Samsung Throws Apple for a Loop

Will Samsung Pay win a standards war over Apple and Google? Apple Pay and Google Pay may have gotten lots of buzz but adoption of contactless payment has been slow. The near field communications (NFC) technologies that they rely on require that merchants invest in new technology at the point of sale. Samsung has acquired LoopPay and its technology to allow phones to communicate with any magnetic strip reader. The new service is expected to launch in the 2nd half of 2015. Even if NFC is ultimately a superior technology, the ease of adoption may allow Samsung to dominate as users seek a solution that they can use with most merchants. Meanwhile, Google plans to include it’s Pay app on all Android devices which could increase its penetration. Though it is important to note that this might create a conflict with its key Android partner Samsung. This should engender a nice discussion of strategy in “winner take all” standards wars. In class, one might assign groups to debate why Google, Apple, Samsung, or other will win this market.

Contributed by Russ Coff

Dr. K Prescribes Strategy Videos

David Kryscynski (Dr. K) has provided an excellent series of online videos to supplement your course or to help move portions of it online. These are very well produced and may allow you to spend class time on more experiential activities found elsewhere on this site. Below is the video on Porter’s generic strategies but I have provided links to all of the available videos below and listed others that you can gain access to through Wiley. Dr. K’s newest collection can be found on his free web page at LearnStrategy.org.

More Videos (below) Accompany Text

The videos below are also available but are designed to accompany the textbook: Strategic Management 1e by Jeff Dyer, Paul Godfrey, Robert Jensen and David Bryce (BYU Marriott School of Business). Contact your local Wiley sales representative or Executive Editor, Lise Johnson, at lise.johnson@wiley.com to receive additional information about class-testing or possibly using the videos without the text. For information on how to utilize these animations for non-academic use please send an email to ols_dept@byu.edu.

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Cultural Sensitivity Gone Wild

Almost anything good can be taken too far. Cultural sensitivity may be no exception. Individuals who try to be overly culturally sensitive may risk appearing disingenuine or alienate those in their own culture. Perhaps this has application in a discussion of global strategy (as well as etiquette in restaurants).

 

Contributed by Russ Coff

Stuck in the Middle Blues

Samsung’s profits are down by a whopping 25% and they put the blame firmly on Chinese competitors entering with cheaper smartphones (see this NYT article). Companies like Xiaomi and Huawei have increased market share in China over the last year as they sell good products at break-even prices. Now, they have turned their sights on western markets that eat into Samsung’s bread and butter. Pressure on Samsung to respond with lower prices? Perhaps but Apple continues to compete effectively at the high end. It’s proprietary operating system keeps rivals from fully imitating many of the most important product attributes. For now, Samsung is signalling that it will accelerate efforts to differentiate their products — an innovation war more than a price war. The real winner may be Google which gains as Android dominates growth in this market. As you can see, this “live” case allows one to explore the complexities of how different strategies play out in the market. It also pushes us to explore how a sequence of strategies might unfold leading to a longer term competitive advantage. This case might go nicely with the HBS case on Samsung’s dual (cost/differentiation) advantage in memory chips and the threat of Chinese rivals. Of course, in the race for new features, one wonders what they will think of next…

Heard Through Michael Leiblein

French Connection (in Mexico)

Daimler and Renault-Nissan have entered into a new alliance to open a new joint plant in Mexico. As the video below indicates, they intend to achieve economies of scale that neither partner could accomplish on their own while maximizing differentiation between the two brands. What are the tradeoffs in trying to achieve these competing goals? How will consumers perceive the arrangement? This could spur some nice discussion on alliance management — an opportunity, perhaps to apply the “Four C” alliance framework or the Resource Pathways framework to assess the opportunities and risks. If you are looking for a complementary exercise, this case would go nicely with the Global Alliance Game.

Contributed by Aya Chacar

Frozen Corporate Strategy

Disney’s Frozen is now the top grossing animated film of all time (almost $800 million in revenue so far). But that is only the box office proceeds. FrozenThe Lion King brought in over 2 billion and the box office was just a small part (see the HBS Lion King case for a breakdown). Of course, they will leverage the characters across their entertainment assets (frozen cruises, stage shows, theme parks, broadcasting, etc.). This might make one think that the bulk of the additional returns stem form their diversification strategy. In fact, most of the revenue will come from merchandise sales where the manufacturing is outsourced. Because Disney owns the rights to the characters, they have bargaining power to appropriate most of the profit — no need to vertically integrate. For a rare discussion of management policies to maximize cross-business opportunities, see the Lion King B case (The Synergy Group). Interestingly, Disney has loosened their copyright grip to allow the many spoofs that have overtaken YouTube (click here for a listing). They now see this as free advertising that pumps up the demand for merchandise. This all makes for a nice classroom discussion as well as a host of entertaining videos (like the one below).

Contributed by Russ Coff

Special Orders Outsourced at BK

This funny video depicts the movement from poorly trained and low paid local workers to outsourced workers overseas and finally to flawed voice recognition software. The result is equally frustrating for the customer. Ultimately, this touches on a variety of subjects including human capital, global strategy, outsourcing, and technology strategy. One important caution is that the video reinforces stereotypes. This too should probably be a part of the conversation.

Contributed by Russ Coff

The Bear Necessities…

There are several nice Samsung cases that describe how the company has tried to merge Western practices (and managers) with Korean/Japanese practices (and managers), to become the truly global firm. It leads to a nice discussion of how a firm can transcend national identity and become a global player. The advertisement below exemplifies this: 1. Bears aren’t identified with a single region (a global species), and probably considered “cute” just about everywhere; 2. The advertisement is easily dubbed in any language as you never see the people talking; and 3. The creative/fun aspect of the ad is probably not what students think of when they think about Samsung tech products — it exemplifies that Samsung has achieved a sophisticated level of global infotainment expertise. Or has a great ad agency. Or you could just do something simpler by using it in an intro about how diversified Samsung is. (e.g., “What industries do you think Samsung is in?” (put answers on board) If someone gets to washing/drying machines, pause for a moment, smile, run the ad. If no one gets to washing/drying machines, pause, smile, ask “What about major appliances?” and run the ad. Fun fun fun.

If you have other ideas for how to use this, please post them as comments below.

Contributed by Melissa Schilling

Graphene with a Kitchen Blender?

Can a simple “kitchen blender” method of making graphene shake up the electronics industry? The one-atom thick sheets of carbon may one day replace silicon wafers and revolutionize computing and electronics. For example, recent findings suggest that electricity can be generated by running salt water over graphene. Samsung may soon use graphene to make ultra thin hard cases for it’s phones. A fun thought experiment in class might be to develop scenarios for how this disruptive innovation might alter the dynamics of the industry (and adjacent industries).

Contributed by Russ Coff

The Key Lime Market Sours

This NYT article about the scarcity of key limes, and the concurrent price increase, is perfect for a PESTEL analysis. The current violence in Mexico (Political factor), rains when the trees were blooming and pests (environment) have resulted in poor harvests. The problem is compounded because of the increase in demand from Hispanics in the US, and the growing popularity of Mexican food around the world (social factors). The Florida plantations that used to be the main source of key limes were all but wiped out by hurricane Andrew and citrus canker (environment). Production moved to Mexico because of the weather, but also because legal factors (NAFTA) make it cheaper to import the limes from Mexico than from anywhere else. This explains why lately waiters have been asking if I want lemons or limes with my half and half tea…

Contributed by Susana Velez-Castrillon

Turning Around Chrysler … Again

This clip is an interview to Sergio Marchionne, CEO of FIAT and Chrysler, from “60 minutes.” Marchionne explains the process of transforming the struggling company into a profitable contender in the world market. This helps to introduce topics such as merger integration, alliances, strategy implementation, and turnaround strategy. There has been some buzz about Chrysler having an IPO. This adds an important stakeholder component since the main barrier to the IPO is disagreement on the purchase price for shares owned by the autoworker healthcare trust (42% of outstanding shares).

Contributed by Elisa Operti

An Epic Split in the Strategy Field

Birgul Arslan suggests that the Epic Split commercial of Volvo in the Volvo Trucks Case to showcase how truck companies may differentiate themselves with their technology. I see a broader use in the context of almost any kind of alignment one might want to discuss (e.g., strategies, governance, organizational units, etc.). Any misalignment could result in catastrophic results…

Contributed by Birgul Arslan

Gibberish as a Second Language

Ever wonder what English sounds like to non-English speakers? This video goes a long way to demonstrate. You may feel like you should know what these people are saying but it just doesn’t sound quite right. This is another in the series of videos that are useful for teaching international business.

Contributed by Russ Coff

Baby Click Me One More Time

Market signals can be rather noisy and firms may over react or miss the signal entirely. In a similar way, the resource based view draws on causal ambiguity as an isolating mechanism — firms may misread noisy observations and imitate the wrong thing. This clip illustrates that problem as a firm ramps up to meet demand triggered by unusual activity on its web page…

Contributed by Russ Coff

Flush with Cash…

A recent Wall Street Journal article points to a resurgence of toilet manufacturing in the U.S. but it is mostly under foreign ownership (like the Japanese company, Toto). Mary Tripsas has a nice HBS case on Toto’s attempts at entering the U.S. market and the WSJ article seems a nice conclusion to the story. A broader question one might ask is why product innovation has not penetrated the U.S, market in this industry. In Japan, top end toilets are highly differentiated and even link to electronic devices like Android smartphones. As such, this might spur discussion of when innovations are likely to take hold as well as questions about entry into new markets. Nevertheless, this video reminds us that there may still be a need for low tech solutions in this market…

Contributed by Russ Coff

Cross Cultural Craziness

Cultural differences certainly present an important barrier to expansion in new markets. This sequence of 3 commercials get at a few of these differences in a funny way. You can probably show any one of them to spark further discussion on how to manage these problems (mode of entry, routines, etc.).

Contributed by Russ Coff

Chinese Dilemma: 170 Auto Makers

Rose Yu of the WSJ has a nice recent article on the fragmented nature of the Chinese auto market and how this is leading to over capacity in the industry.electriccarconcept[1] Mark Lehrer identifies some nice classroom uses for this article in the WSJ WeeklyReview service. Here is what he suggests:

  • SUMMARY: The US auto industry has long had three big domestic car makers. China has more than 170. Optimistic Chinese auto executives send shudders through the rest of the global auto sector. Industry watchers worry that the world’s No. 1 auto market could soon be awash in overcapacity. That would rev up competition in China and pressure companies here to export more of their cars.
  • CLASSROOM APPLICATION: As a case in industry analysis, excess capacity seems to be an endemic feature of the car industry (related article). As a study in foresight, the question for class discussion is, first, how to deal with the problem in the US, and second, how to brace for the problem furling over from China in a few years.

QUESTIONS: Continue reading

ONN: Outsource Your Own Job

ONN (Onion News Network) spoof on outsourcing — in the end all work is outsourced to one person. Very funny and explores the limits of outsourcing.

Sometimes the truth is stranger than fiction. Here is a real news story about a programmer who outsourced his own job to a developer in China. He continued to get great performance reviews while he watched cat videos on YouTube.

Contributed by Aya Chacar

Ryanair: New heights from low costs

In this interview (9:44), Deputy CEO, Michael Cawley, explains Ryanair’s relentless pursuit of cost reduction and the resulting value created. High demand elasticity contributes to their advantage since the increase in total demand arising from lower prices gives them added volume on routes that might not be profitable for other carriers. The interview is conducted by Juan Jose Guemes from IE Business School. Of course, there are several nice cases written about the company that go well with this.

Contributed by Birgul Arslan