Q-Cells exemplifies the successes and challenges of global importing and exporting. Founded in Germany in 1999, the company became the largest manufacturer of solar cells worldwide. By 2010, however, it was experiencing losses due, in part, to mistiming some of the entry strategies.

First, it is important to know that Germany is a high-cost manufacturing country compared to China or Southeast Asia. On the other hand, Germany is known for its engineering expertise. Q-Cells gambled that customers would be willing to pay a premium for German-made solar panels. The trouble was that solar cells aren’t that sophisticated or complex to manufacture, and Asian competitors were able to provide reliable products at 30 percent less cost than Q-Cells.

Q-Cells recognized the Asian cost advantage—not only are labour and utility costs lower in Asia, but so are the selling, general, and administrative (SG&A) costs. What’s more, governments like China provide significant tax breaks to attract solar companies to their countries. Therefore, Q-Cells opened a manufacturing plant in Malaysia. Once the Malaysian plant is fully ramped up, the costs to manufacture solar cells there will be 30 percent less than at the Q-Cells plant in Germany.

Then, Q-Cells entered into a joint venture with China-based Lightweight Devise Co. (LDC), in which Q-Cells used LDC silicon wafers to make its solar cells. The two companies also used each other’s respective expertise to market their products in China and Europe. Although the joint venture gave Q-Cells local knowledge of the Chinese market, it also locked Q-Cells into buying wafers from LDC. These wafers were priced higher than those Q-Cells could source on the spot market. As a result, Q-Cells was paying about 20 cents more for its wafers than competitors were paying. Thus, in the short term, the joint venture hurt Q-Cells. However, the company was able to renegotiate the price it would pay for LDC wafers.

To stay cost competitive, Q-Cells has decided to outsource its solar-panel production to contract manufacturer Flextronics International. Q-Cells’ competitors, Sun Power Corp. and BP’s solar unit, also have outsourced production to contract manufacturers. The outsourcing has not only saved manufacturing costs but also brought the products physically closer to the Asian market where the greatest demand is currently. This has reduced the costs of shipping, breakage, and inventory carrying.

Case Exercises:

1. Explain the framework that help an organization to choose a country-entry mode.

2. Do you think Q-Cells could have avoided its current financial troubles? How?

3. Do you see import or export opportunities for entrepreneurs in the solar industry?

4. What advice would you give small entrepreneurs when they try to enter foreign markets?

Ragan, Inc. was founded nineteen years ago by brother and sister Carrington and Genevieve Ragan. The company manufactures and installs commercial heating, ventilation, and cooling (HVAC) units. Ragan, Inc. has experienced rapid growth because of a proprietary technology that increases the energy efficiency of its units. The company is equally split between the two siblings. The original partnership agreement between them gave each 500,000 shares of stock. The company has since gone public. At that time, the siblings retained their shares and 1,000,000 shares of new stock were issued.

The firm anticipates needing to raise a large amount of capital $10 million in the coming year to facilitate further expansion and are evaluating several financing options. The first option is to issue zero-coupon bonds that mature in 20 years. Similar zero-coupon bonds currently have a YTM of 4.5%. The second option is to issue 4% coupon bonds that mature in 20 years. Similar bonds have a YTM of 4%. The third option is to issue preferred stock with a fixed dividend of $0.85 per share. These preferred stock would have a required return of 7.5%. The firm currently has no preferred stock outstanding. The fourth option is to issue common stock.

The stock is currently trading on the market for $20 per share. The firm most recently paid a dividend on common stock of $0.50 and plans to increase that dividend by 25% per year for the next five years. After that, the firm will level off at the industry average of 5% per year, indefinitely. Carrington and Genevieve estimate the required return on the stock to be 15%.

1. What would the shares of preferred stock sell for and how many would they have to sell? How would this impact the firm’s dividend expenses going forward?

2. Based on the information about the common stock dividends, what should the value of the stock be today?

3. What do you think about the estimate of a 15% required return? What does the current stock price suggest about the required return?

Please show all steps. Thank You.

Frederick Cooper Lamp Company was founded in Chicago in 1923 by Frederick Cooper, an artist specializing in sculpture and watercolor art. The firm was launched in response to requests from clients that Cooper incorporate his works of art into lamps.

Relying on hand labour alone to make its lamps, chandeliers, and sconces, Cooper’s company quickly became recognized as a manufacturer of high-quality, distinctive products. Throughout its history, one of Cooper Lamp’s signature treatments was “the use of silk and other fine and exotic materials to produce unique hand sewn lampshades, many of which are adorned with distinctive bead and fringe treatments.” The firm used the focused differentiation business-level strategy, which essentially means that Cooper Lamp made expensive products that provided unique value to a small group of customers who were willing to pay a premium to purchase uniqueness (we fully describe the focused differentiation strategy later in the chapter).The words of a company official reflect Cooper Lamp’s strategy: “We offer a very high quality product. Our shades are hand-sewn, using unique fabrics. We use unique materials. We put things together in a unique fashion and as a result we have a very good name among the designers and decorators, and the stores. We sell to very high-end stores, [including] Bloomingdale’s, Neiman Marcus, [and] Horchow.” Thus, Cooper made “really expensive lamps for a niche market.” Cooper’s cheapest lamps sold for $200, while its crystal chandeliers cost upwards of thousands of dollars.

The reason we use the past tense to describe Cooper’s strategy is that the firm as it was known changed in August 2005. At that time, Cooper left its historic Chicago manufacturing facility, as required by the terms of its sale to developers who intend to convert its historic 240,000- square foot building into residential condos. The four-story building was sold and workers were laid off because the firm had to reduce the costs it incurred to manufacture its high-quality products. Some of the dismissed workers had been with the company for over 40 years. Other changes were in play as well, as indicated by the following comments from an employee: “We’ve sold the name but we can’t say who bought it. That was part of the deal. But we can say Frederick Cooper will not be who it was before. But we’re not going out of business. The new name will be Frederick Cooper Chicago.”

What caused the demise of Frederick Cooper Lamp Company? The answer is perhaps familiar: declining demand for high-quality handmade products; inefficient, high-cost manufacturing facilities; and cheap imports from other nations that offer customers a reasonable degree of quality at a substantially lower price. From a strategic perspective, the firm’s demise resulted from its below-average returns, which was a direct result of its not successfully implementing its business-level strategy.

Sources: R. Berg, 2005, Frederick Cooper workers to strike, Chicago Indymedia, www.chicago.indymedia.org,

Question: Using the case example of the Frederick Cooper Lamp, Identify evidence of the different types of generic strategies being pursued by the company. Then, explain what factors are influencing the choice of strategies that you identify and why? Provide current examples to support your answers by exemplifying each generic strategy alone.

Brunswick Parts is a small manufacturing firm located in eastern Canada. The company, founded in 1947, produces metal parts for many of the larger manufacturing firms located in both Canada and the United States. It prides itself on high quality and customer service, and many of its customers have been buying at least some of their parts from Brunswick since the 1950s.

Production of the parts takes place in one of two plants. The older plant, located in Fredericton, was purchased when the company was founded, and the last major improvements to the plant took place in the 1970s. A newer plant, located in Moncton, was built in 1995 to take advantage of the expanding markets. The same part can be produced in either plant, and the final scheduling decision is based on capacity, transportation costs, and production costs.

At a weekly production meeting, Sara Hunter, the manufacturing manager expresses her frustration at trying to schedule production.

Something isn’t right. We build a new plant to take advantage of new manufacturing technology and we struggle to keep it filled. We didn’t have this problem a few years ago when we couldn’t keep up with demand, but with the current economy, marketing keeps sending orders to the old plant in Fredericton. I know manufacturing, but I guess I must not understand accounting.

The latest order that generated discussion among plant management was placed by Lawrence Machine Tool Company, a long-time customer. The order called for 1,000 units of a special rod (P28) used in one of its many products. The order was received by the marketing department. Following the established procedure at Brunswick, the marketing manager checked the product costs for both plants. Because quality and transportation costs would be the same from either plant, a decision was made to produce and ship from the Fredericton plant.

The cost system at Brunswick is a traditional manufacturing cost system. Plant overhead (including plant depreciation) is allocated to products based on estimated production for the period. Separate overhead rates are computed for each plant. Corporate administration costs are allocated to the plants based on the estimated production in the plant for purposes of executive performance measurement. Production is measured by direct labor-hours. Cost and production information for P28 follows.

Corporate and plant overhead budgets are as follows:

Required:

a. What would be the reported product cost of P28 per unit for the two plants?

b. At what plant should the P28 units for the Lawrence order be produced?

• Moncton

• Fredericton

Case Study Instructions: Read this case study and answer the questions that follow: Virgin was founded in 1970 by Richard Branson and is classified as a holding company for multiple ventures under the Virgin Group. When it comes to innovation Virgin is one of the top companies in the world. What began as a mail order record company has evolved into one of the most diverse companies in existence. Virgin invests in and builds companies that revolve around delivering fantastic customer experience and change the scope of industries. They do everything from space tourism to air travel, make comic books and video games. The company now holds over 200 companies and operates in 29 countries. They’ve found that the most successful ideas they get are the ones that are marketing, sales, and customer focused, sit under the Virgin brand, have a well-defined and differentiated customer offer and oftentimes are delivered in partnership with experts in their field.
Virgin takes the ideas it gets and boils them down into several categories. Anything that doesn’t quite fit into an existing company gets sent to corporate development for review. They take the time to read and respond to every proposal. They do not disclose how rewards are awarded but there are substantial ones for good ideas that are implemented. Internally Virgin also sources business plans and ideas from employees. Once a flight attendant had an idea. It got presented to the CEO and before long she had a considerable role in starting up Virgin Brides (which beyond being a fantastic idea didn’t quite work out in the market place). It’s incredible that a flight attendant can have an idea that makes it that far in a company. Notice that Virgin has over 200 companies under it. If you stop for a second you’ll realize just how massive that number is. That is a lot of innovation for a company only 40 years old. Financially they do quite well so obviously something has been working out for them. Not a lot of firms innovate this much or support this much innovation but that’s kind of the key – they don’t just source great ideas, they act on them. Sourcing this many fantastic ideas isn’t easy – it’s a lot of hard work for the company and they have to devote time and resources to going through all of them never mind actually taking the time to respond. But it shows that they care and that they’re serious about this. All great innovations come from an idea. Some go so far as to say it’s the most important part of the process (Seth Godin would likely disagree and say that shipping is the most important). Some companies looking at Virgin’s requirements might find them surprisingly strict, others surprisingly loose. No matter how you view it the only thing that remains true at the end of the day is that Virgin’s strategy works – and it works well.

Required:
Business excellence is about strategy. From the case study which strategies has Virgin used to achieve continuous creativity and innovation.

          Fjällräven is a Swedish company specializing in outdoor equipment—mostly clothing and rucksacks. Fjällräven was founded in 1960 by Åke Nordin(1936–2013). Its most popular product is the Kånken rucksack (shown below). The Fjällräven Kånken rucksack which is made from tent fabric proved comfortable and durable. It made the brand well known in just a decade.

          The company has a strong market presence in the Nordic countries. It is also represented in other European countries, especially Germany. The company would like to expand and increase sales in the US market, however, the US market is crowded with strong competitors such as JanSport, the North Face, among others.

          Your task is to come up with a promotional strategy for Fjällräven’s Kånken rucksack. Feel free to use any promotional tools we have talked about in class so far, be creative! Make sure you specify the target market (e.g., segments) and have a clear message.

>> Club Med case study.

Club Méditerranée or Club Med is a French company founded in 1950 by Gérard Blitz and Gilbert Trigano with the objective of offering holidays to customers With an innovative "all-inclusive" formula. The idea of happiness was at the heart of the concept. Today, Club Med has 72 resorts in more than 30 countries, including the Mediterranean, the tropics. and even the snow-covered Alps. In 2013, more than 1.5 million customers Chose Club Med for their holidays. Club Med has revolutionized holidays with its all inclusive formula. At the time of its creation, the company aimed to give people a sense of freedom through nature and sports that allowed them to be happy and one with the others. Club Med proposed a new social link that was more festive and less binding on the client. It wanted to reconcile individual liberty and social life. At that time, in the holiday villages, customers could do what they wanted without the concept of money being present. Upon arival, customers were provided with necklaces made out of beads that allowed customers to pay for their drinks (Which would later be patented). Big tables allowed customers to share their meals and get acquainted with each other. The notions of freedom and equality were and still remain fundamental to the culture of Club Med. Since its creation, Club Med has never ceased to innovate. New and unknown destinations were added to the portfolio Tahiti in 1955 and Leysin in Switzerland in 1956. In 1967, Club Med created the first mini clubs for children. In the years 1980-1990, deciline of the attractiveness of the concept of holiday homes and the sharp rise of competition at lower prices weakened Club Meds posi-tion. The company's strategy at that point was unclear-it was neither a volume nor a value strategy. In addition, the economic crisis of 1993, a result of the Gulf war, and the events of September 2001 severely affected Club Med in the same way it affected all kinds of tourism. In 2004, Club Med decided to redirect to a value strategy in order to target an international clientele that wanted comfort, elegance, service, and customization. The holiday package offer was therefore repositioned with the closure of entry-level vacation villages (classified 2 trident), renovation of other villages in 4 trident to 5 trident, and the creation of a new range of luxury 5 trident (villages, villas, and chalets). Club Med now offers an all-inclusive premium with a high range of services and an extension of the à la carte services that come with gourmet food and high quality drinks. Starting at 4 trident, all clubs offer a spa in partnership with a famous brand. The shows in the resorts are all designed by specialized companies. Clubs for children have dedicated spaces with an emphasis on nature and local culture. The sports schools offer up to 10 different disciplines with qualified coaches and quality equipment. For its 5 trident resorts, Club Med chooses sites of exception in the most beautiful destinations of the World, such as Cancun in Mexico, Punta Cana in the Dominican Republic, and Kani in the Maldives. The development of these resorts is entrusted to renowned architects and designers. The services developed are high-end with all-day room service, a concierge service, and champagne offered after 6 p.m. Private villas come with a butler. In the 5 trident resorts in the Maldives, the villas are placed on stilts; clients have private access to the sea, and can observe marine life through a transparent floor in the room. This repositioning to the high-end has also necessitated a change in the relationship between customers, called Gentle Members, and staff, called Gentle Organizers. Club Med has 15,000 Gentle Organizers of 100 different nationalities to meet the requirements of its international clientele. They are qualified in various fields and specialize in cooking, sport, amusement, and client servicing. Trainings to inculcate precision and a sense of premium service have been developed. A resort school has even been created in Vittel, France; it welcomes 10,000 trainees every year. Club Med is always looking to recruit real talent and unique personalities. The organization's customer relationship has also evolved through the development of customer relationship management tools for a finer segmentation of customers. In some agencies, a concept of sale side-by-side has been developed to allow clients to customize their holiday packages along with the sellers.Club Med's communication campaign "and what's your idea of happiness?" highlights this upmarket strategy. This campaign has been deployed in 47 countries and in 22 languages. The positioning of Club Med's resorts, from 3 trident to 5 trident, allows for a broader coverage of the competition field-from standardization, and luxury services to all-inclusive offers. No other company offers this. Club Med's 4 trident resorts are in competition with the Swiss Mövenpick (69 hotels in 23 countries) and the Jamaican Sandals (12 resorts in Jamaica and the Bahamas). Club Med's 5 trident resorts compete with the Singaporean Banyan Tree (30 hotels and 60 spas all over the world). Finally, the Club Med luxury villas are in competition with the villas of the Mauritius company Beachcomber that works on the philosophy "dream is a serious thing" (9 hotels, resorts, and luxury villas), Aman Resorts (25 hotels in 15 countries), and the Ritz-Carlton (80 hotels in 27 countries). With the range and quality of its service, Club Med turns holidays into a one-of-a-kind experience. The focus on a globalized customer strategy helped Club Med grow and ensured its unique positioning in the market. As of January 2015, the proposed takeover of Club Med by the Chinese investor Fosun will help accelerate the internationalization of the brand and its development in Asia.

Questions

1, How did Club Med reach an upscale positioning and achieve excellence in the quality of service ?

2. Was Club Med's upmarket positioning the only one viable strategy?

3. Do you think that Club Med takes a risk by not in specializing in a particular range level, such as 4 trident or 5 trident?

Besserbrau AG is a German beer producer headquartered in Ergersheim, Bavaria. The company, which was founded in 1842 by brothers Hans and Franz Besser, is publicly traded, with shares listed on the Frankfurt Stock Exchange. Manufactur- ing in strict accordance with the almost 500-year-old German Beer Purity Law, Besserbrau uses only four ingredients in making its products: malt, hops, yeast, and water. While the other ingredients are obtained locally, Besserbrau imports hops from a company located in the Czech Republic. Czech hops are considered to be among the world’s finest. Historically, Besserbrau’s products were marketed exclusively in Germany. To take advantage of a potentially enormous market for its products and expand sales, Besserbrau began making sales in the People’s Republic of China three years ago. The company established a wholly owned sub- sidiary in China (BB Pijio) to handle the distribution of Besserbrau products in that country. In the most recent year, sales to BB Pijio accounted for 20 percent of Besserbrau’s sales, and BB Pijio’s sales to customers in China accounted for 10 per- cent of the Besserbrau Group’s total profits. In fact, sales of Besserbrau products in China have expanded so rapidly and the potential for continued sales growth is so great that the company recently broke ground on the construction of a brewery in Shanghai, China. To finance construction of the new facility, Besserbrau negotiated a listing of its shares on the London Stock Exchange to facilitate an initial public offering of new shares of stock.

Required: Discuss the various international accounting issues confronted by Besserbrau AG.

What are one in-person event and one technologically driven activity that teachers can be used to share resources, information, or data with families during the school year? How can it build a strong rapport between school and home?

How do children benefit from physical education in school? When you were in school what type of physical education was provided for you? If you have children has it changed and how? 2 to 3 paragraphs