 
|
 |
|
       |
|
WEB
CASE 1: Global
PepsiCo PepsiCo's response to what some analysts saw as doom and gloom was to energetically expand its markets in two ways—in terms of the number and type of products and in terms of where those products would be sold. That is, the firm decided to expand internationally, and to do so in a big way. But achieving that goal has been difficult. Thanks to General Eisenhower's efforts to have Coke available to service personnel worldwide during World War II, Coca?Cola has been able to develop a dominant international position. In 1993, for example, PepsiCo derived only 15 percent of its profits from international sales—9.4 percent from snacks and 5.6 percent from beverages. Coca?Cola, on the other hand, derived 78.7 percent of its profits from international soft drink sales. Such a vast difference—78.7 versus 5.6—poses a formidable obstacle or presents a tremendous opportunity, depending on whether you are a pessimist or an optimist. Pepsi is learning in many different ways as it expands internationally. For example, it learned by doing things wrong in Germany: Pepsi's outside personnel were arrogant and offended retailers, and Pepsi failed to establish brand identity through marketing campaigns. Two large German retailers refused to carry Pepsi products for two years. In Spain, on the other hand, Pepsi learned from doing things right: Pepsi aligned itself with two local companies—Kesa, a bottler, and Kas, an owner of several beverage brands. Kas had an extensive distribution network already in place. Using that network and the local knowledge of taste appeal, Pepsi is introducing new products and gaining market share in Spain. Pepsi is now sold in more than 160 countries around the globe. Its newest soft drink, Pepsi Max, is sold in Europe, the Far East, and Latin America. Pepsi began to use The Pepsi Challenge marketing campaign, which was so successful in the United States in the 1970s, in Mexico in 1994. And, although Coca?Cola won a court judgment to prevent that campaign in Argentina, Pepsi has plans to expand it to Singapore, Malaysia, and Portugal. Pepsi's one strong advantage as it moves to increase its global presence is that it is not just a soft drink or even just a beverage company. It is expanding its snack foods and restaurants internationally at the same time as it expands its beverages. That strategy spreads its risks, increases its distribution channels, heightens its name and brand recognition, and contributes to an investment structure that enables it to continue its expansion. Questions
References: Patricia Sellers, "Pepsi Opens a Second Front," Fortune, August 8, 1994, pp. 70-76; "Will the Pepsi Brass Be Drinking Hemlock?" Business Week, July 25, 1994, p. 31; "Pepsi Dares to Compare-Everywhere," Beverage World, March 1994, p. 18; "We Have a Big Pond to Play In," Forbes, September 13, 1993, pp. 216-224; and Gary Hoover, Alta Campbell, and Patrick J. Spain (Eds.), Hoover's Handbook of American Business 1994 (Austin, Tex: The Reference Press, 1993), pp. 868-869.
WEB
CASE 2 Seagram expanded its liquor line and eventually became a worldwide leader in the whiskey business, a position it still maintains (it is second only to Britain's Grand Metropolitan Plc). Then, during the 1950s and 1960s, alcohol consumption began to decline. Seagram sold its U.S. wineries and moved to other fields. Perhaps its most important move came when it acquired a 19 percent interest in Du Pont. The size of that stake has grown over the years and today accounts for more than half of Seagram's earnings. Then, in 1988, Seagram bought the Florida orange juice company, Tropicana, and immediately invested in improving and expanding its manufacturing and distribution facilities. In 1991 Tropicana took over the number-one position in the U.S. orange juice market from Coca-Cola's Minute Maid. That same year Seagram also undertook a major reorganization. Previously structured geographically, Seagram moved to an organizational structure based on its two major groups-spirits and nonspirits-in recognition of the now-dominant role of nonalcoholic products within the firm. Tropicana's sales have grown by more than 30 percent since being acquired by Seagram. However, both Coca-Cola and Pepsico have moved into this market. Although Tropicana is already number-one in worldwide sales of ready-to-serve orange juice and plans to use that position to gain market share in all fruit juice drinks, Coke and Pepsi are strong competitors, and succeeding against them will require high levels of managerial skills. Tropicana can convert many of its current weaknesses into future opportunities. Until 1990 Tropicana operated in only one foreign market—France—but since then Tropicana has moved into Argentina, Belgium, Canada, Germany, Ireland, Japan, the Philippines, Sweden, Taiwan, and the United Kingdom. As a result, Tropicana's international sales by the late 90s were topping $200 million a year. As recently as early 1994, Tropicana did not produce many single-serving products, which kept it from marketing through vending machines and in-store coolers. Clearly, that weakness represented a strong opportunity. Thus, late in 1994, Tropicana began to introduce vending machines and increase its production of single-serving sizes. In addition, Tropicana, although it had a strong distribution network in grocery stores, had a weak distribution network for convenience stores, delicatessens, and restaurants. Again, that represented an opportunity for strong growth. Integrating the distribution networks of Seagram and Tropicana could have been a first step to take advantage of this opportunity. However, in 1998, Seagram sold Tropicana to Pepsico for $3.3 billion. Questions
References: "Juice Wars," Forbes, April 11, 1994, pp. 58-59; Ken Auletta, "Rising Son," The New Yorker, June 6, 1994, pp. 56-69; Milton Moskowitz, Robert Levering, and Michael Katz, Everybody's Business (New York: Doubleday, 1990), pp. 333-334; "Management: Seagram's Single Market Solution," International Management, June 1, 1993, pp. 60-61; and Leslie Holstrom and Ann Dugan, "The House That Jack Built," Euromoney, August 1, 1990, pp. 20-30; "Eight Decades in Seagram History," accessed October 1999 at http://www.seagram.com
WEB CASE 3: The Sky's the Limit Back in 1975, two high school friends got together and decided to start a business in the embryonic software market. The first commercial microcomputers were just coming to the market, and the two friends had fallen in love with both the technology and what they saw as its long-term potential. Their first product was a version of the programming language BASIC. The fledgling business grew steadily as they modified and extended their BASIC programs for new computers just entering the market. In 1979, the two friends, William Gates and Paul Allen, moved the business - called Microsoft - to Seattle. And the rest, as they say, is history. Microsoft's big break came in 1980 when IBM selected Gates and Allen to write the operating system software for its new line of personal computers. Gates and Allen bought the rights to an existing program for $50,000, modified it a bit, and named it MS-DOS (for Microsoft Disk Operating System). Even though IBM was a relative latecomer to the PC market, its dominance in the computer industry brought it instant respect. And because other software developers wanted their products to run on IBM computers, MS-DOS quickly became the industry standard. Paul Allen became seriously ill in 1983 and left the firm in Gates's capable hands. For the next seven years, Microsoft developed relationships with other computer manufacturers and began introducing new application software like Word (for word processing), Excel (a spreadsheet) and PowerPoint (a presentation package). When the firm made its initial public stock offering, Gates became the PC industry's first billionaire. Popular new products such as Windows, Windows 95, and Microsoft Office, and deals with new industry giants such as Compaq and Dell, cemented Microsoft's place at the top of its industry. Today, Word controls 90 percent of the worldwide market for word processing, and Excel has 87 percent of the spreadsheet market. Windows and Windows 95 together have 83 percent of the operating systems market. And the firm's total annual revenues approach $10 billion. Because of the clout Microsoft has throughout the industry - and perhaps because of its continuing success - both the firm and Gates are widely feared and criticized in some quarters. For example, other software developers complain about unfair business practices. Some computer manufacturers fear that they may become too dependent on Microsoft as the sole provider of software for their products. And even the government keeps a wary eye on Microsoft for possible antitrust practices. But Gates himself keeps his eye on the future, and on Microsoft as it heads unwaveringly toward it. For example, he personally oversaw the fifteen-year development of the firm's newest success story, Windows NT, an operating system for computer networks. And he actively participates in every major decision made by the firm's top managers. He also fosters communication throughout the organization, and stresses the need to keep the firm lean and nimble, always wanting to avoid the bureaucratic procedures that saddle many big companies. And he keeps a close eye on the bottom line at all times, closely analyzing monthly and quarterly sales reports. In many ways, however, Gates's biggest role at Microsoft today is as its public persona. He appears at all major news conferences, makes all major announcements, and travels extensively to keep in touch with suppliers, computer manufacturers, customers, strategic allies, and government officials. He typically works sixteen hours a day, and seldom takes any time off. Even when he is "away from work," he keeps up with things via e-mail. And in every corner of the globe, Microsoft employees look at Gates with something bordering on awe. Some, for example, visibly copy his mannerisms. They also clearly recognize that because of his own personal work habits and schedule he surely expects no less from each of them. The sky, then, does seem to be the limit for Gates and Microsoft. The firm's dominance in its core software markets continues to grow, and its products are gaining ever-wider recognition and acceptance. But a few thunderclouds are on the horizon. For one thing, Microsoft faces formidable competition from firms such as Netscape in the emerging markets related to the Internet. And for another, computer giants like IBM and Compaq are seeking new alliances to avoid being too much at the mercy of Microsoft. But like many weather forecasts, the chances of these thunderclouds actually raining on Gates's parade are really quite slim. Case Questions 1. Identify as many examples as you can in this case to illustrate
the four management functions and ten management roles. Case References: "Microsoft's Future," Business Week, January 19, 1998, pp. 58-68; David Kirkpatrick, "He Wants All Your Business - And He's Starting to Get It," Fortune, May 26, 1997, pp. 58-68; Hoover's Handbook of American Business 1997 (Austin, Texas: The Reference Press, 1996), pp. 926-927; Brent Schlender, "On the Road with Chairman Bill," Fortune, May 26, 1997, pp. 72-81; Randall E. Stross, "Manager Gates Builds His Brain Trust," Fortune, December 8, 1997, pp. 84-98; and Brent Schlender, "Microsoft - First America, Now the World," Fortune, August 18, 1997, pp. 214-217.
|
