MBA PROGRAM

MASTER OF BUSINESS ADMINISTRATION

STRATEGIC MANAGEMENT (MBA 731) –TAKE HOME EXAMINATION

NAME: _____________________________________ID NO: ___________SECTION: _____

Instructor’s Name  Instructor’s Name 

Hailemariam G. (Ph.D) Yirgalem T. (Ph.D)
hailishflying7@gmail.com yirgishing1997@gmail.com

Instructions: Please carefully read the instructions below

1 The exam must be taken completely alone. Checking your exam answers or discussing any of the
materials or concepts with any other person is forbidden. If the students’ exam answers are found
the same, it shall be voided automatically
2 You can work on the exam for 48 hrs. Please submit the exam answer file typed in a word
document or scanned image to your course instructor via email only BEFORE 1:59 PM ON
TUESDAY, MAY 05, 2020. Unequivocally no postponements - Late submissions are totally
unacceptable. The only option for submission is by email. Email problems will not be accepted for
any case. It is your responsibility to make sure that your email works properly and that your
instructors receive the submission on time.
3 While sending the email, write your section and program (extension/weekend) in the subject line
4 Once exam answer file is submitted for grading, no requests for amendments or supplements will
be permitted.
5 Once you submit your exam answer file, you will receive a confirmation email from your course
instructor. If you have not received confirmation email within two hours of sending your email,
please contact your instructor.

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 Date: May 03, 2020
Maximum Mark: 50%

INSTRUCTION-DISCUSS ALL THE QUESTIONS AND SUPPORT YOUR VIEW WITH EXAMPLE(S)

Q1#

CASE STUDY- ONE

Proactive Response Strategies to COVID-19 Business Challenges

Since the COVID-19 crisis struck, organizations in vulnerable sectors worldwide have seen their
revenues drop substantially in a matter of weeks — in some cases, dwindling to almost nothing.
Countless companies have taken reactive steps to ward off major losses, such as establishing
remote work arrangements, securing supply chains, reducing employee workload, cutting costs,
and applying for government support. After a burst of frenetic activity, some organizations finally
have time to think about capturing opportunities.

One proactive business response to COVID-19 is to offer the same (or similar) products and
services through an online channel. This may occur through the digitization of physical products
or, in the case of services, through a technology-mediated delivery solution.

When Chinese cosmetics company Lin Qingxuan was forced to close 40% of its stores, including all
of its locations in Wuhan, sales plummeted by 90%. However, the company redeployed its beauty
advisers as online influencers, leveraging digital tools such as WeChat to engage customers
virtually and drive online sales. On Valentine’s Day, Lin Qingxuan launched a large-scale, live
stream shopping event featuring more than 100 beauty advisers; one adviser’s sales in just two
hours equalled that of four retail stores. The company’s February sales climbed 120% over last
year’s.

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When Nike was forced to shut more than 5,000 of its 7,000 directly owned and partner-operated
stores across China, its offline business ground to a halt — but its online operations did not. Nike’s
staff engaged with Chinese consumers digitally by offering at-home workouts. Between December
2019 and the end of February, Nike reported more than 35% growth in its online sales in greater
China over the same period the previous year. As stores began to reopen across the country,
Nike’s digital business accelerated even more, approaching triple-digit growth levels. Nike now has
a road map to follow as the virus makes its way across Europe and North America.

Meanwhile, vineyards from Burgundy to Napa Valley are offering online wine-tasting lessons in
combination with wine purchases and have seen sales explode. Similarly, London’s Bimber
Distillery, a whiskey maker, has cancelled its distillery tours, instead delivering tasting kits to
customers and running events online.

As more and more people are confined to their homes, there is a golden opportunity for
educational institutions to proactively expand the scale and scope of their operations. While
many schools, universities, and private-sector education providers have temporarily closed their
doors, others have quickly shifted their instruction online. For example, Zhejiang University (ZJU),
a renowned university in China, officially started online teaching on Feb. 24 — in line with the
original term calendar. Contingency teaching covers all ZJU students, including international
students, and many courses are open to learners worldwide. Two weeks into the experiment, the
university was offering more than 5,000 courses to both undergraduate and graduate students.
The course hub learning at ZJU attracted 570,000 visits, and its live streaming app achieved a
total audience of 300,000. Meanwhile, around 2,500 graduate students at the university are
expected to defend their theses online this spring.

Anther proactive business response to COVID-19 is dampening the demand for many products
and services, resulting in an underutilization of organizational infrastructure. Factories run under
capacity; restaurants, bars, and hotels sit empty; service providers go unused.

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While the need for some products and services has fallen, however, demand for others is high
and even growing. Some organizations are taking advantage of this shift by deploying existing
infrastructure to produce different products or to offer new types of services.

As soon as it became clear that hand sanitizer was in short supply worldwide, companies such
as LVMH (perfumes), Pernod Ricard (alcoholic beverages), and Skyrora (rockets) switched to
producing it within a few days. Meanwhile, car manufacturers such as GM and Ford have
modified some idle production lines to manufacture medical devices like ventilators. With sales
of cars in China down 90%, automotive giant BYD Co. switched to producing millions of surgical
face masks per week. James Dyson, founder of Dyson, announced that the company had
designed and built an entirely new ventilator in just 10 days, after receiving a request from British
Prime Minister Boris Johnson.

Hotel chains such as Best Western and Hilton have pivoted, offering their rooms to hospital staff
and COVID-19 patients in the United Kingdom. Limited to no-contact takeout and delivery
services, restaurant sales have plummeted, while grocery stores have had to limit items per
shopper due to high demand. The Panera Bread chain, aligning to the changed market, has
increased the range of products it sells from its cafes, now including staple groceries along with
salads and sandwiches in a new Panera Grocery service.

Chinese company Huami, manufacturer of the Xiaomi fitness-tracking band, is shifting its current
focus from fitness to data. Reviewing its data on 115,000 users in Wuhan and neighboring areas
from July 2017 to February 2020, Huami found an anomaly in January’s sleeping heart-rate data.
(Similar patterns were found in other Chinese cities coincident with the virus’s local spread.)
Huami is now developing an early-warning system to flag similar future anomalies and possibly
preempt another major pandemic.

Suddenly struggling to meet the demand for their products and services, some companies need
to quickly augment their infrastructure to increase production and/or delivery capacity. Finding
new infrastructure is easier said than done and often requires collaboration with external

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partners, but a number of organizations worldwide are taking inventive steps to bridge such
gaps.

Amazon recently announced that it is looking to hire an additional 100,000 employees in the
United States to meet increased demand from homebound online shoppers. It has
now partnered with the ride-booking company Lyft as both demand and fares for Lyft trips have
fallen dramatically. Lyft is encouraging its drivers to pursue positions as warehouse workers,
delivery people, or grocery shoppers to earn additional income, and applications for Amazon
positions are available through the Lyft driver web portal.

Walmart, meanwhile, hopes to hire up to 150,000 temporary employees in the United States to
meet increased demand. The company also plans to pay $550 million in bonuses to its current
employees. The application process for temporary employees will shrink from two weeks to a
single day, and the company is reaching out to the hospitality and restaurant sectors to hire
people facing layoffs.

In Sweden, over 1,000 laid-off Scandinavian Airlines workers were offered fast-track training to
help the country’s health care system fight the coronavirus pandemic. In the U.K., easy Jet and
Virgin Atlantic crew and staff — including thousands trained in CPR — were offered jobs in
temporary NHS Nightingale hospitals.

The sharing economy has been a popular business model in China for some time, as enterprises
have embraced shared bikes, cars, portable batteries — and, most recently, employees. When
Alibaba’s supermarket chain Hema found itself in urgent need of labor to meet demand, it turned
to an innovative “employee sharing plan” to “borrow” more than 3,000 employees made
temporarily redundant from jobs in restaurants, hotels, and movie theatre chains. Borrowed
employees were trained to work as either goods sorters or packagers, and Hema worked out an
employee salary split with employers.

In Germany, McDonald’s staff have been given permission to work at Aldi stores while the fast-
food chain’s restaurants are shut. Aldi has been overwhelmed by demand as grocery shopping
has significantly increased during the pandemic. The employee-leasing agreement is for a limited

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period only, and all those who apply can simply return to McDonald’s once their restaurants
reopen.

By: Michael Wade and Heidi Bjerkan April 17, 2020 https://sloanreview.mit.edu/

Read the above article and answer the following questions: [15 Marks]

A). Do you observe any integration or intensive strategies? Discuss

B). Discuss your view if you see any action related to diversification strategies, defensive
strategies, outsourcing and joint venture.

Q2#

CASE STUDY - TWO

Southwest Airlines has long been one of the standout performers in the U.S. airline industry. It is
famous for its low fares, which are often some 30% lower than those of its major rivals. These are
balanced by an even lower cost structure, enabling it to record superior profitability even in bad
years such as 2002, when the industry faced slumping demand in the wake of the September 11
terrorist attacks. Indeed, from 2001 to 2005, quite possibly the worst four years in the history of
the airline industry, while every other major airline lost money, Southwest made money every
year and earned an ROIC of 5.8%. Even in 2008, an awful year for most airlines, Southwest made
a profit and earned an ROIC of 4%.

Southwest operates somewhat differently from many of its competitors. While operators like
American Airlines and United Airlines route passengers through hubs, Southwest Airlines flies
point-to point, often through smaller airports. By competing in a way that other airlines do not,
Southwest has found that it can capture enough demand to keep its planes full. Moreover,
because it avoids many hubs, Southwest has experienced fewer delays. In the first eight months
of 2008, Southwest planes arrived on schedule 80% of the time, compared to 76% at United and
74% at Continental.

Southwest flies only one type of plane, the Boeing 737. This reduces training costs, maintenance
costs, and inventory costs while increasing efficiency in crew and flight scheduling. The operation

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is nearly ticketless, with no seat assignments, which reduces cost and back-office accounting
functions. There are no meals or movies in flight, and the airline will not transfer baggage to
other airlines, reducing the need for baggage handlers. Southwest also has high employee
productivity. One-way airlines measure employee productivity is by the ratio of employees to
passengers carried. According to figures from company 10-K statements, in 2008 Southwest had
an employee-to-passenger ratio of 1 to 2,400, the best in the industry. By comparison, the ratio
at United Airlines was 1 to 1,175 and, at Continental, it was 1 to 1,125.

Southwest devotes enormous attention to the people it hires. On average, the company hires
only 3% of those interviewed in a year. When hiring, it emphasizes teamwork and a positive
attitude. Southwest rationalizes that skills can be taught, but a positive attitude and a willingness
to pitch in cannot. Southwest also creates incentives for its employees to work hard. All
employees are covered by a profit-sharing plan, and at least 25% of an employee’s share of the
profit-sharing plan has to be invested in Southwest Airlines stock. This gives rise to a simple
formula: the harder employees work, the more profitable Southwest becomes, and the richer the
employees get. The results are clear. At other airlines, one would never see a pilot helping to
check passengers onto the plane. At Southwest, pilots and flight attendants have been known to
help clean the aircraft and check in passengers at the gate. They do this to turn around an aircraft
as quickly as possible and get it into the air again because an aircraft does not make money while
it is on the ground. This flexible and motivated workforce leads to higher productivity and
reduces the company’s need for more employees. Because Southwest flies point-to-point rather
than through congested airport hubs, there is no need for dozens of gates and thousands of
employees to handle banks of flights that come in and then disperse within a two-hour window,
leaving the hub empty until the next flights a few hours later. The result: Southwest can operate
with far fewer employees than airlines that fly through hubs.

Source: Charles W. L. Hill and Gareth R. Jones (2010). Strategic Management Theory: An
Integrated Approach, Ninth Edition. South-Western Cengage Learning

Case Discussion Questions (15 Marks)

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1. How would you characterize the business model of Southwest Airlines? How does this differ
from the business model used at many other airlines, such as United and American Airlines?

2. Identify the resources, capabilities, and distinctive competencies of Southwest Airlines.

3. How do Southwest’s resources, capabilities, and distinctive competencies translate into

superior financial performance?

4. How secure is Southwest’s competitive advantage? What are the barriers to imitation here?

Q3#

Develop a 4 × 4 × 4 QSPM (Quantitative Strategic Planning Matrix) for an organization of your

choice (i.e., four strengths, four weaknesses, four opportunities, four threats, and four
strategies). Note that; while doing the analysis and choice, consider the alternative strategies
derived from Strengths-Weaknesses-Opportunities-Threats (SWOT), Strategic Position and Action
Evaluation (SPACE) and Boston Consulting Group (BCG) matrices. Follow all the SWOT matrix,
SPACE matrix, BCG matrix, and QSPM guidelines. (15 Marks)

Q4#

Analyse the competitive position of your college in the market for business education. Then
answer the following questions (5 Marks).

1. Does your College have a competitive advantage? If so, on what is this advantage based and is
this advantage sustainable? How about Distinctive competency

2. If your College does not have a competitive advantage in the market for business education,
identify the inhibiting factors that are holding it back.

3. How might the Internet change the way in which business education is delivered? Does the
Internet pose a threat to the competitive position of your College in the market for business
education or is it an opportunity for your College to enhance its competitive position? (Note that
it can be both.)