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BUSS4 - the tutor2u Ten for 2014
1st February 2014
Each year we attempt to pick a manageable selection of businesses which offer the potential for AQA BUSS4 students to combine some Section A (China) and Section B research.Here are our suggestions for 10 firms to follow for BUSS4 students wanting to deepen their understanding of real businesses as they prepare for the two essay questions this summer. In a couple cases we’ve grouped firms together, so the total number of businesses is actually more than 10!The tutor2u 10 is chosen entirely subjectively, based on the following criteria:Each entrant should ideally have;- Accessible media coverage- Good mix of written, audio & visual research materials- An international/global dimension- Potential for “compare and contrast”- Rich sources of relevant evidence for AQA BUSS4 research theme for 2014 (China)- Reasonable expectation of examiner familiarityThe list is shown below, with a brief comment on the reason for selection.
A favourite for several years, and it is hard to imagine teaching BUSS4 without using Starbucks! Ideal for Ansoff, ethics, CSR, Porter’s generic strategies, organisational culture, globalisation, leadership styles - the list is endless! For 2014 Starbucks can be used as a great example of a successful market entry strategy in China. Initially Starbucks entered China through a series of joint ventures. Since then it has taken control of a business that has established market leadership in a country where people didn’t historically like coffee! We’ve written several blogs about how Starbucks’ strategy in China – read through them to grab the research evidence you need.
A second year on our list and Ikea is fast becoming an essential research case study for BUSS4. Ikea’s patient, long-term investment in China and its strategy of successful localisation there provides compelling evidence of how to succeed in China. What can other international retailers like Tesco and Wal-Mart learn from Ikea’s strategy? Ikea has become a global retail success story based around a distinctive retail format, strong organisational culture and high quality leadership. Ikea has set itself a challenging corporate growth objective by 2020 and needs to continue its international expansion in order to be able to achieve it.
We group Amazon and Alibaba together because they are now the world’s two biggest names in e-business: The "Two A's": one based in the US; the other in China!
The relentless growth and success of Amazon continues to make it an essential part of BUSS4 research as students prepare for June 2014. Amazon CEO and Founder Jeff Bezos is a great example of a leader who takes a long-term view of strategy and Amazon’s disruptive business model continues to send shockwaves through an increasingly wide range of markets, not just retailing. However, in China, Amazon has struggled to establish a strong market position in the face of strong competition from local Chinese businesses, notably Alibaba. Why is that?
The story of Alibaba’s growth is a great example for students to use. Chinese consumers and households have adopted e-commerce widely and Alibaba (set up by former English Teacher Jack Ma) is now the world’s leading e-commerce business.
Jaguar Land Rover (JLR) and Tata Group
We group JLR and Tata Group together, not the least because JLR is owned by Tata! The takeover of JLR has proved to be one of the most successful in British business history and is an ideal example to use for a Section B question on external growth, as is Tata’s long-term approach to investment. Tata is now the UK’s biggest employer in the manufacturing sector and operates with a distinctive organisational structure.
JLR itself is a stunning example of success in China and the fast-growing motor industry there is also worthy of study. Multinational brands like JLR, BMW, Toyota and Nissan have invested heavily in China through joint ventures and the rapid growth of an affluent Chinese middle class continues to support strong market growth.
A new entrant in 2013 and still worthy of a place this year too! The South Korean multinational conglomerate has an aggressive growth strategy based around a "fast follower" strategy and distinctive corporate culture. Samsung is challenging Apple, Lenovo, Google and Huawei aiming to become the global leader in consumer electronics and it has looked on course to achieve that with its stunning record of new product development. However, is it now too reliant on the returns from mobile technology? As a conglomerate, how should it manage its product portfolio?
We’ll group these two together and they are new to the tutor2u 10 in 2014 with good reason! They are both great examples of Chinese-based multinational technology firms with credible global ambitions.
Huawei is a Chinese multinational networking and telecommunications equipment and services company. It has grown rapidly to become the largest telecommunications equipment maker in the world, having overtaken Ericsson in 2012. Almost half of Huawei’s 150,000 employees are engaged in research and development as it seeks to grow market share in a wider range of business and consumer electronic markets (including smartphones and tablets). A major competitive threat to the likes of Apple and Samsung, Huawei is also a controversial business (from the perspective of the West) as you’ll discover if you choose to research it!
Perhaps one of the best-known Chinese brands in developed economies, Lenovo has set its sights on Apple and Samsung as it aims to become a global leader in electronic and other computing devices. It first came to prominence in 2005 when it bought IBM’s personal computer division and it has grown rapidly to become the world’s largest manufacturer of personal computers. Now it wants to be a global leader in smartphones and tablets. It is already the market leader in China and its recent acquisition of Motorola from Google has given it a potential platform to challenge the big two!
Back in the list for 2014 and an almost perfect case study for understanding the opportunities and threats of doing business with and in China! Several years ago, Apple was the centre of media attention because of the working conditions at several of its key suppliers in China (notably the factories operated by Taiwan-based Foxconn). Whilst the CSR issues are still relevant, the focus has now shifted to the competitive battle being waged in China by Apple. To sustain its growth record of recent years, Apple simply must succeed in China. Yet, despite the recent distribution deal with China Mobile, Apple faces intensive competition from local smartphone manufacturers such as Lenovo, Xiaomi and Huawei.
A new entrant for 2014, but with much to offer the BUSS4 student. GSK is the world’s third largest pharmaceutical business with widespread business interests in developed and emerging markets. However, its operations have come under intense scrutiny after it was fined a record amount by authorities in the US for unethical and illegal business practices. GSK appointed a new CEO (Sir Andrew Witty) to lead a major change programme. However, this has been undermined by further accusations (denied by GSK) of illegal activity in the Chinese healthcare sector. An excellent case study of the threat and risks posed by doing business in China, GSK is also excellent for Section B (new leadership, corporate culture, ethics, innovation).
Another favourite over recent years which remains relevant for June 2014. Sony combines just about everything you might want for BUSS4. The so-called “Apple of the 80’s” has ensured a terrible time recently. Hit by the Japanese earthquake (contingency planning; external shocks); new leadership (Kazou Hirai); heavily losses due to intense competition and the high Yen. Add in innovation (PS4, Sony Xperia) and organisational culture (“Sony must change… Sony will change” says Hirai) and you have a terrific case study for BUSS4. Hirai’s turnaround strategy is struggling to gain momentum and activist shareholders are circling the business demanding faster and more dramatic change.
In terms of China, Sony has taken a strategic decision NOT to invest heavily in China, preferring instead to focus on building market share in Europe and Japan. The intense existing competition for smartphone operators in China might make this a smart move. Perhaps a better opportunity in China is the opening-up of the games console market there. This is a good example of how a change in the external environment (in this case, a change in regulation) opens up opportunities for multinationals like Sony. However, it will face strong competition from the likes of Microsoft, Lenovo and Huawei.
And finally, the company that claims to “feed the world”! Yum! Brands is the world's largest fast food restaurant company with around 40,000 restaurants around the world in over 125 countries. It owns and operates KFC and Pizza Hut as part of its product portfolio. It is a great example of truly globalised business, with a distinctive team-based corporate culture, that has relied on organic rather than external growth for its success.
In China, Yum Brands invested for the long-term and built KFC (in particular) into a one of the most successful Western brands through a clever strategy of operational control and localisation. However, 2013 proved to be a tough year for KFC in China after some of its outlets were discovered to be serving chicken products with excessive chemicals. KFC sales in China dropped significantly and have been held-back again by the outbreak of bird-flu in early 2014. How can KFC respond?