Unit 3: The Future of Food Retailing? Tesco in South Korea

Here is a fascinating short video on the techniques and tactics adopted by Tesco as they sought to become South Korea’s number one offline and online food retail store.


This is really useful for the Unit 3 examination. Emerging markets and Business Strategies are a key feature.....

Unit 4: Nokia - Strategy for change

I can’t think of a better case study than Nokia for students to research for Unit 4.  Nokia is a global brand, a market leader and a firm rich in heritage.  But it faces a strategic crisis which is caused by a range of external and internal factors that are core to A2 and similar business strategy specifications.  

In this note, we’ve outlined some of the main strategic issues facing Nokia and linked to recent supporting resources which students should examine.  A well-prepared student getting ready to wow the examiner with relevant evidence-based research in an essay should be ready to include Nokia in an answer!

Background resources: 

Does Nokia need an upgraded CEO (July 2010) - great for setting out the strategic issues prior to appointment of Stephen Elop
Nokia - a problem of culture? Tom White’s excellent blog piece on the cultural challenges / issues
Stephen Elop and the Burning Platform memo - business strategy gold dust - this should appear in every essay on strategic change!
Leadership & Strategy - “Welcome to Nokia” - Links to a Reuters special report on Nokia and its new CEO

Key features of the recent Nokia story:

- Finnish conglomerate turned itself into the world’s leading mobile phone company in the 1990s. So Nokia has already been through one (successful) change programme, turning itself from an unfocused conglomerate into a focused mobile phone producer.  Can it change again?
- Global market leader in mobile phones - but not smart phones
- Still profitable, but revenues under pressure
- September 2010: Appointed new CEO - Stephen Elop - to drive strategic change
- February 2011 - Elop issued the famous “burning platform” memo bluntly explaining the serious strategic challenges facing Nokia
- Elop outlined results of his strategic review on Feb 11 2011 - making it clear that Nokia had to undergo a substantial programme of change
- Elop announced a strategic partnership with Microsoft in March 2011 to jointly develop smartphones using the Windows mobile platform - ditching Nokia’s previous investment in its homegrown Symbian platform
- Elop has swept away many elements of Nokia’s previous organisational structure - a significant process of delayering
- Elop has refocused the business on leadership (managers taking decisions and responsibility) and markets (innovation driven by people competing in key mobile phone segments)
- Decision-making has been delegated to local/national teams rather than relying on decisions by an overly-centralised senior management team
- Goals and incentives for the senior leadership team are now more transparent
- The new strategy brings clarity and a sense of direction to Nokia - but will it be enough to achieve a successful turnaround?

Why did Nokia need to change?

- Almost everyone who understands the challenges facing Nokia agrees that change is unavoidable
- Nokia had missed the major change in its market - the smartphone revolution
- Nokia had continued to focus on mobile phone devices (hardware) rather than mobile phone applications (software)
- The product life cycle of Nokia’s products had shortened dramatically as others (Apple, Google Android) developed smartphone platforms and an associated “ecosystem” of apps.  The consumer transition from traditional mobile phones to smartphones has been dramatic, and caught Nokia off-guard
- Nokia has faced intense competition from mobile phone producers in emerging markets who can make fast, cheap handsets at the lower end of the mobile phone market
- Many in Nokia regret that the business had become too product-led rather than customer-led; a missed opportunity
- Poor leadership and complacency (bred from success in non smart-phones)
- The wrong culture - over-consensual; lacking innovation and entrepreneurial spirit
- Complex, overly-bureaucratic organisational structrure with poor accountability
- Nokia had become “clogged with bureaucracy”
- Decisions being made within the firm were often cancelling each other out!
- “A series of committees, boards and cross-functional meetings held-up decisions

Stephen Elop’s response as the New CEO

On his first day at Nokia: Elop sent an email to all employees asking three questions:
- What do you think I need to change?
- What do you think I need not or should not change?
- What are you afraid I’m going to miss?

The email generated thousands of replies and the responsess suggested that Nokia’s corporate communication had failed; many complaints of management indecision and staff frustration.

The “burning platform memo”:

- Laid out the challenges facing Nokia in smartphone and also lower-end mobile phone markets
- Standing on a burning (oil) platform can force someone to make a major change in behaviour

Elop’s comments on Nokia in the memo:

“We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.
“There is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.”
“The Shenzhen region of China is able to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally – taking share from us in emerging markets.”
“Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem.”
“We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.”

Issues for Elop

- Is his strategic change too late? Will Apple and Google (Android) have gained too much market share before Nokia can make a success of its strategic partnership with Microsoft
- Elop’s background - he is the first non-Finn to run the company in its 145 years of existence (a source of cultural conflict, or an advantage?)
- Is the crisis at Nokia sufficiently serious/grave to ensure that all necessary changes (including to the firm’s culture) are made in time?

How Nokia links in with Unit 4;

New leadership (internal causes of change): an outsider arrives to shake up the way Nokia does business!

Retrenchment (closing down Symbian) followed by strategic partnership with Microsfoft (another major internal cause of change)

Strategic decision-making / corporate planning: Nokia’s decision-making had become ineffective - too slow; inconsistent

Technology (smartphone ecosystems) as a source of change: consumers no longer buying a handset; they are buying apps that run on phones

Culture as a constraint on change management: will Nokia’s conservative, bureaucratic culture get in the way of rapid, fundamental change?

Changes in strategic direction: the change from a focus on products (phones) to software applications (phone “ecosystems)

Impact of competition from emerging markets: the effect of faster, cheaper competitors
Globalisation of markets: Nokia’s new objective of supply “the next 1 billion mobile phone handsets” resulting from rapid demand growth in emerging economies

Business and the competitive environment: emergence of stronger, more successful competitors (Apple, Samsung, RIM, Google, LG) 

Unit 4: Mothercare - A change of Strategy

Mothercare announced a fall in full year profits this morning, along with some of it’s key plans for the next year or so. This BBC article provides some details which will be of interest to students looking for real life examples of strategy change.


There is plenty for students to get their teeth in to here, in particular:


* retrenchment in the face of an economic downturn and increasing competition

* more emphasis on developing overseas markets

* a focus on on-line business and wholesale business

This could easily be a future case study for Unit 4.

There is also an article in the Guardian on this which has a bit more detail (Click here)

The subject of reducing High Street presence can also be seen in the recent appointment of Mary Portas as the new tsar to try to revitalise UK town centres (Click Here).

Unit 4 - Top CSR performers in UK

Some topical evidence here from BITC. This is the publication of their latest rankings for the CSR performance of 300 of the UK’s largest businesses... For all that Morissons says it does, it does not make the top companies (neither does any of the other supremarkets!)


The BITC describe their Corporate Responsibility Index as follows:

“The Corporate Responsibility (CR) Index was first launched in 2002 following consultation with more than 80 organisations and key stakeholders. Since then it has become recognised within the UK and abroad as one of the leading benchmarks for responsible business. Over 300 large businesses have used it as a management tool since 2002, with many using it consistently year on year.”

The Platinum (top) standard firms are as follows:

BITC's CR Index 2011 - Platinum listing

View more documents from Business in the Community

At the next level down is the Gold Standard, achieved by the following businesses:

BITC's CR Index 2011 - Gold listing

View more documents from Business in the Community

Unit 4a: Practice Question - Kingfisher Plc

Kingfisher plc-unit-4a practice-question

View more documents from mattbentley34.

Unit 3: Outsourcing

Over a third of UK companies now do some of their production work abroad, whilst 10% have over half of their manufacturing offshore in lower cost locations. Dyson is a high profile example of a company that has relocated production abroad to Malaysia, whilst keeping their research and design operations in the UK.

Most recently we are witnessing a trend for service sector businesses to follow suit. In recent times we have seen Norwich Union, Abbey National, Tesco, British Airways and National Rail Enquiries all transfer parts of their operation overseas.


There are three main drivers promoting outsourcing as a business strategy:

(1) Technological change – Information, communication and telecommunication costs are falling - this makes it easier to outsource service and manufacturing operations to sub-contractors in other countries. Technological advances now promote “Just in time delivery” inventory strategies for the delivery of components and finished products and encourage the development of “virtual manufacturing”. Communication costs are dropping sharply - the average price of a one minute international call was 74% lower in 2003 than in 1993.

(2) Increased competition in a low-inflation environment - which increases the pressure on businesses to achieve lower costs as a means of maintaining market share.

(3) Pressure from the financial markets for businesses to improve their profitability.

For many large businesses, there are cost advantages to be gained through doing business via a call centre located overseas. Outsourcing is not simply confined to service sector industries. Many manufacturing businesses are using outsourcing as a means of reducing their costs, providing greater flexibility of production levels at times of volatile demand and also in speeding up the time it takes to get their goods to market, especially new products.

Unit 3: Economic environment: Emerging Markets (introduction)

We’ve lived through an extraordinary period in world economic history. Sustained economic growth outside the areas once seen as the ‘rich world’ - primarily Western Europe, the US and Japan – is reordering the global balance of economic power.


The ‘emerging markets’ is a term used by commentators to group together some of these awakening giants. You may have heard of the BRIC economies - Brazil, Russia, India and China - a label that serves as a handy acronym to remind you of some of the key players. But there are plenty more. What does this mean for business?

This fascinating graphic asks where will the next $10 trillion (that’s $10,000 billion, or $10,000,000 million) of world income come from. Forecasters anticipate that this might be achieved as soon as September 2013. You’ll see that much will come from some surprising sources. (If you need a guide to the idea of GDP, try here)


On one level, the rise of the emerging markets is not so amazing. It’s just the world going back to ‘normal’. What was probably odder was that there was a time when a tiny country (e.g Britain) produced 10% of all the income in the world. At the height of America’s relative power it was producing over 20% of the entire world’s income. It’s not surprising to see power shift back towards Asia, as this is where the majority of the world’s population lives.

What does this mean for business?

- More and more consumption is coming from the emerging markets, with obvious implications for firms as they look abroad for export opportunities.

- As poor countries become richer, wages and costs in those economies start to rise. That makes them less immediately attractive as places to ‘offshore’ business production. Increasing growth from new sources also puts price pressure on globally traded resources like oil.

- The rising giants are producing powerful new multinational companies that increasing seek to compete in markets once dominated by the familiar rich world companies we have grown up with.

But you may wish to also consider that:

- At the moment, most of the population of emerging markets are still pretty poor, by our standards. It will take another couple of decades before average living standards (and shopping habits) come to resemble ours. Diversity is a tough issue for international business.

- Sadly, low levels of income and employment remain a reality for far too many people. This continues to be a significant ethical, political and business issue. Firms will still have to wade through a maze of tricky issues as they seek to move production into countries like Vietnam or Kenya. The public often views company behaviour in this area with suspicion (see the Primark Question).

- Things might change. Events in the Middle East (see the politics bit of PEST analysis) have shown how potentially unstable many of the emerging markets remain.

Unit 2 & 4: Motivation at work. Keeping staff happy....

When I first glanced at the link below my initial reaction was that the recession must nearly be over. When firms start to advertise the benefits of the office you could be working in, it’s usually a sign that they are having trouble finding recruits for their organisation. But watch it anyway as the clip raises several interesting points about how work place design could influence workforce performance.


Click here for the clip: How to spruce up the work place

Back before the recession, firms like Google were looking to attract applicants (and presumably keep the staff that they had) by hyping up the ‘delights’ of their wacky workplace (see video clip).  The reporter in the video clip above uses the word ‘gimmick’ when describing the HQ of hip firm Trunki .

What do you think? (Would it motivate you to work?)

Of course, there’s nothing new in the desire businesses have always had to create workplaces that maximise employee productivity. You might have heard of the famous Hawthorn Effect and it’s an issue worth giving some consideration to.

Students should also think about the possible business implications of encouraging staff to work from home.

This issue is addressed by the BBC at why can’t everyone telework?. Also click on this link which looks at the question is ‘working from home’ a skive?

Labour Markets - Women get paid less than men shock!

Thanks to Sami for finding this little gem from the Economist. Sorry Lara, you are destines to a life of poverty...unless you marry a rich Turkish dude!


Female students expect lower salaries across Europe

WOMEN earn on average 17.5% less than men in the European Union. No surprise then, that female university students in Europe expect to earn less than men once they graduate. According to a recent report by Universum, a Swedish consultancy, women studying in the top European institutions expect to earn on average around €8,600 ($12,400), or 21% less than men, (men expect a graduate starting salary of €40,898).

Women and men seem to differ in workplace and career aspirations, which may explain why salary expectations differ. Men generally placed more importance on being a leader or manager than women (34% of men verses 22% of women), and want jobs with high levels of responsibility (25% v 17%). Women, however want to work for a company with high corporate social responsibility and ethical standards; men are more interested in prestige (31% v 24%).

Unit 4: Motivation

Excellent clip on what motivates people....and Harry, it is NOT money!!!!

Unit 4: Motivation - Classic Video - Try and link to Morissons

These two videos are an excellent intro to motivation.


Jumping for the Jelly Beans is Herzbergs explanation of his two factor theory and the video has been conveniently split into two parts.

Part one covers the basics of the two factor theory whereas part two covers his explanation of job enrichment therefore allowing these two videos to be used over two lessons.

Part two also has a reall useful summary of the importance of hygiene factors.

What makes these videos really cool is their grainy 70’s look. (Miss Meeajan wasn't even born when these were made!)

Video One:



Video Two: