Practise selecting, constructing and applying business tools to case evidence, then interpret their outputs, assumptions and limitations to support strategic recommendations.
At the time, The Imperial was recruiting receptionists. Martin applied and got one of the positions. Five years later, he was promoted to head of reception, and four years after that, though only 30 years old, he was appointed as manager of the entire hotel.
Martin also had a problem of human resources: how to improve his working relationship with Susan Chapman, the Head of Housekeeping.
In November 2013, a particular situation brought these tensions to the surface. One employee in the Housekeeping Department, Guthoni, was frequently calling in sick and did not come to work. Rather than enquiring about the reason, Susan dismissed Guthoni for repeated absenteeism. What Susan did not know is that Guthoni had been diagnosed with a terminal illness and required frequent medical treatment.
Global Properties (GP) owns The Imperial through a private limited company. GP takes a hands-off approach and prefers an on-site manager who generates profits; most profits are paid to GP shareholders in dividends. Martin Kimathi was promoted from receptionist and Head of Reception to manager. Relevant recruitment methods for a new manager could include internal promotion of an experienced hotel employee or external recruitment using applications, interviews and references. The Imperial’s structure can be shown as GP/shareholders at the top, the hotel manager below, heads of departments such as Reception, Catering and Housekeeping below the manager, and supervisors and operational employees below them. Strengths include a famous corporate image, high-quality service, elegant décor, private beach and airport access; weaknesses include limited improvement budgets, old-fashioned facilities, declining bookings and a shrinking market share. Opportunities include rising tourism and new traveller interest in safaris and cultural tourism; threats include political unrest and competition from newer luxurious hotels with better facilities.
Analyse the advantages and disadvantages for G P of using a SWOT analysis.
Trestle Z PLC (TZ ), a specialist coffee roaster, operates in the secondary sector. Its instant coffees are sold worldwide in a very competitive market. Consumers in this market have strong brand loyalty.
Option 1: Take over a specialist coffee business TZ is considering taking over Green Glass (GG) for $600 million. GG owns 1000 cafés in the USA that sell speciality products at high prices. It also has an e-commerce subscription service that sells its coffee beans to consumers. In 2020, GG’s net profits were $120 million. GG has a well-organized distribution channel and strong brand awareness in the USA. TZ would operate the cafés using the GG branding.
Trestle Z PLC (TZ ), a specialist coffee roaster, operates in the secondary sector. Its instant coffees are sold worldwide in a very competitive market. Consumers in this market have strong brand loyalty. Although demand for instant coffee has not grown in many richer countries, it is growing in emerging markets and Eastern Europe. TZ has no control over the price of its raw material (coffee beans), as prices are determined by world markets.
Trestle Z PLC (TZ)
Trestle Z PLC (TZ), a specialist coffee roaster, operates in the secondary sector. Its instant coffees are sold worldwide in a very competitive market. Consumers in this market have strong brand loyalty.
Although demand for instant coffee has not grown in many richer countries, it is growing in emerging markets and Eastern Europe. TZ has no control over the price of its raw material (coffee beans),
as prices are determined by world markets.
The directors of TZ want to increase the company's gross profit margin and net profit margin and grow the business. Table 5 gives selected financial information for the company for 2019 and 2020.
Table 5: Selected financial information for TZ
TZ's directors are considering two options.
Option 1: Take over a specialist coffee business
TZ is considering taking over Green Glass (GG) for million. GG owns 1000 cafés in the USA that sell speciality products at high prices. It also has an e-commerce subscription service that sells its coffee beans to consumers. In 2020, GG's net profits were million. GG has a well-organized distribution channel and strong brand awareness in the USA. TZ would operate the cafés using the GG branding.
Option 2: Launch its own chain of cafés
These cafés would compete against established chains of cafés serving the mass market. Initially, the launch would be in three EU countries but would then, if successful, be launched across the world. TZ would produce a range of freshly ground coffees for sale in the cafés.
Explain, using the Ansoff Matrix, TZ's proposed takeover of GG.
PU is having a challenging year because of recent major developments in the external environment. The university has had to make significant changes to how it operates. Throughout 2020/21 there was an economic recession in the country (Country A), and it may continue for several years. In addition, in September 2021 there was a catastrophic accident at a nearby chemical plant. The impact on the surrounding area was severe. The explosion caused a large amount of damage to nearby buildings, including to student accommodation, lecture theatres and other university buildings. In addition, part of the teaching campus was contaminated by harmful chemicals. Many of the teaching facilities became unusable and will remain so for at least two years as the clean-up operation takes place. Local water supplies have also been contaminated, and the water is still not safe to drink. Fortunately for PU, most of its research facilities are on a separate campus several kilometres away and were not affected by the accident. In September 2021, all on-site teaching stopped for two months while some very limited classroom accommodation was found elsewhere in the city and on a separate campus. For the rest of the academic year, efforts were made to ensure courses continued to be delivered in these temporary classrooms and by providing lectures online. However:
• The university had insufficient IT equipment for the lecturers.
• Many of the lecturers had inadequate IT skills to prepare and deliver high-quality online courses.
• Many lecturers found it very difficult to teach without face-to-face contact.
• Many students lacked the necessary IT equipment or internet connection to attend online lectures.
• Some international students had to return to their home countries, as their accommodation had been damaged.
• Some students demanded compensation because the courses did not meet their expectations.
• Some employees were made redundant.
Some of the research at PU’s teaching campus was suspended until the end of the 2021/2022 academic year. However, the Faculty of Medicine received a large amount of funding from the government to research medicines for reducing the impact on people and animals of exposure to dangerous chemicals, and the Faculty of IT received funding from the founder of one of the world’s largest software companies to research the use of artificial intelligence (AI) in detecting contamination.
Other operating cost savings were made. However, Adriana decided to maintain PU’s aggressive marketing strategies in contrast to most other universities, which were cutting marketing budgets because of the economic recession. Adriana saw marketing expenditure as a worthwhile investment. The promotion emphasized PU’s achievements both in research and teaching, its services for students, its high levels of student satisfaction and its competitive fees.
Failure to achieve some of these articles has recently been alleged in social media and is now appearing in national newspapers:
• A recent appointment as a trustee of the university, Di Jones, is causing controversy. Di is a director of a multinational computer company that is funding some of PU’s IT research. Political activists have discovered that Di is descended from a family that used slaves on their sugar plantation in the 19th century. The activists want her removed from her role.
External STEEPLE influences on PU include the economic recession, the catastrophic chemical-plant accident and contamination, technological change in online teaching and AI, changing student demand and international enrolment, government grants and regulation, ethical and social expectations about inclusion and freedom of speech, and ecological pressure to reduce energy use, waste, pollution and carbon emissions. PU can improve sustainability in 2022/23 by continuing solar electricity, improving energy efficiency, reducing water use and waste, using online or blended teaching carefully, expanding IT equipment and training, reducing unnecessary travel and underused facilities, choosing sustainable suppliers and rebuilding damaged facilities with sustainable design. It should monitor financial, social and ecological results so that sustainability is not limited to the accidental reduction in resource use.
Outline two STEEPLE factors that influence P U 's decisions.
High Plains PLC (HP) High Plains PLC (HP ) owns 600 budget hotels. It operates in a rapidly growing market and has a 60 % market share of the budget hotel market. Recent secondary market research on the hotel industry revealed:
• guests of luxury hotels are brand loyal
• 80 % of guests of budget hotels respond positively to a price reduction
• the budget hotel market is growing rapidly
• detailed statistics and information on all hotel chains.
High Plains PLC (HP)
High Plains PLC (HP) owns 600 budget hotels. It operates in a rapidly growing market and has a 60 % market share of the budget hotel market.
Recent secondary market research on the hotel industry revealed:
- guests of luxury hotels are brand loyal
- 80 % of guests of budget hotels respond positively to a price reduction
- the budget hotel market is growing rapidly
- detailed statistics and information on all hotel chains.
HP's directors aim to increase occupancy rates in HP's hotels from the current 65 % to 80 % by the end of 2024. Each of HP's hotels has 400 rooms. People on business trips account for only 15 % of the hotels' bookings.
HP is considering two options.
Option 1: Price discounts on 100 of the rooms in each of HP's hotels
The discounts would undercut prices charged by its major competitor, Kampfort Inns (KI), by 10 %. HP would also offer a price match guarantee, which means that it would match any lower price charged by KI for any room.
Option 2: Upgrade 100 of the standard rooms in each of HP's hotels
Upgraded rooms, called HP+, would have improved IT facilities, new décor, a coffee machine and a better shower. HP+ rooms would be per night more expensive than standard rooms. Estimated upgrade costs are per room, and the upgrades would take two years to complete. The HP+ rooms are targeted both at the business traveller market segment and at customers willing to pay slightly more for an enhanced hotel experience.
Construct a Boston Consulting Group (BCG) matrix for HP, identifying the correct segments for HP's standard rooms and its HP+ upgraded rooms if Option 2 is chosen.
Las Migas
Carolina plans to set up a bakery, Las Migas, in a small town. Competition from established bakeries is strong. Carolina has asked for a bank loan because her personal savings are insufficient. The bank manager requested the following information:
- a business plan
- a cash flow forecast for the first four months of operations.
Carolina has no experience with financial forecasts but she estimated the figures for Las Migas for the first four months of operations. These figures are shown in Table 1.
Table 1: Estimated figures for Las Migas for the first four months of operations
State two elements, other than a cash flow forecast, of a business plan.
Now she began to think about the next phase of her career and her life. She was approaching her late thirties. In the US, many female musicians and film stars struggle to remain popular in their forties: modelling jobs are harder to get; girls and younger women typically prefer younger musicians and stars; and the idea of selling youthfulness becomes more diffi cult as women grow older. LadyA hired business consultants, Kersey & Joyce (K&J), who specialized in the strategic direction of brands, to help her consider her options. K&J identifi ed three strategic options in their report to LadyA.
Option 3: Re-brand herself. With this strategy, LadyA would actually lower her media profile for three years. During that time, she would associate herself with a charitable cause, to tackle issues such as malnutrition in developing countries, homelessness in big cities, or international trafficking of children. She would use her wealth to set up various non-profit organizations to support the charitable cause, and utilize various techniques for marketing non-profit organizations. She would then appear on American television talk shows and do magazine interviews, building a new brand identity based on the image of a strong, mature, determined and compassionate woman. This would allow for new revenue streams to be sought based on this new brand.
Kersey & Joyce’s Option 3 would lower LadyA’s media profile for three years, associate her with a charitable cause such as malnutrition, homelessness or child trafficking, establish non-profit organizations and build a new brand identity as a strong, mature, determined and compassionate woman. It could create new revenue streams and a socially positive reputation, but it would reduce her visibility and involve costs, uncertainty and the risk that audiences would reject the new identity. Option 1 would move into South American markets, use the name Lady Alejandra, tour and repeat her career through downloads, concerts, films, endorsements, magazine covers and perfume and cosmetics. Option 2 would develop clothing, shoes, handbags and lingerie under the LadyA family brand, distribute through US department stores and use e-commerce internationally.
| Additional information for one LadyA concert | Amount |
|---|---|
| Average price per ticket | $300 |
| Variable cost per ticket | $50 |
| Fixed costs | $2 750 000 |
Additional information for one LadyA concert
Describe one strength and one weakness of K\&J's Option 3.
LadyA has rejected Option 3. Recommend whether LadyA should choose Option 1 or Option 2.
Fru-Yo (FY) produces premium-priced yoghurts. FY has strong brand loyalty and relies only on word-of mouth promotion. FY’s target market is consumers who may have health problems. FY created two new zero-sugar fruit yoghurts. FY did no market research into the new yoghurts but is confident that FY’s brand loyalty will ensure success. The market constantly changes because competitors regularly introduce new healthy yoghurts.
Fru-Yo (FY)
Fru-Yo (FY) produces premium-priced yoghurts. FY has strong brand loyalty and relies only on word-of mouth promotion. FYs target market is consumers who may have health problems.
FY created two new zero-sugar fruit yoghurts. FY did no market research into the new yoghurts but is confident that FYs brand loyalty will ensure success. The market constantly changes because competitors regularly introduce new healthy yoghurts.
Table 2 shows forecasted financial information for the two new zero-sugar fruit yoghurts, Yoghurt A and Yoghurt B.
Table 2: Forecasted financial information for FY's new zero-sugar fruit yoghurts
Using Table 2:
calculate the mean value of Yoghurt A's forecasted returns once on market (years 1-4) (show all your working).