BUSINESS GROWTH AND STRATEGY PROJECT

TOPIC-STRATEGIC MANAGEMENT CASE STUDIES

By: Sonali Agarwal Sakshi Shubh Deepika Rawat Megha Talwar Surbhi Sood

3465 3458 3485 3491 3483

ACKNOWLEDGEMENT
We gratefully acknowledge the support of our Business Growth and Strategy teacher Ms.Achint Arora for nurturing; guiding and making us understand, the various strategies adopted by the business firms. She helped us in analyzing the internal and external environment required for proper strategy planning. Her insight about the project has been a crucial ingredient of this project. It was her vision which helped us in completing the project successfully. We whole heartedly thank Apple, Starbucks, Pizza Hut, Mc Donalds and Tesco and above all Google for providing us all the information we required for this project through their websites.

Contents
1) Introduction to strategic management Strategic Management Approaches to Strategic Management Strategy Formation Strategy Evaluation and Choice Limitations of Strategic Management 2) Case Study 1 Apple Overview Mission Statement External Analysis Internal Analysis Value Chain Analysis SWOT Analysis Effective strategies used by APPLE Recommendations 3) Case Study 2 Starbucks About Starbucks Starbucks performance till 2008 SWOT Analysis Strategic changes by Starbucks Performance after the strategic changes 4) Case Study 3 Pizza Hut About Pizza Hut Mission Statement Marketing Strategy- Think Global, Act Local SWOT Analysis Pricing Strategy Recommendations 5) Case Study 4 Mc Donalds About McDonalds Strategy changes Resistance to changes Feedback SWOT Analysis 6) Case Study 5 Tesco Overview SWOT Analysis Strategy Overview Conclusion

BIBLIOGRAPHY
http://en.wikipedia.org/wiki/Strategic_management http://naratvshow.com/?p=518 http://topics.nytimes.com/top/news/business/companies/starbucks_corporation/ind ex.html http://en.wikipedia.org/wiki/Starbucks http://www.mckinseyquarterly.com/Starbucks_quest_for_healthy_growth_An_inte rview_with_Howard_Schultz_2777 http://en.wikipedia.org/wiki/Starbucks http://money.cnn.com/2008/07/30/markets/thebuzz/index.htm http://www.reuters.com/article/2008/01/31/us-starbucksidUSWNAS851720080131 http://blogs.hbr.org/quelch/2008/07/how_starbucks_growth_destroyed.html http://www.nytimes.com/2009/01/29/business/29sbux.html?_r=2 http://seekingalpha.com/article/283187-starbucks-steamy-performance http://www.huffingtonpost.com/2011/08/02/starbucks-growth_n_916380.html http://thehiringsite.careerbuilder.com/2011/06/03/howard-schultz-on-howstarbucks-got-its-groove-back http://ycharts.com/analysis/story/starbucks_brews_up_16_revenue_growth http://news.starbucks.com/article_display.cfm?article_id=184 http://en.wikipedia.org/wiki/File:Starbucks_Map.svg www.Pizzahut.com Yum France Investor Day Report, 2006

www.papajohns.com www.dominos.com www.pizzatoday.com http://www.pizzahut.co.in/ http://www.slideshare.net/quvol/final-pizza-hut-2010 Organization Effectiveness and Change Management - Google Books www.scribd.com http://www.docstoc.com/docs/24386017/Brand-Strategy-of-Pizza-Hut http://www.ivoryresearch.com/sample36.php http://www.ivoryresearch.com/sample5.php http://blogs.hbr.org/hbr/kaplan-norton/2008/09/tescos-approach-to-strategyco.html http://www.corporatewatch.org/?lid=252#stra http://www.bized.co.uk/educators/16-19/business/strategy/activity/strategic1.htm http://www.freeonlineresearchpapers.com/case-study-tesco-plc http://en.wikipedia.org/wiki/Tesco http://www.mbaknol.com/management-case-studies/tesco%E2%80%99s%E2%80%98steering-wheel%E2%80%99-a-tool-for-strategic-value-creation-andbusiness-transformation/ http://en.wikipedia.org/wiki/Tesco.com http://www.fundinguniverse.com/company-histories/Tesco-plc-CompanyHistory.html http://www.insidecrm.com/features/strategies-apple-loyal-customers/ http://www.thehindubusinessline.com/features/brandline/article2828944.ece http://www.businessweek.com/magazine/content/06_20/b3984065.htm http://en.wikipedia.org/wiki/McDonald's

Introduction to Strategic Management

Strategic Management
Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment. It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. Strategic management provides overall direction to the enterprise. Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization. It depends on the organizational structure.

Approaches to Strategic Management

Strategic management can depend upon the size of an organization, and the proclivity to change of its business environment. These points are highlighted below:

A global/transnational organization may employ a more structured strategic management model, due to its size, scope of operations, and need to encompass stakeholder views and requirements. An SME (Small and Medium Enterprise) may employ an entrepreneurial approach. This is due to its comparatively smaller size and scope of operations, as well as possessing fewer resources. An SME's CEO (or general top management) may simply outline a mission, and pursue all activities under that mission.

Strategy Formation
The initial task in strategic management is typically the compilation and dissemination of a mission statement. it specifies the scope of activities an organization wishes to undertake, coupled with the markets a firm wishes to serve. Following the devising of a mission statement, a firm would then undertake an environmental scanning within the purview of the statement.

Strategic formation is a combination of three main processes which are as follows: Performing a situation analysis, self-evaluation and competitor analysis: both internal and external; both micro-environmental and macro-environmental. Concurrent with this assessment, objectives are set. These objectives should be parallel to a time-line; some are in the short-term and others on the long-term. This involves crafting vision statements (long term view of a possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.

Strategy Evaluation and Choice

An environmental scan will highlight all pertinent aspects that affect an organization, whether external or sector/industry-based. Such an occurrence will also uncover areas to capitalize on, in addition to areas in which expansion may be unwise. These options, once identified, have to be vetted and screened by an organization. In addition to ascertaining the suitability, feasibility and acceptability of an option, the actual modes of progress have to be determined. These pertain to: The basis of competition The basis of competition is the competitive advantage used or established by the strategy. This advantage may derive from how an organization produces its products, how it acts within a market relative to its competitors, or other aspects of the business. Mode of action Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a SWOT analysis to figure out the internal strengths and weaknesses, and external opportunities and threats of the entity in business. This may require taking certain precautionary measures or even changing the entire strategy. Suitability Suitability deals with the overall rationale of the strategy. The key point to consider is whether the strategy would address the key strategic issues underlined by the organization's strategic position.

Feasibility Feasibility is concerned with whether the resources required to implement the strategy are available, can be developed or obtained. Resources include funding, people, time, and information. or cash flow in the market

Acceptability Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders, employees and customers) with the expected performance outcomes, which can be return, risk and stakeholder/stakeholders reactions.

Limitations of Strategic Management

Although a sense of direction is important, it can also stifle creativity, especially if it is rigidly enforced. In an uncertain and ambiguous world, fluidity can be more important than a finely tuned strategic compass. When a strategy becomes internalized into a corporate culture, it can lead to group think. It can also cause an organization to define itself too narrowly. Many theories of strategic management tend to undergo only brief periods of popularity. Many theories tend either to be too narrow in focus to build a complete corporate strategy on, or too general and abstract to be applicable to specific situations. Populism or faddishness can have an impact on a particular theory's life cycle and may see application in inappropriate circumstances. Source: http://en.wikipedia.org/wiki/Strategic_management

Case Study: APPLE Inc.

Overview
Apple Inc., formerly Apple Computer, Inc., is a multinational corporation that designs and sells consumer electronics, computer software, and personal computers. Apple's core product lines are the iPad, iPhone, iPod music player, and Macintosh computer line-up. Its software includes the Mac OS X operating system; the iTunes media browser; the iLife suite of multimedia and creativity software; the iWork suite of productivity software; Aperture, a professional photography package; Final Cut Studio, a suite of professional audio and filmindustry software products; Logic Studio, a suite of music production tools; the Safari web browser; and iOS, a mobile operating system. Founders Steve Jobs and Steve Wozniak effectively created Apple Computer on April 1, 1976, with the release of the Apple I, and incorporated the company on January 3, 1977, in Cupertino, California. For more than two decades, Apple Computer was predominantly a manufacturer of personal computers, including the Apple II, Macintosh, and Power Mac lines, but it faced rocky sales and low market share during the 1990s. Jobs, who had been ousted from the company in 1985, returned to become Apple's CEO in 1996 after his company NeXT was bought by Apple Inc., and he brought with him a new corporate philosophy of recognizable products and simple design. With the introduction of the successful iPod music player in 2001, Apple established itself as a leader in the consumer electronics industry, dropping "Computer" from its name. The latest era of phenomenal success for the company has been in the iOS range of products that began with the iPhone, iPod Touch and now iPad. As of 2011, Apple is the largest technology firm in the world, with annual revenues of more than $60 billion. As of July 2011, Apple has 357 retail stores in ten countries, and an online store. It is the largest publicly traded company in the world by market capitalization, overtopping ExxonMobil, as well as the largest technology company in the world by revenue and profit, worth more than Google and Microsoft combined. As of September 24, 2011, the company had 60,400 permanent fulltime employees and 2,900 temporary full-time employees worldwide; its worldwide annual sales totalled $65 billion, growing to $108 billion in 2011. Fortune magazine named Apple the most admired company in the United States in 2008, and in the world from 2008 to 2011. However, the company has received widespread criticism for its contractors' labor, and for its environmental and business practices. Source: wikipedia

Mission statement
Apple is committed to bring the best personal computing experience to students, educators, creative professionals and consumers globally through innovative hardware, software and internet offerings. Apple computer is committed to protecting the environment , health and safety of our employees, customers and the global communities where they operate. Apple strives for continuous improvement in our environment , health and safety management system and in the environment quality of our products, processes and services.

External analysis
The industry has a fast growth. Everyday new and innovative products flood the markets. From mobile phones to laptops there is a new product advertised almost every week. The major players of the industry are Dell, HP, Apple, Acer and Lenovo. There is a high entry barrier due to the standardization of the PC components. If any new players wish to come into this business, they need to have a differentiated strategy form the existing companies. Also, a high learning curve exists which means the customers take time to get accustomed with the new product. The existing brand names make the entry barriers high. Suppliers for this industry are powerful. There are only a handful of companies like Intel and Microsoft which manufactures microprocessor and operating systems (OS). These suppliers are hard to switch due to dominant production of such components. There is always a threat of forward integration by the suppliers since the products manufactured by these suppliers are highly sophisticated and the other components needed for the production of PCs are not so difficult to imitate. But there are many sources which do provide small PC components like memory chips, disk drives and keyboards. Substitutes for most of the products are easily available at a lower price. Although buyers do look for quality and brand name, some of the components they need are purchased from these substitute providers at a low cost. For example if a consumer cannot afford to buy an Apple iphone then he/she has the option to buy any alternative low cost smart phone from some other company. There is high competition due to high industry growth. Manufacturers of these products try every possible strategy to attract the attention of customers through promotion and advertising. Apple fights with its highly innovative products whereas Dell and HP have better marketing and distribution strategies. According to the present conditions Apple does have a Gross margin of 35% which exceeds that of Dells 19% andHPs 24%. In this extremely competitive environment, companies are highly responsive to any new product as they can imitate at low costs. It is almost reaching a status of mature market with intense competition but it is still growing. There are companies which are coming up with low cost strategies to compete with the existing manufacturers and this had led to intense rivalry. Companies like Acer and HP acquired Compaq are already competing with Apple and other companies with notebooks on the basis of cost. Also there are a wide range of MP3 players available in the market which ranges

from $30 to $499 and from 1 GB to 160GB. Also there are several websites which give access to downloading and listening music which becomes a high threat for products like itunes. The type of consumers for this market can be categorized as home, small and medium sized business, corporate, education and government. Since buyers are mostly not concentrated they have less bargaining power for prices and models. Buyers do have a high switching cost which discourages them from buying a similar product from another supplier. But there are a number of substitutes available which makes buyers powerful to choose from the available options and also because they are very price sensitive. The customers always have an advantage of choosing the electronic good according to the need and taste. This industry has a vast customer base and companies have to be customer oriented and should innovate according to their demand. Apple targets customers who are techno savvy, who look for something unique. They have a wide range of products like computers (Mac book), ipods and iphones which are highly differentiated. Customers desire to buy its products as they are icons of the digital industry. Exit barriers for this industry are high. There is a lot of capital requirement to establish a firm inside the electronics and PC industry. There is a chance of exit becoming almost impossible due to strategic interrelationships between these firms. Not all the products are made by the same firm. And so they have to depend on other firms in the industry for making a final product ready for the customers. So it is very difficult if one firm leaves, leaving the other dependent firms in dilemma. Technological changes in the industry are very fast. Everyday a new product or a new application or version for the existing product is available. Consumers are very demanding and it makes it necessary for the firms to compete with each other and become the first mover or the best as a second mover in bringing out a new innovation. The young generation in particular is very trendy and they love to show of the new things as a fashion statement. And so they expect companies to give them something which is different than what others have. It is both an opportunity and a threat when it comes to rapid technological changes. Companies have to move faster than the imagination of both their competitors and the consumers. If not, it is not long for them to go down in history forever.

Internal analysis Strengths and Weaknesses:

Apple Inc. makes a difference in the PC industry through its innovative product design and high standard applications. Macintosh has been the powerful tool to build the success story of the company. The integrated system of computer was its differentiated strategy which presented the Macintosh along with its own Operating System (OS). The new step in Consumer Electronics Industry has outshined Apple Incs performance as a smart company. The innovative products like iPod and iPhone have been very successful in potential music market. Customers have a great trust on companys elegant products and they always look forward to be loyal to the brand. Apple keeps it Price strategy different from its competitors which give

computers and other entertainment devices at low cost. The high prices (especially Computer) keep it access limited to only people with high income level. The Apple computer had compatibility issues with Microsoft Office and IBM PCs, which motivated the research and development at the company. As the company has a wide product line, each new product makes the previous one dull against it; the issue of cannibalization may be a reason of bothering the expected revenue generation of the products.

Core Competencies: Apple has been the leader of the Consumer Electronics industry and
has maintained a distinct image in PC manufacturing and Music too. The Core competencies responsible behind the success are mainly the Unique resources and Differentiation strategy. It offers the best designed hardware and incomparable software in its products. The Apple has been giving Plug and Play solutions. The hard drive based player called iPod has a stunning design which has become the icon of the digital age. Apple has a Think Different motivation and it believes in Value Creation. The success of some products like iPod and iPhone cannot decide its sustainable competitive advantage because the industry has intense rivalry and imitation is also a threat. Hence, Innovation plays a key role to remain the leading company in the dynamics of fast-growing markets, and Apple definitely can withstand the changes with its innovative skills. Apple has been able to command a premium in market and gain above average returns owing to its innovation and differentiation of technologically superior products.

VALUE CHAIN ANALYSIS

Technology and Product Design: This Component is the true core of Apples Capability. The learning and innovation in technology in its products has led Apple to leverage its expertise in iPod, iPhone, iTunes and iWorks suite of products. Over due course of time, Apple has been able to perfect the chain of activities in innovation. It is really the strongest advantage for a company to be independently manufacturing from scratch to finished product with application and peripherals. Apple starts from its new ideas of product design, designs it through its own resources and funding, then manufactures it and finally markets it wholeheartedly. Production: The bundled packages of Apple-developed hardware and software became the cornerstone for its own production process. Apple achieved unparalleled performance via 64-bit architecture, integrated distinctive styling with the multi-colored translucent iMac cases, and redefined intuitive operation with the iPod. The research and development oriented products give an extraordinary performance and products like Mac which soon became an identity of Apple Inc. While every product introduction has not been a success (Lisa, Newton), Apple treats component production as a natural extension of design process. Marketing and Advertising: Distinctive marketing campaigns have been a strategy of Apple to attract customers and to spread the information among them. Television commercials, Print Advertisements, Posters in Public areas and wrap advertisement campaigns have been successful ways of outshining the new product. Apple continues to command a market premium for producing a better mousetrap throughout its history. Steve Jobs personally unveils all new

product introductions, reviews corresponding marketing campaigns and approves new product development guidelines. This adds to better targeting to the market and consequently, it is a special concern of companys CEO. Customer Service: Apple believes in keeping a place in customers heart, the customer loyalty is a great strength to the company. The credit for such a strong relationship between the company and its customers goes to companys customer service and the nature of products which fulfills the need of todays stylish people. Apple created a virtual love affair with their customer base by delivering technically superior products (iPods vs. other MP3 players, Macs vs. PCs, etc.), and aggressively pursuing hardware and software updates. Apple integrated their primary activities so well that it is transparent to the consumer where one activity begins and the other ends. A perfect example of this is Apples willingness to develop software to run Windows XP on its new Intel-based iMac and then post it online free to iMac users. In such an environment, customer service merely becomes the realization of receiving a little more than expected.

SWOT ANALYSIS STRENGHTS:

Strong cash base Intellectual capital Technology leader Brand image Charismatic leadership iTune store Partnership with intell computers Strong brand loyalty Strong R&D

WEAKNESS:
High proprietary system Niche market , less penetration The product life cycle of apple are very small Weak presence at enterprise and governmental business arena. Apple market share is far behind its competitors.

OPPORTUNITIES:
The laptop and consumer electronics market growth is high. Downloadable music and mp3 players are highly marketable.

Increase in worms and viruses on PC so the antivirus solution can be developed by apple.

THREATS:
Extensive competition Substitute products Low prices of competitors Technical advancements Economy downfall

TOWS MATRIX
STRENGHT WEAKNESS

SO strategies (maxi/maxi)

WO strategies (mini/maxi)

OPPORTUNITIES

-Strong r and d and technology -By tapping the opportunity of can be used to tap the high high market demand , apple market demand for laptops and can increase its market share. PC. -Strong cash base can be used to create antivirus solutions.

THREAT

ST strategies (maxi/Mini) -Strong brand loyalty is effective to overcome the threat of extensive competition and substitute products. - as apple is the technology leader in its market it overrules the threat of fast technological changes.

WT strategies (mini/mini) -low priced products should be created by investing in its Rand D to attract the market share from its competitors.

Effective Strategies Apple Used to Create Loyal Customers

A Store Just for Apple: Apple has historically been troubled by big-box sales staffers who are ill-informed about its products, a problem that made it difficult for Apple to set its very different products apart from the rest of the computing crowd. By creating a store strictly devoted to Apple products, the company has not only eliminated this problem but has made an excellent customer-loyalty move. Apple stores are a friendly place where Mac and PC users alike are encouraged to play with and explore the technology that the company offers. This is a space where Macheads can not only get service but also hang out with others who enjoy Apple products just as much as they do. By creating this space, Apple encourages current and new customers to get excited about what it has to offer. Complete Solutions: Apple's products complement and complete each other. Buy an iPod, and you can download music via iTunes. For the average user, most Mac programs are produced by Apple. This sort of control over the entire user process, from hardware to software, strengthens customer loyalty. Apple users generally don't have to stray to find products and solutions they want. Are You a Mac?: Let's face it, Apple is a hip brand. It pushes a strong identification with everything young, up-to-the-minute and smart. Consider Apple's I'm a Mac campaign. The Mac guy is smooth and confident, while PC appears uptight and old. Once you've become smooth, would you want to go back to uptight? Varied Products: Many consumers may not be ready to buy an Apple computer, but they're willing to give gadgets like the iPod or iPhone a try. By selling products with lower entry costs, it creates an opportunity for new users to be introduced to Apple. If these users enjoy their gadgets, they're more likely to consider buying an Apple computer in the future. Media Fodder: Media outlets, especially bloggers, love to write about Apple. Why? Because Apple makes it so easy. With leaked rumors about new developments, its very own expo and mysterious shutdowns of its online store, Apple gift wraps news stories that are just begging for speculation and hype. By perpetuating this cycle of media frenzy, Apple keeps its customers excited about buying new Apple products now and in the future. Education Sales: By selling its products to schools and universities, Apple turns classrooms into showrooms. If students go through school using Apple products, they become comfortable with the interface and familiar with the superior performance the brand offers. By creating this early exposure, Apple captures customers before they even know that they are customers. Products That Deliver: Apple carefully considers what consumers are looking for, so its products are a result of both extensive research and strong design. This meticulous planning is a large contributor to Apple's high customer-satisfaction rates. It's plain and simple: Robust and easy-to-use products not only make your customers happy, but also make them want to buy more products from you in the future.

Outsourcing Unpleasantness: With Apple products, the average consumer's interaction with the company is likely to be low. Unless something goes wrong, you don't have any reason to speak with an Apple customer-service representative. Of course, the iPhone presented an opportunity that could have made Apple much more involved, similar to administering iTunes for the iPod. With a phone, interaction becomes multifaceted. You have to consider billing errors, quality of wireless service, contracts and a number of other factors that often lead to customer frustration. With the iPhone, Apple was wise to stick with building a good product and letting AT&T handle the service. Consistency: All of Apple's products have the same basic architecture. Because of this consistency, customers who already own Apple products have a good idea of what they'll be getting before they make a purchase. They know that it will be easy to adapt to new hardware, and this makes them more open to making a repeat purchase. New Innovations: Although the architecture of Apple products is consistent, its portfolio is not. The company offers consumers a number of different ways to enjoy its products. By giving customers an opportunity to employ Apple in their living rooms, pockets and offices, Apple makes it easy to stay loyal to a brand they already like. Attractiveness: From packaging to aesthetic design to user-interface experience, Apple makes its products accessible and attractive. Bright colors, a smiling icon and slick-looking hardware remind customers every time they use Apple products that what Apple offers is appealing. Source: http://www.insidecrm.com/features/strategies-apple-loyal-customers/

Recommendations
Apple should start thinking of hitting other regions such as growing countries. And to start a wide marketing plan to reach every in oder to achieve the last objective for Apples vision.

Case Study : Starbucks

About Starbucks
Starbucks Corporation is an international coffee company and coffeehouse chain based in Seattle, Washington and was founded in 1971 by an English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker. It is a roaster, marketer and retailer of specialty coffee in the world. It is the largest coffeehouse company in the world, with 19,435 stores in 58 countries, including 12,781 in the United States, 1,241 in Canada, 1,062 in Japan, 976 in Great Britain and 645 in China. Starbucks purchases and roasts whole bean coffees that it sells, along with handcrafted coffee and tea beverages and a variety of fresh food items, through Company-operated stores. The Company also sells a variety of coffee and tea products and licenses its trademarks through other channels, such as licensed stores, grocery and national foodservice accounts. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also offered at grocery stores. Success of Starbucks was the result of its founders' passion for quality coffee as well as exotic tea and their good business sense helped them run a profitable business. The company depended mainly on word-of-mouth to get more people into its stores, then relied on the caliber of its product to give patrons a sense of discovery and excitement. It built customer loyalty cup by cup as buyers of its products developed their palates. However Howard Schultz purchased Starbucks when Jerry Baldwin and Gordon Bowker decided to sell the entire Starbucks operations in Seattle in 1987. Source :http://en.wikipedia.org/wiki/Starbucks ,http://naratvshow.com/?p=518

Starbucks Performance till 2008

In 1987, Starbucks had 11 stores and 100 employees, and schultz had this dream to create a national brand around coffee and a unique experience in Starbucks' stores that, hopefully, they would be able to extend from the West Coast to around the country.

And from that point on, the dream started becoming a reality, and it almost had a life of its own. What they were building seemed to work wherever they opened stores. They had a little bit of luck and business acumen and perhaps just the fortuitous opportunity that comes along with perfect timing. For 15-plus years or so, almost everything they did worked as they built this very unique brand around coffee and a values-based organization. The first Starbucks location outside North America opened in Tokyo, Japan, in 1996. Starbucks entered the U.K. market in 1998 with the $83 million acquisition of the then 60-outlet, UK-based Seattle Coffee Company, re-branding all the stores as Starbucks. In September 2002 Starbucks opened its first store in Latin America, in Mexico City. In August 2003 Starbucks opened its first store in South America in Lima. These were all company-owned stores, not franchised. In order to keep the company in full control of the quality of its products and the character and location of its stores" franchising was avoided . Starbucks successfully went to Initial Public Offering (IPO) in June 1992, which turned into one of the most successful IPOs of the year. Being a public company, Starbucks was able to gain a leverage to accelerate the expansion of its network. Source:http://en.wikipedia.org/wiki/File:Starbucks_Map.svg

International presence of Starbucks

Starbucks has expanded rapidly in number, averaging five stores opening every week, into the 2000s. In recent years however, its endeavor of expansion has been coming to a screeching halt. Little by little, Starbucks has been losing some of the signature traits it had been founded on. In 2008, Mr. Schultz faced a difficult task: He had to slow down the company to make stores feel more like hip neighborhood coffeehouses while also delivering the steady growth that investors have come to expect from Starbucks. Source:http://topics.nytimes.com/top/news/business/companies/starbucks_corporation/index.htm l http://naratvshow.com/?p=518

http://www.mckinseyquarterly.com/Starbucks_quest_for_healthy_growth_An_interview_with_H oward_Schultz_2777

Factors Undermining Starbucks performance

1. Economic Downturn Economy appeared to have certainly dampened Starbucks' performance. As good times vanished in the Great Recession of 2008, Starbucks found itself in an economic climate that had most people reassessing their daily spending habits on luxury items. The companys revenues and profit tumbled as a result. As the economic doldrums persisted and customers continued to cut back, Starbucks was being forced to make more cuts. Shares of Starbucks had fallen more than 30% in 2008, amid a drastically tightening consumer spending environment and concerns of a U.S. recession. 2. Aggressive pace of new store pening It was not too long ago that the arrival of a Starbucks was a major event, a recognition that a town or neighborhood was worthy of the chic Seattle-based chain. But in the last several years, every street corner, airport concourse and roadside rest stop in America seemed to attract a Starbucks. In five years, Starbucks nearly tripled the number of stores worldwide, from 5,886 in 2002 to 15,011 in 2007. In February 2007, a leaked internal memo written by founder Howard Schultz showed that he recognized the problem that his own growth strategy had created: "Stores no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store." New store openings and new product launches fueled the stock price. But sooner or later chasing quarterly earnings growth targets undermined the its brand. The early adopters who valued the club-like atmosphere of relaxing over a quality cup of coffee found themselves in a minority. To grow, Starbucks increasingly appealed to grab and go customers for whom service meant speed of order delivery rather than recognition. Starbucks introduced new store formats like Express to try to cater to this second segment without undermining the first. But many Starbucks veterans had switched to Peets, Caribou and other more exclusive brands. And while Starbucks used to claim that its aggressive pace of new store openings wouldn't cannibalize sales at existing Starbucks, it got to a point where that clearly was no longer the case. Opening new stores and launching a blizzard of new products created only superficial growth. Such strategies took top management's eye off of improving same store sales year-on-year. This was the heavy lifting of retailing, where a local store manager has to earn brand loyalty and increase purchase frequency in his neighborhood one customer at a time. That store manager's efforts were undercut when additional stores were opened nearby. Eventually, the point of

saturation was reached and cannibalization of existing store sales undermined not just brand health but also manager morale. It brings to mind the hilarious joke from the mockumentary "Best in Show" about a married couple meeting at Starbucks...but not at the same Starbucks. The woman said she was sitting at a Starbucks and saw her future husband across the street at another Starbucks. It's funny because it wasn't that far from reality. 3. Stiff competition Starbucks competitors in the coffee beverage sales included 7-Eleven, Dunkin Donuts, BIGGBY Coffee, Caribou Coffee, McDonald's, Panera Bread, and Einstein Bagels. Competitors such as McDonald's and Dunkin Donuts not only had extensive menus, but also the financial resources and position to leverage their strengths and thus threatened Starbucks profitability. A reason for the popularity of the McDonalds coffee bar was the convenience of being able to get breakfast and a premium roast coffee at the same place. Not only can the customers get breakfast and coffee in one place, they can get their drinks for less. McDonalds priced their drinks about 20% lower than Starbucks. Dunkin Donuts was another direct competitor that had essentially waged war against Starbucks in the coffeehouse market. The primarily doughnut oriented restaurant chain had decided to put ready to serve coffee at the top of its focus. With products such as the Dunkaccino, White hot chocolate, Coolatta, lattes and iced lattes, as well as regular and seasonal hot and iced coffee, they will directly compete with Starbucks. In late 2007, Dunkin Donuts made a surprising announcement: In a national taste test in 10 major U.S. cities, the chain had put its most popular brew up against Starbucks. The taste test showed that of the sample tested more people preferred the taste of Dunkin Donuts coffee over Starbucks. Dunkin Donuts was also moderately priced to satisfy economic consumers. In terms of perception, 7-Eleven and Dunkin Donuts provided coffee in a "no-nonsense fashion", which attracted customers who were extremely price sensitive. Source:http://blogs.indews.com/marketing/starbucks_competitors.php 4. Diversifying non-coffee menu As the company grew and customer traffic increased, Starbucks introduced many new products to broaden its appeal. It expanded its food offerings while introducing efficiencies like those automated espresso machines. These new products undercut the integrity of the Starbucks brand for coffee purists. They also challenged the baristas who had to wrestle with an ever-morecomplicated menu of drinks. With over half of customers customizing their drinks, baristas hired for their social skills and passion for coffee, no longer had time to dialogue with customers. Starbucks also lost its focus on coffee and tried to peddle food, DVDs and other non-caffeinated beverages. The company tried to do too much...and alienated many core customers in the process.

The brand experience declined as waiting times increased. Gradually, complaints surfaced that Starbucks felt more like a fast-food restaurant than a coffeehouse. Due to these factors, in the summer of 2007, its customer traffic declined for the first time since the company went public, sending the stock tumbling. By the end of its fiscal 2008, Starbucks stock, once seemingly invincible, had declined by over 50 percent. In 2008, When Starbucks reviewed some of its underperforming stores, Schultz was horrified to learn that the stores that they ultimately had to close had been open less than 18 months. When we look at thatthe money invested and the money that they had to write offthose decisions were made with a lack of discipline. Source:http://topics.nytimes.com/top/news/business/companies/starbucks_corporation/index.htm l http://naratvshow.com/?p=518 http://en.wikipedia.org/wiki/Starbucks http://www.mckinseyquarterly.com/Starbucks_quest_for_healthy_growth_An_interview_with_H oward_Schultz_2777

SWOT ANALYSIS Strengths

1. Strong global brand. 2. High quality and diversified products. 3. Strong, loyal customer base. 4. Strong relationships with the employees. 5. Has a strong position to take advantage during economic recovery.

Weaknesses
1. Overextended premium coffee market self cannibalization. 2. Stiff competition. 3. Current economy. 4. High pricing. 5. Diversifying non coffee menu. 6. Targeting selective customer age group.

Opportunities 1. Expansion opportunity.

2. Expend segmentation. 3. Free internet in all Starbucks coffee shops.

Threats
1. Economic downturn. 2. Competition targets the same markets. 3. High price of dairy products. 4. Alienation of younger domestic market segments.

TOWS MATRIX
STRENGTHS OPPORTUNITIES SO strategies (maxi-maxi) WEAKNESSES WO strategies (mini-maxi)

Opening new stores overseas Providing free internet in all as it had strong global brand Starbucks' stores to attract image. more people and fight competition. Searching for new customer and market segments to Expend market segmentation expand. by offering new customized drinks like blenders with fresh fruits.

THREATS

ST strategies (maxi-mini)

WT strategies (mini-mini)

It can price its products high Creating new complementary as it had strong loyal customer products which contain good base. quality and lower price to attract more customers. Has a strong position to take advantage during the period of economic downturn.

Strategic changes by Starbucks

In 2000s, Starbucks faced a difficult operating environment, Howard schultz was on an ongoing drive to reinvent the way Starbucks was doing its business. He retook the reins in an effort to revive the corporation during a global economic crisis in 2008. He focused his efforts on the customer experience, recapturing some of the magic of the chains early years, when employee made the drinks by hand and customers were excited by top-notch coffee. Some initiatives that Starbucks was taking to enhance long-term fundamentals by slowing growth, controlling costs and investing in traffic-driving strategy" were: 1. Closure of stores In January 2008, Starbucks ousted its chief executive, James L. Donald, and brought back Mr. Schultz to try to invigorate the company. Mr. Schultz laid off 1,000 employees to reenergize the brand and boost its profit and closed 600 underperforming locations in the United States amid growing economic uncertainty while scaling back the rate of store openings domestically. Starbucks had cut its forecast for 2008 U.S. store openings to 1,175 from 1,600. These closings and layoffs effectively ended the companys period of growth and expansion that began in the mid-1990s. Starbucks seemed to be a mass brand attempting to command a premium price for an experience that was no longer special. To encounter this fundamental problem it had to cut prices (and that implies a commensurate cut in the cost structure) and also had to reduce distribution to restore the exclusivity of the brand. Sometimes, in the world of marketing, less is more. On January 28, 2009, Starbucks announced the closure of an additional 300 underperforming stores and the elimination of 7,000 positions. CEO Howard Schultz also announced that he had received board approval to reduce his salary. As part of the cuts, he reduced his salary to less than $10,000 a year, from $1.2 million. The company also took other cost-cutting measures, including renegotiating prices with landlords and suppliers, trimming vacation and personal days for hourly store employees and adjusting the way individual stores operate. For example, the company announced that stores where few customers order decaffeinated coffee after noon will no longer brew the coffee ahead of time and will instead make it on demand. While cutting costs, Starbucks tried to appeal to newly value-conscious customers. "These decisions have been made to ensure the company is leaner and prepared to endure a worsening economic climate, Mr. Schultz said in a letter to employees. In a conference call with Wall Street analysts Schultz also said the new cuts were necessary because of the unprecedented dip in consumer confidence and the rapid weakening of the economy. At the same time, Starbucks moved aggressively to open stores overseas, where business remained robust. It planned to increase international store openings by 75 outlets to 975.

http://blogs.hbr.org/quelch/2008/07/how_starbucks_growth_destroyed.html http://www.nytimes.com/2009/01/29/business/29sbux.html?_r=2 2. Started community website "my Starbucks idea" In early 2008, Starbucks started a community website "My Starbucks Idea" designed to collect suggestions and feedback from customers. Other users commented and on suggestions. 3. Introduced loyalty program In May 2008, a loyalty program was introduced for registered users of the Starbucks Card (previously simply a gift card) offering perks such as free Wi-Fi Internet access, no charge for soy milk & flavored syrups, and free refills on brewed drip coffee. It also introduced new discount programs like its $25 Gold Card, which offers 10 percent off on all items. http://topics.nytimes.com/top/news/business/companies/starbucks_corporation/index.ht ml http://en.wikipedia.org/wiki/Starbucks On March 18, 2009, Starbucks Coffee Company held its Annual Meeting of Shareholders in Seattle where Howard Schultz, chairman, president and ceo, outlined the companys strategy to grow for the long term. Despite the challenging economic environment, Starbucks is profitable, has a strong balance sheet and generates solid cash from operations, said Schultz. Our customers connection with, and trust in the Starbucks brand remains at a high level. We are laser-focused on delivering the finest quality coffee and getting the customer experience right every time. Weve also been putting our feet into the shoes of our customers and are responding directly to their needs, said Schultz. Our customers are telling us they want value and quality and we will deliver that in a way that is both meaningful to them and authentic to Starbucks. During the Annual Meeting, Troy Alstead, executive vice president, chief financial officer and chief administrative officer, underscored the companys strong financial position and outlined a two-fold growth strategy for the company: 1. Focussing attention on increasing profits in existing stores by:

Aligning the companys cost structure in fiscal 2009; Improving operational efficiencies and making technology investments; Meeting customers needs for value and quality; and Investing in the tools and training store managers need.

2. Making strategic investments in key initiatives by:

Entering the $17 billion instant coffee market earlier this month with the launch of Starbucks VIA Ready Brew instant coffee; Growing its consumer products, licensed stores and foodservice channels; and Focusing on disciplined global store expansion in key markets.

http://en.wikipedia.org/wiki/Starbucks Our customers like the changes weve been making, even as the economic environment is impacting the way customers interact with companies and brands, said Schultz. The health of the company, the continued relevance of the brand and our disciplined go-forward plan make us optimistic about Starbucks future. (http://news.starbucks.com/article_display.cfm?article_id=184)

Other strategic changes made were:

1. Pricing strategies For the first time in its history, Starbucks announced a modified pricing structure in July 2009. Impacted by the recession, Starbucks has suffered a loss of customer traffic to its stores and decided to lower its prices on some popular products; such as brewed coffees and lattes. It also redesigned its menu to feature lower priced brewed coffees, as well as offering promotions on iced drinks. 2. Product mix Starbucks revamped its menu, adding a healthier selection of food. Fruit and yogurt parfaits and warm breakfast sandwiches were made part of its regular selection. Starbucks constantly searched for innovative ideas, products and experiences that could be offered to its customers. In addition to sales through its retail stores, Starbucks sold coffee and tea products directly to business units. Through its joint venture partnerships with Pepsi and Dreyers respectively, Starbucks also sold bottled Frappuccino coffee drinks and a line of coffee ice cream. 3. Distribution strategy In 2008, Starbucks operated 7,238 retail stores in North America and 1,979 stores internationally. The revenue from its company operated stores accounted for 84% of its total revenue. Despite the closure of 600 under-performing retail stores, Starbucks planned to open another 10,000 retail stores. In addition, Starbucks had been developing the companys brand through third parties outside the coffee house. Specialty retail operations included licensed stores, packaged tea and coffee, branded products, foodservice operations and generated 16% of Starbucks total revenue in 2008. There were more

than 7,400 licensed and franchised stores, while there are 9,000 company-operated stores. Located in places like airports and supermarkets, licensed stores generated licensing fees and royalties as well as revenue from supplying Starbucks coffee, teas and CDs. Starbucks also sold whole bean and ground coffees to foodservice operators like restaurants, offices, hotels and cafes, which accounted for 25% of companys specialty revenue. http://naratvshow.com/?p=518

Starbucks' performance after the incorporation of strategic changes

The strategy sparked a comeback for the coffee powerhouse. Starbucks had experienced a rapid expansion and an incredible success until 2007 when the economy took a downturn for the worst. During 2007 and 2008, the share price of Starbucks Corporation decreased sharply by 54% compared to a high of $39.63 in May 2006, as investors believed that the company had overextended itself in a premium coffee market. In its first quarter of fiscal year 2008, Starbucks suffered a 3% decrease in transactions for the first time. Starbucks slowly made a come-back. The stock and revenue perked up considerably since the recession where the stock traded below 10 dollars a share.

Graph

showing

starbucks'

revenues

and

corporation

price

(http://ycharts.com/analysis/story/starbucks_brews_up_16_revenue_growth)

Starbucks performance in the Q3 of fiscal 2009 marked its first earnings growth since Q1 2008 the company earned $152 million, compared to its loss of nearly $7 million just a year earlier. (http://thehiringsite.careerbuilder.com/2011/06/03/howard-schultz-on-how-starbucks-got-itsgroove-back) In 2010, Starbucks said its profit increased more than eightfold in the second quarter, as more customers visited its stores and spent more. Its international arm and sales outside its own stores both helped increase profits to $217.3 million. It's revenues increased to a record $10.7 billion, and its operating income increased to $1.4 billion, up from $562 million in fiscal 2009. It was a painful period for the company in early 2009, but the fortunes of the chain and Mr. Schultz improved greatly in 2010. The decision to close 600 stores was the right one. Starbucks seemed to be expanding just for the sake of growing -- with little regard for profits or common sense. Thanks to more traffic in the stores and renewed earnings growth, shares of Starbucks had risen above $24 a share. Starbucks continued its strong performance in 2011, as more customers began to visit its stores around the globe. The Seattle-based company's 2011 fiscal year revenue increased 7 percent to $11.7 billion and its profit jumped nearly 32 percent to $1.25 billion, or $1.62 per share. In February, 2011, schultz said that two years ago, the chain was concerned about competition from McDonald's and the like. Now, he believes, "I think weve done a very good job in creating the kind of experience that really does differentiate Starbucks from everybody else. (http://www.huffingtonpost.com/2011/08/02/starbucks-growth_n_916380.html) In March 2011, Starbucks marked its 40th anniversary with a redesigned logo and a spate of new products, including a new line of calorie-conscious food and two types of coffee that will be marketed for a limited time. In july 2011, Debt as a percentage of total capitalization was at the lowest point since December quarter of 2007, Returns on equity and assets were at the highest levels in two years, Same-store sales growth had returned, driven by the perfect blend of customer traffic and transaction value increases. Starbucks had succinctly raised prices on top-selling drinks (like my double espresso) with no apparent resistance by caffeine addicted patrons, Operating cash flow on track totaled to $1.5 billion by fiscal year end, The company enacted its first dividend and upped the amount of shares available for repurchase. (http://seekingalpha.com/article/283187-starbucks-steamy-performance) Starbucks reported that it earned $382.1 million, or 50 cents per share, for the quarter that ended January 1, 2012. Thats up from $346.6 million, or 45 cents per share, in the same quarter the previous year. The companys total revenue increased 16 percent to $3.44 billion.

The company delivered major gains in its consumer products business, which makes Via instant coffee, Starbucks ice cream and other items for sale in grocery stores and other retailers. Revenue from this segment increased 72 percent. It also benefited from the addition of 241 new stores during the quarter. Starbucks now operates 17,244 stores worldwide. http://topics.nytimes.com/top/news/business/companies/starbucks_corporation/index.html http://money.cnn.com/2008/07/30/markets/thebuzz/index.htm

Case Study : Pizza Hut

Pizza Hut
It started in 1958 when Frank and Dan Carney opened the first Pizza Hut in Wichita, Kansas. The first Pizza Hut restaurant was small, with enough room for 25 seats; the restaurant sign only had space for nine letters. Frank and Dan wanted to have Pizza in the name, which left space for just 3 more letters. Because the building looked like a hutPizza Hut was born! Fifteen years later, the first UK restaurant opened. Since then Pizza Hut became the biggest Pizza Company on the planet. It is the UKs leading pizza restaurant and delivery chain too, with over 600 outlets across the country. It is a part of Yum Restaurants International (who also own KFC, Taco Bell, Long John Silvers, A & W and Pizza Hut Worldwide). Source: http://www.pizzahut.co.in/

Pizza Huts Mission Statement

We take pride in making a perfect pizza and providing a courteous and helpful service on time all the time. Every customer says, I will be back! We are the employer of choice offering team members the opportunities for growth, advancement and rewarding careers in a fun and a safe working environment. We are accountable for profitability in everything we do, providing our shareholders with value growth. P.E.A.R.L.S Passion for excellence in doing anything. Execute with positive energy and urgency. Accountable for growth in customer satisfaction and profitability. Recognize the achievements of others and have fun doing it. Listen and more importantly, respond to the voice of customer. Safety is always first. Source: http://www.slideshare.net/quvol/final-pizza-hut-2010

Pizza Huts Marketing Strategy

Pizza Hut has always tried to target and satisfy various customer categories in different countries depending upon various factors and situations. In order to fulfill its marketing objective of maximizing customer satisfaction by providing high quality products, it has believed in the following marketing strategy: Think Global, Act Local Pizza Hut has tried to target each and every diverse population segment either in the basis of age (kids, teenage, office goers, senior citizens) or on basis of lifestyle (singles or couples) or special interest groups (celebrations, parties, festivals). In Malaysia for instance, Pizza Hut targets both urban adults as well as families with pre teens and teenage children by offering a delicious mix of nutritious Italian-American cuisine which includes worlds favorite pan pizza. Pizza Hut Malaysia at the same time offers a cozy, friendly ambience in which to relax and have a great time with family or friends. Pizza Hut Malaysia success has been due to imaginative and innovative thinking in continuously developing, marketing and promoting new pizza products with unique and distinctive flavor, taste, style and appeal. In order to target the entire family experience, Pizza Hut launched a Hand Tossed Pizza which was Pizza Huts first step in traditional stuffed crust segment. It offers not- to- thin and not- tothick crust on which the entire family agrees. To tap the market for young single in- hurry office goers looking for fast lunch, Pizza Hut came up with Personal Pan Pizza for One. The Personal Pan Pizza revolutionized lunch and became the perfect solution to satisfy pizza cravings in a hurry. To satisfy the New York pizza lovers, Pizza Hut introduced a The Big New Yorker Pizza. This pizza was 30% larger than Pizza Huts largest pizza. In some countries, to capture the interest of Echo Boomer Generation which is the ultimate cheese loving population, Pizza Hut launched The Ultimate Cheese to give them the ultimate pizza experience. As Pizza Hut is the worlds largest Pizza manufacturing company believing in strategy of Think Global, Act Local, somewhere in USA, Pizza Hut introduced variants with extra cheese or large in size, at the same time, when Pizza Hut wanted to grow in international waters as Asia, it diversified to adapt their cultures and provide their favorite flavors. Source: www.Pizzahut.com

Pizza Hut: INDIA

Pizza Hut made its entry in India in 1996. Since pizza is a food foreign to the Indian palate, Pizza Hut tried to develop a bond with the Indian consumer. Pizza Hut went in for an Indianization campaign. They created Indian Toppings and vegetarian pizzas such as Paneer Tikka, Spicy Korma and the Tandoori range, which have been extremely successful. The worlds only 100% vegetarian Pizza Hut restaurants are located in Ahmedabad, Surat and Mumbai, and a special Jain menu sans root based ingredients (garlic and onion) are again a reflection of the companys adaptation to the local preferences. Dressings on salads are completely egg less. Pizza Huts advertising strategy also lays emphasis on its being an international brand with an Indian Heart. Its communication is reflective of family values and family bonding. For instance, Pizza Huts arranged marriage commercial in Indian settings, and the Palat(turn) pizza commercial in Hinglish reflect the adaptation. Secondly, highlighting the premise that the pizza is a catalyst that brings people together ensures that this is a foreign brand that connects the Indian consumer. The company understood that the Indian consumer is value conscious and not price conscious. Pizza Hut continuously reinforced its product quality and standards to remain in sync with the Indian consumer. While the company maintained the highest quality standards, they also delivered affordably. The target markets for the company are the young adults (18-29 years). The overall marketing strategy such as the launch of innovative new product ranges every couple of months, or the frequent introduction of exciting customer initiatives, or communication campaigns are centered on the group. In India, eating out has evolved into a form of entertainment. In the efforts to provide that overall dining experience, Pizza Hut not only serves the best pizzas but also sings and dances for the customers. The staff members dance to disco tunes in Mumbai and do bhangra in Amritsar. Families with young children are also recognized as an integral segment of the target audience. Birthday parties and get-togethers are a regular feature at the fast food joint. Pizza Hut wants to satisfy its customers by offering them the best, and expects every employee to be a customer maniac. Source: Organization Effectiveness and Change Management - Google Books

Competition at Core
In the segment of pizza restaurants, there are 4 major international players in addition to various national players operating in every country. Dominos Pizza Founded in 1960, Dominos pizza is the recognized world leader in pizza delivery operating a network of company founded and franchise-owned stores in national and international markets.

Dominos Pizzas vision illustrates a company of exceptional people on a mission to be the best pizza delivery company in the world. With more than 8000 restaurants and delivery units spread across in 50 countries, Dominos holds the 2nd position in international pizza market. Dominos is worlds fastest pizza maker. It makes 14 pizzas in 2 minutes and 35 seconds. Over the period since 1996, Dominos Pizza India has remained focused on delivering great tasting pizzas and sides, superior quality, exceptional customer service and the value for money offerings. They have endeavored to establish a reputation for being a home delivery specialist capable of delivering pizzas within 30 minutes or else FREE to a community of loyal customers from all their stores around the country.

Dominos

Pizza Hut competitor

Little Caesars

Papa Johns

Source: www.dominos.com

Papa Johns In 1984, John Schnatter, at the age of 22,he knocked down the broom closet in his fathers tavern, installed an oven and began delivering pizza out the back of the bar. From day one, John believed he could make a better traditional pizza by using fresh dough and superior-quality ingredients. Today Papa Johns remains focused on making superior quality pizzas along with a variety of other menu items, such as cheese sticks, chicken wings, soups, salads and pastas. Papa John's boasts over 3,000 restaurants around the world and has earned the praise of residents in every hometown. Papa John's is the world's 3rd largest pizza company and is known the world over for its delicious and superior-quality pizzas. Papa John's were able to achieve this by sticking singlemindedly to their promise: Better Ingredients. Better Pizza. Papa John's Pizza is fast becoming a favorite amongst pizza lovers in India. With 25 outlets in the country, 12 more getting ready for launch and 23 more to start serving by the fiscal end, Papa John's is looking to feed more pizza-hungry mouths. Source: www.papajohns.com

Little Caesars Little Caesars is 4th largest pizza manufacturer in USA. The company claims to be the largest carry-out pizza chain in the world. The company is famous for its advertisement campaign of pizza! Pizza! which was later altered to pan! Pan! to promote their Pan Pizzas. It is famous for selling more pizzas at fewer prices. It has notable differentiating strategy wherein it sells Hot-n Ready pizza for $5.00 only which means those customers do not have to call before taking the delivery of their pizza. They can just drop in to a Little Caesar outlet and collect their hot-n-ready pizza instantly. Little Caesar launched its first restaurant in Gurgaon, India in 2009. They are pleased to offer hot, fresh pizza at a value to consumers in India. They are looking forward to grow in India and other international locations with highly qualified franchisees. Source: www.littlecaesar.com

Seeking Competitive Advantage

To outperform the competitors and to grow despite them, Pizza Hut must know why competition prevails, why firms attack and how firms respond. This is done by undertaking Industry Analysis which assesses the attractiveness of the market based on its economic structure through Porters Five Force Model.

Porters Five Force Model

POTENTIAL ENTRANTS

THREAT OF SUPPLIERS BARGAINING POWER

RIVALRY AMONG EXISTING PLAYERS

THREAT OF BUYERS BARGAINING POWER

THREAT OF SUBSTITUTE S

Rivalry Among Existing Players

At present, there are 4 major players in pizza market namely Pizza Hut, Dominos, Papa Johns and Little Caesar and the degree of rivalry among them is very high. The reason is number of competitors is large, industry growth is high and the fixed cost involved is also high.

Threat of New Entrants

Secondly, since industry growth is high, it attracts new potential firms to enter into the market. However if the new entrant is experienced then it will be able to compete with the existing players else, the economies of scale enjoyed by the existing players will force the new entrants to exit the market.

Threat of Substitutes
Thirdly, there can be a threat from substitutes which in case of pizza industry can be other types of junk food as burgers, hot dogs, pastries, sandwiches or pizza in some other form as frozen pizza or pizza mixes.

Threat of Buyers Bargaining Power

Threat can also come from customers or buyers when there are number of suppliers of buyers, concentration is high or a large availability of substitute goods.

Threat of Suppliers Bargaining Power

Threat can also come from suppliers when there is large number of buyers from these suppliers, high concentration of suppliers, high switching costs, and non availability of raw material substitutes. As the competition among existing players, threat of potential entrants, threat of suppliers bargaining power is high, the pizza industry is highly competitive and due to high growth rate, it is highly attractive too.

Source: www.pizzahut.com www.pizzatoday.com

Scanning the Environment : SWOT Analysis

Strengths

Weaknesses
High overhead costs due to large number of restaurants High price pizza which leads to loss of customers. Internal franchisees. conflicts among

Name Recognition First-Mover Advantage (pioneer advantage) Competitive advantage as pizza hut has he largest network of full service restaurants and delivery services.

Broad selection of products to

target different segments.

Opportunities
Increase revenue through more and more innovative pizzas. Increase in brand loyalty through good customer service. Pizza hut has tremendous scope of expansion through its new online ordering system. Pizza Hut home delivery network and entry in to new markets.

Threats
Main threat is from competitors. Out of these threat from Dominos is main concern. The differentiation strategy

followed by any pizza chain is sooner or later adopted by all pizza industry players..

Any competitor offering same

quality and diverse flavors might be a real threat to Pizza Hut.

TOWS MATRIX STRENGTHS OPPORTUNITIES

SO Strategies (maxi-maxi)

WEAKNESSES
WO Strategies (mini-maxi)

In order to target different sections it may increase its revenue by creating more innovative pizzas.

Expansion through online ordering system may help in reducing restaurant costs.

THREATS

ST Strategies (maxi-mini)

WT Strategies (mini-mini)

Since pizza hut is a recognized brand it should keep finding new methods to lure the customers so that even if its one strategy gets imitated the other one is still suitable according to the changing customer needs.

The internal conflicts among the franchisees should be minimized to cope up with the various competitors in the market.

Pizza Huts Pricing Strategy

Pizza Hut follows A High/Low Pricing strategy as far as its new products are concerned where it fixes the price higher then its competitors and then gradually lowers the price below the competitors prices. In simple words, it is applying Price Skimming strategy for its new products. For instance, the price of the Extreme was fixed at $9.99 which was much higher then its competitors. But several sales promotions were used to reduce the price of the pizza below its competitors. Since both Pizza Hut and Pepsi are partners, Bundle Pricing is used where 2 litre bottle of Mountain dew was offered free with The Extreme pizza. As far as the pricing of established products is concerned, Pizza hut believes to give Value for Money to its customers. Thus in order to provide maximum value to the customers and enhance the brand value, it sometimes maintains the same prices while sometimes reduces the prices, while sometimes increase prices also. For instance, in India, when Pizza Hut launched The Great Indian Treat, it didnt increase price of existing pizzas, but reduced the quantity of products in its Value Meals combos. This is because consumers at pizza hut hardly buy single pizzas, they are more satisfied with value meal combos. Therefore by reducing quantity of meal combos, Pizza Hut implicitly increased its price

thereby encouraging customers to try new flavors and at the same time, maintaining its market share and sales. Pizza Hut also launched what is named as Pan 4 all at Rs.200 where pizza hut offered 4 pizzas of different tastes. This scheme provided value for money to the customers. Thus Pizza Huts pricing strategy revolves around providing maximum value to the customer at an affordable price. Pizza hut never plays the price game as it has positioned its brand on high quality and excellent customer service. And even Pizza hut customers dont mind paying a little more than its competitors because of the service it renders and quality it promises. Source: www.scribd.com

Recommendations
High Quality Personnel: In order to maintain the no.1 position in Pizza market, Pizza Hut must obtain total cooperation of its employees thereby increasing productivity, beating competition and enhancing customer satisfaction. For this, proper training program with high incentive schemes must be established. Pay more attention to untapped segment of Senior Citizens: Pizza Hut must innovate and launch some product for Senior Citizens. It could establish Pizza Hut senior club which will organize activities for oldies. Maintain the product quality by continuous innovations thereby giving surprises to the customer off and on. Innovations can be based on consumers reviews and feedbacks as to what changes are they looking for in their pizzas. Location, location and location: the most critical success factor for any hospitality business is Location. Pizza Hut does not aim to be premium brand with selective distribution, instead Pizza Hut is brand which must be available anywhere and every where people thinks of PIZZA. Thus Pizza Hut must increase it coverage. Emphasis on development of Home Delivery Network: Although in developing countries like India, Pizza Hut has opened up a call center to fasten the speed of home delivery. But Pizza Hut must think of more innovative ways to reduce the cost and increase the speed.

 More and More innovative promotions: In developing nations as India and China, where the pizza market is still in growth stage, Pizza Hut must do innovative promotions as done in USA, UK and England which will increase its brand awareness and brand equity. Source: http://www.docstoc.com/docs/24386017/Brand-Strategy-of-Pizza-Hut

Case Study: Mc Donalds

Mc Donalds
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice McDonald, in 1948 they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth. A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27 percent over the three years ending in 2007 to $22.8 billion, and 9 percent growth in operating income to $3.9 billion. McDonald's primarily sells hamburgers, cheeseburgers, chicken, french-fries , breakfast items, soft drinks, shakes and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, wraps, smoothies and fruit. The original mascot of McDonald's was a man with a chef's hat

Truck on top of a hamburger shaped head whose name was Speedee , and was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having puffed out costume legs. With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life .Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility. McDonald's restaurants are found in 119 countries and territories around the world and serve 58 million customers each day. McDonald's operates over 31,000 restaurants worldwide, employing

more than 1.5 million people .The company also operates other restaurant brands, such as PILES CAFE. Focusing on its core brand, McDonald's began divesting itself of other chains it had acquired during the 1990s. The company owned a majority stake in CHIPOTLE MEXICAN GRILL until October 2006, when McDonald's fully divested from CHIPOTLE through a stock exchange. Until December 2003, it also owned DONATOS PIZZA. Some locations are connected to gas stations/convenience stores, while others called McExpress have limited seating and/or menu or may be located in a shopping mall. Other McDonald's are located in Wal-Mart stores. Mcstop is a location targeted at truckers and travelers which may have services found at stops. http://en.wikipedia.org/wiki/McDonald's After 30 years without a major design overhaul, the 51-year-old fast-food giant is adopting a hip new look. It is redesigning its 30,000 eateries around the globe in a 21st century makeover of unprecedented scale. The redesign is risky and has many franchisees up in arms over the high costs of a makeover. But company officials believe the overhaul is needed. McDonald's, restaurants are visited by more than 40 million people every day. It has revamp its menu to attract a new breed of customer. It has added healthier items like premium salads targeted at women, and apple slices and skim milk for children more upscale items like Asian chicken salad show up on its menu. McDonalds promises to be a 'forever young'. The children have grown up eating and enjoying McDonalds and then grow into adulthood. The main reason for makeover is to attract ADULT APPEAL instead of just kids.

Changes
The big red roof looks too dated today its being replaced by a flat roof topped by a newly designed, contemporary, golden sloping curve. The traditional McDonald's yellow and red colors will remain, but the red will be muted to terra cotta and olive and sage green will be added to the mix. To warm up their look, the restaurants will have less plastic and more brick and wood, with modern hanging lights to produce a softer glow. Contemporary art or framed photographs will hang on the walls. After conducting a global contest among design firms, the burger giant chose New York-based Lippincott Mercer in the summer of 2004. McDonald's Europe had removed the red background behind its golden arches logo and replaced it with green. The idea was to symbolise commitment to the environment. Many changes are being made in order to attract adult appeal. These changes are as follows: Comfortable arm chair, cool hanging lights, funky graphics. photos on walls Wi-fi access Shedding kiddie bright colors in favour of more muted and universal colours. Less plastic more brick and wood Contemporary art or framed photographs Plasma TVs for news and weather reports. The new design allows different music to be targeted to each zone. Dining sections will be separated into 3 sections:

Linger zone will offer comfortable armchairs and sofas. The focus is on young adults who want to socialize, hang out, and linger. Grab and go zone will feature tall counters with bar tools for customers who eat alone. Flexible zone for families will have booths featuring fabric cushions with colorful patterns and flexible seating.

Resistance
McDonald's won't confirm the cost of a redesign however estimates are made between $300,000 to $400,000 to renovate an existing outlet -- an amount roughly equal to a restaurant's annual profit .Tearing down a store and rebuilding from scratch could cost $1 million The franchisees will have to pay for the renovations themselves, which has some of them seething. Many franchisees are dead set against this change, especially because they already spent millions remodeling their restaurants in the past few years. The roof change erases 40 years of brand building and there has been no business case presented which justifies the change .Only 20 recently opened restaurants in the U.S. sport the makeover in its entirety. Another 20, primarily in Tulsa and Columbus, Ohio, have been completely remodeled. All brand-new restaurants will have to hew to the redesign blueprints, and by the end of 2006, more than half of the 13,720 U.S. restaurants will feature some element of the design. It's something that McDonald's has to do if it wants to be part of the 21st century. http://www.businessweek.com/magazine/content/06_20/b3984065.htm

Feedback
The proposed change has clearly drawn both early flak and applause. Here are some feedbacks: Many feel that re-imaging of McDonalds restaurants are a welcome sight. Many feel that no matter how much they change its same old thing. There is food out there and better and with more competition. Few find photos not at all new and extremely boring. Many still prefer other fast food joints/restaurants over McDonalds and its Redesigning wont change that. Some observers feel that McDonald's core equity lies with kids , therefore the move to change to adult colors may actually end up alienating these young consumers who have made the brand so successful. Others have said that shedding the kiddie image through the change in colors, taking away the childish mascot Ronald McDonald and introduction of spicy dishes such as Mc Spicy Chicken, is absolutely the right way forward for a family fast food chain, where increasingly kids and adults eat meals together. In Europe many feel its beautiful and more flexible like a lounge. Many now visit more McDonalds after makeover than they did before.

SWOT Analysis

STRENGTHS

INTERNAL WEAKNESSES
Test marketing for pizza failed leaving them much less able to compete with fast food pizza chains. High employee turnover, more money spent on training.

Easily adapt to appeal cultural differences. Like lamb burgers in India and in Middle-East separate entrances for families and single women. Serves only branded processed items such as Kraft cheese, Nestle Chocolate, Heinz Ketchup. It also sponsors Olympic atheletes. Takes food safety very serious and is required to to run through 72 protocols every day. Invests more than $1 billion annually in training its staff.

OPPURTUNITIES

EXTERNAL THREATS
They are benchmark for creating cradle to grave marketing. They have been criticized by many parent advocate groups for their marketing practices. Sued many times for having unhealthy food with addictive additives leading to obesity epidemic. Major competitors like Burger King, Starbucks, KFC etc.

In todays health conscious environment introduction of healthy food items is a great opportunity. Provide optional allergen free food items such as gluten free and peanut free.

STRATEGIES
S-O (Utilising Strengths to exploit Oppurtunities.) S-T (Utilising Strengths to minimise threats.) W-O (Minimising the exposure of Weaknesses in order to exploit the Oppurtunities) W-T(Minimising the exposure of Weaknesses in Order to minimise the Threats.)

S-O Strategy
Since it has adaptable nature both in in terms of cultural differences and food (strength) and moreover today is scenario of healthy environment(opportunity)it can utilise its adaptive nature to overcome cultural differences and introduce more healthy food items in its menu according to different cultures .Moreover it takes food safety very seriously and follows around 72 protocols daily (Strength) and moreover many customers are either allergic to certain items like gluten and or peanut butter OR dislike gluten or peanut butter it can introduce gluten free or peanut free beverages. And as it uses only branded processed products like Nestle chocolate, Heinz ketchup it helps in reducing the probability of unsafe food for customers.

S-T Strategy
Since it has a very good brand image but has been many times criticised for using children for advertisements it can now give an family oriented advertisements as now it is trying to attract adult appeal.

W-O Strategy
It has a weakness of high employ turnover but still it can work in its advantage as its employees are efficient and work effectively. They are highly trained in their work so the probability of making error in preparing beverages of allergic customers is less or reduced.

W-T Strategy
Since its test marketing for pizza failed leaving them much less competitive with fast food pizza chains and on the other hand it has threat of being sued many times of for providing unhealthy foods with addictive additives leading obesity epidemic and pizza being the top most item in unhealthy foods it can use its weakness of marketing failure in pizza to overcome its threat of providing unhealthy food. While McDonald's is changing color to appeal to adults, other brands have undertaken permanent or seasonal color changes for a variety of other reasons. Some of these changes have succeeded, and others have failed miserably.

Here are few examples of color change strategy/Makeover that worked and that didnt worked. Worked
Hutch goes Pink Godrej Bank of Baroda

Hutch goes pink

Makeover of telecom brand Hutch in 2006 with Its Pink.The change of colour of Hutch from Orange to Pink was because of two reasons: Hutch replaced brand Orange. The need to refresh and differentiate the brand from competition as 90% of Indian brands were Red, blue or Green. However on the other hand, Pink is a brave, confident and exuberant color. The color change was SUCCESFUL by any standards, as it was consistently adding several lakh subscribers each month after change. It brought in a new age dimension to the brand and made it younger. Shortly Hutch was acquired by Vodafone and the brand color was changed to global Voda Red.

Godrej
Godrej Launched its new multicolored brand from a single color and transformed into a 3 colored brand: Green, Blue and Ruby. Transformation was accepted without resistance. The aim was to consolidate its presence in the various business areas in which it is present personal grooming, aerospace, property and lifestyle.

Bank of Baroda
Bank of Baroda suddenly changed its colors to to bright Orange. The country is dotted with the brands Orange signage which stands out. Since then Bank of Baroda has gained significantly higher recognition and cut through clutter.

Failed
Coca-Cola

COCA-COLA
Some time back, in the US, Coca-Cola launched white cans emblazoned with silver polar bears, replacing their trademark red cans. This was a temporary change to support the efforts of the World Wildlife Fund in protecting the polar bear, and it was accompanied by a high-decibel campaign with the logo We are turning our cans white because turning our backs wasn't an option. The white cans were unique, beautiful and quite appealing in themselves. They were also very different from the red cans which they replaced. However several consumers reported that the taste of the drink had changed, that the white cans no longer carried the same Coke taste they had enjoyed for so many years. Of course, there was no change whatsoever in the chemical composition or any ingredients of Coca-Cola, but the significant change in color had psychologically affected several consumers, getting them to think their favourite drink had changed. Some other consumers also said the white polar bear cans were confusingly similar to cans of Diet Coke. Exactly one month after launch, faced with such feedback, the Coca-Cola company halted further production of these white cans, and returned to their trademark red containers. Here is a clear example of a change in color that did not work, even though it was only a temporary move.

http://www.thehindubusinessline.com/features/brandline/article2828944.ece

Case Study: TESCO

Overview
Tesco Plc, a British multinational grocery and general merchandise retailer headquartered in Cheshunt, United Kingdom, is the third largest retailer in world by revenue and second largest measured by profits. The company was founded in 1919 by Sir Jack Cohen as a group of market stalls. It gets its name from the combination of name of the founder of Tesco and a partner in the firm of tea suppliers who Cohen worked with, T.E.Stockwell. Tesco opened its first store in Edgeware, North London in 1929. Since that time the company has grown and has reflected the changes in retailing. Till 1990s Tesco was a UK based grocery store but now it has diversified its operations geographically and entered into different areas and thus has an ultimate product ranges few are groceries, telecoms, financial services and consumer goods. Tesco is operating through 5381 stores, generating revenue of 60.93billion pound and giving employment to 4,72,000 people all across the world (as at feb.2010). Tesco is listed on London Stock Exchange and had market capitalization of approximately 24.4billion pound as of 15 July, 2012.

CASE STUDY
The objective of this case study is to find how Tesco has turned from UK focused grocery store (till 1992) to worlds second largest retailer (after Walmart) by profits and how it tackled external threats and took the advantages of the opportunities available and became the number one retailer in UK. Here we are going to focus on the performance of tesco from 1992 to 2004 and the strategies it applied to achieve its goals.

SWOT ANALYSIS:Strengths: Second largest retailer in UK: Tesco had market share of 16.7% in 1992. Being one of the market leader it was the preference of customers so it has the strength to do something new with the existing customer as it has the high probability of being accepted by its loyal customers Strong financial performance: Being one of the leading retailers in US , tesco had strong financial background to suppot its future growth plans. Low cost leadership: Products available at tesco stores were less costly comparative to other competitors. Loyalty schemes: Tesco had different loyalty schemes like clubcard.

Weaknesses: Concentration in UK: Tesco was operating only in UK and there for had no recognition and brand value outside UK and therefore it was difficult fot it to work globally. Lack of geographic diversification Debt reduction: Tesco is not expected to reduce its debt until at least 2006. Tesco has a large capital expenditure program mainly due to its huge investment in space for new stores.Since its expansion is so aggressive, Tesco has little free cash for any other operations.

Opportunities:
Non food retailing market: In UK, Tesco is going to format the hypermarket with their increased sales by shares of 3 percent in the coming few years. It is going to use the structure for the market strategies and the merchandising techniques to the growth of the company. It will help to the growth of the company in overseas business line. Tesco is estimated that it can enter into non food business and can operate it simultaneously with its food business. International expansion: As till 1992 Tesco was not operating outside UK but foreign competitors were entering UK, it had the opportunity to expand globally and give competition and survive and lead amongst competitors. Online presence: With the popularity of internet and lack of time with customers it had the opputunity to serve through online service.

Threats:
Increasing difficulty in getting planning permission for large greenfields sites Three strong competitors (Sainsbury, Asda & Safeway) The arrival of two new store formats: warehouse clubs (Costco) and limited assortment stores (Aldi, Lidl, Netto)

On the basis of SWOT analysis tesco took different strategic decisions.This can be explained through its strategic overview.

Tesco Strategy Overview

Segmented private label Products More to existing customers in existing stores Services Telecommunica tion Hypermarkets New customers in new channels Convenience stores Internet Expanded non food Financial Services

Increase Sales

France

Ireland Europe Central Europe New geographies

Turkey

South-east Asia Asia North-East Asia

1. Segmented Private label:According to this strategy, all private labeled products are labeled tesco and the company uses sub brands to segment the market. The companys own- lable products (50% of sales) are at three levels, value, normal and finest. This strategy was based on the preferences of consumers of different income groups and thus attracting the customers. Different sub brands available are tesco finest, tesca organic, tesco healthy living, tesco kids and tasco value. This strategy was a great success for tesco. -Tesco selects, prepares and packages everyday products in dozen of different ways-from fresh to frozen, from value packs to gourmet treats, from raw ingredients to ready meals. We are continually innovating and investing in new lines to increase choice for our customers.the tesco finest range, introduced in February last year, has been a great success.--- Tesco Annual Report1999 2. Non-food products:To achieve growth in non foods, Tesco focused on building its capacity in four non foods areas. They are entertainment, health and beauty, household and clothing. Tesco non food market share in UK increased from 1% in 1999 to 6% in 2004.In September 2004 tesco announced that 20% of its sales came from non foods and some of its stores are becoming destination of non-food products eg. Tesco extra hypermarket in Newcastle (100 million pound non-food turnover). Tescos clothing ranges, Cherokee, Florence and fred are the fastest growing in UK with 4.4% market share. Tescos petrol stations, in store pharmacies, Teso homes have been doing well also.

3. Services :Service Tesco Services Partners Bank financial Royal Scotland Year launched of July 1997 Details 50/50 Joint venture, Targeted Tesco clubcard holder initially

Travel Services

travelcare

Dec 2002

Online travel sold through tesco.com, Low cost packages andt ravel deals Leading shopping and information site for women in UK, Initially 50% stake then 100% Tesco Talk home telephone service, Low prices than British telecom 50/50 joint venture, initially prepay ;contracts later launched

ivillage.com

ivillage.com Inc (US)

Dec 2000

Tesco Telecom Fixed Cable and Wireless Jan 2003 Servista Vertex Line Telephone Mobile Phones O2 May 2003

Financial services: In partnership with RBS, Tesco started provided different tesco financial products like Clubcard plus, Tesco visa, saving account, home insurance, personal loans, travel insurance, tax free savings, pet insurance, motor insurance, life insurance,travel money etc. Tesco gives its financial services offer strong in-store support and has TPF cash machines in every store. Tesco personal finance made a profit of 160million across 4.2 million customer accounts in 2004 which rises from a 30million loss in 1998. 4. Store Formats:Tesco segmented its store portfolio into four different store formats to capture mere customers. They are :

Fascia

Format Hypermarket

Average Area(m2) 7,500

Sales Purpose Destination Shopping

Description Very large stores offering maximum food and non food range

Superstore

3,600

One-stop weekly Large stores offering a shop full range and non food products

Metro

1000

Top-up

High street store in large city centre shopping areas aimed at workers, shoppers and local residents Petrol station forecount shops selling a range of everyday product.

Express

200

Impulse

Tesco focused on developing either large or small stores, moving away from conventional stores and thus in 2004 it had 227 express, 447 superstores, 161 metro and 83 extra stores. The different Tesco store formats are designed to suit the varied shopping patterns of our customers. The flexibility they provide also helps us meet the changing demands of planning policy. In designing new stores, we take account of the specific needs of the local community and are careful to ensure that architecture and landscaping are in sympathy with the surrounding area Improvements in our ordering and distribution systems now allow us to supply smaller compact stores in areas which were previously difficult to serve. Tesco Annual Report 1995

5. Internet:Tesco is the worlds leader e-grocer with operations in three continents.Tesco.com is one of the few success stories in selling groceries on the internet. Tesco has operated on the Internet since 1994 and started an online shopping service named 'Tesco Direct' in 1997. Tesco.com was formally launched in 2000. It also offers a wide range of other products, including electronic goods, books, broadband and financial services.Tescos internet sales increased from 4 million in 1997 to 577million in 2004 while average orders per week increased from 1000 in 1997 10 1,20,000 in 2004. 6. New Geographies:Tesco was leader in UK but now it needs to expand its business and thus entered in international market to create new market for its products and services. Tesco objective was to capture large, growing market so as to add meaningful scale to existing UK business.Tesco financed its glabal growth with the profits of its UK operations.Tesco has a range of operations and competitors around the world and enters new countries by buying a well run retail chain. Date June 1994 Company Global TH Acquisition 57% # of Details stores 44 Purchased share of 44 store publically

listed Hungarian chain; average store size 3,000sqft Sept 1994 Dec. 1994 Nov. 1995 April 1996 Wm Low & 100% Co. Catteau Savia 5% 100% 36 13 57 Regional supermarket chain with 45 stores in Scotland and 12 England Increased stake in Catteau to 100% Small retail chain in southern Poland; average store size 5,280sqft Retail food and general merchandise business of US retailerKmart in former Czechoslovakia Acquired Food Retaining business of Associated British Foods in Northern Ireland and Rebublic of Ireland 13 Tesco owns 49% of Tesco Stores Thailand which acquired 75%of Lotus (270m sales); Charoen Pokhand owns remainder Purchased share in two hypermarket operation from Samsung Small chain of five modernhypermarkets in Izmir in western Turkey with sales of 124m; initial stake raised to 84.3%

Kmart Czech 100% & Slovakia ABF Retail 100%

May 1997

1998

Lotus

49%

Mar 1999 Nov 2003

Home Plus Kipa

81% 51%

2 5

Tesco is rapidly expanding internationally and now has operation in more than 12 countries. Till 2004 it was operating in 2 continents but after 2007, it entered in US market and thus now has stores in 3 continents. Tesco has learnt that it must achieve leadership or exit the market. -- Our strategy is to expand rapidly and become the strongest player in the markets we Paul Kennedy, CEO, Tesco Hungary, September 2003 operate in."

Tesco always acknowledged that owning (and even organically developing, prior to planning restrictions) Catteau in 1993-97 was never an end in itself. However, when the opportunity to take the next step forward emerged (to acquire some or all of Docks De France in 1996), Tesco could not justify the considerable outlay (c. 2 billion) to itself in returns terms (and in the short time allotted). And we can add that many shareholders were relieved that Tesco made this decision. Morgan Stanley, Jan 1999

7. Tesco Steering Wheel Strategy:-

--Tesco doesnt want one leader. We want thousands of leaders who take initiative to execute the strategy. This is the statement made by Sir Terry Leahy, CEO of Tesco. According to Sir Terry Leahy, the biggest challenge was of delivering a distinctive and consistent buying experience to consumers in every store when more than 400,000 employees are working for it in

multiple countries.So to keep local store managers and employees engaged in satisfying consumers in their shopping experiences tesco came with the concept of The Tesco Way. They aimed at improving its competitive position in the market by becoming more customer focused and concentrated on differentiating itself from other retailers through the services it provided. Tesco communicated its new strategy to its employees via a "steering wheel," a simple symbol and metaphor for a tool intended to drive performance and help employees navigate into the future. The Tesco steering wheel has four 90 degree arcs, representing the four BSC areas of focus: financial, customer, operations, and employee performance. Every store gets a monthly steering wheel update, a summary of its metrics within each of the four arcs, so that all employees in Tesco's multiple regions and formats get feedback on their performance. Tesco supplements its steering wheel report with "shopping lists" that capture key elements of the strategy in simple forms that employees can follow in their everyday activities. The steering wheel has helped the company stay focused on its strategy even as it experienced rapid growth over the past two decades. Recently, Tesco added a fifth dimension, community, to the steering wheel report to encourage employees to be excellent citizens in the communities where they work and live. Conclusion:In the light of above analysis it can be concluded that since the introduction of strategic changes by tesco, tescos performance has been improving domestically as well as globally. Every strategy has reaped benefits to tesco in terms of profit and customer loyalty by increasing their satisfaction level. Tesco has turned from one of the leading UK retailer to top retailer in UK ang second largest in the world in terms of profits. Tesco success story is a great example to lean how strategy as well strategic management are important for success of an organization. Market Share of the Top Four Supermarkets (%) 1998 1999 2000 2001 Sep 2003 Apr 2005 Feb 2006 Tesco 22.9 23.4 19.1 14.8 10.0 24.2 18.6 16.2 10.1 22.8 15.8 12.4 9.3 29.8 16.2 17 10 6 26 15.9 16.5 12.2* 30.6 16.3 16.6 11.1*

Sainsbury's 19.8 Asda Safeway Morrisons 14.1 10.2 -

Sources: BBC News and Yahoo UK

Tesco's Summary Five Year Record Year ended February 2001 (m) 22,585 2002 (m) 25,401 2003 (m) 28,280 2004 (m) 33,557 2005 (m) 37,070

Group sales Turnover excluding VAT UK Rest of Europe Asia

18,203 1,737 860 20,800

19,821 2,181 1,398 23,400

21,309 2,664 2,031 26,004

24,760 3,385 2,669 30,814

27,146 3,818 3,010 33,974

Underlying operating profit UK Rest of Europe Asia 1,100 70 4 1,174 Return on capital employed Retail statistics UK Number of stores Total sales area (000 sq ft) 692 17,965 729 18,822 163,443 1,982 21,829 160,157 1,878 23,291 162,459 1,780 24,207 166,534 11.0% 1,213 90 29 1,332 10.8% 1,297 141 71 1,509 10.2% 1,526 184 122 1,832 10.4% 1,694 218 152 2,064 11.5%

Turnover per full-time equivalent 159,678

employee () Weekly sales per sq ft () International Number of stores Number of hypermarkets Total sales area (000 sq ft) Source: Tesco Annual Review, 2005 These data also suggests that tescos strategic actions were a huge success and helped it in achieving its objectives. But still tesco has the opportunity to grow by expanding its business in othes continents. It can now with its strong global financial structure, enter in US and give challenge to Walmart in its domestic country. It has many future options.(IN 2007 tesco entered in US market) We're not in South America, happily. We've been pretty careful. We haven't invested in Russia or Indonesia. You have to make choices about where you go. We don't always get it right, but we're pretty happy about our country selection. So far, so good. David Reid, Chairman, Tesco, October 2003 We never say never to the U.S. It's a big market, it's a good market in many ways. If we could find the right way, we'd obviously have a look at it. We're very cautious because Britain doesn't have a great track record over there. But equally, if Tesco is in Europe, in Asia, then maybe one day it will be in the U.S. David Reid, Chairman, Tesco, October 2003 "We don't want to be sitting here in 10 or 15 years' time saying China has been a great success and what a shame Tesco wasn't there. David Reid, Chairman, Tesco, Sept 2003 References http://www.ivoryresearch.com/sample36.php http://www.ivoryresearch.com/sample5.php http://blogs.hbr.org/hbr/kaplan-norton/2008/09/tescos-approach-to-strategy-co.html http://www.corporatewatch.org/?lid=252#stra http://www.bized.co.uk/educators/16-19/business/strategy/activity/strategic1.htm http://www.freeonlineresearchpapers.com/case-study-tesco-plc http://en.wikipedia.org/wiki/Tesco 215 68 10,397 250 102 13,669 309 152 18,115 440 194 22,111 554 273 24,928 21.75 22.43 21.86 22.48 23.89

http://www.mbaknol.com/management-case-studies/tesco%E2%80%99s-%E2%80%98steeringwheel%E2%80%99-a-tool-for-strategic-value-creation-and-business-transformation/