Task:
During the 1980s and 1990s, Blockbuster dominated the US home video rental market. However, the emergence of Netflix in 1997 with its ‘rental by mail’ model challenged Blockbuster’s business model (and market dominance). Blockbuster’s market position was further weakened when Netflix began to stream video content directly to consumers’ computers. In this case study, you are required to explains the ascendancy of Netflix and how it should maintain its dominance.

Discussion:
1. Identify and explain the Strategic Choices (E.G., business, corporate, international, acquisitions/alliances and entrepreneurship) adopted by Blockbuster and Netflix that led to their respective fall and rise.
2. Identify the challenges and competitors to Netflix and evaluate whether it will continue to remain as the dominant online streaming provider.
3. Discuss whether Netflix should apply deliberate or emergent strategy development (Strategy in Action) to maintain its dominance and what factors will be involved in this process.

Tesbury International

When Tesbury started to expand internationally in the early 1990s, the company set up an international division to oversee the process. The international division was based in Bentonville, Arkansas, at the company headquarters in the United States. Today, the international division oversees operations for Tesbury as the largest global retailer in the world with 11,695 stores under 63 banners in 28 countries that collectively generate almost $500 billion in sales per annum. Some 2.2 million Tesbury employees work in these international positions to serve more than 100 million customers weekly. 40% of the company’s customers are outside the United States.

In terms of reporting structure, the international division is divided into three regions – Europe, Asia and America with the CEO of each region reporting to the CEO of the international division, who in turn reports to the CEO of Tesbury.

Initially, the senior management of the international division exerted tight control over merchandising strategy and operations in different countries. They also made almost all decisions for the representative managers in the different countries. This means that the managers in the various countries had limited flexibility to respond to issues concerning their particular area.

The reason for the tight control was straightforward; Tesbury’s senior managers wanted to make sure that international stores copied the format for stores, merchandising and operations that had served the company so well in the United States. They believed naively perhaps that topmost control over merchandising strategy and operations was the way to make sure this was the case.

By the late 1990s, with the international division approaching $20 billion in sales, Tesbury’s managers concluded that this approach was not serving them well. Country managers has to get permission from their superiors in Bentonville before changing strategy and operations and this was slowing decision making. There was information overload at the headquarters and this led to some poor decisions. Tesbury found that managers in Bentonville were not necessarily the best ones to decide on store layout in Mexico, merchandising strategy in Argentina, or compensation policy in the United Kingdom.

At a point in its international expansion, Tesbury decided to acquire Britain’s Bestfresh supermarket chain. It is estimated that this acquisition will some $14 billion to Tesbury’s international divisions. With this acquisition in mind, Tesbury managers realise that it was not appropriate for managers in Bentonville in America to be making all important decisions for Bestfresh in the United Kingdom. As one manager puts it, “you cannot run the world from one place.”

As a practical matter, given the product mix in Tesbury stores, products and services have to be tailored to conditions prevailing in the local market. Currently, significant responsibility for sourcing remains at the country and regional level, however, Tesbury would like to have a better and more efficient merchandising and operating strategy.

1. Identify the organisational structure that Tesbury used in its international expansion strategy and explain two reasons why the company used this structure.

2. Explain two problems that the use of this structure created for the company that hindered its smooth operations.

3. Recommend an alternative structure for the international expansion into the United Kingdom and explain three reasons why this structure might work well for the company.

4. Changing the structure would involve organizational change. Explain organizational change and examine three steps that can be used to change the structure

1. A quick history: When I was taking finance classes in the early 1990s, My finance professor, an intimidating guy from Rochester, NY, impressed upon us all that we'd have to be fools not to be earning 10% in the market. This was largely due to the times. Everyone made money in the early 90s. The way you measure your gains against everyone else is by using CAPM. Your text mentions some shortfalls of CAPM that have popped up over the years. If we assume the problems with CAPM were always there, how might the prevalent use of CAPM have led to irrational capital pricing decisions and how might that affect the value of a company?

3. What are the advantages/disadvantages of financing an expansion with debt rather than equity? Does this change if you are financing a replacement project?

E-ZPass In the 1990s, a task force was formed among executives of seven regional transportation agencies in the New York–New Jersey area. The mission of the task force was to investigate the feasibility and desirability of adopting electronic toll collection (ETC) for the interregional roadways of the area. Electronic toll collection is accomplished by providing commuters with small transceivers (tags) that emit a tuned radio signal. Receivers placed at tollbooths are able to receive the radio signal and identify the commuter associated with the particular signal. Commuters establish ETC accounts that are debited for each use of a toll road or facility, thus eliminating the need for the commuter to pay by cash or token. Because the radio signal can be read from a car in motion, ETC can reduce traffic jams at toll plazas by allowing tag holders to pass through at moderate speeds. At the time the New York and New Jersey agencies were studying the service, electronic toll collection was already being used successfully in Texas and Louisiana. Even though several of the agencies had individually considered implementing ETC, they recognized that independent adoption would fall far short of the potential benefits achievable with an integrated interregional system. The task force was most interested in identifying the ideal configuration of service attributes for each agency’s commuters and determining how similar or different these configurations might be across agencies. The task force identified a lengthy list of attributes that was ultimately culled to six questions: • How many accounts are necessary and what statements will be received? • How and where does one pay for E-ZPass? • What lanes are available for use and how they are controlled? • Is the tag transferable to other vehicles? • What is the price of the tag and possible service charge? • What are other possible uses for the E-ZPass tag (airport parking, gasoline purchases, and so forth)? From a researcher’s perspective, it also seemed important to assess commuter demand for the service. However, the task force was not convinced that it needed a projection of demand, because it was committed to implementing ETC regardless of initial commuter acceptance. The task force considered its primary role to be investigating commuters’ preferences for how the service should be configured ideally. Questions

1. Evaluate the problem-definition process. Has the problem been defined adequately so that a relevant decision statement can be written?

2. What research questions might be tested?

3. Write a complete research proposal for E-ZPass.

Ryan is implementing a merge sort algorithm that he heard about in computers class. However, he was not paying attention, and ended up implementing the merge sort in a very unusual way. The standard merge sort takes a list, and recursively splits it in half, until there is only one element left. It then uses the idea that two sorted lists can be easily merged in O(n) time using "two pointer technique" (this step is usually called merge). Ryan does not know about two pointer technique, so he decided to replace merge with a bubble sort! The bubble sort runs in O(n^2) time. What is the runtime of this merge sort implementation?

Explore how multinational giant Philips NV has evolved over time. The Dutch company, which was internationally oriented almost from the start, moved to a national organization approach during World War II. This approach, which allowed the company to tailor its product line and marketing to each national market, remained in place for several decades, however, by the 1970s, the duplication of effort the approach required began to cause problems and Philips shifted toward a product division structure that established international production centers. In the mid-1990s, a new CEO implemented significant changes replacing Philips’ 21 product divisions with just 7 global business divisions. This new structure was further refined in 2008 to establish three global divisions responsible for product strategy, global marketing, and production decisions. QUESTION 1: Why did Philips’ decentralized structure make sense in the 1950s and 1970s? Why did this structure start to create problems for the company in the 1980s? QUESTION 2: What was Philips trying to achieve by tilting the balance of power in its structures away from national organizations and toward the product divisions? Why was this hard to achieve? QUESTION 3: What was the point of the organizational changes made by Cor Boonstra? What was he trying to achieve? QUESTION 4: In 2008 Philips reorganized yet again. Why do you think it did this? What is it trying to achieve?

1. Lina Martinez wants to buy a new high-end audio system for her car. The system is being sold by two dealers in town, both of whom sell the equipment for the same price of $2,000. Lina can buy the equipment from Dealer A, with no money down, by making payments of $175.83 a month for 12 months; she can buy the same equipment from Dealer B by making 36 monthly payments of $68.36 (again, with no money down). Lina is considering purchasing the system from Dealer B because of the lower payment.

1. Find the APR for Dealer A. Use a financial calculator to find the answer. Round the answer to 2 decimal places.  (1)

2. Find the APR for Dealer B. Round the answer to 2 decimal places.  (1)

What do you recommend?  (1)

Black Oil Company is trying to decide whether to lease or buy a new computer-assisted drilling system for its extraction business. Management has already determined that acquisition of the system has a positive NPV. The system costs $9.4 million and qualifies for a 25% CCA rate. The equipment will have a $975,000 salvage value in five years. Black Oil’s tax rate is 36%, and the firm can borrow at 9%. Cape Town Company has offered to lease the drilling equipment to Black Oil for payments of $2.15 million per year. Cape Town’s policy is to require its lessees to make payments at the start of the year.

Suppose it is estimated that the equipment will have no savage value at the end of the lease. What is the maximum lease payment acceptable to Black Oil now?

Mileage ratings for cars and trucks generally come with a qualifier stating actual mileage will depend on driving conditions and habits. A car manufacturer states that its new truck will average 19 miles per gallon with combined town and country driving. Assume the mean stated by the manufacturer is the actual​ average, and the distribution has a standard deviation of 3.6 mpg. Complete parts a and b below

a. Given the above mean and standard deviation, what is the probability that 100 drivers will average more than 18.1 miles per gallon? _________(round to four decimal places as needed)

b) Suppose 1000 drivers were randomly selected. What is the probability the average obtained by these drivers will exceed 18.1 mpg? _________(round four decimal places as needed)

Thank you

7.Are the following scenarios one-tail or two-tail tests? Explain why for each. a) If I don’t have enough money to pay the bill I’m going to look like a jerk on my big date. b) I’m handing out beer coupons and will get arrested if I give one to a minor. c) I’m distributing fliers for a new teen-oriented business in town and I don’t want to waste them on members of the wrong demographic. d) You’re placing a food order for your upcoming party and the food will be spoiled by the day after the party if it’s left over.8.Using the situations above, give the critical z-table value for each when paired with the following confidence intervals. a) 90%. b) 95%. c) 80%. d) 99%.