Assignment: Global Business

Part 1

Prepare a document based on credible research and course materials addressing the following:

• Discuss the four strategies firms can use when entering foreign markets.
• Using specific examples, describe the strategies used by the following companies in global expansion:

o Intel
o McDonald's
o Goya
o Boeing
o Coca-Cola
o Nokia

• Have any of these companies experienced an evolution of strategies as discussed in the text?

Please provide your answers in a 3- to 4-page Microsoft Word document.

Strategic Management

Part 2

Read the case study located in the section titled Case Studies (bottom of page)and prepare a 3- to 4-page report in a Microsoft Word document concerning the following situation:

This case focuses on the corporate governance aspect of Martha Stewart Living Omnimedia (MSO), a media empire founded by Martha Stewart. Stewart is a former model and devoted her career to domestic perfection and luxury. She is the brand icon of MSO; however, with new technology and the shift of consumer tastes and preferences, MSO's business model is receiving serious threats from other competitors.
After a review of the history of Martha Stewart Living Omnimedia, the case discusses its competition, the legal problem that Martha Stewart encountered, changing leadership within MSO, Martha Stewart's questionable compensation, and the future of MSO. The case concludes with a discussion of MSO's future at a crossroads.

The case underscores the importance of corporate governance when conditions in the environment change. An analysis of the separation of ownership and managerial control, board of directors, and executive compensation will aid in evaluating the future of MSO. Some analysts suggest that MSO will lose its competitiveness once Martha Stewart leaves the company; others suggest that the MSO brand has lost its brand image by going into product lines such as cleaning fluids and dog poop bags. Also, a few analysts suggest that MSO is a potential takeover target.

This case is ideal for demonstrating the importance of corporate governance. The following points are to guide a review and discussion of some important concepts.

• Discuss MSO's corporate governance. Has the company been able to separate the ownership and managerial control?

• Evaluate the effectiveness of MSO's board of directors. Have the directors been able to monitor and control the company?

• Executive compensation is a method of governance mechanisms. Discuss Martha Stewart's compensation and evaluate its effectiveness.

• Is MSO in financial trouble? Discuss the possibility of the market for corporate control. Will MSO become a takeover target?

• Describe MSOs next move in terms of growth and expansion. Provide an analysis, of what additional recommendations would be required to be done to help MSO achieve its goals?

• Evaluate MSO's international strategy and its use of alliances to achieve company objectives, what would be their best strategy?

Case Study

Mini-Case

Is JCPenney Killing Itself with a Failed Strategy?

A few years ago, JCPenney was a traditional, low-end department store that appeared to be in a slow decline. Bill Ackman of Pershing Square Capital Management, a hedge fund investor, bought a large stake in the company and pushed to hire a new CEO, Ron Johnson. Johnson, who had successfully created the Apple retail store concept, was tasked with turning around the company's fortunes.

In January 2012, Johnson announced the new strategy for the company and rebranding of JCPenny. The strategy announced by Johnson entailed a remake of the JCPenny retail stores to create shops focused on specific brands such as Levi's, IZOD, and Liz Claiborne and types of goods such as home goods featuring Martha Stewart products within each store. Simultaneously, Johnson announced a new pricing system. The old approach of offering special discounts throughout the year was eliminated in favor of a new customer-value pricing approach that reduced prices on goods across the board by as much as 40 percent. So, the price listed was the price to be paid without further discounts. The intent was to offer customers a "better deal" on all products as opposed to providing special, high discounts on selected products.

The intent was to build JCPenny into a higher-end (a little more upscale) retailer that provided good prices on branded merchandise (mostly clothes and home goods). These changes overlooked the firm's current customers; JCPenny began competing for customers who normally shopped at Target, Macy's, and Nordstrom, to name a few of its competitors. Unfortunately, the first year of this new strategy appeared it to be a failure. Total sales in 2012 were $4.28 billion less than in 2011, and the firm's stock price declined by 55 percent. Interestingly, its Internet sales declined by 34 percent compared to an increase of 48 percent for its new rival, Macy's. All of this translated into a net loss for the year of slightly less than $1 billion for JCPenny.

It seems that the new executive team at JCPenny thought that they could retain their current customer base (perhaps with the value pricing across the board), while attracting new customers with the new "store-within-a-store" concept. According to Roger Martin, a former executive, strategy expert, and current Dean at the University of Toronto, "... the new JCPenney is competing against and absolutely slaughtering an important competitor, and it's called the old J.C. Penney." Only about one-third of the stores had been converted to the new approach when the company began to heavily promote the concept. Its new store sales produced increases in sales per square foot, but the old stores' sales per square foot markedly declined. It appears that Penney was not attracting customers from its rivals but rather cannibalizing customers from its old stores. According to Martin the new CEO likely understands a lot about capital markets but does not know how to satisfy customers and gain a competitive advantage. Additionally, the former CEO of JCPenney, Allen Questrom, described Johnson as having several capabilities (e.g., intelligent, strong communicator) but believes that he and his executive team made a major strategic error and was especially insensitive to the JCPenny customer base.

The question now is whether the company can survive such a major decline in sales and stock price. In 2013, it announced the layoff of approximately 2,200 employees to reduce costs. In addition, CEO Johnson announced that he was reinstituting selected discounts in pricing and offering comparative pricing on products (relative prices with rivals). The good news is that transformed stores are obtaining sales of $269 per square foot, whereas the older stores are producing $134 per square foot. Will Johnson's strategy survive long enough for all of the stores to be converted and save the company? The answer is probably not, because Johnson was fired by the JCPenny board of directors on April 8, 2013, about 1.5 years after he assumed the CEO position.