Paraphrase

This file consists of questions and their answersI want it to be paraphrased very very well, but still keep all the business terms in there, Its very important to keep the business terms in the same terms and not to change these business terms.

Q1) As the executive responsible for business development at Newell, you have decided to purchase Calphalon. Provide reasoning consistent with this strategic decision.

A) Assess the industry attractiveness. (Make sure that you define the industry)

In order to determine the industry attractiveness of Newell’s acquisition of Calphalon, we must first analyze their Five Forces using the first of Porter’s three tests. Newell is a worldwide marketer of consumer products and other home organization products such as home solutions commercial items, writing, baby and parenting products in the consumer goods industry and Calphalon is a leader in premium cookware and kitchenware, also in the consumer goods industry. Since both Newell and Calphalon use raw materials for their production whether it is ink, plastic, fibers and other performance materials for Newell or metals, steel and other electrics for Calphalon, they are exposed to countless suppliers with weak power to manipulate prices and are open to choosing the price that is most adequate for them. Newell deals with large retail stores such as Home Depot, Wal-Mart, and Target who have strong buying power, they have to hedge with these companies in order to offset increasing raw material prices and low return margins. Whereas Calphalon, being a low end of the market brand, deals with smaller stores that have less buying power than the stores Newell works with, since the buyers of Calphalon products have no room to negotiate much prices since their payments terms are already late. Newell’s products are simple and serve basic purposes, which make them easy to substitute with, and Calphalon’s cookware and kitchenware products compete with similar products from other brands that make their products substitutable. The rivalry in both markets is moderate at best since there isn’t a competition in price for any of the products that Newell or Calphalon produce. Since there are no major government regulations that prevent businesses from entering the market, the barriers to enter such an industry are low, whether it’s making pens, markers, and home solution goods like Newell or cookware and kitchenware like Calphalon, but Newell manages to keep those new entrants from competing by building strong relationships with its suppliers and buyers. Nonetheless, it’s tough for new entrants to compete in such economies of scale while suffering low margins from price competition.

B)What is the cost of entry to acquire Calphalon?

As per the 10K, the costs of entry to acquire Calphalon are $28.8 million, which is a drop in a bucket for Newell. However, Newelization is limited through this purchase and Calphalon is only 3% of Newell’s sales.

c) Is the business better-off? Provide both VRIO and Value Chain Analyses and explain how the acquisition will create value for Newell.

Newell creates value in this acquisition, since their financials weren’t looking good, and they were challenged by the change in the CEO, lower stock price and the recession, which declined demand, balancing customer needs, and having less negotiation power from Wal-Mart because Wal-Mart was growing bigger and struggling with dealing with new products, and by bringing more to the table such as cookware and kitchenware products with their acquisition, Newell will reduce these large retail store’s increasing bargaining power. The transferring of new skills such as new product development, new distribution channels, and marketing from Calphalon will benefit Newell. Newell and Calphalon’s products are both simple, and not rare to find since there are other brand producers of cookware, kitchenware, writing, commercial products, and home solutions in the industry. However, in my opinion, Newell is better-off without acquiring Calphalon since they both provide completely different products to different customers, and both companies face high threats of new entrants, substitutes and high bargaining power of their customers. Besides the fact that there is little resource sharing between both companies, the transferred skills, new distribution channels and marketing that Newell will gain from acquiring Calphalon are irrelevant to Newell’s business design, since the new distribution channels and customers that Calphalon distributes to are not the same as the ones that Newell works with, and they both work with different price points. Newell hasn't needed to market before because they only produce staple goods and the only marketing needed was store shelf space, so this marketing skill will just cost them more money to invest in more marketing strategies, high customer service, relationship building and in store needs to market for Calphalon’s kitchenware. Newell already has it’s own Wearever cookware brand as its high-end brands and doesn't need to overlap the two.

2. IDEO – Strategy Implementation

A) What is IDEO’s functional strategy? What is IDEO generic strategy? What is IDEO’s Organizational Structure.

IDEO is an innovation design firm in the design industry. The structure of their design group is simple, with Dave Kelly being the “Boss” with the final decision, but the employees are free to be creative and introduce new ideas and fresh innovations. The machine shop, sales, and toy division is multidivisional since each division mentioned is responsible for a distinct business area. IDEO functions with an innovative strategy by understanding their customer’s needs and offering latent user needs creatively. IDEO demonstrates a differentiation generic business strategy by creating a unique value in their products that customers perceive as distinct, which allows them to charge a premium price.

B) Give one example for each type of IDEO control systems (personal, output, and behavioral).

IDEO uses the personal control system by having a face to face with their “Boss,” Dave Kelly and what they refer to as “adults in the room.” They measure their output with a strict timeline of 24 hours for their sub-design goals for breakout teams to keep it within reason and also within budget to keep it within the same cost range as a regular cart. The behavioral control that IDEO uses is the one conversation at a time and my favorites, which is the try first and ask for forgiveness later.

C) Give three examples of IDEO’s organizational culture.

IDEO builds a culture of innovation and freedom. A few norms or values in the IDEO company are that there are no titles for each other until the “adults” are in the room, it has a flat structure with Dave Kelly as the boss making the final decisions, and they want their employees to be creative by being playful, communicative and work as a team by failing often, and succeeding sooner.

Q3)

A) What is E-harmony functional strategy?

E-harmony’s functional strategy is one of quality. They provide a wide range of potential candidates as well as services in order to facilitate communication between each other. E-harmony invests into their scientific linking of profiles and matching algorithms to find potential candidates to make available for their customers. The quality of candidates found on E-Harmony is of better quality since they’re serious enough to answer a 200-question survey to see if they are credible users or could be rejected as well.

B) What isE-harmony generic business strategy?

E-Harmony has a differentiation focus business strategy, as they try to differentiate themselves from other online match making websites with the quality of their candidate pool using their scientific linking of profiles, matching algorithms, and 200-question survey to enhance their customer base by quality, and not quantity.

C) What strategy should E-harmony move to give the competition from match.com (chemistry)? Include at least 3 resources to support your recommendation.

I believe E-Harmony should move into a Standard Globalization Strategy to sustain their competitive advantage by staying on the course they are in with their advancements in technology applications, matching algorithms, 200-questionaire survey, and scientific linking of profiles but moving internationally since their matchmaking seems to be of success in the United States and they already have the database to do so. Also by expanding their niche to where demand seems to be stronger.

Q4)Inside the Meltdown

A)  Define competitive disadvantage in terms of the VRIO framework.

In the VRIO framework, competitive disadvantage is a scenario where a firm’s resources and capabilities are both not short in supply and do not persist over time thus may lead to a firm losing customers to a competitor. If short supply and persistence over time is not met, then the capabilities and resources of a firm can’t be considered to have sustained competitive advantage.

 

B)  Give two examples of resources or capabilities from the Inside the Meltdown case that contributed to Bear Stearns or Lehman’s demise.

 

Bear Stearns was a successful investment bank in Wall Street before its demise. During the housing boom, Bear Stearns opened a collection of hedge funds that commenced on buying different mortgaged-backed security classes. When the value of homes began to decline and subprime mortgages began to also decrease, these hedge funds started experiencing serious losses. This resulted into Bear Stearns bailing out itself to the tune of over $1bn which meant the firm was only left with countless assets in which it couldn’t sell. Moreover, Bear Stearns operated on borrowing money on a daily basis from other banks to fund its operations. Consequently, when mortgage investments and businesses began to decline, creditors started doubting the firm’s ability to repay loans which resulted in the firm being denied credit facilities to enable its operations. Subsequently, investment bank JP Morgan Chase bought the firm to giving it a loan to cover all its bad investments; thus its demise.

Lehman Brothers also collapsed due to building up losses from mortgage investments that led to creditors to ultimately lose faith in the firm thus pulling back on funding through short-term financing. This loss of faith was not helped by the growing suspicion that it had under reported its losses on real estate. The firm was accruing massive debts; this coupled with no money to enable operations meant it required a buyout that never came which resulted into the firm filing for bankruptcy.

 

C)  Define moral hazard and systemic risk. Using the four different ethical approaches: Friedman doctrine, Utilitarian, Rights approach, and Justice suggest how each of these principles might have been used to address the financial crisis. 

 

Moral hazard occurs when one is prompted to feel insulated from the full consequences of a catastrophic event and thus changes behavior accordingly. Systemic risk is the potential of the fate of an institution in a market to affect all other firms in that market.

Friedman doctrine approach suggests that the government should not interfere with businesses. This doctrine was responsible for preventing moral hazard where business will create a market fail and later ask the government for bailout. According to this doctrine, companies that fail should be left to fail.

 

Utilitarian approach seeks to maximize the results according to the objective measures that permit the comparison of interests. This approach would have meant Lehman brothers and Bear Stearns to consider other investments that would have resulted in short term returns that would have provided operation funds instead of continued borrowing.

Right approach is an approach that is dependent on doing what is right regardless of the consequences. This means that Lehman Brothers should have filed for bankruptcy instead of understating its real estate losses.

Justice approach means that fairness is the core objective in any approach assumed. Since the government, actually facilitated Bear Stearns buy out, it would have assumed the same approach with Lehman’s Brother instead of letting it going under thus giving it a chance to pay its debts a recoup its losses.

Q5) Which complementary asset of the feedback loop is Santa Anita racetrack missing?

I believe Santa Anita racetrack needs to produce complements themselves by bundling options, making different bet types, and making it more accessible for betters to bet on their horse and race of choice. There is real value in combining these complements because the feedback loop of driving more bettors to these horse races will produce more advantages and they would win more money.