Term Paper on "Business Case Studies"

Term Paper 6 pages (1716 words) Sources: 1

[EXCERPT] . . . .

Business Case Studies

Krispy Kreme Doughnuts in 2006

The early 2004 strategy of Krispy Kreme Doughnuts was an expansionist one, focused on opening new stores within both primary and secondary markets in order to increase sales and promote the brand and also to achieve organizational development. Their competitive strategy was based on offering delicious products, opening stores all across the U.S. And creating the Krispy Kreme brand and culture.

The main reason why Krispy Kreme Doughnuts had such a hard time starting with of 2004 was derived from the previous expansion strategy. The incredible boost they encountered up until 2004 gave company officials far too much trust in the corporate capabilities and offered a distorted vision of reality. Extensive but unsupported expansion was the main cause for the financial crisis commenced in May 2004.

The doughnut company had been met with outstanding financial performances prior to 2004. The company's revenues had registered a 200% increase in February 2004, as compared to January 2000. The net income of February 2004 had grown by 858% as compared to the net incomes of January 2000. The most profitable business operation derived from the selling of doughnuts through the company's own stores.

4. One thing went wrong: the company executives were far too thrilled about the positive prospects of Krispy Kreme and implemented unsustainable growth strategies. However, in time they realized their mistakes, but instead of repairing them, they increased their negative outcome by forging and hiding financial statements.

5. Yes, the company executives we

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re definitely employing aggressive accounting tactics to cover up the financial shortages of Krispy Kreme. Not only is this procedure immoral, it is also illegal. Aimed to conceal the truth from company employees, shareholders, business partners and other corporate stakeholders, the cover-up had disastrous effects and could prevent the organization from regaining their initial status.

6. The company's reputation can be seen as both weakness and strength. In this order of ideas, customers would be happy to hear about the revival of one of their all time favourite brands. However, investors would remember the accounting frauds and would have reduced confidence in the company. Another strength derives from the company's commitment to their customers, their learnt lessons and their determination not to repeat the mistakes. Also, the wide variety of products is also a plus. Threats from the environment refer to increased competition and a tendency to renounce sweets in the detriment of healthier and less fattening products.

7. Krispy Kreme still owns most of their retail locations which they could easily use for the selling and promotion of their products. In addition, they have the support of the consumers and the extensive expertise of long time loyal employees. Therefore, yes, they could make a comeback.

8. A comeback is indeed feasible, but it could be difficult to regain the lost trust of investors. The comeback is doable moreover since during the past years the company has managed to put together parts of their business, but the negative impact of the financial scandal of 2004 is still felt.

9. Other than making the comeback, the company should regain the trust of their stockholders and diversify their product palette to include diet products.

10. First of all, the company needs to cut all connections with the employees and managers involved in forging financial statements. Then, they should promote their desire to satisfy customers' needs.

Case 3: Whole Foods Market in 2006

1. Whole Food Market bases their strategy on strong marketing campaigns, which inform the population of the benefits of consuming naturally grown vegetables and basically healthy foods. The company's growth strategy was in the beginnings based on the acquiring of small chains of stores, but during the present, it is based upon the opening of own stores.

2. John Mackey, the chief executive officer at Whole Foods takes pride in the company's ability to adapt to the requirements of the environment, and states that their prior mission is to help the planet and its population lead a better life. They integrated the contemporaneous environmental concerns into the line of business and support a live with reduced waste of natural resources and diminished levels of pollution.

3. My answer to this question will be a subjective one, as I am a stated supporter of organic foods and believe in any organization which promotes these values. The company's motto implies that though our consumption and promotion of naturally grown products, we help ourselves become better and more aware individuals and we would then be able to save our planet.

4. The core values presented in exhibit 3 represent the framework for the activities undergone by Whole Foods Market. However they may only seem like window dressings, I find them to be rather true. For instance, the company mentions from the start their interest in gaining financial interest, but they will do this by presenting the consumers with high quality naturally grown products. Proof of their commitment stands the numerous changes and improvements brought to Whole Foods.

5. From a financial perspective, Whole Foods Market is presented with steady growth over the past years, a trend which is expected to remain ascendant for the years to come as well. The company's sales have increased by 74% by 2005, as compared to the sales of fiscal year 2002.

6. Whole Foods Market's strategy is based on the company's core values and competencies and it is aimed at increasing the value of their products and by this, increasing the company's profits. The major competitive advantage is the increased attention to details they present in regard to the large number of perishable products sold. So far, Whole Foods is the undisputed leader on the organic foods market and its perception of leader represents a definite advantage.

7. The potential acquisition of Wild Oats would be a highly successful business strategy from two different perspectives. First of all, Wild Oat is Whole Foods' main competitor, and a merger with them would reduce the competition pressure. Secondly, given that Wild Oats has generally opened stores in territories far from the Whole Foods stores, a merger would increase the company's market share and would ease the penetration of other regions. The resistance to merger by FTC is entitled by the possibility that joint together, Wild Oats and Whole Foods' could detain monopoly.

8. The online industry has yet to be presented and governed by with sufficient and clear laws; therefore, the legitimacy of the messages posted by John Mackey is disputable. Little can be done.

9. In order to sustain growth and financial performance, John Mackey could develop and implement a strong marketing campaign, focused on the benefits of naturally grown products for both population and planet. In addition, he could try to enter new markets and reduce costs in order to reduce the retail price and approach those individuals who do not purchase organic products due to their high prices.

Case 4: Procter & Gamble's Acquisition of Gillette

1. Procter and Gamble's corporate strategy revolves around repeated acquisitions of national and international brands which add value to the company. Most of their products are related and belong to the cosmetics and hygiene segment, but there are also other types of products sold by P&G, such as foods. From a general stand point, Gillette's business is related to the P&G's, as most of their products are designed for personal care.

The merger between P&G and Gillette is expected to retrieve a 1+1=3 value. This value is expected to be achieved through increasing the product palette by adding to it five international billion dollar brands, by increasing the number of sales due to the penetration of new markets and the reduction of costs.

2. Procter & Gamble activates in a highly attractive industry moreover when they commercialize general products, required in the everyday life. Its competitive strengths are represented by the company's international recognition, the strength of their brand and the high quality of their products; and the company's business units are increasingly strong in their adherent markets.

9-cell industry attractiveness / business strength matrix displaying the business units of Procter and Gamble, as well as Gillette's would reveal the two companies' financial strengths, previous expertise in the industry and increased capability to adapt to the changes and demands of the environment, increased commitment to satisfying customers' needs, international recognition and the strength of their brands.

3. Procter and Gamble possesses sufficient resources to support business growth and development. And the acquisition of Gillette will increase even further their resources and retrieve an even more appropriate resource fit.

While during the period 2000-2005, Procter and Gamble has registered significant growths, Gillette has also increased their profits, but a slower rate. Both companies have followed a constantly ascendant trend, but at different growth rates. P&G's net sales for 2005 had registered a 42% increase as compared to the company's net sales of 2000. Gillette's net sales for 2005 were higher with 36% as compared to the sales of 2000. Over the… READ MORE

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Quoted Instructions for "Business Case Studies" Assignment:

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Hi - Below is 3 separate case studies with questions for each from the text Crafting & Executing Strategy (The Quest for Competitive Advantage) 15th Ed Thompson/Strickland/Gamble. I can fax the actual case studies (each 15-25 pgs) if that is easier.

Week 4 - Case 2

This week's case is the Krispy Kreme Doughnut Co. As you may recall, this firm had a wonderful ride up the charts but quickly collapsed. This case brings it up to date. You may use the Case Tutor tools to assist in preparing your reponses to the following questions.

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1. What were the chief elements of Krispy Kreme's strategy as of early 2004? Which one of the five generic competitive strategies best characterize Krispy Kreme's strategy? Does Krispy Kreme's strategy have a vertical integration component?

2. Do you see any strategy-related reason to believe that the company was headed for big trouble in mid- 2004 or was what happened to the company in 2004 a "legitimate" surprise?

3. What is your assessment of Krispy Kreme's financial performance prior to 2004? What was the most profitable part of Krispy Kreme's business as of the end of fiscal 2004? Please use the financial ratio summary in Table 4.1 of Chapter 4 as a guide in doing the calculations to support your financial assessment.

4. What is your diagnosis of what went wrong at Krispy Kreme in 2004 to produce the sudden downturn in the company's financial performance? What factors caused the company to crash so quickly when its future and growth prospects seemed so bright?

5. Do you think top management was employing "aggressive" accounting tactics to try to cover up disappointing earnings problems and keep the stock price pumped up? Do you see anything unethical going on here? Why or why not? What evidence supports your views?

6. The firm has struggled for several years. What does a SWOT analysis reveal about Krispy Kreme's overall situation as the company heads into 2008?

7. What is your assessment of Krispy Kreme's competitive strengths and weaknesses in comparison with key rivals as of 2007? Does the company possess the competitive strength to mount a comeback? Please use the methodology in Table 4.5 of Chapter 4 in arriving at your answer.

8. On the basis of your competitive strength assessment above, what do you think of Krispy Kreme's turnaround prospects? Just how good are they? Is a comeback feasible? What evidence supports your answer?

9. What major issues besides how to make a comeback do you think that Krispy Kreme management needs to address?

10. What recommendations would you make to Krispy Kreme management to return Krispy Kreme to profitability by the end of 2008?

Week 6 - Case 3

This week's case is Whole Foods (Page C-2). You may want to use Case Tutor tools to aid you through the case analysis process. Read the guidelines in the Guide to Case Analysis (see Course Documents) for additional guidance.

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1. What are the chief elements of the strategy that Whole Foods Market is pursuing?

2. Is the strategy well matched to recent developments and conditions in the natural and organic foods segment of the food retailing industry?

3. Do you think John Mackey has a good strategic vision for Whole Foods? Why or why not? What do you like/dislike about the company's motto "Whole Foods, Whole People, Whole Planet?" Do the motto and the principles underlying it (Exhibit 1) really matter at this company or are they just nice words and cosmetic window dressing? Explain.

4. Do Whole Foods Market's core values as presented in case Exhibit 3 really matter? Are they "real" or just cosmetic window dressing? What evidence can you cite to support your answer? Have Whole Foods' core values contributed to the company's success? Why or why not?

5. How well is Whole Foods Market performing from a financial perspective? Do some number-crunching using the data in case Exhibits 9 and 10 to support your answer. Use the financial ratios presented in Table 1 of Chapter 4 (pages 98-99) as a basis for doing your calculations.

6. How well is Whole Foods Market performing from a strategic perspective? Does Whole Foods enjoy a competitive advantage over its 3 chief rivals: Wild Oats, Fresh Market and Trader Joe's? Does the company have a winning strategy?

7. Is the proposed acquisition of Wild Oats as positive move? Explain your position. Is the FTC case against this acquisition warranted? Explain your position.

8. John Mackey is been posting anonymous comments about Whole Foods on the internet. Is this legal? Is it ethical? What should be done, if anything?

9. With the negative press and the FTC hold on the Wild Oats acquisiton, what recommendations would you make to John Mackey regarding the actions that Whole Foods' management needs to take to sustain the company's growth and financial performance?

Week 8 - Case 4

This week's assignment is the Proctor & Gamble Case (Page C-392). You may use the Case Tutor tools to support your analysis and responses to the questions on this case. After completing your case, go to the Discussion Forum and address the topics surrounding this case.

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1. What is Procter & Gamble's corporate strategy? Do the company's businesses seem to be related or unrelated? Are Gillette's businesses closely related to P&G's businesses? How will a merger with Gillette provide a 1 + 1 = 3 effect for P&G?

2. What is your evaluation of Procter & Gamble's business lineup? How attractive are the industries it competes in? What is the competitive strength of each of its business segments? Does Gillette seem to compete in attractive consumer segments? Are its business units strong in their respective markets? What does a 9-cell industry attractiveness/business strength matrix displaying P&G and Gillette's business units look like?

3. Does Procter & Gamble's business line-up exhibit good resource fit? How do Gillette's profit margins compare to the profit margins for P&G's businesses for the 2000 - June 2005 time period? Do both companies have similar growth rates and debt structures? How do the free cash flow and free cash flow productivity rates compare for the two companies? Does it seem that the addition of Gillette business units will boost P&G's bottom line?

4. What is your assessment of the $57 billion acquisition price Procter & Gamble paid for Gillette? Does the 20% purchase price premium seem appropriate? Are the sales and EBITDA multiples based on the $57 billion purchase price in line with other mergers in consumer goods industries? Does the 0.975 exchange ratio seem fair to both P&G and Gillette shareholders?

5. What strategic actions should Procter & Gamble executives undertake to ensure the Gillette acquisition ultimately benefits shareholders? What must be done to achieve the expected 1 + 1 = 3 benefit? Should the company pursue additional acquisitions? Should certain business units be eliminated from the business lineup?

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