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1. Resource and capability analysis

2. VRIN test
3. Core competence
4. Distance competence
. Resource bundles
!. Dynamic Capability
". #$%T analysis
&. Value Chain
'. (ench )ar*in+
The ,irst decade o, the 21
-uly 2...: company o,,ered employee stoc* option plan /0#%12
2.1132.12: terrorist attac* and dot com bubble burst made 4)5s sales dropped by 34 6
,rom 2.2 (illion to 1. (illion. Decline in pro,its ,rom positi7e 44 million to a ne+ati7e
! million
2.13: 4) drop tradition o, lon+ li7e employee by layin+ o,, 3& 6 o, 8or*,orce and
closin+ entire plant in 9eor+ia.
To replace li,e lon+ employee they ha7e ne8 social contract.
The implementation o, ne8 social contract: company desi+n bene,it plans such as
educational reimbursement and 4.1 : plans to be more portable. The intention is to
decrease the cost o, chan+in+ ;obs ,or employee 8hose the +i,ts and talents no lon+er
matched 8ith the company.
2..332..&: pro,its be+an to climb< in 2..&< thou+h not all hi+h but it reached a record
2..' : hit by recession. #ales dropped by 1' 6 ,rom 2 billion to 1.! billion. 1ro,its also
dropped ,rom 12 million become !& million
2.1.: they produce +ood =uality chair 8ith hal, the price
4) in 2.13:
The belie,s: intended as a basis ,or unitin+ all employees < buildin+ relationships< and
contributin+ to communities:
3 Curiosity and e>planation
3 0n+a+ement
3 1er,ormance
3 Inclusi7eness
3 Desi+n
3 ?oundations
3 @ better 8orld
3 Transparency
4)5s li7in+ o,,ice
2.13 4) be+an introduced Ai7in+ %,,ice< an antithesis o, cubicle o,,ice. Ai7in+ o,,ice is
desi+ned to ,oster camaraderie< connection< spontaneous interaction and +roup
@t 2..': cut o,, the salaries o, the 8or*ers< startin+ 8ith the top mana+ement. (ut ended
in 2.1. as the ,inance o, the company impro7es.
#0C re+ulations re=uired that public traded company to ha7e board o, directors. 4)5s
corporate policy ma;ority o, (%D had to be independent 8ith N@#D@B standard
In 4) 8or*ers all le7els encoura+ed to +i7e and put ne8 ideas. 4) practiced shared
leadership in it5s mana+ement.
(ecause o, the employee ,elt empo8ered they acted as company 7alue ,or e>ample 8hen
the C0% 8as puttin+ o, his sa,ety +lass o,,< a 8or*er scolded him and told him to put it
The empo8erment o, the employee also rein,orce throu+h employee +i,t committee and
the en7ironmental =uality action team. 4) employee also could 8or* 1! paid hours a
year 8ith charitable or+aniCations o, their choice. The company set +oals ,or the number
o, employee 7olunteer hours contributed annually to its communities. 1ro+ress to8ards
meetin+ those +oals 8as reported to the C0%.
The en7ironmental a,,airs team had responsibility ,or such acti7ities as recyclin+ solid
8aste and desi+nin+ products ,rom sustainable resources
4) products 8e sold internationally throu+h 8holly o8ned subsidiaries in countries and
8ere o,,ered throu+h independent dealerships spread o7er 1.. countries. 4) used so
called +reen mar*etin+ to sell its product. To enhance its mar*etin+ analysis and
promotions 4) also se+mented its mar*ets +eo+raphically
4) stro7e to maintain e,,iciencies and cost sa7in+s by minimiCin+ the amount in7entory
on hand throu+h -IT process. #ome suppliers deli7ered parts ,i7e or si> times a day
1roduction 8as o7er dri7en 8ith direct materials and components purchased as need to
meet demand. The standard lead time ,or the ma;ority o, the company products 8as 1. to
2. days. @s result< the rate o, in7entory turno7er 8as hi+h. 4) manu,acturin+ strate+y
8as to limit ,i>ed production cost by outsourcin+ component parts ,rom strate+ic
suppliers . This strate+y had allo8ed the company to increase the 7ariable nature o, its
cost 8hile retainin+ proprietary control o7er those production processes that it belie7ed
pro7ided a competiti7e ad7anta+e. )anu,acturin+ operations 8ere lar+ely assembly3
4R mana+ement considered as stren+th o, 4). The 7oluntary turno7er at 4) to be less
than 2 6
1ay 8as +eared to ,irm per,ormance and too* many ,orms. @ll employee recei7ed a base
pay and< in addition participated in pro,it sharin+ pro+ram< a retirement income plan < a
len+th o, ser7ice bonus< uni7ersal annual bonus based on 0V@ ob;ecti7es. (eside those
the employees also +et standard bene,its such as health insurance< dental insurance<
7ision care plans< prescriptions plans and lon+ term disability plan< li,e insurance<
accidental death and many more.

durin+ normal economic times< ,inancial mana+ement at 4) 8ould ha7e been
considered conser7ati7e. Throu+h 2..!< the companyDs le7era+e ratio 8as belo8 the
industry a7era+e and itDs time interest earned ratio 8as o7er t8ice the industry a7era+e
durin+ recession the debt to e=uity ratio rose ,rom 1.1& /2..!2 to 4".!! /2..&2.
to impro7e this condition 4) sold more than 3 million shares o, stoc* in ,iscal 2..'. in
,our pre7ious year 4) had been repurchasin+ shares. The debt to e=uity ratio 8as
reduced to 3.&1 by the end 2..'. to impro7e short term assets< di7idends per share cut by
appro>imately ". 6 and capital e>penditures 8ere reduced to Cero in 2..'.
,or 2..&< 16 o, 4) re7enues and 1. 6 o, itDs pro,its 8ere ,rom outside north @merica.
In 2.." outside north @merica countries accounted ,or 1!. 6 re7enues and 2.6 o, 4)
pro,its. 4) al8ays belie7ed to in7ested in RED< it in7ested tens o, millions ,or RED.
The in7estment pro;ect 8as code named purple.
The accessories team
this 8as an out+ro8th pro;ect ,rom pro;ect purple. %ne o, the +oals o, the accessories
team 8as to stretch beyond normal business boundaries. %,,ice accessories 8as one area
in 8hich 4) had not been historically in7ol7ed.
In 2..! they assembled a ,le>ible team to launch a ne8 product in 1! months. The team
consist people ,rom many disciplines. %7er the ne>t 2 months they remained a +roup o,
si>. Durin+ its ,irst & months the accessories team met t8ice a 8ee* ,or hal, a day. 2.
months out it met only once a 8ee*. The +roup acted 8ith a ,air amount o, autonomy but
not ,ully.
Aeadership and decision ma*in+ 8as shared both 8ithin the accessories team and across
the or+aniCation. %ut o, this process +re8 4)Ds Thri7e collection. The name 8as chosen
to indicate the ,ocus on the indi7idual and the idea o, personal com,ort< control and
er+onomic health. Thri7e collection 8ere desi+ned ,or impro7in+ the indi7idualDs
8or*in+ en7ironment
o,,ice e=uipment 8as economically 7olatile industry. This se+ment 8as hit hard by the
recession. Industry sales decreased by 2!. 6 ,rom 2..& to 2..'. 4) stoc* mar*et 7alue
o, more than 1 billion at the end o, 2..' represented ".3 6 o, total stoc* mar*et 7alue o,
the industry. The 7alue o, 4) shares had increased more than 1.4 billion by 2.11
representin+ 1..& 6 o, the industry total stoc* mar*et 7alue. The top 3 competitors 8ere
ha8orth< steelcase< and 4NI corporation the industry had been impacted by couple o,
trends such as:
1. telecommutin+ had decreased the need o, lar+e companies to ha7e o,,ice
e=uipments ,or all employees
2. more employees 8ere spendin+ more hours in ,ront o, computer screens than e7er
be,ore / need ,or er+onomically correct o,,ice ,urniture had increased to help
decreasin+ ,ati+ue and in;uries2
3. cost o, ra8 materials and competition o7erseas
those trends tended to impact lo8 cost o,,ice ,urniture producers more than they impacted
,or the hi+h =uality producers.
T40 ?FTFR0
4) per,ormance had steadily impro7ed throu+h year end 2.12
4) e>ecuti7es ,aced 2 =uestions:
1. 8ill the strate+ies that ha7e made 4) an outstandin+ and a8ard 8innin+
company continue to pro7ide it 8ith the ability to rein7ent and rene8 itsel,H
2. $ill disrupti7e +lobal< economic< and competiti7e ,orces compel it to chan+e its
business model
C4@1T0R 4 BF0#TI%N#
1. ho8 8ell is the companyDs strate+y 8or*in+H
2. $hat are the companyDs competiti7ely important resources and capabilitiesH
3. @re the companyDs cost structure and customer 7alue proposition competiti7eH
4. Is the company competiti7ely stron+er or 8ea*er than *ey ri7alsH
. $hat strate+ic issues and problems merit ,ront burner mana+erial attentionH