case study on business policy and strategic management

Business Policy and Strategic Management

Business policy and strategic management are key concepts in business studies and entrepreneurship. They refer to the processes, frameworks, and methodologies that an organization uses to ensure they meet its goals and objectives, and they can help the business to become more efficient and competitive in its marketplace. Here’s a bit more about each:

• Business Policy : This refers to the set of rules and guidelines that an organization follows to make consistent and efficient decisions. The business policy helps to create a framework within which all employees can understand their roles and responsibilities. These policies can cover everything from human resources and finance to operations and marketing. Business policies can help improve the decision-making process, increase transparency, and ensure that all actions align with the organization’s goals. Business Policy: Meaning, Types, and Examples
• Strategic Management : This broader concept encompasses an organization’s overall strategy. Strategic management involves setting objectives, analyzing the competitive environment, analyzing the internal organization, evaluating strategies, and ensuring that the strategies are rolled out across the organization. Strategic management is typically divided into five stages: goal-setting, analysis, strategy formation, implementation, and monitoring. Everything you need to know about “strategic management”

Both business policy and strategic management play critical roles in the success of an organization. Policies ensure consistency and fairness, while strategic management ensures that the organization is moving in the right direction and that all actions and policies support the organization’s overarching goals.

Relationship between business policy and strategic management

Business policy and strategic management are inherently intertwined concepts, each serving to guide and inform the other. The relationship between these two aspects of business can be thought of as both sequential and cyclical.

• Sequential Relationship : At the highest level, strategic management usually comes first. Management begins by setting strategic goals and plans for the organization, often in response to external market conditions and internal capabilities. Once the strategic goals have been established, business policies are developed to help implement these strategies. Policies provide guidelines and rules that govern the behavior of individuals and units within the organization, helping to align daily operations and decisions with the strategic objectives.
• Cyclical Relationship : Over time, business policies and strategic management feed into each other, creating a continuous cycle of improvement and adaptation. As business policies are implemented, their effectiveness in achieving strategic goals is monitored and evaluated. This feedback can then inform strategic management, leading to adjustments in strategic goals and new or revised policies.

In essence, strategic management gives the organization its direction and purpose, while business policies provide the concrete steps needed to get there. Strategic management defines ‘what’ the organization aims to achieve, and business policy determines ‘how’ it will do so.

However, this is not a one-way relationship. Business policies, once in place, can also influence strategic management. The lessons learned from implementing policies, their successes and failures, can influence the future strategic direction of an organization.

For instance, if a certain policy led to significant efficiency gains in a particular department, strategic management might choose to focus more resources on this area and adjust their strategy accordingly. Conversely, if a policy doesn’t produce the desired results or leads to unforeseen issues, strategic management might need to reassess its goals or strategies to reach them. This constant feedback loop ensures the organization remains adaptable and responsive to both internal and external changes.

Example of business policy in strategic management

Suppose a technology company, TechCo, has set a strategic goal to become the market leader in its sector within five years. As part of their strategic management process, they identify that innovation and customer satisfaction are key areas they need to excel in to achieve this goal.

Now comes the part where business policies come into play:

• Innovation : To foster innovation, TechCo implements a policy allowing employees to spend 20% of their work time on personal projects related to the company’s interests. Similar policies at companies like Google inspire this. The idea behind this policy is that giving employees the freedom to explore new ideas will foster creativity and potentially lead to the development of new products or services.
• Customer Satisfaction : To increase customer satisfaction, TechCo implements a policy to address customer complaints within 24 hours. Additionally, they introduce a policy to conduct regular customer satisfaction surveys and incorporate customer feedback into product development.

These business policies are not standalone decisions but are aligned with the strategic goal of becoming a market leader. They provide a structured way for the company to work towards its strategic objectives.

Over time, TechCo will evaluate the effectiveness of these policies. If the innovation policy results in new product ideas and the customer satisfaction policy leads to higher customer retention rates, the company will know it’s on the right track. If not, it might be time to rethink the strategies or the policies designed to implement them.

This example illustrates how strategic management defines what a company wants to achieve, and business policy outlines how it plans to achieve it. The policies provide a roadmap for employees and teams, guiding their actions and decisions toward the strategic goals.

Case study of successful business policy in strategic management

A well-known example of a successful business policy in strategic management is the “Think Different” policy initiated by Apple Inc. under Steve Jobs.

In the late 1990s, Apple was struggling. They had a slew of products but lacked direction and focus, and they were losing market share to competitors. When Steve Jobs returned to Apple as CEO in 1997, he implemented a business policy that would forever change the company’s trajectory.

Strategic Goal:  Jobs’ strategy was to reestablish Apple as an innovative company capable of disrupting markets and offering consumers intuitive, design-led technology products.

Business Policy:  Jobs implemented a business policy of simplification and focus. He drastically reduced the number of Apple’s products from about 350 to just 10 . This policy was a departure from the then-common practice of offering a wide range of products to cater to every possible customer segment.

Jobs believed that by focusing on a select few products, Apple could dedicate more resources to ensuring that those products were innovative, well-designed, and user-friendly. This policy is applied across the entire organization, from product design to marketing.

Result:  The policy was tremendously successful. The iMac, released in 1998, was the first product of this new policy. Its unique design and user-friendly interface were a hit with consumers, and it marked the beginning of a series of successful products, including the iPod, iPhone, and iPad. These successes turned Apple into one of the most valuable companies in the world and a leader in multiple technology markets.

This case study shows how business policy can drive strategic goals. Steve Jobs’ decision to simplify and focus Apple’s product line was a bold policy decision that directly supported his strategic goal of reestablishing Apple as an innovative, design-led company. Through a clear and decisive policy, Apple could align all aspects of the organization behind this strategy and execute it successfully.

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Strategic Management and Business Policy, Case Study Example

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Starbucks is obviously one of the biggest beverage companies in the world today. Key to Starbucks’s successful strategy is to actively listen to, interact with, and act on the expectations of its customers, who possess a strong environmental and social conscience, and to constantly demonstrate reductions in the environmental footprint of its operations. As such, this paper gives a strategic viewpoint regarding the environmental impacts of Starbucks. The strategies of Starbucks to distribute coffee, such as through coffee stores, grocery markets, and new retail channels, as well as their benefits and consequences are studied. Price is about what will charge customers for products and services. This paper discusses how pricing scheme should consider profit margins and the possible pricing response from competitors. The integration of various internal and external factors is best revealed through SWOT analysis, which provides a simple overview of Starbuck’s future strategic situation. And finally, it is recommended that the research encompass the multiple media channels and target markets in relationship to the campaign objectives previously outlined by examining what percentage of the media budget is spent on the media vehicle and the resulting analysis of the data to reveal what avenue produces the greatest brand awareness.

Table of Contents

Introduction. 4

Size and Growth of Market 4

Competition in Market 5

SWOT Analysis. 6

Pricing Methodology. 10

Financials (Sales and Margins) 11

Recommendations and Conclusion. 13

Introduction

Starbucks, as one of the ruling kings in the entire coffee industry, is now everywhere. It sells not only its coffee; it sells the “Starbucks’ experience” away from home and away from work. From a retailer and roaster of coffee beans in Seattle, Starbucks is now a world-renowned organization that provides the best coffee choices for the market. Today, the business also has managed to establish several retail branches around the world. Due to this, the possibility of creating different choices and different coffee tastes has also been given birth. Towards the future, it is foreseen that adjustment on the making of coffee based on the coffee culture of the people living within the area where the retail stores and international shops of the business are located. As Shariff and Abington (2012) point out, Starbucks strategic objectives for 20112 -2014, should be tied to its mission statement which is concerned with the maintenance of the most strategic and respected brand in the world, can be achieved by a collective effort, in which all major players and stakeholders are made to pull the same rope at the same time in the same direction.

Size and Growth of Market

Starbucks is now powerhouse premium brand in a category in which only cheaper commodity products once existed. As of July 28, 2011, some 40 million customers a week flock to its nearly 17,018 company-oriented and licensed stores in 50 countries (Andrejczak, 2011). Starbucks achieves remarkable revenue growth more than 20 per cent per year. Starbucks’s triumph has drawn a full litter of impressionists, from direct players such as Caribou Coffee to fast-food merchants (such as McDonald’s) and even discounters (Kicks Coffee Café at a Wal-Mart) (Andrejczak, 2011). Nowadays it looks like that every person is selling their own product of premium coffee. In the early 1990s, there were only two hundred coffeehouses in the United States. Today there are more than 1,000 within the US only (Andrejczak, 2011). To continue its extraordinary growth in an ever more over-caffeinated market, Starbucks has brewed up a determined, multipronged strategy of growth.

In order to maintain a healthy sales volume and growth track record from 2012-2014, Starbucks must recognize that the competition is here to stay throughout the world. In countries such as Vietnam, the opportunities for Starbucks to thrive are substantial, but the competition is just around the corner. McDonalds has been in existence much longer than Starbucks, and also has a clearly recognizable and popular brand image. It is not surprising that the fast food giant, experiencing some troubles of its own, is one of the most important threats to Starbucks’s well being and overall growth strategy.

Competition in Market

Starbucks faces tremendous competition in some retail markets throughout the world. Many retailers have developed coffees and specialty drinks that offer a similar experience to Starbucks and consumers have jumped on the bandwagon. For example, Dunkin Donuts, a U.S. donut retailer, has expanded its coffee product line to include gourmet coffees for home use, as well as a wide variety of specialty drinks (Vinzant, 2007). McDonalds has also entered the gourmet coffee market, with its premium and iced coffee products at lower prices than what Starbucks offers. Finally, Panera Bread retailers have established a winning strategy with their line of gourmet bagels and pastries, soups, and sandwiches, coupled with premium coffee products (Vinzant, 2007).

As many fast food restaurant retailers expand their gourmet coffee product offerings, Starbucks has taken notice. Pirko (2008) states the following: “When McDonald’s and Dunkin Donuts become yours competitors, and it brings you down to more into the commercial world — and their price really matters”. In this context, many consumers have reduced their consumption of the more expensive specialty coffee drinks in favor of lower-priced coffees at other retailers, such as Dunkin Donuts and McDonalds (Pirko, 2008). As a result, Starbucks has observed a decline in growth and stagnant sales, as consumers must spend their incomes wisely on such necessities as their mortgages, gas, and basic food supplies (Pirko, 2008). There are important implications of the current economic marketplace for Starbucks, and the competition plays a substantial role in these consequences.

SWOT Analysis

Moore and Gooderl (2008, p. 80) state that a solid foundation for competitive advantage requires a match between the strengths and weaknesses of a business and current opportunities and strengths. This integration of various internal and external factors is best revealed through analysis of strengths and weaknesses, which provides a simple overview of Starbuck’s strategic situation.

Strengths: As Starbucks has gained tremendous ground on the competition with its fierce entrance into the world marketplace, its retail store model has been successful in many countries throughout the world, and the emphasis placed upon gourmet coffees and specialty drinks has been well accepted by world consumers. In many ways, Starbucks has established a proven strategic formula that has forever transformed the ways in which consumers view the coffee business and the beverage as a whole (UW Business School, 2003). Most importantly, Starbucks’ revenue and growth strategy surpasses all of the competition, and its objectives to expand into new foreign markets have been triumphant. Starbucks’ primary entrance strategy to surround new markets until they are saturated has been tremendously advantageous for the business and its employees. Finally, Starbucks clustering strategy, whereby a number of retailers might be observed within blocks of each other has attracted consumers in large numbers.

Weaknesses: Starbucks has been observed as a strong supporter of innovation and new product development; however, some of these products have been less successful than anticipated, which introduces a level of vulnerability for the corporation and its objectives. Furthermore, despite ever-increasing expansion into new markets, Starbucks continues to focus much of its attention on the United States, where it is headquartered, and this may lead to future problems related to business longevity and success (Fellner, 2008). If the type of emphasis placed upon the United States was introduced into foreign markets, new opportunities could emerge. Nonetheless, Starbucks remains vulnerable to external competition and threats from lower cost coffee retailers with similar product offerings. Finally, Starbucks has witnessed a number of store closures in the recent past, due in large part to its retail saturation strategy. In essence, some of these retailers have not generated sufficient sales growth to remain in operation successfully (Fellner, 2008). Therefore, a loss of revenue has been observed in these retail stores, which has placed a burden on the corporation and its revenue stream.

Opportunities: Starbucks continues to expand its horizons in both world and domestic markets, offering many different coffee products at different periods, including seasonal specials and new ground coffees. High revenue growth expected from proposed opening of 500 new stores in 2011 and beyond. Excellent growth potential predicted for Starbucks Blonde roast, which is a new roast profile that has been added to the company 40 year heritages (Starbucks Newsroom, 2011). Forty percent of US coffee consumers have strong preference for lighter roast, which will facilitate rapid take off of Starbuck Blonde Roast. Reliable consumers trust in company’s brand for delivering quality from its 80 variations of taste. The company is well-positioned to exploit consumer behavioral patterns towards coffee. According to Jeff Hansberry, President of Chanel Development for Starbucks, customers spends 60 seconds in the company coffee aisle to make a decision base on taste and intensity (Starbuck Newsroom, 2011).

These products have become popular during such holidays as Thanksgiving and Christmas to accompany the holiday spirit. Starbucks also represents itself widely in many social causes and initiatives, including its Fair Trade line of coffee products (Fellner, 2008). Starbucks has been achieving significant cost reductions from the use of green buildings, energy and water conservation and is poised to achieve 100% recycling and re-use of coffee cups by 2015. As the organization continues to expand its foreign retail outlets, the business looks to such foreign markets as China and Japan to integrate its brand reputation and image into the existing market landscape. Finally, Starbucks has expanded its brand name through a number of co-branding strategies with other manufacturers as a means of promoting sales growth and longevity throughout the world (Fellner, 2008). These opportunities enable the business to expand upon brand growth and to determine the most effective means by which the business will continue to grow and prosper.

Threats: Despite its strong saturation strategy, Starbucks has experienced a number of threats from the competition, including those brands that sell similar products at competitive prices, including Dunkin Donuts and Seattle’s Best Coffee. This demonstrates that Starbucks is not the only name in coffee in the eyes of many consumers. Furthermore, despite the significant popularity of coffee products, it is possible that at some point in the future, tea or another beverage could emerge as the clear winner, surpassing coffee as one of the most popular drinks. In addition, Starbucks is not excluded from the ever-increasing prices of fuel and operating costs that are required to keep the business afloat. The aftermath of these circumstances increases the vulnerability of the organization and requires Starbucks to gradually increase its prices to remain profitable. Perhaps most importantly is the fact that despite the popularity of Starbucks, no organization is safe in a weakening market economy. There is a possibility of creating excess capacity in the opening of new stores should economic downturns occur in 2012-2015 period. Starbucks is particularly susceptible because of its saturation strategy and increased caution regarding consumer spending. It is more important than ever that Starbucks continue to recognize their most imminent threats and to exercise caution whenever necessary to ensure that their brand reputation and revenue stream are protected at all costs.

Pricing Methodology

Price is about what will charge customers for products and services. Pricing scheme should consider profit margins and the possible pricing response from competitors. In addition, pricing strategies should compose not only the listed price but also discounts and annual membership with additional benefits such as free overtime. Whenever competitors change their prices, the seller usually responds quickly and aggressively. Recently a magazine surveyed coffee drinkers and found that more liked McDonald’s coffee and Dunkin’s Donuts coffee than liked Starbucks Coffee. Yet Starbucks charges $1.60 for a cup and McDonalds and Dunkin’ Donuts only about $1.20 (Boyes & Melvin, 2011, p. 110). Why? Because Starbucks sells not just the coffee, but the entire experience of going to a Starbucks shops. And until McDonalds or some other coffee sellers come up with a way to take away the value that consumers place on the entire Starbucks experience, Starbucks will be able to earn those positive economic profits.

The shareholder of a non-dividend paying company looks through more of a speculative aperture. If the company pays no dividend, then none will ever be paid, because management has little or no confidence in the future of their company. These shareholders own shares more for the capital gains aspect and assume the risk of getting caught in a market collapse. In this case, the shareholder that bought at a high price would need to continue holding until the market recovered, without receiving any dividends or justifying the sale of some shares in lieu of cash dividends.

Boyes and Melvin (2011, p. 111) say that Starbucks has differentiated its product. Differentiation means there are substitutes, but consumers place a value on the brand name. To a consumer, a Starbucks coffee is a different entity than a McDonald’s coffee. They (2011, p. 111) refer to a market in which there are many smaller firms with special attribute is in monopolistic competition. The coffee shop with a special attribute is in monopolistic competition; what occurs is that over time the special attribute loses value as rivals are able to mimic it or come up with the better alternatives. The difference is what consumers value most – what they pay extra for.

Producers commonly provide intermediaries with discounts, or reductions, from list prices. Although there are many types of discounts, they usually fall into one of five categories: trade, quantity, cash, seasonal, and allowance (Pride & Ferrel, 2010, p. 278). Such discounts can be a significant element in marketing strategy.

Financials (Sales and Margins)

Theoretically, marketing objectives elaborate points to be achieved within a given period. Therefore, marketing objectives for Starbucks must be measurable such as objectives to increase revenue by 5% in the 2 nd year and 15% in the 3 rd year as we use in this calculation for financial sales and margins. Concerning the situation, I suggest future general future strategic objectives of Starbucks as following:

• Sales of $3 billion within 3 year of commercial operation, representing over 15,000 unlimited consumers and 5,000 per customers within the 3-year period
• Year-to-year Growth of 5% in the 2 nd year and 15% in the 3 rd year
• Maintain net profit of 30% in 3-year period
• Retain 93% of sales from subscription segment

Quality control plans become important factors in determining the success of a marketing plan; therefore, there is a need to create quality control plans. According to two of Deming’s 14 principles, the process improvement should follow following criteria:

Table 1 Quality Control

Concerning the financial plan, we assume that Starbucks has two schemes: packaging (monthly subscription) and non-packaging plans each with different requirement. Following table represent the projected turnover or revenue within the next three years (2012-2014). This number is in line with the profit plan as presented at previous section.

Table 1 Projected Revenue/Turnover in 3-Year Period

The increase in the volume of sales within the coming period would result in the profit plan. Assuming that there is no additional purchase of fixed cost then the 5% increase in sales in the 2 nd year and 15% in the 3 rd year will also increase the total variable cost by 5% and 15%, respectively. The calculation revealed that an increase in sales and cost of sales by 5% and 15% in the 2 nd and 3 rd year will create a 30% increase in gross operating profit. In short, the proportion of fixed cost is 57% of the total cost and variable cost is 43% of the total cost. Fixed costs compose of rental facilities and employees costs while variable costs include electricity, maintenance and many others.

Recommendations and Conclusion

Starbucks, with its currently imposing brand strength should add Starbucks Blonde roast to the portfolio as its strive to develop over 500 stores in the 2012-2014 financial period, and employ a Strategic Canvass Approach, in which values are delivered to customers to ensure the achievement of shared success, through the delivery of strategic packages through single pictures that are unique to the market (Shariff & Abington, 2012).

The continued use of Farmers Support Centers in established and new farming locations to ensure loans are distributed and technical advice imparted in a timely manner to facilitate the use of right practices, should begin the delivery of value process, as this will ensure quality coffee beans are produced for processing and consumption by global consumers. This strategy will ensure other farmers in other locations are attracted to the package delivered, due to the financial rewards and support offered and further drives the Starbuck Strategic Canvass Approach in the market place.

Starbuck will also be well advised to continue with cultural, modifications all its newly recruited manages and franchises in locations the best represent its model for meting customers globally, so that the same set values and practices can be replicated and enable customers to look forward to the Starbucks Experience, even when they are tourists in other countries.

Financial downturns was a significant threat to the company success in the 2007-2009 period, but it can hedge against this by extending its purchase of coffee at fixed price and to price to be fixed commitments, as well as acquiring greater storage capacity in centralized strategic locations. This will enable it to deliver its brands at competitive prices that also meet the budget of its customers.

Finally, Starbucks must realize that values and benefits must also be aligned with its internal stakeholders or employees, and must conduct timely job evaluations, job satisfactions surveys, in order to promote and other wise reward these important players, so that it can maintain the excellent, experienced, diverse and stable organizational structure it has attained and used skillfully to generate revenues as high the $8.96 b in 2010.

From the above analyses, we have come to a conclusion that despite the company’s success, Starbucks leaders understand their current and future vulnerabilities. For example the larger Starbucks grows; the harder it will be to foster the unique Starbucks Experience. To put it simply, in the words of Howard Schultz, Starbucks has to work to “stay small while growing big” (Michelli, 2007, p. 14). To that end, the future of Starbucks lies in its partners owning millions of positive daily interactions throughout the Company.

Andrejczak, Matt. (July 28, 2011). Starbucks to increase new store openings. Market Watch. Retrieved August 18, 2011 from <http://www.marketwatch.com/story/starbucks-to-increase-new-store-openings-2011-07-28>

Boyes, William, & Melvin, Michael. (2011). Fundamental of Economics. Cengage Learning, 110-115. ISBN: 0538481196

Fellner, Kim (2008). Wrestling with Starbucks: Conscience, Capital, Cappuccino. Rutgers University Press.

Michelli, Joseph A. (2007). The Starbucks Experience: 5 Principles for turning ordinary into Extraordinary. McGraw-Hill Professional.

Pirko, T. (2008). Starbucks tries to roast its competition . Retrieved August 18, 2011, from <http://marketplace.publicradio.org/display/web/2008/03/19/starbucks_competition/>

Pride, William M., & Ferrel, O. C. (2010). Marketing Express. Cengage Learning, 278-280.

Shariff, A., Abington, A. (2012). Solution Focused Strategy Canvassing: An Approach to Enabling Collective Effort in Making Strategic Happen Inter Action Vol.2 Issue 1 Ashridge Business School www.ashridge.org/UK , 01/25/12

Starbucks Newsroom (2010). Starbucks Aim Innovation at Multi-Billion Dollar Global Coffee Market Starbucks www.newstr=arbucks.com/article_display.cfm?aticle_id=578 , 01/25/12

Starbucks Corporation (2011). Fiscal 2010 Annual Report www.phx.corporate-ir.net/External.File?item…t=1 , 01/25/12

UW Business School (2003). Starbucks Corporation: competing in a global market . Retrieved August 18, 2011, from <http://bschool.washington.edu/gbc/documents/starbucks_final.pdf>

Vinzant, C. (2007). Starbucks perks up the competition: which national chain serves up the best brew? Retrieved August 18, 2011, from <http://money.aol.com/special/canvas/_a/starbucks-perks-up-the-competitionwhich/20070110145109990001>

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Business Strategy Examples In 2024: Examples, Case Studies, And Tools

A business strategy is a deliberate plan that helps a business to achieve a long-term vision and mission by drafting a business model to execute that business strategy. A business strategy, in most cases, doesn’t follow a linear path, and execution will help shape it along the way.

Table of Contents

What is a business strategy?

At this stage, it is important to clarify a few critical aspects.

As an HBR working paper entitled “From Strategy to Business Models and to Tactics” pointed out:

Put succinctly, business model refers to the logic of the firm, the way it operates and how it creates value for its stakeholders. Strategy refers to the choice of business model through which the firm will compete in the marketplace. Tactics refers to the residual choices open to a firm by virtue of the business model that it employs.

Personally, I have a controversial relationship with the concept of “strategy.” I feel it’s too easy to make it foggy and empty of practical meaning.

Yet strategy and vision matter in business.

A strategy isn’t just a calculated path, but often a philosophical choice about how the world works.

Usually, it takes years and, at times, also decades for a strategy to become viable. And once it does become viable, it seems obvious only in hindsight.

In this guide, we see what that means.  

In the real world, the difficult part is understanding the problem

In the real world, a lot of time and resources are spent on defining the problem.

Classic case studies at business school assume in most scenarios that the problem is known and the solution needs to be found.

In the real world, the problem is unknown, the situation is highly ambiguous, and the most difficult part is making the decision that might solve that same problem you’re trying to figure out. 

How do you execute a strategy in that context? Business modeling can help!

Is a business strategy the same thing as a business model?

As the business world started to change dramatically, again, by the early 2000s, also the concept of strategy changed with it. 

In the previous era, the strategy was primarily made of locking in the supply chain to guarantee a strong distribution toward the marketplace. 

And yet, the web enabled new companies to form with a bottom-up approach.

In short, product development cycles shortened, and frameworks like lean , agile , and continuous innovation became integrated into a world where software took over. 

Where most of the processes before the digital age, were physical in nature. As the web took off, most of the processes became digital.

In short, the software would become the core enhancer of hardware. 

We’ve seen how in cases like Apple’s iPhone , it wasn’t just the hardware that made the difference.

But it was the development ecosystem and the applications that enhanced the capabilities of the device. 

Thus, from a product standpoint, hardware has been enhanced more and more with the software side.

At the same time, the way companies developed products in the first place changed. 

Software and digits-based companies could gather feedback early on, thus enabling the customers’ feedback as a key element of the whole product development cycle. 

Therefore, wherein the previous era, companies spent billions of budgets to release markets, and products, with little customer feedback.

In the digital era, customer feedback became built into the product development loop. 

That led to frameworks with faster and faster product releases, which also changed the way we do marketing . 

In a classic MVP approach, the loop (build, measure, learn) has to be very quick, and it has to lead to the so-called product/market fit .

As the web made the ability to gather customers’ feedback early on, and as the whole process becomes less and less expensive, also lean approaches evolved, to gain feedback from customers as early as possible. 

From build > demo > sell, to demo > sell > build , lean approaches got leaner. 

And the era of customer-centrism and customer obsession developed:

This whole change flipped the strategy world upside down.

And from elaborate business plans , we moved to business modeling , as an experimental tool, that enabled entrepreneurs to gather feedback continuously.

In a customer-centered business world, business models have become effective thinking tools, to represent a business and a business strategy on a single page, which helped the whole execution process. 

The key building blocks of a classic business model approach, like a business model canvas or lean startup canvas  move around the concept of value proposition , that glue them together. 

And from the supply chain , we moved to customer value chains .

Where most digital business models  learned to gather customers’ feedback in multiple ways. 

The business strategy formed in the digital era, therefore, developed its own customer-centered view of the world, and the business theory world followed.

Academics, following practitioners, moved away from traditional models (like Porter’s Five Forces ) to more customer-centered approaches ( business model canvas , lean canvas).  

The mindset shift flipped from distribution and optimization on the supply side.

To optimize on the demand side, or how to build products that people want, in the first place. This is the new mantra.

No more grandiose business plans, just substantial testing, iteration, and experimentation. 

In this new context, we can understand the strategy developed by several players and how business modeling has become the most important strategy tool. 

And the interesting part is, whether you want to scale to become a tech giant, or you just want to build a small, viable business, it all starts from the same place!

Is business strategy a science?

Business strategy is more of an art than a science.

In short, a business strategy starts with a series of assumptions about how the business world looks in a certain period of time and for a certain target of people.

Whether those assumptions will turn out to be successful will highly depend on several factors.

For instance, back in the late 1990s when the web took over, new startups came up with the idea of revolutionizing many services.

While those ideas seemed to make sense, they turned out to be completely off, and many of those startups failed in what would be recognized as a dot-com bubble.

While in hindsight certain aspects of that bubble came up (like frauds, or schemes).

In general, some of the ideas for which startups got financed seemed to be visionary and turned out to work a decade later (see DoorDash , or Instacart , in relation to Webvan’s bankruptcy). 

For instance, some startups tried to bring on-demand streaming to the web (which today we call Netflix ). Those ideas proved to be too early.

They made sense but from the commercial standpoint, they didn’t.

Thus, if we were to use the scientific method, once those assumptions would have proved wrong in the real world, we would have discarded them.

However, those assumptions proved to be wrong, in that time period, given the current circumstances.

While we can use the scientific inquiry process in business strategy, it’s hard to say that it is a scientific discipline.

So what’s the use of business strategy?

In my opinion, business strategy is useful for three main reasons:

• Focus : chose one path over another.
• Vision : have a long-term strategic goal.
• Commercial viability : create a self-sustainable business.

As a practitioner, someone who tries to build successful businesses, I don’t need to be “scientific.”

I need to make sure not to be completely off track. For that matter, I aim at creating businesses.

Thus, I need to understand where to focus my attention in a relatively long period of time (3-5 years at least) and make sure that those ideas I pursue are able to generate profits, which – in my opinion – might be a valid indicator that those ideas are correct for the time being.

If those conditions are met, I’ll call it a “successful business.”

Those ideas will become a business model , that executes a business strategy.

This doesn’t mean those ideas, turned into a business model , pushed into the world will always be successful (profitable).

As the marketplace evolves I will need to adjust, and tweak a business model to fit with the new evolving scenarios, and I’ll need to be able to “bet” on new possible business models .

Survivorship bias

Survivorship bias is a phenomenon where what’s not visible (because extinct) isn’t taken into account when analyzing the past.

In short, we analyze the past based on what’s visible.

This error happens in any field, and in business, we might get fooled by that as well.

In short, when we analyze the past we do that in hindsight.

That makes us cherry-pick the things that survived and assume that those carry the successful characteristics we’re looking for.

For instance, for each Amazon or Google that survived there were hundreds if not thousands of companies that failed, with the same kind of “successful features” as Amazon or Google.  

So why do we analyze successful companies in the first place? In my opinion, there are several reasons: 

• Those successful companies have turned into Super Gatekeepers to billions of people : as I showed in the gatekeeping hypothesis , and in the surfer’s model , a go-to-market strategy for startups will need to be able to leverage existing digital pipelines to reach key customers.

• Modeling and experimentation : another key point is about modeling what’s working for other businesses and borrowing parts of those models, to see what works for our business. By borrowing parts you can build your own business model, yet that requires a lot of testing. 

• Skin in the game testing : therefore business models become key tools for experimentation, where we can use real customers’ feedback (not a survey, or opinions but actions) and test our hypotheses and assumptions. When we’re able to sell our products, when people keep getting back to our platform, or service, there is no best way to test our assumptions that measure those actions. 

Lindy effect and aging in reverse

Nicholas Nassim Taleb , in his book Antifragile , popularized a concept called Lindy Effect .

In very simple terms the Lindy Effect states that in technology (like any other field where the object of discussion is  non-perishable)  things age in reverse.

Thus, life expectancy, rather than diminishing with age, has a longer life expectancy.

Therefore, a technology that has lived for two thousand years, has a life expectancy of another thousand years.

That is a probabilistic rule of thumb that works on averages.

Thus, if a technology (say the Internet) has stayed with us for twenty years, it doesn’t mean we can expect only to live for another twenty years at least.

But as the Internet has proved successful already, the Lindy Effect might not apply.

In short, as we have additional information about a phenomenon the Lindy Effect might lose relevance.

For instance, if I know a person is twenty, yet sick of a terminal disease, I can’t expect to use normal life expectancy tables.

So I’ll have to apply that information to understand the future.

Strategies take years to fully roll out

It was 2006, when Tesla, with his co-founder   Martin Eberhard , launched a sports car that broke down the trade-off between high performance and fuel efficiency.

Tesla, which for a few years had been building up an electric sports car ready to be marketed, finally pulled it off.

As Elon Musk would   explain   Back in 2012:  

In 2006 our plan was to build an electric sports car followed by an affordable electric sedan, and reduce our dependence on oil…delivering Model S is a key part of that plan and represents Tesla’s transition to a mass-production automaker and the most compelling car company of the 21st century.

The beauty of a strategy that turns into a successful company, is that it might take years to roll out and seem obvious only in hindsight. 

This connects to what I like to call the transitional business model.

Or the idea, that many companies, before getting into a fully rolled out business strategy, transition through a period of low scalability and low market size, which will help them gain initial traction. 

As a transitional business model proves viable, it helps the company shape its long-term vision, while its built-in strategy is different from the long-term strategy.

The transitional business model will guarantee survival. It will help further refine the long-term strategy and it will also work as a reality check. 

As the transitional business model proves viable, the company moves to its long-term strategy execution. 

As the business strategy gets rolled out, over the years, it becomes evident and obvious, and yet none managed to pull it off.

When Netflix moved from DVD rental to streaming. DVD rental was the transitional business model that helped Netflix stay in business in the first place.

And yet, when Netflix moved from DVD to streaming it had to apparently change its strategy.

When, in reality, it was rolling out its long-term strategy, shaped by the transitional business model. 

Caveat: Frameworks work until suddenly they don’t

When you stumbled upon a “business formula,” you can’t stop there.

That business formula, if you’re lucky, will allow you to succeed in the long term. Yet as more and more people will find that out, that will lose relevance.

And the matter is, the reality is a villain. Things work for years until they suddenly don’t work anymore.

We’ll see some frameworks, but the real deal is not a framework but the inquiry process that makes us discover those frameworks.

In short, the value is in the repeatable process of discovery and not in the discovery itself. A discovery, once spread, loses value.

Master a business strategy process

There isn’t a size-fits-all business playbook that you can apply to all the scenarios.

Some of the business case studies we’ll see throughout this article will show companies that have dominated the tech space in the last decade and more.

While the playbook executed by those companies worked for the time being.

That doesn’t mean you should play according to their playbook. If at all you’ll need to figure out your own.

Thus, what matters is the process behind finding your business playbook and my hope is that this guide will inspire you and give you some good ideas on how to develop your own business strategy process!

Business strategy case studies

We’ll look now at a few case studies of companies that, at the time of this writing, are playing an important role in the business world.

• Alibaba Business Strategy.
• Amazon Business Strategy.
• Apple Business Strategy.
• Airbnb Business Strategy.
• Baidu Business Strategy.
• Booking Business Strategy.
• DuckDuckGo Business Strategy.
• Google (Alphabet) Business Strategy.

What is a business model’s essence?

Keeping in mind the distinction between business strategy and business models is critical.

The other element used in this guide is a business model essence.

Shortly, I’ve been looking for a way to summarize the key elements of any business in a couple of lines of text:

Therefore, for the sake of this discussion, you’ll find each company’s business strategy, a business model essence that will help us navigate through the noisy business world.

From there, we’ll see the business strategy of a company.

Alibaba Business Strategy

Business Model Essence : Online Stores Leveraging On An E-Commerce/Marketplace Distribution And Monetization Strategy  

As pointed out in Alibaba’s annual report for 2017:

We derive revenue from our four business segments: core commerce, cloud computing, digital media and entertainment, and innovation initiatives and others. We derive most of our revenue from our core commerce segment, which accounted for 85% of our total revenue in fiscal year 2017, while cloud computing, digital media and entertainment, and innovation initiatives and others contributed 4%, 9% and 2%, respectively. We derive a substantial majority of our core commerce revenue from online marketing services. 

Alibaba, like Amazon , became an “everything store” in China.

It leveraged its success to build also other media platforms ( Youku Todou and UCWeb). The e-commerce, marketplace business model has become quite common since the dawn of the web.

From that business model tech giants like Amazon , eBay and Alibaba have raised.

Alibaba’s vision, mission, and core principles

Alibaba’s Business Strategy starts from its core values defined in its annual report:

• Customer First : “The interests of our community of consumers, merchants, and enterprises must be our first”
• Teamwork: “ We believe teamwork enables ordinary people to achieve extraordinary things.”
• Embrace Change   I”n this fast-changing world, we must be flexible, innovative, and ready to adapt to new business conditions in order to maintain sustainability and vitality in our business.”
• Integrity “We expect our people to uphold the highest standards of honesty and to deliver on their commitments.”
• Passion “We expect our people to approach everything with fire in their belly and never give up on doing what they believe is right.”
• Commitment  “Employees who demonstrate perseverance and excellence are richly rewarded. Nothing should be taken for granted as we encourage our people to “work happily and live seriously.”

Alibaba’s mission is “ to make it easy to do business anywhere, ” and its vision is “to build the future infrastructure of commerce… a company that would last at least 102 years.”

For that vision to be executed it has three major stakeholders: users, consumers, and merchants.

The focus on the “at least 102 years” might seem fluffy words, yet those are important as this kind of goal helps you keep a long-term vision while executing short-term plans.

It isn’t unusual for founders to set such visions, as they help keep the company on track in the long run.

And this is where a business strategy starts.

All the business models designed by Alibaba will follow its vision, mission, and values they aim to create in the long run.

Read : Alibaba Business Model

Alibaba ecosystem and value proposition

These elements gave rise to an ecosystem made of “consumers, merchants, brands, retailers, other businesses, third-party service providers and strategic alliance partners.”

As Alibaba points out in its annual report “our ecosystem has strong self-reinforcing network effects benefitting its various participants, who are in turn invested in our ecosystem’s growth and success.”

Network effects are a critical ingredient for marketplaces’ success.

To give you an idea, the more buyers join the platform, the more Alibaba’s recommendation engine will be able to suggest relevant items to buy for other customers, and at the same time the more merchants will join in, given the larger and larger business opportunities.

Keeping these network effects going is a vital element of long-term success but also among the greatest challenge of any marketplace that wants to be relevant.

Even though Alibaba’s essence is in online commerce, the company has several business model s running and a business strategy that at its core is evolving quickly.

Thus, the core commerce has made it possible for Alibaba to build a whole new set of “companies within a company.”

From digital entertainment and media, logistics services, payment, financial services, and cloud services with Alibaba Cloud.

Thus, from a successful existing online business model , Alibaba has expanded in many other areas.

And its future business strategy focuses on developing, nurturing, and growing its ecosystem.

More precisely, its strategic long-term goal is to “serve two billion consumers around the world and support ten million businesses to operate profitably on its platforms”

To achieve that Alibaba is focusing on three key activities:

• Globalization.
• Rural expansion.
• And big data and cloud computing.

For its core commerce activities, Alibaba has designed a value proposition that moves around a few pillars:

• Broad selection: over 1.5 billion listings as of March 31, 2018.
• Convenience:  seamless experience anytime, anywhere from online and offline.
• Engaging, personalized experience: personalized shopping recommendations and opportunities for social engagement.
• Value for money: competitive prices offered via a marketplace business model.
• Merchant quality: review and rating system to keep merchants’ quality high.
• Authentic products: merchant quality ratings, clear refund, and return policies, and the Alipay escrow system.

From that value proposition , Alibaba has been able to grow its customer base and offer wider and broader products, until it expanded in the service and cloud business.

Amazon Business Strategy

Business Model Essence : E-Commerce/Marketplace Distribution And Monetization Model Leveraging On Proprietary Infrastructure To Offer Third-Party Services

Starting in 1994 as a bookstore, Amazon soon expanded and became the everything store.

While the company’s core business model is based on its online store.

Amazon launched its physical stores, which generated already over five billion dollars in revenues in 2017.

Amazon Prime (a subscription service) also plays a crucial role in Amazon’s overall business model , as it makes customers spend more and be more loyal to the platform. 

Besides, the company also has its cloud infrastructure called AWS, which is a world leader and a business with high margins. Amazon also has an advertising business worth a few billion dollars.

Thus, the Amazon business model mix looks like many companies in one. Amazon measures its success via a customer experience obsession, lowering prices, stable tech infrastructure, and free cash flow generation.

Therefore, even though in the minds of most people Amazon is the “everything store.”

In reality, its revenue generation shows us that it has become a way more complex organization, that also has a good chunk of advertising revenue and third-party services.

For instance, Amazon is also a key player with its AWS in the cloud space.

And is well a key player in the digital advertising space, together with Google and Facebook :

Amazon has been widely investing in its technological infrastructure since the 2000s, which eventually turned into a key component of its business model .

Read : Amazon Business Model

Amazon’s vision, mission, and core values

Jeff Bezos is obsessed with being in “day one,” which as he puts it , “ day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always  Day 1. “

It all starts from there, and to achieve that Jeff Bezos has highlighted a few core values that makeup Amazon ‘s culture and vision :

• Customer obsession.
• Resist proxies.
• Embrace external trends.
• High-velocity decision-making.

As pointed out by Amazon , “w hen Amazon.com launched in 1995, it was with the mission “ to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. ” 

This goal continues today, but Amazon ’s customers are worldwide now and have grown to include millions of Consumers, Sellers, Content Creators, and Developers & Enterprises.

Each of these groups has different needs, and we always work to meet those needs, innovating new solutions to make things easier, faster, better, and more cost-effective.”

In this case, Amazon ‘s mission also sounds like a vision statement.

Whatever you want to call it, this input is what makes a company look for long-term goals that keep them on track.

Of course, that doesn’t mean a well-crafted vision and mission statement is all that matters for business success.

Yet, it is what keeps you going when things seem to go awry.

Amazon moved from an online book store to the A-to-Z store it kept its mission almost intact while scaling up.

Start from a proof of concept, then scale up

It is interesting to notice how businesses evolve based on their commercial ability to scale up.

When Amazon started up as a bookstore, it made sense for several reasons, that spanned from logistics to pricing modes and industry specifics.

Yet, when Amazon finally proved that the whole web thing could be commercially viable, it didn’t wait, it grew rapidly.

From music to anything else it didn’t happen overnight, but it did happen quickly.

Thus, this is how Amazon’s mission shifted from “any book in the world” to “anything from A-Z.”

This isn’t a size-fits-all strategy. Amazon chose rapid growth, similar to a blitzscaling process as aggressive growth was a way to preserve itself.

Hadn’t Amazon grown so quickly, it could have been killed.

The opposite approach to this kind of strategy is a bootstrapped business, which is profitable right away and self-sustainable.

Decentralized and distributed value creation: the era of platforms and ecosystems

Before we move forward, I want to highlight a few key elements to have a deeper understanding of both Amazon and Alibaba’s business models and their strategies.

Before digitalization would show its use and commercial viability, most of the value creation processes were internalized.

That meant companies had to employ massive resources to generate value along that chain.

That changed when digitalization allowed the value creation process to be distributed, and we moved from centralized to grassroots content creation.

This is even clearer in the case of platforms, and marketplaces like Amazon and Alibaba.

For instance, where in the past the review process and quality insurance would be done centrally by making sure that the supply complied with the company’s quality guidelines.

Introducing distributed review systems, where the end-users checked against the quality compliance, allowed companies like Alibaba and Amazon to generate network effects, where the more users enriched the platforms with those reviews the more the platform could become valuable.

For that matter though, the main platform’s role will be to fight spam and attempt to trick the system.

Other than that (fighting spam is a challenging task) all the rest is managed at the decentralized level, and the value creation happens when more and more users review products and services on those platforms.

We’re referring here to the review system, but it applies almost to any aspect of a platform.

Amazon for years allowed third-party to feature their stores on Amazon ‘s platform, while they kept the inventory.

This meant an outsourced and distributed inventory system, spread across the supply side.

Therefore, the supply side not only made the platform more valuable by creating compelling offerings.

But it also made it more valuable from the operational standpoint, by allowing a better inventory system, which could be turned quickly.

Therefore, the critical aspect to understand in the digital era is decentralized value creation, which makes the value creation process less expensive for an organization, more valuable to its end users, and more scalable as it benefits from network effects.

How do decentralize value creation?

Many platform-like business models have leveraged a few aspects:

• User-generated content (Quora, Facebook , Instagram).
• Distributed inventory systems ( Amazon , Alibaba).
• Peer-to-peer networks ( Airbnb , Uber).

This implies a paradigm shift.

When you start thinking in terms of platforms, no longer you’ll need a plethora of people taking care of each aspect of it.

Rather you’ll need to understand how the value creation can be outsourced to a community of people and make sure the platform is on top of its game in a few aspects.

For instance, Amazon and Alibaba have to make sure their review system isn’t gamed. Airbnb has to make sure to be able to guarantee safety in the interactions from host to guests and vice-versa.

Quora has to make sure to keep its question machine to keep generating relevant questions for users to answer (the supply-side).

If you grasp this element of a platform, you’re on a good track to understanding how to build a successful platform or marketplace.

Apple Business Strategy

Business Model Label : Product-Based Company Leveraging On Locked-In Ecosystems With A Reversed Razor And Blade Business Strategy

Apple sells its products and resells third-party products in most of its major markets directly to consumers and small and mid-sized businesses through its retail and online stores and its direct sales force.

The Company also employs a variety of indirect distribution channels , such as third-party cellular network carriers, wholesalers, retailers, and value-added resellers.

During 2017, the Company’s net sales through its direct and indirect distribution channels accounted for 28% and 72%, respectively, of total net sales.

Many people look at the iPhone, or the previous products Apple has launched successfully in the last decade and assume that their success is due to those products.

In reality, Apple has followed throughout the years a strategy that focused on five key elements:

• Strong branding.
• Beautifully crafted products.
• Technological innovation.
• Strong distribution.
• Locked-in ecosystems.

In short, Apple can sell an iPhone at a premium price because it employs a reversed razor and blade strategy.

This strategy implies free access to Apple’s Ecosystem (ex. iTunes, and Apple Store).

That makes the whole experience through Apple’s devices extremely valuable.

Thanks to that experience, the perception of high-end (luxury-like) products, together with a reliable distribution, justifies Apple’s premium prices.

Apple’s managed to build a business platform on top of the iPhone, thus creating a strong competitive moat, which lasts to these days:

Therefore, Apple’s future success can’t be measured with the same lenses as the last decade.

The real question is: what product will Apple  be able to launch successfully?

And keep in mind it’s not just about the product. Apple’s formula summarized above can be replicated over and over again.

But it isn’t a simple formula. And as locked-in ecosystems, in which Apple controls as much as possible, the experience of its users has proved quite successful in the last decade.

That might not be so in the next, given the rise of more decentralized infrastructure.

For that matter, Amazon might be well moving from a reversed razor and blade model:

To a service-based model:

This isn’t surprising, as a service business has a few compelling advantages:

• High margins.
• A relatively stable revenue stream.
• Scalability.

As Apple has relied on home runs with its products, from the new Mac to the iPod, iPhone, and iPhones, that kind of success isn’t easy to replicate, and it makes the company relies on a continuous stream of fresh sales to keep the business growing.

A service business would balance things out.

It is important to remark this isn’t something new to Apple :

When Apple introduced the iPhone, it isn’t like it was an overnight success. It was successful, but it had to create a whole ecosystem to make the iPhone a continuous source of growth for the company!

When it comes to business strategy, as pointed out in Apple’s annual reports:

The Company is committed to bringing the best user experience to its customers through its innovative hardware, software and services. The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software and services to provide its customers products and solutions with innovative design, superior ease-of-use and seamless integration.

Understanding this part is critical. As I explained above, at the time of this writing many think of Apple as the “iPhone company.”

Yet Apple is way more than that, and its business strategy is a mixture of creating ecosystems by leveraging on these pillars:

• Operating systems.
• Applications software.
• Innovative design.
• Ease-of-use.
• Seamless Integration.

Those elements together make Apple ‘s products successful. As Apple further explained:

As part of its strategy, the Company continues to expand its platform for the discovery and delivery of digital content and applications through its Digital Content and Services, which allows customers to discover and download or stream digital content, iOS, Mac, Apple Watch and Apple TV applications, and books through either a Mac or Windows personal computer or through iPhone, iPad and iPod touch® devices (“iOS devices”), Apple TV, Apple Watch and HomePod.

Once again, it isn’t anymore about creating a product, but about generating self-serve ecosystems.

How do you support those ecosystems?

It depends on what’s your target. A media company will primarily need an ecosystem made of content creators (take Quora or Facebook or YouTube ).

In many cases, a digital media company over time has to be able to nurture several communities to create a thriving ecosystem.

For instance, large tech companies or startups, often rely on several communities:

• Programmers and developers ( Google , Apple ).
• Content creators and publishers ( Google , Quora, YouTube ).
• Artists and creative talents ( Apple , YouTube ).

In Apple ‘s case though, the first ecosystem is the community of developers building third-party software products that complement the company’s offering:

The Company also supports a community for the development of third-party software and hardware products and digital content that complement the Company’s offerings.

When you combine that with a high-touch strategy (where skilled and knowledgeable salespeople interact with customers) you create a flywheel, where customers are retained for longer, the brand grows as a result of this high-touch activity which creates a better post-sale experience and triggers word of mouth and referral from existing customers:

The Company believes a high-quality buying experience with knowledgeable salespersons who can convey the value of the Company’s products and services greatly enhances its ability to attract and retain customers.Therefore, the Company’s strategy also includes building and expanding its own retail and online stores and its third-party distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience.The Company believes ongoing investment in research and development (“R&D”), marketing and advertising is critical to the development and sale of innovative products, services and technologies.

Read : Apple Business Model

Airbnb Business Strategy

Business Model Essence : Peer-To-Peer House-Sharing Network With Fee-Based Monetization Strategy

As a peer-to-peer network, Airbnb allows individuals to rent from private owners for a fee.

Airbnb charges guests a service fee between 5% and 15% of the reservation subtotal; While the commission from hosts is generally 3%.

Airbnb also charges hosts who offer experiences a 20% service fee on the total price.

The digitalization that happened in the last two decades has facilitated the creation of peer-to-peer platforms in which business models disrupted the hospitality model created in the previous century by hotel chains like Marriott, Holiday Inn, and Hilton.

Airbnb is quickly branching out toward offering more experiences. We can call Airbnb the “marketplace of experiences.”

In short, just like Amazon started from books, Airbnb has started from house-sharing.

But that is the starting point, which gives the innovative company enough traction to validate its whole business model and expand to other areas.

The principal aim of Airbnb is to control the whole experience for its users. This means creating an end-to-end travel experience that embraces the entire process .

Thus, it’s not surprising that we’ll see Airbnb expanding its marketplace to more and more areas. This is also shown by the fact that Airbnb might soon offer bundled travel packages .

Just as we’ve seen in the case of Alibaba and Amazon , Airbnb follows a marketplace logic, where it needs to make the interactions between its key users (hosts and guests) as smooth as possible, with an emphasis on safety.

As a platform, Airbnb initially used a strategy of improving the quality of its supply by employing freelance photographers that could take pictures of host homes.

This, in turn, made those homes more interesting for guests, as they could appreciate those homes more.

As many people in real estate might know, the quality of the pictures is critical.

Although this might sound trivial, this is what improved the Airbnb supply side.

Indeed with better and professionally taken images, Airbnb improved its reach via search engines (yes, search engines are thirsty for fresh and original content, images comprised).

And it enhanced the experience of its potential customers.

Now Airbnb is converting its business model to digital experiences. In addition to changing the whole strategy.

Whereas Airbnb focused in the past on covering major cities across the world.

Changing travel habits made Airbnb focus on digital experiences and local, extra-metropolitan areas throughout the pandemic.

While, post-pandemic, as people travel for longer stays, the whole platform has been structured around these. 

Read : Airbnb Business Model

Baidu Business Strategy

Business Model Essence :  Online Marketing Free Services Advertising-Supported Revenue Model

Baidu makes money primarily via online marketing services (advertising). In fact, in 2017, Baidu made about $11.24 in online marketing services and a remaining almost $1.8 billion through other sources. According to Statista,

Baidu has an overall search market share of 73.8% of the Chinese market. Other sources of revenues comprise membership services of iQIYI (an innovative market-leading online entertainment service provider in China) and financial services.

At first sight, Baidu might seem the mirror image of Google , but in China.

However, this is a superficial view. While Baidu has followed in China a similar path to Google , it did take advantage of the fact that Google wasn’t available there, to build its dominant position.

Baidu also has a more efficient cost structure than Google. It had also introduced innovations in its search products (like voice search devices for kids) at a time when Google wasn’t there yet.

Read : Baidu Business Model

Baidu mission: two-pillar business strategy and value propositions acting as a glue for its key users/customers

In the past years, Baidu has followed an expansion business strategy focused on acquiring assets and companies that complemented its core business model .

As the leading Chinese search provider, in 2017, Baidu updated its mission to “ Baidu aims to make a complex world simpler through technology.”

This mission is achieved via a two-pillar strategy:

• Strengthening the mobile foundation (similar to Google’s mobile-first).
• And leading in artificial intelligence.

Baidu’s key partners comprise users, customers, Baidu union members, and content providers.

For each of those critical segments, Baidu has drafted a fundamental value proposition .

Thus, to generate a value chain that works for these stakeholders, Baidu has to balance it with a diversified value proposition :

• Users:  enjoying Baidu search experience want a search engine that gives them relevant results.
• Customers: with 775,000 active online marketing customers in 2017, consisting of SMEs, large domestic businesses, and multinational companies, distributed across retail and e-commerce, network service, medical and healthcare, franchise investment, financial services, education, online games, transportation, construction and decoration, and business services. Those businesses look for a trackable, and sustainable ROI for their paid advertising campaigns. By bidding on keywords, they can target specific audiences.
• Baidu Union Member: share revenues with Baidy by displaying banner ads on their sites in relevant spaces filled by the  Baidu search algorithm (think of it as Google’s AdSense Network ). Those publishers and sites can generate additional revenues and monetize their content without relying on complex infrastructure, that instead is employed by Baidu.
• Content Providers:  video copyright holders, app owners who list their apps on the Baidu app store, users who contribute their valuable and copyrighted content to Baidu products, and publishers. Those users get visibility or money in exchange for this content. Baidu has to make sure to allow those content providers to get in exchange for their work and creativity visibility and revenues.

Understanding how the value proposition for each player comes together is critical to understanding the business decisions a company like Baidu makes over time.

For instance, as Baidu (like Google ) moves more and more toward AI, the need to balance the value proposition for Baidu Union Members might fickle.

Booking Business Strategy

Business Model Essence :  House-Sharing Platform Leveraging On A Two-Sided Marketplace With A Commission-Based Revenue Model

Booking Holdings is the company that controls six main brands that comprise Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com, and OpenTable. 

Over 76% of the company’s revenues in 2017 came primarily via travel reservations commissions and travel insurance fees.

Almost 17% came from merchant fees, and the remaining revenues came from advertising earned via KAYAK.

As a distribution strategy, the company spent over $4.5 billion on performance-based and brand advertising.

Read : Booking Business Model

Booking mission, value proposition, and key players

Booking’s mission is to “help people experience the world.” Booking does that via a few primary brands:

• Booking.com.
• priceline.com.
• Rentalcars.com.

The mission of helping people experience the world is executed via three primary value propositions delivered to consumers, travelers, and business partners:

• Consumers are provided what Booking calls “the best choices and prices at any time, in any place, on any device.”
• People and travelers can easily find, book, and experience their travel desires.
• Business partners (like Hotels featured on Booking.com) are provided with platforms, tools, and insights in exchange.

Boomedium-term term strategy is focused on:

• Leveraging technology to provide the best experience.
• Growing partnerships with travel service providers and restaurants.
• Investing in profitable and sustainable growth.

DuckDuckGo Business Strategy

Business Model Essence : Privacy-based Search Engine Built On Google’s Weakness With An affiliate-based Revenue Model

DuckDuckGo makes money in two simple ways: Advertising and Affiliate Marketing.

Advertising is shown based on the keywords typed into the search box. Affiliate revenues come from Amazon and eBay affiliate programs.

When users buy after getting on those sites through DuckDuckGo the company collects a small commission.

While this model might not sound that exciting. DuckDuckGo managed to grow quickly by leveraging Google’s primary weakness: users’ privacy. Where Google’s primary asset is made of users’ data. DuckDuckGo throws that data away on the fly:

It is important to remark that DuckDuckGo is still figuring out a business model that can make it sustainable in the long term.

Indeed, the company got a venture round of $10 million back in August 2018.

DuckDuckGo will be tweaking its business model in the coming years, to reach a “ business model /market fit.”

Read : DuckDuckGo Business Model

Read : DuckDuckGo Story

Google (Alphabet) Business Strategy

Business Model Essence :  Free Search Engine Distributed Across Hardware, Browsers, And Members’ Websites With An Hidden Revenue Generation Model

As of 2017, over ninety billion dollars, which consisted of 86% of Google ’s revenues came from advertising networks.

The remaining fraction (about 13%) came from Apps, Google Cloud, and Hardware. While a bit more than 1% came from bets like Access, Calico, CapitalG, GV, Nest, Verily, Waymo, and X.

Google business model is changing over the years.

Even though advertising is still its cash cow, Google has been diversifying its revenues in other areas. 

While in 2015 90% of Google’s revenues came from advertising, in 2017, advertising revenues represented 86%.

Other revenues grew from about 10% in 2015 to almost 13% in 2017.

Why did Google get there? And where is Google going next? To understand that you need to understand the “moonshot thinking.”

Read : Google Business Model

Read : Google Cost Structure

Read : Baidu vs. Google

Understanding Google’s moonshot thinking and a breakthrough approach to business

As highlighted in the Alphabet annual report for 2018:

Many companies get comfortable doing what they have always done, making only incremental changes. This incrementalism leads to irrelevance over time, especially in technology, where change tends to be revolutionary, not evolutionary. People thought we were crazy when we acquired YouTube and Android and when we launched Chrome, but those efforts have matured into major platforms for digital video and mobile devices and a safer, popular browser. We continue to look toward the future and continue to invest for the long-term. As we said in the original founders’ letter, we will not shy away from high-risk, high-reward projects that we believe in because they are the key to our long-term success.

Understanding the moonshot approach to business is critical to understanding where Google (now Alphabet) got where it is today, and where it’s headed next.

Since the first shareholders’ letter from Google’s founders, Brin and Page they highlighted that “ Google is not a conventional company. We do not intend to become one.”

Google has successfully built ecosystems that today drive

To understand where Google is going next, you need to look at the AI Economy , in which the tech giant is trying to lead the pack.

Whether or not it will be successful will highly depend on its ability to keep creating successful ecosystems, just as Google has done with Google Maps (you might not realize but Google Maps powers up quite a large number of applications) and Android.

At the time of this writing, Google is widely investing in other areas, such as:

• Voice search.
• AI and machine learning applications.
• Self-driving cars.
• And other bets.

If that is not sufficient Google has made several moves in different spaces, to keep its dominance on mobile, while moving toward voice search, like the investment in KaiOS, which business model is interesting as it finally allows an ecosystem to be built on top of cheap mobile devices in developing countries:

That is why Google keeps making “smaller bets in areas that might seem very speculative or even strange when compared to its current businesses.”

Those other bets made “just” $595 million to Google in 2018.

This represented 0.4% of Google ‘s overall revenues , compared to the over $136 billion coming from the other segments.

Google ‘s North Star is its mission of “ organizing the world’s information and making it universally accessible and useful.” 

Read : KaiOS Business Model

Let’s go through a few other tips for a successful business strategy. 

Problem-first approach

The customer-problem quadrant by LEANSTACK’s Ash Maurya is a great starting point to define and understand the problem, that as an entrepreneur you will going to solve. 

Indeed, a successful business is such, based on the market’s rewards for the entrepreneur’s ability to solve a problem.

Keep in mind that defining and understanding problems in the real world is one of the most difficult things (that is why entrepreneurship is so hard).

To properly stumble on the right definition of the problem you’re solving, there might be some fine-tuning going on, which in the business world we like to call product-market fit . 

Business engineering skills

Another key element is not to lose sight of the context you’re operating.

As such, analyzing that properly might require some business engineering skills . 

To simplify your life you can use the FourWeekMBA business analysis framework.

Don’t strategize on a piece of paper

Strategies always work well on a piece of paper.

Yet when execution comes suddenly we can realize all the drawbacks of that.

In very few, rare cases, a designed strategy will work as expected.

However, the reason we plan and strategize isn’t just to make things work as we’d like them to.

But to communicate a vision we have to those people (employees, customers, stakeholders) who will help us get there. 

That is why when we strategize it’s important not to lose sight of the essence of our strategy, which is the long-term vision we have for our business.

The rest is execution, practice, and a lot of experimentation!

The innovation loop

Innovation starts by tweaking, testing, and experimenting also in unexpected ways.

Often though, as a business strategy is documented after the fact, it seems as if it was all part of a plan. 

In most cases, the innovation loop starts by stumbling upon that thing that will have a great impact on your business.

Therefore, as an entrepreneur, you need to keep pushing on those models that worked out.

But also to be on the lookout for new ways of doing things. 

Barbell approach 

In a barbel approach we want to have a clear distinction between two domains: 

• Core business : on the core business side, where you have a consolidated strategy, and a business model that has proved to work, it’s important to be structured. This means having a clear culture, following given processes, and slowly evolving your business model. 
• New bets : as your business model will become outdated over time, and that might happen also very quickly, you need to be on the lookout for new opportunities emerging, also in new, completely unrelated business fields. 

For instance, a tech giant like Google, has a part of its business skewed toward a few bets it placed on industries that are completely unrelated to its core business (search).

Those bets are not contributing at all to its bottom line (only some of those bets are generating revenues but those are extremely marginal compared to the overall turnover of the company). 

However, those might turn out widely successful (or huge failures) in the years to come. 

Thus, with a barbell approach, we want to consolidate what we have. But also be open to what might be coming next!

Business Explorers

Strategic analysis thinking tools.

Strategic analysis is a process to understand the organization’s environment and competitive landscape to formulate informed business decisions , to plan for the organizational structure and long-term direction. Strategic planning is also useful to experiment with business model design and assess the fit with the long-term vision of the business.

Business model canvas

The business model canvas aims to provide a keen understanding of your business model to provide strategic insights about your customers, product/service, and financial structure;

so that you can make better business decisions.

Blitzscaling canvas

In this article, I’ll focus on the Blitzscaling business model canvas. This is a model based on the concept of Blitzscaling.

That is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency. It focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Pretotyping

Pretotyping is a mixture of the words “pretend” and “prototype,” and it is a methodology used to validate business ideas to improve the chances of building a product or service that people want.

The pretotyping methodology comes from Alberto Savoia’s work summarized in the book “The Right It: Why So Many Ideas Fail and How to Make Sure Yours Succeed.”

This framework is a mixture of the words “pretend” and “prototype,” and it helps to answer such questions (about the product or service to build) as: Would I use it? How, how often, and when would I use it?

Would other people buy it? How much would they be willing to pay for it? How, how often, and when would they use it?

Value innovation and blue ocean strategy

A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created.

At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken.

Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Growth hacking process

Growth hacking is a process of rapid experimentation, coupled with the understanding of the whole funnel, where marketing , product, data analysis, and engineering work together to achieve rapid growth.

The growth hacking process goes through four key stages analyzing, ideating, prioritizing, and testing.

Pirate metrics

Venture capitalist , Dave McClure, coined the acronym AARRR which is a simplified model that enables us to understand what metrics and channels to look at. At each stage of the users’ path toward becoming customers and referrers of a brand.

Engines of growth

In the Lean Startup, Eric Ries defined the engine of growth as “the mechanism that startups use to achieve sustainable growth.”

He described sustainable growth as following a simple rule, “new customers come from the actions of past customers.”

The three engines of growth are the sticky engine, the viral engine, and the paid engine. Each of those can be measured and tracked by a few key metrics, and it helps plan your strategic moves.

The RTVN model is a straightforward framework that can help you design a business model when you’re at the very early stage of figuring out what you need to make it succeed.

Sales cycle

A sales cycle is the process that your company takes to sell your services and products.

In simple words, it’s a series of steps that your sales reps need to go through with prospects that lead up to a closed sale.

Planning ahead of time the steps your sales team needs to take to close a big contract can help you grow the revenues for your business.

Comparable analysis

A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company.

To find comparables, you can look at two key profiles: the business and economic profiles.

From the comparable company analysis, it is possible to understand the competitive landscape of the target organization.

Porter’s five forces

Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition.

It was published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s.

The model breaks down industries and markets by analyzing them through five forces which you can use to have a first assessment of the market you’re in.

Porter’s Generic Strategies

Porter’s Value Chain

Porter’s Diamond Model

Bowman’s Strategy Clock

VMOST Analysis

Fishbone Diagram

GE McKinsey Matrix

VRIO Framework

3C Analysis

AIDA stands for attention, interest, desire, and action. This is a model that is used in marketing to describe the potential journey a customer might go through, before purchasing a product or service. The variation of the AIDA model is the CAB model and the AIDCAS model.

PESTEL analysis

The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization.

This is a critical step that helps organizations identify potential threats and weaknesses. That can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.

Technology adoption curve

The technology adoption curve is a model that goes through five stages. Each of those stages (innovators, early adopters, early majority, late majority, and laggard) has a specific psychographic that makes that group of people ready to adopt a tech product.

This simple concept can help you define the right target for your business strategy.

Business model essence

A Business Model Essence, according to FourWeekMBA, is a way to find the critical characteristics of any business to have a clear understanding of that business in a few sentences.

That can be used to analyze existing businesses. Or to draft your Business Model and keep a strategic and execution focus on the key elements to be implemented in the short-medium term.

FourWeekMBA business model framework

An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand.

The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.

TAM, SAM, and SOM

Understanding your TAM, SAM and SOM can help you navigate the market you’re in and to have a laser focus on the market you can reach with your product and service.

Brand Building

Value Proposition Design

Product-Market Fit

Freemium Decision Model

Organizational Design And Structures

Speed-Reversibility Matrix

Minimum Viable Product

SWOT Analysis

Revenue Modeling

Business Experimentation

Business Analysis

Ansoff Matrix

Key takeaway

I hope that in this guide you learned the critical aspects related to business strategy, with an emphasis on the entrepreneurial world. If business strategy would only be an academic discipline disjoined from reality, that would still be an interesting domain, yet purely speculative.

However, as a business strategy can be used as a useful tool to leverage on to build companies, hopefully, this guide will help you out in navigating through the seemingly noisy and confusing business world, dominated by technology. As a last but critical caveat, there isn’t a single way toward building a successful business.

And oftentimes the way you choose to build a business is really up to you, how you want to impact a community of people and your vision for the future!

Other resources: 

• Types of Business Models You Need to Know
• What Is a Business Model Canvas? Business Model Canvas Explained
• Blitzscaling Business Model Innovation Canvas In A Nutshell
• What Is a Value Proposition? Value Proposition Canvas Explained
• What Is a Lean Startup Canvas? Lean Startup Canvas Explained
• How to Write a One-Page Business Plan
• How to Build a Great Business Plan According to Peter Thiel
• How To Create A Business Model
• What Is Business Model Innovation And Why It Matters
• What Is Blitzscaling And Why It Matters
• Business Model Vs. Business Plan: When And How To Use Them
• The Five Key Factors That Lead To Successful Tech Startups
• Business Model Tools for Small Businesses and Startups

Additional Business Strategy Tactics

Blue ocean player.

Blue Sea Player

Constructive Disruptor

Niche player

Blitzscaler

Continuous Blitzscaler

What is business strategy?

What are examples of business strategies.

Things like product differentiation, business model innovation, technological innovation, more capital for growth, can all be moats that organizations focus on to gain an edge. Depending on the context, industry, and scenario, a business strategy might be more or less effective; that is why testing and experimentation are critical elements.

Connected Strategy Frameworks

ADKAR Model

Business Model Canvas

Lean Startup Canvas

Blitzscaling Canvas

Blue Ocean Strategy

Business Analysis Framework

Balanced Scorecard

Blue Ocean Strategy 

GAP Analysis

GE McKinsey Model

McKinsey 7-S Model

McKinsey’s Seven Degrees

McKinsey Horizon Model

Porter’s Five Forces

Porter’s Value Chain Model

PESTEL Analysis

Scenario Planning

STEEPLE Analysis

FourWeekMBA Business Toolbox

Business Engineering

Tech Business Model Template

Web3 Business Model Template

Asymmetric Business Models

Business Competition

Technological Modeling

Transitional Business Models

Minimum Viable Audience

Business Scaling

Market Expansion Theory

Speed-Reversibility

Asymmetric Betting

Growth Matrix

Revenue Streams Matrix

Pricing Strategies

Other business resources:

• What Is Business Model Innovation
• What Is a Business Model
• What Is Business Strategy
• What is Blitzscaling
• What Is Market Segmentation
• What Is a Marketing Strategy
• What is Growth Hacking

More Resources

About The Author

Gennaro Cuofano

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Top 40 Most Popular Case Studies of 2021

Two cases about Hertz claimed top spots in 2021's Top 40 Most Popular Case Studies

Two cases on the uses of debt and equity at Hertz claimed top spots in the CRDT’s (Case Research and Development Team) 2021 top 40 review of cases.

Hertz (A) took the top spot. The case details the financial structure of the rental car company through the end of 2019. Hertz (B), which ranked third in CRDT’s list, describes the company’s struggles during the early part of the COVID pandemic and its eventual need to enter Chapter 11 bankruptcy. 

The success of the Hertz cases was unprecedented for the top 40 list. Usually, cases take a number of years to gain popularity, but the Hertz cases claimed top spots in their first year of release. Hertz (A) also became the first ‘cooked’ case to top the annual review, as all of the other winners had been web-based ‘raw’ cases.

Besides introducing students to the complicated financing required to maintain an enormous fleet of cars, the Hertz cases also expanded the diversity of case protagonists. Kathyrn Marinello was the CEO of Hertz during this period and the CFO, Jamere Jackson is black.

Sandwiched between the two Hertz cases, Coffee 2016, a perennial best seller, finished second. “Glory, Glory, Man United!” a case about an English football team’s IPO made a surprise move to number four.  Cases on search fund boards, the future of malls,  Norway’s Sovereign Wealth fund, Prodigy Finance, the Mayo Clinic, and Cadbury rounded out the top ten.

Other year-end data for 2021 showed:

• Online “raw” case usage remained steady as compared to 2020 with over 35K users from 170 countries and all 50 U.S. states interacting with 196 cases.
• Fifty four percent of raw case users came from outside the U.S..
• The Yale School of Management (SOM) case study directory pages received over 160K page views from 177 countries with approximately a third originating in India followed by the U.S. and the Philippines.
• Twenty-six of the cases in the list are raw cases.
• A third of the cases feature a woman protagonist.
• Orders for Yale SOM case studies increased by almost 50% compared to 2020.
• The top 40 cases were supervised by 19 different Yale SOM faculty members, several supervising multiple cases.

CRDT compiled the Top 40 list by combining data from its case store, Google Analytics, and other measures of interest and adoption.

All of this year’s Top 40 cases are available for purchase from the Yale Management Media store .

And the Top 40 cases studies of 2021 are:

1.   Hertz Global Holdings (A): Uses of Debt and Equity

2.   Coffee 2016

3.   Hertz Global Holdings (B): Uses of Debt and Equity 2020

4.   Glory, Glory Man United!

5.   Search Fund Company Boards: How CEOs Can Build Boards to Help Them Thrive

6.   The Future of Malls: Was Decline Inevitable?

7.   Strategy for Norway's Pension Fund Global

8.   Prodigy Finance

9.   Design at Mayo

10. Cadbury

11. City Hospital Emergency Room

13. Volkswagen

14. Marina Bay Sands

15. Shake Shack IPO

16. Mastercard

17. Netflix

18. Ant Financial

19. AXA: Creating the New CR Metrics

20. IBM Corporate Service Corps

21. Business Leadership in South Africa's 1994 Reforms

22. Alternative Meat Industry

23. Children's Premier

24. Khalil Tawil and Umi (A)

25. Palm Oil 2016

26. Teach For All: Designing a Global Network

27. What's Next? Search Fund Entrepreneurs Reflect on Life After Exit

28. Searching for a Search Fund Structure: A Student Takes a Tour of Various Options

30. Project Sammaan

31. Commonfund ESG

32. Polaroid

33. Connecticut Green Bank 2018: After the Raid

34. FieldFresh Foods

35. The Alibaba Group

36. 360 State Street: Real Options

37. Herman Miller

38. AgBiome

39. Nathan Cummings Foundation

40. Toyota 2010

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Teaching Resources Library

Strategy Case Studies

7 Favorite Business Case Studies to Teach—and Why

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• Case Teaching
• Course Materials

FEATURED CASE STUDIES

The Army Crew Team . Emily Michelle David of CEIBS

ATH Technologies . Devin Shanthikumar of Paul Merage School of Business

Fabritek 1992 . Rob Austin of Ivey Business School

Lincoln Electric Co . Karin Schnarr of Wilfrid Laurier University

Pal’s Sudden Service—Scaling an Organizational Model to Drive Growth . Gary Pisano of Harvard Business School

The United States Air Force: ‘Chaos’ in the 99th Reconnaissance Squadron . Francesca Gino of Harvard Business School

Warren E. Buffett, 2015 . Robert F. Bruner of Darden School of Business

To dig into what makes a compelling case study, we asked seven experienced educators who teach with—and many who write—business case studies: “What is your favorite case to teach and why?”

The resulting list of case study favorites ranges in topics from operations management and organizational structure to rebel leaders and whodunnit dramas.

1. The Army Crew Team

Emily Michelle David, Assistant Professor of Management, China Europe International Business School (CEIBS)

“I love teaching  The Army Crew Team  case because it beautifully demonstrates how a team can be so much less than the sum of its parts.

I deliver the case to executives in a nearby state-of-the-art rowing facility that features rowing machines, professional coaches, and shiny red eight-person shells.

After going through the case, they hear testimonies from former members of Chinese national crew teams before carrying their own boat to the river for a test race.

The rich learning environment helps to vividly underscore one of the case’s core messages: competition can be a double-edged sword if not properly managed.

Executives in Emily Michelle David’s organizational behavior class participate in rowing activities at a nearby facility as part of her case delivery.

Despite working for an elite headhunting firm, the executives in my most recent class were surprised to realize how much they’ve allowed their own team-building responsibilities to lapse. In the MBA pre-course, this case often leads to a rich discussion about common traps that newcomers fall into (for example, trying to do too much, too soon), which helps to poise them to both stand out in the MBA as well as prepare them for the lateral team building they will soon engage in.

Finally, I love that the post-script always gets a good laugh and serves as an early lesson that organizational behavior courses will seldom give you foolproof solutions for specific problems but will, instead, arm you with the ability to think through issues more critically.”

2. ATH Technologies

Devin Shanthikumar, Associate Professor of Accounting, Paul Merage School of Business

“As a professor at UC Irvine’s Paul Merage School of Business, and before that at Harvard Business School, I have probably taught over 100 cases. I would like to say that my favorite case is my own,   Compass Box Whisky Company . But as fun as that case is, one case beats it:  ATH Technologies  by Robert Simons and Jennifer Packard.

ATH presents a young entrepreneurial company that is bought by a much larger company. As part of the merger, ATH gets an ‘earn-out’ deal—common among high-tech industries. The company, and the class, must decide what to do to achieve the stretch earn-out goals.

ATH captures a scenario we all want to be in at some point in our careers—being part of a young, exciting, growing organization. And a scenario we all will likely face—having stretch goals that seem almost unreachable.

It forces us, as a class, to really struggle with what to do at each stage.

After we read and discuss the A case, we find out what happens next, and discuss the B case, then the C, then D, and even E. At every stage, we can:

see how our decisions play out,

figure out how to build on our successes, and

address our failures.

The case is exciting, the class discussion is dynamic and energetic, and in the end, we all go home with a memorable ‘ah-ha!’ moment.

I have taught many great cases over my career, but none are quite as fun, memorable, and effective as ATH .”

3. Fabritek 1992

Rob Austin, Professor of Information Systems, Ivey Business School

“This might seem like an odd choice, but my favorite case to teach is an old operations case called  Fabritek 1992 .

The latest version of Fabritek 1992 is dated 2009, but it is my understanding that this is a rewrite of a case that is older (probably much older). There is a Fabritek 1969 in the HBP catalog—same basic case, older dates, and numbers. That 1969 version lists no authors, so I suspect the case goes even further back; the 1969 version is, I’m guessing, a rewrite of an even older version.

There are many things I appreciate about the case. Here are a few:

It operates as a learning opportunity at many levels. At first it looks like a not-very-glamorous production job scheduling case. By the end of the case discussion, though, we’re into (operations) strategy and more. It starts out technical, then explodes into much broader relevance. As I tell participants when I’m teaching HBP's Teaching with Cases seminars —where I often use Fabritek as an example—when people first encounter this case, they almost always underestimate it.

It has great characters—especially Arthur Moreno, who looks like a troublemaker, but who, discussion reveals, might just be the smartest guy in the factory. Alums of the Harvard MBA program have told me that they remember Arthur Moreno many years later.

Almost every word in the case is important. It’s only four and a half pages of text and three pages of exhibits. This economy of words and sparsity of style have always seemed like poetry to me. I should note that this super concise, every-word-matters approach is not the ideal we usually aspire to when we write cases. Often, we include extra or superfluous information because part of our teaching objective is to provide practice in separating what matters from what doesn’t in a case. Fabritek takes a different approach, though, which fits it well.

It has a dramatic structure. It unfolds like a detective story, a sort of whodunnit. Something is wrong. There is a quality problem, and we’re not sure who or what is responsible. One person, Arthur Moreno, looks very guilty (probably too obviously guilty), but as we dig into the situation, there are many more possibilities. We spend in-class time analyzing the data (there’s a bit of math, so it covers that base, too) to determine which hypotheses are best supported by the data. And, realistically, the data doesn’t support any of the hypotheses perfectly, just some of them more than others. Also, there’s a plot twist at the end (I won’t reveal it, but here’s a hint: Arthur Moreno isn’t nearly the biggest problem in the final analysis). I have had students tell me the surprising realization at the end of the discussion gives them ‘goosebumps.’

Finally, through the unexpected plot twist, it imparts what I call a ‘wisdom lesson’ to young managers: not to be too sure of themselves and to regard the experiences of others, especially experts out on the factory floor, with great seriousness.”

4. Lincoln Electric Co.

Karin Schnarr, Assistant Professor of Policy, Wilfrid Laurier University

“As a strategy professor, my favorite case to teach is the classic 1975 Harvard case  Lincoln Electric Co.  by Norman Berg.

I use it to demonstrate to students the theory linkage between strategy and organizational structure, management processes, and leadership behavior.

This case may be an odd choice for a favorite. It occurs decades before my students were born. It is pages longer than we are told students are now willing to read. It is about manufacturing arc welding equipment in Cleveland, Ohio—a hard sell for a Canadian business classroom.

Yet, I have never come across a case that so perfectly illustrates what I want students to learn about how a company can be designed from an organizational perspective to successfully implement its strategy.

And in a time where so much focus continues to be on how to maximize shareholder value, it is refreshing to be able to discuss a publicly-traded company that is successfully pursuing a strategy that provides a fair value to shareholders while distributing value to employees through a large bonus pool, as well as value to customers by continually lowering prices.

However, to make the case resonate with today’s students, I work to make it relevant to the contemporary business environment. I link the case to multimedia clips about Lincoln Electric’s current manufacturing practices, processes, and leadership practices. My students can then see that a model that has been in place for generations is still viable and highly successful, even in our very different competitive situation.”

5. Pal’s Sudden Service—Scaling an Organizational Model to Drive Growth

Gary Pisano, Professor of Business Administration, Harvard Business School

“My favorite case to teach these days is  Pal’s Sudden Service—Scaling an Organizational Model to Drive Growth .

I love teaching this case for three reasons:

1. It demonstrates how a company in a super-tough, highly competitive business can do very well by focusing on creating unique operating capabilities. In theory, Pal’s should have no chance against behemoths like McDonalds or Wendy’s—but it thrives because it has built a unique operating system. It’s a great example of a strategic approach to operations in action.

2. The case shows how a strategic approach to human resource and talent development at all levels really matters. This company competes in an industry not known for engaging its front-line workers. The case shows how engaging these workers can really pay off.

3. Finally, Pal’s is really unusual in its approach to growth. Most companies set growth goals (usually arbitrary ones) and then try to figure out how to ‘backfill’ the human resource and talent management gaps. They trust you can always find someone to do the job. Pal’s tackles the growth problem completely the other way around. They rigorously select and train their future managers. Only when they have a manager ready to take on their own store do they open a new one. They pace their growth off their capacity to develop talent. I find this really fascinating and so do the students I teach this case to.”

6. The United States Air Force: ‘Chaos’ in the 99th Reconnaissance Squadron

Francesca Gino, Professor of Business Administration, Harvard Business School

“My favorite case to teach is  The United States Air Force: ‘Chaos’ in the 99th Reconnaissance Squadron .

The case surprises students because it is about a leader, known in the unit by the nickname Chaos , who inspired his squadron to be innovative and to change in a culture that is all about not rocking the boat, and where there is a deep sense that rules should simply be followed.

For years, I studied ‘rebels,’ people who do not accept the status quo; rather, they approach work with curiosity and produce positive change in their organizations. Chaos is a rebel leader who got the level of cultural change right. Many of the leaders I’ve met over the years complain about the ‘corporate culture,’ or at least point to clear weaknesses of it; but then they throw their hands up in the air and forget about changing what they can.

Chaos is different—he didn’t go after the ‘Air Force’ culture. That would be like boiling the ocean.

Instead, he focused on his unit of control and command: The 99th squadron. He focused on enabling that group to do what it needed to do within the confines of the bigger Air Force culture. In the process, he inspired everyone on his team to be the best they can be at work.

The case leaves the classroom buzzing and inspired to take action.”

7. Warren E. Buffett, 2015

Robert F. Bruner, Professor of Business Administration, Darden School of Business

“I love teaching   Warren E. Buffett, 2015  because it energizes, exercises, and surprises students.

Buffett looms large in the business firmament and therefore attracts anyone who is eager to learn his secrets for successful investing. This generates the kind of energy that helps to break the ice among students and instructors early in a course and to lay the groundwork for good case discussion practices.

Studying Buffett’s approach to investing helps to introduce and exercise important themes that will resonate throughout a course. The case challenges students to define for themselves what it means to create value. The case discussion can easily be tailored for novices or for more advanced students.

Either way, this is not hero worship: The case affords a critical examination of the financial performance of Buffett’s firm, Berkshire Hathaway, and reveals both triumphs and stumbles. Most importantly, students can critique the purported benefits of Buffett’s conglomeration strategy and the sustainability of his investment record as the size of the firm grows very large.

By the end of the class session, students seem surprised with what they have discovered. They buzz over the paradoxes in Buffett’s philosophy and performance record. And they come away with sober respect for Buffett’s acumen and for the challenges of creating value for investors.

Surely, such sobriety is a meta-message for any mastery of finance.”

More Educator Favorites

Emily Michelle David is an assistant professor of management at China Europe International Business School (CEIBS). Her current research focuses on discovering how to make workplaces more welcoming for people of all backgrounds and personality profiles to maximize performance and avoid employee burnout. David’s work has been published in a number of scholarly journals, and she has worked as an in-house researcher at both NASA and the M.D. Anderson Cancer Center.

Devin Shanthikumar  is an associate professor and the accounting area coordinator at UCI Paul Merage School of Business. She teaches undergraduate, MBA, and executive-level courses in managerial accounting. Shanthikumar previously served on the faculty at Harvard Business School, where she taught both financial accounting and managerial accounting for MBAs, and wrote cases that are used in accounting courses across the country.

Robert D. Austin is a professor of information systems at Ivey Business School and an affiliated faculty member at Harvard Medical School. He has published widely, authoring nine books, more than 50 cases and notes, three Harvard online products, and two popular massive open online courses (MOOCs) running on the Coursera platform.

Karin Schnarr is an assistant professor of policy and the director of the Bachelor of Business Administration (BBA) program at the Lazaridis School of Business & Economics at Wilfrid Laurier University in Waterloo, Ontario, Canada where she teaches strategic management at the undergraduate, graduate, and executive levels. Schnarr has published several award-winning and best-selling cases and regularly presents at international conferences on case writing and scholarship.

Gary P. Pisano is the Harry E. Figgie, Jr. Professor of Business Administration and senior associate dean of faculty development at Harvard Business School, where he has been on the faculty since 1988. Pisano is an expert in the fields of technology and operations strategy, the management of innovation, and competitive strategy. His research and consulting experience span a range of industries including aerospace, biotechnology, pharmaceuticals, specialty chemicals, health care, nutrition, computers, software, telecommunications, and semiconductors.

Francesca Gino studies how people can have more productive, creative, and fulfilling lives. She is a professor at Harvard Business School and the author, most recently, of  Rebel Talent: Why It Pays to Break the Rules at Work and in Life . Gino regularly gives keynote speeches, delivers corporate training programs, and serves in advisory roles for firms and not-for-profit organizations across the globe.

Robert F. Bruner is a university professor at the University of Virginia, distinguished professor of business administration, and dean emeritus of the Darden School of Business. He has also held visiting appointments at Harvard and Columbia universities in the United States, at INSEAD in France, and at IESE in Spain. He is the author, co-author, or editor of more than 20 books on finance, management, and teaching. Currently, he teaches and writes in finance and management.

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• © 2019

Case Studies in Strategic Management

How Executive Input Enables Students’ Development

• Gunther Friedl 0 ,
• Andreas Biagosch 1

TUM School of Management, Technical University of Munich, Munich, Germany

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• Merges theoretical knowledge, strategic thinking and specific analysis with practical business decisions
• Presents a new approach to case studies applied at the TUM School of Management
• Includes two case studies that won the international case writing competition at EFMD

Part of the book series: Management for Professionals (MANAGPROF)

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Table of contents (4 chapters)

Front matter, case: the renewed case seminar.

• Andreas Biagosch

Supporting Companies and Participating Managers in Case Study Presentations

Case: unu gmbh: sharing is caring—a suitable business model for e-scooter in germany.

• Franziska Beck, Michael Krauß, Frieder Weidenbach

Case: UBS—Acquisition of Commerzbank AG as a Possible Growth Strategy

• Fahrudin Abazi, Philipp Deisler, Michael Eisenlauer

Back Matter

• Case Method
• Executive Education
• Business School
• Commerzbank AG

Gunther Friedl, Andreas Biagosch

Andreas Biagosch worked for McKinsey & Company for more than 30 years. He is now member of several supervisory boards of large family firms and lectures at the Technical University of Munich.

Gunther Friedl is a Professor of Management Accounting at the Technical University of Munich and Dean of its Business School TUM School of Management.

Book Title : Case Studies in Strategic Management

Book Subtitle : How Executive Input Enables Students’ Development

Editors : Gunther Friedl, Andreas Biagosch

Series Title : Management for Professionals

DOI : https://doi.org/10.1007/978-3-319-95555-1

Publisher : Springer Cham

eBook Packages : Business and Management , Business and Management (R0)

Copyright Information : Springer International Publishing AG, part of Springer Nature 2019

Hardcover ISBN : 978-3-319-95554-4 Published: 22 September 2018

Softcover ISBN : 978-3-030-07057-1 Published: 08 February 2019

eBook ISBN : 978-3-319-95555-1 Published: 08 September 2018

Series ISSN : 2192-8096

Series E-ISSN : 2192-810X

Edition Number : 1

Number of Pages : XX, 91

Number of Illustrations : 21 b/w illustrations, 45 illustrations in colour

Topics : Accounting/Auditing , Management Education , Innovation/Technology Management , Start-Ups/Venture Capital , Financial Accounting

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Nike Strategic Management: The Case Study Essay

Introduction, marketing environment and success strategy, drivers to superior performance, strategic management tools, marketing strategy and international markets, competitive advantage and value creation.

Nike Inc. is an international company based in the United States, which deals with sportswear and other apparels. The company is ranked as the top seller of sports shoe and clothing. Nike was started in 1964 by Bill Bowerman and was originally called Blue Ribbon Sports, but was later changed to Nike in 1978. During that time, its main goal was to produce low cost, high quality shoes for Americans to break Germans control over domestic trade (Nike, Inc., 2009).

Today, Nike not only distributes its products domestically, but also all around the globe. It has market regions in continents such as Asia, Europe, and United States. Besides, Nike has produced many brands such as Nike Skateboarding and Nike Pro. This paper focuses on the Nike Company and the strategic methods and tools that have led to its superior performance.

According to Peters (2009), Nike produces a wide range of products, which are categorized according to their relevant sports. Nike’s first products were track shoes, which were meant for running: the company has managed to design and produce shoes for different games such as baseball, hockey, football, basketball and Cricket.

This is due to the ever-increasing number of customers favoring the company’s products. The latest product that has been produced is the Cricket shoe named as air zoom Yorker (Nike, Inc., 2009). Air Zoom Yorker is better because it is 30% lighter as compared to the one designed by Reebok. Another new product is air Jordan XX3, which is meant for basketball.

Additionally, as a company that relies on collaborative marketing, Nike together with Apple Inc. has designed a product that is able to check runner’s performance through a radio device, which is placed inside the shoe and is connected with the iPod nano. Nike has also produced shoes that contain flywire and lunarlite foam meant to make the shoe lighter.

The Nike+sports brand records the mileage, lost calories, and time used. According to Mintzberg, Ahlstrand, and Lampel (2005), product differentiation and market segmentation form the basis for strategic management in marketing. In this light, meeting customers’ demands has been the strategic objective in Nike’s plan.

Dess and Alan (2006) affirm that the marketing strategy used by Nike is an essential element for its success. It has enticed its customers through advertising with a slogan ‘Just Do It’. Nike has also teamed up with athlete celebrities through sponsorship agreements. It has many elements of advertising such as advertising through television.

The first advert was created by Wieden and Kennedy at New York marathons. Similarly, Nike has also won Emmy Awards for commercial advert. The advert that won the award was based on what an athlete could face if there was Y2K realization on 1 January 2000.

The second commercial advert was called ‘move’, which marked the famous athletes. In product promotions, Nike pays players to wear their products such as t-shirts, shoes and shorts in order to advertise them. Such players include Michael Jordan, and through him, the promotion has boosted Nike’s publicity and sales. It also sponsors many football clubs in Brazil, Netherlands and United States.

Golf players like Tiger Woods and Michelle Wie have also benefited from the sponsorships. Nike also sponsors high school basketball and has developed websites for various sports such as nikerunning.com (Johnson & Scholes, 2008).

However, Nike has faced a tough competition in the market with companies such as Reebok and Adidas, which sell the same products as it does. Reebok has many female consumers, but has a weakness of poor marketing as compared to Nike. It does not always advertise its products on Televisions as compared to other Companies. Nike has tried to capture a big market share of female customers by sponsoring Women’s world cup football, which was held in 1999.

Nike has used the five forces model of competition that determines the industry structure. This model has helped it to deal with external forces such as, new entrants in the market, alternative products or services, bargaining influence of suppliers and buyers and competition and enmity among other competitors (Berman & Evans, 2006).

Onkvisit and Shaw (2004) argues that the risk of new entrants has been a threat to Nike since there are other firms in the clothing and shoe industry that have a potential to produce sportswear shoes and clothes if given a choice. Entry of new entrants has affected the prices because Nike has lowered some of its product costs.

However, the threat has been minimized by government regulations and brand loyalty. Further, Nike avoids extreme rivalry among other competitors because it is a risk to profitability rates. Nike, Inc. considers the bargaining power of the buyers as a threat because strong buyers have the power to lower the products prices and hence raise costs. The buyers are capable of buying in huge quantities and therefore getting a lot of profit while the firm suffers loss (Lynch, 2006).

The company has balanced its products productions and costs to minimize the bargaining power of buyers. Nike has also been able to cope with the bargaining power of suppliers, which poses a threat because the suppliers have power to increase the prices on raw materials. Nike has reliable suppliers who inform the management first upon the increase of costs of raw materials.

Nike has common drivers that produce superior performance. These drivers include people management, which entails realization of the potential of the employees either in groups or in an individual level. The company has come up with a strategy of upholding fairness among the employees, communication and caring for employees (Nike, Inc. 2009).

Through communication, the company ensures that there is a flow of information between the top, middle and higher levels to ensure that every employee’s contribution is taken into consideration. Nike, Inc. also motivates the employees by giving them incentives and rewards to build commitment to promote the organization.

People development enables employees to utilize their potentials and fully contribute to the organization’s goal realization. Rewards and recognitions motivate employees to give their best performance and strive to excel through continuous improvement (Berman & Evans, 2006). Furthermore, Nike has authorized the customer liaison manager to replace customer’s products in case of a complaint. The manager can make decisions without consulting the management.

Johnson and Scholes (2008) assert that leadership is another driver to superior performance, and it entails transforming the organizations direction and instigating others to follow. Leadership is paramount in Nike’s strategic management. Leaders have a stake in realization of the vision, mission and objectives of an organization because they ensure that other employees follow the organizations values. Leadership is developed at top, middle and lower levels in the organization.

Continuous improvement is another driver, which is activated by both customers and employees. In this case, there is feedback from the customers and from the employees and hence customer’s needs are met. Organizations’ processes are improved because customers provide their needs and the employees act and produce products according to customer’s specifications – all the stakeholders gain improvement benefits (Joshi, 2005).

Similarly, customer focus is a driver where a relationship with customers is an important issue. This entails assessing customer’s perceptions about products and acting on their response as soon as they raise an issue of concern about a product. Close relationships with customers benefits all the stakeholders involved. Nike has also employed process focus as a driver for performance improvement. The system performance has to meet the set objectives since it is a key technique (Nike, Inc., 2009).

Another important driver to performance is collaborating with suppliers. This entails relationships between the organization and the suppliers (Lynch, 2006). Nike has recognized suppliers as key for the organization to achieve shared goals while also sharing expertise and knowledge.

Improving on processes allows working with suppliers to share resources and improve performance. Nike applies various communication strategies within all its stakeholders to encourage openness and reliance. When communication flows through all the levels in the organization, it makes it easy for the employee’s ideas to be taken into consideration.

Stimulating innovation and creativity is another driver that has supported Nike to build up competitive products and services. This has been achieved by modifying the organization structure and being involved with product improvement activities. Nike has also managed its assets and resources to improve the effectiveness and efficiency of the organization. Protection of its properties maximizes customer’s value (Mark, 2000).

Onkvisit and Shaw (2004) concurs that measuring performance and benchmarking is another driver that Nike uses for superior performance. By utilizing a balanced score card, it has been able to measure process improvements alongside with the organizations objectives.

The company also monitors performance in other organizations and collect information from existing and future stakeholders. It uses the information to plan for the future, set targets to be achieved within a certain period, and get unique ideas on improvements from other organizations.

Furthermore, Nike employs corporate social responsibility as a driver to superior performance as well as interacting with the society representative. A good example of this is boosting children’s games in the community by sponsoring their sports and provision of uniforms that has Nike’s logo (Nike, Inc., 2009).

Strategic management is a technique that Nike, Inc. has been able to apply to determine how it is performing in its current position and how its future should be. This has greatly helped the managers to lay a plan for the organization and take it where they want it to be. The management employs strategic management components such as vision, environmental analysis, strategy creation, strategy implementation, and strategy assessment (Nike, Inc., 2009).

Nike has set business plans through strategic management in order to assess its business areas. It is a process which managers build strategies to get better results in performance. This involves studying the competitors’ techniques, both in the current and future. The Company has utilized strategic management tools which have supported it to examine itself in the present and perceive how its future will be. Strategic management acts as a road map to show managers the best direction to follow for the organization to be where it is supposed to be (Lynch, 2006). The tools employed for strategic management include mission statement, SWOT analysis, SMART goals and benchmarking.

Mission statements help to make clear how the organization is observed and how it will be perceived in the future. The organization reflects on how it will be different from other competitors like Reebok in the market place. SWOT analysis has been applied to find out the organizations strengths, weaknesses, prospects and risks.

Berman and Evans (2006) affirm that this has supported the organization to take advantage of its strengths and reduce the impact of its weaknesses. SWOT analysis has assisted the management to consider other external factors such as new openings and risks to be avoided.

SMART goals ensure that the goals and objectives laid down are specific, assessable, achievable, appropriate, and timely. SMART goals are essential for Nike’s management because they have enabled the company to get rid of frustrations due to unrealistic goals. The management has been specific to establish whether the set goals have been met.

Measuring enables the management team to gauge whether they are about to reach their goals and if not close to the goals, how much time and work is remaining in order to get there (Mintzberg, Ahlstrand, & Lampel, 2005).

Benchmarking is another tool that is employed to scrutinize and adapt to the best processes from other organizations around the globe. As explained earlier, managers have been able to improve the organizations performance to meet its goals and to be at the competitive edge over its competitors.

Other techniques that have been used in project management include program evaluations; this helps the company to evaluate a project from start to end. This has supported the management to ascertain the time left to for the completion of the projects. Nike utilizes these projects and programs to reach its goals and achieve its objectives.

The Company uses break even analysis technique to decide on the number of products to sell to break even and grow to be profitable. Lynch (2006) says that game theory is applied in the market to conclude how the customers will react and it does this either through increase in prices or introduction of new products.

Financial control techniques like budgets, audits, and financial breakdown are efficient in controlling and balancing the cost of business. Budgets are employed to manage the organizations income and expenditure as well as allocation of resources to different activities and projects.

Nike has many strategic management techniques organized in steps to achieve the laid down goals and objectives. First, environmental scanning is a process that the company employs to collect information from both internal and external environments that has power to influence the organization. This is meant for improving the processes through analyzing competitors, employees, products, and suppliers (Mark, 2000).

After analyzing the environment, strategy formulation is the next step where Nike management takes the best plan among many to accomplish organizational goals and objectives. Through this stage the managers set strategies for business and functional policies. Strategy implementation is taking the best plan and implementing it (Berman & Evans, 2006). Organization structure is devised in this step together with the allocation of resources, hiring of human resource and coming up with a clear decision making process.

Strategy evaluation is the last step where the strategy implemented is assessed to determine whether it is performing well and if it has deviated, and that the best corrective actions are taken. The purpose for the evaluation is to make sure that that the organization goals are met.

In light of this, Nike has been on the global market and has gained competitive advantage on the market. Its marketing managers keep on analyzing the global industries and how competition keeps changing. Trade is increasingly becoming global because of improvement in transport and communication. Nike’s consumers have been able to have access to a wide range of products in their countries. Nike started exporting its products in small amounts, but later increased and reached the export stage. It got more and more foreign orders until it was able to export its products all over the world (Nike, Inc., 2009).

Nike has stayed at international market for a long time and it applies many techniques such as adding new brands. Nike keeps on adding new products such as sports shoe and clothes. The information about the new product is posted on the website (nike.com) where consumers can read. Joshi (2005) asserts that through advertising of the new product, Nike gains an increase in sales because this has brought in new customers who have never bought the current products.

The existing customers have had a variety of the products to choose. Nike combines the new brand and the old ones into an exceptional package as an offer. Nike has also become a valuable resource to its customers by giving them free information about the products. They have assisted their customers to easily get services, fast deliveries, and at low costs.

The company is unique since it produces exclusive and best quality products. They have also promoted the end result of products by telling the consumers about the benefits they will get when they choose to use the products. Nike keeps on changing its marketing strategies due to other aggressive and innovative rivals like Puma, Reebok, and Adidas (Peters, 2009).

Nike’s brands have turn out to be to be very strong as compared to others such as Reebok and Puma. Their secret is brand management because despite selling their products at a higher price, consumers are still willing to pay more money for its brands which are believed to be of high quality with different styles. Due to the strong brand competitive advantage, Nike has been able to increase its market share all over the globe. Its prices are a bit high as compared to other competitors but it has made many sales than those of its competitors.

Nike, Inc. has gained a competitive advantage over its rivals. This is achieved through giving consumers a greater value and offering high quality products. The company has devised superior value over other competitors. Nike, Inc. uses Michael Porters strategies for competitive advantage such as cost leadership, focus, and differentiation (Johnson & Scholes, 2008).

The reason why Nike, Inc. has gained a competitive advantage over other companies is that it undertakes an evaluation process, which involves evaluation of resources, clarification of goals, defining customers and examining competitors.

In evaluation of resources, the company relies on the resources available and plans on how to use them through product offering and resources. In goals clarification, Nike plans on how to achieve its goals and objectives. Defining customer’s strategy entails looking at the products and services that the plans to develop, and is not provided by the other competitors.

This assists Nike, Inc. to determine and communicate to its customers in order to understand their needs and get additional suggestions from them. Examination of competitors helps to identify other ventures targeting a particular market. Through this, Nike compares its strengths and weaknesses with the other competitors (Nike, Inc., 2009).

In this regard, there are many techniques used to achieve a competitive advantage. These techniques include product differentiation, service differentiation, people differentiation, image differentiation, quality differentiation, and innovation differentiation (Lynch, 2006). Product differentiation implies that Nike has a wide range of products. Other competitors have tried to imitate its products but it remains upfront due to its quality and the products are different in styles and consistency.

Peters (2009) argues that in service differentiation, Nike, Inc. offers additional services such as delivery and product return services. This extra service is the one that consumers are after. Information and other instructions about the products are also extra services that attract customers.

People differentiation entails hiring result oriented employees who are better than those in other rival companies. Because employees are intangibles, it is difficult to imitate them as in the case of tangibles. Training employees and paying attention to their needs gives Nike Inc. a competitive advantage.

Employees such as production staff produce quality products, and it is hard for the competitor to know that the competitive advantage is due to employees’ improvement. The competitor may think that the competitive advantage is due to equipments and materials. People differentiation is essential when customers are directly served by the employees. The way employees handle a customer at first time determines whether he will return another time (Berman & Evans, 2006).

Image differentiation is another technique that has been applied by Nike to differentiate its brand image from other competitors. A negative image can destroy the company’s image within a short time. As Nike undertakes many activities, it supports its image because the “Nike” mark symbolizes good, and it is easy to identify. In quality differentiation, Nike sells high quality products to its customers. Innovation differentiation entails process innovation.

Process innovations reduce the costs of production and the competitors may take time to discover what the company is doing to gain competitive advantage (Nike, Inc., 2009). Nike strives to sustain its competitive advantage because it is not long lasting. This sustainability is achieved through giving value to customers, creation of non-imitable products, which may not be copied by its rivals, and production of products that cannot customers cannot substitute easily.

In selecting a competitive advantage, Nike, Inc. selects ways of making products that competitors cannot imitate easily because the management understands what its customers needs are.

The company has realized that variety is totally different from differentiation. Nike has strived to stay at the competitive edge because of its efforts and strategies. It has faced many challenges since other competitors have tried to copy it through successful advantages for their business in the dynamic market place. Thus, establishing the market edge is important as well as maintaining it (Mark, 2000).

There are many ways that Nike has attracted its customers for value creation. Customer incentive programs are one of the successful programs within the organisation (Nike, Inc., 2009). Nike offers give away to customers, tickets, sales, sponsorships and discounts. Nike sponsors many players in different sports.

Such players who have benefited from sponsorships include; James Blake and Roger Federer. It also sponsored Indian cricket team for a period of five years and national soccer clubs in countries like India, Netherlands and Malaysia. Top golfers like Tiger woods and Lucas Glover has also benefited from Nike’s sponsorships.

Moreover, Nike has retained both traditional and non-traditional methods of distribution in over 100 companies, but it focuses more on its primary market regions. Apart from product diversification, Nike has diversified supply chain and manufacturing due to international economic crises and other risks. It has many contracted suppliers outside the United States, including Vietnam and Thailand. There are other contractors who manufacture its products in over 35 countries.

In the year 2003, China manufactured 38%, Indonesia 27%, Vietnam 18% and Thailand 16%, while the rest was manufactured by other countries. This has enabled Nike to make large amount of sales. Supplier diversity has also increased its competitiveness in the market and it continues to contract more suppliers in many countries because it believes that supplier relationship is vital.

Nike Inc has also employed value creation as a management goal. Creating value for consumers has increased sales as well as the shareholders through the increase in stock price. Value creation is characterized by brands, people and innovation (Mintzberg, Ahlstrand, & Lampel, 2005). Nike, Inc. has prioritized value creation in its decision-making. This has helped the managers to know where and how to build the companies capability to attain profitable and lasting growth.

Mark (2000) agrees that through value creation, the company has been able to understand the basis and drivers of value creation in the business and market place. They have realized that the consumers value high quality and timely delivery of products and so the processes that lead to the delivery of high quality products are greatly valued. Some of the customers have valued innovation and so the processes involved in creation of new products are also highly valued.

Value creation also entails product and process innovation as well as knowing the consumers needs. Nike, Inc. has also realized that value for employees is essential since they feel motivated and work hard to produce better results. Therefore, proper treatment of the employees and involving them in decision-making creates value.

Nike has awarded and promoted managers who have defeated the other competitors like Puma in value creation. In this case the managers have positioned capital better than the other competitors. Nike has gained an advantage in developing the organizations ability to get more profits and future growth.

Other companies that have achieved the benefits of value creation are Coca-Cola and the Lloyds banks. These companies applied value creation as a technique and have realized growth and increase in their profitability. In acquisitions, Nike has acquired Upscale Footwear Company, surf apparel company, Hurley international and converse Inc. It has sold some of its subsidiaries such as Bauer Hockey and Starter (Nike, Inc., 2009).

Nike, Inc. has achieved its superior performance, mostly through competitive positioning and value creation. This has been achieved through advertising, brand name recognition, product innovation, and striving to be at the competitive edge despite having a stiff competition.

Nike employs many strategies and techniques such as strategic management tools and models, product differentiation, and proper distribution channels. Many consumers have realized the uniqueness of their products and recognize them through the trade name ‘Just Do it’ and Swoosh Logo. They have maintained customers because of their high quality products and unique marketing strategies.

Berman, B. and Evans, J. (2006), Retail Management, A strategic Approach , London: Prentice Hall.

Dess, G. L. and Alan, B. E. (2006), Strategic Management: Text and Cases. Boston: McGraw-Hill Irwin.

Johnson, G. and Scholes, K, (2008), Exploring Corporate Strategy , (8th edn), London: Prentice Hall.

Joshi, R. M. (2005), International Marketing , New York: Oxford University Press

Lynch, R. (2006), Corporate Strategy , (4 th edn) London: Prentice Hall.

Mark, M. H. (2000), Creating Public Value: Strategic Management in Government, Cambridge: Harvard University Press.

Mintzberg, H., Ahlstrand, B. and Lampel, J. (2005), Strategy Safari: A Guided Tour Through the Wilds of Strategic Management , London: Prentice Hall 11.

Nike, Inc. (2009), Annual Report on Form 10-K , [pdf]. Available at: < http://media.corporate-ir.net/media_files/irol/10/100529/AnnualReport/nike-sh09-rev2/docs/Nike_2009_10-K.pdf > .

Onkvisit, S. and Shaw, J. (2004), Process International Marketing. International Marketing: analysis and strategy , (4 th edn), OH: South-Western College Publishing.

Peters, J.W. (2009), The Birth of ‘Just Do It’ and Other Magic Words. August 19. The New York Times .

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IvyPanda. (2022, July 31). Nike Strategic Management: The Case Study Essay. https://ivypanda.com/essays/strategic-management-the-case-of-nike-inc/

"Nike Strategic Management: The Case Study Essay." IvyPanda , 31 July 2022, ivypanda.com/essays/strategic-management-the-case-of-nike-inc/.

IvyPanda . (2022) 'Nike Strategic Management: The Case Study Essay'. 31 July.

IvyPanda . 2022. "Nike Strategic Management: The Case Study Essay." July 31, 2022. https://ivypanda.com/essays/strategic-management-the-case-of-nike-inc/.

1. IvyPanda . "Nike Strategic Management: The Case Study Essay." July 31, 2022. https://ivypanda.com/essays/strategic-management-the-case-of-nike-inc/.

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IvyPanda . "Nike Strategic Management: The Case Study Essay." July 31, 2022. https://ivypanda.com/essays/strategic-management-the-case-of-nike-inc/.

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Business Management Case Study: A Complete Breakdown

Gain a comprehensive understanding of the "Business Management Case Study" as we break down the concept from start to finish. Discover the incredible journeys of companies like Apple Inc., Tesla and Netflix as they navigate innovation, global expansion, and transformation. This detailed analysis will provide insights into the dynamic world of business management.

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Case studies play a pivotal role in understanding real-world challenges, strategies, and outcomes in the ever-evolving field of Business Management. This blog dives into the intricacies of a compelling Business Management Case Study, dissecting its components to extract valuable insights for aspiring managers, entrepreneurs, and students alike. Learn the study behind some of the most significant Business Management Case Studies & how an online business degree can help you learn more in this article. 

Table of Contents

1) What is Business Management? 

2) Case Studies in Business Management 

    a) Apple Inc. Innovation 

    b) Tesla’s EV revolution 

    c) Amazon retailer to e-commerce giant 

    d) McDonald’s global expansion 

    e) Netflix’s transformation 

3) Conclusion 

What is Business Management?  

Business Management refers to the set of activities, strategies, and practices employed to oversee and coordinate an organisation's operations, resources, and personnel to achieve specific goals and objectives. It encompasses a wide range of responsibilities to ensure an organisation's efficient and effective functioning across various functional areas. 

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Case Studies in Business Management  

Here are some of the notable case studies in the field of Business Management that have garnered attention due to their complexity, innovative strategies, and significant impact on their respective industries:  

Apple Inc. innovation  

a) Background: Apple Inc. is a global technology giant noted for its innovative products and design-driven approach. In the early 2000s, Apple faced intense competition and declining market share. The company needed to reinvent itself to remain relevant and competitive. 

b) Problem statement: Apple's challenge was revitalising its product line and regaining market leadership while navigating a rapidly changing technological world. 

c) Analysis of the situation: The Case Study dives into Apple's design thinking and customer-centric innovation to develop products that seamlessly blend form and function. The company's focus on user experience, ecosystem integration, and attention to detail set it apart from its competitors. 

d) Proposed solutions: Apple's strategy involved launching breakthrough products like the iPod, iPhone, and iPad that redefined their respective markets. The company also invested heavily in creating a robust ecosystem through iTunes and the App Store. 

e) Chosen strategy: Apple's commitment to user-centred design and innovation became the cornerstone of its success. The strategy encompassed cutting-edge technology, minimalist design, and exceptional user experience. 

f) Implementation process: Apple's implementation involved rigorous research and development, collaboration among various teams, and meticulous attention to detail. The company also established a loyal customer base through iconic product launches and marketing campaigns. 

g) Results and outcomes: Apple's strategy paid off immensely, leading to a resurgence in its market share, revenue, and brand value. The company's products became cultural touchstones, and its ecosystem approach set new standards for the technology industry. 

Tesla’s EV revolution  

a) Background: Tesla, led by Elon Musk, aimed to disrupt the traditional automotive industry by introducing electric vehicles (EVs) that combined sustainability, performance, and cutting-edge technology. 

b) Problem statement: Tesla faced challenges related to the production, scalability, and market acceptance of electric vehicles in an industry dominated by internal combustion engine vehicles. 

c) Analysis of the situation: This Case Study examines Tesla's unique approach, which combines innovation in electric powertrains, battery technology, and software. The company also adopted a direct-to-consumer sales model, bypassing traditional dealership networks. 

d) Proposed solutions: Tesla's solutions included building a network of Supercharger stations, developing advanced autonomous driving technology, and leveraging over-the-air software updates to improve vehicle performance and features. 

e) Chosen strategy: Tesla focused on high-quality engineering, creating a luxury brand image for EVs, and promoting a community of passionate supporters. The company also bet on long-term sustainability and energy innovation beyond just manufacturing cars. 

f) Implementation process: Tesla faced production challenges, supply chain issues, and scepticism from traditional automakers. The company's determination to continuously refine its vehicles and technology resulted in incremental improvements and increased consumer interest. 

g) Results and outcomes: Tesla's innovative approach catapulted it into the forefront of the EV market. The Model S, Model 3, Model X, and Model Y gained popularity for their performance, range, and technology. Tesla's market capitalisation surged, and the company played a significant part in changing the perception of electric vehicles. 

Amazon retailer to e-commerce giant  

a) Background: Amazon started as an online bookstore in the 1990s and quickly expanded its offerings to become the world's largest online retailer. However, its journey was riddled with challenges and risks. 

b) Problem statement: Amazon faced difficulties in achieving profitability due to its aggressive expansion, heavy investments, and price competition. The company needed to find a way to sustain its growth and solidify its position in the e-commerce market. 

c) Analysis of the situation: This Case Study explores Amazon's unique business model, which prioritises customer satisfaction, convenience, and diversification. The company continuously experimented with new ideas, services, and technologies. 

d) Proposed solutions: Amazon's solutions included the introduction of Amazon Prime, the Kindle e-reader, and the development of its third-party seller marketplace. These initiatives aimed to enhance customer loyalty, expand product offerings, and increase revenue streams. 

e) Chosen strategy: Amazon's strategy revolved around long-term thinking, customer obsession, and a willingness to invest heavily in innovation and infrastructure, even at the expense of short-term profits. 

f) Implementation process: Amazon's implementation involved building a vast network of fulfilment centres, investing in advanced technology for logistics and supply chain management, and expanding its services beyond e-commerce into cloud computing (Amazon Web Services) and entertainment (Amazon Prime Video). 

g) Results and outcomes: Amazon's strategy paid off as it transformed from an online bookstore to an e-commerce behemoth. The company not only achieved profitability but also diversified into various sectors, making Jeff Bezos the richest person in the world for a time. 

McDonald’s global expansion  

a) Background: McDonald's is one of the world's largest and most recognisable fast-food chains. The Case Study focuses on the company's global expansion strategy and challenges in adapting to diverse cultural preferences and market conditions. 

b) Problem statement: McDonald's challenge was maintaining its brand identity while tailoring its menu offerings and marketing strategies to suit different countries' preferences and cultural norms. 

c) Analysis: The Case Study analyses McDonald's localisation efforts, menu adaptations, and marketing campaigns in different countries. It explores how the company balances standardisation with customisation to appeal to local tastes. 

d) Solutions and outcomes: McDonald's successfully combines global branding with localized strategies, resulting in sustained growth and customer loyalty in various markets. The Case Study demonstrates the importance of understanding cultural nuances in international business. 

Netflix’s evolution  

a) Background: Netflix started as a DVD rental-by-mail service and became a leading global streaming platform. The Case Study explores Netflix's strategic evolution, content production, and influence on the entertainment industry. 

b) Problem statement: Netflix's challenge was transitioning from a traditional DVD rental business to a digital streaming service while competing with established cable networks and other streaming platforms. 

c) Analysis: The Case Study analyses Netflix's shift to online streaming, its investment in original content production, and its use of data analytics to personalise user experiences and content recommendations. 

d) Solutions and outcomes: Netflix's strategic pivot and focus on content quality and user experience contributed to its dominance in the streaming market. The Case Study illustrates how embracing digital disruption and customer-centric strategies can drive success.  

Conclusion  

These case studies offer valuable insights into different facets of Business Management, including innovation, strategic decision-making, customer-centric approaches, and market disruption. Analysing these cases provides aspiring managers and entrepreneurs with real-world examples of how effective strategies, risk-taking, and adaptability can lead to remarkable success in the dynamic business world. 

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The 2008 crisis pointed toward rapid financial readjustments, the primacy of cost-driven survival strategies and simultaneously the need for longer term repositioning so as to be able to create the resources and flexibility for strategies to be more reactive, more adaptive and yet more durable. Are we to see more trade-offs toward the short term or do we take from 2008 that more importance should be given to long-term durability? Part of the long-term thinking of corporations is investment and technological change. The invasion of consumer buying habits by innovations such as social networks is provoking fundamental changes in retailing and in consumer goods marketing with consequent implications for investment back down the supply chain. The pace of technical change and consumer buying habits shows no sign of diminishing. As further fuel to these changes, the significance of emerging markets has been very evident in the aftermath of 2008 with considerable visibility of China’s development into a world economic superpower (or is it going to run into bottleneck constraints and revert to more normal growth). Alongside this strand of thinking is a rethinking of globalization as a strategy. The emphasis is now on regional power coupled with increasing free trade. This is a more intricate paradigm than global standardization requiring correspondingly more complex patterns of internationalization. So change is even more positively on the agenda and the capacity to interpret and respond to contextual shifts and rapidly evolving new competitors will become a requisite core competence. Fundamentally, strategic advantage in any and all contexts is driven and fueled by the resources and capabilities of firms. The resource-based view is gaining more attention and will gain more traction in reality as firms begin to work out how to define, measure, and create core competences. The resource based view is a theory waiting for major practical advancement. Without core competences, firms are destined to be price competitors or at best rapid imitators. Long-term superior performance will accrue to those who know what are their strategic assets. The principle focus of strategy regarding the creation of wealth will continue to dominate and will remain critical to the competitive survival of firms. However, the definition of wealth in the economic literature is starting to shift toward a more holistic view that integrates financial and societal well being – a reflection probably of broader public opinion. The effect on the field of strategy is an increase in importance of areas such as corporate social responsibility as well as providing ammunition for the need for organizations to take an even longer view in spite of current short-term financial pressures. The implementation of strategy is an area that requires more attention in terms of providing a working framework of how to execute the wide variety of strategic models available in the literature. Implementation remains a minefield of mobilising financial, human, organizational and social capital, in the form of industry networks. Strategic Management Vol. 12 is a rich collection of the latest thinking on strategic management. We are indebted to our colleagues in international business schools and corporations across the globe, who have contributed with their ideas, opinions, best practices, and latest research finding. It has been a privilege to be part of this great network of strategic minds that have created this comprehensive collection of strategic management concepts.

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