Practice Cases for Job Interviews

Students often approach us asking for cases that might prepare them for job interviews. Any of the cases in this book can be used for that purpose. However, the cases at the end of each chapter are generally tailored towards that chapter’s content, and so remove a lot of real world complexity. In an interview situation, participants are likely to receive less well-defined cases that test their ability to (1) detect the strategic issue(s), (2) analyse the issue(s), (3) come up with a workable, practical way forwards and perhaps (4) think of ways to reconceive the original problem.

The following cases recognise that strategy problems rarely fit neatly into one or even two analytical categories. Part of the skill of the strategist is being able to discern relevant tools, techniques and concepts from different strategy categories with which to makes sense of complex problems and, critically, to understand how these may interact in order to provide a holistic solution(s). The following integrative cases are designed to test readers’ ability to discern different strategic issues within a single case and to attempt to find ways in which multiple analytical techniques may be integrated in order to provide well rounded strategic solutions.

Turkish Delight: Into Africa?

During September, the CEO and owner of Turkish Delight, a small travel company based in West London, visited a leading business school in order to get help with the company’s strategy. As an entrepreneur, he has a strong sense of opportunities in the travel industry and he is also a self-confessed “techie” who loves nothing more than to be fiddling around with the technology of his business. The company, Turkish Delight, which he founded five years earlier, resulted from his belief that Turkey would be the next “big thing” in travel destinations for UK customers, but his employer at the time was not interested in pursuing this idea. Since then there has been a strong and growing interest in Turkey as a holiday destination.

Turkish Delight Ltd offers holidays to the secluded highlands of Turkey. Set in pine forests with a mild climate, customers are housed in discrete villas with service available 24/7. The customers are a mix of Yuppies (young upwardly mobile professional persons), Dinkies (double income no kids) from the City of London and over-50s from around Manchester in the north of England who now have more disposable income as their children have left home and finished further education. The business is very well regarded among travel operators and has one of the highest levels of repeat custom in the industry. Its particular strength is customer service with customers being met at departing and arriving airports and personally escorted to their accommodation. Turkish nationals studying in the UK are recruited to look after customers in Turkey as they are fluent in English and have a deep understanding of Turkish culture and customers. They are retained for two seasons only and are not part of the permanent employee base of 20.

Twelve months ago, the CEO became aware that another London-based travel business was failing due to poor management and over-investment in cutting-edge technology. In liquidation, he was able to procure the technology for very little cost so Turkish Delight can now book customers directly onto specific short and medium haul aircraft having purchased their holiday. This gives customers peace of mind about where they will sit without having to be at the airport many hours in advance and still risk an uncertain outcome. He now realises this side of the business is scalable and can be offered to other travel providers as well. He has begun to do this in order to increase volume rapidly as margins are very low. He also realises that he can book aircraft seats and indeed entire aircraft in advance of anticipated seasonal demand.

The finances of Turkish Delight are quite robust. The company has around £5m cash in the bank with negligible debt and his offices are on a long-term lease at attractive rents. For the last financial year ended March 1989, sales were £19m and earnings after tax were £0.4m, which is rather low in relation to other travel companies.

As he stands in the lobby of the business school he is understandably nervous. He has a gut feel that South Africa is the next place to be but he is well aware that now, in 1991, apartheid is a serious issue and no one knows how things will turn out. At the moment, businesses are withdrawing from South Africa and those which remain, such as Barclays Bank, are receiving a great deal of negative publicity and some bank premises have been vandalised. However, he has already visited South Africa to see the situation for himself and has been very impressed. He was shown around a number of excellent, world class hotels which offer accommodation at very competitive rates. The hotels are clearly concerned about the general perception of security and have their own sophisticated forms of secure transport and their facilities are well protected. The main airline has also offered highly competitive airfares for his customers and government officials are clearly going to help with clearing any regulatory hurdles. They have also said that Turkish Delight would only be liable for very low levels of tax for the first two years of operations. The CEO has also carried out a survey of his customers flying to Turkey last month asking whether they would be interested in travelling with his firm to South Africa and 88% said they would. Nevertheless, he feels that, with the growth in his business and the uncertainty around South Africa, he should seek your opinion about what his strategy should be.

Natural History New Zealand: Natural Selection?

Natural History New Zealand (NHNZ) has been around for 35 years based at the “end of the earth” in one of the world’s southernmost cities: Dunedin. Michael Stedman has been with the company for 21 of those years and CEO over the past decade.

Extinction was a real possibility just a few years ago. NHNZ was a department of Television New Zealand (TVNZ) and dying a slow death. It was making local programmes about local wildlife – which it had by this point filmed many times over – to a very small local audience (New Zealand’s population is just over 4 million). When the previously state-owned TVNZ was privatised it began to focus more on cost cutting. NHNZ was an obvious target. TVNZ put NHNZ up for sale, and much to their surprise they received 10 offers for NHNZ from all parts of the globe.

In a decision that Stedman attributes to some strange sense of antipodean loyalty, an Australian Company was TVNZ’s preferred buyer. “But it was a company that we could have bought. They were too small. They couldn’t have given us anything that we couldn’t already give ourselves.” Stedman told TVNZ executives that he would leave and take the rest of NHNZ’s staff with him to set up their own company before he’d watch it be sold to the Australian buyer. TVNZ eventually relented and agreed to sell NHNZ to Stedman’s preferred choice: Rupert Murdoch’s Fox Corporation.

By combining its particular expertise with Fox’s global empire of distributors, partners and buyers, NHNZ has quickly become the world’s second-largest nature programming production company behind the BBC’s Natural History Unit, something that Stedman is very proud of. “The reaction from the BBC when they heard that we were ‘going global’ was interesting. First they were amused, then, when we didn’t go under, they though ‘hm’. Then when we started stealing business off them they got annoyed. Now they hate us. We steal a lot of business from them.” Stedman is certain that NHNZ will overtake the BBC within the next couple of years.

More staff have been hired in Dunedin (NHNZ is Dunedin’s largest employer after the local university and local government authorities). The audience for NHNZ’s programmes now spans 130 countries and is measured in millions rather than thousands, and, as it has spread its wings, it has picked up an increasing number of awards. Last year, a series co-produced with Animal Planet, called Twisted Tales (which traces the strange relationships between particular animals and humans), won an Emmy for “Outstanding Achievement in a Craft in News and Documentary Programming” for NHNZ writer-zoologists Ian McGee and Quinn Berentson. The next instalment of the series has been nominated again this year. Berentson claims that the series was “quite easy to write because we both have twisted minds and we both think along the same lines”.

Programmes like Twisted Tales indicate a willingness to broaden NHNZ’s scope beyond films of animals. This means moving, in Stedman’s terms, into a number of “natural extensions”. In the word of NHNZ’s public relations and marketing people: “We don’t just work with wildlife. Our experience extends into genres such as adventure, travel and science, where we venture just as boldly to produce a variety of quality programming … We now bring our traditional pioneering spirit to our work in every continent and throughout the world’s oceans in pursuit of compelling, often unique stories.” Particularly high hopes are held for a series entitled Kill or Cure: The Bizarre and Curious History of Medicine.

Beyond the access to new markets provided by Fox, to what does Stedman attribute NHNZ’s global success?

“Being from New Zealand is our biggest asset,” Stedman explains. “Whenever we entertain potential clients we really play this up – New Zealand wine, New Zealand food … the whole thing.” He reasons that people really like the association with New Zealand. It triggers positive associations for those who have had contact with New Zealand before, and a positive curiosity for those who have not.

NHNZ’s corporate prospectus also highlights the importance of its “Kiwi Heritage”. “NHNZ is founded on a passion for telling the stories of New Zealand’s unique animals”, it explains. Having been one of the first islands to have broken from the earth’s primeval land mass, New Zealand’s animals are certainly curious – a mix of prehistoric lizards and strange birds, many of whom have “evolved” to the point of no longer being able to fly, on account of their not having to share the land with mammalian predators not born before New Zealand was set adrift. While not as vibrant or spectacular, in plumage or deed, as their better-known Australian and Asian cousins, they are just as idiosyncratic.

Stedman believes there is a strong link between the nature of a company and the lay of its land: “this is [partly] why we get on so well with the Japanese – having grown up on a rugged isolated island pocketed with communities. They’re always saying that we’re like them, a bit quiet and introverted, relational, community oriented. They say we have very similar senses of humour.” Japan is NHNZ’s fastest growing market. “Australians on the other hand are much more extrovert, big and bold. It’s a big wide-open land. I think this is why Murdoch gets a bum rap. He’s no worse, probably a lot better than, other media moguls, but he’s out there being up front and telling it straight. So others, particularly the British, label him a brash upstart Aussie … he he he [laughs], the British hate him.”

NHNZ’s corporate symbol and mascot, New Zealand’s indigenous mountain parrot the Kea, also says much about the company’s distinctive spirit. “[Our symbol has] been the Kea for a long time now,” Stedman explains, “but we recently revisited it and decided that we were pretty happy with it. I mean the obvious choice would have been a f . . . ing Kiwi, but who wants to be a fat, dozy, dull, nocturnal, flightless bird.” Examining the nature of the Kea makes it easy to see why NHNZ prefers this association. It is a bird of paradox: “Hooligans, vandals and killers; but superb parents and resourceful providers”, says one source. “Endearing and mischievous”, says another. The New Zealand Department of Conservation’s website’s entry on the Kea runs as follows:

To survive in its harsh alpine environment Kea have become inquisitive and nomadic social birds – characteristics which help the Kea to utilize and find new food sources. It is thought to have developed its own special character during the last ice age by using its unusual powers of curiosity in its search for food. Their inquisitive nature often causes Kea to congregate around novel objects and their strong beaks have enormous manipulative power.

One suspects that Stedman may also take a perverse pleasure in stories of Kea tormenting and often killing that other lumbering New Zealand stereotype – the sheep. “You know, a Swiss scientist has determined that on its level of intelligence the Kea should be classified as a primate”, he says proudly. This “intelligence” enables the development of sophisticated business relationships. “It is all about relationships”, Stedman says, and coming from where NZNH does provides a point of differentiation here as well.

He struggles to put his finger on what it is exactly: “New Zealanders seem to be unusually curious, and it’s a genuine curiosity, but they seem to also be quite sensitive to cultural differences, so they don’t push too hard. At the same time there’s also an inquisitive naivete, but with brains.” (I mention a statistic that Air New Zealand use a lot in their marketing – that New Zealanders on average travel more miles in their lifetime than people from any other nation. “Yes, that makes sense”, he says.) However, what he is trying to say becomes clearer as he relates one story from his past and two from the NHNZ’s present.

One of my early coups came when I happened to be in LA. I went to a just-released movie called Star Wars and thought it was great. I was in my twenties working on a children’s television program for TVNZ and thought it would be great if we could do a feature on it, show a bit of footage, you know. So the next day I rang up the marketing manager of 20th Century Fox and we had a bit of a chat. I asked if he could let me have some stuff. He said “Sure” and asked where I was staying. The next morning, a huge package arrives, full of film, posters, all sorts of paraphernalia. My US friends asked how I’d managed to pull it off, so I told them that I called the guy up and asked. They would never have thought of doing that. I was too stupid to know that I shouldn’t. But the guy didn’t seem to mind. New Zealander’s often don’t feel bound by the “can’ts” and “shouldn’ts” that you find in other places.

It’s important to treat people how they like to be treated, but you have to make an effort to find out what this is. A few weeks ago I sent a fax to a Japanese manager and got nothing back. What do you do? Should I fax him again, should I phone him up directly? I mean, you don’t want to be pushy. Anyway, I managed to get through to talk to his assistant and asked if I should send another fax. He said, “Yes, keep sending faxes, he has a big pile of them on his desk, he likes getting them, sooner or later he’ll come in and your fax will be on the top and he’ll get back to you.” So, I kept sending the faxes and he did, eventually, get back to me.

A lot of selling supposedly happens at these huge trade conventions. But after days of viewing and being sold to, a lot of people glaze over. You can sense this pretty quickly and if somebody’s zombied there’s not much point trying to sell to them. It’s better to sit back and chat about something completely different, you can always send them an e-mail a couple of days later when they’re more relaxed, away from the madness.

All of this seems to give NHNZ a real, albeit intangible, competitive advantage. Stedman relates what he believes to be perhaps the most satisfying thing he has ever been told by a client. “A manager of a Japanese company said ‘you are the least arrogant company that we deal with’. You’ve no idea how much that meant to us.” He contrasts the approach of some his competitors. The BBC? “The BBC seems to still walk about with the remains of a colonial outlook, they think they’re doing everybody a service by coming in to film other countries with the British approach. Plus they have a huge millstone around their neck – David Attenborough. I mean he’s good, but it’s hardly ground-breaking.” (“I’m more of a David Bellamy fan”, he adds, not surprisingly. “I like his passion.”) The Americans? “I was at a convention in Japan last week and this group of managers from one of our competitors decides to go out to dinner, on their own … for Pizza! I mean how stupid is that.”

Universal: Anticipation^*

PA:

“Mr. John Frobisher of Universal on the line for you, Bob. Will you take the call now?”
John Frobisher was CEO of one of the largest branded foods retailers in the USA. Bob’s consultancy in the UK had recently carried out a substantial project for them, investigating a potential acquisition target in Canada.

Bob:

“Yes, that’s great. Put him straight through.”

John:

“Hey Bob, how are you doing?”

Bob:

“I’m doing fine John – how are you?”

John:

“Well, thank you Bob – things are going great. That last presentation you gave to the Board was right on the button. They were very pleased – good clear points, strong conclusion and recommendation; none of this ‘sitting on the fence’ type analysis we’ve had before, which leads me to the reason for the call. You know our branded business has been booming here in the US – demand has been strong and consistent for our high-end products. Now we have sorted out our cost structure, so it’s the lowest among our direct competitors, and are beginning to close in on the non-branded producers, we believe we can sustain our profitability in the US for some time to come. However, we must not be complacent. The Board has been wondering why not replicate this success in the UK. There is likely to be demand for products of our quality and our brand may well transfer across border. They wondered who we could ask to look into this for us, as we don’t have the resources at Head Office for this task, and I mentioned you and your team. You did a great job on the last project and your credibility here is high. Would you be willing to take this on?”

Bob:

“Well John, it’s great you are pleased with our last project. We’d be delighted to investigate this opportunity for you. As you know, contrary to many big name consulting practices, we do not have templates for projects so we’ll have to think over the main issues and get back to you with our thoughts on how we would structure our investigation, the sort of data we would aim to get, and what the deliverables would be.”

John:

“Sure, Bob – no problem. We like your approach. I have some contacts here at Universal who can help on the data front and when you’re ready we can fix up a meeting. Speak soon. Bye.”

Bob smiled as he replaced the phone. The best of all worlds, he thought – a large satisfied customer coming back with more assignments. However, as his firm’s policy was not to have standard solutions to problems, or a bank of questions, since this led to lazy thinking, his team would have to come up with the key questions for this opportunity and work out what data would be needed as well as how that would be acquired. Somehow, they had to decide whether the idea of Universal launching in the UK was sound or fanciful.

Delft Belting: MegaFuture?

You are one of a small team of corporate finance executives in the London-based investment banking division of one of the largest Japanese banks. Your role is buying and selling companies on behalf of the Bank’s clients. Today there is an air of crisis in the department; the Managing Director of the UK and European operation has called a special meeting. The Bank’s largest client, “MegaIndustries”, a massive Japanese corporation, has asked the Bank to act as advisor in the purchase of a Dutch Belting company. This is important news as MegaIndustries doesn’t appear to be using its normal “house bank”. Your bank has been trying to become MegaIndustries’s “house bank” for a long time as this would result in very significant increases in business volume and access to more lucrative projects. The Managing Director is fully aware of the significance of the opportunity.

MegaIndustries is a highly secretive and family-controlled company. It is not listed on any stock exchange but its size and power is beyond dispute – just their cash balance at your bank is equal to 5% of your net assets! It is difficult to give a precise figure for the size of MegaIndustries but its total assets are reported to be some US$335bn! MegaIndustries’ business is very broadly based but has a very substantial automotive components division. Their interests are in rubber, plastic and alloy parts used in the automotive sector, such as air ducting, windscreen wipers, timing belts, tyres, alloy trim etc. This vast company has managed to achieve this position by organic growth in just one country and, apart from a greenfield operation in the US, they have never employed any other methods of corporate expansion. However, times change and they now wish to acquire a belting company in Holland, called The Delft Belting Company. Delft Belting came to their attention when they purchased a small sample of their timing belt product to help them fulfil an order. MegaIndustries was very impressed by the quality of the Delft product.

MegaIndustries has never acquired a company before and have therefore put the matter entirely into your hands. They wish you to handle all aspects of the transaction. The only restriction is that they are very reluctant to pay over £90m for the company.

The Delft Belting Company operates out of one factory building in Southern Holland, near Rotterdam, manufacturing rubber belts, which are for use in cars (fan belts, timing belts) and the mining industry (conveyor belts). It supplies belts to the leading automotive companies in Germany, France and to Fiat in Italy. The Chairman, and 100% owner of the business, is Mr van Meerden, who is 30 years old. He founded the business some seven years earlier with the assistance of Mr Oosterhouse, Director of Sales and Marketing, a 62-year-old war hero, well respected in the local Delft community. The business is reported to be growing steadily at around 20% per year. There are no other Belting businesses in Holland. As the Delft Belting Company is a private company there is very little information available. A search on the internet reveals the following figures:

Your boss knows that van Meerden is already in talks with other possible bidders for his business and time is of the essence. However, he is prepared to talk with you to see if you are a credible bidder. Armed with this information, your boss hands the team air tickets to Rotterdam where you will be met and taken to a neutral venue to meet Mr van Meerden.

In the taxi on the way to Heathrow, further information comes in on your smartphone from your bank in Japan:

MegaIndustries have tried to do this deal before with their house bank. It didn’t have a corporate finance capability in Europe so teamed up with an aggressive Wall Street firm that took one look at the figures and said that “on a PE of 5x, the Delft Belting Company was not worth more than £45m! Mr van Meerden’s hoped for £95m was ludicrous.” The Dutch are a very direct people and, when the house bank presented this valuation to Mr van Meerden he told them to “get lost!” The meeting lasted three minutes!

Rumour has it that a friend of our Bank inside MegaIndustries overheard this story and told MegaIndustries’ Chairman that they hadn’t used a very professional firm. He should know that your bank had recently set up a specialist acquisition department to handle M&A transactions in Europe and strongly recommended your team as expert in these deals. This is how our bank has managed to get the mandate!

In the taxi, the team realise that they need to:

The team also know they need to keep a clear record of key decisions made and issues discussed so that if the deal goes wrong they can defend themselves in court. (The team had all seen the morning papers of the ruin of a corporate finance director due to inadequate records, which resulted in his implication in serious fraud.) How would you address the three points listed above?

Danone Argentina: Once a Maverick …?

One evening in September 2008, Dr Dirk van de Put – Groupe Danone’s General Manager for Fresh Dairy Products (FDP) and Waters in South and North America – turned off the TV. It had been broadcasting the latest news: financial crisis, recession, perfect storms, credit crunches … But the crisis was not only in the news: the first traces that the GFC was affecting his company were already landing on his desk.

Reports from across the Americas were revealing that sales were being affected. The number of people buying Danone products on a monthly basis was declining; and the amount of money spent on those products was also going down. He began to reflect …

In 1919, Isaac Carasso produced the first Danone yogurts after being struck by the number of children in his native Barcelona suffering from intestinal disorders. Carasso used lactic ferments from the Pasteur Institute in Paris. He named his first factory after his son Daniel – Danone in Catalan – and Daniel went on to set up the family business in France in 1929. By the 1990s, through takeovers, partnerships and joint ventures, Groupe Danone had become the third-biggest food group in Europe, symbolised by a little boy gazing at a star.

Since the 1990s, the Group has focused upon promoting healthy products, concentrated on four lines: FDP, Waters, Baby Nutrition and Medical Nutrition. By the end of 2007, a full 100% of sales were generated by food products with a focus on health, up from 39% in 1996. At the same time, the consolidation of the European Union and growth in local competition led to a decline in industry profits, creating an incentive for more serious investment in other regions, initiating an international expansion into Asia, the Americas and Africa. By the end of 2007, Groupe Danone employed more than 76,000 people in 159 production sites with no single country representing more than 14% of the company’s revenues. Its main brands included Danone, Actimel and Danonino (FDP); Evian and Volvic (Waters); Nutricia and Cow&Gate (Baby) and Nutricia and FortiCare (Medical).

The GFC was not the first economic crisis that Dr van de Put had faced with Danone. As Regional Manager for Danone Latin America, he had successfully navigated Argentina’s economic downfall of 2001. And he had learned much from the experience.

As part of Danone’s global expansion, the Argentine market was entered through the acquisition of a controlling stake in Bagley – a local cookies, crackers and sweets producer. It then added other well-positioned and prestigious brands to its Argentine stable: Villa Alpina, Villa del Sur and Villavicencio, in bottled water, and formed a joint venture partnership with local FDP business Mastellone group. In 2001, Danone generated sales for €1,500 million in the Latin American region, and was the market leader in all business lines (FDP, Biscuits and Cereal Snacks, and Bottled Water).

Danone Argentina’s FDP management team, led by van de Put, Patrick Sauvageot – CEO of Danone Argentina – and Gustavo Valle – CFO of the FDP business unit and Treasurer Danone Argentina – analysed the situation of the FDP business. Groupe Danone had set a specific goal for Argentina. In Patrick Sauvageot’s words: “We had a target: it was to improve the company’s profits through an increase in volume and in net sales.”

This went against the conventional wisdom that prevailed at the time. Sauvageot stated: “the company already had a share of more than 50% of the Argentine market, and the country’s per capita consumption of yogurt was of 6kg per year per person, a very high volume by the region’s standards. The feeling was that the company did not have much room to grow, and that the only way to increase profits would be to reduce costs.”

Danone’s team had a different view. Sauvageot explained: “France and Spain had per capita consumption levels that were about five times that of Argentina. In those countries, yogurt was sold in smaller pots than in Argentina (125g against 200g), and the cost per kilogram was 30% lower. We realised that the market’s potential actually depended on us.”

So the team pushed for growth. There was a plant working at 30% of its capacity, so there was no need of further investment. The product range in the FDP business consisted of “middle-of-the road” type products. Applying the European experience regarding price and product size, and using European technology for the new type of packaging, they decided to re-launch “Yogur Entero La Serenisima” with the new name of “Yogurisimo”. This yogurt, sold in smaller pots and at a lower price per unit, was introduced as a premium healthy alternative as it had two varieties of lactic ferments.

But soon, the country’s economic climate started to be a cause of worry. In the third quarter of 2001, key indicators showed the presence of a recession. The country’s currency (the Peso) had been subject to a 1-to-1 peg with the US dollar for about 10 years, but the government was finding it increasingly difficult to sustain that monetary equation. The crisis finally broke at the end of 2001, when consumers’ incomes were severely restricted – first by the corralito¹ and then by the devaluation of the Peso. A dilemma arose: could the management team still push ahead with a growth strategy in an economic crisis? And if so, how?

Van de Put remembered: “Most competitors reacted by applying the ‘traditional recipe’ used in a case of recession and devaluation: they immediately worked on their costs, raising prices to sustain their margins in US dollars. With raw materials becoming much more expensive, they also began to restructure in order to bring fixed costs down.” So his team conceived an innovative strategy: “We knew that, if Danone reacted in the same direction as competitors, it would mean a huge decline in some of our businesses – around 20–30% in volume. We decided to take other measures.”

They initially contacted the supermarkets. “It was essential to show consumers a lower – and stable – price. Promising to decrease our own prices and to invest highly in advertising, we asked them to lower their margins by 5%”, said van de Put. Smaller retailers, such as traditional convenience stores, were also gaining momentum among middle and low-income consumers. Valle added: “Because they received deliveries daily and paid in cash – a more than scarce commodity given the economic conditions – it was a priority for us to serve them as well.”

“At the same time, the company visited its suppliers and asked them to start selling to Danone 5% cheaper than before. In doing so, Danone guaranteed suppliers that once the crisis was over revenues and volumes would increase. In the meantime, suppliers would accept lower margins but they would survive.” Those suppliers with which Danone had no bargaining power were changed, and foreign suppliers (responsible for about 80% of the company’s costs in raw materials, excluding milk) were replaced by local ones. In Sauvageot’s words: “It was essential for the company to develop and protect its suppliers, many of which were broke or had suffered a drop in their activities. Our suppliers were treated as partners in the crisis. It was like war time, there was energy, people did things that would seem impossible at other moments.”

Then the company focused on consumers. Sauvageot stated: “The downsizing of our products would let consumers perceive that they could buy a yogurt pot for less. The crisis seemed to be an ideal moment to put the idea into practice. At the same time, we printed the price on the packs with the intention of making it clear that we were going to maintain it. That would also keep retailers from applying bigger margins and thus sell the products at higher prices.”

Subsequently, foreseeing a general drop in TV advertising, Danone contacted major TV stations in order to make a deal. The company’s access to cash earned them a great advantage as Danone used it to get better conditions when hiring advertising air time. Among its advertising, Danone decided to inform the consumer about its decision not to raise prices, and launched commercials that were linked to the crisis. Van de Put recalled the message conveyed by the ads: “We understand that these are very tough times in Argentina, but La Serenisima won’t let you down. We have decided that we will not increase our prices and we will offer you some products at a cheaper price.”

The need to ride out the crisis was seen to be no reason to delay innovation. Francisco Camacho, who took over Danone Argentina in 2004, stated: “Instead of fighting the storm, the company had to accelerate the innovation process compared to previous years. This was achieved through the re-valorisation of existing products.” Besides the launch of Yogurisimo, Serenito and Casancrem were relaunched and underwent a full renovation that included both the upgrade of the value perception and the downsizing of the pot. The company also introduced innovative products with proven international success, such as Danonino. Actimel, which had been imported from Brazil, began to be produced locally. Aiming at the lower income consumer, Danone started offering the sachet packaging for Yogurisimo: through the small gap that this presentation offered against the price of milk, it allowed the consumers to switch to yogurt. In fact, 55% of new yogurt consumers entered the category through the purchase of sachets. Similar innovative approaches were applied in bottled waters too.

“We believed that the best moment to attack was when everybody else was in trouble: while everybody cut their advertising costs, Danone would get much more visibility in the media. We had never advertised heavily, but we made a conscious decision at that time to become one of the most relevant advertisers in Argentina”, remembered Valle.

Moreover, the company considered it essential to keep up its trading volumes. In van de Put’s words: “I was convinced that this business was measured in terms of volume. If you lose volume you start to get into big trouble. Critical mass is very important because it pays for your fixed costs, it pays for your distribution system, and it is good for the morale of the company.”

The parent company in Paris was understandably nervous. But van de Put promised: “We will maintain the absolute margin in Pesos in year one, in year two it will increase and in year three we will be back to having the same margin in US dollars that we had before the crisis.” Groupe Danone eventually agreed to van de Put’s counter-intuitive strategy of growth and innovation in a crisis.

Success did not come quickly, and van de Put and his team spent a tense few months waiting for positive signs to emerge. It took four to five months for consumers and media to grasp that Danone was doing things differently and only then did the company start to see a growth in volume. Over the next four years, Danone Argentina increased its volume about 20% to 30% each year. And after four years the volume sold doubled the pre-crisis figures. Profits followed a similar path. In 2004, the company had a 69% share in FDP, up from 59% in 2001. And this market, against all odds, had almost doubled its per capita consumption figures. By 2007, Danone’s share had risen to 76%.

… Back at his desk in September 2008, Dr van de Put focused his mind back on the crisis at hand. He looked at the last quarter’s global figures. As with most stocks in most markets, Danone’s stock prices were plummeting.

He now oversaw operations in nine North and South American countries. Responses to the crisis varied: Brazil was continuing to perform well whereas sales volume in Mexico was softening. Danone US witnessed a marked slowdown in the fourth quarter. The bottled water business continued to be strong, particularly in Mexico and Argentina. But the GFC was going to impact on all of the countries that van de Put was responsible for.

Van de Put was confident that his FDP markets still had room to grow, but they were inserted in economies that would soon be shrinking. His experience in Argentina showed him that Danone had been able to ride out adverse conditions through bold action, clever innovations and strategic partnerships. Could he replicate the strategy in bigger – and different – markets? Would customers, suppliers and the media react in the same way? Could he (indeed should he), be a maverick once more?

Grey Boxes^*

With three days to go before Christmas, a file landed on my desk with “most urgent” stamped on the cover. Inside was a memo from the Managing Director saying: “In the light of this bank’s substantial exposure to this client firm, and the request from this client for further financing, we must review, urgently, the bank’s position. A Board meeting has been arranged for Christmas Day to make a decision on this matter. Review all the documentation to date, including the current request, and present your summary recommendations at 10 AM, December 25th, in the Boardroom. Present will be myself, the Chairman and the Heads of Corporate Finance, the Credit Committee, and Risk Finance.” Investment banking was living up to its reputation as 24/7.

The client firm had a reputation as an innovator in electronics and was well regarded in the industry. A number of innovations had been patented successfully and the firm continued to grow rapidly. However, the firm was highly indebted and most of this debt was held by our bank. Understandably, the bank was getting very nervous as the amount of outstanding debt continued to grow and there appeared to be no real sign from the firm that any of its products would really be a stellar performer. And now here they were, asking for a substantial increase in funds of £50m for a completely new product.

Shortly after the file landed on my desk, a grey box the size of a small briefcase arrived. It had a few dials and switches and weighed a ton. Attached was a technical note that was hard to follow, but it was clear that the device was supposed to be portable! How would it be carried? It wouldn’t fit into anything but the largest of bags and it didn’t have its own case. One would certainly be conspicuous carrying it down the street, but for all the wrong reasons.

Christmas Day arrived and my presentation began. The atmosphere was tense, as the Head of the Credit Committee had been supporting this client from the beginning and the Head of Risk felt that the bank was already too exposed. The new product, for which further financing was required, seemed to underwhelm the meeting, especially when it was revealed that it was supposed to be portable and yet was bulky, heavy and ugly! In my presentation, I had to point out that the device was very power hungry and so battery life was extremely limited, and the device only seemed to work effectively in relatively few locations. Indeed, it was more likely not to work at all. “What about using it in a car, as there would be a power source and its weight would be less of an issue?” suggested one Director. I replied that we failed to get it to work in a car, possibly because it was moving, or there was some sort of interference with the engine and other electronics.

Conscious of my career being on the line in front of such a senior audience, I gave a highly detailed and conservative analysis of the client’s financials, and drew widely on industry experts for forecasts and market soundings. Using the bank’s credit assessment techniques as well as a number of other evaluative methods, the figures, at best, were an either-way bet. I had been asked to prepare a presentation for a credit committee, and therefore conservative, point of view. I therefore recommended the bank walk away from any further financing of the client as the numbers really did not support further exposure based on the bank’s own criteria for loans. I also recommended the bank reduce its exposure to the firm by syndicating some of the debt. For the committee, the fate of the client hung in the balance. To refuse financing would imperil the client’s future. There is no doubt that the client would have had a very hard time getting finance from another bank when its own bank had refused it.

The Head of Risk asked: “When should the bank stop lending to a firm that is really not showing results, and just keeps coming up with new products for which there appears to be no demand?” The Head of the Credit Committee responded by remarking that the client had never defaulted on an interest payment and then, to my surprise, said that the numbers were only part of the equation. What he wanted to know was: “What does the client MD think about when he gets up in the morning? What worries him when he is shaving in front of the mirror?” The Managing Director of the bank agreed, saying: “The key to good lending is really understanding the entrepreneur – a great idea in the hands of a poor entrepreneur is a disaster, a mediocre idea in the hands of a great entrepreneur is success.”

There followed a spirited discussion between the Directors around which they largely agreed that the client MD was passionate about his firm and his products and that he would do anything to get his products to work. After a bruising meeting for all concerned, the Board agreed, late on Christmas Day, that they would support the client and finance the launch of its new product – even though the Head of Risk could not see why anyone would want an oversized, pig-ugly, temperamental grey box!

Using The Strategy Pathfinder 3rd Edition for Assessments and Examinations

We have had great success in using our approach to live cases in The Strategy Pathfinder as end-of-term/course assessments and exam questions. Three approaches for doing this are:

Examinations

1. Pathfinder cases make excellent exam material as they are short (which helps to address the problem of reading speed in English for some students) and thought provoking – this is a major difference with many textbooks where cases are generally just illustrations and lack depth. We tend to use a case as Section B in an exam paper.
2. In our experience students may be adept at using terms and concepts from strategy but when challenged are distinctly hazy as to what they mean in precise terms. In order to ensure that students really do understand core concepts in strategy, we have compulsory questions in Section A of an exam paper, which are of two types. The first requires short definitions of key terms together with an example that may be drawn from a case taught during the course. To this end, The Strategy Pathfinder 3rd edition provides a glossary of key terms used in the book. The second set of compulsory questions allows for more discussion around the implications that key theories or concepts have for understanding strategy.

Assessments

We would ask students to select one of the following two options for individual assessment:

1. Students will be asked to select one of the live cases from the book to research further before addressing the case questions. We suggest that they do not use a case that has been covered in the taught course. The advantage of this type of assessment is that the geographic and industrial variety of cases means that there is almost always something with which students identify strongly and this comes through in the effort shown in their assignments.
2. We particularly like students to have the chance to craft their own short live cases as this causes them to (a) think critically about what a strategic issue might look like, (b) consider which strategy framework(s) might be appropriate for analysing the issue and (c) recognise that strategy problems rarely fit neatly into one framework. In our experience, executives on short courses find this an appealing option as it allows them to think about a strategic issue close to their interests/experience. At the undergraduate level this generates a great deal of enthusiasm and stimulates excellent work.

An example of how this second approach can be used in a novel form for assessment is produced below.

Term 1 Assessment (100%)

1. The write-up is 2,000 words maximum. Where scripts exceed the word limit, the surplus text will not be considered in awarding marks.
2. Scripts should be 12-point typeface and one and a half lines spaced.
3. Marks are given for clarity of layout and overall appearance.
4. The front page must contain
   1. (a) a declaration of the number of words in the report
   2. (b) the exam number of the student.
5. The assessment can be handed in at any time to the undergraduate office during the term, but must be handed in before 12 noon, Friday xth January 20xx. Late scripts will be penalised.

The assessment is in two parts: (a) a mini case and (b) a briefing note.

The mini case

1. The mini case should be between 800 and 1,200 words in length. The mini case can be on any strategic problem or issue to tackle/resolve/unpack. Organisations that might be focused upon can include commercial, not-for-profit, private or public firms. Ideally the title of the mini case will be a provocative question that the student intends to support/expose – for instance, “Swimming against the tide” (to depict a company that is being overwhelmed by environmental pressures). At the end of the case, there must be one, two or three questions that could be set for readers of the case.
2. The case should be a real organisational situation (rather than fictitious, although start-up ideas are acceptable). Good sources for ideas are the business press (Financial Times, The Economist, Business Week, Forbes, etc.). Students should not contact companies. In some instances, it is possible to gather primary data (perhaps through observation or survey of fellow students) and secondary data (such as stock prices, etc.). One particularly good assessment last year was a strategic review of the local coffee shop which centred upon student perceptions of its uniqueness.
3. The case can be located in the past (describing and analysing a prior strategic issue, such as why an organisation failed), the present (focusing on a current strategic issue) or future oriented (anticipating future strategic issues that should be planned for).

The key to a good case is setting up a clear strategic issue to be resolved (in the briefing note which follows).

The briefing note

The briefing note can use up the remaining words. It must analyse the case and explain clearly how the material relates to a core concept/technique/tool/theory in strategic management. On balance, it is better to demonstrate how this works for just one or two concepts/theories/techniques, rather than many. The value-added is a detailed appreciation of these underpinning frameworks. A suggested structure is an introductory paragraph diagnosing the problem(s) in the mini case. The note would then focus upon one or two of these strategic issues and show how a technique, concept or framework may give insight to the problem. The examiner needs to accept that the briefing note cannot analyse adequately all issues that may be raised in the mini case, within this format. There should follow a broader appreciation of how the individual case might relate to broader strategic issues.

Examples of such micro-cases can be found in Angwin, D.N. and Cummings, S. (2017) The Strategy Pathfinder, 3rd edition, Wiley. There are many mini cases throughout this book and the first case in each chapter also has a briefing note (these notes are rather broader than you need to write).

Good assessments will be those with a tight fit between case material and briefing, i.e. with little unused case material on an unfocused briefing note. Those answers that are analytical rather than just descriptive fare best, so be careful that the note does not just list case data without any real analysis and interpretation. As befits the nature of the course, marks are given for critical review. Scripts attracting the highest marks will be able to highlight the implications of the focal issue for other firms, show links with theory and locate the insights to the wider strategic management field.

Marking Guidelines

During the strategy course, students are informed that marks are broadly proportioned as follows:

• 30% for the case study
• 50% for the analysis
• 20% for integration between the two sections.

In more detail

Case study

The examiner is looking for a clearly defined strategic problem/issue. This may be more than one issue and recognition of this (should be in the questions they pose) may be rewarded. Marks are for clarity as well as quality of writing: is the case engaging? Does it raise interesting issues? Are these issues really strategic?

Although the assessment suggests that the case should focus on one firm, it is also acceptable for students to choose an issue that involves several firms, an industry-level problem or a sub-unit within the firm.

Analysis

Although students may raise several questions based upon the case, they should only address one or two, owing to space constraints. Clearly there is a trade-off here between depth and breadth. The assessment is looking for the skilful use of techniques, frameworks and concepts from the course, to add value to the case study – that is, to reveal something that could not be gained from just a superficial reading of the text. The examiner is not looking for a description of frameworks (in such a short piece, this is not helpful – unless the description reveals value in some way), but skill in their use. It is really a test of whether the student recognises the strategic issues, understands the frameworks that can be applied to particular problems and can show how well he or she understands the detail.

Integration

This is about the quality of “fit” between the analysis and the case study. Does the data really fit the analysis? Does the analysis really fit the data? Is there a poor overlap between case material and analysis? Is it necessary for the author to introduce new data in the analysis in order to carry it out – an item that should have been included in the case study? Is there material in the case study that really should have been in the analysis? Has the student really chosen the “right” or “best” frameworks for the job? For instance, a number of students will tend to view Porter’s Five Forces as the ultimate all-purpose strategy framework (in the briefing for the assessment, students are strongly advised against using SWOT, as it may be too descriptive in the wrong hands). If another framework they are expected to know has not been used, then this is a poor fit. It is made very clear that students need to spend time working on the fit between analysis and data, and this will require several iterations – using a highlighter pen is a good tip for spotting redundancy of material.

General Comments

• If SWOT has been used, despite advice during the course, then it really has to be used in a very robust way, or be marked down.
• Remember that, due to space constraints, only one or two issues can be tackled, so although a case may raise other issues that cannot really be addressed at this time, the student should show awareness of those issues in the end-of-case questions.

Marking Grid

For some executive courses, a grid is the preferred method for presenting marks. A suggested format is shown here.

Overall mark:

Breakdown and comments:

Sample External Examiner Comments

“I have reviewed the corporate strategy scripts sent to me. I believe that this was a great assignment and the course looks like it was well taught.”

“The assignment was demanding and stretching. The best assignments showed the level of critical thinking that we should expect. I see the marking as consistent and fair, and good feedback has been given to the students. I also note that the full range of marks has been given.”

“What an exciting assignment. Students clearly revelled in the task and the best scripts showed excellent application and understanding. It’s refreshing to see a new approach to strategy assessment which enthuses and encourages students to develop their understanding of strategy concepts and techniques.”

“This was a challenging assignment that offered students the chance to excel (as demonstrated by the high proportion of first-class marks). Some students found the task very stretching but still managed to produce at minimum a very good descriptive case. The assignment was effective at separating out the ‘sheep from the goats’.”