ETHICS CAPSULE 5
SET 1: STRATEGIC PLANNING FOR COCA-COLA EXERCISE 5A
Develop Hypothetical Coca-Cola Company Strategies
Purpose
Chapter 5 identifies, defines, and exemplifies 11 key types of strategies available to firms. This exer- cise will give you practice formulating possible strategies within each broad category.
Instructions
Step 1 Review the Cohesion Case and your answers to the prior end-of-chapter assurance-of-learn- ing exercises.
Step 2 For the 11 strategies given in Table 5-3, identify a feasible alternative strategy that could reasonably benefit the Coca-Cola Company.
EXERCISE 5B
Should Coca-Cola Build, Borrow, or Buy in 2020–2021?
Purpose
Comparing what is planned versus what you recommend is an important part of case analysis. Do not recommend what the firm actually plans, unless in-depth analysis of the situation reveals those strate- gies to be best among all feasible alternatives. This exercise gives you experience conducting research to determine what a firm is doing in 2018–2019 and should do in 2020–2021.
Instructions
Step 1 Go to the Coca-Cola corporate website and click on Press Center. Read through the most recent ten press releases.
Step 2 Determine two strategies that Coca-Cola is actually pursuing. Give some pros and cons of those two strategies in light of the guidelines presented in this chapter.
Step 3 Determine two strategies that Coca-Cola is not pursuing. Give some pros and cons of those two strategies in light of the guidelines presented in this chapter.
SET 2: STRATEGIC PLANNING FOR MY UNIVERSITY
EXERCISE 5C
Develop Alternative Strategies for Your University
Purpose
It is important for representatives from all areas of a college or university to identify and discuss al- ternative strategies that could benefit faculty, students, alumni, staff, and other constituencies. As you complete this exercise, notice the learning and understanding that occurs as people express differences of opinion. Recall that the process of planning is more important than the document.
Instructions
Step 1 Recall or locate the external opportunity and threat and internal strength and weakness fac- tors that you identified as part of Exercise 1A (p. 65). If you did not do that exercise, discuss now as a class important external and internal factors facing your college or university.
Step 2 Identify and put on the screen 10 alternative strategies that you feel could benefit your col- lege or university. Your proposed actions should allow the institution to capitalize on par- ticular strengths, improve on certain weaknesses, avoid external threats, or take advantage of particular external opportunities. Number the strategies as they are written on the screen from 1 to 10. State each strategy in specific terms, such as “Build two new dormitories,”
rather than in vague terms, such as “Do market penetration.”
Step 3 On a separate sheet of paper, number from 1 to 10. Everyone in class individually should rate the strategies identified, using a 1 to 3 scale, where 1 = I do not support implementation, 2 = I am neutral about implementation, and 3 = I strongly support implementation. In rating the strategies, recognize that no institution has sufficient funds to do everything desired or potentially beneficial.
Step 4 Your professor will now pick up the rating sheets and have a student add up the scores for each strategy. That is, sum the ratings for each strategy, so that a prioritized list of recommended strategies is obtained. The higher the sum, the more attractive the strategy. This prioritized list reflects the collective wisdom of your class. Strategies with the highest score are deemed best.
Step 5 Discuss how this process could enable organizations to achieve understanding and commit- ment from individuals.
SET 3: STRATEGIC PLANNING FOR MYSELF
EXERCISE 5D
The Key to Personal Strategic Planning: Simultaneously Build and Borrow
Purpose
As a means to achieve various strategies, companies usually choose between “build, borrow, and buy”
to grow. However, individuals must build and borrow. This exercise gives you insight on how to build and borrow to launch a successful career.
Instructions
Step 1 List four ways you can BUILD (i.e., grow internally) to advance your career opportunities.
Step 2 List four ways you can BORROW (i.e., grow using others) to advance your career opportunities.
Step 3 Compare and contrast your lists with those of other students. Collectively decide on the four best BUILD and four best BORROW means to achieve your objectives.
SET 4: INDIVIDUAL VERSUS GROUP STRATEGIC PLANNING
EXERCISE 5E
What Is the Best Mix of Strategies for Coca-Cola Company?
Purpose
Strategic-management classes are usually composed of team of students who perform case analysis.
The purpose of this exercise is to examine whether individual decision making is better than group de- cision making. Academic research suggests that groups make better decisions than individuals about 80 percent of the time. No company has sufficient resources to implement all strategies that would benefit the firm. Thus, tough choices have to be made. Ranking strategies as to their relative attrac- tiveness (1 = most attractive, 2 = next most attractive, etc.) is a commonly used procedure to help determine which actions to actually fund. Often, a group of managers will jointly rank strategies and compare their ranking to other groups. This ranking process may be used to determine the relative at- tractiveness of feasible alternative strategies.
The purpose of this exercise is to examine how well students understand the advantages and dis- advantages of a firm pursuing the strategic options described in Chapter 5. This is a fun exercise that also gives you experience selecting among feasible alternative strategies for a company.
Situation
Coca-Cola is doing really well, but wants to do better. Coca-Cola is trying to decide what strategies would be best for the company going forward. Seven strategies discussed in Chapter 5 are being seri- ously considered, as listed.
Strategies
Production operations
1. Forward integration: Build 100 Coca-Cola stores.
2. Backward integration: Purchase a 10,000-acre sugarcane farm to gain better control over sup- plies needed for Coca-Cola retail stores globally.
3. Horizontal integration: Acquire four beverage brands from Dr Pepper Snapple.
4. Market development: Build a manufacturing plant in Africa to better serve that continent.
5. Market penetration: Launch an advertising, promotion, and publicity campaign globally to shift public perception of Coca-Cola from unhealthy to healthy.
6. Product development: Develop, produce, and launch a full line of organic juices.
7. Unrelated diversification: Acquire a construction company to handle building new stores and manufacturing plants and distribution centers globally.
Task
Rank the seven strategies listed in terms of their relative attractiveness for Coca-Cola, where 1 = the most attractive strategy to pursue, 2 = the next most attractive strategy, etc. to 7 = the least attractive strategy to pursue. Rank the strategies first as an individual, and then as part a group. Then, listen to the EXPERT ranking and rationale. In this manner, this exercise enables you to determine what individual(s) and what group(s) in class make the best strategic decisions (i.e., that come closest to the expert ranking).
Steps
1. Fill in Column 1 in Table 5-9 to reveal your individual ranking of the relative attractiveness of the proposed strategies. For example, if you feel backward integration is the seventh-best op- tion, then in Table 5-9, enter a 7 in Column 1 beside Backward Integration.
2. Fill in Column 2 in Table 5-9 to reveal your group’s ranking of the relative attractiveness of the proposed strategies. For example, if your group feels backward integration is the third-best op- tion, then enter 3 into Column 2 beside backward integration.
3. Fill in Column 3 in Table 5-9 to reveal the expert’s ranking of the relative attractiveness of the proposed strategies.
4. Fill in Column 4 in Table 5-9 to reveal the absolute difference between Column 1 and Column 3 to reveal how well you performed as an individual in this exercise. (Note: Absolute difference disregards negative numbers.)
5. Fill in Column 5 in Table 5-9 to reveal the absolute difference between Column 2 and Column 3 to reveal how well your group performed in this exercise.
6. Sum Column 4. Sum Column 5.
7. Compare the Column 4 sum with the Column 5 sum. If your Column 4 sum is less than your Column 5 sum, then you performed better as an individual than as a group. If you did better than your group, you did excellent.
8. The Individual Winner(s): The individual(s) with the lowest Column 4 sum is the WINNER.
9. The Group Winners(s): The group(s) with the lowest Column 5 score is the WINNER.
TABLE 5-9 Strategic Planning for Coca-Cola: Individual versus Group Decision Making
Column Number
The Strategies
(1) My Rank
(2) Group Rank
(3) ExPERT Rank
(4) Absolute Value 1-3
(5) Absolute Value 2-3 1. Backward integration
Purchase sugarcane farm 2. Forward integration
Build 100 stores 3. Horizontal integration
Acquire four Dr Pepper brands 4. Market development
Build manufacturing plant in Africa
5. Market penetration
Launch marketing campaign 6. Product development
Launch a full line of organic candy juices
7. Unrelated diversification Acquire a construction company