Student name: LE QUANG HUY Student ID number: 31171020391
UNIT AND TUTORIAL DETAILS
Unit name: STRATEGIC MANAGEMENT Unit number: SM_S1DH43ISB-1
Tutorial/Lecture: MICHAEL SARAM Class day and time: Lecturer or Tutor name: MICHAEL SARAM
ASSIGNMENT DETAILS
Title: ASSIGNMENT #1 1st November, Length: 1900 words Due date: 2019 Date submitted: 1st November, 2019
DECLARATION
I hold a copy of this assignment if the original is lost or damaged.
I hereby certify that no part of this assignment or product has been copied from any other student’s work or from any other source except where due acknowledgement is made in the assignment. I hereby certify that no part of this assignment or product has been submitted by me in another (previous or current) assessment, except where appropriately referenced, and with prior permission from the Lecturer / Tutor / Unit Coordinator for this unit. No part of the assignment/product has been written/ produced for me by any other person except where collaboration has been authorised by the Lecturer / Tutor /Unit Coordinator concerned. I am aware that this work may be reproduced and submitted to plagiarism detection software programs for the purpose of detecting possible plagiarism (which may retain a copy on its database for future plagiarism checking).
Student’s signature: LE QUANG HUY
Note: An examiner or lecturer / tutor has the right to not mark this assignment if the above declaration has not been signed. CASE ILLUSTRATIONS 1. Does Starbucks’s strategy (as described in Illustration Capsule 1.1) seem to set it apart from rivals? Does the strategy seem to be keyed to a cost-based advantage, differentiating features, serving the unique needs of a niche, or some combination of these? What is there about Starbucks’s strategy that can lead to sustainable competitive advantage? - According to Illustration Capsule 1.1, the key elements of Starbucks’ strategy are as follow: a. Train “baristas” to serve a wide variety of specialty coffee drinks that allow customers to satisfy their individual preferences in a customized way. => Starbucks is focusing on emphasizing HRM activities that improve the skills, expertise and knowledge of the company personnel. b. Emphasize store ambience and elevation of the customer experience at Starbucks stores. => Starbucks is focusing on increasing marketing and brand-building activities. c. Purchase and roast only top – quality coffee beans. => Starbucks is focusing on seeking out high – quality inputs. d. Foster commitment to corporate responsibility. => Starbucks is focusing on a sustainable growth. e. Expand the number of Starbucks stores domestically and internationally. => Starbucks is focusing on expanding their market and brand image. f. Broaden and periodically refresh in-store product offerings. => Starbucks is focusing on improving customer service or adding extra services. g. Fully exploit the growing power of Starbucks name and brand image with out-of- store sales. => Starbucks is focusing on branding and marketing - Based on those key elements mentioned above, we can see clearly that Starbucks’ strategy seems to set it apart from rivals. Moreover, it also seems to be keyed to a cost – based advantage, differentiating features, serving the unique needs of a niche and in turn, leads to sustainable competitive advantage. According to the text book, there are five strategic approaches to sustainable competitive advantage and I will explain why Starbucks’ strategy can lead to such an advantage based on their strategic approach – A focused – differentiation strategy. a. Starbucks’ strategy is aiming to enhance differentiation between the brand and its rivals based on some important value drivers. b. Thanks to the strategy, Starbucks creates an upscale experience for coffee drinkers by catering to individualized tastes, enhancing the atmosphere and comfort of the shops, and delivering a premium product produced under environmentally sound fair trade practices. By doing so, Starbucks is able to charge prices for its coffee that are well above those of its rivals and far exceed the low cost of its inputs. 2. Go to investor.siriusxm.com and check whether Sirius XM’s recent financial reports indicate that its business model is working. Are its subscription fees increasing or declining? Are its revenue stream advertising and equipment sales growing or declining? Does its cost structure allow for acceptable profit margins?
2018 2017 2016
Revenues $5.8 Billion $5.4 Billion $5.0 Billion Net income $1.2 Billion $648 Million $746 Million
- Adjusted EBITDA Climbs 6% to $2.2 Billion
- The company’s revenue increases from $5.0 Billion in 2016 to $5.8 Billion in 2018. - Net income has a dramatic change from $746 Million in 2016 to $1.2 Billion in 2018 => This illustrates an increase in value proposition as well as an effective and growing profit formula. Therefore, the business model is working well. 2018 2017 2016 Subscription revenue $4.59 Billion $4.47 Billion $4.19 Billion
- The subscription revenue of the Sirius XM has increased from $4.19 Billion in 2016 to $4.59 Billion in 2018. 2018 2017 2016 Advertising revenue $187.56 Million $160.3 Million $138.23 Million
- The revenue from the advertising has increased $138.23 Million in 2016 to $187.56 Million in 2018. 2018 2017 2016 Equipment revenue $154.87 Million $131.58 Million $118.94 Million
- The Equipment revenue has also have the increasing trend from $118.94 Million in 2016 to $154.87 Million in 2018. - Net profit margin increases from 14.92% in 2016 to 20.69% in 2018. As a result, the cost structure has improved a lot. Thus, company’s cost structure allows for acceptable profit margins. 3. How does the scope of a business affect the language of its vision statement? How would you reword the Whole Foods vision statement (as shown in Illustration Capsule 2.1) to reduce it to less than 100 words? (Currently = 154 words) - The scope of a business will decide the long term’s direction and the shape of the company, which is an important factor in writing a vision statement. - Reword the Whole Foods vision statement:
Foods Market is a dynamic leader in the quality food business with an aim to set the standards of excellence for food retailers. Our motto – Whole Foods, Whole People, Whole Planet – emphasizes that our vision reaches far beyond just being a food retailer. Our success in fulfilling our vision is measured by customer satisfaction, team member synergy, return on capital investment, and corporate social responsibility. Our ability to instill a clear sense of interdependence among our various stakeholders is contingent upon our efforts to communicate more often, openly and compassionately. Better communication equals better understanding and more trust. 4. Does the corporate culture at Patagonia match its stated values (as described in Illustration Capsule 2.2)? What independent authoritative views support and dispute the implication that Patagonia’s stated values are real rather than cosmetic? Outline Patagonia’s business strategies and strategic actions. Are any of them in conflict with its stated values? - According to Illustration Capsule 2.2, Patagonia has four core values and the corporate culture at Patagonia matches well with them: a. Quality: Pursuit of ever – greater quality in everything we do b. Integrity: Relationships built on integrity and respect. c. Environmentalism: Serve as a catalyst for personal and corporate action. d. Not bound by Convention: Our success – and much of the fun – lies in developing innovative ways to do things. - The independent authoritative views supporting and disputing the implication that Patagonia’s stated values are real rather than cosmetic lies in the case. Patagonia, Inc. is an American outdoor clothing and gear company that clearly “walks the talk” with respect to its mission and values. Although its mission is vague, it states clearly the foundational “how” and “why” of the company. Patagonia’s stated values Business strategies and strategic actions Quality - At Patagonia, quality must come through honourable practices or not at all. - Routinely, Patagonia opts for more expensive materials and labour to maintain internal consistency with the mission. Integrity - Patagonia learned early on that it could not make good products in bad factories, so it holds its manufacturers accountable through a variety of auditing partnerships and alliances. Environmentalism - Patagonia targets for use sustainable and recyclable materials, ethically procured. Not bound by Convention - Demonstrating leadership in environmentalism, Patagonia established foundations to support ecological causes even defying convention by giving 1% of profits to conservation causes.
5. Indicate which of Yum! Brands’ company objectives (as stated in Illustration Capsule 2.3) are strategic and which are financial. Use the balanced scorecard approach to propose an effective company performance management system for Yum! Brands. How has Yum! Brands performed when compared to its stated company objectives? - Strategic objectives are goals concerning the company’s marketing standing and competitive position. - Financial objectives communicate management’s goals for financial performance. Strategic objectives Financial objectives - Add 1,000 new Taco Bell units in the United - Increase Taco Bell revenues from $7 billion in States by 2020. 2012 to $14 billion in 2022. - Achieve a number - two ranking in quick – - Increase the operating margin for KFC, Pizza Hut, service chicken in western Europe, the United and Taco Bell from 24 percent in 2014 to 30 Kingdom and Australia. percent in 2017. - Increase the percentage of franchised KFC units - Sustain double – digit EPS growth from 2015 in China from 6 percent in 2013 to 10 percent in through 2020. 2017. - Expand the number of Pizza Hut locations in China by 300 percent by 2020. - Increase the number of Pizza Hut Delivery stores in the United States from 235 in 2014 to 500 in 2016. - Expand the digital ordering options in all quick – service concepts. - Increase the number of restaurant locations in India from 705 in 2013 to 2,000 by 2020. STRATEGY CHALLENGES 1. Using the business model canvas, describe the current (at the time the Case Study was written) business model of the company in your respective Case Study. - I described the business model in another pdf file. 2. Evaluate the vision and mission statements of the company in your respective Case Study. Are the vision and mission statements in alignment with the current business model of the company? Give compelling reasons to support your evaluations and conclusion. - Under Armour’s mission statement: “To make all athletes better through passion, design, and the relentless pursuit of innovation.” - Under Armour also reworded the mission as: “Under Armour Makes You Better”. - Under Armour’s vision is to inspire you with performance solutions you never knew you needed and can’t imagine living without. 3. What are the short-term and long-term financial and strategic objectives of the current business model of the company. - Short – term financial objectives: + In 2018, international sales were expected to grow 25 percent. Gross margins were expected to improve 50 basis points to 45.5 percent. + A second restructuring plan in 2018 to further optimize operations. This plan entailed: Up to $105 million in cash-related charges, consisting of up to $55 million in facility and lease terminations and up to $50 million in contract termination and other restructuring charges; and Up to $25 million in non-cash charges, comprised of up to $10 million of inventory related charges and up to $15 million of asset-related impairments. Expected sales of $7.5 billion in 2018 - Long – term financial objectives: The 2017 and 2018 restructuring efforts to produce a minimum of $75 million in savings annually in 2019 and beyond. - Strategic objectives: Current long-range plans called for perhaps as many as 800 such stores in 40+ countries outside North America sometime in the 2020 to 2025 period
