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(1) Royal Bank of Scotland Royal Bank of Scotland is one of the top three banks in Europe.

They are just very good at running businesses, with a high degree entrepreneurial flair.Anik Sen of Golman Sachs (The Times, 21 July 2003). Royal Bank of Scotland (RBS) is one of the oldest banks in the UK. It was founded in 1727 in Edinburgh, by Royal Charter, as the Royal Bank and opened its first branch in Glasgow in 1783. It developed a network of banks across Scotland in the nineteenth century but it was not until 1874 that it opened its first branch office in London. From the 1920s it grew by acquisition, swallowing Drummonds, William Deacons Bank, Glyn, Mills and Co., and Child & Co., then merging with Edinburgh based National Commercial Bank of Scotland, which itself comprised the National Bank of Scotland and Commercial Bank of Scotland. At this stage it dominated 40% of Scotlands Banking business. In 1985 it merged with William & Glyn to give it a presence in England and ownership of the banker to the Queen, Coutts. This was the first glimpse of the banks entrepreneurial flair. It also started by set up Direct Line (the direct car insurance company) which went on quickly to become one of the dominant forces in direct insurance. Realising it was very dependent on the UK market, it acquired Citizens Financial Group of Rhode Island, a small savings bank in the USA. It also started to refocus on its core business of retail banking and started on a round of cost cutting. It realised that retail banking was becoming a commodity and, to compete on price, it had to achieve economies of scale that were just not available to it on a conventional banking model. Its answer in 1997 was to set up the UKs first on -line banking service. Not content with this it realised that other organisations were probably better at marketing banking services than the banks themselves and joined forces with a number of well know brands such as Tesco, the supermarket, and Virgin One to offer on-line banking. RBS did the back-office operations, all the time driving down costs because of economies of scale. However, it also chose not to enter the high street price war being waged by its bigger rival. In 2000 RBS bought its far bigger rival, NatWest (which included Ulster Bank), in what is the biggest take-over in British banking history. Whereas RBS had just 650 branches, NatWest had 1650 and Ulster Bank a further 228 branches. As a result RBS underwent a large round of redundancies to further cut back its cost base - a realisation of what the core strategy was for this part of the business. Since 2000 the bank has been continuing its policy of organic growth and opportunistic but tactical acquisitions. It has grown the wholesale side of its banking operation corporate lending, derivatives foreign exchange and leasing. It is now the biggest banker in the UK in small business and corporate banking. Its US bank, Citizens, has also acquired the

Mellon banks regional retail franchise, Medford Bancorp and Commonwealth Bancorp, increasing its geographical coverage in New England and making it the twentieth largest US bank measured by deposits. It has also purchased Santader Direkt, a Frankfurt based credit card company in what is thought to be its first steps into mainland Europe. More recently it purchased Churchill Insurance, a direct competitor to Direct Line, and now intends to merge it with Direct Line. It is also thought to be interested in taking over former Building Societies, in particular Abbey National, so as to give it more exposure to mortgage (house lending) business as well as a savings bank. Today RBS is an international bank, employing some 112,000 people worldwide. In 2002 RBS made pre-tax profits of 4.7 billion - five years earlier they had been just 1 billion. Its entrepreneurial executive Chairman is Sir George Mathewson. He joined the bank after being head of the Scottish Development Agency and has been accused of running the bank like a venture capital company. His Chief Executive, Fred Goodwin, is one of the youngest among the FTSE 100 and also came from outside the company. Questions: 1. What are the main elements of the Royal Bank of Scotlands strategy? 2. Why have they used acquisition so much? 3. Explain each acquisition and the reasons behind it.?

(2) HFL Ltd HFL Ltd is the UKs pre-eminent drug surveillance and contract research company. It is the only laboratory in the world engaged in both sport drug surveillance and contract research. It currently undertakes funded research for the World Anti-doping Agency and the UK Horserace Betting Levy Board(HBLB). HFL has pioneered sports doping control research and surveillance in the UK, testing athletes and racing animals as part of forensic doping control processes and providing research and bio-analysis testing services to pharmaceutical, food, consumer products and healthcare clients. Based in Newmarket at the heart of the UKs best-known horse racing and breeding areas, it started life in 1963 owned by the HBLB, an inherently conservative quango (a quasi-governmental body), and enjoyed a steady stream of income from the monitoring of racehorse and greyhounds to ensure that their performance was not artificially enhanced by illegal substances. This is therefore an unlikely organisation to look to as an exercise in change management. But change it did, and by 2007 it had diversified

into drug testing on humans and been sold for 20.25 million to Quotient Bio Research Ltd owned by a consortium of investors, including HFLs Chief Executive David Hall and other senior managers. HFL currently has a turnover of over 10 million, employs some 130 people and enjoys a far more entrepreneurial culture. The change catalyst was the appointment of David Hall as Chief Executive in 2001. His brief was to broaden the business base away from racing horses and greyhounds and he effectively privatised the company. David is a scientist Chartered Engineer with a PhD but also has an MBA,which is where his theoretical knowledge of how to change the culture of an organisation came from. The challenge was to put it into practice at HFL. David would say that he has had a passion for creativity and innovation and the pursuit of a perfect culture that provides a common thread throughout his career before joining HFL. For example, he set up a technology transfer organisation in London Thames Gateway Technology. The challenge, as David sees it is to get the very best from your staff and to truly differentiate your company on the basis of its people. The HFL culture demands involvement and communication is a vital element in this process. David wants it to run downwards, upwards and sideways through all feasible routes, so there is no excuse for not knowing. Davids preferred leadership style is to animate and facilitate rather than command and control. Because of this his preferred communication style involves limiting group size to 20, which he sees as far more conducive to participation. He gives state of the union addresses to these groups every six months. He also instituted informalcoffee and cakes sessions on Monday mornings to help communication and get people to mix across boundaries and functions. There are also more formal mechanisms like team briefs and a mythical Uncle Bernard who will answer e-mailed questions from staff. The elected Staff Association also conducts quarterly surveys and plays an important part in promoting and monitoring change, even chasing the introduction of new ideas. HFL also use cross-functional teams for project work and senior managers often take spells doing other peoples jobs. HFLs scientific work depends critically on new ideas, which is why David is keen to encourage creativity. To do this he set up a Creativity Club and an Innovation Club. Each provides an environment for the free exchange of ideas, to push boundaries, and to harness the creative energies of staff. Every idea gets posted on the companys intranet and staff invited to comment. The best ideas might be taken forward by project teams. The company also has a book club that encourages the reading of business books, which also can lead to the introduction of new ideas. There is also the Business Intelligence Group, established to trawl the outside world for new ideas and to establish benchmarks for its activities. Everyone who sees or hears things outside the company is debriefed and the ideas passed on or project teams set up to take the idea further. It was this process that lead to the companys move into human

drug testing. David is a great believer in the power of positive thinking another thing he likes to encourage in staff. He believes it can raise the proportion of time people spend working at maximum output. He arranged in-house training sessions on the topic which resulted in individuals producing affirmations to complete challenging personal tasks. David participated in the training and his affirmation resulted in him cycling coast-to-coast and back to raise money for charity. HFL uses what it calls a strategy map, divided into four interconnecting are as: customer, reputation, people and finance. The aim in the customer area is to become, or remain, first choice for analytical chemistry by improving loyalty, building relationships and innovating. HFL aims to be the best customer choice, but not necessarily the cheapest. To achieve this it has to remain at the leading edge of its science and at the forefront of innovation. But innovation need not always be scientific. So, for example, to help cement customer relationships it set up a Customer Club for clients around the world. Staff involvement and enthusiasm at HFL is no accident. It is carefully nurtured with formal and informal techniques. There are performance reviews and a bonus scheme. HFL has Investors in People status and in 2005 was voted b y its staff into the list of The Times 100 Best Companies to Work For. But David will also admit that there have been casualties along the way, with less willing staff being replaced, particularly at senior management levels. And new managers have had a crucial part to play in changing the culture. David recruited Anne Stringer from a Cambridge wine business, nominally as finance director, but also with responsibility for HR and IT, to head up Central Services. Questions: 1. Why is effective communication so important in changing culture? 2. What are the techniques HFL uses to promote internal and external Communication ? How do the informal reinforce the formal techniques? 3. How is it promoted and what benefits has it brought?

(3) Virgin Virgin is one of the best known-brands in Britain today, with 96% recognitionand it is well known world wide. It is strongly associated with its founder 95% can name him. In 2004 Interbrand ranked it eighth in the global rankings for Brand of the Year. Research shows it is associated with value for money, quality, good service, innovation, fun and a sense of competitive advantage. But despite its high

profile, Virgin is actually made up of lots of small companies 20 umbrella companies with some 270 separate, semi independent businesses, most set up in partnership with other companies.This mirrors a Japanese management structure called keietsu, where different businesses act as a family under one brand, each empowered to run their own affairs independently, but offering help and support where needed. Richard Branson explains: Despite employing over 20000 people, Virgin is not a big company - its a big brand made up of lots of small companies. Our priorities are the opposite of our large competitors....For us our employees matter most. It just seems common sense that if you have a happy, well motivated workforce, youre much more likely to have happy customers. And in due course the resulting profits will make your shareholders happy. Convention dictates that big is beautiful, but every time one of our ventures gets too big we divide it up into smaller units....Each time we do this, the people involved havent had much more work to do,but necessarily they have a greater incentive to perform and a greater zest for their work. Virgin uses its brand as a capital asset in joint ventures. It is continually searching out opportunities where it can offer something better, fresher and more valuable. Virgin contributes the brand and Richard Bransons PR profile, whilst the partner provides the operating capability and often the capital input in some ways like a franchise operation. New firms are set up and sold off to finance Virgins global expansion. In the three years to 2002 Virgin raised an estimated 1.3 billion in this way. Among these the biggest was the sale of 49% of Virgin Atlantic to Singapore Airlines for an estimated 600 million, followed in 2001 by a 75 million mortgage secured on his remaining stake. Virgin sold 50% of Virgin Blue, the Australian low-fare carrier to Patrick Corp. for 96 million. It also sold Virgin One to Royal Bank of Scotland for 45 million, the Virgin Active health clubs for 75 million and the French Megastore business to Lagardre for 92 million. Virgin has also raised smaller amounts by selling stakes in Raymond Blancs restaurants. The brand has been largely built through the personal PR efforts of its founder. According to Richard Branson: Brands must be built around reputation, quality and price .People should not be asking is this one product too far? but rather, what are the qualities of my companys name? How can I develop them? According to Will Whitehorn, director of corporate affairs at Virgin Management: At Virgin, we know what the brand name means, and when we put our brand name on something, were making a promise. Its a promise weve always kept and always will. Its harder work keeping promises than making them, but there is no secret formula. Virgin sticks to its principles and keeps its promi ses. Virgin defines its consumers as the publicat large anyone who will buy from us. It defines its customers as people who are using Virgin products or services and

would like to extend its relationship with them, for example through Virgin Mobile. It believes its products and services are about making life easier developing better value for money, a better service, challenging the status quo, and injecting an element of fun into what traditionally been dreary marketplaces. For example, in the airline industry it aims to offer excellent customer service and has consistently innovated in many ways like offering on-board messaging. In 2004 Virgin Atlantic was voted best long haul business airline by Business Travel and best transatlantic airline by Travel Weekly. Virgin Mobile offers one simple tariff with no extra charges rather than the complicated contracts offered by other mobile phone companies. In 2003 Mobile Choice Consumer placed it first for the best pre-pay package and best for customer service. Service quality is at the core of many of the businesses and this is delivered by staff having the culture of going the extra mile. Staff are seen as the companys most valuable asset. They give the company its personality, shape its culture and innovate. Staff training encourages empowerment and challenging of existing rules and reinforces the brand culture. There numerous activities designed to promote team spirit and reinforce brand values, including Richard Bransons summer party for staff. All staff have annual appraisals and a continuous service policy allows them to move freely around the Virgin Group of companies. They enjoy a group-wide discount scheme. The Group conducts regular employee satisfaction surveys and focus groups. It has staff committees and makes use of ideas/suggestions boxes. The company encourages employees to go that extra mile by schemes that reward this such as Virgin Atlantic and Virgin Holidays Heroes, Virgin Mobile Shout Scheme, Virgin Moneys Academy Awards and the Group-wide Star of the Year prize dinner. In 2003 Virgin was voted by Business Super brands the brand that most values its employees. Richard Branson now runs the Virgin empire from a large house in Londons Holland Park. Although there does not appear to be a traditional head office structure, Virgin employs a large number of professional managers. It has a devolved structure and an informal culture. Employees are encouraged to come up with new ideas and development capital is available. Once a new venture reaches a certain size it is launched as an independent company within the Virgin Group and the entrepreneur takes an equity stake. Will White horn, Bransons right hand man for the last 16 years, says of Richard: He doesnt believe that huge companies are the right way to go. He thinks small is beautiful....Hes a one -person venture capital company, raising money from selling businesses and investing in new ones, and thats the way it will be in the future (The Guardian, 30 April 2002).In 2007 Richard Branson announced that he would be taking a less active role in the dayto-day management of his companies.

Questions 1. How would you describe the structure of the Virgin Group? 2. Do you agree that Virgin is now just a branded venture capital company? Explain what this means. 3. What does the Virgin brand bring to a product or service? How far can the brand be stretched?

(4) Cadbury In 2007 Cadbury Schweppes announced its intention to either sell off or demerge its Americas Beverages operation because it thought that shareholder value would be enhanced as focused and independent businesses. Cadbury merged with Schweppes in 1969 to form the international confectioner and fizzy drinks giant Cadbury Schweppes. Both companies have a long history. Cadbury has come a long way from its days as a chocolate manufacturing family firm with Quaker values and ideals. The original shop was opened in 1824 selling chocolate as a virtuous alternative to alcohol but the company went on to become large-scale manufacturer of chocolate based at the now legendary Bournville factory, built in 1879, and its picturesque village with its red-brick terraces, cottages, duck ponds and wide open parks. Over the next 100 years it developed the products that have become so familiar: Dairy Milkin 1905, Milk Trayin 1915, Flakein 1920, Crme Egg in 1923 and Rosesin 1938. Jean Jacob Schweppe, a German, invented a system for making carbonated water in 1793 and opened a factory in London in 1790. Ownership changed in 1834 and the company started making flavoured sodadrinks like lemonade. It produced Ginger Ale and the famous Tonic Water in 1870, popular in India because the quinine helped prevent malaria. Cadbury Schweppes growth exceeds market trends - first half results for 2007 show revenuegrowth at +6%. This continuing growth comes from three sources: organic growth, mainly through finding new channels of distribution; acquisition of new brands; efficiency saving (profit only) as aging products are produced at a lower cost. By 2007 most of Cadbury Schweppes core products were at the mature stage of their life cycle and sales were therefore stagnant, so it had to search for ever more inventive ways of achieving the ambitious growth targets it set itself. However, these core areas are also hugely cash generative, giving the company between 300 and 400 million a year. So how did it use this cash surplus to generate continuing growth? To start with the company was constantly looking for new markets for its products, but since most of these products already sell around the world, it has now developed a two-pronged growth strategy, both reliant

uponthe companys strong cash flow. Because about 70% of its products are bought on impulse, it is looking for new channels of distribution so as to encourage sales, or indulgence opportunities as they are called. Chocolate bars and drinksare now sold anywhere from petrol stations to off-licences. Vending machines selling them can be found anywhere from factory floors to tube stations. The company wants more products to be sold in restaurants and pubs. The second strand to the companys strategy was buying into other related high growth segments, where the company can capitalise on its existing distribution chains or use new distribution chains to sell more of its existing products. The company has followed an acquisitions strategy for many years. In 1986 it bought Typhoon Tea, Kenco Coffee and Canada Dry and Sunkist soft drinks. In 1989 it bought Crush soft drink and Bassett and Trebor in the UK. The best selling US brands, Dr Pepperand 7UP, were purchased in 1995. The company has also diversified out of fizzy drinks, which in 1998 accounted for 85% of the important US market, with the acquisition of brands like Snapple, Hawaiian Punch and Nantucket Juices. By 2002 fizzy drinks accounted for only 50% of drinks sales. The latest target foracquisitions is the fast growing chewing gum market. In 2000 it bought Hollywood, the French gum maker, and Dandy, the Danish gum maker. In 2002 purchased the US company Adams from Pfizer. Adams brands include Halls, Trident, Dentyne, Bubbas, Clorets, Chiclets and Certs. It also purchased Intergum in Turkey and Kandia-Excelentin Rumania. By 2007 gum and other better for you products accounted for some 30% of confectionary sales. But there have been other confectionary acquisitions such as Green & Blacksin 2005. These acquisitions makes Cadbury the market leader in non-chocolate confectionery including gum and functional products such as sore throat remedies, and will give it a foothold in markets such as Japan and Latin America. However the beverages market has proved tough despite the fact that Cadbury Schweppes portfolio of beverage products are sold around the world and many are international brands, such as Dr Pepper and 7UP. In the late 1990s the company decided to focus on strong regional beverages in particular in the Americas and Australia. In 1999 it sold off its beverage businesses in about 160 countries to and in 2006 it concluded the sale of its European beverages business in order to focus on the Americas. North America is the largest market for its drinks. But distribution here has proved complex and problematic. Coca-Cola (40% of market), Pepsi (30%) and Cadbury (20%) all use franchisers to manufacture, bottle and distribute their products within geographic areas. However, Cadbury Schweppes originally had no dedicated distribution system of its own and channeled 20% of its product through those of Coca-Cola, 30% through those of Pepsi and 50% through independent bottlers. Relationship eventually broke down to such an extent that Cadbury Schweppes sued

Pepsialleging that the company tried to block the distribution of its products to a large US restaurant chain. As a result the company decided to distribute its entire product through the independent bottlers, but at the same time took shareholdings in five of them and merged them to form the Dr Pepper/Seven UP Bottling Group, in which it now has a 40% stake. In this way it took more control over its distribution in the USA and present more consumers with indulgence opportunities. In Australia the company bought the Pepsi Lion Nation joint venture to secure its distribution channels. In 2007 Cadbury Schweppes decided to focus on its strength. It was claiming to be the leading global confectionary company with unrivalled product and geographic reach. Cadbury is in fact the worlds largest confectionary business with a 10% share of the global market and has number one or two positions in nearly half the top 50 confectionary markets, with strong brands and positions in the markets of chocolate, gum and candy. It also generates 30% of its sales from new emerging markets. Confectionary revenues grew by over 5%, on average, between 2004 and 2007 and beverages had become the poor sister in the relationship with a separate management structure but delivering growth below the targets for the company. So what will the future hold for the new Cadbury plc? As we have seen, it will start life as a huge business with sales of nearly 5 billion. The companys goal is to maintain its market leadership position, and to leverage its scale and advantaged positions to maximize growth and returns. The stated new priorities are: To drive growth through concentration on fewer, faster, bigger, better participation and innovation, supported by its global category structure; To drive cost and efficiency gains to achieve margin goals; To continue to invest in capabilities to support its growth and efficiency agendas. The question, of course, is what does this mean in terms of strategies? The company still has what we might see as a mature product portfolio, albeit, in a global leadership position and in emerging markets where confectionary is not amature product. Questions 1. Why do you think it was decided to split the company in 2007, after almost 40 years? Is there any evidence that this decision was a good one? 2. Are all of Cadburys products at the mature stage in their life cycle in each of their market? Give examples. 3. What do Cadburys new goals and priorities mean? What do you think of them?

(5) Dell We learned the importance of ignoring conventional wisdom and doing things our way....Its fun to do things that people dont think are possible or likely. Its also exciting to achieve the unexpected. Born in 1965, Michael Dell is the ninth richest man in the world with a fortune in excess of 12.5 billion. Michael started Dell Computers in 1984 with just 620. Since then the company has grown at five times the industry average growth rate to become one of the biggest manufacturers and marketers of PCs in the world. Its share price has increased 36,000 percent in the last decade. Today Michael is CEO of a company is worth over $18 billion and employing some 37,000 people, globally. His entrepreneurial career started early .At the age of 12 he made 1,200 by selling his stamp collection. At the age of 14 he devised a marketing scheme to sell newspapers which earned him over 11,000. From the age of 15 his interest in calculators and then computers started to grow. He purchased his first computer an Apple II in 1980 and immediately took it apart to see how it was built. Within a couple of years he had started buying microchips and other bits of computer hardware in order to build systems because he realised that he could buy, say, a disk drive for 500 which would sell in the shops for 1,800. In 1983 he began a pre-med degree at the University of Texas but continued his lucrative business selling upgraded PCs and add-on components out of his dormitory room. Dell assembles computers. Originally assembled in the USA, they are now assembled also in Ireland, Malaysia, China and Brazil. However, from the start Michael Dell knew what the critical success factor for his business was. He used an expert to build prototype computers whilst he concentrated on finding cheap components. And the company still sources its components from around the world. Dell grew at an incredible pace, notching up sales of 3.7 million in the first nine months. The company pioneered direct marketing in the industry whereby systems are built to the customers specifications after an order is placed, and then shipped directly to the customer. More lately, it has pioneered the development of integrated supply chain management, linking customers orders directly to its supply chain.. At all times it has focused clearly on a low-cost/low-price marketing strategy. We built the company around a systematic process: give customers the high-quality computers they want at a competitive price as quickly as possible, backed by great service. Every division in Dell is tasked to continuously improve efficiency and reduce costs and workers undertake extensive training through its team-based Business Process Improvement programme. This is aimed at reinforcing the importance of cost reduction, but also putting in place processes and procedures that allow efficiency savings to be implemented, giving the team control over implementing new ideas. As Dell says; Empower workers with the tools to make a difference

and the innovation will follow. And productivity at Dell, measured by the number of computers built per employee, has increased 240% in the last five years. Dell was a pioneer of e-business. What makes Dell special today is its fully integrated value chain - B2B2C. Suppliers, including many small firms, have real time access to information about customer orders and deliveries via the companys extranet. They organize supplies of hard drives, motherboards, modems etc. on a just-in-time basis so as to keep the production line moving smoothly. From the parts being delivered to the orders being shipped out takes just a few hours. Inventories are minimized and, what is more, the cash is received from the customer before Dell pays its suppliers. These systems and processes are part of Dells competitive advantage. They help keep Dells costs low and to build to order. In the 1990s, in order to protect this, the company started applying for patents, not for its products, but for different parts of its` ordering, building and testing processes. It now holds over 80 such patents. Dell has created a three way information partnership between itself and its customers and suppliers by treating them as collaborators who together find ways of improving efficiency: The best way I know to establish and maintain a healthy, competitive culture is to partner with your people - through shared objectives and common strategies....Dell is very much a relationship orientated company....how we communicate and partner with our employees and customers. But our commitment doesnt stop there. Our willingness and ability to partner to achieve our common goals is perhaps seen in its purest form in how we forge strong alliances with our suppliers.....Early in Dells history we had more than 140 different suppliers providing us with component parts....Today our rule is to keep it simple and have as few partners as possible. Fewer than 40 suppliers provide us with about 90 percent of our material needs. Closer partnerships with fewer suppliers are a great way to cut cost and further speed products to market. Dells market place is highly competitive. Dell prides itself on good marketing of quality products but, most important, speedy delivery of customized products factors it believes are reflected in the Dell brand. The idea of building a business solely on cost or price was not a sustainable advantage. There would always be someone with something that was lower in price or cheaper to produce. What was really important was sustaining loyalty among customers and employees, and that could be derived from having the highest level of service and very high performing products. Nevertheless, whilst it might not sell the cheapest computers in the market place, the price it asks must always be competitive and that means costs must still be kept as low as possible. We had to learn the basic steps that most companies, which grow and mature more slowly, learn when they are much smaller in size. We were moving in the right direction with our emphasis on liquidity, profitability and growth. But we were also challenged by a cultural issue. We had created an atmosphere in which

we focused on growth....We had to shift to focus away from an external orientation to one that strengthened our company internally. For us growing up meant figuring out a way to combine our signature informal, entrepreneurial style and want -to attitude with the can-do capabilities that would allow us to develop as a company. It meant incorporating into our everyday structures the valuable lessons wed begun to learn using P&Ls. It meant focusing our employees to think in terms of shareholder value. It meant respecting the three golden rules at Dell: 1. Disdain inventory. 2. Always listen to the customer. 3. Never sell indirect.

Questions 1. How much of a generic product is a Dell computer? 2. What do you think of Dells marketing strategy? 3. From what you know about the company, is Dells competitive advantage based solely on its external architecture? What else might contribute to this?

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