Case Objectives and Use

This case focuses on the merger of Chrysler Corporation, a leading US automotive manufacturer, and Daimler-Benz AG, a Germany based global industrial manufacturer. Our key objective is to evaluate the desirability of this merger from Chrysler’s point-of-view and to examine the potential consequences of the merger for the US automobile industry and the automotive industry worldwide.

This case is appropriate for a Business Strategy and Policy course at the graduate and undergraduate levels. It is also appropriate for an International Strategy and Policy course at the MBA and MIM levels.

Case Synopsis

On May 6, 1998, Chrysler Corporation merged with Daimler-Benz AG. At the time, this represented the largest industrial merger. It did not come out of the blue, as talks had been occurring on and off for five years. Delaying the merger were internal weaknesses as well as unstable profitability for both companies. Chrysler streamlined its business operations and brought back a love of making cars. Despite their success in the domestic market, Chrysler struggled abroad. Mercedes-Benz, the automotive division of Daimler-Benz, experienced high sales in the international market but sells comparatively little in the US. Chrysler was the third largest American automaker. Daimler-Benz was one of the cornerstones of Germany’s industrial base. This $40 billion (US) stock deal produces DaimlerChrysler, the world’s fifth largest maker of cars and trucks.

**********************************************************************************************************************
 

1. To emphasize that careful strategic management is necessary, not only in times of difficulty, but must be maintained in times of prosperity to avoid problems in the long run;
2. To emphasize that core competencies can become core rigidities;
3. To examine the causes of the decline of the mainline department store;
4. To conduct a competitive analysis of the department store industry in Canada;
5. To simulate strategy formulation in the department store industry in Canada.

After about a century as Canada’s most prominent department store, revenue and market share of The T. Eaton Company Limited began to decline, over some years. In 1995 and 1996 Eaton’s experienced serious losses and by early 1997 the company was on the verge of bankruptcy. In February, 1997 Eaton’s applied to the courts for bankruptcy protection while management worked out a restructuring plan.

The company had been founded by Timothy Eaton in 1869. In an era when granting customers’ credit and haggling over prices were commonplace, Eaton’s began with two starkly contrasting policies - cash sales only and a marked price for each merchandise item. And, at a time when buyers beware was in vogue, Eaton’s came out with the unequivocal guarantee goods satisfactory or money refunded. With these and other innovative retailing practices, Eaton’s grew rapidly. By the late 1920s Eaton’s market share of department store sales was about fifty percent and remained at approximately this level into the 1950s. Several developments in the external environment, however, reduced total sales by mainline department stores in general and Eaton’s in particular.

Despite these and other difficulties, one of Eaton’s major competitors, The Hudson’s Bay Company (HBC) had a twenty-year history of growth by acquisition. In a surprise move shortly after the bankruptcy protection application, Eaton’s appointed George Kosich as President and Chief Executive Officer. Kosich was the former President and Chief Executive Officer of HBC credited with saving the company from financial disaster during the 1980s and increasing sales by about fifty percent during his tenure as President. He now faced the daunting task of bringing Eaton’s back to profitability. HBC, however, moved to make that task even more challenging with the acquisition of K Mart Canada in 1998.

__________________
Contact person: Hal Schroeder, University of Lethbridge, Lethbridge, Alberta, Canada T1K3M4
Voice: (403) 329-2631; Fax: (403) 329-2038; E-mail: Schroeder@uleth.ca

**************************************************************************************************************************

The purpose of this case is to show how a small and highly international company develops from being reactive (cutting down prices in times of growing competition) to proactive and to see itself as a problem solver for its end-users. The case is placed in a major crisis for the company and the students should be able to analyse the strategy followed by the company and the management’s reaction to the crisis. The alternatives in the strategic objectives ca be discussed and evaluated by the students leading to the formulation of a new strategy and to an analyse of its implications internal and in the environment.

The teaching note was written for graduate courses in Strategic Management/Marketing and especially in courses with an internationalization perspective. The theoretical link is to strategy formulation and to how a company can use its core competence to develop and implement a new strategy.
 

The Danish firm Fishery Industry (the case is disguised so the name of the company and the persons is fictional) was in 1992 a small machine producing company exporting more than 80% of its total sale. In the beginning of the 1990’s the company saw its sale going down and there was a lack of technological development in the company. At the time of the case - in the beginning of 1992 - some decisions had to made. The two owners CEO Jensen and the sales director Petersen were overnight going through all the problems, writing them down, and in the morning they had to try to find a solution.

We are following their process of analysing and discussing and the case has a lot of background information about the company and its environment: The market is turbulent, there is a demand for new technology and the company needs an organisational restructuring and a lot of minor changes in their strategy.

In the epilogue the case gives the opportunity to compare the students recommendations with the changes that actually were made in the company.

________________________
Contact Person: Erik S. Rasmussen, Odense University, Department of Marketing
Mail: Campusvej 55, DK5230 Odense M, Denmark
Voice: +45 6615 8600; FAX: +45 6615 5129; E-mail: era@busieco.ou.dk

**************************************************************************************************************************
 
 

The key objective of the case is to have students realize that Southwest’s advantage over other airlines was rooted in a combination of four elements: 1) low cost structure, 2) limited growth strategy, 3) distinctive corporate culture, and 4) innovative human resource practices. Another objective is to assess the roll played by Herb Kelleher, the airline founder and present CEO, in leading the company, and to speculate on the future of Southwest without Kelleher. A third objective is to have students evaluate Southwest’s recent expansion into larger and larger geographical markets. Is Southwest abandoning its limited growth strategy?

This is a rather broad case that is suitable for teaching Strategic Management or Business Policy at the undergraduate or graduate level. It is appropriate to place the case at the beginning of the course since it is not too complex. Because of its emphasis on human resources, marketing, and advertising, the case could also be used in human resources, marketing and advertising classes.
 

The case shows how Southwest Airlines took advantage of the airline deregulation act to become the Seventh largest domestic carrier, and how Southwest initiated the low cost airline service revolution which, in turn, transformed air transportation into a highly competitive business. It identifies Southwest’s focus on profitability rather than market share as both a survival strategy during the early years of deregulation, and a winning strategy during the 1990s. It points out that Southwest rejected conventional strategic planning and developed instead a set of tactical plans designed to meet a variety of alternatives. Using statistics published by the Department of Transportation, the case makes it plain that the key to Southwest’s profitability was its relative cost advantage over other carriers. But cost advantage was sustained by an elaborate corporate culture--the next topic discussed in the case. Southwest’s corporate culture shaped, in turn, its human resource management effecting recruitment, training, promotion, profit sharing, compensation, benefits, and labor relations. (Southwest is a unionized carrier). Finally, all through the case and in a special section at the end, the leadership style of Southwest CEO Herb Kelleher is explored and described.

________________
Contact Person: Isaac Cohen, San Jose State University.
Mail: Dept. of Organization and Management, COB, One Washington Sq., San Jose, CA 95192
Voice (408) 924- 3567; FAX (408) 925-3555; E-Mail : cohen_i@cob.sjsu.edu

************************************************************************************************************************
 

This case is intended to serve as an introduction to the dynamic nature of corporate strategy. It demonstrates that companies must constantly reassess their strategic direction in light of ever changing internal and environmental concerns. This case provides the student with an opportunity to utilize basic concepts and analysis tools to assess a company's current strategy. Special focus is given to the numerous ways a change in strategic direction permeates throughout a company's functional areas. Additionally, it reveals the potentially transitory nature of market dominance in a hyper-competitive, technology-intensive industry.

The teaching note was written for undergraduate and introductory graduate courses in Policy and Strategy. It is intended to be beneficial during the early to middle stages of the course by introducing fundamental strategic analysis tools and demonstrating how a strategy must be effectively deployed to prevent it from becoming empty rhetoric. The case may also be useful in supplementing courses in Technology Management, Marketing, and Operations Management.

For a company that seemed to have experienced easy and unencumbered success, the first quarter of 1998 drew to a turbulent close for Iomega, the Roy, Utah-based maker of personal computer storage devices. Kim Edwards, Iomega’s CEO, submitted his resignation shortly before the company surprised shareholders by posting a first quarter loss of $18.6 million. Under Edwards' stewardship, Iomega had experienced a Phoenix-like resurgence during the previous three-year period as it moved from being a technology focused niche producer to a market-driven consumer products company. During that period, revenue grew from a modest $141 million in 1994 to a Fortune 1000 qualifying $1.73 billion in 1997.

James Sierk, the newly appointed interim CEO, was then faced with managing the company through another fundamental strategic change. In order to position its flagship ZIP drive as the eventual successor to the rapidly aging floppy drive, Iomega had to develop the OEM sales channel while maintaining its enviable position in the consumer after-market. James is faced with having to mold the structure and objectives of the various functional areas to support the new strategy and increased scale of business activity.

_______________________
Contact Person: Steve Gustafson, Daniels College of Business, University of Denver
Mail: 974 Richmond Dr. #3, Fort Collins, CO 80526 USA
Voice (970)-229-9803 Fax (970)-226-9556 E-mail: sgustafs@aol.com

*************************************************************************************************************************
 

1. Strategy Description and Evaluation– Students should be able to describe the broad strategic thrusts of the industry competitors and ask and answer skeptical questions about Kellogg strategy and its likely effectiveness. They have to focus on the fundamentals in a sea of data. Another focus in this arena is competitive strategy formulation. Can Kellogg return to past performance levels?
2. Evaluation of Management Performance - Through financial and concept analyses students can evaluate the performance of Kellogg management.
7. Social Responsibility and Government Relations Awareness – Numerous issues are discussed relating to ethics and relations with government.

"Kellogg and the Ready-to-eat Cereal Industry" is a comprehensive business case. It describes some of the history and recent business situation and prospects of the dominant competitor in an oligopoly. Kellogg has lost market share in the domestic market while maintaining a stronger dominance in foreign markets. The industry is global with a North American home market.

The competitive landscape is sketched through summary sections on each of Kellogg’s competitors, a section focused on the industry as a whole, and an in depth section focused on Kellogg in its competitive arena. Common financials are provided for Quaker, General Foods, General Mills, and Ralcorp and some of their history, strategy and tactics are described. Industry issues such as reacting to the growing market power of store label products, avoiding or winning any repeat of an industry price war that occurred in 1996-97, improving internal cost structures, and managing relations with a watchful federal government are detailed.

The lion’s share of the case details Kellogg’s business situation and prospects. Information is presented which focuses on the company’s research and development and its new products and product line extensions, its marketing and advertising, its international operations, and its broad financial strategies. Copious quantitative results are displayed. The case also includes a discussion of the Kellogg mission and management philosophy.
 

____________________
Contact Person: Dr. Joseph A. Schenk, University of Dayton
300 College Park Dayton, Ohio 45469-2235

******************************************************************************************************************
 
 

This case allows students to understand that one of the largest companies in the world has many problems: a saturated market, many unhappy franchisees, an outdated product (menu), and no long-term strategy except more growth. A second teaching objective is for students to understand agency abuse on the part of top management. Finally, students can analyze the lack of domestic growth while relying on a more risky international growth.

This complex case can be used in strategy or international business at the undergraduate or graduate level. It is a comprehensive case, best used in the later part of the course. It may also be useful in marketing or advertising classes.

McDonald’s Corporation is the largest fast food company in the world. It operates over 23,000 restaurants in 110 countries. McDonald’s is one of the best known brand names globally, had $11.4 billion in revenues in 1997 and $1.6 billion in net income. McDonald’s restaurants are highly standardized, both in style and in menu. Yet, in the past, the company has been able to adapt and change to fit varying cultural norms in various countries. McDonald’s has saturated the domestic market and new stores are cannibalizing sales from older stores.

A major focus of the firm is children, with smaller meals and playgrounds in the stores. McDonald’s relies heavily on advertising and special promotions, often giving away unique toys such as Beanie Babies. Dividends have been low, the stock price has remained flat for some time, and many franchisees are unhappy. The menu has remained essentially the same for years, many complain that the food does not taste good, and the health conscious consumer of the 90s is rejecting McDonald’s offerings.

The CEO stated, "We don’t have to change. We have the most successful brand in the world." Yet, the firm began a cost-cutting effort and the CEO acknowledged at the 1998 Annual Stockholders meeting that the performance of the firm was "disappointing." Should the firm consider diversification into other products? Should the firm try to please younger adults who want a tastier, healthier product? Should the firm slow down on international expansion? Marketing experts wonder how long the extensive and expensive sales promotions can continue.

___________________________
Contact Person: Jan Zahrly, University of North Dakota, Grand Forks, ND 58201
Voice: 701/777-4697 FAX: 701/777-4092 E-mail: zahrly@badlands.nodak.edu
 

***********************************************************************************************************************
 
 

This case can be interpreted in several ways. The simplest is as a historical account of one of the greatest military disasters of all time. However, a closer examination of the actions taken by Napoleon can prove useful to students of modern business practices. While such factors as poor planning, bad weather, insightful leadership on the opposing side and just plain bad luck are often cited as explanations for the disaster, many historical accounts mention Napoleon’s hubris as a prime reason for the debacle. Just as Napoleon’s hubris led to poor decisions, more than a few modern business leaders engage in behaviors such as takeovers and corporate expansion programs that ultimately prove to be detrimental to their respective companies. These actions can sometimes implicitly suggest the firm's management believes that "the world, and the major forces in it including financial markets, government regulators, and competitors, are wrong, I am right, and do not have to play by the same rules as others." Unfortunately, corporate hubris is punished just as severely as the kind exhibited by Napoleon.

This case is intended for use in undergraduate level strategic management courses and possibly military history courses. It also may be appropriate for graduate management courses and graduate organizational behavior courses.
 

From June to December 1812, Napoleon Bonaparte engaged in a campaign to invade Russia and force its ruler, Czar Alexander I, to sign a peace treaty. The invasion was a complete disaster for Napoleon's forces, which lost over 500,000 men. The case presents a summary of the events leading up to the invasion, significant events which occurred during the invasion and subsequent retreat, and a brief review of the invasion’s consequences for both Napoleon and Europe as a whole. Though thoroughly grounded in the historical record, the case is presented from a managerial perspective.

_____________________________
Contact Person: Mark Kroll, School of Business, The University of Texas at Tyler,
3900 University Blvd., Tyler, TX 75799
Phone: 903-566-7417, Fax: 903-566-7372, e-mail: mkroll@mail.uttyl.edu

*************************************************************************************************************
 

Nucor Corp. and the U.S. Steel Industry is intended to be used as an integrative case to bring together all of the concepts and analytical tools commonly presented in undergraduate and MBA strategy courses. The case allows for analysis of both industry and firm factors within one case. The case presents an interesting contrast: the mature U.S. steel industry and high-growth Nucor Corp. and illustrates how Nucor is able to successfully integrate three critical organizational aspects (technological innovation, continuous process refinement, and strong corporate culture) to achieve dramatic success.
 

The steel industry is a classic example of a market in the late stages of maturity. Prospering through the 1960s, shifting market dynamics led to dramatic industry-wide declines in growth and profitability. The industry’s decline was so dramatic that it was seen by many as symptomatic of larger failure in the U.S. economic system. In the 1970’s, an innovative force appeared in the domestic steel industry: minimills. Unlike integrated steel mills, which rely on integrated coke and ore production; minimills used a new technology and required a capital investment of 5 to 10% of that required for an integrated mill. Minimill’s quickly stole most of the commodity steel market away from integrated producers

Nucor Corp.’s first pour of steel was inauspicious at best -- malfunctions caused molten steel to escape into the plant, causing employees and VIP’s alike to flee. Despite this ominous start, Nucor Corp. has become a benchmark for both the U.S. steel industry and U.S. industry in general. Nucor is one of the fastest growing and most efficient steel producers in the world. Despite declining demand for steel, Nucor has achieved phenomenal growth, from pouring its first batch of steel in the 1960’s, the company has become one of the top five producers of steel in the U.S. Nucor has repeatedly achieved technological feats other steel producers thought impossible. Their hourly pay is among the lowest in the industry, yet they have the highest productivity per worker of any steel producer in the U.S. and near zero employee turnover. How has Nucor achieved such phenomenal success? Can it continue to do so?

____________________
Contact Person: Steve Gove, Arizona State University, Tempe, AZ 85287-4006
Mail: Department of Management, PO Box 874006, Tempe, AZ 85287-4006
Voice: (602) 965-3431 FAX: (602) 965-8314 E-mail: Steve.Gove@asu.edu

***********************************************************************************************************************

Rayovac Corporation produces disposable and rechargeable household-use batteries, hearing aid batteries, and battery-operated products like lanterns and flashlights. The case presents information on the company's history, products, internal environment, and external environment. The company's business strategy is then presented for evaluation. Rayovac faces stiff competition from Duracell and Energizer brand batteries and must determine how to compete effectively in the twenty-first century. Students are expected to analyze the growth strategy as well as specific distribution and promotion plans.
 

____________________
Contact Person: Dr. Jeff W. Totten, University of Wisconsin Oshkosh, Oshkosh, WI 54901
Phone: (920) 233-0489; Email: totten@vbe.com

******************************************************************************************************
 
 

Replacements, LTD. presents the fascinating story of Bob Page, an entrepreneur who turned a hobby into a business. In 1981, Bob quit his job as a state auditor to pursue full time his hobby of buying used china to help people replace broken pieces from discontinued patterns. Bob had revenues of $53,000 the previous year from his hobby. By late 1997, Replacements had grown to about 500 employees and had sales approaching $60 million. Bob is proud of his success and notes that he has accomplished it without business plans or strategies, budgets, and most of the things business schools prescribe. The case allows students to study the development of a unique business, to analyze opportunities and threats the business faces, and to develop recommendations. It also allows students to deal with issues ranging from the appropriate role for the entrepreneurial manager to the value of diversity in the workplace.

The authors designed the case as an integrative case to be taught across the typical business curriculum. It includes sections on marketing, finance, operations management and information systems, human resources and organization behavior, and corporate strategy. Instructors can teach the sections individually or in combination, or they can teach the entire case. The case is appropriate for advanced undergraduate, graduate, and executive education courses in the functional areas listed or in strategic planning courses at both the firm or functional area levels. It is also appropriate for entrepreneurship courses. Because of the integrative nature of the case, students can see and appreciate the impact of decisions in one functional area on the operations in other functional areas.

Replacements, located in Greensboro, North Carolina, buys and sells china, crystal and glassware, flatware, and collectibles. The company finds and inventories pieces from discontinued patterns so that customers can replace lost or broken pieces or complete incomplete sets. Since its founding in 1981, it has grown at a compound annual growth rate of over 50 percent. The company serves customers from around the world and has become by far the largest such company in the world.

Bob Page attributes his success to a single-minded focus on making customers happy. Although Bob has achieved this success without formal planning, the case raises the question of whether it is now time for him to consider more formal functional and corporate level planning.
 

*********************************************************************************************************************
 

Case Objectives and Use

This case series can be used to strengthen students understanding of the challenges and frustrations facing operating managers of entrepreneurial ventures in high technology businesses. The viability of the initial product concept and the appropriateness and impact of the strategic assumptions made by the founders are major considerations. Students need to consider precisely what it is that companies do to add value for customers, and specifically what it is that SSC does that adds value for its customers. How is the value-added proposition communicated and sustained over time? What are the key lessons to be derived from SSC's near collapse in 1989? What lessons can be gained from an understanding of John Celms actions to salvage the company? Are those lessons transferable to other situations?

Seattle Silicon is best used in an MBA course in technology management or business strategy, or an equivalent, upper division undergraduate course. It should probably be used later in the course, after students have dealt with less complex situations in more easily understood industrial contexts, and after a foundation in strategic management concepts has been developed.

Case Synopsis

The Seattle Silicon case series describes the challenges faced by managers of smaller firms in the semiconductor and silicon compiler markets. The (A) case reveals that Seattle Silicon Corporation had attracted significant venture capital backing and had what appeared to be a superior entry product in the technologically sophisticated, niche market for silicon compilers. Nonetheless, after seven years of operation, the company accumulated an operating deficit of over $20 million. John Celms, recently appointed CFO, is faced with a series of decisions that will determine the future of the company, if indeed it has a future at all. Should a turnaround be attempted? If so, how, and is John Celms the right person for the job?

The (B) case describes SSC's decision to spin off the software portion of the business, and Celms efforts to salvage the silicon design segment of the business. Despite concerted attempts to achieve financial stability, losses continue to mount; only 1992 is profitable, with an after tax profit of $600,000 on $3.8 million in sales. A positive bottom line in 1991 is achieved only because of a $5.1 million gain on the discontinuance and sale of the design tool division. The (B) case closes with a description of the company's attempt to enter the wireless market. Financial results at the end of 1997, while improved, highlight the continued precarious status of the company, despite optimism about its long-term strategy in the microcontroller market. The (B) case requires that students evaluate Seattle Silicon’s new strategy.

______________________________
Contact Person: Gerald M. Myers, School of Business, Pacific Lutheran University, Tacoma, WA 98447.
Voice: 253-535-7304 FAX: 253-535-8723 E-mail: myersgm@seanet.com

**********************************************************************************************************************

The case objectives are: 1) Demonstrate the economic impact on a community when a major employer leaves, 2) Describe the socio-economic-political fall-out of a plant closing, 3) Document the direct and indirect personal trauma on individuals when they lose jobs that they have held for many years, 4) High light corporate and community responses to lessen the negative impact of a plant closing.

The case could be used in the following courses: 1) Strategic Management, 2) Organizational Behavior, 3) International Business, and 4) Public Administration. It could be used for upper level graduates, MBA’s, and classes in executive education.
 

After telling employees their jobs were secure Thomson announces that the Bloomington, IN plant would close and all manufacturing would be transferred to Juarez, Mexico. The case centers on events, which occurred between the announcement and the closing some nine months later.

The case traces the plant from its inception in 1940 to 1998. By 1995, this plant had produced over 65 million color televisions. Three years later, they closed their doors. The shock and dismay of many of the employees are documented. The financial loss on the town of Bloomington, IN is covered. What Thomson did to soften the impact on the community and their employees is discussed.
 

____________________
Contact Person: W. Harvey Hegarty, Kelley School of Business
Indiana University, Bloomington, IN 47405
Phone: 812-855-2580; Email: Hegarty@indiana.edu

**********************************************************************************************************************
 

This case provides the reader with detailed information about the U.S. Toy Manufacturing Industry. The case provides a variety of information to the student that gives them a great deal of information to review as they attempt to analyze this increasingly competitive industry.

The teaching note was written for undergraduate courses in Strategic Management using publicly available secondary sources, and is expected to serve as a means of reinforcing material on external situation analysis. The case provides sufficient material to examine both broad and task environmental elements and determine the key success factors in the industry. The material may also be useful as background material for a course in small business management, given the introduction of new products by small, entrepreneurial firms, or for a course in international management, given the increasingly global nature of the toy industry.

The U.S. Toy Manufacturing Industry has undergone some interesting changes over the past decade. This case provides information about several facets of the industry, including key competitors, information about competitive forces (Porter), distribution channels, and globalization. Several factors, in particular, are presented to the reader that loom on the horizon as issues that toy manufacturers must cope with in order to prepare for the coming millennium. Among the issues addressed in this case are consolidations of industry leadership, decreased birth rates in the U.S., increasing overseas production, changing buying patterns, changes in operations, and increased social awareness and regulatory pressures.

The case demonstrates how an industry can quickly evolve in a short ten-year period. The case shows that many firms, such as Coleco, have filed for bankruptcy, while new companies have emerged as powerful adversaries in new industry segments, such as Sony and Nintendo in the video game segment. In addition, the case highlights the emergence of a new industry leader – Mattel, which surpassed Hasbro, currently the number two company in the industry.
 

____________________
Contact Person: Kirk C. Heriot, Ph.D., North Georgia College & State University, Dahlonega, GA 30597
Mail: School of Business and Government, Dunlap Annex, Dahlonega, GA 30597
Voice (706) 867-2723 FAX (706) 867-1688 E-mail: Kcheriot@nugget.ngc.peachnet.edu