List of Case Studies on Strategy - Case Catalogue IV

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36 Restructuring estructuring T TTurnaround T urnaround Strategies Strategies Alliance; AT Kearney and Tower Perrin; Loss-making mega contracts; Incompetent managers and poor decisions; General Motors; Structural problems and cultural clashes; Computer services and s<strong>of</strong>tware; Turnaround specialist divestments and spin<strong>of</strong>fs. Siemens: The Challenges <strong>of</strong> Leadership Change After 12 years at the helm <strong>of</strong> affairs <strong>of</strong> Siemens AG, Heinrich von Pierer, who was considered one <strong>of</strong> Germany’s top managers and was credited with transforming the 157-year-old electronics and electrical engineering conglomerate into a powerful global player, stepped down from the chief executive position in January 2005. In place <strong>of</strong> Heinrich von Pierer, Klaus Kleinfeld, CEO (Chief Executive Officer) <strong>of</strong> Siemens’ US unit, was appointed as the new CEO <strong>of</strong> the company. Though the company was in a good financial state, some <strong>of</strong> its prominent business units like the mobile handset unit and Siemens Transportation Systems were incurring heavy losses. Pedagogical Objectives • To understand the leadership styles <strong>of</strong> Heinrich von Pierer and Klaus Kleinfeld • To discuss as to which approach would be adopted by Kleinfeld, the ‘American’ approach or the consensus-driven German management style in turning around Siemens AG. Industry Not Applicable Reference No. RTS0058 Year <strong>of</strong> Pub. 2005 Teaching Note Not Available Struc.Assig. Not Available keywords Siemens; Klaus Kleinfeld; Heinrich von Pierer; ‘Top’ or ‘time-optimised processes’; 10-point Programme; Siemens under Heinrich von Pierer; Operation 2003; Siemens Management System; USmanagement style; Siemens Transportation Systems; Telecommunications unit; Medical solutions; Leadership change; American leadership style; Challenges <strong>of</strong> leadership change. Sara Lee Corporation: Brenda C Barnes’ Restructuring Strategies Sara Lee is a global manufacturer and marketer <strong>of</strong> high-quality, high-pr<strong>of</strong>ile branded consumer products. But the company had been recording flat growth since the early 1990s. Continuous restructuring to revive its fortunes had failed. In February 2005, its new CEO www.ibscdc.org (Chief Executive Officer) Brenda Barnes announced a major restructuring strategy. Pedagogical Objectives • To highlight the diversification strategies <strong>of</strong> Sara Lee, by shifting consumer preference towards low price and low-calorie foods, and increasing the trend <strong>of</strong> private label brands • To understand the reasons for the failure <strong>of</strong> Sara Lee’s previous restructurings and its future challenges. Industry Food and Apparel Reference No. RTS0057 Year <strong>of</strong> Pub. 2005 Teaching Note Not Available Struc.Assig. Not Available keywords Sara Lee Corporation; Restructuring strategies; Diversification strategies; Brenda C Barnes; Branding strategies; Brand portfolio; Brand extension; Apparel industry; Food and beverage industry; Loss <strong>of</strong> focus on key brands; Huge portfolio <strong>of</strong> brands; Consumer behaviour; Global conglomerate; High-quality branded products; Continuous restructuring programmes. Southwest Airlines: The Changing Cost Structure and Corporate Culture Southwest Airlines, the largest domestic passenger airline with the highest market capitalisation in the US airline industry, has been the only airline in American history to have recorded pr<strong>of</strong>its for 32 consecutive years since its inception in 1971. Southwest relied on a unique business model <strong>of</strong> ‘low cost – no frills – high customer service’ and leveraged its human resources effectively to achieve extraordinary success. Southwest had been in the top ten list <strong>of</strong> FORTUNE’s Most Admired Companies every year since 1998. Southwest had sustained the success and its position even when the whole airline industry plunged into losses after the 9/11 terrorist attacks and also withstood the competition from a horde <strong>of</strong> airlines, which tried to replicate its strategies and business model. But since 2002, Southwest also had been caught up with the general troubles associated with the other airlines – higher cost structure, changing consumer attitude, infrastructure bottlenecks, and changing corporate culture. Pedagogical Objectives • To understand (1) the evolution <strong>of</strong> Southwest as successful airline in America (2) The business model <strong>of</strong> Southwest Airlines (3) the strategic and competitive advantages <strong>of</strong> Southwest Airlines (4) the leadership <strong>of</strong> Herb Kelleher (5) and the employee empowerment <strong>of</strong> Southwest Airlines in achieving success in the highly competitive Airlines industry • To discuss the changing cost structure and corporate culture <strong>of</strong> Southwest Airlines. Industry Airlines Reference No. RTS0056 Year <strong>of</strong> Pub. 2005 Teaching Note Available Struc.Assig. Available keywords Southwest Airlines; Leading low-cost airline; FORTUNE’s most admired companies; ‘Triple Crown’ award; Herb Kelleher; Strategic advantages; Business model; Hub-and-spoke system; Point-topoint airline network; Corporate culture; The Southwest Airlines way; Competitive advantage; Lowest cost structure; LUV airline; Changing employee attitude. NVIDIA: The Graphic Chipmaker’s Turnaround Strategy NVIDIA Corporation (NVIDIA), a global leader in manufacturing graphic processors, failed to deliver its most ambitious graphic processing unit, ‘NV30’, to the market as per schedule in 2002. Besides, NVIDIA’s tussle with Micros<strong>of</strong>t and an accusation against NVIDIA’s employees <strong>of</strong> insider trading added to the company’s woes. From $11 billion in January 2002, NVIDIA’s market value fell to $1 billion by October 2002. However, having learnt from its mistakes and with a focused turnaround plan, NVIDIA was back into its leadership status by early 2005. Pedagogical Objective • To highlight NVDIA’s turnaround strategy to emerge as a leader in the global chip market. Industry Graphics, Video Chips and Boards Reference No. RTS0055 Year <strong>of</strong> Pub. 2005 Teaching Note Not Available Struc.Assig. Not Available keywords NVIDIA; NVIDIA’s GPU (Graphic Processing Unit); NVIDIA’s product cycle; Worldwide graphic chip market; Micros<strong>of</strong>t’s Xbox; NVIDIA’s price dispute with Micros<strong>of</strong>t; NVIDIA’s challenges; NVIDIA’s turnaround plan; Jen-Hsun Huang; NVIDIA’s competitors; NVIDIA’s market share; Insider trading.
Nestle: The Organizational Transformation In nearly 140 years <strong>of</strong> existence, Nestle had grown from a small baby food manufacturing house in Vevey, Switzerland, to the world’s largest food company, operating in 86 countries and with more than 500 factories spread across the globe. Nestle owns some <strong>of</strong> the world's best selling brands in instant c<strong>of</strong>fee (Nescafe), baby food (Cerelac), bottled water (Perrier) and pet care (Friskies). The company's growth strategy through acquisitions resulted in an ‘unwieldy empire’, lower pr<strong>of</strong>it margins and a negative response from stock markets. To accelerate pr<strong>of</strong>its without a slow down in growth, chief executive <strong>of</strong>ficer, Peter Brabeck, initiated a transformation <strong>of</strong> the organisation, which analysts felt was akin to moving a mountain. Pedagogical Objectives • To understand the business model <strong>of</strong> Nestle and the conditions in which its organisational transformation took place • To discuss as to how and whether Nestle could be transformed. Industry Food and Beverages Reference No. RTS0054 Year <strong>of</strong> Pub. 2005 Teaching Note Not Available Struc.Assig. Not Available keywords Nestle; Largest food company; Nescafe; Cerelac; Decentralised operational model; Organisational transformation; Business model; Nestle empire; Mergers and acquisitions; Peter Brabeck; Henri Nestle; Misguided diversification; Food industry consolidation; Centralised management model; Global Business Excellence Resource Planning System (GLOBE) Kraft Foods in Crisis: Roger K Deromedi’s Restructuring Strategies Kraft Foods Inc. is a leading confectionery, food and beverage company. Since 2001, it has been losing out to cheaper store brands, private label brands and competitors, due to consumer preference towards low-priced and low calorie foods. A lack <strong>of</strong> new products, the exit <strong>of</strong> top executives and a failure to supply what retailers wanted were also troubling the company. The parent company, Philip Morris, began pressurising Kraft Foods for a possible spin-<strong>of</strong>f. In January 2004, chief executive <strong>of</strong>ficer Roger K Deromedi announced a restructuring plan aimed at trimming non-core brands, focusing only on blockbuster brands and re-fashioning the product line up. Pedagogical Objectives • To discuss the restructuring activities adopted by Deromedi to make Kraft competitive • To discuss the opportunities and challenges faced by Kraft in the changing food market. Industry Food Reference No. RTS0053 Year <strong>of</strong> Pub. 2006 Teaching Note Not Available Struc.Assig. Not Available keywords Kraft Foods Inc.; Private label brands; Roger K Deromedi; Low price; Low calorie foods; Philip Morris Companies (Altria Group); Restructuring; Nabisco Holdings; Food and beverages business; Competitive advantage; Product innovations; Diversification; Oscar Mayer meat brand; Marketing and promotion strategy; Sustainable growth plan. Deutsche Bank: Ackermann’s Restructuring Formula Josef Ackermann, the chief executive <strong>of</strong> Deutsche Bank, had set a high target <strong>of</strong> a 25% return on equity in 2005 in order to transform his institution into one <strong>of</strong> the best banks in the world. Despite the bank’s failed mergers with Citigroup, Germany’s Postbank and Credit Suisse First Boston and its stock plunging by 6.9% in 2004, Ackermann was confident that the bank would be able to deliver its set targets. Pedagogical Objective • To discuss the restructuring <strong>of</strong> the Deutsche Bank under the leadership <strong>of</strong> Ackermann. Industry Money Centre Banks Reference No. RTS0052 Year <strong>of</strong> Pub. 2005 Teaching Note Not Available Struc.Assig. Not Available keywords Deutsche Bank; Josef Ackermann; German banking industry; Restructuring strategies; Money machine; Investment banking; Universal bank; European banks; Euro effect; Single market programme. Thailand’s Siam Cement Group: The Conglomerate’s Resurgence from the Asian Crisis Siam Cement Group (SCG), Thailand’s largest industrial conglomerate, is the Asian market leader in many diversified businesses. Siam Cement was established by King Rama VI in 1913 and since then it has come a long way in shaping up Thailand's industrial sector. The company was on an expansion bid when the Asian financial crisis hit the region in 1997. Thailand, being one <strong>of</strong> the worst hit countries, saw the devaluation <strong>of</strong> the baht, the Thai currency, and thereby the collapse <strong>of</strong> the economy. To survive the blow, Chumpol NaLamlieng, the President <strong>of</strong> Siam Cement, formulated restructuring strategies. Their implementation helped the company survive and gradually move towards pr<strong>of</strong>its. By 2004, with a stable external economy and growing internal pr<strong>of</strong>its, the company was moving ahead towards achieving Chumpol's vision <strong>of</strong> turning the company into a regional leader and the ASEAN (Association <strong>of</strong> South East Asian Nations) region into a leading industrialised area. Pedagogical Objectives • To understand (1) the evolution <strong>of</strong> SCG (2) the impact <strong>of</strong> the Asian financial crisis on Thai industries • To discuss the competitive strategies adopted by Chumpol NaLamlieng, and his vision for the future <strong>of</strong> the company, Thailand and the ASEAN region. Industry Cement, Paper and Petrochemicals Reference No. RTS0051 Year <strong>of</strong> Pub. 2005 Teaching Note Not Available Struc.Assig. Not Available keywords Siam Cement Group (SCG); The Asian financial crisis; Thailand; Industrial conglomerate; Restructuring strategies; Association <strong>of</strong> South East Asian Nations (ASEAN); Divestment <strong>of</strong> non-core business; Thailand’s ‘industrial powerhouse’; King Rama VI; A white elephant in a hexagon; Kingdom <strong>of</strong> Siam; Crown Property Bureau; Asian market leader; Chumpol NaLamlieng; Devaluation <strong>of</strong> baht. Parker Hannifin Corporation: Donald Washkewicz’s Turnaround Strategies Parker Hannifin Corporation is one <strong>of</strong> the world's leading motion and control technologies and systems manufacturers. It provides precision-engineered solutions to commercial, mobile, industrial and aerospace markets. When the industrial recession set in during 2001, the company was faced with huge amounts <strong>of</strong> excess capacity and high costs. The company’s chief executive <strong>of</strong>ficer, Donald Washkewicz, introduced lean manufacturing throughout the company. This helped it change its operational structure, resulting in decreased overheads, www.ibscdc.org S S T T R R A A T T E E G G Y Y – – I I 37
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List of Case Studies on Strategy - Case Catalogue IV

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