BUSINESS STRATEGY

KRAMER SPRING 2007

CASE DISCUSSION ASSIGNMENT
QUESTIONS

Case 1 Whole Foods Market in

2006:
Mission, Core Values, and Strategy
Assignment Questions
1. What are the chief elements of the strategy that Whole Foods Market is pursuing?
2. Is the strategy well matched to recent developments and conditions in the natural and organic foods
segment of the food retailing industry?
3. Do you think John Mackey has a good strategic vision for Whole Foods? Why or why not? What do you
like/dislike about the company’s motto “Whole Foods, Whole People, Whole Planet?” Do the motto and
the principles underlying it (Exhibit 1) really matter at this company or are they just nice words and
cosmetic window dressing? Explain.
4. Do Whole Foods Market’s core values as presented in case Exhibit 3 really matter? Are they “real” or
just cosmetic window dressing? What evidence can you cite to support your answer? Have Whole
Foods’ core values contributed to the company’s success? Why or why not?
5. How well is Whole Foods Market performing from a financial perspective? Do some number-crunching
using the data in case Exhibits 9 and 10 to support your answer. Use the financial ratios presented in
Table 1 of Chapter 4 (pages 98-99) as a basis for doing your calculations.
6. How well is Whole Foods Market performing from a strategic perspective? Does Whole Foods enjoy a
competitive advantage over its 3 chief rivals—Wild Oats, Fresh Market and Trader Joe’s? Does the
company have a winning strategy?
7. What recommendations would you make to John Mackey regarding the actions that Whole Foods’
management needs to take to sustain the company’s growth and financial performance?

Case 2 Oliver’s Markets

Assignment Questions
1. What are the key elements of the strategy at Oliver’s Market? Which of the five generic competitive
strategies discussed in Chapter 5 is Oliver’s Market pursuing?
2. What competitive pressures must Oliver’s Market be prepared to deal with? What do we learn about the
nature and strength of the competitive pressures Oliver’s faces from doing a five-forces analysis of
competition (as described in Chapter 3)? Which of the five competitive forces is the strongest?
3. Based on your analysis of the competitive pressures, is the supermarket industry in the Sonoma County
area (where Oliver’s is located) competitively attractive? Why or why not? Is there a potential for a
company like Oliver’s Market to realize above-average profits and return on investment doing business
in Sonoma County?
4. What driving forces are operating in the supermarket industry in Sonoma County?
5. What does a strategic group map reveal about the positions of the major players in the Sonoma County
retail food market? Is Oliver’s in a good position on the map? Why or why not? Who are Oliver’s closest
and toughest competitors?
6. What are the key success factors for competing in the supermarket industry in Sonoma County?
7. What is your assessment of Oliver’s financial performance and financial condition? Is the company in
good financial shape? Why or why not? You should use the financial ratio summary in Table 4.1 of
Chapter 4 as a guide for doing the calculations needed to support your assessment of how well Oliver’s
market is performing.
8. Based on case Exhibit 6, how well does Oliver’s financial performance compare to the industry
averages? Based on case Exhibit 8, how well is Oliver’s performing compared to key competitors?
9. What does a SWOT analysis reveal about the attractiveness of Oliver’s situation? Just how attractive is
the company’s situation and position?
10. Based on your analysis of the supermarket industry in Sonoma County and Oliver’s situation, what
problems and issues should Steve and Tom consider? Which ones are top priorities? Which are low
priorities?
11. Should Oliver’s expand? If so, which site or sites should they purchase? Should Tom be allowed to buy
into the new store? Based on the demographic information available in case Exhibit 13, how do the
proposed sites compare to the current locations?
12. Aside from the expansion issue, what other recommendations would you make to Steve and Tom?
Case 4 Competition in the
Golf Equipment Industry
Assignment Questions
1. What are the defining characteristics of the golf equipment industry? What is the industry like?
2. What is competition like in the golf equipment industry? What competitive forces seem to have the
greatest effect on industry attractiveness? What are the competitive weapons that rivals are using to try to
outmaneuver one another in the marketplace? Is the pace of rivalry quickening and becoming more
intense? Why or why not?
3. How is the golf equipment industry changing? What are the underlying drivers of change and how might
those driving forces change the industry?
4. What does your strategic group map of the golf equipment industry look like? Which strategic groups do
you think are in the best positions? Which are in the worst positions?
5. What key factors determine the success of companies competing in the golf equipment industry?
6. Which of the major companies in the golf equipment industry appear to be competitively strongest and
weakest? Do a competitive strength analysis of Callaway, TaylorMade, Titleist/Cobra, Ping, and Nike
using the methodology shown in Table 4.5 in Chapter 4 to support your answer.
7. What recommendations would you make to Callaway Golf to improve the company’s competitive
position in the industry and its financial and market performance?
8. What recommendations would you make to Fortune Brands?
9. What recommendations would you make to TaylorMade-adidas Golf?
Case 5 Dell Inc. in 2006:
Can Rivals Beat Its Strategy?
Assignment Questions
1. What is your evaluation of Michael Dell’s performance first as Dell’s CEO and more recently as its
Chairman? How well has he performed the five tasks of crafting and executing strategy that were
discussed in Chapter 2?
2. What are the elements of Dell’s strategy? Which one of the five generic competitive strategies is Dell
employing? How well do the different pieces of Dell’s strategy fit together? Is Dell’s strategy evolving?
3. Does Dell’s expansion into other IT products and services make good strategic sense? Why or why not?
4. What does a SWOT analysis reveal about the attractiveness of Dell’s situation?
5. What does a competitive strength assessment reveal about Dell, as compared to IBM-Lenovo, Hewlett-
Packard, and Gateway? Among these competitors, who enjoys the strongest competitive position?
A0Who is in the weakest overall competitive position?
6. Has Dell’s strategy given it a sustainable competitive advantage? What is the basis for whatever
competitive advantage it has?
7. What is your assessment of Dell’s financial performance during 1998-2006? Use the financial ratios
presented in Table 4.1 of Chapter 4 (pages 98-99) as a basis for doing your calculations and drawing
conclusions about Dell’s performance.
8. Is Dell’s strategy potent enough to beat out Hewlett-Packard? What are Dell’s chances for becoming the
dominant leader in the global PC market? How good are Dell’s prospects for continued growth in
revenues and earnings?
Case 20 Harley-Davidson in 2004
Assignment Questions
1. What are the dominant business and economic characteristics of the global motorcycle industry? What is
the industry like?
2. What cross country differences in cultural, demographic, and market conditions exist in the global
motorcycle industry?
3. What are the key elements of Harley-Davidson’s competitive strategy? How has the company utilized
offensive and defensive moves to secure its position as the leader of the heavyweight motorcycle
segment? Does it appear that Harley-Davidson’s strategy is working? Is its performance acceptable?
4. How strongly is Harley-Davidson positioned in international markets? How does the company’s
performance in international markets compare to its performance in the United States? How would you
characterize Harley-Davidson’s approach to international competition?
5. What recommendations would you make to Harley-Davidson’s executive management to improve
performance both domestically and in international markets? What should the company do to improve its
appeal with younger riders in the U.S. and Europe? How might the company better cope with the aging
of the baby boomer generation? Does it appear the company will be able to increase sales to 400,000
units by 2007 as suggested by Jeffrey Bleustein?
Case 12 Krispy Kreme Doughnuts
in 2006: Is a Turnaround Possible?
Assignment Questions
1. What were the chief elements of Krispy Kreme’s strategy as of early 2004? Which one of the five
generic competitive strategies best characterize Krispy Kreme’s strategy? Does Krispy Kreme’s strategy
have a vertical integration component?
2. Do you see any strategy-related reason to believe that the company was headed for big trouble in mid-
2004—or was what happened to the company in 2004 a “legitimate” surprise?
3. What is your assessment of Krispy Kreme’s financial performance prior to 2004? What was the most
profitable part of Krispy Kreme’s business as of the end of fiscal 2004? Please use the financial ratio
summary in Table 4.1 of Chapter 4 as a guide in doing the calculations to support your financial
assessment.
4. What is your diagnosis of what went wrong at Krispy Kreme in 2004 to produce the sudden downturn in
the company’s financial performance? What factors caused the company to crash so quickly when its
future and growth prospects seemed so bright?
5. Do you think top management was employing “aggressive” accounting tactics to try to cover up
disappointing earnings problems and keep the stock price pumped up? Do you see anything unethical
going on here? Why or why not? What evidence supports your views?
6. What does a SWOT analysis reveal about Krispy Kreme’s overall situation as the company heads into
2006?
7. What is your assessment of Krispy Kreme’s competitive strengths and weaknesses in comparison with
key rivals as of 2004? Does the company possess the competitive strength to mount a comeback? Please
use the methodology in Table 4.5 of Chapter 4 in arriving at your answer.
8. On the basis of your competitive strength assessment above, what do you think of Krispy Kreme’s
turnaround prospects? Just how good are they? Is a comeback feasible? What evidence supports your
answer?
9. What major issues besides how to make a comeback do you think that Krispy Kreme management needs
to address?
10. What recommendations would you make to Krispy Kreme management to return Krispy Kreme to
profitability by the end of 2006 (or in 2007 at the latest)?
Case 21 Adidas—Will
Restructuring Its Business Lineup
Allow It to
Catch Nike?
Assignment Questions
1. What is adidas’ corporate strategy? Was there a common strategic approach utilized in managing the
company’s lineup of sporting goods businesses prior to its 2005-2006 restructuring? Has the corporate
strategy changed with restructuring?
2. What is your evaluation of adidas’ 1998 acquisition of Salomon SA? Did the acquisition achieve the
Robert Louis-Dreyfus’ objective of putting together the best portfolio of sports brands in the world?
What does a 9-cell industry attractiveness/business strength matrix displaying adidas-Salomon’s business
units look like?
3. Did adidas’ business line-up prior to the divestiture of Salomon and Mavic exhibit good strategic fit?
What value-chain match-ups existed? What opportunities for skills transfer, cost sharing, or brand
sharing were evident? What strategic fits will be possible once Reebok International is acquired?
4. Did adidas’ business line-up exhibit good resource fit between 1998 and 2004? What were the financial
characteristics of each of three major segments? Which businesses might have been considered cash hogs
and cash cows? How did adidas-Salomon’s performance vary by geographic region?
5. Based on your analysis of adidas-Salomon businesses, did the 2005 restructuring make sense? Does it
appear the acquisition of Reebok International will produce positive results for shareholders? What
strategic actions should adidas CEO Herbert Hainer initiate to improve the company’s financial and
market performance now that the restructuring is nearing completion?
Case 31 Merck and the Recall of
Vioxx
Assignment Questions
1. Do you see anything unethical about how Merck handled the research of Vioxx’s safety?
2. What evidence supports the conclusion that the actions and behavior of Merck’s executives were ethical
and aboveboard insofar in how the marketing of Vioxx was handled?
3. What evidence indicates that Merck’s executives knew that there were important safety issues regarding
Vioxx that were not adequately disclosed to doctors and patients?
4. Do you see anything unethical about how Merck handled the marketing of Vioxx? Is it ethical for a
pharmaceutical company to market its drugs directly to the public as opposed to marketing through
doctors (by informing them of the benefits and potential adverse side effects of their drugs)?
5. Did the Federal Drug Administration do a good job in monitoring the safety of Vioxx? Should the FDA
have been more aggressive in pushing Merck to do more research and clinical trials regarding the safety
of Vioxx following the results of the Naproxen study? Should the FDA have insisted on stronger
warning labels? Why or why not?
6. Did Merck act appropriately in recalling Vioxx and ceasing all efforts to market Vioxx in September
2004? Should it have recalled the drug sooner? Why or why not?

TEXT: Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases by
Thompson, Strickland and Gamble, 15th ed., McGraw-Hill-Irwin, 2007