Company

Mubadala is an Arabic word which means exchange. Mubadala Development Company was established in October 2002 with its main objective being a public joint stock company. During this time, Sheikh Khalifa bin Zayed Al Nahyan issued a decree for official establishment of the company as government-owned disambiguation firm of the United Arab Emirates. This was considered as one of the major advances made by the Sheikh, whose major aim was to form an organization that was greatly recognized so that its growth could be boosted economically.

Thus, the company became a state owned entity by the Abu Dhabi government in United Arab Emirates (UAE) . The funds obtained from the Abu Dhabi government were utilized in putting up business links between Mubadala and potential industrial sectors which were important in initiating a business deal. In addition, the funds were used in form of a loan to back-up business that had been put in place within the region. . The relations between Mubadala and other industrial companies was a critical factor towards the formation of an established business network.

The criteria for selecting business partners highly relied on the chances that arose and this varied from international to national partners. This required identification and development of a business opportunity so that it could suit the demand of other arising partners. During the initial period of establishment, Mubadala could employ less than 50 employees. However, by the year 2008 the company had grown by 800% in terms of employee capacity. Since the Abu Dhabi government was a sole shareholder in the business, Mubadala obtained funding in form of equity capital.

With time, the company sought its financial assistance through equity and financing through appealing or debts. Much development in terms of economy and industry was taking place and there were plans underway for Abu Dhabi and Dubai. However, as this went on, Mubadala realized that a good proportion of natural gas was being utilized by consumers in the United Arab Emirates. Even though the UAE had a rich source of gas and oil, it required gas for export, maintenance of reservoir pressure and favor growth in industrial production. This lead to a conclusion that a reliable gas source for import was of need to the UAE nationals.

A natural gas pipeline transport plan of approximately 400km was laid up to convey natural gas from Qatar to Abu Dhabi power plants. Mubadala’s first project referred to as Dolphin energy was the operating company in charge of the natural gas project. The project was 51% owned by Mubadala with the remaining shares getting divided equally between Total and Enron, but were later bought by Occidental. Returns were anticipated to cover up for all the expenses incurred during the whole project, despite the fact that Dolphin was complex in terms technology and expensive.

There was much pressure from the nationals, about Mubadala having to transport natural gas to an energy rich nation; however this was overcame by the company’s executives . In 2007, Mubadala fulfilled one its business dreams by confirming that there was gas flowing into the UAE. This achievement gave honor and pride to Dolphin, grading it high in terms of business plans and strategies; and influenced more other persons outside UAE to get into partnership with Mubadala and Abu Dhabi.

Out of the 1000 jobs that Dolphin created, 900 were held in Qatar, 150 in Abu Dhabi; out of which UAE nationals took 100 positions in leadership. Dolphin earned a name for Mubadala in international investors, hence introducing it into the financial society outside the United Arab Emirates. As evidenced, in 2004, out of financing with the local, regional and international banks, Dolphin was able to raise $1. 36 billion within four years; that in part would support the dolphin project.

This was the first time Mubadala had sought for funding internationally: meaning that there had to be effectiveness in production out of the already existing projects, lessen risks by involving the financiers in its projects, and to involve other parties that were not necessarily in partnership with the company. The international banking community in turn supported Mubadala based on how committed it was towards meeting its returns. This added more credit to the company to business firms abroad, such that by 2007, it had established corporate relationship with over sixty regional and international investment banks .

Since Mubadala had established trust in its partners, the international banking community gave it the mandate to transact business on behalf of the government of Abu Dhabi. As a result Mubadala was able to transact $2billion with twenty one international banks. The Dolphin was then dealt away with, because Mubadala was investing in firms that were already successful. From 2004, “Mubadala was a development organization with a definitive and sustainable plan”, observes Mubadala’s executive director of the of the properties Development unit, Ossama Khoreibi .

One of Mubadala’s greatest challenges was insufficient human resources, for the projects were getting sensitive and technical for a small inexperienced staff to handle; the leaders had to see that the structure of the company went in hand with the strategy. Mubadala had greatly diversified by 2007 as a company, but with an extra ordinary range that was hard for the employees to be proficient in. Mubadala’s major objective is to ‘develop and manage an extensive and economically diverse portfolio of commercial initiatives’.

This is done in two ways: either independently or in partnership with organizations that are leading internationally. The strategy for Mubadala is to establish itself on well planned capital that lasts for a substantial amount of time and is able to regenerate reasonable amounts of finances. Its effects are felt locally and abroad, through the services that it offers in its various sectors. Mubadala’s projects are based on investment and development, managed by two groups each with a designated role. The groups include: the operations group, and the finance and corporate affairs group.

The operations group that is responsible for investigating business ideas, choosing investment opportunities, going through all that has been acquired, putting up and utilization of business plans; composes of approximately 200 professionals. It is made up of six units under the organization of the industrial sector namely: Energy and industry, acquisitions, aerospace and technology, infrastructure and services, healthcare, and real estate and hospitality. The Finance and corporate affairs group offers financial analysis and advice to the company, and gives necessary details pertaining to financial details.

With time the finance and corporate affairs group developed into a group that worked on its own, keeping records for the company and engaging in any other activity that enabled smooth running of the company. The group is presently constituted of: administration, human resources, planning and development, project and corporate finance, communication units, legal and management in information systems. The government represented by a board of directors composing of seven members, approves the projects put forward by the operations group and provides financial aid towards project implementation .

2. 0 EMAL – A Project of Mubadala Abu Dhabi has an abundance of energy resources, amongst them being aluminum. Mubadala decided to invest in the industry due to a number of reasons such as: there is need to boost industrialization in Abu Dhabi, aluminum smelting is a major energy yielding industry in the world therefore has the potential to provide the best investment opportunity, and finally, there had been only two streams of attempts to industrialize that had been witnessed since 1960s; implicating that there was a vast opportunity to explore in the metal smelting industry .

Based on utilization, aluminum has many functions: it rates second after iron on its extent of use worldwide. Aluminum industry would enhance the economy of the UAE by giving value in the investment over a long period of time hence creating more benefits. Aluminum is valued for resistance to corrosion; light weight, pure aluminum and its alloys are used in many industries amongst them being transport, aerospace and construction. Aluminum is recyclable without losing its desirable quality as may happen to other metals.

Even though advances in technology in plastics some areas have taken over the utilization of aluminum, its unique properties still stand out . Emirates Aluminum (EMAL) is coined from the names Mubadala and DUBAL, that came into partnership to construct a hi-tech aluminum smelter in the Emirate of Abu Dhabi; DUBAL was an aluminum producer based in Dubai. The joining of DUBAL and Mubadala was in 2007 under the president of the UAE, HH Sheikh Khalifa Bin Zayed Al Nahyan, through decree number 7 of 2007.

EMAL with its locations in Taweelah, has a plan of production of 1. 4 million ton per annum aluminum smelter which will be put up in two equal phases: phase 1, will produce 720,000 ton per annum, the highest aluminum smelter ever constructed and the most booming industrial project in the UAE, beside the other energy producing industries; this is to be completed in 2010 and phase 2, is to be catered after perfection of phase 1. Transport was facilitated by construction of a new port to facilitate delivery of raw materials .

EMAL international is an affiliate company that is put to handle aluminum project besides that in the UAE, which include a bauxite mine and alumina refinery in Guinea, and a 720, 000 ton per annum smelter in Algeria. With EMAL and EMAL international in place, Mubadala is putting an investment of close to $20 billion in the aluminum industry. Abu Dhabi has an objective of becoming the top producer in the aluminum sector yielding 10% of the world’s total amount within a p of a week; with EMAL, the Algerian, and Saudi smelters adding over 3.

5 million by 2012, which is attainable. The aluminum project meets the standards of operation that Mubadala runs on. Such as leveraging the energy stock in Abu Dhabi, offering technologically advanced jobs to the locals; and at the same time opening a greater diversity of aluminum related projects for investment by companies that are not government based. In DUBAL for instance, a greater percentage of employees were from the UAE; similarly, EMAL seems to offer good working opportunities to a number of nationals.

Quick growth of the aluminum sector is being observed in Abu Dhabi’s neighbors; Bahrain for instance that has a work force of 3000, 90% of who are Bahraini nationals. Besides adding energy value to the energy store in Abu Dhabi, Many quality jobs are being created by the Dubai aluminum; the increased growing demand prompts production of the metal in millions of ton that will be sold at higher prices. Therefore all the funds used in investment can be recovered over a short period of time .

Mubadala’s plan is to play a lesser role but catalyze activities within the aluminum related industries and still ensure that the sector is large enough to create more employment opportunities. The local industries are allocated 50% shares in the smelter industry. Mubadala’s next project is development of aerospace and automobile industries . Therefore production of a large amount of aluminum is beneficial towards putting up the industry since it requires the metal as a raw material. A gas power plant which produces energy amounting to 2,000MW is planned for so as to maintain a constant and reliable energy supply.

The smelter will apply a high level of technology through utilization of the DUBAL’s UAE developed cell technology; this will utilize the amount of energy used in smelting, save funds fueled towards production, and increase the amount of metal yield; 756 reduction cells will be located in two places. Products of the iron smelter will include primary aluminum extrusion billets, sheet ingots, and different shapes and sizes of ingots of unalloyed aluminum of high quality. This will be supplied to the packaging, technology, electronic and construction industries in addition to the aerospace and automotive industries.

Environmental standards set by the Abu Dhabi Environmental Agency had to be adhered to. Under EMAL’s plan, environmental conservation is be a priority: to control suffocation of marine flora and fauna by heat through employment of the best gas turbines and cooling towers to industrial water before discharging into the sea. Sulphur-dioxide scrubbers will be put in chimneys to avoid emission of poisonous gases to the atmosphere that would create air pollution. This plan is budgeted to cost USD200 million which will be a contract to Alstorm to supply its centers for gas treatment.

Alstorm has the best technology applied in reduction of sulphur- dioxide and fluoride emission into the air. Italian cooling tower technology (SPIG) will be used to make the water used during the production process suitable to the delicate marine life- up to one degree Celsius temperature range, which is within the required range that allows a maximum increase of plus 5. SPIG applies a technologically advanced system of water cooling that applies seismic design vibration control and reduction in energy consumption, hence reduces the effects of the cooling turbines on the environment.

3. 0 Conclusion The environmental responsibility seem as a challenge due to the high cost of materials that are vested towards it , however EMAL takes this as a strength ; the environmental conservation plan is strategic, long term and beneficial. The investment in the project goes in hand with Mubadala’s strategy of creating job opportunities, creating more areas of investment, advancing Abu Dhabi technologically, and financing business through returns . Bibliography: Abdelal Rawi & Tarsis Irina, ( 2009): Mubadala: forging Development in Abu Dhabi.

Retrieved 29th January from: http://www. 2shared. com/file/4749219/29699f4d/Mubadala_Forging_Development_in_Abu_Dhabi. html Fitsal Teri, (2008): Standard Chartered: Middle East and Africa: the Guide to Working Capital Management. ISBN 9889932652, 9789889932657, PPP Company Ltd. Mubadala Website. Retrieved 29th January from: www. Mubadala. ae Peck C. Malcolm, (1986): The United Arab Emirates: A Venture in Unity. ISBN 0865311889, 9780865311886, Taylor & Francis. Rehman A. Aamir, (2008): Dubai & Co. : Global Strategies for Doing Business in the Gulf

The case analysis considered the infringement case filed by Elm City Cheese Company against Federico covering. The action covers its Italian-style grated cheese product that the defendant intended to appropriate without permission in his own cheese company established after resigning from Elm City Cheese Company. The court decided in favor of the plaintiffs and against the defendant. Non-disclosure, non-competition, and consumer protection are the legal issues covered by trademark law, federal labor law, and consumer protection law.

The ethical issues involve the infringement on the part of the defendant and claim for restriction on the part of the plaintiff. The three ethical perspectives, utilitarian, categorical imperative, and justice as fairness, provide different considerations in determining the issue. Injunctive relief and/or fine for damages are corrective measures for infringement and imposition of security measures is the corrective measure for restriction. Background There are two primary stakeholders in Elm City Cheese Company, Inc. et al v. Federico et al. (1999), which was decided in Connecticut.

One is the plaintiff, Elm City Cheese Company, a small family-owned cheese manufacturing company operated by the Weinstein family since the 1950s and based in Connecticut. The company specifically manufactured Italian-style grated cheese using its own recipe and manufacturing process since the company started. The other is Mark Federico, a former accountant and trusted friend of the Weinstein family, who resigned and together with his associates established a similar company manufacturing the same kind of cheese produced by the Weinstein family for sale in the same market.

The plaintiff filed an action against the defendant under the Uniform Trade Secrets Act to protect his trade secret from appropriation by another person without permission. The Elm City Cheese Company sought court action because the appropriation of its trade secret, the recipe and process of making Italian-style grated cheese, would significantly affect its business. Although, the company established by the defendant was in Rhode Island a contiguous state, the proximity means that the defendant would be using the trade secret to compete directly with Elm City Cheese Company in practically the same market.

The resolution of the issue is crucial to the exercise of the exclusive proprietary right of Elm City Cheese Company over its trade secret, which it has kept within the family. The defendant was trusted as part of the family. As an accountant, the defendant handled the finances of both the business and the family. He was also a party to the day-to-day operations of Elm City Cheese Company and a privy to all the trade secrets of the company. The resolution of the action brought against the defendant would determine the ability of the defendant to manufacture and market the same kind of cheese made by the Weinstein family.

The court ruled in favor of plaintiff and against the defendant. Legal Analysis Three legal issues emerged from the case relative to the Uniform Trade Secrets Act, unfair competition law, and federal consumer protection law. First is whether the defendant violated the duty not to disclose or use trade secrets of a former employer. Second is whether the defendant violated the duty not to compete with a previous employer. Third is whether the defendant violated the principle of consumer protection in appropriating the trade secret of a former employer.

The court ruled against the defendant on these issues. Non-disclosure and limited use of trade secrets governed operates as a duty of employees based on three tests. The first test is when the imposition of the duty is necessary in protecting the legitimate interest of the employer and the appropriate protection is confidentiality. The second test is when the restriction imposed for the operation of non-disclosure does not exceed a period deemed necessary in protecting an employer’s interest.

The third test is that the geographical scope of the limitation does not go beyond what is necessary to secure the employer’s interest. Concurrently, the legitimate interests of an employer are trade secrets and information on customers such as customer contacts. (Perritt, 1994) Confidentiality and non-disclosure as duties exacted by employers from employees during and during a reasonable period immediately following the termination of employment operates based on the assumption that the employer holds a legitimate interest that requires protection.

In the Elm City Cheese Company case, the Connecticut Supreme Court through a majority vote assumed the existence of an obligation, implicit in the employment contract (Perritt, 1994), of Federico to maintain the confidentiality and not to disclose or use the trade secrets of his former employer. The court also supported the existence of a trade secret covering Italian-style grated cheese, which required reasonable protection. Federico cannot use the trade secret in his own company for three years.

However, the dissenting opinion expressed the lack of a trade secret and non-operation on the confidentiality and non-disclosure principle because there was no sufficient evidence to indicate that the company and the Weinstein family regarded and intended as trade secret its recipe and manufacturing process. The employee manual did not mention about its trade secret and its interest to protect this trade secret by exacting the duty of confidentiality and non-disclosure from its employees via the employment contract.

Nevertheless, it was apparent that the Weinstein family trusted the defendant as a family and relied on this fiduciary relationship to protect its interests (Glusman & Ciociola, 2006). The company never contemplated the need for explicit imposition of the duty from the defendant. Non-competition with a previous employer operates through the test of reasonableness. A restriction on the employer not to compete with the employer should be to secure a protectible interest such as trade secrets. This considers two pitting interests.

Business firms consider trade secrets form part of company assets and an area of expenditure or investment by the firm. Employees could consider those covered by what the company considers as trade secrets as personal attributes. Decisions lean towards business interest in special circumstances when knowledge or skills comprise a special area of investment by companies. (Filipp, 2008) A non-competition clause in the employment contract also signifies the employee’s transfer of its personal attributes to the company (Cava, 1990).

In the Elm City Cheese company case, accounting as the area for work of the defendant appears only to have an indirect relation to knowledge of the recipe and manufacturing process of the company. This puts into question whether the work of the defendant for the company, constitutes a special circumstance as raised by the dissenting opinion. The employment contract also does not include a non-competition clause. Nevertheless, the court placed stress on the fiduciary regard of the company towards the employers and his position as privy to trade secrets and the implied non-competition duty.

This means that Federico and his company Lomar infringed the implied non-competition duty and practiced unfair competition (Sander, 1997) by establishing a cheese manufacturing company producing the same product as Elm City Cheese Company. The court held that Federico could manufacture other types of cheeses other than Italian-style grated cheese. Trademark laws secure consumer protection is by ensuring that trademarks and other intellectual property are able to enable differentiation by consumers and guarantee their choice.

Infringement of trademark laws would defeat differentiation since two companies or two brands sell exactly the same product. (Sander, 1997) Public interest operates as a factor considered in determining cases involving trade secrets (Filipp, 2008). Federico and his company Lomar violated the principle of consumer protection in appropriating the trade secrets by making the same product as that of Elm City Cheese Company. This could cause confusion among consumers. Ethical Analysis Two ethical issues emerge from the case.

One is whether Federico can establish a similar company and manufacture the same product as his former employer. The other is whether the Elm City Cheese Company can restrict Federico from engaging in a similar business and products. The utilitarian perspective considers ethical action as that which considers the well-being of all people involved or affected by the issue. As such, actions should enable the achievement of the greatest benefit with the least detriment to the affected persons. Actions should also secure the greatest benefit for the most people.

(Johnson, 2007) Based on this perspective, the appropriation of the trade secrets of Elm City Cheese Company by Federico constitutes unethical behavior because it results in greater detriment to more people relative to the personal benefit to him. The court action to restrict Federico and Lomar from appropriating the trade secrets of Elm City Cheese Company constitutes ethical action. The parties adversely affected by the infringement includes the Weinstein family, its employees, and its customers while the parties benefiting from the infringement is Federico, other company owners, and its employees.

Federico can ensure greater benefits by establishing products of its own to provide the same benefits but with no detriment to other parties. The categorical imperative perspective explains that the pursuit of ethical action is an imperative and without any qualifications. Individual should pursue what is ethical regardless of what the consequences could be. (Johnson, 2007) In the Elm City Cheese Company case, the ethical action is for Federico to honor the trade secrets of the company and the Weinstein family. He cannot claim any aspect of the trade secret as his personal attribute to justify his appropriation of the trade secret.

Since the ethical action is categorical imperative, it is unethical for Federico to appropriate the trade secrets of his previous employer as a way of competing with Elm City Cheese Company. Federico should not have deviated from this ethical action even if he would have trouble in developing his own cheese product. The justice as fairness perspective provides that ethical action is something aligns with the equal application and protection of rights. This also means the consistency in the treatment of people except only when there are significant differences that justify variance in treatment.

There should also be distribution of benefits and burdens across a group. (Johnson, 2007) In application, while Federico has the right to establish his own company similar to the Weinstein family, there should be equal protection of rights. Since Elm City Cheese Company has exclusive proprietary right over its Italian-style grated cheese, Federico should respect this right in the same manner that Elm City Cheese Company would respect the exclusive appropriation rights of Federico over the cheese products he exclusively and uniquely developed for his cheese company.

Contributing Factors Elm City Cheese Company is a small family-owned business. While its corporate culture is typical of small family run companies, this allowed unethical behavior to happen. The corporate culture of Elm City Cheese Company heavily relies on fiduciary relations. As a direct result, apart from the basic elements of an employment contract, other duties expected from employees impliedly operates through legal provisions but not explicitly communicated or included in the contract. This is typical of small family-run firms.

The small size of the organization means that the owners know all the managers and employees by name and even some personal information. Most of the managers and employees live in the same community and the relationship could even extend beyond the workplace. However, by relying on trust alone based on the assumption that this would deter any unethical action this also creates room for abuse. Federico was trusted as part of the family and he was privy to sensitive information, related to his work as accountant. The non-expectation of violation of the trust and lack of precaution or complacence enabled the unethical action to happen.

Another characteristic of the corporate culture of Elm City Cheese Company is its informal system of management. The policies and rules are based on the basic principles of human relations and largely unwritten. The company has no provision in its employment manual about the confidentiality of its trade secrets and expectations of non-disclosure from its employees. The same information does not appear in its employment contracts. This led to the infringement, whether this was due to the belief of appropriateness of the action due to lack of written rules or due to knowing appropriation of trade secrets.

Ethical Decision Factors to Consider In the first issue on whether it is ethical for Federico to establish a similar company and manufacture the same product as that of his former employer covers various factors. The utilitarian perspective identifies these factors as the stakeholders or the parties affected by the action as well as the benefits and harm to these stakeholders. If more stakeholders experience harm or if the overall detriment outweighs the benefits then the action is unethical. The party concerned should cease from doing the action.

If the party pushed through with the action, then that party should face the consequences for inflicting harm. Based on the categorical imperative perspective, the consideration is the nature of the action, particularly whether this adheres to ethical norms and reasonable expectations of practice. If the action is unethical, the person should not pursue it even if the person does not agree with it or the person suffers some form of loss. If the person pursues the action, then the imperative penalty for pursuing that action follows.

The justice as fairness perspectives calls for the consideration of the existence of rights and its equal application. If the action violates equal protection of rights, then it is unethical and involves the liability that comes with the violation of rights. The second issue on whether Elm City Cheese Company can restrict Federico from engaging in a similar business and the same product, the different perspective also identify different considerations. The utilitarian perspective points to the weighing of costs and benefits to stakeholders.

The restriction is ethical if this ensures the greatest benefit with the least harm to the parties affected. The categorical imperative provides the consideration of whether Federico, being in the same position as the Weinstein family, would also seek restriction against a former employee infringing its trade secrets. The justice as fairness identifies the exercise and protection of rights by one person that is also available to another person, such as if the right to seek restriction applies to Elm City Cheese Company as well as Lomar. Recommended Corrective Action

The corrective action for the issue on infringement of trade secrets and non-competition is injunctive relief to cease disclosure or maintain confidentiality and fine for damages (Filipp, 2008) for the Italian-style grated cheese product made by Lomar. However, Lomar can manufacture other kinds of cheese products. Injunctive relief running three years was the penalty imposed by the court on Federico for his actions. Pepsi Company sought injunctive relief in 1995 to prevent the employment of an executive officer at Gatorade/Snapple since this would necessitate disclosure of its trade secrets (Brown & Gutterman, 2005).

The corrective action for the issue on the claim for restriction is to enforce security measures in areas make the trade secret vulnerable. There should be explicit and active efforts to protect the trade secret to claim infringement. (Cava, 1990) Elm City Cheese Company should exercise active effort to protect its trade secrets. Coca-cola exercise security measures to protect its cola recipe. It withdrew from India when a law required the company to share its recipe with a local manufacturer. Coca-cola also preferred to keep its recipe secret instead of obtaining patent.

(Pendergrast, 2000) KFC also keeps its colonel’s original chicken recipe in a guarded vault accessible to only a few top executives (Chartrand, 2001). Elm City Cheese Company needs to make changes in its policies to prevent a repeat of these issues in the future. One change is to incorporate explicit provisions covering its trade secrets in company policies and employee manuals (Cava, 1990; Filipp, 2008). This constitutes a security measure because employees aware of the policies would not likely to unknowingly infringe and in case of infringement there is clear evidence of the existence of trade secrets subject to protection.

The other change is to include confidentiality and non-disclosure clauses in employment contracts, especially for personnel becoming privy to trade secrets, to an extent deemed reasonable (Cava, 1990; Filipp, 2008). As another security measure, the company can adopt this to deter infringement or gain a strong basis for claims. Reference List Brown, R. L. , & Gutterman, A. S. (eds. ) (2005). Emerging companies guide. Chicago, IL: American Bar Association. Cava, A. (1990). Trade secrets and covenants not to compete: Beware of winning the battle but losing the war.

Journal of Small Business Management, 28(4), 99-104. Chartrand, S. (2001, February 5). Patents; Many companies will forgo patents in an effort to safeguard their trade secrets. The New York Times. Retrieved June 4, 2009, from http://www. nytimes. com/2001/02/05/business/patents-many-companies-will-forgo-patents-effort-safeguard-their-trade-secrets. html? sec=technology&&n=Top%2FNews%2FTechnology%2FColumns%2FPatents Elm City Cheese Company, Inc. et al v. Federico, et al. , 251 Conn. 59, 752 A. 2d 1037 (1999).

J. Crew at Stonestown mall is having difficulty targeting San Francisco State students to shop at their store, even when J. Crew offers a 15% off discount to college students. J. Crew is a very successful brand that reaches out to young business professionals; however J. Crew, specifically at Stonestown mall, is having difficulty reaching out to the college students at San Francisco State University. J. Crew believes the students at SFSU are a smart target to reach, considering the University is located right next to the Stonestown mall. Although J. Crew believes the college students are smart target to reach, many students are unaware of the student discount they offer. Looking over J. Crew’s past marketing campaigns, they have used older looking models. When doing our research, we noticed that J. Crew’s top competitors: GAP (Banana Republic), and BCBG use younger, college age range, type of models. With this is mind, we feel that the best advertising campaign is to follow their competitors and choose younger looking models, in order to reach out to the college market. J. Crew’s competitors use fun advertising methods to reach out to a younger market.

We noticed in all of GAP holiday commercials, the young models are jumping around having a good time. We get a sense of fun and playful energy from the commercial, which could draw in college students. Gap also gives off a feel of comfort, casual and trendy style in clothing for the everyday college wear. We feel that if J. Crew starts advertising with younger looking models emphasizing on basic wear of a typical college student, J. Crew may have better success at reaching out to the SFSU students.

Advertising Objective

Our main advertising objective is to gain attention of the college students. The goal of our advertising campaign is to create interest for the brand and thus to encourage college students (the target audience) to make an initial purchase of a J. Crew products. Advertisement should seek to tell the market about J. Crew’s products, emphasize the quality and fashion of the products, and last but not least build awareness of the company. We can typically employ creative advertising strategies in order to cut through other competing advertisements.

Situational Analysis

J. Crew first debuted in 1983 as a catalog only shopping experience by Arthur Cinader. Six years later he opened its first flagship store in South Street Seaport New York. J. Crew is American clothing and accessories for men and women. They recently added several line extensions such as “Crewcuts” for children ages 2-12, “J. Crew weddings and Parties”, and “J. Crew Collection” for limited edition pieces. The retailer is known for its young and preppy fashions including jeans, khaki’s, and other basics that are quite pricy and targeted to young professionals. They have 300 stores worldwide including the website and catalog. In 2003 Millard Drexler the former CEO of Gap Inc. ecame the new CEO for J. Crew by pushing service, quality and innovation to the next level. This caused so much controversy with the two companies, being that they are major competitors. J. Crew partners with the best fabric mills and craftsmen such as Jack Purcell, Timex, Thomas Mason, and Red Wing to get the best quality goods. J. Crew is continuing to expand their retail series with specialty boutiques such as Men’s only shops that specializes in Suiting and Madewell a modernized interpretation of an American denim label founded in 1937 which targets women ages 18-40.

Although we think J. Crew does good overall, the Stonestown mall wants to gain attention of the college students because they offer a student/teacher discount. The problem is many of the college students don’t shop at J. Crew because they don’t know much about it.

Swot Analysis

J. Crew for the college audience

Strengths

• Over 300 stores in the United States
• E-commerce website (convenience)
• Discount sales ongoing
• Multiple lines for different age categories

Weaknesses

• Too Pricey for the normal college student
• Targeted more for the young “Business” professionals
• No commercials aired/ Advertisements are few

Opportunities

• Target advertisements to that particular age group
• Possible commercial advertisement for future
• Expand to new segments of the young market

Threats

• Increased competition of Gap Inc.
• During the recession students do not have the luxury to spend on pricey clothing
• Increased celebrity advertisement of competitors
• More discounted sales at competitors

Target Audience Demographics

For our advertising plan we will target young college students living in the city. These students will be mainly females, as college female students are more willing to pay good money for their clothing than male students.

Because our target audience consists mostly of young college students, most will be seen as single. The typical consumer will only make about $12,000 annually or less, most with part time jobs and attending school full time. Psychographics: The psychographics of our target audience will be students living in dorms and on the campus. We will also target young adults living in apartments near college campus life. Most young students don’t mind a little shopping to help them cope with a bad grade or too much studying.

These students will be found around the mall regularly and will be shopping at competing stores like GAP. These consumers will be living the college life, learning to be professional in school as well as out. They should enjoy social gatherings and night events where they can show off their style. We will target students that are often in search for discounts at high end stores, looking for long lasting quality in basic casual as well as professional clothing. They need to be able to finance their money well and buy good quality products with long durability.

 Consumers’ Perceptions

Our consumers’ perception of the brand, J. Crew, usually entails the style they advertise in commercials and television. J. Crew can be seen as a style with practical women in finely cut business suits and overcoats. When most people visualize the company they visualize classy and professional clothing.

The problem is they are not seen as the standard, like Gap, for instance, they lack the basic necessities to attract young college students. J. Crew just wants to maintain its professional status, but attract a younger crowd who are establishing their position in the real world applying and interview for jobs. When walking into the store, consumers see bright lights and a variety of fabrics and styles. The dresses range from simple around the house to dressy date-night dresses. The one-thing consumers’ can expect to see when entering J. Crew is the variety of clothing.

Consumers’ can perceive clothing brands based on what they see on television, advertisements, and magazines. For instance, there was a point during the election, when Michelle Obama was wearing all J. Crew clothing. After seeing this, consumers’ then compare their own lives to the First Lady and the President. It gives off the intention that people wearing J. Crew are wealthy and extremely successful individuals. This perception is false because not everyone needs to be wealthy to afford this clothing. Many people are looking for a good way to be fashionable and professional at the same time.

J. Crew provides high quality clothing for a good price. This store may seem more expensive, but price goes hand and hand with quality. College students can choose to buy cheaper clothes, but they can’t be guaranteed to last as long as higher quality fabrics. While, if they were to buy clothing from J. Crew, a high-end clothing company, their clothes would last longer and there would be no need for repurchasing products. According to youlookfab. com one of the customer’s comment on how the preppy and fashionable products were expensive, but the quality and drape were impeccable.

Other opinions on J. Crew revolve around the age range of the clothing. Most people look at J. Crew as clothing for older more mature audiences. They believe it should be for women in their 40’s or older. This is a common misconception as the style is mostly for a professional look, but for a young professional style. Models often used in the J. Crew magazine, most recently, are younger looking professionals with a modern feel to them. The store has become more mainstream recently, but still continues to maintain innovative colors and ensemble combinations. J.

Crew keeps their nice basics and people can often leave the house wearing their attire from head to toe. Consumers’ often perceive J. Crew as currently declining in quality and have problems with sizes and overall fit. As sizes and fit compare depending on the consumer, the fit would be made specifically for younger professionals. As for quality, our prices may have been declining, but our quality can be just as durable as before. As all retail stores were hit hard in the economy, many stores have decreased in overall price. Quality can often be an issue to those who have over worn a piece of clothing.

Many customers will find J. Crew products at a rack store or a second hand store and buy them there. Even though they are usually a few years older, they still remain in good condition as if they had never been worn. This contributes to the proof of quality as well as durability in J. Crew clothing. Consumers will always find a way to agree or disagree, but the best we can do to keep those customers content is to create good quality clothing at a sufficient price, producing long lasting and stylish clothing for both professional and casual occasions.

The Competition Swot Analysis

Due to the recession consumers are looking for fashionable goods at a low price at stores such as: H&M, ZARA, and MANGO. Being mass distributed to chains such as Nordstrom, Macy’s, and Bloomingdales where they can offer sales promotions, which will deter consumers to go to actually BCBG stores.

The Creative Strategy

The Single Most Compelling Benefit Our Brand Can Offer to Our Target Consumers For J. Crew, we are using a differentiation strategy using their special student discount, which makes it unique and puts it up against regular retailers whom do not offer such discounts. J. Crew offers a special student and teacher discount of fifteen percent off of all regular priced items, sale items are not included in the discount.

This offer is valid for any in-store purchase until the student graduates, and all that is needed is a student identification card. In our current economic situation today, people are more conscious with their spending and hold on to tighter budgets. Luxury clothes are not as affordable as they used to be. Most consumers’ perceptions of J. Crew are that it is an expensive clothing brand. They think that they get better deals from retailers who have the same clothes for cheaper prices. As we promote J. Crew’s student discount and basic clothing items, we have a particular target market in mind.

We are looking at this offer as an option or alternative for example, against the retail competition. It is an offer whose benefits are best maximized around college campuses and young professional environments. The discount solves the problem for students who want a back to school shopping spree that is easier on the budget. When we look at dollar value with regards to J. Crew, it is not just the discount itself that we are looking at but also the long-term utilization of the back to school basic items that have multi-purpose uses.

So when you think of J. Crew clothing you might want to consider it as an investment, not as an expensive luxury. After all, same with any product you consider buying, you would rather put your money on quality and reliability over a cheaper product that will not last you nearly as long. What is even better about J. Crew is that it is a long term savings on your clothing budget and it will not be as affected by rising clothing prices due to its special student discount. You get more quality per dollar with J. Crew than any other clothing store.

With more quality per dollar, consumers can wear their clothes for longer and consume less clothing, which means a lot of savings on their clothing budget. Consumers will feel comfortable wearing J. Crew because they know they are wearing a luxurious brand and saving money at the same time. Now consumers do not need to shop at the cheaper retailers as often as they used to and keep their money in their wallets for much longer. B. Support: Why Should College Students Shop Here? J. Crew is prominently known for being a luxurious clothing brand with higher prices.

The brand features collections of men’s and women’s clothing, accessories, and shoes, in “classic styles” with a J. Crew “twist”. Many of the products feature luxury materials such as Italian cashmere and leather, Czech glass buttons, and British wool. J. Crew is the perfect brand to wear every day because it does the savings for you. When buying the back to school basics, you are not only using these items for a professional setting, but also in your everyday school and recreational outfits. The average college student would not normally be interested in shopping at J.

Crew, but if they are informed of the college student discount and the basic clothing items that they offer, it will be more enticing to shop there. The biggest push is raising awareness of the student discount because most students are unaware of it. Since J. Crew is not advertised often, it would be most efficient to raise awareness to college students on college campuses with flyers or online through Facebook. When they become aware, it will make them interested to see what the store sells and perhaps tempt the student to visit a local store or shop online.

During a visit in store or online, the consumer will notice the advertised “Back to School Basics” and special student discount emphasizing the basic clothing items. These basic clothing items will be more appealing to students who now know that they can get regular discounts on clothes that they can wear everyday for any occasion. Basic clothing items and professional items will be a great investment for the average J. Crew shopper and many others. The average J. Crew shoppers are females ranging from ages 18-49.

Most of these consumers are young professionals or part of families with incomes of $60,000 and greater. The shoppers who are in the age range of 18-49 and do not necessarily have the money to regularly shop at J. Crew, should have a chance to purchase basic clothing items and young professional attire. The important idea of buying J. Crew clothing is that it can not only be worn on teachers and students at school or in everyday recreation, but also when you graduate and get a job in the real world you can still wear the clothes for casual or business attire.

Tone of Advertising

When it comes to J. Crew, consumer’s original thoughts are: expensive, elegant, and older professional. We would like to use a tone to raise awareness to college students and young professionals that would slightly alter a consumer’s thoughts. The tone that we would like to use would be young, playful, trendy, and basic. The tone would push the young professional look and “Back to Basics” slogan around back to school shopping time. J. Crew does not have commercials so implementing commercials with a young, playful, and happy tone would be most effective.

These commercials would include young, professional looking adults jumping and dancing around with popular music in the background. The actors in the commercial would be wearing a mixture of basic items and professional items that are in all different colors to make the commercial appealing to the eye and promote the basics that people may not have noticed before. The idea in this would be to make J. Crew’s advertising more like GAP’s and have it start appealing to more of the college kids and young professionals. GAP’s 2009 Holiday Commercial is the perfect example of the tone J.

Crew should promote. Most importantly, these advertisements and commercials need to promote money savings (such as the student/teacher discount) and “Back to School Basics”. The most important things to a college student is saving money, and looking good while doing so. If J. Crew follows this newly thought out plan, they will accomplish just that!

The Creative Brief J. Crew, specifically at Stonestown mall, is having difficulty reaching out to the college students at San Francisco State University. J. Crew is mainly categorized as expensive and for an older professional.

By changing their advertisement strategies to have a younger feel, we hope to gain awareness of college students at SFSU. Our advertising plan will focus on college students and young professionals. These students will be mainly females and most will be seen as single. They will make about $12,000 annually or less, most with part time jobs and attending school full time. College students usually enjoy social gatherings and night events where they can show off their style. They are looking for long lasting quality in basic casual and trendy clothes. Most college students visualize J. Crew as classy and old professional clothing.

The brand is seen as expensive but college students regard J. Crew products as being high quality. The single most compelling idea we need to communicate to our target market is that fact J. Crew allows college students to wear high quality and fashionable clothes, while saving money at the same time. J. Crew is prominently known for being a luxurious clothing brand with higher prices. But the brand has also basic clothing items for the typical college student on which they can get regular discounts. Our desired brand personality/tone of J. Crew should be a young, playful, and trendy

I have produced a Case Study on Cafedirect, which is a well-known coffee supplier in the U. K. It is an Ltd business, because the organisation is owned and operated by private individuals. In this assignment I will try to produce evidence that shows I understand how the business works, what it sets out to do, how it is organised and how it looks after its customers. P1 A description of what the business does, what its aims and objectives are In this section of my assignment I have to give a description of what the business does what its aims and objectives.

Cafedirect is the UK’s leading fairtrade company – providing the best deal for coffee and tea growers in the developing world. In return, cafi?? direct are able to supply their customers with some of the highest quality teas and coffees. Basically this means the coffee is purchased direct from the grower’s co-operatives, not from the middlemen. The price paid is never lower than an agreed minimum, regardless of any fall in world market price reductions. When the world price goes above this minimum, Cafi?? direct pays an extra 10% social premium.

Pre-payments, regular price updates and a business development program all go to help the growers help themselves by negotiating better terms for all their coffee. By building strong partnerships with growers, guaranteeing a good price, with a shared aim of producing the best coffee, by doing this Cafedirect enables the growers to invest back into their businesses and communities. This way everyone benefits, Growers are more secure and better able to improve the quality of their crop, so we the consumer get a better cup of coffee. Cafedirect has many major competitors such as Nescafe, Kenco, Maxell House and Carte Noire.

Cafedirect’s mission statement is “To be the leading brand which strengthens the influence, income and security of producer partners in the south and links them directly to the consumer. ” Its success is built on the inter-dependence of the company and the producers and their relationships with other organisations. Cafedirect employs people who share its belief in Fairtrade and its principles. This must also be matched with the right business background for each particular job. People who work at Cafedirect are able to work independently as well as part of a team.

Cafedirect works to ensure that all its employees make best possible use of opportunities for learning and personal development, whether specific job related skills or opportunities for wider personal development. Cafedirect’s producers are at the centre of its operations and all employees have the opportunity to learn more about the issues facing them either here in the UK, when representatives from all 30 co-operatives attend the biennial producer’s conference, or when staff has the opportunity to visit the co-operatives themselves. Cafedirect producers frequently visit the UK for training or promotional activity.

During these visits they often spend time with the team updating them on their work, their community, the challenges they face and hurdles overcome, as well as the future. This often proves to be very motivational as it reinforces Cafedirect’s purpose to improve the lives of its producers. Cafedirect is committed to treating all members of staff and applicants for employment in the same way; at cafedirect all the employees have rights regardless of gender, sexual orientation, race, ethnic origin, marital status, age, disability or religion.

Marketing The market activities of a business are designed to ensure that it identifies what the customer needs and providing it. Each employee at Cafedirect is highly focused on fulfilling the customers needs, the staff at Cafedirect are also keen to find out what else they can do to keep customers happy and what additional needs customers may have that they don’t even know about.

Cafedirect invests more than a third (36%) of its gross profit into marketing and product development to ensure growth, to raise awareness of Fairtrade, and to communicate the brand and product range. The system of developing sales and new markets is not dissimilar to other companies. However, the unique feature in the Cafedirect process is to match consumer needs with those of its producers. This adds a degree of complexity to the process but is crucial to its mission. When a new product is developed, Cafedirect examines both consumer and producer requirements.

Cafedirect identifies new product lines, conducts feasibility studies with producers to establish the most effective production processes, and then brings it to market with a comprehensive sales and marketing programme. Cafedirect’s full ranges of coffee and tea products are available from major supermarkets and most independent retailers. Its products are mainly targeted at the older generation but a recent development on the marketing front is the new premium instant coffee brand ‘5065’, launched in 2002 to attract younger customers.

1. Calculating all three options based on costs and corrugating medium 168(70%*400)*60% 30% of out of pocket costs 120(30%*400) Total 288 West Papers Costs Total 430 Eire Papers Costs Outside linear(Southern div) 54(60%*90) Printing(Thompson div) 25 Own Supplies 312(432-5-36) Total 391 As shown in the calculations above, Northern should accept the bid from Thompson division as it has the lowest cost if all transfer prices within the company were calculated at costs. Incurring the lowest costs would also enable Birch Paper Company to earn the highest profits possible.
2. As alternatives for sourcing exists, Mr. Kenton should be permitted to choose the alternative that is in Northern division’s own interests. The transfer price policy gives him the right to deal with either insiders or outsiders at his discretion. If he is unable to get a satisfactory price from the inside source which is Thompson division, he is free to buy from outside. Mr. Kenton, manager of the Northern division should not accept the bid from Thompson division. The three bids from Thompson division, West Paper Company and Eire Paper Company are $480, $430 and $432 respectively. Accepting the bid from Thompson division would be accepting the highest bid amongst all three offers (highest costs). This would result in the lowest profits. As the Northern division is evaluated as an investment center, it is judged independently on the basis of its profit and return on investment. Mr. Kenton should not accept the bid from Thompson division.
3. The method of using transfer price to decide whether to insource is optimum if the selling profit center can sell all of its products to either insiders or outsiders and if buying center can obtain all of its requirements from either outside or insiders. The market price then represents the opportunity costs to the seller of selling the product inside. In this case, Thompson division had been running over capacity and Southern division also had excess inventory. The transfer price of $480 offered by Thompson division does not represent the opportunity costs of selling inside as there is no demand market for the product outside.

Also, the transfer price of $480 is higher than the market price which is around $430. Deciding based on transfer price will not induce goal congruence as the situation is not ideal. Without any intervention from the vice president of Birch Paper Company, the Northern division would most probably accept the lowest bid from West Paper Company. This might result in the highest profits for Northern division but it is not in the best interests of Birch Paper Company. Accepting the bid from Thompson division would boost demand for the two other divisions. The losses cut would most probably be more than the costs saved by Northern division which is $50 ($480-$430).

The vice president should give specific orders to Northern division to accept the bid from Thompson division. However, as the transaction in this case represents less than 5% of the volume of any of the divisions involved, it might not be possible for the vice president to intervene other transactions when similar problems arise.

The policy can be put regarding the transfer pricing which would be based on the opportunity cost of the divisions. If the divisions is operating at full capacity then the opportunity cost would be the market price that the division is charging for its products and if the division is operating at less than the full capacity and order fulfilment can be achieved at less than the capacity than the opportunity cost should be the variable cost of producing the extra units. This would help is reducing the cascading effect of overpricing the inputs to each other and rather would be based on the opportunity cost involved. it is apparent that each division is trying to maximize its own profit by posting a high mark-up for its output; with Thompson Division posting 20% on top of its out-of pocket cost and Southern’s 40%.

With this set up, it is also obvious that without top management’s intervention, Northern will buy boxes from West Paper because the latter had the lowest bid price. If this will happen, the Company’s ultimate goal of maximizing its profits will not be attained. The operations of the two other divisions (Thompson and Southern) will not be maximized when there is already an opportunity. There will be high opportunity loss for the other two divisions. The company as a whole will have to shoulder for the cost of design and development work incurred by Thompson’s package design and development staff.

However, if Northern gets boxes from Thompson, operating capacity of Thompson will be maximized and excess inventory of Southern will be utilized. Only that, a transfer price should be set. Thompson will still realize profit even if it lowers down its price at West Paper’s offer of $430. Southern Division as well could lower down the price of its linerboard for Thompson. With the company’s adoption of a transfer pricing system, all these concerns will be addressed. Thompson division need not charge the full 20% of its overhead cost if it is not operating at its full capacity, thus passing on the burden to the other division.

• Ideally, when there is an availability of market price, the division should use it. However, Thompson used a cost-based transfer price instead.

  Cost-based transfer price should only be used when the market price is not available. The problem with Birch’s transfer pricing system is that they allow each division to set their own price freely which is in line with the company’s policy to decentralize responsibility and authority. When each division can set their own price, conflicts and disagreements can occur on a frequent basis and each division could make decisions that only benefit their own division rather than the company as a whole. Firstly, we look at the transfer price that Thompson quoted. It is about $50 more than the market price.

This shows that their price is not competitive enough. Thompson is operating below capacity and yet it quoted a price which is higher than the market price. The reason given was that anything less than $480, they will not be able to earn a profit and also, given that they did not get any profit from developing the product for Northern, Brunner feels that they are entitled to a good markup. This is inconsistent with the expectation that the division must meet the market price if they wanted the business. Market price should be used as it reflects how well is the division doing as compared to competitors. The amount of upstream fixed costs and profits that are included in the final price that was sold to the outside customer could be substantial if Thompson’s bid was accepted.

And Northern might not be willing to reduce its own profit to optimizecompany profit. Hence, Thompson, if unwilling to follow the market price blindly, could use the two-step pricing to calculate their transfer price. That is, transferring the goods to Northern on standard variable cost on a per unit basis and fixed cost and profit on a lump sum basis. In this way, Thompson will not be transferring majority of their fixed cost to Northern because they are operating on excess capacity. But of course, this method must be discussed with Northern. It was mentioned that Southern quoted the market price to Thompson even though they are operating on excess capacity.

This will not pose a problem as the market price reflects the demand and supply situation of the market and is adjusted automatically by the demand and supply. Also, account must be taken into of the fact that Thompson will not be able to get a better price from other outside sources as most will follow the market price too. The underlying problem of the transfer price system could be that each division is judged based on profits and return on investment. This causes the division to over-emphasize on profits and encourages goal incongruence.

Each division aims at achieving short-term profits so as to look better in the company’s eyes. In their bid to achieve a high profit figure, they fail to optimize the company’s profit as a whole. This will affect the company long-term profits. Hence, the company should not just assess each division based solely on financial figures like profit and return on investment. The company should assess them based on other non-financial things like quality so as to divert the division’s emphasis on profits. In addition, the company should allow the divisions concerned to negotiate between themselves as they are the ones closest to the situation, rather than just asking the divisions to meet the market price.

This report will present a comprehensive analysis of the strategic position of Silverstar Holdings. The current and past financial position will be analyzed and an interpretation will be given. Portfolio Analysis Tools like the BCG Matrix, the SPACE Matrix, and the Grand Strategy Matrix will be used to study the firm’s current strategies in place, and include suggestions for future strategic changes with help of the SWOT Matrix. Porter’s Five Forces Model will be used to evaluate the current scenario and make projections.

Past and Present Strategies

Organizations utilize scarce resources to take advantage of a limited number of relevant opportunities. Strategic Planning is all about defining and redefining hypotheses based on new acquired information, research and experience (Richard, 1999).

It is often perceived to be very risky when a firm pursues multiple strategies, but organizations like Silverstar with entirely different Strategic Business Units, often find it feasible to implement a combo of three or even more. Since its incorporation, Silverstar has pursued a combination of Related Diversification, divestiture, product development, forward integration, market development, and retrenchment. The plethora of strategies that have been used thus far may appear confusing and negating each other, but when put in perspective, each has been implemented with a clear end result in mind.

Currently, Silverstar Holdings has three subsidiaries: Strategy First, a global developer and publisher of entertainment software for computers, Fantasy Sports, subscription based fantasy game provider, and Magnolia Broadband, a startup focusing on wireless broadband innovation for cell phones. Since its inception, the company has focused on acquisitions. The current focus is on game related media and online marketing organizations, and sensing greater opportunities in North America, the company pursued a market development strategy by shifting operations to North America and leasing offices for all its subsidiaries.

In a cost cutting effort, the company divested its holdings in Student Sports, in which it had been incurring repeated losses. In the entertainment software industry the competition is intense, and the presence of more resourceful competitors has forced Silverstar to focus on forward integration with software retailers and wholesalers, to minimize the added costs of retail shelf space competition for Strategy First’s products.

Portfolio Analysis

This part of the analysis focuses on how effectively the company is implementing its current strategies, and what, if any strategic changes need to be made.

BCG Matrix

BCG Matrix is used to represent the SBUs of a firm with their relative position along the market share situation, and the industry’s growth rate in which they operate. As stated previously, the company has 3 operating subsidiaries, each of which has its unique position in the BCG Matrix (Cook, 1998).

Strategy First has been placed in the third quadrant and is hence classified as a Cash Cow. The SBU has had increasing revenues from 2003 till 2005, and increasing operating profit. The scope for further growth of the industry is limited in the region it currently operates in. The SBU should be managed in a way that it continues to generate excess cash through cost cutting in payroll and administrative expenses.   Fantasy Sports is the organization’s best long run opportunity for growth and profitability. It is the market leader at present in the Fantasy Sports industry and has recorded increased sales and revenues for 2005 and hence has been classified as a Star in the matrix. More investment should be made so the division can recognize its true potential.

Due to recurring losses and non substantial revenues, the division of Student Sports was sold off to minimize losses. Till it was in operation, the division was characterized by a low market share of the marketing services provided to high school athletic market, that was not growing rapidly and hence the placement as a dog, i.e. a division with no returns and a constant drain on the resources.

Since Magnolia Broadband is still in its developmental stages, and the future of the division in terms of long run profitability and sustainability is uncertain, the division has been classified as a Question Mark. The high potential for increased market growth in the industry might be utilized to achieve long term revenues and profits.

Grand Strategy Matrix

Grand Strategy Matrix provides an overall perspective on the performance, both current and future of the organization’s divisions, evaluated along two dimensions (Anderson, 1995). According to the quadrant placement of the division, the future strategies can also be worked upon and devised.

• Rapid Market Growth
• Strong Competitive Position
• Weak Competitive Position
• Slow Market growth

As per the quadrant placement, the following are the recommended strategies for each division:

• Fantasy Sports: Should pursue Market Penetration, Market and product development and all forms of Integration strategies to further improve its excellent strategic position.
• Magnolia Broadband: Market and Product Development, and market penetration are the ideal strategies, but if the situation becomes too dire in terms of financial loss, then liquidation and divestiture may be considered (Anderson, 1995).
• Strategy First: Should pursue related and unrelated diversification and joint ventures to continue to operate profitably in its market characterized by strong competitive situation yet a relatively slow market growth.

SWOT Matrix

SWOT Matrix is used as a matching tool whereby managers can leverage on a company’s existing strengths and reduce the impact of its weaknesses. Similarly, the opportunities can be utilized by minimizing the impact potential of threats (Amara, 2003).

Strength Opportunities Strategy

1. Alliances with larger distributors of products
2. Fantasy Sports  is the market leader in its industry
3. Increasing revenues, decreased administrative and payroll costs
4. Reduced distribution costs through the launch of an online initiative by Strategy First
5. No work stoppages due to labor union issues
6. All SBUs except the sold off Student Sports operating in high consumer demand industries with potential for growth
7. Weaknesses Threats Strategies
8. Constant cost of leased office buildings for all subsidiaries
9. Diluted ownership of 3% in Magnolia Broadband due to repeated stock offerings
10. Repeated mergers and acquisitions have negatively affected the organization’s bottom line and cash flow position
11. Reduced subscribers for Fantasy Sports
12. No dividend payments on common stock so far
13. Weakness OpportunitiesStrategy
14. Increased consumer demand
15. Expansion beyond North America into Europe and Asia
16. Increased product diversification and consolidation trend in the market.
17. Further expansion without incurring more debt or diluting holdings by using working capital and retained earnings
18. Strengths Threats Strategy
19. Increased dependence on subscriptions for revenues
20. Increased government regulation of industry
21. Uncertain fund repatriation
22. Foreign currency fluctuations
23. Interest rate risk affecting Interest Income and expense
24. Increased competition for retail shelf space among distributors

Porter’s Five Forces Model

Porter’s Five Forces Model is often used in strategy formulation by analyzing the competitive situation in the market/industry. Of the five forces, the most important is rivalry among competing firms . Strategy First operates in the highly competitive consumer software market that is rapidly changing. Since the competitors are becoming more resourceful, mergers and acquisition to achieve consolidation in the market are high, and aware consumers have the option to choose from a multitude of software brands available, the market for the SBU is characterized by high rivalry among competing firms.

Fantasy Sport also operates in a market that has intense competition among other sports games providers and also from large and small media groups who have entered the market. For Magnolia Broadband in which Silverstar has diluted holdings of only 3%, the rivalry among competing firms is on the lower side. The SBU is at a developmental stage with increase in sales and growth and increased consumer demand in the mobile telecom market.

Potential Entry of new competitors in the market is very easy for both Fantasy Sports and Strategy First. There are no governmental regulations preventing new companies to enter both these markets, and the increased trend of acquisitions for consolidation purposes means that new operators can enter the market. The initial cost of entry is also low, and online sales for both also make it feasible for new entrants.

The potential for the development of substitute products is high for Magnolia Broadband and Strategy First. A number of mobile operators in the North American region have started providing products and services that use Wireless Broadband service. Consumer Entertainment software has evolved so that innumerable varieties and substitutes are being provided and demanded by the customers.

The bargaining power of suppliers has an effect on the competition strength in the industry. Since the competition for retail shelf space for consumer software products has increased exponentially, Strategy First has adopted the strategy of backward integration by forming alliances with large distributors of their products achieving important cost savings for both.

The bargaining power of consumers is high for Fantasy Sports and Strategy First simply because the switching costs are very low and the consumers are extremely well aware of the product features, its substitutes available and the costs (Anderson, 1995). Also, since the products of both these SBUs are available online, the consumers also have increased discretion in selecting the source from which they make the purchase, and when they do it.

Conclusion

Since its incorporation in South Africa with a focus on mergers and acquisitions in the sports related fields to the current operations in the North American region with focus on Internet related sports and media, the company has implemented dynamic and in some cases drastic policies in line with its latest mission statement. However, as shown by the detailed portfolio analysis and SWOT Matrix construction, the repeated strategic policy decisions have led to a weakened financial position of the company where operations had to be discontinued of Student Sports, only a few years after its acquisition.

Despite this fact, two of the firm’s subsidiaries are doing well: Strategy First and Fantasy Sports. However, it is important that new markets are explored and new investment made in the launching of new products to continue to ensure good performance for these divisions. Silverstar Holdings is on the right track with forward integration in the form of major alliances with large distributors of Strategy First’s products.

New products launched in new markets, with some cost cutting will ensure that no additional debt/equity is required for further financing plans. The two risks, interest rate and foreign currency are more or less beyond the company’s control and would be the same for all competitors also. A policy change of using US dollars instead of the South African Rand could be considered for future use, like the option of purchasing instead of leasing office buildings for its divivions.

References

1. Alpert, Richard (1999). Strategy Reform and development: A Case Study
2. Amara, Roy (2003). Strategic Planning in a changing corporate environment.: Long Range Planning.
3. Anderson, Carl (1995). Managerial Perceptions and Strategic Behavior: Academy of Management Journal.
4. Cook, Curtis, (1998). Corporate Strategy Change Contingencies”. Academy of Managemnt Proceedings.

It is Walt Disney Company. This tradition began at 1987. When somebody asked the first Most Valuable Player of the Super Bowl Award what he was going to do after winning. The player said “I’m going to Disneyland.” Since then it has became a slogan for the company and main advertising logo