Strategy and Management (GEEN0041) Mini Case 1 ROBIN HOOD ‘Two years after his insurrection against the High Sheriff of Nottingham had begun, Robin Hood was sat alone in a quiet part of Sherwood Forest wondering about the present situation and about what he should do next, Just how well was his campaign really progressing? Were his forces adequate for the task in hand? This in terms of both numbers and discipline? Was his base in the forest sufficiently secure? Were the options available to him attractive or unattractive? He was also thinking that he was no longer finding the campaign fun. In the beginning, with just a small band of men, the camaraderie and trust had been enormous. Things fell into place and things went their way. Now everything was much more complex. To all intents and purposes he now had an army, albeit a rather irregular one In the beginning his revolt had been a personal vendetta against the way the Sheriff ran his administration - both the Sheriffs actions and his values had annoyed him. Robin Hood had quickly realised that alone he was powerless and he had set about building a small band of loyal supporters. His campaign initially proved attractive to like-minded men, some with their own personal grievances and others who held a deep sense of injustice concerning what was going on in the county - but as time progressed, anyone who tuned up and offered his services was made welcome. Few questions were asked if men expressed a desire to serve and lead the lifestyle ‘outside the law that was necessary. Quantity was proving more tempting than either quality or values, Having said that, everyone concemed shared a common enmity against the Sheriff; and Robin devoted considerable time and attention to forging his motley group into a disciplined fighting force. Robin's view of the line of command was simple and unequivocal, Whatever Robin said, went. He appointed loyal lieutenants to control the forces and ensure discipline, His was a clear command and control style of leadership Will Scarlett was responsible for intelligence and scouting. His men tracked every move made by the Sheriff and his forces; and they were always on the lookout for the travel movements of wealthy merchants and tax collectors who must pass through or near Sherwood Forest. ‘Overall discipline lay with Little John, a giant of a man who was Robin's second in command. The story of how the two had confronted each other on a bridge and fought with staves had become something of a legend amongst the men. John was also in charge of archery training - for home-crafted bows and arrows were the band's weapon of choice. ‘A man called Scarlock handled all the finances; he was an expert at trading loot for cash. Once the men and any necessary supporters and informants had been paid off, a temporary safe hiding place for the surplus was essential prior to any distribution to the needy. An army will always require feeding, a task that grew increasingly tricky as the Band of Merry Men grew larger and larger. As the news of Robin's exploits spread around the country, his fame grew. He was becoming something of a legend, and this was attracting recruits from far and wide. Although there is fresh meat and game to be caught in a forest, much more is required; and this was the responsibility of Much the Miller's son. ‘The increasing size of his Band was, then, both a strength and a weakness. What had started as a small bivouac had become a major encampment, There were not enough raids and skirmishes to occupy all the men all the time, and consequently discipline was harder to maintain. They took to playing games to occupy themselves, and there was always a risk they would lose the edge and readiness for real danger. Sometimes it was obvious their vigilance regarding the Sheriffs disciplined forces was quite inadequate. Quite often these days, Robin mused, 'I don't recognise half of these men that I command’ - and he meant this in two ways Much the Miller's son struggled sometimes to acquire the provisions they needed. He could always ask Scarlock for money to go out and buy food from local villages and markets, but this wasn't the intended destiny of the money the Band stole. If you are using the money to feed the army it detracts from the core purpose to ‘steal from the rich and give to the poor. It would not have been quite so bad if travellers and tax collectors hadn't started ooking for alternative routes which avoided the Forest, Their alternatives were taking longer, but their chance of 1a safe passage was much greater. Demand was inereasing a. just the time supply was decreasing! {need a new approach’ decided Robin. He had been wondering lately about changing from a straey of stealing and outright confiscation to a levy for ae tans through Sherwood Forest. Somewhat worryingly 19 hhim, a number of his most loyal lieutenants were completely opposed to this. It implied a change (> Deir core purpose. And there was a genuine logic to their ryumment. f they ‘earned’ (if that was the right ‘vord) less, there would be less surplus to distribute to the poor raendy. In turn that could cost them dearly in lost suppor, ‘the Band counted on those they looked after to ath hide and inform the Band, There might be desertions ‘Supplies might be harder to find. There was a real risk. aot ee. Toca farmers and poorer trades-people also used the forest - would some be exempt from the tax, and, if s0, whom? Robin was also increasingly concerned about his enemy. AS his own forces became less disciplined, the Sheriffs troops became more organised and greater in number. “They were an ever-greater threat The Sheriff still had his aw ways of raising money ~ mainly taxes - and he spent this to increase his security. Robin Hood may have owecnded in diverting some of the taxes collected to his ow funds, but enough was still reaching the Sheriffs Suffers. The Sheriff was also receiving funds from his own flies in other parts of the country. In the past the Sherif had been forced on to the defensive by Robin's Merry Men, but now he was turning the tables and taking an offensive approach. ‘ideally 1 need to conclude this campaign before the Sheriff is strong enough to deliver a mortal blow’, Robin thought - but he couldn't work out how he might achieve this objective! One alternative was always to try and kill the Sheriff - whieh he would have enjoyed enormously at a personal a ff only he could get close enough to have the opportunity "As time passed, this seemed an increasingly less likely outcome. In any case, it was by no means acstuin this would end the campaign, The Sheriff had friends in high places ~ he was in favour at cour’ and certainly ‘with the Regent, Prince John, who might be counted on to intervene if provoked enough. ‘Although Prince John and Robin Hood were hardly friends, they were not yet swom enemies. Robin supported fhe absent King Richard - captured and imprisoned whist fiehting abroad for the Holy Land - whilst Prince Joh ie smed of ascending the throne in his place. John was known fo ‘be volatile and vicious with his enemies. He was ‘unpopilar with the generall populus and with ay inereasing number of barons who wanted to see Richard tun aa they mistrusted John and his spurious claim to the throne, Indeed a group of barons was actively raising funds to pay Richard's ransom to his captors in Austria, His ‘secure position made John a dangerous and unpredictable man. Robin had recently been invited to join the barons - Ins support would grant him future amnesty if their campaign was successful. But were his support to ‘become known to Prince John, he could be perceived as Something much more significant than a ‘troublesome provincial bandit. Dare he take ths risk? If Prince John's omy took tothe field against im, the pursuit would Po telentless and Sherwood Forest would no longer offer protection and a relatively safe haven. In the distance Robin heard the supper horn. His hunger Was such that he decided any momentous decision would pans g wait for another day. Indeed as he began to smell the rouste venison, the problems already seemed less urgent. Perhaps, afterall, he could still achieve nothing significant and make a real difference. But could he do it before he got himself killed? QUESTIONS: 1. How had Robin Hood ended up with this dilemma and how do you see his alternative choices? What are the risks in these choices? a. Wrihings were turing against him, what had gone wrong? ad he made errors of judgement in deciding what to do, or ‘had the implementation ‘of fundamentally good ideas let him down? 3. What should he do next ~ other than have supper, of course! ‘This case was written by John Thompson - based on a case originally created by Joseph Lampel and published in Mintaberg H, Quinn JB and Lampel 3 (1999) The Strategy Process, Prentice Hall.Str: and. Mini Case 8 2 Preset CU aL Human ré ‘Human resources and business strategies need to match — but this will change over time. Hewlett Packard's reputation for innovation and enlightened people management is lauded not only amongst academics and management gurus ut also by other major companies. From its origin as a garage business producing technical equipment in 1937 to its presentday status 35 4 $47 billiona-year company, the emphasis has been on fast-paced innovation together with highly sophisticated performance management process and 2 set of cultural values enshrined in the "HP Way" ‘The major strength of HP has been the manner in which it strongly links business and human resource strategies, This gains clarity from the business planning process. Both the long-term plan and the annual plan have clear THR elements. For the Jong term, strong leader ship and organisational development processes fare combined with detailed scanning of demo- sgraphie trends to ensure capabilities will allan with longterm aims. For the annual plan, the performance management system uses various frechanisms to plan, monitor and assess indi vidual performance. Because HP is operating in ‘high-velocity environment, performance targets at the individual level are determined largely between manager and employee in negotla- tion and these are subject to high revisability in case environmental conditions make existing targets in appropriate or unrealistic, 360° appraisal is used because of the importance of teamwork. In addition to the annual formal appraisal, HP is committed to the practice of Continuous appraisal, encouraging informal oe Source: Johnson J., Scholes K., ‘Exploring C: Prentice Hall, Pearson Educatio esource strategies at Hewlett Packard nagement (GEEN0041) feedback combined with coaching and coun- selling to develop employecs. But growth has brought issues of increased bureaucracy, which has sapped innovation and reduced knowledge transfer. HP responded in two ways: the frst was to split the firm into two with the computing side of the business retaining the name and Hewlett Packard brand. Second, they announced the move into ‘eservices'. ‘A consequence is that the traditional style of people management based on culsural control through internalisation of the HP Way is under threat. A key pillar of the HP Way, ‘management by walking about, is seen by some as anachron- istic given the global and virtual character of teams and the number of people working from home, The paradox of HR systems is that they must provide a high degree of continuity and ‘consistency so that employee expectations of the teffort-reward bargain are reasonably consistent, ‘whilst at the same time they must be flexible to adapr.to changing environmental conditions. HP has a long history of change management and HR excellence, but even for them, resolving their present tensions represents a considerable challenge. propared by Philip Ses, udge Intute of Management Stasis Gee Chapter 3 of reference 3): Question What are the specific changes that Hewlett Packard should make to its performance management framework to support its move into e-services? ‘orporate Strategy’, Sixth Edition, FT a, Essex, 2002, ISBN 0 273 651129_ Strate Mini Case 3 {illustration 5.9 . and Management (GEEN0041) Organisational purposes for a social services j department Organisations are finding it useful to publish a statement of their purposes. This is usually done at several levels of detail ‘As part of its strategic plan for 2000-2003, Sheffield City Council Social Services Depart- ment outlined its purposes, priorities and tar gets. The following are extracts from this plan. 1, Statement of purpose We will work within the framework of the law and © protect and strengthen the welhbeing of people And families in Sheffield, focusing on the most vulnerable; ‘© work rogether with people, their families and ‘with other organisations to ensure the provi sion of helpful, timely and good value social services. 2, Primary objectives for 2000-2003 We will: © ensure all our statutory duties are fulfilled; fe ensure that people can easily and quickly con- tact us for advice and help; ‘© make timely and accurate assessments of need, taking into account people's circumstances, cul ture, age, sex, health, disability and sexuality; ‘© apply the rules for arranging services (eligibility Criteria) fairly and consistently; ‘© provide clear care plans {to clients) to explain how we will arrange and provide help and suppor ‘© regularly check that help and support are being provided and are of an acceptable standard; ‘© ensure our workforce is effectively supported fand managed and that expenditure is con- trolled within cash timits. 3, Service priorities ~ people with mental health problems! Priorities for 2000/2001 are to: © clevelop an integrated adult mental health ser- vice with Community Health Sheffield? ee ‘© rcorganise community mental health teams to focus on access and assessment and provide effective services for people with serious men- tal illness; ‘© continue implementation of the Government's * National Service Framework Development Pla’ In conjunction with our partners, © ensure that investment from the mental health * ‘grant is allocated in line with this government Framework, 4, Targets (mental health) ‘We will be meeting our objectives if we sec: © fewer people readmitted to hospital; f@ all service users with an identified care co. ordinator, ‘© an increase in the number of community sup- port and short-term care places. Notes 1. There were anal service plans for each arca ~ this is one example, 2, Tals isa health care agency. 43. This plan concemed Improvements in mental health care through better Interagency working. Source: Shetield Clty Council Questions 1. How useful are these various statements of purpose to the shaping and implementation Of the department's strategy? In answering the ‘question, ensure that you give a critique of each of the various ‘levels’ of statement in order to establish: (a) what it is meant to achieve; (b) whether you feel that it does so; (© any improvements you would suggest. 2. Comment on the extent to which these vari- ‘ous levels of purpose are consistent with each other. Source: Johnson J., Scholes K., ‘Exploring Corporate Strategy’, Sixth Edition, FT Prentice Hall, Pearson Education, Essex, 2002, ISBN 0 273 651129Strat and Management EN0041) Mini Case 4 Diversification in Agriculture In recent years, agriculture in many countries has experienced turmoil, uncertainty and decline, ssentially the problem has been one of overcapacity. Increasing surpluses of staple commodities such as grain, butter, milk and meat developed as demand for many products became static and the consumption of animel fats declined. Prices have been forced down, costs have risen, and government and Buropean Union support is being reduced. To remain viable many farmers have had to seek alternative uses for their resources, which comprise land, labour and capital equipment. ‘There are limited opportunities for adding value to existing products and for producing alternative and unusual crops, but increasingly farmers are establishing non- {arming enterprises to yield revenue, profit and employment. A number of opportunities exist, but many require skills which are different from those which are essential In farming, Farmers therefore need to be more strategically aware and take a wider view of the essential purpose of their enterprises. They also need to develop new skills and competencies. ‘The ‘predictable’ opportunities avallable include the following: «+ forestry: there is a large demand in the UK for wood and wood products, much of ‘which Is currently satisied through imports ‘+ tourism: bed and breakfast accommodation, self-catering cottages, caravanning and camping facilities + retailing direct to the public through farm shops and garden centres «sport and recreation: ponds and gravel pits for fishing or growing fish to sell to angling clubs; shooting either game or clay pigeons, and possibly including gun hire; sailing facilities; equestrian opportunities including horses for trekking and hunting, and stabling; golf courses on surplus land; and using rough terrain and woodland for simulated war games + engineering, woodworking and craft workshops. In recent years, more enterprising farmers have sought opportunities through the Internet, One farmer's wife in Sussex (UK) has developed a major electronic estate agency. Her husband travels around the properties when he is not active on the farm, photographing them with a digital camera and putting up the ubiquitous ‘for sale" boards; his wife masterminds the TT side of the business. Because the business has been able to secure a number of properties in the high-price south-east and London area, the business is incrative, Quite different, but also very successful, is Ample Bosom, an on-line company which sells bras for the fuller figure from a farm in North Yorkshire (UK). The farmer's wile, Sally Robinson, was able to secure a £7500 diversification grant and she had access to a disused farm building, The site receives some 15,000 hits a week (in 2000) from buyers as far away as Singapore and New Zealand, The aim of the business is to supply a wide range of styles in unusual sizes, and which would not normally be readily available in a high-street shop, using products supplied by leading manufacturers. ‘otiestton: Can you think of other 'good ideas’ which would utilize the skills and spare resources of a farming business? ‘Source: Thompson JL., ‘Strategic Management’, Fourth Edition, Thomson, London, 2002, ISBN 1-86152-587-7Strategy and Man: (EEN0041) Mini Case 5 Flying Flowers Flying Flowers, as the name suggests, sels flowers by post. The company was set up in Jersey in the Channel Islands in the early 1980s to save a struggling glasshouse business ~a loss-making nursery needed and created a new opportunity. By 1996 turnover had grown to £35 million, with pre-tax profts of £4 millfon. ‘There are several key elements to the strategy and the success, First, the company holds only low stocks of the actual flowers, many of which it buys in cheaply from countries such as Colombia: flowers from Jersey does not have to mean flowers grown in Jersey! Demand fluctuates markedly, peaking twice, at Christmas and Mother's Day, when the ‘company typically receives 15,000 postal and 5000 telephone orders per day for a short, period. Christmas sales amount to 5 million carnations in 330,000 boxed deliveries. Coping with this surge in demand Is critical for success. The second key element therefore is staffing and staff management. As tourism is a leading source of employment in Jersey, and is strongest during the summer months, Flying Flowers Is able to use casual hotel and restaurant staff, They are relatively plentiful on an island of scarce labour resources, and critically they are often laid off temporarily over Christmas and Mother's Day when tourism falls off, ‘Thirdly, the company uses a disused glasshouse to house a noisy, steam-breathing machine which produces polystyrene boxes every working day of the year. These are ‘then piled high to ensure that any demand peak can be catered for, Fourthly, and very critically, Flying Flowers has invested in IT to support both control ‘and marketing, It holds a database on one million people and carefully targets its direct, ‘mail, analysing all responses and orders in detail, It has opened a telephone call centre in Witham, Essex. Flying Flowers as a concept adds value for customers — high-quality, fresh flowers delivered directly to the door. Its operating costs are relatively low for the reasons described above and, of course, there are no returns to deal with. ‘The skills and competencies have been further exploited with the acquisition of other businesses. Flying Flowers bought Gardening Direct (mail-order bedding plants), Stanley Gibbons (publisher and stamp supplier) and another supplier of first-day covers. ‘ovestions: How does Flying Flowers add value? ‘What is the nature of its strategic position? Did the acquisitions make sense in relation to its competencles and capabilities? Source: Thompson J.L., ‘Strategic Management’, Fourth Edition, Thomson, London, 2002, ISBN 1-86152-587-7Strategy and Management (GEEN0041) Mini Case @ G6 OEE Simm Information technology and the five competitive forces Information technology ear transyorm the competitive forces in an industry In Chapter 3, the Bive forces framework was introduced as a way of mapping out the com- petitive forces in an industry. New entrants Barriers to entry may be raised because of the front invesiment needed to operate and compete - although this continues to decline. ‘More importantly, incumbents may have tied suppliers and/or customers into their particular systems, creating inertia to change. Barriers may be kywered for a number of the reasons mentioned below, such as hetterinformed con sumers leading to less customer loyalty. Power of suppliers ‘A thajor threat for many organisations is rat their suppliers are able to forward imegrate ‘using IT and take over some of all of the fune- tions undertaken by the onginisation. This is particularly threatening for intermediaries ~ such as travel agents - where IT is increasing the number of companies dealing directly with the end customers. But suppliers may have power without forward integration, in particu- lar where they own the “technology platform” around which a business's systems and oper tions are built, Microsoft's Windows operating, system is still hugely powertul in this respect. Power of buyers Tt has been cluimed that one of the most important social impacts of the Internet is to. ‘empower consumers by giving them easy access to market information and, therefore, making. them more knowledgeable and discerning. Sn nn ‘Source: Johnson J., Scholes K., ‘Exploring Corporate Strategy’, Sixth Edition, FT consumers. ‘The same would apply to business tobusiness transactions - eauctions being an ‘obvious example. Substitutes, TT is fmpacting at all three levels of substitu- tion, It is creating direct productforproduct substitution (eg. Intemet vs. branch banking). But it is also substituting the need for certain products and services as consumers are able to undertake those tasks themselves using TT software packages (eg. some legal services) oF satisfy the need ina different way (e.g. tele- conferencing instead of business travel). At the level of generic substitution, IT hardware, soft- ware and (Trelated services are capturing a ‘growing percentage of consumer spending ~ at the expense of sectors whose products/services are seen as fess exciting. Competitive rivalry As consumers become more knowledegeable about the offerings of different providers 1€ is driving many markts fo be commodity tke ~ in thie sense that consumers regard the offerings fs much the same. OF cOUFSC, ST +n aovist providers in their attempts to differentiate thema- Rees from competitors = largely in terms of improved service. ut IT software and systems dre widely available to competitors ~ 50 they muy catch up quickly. So IT is fuelling hyper comps js aincussed in Chapters 3 and 6, Questions 1, Choose an organisation with which you are familiar (or one of the case studies in this book) ‘and analyse how IT will impact on each of the five forces. 2. What are the implications for the organisation's future strategies? Prentice Hall, Pearson Education, Essex, 2002, ISBN 0 273 651129Strategy and Mana; Mini Case 7 ent (GEEN0041) Changes in organisational routines (Changes in organisational routines can be a powerful signal of and stimulus for change. © In a retail business with an espoused strat egy of customer care, the chief executive, on visiting stores, tended to ignore staff and customers alike: he seemed to be interested. only in the financial information in the store ‘manager's office. He was unaware of this tuntil it was pointed out; and his change in behaviour afterwards, insisting on talking to staff and customers on his visits, became a story’ which spread around the company, substantially supporting the strategic direc- tion of the firm, © Public sector organisations have been obsessed. with the stewardship of public funds, often resulting in very riskaverse cultures. Some hhave tried to break this by setting up internal, ‘investment banks so that staff can “bid! for the funding of new ventures. © Given that a drug can only be promoted on launch on the basis of claims substantiated. by clinical data, how pharmaceutical firms conduct clinical trials is strategically import- ant. The traditional approach has been to base extensive data collection on a scientific research protocol; and then write a report explaining why all these data had been collected. It was a highly time-consuming and costly process. Some firms changed their Procedures to ensure that scientific tests addressed regulatory and medical need. They created ideal claims statements and drafted the report they would need. Only then did they create research protocols and data col “lection forms, specifying the data required from the trials to support the claims. ‘© The chief executive of Oticon, the Danish company manufacturing hearing aids, sought ‘Source: Johison J., Scholes K., ‘Exploring Corporate Strategy’ to transform the organisation into a knowledge-based’ company. He introduced an open-plan office with mobile seating ‘arrangements, and put everyone (0 work in project-based teams. Traditional job responsi bilities were broken down and all head office staff were required to do up to five jobs, deciding themselves what they should prioritise and working in frequently chan- wing project teams. The new office had no ‘walls, but only workbenches with computer terminals. People moved between desks ‘cording to the projects they were working taking « set of drawers with them, Incoming mail was scanned on to the com: puter; if someone wanted to view something on paper, they went to the mail room, and it was then shredded. @ The members of an operating board of a subsidiary of a major multinational had offices in different sites of its operation in the UK. They had a tendency to blame each other for the problems of the firm. The result was overdefensiveness and low- quulity decision making, Eventually the board members relocated to one site with offices in the same building, The daytoday contact ith each other resulted in more open personal relationships, a greater readiness to sort out day-to-day problems and, eventu- ally, @ greater understanding of strategic Questions 1. Using the examples above, explain why changes in routines might help achieve strategic change. 2. Extend the list of examples in the illustration by suggesting routines that might be changed in order to effect change in some organisations with which you are familia. , Sixth Edition, FT Prentice Hall, Pearson Education, Essex, 2002, ISBN 0 273 651129Strat ind Man: Mini Case 8 ment -EEN0041 Differentiation in the wine industry: an Australian success story Successful differentiation needs to be based on what customers value. By 2001 the traditional dominance of French wines in the UK had ended, with sales of Australian wine outstripping them for the first time. By 2000, Australian wines accounted for 19.5 per cent of UK wine sales in terms of value (up 25 per cent over 1999), with French wines showing a steady decline. And for wines over 455.00, Australian wine had already overtaken French wines, In the prestigious 2000 wine sampling contest in London, the Australians had won awards for three-quarters of the wines entered, However, many wine experts still regarded Australian wines as inferior to French wines. For example, in some top London restaurants such as Le Gavroche, Australian wines were not served because they believed that customers preferred the quality of French wine over ‘something more than a chemist’s blend’ (FT, 11 February 2001). Whilst French wine still tended to be favoured for eating out, Australian wine was favoured by take-home drinkers - and 84 per cent of all wine sold in the UK was drunk at home. ‘The success of Australian wines with retailers ‘was put down to several factors. The quality was consistent, compared with French wines that could differ by year and location. Also, whilst the French had always highfi importance of the local area of ori wine within France, Australia had, in effect, branded’ the country as a wine region and then concentrated on the variety of grape ~ a Shiraz or a Chardonnay, for example. This avoided the confusing details of the location of vineyards and the names of chateaux that many customers found difficult about French wines, Terry Davies, managing director of Beringer Blass, explained: ‘you can pronounce the name on the bottle on our wines’, the inference being that people often could not on a bottle of French Historically the European wine makers had also focused on their home markets. This was Particularly the case in Italy, but French pro- ducers also tended to assume that consumers overseas would buy wine in much the same way as in France. This was changing, how- ever. French wine makers were becoming less insular, Caroline Gilby, a consultant to the industry, explained that one wellknown Chablis producer had spent time working in Chile, the US and Australia before taking up his, present job. ‘Wine makers interested in quality will have travelled. That's quite a change and it has started to happen only in the last five years." Mike Paul of Destination Wine also believed that ‘there are signs that there could be a backlash from the old world as France and Italy get their act together" (FT, 3/4 March 2001). Sources: Adapted fom Finance Tes, 11 February and 318 March 200 Questions 1. What other reasons might account for the suc- ess of Australian wines? 2, What would you advise French wine producers to do to counter the Australian success? jource: ‘Explori ?, Sixth Edition, FT Souree: Johnson J., Scholes K., ‘Exploring Corporate Strategy’, Sixt! Prentice Hall, Pearson Education, Essex, 2002, ISBN 0 273 651129and Management Mini Case 9 The power of the knowledge worker In a knowledge-based economy people are truly the most valuable asset. buman resource policies need to reflect wis. How to recruit and retain knowledge workers is one of the biggest challenges organisations face in the knowledge era, Where there is no longer a shortage of ideas, there is, however, invariably a shortage of the right type of people to execute them. Whether they are ICT specialists, engi cers familiar with the latest CAD-CAM, middle ‘managers able to work virtually and without tak ing into consideration geographical boundaries, or frontiine service workers able to deal with any customer enquiry, knowledge workers are invaluable, Organisations, especially in America, have seen prime staff leave to set up their own dot.com companies. Even after the crash of dot.com stocks, tumover of staff remains a problem. Knowing how valuable they are and that there is no longer such a stigma attached to a CV characterised by many employers, such workers are changing jobs rapidly, often Increasing their salaries substantially exch time, Organisations are beginning to respond, Some companies are making a point of becoming an employer of choice by offering better pensions, loyalty bonuses, flexible working and help with child care. Employers are beginning to put these ‘work-life’ policies on the board's agenda ‘ARM Holdings in the UK was a case in point. ‘The company is a leading intellectual property provider, licensing processors, peripherals and chip designs to leading electronics companies In all its communications, ARM emphasises that people are important, empowered and well looked after. An alternative approach is to make workers more knowledgeable either through training, especially through the web, or, as Ford has done, by offering a PC, printer and Internet access to all emplayces for a $5 monthly fee. The logic being that workers will be able to communicate amongst themselves more easily, be more able to use computers at work and will become more acquainted with the mindset of e-consumers which will help make the whole organisation more customer focused. ‘The knowledge worker, a term first coined by the management guru Peter Drucker in 1988, is ere to stay, There is the potential co create a ‘win-win relationship, with employees gaining, job security, interesting work and an improved. work-life balance and the best organisations gaining competitive advantage from the best workers Prepared by il Shepherd, Universy of strathelyde. Sources: Adapted from ARM company report and website Business Week, 21 February 2000, p. a1; The Economist, 25 ‘March 2000, pp. 101-103; The Sunday Time, 29 October 2000, section 7, p- 24 Question Referring to Exhibit 10.3 (page 489), identify the different ways in which human resource strategies can give competitive advantage to knowledge- based organisations. ‘Source: Johnson J., Scholes K., ‘Exploring Corporate Strategy’, Sixth Edition, FT Prentice Hall, Pearson Education, Essex, 2002, ISBN 0 273 651129 See \ Exo’ >Leadership development © Workforce development @ Organisational development Scanning long-term angen Goa Long-term people trends Long-term cy people strategy BUSINESS STRATEGY « Scanning current cycle Short-term business! capability hereon ore people strategy ¥ Objective setting __ @ Performance metrics © Rewards © Short-term t ing Source: Adapted tram Gratton, V, Hope Wally, , Sa and C. Tuts, Strategic Muman Resource Management, Oxford Univesity Pres, 1998, 9.185Strategy and Management (GEEN0041) Mini Case 10 OTe ed Espoused synergies in acquisitions Many companies cite synergy as one of the justifications for mergers and acquisitions. Primedia and About In December 2000, About-com, a US Internet portal, was acquired by Primedia, a magazine ‘Publisher based in the USA. About.com covered ‘over 50,000 subjects and was the seventh most frequently visited Internet site, with 60 million users each month. Primedia published 220 maga- zines, including periodicals and trade publica- tions, and owned a television network as well as 200 websites and other Internet properties. The CEO of Primedia, Thomas Rogers, said, “The Primedia and About merger creates the leading model for the integration of traditional and new media niche content and the result- ing delivery of targeted marketing vehicles. . Primedia is the leading traditional media com- pany in the delivery of highly targeted niche print and video products to consumers. About {s the leading online company in the delivery of niche content. This is the most synergistic com- bination cither of these two companies could enter into and creates a one-ofakind company that no two other companies could create.’ Primedia planned to take advantage of cross- ‘marketing and shared content with the new merger. Rogers argued that, as well as the bene- fits from sheer scale in market niches, there ‘would be major costsaving synergies. Revenue would be generated by applying ‘Primedia's 1,600-person sales force and 60,000 advertisers to About’s niche-based sites [and} driving Primedia magazine subscriptions on these sites’ Cost synergies would result from cutting back About’s marketing expenses whilst significantly cutting back Primedia's own spending on Inter- net businesses, Tata Tetley In March 2000, Tata Tea, India's largest pro- ducer of tea, acquired the Tetley Group, the second-biggest tea brand in the world. Ac- cording to the vicechairman of Tata Tea, Mr Kumar, ‘the synergies will produce a global leader’. Tata would supply produce to Tetley for the manufacture of teabags and it would gain from Tetley's skills in blending, packag- ing, inventory management, cost control and distribution. Kumar argued that in an industry in which brand strength is a critical business success factor, Tetley's fair for product development and marketing would allow Tata to gain a larger share of the tea market and opportunities to achieve synefgies and higher added value Tata's activities would also benefit from stan- dardised management practices, including the quality performance norms and consumer focus of Tetley. The two organisations would ‘work under a unified global strategy, and their combined strength would help to create oppor- tunities to expand sales in existing and new markets ‘The breadth of experience and vertical integra- tion would equip Tata to compete anywhere in the world, With the globally recognised Tetley brand and other regional brands, Tata would have a product portfolio of over 100 varieties of teas (margins for which were higher than for taditional tea) and this would make it possible to tap into markets effectively and increase market share. Prepared by Urmila Lawson, University of Strathclyde Graduate Sool of Buslnest Sources 8, Quint, ‘About.com acquired by Primed: sn or ‘syneray?, Information Today, Dac. 2000, val 17,11, p22 K taerehant, Tata may have swallowed Tetley but "tea folk" will emai, The Financial Times, 8 Feb. 2000, p28. Questions 1. What would the corporate parent need to do to ensure the realisation of the sorts of synergy described above? 2, What might prevent the realisation of these synergies? Source: Johnson J., Scholes K., ‘Exploring Corporate Strategy’, Sixth Edition, FT Prentice Hall, Pearson Education, Essex, 2002, ISBN 0 273 651129Strategy and Management (GEEN0041) Mini Case 11 Sustaining a low price strategy: easyJet revisited Sustainability of competitive advantage raises major challenges for the long-term success of an organisation. Undoubtedly easyJet has been a huge success However, following its suc- cessful flotation, some commentators suggested there were threats looming on the horizon. In fact, easylet's 2000 prospectus for its flotation hhad fourteen pages on risk alone. ‘The acquisition of over 30 new Bocing 737s and the search for the passengers to fill them could ramp up the pressure on themselves. Analysts pointed to the fact that Debonair went bust by trying to grow too fast and suggested that there might not be much more volume to squeeze out of the low-price intra-European routes, As they tried do so, might this also mean easyJet would face increasing competition from rivals such as Ryanair whom hitherto they had largely avoided: and increasing competition sould mean pressures on already modest margins. ‘A second risk revolved around their corpor- ate ambition, By 2001 the portfolio included easyEverything, an Internet café operation, easyRentacar.com, an Internetonly car rental company, easyValue.com, comparison online shopping, easydot.com, a free web-based e-mail service and, being planned, easyMoney.com, an online financial services business. The exten- sion of their brand into these other areas at the same time as trying to extend their core opera tion would inevitably increase the complexity of their business: and complexity costs money to manage, not least in management time and corporate overhend, as easyfet's Mag-carrier competitors would testify In their in-flight magazine, easyJet proudly profiled their young, all-737 fleet. Although known as the reliable workhorse of the skies, the 737 is nn old aircraft. A serious design fault, on this aircraft (remember Concorde) could ground easyJet’s entire operation, So by buying only 737s easyJet had taken another isk by putting all heir cggs in one basket In addition to this, 2000 saw easyfet enter a dispute with the owners of ts base at Luton aie: port, who wished to raise the landing charges. By 2001 a eustomer booking online with easyJet found increased charges identified separately on their quotation as a ‘fat cat’ charge; and there were reports that Stelios Hajiloannow had con- sidered moving easylet’s base from Luton to Liverpool Others suggested that easyJet were leaving themselves open to being the victim of their own success. Successful strategies can become set in stone, whereas the strategic innovator has to stay open to new and potentially different opportunities. easyfer appeared 10 be totally engaged with and very happy playing the game they had learned to play well. Its committed workforce, who provided enthusiastic support for its no fills strategy, might find future change ciffcut. Prepared by Phyl Johnson, University of Statheyde, Graduate School of Business. Sourcer: Adapted from The Economist ‘Lowscost allies easy does it, 18 November 2000, pp. 122-124 O, Sul, "Easyle’s $509 milion gamble’, European Management Journal, vl. 7, no. 1 (1996, pp. 20-38 Questions 1. Do you think easyset's successful no-frills strat- egy is sustainable? 2, What recommendions would you make to Stelios Hajloannou to ensure the future success of easylet? Source: Johnson J., Scholes K., ‘Exploring Corporate Strategy’, Sixth Edition, FT Prentice Hall, Pearson Education, Essex, 2002, ISBN 0 273 651129