4.19 Questions
Question 1:
Define briefly what a business model is.
Question 2:
Describe briefly a business
model for a retailing firm.
Question 3:
Describe briefly what is meant by business strategy, including
how it can be defined relative to Porter’s concept of a value
chain.
Question 4:
Refer to the following “Item 1” information for Wal-Mart and Best Buy:
Wal-Mart:
ITEM 1.
BUSINESS
General
Wal-Mart Stores, Inc. (“Walmart,”
the “company” or “we”) operates retail stores in various
formats around the world and is committed to saving people
money so they can live better. We earn the trust of our
customers every day by providing a broad assortment of
quality merchandise and services at everyday low prices
(“EDLP”) while fostering a culture that rewards and embraces
mutual respect, integrity and diversity. EDLP is our pricing
philosophy under which we price items at a low price every
day so our customers trust that our prices will not change
under frequent promotional activity. Our fiscal year ends on
January 31 for our U.S., Canada and Puerto Rico operations.
Our fiscal year ends on December 31 for all other
operations. During the fiscal year ended January 31, 2010,
we had net sales of $405.0 billion.
Best Buy:
Item 1. Business
Description of Business
We are committed to growth and
innovation. Our business strategy is to treat customers as
unique individuals, engaging and energizing our employees to
serve customer needs with end-to-end solutions, while
maximizing overall profitability. We believe we offer
consumers meaningful advantages in store environment,
multi-channel shopping, product value, product selection,
and a variety of in-store and in-home services related to
the merchandise we offer, all of which advance our
objectives of enhancing our business model, gaining market
share and improving profitability.
Use Porter’s concept of a Value Chain to describe the two most
important links in Wal-Mart’s Business Strategy and Best Buy’s
Business Strategy.
Give brief reasons in support of your argument, using
information contained in Item 1.
Question 5:
When Business Strategy is
defined relative to Porter’s concept of a value chain, a
distinction is made among strategies that differ with respect
to:
a. The
business performs different activities from rivals or,
b. The
business performs similar activities in different ways
c. The
business chooses not to perform certain activities
Refer to the Wal-Mart and Target
Item 1 from their latest 10-K. Describe precisely the difference
you see in their business strategies using Porter’s framework.
Question 6:
Describe briefly how business
strategy is communicated when using a Balanced Scorecard
approach.
Question 7:
An article titled:
“Coca-Cola agrees to acquire North American bottling operations”
in the
San Antonio Business Journal,
February 25, 2010 stated:
“The Coca-Cola Co. has agreed to buy
Coca-Cola Enterprises Inc.’s entire North American bottling
business — and along with it the company’s bottling plant in
San Antonio.
Atlanta-based Coca-Cola Co. (NYSE: KO) is the
company that manufactures the soda concentrates for its line
of Coke products. Coca-Cola Co. also provides global
marketing support to its brands.
Coca-Cola Enterprises (NYSE: CCE) operates
the bottling and distribution systems for the soda maker.
Officials with the San Antonio plant could
not immediately be reached for comment. The local bottler is
responsible for manufacturing and packaging Coke and Diet
Coke products within the San Antonio service territory. The
bottler is also responsible for marketing those products to
area grocery stores, convenience stores and restaurants.
The company’s plant is located across the
street from the AT&T Center and Freeman Coliseum complex in
East San Antonio.
Under the terms of the agreement, Coca-Cola
will acquire the assets and liabilities of Coca-Cola
Enterprises in a cash-and-debt deal worth $13 billion.
Coca-Cola Enterprises’ North American
operations control 75 percent of the U.S. distribution
market for Coke products and 100 percent of Canada’s
distribution market.
The two companies expect the transaction will
close in the fourth quarter of 2010.
The Coca-Cola Co. says this transaction
should create operational efficiencies of $350 million over
the next four years. The deal should be accretive to
earnings per share on a fully diluted basis by 2012.”
This
announcement makes Coca Cola’s investment decision more similar
to PepsiCo than it was when described in Item 1 of the 2010 10-K
(covering 2009 operations).
Apply the
Balanced Scorecard method for communicating KO’s change in
business strategy.
Real World Exercise on Business Model
and Business Strategy
Select two
companies from the Current FTS Dataset that are competitors, or
at least are in the same industry even if they do not directly
compete with each other.
i.
Identify and describe the
business model for the two stocks you have selected.
Relevant material for this project can be found in
Item 1 of the 10-K, the MD&A section of the 10-K and other
relevant sources.
You should use Porter’s concept of a value chain to describe the
business model for the two stocks.
ii.
Identify and describe the
business strategy for the two stocks you have selected.
You can refer to part i. to describe the business
strategy. You should
explicitly describe how the two strategies differ or why you
think they are the same if you do not view them to be different.
iii.
Suppose you use the balanced scorecard approach to communicate the business strategy to
your clients.
Describe what this approach is and identify three performance
measures that you assess to be most important for evaluating
performance along the different perspectives/dimensions embraced
by a balanced scorecard approach.