Case Study 1

Reference: Hutt, M. & Speh, T. (2014), Business Marketing Management: B2B (11th edition), South-Western Cengage Learning.

Chapter 6 – Case Study page. 171-172

Schwinn: Could the Story Have Been Different?

At its peak, Schwinn had more than 2000 U.S. employees, produced hundreds of thousands of bicycles in five factories, and held 20 percent of the market. Today, however, Schwinn no longer exists as an operating company. The firm, founded in 1895, declared bankruptcy in 1992 and closed its last factory one year later. The Schwinn name is now owned by Canada-based firm and all of the bikes are manufactured in Asia. Harold L. Sirkin, a senior vice president at Boston Consulting Group, argues that Schwinn's story could have been different. He outlines two alternative pathways that might have provided a happier ending to the Schwinn story.

Alternative Reality One: Aim High

Under this scenario, Schwinn decided to center on midrange and premium segments of the market, leaving low-end bicycles for competitors. However, the firm determined that it could substantially reduce cost by turning to low-cost partners in rapidly developing economies for labor-intensive parts. Schwinn interviewed hundreds of potential suppliers and locked the best ones into long-term contracts. Schwinn then reconfigured its operations to perform final assembly and quality inspection in the United States. Still, the changes forced Schwinn to make some painful choices- nearly 30 percent of the workforce was laid off. However, such moves allowed Schwinn to produce bikes at half the previous cost, maintain a significant position in the midrange bicycle market, and leverage its product design capabilities to build a strong position for its brand in the high-end market. As a result, Schwinn is extremely competitive in the U.S. market and is a major exporter of premium bikes to China and Europe. Because of this growth, Schwinn now employs twice as many people in the United States as it did before outsourcing began.

Alternative Reality Two: If You Can't Beat Them, Join Them

Schwinn went on the offensive and moved as quickly as possible to open its own factory in China. By bringing its own manufacturing techniques and by training employees in China, Schwinn was able to achieve high quality and a much lower cost. However, the decision meant that 70 percent of Schwinn's U.S. workers would lose their jobs. But Schwinn kept expanding its China operations and soon started selling bicycles in Chinese market, not only at the low-end but also to the high-end, luxury segment, leveraging its brand name. Schwinn then extended its global operations and reach by adding new facilities in Eastern Europe and Brazil. The company has sold over 500,000 bikes in new markets.

My question is

How distinctive types of international strategy and the essential components of a global strategy are applied to this case study? Apply the theory studied in chapter 6 as well in other chapters to answer the question and also support the answer with other academic resources. (500 words).

it says that it is from chapter 6 of the Book Business Marketing Management (11 edition), Chapter 6.

Love it or hate it, IKEA is the most successful furniture retailer ever. With 276 stores in 36 countries, they have managed to develop their own special way of selling furniture. Their stores’ layout means customers often spend two hours in a store – far longer than in rival furniture retailers. IKEA’s philosophy goes back to the original business, started in the 1950s in Sweden by Ingwar Kamprad. He built a showroom on the outskirts of Stockholm where land was cheap and simply displayed suppliers’ furniture as it would be in a domestic setting. Increasing sales soon allowed IKEA to start ordering its own self-designed products from local manufacturers. But it was innovation in its operations that dramatically reduced its selling costs. These included the idea of selling furniture as self-assembly flat packs, which reduced production and transport costs, and its ‘showroom-warehouse’ concept, which required customers to pick the furniture up themselves from the warehouse (which reduced retailing costs). Both of these operating principles are still the basis of IKEA’s retail operations process today. Stores are designed to facilitate the smooth flow of customers, from parking, moving through the store itself, to ordering and picking up goods. At the entrance to each store large notice boards provide advice to shoppers. For young children , there is a supervised play area for a time. Parents are recalled via the loudspeaker system if the child has any problems. IKEA ‘allow customers to make up their minds in their own time’ but ‘information point’ have staff who can help. All furniture carries a ticket with code number which indicates its location in the warehouse. (For larger items customers go to the information desks for assistance.) There is also an area where smaller items are displayed, and can be picked directly. Customers then pay at the checkouts, where a ramped conveyor belt moves purchases to the checkout staff. The exit area has service points, and a loading area that allows customers to bring their cars from the car park and load their purchases. Behind the public face of IKEA’s huge stores is a complex worldwide network of suppliers. 1 300 direct suppliers, about 10 000 sub-suppliers, and wholesale and transport operations, including 26 distribution centres. This supply network is vitally important to IKEA. From purchasing raw materials, right through to finished products arriving in its customers’ homes, IKEA relies on close partnership with its suppliers to achieve both ongoing supply efficiency and new product development . However, IKEA closely controls all supply and development activities from IKEA’s hometown of Älmhult in Sweden. But success brings its own problems and some customers became increasingly frustrated with overcrowding and long waiting times. In response IKEA launched a programme ‘designing out’ the bottlenecks. The changes included:

 clearly marked in-store short cuts allowing those customers who just want to visit one area to avoid having to go through all the preceding areas;

 express checkout tills for customers with a bag only rather than a trolley;

 extra ‘help staff’ at key points to help customers;

 redesign of the car parks, making it easier to navigate;

 dropping the ban on taking trolleys out to the car parks for laoding (originallly implemented to stop vehicles being damaged);

 a new warehouse system to stop popular product lines running out during the day;

 more children’s play area.

IKEA spokewoman Nicki Craddock said: ‘We know people love our products but hate our shopping experience. We are being told that by customers every day, so we can’t afford not to make changes. We realised a lot of people taook offence at being herded like sheep on a long route around stores. Now if you know what you are looking for and just want to get in, grab it and get out, you can.’

REQUIRED: Using appropriate academic sources and supporting evidence from the case study above:

1.1 Identify and define any FOUR (4) strategic operations management decision areas that IKEA has relied on to innovate its operations. State the objective of each of the four decision areas identified, and for each decision area identified providetwo examples of activities used by IKEA to achieve the objective. (20)

Love it or hate it, IKEA is the most successful furniture retailer ever. With 276 stores in 36 countries, they have managed to develop their own special way of selling furniture. Their stores’ layout means customers often spend two hours in a store – far longer than in rival furniture retailers. IKEA’s philosophy goes back to the original business, started in the 1950s in Sweden by Ingwar Kamprad. He built a showroom on the outskirts of Stockholm where land was cheap and simply displayed suppliers’ furniture as it would be in a domestic setting. Increasing sales soon allowed IKEA to start ordering its own self-designed products from local manufacturers. But it was innovation in its operations that dramatically reduced its selling costs. These included the idea of selling furniture as self-assembly flat packs, which reduced production and transport costs, and its ‘showroom-warehouse’ concept, which required customers to pick the furniture up themselves from the warehouse (which reduced retailing costs). Both of these operating principles are still the basis of IKEA’s retail operations process today.

Stores are designed to facilitate the smooth flow of customers, from parking, moving through the store itself, to ordering and picking up goods. At the entrance to each store large notice boards provide advice to shoppers. For young children , there is a supervised play area for a time. Parents are recalled via the loudspeaker system if the child has any problems. IKEA ‘allow customers to make up their minds in their own time’ but ‘information point’ have staff who can help. All furniture carries a ticket with code number which indicates its location in the warehouse. (For larger items customers go to the information desks for assistance.) There is also an area where smaller items are displayed, and can be picked directly. Customers then pay at the checkouts, where a ramped conveyor belt moves purchases to the checkout staff. The exit area has service points, and a loading area that allows customers to bring their cars from the car park and load their purchases.

Behind the public face of IKEA’s huge stores is a complex worldwide network of suppliers. 1 300 direct suppliers, about 10 000 sub-suppliers, and wholesale and transport operations, including 26 distribution centres. This supply network is vitally important to IKEA. From purchasing raw materials, right through to finished products arriving in its customers’ homes, IKEA relies on close partnership with its suppliers to achieve both ongoing supply efficiency and new product development . However, IKEA closely controls all supply and development activities from IKEA’s hometown of Älmhult in Sweden.

But success brings its own problems and some customers became increasingly frustrated with overcrowding and long waiting times. In response IKEA launched a programme ‘designing out’ the bottlenecks. The changes included:

clearly-marked in-store short cuts allowing those customers who just want to visit one area to avoid having to go through all the preceding areas;

• express checkout tills for customers with a bag only rather than a trolley;

• extra ‘help staff’ at key points to help customers;

• redesign of the car parks, making it easier to navigate;

• dropping the ban on taking trolleys out to the car parks for laoding (originallly implemented to stop vehicles being

  damaged);

• a new warehouse system to stop popular product lines running out during the day;

• more children’s play area.   

IKEA spokeswoman Nicki Craddock said: ‘We know people love our products but hate our shopping experience. We are being told that by customers every day, so we can’t afford not to make changes. We realised a lot of people taook offence at being herded like sheep on a long route around stores. Now if you know what you are looking for and just want to get in, grab it and get out, you can.’

REQUIRED:

Using appropriate academic sources and supporting evidence from the case study above:

1. Identify and define any FOUR (4) strategic operations management decision areas that IKEA has relied on to innovate its operations. State the objective of each of the four decision areas identified, and for each decision area identified provide two examples of activities used by IKEA to achieve the objective.

QUESTION 1

1. In accordance with the IASB Conceptual Framework, which of the following is consistent with the definition of expenses?

   		Decreases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to distributions to holders of equity claims.
   		Decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to control of equity claims.
   		Decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims.
   		All of the given answers are correct.

2 points   

QUESTION 2

1. For Australian corporate entities, which of the following is usually deemed to be the date on which the financial statements are authorised for issue?

   		The date of preparation of financial statements
   		The balance sheet date
   		The date the Directors' Declaration is signed
   		The date of the auditors' report

2 points   

QUESTION 3

1. Changes in accounting estimates include:

   		changes in expected warranty costs on goods sold under guarantee
   		changes in the expected pattern of consumption of economic benefits of depreciable assets
   		changes in the provision for inventory obsolescence
   		All of the given answers are correct.

2 points   

QUESTION 4

1. With regard to related parties and other organisations within a group (economic entity), __________ means the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

   		control
   		significant influence
   		authority and responsibility
   		disclosure requirement

2 points   

QUESTION 5

1. Patents, goodwill, brand names and trademarks are examples of __________.

   		tangible assets
   		intangible assets
   		current assets
   		agricultural assets

2 points   

QUESTION 6

1. According to paragraph 79 of AASB 101, an entity shall disclose the following, either in the statement of financial position or the statement of changes in equity, or in the notes for each class of share capital, except for:

   		the number of shares authorised
   		the number of shares issued and fully paid, and issued but not fully paid
   		par value per share, or that the shares have no par value
   		shares in the entity held by the entity or its competitors

2 points   

QUESTION 7

1. Companies have argued that the recognition of a profit or loss on the translation of _________________ monetary items at the end of each reporting period is inappropriate, since the exchange rate constantly fluctuates and there is significant doubt about whether the unrealised profit or loss will ever be realised.

   		non-current
   		current
   		long-term
   		None of the given answers are correct.

2 points   

QUESTION 8

1. The price that would be received to sell an asset or paid to transfer a liability in an orderly sale between market participants at the measurement date is termed ________.

   		tangible value
   		intangible value
   		book value
   		fair value

2 points   

QUESTION 9

1. Which of the following standards is referred to in relation to the disclosure of interest in other entities (in relation to subsidiaries and other entities)?

   		AASB 10
   		AASB 3
   		AASB 12
   		None of the given answers are correct

2 points   

QUESTION 10

1. The amount of tax assessed by the ATO based on the entity's operations for the period will be reflected in which account?

   		Income tax expense
   		Deferred tax asset
   		Deferred tax liability
   		Income tax payable

How the English language has evolved like a living creature

Some linguists think of language as a living thing: It grows and changes, and every time a child learns it, the language reproduces itself. Now, a team of researchers is using the analogy of evolution to explain language change, arguing that key factors in biological evolution—like natural selection and genetic drift—have parallels in how languages change over time. And it turns out that the random changes, known as “drift” in biology, may have played an outsized role in the evolution of the English language.

Historians of English have long acknowledged that social and cognitive factors shape language over time. For example, languages lose irregular verb conjugations or other word forms that are hard to remember. And certain words or pronunciations get used because they are associated with people who have status and power—think about how new arrivals adopt the local accent in order to fit in. These pressures on language are based on concrete factors, similar to the biological pressures of natural selection.

But that explanation didn’t satisfy University of Pennsylvania (UPenn) evolutionary biologist Joshua Plotkin. He was puzzled by oddities such as a growing preference for the word “clarity” over its synonym “clearness.” According to standard linguistic theory, “clearness” should be more common because adding “-ness” is an easy-to-remember rule for making a noun out of an adjective. But that’s not what happened in English. “As an outsider,” Plotkin says, “this increase seemed at odds with the notion that language … regularize[s] over time.” So he decided to roll up his sleeves and apply some theories from evolutionary biology.

With another evolutionary biologist and two linguists from UPenn, he analyzed three databases of historical English together containing more than 400 million words and ranging from 1100 C.E. to the 21st century. The researchers used statistical methods from population genetics to analyze three well-known changes in the English language: how past-tense verbs in American English have taken the “-ed” ending, (as when “spilt” became “spilled”), how the word “do” became an auxiliary verb in Early Modern English (as in “Did you sing?”), and how negative sentences were made in Old to Early Modern English.

They found that selection was the likely cause of how negative sentence structures changed over time (like how the Old English “Ic ne secge” became the Early Modern English “I say not”). But the two other changes were likely the results of random drift, they write today in a letter published in Nature. That’s because, rather than having an even rate of change, the frequencies of alternative forms changed in fits and starts—jagged fluctuations that were obvious in the data set. When it came to the verbs, they found that drift’s influence was stronger when the verb was less frequent. Only six past tense changes in their data set, such as “lighted” to “lit,” were deemed to have changed for purposeful reasons, such as being easier to learn and use.

Explain how the English language evolved

Associations between Quantitative, Qualitative Job Insecurity and Well-being

Research questions

De Witte et al. (2010) investigated the association of employee’s perception of quantitative and qualitative job insecurity with job satisfaction, and psychological distress in the Belgium banking sector.

Job insecurity is defined as the employees’ concerns about their work-related future. There are two kinds of job insecurities, the quantitative job insecurity and the qualitative job insecurity. The quantitative job insecurity is about the threat to the continuation of the job in the future. The qualitative job insecurity is about threat to the various valued aspects of the job, such as job content or working conditions.

Data collection and respondents

In total, there were 69,000 employees working in the 63 Belgian banks affiliated to the sector’s joint industrial committee in 2001. As questioning all employees would be too expensive, the researchers decided to survey a sample of 15,000 employees (roughly 21%).

All the 63 banks participated in the survey. About 21% of employees in each bank were invited to participate in the survey. Within each bank, the respondents were selected at random with no particular quota for gender, age or employee level. The survey was based on addresses which had been provided by the banks (name, language, address) and each randomly selected employee received a personalized envelope through regular mail, sent to him/her by the employer. The completed questionnaire needed to be returned (free of charge) through the internal post within each bank. The researchers travelled to each bank to collect the completed survey.

The sample was representative for employees in the banking sector, however, not for the total working population. More men (58.5 percent) than women (41.5 percent) participated. About two in three respondents were between 35 and 44 years old or between 45 and 54 years old, while about one in four was between 25 and 34 years old. Only a minority (4 percent) was younger than 24 or older than 55. Most respondents had an education beyond high school (63.9 percent), had partners with an income and children (72.4 percent), and worked full-time (85 percent). There were about as many white-collar workers (54.4 percent) as executives (45.6 percent).

Measures

Quantitative job insecurity was measured with four items developed by De Witte (2000) on a scale from 1 (strongly disagree) to 4 (strongly agree). Sample items were “I feel insecure about the future of my job”’ and “I am sure that I will be able to keep my job” (reverse coded). Reliability (Cronbach’s alpha) equalled .89.

Qualitative job insecurity was measured with ten items from the 17 item measure that was originally proposed by Ashford, Lee, and Bobko (1989). These job features concerned four broad dimensions previously distinguished to describe the various characteristics of a job: job content (autonomy, skill utilization, and specific tasks), working conditions (workload and quality of working conditions), employment conditions (wage, working hours, and opportunities for promotion), and social relations at work (relations with colleagues and supervisors, respectively). Respondents had to indicate whether each of the job features would likely improve or deteriorate in the near future (1 = strongly deteriorate; 5 = strongly improve). We recoded the items so that a high score reflected qualitative job insecurity. Cronbach’s alpha equalled .87.

Job satisfaction was measured with one item: “Overall, how satisfied are you with your current job?” (1 = very dissatisfied; 5 = very satisfied).

Psychological distress was measured with the 12-item version of the General Health Questionnaire (Goldberg, 1978). A sample item was “Have you recently lost much sleep over worry?” Responses varied from 1 (“less than usual”) to 4 (“much more than usual“). Reliability (Cronbach’s alpha) was .89.

Control variables. The following social demographics and work-related factors were included: gender (0 = men; 1 = women), age (1 = 18–24; 2 = 25–34; 3 = 35–44; 4 = 45–54; 5 = 55+), education (0 = no education beyond high school; 1 = education beyond high school), extra income (0 = no partner with extra income; 1 = partner with extra income), children (0 = no children; 1 = children), occupational position (0 = white-collar worker; 1 = executive), working hours (0 = part-time; 1 = full-time). The demographics were used as control variables in data analysis.

Instructions for answering the questions

Use at least four academic sources in English to answer the questions. The sources can be books or peer reviewed journal articles or a combination of both books and peer reviewed journal articles. The academic sources as well as responding to the questions will be around 2000 words in total.

Q1: Sample size

The sample size for this study is fifteen thousand employees selected from a total of 69,000 bank employees (about 21% of the employees). Is a sample of this size necessary? Give your reasons.

Q2: Sampling method

What is the current method of sampling? What are the advantages and disadvantages of the current sampling method?

Q3: Measures of variables

Give your comments on the reliability and validity of measures of the variables.

Q4: Collection of data on social demographics

The purpose of this research is to find the associations between quantitative and qualitative job insecurity and well-being. However, data on variables such as gender, age, education level, extra income were also collected. What is the purpose of collecting data on variables such as gender, age, educational level etc.?

Q5: Research design

What research design is used for current research? What are the positive and negative side of the current research design?

References

Ashford, S. J., Lee, C., & Bobko, P. (1989). CONTENT, CAUSE, AND CONSEQUENCES OF JOB INSECURITY: A THEORY-BASED MEASURE AND SUBSTANTIVE TEST. Academy of Management Journal, 32(4), 803-829. doi:10.2307/256569

De Witte, H. (2000). Arbeidsethos en jobonzekerheid: meting en gevolgen voor welzijn, tevredenheid en inzet op het werk (Work Ethic and Job Insecurity: Measurement and Consequences for Well-Being, Satisfaction, and Performance at Work). In van groep naar gemeenschap, ed. R. Bouwen, K. De Witte, H. De Witte, and T. Taillieu, 325–350. Leuven: Garant. Goldberg, D. P. (1978). Manual of the General Health Questionnaire. Windsor, UK: NFER-Nelson.

De Witte, H., De Cuyper, N., Handaja, Y., Sverke, M., Näswall, K., & Hellgren, J. (2010). Associations between quantitative and qualitative job insecurity and well-being: A test in Belgian banks. International Studies of Management & Organization, 40(1), 40-56. doi:10.2753/IMO0020-8825400103

In an open economy, why is the supply curve in the foreign-currency exchange market vertical?

• Net capital outflow is determined by real GDP, not the real exchange rate.
• Net capital outflow is extremely sensitive to small changes in the real exchange rate.
• Net capital outflow is determined by the real interest rate, not the real exchange rate.
• Net capital outflow equals net exports.

a. Use the information to sketch the income consumption curve on a graph.

b. Draw the Engel curves for hot dogs and hamburgers.

Income HotDogs Hamburgers

$10 3 7

15 6 9

20 10 10

c. What is the income elasticity of hot dogs for this consumer as income increases from $10 to $15? (calculate using percentage changes of income and quantity demanded).

Suppose that a government passed a new law that requires firms to comply with strict regulations. This law discourages investment in the country. At the same time, government surplus increases sustainability because of effective policies. In a single well labeled graph , show the consequences of above information on the market for loanable funds. Be sure to specify changes in the equilibrium interest rate and equilibrium quantity of loanable funds.