ADMINISTRATIVE PROCESSES

Final Examination

3rd Tri. SY 2020-2021

1. Two of the major competitors in the fast-food industry – Wendy’s and Mcdonald’s have
positioned themselves differently. Wendy’s has taken the adult approach, practically ignoring
the children’s market with its advertising tie-ins and toy giveaways. Mcdonald’s has long
pursued the kids’ market. Think about demographic and sociocultural trends and changes. How
would each organization’s interpretation of these trends and changes affect its choice of
strategy? Which organization do you think is positioned better? Explain your choice.

2. Customer loyalty can be a powerful competitive advantage. And customer loyalty is more than
repeat purchasing. Customers who are loyal tend to buy more over time and, most important,
tend to tell others about a company to their family, friends, and colleagues. Enterprise Rent-
ACar figured this out early on and, rather than having a complicated and sophisticated customer
research program, they focused on two simple questions – one about the quality of the
customer’s rental experience and, the second, the likelihood that they would rent from the
company again. What do you think about this view? What organizational capabilities would be
necessary to develop customer loyalty?

3. Although the styles and details may have changed, the shirts, skirt and jackets we wear today
aren’t a whole lot different than what was worn a decade ago. However, the ways they’re
produced have been transformed by a forced infusion of information technology. When
American apparel makers learned to view their product not as pieces of fabric sewn together
but as a process of harnessing information along a chain that runs from the factory floor to the
retail counter, they were able to improve their performance. Strategic factors such as bar
coding, computer systems and software, high-tech distribution centers, and uniformity
standards have played a role in this reinvention of the clothing industry. How would each of
these factors affect a clothing manufacturer’s functional strategies in R&D,
productionoperations, marketing, HR management, informational systems, and financial-
accounting systems?

4. Time for Bread

From the heartland of America comes bread baked with heart. As a leader in the fast-casual
dining business, St. Louis-based Panera Bread Company operates and franchises more than
1,540 bakery cafes in 40 states and Canada under the Panera Bread, St. Louis Bread Company,
and Paradise Bakery & Café trademark names. Its mission statement – A loaf of bread in every
arm – reflects the company’s purpose and its passion.
Panera’s beginnings can be traced to 1981 when CEO Ron Shaich confounded Au Bon
Pain Company, which operated bakery-cafes on the East Coast and internationally. Shaich and
his management team were looking for a concept that combined Au Bon Pain’s quality food
with the potential for a broader appeal. In late 1993, Shaich met the owners of St. Louis Bread
Company which had 19 bake shops doing about $1 million in lunch business a year. St. Louis
Bread has targeted suburban areas where real estate was less expensive, the competition was
less intense, and the target customers lived. Shaich sensed an opportunity, seeing it as “our
gateway into the suburban marketplace and backward into a manufacturing business.” After
studying the business inside and out, they decided to sell Au Bon Pain Company and purchase
the St. Louis Bread Company. Their goal – turn the concept into a national brand under the
Panera Bread name.
The management team at Panera (Latin for “time for bread”) spent considerable time
trying to figure out what this business should look like. They looked at restaurants,
coffeehouses, and even retailers in an attempt to understand what it would take to be
successful. One thing they discovered was that consumers were tired of the boring sameness of
dining-out choices. Shaich said, “Customers are rejecting fast food. They want something better,
something special.” The new owners knew they would have to achieve that perception by
paying careful attention to the details. They also used what they had learned in running Au Bon
 Pain-quality makes a real difference. In Panera’s case, that means, among other things, making
fresh dough every single day in 26 locations and trucking it to the cafes for baking.
During 2011, Panera opened 68 new stores. Compare that to 2007 when the company
had opened 169 new stores.
The uncertain economic environment over the last couple of years led the executive
team to pursue more moderate rate of growth. Panera’s locations, of which about 62 percent
are owned by franchisees, sell custom sandwiches made with artisan breads as well as soups
and salads. Customers also can buy bread, bagels, pastries, and gourmet coffees to go. Panera
has attracted customers and built significant loyalty by concentrating on the quality of their
fresh-baked breads and other ingredients. Although the average customer check at a typical
Panera store is $8.51, company executives recently implemented a “category management”
strategy to redefine its menu structure and utilize store associates to change customer behavior.
The goal was to increase gross profit per sales transaction. An important component of this
strategy was a system wide rollout of breakfast items that utilized many of the ingredients
already in fixed labor costs. Another important component was the rollout of the MyPanera
Loyalty Program. Guests who register can earn a combination of rewards and enjoy unique
experiences allowing Panera to deepen relationships with its most loyal customers. This
program has resulted in increased purchase frequency with MyPanera members. Even in
today’s worrisome economy, the company appears to have tapped into a consumer
phenomenon of affordable indulgences. Consumers want to “reward” themselves with small but
good-quality products in a few categories that are important to them. Panera’s premium
sandwiches, bread, and pastries fit into this category. Maybe it really is Panera’s “time for
bread!”

Discussion questions
1) What corporate, competitive, and functional strategies is Panera using to realize it goal
of turning the concept into a national brand under the Panera Bread name? Be as
specific as possible.
2) How would you recommend Shaich and his management team evaluate whether the
company is accomplishing its corporate strategy?
5. They’ve Got Game
Which one of the world’s most recognizable slogans (Just Do It) and brand logos (the
swoosh), you wouldn’t think that Nike would have to worry about the competition. However, in
the athletic apparel industry where consumer tastes are fickle and the intensity of rivalry high,
even Nike needs effective competitive strategies.

Nike, the company, reflects the brash confidence of its founder and board chairperson,
Phil Knight. He still believes, as one of his company’s most controversial Olympic ads once
stated, “You don’t win silver. You lose gold.” With that type of attitude, its no wonder that its
shoes are consistently top sellers and that Nike is the innovator and industry leader as the
world’s number one athletic apparel company with 40% of the US athletic footwear market.
How does Nike play the game?

One thing Nike understands well is the power of a competitive spirit, which continues to
be a guiding force in the way the company does business. The competitive spirit, instilled by the
late Bill Bowerman, Knight’s mentor and track coach at the University of Oregon, has
characterized the company’s culture from the early days. The company (then called Blue Ribbon
Sports) began with a handshake between Knight and Bowerman as they decided to import
cheap, high-tech Japanese “Tiger” shoes to challenge Adidas, the industry leader. Even then,
Knight was not afraid to go after someone, even the industry leader. And this competitive spirit
influences strategic actions in other areas. For instance, when Foot Locker (one of Nike’s biggest
retailers), upset by Nike’s hard-nosed marketing tactics, trimmed orders and slashed prices, Nike
struck back by cutting shipments to the company on some of its top sellers. The move had
serious consequences (Nike’s US sales fell 5% and its stock price plummeted), but it also brought
Foot Locker back to the bargaining table. Later, an analyst said, “Nike knew its actions were
going to have a negative impact, but they did it anyway” because they knew they’d prevail at
the end. Even the company’s name reflects this competitive spirit: Nike is the name of the Greek
goddess of victory.
 Another thing Nike understands well is marketing. Knight has been called the “most
powerful person in sports” even though he’s never played pro sports or owned a pro sports
team. What he’s done, though, is rewrite the rules of sports marketing. When he signed a young
basketball player by the name of Michael Jordan, an endorsement relationship began that even
today remains the gold standard. And Nike continues to go after the new sports geniuses. For
instance, Nike consistently beats rivals to sign top athletes to endorsement contracts. And you
can’t discuss Nike’s marketing prowess without mentioning the company’s legendary ads. Nike
has always taken chances in its advertising by sounding off on social and political issues in
sports. Knight says he knows that he risks offending people but believes “the publicity and
notoriety are worth it.” CEO Mark Parker says that the company is making major changes at the
retail level. He says, “We’re grabbing the opportunity to take Nike and our industry to
someplace new, where consumers have experiences that are physical and digital and mobile.” In
addition, the company acquired Umbro, one of the world’s great football brands.

Not only is the company on the cutting edge in its marketing, but it continues to take
risks in its products. It’s focusing on more actions markets such as skateboarding, snowboarding,
and surfing. And it’s developed a new collection of casual and sporty street apparel. Whether
the company can exploit its brand power in these new markets remains to be seen. But one
thing is for sure… this company’s got game!

Discussion questions

1) Describe Nike’s company strategy.

2) What competitive advantage(s) do you think Nike has? Have its resources, capabilities,
or core competencies contributed to its competitive advantage? Explain.
3) Do Nike’s functional strategies support its competitive strategy? Explain.
4) What do you think Nike has to do to maintain its strong competitive position?