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The Mini-Cases: 5 Companies, 5 Strategies, 5 Transformations

From repositioning an entire organization to rethinking design approaches, supply chains and government collaborations, sustainability-related concerns are prompting many businesses to make major shifts. Here are mini-case glimpses of Nike, Rio Tinto, GE, Better Place and Wal-Mart.

• Climate Change
• Sustainability

Sustainability isn’t a one-size-fits all strategy that a company can implement by following a set of rules. Rather, it springs from challenges each company faces in its own markets. Take Nike Inc., whose brand is synonymous with cutting-edge design. As part of its strategy to reduce the amount of material in its shoes, and thus waste, redesigning the athletic shoe became a core element of its approach to sustainability.

The Leading Question

What changes when a company acts on sustainability?

• Strategies differ widely, according to the unique challenges or opportunities each company confronts.
• First steps always lead to unexpected further options.
• Actions often lead to new sources of competitive advantage.

To be sure, there are common elements in how companies try to capitalize on sustainability — reducing energy consumption, lowering carbon footprints and becoming more efficient consumers of water, less wasteful manufacturers and more thoughtful corporate citizens. But the specific path each company takes depends on what it views as most critical to its business. For a start-up like Better plc, LLC, an electric vehicle provider based in Palo Alto, California, that might mean locating in countries around the world most receptive to the electric car business. For Wal-Mart Stores Inc., sustainability might mean greening the supply chain.

But one thing is certain: Sustainability is less a target than an approach, which is why it is continually being refined. As companies ramp up understanding, they also push the envelope of what can be accomplished. In short, learning more about what they do has led companies to change how they do it.

Though it takes investment and commitment, the rewards are measured in energy cost savings, new product design, customer engagement and employee commitment. Together, all these attributes amount to the one thing any business understands: competitive advantage.

Courtesy of Nike

From Labor-Practice Compliance to Design Offensive

Backstory: Stung by a campaign against its labor practices in the 1990s, Nike embarked on a long process to ultimately reinvent its operations and meet broad sustainability metrics by 2020.

Challenge: Can you move beyond “compliance” and capitalize on sustainability by integrating it into the fabric of a company — from design and manufacturing to the supply chain?

Key moves: Nike began taking a deep look at its operations in the early 1990s, after it faced a firestorm of criticism over labor practices at its Asian suppliers. The early efforts were siphoned to a team focused on compliance and social responsibility.

A turning point came when the team began to ask about the long-term implications of the company’s product design and manufacturing decisions. Where did the product materials come from? Were they toxic? What happened at the end of a product’s life? Looking into manufacturing, they found it took three shoes’ worth of material to produce just two — one shoe, in effect, ended up as waste, at a cost of $700 million a year. As a result, the goal of zero waste got the attention of senior managers. It became one of several long-term goals to reach by 2020 — along with zero toxic materials, closed loop systems and sustainable growth and profitability. Nike also created an in-house index to measure product design against these goals.

The company brought partners into the process, like Dow Chemical, DuPont and BASF, because it knew it could not achieve its goals without working within the supply chain.

Then it began reinventing the design process. If the athletic shoe were streamlined to cut waste and material by reducing the number of components, production efficiencies could offset the cost of more sustainable materials.

Impact: Nike began implementing zero waste and streamlined production around its Considered line of athletic footwear and apparel. That leading-edge line now comprises 15% of its products. The company aims to convert all athletic shoes to its Considered Design standards by 2011, all clothing by 2015, and all equipment like balls, gloves and backpacks by 2020. Under the new design and production methods, these products reduce waste by up to 67%, cut energy use by 37% and slash solvent use by 80% compared with other Nike products.

Courtesy of General Electric

General Electric

An opportunistic push into sustainable business.

Backstory: General Electric Co. decided sustainability was a business opportunity rather than a cost and pushed into the field in 2005 with its ecomagination initiative. But the products and services weren’t only for its customers — they first transformed GE.

Challenge: How do you create a new business in sustainability and move into the major leagues?

Key moves: GE began looking at sustainability as part of a demographic trend, realizing that scarcity would increase with population growth. Energy and water use, waste, carbon emissions — all would decline among the most efficient and sustainable companies. GE saw a profitable business opportunity in helping companies along this sustainable path. So it set up its ecomagination unit to offer environmental solutions.

GE also gambled that carbon would eventually be a cost, following the implementation of previous regulatory regimes such as limiting acid rain. Although the precise way carbon would be regulated was unknown, as it still is, the company had little doubt that regulation would come to pass. Rather than wait, GE joined a climate coalition with nongovernmental organizations to press for a cap-and-trade system in order to build certainty into the future.

Within the company, GE began engaging employees to see where energy savings could be found. That might include turning off the lights when a factory was idle or even installing a switch so that lights could be turned off. Ecomagination sold solutions within GE, whether the project involved installing LED lights on a factory floor, recycling water at a nuclear facility or offering combined heat and power generation units at a plant in Australia. Within GE, managers began to be measured on how much energy savings they had achieved.

Impact: The company so far has saved $100 million from these measures and cut its greenhouse gas intensity — a measure of emissions against output — by 41%, according to the company’s sustainability report. The work inside GE became a proof of concept to external customers grappling with similar issues. Ecomagination targeted C-level executives to build this business, since most problems cut across divisions (improving energy efficiency, for example).

So far GE has invested $4 billion in this effort, much of it in research and development. But it reaped sales of $17 billion in 2008, up 21% from a year earlier, and is striving for $25 billion in sales in 2010.

Courtesy of Rio Tinto

Mining the Social Dimensions of Its Vast Operations

Backstory: Given its business of mining over 5 million tons of rock a day, Rio Tinto has a big footprint. The mines are expensive, take decades to fully develop and are not portable if something goes wrong. To reduce the political and economic risk and thus ensure steady returns, Rio Tinto has sought to win the backing of local communities, governments and the societies in which it operates.

Challenge: How does a company obtain a “social license” to operate, and nurture the local labor force that it needs?

Key moves: About a decade ago, Rio Tinto came up with the concept of working within communities on outreach and social and economic development. At the time, the company was developing a mine in Madagascar that was a source of contention with NGOs, which were worried about threats to biodiversity and the local community. Ninety percent of the island had already been cleared by farming, grazing and charcoal production; the mine was situated in one of the island’s last pristine regions. The challenge was to create an operation “respectful to the environment, respectful of our employees, that is seen to be sustainable,” said CEO Tom Albanese.

A plan was developed to protect the environment and create economic opportunities in the communities surrounding the project, setting up standards and goals for the company to meet. These in turn aligned with broader company policies on environmental stewardship, social well-being, governance and economic prosperity.

Putting this strategy to work, Rio Tinto created a long list of measures, including:

• Policies to protect biodiversity and water quality around mine locations
• Employment for aboriginal peoples living near its mines
• Training programs to shift employees from manual labor to skilled positions
• Plans for the day when mining would be done, seeking to prevent “ghost towns”
• Goals for greenhouse gas emissions and energy use

Impact: Through these coordinated initiatives, Rio Tinto has obtained what it calls a “social license to operate.” The company felt an urgency because it recognized a global brand risk if it operated without such a license. Rio Tinto also helped form the International Council on Mining & Metals, which encourages sustainable practices across the mining sector.

Courtesy of Better Placec

Better Place

Charging ahead in favorable regulatory climates.

Backstory: Better Place saw a future in electric cars and a demand for ways to recharge them. But how soon will electric charging stations make sense?

Challenge: What’s the fastest way to bring the electric “filling station” — a technology of the future — to market?

Key moves: Shai Agassi founded Better Place in 2007 on a straightforward rationale: Oil is finite, petroleum prices will inevitably rise and global warming has created the impetus to reduce carbon emissions. Electric cars will be part of the emissions-reduction answer, as long as they have refilling stations.

Still, there was a big gap between that knowledge and the kind of favorable policies needed to create a critical mass of electric cars, at least in most markets.

So Better Place decided to analyze which geographic areas had already made political and cultural strides toward favoring electric vehicles — in essence, “outsourcing” its work on regulatory policy change to communities in which it was already underway.

Among Better Place’s criteria for identifying hospitable locations for operation were that the public had to be receptive to electric cars, therefore creating an underlying market, and the government had to be creating a political climate to bring electric transportation to life. At the top of its list of nations was Israel, which wants all new cars to be electric by 2020. Urban centers in Israel are also less than 150 kilometers apart (about 90 miles), and 90% of car owners drive less than 70 kilometers per day, perfect for a short-haul electric vehicle. Add on gasoline taxes and a burgeoning wind industry, and Israel appeared the perfect habitat to nurture electric vehicles — and thus electric refilling stations.

Coming in a close second was Denmark, which has a strong green consumer movement and has committed to cutting carbon emissions by 21% by 2012. Better Place also partnered with the city of Copenhagen for the rapid deployment of electric recharging stations. In addition to these two leading-edge countries, the company is working in Australia, the United States (Los Angeles) and Japan to roll out recharging stations.

Impact: By identifying favorable locations, Better Place is accruing a competitive advantage in removing a major barrier to the widespread adoption of electric cars. It has also positioned itself to be the first to reap the benefits when battery pack recharging facilities and infrastructure are more universally accepted, by having proof of concept in hand in leading-edge nations.

Image courtesy of Wal-Mart

Repurposing the Supply Chain

Backstory: Wal-Mart, the largest retailer in the world, with over 7,800 stores, has been working steadily to improve sustainability. From installing green roofs to rolling out a more efficient trucking fleet, the company has moved forward internally, but now it is bringing its suppliers along.

Challenge: How do you green the supply chain?

Key moves: Wal-Mart has been pushing sustainability since adopting the strategy in 2005, establishing goals of being 100% fueled by renewable energy, producing zero waste and selling products that will sustain the environment.

So how does that happen? In one famous example, the company began working with Unilever plc in 2005 to sell concentrated laundry detergent in a 32-ounce container (equivalent to 100 ounces under a previous formulation). Consumers got a more powerful detergent in a smaller package. Three years after rollout, the new container had saved 80 million pounds of plastic resin, 430 million gallons of water and 125 million pounds of cardboard, according to a company fact sheet. More importantly, it became an industry standard, prompting other packaged goods companies to switch to concentrated detergent as well.

Wal-Mart’s zero waste initiative is also moving forward. The company, which is aiming to eliminate all its landfill waste by 2025, was able to reduce waste by 57% between 2008 and 2009. It did so by improving inventory management, increasing donations and ramping up recycling (including 25 billion pounds of cardboard).

Now it is striving to push these criteria down into the supply chain on a three-stage path. First, it wants suppliers to rate their products on sustainability criteria. Second, it wants to gather data on product life cycles. Third, it is creating a sustainability index that will increase transparency for the consumer.

The first initiative, rolled out earlier this year, involves a questionnaire sent to more than 100,000 suppliers. It polls them on four categories: their energy and greenhouse gas emissions, waste and quality initiatives, “responsibly sourced” materials and ethical production.

Products are also being measured through their life cycles. Collaborating with academics, retailers, NGOs, suppliers and government in a consortium, Wal-Mart’s goal is to build a global database of product information. As environmental business consultant Joel Makower wrote on his blog, http://makower.typepad.com, “the consortium’s mandate is to focus on how to evaluate products, which Wal-Mart hopes will become the basis for standards, ratings, or other product-level evaluations that it would use in its stores.”

That data will be used to develop an index consumers can use to evaluate products, though it’s still unclear how that information will be measured and presented. Nor is there a timeline for rolling out such an index.

Impact: Wal-Mart wants its sustainability index to be open to all, becoming a standard to measure and communicate the green credentials of a product and thus becoming “a tool for sustainable consumption.” In the process, the exercise of measurement itself may reap rewards in more efficient production, less waste and lower emissions — all of which are also cost-saving measures.

About the Author

Samuel Fromartz writes frequently on sustainability topics and is the author of Organic, Inc.: Natural Foods and How They Grew (Harcourt, 2006).

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Strategic Planning and Decision Making in State Departments of Transportation (2004)

Chapter: chapter four - two mini-case studies.

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

32 CHAPTER FOUR TWO MINI-CASE STUDIES Because the essence of strategic management entails the integration of numerous management and decision proc- esses around a strategic framework that sets the direction for moving into the future in a deliberate manner, it can be helpful to have an overview of how given organizations tie the various elements of the process together. Therefore, this chapter presents mini-case studies of two state DOTs at very different stages in developing their strategic man- agement processes. The first is the Pennsylvania Depart- ment of Transportation (PennDOT), a seasoned leader in the field, and the second is the Illinois Department of Transportation (IDOT), a relative newcomer to strategic planning. Although different in many respects, both cases illustrate carefully crafted approaches to strategic man- agement. PENNSYLVANIA DEPARTMENT OF TRANSPORTATION Strategic planning was first initiated at PennDOT in 1982. That initial effort produced a set of 24 major objectives for the department, with the strategies for achieving them to be developed by the relevant organizational units. It also led to the formation of the top-level strate- gic management committee (SMC), which still exists as the highest level policy-making body at PennDOT, and a requirement for the major divisions and the 11 engineering districts to develop 4-year business plans and accompany- ing budget requests designed to help accomplish the major objectives. Over the past 20 years the process has been repeated and enhanced at roughly 4-year intervals, coinciding with the beginning of new gubernatorial administrations. Along the way, participation in developing PennDOT’s strategic planning has broadened considerably, to include as many as 400 to 500 managers and employees in fleshing out stra- tegic objectives and actions as opposed to the 50 top man- agers who were involved in the initial exercise. Although the process became deeply imbedded in the organization, the first round of the Baldrige assessment process, a comprehensive approach to strengthening organ- izational effectiveness, which PennDOT began in 1998, re- vealed that the lack of an effective strategic planning proc- ess constituted a major performance gap in the department. This assessment showed that although strategic planning was taken very seriously at PennDOT, the resulting plans did not drive decisions and behavior in the department on a consistent basis, the plans were not used effectively to manage people and organizational units, and the plans were not necessarily tied to fiscal reality. Therefore, the secretary and the SMC chartered a gap-closure team to lead a 2-year effort to design and implement a revamped strategic planning process. Strategic Planning From this effort a continuing process emerged consisting of planning, implementation, and evaluation on an ongoing basis (Poister 2002). PennDOT’s strategic plan was devel- oped through a process that included the following five steps: 1. Leadership direction—Developing or revalidating the department’s mission, vision, values, and strategic focus areas. 2. Customer expectations—Identifying customer expec- tations as related to the strategic focus areas through analysis of survey data, focus groups, and key stake- holder interviews. 3. Customer service capabilities—Assessing the de- partment’s capacity to meet customer expectations through focus groups with employees, and separately with partners and suppliers, as well as analyzing relevant operating data. 4. Priority tasks and strategies—Developing and evalu- ating alternatives within each focus area to produce a set of high-level goals and strategic objectives, and the strategies for achieving them. 5. Plans and performance targets—Reconciling strategic objectives, performance measures, targets, and budgets to produce plans and strategies that were effective, technically realistic, and fiscally respon- sible. The 8 strategic focus areas, 13 high-level goals, and 21 strategic objectives that came out of this process in 1999 are summarized in Figure 8, which also identifies the own- ers and leaders for each strategic objective. The owners serve as the sponsors of these strategic initiatives, whereas the leaders take the technical lead in implementing them. The targets were meant to be aggressive, but not unrea- sonable, and they were established based on budget re- alities so that the owners, leaders, and other responsible managers would know where the required funding was coming from.

33 STRATEGIC FOCUS AREAS HIGH-LEVEL GOAL STRATEGIC OBJECTIVE OWNER/ LEADER Smoother Roads Improve ride quality by incorporating smooth road strategies into a comprehensive pavement program. Ryan/ Moretz Refine winter services best practices to achieve more timely and efficient response. Hoffman/ Wise Maintenance First Cost-Effective Highway Maintenance Investment Use life-cycle criteria as a tool for asset management and investment to reduce outstanding maintenance needs. Hoffman/ Christie Improve customers’ experiences of our facilities by enhancing beautification efforts and reducing roadside debris. Yearick/ Peda & Hull Balance Social and Environmental Concerns Develop timely transportation plans, programs, and projects that balance social, economic, and environmental concerns. King/ Schreiber Quality of Life Demonstrate Sound Environmental Practices Implement a strategic environmental management program that adopts sound practices as our way of doing business. Ryan/ Kober Delivery of Transportation Products and Services Meet project schedules and complete work within budgeted costs. Ryan/ Azzato Implement congestion management strategies that limit work zone restrictions, address incident management, and reduce corridor travel delays. Hoffman/ Koser Mobility and Access Efficient Movement of People and Goods Implement Keystone Corridor rail passenger improvements as a pilot multi-modal initiative. Peltz/ Smedley Improve Customer Satisfaction Implement a department-wide systematic process to continue to improve customer satisfaction. Serian/ Cross Customer Focus Improve Customer Access to Information Improve information access by providing quality customer contacts across the organization with special attention to driver and vehicles inquiries. Serian/ Cleaver FIGURE 8 PennDOT strategic focus areas, high-level goals, and strategic objectives.

34 STRATEGIC FOCUS AREAS HIGH-LEVEL GOAL STRATEGIC OBJECTIVE OWNER/ LEADER Map key processes and improve those with the most strategic impact on business results. Tartline/ Harris Innovation and Technology World Class Process and Product Performance Deliver business results through planned enterprise-focused information technology. Tartline/ Reed Implement cost-effective highway safety improvements at targeted high-crash/fatality locations. Ryan/ Bryer Safer Travel Upgrade safe driving performance through education and enforcement initiatives. Yearick/ Seitz & Bryer Implement prevention strategies to reduce the employee injury rate. Tartline/ Dennin Safety Safer Working Conditions Implement prevention strategies to reduce the vehicle accident rate. Tartline/ Dennin Provide employees with the tools and expectations to communicate effectively to facilitate leadership at all levels. Yearick/ OCCR Internal Com. Mgr. Leadership at All Levels Improve Leadership Capabilities and Work Environment Develop employee skills and capabilities through a structured process of instruction, practice and leadership opportunities. Tartline/ Harris Implement a methodology to involve partners and stakeholders more meaningfully in PennDOT activities. Zimmerman/ Cvejkus Relationship Building Cultivate Effective Relationships Strengthen the efficiency and effectiveness of transportation grant programs using the methodology for partners and stakeholders. Voras/ Brown FIGURE 8 (Continued).

35 Scorecard The strategic plan that emerged in early 2000 from the im- position of fiscal reality onto proposed strategic objectives and targets is summarized in a scorecard that presents the goals and objectives, performance measures, and targets. There are actually two versions of the scorecard: the secre- tary’s scorecard and the SMC scorecard. The SMC score- card is used internally to manage the strategic agenda. It is organized by the strategic objectives and shows a measure and a target, or multiple measures and targets, for each of the 21 strategic objectives. The secretary’s version of the scorecard, shown in Figure 9, provides a simpler format structured by the 13 high-level goals. Although the SMC scorecard is used internally to manage the plan, the secre- tary’s version is oriented more toward public consumption, focusing attention more generally on PennDOT’s overall goals. Cascading Plans The department’s scorecard provides a framework for de- veloping organizational scorecards and business plans. Strategic planning at PennDOT is cascaded down into the organization by requiring the 11 districts and 6 deputates to develop their own strategic objectives and scorecards driven by the enterprise-level strategic agenda. These or- ganization scorecards, which must be approved by the SMC, are built, tested, and justified with the same five-step planning process used at the departmental level. The lead- ership direction comes directly from the strategic objec- tives in the enterprise-level scorecard that relate to the di- vision or district’s responsibilities, along with the underlying rationale that produced them. Each of these or- ganizational units must establish objectives, measures, and targets that contribute to those in the enterprise-level score- card that the organization “owns,” although it can add other “indirectly aligned” objectives as well. Business Planning Business planning is the vehicle PennDOT uses to align organizational units’ activities and priorities with the enter- prise-level strategic agenda. Thus, to advance the depart- ment’s strategic plan, each of the districts and deputates develops business plans designed in part to accomplish its own scorecard objectives. (Some central office bureaus and county maintenance units develop scorecards and business plans as well; however, this is not required at this point.) All of PennDOT’s strategic objectives are implemented through the 4-year business plans, which are updated an- nually. The business plans, which encompass all core func- tions and routine activities as well, present planned efforts for each objective in the organizational scorecards, spelling out exactly how the district or deputate will accomplish a given objective in terms of tasks, work programs, projects, action items, and schedules. This is important because the owners and leaders, and responsible managers at subunit levels, have considerable flexibility as to how they plan to accomplish certain objectives. Resource Allocation Some of PennDOT’s strategic initiatives, primarily those relating to IT, are funded separately through one-time allo- cations from special funds held expressly for that purpose. However, most strategic initiatives are supported through the normal budgeting process, which allocates resources to organizational units for particular uses. Therefore, the business plans all contain specific budgets that invest re- sources in planned actions responding to strategic objec- tives as well as other activities. This requires the districts and deputates preparing business plans to tie their budget request directly to strategic initiatives and to make sure that their plans and work programs are fiscally realistic. When the SMC approves business plans and their associ- ated budgets, usually after some degree of revision and ne- gotiations with respect to targets, programs, and budgets, these managers can be confident that they will have suffi- cient resources to achieve the targets for which they will be held accountable. Performance Management For many years PennDOT has used a management-by- objectives participative approach to providing direction and control over the work of individual managers and em- ployees. In its current form, the more formal written per- formance contracts have been shortened and incorporated in annual employee reviews (EPRs) as “expected work re- sults,” which are grafted onto the more constant annual job descriptions. With the new strategic management process, the EPRs are driven primarily by the strategic agenda, so that individuals who are owners or leaders of strategic ob- jectives, or otherwise identified as having some responsi- bility for them, have those objectives and their attendant action items, along with accompanying performance meas- ures, embodied in the EPRs. This is the case at the enterprise level, but also with the organizational scorecards and associated business plans. Whether or not business plans are used below the district or deputate level, managers at many levels negotiate with subordinates to contribute specified efforts toward accom- plishing strategic objectives and hold them accountable for those results through quarterly performance reviews. Therefore, by tying individuals’ expected work results to strategic objectives, PennDOT’s performance management

36 Strategic Focus Area High-Level Growth Pledge to Customers How Success Will be Measured? External (Customers) Internal (Support) Measurement Tool (Metric) Target 2002 2005 Smoother roads Better ride conditions on major (NHS) highways X International Roughness Index (IRI) 104 for NHS roads 99 for NHS roads MAINTENANCE FIRST Cost-effective highway maintenance investment Reduction in outstanding maintenance needs X Condition assessment for highways and bridges Complete asset management system Meet target established in 2002 Balance social, economic, and environmental concerns Timely decisions based on public and technical input on project impacts X Highway project environmental approvals meeting target dates 75% meeting target dates 90% meeting target dates QUALITY of LIFE Demonstrate sound environmental practices Attaining world class environmental status X ISO 14001 environmental criteria Implement a pilot program Meet ISO standards Delivery of transportation products and services Honoring commitments on scheduled transportation projects X Dollar value of 12-year program construction contracts initiated $1.3 billion per year $1.4 billion per year MOBILITY and ACCESS Efficient movement of people and goods Reduced travel delays X 2002–peak period work zone lane restrictions 2005–travel delays on selected corridors Set baseline in 2000 for reduced 2002 lane restrictions Meet target set in 2002 to reduce corridor travel delays Improve customer satisfaction Competitiveness on Malcolm Baldrige Criteria for Excellence X Baldrige Organizational Review Package Scores— Customer Criteria 80 department average 100 department average CUSTOMER FOCUS Improve customer access to information Prompt answers to telephone inquiries X Answer rate of calls to the Customer Call Center 94% of calls answered 94% of calls answered INNOVATION and TECHNOLOGY World class process and product performance Competitiveness on Malcolm Baldrige Criteria for Excellence X Baldrige Organizational Review Package Scores—All Criteria 500 level met by lead organizations 600 level met by lead organizations Safe travel Fewer fatalities from highway crashes X Number of fatalities per year 5% reduction in fatalities 10% reduction in fatalities SAFETY Safer working conditions Fewer work- related injuries X Injury rate per 100 employees working 1 year 8.25% injury rate 7.5% injury rate LEADERSHIP at all LEVELS Improve leadership capabilities and work environment Positive trends in employee feedback on job-related factors X Organizational Climate Survey (OCS)—Selected Items 48% positive rating 54% positive rating RELATIONSHIP BUILDING Cultivate effective relationships Effectiveness of partnerships to achieve business results X PennDOT/partner business effectiveness survey scores Establish metric, baseline and target Meet target established in 2002 FIGURE 9 PennDOT scorecard of measures.

37 process uses the EPRs to instill individual responsibility for advancing the strategic agenda deep into the depart- ment. Dashboards and Scorecards Basically, the scorecards are used to manage PennDOT’s strategic agenda at multiple levels. The districts and depu- tates are responsible for reviewing their scorecards on a quarterly basis, and monitoring the performance measures for each objective against the targets and milestones that have been set. Adjustments in programs, work plans, as- signments, and resource allocations are made as necessary to keep their objectives on track. As the embodiment of PennDOT’s strategic agenda, the SMC scorecard contains the most important set of per- formance measures to monitor in terms of guiding the de- partment into the future. However, the SMC also con- cluded that focusing solely on the scorecard could be problematic in that many goals, processes, and functions that are important to the department do not appear on it. Therefore, the SMC decided to develop and monitor a dashboard in addition to the scorecard. In contrast to the change-oriented scorecard, the dashboard tracks a number of measures that pertain to the department’s core functions; important activities and busi- ness results it must produce on an ongoing basis. Although there is considerable overlap between the two, the dashboard is concerned more with more immediate per- formance, whereas the scorecard is more future oriented. Thus, the dashboard focuses on ongoing operations rather than strategic initiatives, and tends to be more input and output oriented, whereas the scorecard is more oriented to outcomes and results. PennDOT’s dashboard, which uses a green light/yellow light/red light format, is reviewed on a monthly basis using a management-by-exception approach. As is the case with the SMC, the districts, deputates, and other units that have scorecards also have complementary dashboards for track- ing the performance of their core functions. Dashboards as well as scorecards are required in business plans, because the districts and deputates cannot afford to lose track of their core functions while they focus on implementing their strategic agendas. Thus, the scorecards align PennDOT’s change-oriented objectives to create a direct path from the department-wide strategic agenda through the business plans to work units and individual employees. Conversely, the dashboards are more daily-work oriented to create a di- rect path from the individual employees and work units through the organization dashboards to department-level core business priorities or objectives. Reviewing and Revising the Strategic Agenda The SMC reviews progress in achieving the strategic ob- jectives identified in “Moving Pennsylvania Forward” on a rotating basis, examining a few each month over a 6- month period, with progress on each objective reviewed every 6 months. The more detailed SMC scorecard is the principal reporting mechanism for tracking the suc- cess of the business plans in advancing the strategic agenda. The SMC scorecard, as opposed to the secretary’s version of the enterprise-level scorecard, tracks progress on each strategic objective, not the more general goals, and often incorporates multiple measures for a given strategic objective. Therefore, the owners and leaders prepare semi-annual progress reports for the SMC on each objective as it comes up on the rotating schedule. They are held accountable by the secretary and the SMC for achieving department-wide results on their strategic objectives, and their progress along these lines also feeds into their quarterly EPRs and thus their own individual annual performance appraisals. In turn, the deputy secretaries and other executives who are the owners and leaders of strategic objectives track those same indicators, or other appropriate ones, for organiza- tional units under their direction to hold those units respon- sible for their piece of the plan. Each December, the SMC conducts a systematic review of the entire enterprise-level scorecard to determine whether and how it might need to be updated. For exam- ple, if a particular strategic initiative has been completed, the SMC will probably decide to remove it from the score- card. Alternatively, the SMC may decide, perhaps based on its continued scanning of the external environment, that new strategic objectives are needed. For example, in De- cember 2001, two additional strategic objectives address- ing post-September 11 security concerns were added to the scorecard. Such new objectives are developed by technical teams of managers and employees at the direction of the SMC and they follow the same process that was used to develop the original scorecard objectives. Finally, the SMC may consider changing the measure or the targets that have been defined to track the progress of particular strategic objectives. To summarize, at Penn DOT strategic management is an ongoing process, moving through a continuous cycle of planning, implementation, and evaluation. The enterprise- level strategic agenda, summarized in the departmental scorecard, is implemented through scorecards and business plans developed by the districts and deputates, and in some cases by county maintenance units and central office bu- reaus. These organizations review their scorecards on a quarterly basis to manage with the measures and ensure that they achieve scorecard targets. The district and depu-

38 tate business plans, containing both organization score- cards and dashboards, must be updated annually and ap- proved by the SMC to ensure alignment with enterprise- level strategic objectives. At the departmental level, the SMC monitors its score- card on an ongoing basis and annually reviews the overall strategic agenda, sometimes making modifications based on current external and internal scan data in addition to the department’s progress in achieving “Moving Pennsylvania Forward” scorecard targets. Periodically, at roughly 4-year intervals coinciding with changes in administrations, Penn- DOT has undertaken more comprehensive efforts to update its strategic agenda so as to respond more deliberately to changing trends and forces, newly emerging issues, new customer demands, and shifting political mandates. Administrative Transitions PennDOT’s strategic planning process has evolved through the administrations of three governors and has become well institutionalized at this point. With a new governor and a new secretary of transportation taking office in Janu- ary 2003, the stage was set for possible additional refine- ments and further direction setting through strategic plan- ning. Initially, the new secretary has decided to retain the process, and the SMC has reviewed the scorecard and made some changes in the strategic objectives in time to guide the current round of business planning and budget development throughout the organization. The intention then is to use this coming year to undertake a more com- prehensive effort to update the strategic plan, and the proc- ess may be further refined along the way. ILLINOIS DEPARTMENT OF TRANSPORTATION IDOT initiated strategic planning activities in early 2000. Although the secretary of transportation had considered the possibility earlier, a blanket mandate from the governor in 1999 provided the leadership commitment from the top of state government that the secretary felt was needed to make strategic planning effective. The effort was led by the deputy secretary and the assistant to the secretary for strategic planning, working with a 30-member strategic planning team, and it was facilitated by an external con- sulting group. Strategic Plan Working with the balanced scorecard approach, the plan- ning team completed the enterprise-level strategic plan in a few months, and it was approved by the department’s ex- ecutive committee in July 2000. As shown in Figure 10, the original strategic plan included 14 objectives spread across the four quadrants of the public-sector balanced scorecard, which substitutes a “mission effectiveness” or “program delivery” quadrant for the “financial” quadrant found in private-sector scorecards. For each of these objec- tives, one or more types of performance measures were identified for tracking success. In addition, for each strate- gic objective, targets or more specific objectives were identified, whose accomplishment would lead to achieving the overall strategic objective. Furthermore, for each of these targets, the plan identifies specific initiatives to be undertaken to accomplish the target. This specification of measures, targets, and initiatives is illustrated in Figure 11 for IDOT’s objective concerning improved safety for the traveling public and department employees. Cascading Strategic Plans Once the enterprise-level strategic plan was approved, IDOT began training division and office teams made up of cross sections of managers and employees in strategic planning and use of the balanced scorecard model. These groups then set about developing their own strategic plans in support of the department-wide plan. As an interesting process innovation, a mobile laptop system was employed to help these teams develop their strategic plans. This collaborative software, supported by a wireless system of lap- top computers, serves as an “electronic flipchart” in facili- tated sessions; helps groups in brainstorming, analyzing, and processing information; and greatly reduces the meet- ing time required to accomplish particular planning tasks. As of April 2003, IDOT had completed 28 balanced scorecards, including those for the 4 major divisions, 8 central office bureaus, 6 staff support offices, and 9 re- gional highway districts, in addition to the department’s overall enterprise-level scorecard. Each of these scorecards is reviewed and must be approved by the next level up in the chain of command. For instance, district engineers take the lead in selecting members of their strategic planning teams and in developing their scorecards, but these teams and plans must be approved by the director of the division of highways. This ensures alignment of the scorecards de- veloped by these organizational units with the depart- ment’s overall scorecard. Several of these scorecards have now been revised and updated from their original versions. All of IDOT’s scorecards are reviewed at least annually and updated as appropriate. For example, although the en- terprise-level scorecard originally consisted of 14 objec- tives, it then added one new objective for a total of 15, and now is likely to be reduced to 13 objectives through the successful completion of one and the combining of two others. These scorecards constitute strategic plans at the division, office, bureau, and district levels, all within the

39 CUSTOMER SATISFACTION & PARTNERSHIPS LEARNING & GROWTH C1. Expedite the delivery of work and services to minimize public inconvenience. L1. Attract, develop and retain a diverse, quality workforce—tools include cohesive employee recognition program. C2. Continue to assess customer satisfaction and needs—to drive process improvement. L2. Develop knowledge management/sharing process and create an environment that encourages innovation. C3. Improve safety for the traveling public and Department employees. L3. Establish consistent internal communications to ensure all employees have access and the ability to share information about IDOT activities and progress. C4. Improve proactive external communications— increase public understanding of IDOT objectives programs, and projects. L4. Revitalize a department professional identity. BEST BUSINESS PRACTICES DELIVERY OF PROGRAMS AND SERVICES B1. Document, evaluate, and improve business processes. P1. Assess and/or establish levels of delivery of programs and services. B2. Acquire and allocate resources (including money, people, technology, and capital assets) based on demonstrated needs—evaluate investment strategy and use to ensure mission accomplishment. P2. Design and develop a mechanism to better integrate and coordinate the delivery of programs and services—reduce overlap. B3. Create an organizational environment where leadership is fostered at all levels in an effort to improve decision making. P3. Develop program/service risk assessment process relating to external factors (examples of external factors are special interest groups, resources, and components necessary for the completion of the program.) P4. Assist appropriate agencies to ensure ongoing security of transportation services in the face of credible threats or attacks. FIGURE 10 IDOT Enterprise Plan at May 31, 2002. framework of the overall enterprise-level strategic plan. Most of these units also develop their own annual work programs, and the scorecards are a driving force in devel- oping the work programs. Assigning Responsibilities IDOT assigns lead responsibility for several elements in its strategic plans. First, each of the scorecards is assigned a champion for the entire plan. Typically, this is the head of the organizational unit for which the plan has been de- signed (i.e., division or office director, district engineer, or bureau chief) or his/her designee. Second, each objective on a scorecard has a champion or leader to coordinate and report on progress on that objective as needed. Optionally, the targets specified for each objective may also have target managers. Finally, most objectives and/or targets have multiple initia- tives to help guide actions that will accomplish the objec- tives and targets. Each initiative is assigned an initiative manager who takes the lead in developing action plans for implementing the plans as well as achieving the targets.

40 To be measured by: 1. Change in internal attitudes and understanding surrounding safety. 2. Percent of reported work zone accidents that involved noncompliance with IDOT safety policy. 3. Percent of development of the General Accident Information System against established milestones. 4. Number of safety innovations implemented during the review period. 5. Percent change in vehicle crashes involving fatalities and/or serious injury. To be accomplished through: Target No. 1: Establish consistency and internal cohesion in the department’s employee safety focus: Initiatives: 1. Conduct review of current safety policy. 2. Review internal structure and recommend improvements if warranted [i.e., zone activities (internal and external)]. 3. Establish employee attitude/understanding baseline. Target No. 2: Examine and improve (internal and external) safety information flow: Initiatives: 1. Rework and implement the General Accident Information System (GAI). 2. Educate the public on a continuing basis. Target No. 3: Imbed safety in all department processes: Initiatives: 1. Develop process to find, share, and implement innovative ideas on safety. 2. Integrate safety into all relevant process steps under Objective B1. FIGURE 11 Objective C3: Improve safety for the traveling public and department employees. (Source: Illinois DOT.) At each level, these champions and managers are re- sponsible for both coordinating efforts and reporting on progress in achieving their strategic objectives. In essence, the hierarchy of strategic plan implementation and report- ing mirrors the traditional top-down hierarchy of the whole agency, which is comfortable for most managers and em- ployees. The difference is that implementation of the plans for the most part relies on teams on which individual rank has little meaning to the process. The initiative managers put together cross-functional or multidisciplinary teams as needed to implement their stra- tegic initiatives. Moving away from the command and con- trol management style that traditionally has dominated IDOT, these initiative managers are encouraged to com- municate across chains of command, if necessary, to achieve their objectives. However, they are required to re- port through the normal chains of command to ease possi- ble concerns about unsupervised activities taking place. At present, these individual-level assignments to take additional responsibilities as objective coordinators, target managers, or initiative managers are completely voluntary, and although they are recognized as an important part of the employee’s duties, they do not lead directly into the normal annual employee evaluation process. Rather, moti- vation for attending to these assignments and performing effectively in these roles is based primarily on leadership and communication, a sense of professional pride, peer support, and a highly visible process for reporting success or failure in implementing strategic initiatives and achiev- ing strategic objectives. IDOT’s assistant to the secretary for strategic planning indicated that assigning individual responsibility and fol- low-up on implementation activities is crucial to the suc- cessful completion of strategic initiatives. Eliciting com- mitments from individuals regarding specific tasks in the plan, emphasizing team work and collective responsibility, and then conducting quarterly, semi-annual, or annual re- views and updates in public settings serves to provide a powerful incentive for target managers and initiative man- agers to ensure that these strategic initiatives are imple- mented effectively. Performance Measurement To track overall success, IDOT uses a few general per- formance measures for each objective and encourages the use of more focused measures at each successive lower level of planning. The teams created to implement strategic initiatives use outcome measures derived from ongoing motorist surveys, employee surveys, crash reports, average daily travel counts, and so forth, to show long-term trends in bottom line results. Other more output-oriented meas-

41 ures (e.g., the number or percent of targeted process re- views completed) are used to track the efforts expended on strategic initiatives, assess needed changes in tactics, or understand when manpower shortages or other factors are slowing down progress. The assistant to the secretary for strategic planning usu- ally suggests performance measures at the outset of a new project; however, the teams have the option of rejecting them as long they have replacement measures that are bet- ter suited to the purpose. The general philosophy regarding performance measurement at IDOT is to make the meas- ures as nonthreatening as possible, rather than emphasize accomplishment of objectives; identify what is going well versus what may need to be changed. However, once agreement is reached regarding objectives, initiatives, im- plementation plans, and performance measures, tracking the measures and reporting performance data provides a powerful accountability tool for ensuring that a high prior- ity is placed on achieving the strategic objectives. Budget Linkages IDOT’s strategic planning process for the most part is loosely linked to budgeting. When additional financial re- sources are necessary, funds are earmarked in the budgets prepared by the division, office, bureau, or district that is responsible for implementing a particular strategic initia- tive. On the other hand, budget realities are often a major factor in determining whether the department can more forward with proposed strategic objectives, planned initia- tives, or recommendations from an implementation team in the first place. However, given the nature of most of IDOT’s strategic objectives, the budget is often not a major issue, even in a period of tighter fiscal constraints. Most of the strategic objectives cut across organizational lines and focus on or- ganization development or process improvement rather than the capital program or direct investment in the trans- portation system, meaning that the costs of these initiatives are typically measured in man-hours rather than dollars. Many of the activities derived from these initiatives; for example, process or program reviews, or on-the-job train- ing by peers and supervisors, can be completed using exist- ing personnel, and with appropriate time management techniques they can be cost-neutral and not require addi- tional funds. Conversely, the strategic plan does help IDOT delineate and prioritize additional spending in some areas, particu- larly with respect to IT. Although the department does not have a strategic objective that focuses on IT per se, virtu- ally all of the process improvements that are called for by several of the objectives require technological improve- ments designed to upgrade communication and informa- tion, save time, and/or reduce paperwork or other costs. In addition, IDOT’s Bureau of Information Technology has developed its own scorecard to further the improvement of IT processes and services in support of strategic objectives in higher-level plans. Through the strategic planning proc- ess IDOT identifies needs for additional IT that substan- tially exceed currently available budget levels. Rather than relying on the standard incremental approach, the ongoing planning work provides a systematic approach to assem- bling a priority list of IT acquisitions with fairly firm costs that the department can readily promote in future budget cycles. Evaluation of the Planning Process A cost-benefit analysis conducted in the spring of 2002 (SAIC 2002), and random surveys of both motorists and IDOT employees conducted in 2001, 2002, and 2003, show that the results of the strategic planning activities are paying off for the transit department and Illinois taxpayers. The benefit-cost analysis projects that all start-up costs of the strategic planning initiative, including employee time for training, planning, and implementation, will have been recovered by early 2004, primarily through process im- provements that have come out of the strategic plan. An in-house survey completed in April 2003, indicated that more than 40% of IDOT employees believe that goals and objectives are clearer as a result of the strategic plan- ning initiative. The survey also indicated that nearly two- thirds of IDOT employees believe that worker productivity and job satisfaction have improved over the 36 months that the strategic initiative has been in place. Correspondingly, annual surveys of the motoring public, conducted by the University of Illinois at Springfield, showed that a majority of motorists believe that IDOT is doing a good or excellent job, particularly in terms of roadway maintenance, high- way construction and repair, travelers’ services, and em- ployee conduct on the job. New Administration At the beginning of 2003, with a new governor in Illinois, a new secretary of transportation assumed direction of IDOT and, for the most part, assembled a new executive team. However, the new secretary also decided to retain the strategic planning process and the top staff personnel most closely associated with it, even though the new administra- tion may alter strategic priorities. Therefore, strategic planning has survived its first administrative transition at IDOT, and this is expected to help provide a sense of con- tinuity in a department that has seen substantial turnover in personnel over the past several years.

42 COMPARISONS These two departments were selected for mini-case studies as part of this synthesis because they illustrate both simi- larities and differences in their approaches to strategic management. At this time, PennDOT has been involved in strategic management for some 20 years and has worked to sharpen and deepen the process to ensure positive results in achieving its strategic goals and objectives. Currently, PennDOT has a mature strategic management process that affords a high degree of alignment among all the elements shown in Figure 1. By way of contrast, IDOT initiated its first strategic planning efforts in 2000, and it may not, like PennDOT, have all the elements in place. However, IDOT also presents a noteworthy case, because it is installing a very deliberate strategic management process, which en- sures follow-through in implementing and evaluating stra- tegic plans. Driving Decisions Both PennDOT and IDOT have developed strategic plans for their organizations that are summarized succinctly in scorecards. Both departments then require districts and di- visions to develop their own strategic plans or scorecards within the framework of the overall corporate-level strate- gic plan and, in both cases, these lower-level scorecards must be approved by higher-level management. However, PennDOT also requires these units to develop 4-year busi- ness plans, updated annually, which are the principal vehi- cles for driving the department’s strategies down into the operations of the organization. IDOT, in contrast, relies primarily on action plans developed for individual strategic objectives and/or targets as the means of implementing strategic plans at each level of the organization. Building Ownership Both PennDOT and IDOT place great importance on as- signing individual executives or managers to take the lead responsibility for implementing strategies and achieving strategic objectives. Whereas PennDOT identifies owners and leaders for each strategic objective, however, the IDOT process is more elaborate, with owners assigned for overall strategic plans, strategic goals, objectives, targets, and strategic initiatives. This is consistent with IDOT’s re- liance on the action plans developed by these owners and the teams they put together for implementing the depart- ment’s strategic objectives. Interestingly, for PennDOT, the responsibilities assigned to individuals for implement- ing strategic plans lead into these individuals’ annual per- formance appraisals, whereas for IDOT these are consid- ered to be “additional responsibilities,” which do not. Allocating Resources Many of the strategic initiatives established by both of these departments can be supported with existing budgetary re- sources, although PennDOT uses its business planning proc- ess to work these initiatives into the operating budgets of or- ganizational units, whereas IDOT has numerous labor- intensive initiatives whose costs are covered principally by as- signing individuals and teams to work on them. The two de- partments also differ with respect to strategic initiatives that entail additional direct monetary investment, such as substan- tial upgrades in IT. Whereas PennDOT estimates the cost of such initiatives as part of the planning process and earmarks funding sources at that point, IDOT establishes the initiative as part of the planning process and then, as part of the im- plementation process, begins to identify costs and priori- tize investments to be made as funds become available. Evaluating Performance Each of these transportation departments establishes per- formance measures for each strategic objective, including typically a mix of output and outcome indicators. For each of its measures, PennDOT sets numerical targets to be achieved within a given time frame, whereas IDOT identifies the measure and preferred direction of movement, but does not set numerical targets. Both departments, however, empha- size the importance of performance measures in managing their strategic agendas, and both review the performance data generated to track progress in implementing strategic initiatives and flag problems that need to be addressed. System Maintenance and Enhancement Both PennDOT and IDOT have an individual assigned on a full-time basis to support its strategic management proc- ess, providing staff support at the executive level and gen- erally facilitating development and use of the process. Both departments have also provided training to managers re- garding strategic planning, performance measurement, and related elements of strategic management. In addition, both have commissioned evaluations of their strategic manage- ment processes by consultants to help strengthen them. Fi- nally, new administrations have recently taken office in both departments, and in each case the new executives have decided to adopt the in-place strategic management processes and use them to revalidate or redirect future di- rections and priorities for these organizations.

TRB’s National Cooperative Highway Research Program (NCHRP) Synthesis 326: Strategic Planning and Decision Making in State Departments of Transportation examines state and provincial transportation departments' experience with strategic planning and synthesizes current approaches to linking strategic planning with other decision-making processes, including operational and tactical planning, resource allocation, performance management, and performance measurement.

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Top 40 Most Popular Case Studies of 2017

We generated a list of the 40 most popular Yale School of Management case studies in 2017 by combining data from our publishers, Google analytics, and other measures of interest and adoption. In compiling the list, we gave additional weight to usage outside Yale

We generated a list of the 40 most popular Yale School of Management case studies in 2017 by combining data from our publishers, Google analytics, and other measures of interest and adoption. In compiling the list, we gave additional weight to usage outside Yale.

Case topics represented on the list vary widely, but a number are drawn from the case team’s focus on healthcare, asset management, and sustainability. The cases also draw on Yale’s continued emphasis on corporate governance, ethics, and the role of business in state and society. Of note, nearly half of the most popular cases feature a woman as either the main protagonist or, in the case of raw cases where multiple characters take the place of a single protagonist, a major leader within the focal organization. While nearly a fourth of the cases were written in the past year, some of the most popular, including Cadbury and Design at Mayo, date from the early years of our program over a decade ago. Nearly two-thirds of the most popular cases were “raw” cases - Yale’s novel, web-based template which allows for a combination of text, documents, spreadsheets, and videos in a single case website.

Read on to learn more about the top 10 most popular cases followed by a complete list of the top 40 cases of 2017.  A selection of the top 40 cases are available for purchase through our online store . 

#1 - Coffee 2016

Faculty Supervision: Todd Cort

Coffee 2016 asks students to consider the coffee supply chain and generate ideas for what can be done to equalize returns across various stakeholders. The case draws a parallel between coffee and wine. Both beverages encourage connoisseurship, but only wine growers reap a premium for their efforts to ensure quality.  The case describes the history of coffee production across the world, the rise of the “third wave” of coffee consumption in the developed world, the efforts of the Illy Company to help coffee growers, and the differences between “fair” trade and direct trade. Faculty have found the case provides a wide canvas to discuss supply chain issues, examine marketing practices, and encourage creative solutions to business problems. 

#2 - AXA: Creating New Corporate Responsibility Metrics

Faculty Supervision: Todd Cort and David Bach

The case describes AXA’s corporate responsibility (CR) function. The company, a global leader in insurance and asset management, had distinguished itself in CR since formally establishing a CR unit in 2008. As the case opens, AXA’s CR unit is being moved from the marketing function to the strategy group occasioning a thorough review as to how CR should fit into AXA’s operations and strategy. Students are asked to identify CR issues of particular concern to the company, examine how addressing these issues would add value to the company, and then create metrics that would capture a business unit’s success or failure in addressing the concerns.

#3 - IBM Corporate Service Corps

Faculty Supervision: David Bach in cooperation with University of Ghana Business School and EGADE

The case considers IBM’s Corporate Service Corps (CSC), a program that had become the largest pro bono consulting program in the world. The case describes the program’s triple-benefit: leadership training to the brightest young IBMers, brand recognition for IBM in emerging markets, and community improvement in the areas served by IBM’s host organizations. As the program entered its second decade in 2016, students are asked to consider how the program can be improved. The case allows faculty to lead a discussion about training, marketing in emerging economies, and various ways of providing social benefit. The case highlights the synergies as well as trade-offs between pursuing these triple benefits.

#4 - Cadbury: An Ethical Company Struggles to Insure the Integrity of Its Supply Chain

Faculty Supervision: Ira Millstein

The case describes revelations that the production of cocoa in the Côte d’Ivoire involved child slave labor. These stories hit Cadbury especially hard. Cadbury's culture had been deeply rooted in the religious traditions of the company's founders, and the organization had paid close attention to the welfare of its workers and its sourcing practices. The US Congress was considering legislation that would allow chocolate grown on certified plantations to be labeled “slave labor free,” painting the rest of the industry in a bad light. Chocolate producers had asked for time to rectify the situation, but the extension they negotiated was running out. Students are asked whether Cadbury should join with the industry to lobby for more time?  What else could Cadbury do to ensure its supply chain was ethically managed?

#5 - 360 State Real Options

Faculty Supervision: Matthew Spiegel

In 2010 developer Bruce Becker (SOM ‘85) completed 360 State Street, a major new construction project in downtown New Haven. Just west of the apartment building, a 6,000-square-foot pocket of land from the original parcel remained undeveloped. Becker had a number of alternatives to consider in regards to the site. He also had no obligation to build. He could bide his time. But Becker worried about losing out on rents should he wait too long. Students are asked under what set of circumstances and at what time would it be most advantageous to proceed?

#6 - Design at Mayo

Faculty Supervision: Rodrigo Canales and William Drentell

The case describes how the Mayo Clinic, one of the most prominent hospitals in the world, engaged designers and built a research institute, the Center for Innovation (CFI), to study the processes of healthcare provision. The case documents the many incremental innovations the designers were able to implement and the way designers learned to interact with physicians and vice-versa.

In 2010 there were questions about how the CFI would achieve its stated aspiration of “transformational change” in the healthcare field. Students are asked what would a major change in health care delivery look like? How should the CFI's impact be measured? Were the center's structure and processes appropriate for transformational change? Faculty have found this a great case to discuss institutional obstacles to innovation, the importance of culture in organizational change efforts, and the differences in types of innovation.

This case is freely available to the public.

#7 - Ant Financial

Faculty Supervision: K. Sudhir in cooperation with Renmin University of China School of Business

In 2015, Ant Financial’s MYbank (an offshoot of Jack Ma’s Alibaba company) was looking to extend services to rural areas in China by providing small loans to farmers. Microloans have always been costly for financial institutions to offer to the unbanked (though important in development) but MYbank believed that fintech innovations such as using the internet to communicate with loan applicants and judge their credit worthiness would make the program sustainable. Students are asked whether MYbank could operate the program at scale? Would its big data and technical analysis provide an accurate measure of credit risk for loans to small customers? Could MYbank rely on its new credit-scoring system to reduce operating costs to make the program sustainable?

#8 - Business Leadership in South Africa’s 1994 Reforms

Faculty Supervision: Ian Shapiro

This case examines the role of business in South Africa's historic transition away from apartheid to popular sovereignty. The case provides a previously untold oral history of this key moment in world history, presenting extensive video interviews with business leaders who spearheaded behind-the-scenes negotiations between the African National Congress and the government. Faculty teaching the case have used the material to push students to consider business’s role in a divided society and ask: What factors led business leaders to act to push the country's future away from isolation toward a "high road" of participating in an increasingly globalized economy? What techniques and narratives did they use to keep the two sides talking and resolve the political impasse? And, if business leadership played an important role in the events in South Africa, could they take a similar role elsewhere?

#9 - Shake Shack IPO

Faculty Supervision: Jake Thomas and Geert Rouwenhorst

From an art project in a New York City park, Shake Shack developed a devoted fan base that greeted new Shake Shack locations with cheers and long lines. When Shake Shack went public on January 30, 2015, investors displayed a similar enthusiasm. Opening day investors bid up the $21 per share offering price by 118% to reach $45.90 at closing bell. By the end of May, investors were paying $92.86 per share. Students are asked if this price represented a realistic valuation of the enterprise and if not, what was Shake Shack truly worth? The case provides extensive information on Shake Shack’s marketing, competitors, operations and financials, allowing instructors to weave a wide variety of factors into a valuation of the company.

#10 - Searching for a Search Fund Structure

Faculty Supervision: AJ Wasserstein

This case considers how young entrepreneurs structure search funds to find businesses to take over. The case describes an MBA student who meets with a number of successful search fund entrepreneurs who have taken alternative routes to raising funds. The case considers the issues of partnering, soliciting funds vs. self-funding a search, and joining an incubator. The case provides a platform from which to discuss the pros and cons of various search fund structures.

40 Most Popular Case Studies of 2017

Click on the case title to learn more about the dilemma. A selection of our most popular cases are available for purchase via our online store .

The Ethical Leadership Collection: Mini Case Studies

Quick in-class exercises in leadership.

The mini case studies can fit on a PowerPoint slide or be given to students as one page to read. They were developed to be processed in-class, over the course of an hour. Use of the minis helps students identify the problem, pinpoint possible solutions, and create holistic action plans.

•  (PDF file)  Leadership among Friends  (opens in new window)  : Untangling Competing interests Keywords: employee relations, compensation management, situational leadership
•  (PDF file)  Facing the Challenge:  (opens in new window)  Caught Between HR and Difficult Workers Keywords: employee relations, industrial relations, mental illness
•  (PDF file)  Customer Disservice:  (opens in new window)  A Chronically Late Employee Causes Cascading Problems Keywords: employee relations, customer service, discipline, situational leadership
•  (PDF file)  Stepping Up to Your Own Truth:  (opens in new window)  The Consequences of Saying the Wrong Thing Keywords: employee relations, diversity, workplace anxiety, crisis management, organizational development, situational leadership
•  (PDF file)  Communicating Incentives to Others:  (opens in new window)  Controlling Competitive Co-Workers Keywords: employee relations, compensation, sales
•  (PDF file)  Going Head to Head:  (opens in new window)  Can You Trust Your Business Partner? Keywords: entrepreneurship, eco-tourism, accounting, integrity
•  (PDF file)  Repeat Offenders:  (opens in new window)  When Stopping Crime Goes Awry Keywords: employee relations, industrial relations, discipline, organizational culture
•  (PDF file)  To Produce Yoga Pants in India vs Not to Produce Yoga Pants in India:  (opens in new window)  Reconciling Social Responsibility with Corporate Reality Keywords: supply chain, global development, marketing, eco-business, B-corporation
•  (PDF file)  Who Do You Hire?  (opens in new window)  Ensure Your Decision Is the Right One Keywords: employee relations, recruitment, diversity, organizational development
•  (PDF file)  Religious Accommodation:  (opens in new window)  The Clash Between Faith and Workplace Needs Keywords: employee relations, organizational development, diversity
•  (PDF file)  Do Guests Always Call the Shots?  (opens in new window)  When Customers Oppose Your Diversity Policy Keywords: employee relations, customer service, crisis management, diversity
•  (PDF file)  Love Lost in an Island Paradise:  (opens in new window)  Avoiding a Disastrous Workplace Stoppage Keywords: industrial relations, social responsibility, compensation, global development
•  (PDF file)  What Did You Just See?  (opens in new window)  Diagnosing Harassment  Keywords: employee relations, harassment, software industry
•  (PDF file)  Start of Season:  (opens in new window)  Leadership Style Sets a Tone Keywords: employee relations, discipline
•  (PDF file)  Missing the Message:  (opens in new window)  Organizational Culture and Boundaries at Work Keywords: team relations, harassment, workplace culture
•  (PDF file)  “Their” People:  (opens in new window)  Competing with Racial Prejudice Keywords: racial discrimination, bystander, hiring process, corporate culture   (PDF file)  Version Français/ French version: <<Leur peuple>>
•  (PDF file)  Leadership with Style:  (opens in new window)    Keywords: employee relations, situational leadership
•  (PDF file)  Leading in the Face of Skepticism:  (opens in new window)  Managing Older Employees  Keywords: employee relations, organization development, situational leadership
•  (PDF file)  One for All:  (opens in new window)  How to Prevent Co-Workers from Letting You Down Keywords: teamwork, group projects
•  (PDF file)  Impossible Targets:  (opens in new window)  Managing an Unreasonable Manager Keywords:  sales, target setting, supervisory relations, job fit
•  (PDF file)  Gamers Address the Arab Spring:  (opens in new window)  Coding for Cultural Sensitivity  Keywords: global development, entrepreneurship, diversity

Teaching notes

The mini case studies require no preparation on the part of students. The teaching method has been effectively used for classes up to 75 students. The attached teaching method provides a marking rubric and an in-class form that can be used with students to aid in-class analysis and discussion.   (PDF file)  Download the Teaching Notes  (opens in new window) 

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Case Studies in Strategic Management

How Executive Input Enables Students’ Development

• © 2019
• 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

About this book

Editors and affiliations.

Gunther Friedl, Andreas Biagosch

About the editors

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.

Bibliographic Information

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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Decision Fatigue

What would you do in a dilemma situation and why?

Cash vs. Gift Cards

Which deal would you choose? Which deal would be more memorable if you won?

Surrogation Bias

Is your approach the best way to achieve your strategic goals?

Off-the-job Behavior

Is it ethical to use the information from the applicants' social media page?

Reward vs. Punish

Which option do you prefer and is more motivating?

Do you make decisions in a more centralized or a more decentralized way?

Division Accounting Manager

How much controller autonomy should be given?

Innovation Investment

Why do scientists care about internal resource allocation decisions including innovation budgeting?

Which is a better way of recruiting for your organization?

Unsupportive Data

What do you do when the data contradicts your boss's decision?

Feedback Frequency

Will feedback frequency affect future performance?

Global strategic management

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"This book is designed as a core textbook for those students studying courses on Global Strategy and Strategic Management. It offers an insight into the impact of globalization on business organizations and how managers could and should react. It is written by a well-respected professor of strategy at one of the world's leading business schools and combines a strategic and managerial approach to global issues, blending theory and practical, empirical examples to great effect. Global Strategic Management embraces traditional strategic management teaching, but extends it to a world scale. New to this edition: - More coverage of entrepreneurship and SMEs - Increased coverage of ethics, sustainability and the environment in chapter 15 on CSR - All "basic" strategy content revised and updated, with material on the financial crisis woven throughout - A section on similarities and differences between global strategic management and international business - A section on the impact of Web 2.0 and social networking in chapter 8 - All new, up-to-date mini case studies throughout - New end of chapter cases featuring an impressive spread of global companies, including some in the Far East and multinational corporations from emerging economies. These will come with case study questions and guideline answers on the updated companion website - More distinct pedagogy (chapter introductions, learning objectives, examples highlighted in the text) - More accessible language to ensure student friendliness and readability for ESL students - Improved 2 color page design - Improved pedagogy: learning objectives; mini examples; case studies; summary and key points; learning assignments; key words; web resources; references and further reading"--

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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.

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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 > .

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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/.

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IvyPanda . 2022. "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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