Learning Excercise Guide Lines

Assurance of Learning Exercises With Teaching Notes

PART IV

ASSURANCE OF LEARNING EXERCISES

CHAPTER 1: The Nature of Strategic Management

ASSURANCE OF LEARNING EXERCISE 1A: GATHERING STRATEGY INFORMATION

PURPOSE:

The purpose of this exercise is to get you familiar with strategy terms introduced and defined in Chapter 1. Let’s apply these terms to McDonald’s Corporation (stock symbol = MCD).

INSTRUCTIONS:

1. Go to www.mcdonalds.com, which is McDonald’s Web site. Click on the word Search. Then type the words Annual Report. Then print the 2009 McDonald’s Annual Report. This document may be 100 pages, so you may want to copy the document electronically or order the report directly from McDonald’s as indicated on the Web site. The Annual Report contains excellent information for developing a list of internal strengths and weaknesses for MCD.

2. Go to your college library and make a copy of Standard & Poor’s Industry Surveys for the restaurant industry. This document will contain excellent information for developing a list of external opportunities and threats facing MCD.

3. Go to the www.finance.yahoo.com Web site. Enter MCD. Note the wealth of information on McDonald’s that may be obtained by clicking any item along the left column. Click on Competitors down the left column. Then print out the resultant tables and information. Note that McDonalds’s two major competitors are Yum! Brands, Inc. and Burger King Holdings.

4. Using the Cohesion Case, the www.finance.yahoo information, the 2009 Annual Report, and the Industry Survey document, on a separate sheet of paper list what you consider to be MCD’s three major strengths, three major weaknesses, three major opportunities, and three major threats. Each factor listed for this exercise must include a %, #, $, or ratio to reveal some quantified fact or trend. These factors provide the underlying basis for a strategic plan because a firm strives to take advantage of strengths, improve weaknesses, avoid threats, and capitalize on opportunities.

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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5. Through class discussion, compare your lists of external and internal factors to those developed by other students and add to your lists of factors. Keep this information for use in later exercises at the end of other chapters.

6. Be mindful that whatever case company is assigned to your and/or your team of students this semester, you can start to update the information on your company by following the steps just listed for any publicly held firm.

TEACHING NOTES:

The following are possible external opportunities/threats and internal strengths/weaknesses for the McDonald’s Cohesion Case. The instructions request three for each category but possibilities are listed below. Remind students to keep this information for use in later exercises.

Strengths:S1: Highly successful and recognized advertising. (I’m loving it)S2: Strong employee training and promotion mostly from within.S3: Strong Investor Reputation.S4: Strongest Brand Image as the number-1 fast-food company by sales, with more than 32,000 restaurants in 118 countries.S5: Recognized as a community oriented, socially responsible company.S6: Strong Global Presence and an ability to weather local economic fluctuations.S7: Use pure ingredients and take food safety very seriously.S8: Consistently solid financial performance.

Gross margins (36.7%) and net profit margins (18.2%) above industry averages. Sales revenue up 3.3% in 2008, global comparable sales up 6.9%. Net income up 80% in 2008.

S9: Strong innovation and product development. S10: Large real estate portfolio.S11: Economies of Scale – Nearest competitor in U.S. is half McDonald’s size.

Weaknesses:W1: Lowest Customer satisfaction rating in the industry (69), even below IRS.W2: High employee turnover. W3: Assembly line approach makes it difficult and costly to adapt to changing trends.W4: Core product line out of sync with trends toward healthier lifestyles for adults and children. W5: Sales demonstrates seasonal effects.W6: 80% of restaurants are franchise owned, placing image and reputation in other’s hands.W7: Over-saturation of real estate in the US.W8: Struggles with fluctuations in operating and net profits:

Operating profits $4,433M (2006), $3,879M (2007), $6443M (2008). Net profits $3,544M (2006), $2,395M (2007), $4,313M (2008).


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W9: 70% of operating revenues and 45% of debt are in foreign currency.

Opportunities:O1: Anticipated 4% growth rate in Quick Service Restaurant industry.O2: Low fat, low calorie, healthy hamburger – Could be first on market.O3: Many restaurants (60% in U.S.) have outdated appearance. Remodeling can yield cozier, upscale setting, and upgrade the image.O4: Respond to social changes by innovation within healthier lifestyle foods.O5: Increased beverage options (Gourmet coffees) have been shown to increase customer visits in Europe (+7.2%) and takes advantage of faltering Starbuck’s.O6: Breakfast not available at 25% of locations – can increase return on assets and equity.O7: Joint ventures with retailers (Walmart, etc.) can place new locations in high traffic areas at lower capital cost.O8: Continued focus on corporate social responsibility, reducing the impact on the environment and community linkages. O9: International expansion into emerging markets of China, India, Brazil.O10: Diversify portfolio (i.e., similar to what it did before divesting Chipotle, Boston Market).

Threats:T1: More health conscious customers.T2: Particularly vulnerable in older, established markets (US, EU) to upstarts offering healthier food offerings and more modern, high tech surroundings.T3: Global economic recession causing consumers to spend less (Global GDP Est.-2.3%).T4: Markets in US and EU are mature and saturated, but 70% of locations.T5: Subway and YUM! Brands expanding into developing markets at a higher rate.T6: Litigation: T7: Brand equity at risk: 80% of restaurants owned by franchisees.T8: Contamination of the food supply, especially e-coli, or Mad cow disease, could damage sales, reputation, etc.T9: Intense price pressure from competitors like Burger King, Taco Bell, Wendy’s, KFC and any mid-range sit-down restaurants.T10: Negative public opinion campaigns:

Source: Dale Wiersema. 2009. McDonald’s Corporation Strategic Management Plan.

ASSURANCE OF LEARNING EXERCISE 1B: STRATEGIC PLANNING FOR MY UNIVERSITY

PURPOSE:


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External and internal factors are the underlying bases of strategies formulated and implemented by organizations. Your college or university faces numerous external opportunities/threats and has many internal strengths/weaknesses. The purpose of this exercise is to illustrate the process of identifying critical external and internal factors.

INSTRUCTIONS:

1. On a separate sheet of paper, write four headings: External Opportunities, External Threats, Internal Strengths, and Internal Weaknesses.

2. As related to your college or university, list five factors under each of the four headings.

3. Discuss the factors as a class. Write the factors on the board.

4. What new things did you learn about your university from the class discussion? How could this type of discussion benefit an organization?

TEACHING NOTES:

Ask students to keep results of this exercise because, at the end of each chapter, at least one exercise applies chapter material to your university. While answers to this exercise will vary for each institution, a sample is provided below.

Strengths:1. Location in a state capital with several Fortune 500 companies nearby2. Public institution with strong financial support from state (compared to other publics in state)3. Diverse student body and faculty4. Visionary presidential leadership5. Nationally-ranked programs in several disciplines6. Most programs accredited by appropriate organizations7. Inexpensive tuition compared to public institutions in other states and all private institutions8. Modern buildings for most visible programs (engineering and life sciences)

Weaknesses:1. Urban campus (perceived as a safety issue for prospective students and limits space for building

and expanding campus)2. Pressure to grow size of institution from state legislature3. Pressure from state to admit marginal students in order to provide increased access for

underserved minority students 4. Poor student facilities (gyms and other athletic facilities, in particular)5. Large size hinders ability to react to change6. Substantial percentage of faculty are near retirement age and drawing high salaries


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7. Low levels of student involvement8. Low levels of alumni giving 9. High percentage of classes taught by adjunct faculty10. High student to faculty ratio (many classes enroll more than 100 students per class)

Opportunities:1. Increase in percentage of minority students enrolling in college2. Growth in adult education programs3. Potential for international and online programs4. Development of new disciplines (e.g., homeland security)

Threats:1. Competition for prospective students from other institutions, especially for-profit institutions that

focus on career preparation2. Foreign institutions seek to retain their best students (students who previously may have pursued

an education in the U.S.)3. Potential for decreases in state funding levels 4. Foreign institutions (particularly those in India) seek to acquire private research funding that

previously was awarded to U.S. institutions primarily5. Pressure for career preparation curricula rather than those based on liberal arts and comprehensive

education approach6. Commoditization of education7. Potential for federal regulations governing learning outcomes8. Disasters that disrupt enrollment and operations (e.g., Hurricane Katrina disrupted the operations

and financial stability of several institutions in Louisiana).

ASSURANCE OF LEARNING EXERCISE 1C: STRATEGIC PLANNING AT A LOCAL COMPANY

PURPOSE:

This exercise is designed to give students practical knowledge about how organizations in their communities are conducting strategic planning. The exercise also gives students experience interacting on a professional basis with local business leaders.

INSTRUCTIONS:

1. Use the telephone to contact business owners or top managers. Find an organization that does strategic planning. Make an appointment to visit with the strategist (president, chief executive officer, or owner) of that business.


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2. Seek answers to the following questions during the interview: a. How does your firm formally conduct strategic planning? Who is involved in

the process? Does the firm hold planning retreats? If yes, how often and where?

b. Does your firm have a written mission statement? How was the statement developed? When was the statement last changed?

c. What are the benefits of engaging in strategic planning?d. What are the major costs or problems in doing strategic planning in your

business?e. Do you anticipate making any changes in the strategic planning process at your

company? If yes, please explain.

3. Report findings in class.

TEACHING NOTES:

Answers to this exercise will vary for each student. In the class discussion, be sure to emphasize the range of degrees of strategic planning students will likely find. For instance, the following questions can be used to guide the class discussion.

How many of the organizations used formal as opposed to informal planning? If a firm uses informal planning, do they plan more or less frequently than those that used a formal planning approach?

Did the stated mission statements appear accurate for the businesses or more aspirational in nature?

Did the people interviewed recognize the benefits of strategic planning? How did they inform the organizations’ employees of the strategic plans and the benefits of strategic planning?

What would the students recommend in terms of changes to the strategic planning process used by the businesses they evaluated?

ASSURANCE OF LEARNING EXERCISE 1D: GETTING FAMILIAR WITH SMCO

PURPOSE:

This exercise is designed to help strategy students become familiar with the Strategic Management Club Online (SMCO). The SMCO offers templates for the case analysis exercises in this course.

INSTRUCTIONS:

1. Go to the www.strategyclub.com Web site. Review the various sections of this site.


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http://www.strategyclub.com/


2. Select a section of the SMCO site that you feel will be most useful to you in this class. Write a one-page summary of that section and why you feel it will benefit you most.

TEACHING NOTES:

Answers to this exercise will vary for each student. The SMCO website provides links to websites with information useful for case analysis such as corporate websites, business analysis services, news sites, magazines, governmental sites, and financial ratio analyses. It also provides links to job search websites, graduate school websites, and websites related to strategic planning. Several software packages are available for purchase on the site including a template for generating the matrices required for case analyses. Any of these tools may be mentioned by students in their summaries.


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CHAPTER 2

ASSURANCE OF LEARNING EXERCISE 2A: EVALUATING MISSION STATEMENTS

PURPOSE:

A business mission statement is an integral part of strategic management. It provides direction for formulating, implementing, and evaluating strategic activities. This exercise will give you practice evaluating mission statements, a skill that is a prerequisite to writing a good mission statement.

INSTRUCTIONS:

1. On a clean sheet of paper, prepare a 9 x 3 matrix. Place the nine mission statement components down the left column and the following three companies across the top of your paper.

2. Write “yes” or “no” in each cell of your matrix to indicate whether you feel the particular mission statement has included the respective component.

3. Turn your paper in to your instructor for a class work grade.

MISSION STATEMENTS:

General MotorsOur mission is to be the world leader in transportation products and related services. We aim to maintain this position through enlightened customer enthusiasm and continuous improvement driven by the integrity, teamwork, innovation and individual respect and responsibility of our employees.

North Carolina ZooOur mission is to encourage understanding of and commitment to the conservation of the world’s wildlife and wild places through recognition of the interdependence of people and nature. We will do this by creating a sense of enjoyment, wonder and discovery throughout the Park and in our outreach programs.

SamsoniteOur mission is to be the leader in the travel industry. Samsonite’s ambition is to provide unparalleled durability, security and dependability in all of its products, through leading edge functionality, features, innovation, technology, contemporary aesthetics and design. In order to fill every niche in the travel market, Samsonite will seek to create strategic alliances, combining our strengths with other partners in our brands.


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TEACHING NOTES:Evaluation Matrix of Mission Statements–Solutions

Components General Motors North Carolina Zoo SamsoniteCustomers Yes No YesProducts Yes No YesMarkets Yes No YesTechnology Yes No YesConcern for Survival, Growth, Profitability

No No No

Philosophy Yes Yes YesSelf-concept Yes Yes YesConcern for public image Yes Yes YesConcern for employees Yes No No

ASSURANCE OF LEARNING EXERCISE 2B: WRITING A VISION AND MISSION STATEMENT FOR MCDONALD’S CORPORATION

PURPOSE:

There is always room for improvement in regard to an existing vision and mission statement. Currently McDonald's does not have a vision statement or mission statement, so this exercise will ask you to develop one.

INSTRUCTIONS:

1. Refer back to page 33 the Cohesion Case for a list of McDonald’s Corporation’s values.

2. On a clean sheet of paper, write a one-sentence vision statement for McDonald’s.

3. On that same sheet of paper, write a mission statement for McDonald’s.

TEACHING NOTES:

This is an excellent exercise that should generate a high degree of interest because most students are familiar with McDonald’s. Before they begin, encourage your students to review the chapter and


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make sure they are confident about what an effective vision and mission statement should look like. Tell your students to keep a copy of the vision and mission statements that they develop to refer to future exercises in the book. The statements will vary from student to student but should include the nine essential components of mission statements.

Sample statements are provided below.

Nine Essential Components of Mission Statements1. Customers2. Products3. Markets4. Technology5. Concern for Survival, Growth, Profitability6. Philosophy7. Self-Concept8. Concern for Public Image9. Concern for Employees

McDonald’s Proposed Vision Statement: McDonald’s strives to be the world’s preferred and best quick service restaurant by providing outstanding quality, service, cleanliness, and value to the delight of each and every customer in every restaurant.

McDonald’s Revised Mission Statement:

Our mission is to “be our customer’s favorite place and way to eat” .

We will align our worldwide operations around a global strategy called the “Plan to Win” centering on the five basics of an exceptional customer experience – People, Products, Place, Price, and Promotion.

Through technological leadership, brand strength, the highest of quality standards, and superior people, products and services, we are committed to improving our operations and enhancing our customers’ experience.

We will strive to build on our strong financial position, dedication to the development and enrichment of our employees, commitment to operate as good corporate citizens of our local and global communities, and our strong desire to be environmentally responsible and support the health, safety, and vitality of our employees and customers.

We will remain dedicated to thoroughly delight our customers, employees, shareholders and neighbors.



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ASSURANCE OF LEARNING EXERCISE 2C: WRITING A VISION AND MISSION STATEMENT FOR MY UNIVERSITY

PURPOSE:

Most universities have a vision and mission statement. The purpose of this exercise is to give you practice writing a vision and mission statement for a nonprofit organization such as your own university.

INSTRUCTIONS:

1. Write a vision statement and mission statement for your university. Your mission statement should include the nine characteristics summarized in Table 2-5.

2. Read your vision and mission statements to the class.

3. Determine whether your institution has a vision and/or mission statement. Look in the front of the college handbook. If your institution has a written statement, contact an appropriate administrator of the institution to inquire as to how and when the statement was prepared. Share this information with the class. Analyze your college’s mission statement in light of concepts presented in this chapter.

TEACHING NOTES:

Answers to this exercise will vary by institution. Before writing a vision and mission statement for their university, encourage students to think carefully about what their university is (or should be) and what its ambitions are (or should be) for the future. After a first draft is written, encourage your students to step back and look at their mission statements and vision statements with a discerning eye. The mission statement should accurately define the reason that the university exists and who it wants to serve. The vision statement should accurately reflect what the university wants to become in the future. Use the nine components to evaluate the mission statement. Be sure to compare what they write to the actual statements for the university and/or business school.

As an example, the Tulane University vision and mission statements are provided below (see http://www.tulane.edu/%7Estrplan/index.shtml for more information on Tulane’s strategic plan). The mission statement is coded to identify the nine components that should be included in mission statements.

Tulane’s Vision Statement:


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Tulane will be known as one of the most distinguished and respected universities anywhere because we have been successful in charting and executing an academic course that is firmly rooted in our history, location and unique strengths. Tulane will be an institution that represents the best of the modern research university, anticipating and meeting national and societal needs at the dawn of the 21st century and beyond. We will be a model for higher education nationally and internationally.

Tulane will be a leader, not a follower, in setting the agenda for higher education. Tulane will be a hotbed of ideas and debate on the issues facing our nation and higher education today and in the future.

Tulane will be a university in service to the public, a university truly committed to building and renewing the communities in which its people live and work, from those in New Orleans and Louisiana to those in the far reaches of the world where Tulane has a presence. We will be engaged in community activities that are innovative, of the highest quality and impact, and integrated with our missions of learning and research. Tulane will be a university acting as a community with shared aspirations, values, and goals, an institution where the whole is greater than the sum of its parts. It will be a community where members welcome diversity of all types, and retain and applaud certain values, including academic freedom and shared governance. We will be the first-choice institution for the very best faculty, staff and students.

Tulane’s Mission Statement:

Tulane's purpose is to create, communicate, and conserve knowledge (2) in order to enrich the capacity of individuals, organizations and communities (1, 3) to think, to learn, and to act and lead with integrity and wisdom (6, 7).

Tulane pursues this mission by cultivating an environment that focuses on learning and the generation of new knowledge (2, 7); by expecting and rewarding teaching and research of extraordinarily high quality and impact (3, 7, 8, 9); and by fostering community-building initiatives as well as scientific, cultural and social understanding that integrate with and strengthen learning and research (3, 4, 6, 7, 8). This mission is pursued in the context of the unique qualities of our location in New Orleans and our continual aspiration to be a truly distinctive international university (5).

Key - Nine Essential Components of Mission Statements1. Customers2. Products3. Markets4. Technology5. Concern for Survival, Growth, Profitability6. Philosophy7. Self-Concept


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8. Concern for Public Image9. Concern for Employees

ASSURANCE OF LEARNING EXERCISE 2D: CONDUCTING MISSION STATEMENT RESEARCH

PURPOSE:

The exercise gives you the opportunity to study the nature and role of vision and mission statements in strategic management.

INSTRUCTIONS:

1. Call various organizations in your city or country to identify firms that have developed a formal vision and/or mission statement. Contact nonprofit organizations and government agencies in addition to small and large businesses. Ask to speak with the director, owner, or chief executive officer of each organization. Explain that you are studying vision and mission statements in class and are conducting research as part of a class activity.

2. Ask several executives the following four questions and record their answers:1. When did your organization first develop its vision and/or mission statement? Who

was primarily responsible for its development?2. How long have your current statements existed? When were they last modified? Why

were they modified at that point in time?3. By what process are your firm’s vision and mission statements altered?4. How are your vision and mission statements used in the firm?

3. Provide an overview of your findings to the class.

TEACHING NOTES:

If insufficient class time is available to conduct the entire exercise, an abbreviated version of the exercise could be accomplished by asking students to search the websites of local businesses to see which businesses have posted their mission statements on their websites. The students could then contact one or more of these businesses and ask the questions suggested by the exercise. Encourage your students to ask the businesses why they posted their mission statement on their website.


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CHAPTER 3

ASSURANCE OF LEARNING EXERCISE 3A: DEVELOPING AN EFE MATRIX FOR MCDONALD’S CORPORATION

PURPOSE:

This exercise will provide practice developing an EFE Matrix. An EFE Matrix summarizes the results of an external audit. This is an important tool widely used by strategists.

INSTRUCTIONS:

1.Join with two other students in class, and jointly prepare an EFE Matrix for McDonald’s Corporation. Refer back to the Cohesion Case and to Exercise 1A, if necessary, to identify external opportunities and threats. Use the information in the S&P Industry Surveys that you copies as part of Assurance of Learning Exercise 1A. Be sure not to include strategies as opportunities, but do include as many monetary amounts, percentages, numbers, and ratios as possible.

2.All three-person teams participating in this exercise should record their EFE total weighted scores on the board. Put your initials after your score to identify it as your team’s.

3.Compare the total weighted scores. Which team’s score came closest to the instructor’s answer? Discuss reasons for variation in the scores reported on the board.

TEACHING NOTES:

This is an excellent exercise that gives students “hands-on” experience developing an EFE Matrix.

Although answers will vary, the following provides the steps and an example of what an EFE Matrix for McDonalds should look like.

Five Steps for Developing an EFE Matrix:

1) List external factors.

2) Assign a weight from 0-1 with 0 being not important and 1 being very important. The total weights assigned must equal 1.

3) Assign a 1-4 rating to each external factor based on effectiveness of current strategy. 1 = Poor, 2 = Average, 3 = Above average, and 4 = Superior.

4) Calculate weight * rating.

5) Sum. The highest score is 4 while the lowest is 1. The average is 2.5.


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OPPORTUNITIES Weight RatingWeighted Score

O1: Anticipated 4% growth rate in QSR industry. 0.06 3 0.18O2: Low fat, low calorie, healthy hamburger – first on market. 0.07 1 0.07O3: Many restaurants have outdated appearance. 0.06 3 0.18O4: Respond to social changes by healthy food innovations. 0.04 3 0.12O5: Increased beverage options (Gourmet coffees). 0.06 3 0.18O6: Breakfast not available at 25% of locations. 0.06 3 0.18O7: Joint ventures with retailers can place new locations in high traffic areas at lower capital cost. 0.03 4 0.12O8: Continued focus on corporate social responsibility. 0.02 2 0.04O9: Int’l expansion into emerging markets. 0.06 3 0.18O10: Diversify portfolio. 0.03 2 0.06

THREATS Weight RatingWeighted Score

T1: More health conscious customers. 0.07 3 0.21T2: Vulnerability in older, established markets to modern upstarts. 0.04 3 0.12T3: Global economic recession = reduced consumer spending. 0.06 4 0.24T4: Markets in US and EU are mature and saturated. 0.07 3 0.21T5: Subway and YUM! Brands expanding into developing markets at a higher rate. 0.06 2 0.12T6: Litigation 0.03 3 0.09T7: Brand equity at risk: 80% of restaurants owned by franchisees. 0.04 3 0.12T8: Contamination of the food supply could damage sales, reputation, etc. 0.04 4 0.16T9: Intense price pressure from competitors. 0.07 4 0.28T10: Negative public opinion campaigns. 0.03 2 0.06TOTAL: 1.00 2.92


ASSURANCE OF LEARNING EXERCISE 3B: THE EXTERNAL ASSESSMENT

PURPOSE:


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This exercise will help you become familiar with important sources of external information available in your college library. A key part of preparing an external audit is searching the Internet and examining published sources of information for relevant economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive trends and events. External opportunities and threats must be identified and evaluated before strategies can be formulated effectively.

INSTRUCTIONS:

1. Select a company or business where you currently or previously have worked. Conduct an external audit for this company. Find opportunities and threats in recent issues of newspapers and magazines. Search for information using the Internet. Use the following Web sites:

http://marketwatch.multexinvestor.comwww.hoovers.comhttp://moneycentral.msn.comhttp://finance.yahoo.comwww.clearstation.comhttps://us.etrade.com/e/t/invest/markets

2. On a separate sheet of paper, list ten opportunities and ten threats that face this company. Be specific in stating each factor.

3. Include a bibliography to reveal where you found the information.

4. Write a three-page summary of your findings, and submit it to your instructor.

TEACHING NOTES:

Answers to the exercise will vary for each organization. This activity is analogous to the Internet work needed in preparing a business policy case analysis. This is a good exercise for extra credit. Interaction between business students and actual business managers is an important learning experience in this course.

ASSURANCE OF LEARNING EXERCISE 3C: DEVELOPING AN EFE MATRIX FOR MY UNIVERSITY

PURPOSE:


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More colleges and universities are embarking upon the strategic-management process. Institutions are consciously and systematically identifying and evaluating external opportunities and threats facing higher education in your state, the nation, and the world.

INSTRUCTIONS:

1. Join with two other individuals in class and jointly prepare an EFE Matrix for your institution.

2. Go to the board and record your total weighted score in a column that includes the scores by all three-person teams participating. Put your initials after your score to identify it as your team’s.

3. Which team viewed your college’s strategies most positively? Which team viewed your college’s strategies most negatively? Discuss the nature of the differences.

TEACHING NOTES:

Answers to this exercise will vary for each institution. Students should use the five steps in developing an EFE Matrix.

List key external factors as identified in the external-audit process. Include a total of 10-20 factors from both the opportunities and threats.

Assign to each factor a weight from .0 (not important) to 1.0 (very important). These weights show the relative importance. The total of all the weights should equal 1.0.

Assign a 1-4 rating to each factor to indicate how effectively the firm’s current response strategy: 1 = the response is poor, 2 = the response is average, 3 = the response is above average, and 4 = the response is superior.

Multiply each factor’s weight by its rating to get a weighted score. Sum the weighted scores for each variable to determine the total weighted score for the

organization.

An example is provided below:Opportunities: Weight Rating WS1. Increase in percentage of minority students enrolling in

college.05 3 .15

2. Growth in adults pursuing higher education .10 3 .303. Potential to reach foreign markets through

international and online programs.10 4 .40

4. Development of programs in new disciplines (e.g., homeland security)

.10 4 .40


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Threats:1. Competition for prospective students .15 2 .302. Foreign institutions retaining high ability students .10 2 .203. Potential for governmental funding decreases .10 2 .204. Increased competition for private funding .05 2 .105. Emphasis on career preparation rather than

comprehensive education.10 3 .30

6. Commoditization of education .05 2 .107. Potential for federal regulations of learning outcomes .05 1 .058. Disasters that affect operations .05 1 .05

Total Weighted Score 1.0 2.55

ASSURANCE OF LEARNING EXERCISE 3D: DEVELOPING A COMPETITIVE PROFILE MATRIX FOR MCDONALD’S CORPORATION

PURPOSE:

Monitoring competitors’ performance and strategies is a key aspect of an external audit. This exercise is designed to give you practice evaluating the competitive position of organizations in a given industry and assimilating that information in the form of a Competitive Profile Matrix.

INSTRUCTIONS:

1. Gather information from Assurance of Learning Exercise 1A. Also, turn back to the Cohesion Case and review the section on competitors (pages 33-35).

2. On a separate sheet of paper, prepare a Competitive Profile Matrix that includes McDonald’s, Burger King Holdings, and Yum! Brands, Inc.

3. Turn in your Competitive Profile Matrix for a class work grade.

TEACHING NOTES:

Answers to this question will vary depending on the factors chosen and the competitors analyzed.

The following is what a typical answer might look like.

List critical success factors identified in the internal and external analysis.

Assign to each factor a weight from .0 (not important) to 1.0 (very important). These weights show the relative importance. The total of all the weights should equal 1.0.


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Assign a 1-4 rating to each factor to describe the factor: 1= major weakness, 2 = minor weakness, 3 = minor strength, and 4 = major strength.

Multiply each factor’s weight by its rating to get a weighted score.

Sum the weighted scores for each variable to determine the total weighted score for the organization.

Do the same for one or more competing organizations using the same critical success factors and weights.

McDonald's YUM! Brands Burger KingCritical Success Factors Weight Rating Score Rating Score Rating ScoreGlobal Presence 0.13 4 0.52 3 0.39 2 0.26Market Share 0.07 4 0.28 3 0.21 3 0.14Product Quality 0.09 3 0.27 2 0.18 4 0.36Customer Satisfaction 0.08 2 0.16 3 0.24 4 0.32Financial Stability 0.14 4 0.56 2 0.28 3 0.42Technology 0.08 4 0.32 3 0.24 3 0.16Product Development 0.05 4 0.20 3 0.15 2 0.10Brand Awareness 0.16 4 0.64 3 0.48 3 0.32Price Competitiveness 0.13 4 0.52 3 0.39 3 0.26Diversification 0.07 3 0.21 4 0.28 3 0.14TOTALS: 1.00 3.68 2.84 2.48


ASSURANCE OF LEARNING EXERCISE 3E: DEVELOPING A COMPETITIVE PROFILE MATRIX FOR MY UNIVERSITY

PURPOSE:

Your college or university competes with all other educational institutions in the world, especially those in your own state. State funds, students, faculty, staff, endowments, gifts, and federal funds are areas of competitiveness. Other areas include athletic programs, dorm life, academic reputation, location, and career services. The purpose of this exercise is to give you practice thinking competitively about the business of education in your state.

INSTRUCTIONS:


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1. Identify two colleges or universities in your state that compete directly with your institution for students. Interview several persons, perhaps classmates, who are aware of particular strengths and weaknesses of those institutions. Record information about the two competing universities.

2. Prepare a Competitive Profile Matrix that includes your institution and the two competing institutions. Include at least the following ten factors in your analysis:

a. Tuition costsb. Quality of facultyc. Academic reputationd. Average class sizee. Campus landscapingf. Athletic programsg. Quality of studentsh. Graduate programsi. Location of campusj. Campus culture

3. Submit your Competitive Profile Matrix to your instructor for evaluation.

TEACHING NOTES:

While each answer will vary for this question, students should follow these guidelines.A template is provided below.

List critical success factors identified in the internal and external analysis. Assign to each factor a weight from .0 (not important) to 1.0 (very important). These weights

show the relative importance. The total of all the weights should equal 1.0. Assign a 1-4 rating to each factor to describe the factor: 1= major weakness, 2 = minor weakness,

3 = minor strength, and 4 = major strength. Multiply each factor’s weight by its rating to get a weighted score. Sum the weighted scores for each variable to determine the total weighted score for the

organization. Do the same for one or more competing organizations using the same critical success factors and

weights.

University 1: University 2: University 3:

Critical Success Factors Weight Rating WS Rating WS Rating WSTuition costsQuality of faculty


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Academic reputationAverage class sizeCampus facilitiesAthletic programsQuality of studentsGraduate programsLocation of campusCampus cultureTotals 1.0


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CHAPTER 4: The Internal Assessment

ASSURANCE OF LEARNING EXERCISE 4A: PERFORMING A FINANCIAL RATIO ANALYSIS FOR MCDONALDS CORPORATION PURPOSE:

Financial ratio analysis is one of the best techniques for identifying and evaluating internal strengths and weaknesses. Potential investors and current shareholders look closely at firms’ financial ratios, making detailed comparisons to industry averages and to previous periods of time. Financial ratio analyses provide vital input information for developing an IFE Matrix.

INSTRUCTIONS:

1. On a separate sheet of paper, number from 1 to 20. Referring to McDonald’s income statement and balance sheet (pp 31-32), calculate 20 financial ratios for 2008 for your company. Use Table 4-6 as a reference.

2. In a second column, indicate whether you consider each ratio to be a strength, a weakness, or a neutral factor for McDonald’s.

3. Go to the Web sites in Table 4-5 that calculate McDonald’s financial ratios, without your having to pay a subscription (fee) for the service. Make a copy of the ratio information provided and record the source. Report this research to your classmates and your professor.

TEACHING NOTES:

Ratio (2008) McDonald’s EvaluationLiquidity Ratios Current 1.39 Strength Quick 1.34 StrengthLeverage Ratios Debt to total assets .36 Neutral Debt to equity 1.13 Neutral Long-term debt to equity 0.76 Neutral Times-interest-earned ratio 12.78 StrengthActivity Ratios Fixed Assets Turnover 1.16 Neutral Total Assets Turnover 0.80 Weakness Inventory Turnover 129.4 StrengthProfitability Ratios Gross profit margin 36.7% Neutral Operating profit margin 27.4% Neutral Net profit margin 18.3% Strength


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Return on assets 15.2% Strength Return on equity 32.2% Neutral Price-earnings ratio 16.07 Neutral EPS 3.83 NeutralGrowth Ratios Sales Growth % (3-year) 6.1% Neutral Net Income Growth % (3-year) 23.8% Strength Earnings per share Growth % (3-year) 30% Neutral Dividends per share Growth % (3-year) 29% Neutral

ASSURANCE OF LEARNING EXERCISE 4B: CONSTRUCTING AN IFE MATRIX FOR MCDONALDS CORPORATION

PURPOSE:

This exercise will give you experience developing an IFE Matrix. Identifying and prioritizing factors to include in an IFE Matrix fosters communication among functional and divisional managers. Preparing an IFE Matrix allows human resource, marketing, production/operations, finance/accounting, R&D, and management information systems managers to articulate their concerns and thoughts regarding the business condition of the firm. This results in an improved collective understanding of the business.

INSTRUCTIONS:

1. Join with two other individuals to form a three-person team. Develop a team IFE Matrix for McDonald’s.

2. Compare your team’s IFE Matrix to other teams’ IFE Matrices. Discuss any major differences.

3. What strategies do you think would allow McDonald’s to capitalize on its major strengths? What strategies would allow McDonald’s to improve upon its major weaknesses?

TEACHING NOTES:

The steps for completing an IFE Matrix are as follows:

1. List key internal factors as identified in the internal-audit process. Use a total of ten to twenty internal factors, including both strengths and weaknesses. List strengths first and then weaknesses.


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2. Assign a weight that ranges from .0 (not important) to 1.0 (all important) to each factor. The weight assigned to a given factor indicates the relative importance of the factor to being successful in the firm’s industry. The sum of all weights must equal 1.0.

3. Assign a 1-4 rating to each factor to indicate whether that factor represents a major weakness (1), a minor weakness (2), minor strength (3), or major strength (4). Strengths must receive a 3 or 4 and weaknesses must receive a 1 or 2.

4. Multiply each factor’s weight by its rating to determine its weighted score for each variable.

5. Sum the weighted scores for each variable to determine the total weighted score for the organization.

An example is provided below:

Strengths: Weight Rating WSS1: Highly successful and recognized advertising. (I’m loving it) 0.08 4 0.32S2: Strong employee training and promotion mostly from within. 0.02 3 0.06S3: Strong Investor Reputation. 0.06 4 0.24S4: Strongest Brand Image. 0.07 3 0.21S5: McDonald’s is recognized as a community oriented, socially responsible company. 0.01 2 0.02S6: Strong Global Presence 0.08 3 0.24S7: Use pure ingredients and take food safety very seriously. 0.04 3 0.12S8: Consistently solid financial performance. 0.05 3 0.15S9: Strong innovation and product development. 0.03 2 0.06S10: Large real estate portfolio. 0.02 3 0.06S11: Economies of Scale – Nearest competitor in U.S. is half McDonald’s size. 0.05 4 0.20

Weaknesses: Weight Rating WSW1: Lowest Customer satisfaction rating in the industry (69), even below IRS. 0.10 3 0.30W2: High employee turnover in their restaurants. 0.04 2 0.08W3: Assembly line approach makes it difficult and costly to adapt to changing trends, like organic foods and healthier offerings. 0.08 2 0.16


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W4: Core product line out sync with trends toward healthier lifestyles for adults and children. Highly negative health image (Super size me!) 0.07 2 0.14W5: Sales demonstrates seasonal effects. 0.02 2 0.04W6: 80% of restaurants are franchise owned, placing image and reputation in other’s hands. 0.05 2 0.10W7: Over-saturation of real estate in the US. 0.04 3 0.12W8: Struggles with fluctuations in operating and net profits, which has impact on investor relations. 0.03 3 0.09W9: 70% of operating revenues and 45% of debt are in foreign currency. 0.06 3 0.18TOTAL: 1.00 2.89


ASSURANCE OF LEARNING EXERCISE 4C: CONSTRUCTING AN IFE MATRIX FOR MY UNIVERSITY

PURPOSE:

This exercise gives you the opportunity to evaluate your university’s major strengths and weaknesses. As will become clearer in the next chapter, an organization’s strategies are largely based on striving to take advantage of strengths and improving on weaknesses.

INSTRUCTIONS:

1. Join with two other individuals to form a three-person team. Develop a team IFE Matrix for your university. You may use the strengths/weaknesses determined in Assurance of Learning Exercise 1D.

2. Go to the board and diagram your team’s IFE Matrix.

3. Compare your team’s IFE Matrix to other teams’ IFE Matrices. Discuss any major differences.

4. What strategies do you think would allow your university to capitalize on its major strengths? What strategies would allow your university to improve upon its major weaknesses?

TEACHING NOTES:


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Answers to this exercise will vary for each institution. The matrix below can be used as a guide. Some possible factors to consider include: quality of faculty, quality of students, accreditation, size of endowment, location, available technology, academic rankings, and size of classes.

Key Internal Factor Weight Rating WSStrengthsLocation .10 3 .30Public institution with strong state support .10 3 .30Diverse community .03 4 .12Visionary leadership .10 4 .40Ranked programs .10 3 .30Accreditation of major programs .05 3 .15Tuition is low compared to other institutions .02 3 .06Modern facilities for high visibility programs .05 4 .20WeaknessesUrban campus (perceived safety issues and lack of space for expansion)

.05 1 .05

Pressure to admit marginal students .05 1 .05Poor student facilities .10 1 .10Large size .02 1 .02Older, more expensive faculty .03 2 .06Low levels of student involvement .05 2 .10Poor alumni involvement and giving .05 1 .05Poor endowment .05 1 .05High percentage of classes taught by adjuncts .03 2 .06High student-to-faculty ratio .02 2 .04Totals 1.0 2.41


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CHAPTER 5: Strategies in Action

ASSURANCE OF LEARNING EXERCISE 5A: WHAT STRATEGIES SHOULD MCDONALD’S PURSUE IN 2011-2013?

PURPOSE:

In performing strategic management case analysis, you can find information about the respective company’s actual and planned strategies. Comparing what is planned versus what you would have recommended is an important part of case analysis. Do not recommend what the firm actually plans, unless in-depth analysis of the situation reveals those strategies to be best among all feasible alternatives. This exercise gives you experience conducting library and Internet research to determine what McDonald’s should do in 2011-2013.

INSTRUCTIONS:

1. Look up McDonald’s (MCD) and Burger King Holdings (BKC) using the sites provided in Table 4-5. Find some recent articles about firms in this industry. Scan Moody’s, Dun & Bradstreet, and Standard & Poor’s publications for information.

2. Summarize your findings in a three-page report titled “Strategies Being Pursued by McDonalds in 2010.”

TEACHING NOTES:

Encourage your students to find the resources needed to complete this assignment on the Internet or in library databases to complete this assignment. Below is a list of potential strategies that were developed following a McDonald’s case analysis.

1. Plan to Win by developing a dual-tier market strategy in U.S. And European markets.a. McCafe – more upscale, healthier, adult focusb. McDonald‘s – traditional, low cost, kid focus

2. Buy back, remodel, re-badge, re-image, re-sell 1000 restaurants per year in U.S. and Europe.

3. Expand more rapidly in China, India, Brazil by adding 2000 new restaurants per year.4. Continue McCafe beverage rollout in U.S. (8500) and Europe (2300) through 2011.5. Continue to expand operating hours to include breakfast, late night in U.S. (2200) and

Europe (800) through 2011.6. Develop and rollout of “green“ product packaging in 2010.7. Restructure to support Plan To Win strategy.



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ASSURANCE OF LEARNING EXERCISE 5B: EXAMINING STRATEGY ARTICLES

PURPOSE:

Strategy articles can be found weekly in journals, magazines, and newspapers. By reading and studying strategy articles, you can gain a better understanding of the strategic-management process. Several of the best journals in which to find corporate strategy articles are Advanced Management Journal, Business Horizons, Long Range Planning, Journal of Business Strategy, and Strategic Management Journal. These journals are devoted to reporting the results of empirical research in management. They apply strategic-management concepts to specific organizations and industries. They introduce new strategic-management techniques and provide short case studies on selected firms.

Other good journals in which to find strategic-management articles are Harvard Business Review, Sloan Management Review, Business Horizons, California Management Review, Academy of Management Review, Academy of Management Journal, Academy of Management Executive, Journal of Management, and Journal of Small Business Management.

In addition to journals, many magazines regularly publish articles that focus on business strategy. Several of the best magazines in which to find applied strategy articles are Dun’s Business Month, Fortune, Forbes, Business Week, Inc. Magazine, and Industry Week. Newspapers such as USA Today, Wall Street Journal, New York Times, and Barron’s cover strategy events when they occur—for example, a joint venture announcement, a bankruptcy declaration, a new advertising campaign start, acquisition of a company, divestiture of a division, a chief executive officer’s hiring or firing, or a hostile takeover attempt.

In combination, journal, magazine, and newspaper articles can make the strategic management course more exciting. They allow current strategies of profit and nonprofit organizations to be identified and studied.

INSTRUCTIONS:

1. Go to your college library and find a recent journal article that focuses on a strategic-management topic. Select your article from one of the journals listed above, not from a magazine. Copy the article and bring it to class.

2. Give a three-minute oral report summarizing the most important information in your article. Include comments giving your personal reaction to the article. Pass your article around in class.

TEACHING NOTES:


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This is an excellent activity that introduces students to academic journals and asks students to actually read and comment on a journal article on a strategic management topic. This may be the only occasion in a student’s undergraduate education that he or she is asked to comment on an academic journal article (like those found in the Academy of Management Journal or the Strategic Management Journal).

ASSURANCE OF LEARNING EXERCISE 5C: CLASSIFYING SOME YEAR 2009 STRATEGIES

PURPOSE:

This exercise can improve your understanding of various strategies by giving you experience classifying strategies. This skill will help you use the strategy-formulation tools presented later. Consider the following 8 actual year-2009 strategies by various firms:

1. Microsoft developed a new video camera for its Xbox 360 console that allowed players to control games with the movement of their bodies, rather than by holding a plastic wand in their hands, as required with Nintendo's popular Wii game console.

2. Wells Fargo and Bank of America began to "tweet" - post messages of 140 characters or less on Twitter.com, so customers could see product features. Banks are also putting marketing videos on YouTube.

3. The United Kingdom's huge telecom firm, BT Group PLC, cut 15,000 more jobs on top of the 15,000 the prior year.

4. Japanese electronics maker Panasonic Corp. acquired Osaka, Japan-based Sanyo Electric Company.

5. News Corp. sold off many of its television stations.6. More than 1,000 Chrysler dealers closed their doors and ceased doing

business.7. Germany's Metro AG, the world's fourth-largest retailer after Wal-Mart,

Carrefour SA, and Home Depot, is expanding aggressively into China.8. Time Warner plans to spin off or sell part of AOL.

INSTRUCTIONS:

1. On a separate sheet of paper, number from 1 to 8. These numbers correspond to the strategies described above.

2. What type of strategy best describes the 8 actions cited? Indicate your answers.


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3. Exchange papers with a classmate and grade each other’s paper as your instructor gives the right answers.


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TEACHING NOTES:

Students should classify these strategies based on the alternative strategies described in Table 5-4.

Example Strategy Classification1. Microsoft developed a new video camera

for its Xbox 360 console.Product Development

2. Wells Fargo and Bank of America began to "tweet" so customers could see product features. Banks are also putting marketing videos on YouTube.

Market Penetration

3. The United Kingdom's huge telecom firm, BT Group PLC, cut 15,000 more jobs on top of the 15,000 the prior year.

Retrenchment

4. Japanese electronics maker Panasonic Corp. acquired Osaka, Japan-based Sanyo Electric Company.

Horizontal Integration

5. News Corp. sold off many of its television stations.

Divestiture

6. More than 1,000 Chrysler dealers closed their doors and ceased doing business.

Liquidation

7. Germany's Metro AG, the world's fourth-largest retailer, is expanding aggressively into China.

Market Development

8. Time Warner plans to spin off or sell part of AOL.

Divestiture

ASSURANCE OF LEARNING EXERCISE 5D: HOW RISKY ARE VARIOUS ALTERNATIVE STRATEGIES?

PURPOSE:

This exercise focuses on how risky various alternative strategies are for organizations to pursue. Different degrees of risk are based largely on varying degrees of externality, defined as movement away from present business into new markets and products. In general, the greater the degree of externality, the greater the probability of loss resulting from unexpected events. High-risk strategies generally are less attractive than low-risk strategies.

INSTRUCTIONS:


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1. On a separate sheet of paper, number vertically from 1 to 10. Think of 1 as “most risky”, 2 as “next most risky, and so forth to 10, “least risky.”

2. Write the following strategies beside the appropriate number to indicate how risky you believe the strategy is to pursue: horizontal integration, related diversification, liquidation, forward integration, backward integration, product development, market development, market penetration, retrenchment, and unrelated diversification.

3. Grade your paper as your instructor gives you the right answers and supporting rationale. Each correct answer is worth 10 points.

TEACHING NOTES:

The following strategies are listed in terms of riskiness, where the first is the most risky and the tenth is the least risky. Obviously, there are many variations of each of these strategies, so the sequential ordering is only suggestive; it does not always hold true.

1. Related diversification2. Unrelated diversification3. Liquidation4. Horizontal integration5. Forward integration6. Backward integration7. Market development8. Product development9. Divestiture10. Retrenchment11. Market penetration

EXPERIENTIAL EXERCISE 5E: DEVELOPING ALTERNATIVE STRATEGIES FOR MY UNIVERSITY

PURPOSE:

It is important for representatives from all areas of a college or university to identify and discuss alternative strategies that could benefit faculty, students, alumni, staff, and other constituencies. As you complete this exercise, notice the learning and understanding that occurs as people express differences of opinion. Recall that the process of planning is more important than the document.

INSTRUCTIONS:


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1. Recall or locate the external opportunity/threat and internal strength/weakness factors that you identified as part of Exercise 1D. If you did not do that exercise, discuss now as a class important external and internal factors facing your college or university.

2. Identify and put on the chalkboard alternative strategies that you feel could benefit your college or university. Your proposed actions should allow the institution to capitalize on particular strengths, improve upon certain weaknesses, avoid external threats, and/or take advantage of particular external opportunities. List 10 possible strategies on the board. Number the strategies as they are written on the board.

3. On a separate sheet of paper, number from 1 to 10. Everyone in class should individually rate the strategies identified, using a 1 to 3 scale, where 1 = I do not support implementation, 2 = I am neutral about implementation, and 3 = I strongly support implementation. In rating the strategies, recognize that your institution cannot do everything desired or potentially beneficial.

4. Go to the board and record your ratings in a row beside the respective strategies. Everyone in class should do this, going to the board perhaps by rows in the class.

5. Sum the ratings for each strategy so that a prioritized list of recommended strategies is obtained. This prioritized list reflects the collective wisdom of your class. Strategies with the highest score are deemed best.

6. Discuss how this process could enable organizations to achieve understanding and commitment from individuals.

7. Share your class results with a university administrator and ask for comments regarding the process and top strategies recommended.

TEACHING NOTES:

Answers to this exercise will vary for each institution, but generally include the following types of actions:

1. Raise/lower tuition2. Improve student union3. Build new dorms4. Build new parking lots5. Add more online courses6. Expand fundraising activities7. Expand experiential learning activities8. Increase college-sponsored consulting


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9. Offer new majors10. Improve job placement activities of the college

ASSURANCE OF LEARNING EXERCISE 5F: LESSONS IN DOING BUSINESS GLOBALLY

PURPOSE:

The purpose of this exercise is to discover some important lessons learned by local businesses that do business internationally.

INSTRUCTIONS:

Contact several local business leaders by telephone. Find at least three firms that engage in international or export operations. Visit the owner or manager of each business in person. Ask the business person to give you several important lessons that his or her firm has learned in globally doing business. Record the lessons on paper and report your findings to the class.

TEACHING NOTES:

This is an excellent project for extra credit or for a class paper or project. Encourage students to consider the primary challenges reflected in the business leaders’ responses about competing in a global business. For instance, how did the lessons learned relate to strategic planning? Could the businesses have been better prepared for the situations they faced if they had applied strategic planning principles? Did the lessons relate to differences in culture between the U.S. and the other countries where the businesses competed? How could other businesses better prepare for cultural differences? A good way to end this exercise is to develop a list of best practices based on the students’ reports.


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CHAPTER 6

ASSURANCE OF LEARNING EXERCISE 6A: DEVELOPING A SWOT MATRIX FOR MCDONALD’S

PURPOSE:

The most widely used strategy-formulation technique among American firms is the SWOT Matrix. This exercise requires development of a SWOT Matrix for McDonald’s. Matching key external and internal factors in a SWOT Matrix requires good intuitive and conceptual skills. You will improve with practice in developing a SWOT Matrix.

INSTRUCTIONS:

Recall from Exercise 1A that you already may have determined McDonald’s external opportunities/ threats and internal strengths/weaknesses. This information could be used to complete this exercise. Follow the steps outlines as follows:

1. On a separate sheet of paper, construct a large nine-cell diagram that will represent your SWOT matrix. Appropriately label the cells.

2. Appropriately record McDonald’s opportunities/threats and strengths/weaknesses in your diagram.

3. Match external and internal factors to generate feasible alternative strategies for McDonald’s. Record SO, WO, ST, and WT strategies in appropriate cells of the SWOT Matrix. Use the proper notation to indicate the rationale for the strategies. You do not necessarily have to have strategies in all four strategy cells.

4. Compare your SWOT Matrix to another student’s SWOT Matrix. Discuss any major differences.

TEACHING NOTES:

There are eight steps involved in constructing a SWOT Matrix. 1. List the firm’s key external opportunities.2. List the firm’s key external threats.3. List the firm’s key internal strengths.4. List the firm’s key internal weaknesses.5. Match internal strengths with external opportunities and record the resultant SO Strategies in the

appropriate cell.6. Match internal weaknesses with external opportunities and record the resultant WO Strategies.


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7. Match internal strengths with external threats and record the resultant ST Strategies.8. Match internal weaknesses with external threats and record the resultant WT Strategies.

In class, ask students to reveal feasible strategies formulated in the SWOT Matrix cells. The following is a possible answer to this exercise.

Strengths – S 1. Highly successful and

recognized advertising. 2. Strong employee training and

promotion mostly from within.3. Strong Investor Reputation.4. Strongest Brand Image. 5. Recognized as a community

oriented, socially responsible.6. Strong Global Presence7. Use pure ingredients and take

food safety very seriously.8. Consistently solid financial

performance.9. Strong innovation and product

development. 10. Large real estate portfolio.11. Economies of Scale

Weaknesses – W 1. Lowest Customer satisfaction

rating in the industry.2. High employee turnover in their

restaurants. 3. Assembly line approach makes it

difficult and costly to adapt4. Core product line out of sync

with healthy lifestyle trends.5. Sales demonstrate seasonal

effects.6. 80% of restaurants are franchise

owned.7. Over-saturation of real estate in

the US.8. Struggles with fluctuations in

operating and net profits.9. Foreign currency revenue and

debt. Opportunities – O1. Growth in Quick Service

Restaurant industry.2. Low fat, low calorie, healthy

hamburger 3. Many restaurants have outdated

appearance.4. Healthier lifestyle trends.5. Increased beverage options.6. Breakfast not available at 25%

of locations.7. Potential for joint ventures with

retailers.8. Focus on corporate social

responsibility, sustainability.9. International expansion into

emerging markets.10. Diversify portfolio.

SO Strategies1. Develop and heavily market

more environmentally friendly product packaging (S1,S9,O8)

2. 2. Accelerate growth in China, India, Brazil (S4,S6,O9)

3. Develop a “healthier” hamburger, and be first on the market (S9,O2)

4. Continue to introduce healthier product offerings into the menu (S97O4)

5. Open a new, healthier, more upscale chain (S10,S11,O4,O10)

WO Strategies1. Remodel restaurants in US and

Europe (W1,O3)2. 2. Roll out McCafe beverage

service into greater number of US and EU restaurants (W1,O5)

3. Increase operating hours to include breakfast in more US and EU locations to increase return on assets (W3,O6)

4. Use real estate holdings for joint venture or new restaurant chain (W7,O10)

Threats – T1. More health conscious

customers.2. Vulnerable in older, established

markets to upstarts 3. Global economic recession.4. Markets in US and EU are

mature and saturated.

ST Strategies1. Increase advertising focus on

healthier food offerings and better nutritional info (S1,T1)

2. High focus on purity and quality ingredients (S7,T8)

3. Increase Dollar Menu items to increase customer traffic in down

WT Strategies1. Implement a franchise “buyback,

shape-up, and sell” program, financed by selling off some company owned stores (W1,T7)

2. 2. Increase restaurant automation to lower operating costs, employ less labor


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5. Competitors expanding into developing markets.

6. Litigation: 7. Brand equity at risk.8. Food contamination could

damage sales, reputation, etc.9. Intense price pressure from

competitors.10. Negative public opinion

campaigns

economy (S8,S11,T3)4. Starve out competitors by

leveraging supply chain and economies of scale to lower prices (S8,S11,T9)

(W1,W3,T3,T9)3. 3. Trim operations in the US

and Europe and focus on developing areas where health is of less concern (W4,T1,T4)


ASSURANCE OF LEARNING EXERCISE 6B: DEVELOPING A SPACE MATRIX FOR MCDONALDS

PURPOSE:

Should McDonald’s pursue aggressive, conservative, competitive, or defensive strategies? Develop a SPACE Matrix for McDonald’s to answer this question. Elaborate on the strategic implications of your directional vector. Be specific in terms of strategies that could benefit McDonald’s.

INSTRUCTIONS:

1. Join with two other persons in class and develop a joint SPACE Matrix for McDonald’s.

2. Diagram your SPACE Matrix on the board. Compare your matrix with other teams’ matrices.

3. Discuss the implications of your SPACE Matrix.

TEACHING NOTES:

This is a fun (and learning focused) way to approach this concept. Ask teams of students to prepare this in class. Below is an example layout of the SPACE Matrix for McDonald’s. Remember that student responses may vary because they select sets of variables and assign the values for those variables.

Steps in developing a SPACE Matrix:

1. Select a set of variables to define Financial Position, Competitive Position, Stability Position, and Industry Position.


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2. Assign a numerical value ranging from +1 (worst) to +6 (best) to each of the variables that make up the FP and IP dimensions. Assign a numerical value ranging from –1 (best) to –6 (worst) to each of the variables that make up the SP and CP dimensions.

3. Compute an average score for FP, CP, IP, and SP by summing the values given to the variables of each dimension and dividing the number of variables included in the respective dimension.

4. Plot the average scores for FP, IP, SP, and CP on the appropriate axis in the SPACE Matrix.

5. Add the two scores on the x-axis and plot the resultant point on X. Add the two scores on the y-axis and plot the resultant point on Y. Plot the intersection of the new xy-point.

6. Draw a directional vector from the origin of the SPACE Matrix through the new intersection point. This vector reveals the type of strategies recommended for the organization: aggressive, competitive, defensive, or conservative.

X axisIndustry Position +4.00 +1 worst to +6 best X axis: 4.0 -1.67 = 2.33Competitive Position -1.67 -1 best to -6 worst

Y axisFinancial Position +4.83 +1 worst to +6 best Y axis: 4.83 – 2.67 = 2.16Stability Position -2.67 -1 best to -6 worst


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ASSURANCE OF LEARNING EXERCISE 6C: DEVELOPING A BCG MATRIX FOR MCDONALD’S

PURPOSE:

Portfolio matrices are widely used by multidivisional organizations to help identify and select strategies to pursue. A BCG analysis identifies particular divisions that should receive fewer resources than others. It may identify some divisions to be divested. This exercise can give you practice developing a BCG Matrix.

INSTRUCTIONS:

1. Place the following five column headings at the top of a separate sheet of paper: Divisions, Revenues, Profits, Relative Market Share Position, and Industry Growth Rate. Down the far left of your page, list MCD’s geographic divisions. Now turn back to the Cohesion Case and find information to fill in all the cells in your data table from page 30.

2. Complete a BCG Matrix for McDonald’s.

3. Compare your BCG Matrix to other students’ matrices. Discuss any major differences.

TEACHING NOTES:

Divisions Revenues Profits Market SharePosition

% Industry Growth Rate

United States $8,078,300 $3,059,700 1 weakEurope 9,922,900 2,608,000 1 weakAPMEA 4,230,800 818,800 1 goodRest of the World 1,290,400 (43,600) 1 goodTotal $23,522,400 $6,442,900 1

According to the BCG Matrix, all of McDonald’s geographic divisions fall in the stars category.


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Relative Market Share

Stars Question Marks

Cash Cows Dogs

ASSURANCE OF LEARNING EXERCISE 6D: DEVELOPING A QSPM FOR MCDONALD’S

PURPOSE:

This exercise can give you practice developing a Quantitative Strategic Planning Matrix (QSPM) to determine the relative attractiveness of various strategic alternatives.

INSTRUCTIONS:

1. Join with two other students in class to develop a joint QSPM for McDonald’s.

2. Go to the blackboard and record your strategies and their Sum Total Attractiveness Scores. Compare your team’s strategies and sum total attractiveness scores to those of other teams. Be sure not to assign the same AS score in a given row. Recall that dashes should be inserted all the way across a given row when used.


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Low 0.0Medium .50High 1.0

High +20

Medium 0

Low -20

Industry Sales Growth Rate APME

A Rest of World

Europe

U.S.


3. Discuss any major differences.

TEACHING NOTES:

Do this exercise in teams and allow teams to record their strategies and sum total attractiveness scores on the board. Discuss the nature of differences in scores among teams.

Steps in developing a QSPM:

1. Make a list of the firm’s key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM.

2. Assign weights to each key external and internal factor.

3. Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing. Record these in the top row of the QSPM. Group the strategies into mutually exclusive sets if possible.

4. Determine the Attractiveness Scores (AS): 1 = not attractive, 2 = somewhat attractive, 3 = reasonably attractive, and 4 = highly attractive. Use a dash to indicate that a key factor does not affect the choice being made.

5. Compute the Total Attractiveness Score by multiplying the weights by the AS in each row. The higher the Total Attractiveness Score, the more attractive the strategic alternative.

6. Compute the Sum Total Attractiveness Score.

Note that the weights used for the key factors should be identical to those used in the EFE and IFE matrices for McDonald’s. The options will vary from student to student because they must choose their own strategies. In this example, option 1 is to introduce more healthy offerings and option 2 is to focus on health food advertising.

Weight Introduce More Healthy Offerings

Focus on Healthy Advertising

AS TAS AS TASStrengths – S Highly successful and recognized advertising. 0.080.08 3 0.24 4 0.32Strong employee training and promotion. 0.020.02 ``` ``` ``` ```Strong investor reputation. 0.060.06 ``` ``` ``` ```Strongest Brand Image. 0.070.07 2 0.14 1 0.07MCD recognized as a community oriented, socially responsible.

0.010.01``` ``` ``` ```

Strong Global Presence 0.080.08 ``` ``` ``` ```


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Use pure ingredients and take food safety very seriously. 0.040.04 ``` ``` ``` ```Consistently solid financial performance. 0.050.05 1 0.05 2 0.1Strong innovation and product development. 0.030.03 3 0.09 1 0.03Large real estate portfolio. 0.020.02 3 0.05 1 0.02Economies of Scale. 0.050.05 2 0.1 1 0.05Weaknesses – W Lowest Customer satisfaction rating in the industry (69), even below IRS.

0.10.13 0.3 2 0.2

High employee turnover in their restaurants. 0.040.04 ``` ``` ``` ``Àssembly line approach makes it difficult and costly to adapt to changing trends.

0.080.081 0.08 2 0.16

Core product line out of sync with trends toward healthier lifestyles.

0.070.073 0.21 1 0.07

Sales demonstrate seasonal effects. 0.020.02 ``` ``` ``` ```80% of restaurants are franchise owned. 0.050.05 ``` ``` ``` ``Òver-saturation of real estate in the US. 0.040.04 3 0.12 1 0.04Struggles with fluctuations in operating and net profits. 0.030.03 ``` ``` ``` ```Foreign currency revenue and debt. 0.060.06 ``` ``` ``` ``Òpportunities – O ``` ``` ``` ``Ànticipated growth in Quick Service Restaurant industry. 0.060.06 2 0.12 1 0.06Low fat, low calorie, healthy hamburger 0.070.07 ``` ``` ``` ```Many restaurants have outdated appearance. 0.060.06 ``` ``` ``` ```Social change - innovation within healthier lifestyle foods.

0.040.043 0.12 1 0.04

Increased beverage options. 0.060.06 3 0.18 1 0.06Breakfast not available at 25% of locations. 0.060.06 ``` ``` ``` ```Potential for joint ventures with retailers. 0.030.03 ``` ``` ``` ```Continued focus on corporate social responsibility, environmental sustainability.

0.020.02``` ``` ``` ```

International expansion into emerging markets. 0.060.06 ``` ``` ``` ```Diversify portfolio. 0.030.03 3 0.09 1 0.03Threats – T More health conscious customers. 0.070.07 3 0.21 2 0.14Vulnerable in older, established markets to upstarts 0.040.04 3 0.12 2 0.08Global economic recession causing consumers to spend less.

0.060.06``` ``` ``` ```

Markets in US and EU are mature and saturated. 0.070.07 3 0.21 2 0.14Subway and YUM! Brands expanding into developing markets at a higher rate.

0.060.06``` ``` ``` ```

Litigation: 0.030.03 ``` ``` ``` ```Brand equity at risk. 0.040.04 ``` ``` ``` ```Contamination of the food supply could damage sales, reputation, etc.

0.040.04``` ``` ``` ```

Intense price pressure from competitors. 0.070.07 1 0.07 3 0.21Negative public opinion campaigns: 0.030.03 ``` ``` ``` ```Totals: 2 1.12 0.76



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ASSURANCE OF LEARNING EXERCISE 6E: FORMULATING INDIVIDUAL STRATEGIES

PURPOSE:

Individuals and organizations are alike in many ways. Each has competitors and each should plan for the future. Every individual and organization faces some external opportunities and threats and has some internal strengths and weaknesses. Both individuals and organizations establish objectives and allocate resources. These and other similarities make it possible for individuals to use many strategic-management concepts and tools. This exercise is designed to demonstrate how individuals planning their future can use the SWOT Matrix. As one nears completion of a college degree and begins interviewing for jobs, planning can be particularly important.

INSTRUCTIONS:

1. On a separate sheet of paper, construct a SWOT Matrix. Include what you consider to be your major external opportunities, major external threats, major strengths and major weaknesses. For example, an internal weakness might be a low grade point average. An external opportunity might be a graduate program that interests you.

2. Match key external and internal factors by recording in the appropriate cell of the matrix alternative strategies or actions that would allow you to capitalize upon your strengths, overcome your weaknesses, take advantage of your external opportunities, and minimize the impact of external threats. Be sure to use the appropriate matching notation in the strategy cells of the matrix. Because every individual is unique, there is no one right answer to this exercise.

TEACHING NOTES:

This is a worthwhile homework assignment. Self-assessment prior to major career decisions is beneficial for students. An example is provided below.

Leave Blank Strengths – S1. Good grades2. Financial resources available

for education3. Strong communication skills4. Motivated

Weaknesses – W1. No work experience 2. No foreign language skills3. Degree from regional

university with little brand recognition


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5. Good team playerOpportunities – O

1. Potential to advance education with MBA

2. Many industries and locations with job growth (especially health care and biotechnology)

SO Strategies1. Apply to graduate school

(S1, S2, O1)2. Enter industries with strong

potential for growth (S1, S3, S4, S5, O2)

WO Strategies1. Seek out an internship (W1,

O2)2. Minimize importance of

foreign language by improving other aspects of education (W2, O1)

Threats – T1. Many students graduate each

year with same degree2. Potential for recession or

slow economic growth (fewer jobs available, salaries lower)

3. Jobs outsourced overseas

ST Strategies1. Emphasize good grades to

potential employers (S1, T1)2. Consider pursuing MBA if

job market is weak (S2, T2, T3)

WT Strategies1. Pursue foreign language

training and other skills that can differentiate from others (W2, T1)

2. Seek out internship in growing industry (W1, T2, T3)

ASSURANCE OF LEARNING EXERCISE 6F: THE MACH TEST

PURPOSE:

The purpose of this exercise is to enhance your understanding and awareness of the impact that behavioral and political factors can have on strategy analysis and choice.

INSTRUCTIONS:

1. On a separate sheet of paper, number from 1 to 10. For each of the 10 statements given below, record a 1, 2, 3, 4, or 5 to indicate your attitude where 1 = I disagree a lot. 2 = I disagree a little. 3 = My attitude is neutral. 4 = I agree a little. 5 = I agree a lot.

1. The best way to handle people is to tell them what they want to hear.2. When you ask someone to do something for you, it is best to give the real reason for

wanting it, rather than a reason that might carry more weight.3. Anyone who completely trusts anyone else is asking for trouble.4. It is hard to get ahead without cutting corners here and there.5. It is safest to assume that all people have a vicious streak and it will come out when

they are given a chance.6. One should take action only when it is morally right.7. Most people are basically good and kind.8. There is no excuse for lying to someone else.9. Most people forget more easily the death of their father than the loss of their property.


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10. Generally speaking, people won’t work hard unless they’re forced to do so.

2. Add up the numbers you recorded beside statements 1, 3, 4, 5, 9, and 10. This sum is Subtotal One. For the other four statements, reverse the numbers you recorded so a 5 becomes a 1, 4 becomes a 2, 2 becomes a 4, 1 becomes a 5, and 3 remains a 3. Then add those four numbers to get Subtotal Two. Finally, add Subtotal One and Subtotal Two to get your Final Score.

TEACHING NOTES:

This is an especially fun exercise that takes only about 10 minutes. Scoring is provided in the text and is repeated here for convenience.

Below 16: Never uses manipulation as a tool.16 to 20: Rarely uses manipulation as a tool.21 to 25: Sometimes uses manipulation as a tool.26 to 30: Often uses manipulation as a tool.Over 30: Always uses manipulation as a tool.

A National Opinion Research Center poll found that the average score for Americans is 25.

When discussing the Mach Test in class, consider using the following questions to guide the class discussion.

1. How is a person’s Mach score relevant to their ability to plan strategically? Explain.2. What type of person would you want leading a company – a high or low Mach? Why?


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ASSURANCE OF LEARNING EXERCISE 6G: DEVELOPING A BCG MATRIX FOR MY UNIVERSITY

PURPOSE:

A BCG Matrix is useful to develop for many nonprofit organizations, including colleges and universities. Of course, there are no profits for each division or department and in some cases no revenue. The purpose of this exercise is to have students provide a complete BCG Matrix. However, you can be creative in performing a BCG Matrix. For example, the pie slice in the circles can represent the number of majors receiving jobs upon graduation or the number of faculty teaching in that area or some other variable that you believe is important to consider. The size of the circles can represent the number of students majoring in particular departments or areas.

INSTRUCTIONS:

1. On a separate sheet of paper, develop a BCG Matrix for your university. Include all academic schools, departments, or colleges.

2. Diagram your BCG Matrix on the blackboard.

3. Discuss differences among the BCG Matrices on the board.

TEACHING NOTES:

Let the circles stand for schools/colleges at your institution. The market share is based on the percentage of students enrolled in each school. The growth rate is based on the growth in number of majors. Ask the students what implications arise for disciplines at the university in the different quadrants–how should the university address dogs, question marks, stars, and cash cows? If the university chose to address these disciplines using this perspective, what implications would exist for the role and mission of the university?

% of students enrolled Market SharePosition

% Growth Rate

School of Business 40% 1 mediumSchool of Education 30% 2 lowSchool of Arts 10% 4 lowSchool of Science and Humanities

20% 3 medium

According to the BCG Matrix, the School of Business is a star but could be moving towards a position of cash cow. The School of Education in this example is a question mark. The School of Arts is a dog and the School of Science and Humanities is a question mark.


274


Relative Market Share

Stars Question Marks

Cash Cows Dogs

ASSURANCE OF LEARNING EXERCISE 6H: THE ROLE OF THE BOARDS OF DIRECTORS

PURPOSE:

The purpose of this exercise is to give students a better understanding of the role of boards of directors in formulating, implementing, and evaluating strategies.

INSTRUCTIONS:

Identify a person in your community who serves on a board of directors. Make an appointment to interview that person and seek answers to the questions given below. Summarize your findings in a five-minute oral report to the class.

On what board are you a member? How often does the board meet?


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Low 0.0Medium .50High 1.0

High +20

Medium 0

Low -20

Industry Sales Growth Rate


How long have you served on the board? What role does the board play in this company? How has the role of the board changed in recent years? What changes would you like to see in the role of the board? To what extent do you prepare for the board meetings? To what extent are you involved in strategic management of the firm?

TEACHING NOTES:

This is a great exercise for homework, especially if you can allow some class time for the oral report.

ASSURANCE OF LEARNING EXERCISE 6I: LOCATING COMPANIES IN A GRAND STRATEGY MATRIX

PURPOSE:

The Grand Strategy Matrix is a popular tool for formulating alternative strategies. All organizations can be positioned in one of the Grand Strategy Matrix’s four strategy quadrants. The divisions of a firm likewise could be positioned. The Grand Strategy Matrix is based on two evaluative dimensions: competitive position and market growth. Appropriate strategies for an organization to consider are listed in sequential order of attractiveness in each quadrant of the matrix. This exercise gives you experience using a Grand Strategy Matrix.

INSTRUCTIONS:

Using the year-end 2008 financial information given in the text, prepare a Grand Strategy Matrix on a separate sheet of paper. Write the respective company names in the appropriate quadrant of the matrix. Based on this analysis, what strategies are recommended for each company?

TEACHING NOTES:

The first matrix illustrates the appropriate strategies for each quadrant. The second matrix illustrates the quadrant in which each company is located.

Quadrant II:Market developmentMarket penetrationProduct developmentHorizontal integrationDivestitureLiquidation

Quadrant I:Market developmentMarket penetrationProduct developmentForward integrationBackward integrationHorizontal integration

Quadrant III: Quadrant IV:


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Rapid Market Growth

Weak Competitive Position

Strong Competitive Position


RetrenchmentConcentric diversificationHorizontal diversificationConglomerate diversificationDivestitureLiquidation

Concentric diversificationHorizontal diversificationConglomerate diversificationJoint ventures

Quadrant II:Marriott International

Quadrant I:Herman MillerMGM Mirage

Quadrant III:Ford MotorInternational PaperWeyerhaeuser

Quadrant IV:Oshkosh Truck


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Slow Market Growth

Rapid Market Growth

Weak Competitive Position

Strong Competitive Position

Slow Market Growth


CHAPTER 7: Implementing Strategies: Management and Operations Issues

ASSURANCE OF LEARNING EXERCISE 7A: REVISING MCDONALD’S ORGANIZATIONAL CHART

PURPOSE:

Developing and altering organizational charts is an important skill for strategists to possess. This exercise can improve your skill in altering an organization’s hierarchical structure in response to new strategies being formed.

INSTRUCTIONS:

1. Turn back to the McDonald’s Cohesion Case (p. 29). On a separate sheet of paper, answer the following questions: What type of organizational chart is illustrated for McDonald’s? What improvements could you recommend for the McDonald’s organizational

chart? Give your reasoning for each suggestion. What aspects of McDonald’s chart do you especially like? What type of organizational chart do you believe would best suit McDonald’s?

Why?

TEACHING NOTES:

What type of organizational chart is illustrated for McDonald’s? The chart below illustrates eight SBU divisions in McDonald’s current organizational structure.


278


Source: Wiersema. 2009. McDonald’s Corporation Strategic Management Plan.

What improvements could you recommend for the McDonald’s organizational chart? The chart below illustrates a proposed organizational structure for the future of McDonald’s corporation.


Board of Directors

Vice Chairman & CEO

President & COO

Exec. V.P.& CFO

Exec. V.P.& CHRO

Exec. V.P.& CRO

Exec. V.P.& CMO

Exec. V.P.& General Council

Sr. V.P.& Corporate Controller

Chief Diversity Officer

Chief Creative Officer

President,USA

President,Europe

President,Canada & Latin

America

V.P. & Assoc. General Council

President,APMEA

CEO Exec. V.P.

& CRO

President & COOExec. V.P.

& CMOExec. V.P.

& CHROChief

Diversity OfficerChief

Creative OfficerSr. V.P.

& Corporat

e Controlle

rV.P. & Assoc. General Council

President,

USAExec. V.P. & COO USA

President,

EasternPresident

,Central

President,

WesternPresident

,Europe

President,

NorthernPresident

,SouthernPresident

,Eastern

President,

WesternPresident

,APMEACEO

ChinaNorthern

President,Central

President,Eastern

President,Western

President,Northern

President,Southern

President,Eastern

President,Western

Exec. V.P. & COO USA

President,Greater Asia &

M.E.

M.D.Australia

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Board of Directors

Chief Executive Officer

Chief Operating

Officer

Chief Financial Officer

Chief H. R.

Officer

Chief Restaurant

Officer

Chief Marketing

Officer

Chief Legal

Officer

Corporate Controller

Chief Diversity Officer

Chief Creative Officer

President, USA

President, Europe

President, Canada &

Latin America

Assoc. General Council

V.P. Central

V.P. Eastern

V.P. Western

V.P. Western

V.P. Plan To

Win

President, China

V.P. Southern

V.P. Northern

V.P. Eastern

V.P. Plan To

Win

V.P. Australia

V.P. M.E.&A

V.P. Greater

Asia

President, APMEA

V.P. Plan To

Win

V.P. Southern

V.P. Northern

V.P. Plan To

Win

V.P. South

America

V.P. Canada, Mexico

V.P. Plan To

Win


What aspects of McDonald’s chart do you especially like? Student responses will vary.

What type of organizational chart do you believe would best suit McDonald’s? Why? An SBU or Matrix chart would suit McDonald’s best because of its large size and complexity.

EXPERIENTIAL EXERCISE 7B: DO ORGANIZATIONS REALLY ESTABLISH OBJECTIVES?

PURPOSE:

Objectives provide direction, allow synergy, aid in evaluation, establish priorities, reduce uncertainty, minimize conflicts, stimulate exertion, and aid in both the allocation of resources and the design of jobs. This exercise will enhance your understanding of how organizations use or misuse objectives.

INSTRUCTIONS:


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1. Join with one other person in class to form a two-person team.

2. Contact by telephone the owner or manager of an organization in your city or town. Request a thirty-minute personal interview or meeting with that person for the purpose of discussing “business objectives.” During your meeting, seek answers to the following questions:

Do you believe it is important for a business to establish and clearly communicate long-term and annual objectives? Why or why not?

Does your organization establish objectives? If yes, what type and how many? How are the objectives communicated to individuals? Are your firm’s objectives in written form or simply communicated orally?

To what extent are managers and employees involved in the process of establishing objectives?

How often are your business objectives revised and by what process?

3. Take good notes during the interview. Let one person be the note taker and one person do most of the talking. Have your notes typed up and ready to turn in to your professor.

4. Prepare a five minute oral presentation for the class, reporting the results of your interview. Turn in your typed report.

TEACHING NOTES:

Consider using this exercise as an extra credit assignment and then allow some class time for the results to be presented.

EXPERIENTIAL EXERCISE 7C: UNDERSTANDING MY UNIVERSITY’S CULTURE

PURPOSE:

It is something of an art to uncover the basic values and beliefs that are buried deeply in an organization’s rich collection of stories, language, heroes, heroines, and rituals, yet culture can be the most important factor in implementing strategy.

INSTRUCTIONS:

1. On a separate sheet of paper, list the following terms: hero/heroine, belief, metaphor, language, value, symbol, story, legend, saga, folktale, myth, ceremonial, rite, and ritual.


281


2. For your college or university, give examples of each term. If necessary, speak with faculty, staff, alumni, administration, or fellow students of the institution to identify examples of each term.

3. Report your findings to the class. Tell the class how you feel regarding cultural products being consciously used to help implement strategies.

TEACHING NOTES:

This exercise makes a good homework assignment, though the examples identified should be discussed in class. This will enable students to compare their responses and identify the unifying culture at your institution. An example is provided in the form below.

Cultural form ExampleHero/Heroine Grace Harris is a heroine at Virginia Commonwealth University. She served

as President of the institution twice and also as Provost. She was instrumental in guiding the institution and is known now as the example by which all leaders are measured.

Belief VCU believes that football is detrimental to the learning environment and, for this reason, does not have a football team.

Metaphor VCU is like a friend of the community. It seeks to be seen as a friend and support system in all community affairs.

Language There are several words that are heavily used in the VCU language. They are interdisciplinary, entrepreneurial, international, diversity, and growth.

Value VCU values those things that are represented by its language. These include interdisciplinary programs, programs that generate revenues, international experiences, a commitment to diversity, and growth.

Symbol The symbol of VCU is the ram.

Story VCU evolved from two other small institutions just three decades ago. The president likes to tell this story to illustrate the youthfulness and vigor of the institution.

Legend The work of Dr. John Fenn, a Nobel prize winning scientist is legendary at VCU.

Saga VCU develops an annual report each year that details its many accomplishments.

Folktale Upper classmen often warn freshmen about the “Freshmen 15” – the 15


282


pounds that freshmen tend to gain during the first year of college.

Myth Music students believe that the building which houses the School of Music is haunted by a pianist who died in the Civil War. The School is housed in an old church.

Ceremony Graduation is a ceremony that marks the end of each student’s formal relationship with the institution.

Rite A rite of passage at graduation is the throwing of caps at the conclusion of the service.

Ritual Students have a ritual of going out on Thursday nights.


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CHAPTER 8: Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues

ASSURANCE OF LEARNING EXERCISE 8A: DEVELOPING A PRODUCT-POSITIONING MAP FOR MCDONALD’S

PURPOSE:

Organizations continually monitor how their products and services are positioned relative to competitors. This information is especially useful for marketing managers, but is also used by other managers and strategists.

INSTRUCTIONS:

1. On a separate sheet of paper, develop a product-positioning map for McDonald’s, Wendy’s, Burger King, and Hardee’s. Include in your diagram.

2. At the chalkboard, diagram your product-positioning map. 3. Compare your product-positioning map with those diagrammed by other students.

Discuss any major differences.

TEACHING NOTES:

These are the steps for developing a product-positioning map.1. Select key criteria that effectively differentiate products or services in the industry.2. Diagram a two-dimensional product-positioning map with specified criteria on each axis.3. Plot major competitors’ products or services in the resultant four-quadrant matrix.4. Identify areas in the positioning map where the company’s products or services could be most

competitive in the given target market. Look for vacant areas.


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ASSURANCE OF LEARNING EXERCISE 8B: PERFORMING AN EPS/EBIT ANALYSIS FOR MCDONALD’S

PURPOSE:

An EPS/EBIT analysis is one of the most widely used techniques for determining the extent that debt and/or stock should be used to finance strategies to be implemented. This exercise can give you practice performing EPS/EBIT analysis.

INSTRUCTIONS:

Let’s say McDonald’s needs to raise $1 billion to expand into Africa. Determine whether McDonald’s should have used all debt, all stock, or a 50-50 combination of debt and stock to finance this market-development strategy. Assume a 38% tax rate, 5% interest rate, McDonald’s stock price of $50 per share, and an annual dividend of $0.30 per share of common stock. The EBIT range for 2010 is between $6.332 billion and $9 billion. A total of 1 billion shares of common stock are outstanding. Develop an EPS/EBIT chart to reflect your analysis.

TEACHING NOTES:Amount needed to raise: $1 billionInterest rate: 5%Tax rate: 38%Stock price: $50


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Annual dividend: $0.30 per shareNumber of shares outstanding: 1 billion2010 EBIT range: $6.332 billion to $9 billion

According to the EPS/EBIT analysis, common stock financing should be used in the moderate or high earnings situation but all three options are viable in the low earnings situation.

Common Stock Financing Debt Financing Combination Recession Normal Boom Recession Normal Boom Recession Normal BoomEBIT $6.33 $7.67 $9 $6.33 $7.67 $9 $6.33 $7.67 $9 Interest 0 0 0 0.05 0.05 0.05 0.025 0.025 0.025EBT $6.33 $7.67 $9.00 $6.28 $7.62 $8.95 $6.31 $7.64 $8.98 Taxes $2.41 $2.91 $3.42 $2.39 $2.89 $3.40 $2.40 $2.90 $3.41 EAT $3.93 $4.75 $5.58 $3.89 $4.72 $5.55 $3.91 $4.74 $5.56 # of Shares 1.2b 1.2b 1.2b 1b 1b 1b 1.1b 1.1b 1.1bEPS 3.27 3.96 4.65 3.89 4.72 5.55 3.55 4.31 5.06

ASSURANCE OF LEARNING EXERCISE 8C: PREPARING PROJECTED FINANCIALSTATEMENTS FOR MCDONALD’S

PURPOSE:

This exercise is designed to give you experience preparing projected financial statements. Pro forma analysis is a central strategy-implementation technique because it allows managers to anticipate and evaluate the expected results of various strategy-implementation approaches.

INSTRUCTIONS:

1. Work with a classmate. Develop a 2010 projected income statement and balance sheet for McDonald’s. Assume that Disney plans to raise $900 million in 2010 to begin serving Africa and plans to obtain 50 percent financing from a bank and 50 percent financing from a stock issuance. Make other assumptions as needed, and state them clearly in written form.

2. Compute McDonald’s current ratio, debt-to-equity ratio, and return on investment for 2008 and 2009. How do your 2010 projected ratios compare to the 2008 and 2009 ratios? Why is it important to make this comparison? Use http://finance.yahoo.com to obtain 2009 financial statements.

3. Bring your projected statements to class and discus any problems or questions you encountered.

4. Compare your projected statements to the statements of other students. What major differences exist between your analysis and the work of other students?


286


TEACHING NOTES:

McDonald’s Projected Income Statement (actual figures for 2008)2008 2009 2010 2011

Total Revenue $23,522.4 $23,973.8 $24,975.6 $26,510.5Cost of Goods Sold $14,883.2 $15,168.8 $15,802.7 $16,773.8Gross Profit $8,639.2 $8,805.0 $9,172.9 $9,736.7Selling, General & Admin. Exp. $2,355.5 $2,400.7 $2,501.0 $2,654.7Depreciation $6.0 $99.5 $147.6 $183.3Other Expenses ($165.2) $340.0 $365.0 $375.0Operating Income $6,442.9 $5,964.8 $6,159.3 $6,523.6Interest Expense $522.6 $632.6 $577.6 $496.2Gain on Sale of Assets ($237.7) ($200.0) ($2,400.0) ($3,500.0)Income Before Taxes $6,158.0 $5,532.2 $7,981.7 $9,527.4Income Taxes $1,844.8 $1,657.3 $2,391.1 $2,854.2Net Income $4,313.2 $3,874.9 $5,590.6 $6,673.2Earnings per Share $3.829 $3.439 $4.962 $5.923Dividends Paid $1,830.7 $1,971.6 $2,534.9 $3,379.8Dividends per Share $1.625 $1.750 $2.250 $3.000Retained Earnings $2,482.5 $1,903.3 $3,055.7 $3,293.4Shares Outstanding 1,126.6 1,126.60 1,126.60 1,126.60

McDonald’s Projected Balance Sheet (actual figures for 2008)


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2008 2009 2010 2011Cash $2,063.4 $2,715.2 $3,222.4 $2,583.2Total Receivables $931.2 $1,024.3 $1,042.9 $1,070.9Total Inventory $111.5 $122.7 $124.9 $128.2Prepaid Expenses & Other Current Assets $411.5 $419.4 $436.9 $463.8Total Current Assets $3,517.6 $4,281.6 $4,827.2 $4,246.1Intangible Assets $4,689.4 $4,532.3 $3,894.6 $3,315.2Property, Plant, Equipment $31,152.4 $34,892.4 $37,057.2 $38,482.2Accumulated Depreciation & Amortization ($10,897.9) ($10,997.4) ($11,145.0) ($11,318.5)Net Property & Equipment $20,254.5 $23,895.0 $25,912.2 $27,163.7Total Assets $28,461.5 $32,708.9 $34,634.0 $34,725.0Accounts Payable $620.4 $682.4 $694.8 $713.5Other Current Liabilities $1,917.5 $1,954.3 $2,036.0 $2,161.2Total Current Liabilities $2,537.9 $2,636.8 $2,730.8 $2,874.7Long Term Debt $10,186.0 $12,386.0 $11,286.0 $8,086.0Other Long-term Liabilities $1,410.1 $1,437.2 $1,497.2 $1,589.3Deferred Income Taxes $944.9 $963.0 $1,003.3 $1,065.0Total Liabilities $15,078.9 $17,423.0 $16,517.4 $13,615.0Common Stock ($0.01 Par) $16.6 $16.6 $16.6 $16.6Additional Paid-In Capital $4,600.2 $4,600.2 $4,600.2 $4,600.2Treasury Stock ($20,289.4) ($20,289.4) ($20,289.4) ($20,289.4)Retained Earnings $29,055.2 $30,958.5 $33,789.2 $36,782.6Total Equity $13,382.6 $15,285.9 $18,116.6 $21,110.0Total Liability & Shareholders Equity $28,461.5 $32,708.9 $34,634.0 $34,725.0

McDonald’s Projected Ratios vs. 20082008 2009 2010 2011

Growth RatiosSales Growth 3.2% 1.9% 4.2% 6.1%Profitability RatiosNet Profit Margin 18.3% 16.2% 22.4% 25.2%Return on Assets 15.2% 11.8% 16.1% 19.2%Return on Equity 32.2% 25.3% 30.9% 31.6%Earnings per Share $3.83 $3.44 $4.96 $5.92Dividends per Share $1.63 $1.75 $2.25 $3.00Leverage RatiosDebt to Equity 1.13 1.14 0.91 0.64Long Term Debt to Equity 0.76 0.81 0.62 0.38Times Interest Earned 12.78 9.75 14.82 20.20Efficiency RatiosTotal Asset Turnover 0.83 0.73 0.72 0.76



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ASSURANCE OF LEARNING EXERCISE 8D: DETERMINING THE CASH VALUE OF MCDONALD’S

PURPOSE:

It is simply good business practice to periodically determine the financial worth or cash value of your company. This exercise gives you practice determining the total worth of a company using several methods. Use year-end 2008 data as given in the Cohesion Case on pp. 31-32.

INSTRUCTIONS:

1. Calculate the financial worth of McDonald’s based on four methods: 1) the net worth or stockholders’ equity, 2) the future value of McDonald’s earnings, 3) the price-earnings ratio, and 4) the outstanding shares method. In a dollar amount, how much is McDonald’s worth?

2. Compare your analyses and conclusions with those of other students.

TEACHING NOTES:

Valuation Method (‘000) 2008Equity Method $31,207,900Net Income Method $21,566,000Price/Earning x Net Income $45,445,479Shares x Price Method $61,963,000Average total value $40,045,595

1. Equity Method: Common stock + Retained Earnings + Goodwill (Intangibles)$16,600 + 28,953,900 + 2,237,400 = $31,207,900

2. Net Income Method: Net Income x 5$4,313,200 * 5 = $21,566,000

3. P/E Method: Share Price / EPS x avg. net income (3 years)($55/ .81) * (4,313,200 + 2,395,100 + 3,544,200 / 3 = $3,417,500) 13 * $3,417,500 = $45,445,479

4. Shares x Price Method: Number of shares outstanding x share price1,126,600 X $55.00 = $61,963,000


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ASSURANCE OF LEARNING EXERCISE 8E: DEVELOPING A PRODUCT-POSITIONING MAP FOR MY UNIVERSITY

PURPOSE:

The purpose of this exercise is to give you practice developing product-positioning maps. Nonprofit organizations, such as universities, are increasingly using product-positioning maps to determine effective ways to implement strategies.

INSTRUCTIONS:

1. Join with two other persons in class to form a group of three.

2. Jointly prepare a product-positioning map that includes your institution and four other colleges or universities in your state.

3. At the chalkboard, diagram your product-positioning map.

4. Discuss differences among the maps diagrammed on the board.

TEACHING NOTES:

Be sure to focus on the implications of each map illustrated on the board. Steps for developing a product-positioning map include: 1. Select key criteria that effectively differentiate institutions of higher education.2. Diagram a two-dimensional product-positioning map with specified criteria on each axis.3. Plot major competitors in the resultant four-quadrant matrix.4. Identify areas in the positioning map where the university could be most competitive in the given

target market.

ASSURANCE OF LEARNING EXERCISE 8F: DO BANKS REQUIRE PROJECTED FINANCIAL STATEMENTS?


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High Perceived Quality

Low Perceived Quality

High CostLow Cost

High prestige, private institutions like Harvard

Online programs like University of Phoenix

High prestige, public institutions like University of Virginia


PURPOSE:

The purpose of this exercise is to explore the practical importance and use of projected financial statements in the banking business.

INSTRUCTIONS:

Contact two local bankers by phone and seek answers to the questions listed below. Record the answers you receive and report your findings to the class.

1. Does your bank require projected financial statements when they are part of a business loan application?

2. How does your bank use projected financial statements when they are part of a business loan application?

3. What special advice do you give potential business borrowers in preparing projected financial statements?

TEACHING NOTES:

This is another good homework assignment that gives students experience interacting with local business leaders. Banks, of course, do require pro forma financial statements from businesses before making a commercial loan.


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CHAPTER 9: Strategy Review, Evaluation, and Control

ASSURANCE OF LEARNING EXERCISE 9A: PREPARING A STRATEGY-EVALUATION REPORT FOR MCDONALD’S CORP.

PURPOSE:

This exercise can give you experience locating strategy-evaluation information. Use of the Internet coupled with published sources of information can significantly enhance the strategy-evaluation process. Performance information on competitors, for example, can help put into perspective a firm’s own performance.

INSTRUCTIONS:

1. Visit http://marketwatch.multexinvestor.com, http://moneycentral.msn.com, http://finance.yahoo.com, www.clearstation.com to locate strategy-evaluation information on competitors. Read some recent articles that discuss the fast-food restaurant business.

2. Summarize your research findings by preparing a strategy-evaluation report for your instructor. Include in your report a summary of McDonald’s strategies and performance in 2010 and a summary of your conclusions regarding the effectiveness of McDonald’s strategies.

3. Based on your analysis, do you feel that McDonald’s is pursuing effective strategies? What recommendations would you offer to McDonald’s chief executive officer?

TEACHING NOTES:

This is a good Internet or library exercise for homework. Example strategies may include any of the following, as well as others:

Plan to Win by developing a dual-tier market strategy in U.S. And European markets. Buy back, remodel, re-badge, re-image, re-sell 1000 restaurants per year in U.S. and Europe. Expand more rapidly in China, India, Brazil by adding 2000 new restaurants per year. Continue McCafe beverage rollout in U.S. (8500) and Europe (2300) through 2011. Continue to expand operating hours to include breakfast, late night in U.S. (2200) and Europe

(800) through 2011. Develop and rollout of “green“ product packaging in 2010. Restructure to support Plan To Win strategy.



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ASSURANCE OF LEARNING EXERCISE 9B: EVALUATING MY UNIVERSITY’S STRATEGIES

PURPOSE:

An important part of evaluating strategies is determining the nature and extent of changes in an organization’s external opportunities/threats and internal strengths/weaknesses. Changes in these underlying critical success factors can indicate a need to change or modify the firm’s strategies.

INSTRUCTIONS:

1. As a class, discuss positive and negative changes in your university’s external and internal factors during your college career. Begin by listing on the board new or emerging opportunities and threats.

2. Then identify strengths and weaknesses that have changed significantly during your college career.

3. In light of the external and internal changes identified, discuss whether your university’s strategies need modifying. Are there any new strategies that you would recommend?

4. Make a list to recommend to your department chair, dean, or chancellor.

TEACHING NOTES:

This is largely a reflection exercise that will build upon the earlier SWOT analysis students conducted for their institution. While the specific changes students recall will vary from institution to institution and semester to semester, some of the following examples may be relevant.

In recent years, institutions of higher education have faced rising costs in terms of salaries and benefits, technology, building maintenance, and more. Tuitions have been on the rise too, but the public may feel that tuition is rising too fast and that students are not getting added value for those increased prices. At the same time, state funding has become less dependable. Because many schools are adding revenue by adding students, classrooms and dorms may be crowded and lead to decreases in satisfaction as students struggle to get the classes they need to graduate.

There are an increasing number of for-profit institutions competing for the same set of students. Schools like University of Phoenix and Capella University have been very successful thus far. Business degrees are not as popular as they were in the 1980s and 1990s.


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Students are increasingly seeking out liberal arts degrees rather than professional degrees. An institution might deal with these changes by finding other sources of revenue such as alumni donations. It might work with local developers to identify off-campus housing. It might seek to offer unusual class schedules that could lighten the demand for classes and increase the likelihood for students to get the classes they need. It may redefine itself and develop a differential advantage that better competes with for-profit institutions. Finally, the institution may establish a dual major that combines business and liberal arts.


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CHAPTER 10: Business Ethics, Social Responsibility, Environmental Sustainability

ASSURANCE OF LEARNING EXERCISE 10A: DOES MCDONALD’S HAVE A CODE OF BUSINESS ETHICS?

PURPOSE:

This exercise aims to familiarize you with corporate codes of business ethics. Go to Starbucks’ Standards of Business Conduct found at their www.starbucks.com Web site and more particularly at the http://www.starbucks.com/aboutus/SoBC_FY09_eng.pdf Web page. Then see the Code of Business Ethics for McDonald’s Corporation or lack of one thereof. (At the time of this writing, the author could only find a social responsibility statement for McDonald’s, and it was at the http://www.mcdonalds.com/usa/work/socialresp.html Web page).

INSTRUCTIONS:

1. Go to these sites and print the Standards of Business Conduct for (1) Starbucks Corp. and (2) McDonald’s Corp. Read the two statements.

2. On a separate sheet of paper, list three aspects that you like most and three aspects that you like least about (1) the Starbucks statement and (2) the McDonald’s statement. In other words, compare the two statements. Conclude by indicating which statement of conduct you like best. Why do you think it is best?

3. Explain why having a code of business ethics is not sufficient for ensuring ethical behavior in an organization. What other means are necessary to help ensure ethical behavior? Give the class an example of a breach of ethical conduct that you recall in your work experience.

TEACHING NOTES:

Starbuck’s statement on business conduct is extremely thorough with multiple pages beyond those encouraged for student analysis. On the other hand, McDonald’s statement on social responsibility is limited to one Web page, with an added link for Ronald McDonald House Charities.

Students are asked to indicate the three aspects that they like most and least so responses will vary from student to student. Some things students may mention about McDonald’s code include its emphasis on the community focus with Ronald McDonald House Charities. This link is external to McDonalds (http://rmhc.org/). It provides detailed information on the company mission and vision, goals, news and events, and opportunities to help. Starbuck’s code, in contrast, is based on what its


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employees should NOT do. It is a set of rules rather than a statement of commitment on the part of the company. It details legal disputes, confidentiality policies, conflict of interest policies, and other issues like position on insider trading. While McDonald’s code is written from a perspective of trust, Starbuck’s is written from a position of distrust.

Step 3 of the exercise asks why having a code of ethics is not sufficient for assuring ethical behavior in an organization. The text points out that an ethical culture needs to permeate the organization. This is simply a mind-set among managers and employees that good ethics is not only good business but it is also expected and rewarded by the organization. Various methods for achieving an ethical culture are listed below:

1. Develop a code of business ethics.2. Reward ethical decisions and practices.3. Set a good example.4. Conduct ethics workshops.5. Have everyone sign the code of ethics during pre-employment activities.6. Encourage performance regarding ethical issues.7. Monitor performance regarding ethical issues.8. Institute severe penalties and policies for unethical behavior.

EXPERIENTIAL EXERCISE 10B: THE ETHICS OF SPYING ON COMPETITORS

PURPOSE:

This exercise gives you the opportunity to discuss in class ethical and legal issues in class as related to methods being used by many companies to spy on competing firms. Gathering and using information about competitors is an area of strategic management that Japanese firms do more proficiently than American firms.

INSTRUCTIONS:

On a separate sheet of paper, number from 1 to 18. For the 18 spying activities listed as follows, indicate whether or not you believe the activity is ethical or unethical and legal or illegal. Place either an E for ethical or a U for unethical, and either an L for legal or an I for illegal for each activity. Compare your answers to those of your classmates and discuss any differences.

1. Buying competitors’ garbage2. Dissecting competitors’ products3. Taking competitors’ plant tours anonymously4. Counting tractor-trailer trucks leaving competitors’ loading bays5. Studying aerial photographs of competitors’ facilities6. Analyzing competitors’ labor contracts7. Analyzing competitors’ help-wanted ads


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8. Quizzing customers and buyers about the sales of competitors’ products9. Infiltrating customers’ and competitors’ business operations10. Quizzing suppliers about competitors’ level of manufacturing11. Using customers to buy out phony bids12. Encouraging key customers to reveal competitive information13. Quizzing competitors’ former employees14. Interviewing consultants who may have worked with competitors15. Hiring key managers away from competitors16. Conducting phony job interviews to get competitors’ employees to reveal information17. Sending engineers to trade meetings to quiz competitors’ technical employees18. Quizzing potential employees who worked for or with competitors

TEACHING NOTES:

This exercise is actually a quiz that addresses the different opinions individuals may have about what actually constitutes unethical behavior and how one’s beliefs might change with the situation. Answers to this exercise will vary for each person or group taking the test but the critical portion of the exercise is to use the answers as a basis for in-class discussion.

For instance, try to find commonalities in what the students identified as ethical or unethical. Perhaps many students found analyzing information that is readily available (like reading competitors’ want ads) ethical but gathering information that is not publicly available unethical (like conducting phony job interviews). Encourage the students to think about what they would do under different circumstances. Would their views change if they worked for a company that was struggling to survive? What if they learned that the competitor had used unethical tactics to gather information on their company? How would they resolve their feelings on the ethics of spying if their manager asked them to gather competitive intelligence? Using these questions as a basis for discussion will enhance the learning experience for students.


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ASSURANCE OF LEARNING EXERCISE 10C: WHO PREPARES A SUSTAINABILITY REPORT?

PURPOSE:

The purpose of this activity is to determine the nature and prevalence of Sustainability Reports among companies in your state.

INSTRUCTIONS:

Contact by phone at least five different plant managers or owners of large businesses in your area. Seek answers to the questions listed below. Present your findings in a written report to your instructor.

1. Does your company prepare a Sustainability Report? If yes, please describe the nature and scope of the report.

2. Are environmental criteria included in the performance evaluation of managers? If yes, please specify the criteria.

3. Are environmental affairs more of a technical or a management function in your company?

4. Does your firm offer any environmental workshops for employees? If yes, please describe them.

TEACHING NOTES:

This makes an interesting homework assignment. You may ask several students to give an oral report of their findings in class. Point out to students that Sustainability Reports may be proactive or reactive. Companies may proactively prepare such reports to ensure compliance with state and federal regulations and to protect shareholder interests. Companies may be forced to reactively prepare reports to illustrate that they are compliant with regulations. Shareholders may want Sustainability reports because it will allow them better information on potential liabilities.


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CHAPTER 11: Global/International Issues

ASSURANCE OF LEARNING EXERCISE 11A: MCDONALD’S WANTS TO ENTER AFRICA. HELP THEM.

PURPOSE:

More and more companies every day decide to begin doing business in the forgotten continent – Africa. Research is necessary to determine the best strategy for being the first mover in many African countries (i.e., being the first competitor doing business in various countries).

INSTRUCTIONS:

1. Print off a map of Africa.

2. Print off demographic data on 10 African countries.

3. Gather competitive information regarding the presence of fast-food firms doing business in Africa.

4. List in prioritized order eight countries that you would recommend for McDonald’s entry. Country 1 is your best, and country 2 is your next best. Based on your research, indicate how many McDonald’s restaurants you would recommend building over the next three years in each country. List in prioritized order three cities in each of your eight African countries where you believe McDonald’s should build most of its restaurants.

TEACHING NOTES:

McDonald’s already does limited business in South Africa, and a few countries in Northern Africa. Today, most fast-food companies are focusing their foreign expansion efforts on the Asia-Pacific region due to strong market growth in this region. As a result, expansion into Africa may be a risky move, and would qualify as a “first mover” strategy. McDonald’s chief competitor, Yum! Brands, is pursuing aggressive international expansion, though most of it is focused in Asia. Yum! owns restaurant chains such as Kentucky Fried Chicken, Pizza Hut, Taco Bell, Long John Silver’s, and A&W.


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ASSURANCE OF LEARNING EXERCISE 11B: DOES MY UNIVERSITY RECRUIT IN FOREIGN COUNTRIES?

PURPOSE:

A competitive climate is emerging among colleges and universities around the world. Colleges and universities in Europe and Japan are increasingly recruiting U.S. students to offset declining enrollments. Foreign students already make up more than a third of the student body at many U.S. universities. The purpose of this exercise is to identify particular colleges and universities in foreign countries that recruit U.S. students.

INSTRUCTIONS:

1. Select a foreign country. Conduct research to determine the number and nature of colleges and universities in that country. What are the major educational institutions in that country? What programs are those institutions recognized as offering? What percentage of undergraduate and graduate students attending those institutions are U.S. citizens? Do these institutions actively recruit U.S. students? Are any of the schools of business at the various universities AACSB-International accredited?

2. Prepare a report that summarizes your research findings. Present your report to the class.

TEACHING NOTES:

This makes an interesting homework assignment, in that it asks students to assess global issues from the perspective of a foreign country that is not their own. You may ask several students to give an oral report of their findings in class.

ASSURANCE OF LEARNING EXERCISE 11C: ASSESSING DIFFERENCES IN CULTURE ACROSS COUNTRIES

PURPOSE:

Americans can be more effective in dealing with businesspeople from other countries if they have some awareness and understanding of differences in culture across countries. This is a fun exercise that provides information for your class regarding some of these key differences.

INSTRUCTIONS:


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1. Identify four individuals who either grew up in a foreign country or have lived in a foreign country for more than one year. Interview those four persons. Try to have four different countries represented. During each interview, develop a list of eight key differences between American style/custom and that particular country’s style/custom in terms of various aspects of speaking, meetings, meals, relationships, friendships, and communication that could impact business dealings.

2. Develop a 15-minute PowerPoint presentation for your class and give a talk summarizing your findings. Identify in your talk the persons you interviewed as well as the length of time those persons lived in the respective countries. Give your professor a hard copy of your PowerPoint presentation.

TEACHING NOTES:

Students may find the template below useful in completing this exercise.

1st Interviewee 2nd Interviewee 3rd Interviewee 4th IntervieweeInterviewee Name

Foreign Country

Time spent in countryDifferences in speaking customsDifferences in meeting customsDifferences in meal customsDifferences in relationship customs Differences in friendship customsDifferences in communication


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ASSURANCE OF LEARNING EXERCISE 11D: HOW WELL TRAVELED ARE BUSINESS STUDENTS AT YOUR UNIVERSITY?

PURPOSE:

It would be interesting to know how traveled are students at your university and also how those students consider their travels to be helpful in becoming an effective businessperson. Generally speaking, the more one has traveled, especially outside the United States, the more tolerant, understanding, and appreciative one is for diversity. Many students even state on their résumé the extent to which they have traveled, both across the United States and perhaps around the world.

INSTRUCTIONS:

Administer the following survey to at least 30 business students, including your classmates in the strategic management course. Analyze the results. Give a 15-minute presentation to your class regarding your findings. Turn in a written report of your findings to your professor.

1. How many states in the United States have you visited?2. How many states in the United States have you lived in for at least three months? 3. How many countries outside the United States have you visited?4. List the countries outside the United States that you have visited.5. How many countries outside the United States have you lived in for at least three

months?6. List the countries outside the United States that you have lived in for at least three

months. 7. To what extent do you feel that traveling across the U.S. can make a person a more

effective businessperson? Use a 1-10 scale, where 1 is “Cannot make a difference” and 10 is “Can make a tremendous difference”.

8. To what extent do you feel that visiting countries outside the U.S. can make a person a more effective businessperson? Use a 1-10 scale, where 1 is “Cannot make a difference” and 10 is “Can make a tremendous difference”.

9. To what extent do you feel that living in another country can make a person a more effective businessperson? Use a 1-10 scale, where 1 is “Cannot make a difference” and 10 is “Can make a tremendous difference”.

10. What three important ways do you feel that traveling or living outside the United States would be helpful to a person in being a more effective businessperson?

TEACHING NOTES:

This would be a valuable in-class exercise.


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