dilution of the brand equity of the current name because the new product is totally different from the current products. Some of this problem can be mitigated if the company launches the uncoated bubbles under a different name. Also, product differentiation such as color or shape change can be one of the solutions. The differentiation can make consumers and distributors not confused about high valued coated products. In others words, the uncoated bubble product cannot hurt brand equity of the current product.

Case Writeups : Sealed Air Corporation Essay

The e-Activity Essay

The e-Activity Essay.

From the e-Activity, determine why it is sometimes misleading to compare a company’s financial ratios with those of other firms that operate within the same industry. Support your response with one (1) example from your research. There are a number of comparative ratios that are available, which include Dun and Bradstreet, Value Line, and the Annual Statement Studies published by Risk Management Associates. When a person is out looking at these sources, he or she has to understand that each source has a different emphasis.

For example, Dun and Bradstreet looks at proprietorships, and sells its information to lenders and banks. Thus, D&B has more of a focus on current liabilities and assets, and not market ratios. Moreover, same size companies, in the same industry can use different accounting methods. For example, one organization may use a First In First Out approach, another may use First In Last Out approach. The difference of these approaches could alter several aspects of an organization’s financial data.

From the scenario, determine two (2) strategies that TFC could utilize to reach its expansion goals. You may, for example, consider your analysis of TFC’s financial statements, as well as your knowledge of TFC’s excessive cash position. Provide a rationale for your response.

One action that TFC could take in order to raise capital that will, in turn, enable it to reach its expansion goals is to take on a partner or partners. With Joe wanting to keep that company because of sentimental reasons, he could bring partners in as limited partnerships. These limited partnerships normally have no control in the business (Bringham & Ehrhardt, 2014). Moreover according to Bringham & Ehrhardt, limited partnerships are common in venture capital. Another opportunity for TFC to raise capital is to issue stock. This will allow the organization to raise money by taking the company public, but there could be challenges with this option. With Joe wanting to make sure the business stays in the family, it could open the company up to take overs

Brigham, E. F., & Ehrhardt, M. C. (2014). Financial management (14th ed.). Mason, OH: South-Western Cengage Learning.

The e-Activity Essay