4 Case Studies That Will Motivate You

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 STARBUCKS

starbucks business case studiesCompany brief history:

Starbucks is an American coffee company that was founded on Seattle in 1971. Starbucks is present in forty three countries and fifty states in the US. Being one of the most valued brand, Starbucks has won awards such as “Most Admired Company”, “Best Business”, “100 Best Corporate Citizens”, etc. With undeniable quality, its price is higher than other domestic coffee shops in various countries.

Problems:

In the economic downfall of 2008, Starbucks was forced to shut its 600 stores that weren’t making profit due to which its profit fell 28 percent by March, 2008. The reduction of profit led to further shutting down of 300 shops.

Reasons for the problems:

  • Downfall in economic condition of the US
  • Rapid expansion of the company made it an uninviting place
  • Competition of McDonald’s newly opened coffee bar

Solutions:

Howard D. Schultz, being the CEO of Starbucks made his objective clear: “Reigniting the emotional attachment with customers.” While the previous CEO blamed the economy and the rise in the price of the dairy products for the fall of the business, Schultz stated that, Starbuck’s heavy spending on its expansion that created a bureaucracy generating the problem.

Apart from “a redo of the store layout” strategy, Starbucks focused on a technology-oriented strategy where employee could think and contribute ideas. A concept that suggested the involvement of community was developed with the participation of customers in “My Starbucks Idea” which allowed customers to give opinions on Starbuck’s products, advertisement, services, layout, CSR, in-store music, etc. About 93,000 ideas were shared by more than 1.3 million users on social media which rose the page view to 5.5 million.

After the crises of 2008, Starbucks rebuilt its customer relationship by listening to the customer via social media. It also connected its customers by creating social media communities such as ‘comfy chair group’, ‘frappuccino lovers’, ‘free Wi-Fi group’ and ‘soy group’.

Current state:

The company’s worth $70.9 B
Number of employees 191,000
Number of stores worldwide 19,767
Revenue from sales worldwide $14.98 B
Total assets $10.75B

 

CROCS Inc.

Company brief history:

Crocs is a shoe manufacturer company founded by George Boedecker and Scot Seamans and Lyndon “Duke’ Hanson. Crocs popular for being odorless, bright colored and light weighted had developed a revolutionary supply chain that was a critical factor of its success. Having able to maintain a positive relationship with its customers, its revenue was $847 million in 2007 and its stock had reached up to $68 in October.

Problems:

In 2008, retailers not only stopped buying new products but started cutting back inventory. The US economy slowed down and the cost of keeping a company alive was incredibly high. By 2009, revenue had fallen down to $646 million and the stock had plunged to $1 per share.

Reasons for the problems:

  • The company only produced the rubber clogs which went out of style.
  • The downfall of the US economy.

Solutions:

The vice president of the company Christy Saito decided to expand the company’s product line by introducing sneakers, flats, boat shoes, wedges and even winter boots. These shoes were designed especially for style conscious customers. The new product line provided comfort with style.

“It’s so funny, someone actually stopped me in a mall and said ‘Where did you get those shoes? I love them,’ and I said, ‘These are Crocs,’ “, Saito said when asked about the new line of shoes. As the new shoes was a hit, Crocs jumped back into the market. The new line of shoes accounts for 45% of the sales of the company. The company mainly focused on making people understand that they were not just clog anymore. In order to showcase the new line of shoes, crocs opened 120 stores only in the United States. Crocs also opened up stores and marketed their product overseas which accounted 65% of the sales.

Current state:

The company’s worth $10.47 B
Number of employees 4900
Number of stores worldwide 500
Revenue from sales worldwide $1.20 B
Total assets $722 M

 

IBM

IBM business case studiesCompany brief history:

IBM stands for International Machines Corporation. IBM is an American multinational technology and a consulting corporation. With manufacturing computer hardware, software and middleware, IBM offers hosting, infrastructure and consulting services in areas from mainframe computer to nanotech. The company was established on 1911 as a CTR (Computer Tabulating Recording) company via the merging of International Time Recording Company, Bundy Manufacturing Company, Tabulating Machine Company and Computing Scale company.

By 1984, IBM established itself as the king of the computing world. IBM was mainly successful because it did not build anything itself. It bought hardware components from smaller manufactures and sold its PCs loaded with Microsoft windows.

Problems:

In 1993, IBM declared a loss of $8 billion which reduced its dividend into half the price. The loss forced the company to shut down factories and abandon about 35,000 employees. As IBM had lost more money than any other company in the history of U.S. The CEO of IBM John Akers decided to split the company into various business units such as software, printers, storage, printers and processors. The slit was believed to be able to compete more effectively with the competing firms. Rather than doing well to the company, the split made it difficult for managing the company’s varied departments and led the company towards more loss.

Reasons of the problems:

  • The overflow of PC clones in the market, each building the PC with cheap components and preloading with same version of Windows which IBM could not compete with.
  • The slow innovation of IBM.
  • The low price of the competitor’s products.
  • The core mainframe of IBM was disrupted.

Solutions:

John Akers was fired as CEO of IBM after the further loss. A new CEO, Lou Gerstner was appointed. The new CEO being an outsider, did not have any background in computing. Having not much idea about the company, Gerstner started listening to his clients. He found out that the biggest problem of companies in 1993 was integrating all the distinct computing technologies emerging at that time. Therefore, while cutting costs, Gerstner upturned the move to separate companies. After understanding the customers properly, he discovered that the strength of IBM was to be able to deliver integrated solutions to the customers. He thought that IBM would do great if it could represent more than parts of the components.

IBM also focused on shifting the role of managers. The role of managers were shifted to enabler from controller i.e. the change in coordinating work to bureaucracy from dynamic. IBM implemented all the principles of radical management so that the firm could achieve scale and continuous innovation by initiating disciplined execution. Therefore, IBM survived by reforming their company’s business model from selling low-margin PC’s, printers, hardware and computer chips to providing computing services and IT expertise to varied businesses.

By the year 2010, IBM was able to acquire about 200 companies in IT services sector. It also became the best seller of enterprise server solutions and server business.

Current state:

The company’s worth $139.32 B
Number of employees 386,558
Number of research libraries worldwide 12
Revenue from sales worldwide $ 92.793
Total assets $117.53 B

 

Betsey Johnson

Company Brief History

Betsey Johnson is a fashion designer from America who is best known for her whimsical and feminine designs. Founded in 1978, Johnson has been in the industry for more than thirty years offering apparel such as tees, tops, coats, sweaters, jackets, intimates, swimsuit, jewelry and accessories including beauty products, scarves, fragrance and sunglasses. As of now, Betsy Johnson sell their product in over two thousand stores including Macy’s.

Problem:

The US economic recession forced Betsey Johnson to take a loan from Steve Madden in 2010. In exchange for the loan, Steve Madden was allowed to take over many of her license agreements and intellectual properties. For example, he was allowed to sell products like handbags under her name. In April 2012, Betsey Johnson filed for chapter 11 bankruptcy in which their profit fell drastically. The brand closed about sixty three stores dismissing 350 employees. The bankruptcy filed severe liquidity problems. About $4.1 million was outstanding debt to manufacturers, watchmakers, banks, vendors, creditors, service providers and accountants.

Reasons for problem:

  • The economic recession of US causing shattering impact on high-end fashion brands.
  • The consumers could not afford the brand’s high priced products during the low economy.

Solutions:

The takeover of Steve Madden could not mean that Betsey Johnson had no right to participate in designing and decision making of the brand. Madden decided to focus the brands in department stores by selling lower price designs. Betsey Johnson agreed to this and said, “I would like to design a lower priced line. Many of my young consumers will be able to afford it”. Even though, Johnson still designed apparels for the company, she did not have the final say in anything from promotions to designs.

Steve Madden did an intense research on the customer base of Betsey Johnson. He found out the likes and dislikes of the customers and the products they would be attached to. While Betsey targeted the young “punk” style, Madden focused on the more conservative youth. He did more research on the sales data on popular products in order to win the trust of initial Betsey Johnson customers.

Current state:

The company’s worth $50M
Number of employees 400
Revenue from sales $150M
Total assets $21.3M