Star TV
- Founded in HK in the 90s
- StarTV was a cable network targeting the upper middle class
- Asia’s rich elite watched the cable TV service
- News Corp acquired StarTV because it believed in the high potential of the mainland China market
- Acquisition was a failure because people didn’t enjoy watching American TV with Chinese subtitles in their homes (even if English was their second language)
- Instead, they enjoyed local content (IGNORED CULTURAL DISTANCE)
- Lost 500 million during the late 90s
Tricon Restaurants
- Subsidiary of Pepsico, eventually became Yum! Brands and spanned out from Pepsico
- International brand in 27 countries with 2/3 of profits coming from 7 markets only
- Which markets should Tricon select for their equity investments?
- Tricon existed for the maximization of Pepsico’s sales
Coca Cola
Pull marketing approach, buys into brands who approach them
Pepsico
Push marketing approach, find brands who would represent them
Tricon most profitable markets
- Japan
- UK
- Germany
- France
- Australia
- New Zealand
- Canada
Which market should Tricon focus on?
Mexico: Food and culture are very similar to southern US, $700m of total fast-food consumption, though it is a smaller market. Closes in on the cultural distance
Best Buy (business level strategy)
- Started with a cost leadership BLS through efficiency in manufacturing in the electronic goods market
- Moved onto differentiation because of low margins
Best Buy (corporate level strategy)
Diversification through geography (buying out Future Shop). Bought them out because:
- Regulations are similar
- GDP per capita is similar
- Infrastructure
- Reputation
- Intangible assets like knowledge and IP
- Taking out biggest competitor for reduced costs
and increased buying power for Best Buy from suppliers
Canadian Tire (business level strategy)
Mainstream cost leadership
Canadian Tire (strategic goals and objectives)
- Strengthen core business (Canadian Tire Retail, 63% of overall revenue)
- Align SBUs to support core CTR growth
- To become high-performing, customer-focused organization
- Use high margins from CT Financial Services to reduce costs of other SBUs
Canadian Tire (Diversification + Target Audience)
Related linked level of diversification, diversifying within different industries
- Target audience: Those who need clothes for “dirty work”
Examples of dominant businesses
Lululemon, Louis Vuitton
Sobey vs Loblaw’s
Sobey acquired Safeway to compete against Loblaw’s portfolio of T&T and Shopper’s Drug Mart.
- Sobey owns IGA, Thrifty Foods
Rivian
- Problem: Rivian doesn’t have enough capital for R&D, barrier of entry is too high due to high fixed costs, resources, talent, and heavy manufacturing
- CA: Battery lasts longer than Tesla
- CA: World’s first and most advanced four-motor electric powertrain using advanced battery technology
Lexus (competition creates opportunities)
- A luxury version of Toyota
- German cars capture more sales due to the German premium image
- Wanted to create a functional yet luxurious car to lower the price for consumers who want to buy luxury cars
Soccer (competition leads to innovation)
If a market is profitable, it will lead to more innovation
Cellphones (competition leads to partnerships)
- 3 og competitors in industry: Ericsson, Motorola, Nokia
- Ericsson needed a partner, chose Sony since they created “cool” products with great audio and video
- Called the Sony-Ericsson JV
Computers
As the computer industry matured, manufacturing became a commodity as costs were lowered
- Microsoft were the only company with its own software, outsourced OS to all other tech giants
