Faculty of Business, Economics & Accounting Department of Business Studies HELP Bachelor of Business (Hons) Year 1 HELP Bachelor

of Management (Hons) Year 1 HELP Bachelor of Economics (Hons) Year 1

CASE STUDIES Semester 1, 2014

Subject:

MGT 101 Principles of Management

Subject Lecturer/ Tutor: Puan Norzan Abdullah

ANALYZING A CASE STUDY STAGE 1: QUICKLY GO THROUGH THE GENERAL SCENARIO PRESENTED TO GAIN A GENERAL UNDERSTANDING OF THE SITUATION. Underline/highlight information which may indicate problems exist

STAGE 2: EXAMINE THE QUESTIONS CAREFULLY Read the questions several times-work out what is asking of you

STAGE 3: READ THE CASE AGAIN VERY THOROUGHLY Look for evidence

STAGE 4: PLAN YOUR ANSWER-SOME GUIDELINES You must be able to cite evidence (s) to support your arguments Apply your knowledge of theories to evidence assembled Draw legitimate inferences about matters not explicitly stated Make concrete recommendations- avoid vague conclusions

STAGE 5: WRITE YOUR FINAL ANSWER Express your ideas in your OWN words do not simply paraphrase what you read; be selective in what you quote from the case.

CASE STUDY 1: SWEDBANK Swedbank was founded in 1920 as Swedens first savings bank. The bank has 9.4 million retail customers and 550,000 corporate customers, with 400 branches in Sweden, 257 branches in the Baltic countries, and 220 branches in the Ukraine. The bank has also opened branches in Copenhagen, Helsinki, Kalingrad, Luxembourg, Malbella, Moscow, New York, Oslo, Shanghai, Saint Petersburg, and Tokyo. The bank has total assets of SEK 1,796 billion (June 2009) and around 21,000 employees. In June 2009, the bank announced its intention to bring in a new management structure. The purpose of the change was to move responsibility and authority closer to the banks customers, and strengthen the business, and improve profitability. The new body, known as senior management, would be responsible for the day-to-day decision making. The group consisting of 27 people, includes the regional heads of the Swedish bank and the heads of the three Blatic divisions. In July 2009, Swedbank announced that it would cut 3,600 jobs following a massive second-quarter loss of SEK 1.8 billion (US$228 million). This was in response to the dire economic situation in the Baltic States. Five hundred of the jobs would be cut in Sweden and the rest, mainly by natural retirements, in other countries in which the business operates. Swedbank made a profit of SEK 4.6 billion (US662 million) in the same period in 2008. The root cause of the problem was the double-digit contractions in the economies of Latvia, Estonia, and Lithuania, where the bank has major operations. In September 2009, much to the amazement of customers, the Swedish government, and key analysts, the four main Swedish banks including Swedbank announced that they were committed to making payouts in the form of bonuses to employees. Some of the banks had already gone to their shareholders and to the Swedish government for bailout funds. Swedbank, one of the banks in the states guarantee programme ( a scheme that guarantees payment when borrowing from other banks) was set to pay out SEK 800 billion (US$1.15 billion) in bonuses. Most of the larger payout was to go to brokers, analysts, and fund managers in the investment banking division. Swedbank raised SEK 12.4 billion (US$1.78 billion) in rights issue in December 2008, and in August 2009, it announced a second rights issue worth SEK 15 billion (US2.2 billion). The rights issue was covered by almost 188 percent. The bank saw this as a major endorsement of its management and decision making.

QUESTIONS 1. How do you think good decision making has contributed to the relative success of this business? 2. A decision to move into the Baltic States and the Ukraine was major. How could Swedbank have used the decision-making process to help make this decision? 3. What criteria do you think would be most important to the new senior management group as they make decisions about the companys future? 4. Would you characterize the conditions surrounding Swedbank as conditions of certainty, risk, or uncertainty? Explain your choice. How would these conditions affect managerial decision making?

CASE STUDY 2: MANAGING THE MAGIC Magic happens at the happiest place on earth. At least that is what the people at the Walt Disney Company (Disney) work hard to make us believe. However, the difficult business climate in 2008 and 2009 challenged Disney, as it did many other well-managed companies. CEO Bob Igler and his top management team are working hard to conjure up their own magic; that is, to find the best way to strategically maneuver the company to prosper despite the environmental uncertainties. Disney has had a long record of successes and the Disney Difference is noticeably apparent. What is the Disney Difference? Its high-quality creative content, backed up a clear strategy for maximizing that contents value across platforms and markets. From books, toys, and games to online media, soundtracks, and DVDs, Disney exploits its rich legacy of products through quality creative content and exceptional storytelling. Some of these products include, among many others, The Lon King, Toy Story, The Jungle Book, Cars, Disney-ABC Television, and ESPN programming. Although Disney is a U.S.-based company, its businesses span the globe with operations in North America, Europe, Asia Pacific, and Latin America. Its latest push is Russia, a large untapped media market, where its planning a broadcast version of the Disney Channel. The president of Walt Disney International says, We believe there is vast growth to come out of this market, despite the near-term economic turmoil. The company is also funding a $452 million expansion of the Disneyland theme park in Hong Kong in hopes of boosting poor attendance figures. One of the new themed areas called Grizzly Trail is set in an American frontier gold-mining town and features a roller coaster patterned after a runaway mine train. Despite its magical touch, just a few short years ago, Disney was not such a happy place. When Bob Iger was named CEO in 2005, analysts believed that the Disney brand had become dated. And, there was this sense that Disneys target audience was young and that its products could not possibly be of interest to older kids. Igler, who views himself as the steward of the entire Disney brand, immediately recognized the importance of leveraging in the companys vast media content on different platforms. His strategic approach had been working well until the economy slowed and the decline in global consumer spending made things even more precarious. Now, Iger and his management team will have to use all the strategic tools they have to guide the company and keep the magic coming.

QUESTIONS 1. What is the Disney Difference and how will it affect the companys corporate, competitive, and functional strategies? 2. What challenges do you think Disney might face in doing business in Russia? How could Iger and his top management team use planning to best prepare for those challenges? 3. With the expansion of Disneys Hong Kong Disneyland, what goals were set? What type of planning was necessary? How might Iger and his top management team use the strategic management process to keep the magic coming in the current economic climate?

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CASE STUDY 3: CROSS-FUNCTIONAL TEAMS CAN CURE MORE PATIENTS Faced with increasing expectations from patients, the Hospital Authority of Hong Kong has initiated programmes that aim to improve the clinical outcomes of patients with chronic diseases, using cross-functional teams. For example, the Tuen Mun Hospital introduced a Chronic Obstructive Pulmonary Disease Care Programme (CCP) in 2003 to take care of male patients with chronic pulmonary problems requiring hospitalization. Led by a chest physician, the CCP team consists of various health care professionals: nurses (a chest nurse and quitting-smoking nurse), a physiotherapist, an occupational therapist, a social worker, and a dietician. Patients with chronic pulmonary diseases, satisfying basic criteria such as age, residential characteristics, previous accident and emergency attendance, and hospital admission patterns, are enrolled if they are motivated to quit smoking. Joint assessment and regular meetings are held among the health care professionals to discuss the patient conditions. The programme covers education and prevention, diagnosis and treatment, emotional or social support, as well as discharge planning of the patients. In the past, the strong hierarchical health care system, in which physicians had immense power over nursing and other health care specialists, meant that decisions and attitudes were never questioned. Changes in the way staff has led to closer working relationships and greater opportunity for colleagues to share experiences from various points of view. They receive better communication, greater team cohesion, and support, since reliance on third party (usually the nurses) reporting of patient condition can be reduced. For the patients, it eliminates the need for repeated separate assessment visits, since the crossfunctional team shares information. Also, it should be noted that patients may sometimes withhold information from their medical carriers, because they think that certain health care professionals may only be interested in specific types of problems. Use of crossfunctional teams on the same patient simultaneously would allow a more holistic and accurate assessment of the patients condition. Thanks to the introduction of the CCP programme, the average number of chronic obstructive pulmonary disease emergency admissions was reduced by 37 percent, and there was a 38.5 percent decrease in the 28-day readmission rate from 2003 to 2004. Patients with severe diseases also showed a 36 percent reduction in emergency hospital admission. QUESTIONS 1. What benefits do the cross-functional teams bring to the patients and a hospital respectively? 2. What challenges would there be in creating an effective cross-functional team? How can senior management deal with these challenges? 3. Explain how each of the characteristics of effective teams would be important for an effective cross-functional team.

CASE STUDY 4: THE STORY OF TONY FERNANDES AND AIR ASIA When Tony Fernandes was six years old, he announced that he will start an airline and his father, a physician, quipped, 'if you make past the doorman of Hilton Hotel, I will be happy'. Well, he did make past the doorman of Hilton and then did not stop there. He says marketing is in his blood as his mother ran a successful direct-selling Tupperware business in Malaysia. He won a Formula One racing bet, and some bet it was, as a few months from now the person who lost the bet, Richard Branson, the founder and chairman of Virgin Group that owns 400 companies, will wax his legs, don a red skirt and walk down the aisle of an AirAsia flight serving beverages to passengers. Tony Fernandes acquired bleeding low-cost subsidiary of Air Malaysia from Malaysian Government. Hence, Air Asia was launched in 2001, which turned out to be a profitable airline within two years. Tony Fernades adopted a JV model for expansion in the South East Asian region (JVs in Indonesia, Japan, the Philippines, Thailand). From then on, Air Asia goes on to become the largest low-cost airline in the region. AirAsiaX, Tony Fernandes' low cost international airline launched flights to India in 2010, which flies 45 weekly flights out of India. In 2011, he orders 200 A320neos from Airbus, with an order of 350 aircraft in total (out of these 118 have been delivered). Forty-eight-year-old Anthony Francis Fernandes, better known as Tony Fernandes, who is worth $615 million today, would have ended up as a doctor, like his father (originally from Goa), had he been a disciplined child who followed the path chosen by his parents. But instead, Fernandes, who left Malaysia at the age of 12 to study at Epsom College in Surrey, England, and then graduated from London School of Economics, had other plans. Fernandes, an accountant, started his career with Warner then moved to Richard Branson's Virgin Communications only to move back to Malaysia in 1992, to dabble in a career in the music industry. He became the youngest managing director of Warner Music, Malaysia, and would have stayed in the industry-he plays guitar and pianorevolutionizing ethnic music to take it from the fringes into mainstream of contemporary music But his appetite for taking risks had him move into the uncertain world of airline industry and that too, right after the 9/11 terror attacks. In October 2001, Fernandes mortgaged his home to buy an airline for one ringgit (Rs 17 at current exchange rates). It meant he bought two ageing Boeing 737 jets, 200 employees and $11 million in debt. A year later, the airline miraculously broke even. There was no turning back. Today, if the West has the loose-talking Micheal O'Leary, the CEO of Dublin-based Ryanair, the low-cost carrier that is both loved and loathed in Europe, the East has Tony Fernandes, the group CEO of the Kuala Lumpur-based low-cost airline AirAsia Berhad. Fernandes is

the only airline chief on this side of the planet who has a way with words and cheap tickets, which he manages to offer without losing the plot. Last year, Fernandes, who owns a Formula One racing team, bought British sports car manufacturer Caterham and soccer club Queens Park Rangers to add to his kitty of businesses in hotel, education , mobile phone and insurance industry. He is one of the first CEOs to harness the power of social media networks to sell tickets and market his airline. One Wednesday afternoon he wrote on his Facebook page, 'within a few hours AirAsia will be making a significant step in our journey of being an ASEAN airline'. Within hours, he received about 800 likes. On Twitter, he does an average of at least 10 tweets a day. Fernandes believes in involving himself in the day-to-day functioning of an airline. So, once in every two months or so, he is a cabin crew member on one of his flights or he is handling the check-in counter or he is supervising the loading and unloading of bags. His jokes reveal how well-versed he is with the working of his airline. Like for instance: in an aviation conference he attended in Mumbai about four years ago he spoke about doing business in different countries and how cultural difference can throw up its own set of problems. 'Our pilots and flight attendants are ferried together to and from the aircraft in a coach bus. But when we launched operations in Thailand the pilots there protested, saying they will not travel with flight attendants. Now that was a surprise to me, as in Malaysia, the pilots protest if they are not allowed to travel with flight attendants,' he said QUESTIONS 1. What characteristics of the various leadership styles are evident in Tony Fernandes? Discuss. 2. What sources of power and influence does Tony Fernandes possess? 3. Would you describe Tony Fernandes as more of a transactional or a transformational leader? Justify your answer.

CASE STUDY 5: FLIGHT 001 MOTIVATING EMPLOYEES All retail jobs are not created equal. Just ask Amanda Shank. At a previous job, a storeowner bluntly told her, Youre just a number. You can be replaced at any time. Shank said, When youre told something like that, why would you want to put any effort in? That sort of callous treatment is hardly an incentive. Luckily, after landing a job at Flight 001, Shank started to feel motivated again. Flight 001 co-founder Brad John frequently visits his New York stores to talk with staff about what is happening. While visiting Shanks Brooklyn store where she had recently been promoted to assistant store manager, John asked if customers were shopping differently after the airlines had added new fees for checked luggage. Shank confirmed Johns suspicions and gave him a full report along with recommendations for how they might make adjustments in inventory and merchandising. Shank is thrilled to have found a place where she can make a contribution and be challenged. At this company they make an effort to show youre appreciated; you have a say in what goes on. Youre given compliments and feedback about what you could be better at, she explained. Although growth opportunities might seem limited in retail, store leader Claire Rainwater involves crewmembers in projects that use their strengths. If someone excels at organization and operations, she asks that person to identify and implement an improvement that excites him or her. She gives visually talented associates free reign to create new merchandising displays. Rainwater could easily provide direction on how to approach these tasks, but she allows her crewmembers the autonomy to determine how they want to approach and execute tasks, which ultimately creates a greater sense of empowerment and engagement. Although retail offers careers, Crew Development Manager Emily Griffin says that the industry is temporary for many people. Most associates just want to make some money while pursuing other interests as students, photographers, musicians, etc. Usually Griffin can tell which associates are passing through and who might stick around. What is interesting is that when she started at Flight 001, Griffin thought she was passing through. QUESTIONS 1. According to Maslows hierarchy, which basic needs did Amanda Shanks old boss fail to meet? 2. How might feeling underpaid affect the work of a Flight 001 associate? Apply an appropriate motivation theory. 3. Explain the possible reasons Griffin stayed at Flight 001 to pursue a career.

CASE STUDY 6: SOUTHWEST AIRLINES CORPORATE CULTURE Southwests CEO, Herb Kelleher, managed the airline with a leadership style of flamboyance and fun and a fresh, unique perspective. Kelleher played Big Daddy-O in one of the company videos, appeared as the King of Rock (Elvis Presley) in in-flight magazine advertisements, and earned the nickname High Priest of Ha-Ha from Fortune magazine.21 Although Kelleher was unconventional and a maverick in his field, he led his company to consistently new standards for itself and for the industry. Sincerely committed to his employees, Kelleher generated intense loyalty to himself and the company. His ability to remember employees names and to ask after their families was just one way he earned respect and trust. At one point, Kelleher froze his salary for five years in response to the pilots agreeing to do the same. Often when he flew, Kelleher would help the ground crew unload bags or help the flight crew serve drinks. His humour was legendary and served as an example for his employees to join in the fun of working for Southwest. He was called a visionary who leads by example you have to work harder than anybody else to show them you are devoted to the business. Although Kelleher tried to downplay his personal significance to the company when questions were raised about succession, many analysts following Southwest credited the airlines success to Kellehers unorthodox personality and engaging management style. As one analyst wrote, The old-fashioned bond of loyalty between employees and company may have vanished elsewhere in corporate America, but it is stronger than ever at Southwest. Customer service far beyond the norm in the airline industry was not unexpected at Southwest and had its own name Positively Outrageous Service. Some examples of this service included: a gate agent volunteering to watch a dog (a Chihuahua) for two weeks when an Acapulco bound passenger showed up at the last minute without the required dog crate; an Austin passenger who missed a connection to Houston, where he was to have a kidney transplant operation, was flown there by a Southwest pilot in his private plane. Another passenger, an elderly woman flying to Phoenix for cancer treatment, began crying because she had no family or friends at her destination. The ticket agent invited her into her home and escorted her around Phoenix for two weeks. Southwest Airlines customers were often surprised by the Southwest Spirit. On some flights, magazine pictures of gourmet meals were offered for dinner on an evening flight. Flight attendants were encouraged to have fun: songs, jokes and humorous flight announcements were common. One flight attendant had a habit of popping out of overhead luggage compartments as passengers attempted to stow their belongings, until the day she frightened an elderly passenger who called for oxygen.25 Herb Kelleher once served in-flight snacks dressed as the Easter Bunny. Intense company communication and camaraderie were highly valued and essential to maintaining the esprit de corps found throughout the firm. The Southwest Spirit, as

exhibited by enthusiasm and extroverted personalities, was an important element in employee screening conducted by Southwests People Department. Employment at Southwest was highly desired. When the company held a job fair in Oklahoma City, more than 9 000 people attended in four days. In 1995, 5 444 employees were hired from the 124 000 applications received and 38 000 interviews held. Once landed, a job was fairly secure. The airline had not laid off an employee since 1971. Employee turnover hovered around 7 per cent, the lowest rate in the industry. More than half of Southwests 22 000 employees had been hired after 1990. In 1990, Southwest had only 8 600 employees and less than 6 000 in 1987. During initial training periods, efforts were made to share and instill Southwests unique culture. New employee orientation, known as the new-hire celebration, included Southwests version of the Wheel of Fortune, scavenger hunts, and company videos including the Southwest Airlines Shuffle in which each department introduced itself, rap style, and in which Kelleher appeared as Big Daddy-O. Advanced employee training regularly occurred at the University of People at Love Field in Dallas. Various classes were offered, including team building, leadership and cultural diversity. Newly promoted supervisors and advanced employee training regularly occurred at the University of People at Love Field in Dallas. Various classes were offered, including team building, leadership and cultural diversity. Newly promoted supervisors and Employee initiative was supported by management and encouraged at all levels. For example, pilots looked for ways to conserve fuel during flights, employees proposed designs for ice storage equipment that reduced time and costs, and baggage handlers learned to place luggage with the handles facing outward to reduce unloading time. Employee initiative was supported by management and encouraged at all levels. For example, pilots looked for ways to conserve fuel during flights, employees proposed designs for ice storage equipment that reduced time and costs, and baggage handlers learned to place luggage with the handles facing outward to reduce unloading time. Red hearts and Luv were central parts of the internal corporate culture, appearing throughout the company literature. A mentoring program for new hires was called CoHearts. Heroes of the Heart Awards were given annually to one behind-the-scenes group of workers, whose department name was painted on a specially designed plane for a year. Other awards honoured an employees big mistake through the Boner of the Year Award. When employees had a story about exceptional service to share, they were encouraged to fill out a LUV Report. Southwest placed great emphasis on maintaining cooperative labour relations. Within the firm, almost 90 per cent of all employees were unionised. The company encouraged the unions and their negotiators to conduct employee surveys and to research their most important issues prior to each contract negotiation. Southwest had never had a serious labour dispute. The airlines pilot union, SWAPA, represented 2 000 pilots. At its 1994 contract discussion, the pilots proposed a 10-year contract with stock options in lieu of

guaranteed pay increases over the first five years of the contract. In 1973, Southwest was the first airline to introduce employee profit sharing. QUESTIONS 1. How do you categorize the corporate culture of Southwest Airlines? 2. Describe the non-observable culture and its impact on the success of Southwest Airlines. 3. Describe observable culture and its impact on the success of Southwest Airlines.