Nokia's Lumia deal with China Mobile raises hopes

Nokia is a Finnish multinational company, that also helped develop the GSM system for mobile communication and has been the world’s largest vendor of mobile phone for quite some time. But in the past few years since the evolution of the smartphone/ internet enabled devices, Nokia has seen its market share slowly erode away to strong completion from Apple with the iPhone & Samsung phones powered by Google’s android operating system. In an attempt to strike a balance and stop the ongoing destruction of its once mighty market share, Nokia decided to dump its existing Symbian operating system and signed up with Microsoft to use Windows as their primary operating system for high end smart phones. 

Nokia is now in talks with China Mobile – the world’s biggest mobile phone service operator, on a sales deal for the new Nokia Lumia smartphone/ handset to its subscribers. China Mobile has over 700 million subscribers and also has 4G network capability. But China Mobile is one of the providers that do not have a contract with Apple to sell iPhones. Hence China Mobile is looking to market the Nokia Lumia smart phone in an attempt to win back the market share that it lost since the launch of the Apple iPhone.

Word of this partnership in the making sent Nokia’s stock prices in an upward direction. Nokia is banking on Microsoft’s Windows 8 platform to launch itself back into the smart phone market and from what it seems is making the right moves in that direction teaming up with China Mobile. Nokia released a Lumia variant which is the cheapest Windows 8 phone on the market. It will definitely be completion to the iPhone and Samsung devices and Nokia hopes to release higher/pricier variants of the Lumia in an effort to capture different segments of the market. Now with China Mobile it will also have a 4G cellular network to back it up and provide an excellent customer experience. Microsoft is also looking to launch itself as a key player in the cellular operating system market and is banking on Windows 8 mobile operating system being a success. But it seem to be of the greatest value to Nokia since the company has seen its market share from the once 50% to almost 10% today.

What is to be seen in the days to come is how this strategy or last ditch effort as some may call it will play out for Nokia and also China Mobile & Microsoft. And also if Nokia can extrapolate its strategy globally to regain market its market share.

 

References

http://www.reuters.com/article/2012/12/05/us-nokia-china-idUSBRE8B408I20121205

http://www.forbes.com/sites/ericsavitz/2012/06/14/nokia-doomed/

http://www.forbes.com/sites/greatspeculations/2012/12/05/nokia-scores-big-win-with-china-mobile-partnership-for-lumia-920t/

Citigroup to Cut 11,000 Jobs and Take $1 Billion Charge

Citigroup to Cut 11,000 Jobs and Take $1 Billion Charge

Current Event

Issue:

Citigroup announced on Wednesday that it would cut 11,000 jobs, reducing its work force by roughly 4 percent in an effort to cut costs and increase operating efficiency.

Overview:

Citigroup announced on Wednesday that it would cut 11,000 jobs, a move that will save the company more than $1 billion annually. It will reduce their work force in worldwide by roughly 4 percent in an effort to cut costs and increase operating efficiency.

Under the reduction, 1,900 jobs will be eliminated in the institutional clients division. Another 6,200 positions will be removed from the bank’s consumer banking business, along with 2,600 jobs in the operations and technology group.

Most of the layoffs will be operations and technology support staffers.

Its repositioning plans will increase efficiency, streamline operations and optimize the company’s consumer footprint. Citigroup expects to record charges of $1 billion in the fourth quarter of this year and $100 million in the first quarter of 2013 in connection with the plans. It expects the repositioning to create $900 million in expense savings next year, and that annual expense savings will exceed $1.1 billion annually starting in 2014.

The overhaul is the first big move by new CEO Michael Corbat. Corbat took the role in October from the former CEO Vikram Pandit, who quit abruptly amid reported tensions with the company’s board. Citigroup say that these actions are logical steps in Citigroup’s transformation, which is to increase its operating efficiency by cutting branches and products where the scale does not provide for meaningful returns. Citigroup intend to continue a strategy of focusing on the bank’s core business.

Managerial implications:

The reduction can save Citigroup lots of cost in future. Citigroup is looking to drive profitability higher for its shareholders and doing it through cost savings and improved efficiencies. However, most of the layoffs will be operations and technology support staffers, often resulting in bank branches being closed. As more and more branches closed, many consumers will leave Citigroup.

Reference:

1. “Citigroup to Cut 11,000 Jobs and Take $1 Billion Charge”

http://dealbook.nytimes.com/2012/12/05/citi-to-cut-11000-jobs-and-take-1-billion-charge/?hp

2. “Citigroup new CEO Michael Corbat to slash 11,000 jobs worldwide, 1,700 in New York City” 

http://www.nydailynews.com/new-york/citigroup-new-ceo-michael-corbat-slash-11-000-jobs-worldwide-1-700-new-york-city-article-1.1213922

3. “The Citigroup Bloodbath: New CEO Cuts 11,000 Jobs”

http://www.forbes.com/sites/nathanvardi/2012/12/05/the-citigroup-bloodbath-new-ceo-cuts-11000-jobs/

United Airlines Struggling, Post Merger with Continental

Issue:

Two years after United Airlines merged with Continental Airlines, the new United is still struggling with its operations, staff, and customers.

Overview:

The United-Continental merger of 2010 was supposed to create a powerhouse Airline, servicing 8 major hubs, 5,500 flights daily, and offering passengers close to 400 destination options.  While all of this still might be true, the merger has been anything but smooth sailing for United.  In addition to the financial burden ($60million charge in 3rd quarter for merger related expense), United's booking system has failed twice, and it has the worst on-time record of all the major airlines.  There was hope that everything was supposed to be running smooth at this point, considering that Continental was among the top performing airlines.

There are also obviously merger related problems that the new airline is facing.  They are still working on merging the two computer systems, and technologies which is going to be a hassle depending on how different the systems are.  United now also has to deal with two different sets of employees, Continental was in good standing with their employees, whereas United wasn't.  This also means that United has to renegotiate both sets of contracts for the employees to come up with one new one for the new merger.  This is going to pose a problem, especially if the two separate companies treated their employees differently.  

History says that there is hope for this new merger, both US Airways and Delta experienced growing pains the years following their mergers.  Now both companies are doing well, so hopefully the United merger will follow their lead.

Manager implications:

Mergers are always difficult no matter what the industry.  There is always going to be some lag time before the new firm can run smoothly and start seeing the benefits they had hoped for.  This is of course assuming the merger can succeed, according to many studies the failure rate starts around 50%.  United use the expertise from Continental, to get their on-time records up, and improve employee relations.  They need to utilize the most important benefit from merging, and that is the sharing of information.


Mouawad, Jad "For United, Big Problems at Biggest Airline
"   http://www.nytimes.com/2012/11/29/business/united-is-struggling-two-years-after-its-merger-with-continental.html?pagewanted=all  28 Nov 2012

Japan’s Pain Is Wal-Mart’s Gain

Current event

Issue:

Wal-Mart and other discounters are expanding as a Japanese recession looms and after household income has fallen three straight years.

Overview:

With Japan’s economy on the bottom of a third recession since 2008, and household incomes falling for the last three years, more and more Japanese customers shop at discount stores. Japan’s economy shrank at a pace of 0.9 percent in the three months through September as government data shown. The country’s famously picky and brand-fascinated shoppers are changing to bargain-hunting style. Discount stores are gaining and expanding.

Wal-Mart’s Japan business is operating in name of Seiyu supermarkets and there is no stores operated under the Wal-Mart banner. Wal-Mart acquired a 6.1% state in Seiyu in 2002. In 2005, Wal-Mart acquired a majority interest in Seiyu, making Seiyu a Wal-Mart subsidiary, and in 2007, Wal-Mart increased its ownership stake of Seiyu from 50.9% to 95.1%. After acquiring the remaining shares, Seiyu became a wholly owned subsidiary in 2008.

Wal-Mart’s Japan business saw net sales rise 2 percent during second quarter. Its Seiyu unit will open seven new stores this year and three more in 2013. Steve Dacus, the CEO of the Japanese unit of Wal-Mart Stores Inc, said Seiyu has built a successful business model for food-oriented supermarkets. By thoroughly implementing the “everyday low price” strategy, same-store sales increased 1.9% on the year in the July-September quarter. Sales and profits will exceed year-earlier figures for the full year as well, he added.

However, Wal-Mart faces hurdles in others parts of Asia. In China, as more and more local retail discount stores is opening, Wal-Mart is adding fewer stores than previously planned. And its strategy in India has been hindered by regulations that until September banned foreign companies from investing supermarkets.

Managerial implications:

Wal-Mart expansion in Japan not only improve its revenue, but also can serve more Japanese customers, who are under rapid socio-economic changes - such as lower annual income, aging population increase, food price hike and etc, which fit Wal-Mart’s global mission of “save money, live better”.

1.     “Wal-Mart Bets on Japan’s Falling Income in Soft Economy: Retail” http://www.bloomberg.com/apps/news?pid=webport_news&tkr=MCD:US,PFE:US,WMT:US&tkr2=WMT:US&sid=ash921Sey6dw

2.     “Walmart moves on in Japan with 10 new stores”

http://theasiacareertimes.com/2011/11/walmart-moves-on-in-japan-with-10-new-stores/

3.    “Walmart Japan to open 22 SEIYU supermarkets by end 2013”

http://packwebasia.com/packaging-business/brnding-retail/business-development/2119-walmart-japan-to-open-22-seiyu-supermarkets-by-end-2013

Cross-sector Alliances for Corporate Social Responsibility Partner Heterogeneity Moderates Environmental Strategy Outcomes

Present day companies put quite some emphasis on economic, social and environmental sustainability which is ultimately termed as the Corporate Social Responsibility of a company. It is relatively easier to make Corporate Social Responsibility decision for an independent company. But it gets tougher and more convoluted when there is partner heterogeneity, cross sector alliances, cross or same industry alliances, etc.

Now days we see more and more corporations using strategic alliances to address different social aspects and more importantly environmental issues. It is crucial for a company to strategically choose its alliance/partners and they are generally judged by their alliances and associations. This paper helps explain how partner heterogeneity moderates an alliance’s ability to advance corporate social responsibility goals.

Strategic alliances have been growing at a rate of 25% annually, over the past decade and are expected to increase as organizations grow globally and what will ultimately seem like a global village. The author finds that in an alliance, there tends to be more innovative orientation and the partner with the alliance experience tends to moderate the alliance’s Corporate Social Responsibility decisions. The paper also has supporting data to prove that strategic alliances have more access to varied resources and that they are attempting to address more complex social, environmental and of late political goals. The author develops a cross sector partner diversity index and also an environmental strategy typology index which helps show that cross sector partners are generally associated with more proactive environmental outcomes.

Corporate Social Responsibility through alliances helps foster innovation which is aligned in some way to societal needs. The paper helps provide a new mechanism by testing a theory and hypotheses, of finding the driving factors that will help motivate a company or firm to seek more heterogeneous partners to form an alliance and how this ultimately influences the overall alliance’s Corporate Social Responsibility. Alliances definitely help develop and ensure open coalitions of cooperation and an enabling environment for joint Corporate Social Responsibility.

Resources:

Article: “Cross-sector Alliances for Corporate Social Responsibility Partner Heterogeneity Moderates Environmental Strategy Outcomes.” 

Article Source: Journal of Business Ethics; Oct2012, Vol. 110 Issue 2, p219-229, 11p, 1 Color Photograph, 1 Diagram, 2 Charts

ISSN: 01674544             DOI: 10.1007/s10551-012-1423-2          Accession Number: 80235138

Database: Business Source Complete

 

Collaborative Strategic Management: Strategy Formulation and Implementation by Multi-Organizational Cross-Sector Social Partnerships

Qualitative Article

The point of this article was to create a conceptual model for dealing with cross-sector social partnerships (CSSP).  CSSP is a viable plan when an organization faces either a social, economic, or environmental problem that they can not handle themselves.  The authors claim that there are few other models available, but they are all lacking in some way.  They put together a 5 stage process of their own then tested this on 2 cases out of Canada.  Their 5 stages are:

1.       Assessing the context and forming the partnership

2.       Forming the collaborative plan

3.       Strategy implementation by the partnership

4.       Strategy implementation per the organization

5.       Realized collaborative strategy implementation outcomes

The authors found that their process was a more complete model of discovering value added to the two cases.  They also were the first to have feedback loops integrated within the processes.  They found that these were an integral part of each of the studies successfully implementing their CSSP.  The authors stress that in order to have a CSSP be successful, there needs to be feedback and adaptation at all levels of the process.

Manger implications:

If a firm is going to get involved in any sort of social partnership, then it needs to have some method in place to determine how they are doing at each step of their process.  This will be the only way that the firm will be able to tell if what they are doing will have a successful outcome or not.  Without any sort of feedback loop in place, a firm could be heading for a disaster of a relationship and not even know it.

Resource:

Amelia Clarke, Mark Fuller “Collaborative Strategic Management: Strategy Formulation and Implementation by Multi-Organizational Cross-Sector Social Partnerships”. Journal of Business Ethics, 2010: 85-101

Integration without Employment

Something that is on the minds of most Americas while we vote this week for our next president is the state of nations healthcare system and the options that will be available to us in the days to come. One of the key topics that need to be addressed and is also the focus of this article is, how to address the risk of reduced payment by finding innovative ways to decrease the overall cost of the service but at the same time improving the quality of the service being provided.

This paper revolves around Accountable Care and the authors of this paper present three models for hospital physician alignment strategies which could be applied for Accountable Care:

§  Co-management arrangements

      §  Clinical joint ventures

§  Shared physician leadership structures (Professional services agreements with performance incentives)

Accountable Care proposes that hospitals get away from the traditional approach of having to rely on medical directors and administrative influence for inpatient operations and move towards a more robust system that consists of outsourcing the management of these services to a co-management company thus having access to more expertise and also experience be it doctors or medical staff. Thus ownership will be split between the hospital and the doctors / physicians as per the agreements with the co-management company. The goal is to eventually move the health care system away from a pervasive episodic payment approach and towards a more coordinated and preventive model of care delivery. 

Many critics argue that Accountable Care only gets us half the way and there are many challenges especially with most of the Accountable Care Organizations having to rely deeply on software tools to deliver a more cost effective patient care.  And it can also be noted that a failure to co-ordinate care can often lead to patients not getting the care they need, receiving duplicative care, and being at an increased risk of suffering medical errors.

But an improved co-ordination and communication among the providers, suppliers and doctors can definitely improve the quality of service being provided and also hopefully lower costs. And what remains to be seen in the days to come, is if our Health Care Managers of tomorrow will be able to cope with such a system and get off the vendor mentality back towards a healthcare provider mode thus bringing about changes and reform in the payment and delivery system.

Resources:

Article Source: HFM (Healthcare Financial Management); Aug2012, p54-62, 9p

Article : “Integration without employment”  http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=78388384&site=ehost-live
ISSN: 07350732     Accession Number: 78388384

 

http://www.healthcare.gov/news/factsheets/2011/03/accountablecare03312011a.html

http://en.wikipedia.org/wiki/Accountable_care_organization

http://www.accountablecarefacts.org/

 

 

 

 

How to Maintain Sustainability in Organizations

Sustaining Sustainability in Organizations

Qualitative

Sustainable development is described as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. This definition highlighted the importance of environmental, social and economic factors when considering development. As rapid increase of population and production, many of the planet’s ecosystems are degraded, species are threatened, and global warming is becoming increasingly apparent. The importance of natural environmental problem and social issues get more people attention.

Since the term sustainability has entered the business world, more and more firms realize the importance of sustainability and emphasize the environmental and social goals of their organization. A large number of established literatures have been growing in the area of sustainability in organizations, especially business firms.

Most of these literatures in the sustainability research are to better understand why and how firms decide to adopt more sustainable practices. However, little attention was paid to how sustainable practices remain in place and continues to develop over time. This article is to address this gap by researching how sustainability is developed and maintained in organizations.

The authors found that there are three main topics in sustainability issue. First of all, reporting and monitoring may encourage companies’ sustainability performance. Another main topic of this issue is identifying antecedents of sustainability adoption. In this issue, the focus is on what these attributes are for maintaining sustainability in companies rather than examining factors affecting initial adoption. The last main topic of this issue is the international aspect of sustainability. We can gain better understanding how different types of organization maintain sustainability in the world scope. The author used six special papers to support the three main topics.

Reference:

1. The definition of sustainable development:

http://en.wikipedia.org/wiki/Sustainable_development

2. “Sustaining Sustainability in Organizations”

http://libproxy.uhcl.edu:2057/ehost/detail?vid=5&hid=9&sid=5933e9ab-cd66-4af6-92e4-0d990a99494f%40sessionmgr14&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=80235139

Buyers perceptions and Relationship Outcomes in Interorganizational Networks

Quantitative

Sometimes when making purchases, its not about the price we pay but about whether or not we paid less than others who bought the same thing.  People feel great after thinking they got a deal on a certain product/service and they will probably returnto that same supplier hoping for a similar deal.  Conversely, if someone were to find out that they did not get the better deal, there is going to be some dissatisfaction with that supplier.  This is the basis for the following study.

This study focuses on the relationship between buyers and their suppliers (Business to Business), and the perceptions of how the buyer thinks they are being treated by their supplier.  The authors stress that it is not all about how an actual buyer is being treated but its how they think they are being treated in comparison to other buyers.  This study was done by proposing five different hypotheses about the supplier buyer relationship.  They are paraphrased as follows:

- H1:  A buyer's satisfaction with a supplier is dependent on the economic benefit that they get
 -H2:  In a cooperative buyer system (many buyers working together to increase buying power), buyer's are less satisifed if they think that someone else is getting a better deal than they are.
-H3:  The affects of H2 decrease over time.
-H4:  If all buyers in a group are getting a below average deal from their supplier, any inconsistency in pricing from the supplier will have a larger negative effect on the buyer's satisfaction of the supplier.
-H5:  If all buyers within a group are getting a below average deal from the supplier, then buyer satisfaction with the supplier will be lower.

The data was compliled by contacting one supplier and accessing a portion of their customer database (3,646 of 12,000 total).    From there they contacted the representatives of each firm and mailed questionnaires out.  They ended up with just over 1,300 usable surveys to compile their data. 

Based on their data, the authors were able to support hypotheses 1 through 4.  This means that buyers were satisfied when they recieve economic benefits from their suppliers.  At the same time, buyer satisfaction will decrease if they know that price discrimination exists, regardless of beginning level of satisfaction with the supplier.  Hypothesis 5 was the only one that was not supported, which means that if there is no price discrimination within a buyer's group then overall satisfaction will remain constant.

Manager Implications

What this study proves is that price discrimination has a negative effect on buyers who know what others are paying for the same product/service.  To make sure that buyers are satisfied, a supplier can do one of two things; they either need to make it so buyers do not know what others paid for the product (almost impossible) or have no price discrimination among buyers.  In a B2B case, it makes buyers responsible for their own profits by making them compete against each other on resale price.


Resources:

Link: Consistency Judgments, Embeddedness, and Relationship Outcomes in Interorganizational Networks

How Do Chinese Firms Deal with Inter-Organizational Conflict?----The Relationship Between Ethical Leadership and Inter-Organizational Conflict

Quantitative Article

Nowadays companies are spending a lot of efforts and money to demonstrate themselves as ethical and socially responsible organizations in the eyes of their customers and suppliers. After the bankruptcy of Enron, Lehman Brothers and failure of other organizations, people have started emphasizing the concept of ethical leadership. Ethical leadership enables the employees to engage in good practices which overall result in welfare of everyone in the society. Management's tone has a trickle-down effect on employees. If top managers encourage ethics and integrity so will employees. "But if upper management not cares about ethics and focuses solely on the bottom line, employees will be more prone to commit fraud and feel that ethical conduct isn't a priority".

Due to the importance of ethical leadership, the ethical approach adopted by the leaders has aroused attention in inter-organizational leadership research. Existing ethical leadership literature is exclusively based on the western culture context. The ideas may not suitable to other societal contexts, especially in Chinese business culture. Thus, this article proposes that the ethical leadership concept is especially crucial in the Chinese business culture. Even through this issue has been discussed by other authors; there is little published empirical evidence to evaluate these perceptions. So the authors wrote this article to respond this need.

The type of this research is hypothesis testing. The authors suggested two hypothesizes. The first one is "higher ethical leadership is associated with lower inter-organizational conflict, whether task or relationship". Another is task interdependence moderates the relationship of ethical leadership and inter-organizational. The research collected the data from external suppliers of large listed group company in China and then test the data collected. The results show that the more ethics related efforts the leader demonstrates, the better the understanding and relationship with the other partner could be created, and consequently the less conflict will exist in the inter-organizational cooperating process.

The first of good ethical leadership can improve competitiveness in inter-organizational collaboration. Leaders can effectively facilitate collaboration with external buyers or suppliers, because external stakeholders will adjust their behavior and decision-making in according with the common ethical values and images set by leaders. Another implication is that firms should pay more attention to ethical leadership in interacting with interdependent partners.

Resource:

1.     “How Do Chinese Firms Deal with Inter-Organizational Conflict?” http://libproxy.uhcl.edu:2057/ehost/pdfviewer/pdfviewer?sid=0e133ee1-94a0-47f8-8258-bf50acd4049f%40sessionmgr13&vid=4&hid=12

2.     “Why Is Ethical Leadership So Important?” 

http://www.blurtit.com/q466295.html

3.     “Tone at the top”:

http://www.ventureline.com/accounting-glossary/T/tone-at-the-top-definition/

4.     “Ethical leadership”

http://en.wikipedia.org/wiki/Ethical_leadership

Double Trouble For Boeing & Lockheed Martin

BAE/EADS to ring-fence U.S. firm to save $45 billion deal-paper

Current event

Issue:

Europe (EADS: European Aeronautic, Defense & Space Co.) is planning to unite with Britain (BAE: BAE Systems Plc.) in a bid to create the largest commercial aviation and integrated Defense Company in the world today. The formation of such a company would probably raise concerns in national security and sensitive government programs especially for the United States of America and could lead to major restructuring of the defense industry globally.

Overview:

This arena has seen its share of mergers and acquisitions in the past, like ‘Lockheed’ and ‘Martin Marietta Corp’ forming ‘Lockheed Martin’ and then followed ‘McDonnell Douglas’ being purchased out by Boeing in 1997, but none as large and complex as the proposed BAE and EADS. Traditionally, BAE has been a key component of the US Defense & Aerospace Sector, has US national security access and a top partner especially for Boeing (jet parts and the aerial refueling tanker) and also with Lockheed Martin (F-35 and replacement for Humvee trucks).  And in turn Boeing and Lockheed Martin have been in fierce completion with EADS for quite some time now, especially in the US defense sector, the memories of the Boeing’s win over EADS (and Northrop Grumman Corp) in the battle of the next generation Aerial Refueling Tanker - US defense contract is still fresh in our minds.

Anticipated Outcome and Managerial implications:

This new commercial & defense organization, if formed would present a wide range of international management challenges which would not just stop at an extremely complex organizational structure but also require a restructuring and resigning of almost all existing Defense & commercial contracts with the US government & US aerospace companies. A similar organization was considered nearly a decade ago but was then abandoned. But the proposed new company will have a US specific division and will be able to compete with the traditional American giants like Boeing and Lockheed Martin in the US Defense and Aerospace markets. I can foresee that the merger of EADS and BAE would create a global giant, being touted to be extremely valuable for its customer and more in line to be financially successful to its shareholders.  It is still unclear how this extremely complicated merger would ultimately unfold and it it will be successful this time around. This inter-organizational merger will be keenly watched and studied by government regulators, politicians, strategists, etc across the world in the days to come.

 

Resources:

1. “BAE/EADS to ring-fence U.S. firm to save $45 bln deal-paper” Reuters.com, Web. 23 September 2012

http://www.reuters.com/article/2012/09/23/bae-eads-idUSL5E8KN18120120923

2. Carola Hoyos and Stephanie Kirchgaessner. “BAE-EADS faces tougher US 'firewall’” Financial Times, Web. 18 September 2012

http://ibnlive.in.com/news/baeeads-faces-tougher-us-firewall/292700-70.html

3. Andrea Shalal-Esa and Alwyn Scott. “Why BAE-EADS merger is double trouble for Boeing” Reuters.com, Web. 21 September 2012

http://www.reuters.com/article/2012/09/21/us-boeing-baesystems-idUSBRE88K15W20120921

4. “EADS and BAE deal needs 'thorough examination'” BBC.co.uk, Web. 17 September 2012

http://www.bbc.co.uk/news/business-19629079

5. Andrea Rothman and Jacqueline Simmons. “EADS Explores BAE Combination in Aerospace Revamp” Bloomberg.com, Web. 14 September 2012

http://www.bloomberg.com/news/2012-09-12/eads-said-to-explore-bae-combination-in-aerospace-revamp.html

6. Tom Bawden. “Pentagon wants more details of BAE-Eads merger” Standard.co.uk, Web. 18 September 2012

http://www.standard.co.uk/business/business-news/pentagon-wants-more-details-of-baeeads-merger-8152656.html

VW AG Partnerships in the Commercial Truck Business

Daimler Plans to Extend Partnership with Volkswagen

Current event

Issue:

Daimler is looking to extend their partnership with Volkswagen (VW) to allow them to produce the Crafter Van in Daimler's plant in Germany.

Overview:

Currently VW is producing 40,000 Crafter Vans annually out of the Duesseldorf plant in Germany, which is owned by Daimler. (Taylor) The Crafter Van shares a platform with the Dodge Sprinter van and the Mercedes version of the Sprinter.   Their contract will expire in 2016 and there is talks that Volkswagen may not be renewing the contract due to their recent purchase of the majority stake in MAN SE.

MAN SE is a 253 year old company that specializes in commerical vehicles, engines, as well as mechanical engineering equipment.  Headquartered in Munich, Germany, the company was taken over by Volkswagen on November 3, 2011 when the transaction was approved of  VW’s 56%  ownership stake in the company. (www.man.eu)  This was good news for MAN SE because now they can utilize the vast resources of Volkswagen AG to help make them a much better company.  MAN SE will retain their logo, name, and all of their plants.  There are talks of integrating MAN SE with Volkswagen’s Swedish truck brand, Scania. (Savin)

In Volkswagen’s attempt to be the leader in the automotive world, the commercial vehicle market may be their weakness.  With this new acquisition they hope that they can capitalize on the success MAN SE, and become dominant in that market.  Already, Volkswagen has seen a 9% rise in sales in 2012, and they are planning on expanding their line of light weight commercial vehicles to capitalize on their success. (Savin)

Anticipated outcome:

I don’t believe that there is a reason for Volkswagen to continue the partnership with Daimler.  Even though the Crafter van is a success in Europe, the acquisition of MAN SE allows them to produce their own version of the van’s successor.  I can see the Crafter van being produced until the contract runs out in 2016, while Volkswagen and MAN SE develop the next line of light weight commerical trucks that will surely take over Europe.

Managerial implications:

It would benefit Daimler to keep the partnership with Volkswagen as long as they can.  Volkswagen is a household name in Europe, and their share of the commerical truck market is only going to grow in the coming years. 

Volkswagen is in the driver’s seat in this negotiation, now having purchased a commercial truck company it no longer needs Daimler’s production plant.


Resources

1.                   Taylor, Edward.  “Daimler seeks to extend van partnership with Volkswagen”  UK Reuters, Web. 9 Sept 2012

<http://uk.reuters.com/article/2012/09/09/uk-daimler-volkswagen-idUKBRE8880AS20120909>

2.                    “Volkswagen majority shareholder in MAN”  MAN SE, Web. December 2011

<http://www.man.eu/en/press/publications/man_features/archive_2011/press_newsletter_december_2011/features_details_1735.html>

3.                  Savin, Ana “Volkswagen Plans to Build Vans With MAN” In Auto News, Web. 14 March 2012

<http://www.inautonews.com/volkswagen-plans-to-build-vans-with-man>

Hey guys, my name is Matt McGarry and I am a Project Accountant by day, MBA student by night.  I look forward to a great semester.

Hello Everyone,

My name is Lauhael Godinho; pronounced as ‘Lo-Cal’, this is my final semester at UHCL and I expect to graduate with my MBA in Management of Technology this fall.

I am an engineer by profession and work in the Oil & Gas industry as a Channel Manager.

I love music and also mixing music. And I hope to gain a lot of insight on various topics being a part of this blog.

I'm Xianglei(Ivan) Yun and my major is accounting. I will graduate this semester. I hope learn more new ideas through the communication on blog.

The Strategy Seminar: Alliance for Mainstreet Fairness and Amazon Sales Tax

The Strategy Seminar: Alliance for Mainstreet Fairness and Amazon Sales Tax

The Strategy Seminar

The Strategy Seminar

The Strategy Seminar: Inter-Organizational Studies - Current Event

The Strategy Seminar: Inter-Organizational Studies - Current Event

The Strategy Seminar: *Practitioner Article* Shefawu Alabi

The Strategy Seminar: *Practitioner Article* Shefawu Alabi: Shefawu

The Strategy Seminar: The HP and Oracle Divorce – Current Events – Inter Organizational Studies

The Strategy Seminar: The HP and Oracle Divorce – Current Events – Inter Organizational Studies

The Strategy Seminar: Inter-Organizational Studies - Academic - Social Comparison Among Competing Firms

The Strategy Seminar: Inter-Organizational Studies - Academic - Social Comparison Among Competing Firms

The Strategy Seminar: Shinea Sharma - Multidimensional Performance Measure

The Strategy Seminar: Shinea Sharma - Multidimensional Performance Measure

The Strategy Seminar: Inter-Organizational Studies - Academic Article

The Strategy Seminar: Inter-Organizational Studies - Academic Article

The Strategy Seminar: Six Key Factors for Balancing Control and Trust -Practitioner article - Interorganizational Studies - Ehric Wenzel

The Strategy Seminar: Six Key Factors for Balancing Control and Trust -Practitioner article - Interorganizational Studies - Ehric Wenzel

The Strategy Seminar: Ending Relationships – Practitioner Article – Inter-Organizational Studies

The Strategy Seminar: Ending Relationships – Practitioner Article – Inter-Organizational Studies