Domande d'esame Markets and Strategies, Prove d'esame di Marketing

Scarica Domande d'esame Markets and Strategies e più Prove d'esame in PDF di Marketing solo su Docsity! DOMANDE MARKETS AND STRATEGIES MARIJUANA INDUSTRY Question 1: For venture capital investors, how attractive is the Colorado marijuana industry as an investment destination? Motivate your answer Colorado has been the first state to legalize marijuana representing an enormous opportunity for venture capital investors. In fact, it perfectly embodies the “high risk – high pay-out”, typical of the venture capital and, due to low entry barriers, in the Colorado marijuana industry is easy to enter and easy to grow. Entry barriers could be a problem once the market will become saturated. Furthermore, a very important key factor is the involvement of the political aspect. Indeed, surveys say that over 60% of Americans would be pro-legalization. Porter's five forces analysis measures the potential profitability of the industry. Regarding internal competition, the industry is made up of many small competitors who, due to the limited possibilities of differentiation, compete on price, reducing profit margins. The bargaining power of suppliers is relatively low since the commodity is not scarce, while the bargaining power of consumers is more to the fore since they can choose to consume legal, illegal and home-grown marijuana. It is therefore evident that all these elements make the Colorado marijuana industry a very attractive market for venture capital investors, as it is also a sector in expansion, but, on the other side, there are also high risks due to the volatility of making high profits. As far as the future is concerned, different scenarios could arise. One of them turns out to be the possible legalization in all the US, which would become a problem for venture capital who would have to deal with bank loans. Question 2: how do you think the US marijuana industry will develop over the next ten years? What will be the implications of this development for competition and profitability? Marijuana will always be the same, since the market is stable and there is no room for technological advantage. Companies have no opportunities in implementing a brand differentiation strategy. Nowadays, 35 states in the USA have legalized marijuana for medicinal purposes, while 10 states have legalized it for recreational use. In addition, surveys have shown that about 67% of Americans believe marijuana should be legalized. There are therefore two possible development scenarios: full legalization or not. In the event that marijuana is legalized in all 50 states of the USA, there will be a strong increase in competition with venture capital investors entering the industry. The strong increase in competition could lead to huge sums of capital (bank loans) for mergers and acquisitions in both distribution and growing and the natural tendency to an oligopoly market (like tobacco). Therefore, once competition is eliminated, profitability is very high. On the other hand, in the event that marijuana is not legalized in all states, it would become difficult to have Federal companies for problems such as fund raising or shipping through states. Question 3: which parts of the industry, according to the information you have, offer the best prospects: growing, distribution, or infrastructure? As far as growing is concerned, since it is a single product (raw material) high levels of efficiency can be achieved. On the other hand, it must be considered that the growing face is similar to the agricultural market, characterized by low entry barriers (just land and simple machines), little possibility of differentiation and price competition that will drive prices and profits down. Other risks inherent growing are the possibility of bacteria destroying the crop, the possibility of losing the license if certain quality standards aren't met, as well as competition from home-grown marijuana. With regard to distribution, a strategy of horizontal expansion can be adopted, making mergers and acquisitions with the possibility of becoming big retailers. Other elements that make distribution attractive are the possibility to sell marijuana derivatives (soaps, creams, etc.) and the presence of institutional barriers to entry that allow distribution only with state licenses. Distribution is currently fragmented into many small retail marijuana shops, each representing a small local monopoly. Therefore, they can try to create a differentiation strategy based on quality, customer service and product variety. However, it must also be taken into account that current legislation does not allow for branding of products, making it impossible to create brand differentiation and there is also the risk of illegal competition. All in all, the distribution face offers the best prospects in terms of profits for the future, but in this market is very difficult to make predictions. In the long term we could see the rise of big companies and giant corporation which can market and sell their own version of marijuana products (like tobacco). CIALIS What are, according to you, the most relevant dimensions to segment (i.e., divide) the market of potential customers of a treatment for ED? First of all, it’s important to individualize which part of population is more affected by ED problems according to the age. Among the over 60 1 in 2 are affected by this condition followed by 30-40% of 50-59 year-olds: this means they could be the best target customer compared to 40-49 year-olds and 20-39 year-olds among which the percentages are respectively 10-20% and 10%. Then we should circumscribe the geographical area for our trade: according to a recent research USA citizens seem to be more confident and aware than Europeans when discussing about ED. This means that USA are of course a better target customer, but if we are able to raise Europeans’ consciousness and sensibilization, Europe could be a precious source of customers too. Last but not least we should take into consideration the sentimental situation of affected people because it has been pointed out that 80% of ED patients have a partner and, as reported in Lilly Icos’s interviews, they felt embarrassed when having experienced ED for the first time. As a consequence, the advertising campaign should emphasize Cialis’s benefits especially in a sentimental relationship. What alternative strategies are available to the New York Times, and which of them might be preferable to the strategy currently being pursued by the company? Because of the digitalization of the news industry, the NYT faced a revenue crisis due to the sudden increase in the market competition. Its main strategy nowadays resides still in a compromise between paper and online news, a sort of hybrid model. Although the online field is taking the lead, paper news is still present and very expensive but it can’t be totally cut off for reason of heritage and because it would compromise all the customers used to read newspaper (generally old people affectionate to their physical copies). An alternative strategy was presented as a back-up plan in case the digital planning did not work: the strategy was focused on looking for a business model which could be financially viable for the company. The costs that the company is facing in fact are astonishing. One option was that NYT could become a social enterprise, enlisting charitable support for its news providers for example. However, since the online industry is growing, it seems worth it giving a shot to a digital strategy. For this reason, NYT best option would be going Digital all-in, focusing all its resources in the online market trying to stop the increasing competition. Moreover, though digital portal the Company would be able to diversify the content for every reader also with personalised ads thanks to cookies, bumping revenues from sponsors. Additionally, reducing the printed copies could be seen as a CSR management, which could boost NYT profitability. HARLEY-DAVIDSON What resources and capabilities are needed to compete within the motorcycle industry? Surely intangible and physical resources ae the most important to consider in the motorcycle industry. To compete in an industry with Harley Davidson, Ducati and Honda it is not easy if you don’t have a strong brand image. The power of branding in this industry is limitless. Every rider feels part of a big family under the name of his motorcycle. In Italy for example, since Harley is not as developed as in the US, we have the big fame of the “Ducatisti” group. In order to be a Ducatista you have to get your personal and fabulous ducati, and whenever you will catch another Ducati on the streets his rider will always be happy to share with you a cup of coffee or have a talk about mechanics. That is the power of brand. Another key feature for sure resides in design and power of the motorcycle. You cannot compete in the market if you don’t have a fast, high revving engine, beautiful motorcycle; that’s what every customer in the market wants. Design in this is the key, especially for new generations. Innovation is a tricky one: depends the market. In the USA innovation would not be that appreciated since 50% of the market is taken by vintage motorcycles, meanwhile in Europe innovation is very important in order to compete with other brands such as Honda and Yamaha. Even if some motorcycles have really fast engines, due to the poor branding they really cannot expand. In this market reputation and culture is everything.  Financial services  loans in order to pay the motorcycle  Patents for innovations  Know-how (intellectual properties) from employees and the organizational culture  Plants and equipment necessary for production  CAPABILITIES: r&d with other segments (Harley cannot)  Differentiation and scale economies.  Distribution  Relationship with suppliers. In relation to these resources and capabilities, how does Harley-Davidson compare with other leading motorcycle companies? Harley Davidson fame is mostly attributed to its capable management of resources. They give the company the real competitive advantage. If Harley Davidson is the leader of the sector in the US with more than a 50% share thanks to its branding, (key intangible resource of the company) the same policies did not stick for the Europeans tastes. Its symbol meant to all Americans freedom, will of discovery and adventure which does not exist with such intensity in the Old Continent. Even if the concept of branding is well eradicated in the motorcycle market, Harley Davidson is the perfect example for it. Its customers are loyal to the brand thanks to strategies of support after selling, mechanics substitutes delivery and because they feel like part of a family. The product itself is designed to be considered as a vintage item, and more and more young generations are considering shifting to other brands such Honda or Yamaha just for the will of something new.  NO way of sharing R&D with other branches of the company (cars like Honda)  Customization for costumers.  Limited investing capacity and low production scale and low innovation (vintage) vs. honda  Specific manufactory capabilities and small dealer network (America Europe) unlike honda  High price vs Low price of Honda thanks to the economies of scale. KODAK CASE 1. Why did Kodak's strategy fail? Explain in detail Kodak, before declaring bankruptcy in 2012, was a large company with a strong brand that failed to cope with a radical technological revolution that required computing rather than chemistry to produce images. In fact, Kodak was one of the first to identify this change from analogue to digital and therefore was not late in investing in new digital technologies, the problem was that it was unable to anticipate and properly consider the speed of change which, in addition to the technological side, required a radical change in its business model as well. Big mistakes were made in implementing the new digital strategy. In fact, Kodak used new tools to support the old course of action instead of adapting a completely new one. This hybrid approach, resulting from organizational inertia and a misanalysis, had damaged its business. The strong belief that digitalization would never overtake printed photography was one of the key elements of Kodak's failure, leading the company to focus on its old resources and capabilities instead of outsourcing them. As mentioned before, Kodak did not even consider the speed of this change, which turned out to be much faster than the company's expectations, and vastly underestimated the disruptive power of the new technology, so once they introduced their digital cameras they were already obsolete. Kodak's short-sightedness also manifested itself in its misanalysis of its customers' behavior and how this would change with the arrival of new digital devices. Indeed, the arrival of smartphones was devastating for Kodak, limiting earnings even more. People now use mobile phones to take photographs instead of cameras (except in the professional field) and, instead of printing them, they store and view them on devices. If we look at the cost structure, we can see that Kodak's sunk costs were high. The continuous investment in unprofitable projects that had absorbed huge amounts of money over the years showed that Kodak was not ready for a digital revolution. Furthermore, the highly vertically integrated organizational structure, together with a corporate culture unsuited to a fast-changing environment, contributed to Kodak's collapse and bankruptcy. Others key factors of Kodak’s failure were:  Acquisitions bad-driven.  Decision of entering in the digital market as a leader without having the right knowledges (Saturated, eg. Japanese cameras.)  Reactive company: respond to external inputs instead of having its own strategy. 2. What lessons might other companies facing disruptive change in their core business draw from the experience of Eastman Kodak? Kodak was an established company in the field of analogical photography with a strong set of capabilities that slowed down its change. An important reason for Kodak's failure was its strong corporate culture, which resulted in resistance to change and, as a consequence, the inability to adapt to external conditions. The Kodak case study offers an important lesson in experience for companies facing disruptive technology change in their core business. The first critical factor to consider is time. Time is of primary importance in a rapidly changing environment. Anticipating the competition and entering the market before competitors helps the company to position itself better, to attract critical mass and spread the product. However, Kodak failed to be recognized as a pioneer in the digital industry as its image was still too much associated with analogue cameras and film rolls. Moreover, companies competing in a rapidly changing market must be prepared for radical changes and, it’s important to underline, that change should not only be related to product improvement but also to innovation in business model, technology and product mix. For these reasons, a flexible structure, coordination between top and middle management, efficient communication and a lack of inertia in the organization are essential for market success. Companies must also take a long-term view and implement strategies focused on the long term. In fact, adopting only short-term oriented actions creates barriers to change, preventing companies from participating in the evolution of the industry and disruptive change. Another important lesson to be learned from Kodak's experience is to be very careful when diversifying into unrelated businesses. It is very important, before diversifying, to have the right knowledges, capabilities, resources and KSF to face competition (e.g. Kodak vs Japanese digital cameras manufacturers). I’s also important for the firms to understand the change in the interaction and enjoyment of the product and how it can change the role of various company resources. traditional bank according to a traditional model. These customers receive a small, unsecured loan that they will pay back through frequent and convenient coupons for the borrower. Moreover, social banks differ from charitable enterprises because they are self-sufficient (they have to repay their own costs). However, this model has limitations and risks: - the failure to cover all costs as there are not many investors interested in not getting a return on their investment - it has to be considered that it is a riskier business as loans are offered without asking for a guarantee even if Grameen has recorded very good results as 98% of its clients have been able to repay their debt. The strategy of microcredit banks is called the 'blue ocean strategy' because its target is a new customer that traditional banks do not consider. But it must also be said that these banks are growing more and more and even in the West there are increasing levels of poverty and poorer social classes that would benefit from this new business model. In fact, if on the one hand we want to avoid a financial crisis like the one in 2008, on the other hand there are already national microcredit agencies such as the Italian one, which is experiencing increasing demand. Moreover, the Italian industrial fabric lends itself well to this model because it is made up of small and medium- sized enterprises, but clashes with a different international reality made up of large enterprises and economies of scale necessary for real economic development. PIXAR CASE How does Pixar fosters creativity? Is this model applicable to other industries and which ones? Pixar believes in people more than ideas, that is why it looks for the best talents world-wide creativity is by far the greatest source of competitive advantage that a company can have in the movie industry, especially in the cartoons industry. Creativity and innovation are embodied in the company, Pixar was the first company to release a computer-animated movie (toy story 1995). Art and technology go hand to hand: they are the key in the cartoon market to always create new unique contents. A great strength of Pixar lies in the CEOs and top management, which has to go against its natural tendency to avoid/minimize risks. In fact, they focus on building the capabilities needed to recover when failures occur rather than preventing risks. This is achieved through daily meetings where people have the opportunity to give and receive constant feedback. Therefore, they constantly challenge themselves by looking for flaws that could undermine or destroy their internal culture (one of the sources of competitive advantage). One of their primary objectives is therefore to create and protect a peer culture based on trust and respect for everyone in order to enhance collective creativity. Taking risks and implementing innovative and unexpected ideas are an integral part of Pixar's strategy as it operates in a fast-changing environment where customers expect to see something new every time. As the movie industries, we can remember others which foster creativity: -Fashion design industry such as Gucci. Gucci supports diversity, inclusiveness and equality so that people and employees can focus and express themselves in the best possible way. In this industry, creativity can be achieved by valuing each employee. Moreover, luxury companies adopt a sophisticated organisational model to be innovative and original compared to their peers. -Technology industry such as Google (Learning organization). The role of managers is essential in fostering creativity by: encouraging teamwork, creating bonds between employees, selecting ideas that best fit the company's strategy and clearly communicating the company's vision. -The video streaming industry (e.g. Netflix) where the culture of freedom and responsibility is a key success factor. Managers give their employees higher levels of trust and freedom in order to encourage high performance, development, success and creativity. Can you spot some limits and risks in the Pixar approach to innovation? Pixar believes in people more than ideas, that is why it looks for the best talents world-wide creativity is by far the greatest source of competitive advantage that a company can have in the movie industry, especially in the cartoons industry. Creativity and innovation are embodied in the company, Pixar was the first company to release a computer-animated movie (toy story 1995). Art and technology go hand to hand: they are the key in the cartoon market to always create new unique contents. A great strength of Pixar lies in the CEOs and top management, which has to go against its natural tendency to avoid/minimize risks. In fact, they focus on building the capabilities needed to recover when failures occur rather than preventing risks. The main limits and risks that Pixar faces in its innovation strategy are: -As mentioned before, people are more important than ideas because great people have astonishing ideas. This leads to the need of employing the top-of-the-top in the field. Since ideas are not outsource, if you don’t have the best in your company you risk to lose competitiveness. -A limit resides in the slow decision-making process and in the rigidity of the production. Experience has shown that Pixar can only afford one production at a time because they are unable to focus on more than one project. This means that the company is really risky: if the movie is not liked by the public, years of research and work will result useless. - The volatility of consumer preferences is a great risk. -No exploitation of economies of scale due to limited production. -Liquidity problems due to the nature of the business: high costs of innovation require huge investments and new technologies. - Damage to the peer culture Furthermore, one of the determining factors for Pixar's success is definitely the strong internal culture. Therefore, a big risk could be that this could be damaged due to human psychology being a limitation for the company. In fact, the flatter organizational structure, the presence of strong horizontal communication and the group culture could lead to frustration of ambitious employees for not being rewarded enough for their efforts and results. People's envy is also a potential risk that could damage the team spirit. LEGO CASE What are the main risks and benefits of adopting an open innovation approach? Lego is a world-renowned brand whose success is based on the huge community of fans who contribute to the company's open innovation. In fact, the company's slogan is "you don't have to work with us to work for us" so customers collaborate with the company's employees, provide ideas and think of new projects because they are driven by an intrinsic motivation: seeing their idea selected and considered by Lego managers is extremely rewarding. This is an extremely smart strategy because in this way Lego is able to test its product on the fan community first, lowering the risks of uncertainty and innovation in the market and reducing of course the costs. The benefits of the open innovation business model are: -free access to a huge database that allows the company to develop increasingly innovative products that better meet consumer preferences -low cost in diversifying products because fans provide the ideas for free -increased brand loyalty and market share by increasing fans' involvement in the brand -high brand loyalty: the many adult fans tend to buy Lego products for their children. As a result, Lego is always able to gain market share in spite of its competitors. -lower promotion costs since the product is already known in the fans' community -a strategic factor, as it benefits customers, is the possibility to customise products. However, this model has limitations. Consumers may provide ideas that are not easily implementable, high cost or simply unsafe for children, and real R&D engineers and managers may feel prevaricated because of this important involvement of fans in the development of new ideas. There may be layoffs of employees, rivalry between employees and external users, as well as the risk that by relying too much on customers, the company will no longer invest in R&D. Another problem is time because the ideas are many and varied, but evaluating and selecting them requires care, attention and therefore longer time to search for even those ideas that are really viable. Moreover, there is also the risk that Lego loses its original identity by focusing on projects that are far from its brand image. Despite this, Lego's success is extremely interesting because its innovation comes from the collaboration between external and internal resources: it is in fact the most extreme case of customer-led innovation. Is the successful model of open innovation adopted at Lego applicable to other industries? Which ones? Lego is a world-renowned brand whose success is based on the huge community of fans who contribute to the company's open innovation. In fact, the company's slogan is "you don't have to work with us to work for us" so customers collaborate with the company's employees, provide ideas and think of new projects because they are driven by an intrinsic motivation: seeing their idea selected and considered by Lego managers is extremely rewarding. This is an extremely smart strategy because in this way Lego is able to test its product on the fan community first, lowering the risks of uncertainty and innovation in the market and reducing of course the costs. This is certainly a major advantage for Lego. Not only costumers but also employees are motivated by an intimate satisfaction in performing their job. Lego, taking advantage of this shared enthusiasm, collects thousands and thousands of potentially redundant ideas, also lowering the uncertainty SPOTIFY CASE What is Spotify’s business model? Try to apply Porter’s five forces model to analyze the competition in the music streaming industry and Spotify’s competitive advantage Spotify is an online music streaming platform who has managed to survive in a fast-changing industry disrupted by the digital revolution. Porter's five forces analysis allows to better analyse the competitiveness within the sector through the analysis of the external environment. Application of porter's model: -Industry rivalry is high as there are many competitors offering similar services. For example there is Apple Music, Tidal, Deezer, KKB. Spotify's uniqueness and success factor lies not only in its unique way of advertising, but also in its high quality customer experience. In fact, Spotify, through the combined exploitation of user data and artificial intelligence, offers customers personalized playlists based on their latest listens/preferences. One of the main threats Netflix faces is the presence of a large illegal music streaming market that affects consumers' willingness to pay as their interest is to listen to high quality music at a low price. The vertical type forces introduced by Porter in his model of the 5 competitive forces are: the bargaining power of suppliers and the bargaining power of customers. -Bargaining power of suppliers (e.g. artists/musicians) is moderate. The willingness of suppliers to maximize revenue is closely linked to the number of users using one music platform rather than another (network externalities). Indeed, although they can choose from a wide range of streaming platforms, the most likely choice will be the one with the most users (Spotify has more than 75 million active users in 58 countries). -Customer bargaining power is high given the heterogeneity of preferences and the presence of many music streaming platforms such as Apple Music, Tidal etc. offering similar products. Companies also know that if they increase the price, most users will exploit the illegal market. -Threat of potential new entrants in the sector is low. The market is saturated and the brand too much to be resisted. New entrants can only compete successfully by exploiting large size and economies of scale. However, since we know that this is difficult to achieve especially at the beginning, the threats of new entrants are low. In addition, there are also legal barriers to entry such as the need to possess legal licences/requirements. -The threat of substitute products -The threat of substitute products is low given the difficulty of replicating/replacing the product mix offered by the US-Swedish company. In addition, the music industry has to pay various actors such as artists, musicians and all those with legal rights. Despite its 75 million online music consumers and its operations in 58 countries, Spotify is still not profitable because its costs are higher than its revenues. WALMART-AMAZON CASE Describe Amazon and Walmart's value proposition and respective business models Evaluate the initiatives taken by Walmart to meet the omni-channel challenge. How should it evolve in the future? Walmart is the world's largest offline retailer, competitive on cost and price, but opening up to a mixed offline and online sales model. Its strength lies in its extensive local presence combined with digitalisation. Customers can make a curbside pickup, i.e order online via app or website and determine what time to pick up the product by having it loaded directly into the car. This system has since evolved with 'pickup today', which allows same-day collection within 4 hours, enabling the purchase of fresh products such as fruit and vegetables. In addition, to cut costs, optimise the supply chain and initiate a digital customer relationship, the company introduced the "pickup tower" which is based on the omni channel in-store. This means that the customer scans the barcode at the tower and picks up the product. Another innovation introduced is 'self-checkout' which allows shoppers to scan their purchases themselves and pay directly online in the app. A final innovation introduced is "Walmart Pay" which is a digital wallet on the app that allows shoppers to scan product barcodes and then pay online from the app. Thanks to this extensive use of technology, Walmart has managed to cut waiting times at checkouts, speeding up purchases and learning about its customers' preferences in order to offer targeted discounts. On top of this, Walmart also offers a 100% refund if customer is not satisfied with the product. One problem Walmart faces is the presence of strong competitors, such as Amazon, in the online retail market. The company has to find innovative ways to retain and expand its customer base, but it also has to open up to other international markets in countries such as Latin America, India, China and Europe where it does not have a strong presence. AIRBNB, ETSY, UBER Try to identify the main commonalities in Airbnb, Etsy, Uber’s approaches The success of Airbnb, Etsy and Uber is based on the sharing economy, which, thanks to the Internet and digitalisation, enables direct connections between sellers and buyers. Uber, for example, connects drivers with riders; Airbnb connects home or room seekers with owners; Etsy connects sellers of antiques, vintage and handmade items with buyers of these types of items. The secret of their success lies in the fact that they exploit the network externality. They focused first on the demand by putting themselves in the customer's shoes and trying to understand what they were actually looking for, and only then on the offer. For example, Airbnb, in order to be more successful and attract more customers, hired professional photographers to take pictures of houses and rooms; Uber hired professional drivers adapting its service to the local market, size and climate; Etsy, on the other hand, created a niche market where sellers can make money while buyers can find unique pieces of craftsmanship. Etsy and Airbnb also greatly exploit the sense of community, organic marketing and word of mouth as well as reviews from their customers. In addition, Airbnb has offered the possibility to personalise one's holiday by introducing a unique feature: sharing a room with people who have common interests or values! All this is made possible by the relationship of trust between buyer and seller/supplier. These three companies represent the classic blue ocean strategy: they differ from their competitors because they offer not only goods and services but also emotions and unique experiences. Could any of these approaches be useful for other two-sided platforms or markets in very different industries? Explain why and at what conditions The sharing economy, the power of the internet and digitalisation have been the pillars of the success of two-sided platforms. This approach can also be adapted to other markets such as: -The food delivery industry. The two-sided platform can be exploited to connect customers to their favourite restaurants, thus allowing restaurants to earn more money and customers to have their favourite, special food ready at home. This is what happened for example with Deliveroo. -Medical industry. Doctolib, for example, connects doctors who want to give general health advice with patients who ask for it. -Fashion and second-hand clothing industry. This has been one of the most flourishing and profitable sectors of the bilateral platform as it caters for a type of clientele that is increasingly concerned about environmental issues and willing to buy second-hand products such as clothes. Vinted is an example where people can both become entrepreneurs themselves by selling their clothes and accessories and be the buyers. -Tourism industry. The two-sided platform could connect tour entrepreneurs, art history graduates or people with some qualification in art and history with tourists. The problem these platforms face is that they are intermediaries. If, in the future, there were to be a direct connection between supplier and buyer, these platforms would no longer have any reason to exist. EURODISNEY Using data from the Internet, assess the situation of Eurodisney (now Disneyland Paris) in 2019. Has its economic performance improved? Have the changes introduced been in the direction of higher standardization (i.e. similarity to the original, US model) or adaption to local French-European culture? One of the most critical aspects that EuroDisney has to face is the internalization strategy, i.e. deciding whether to standardize or adapt the product offered to the national culture, even if the final result is always a mixture of the two. Therefore, it is essential to know a population, its values, traditions, lifestyles, habits in order to understand whether to lean more towards standardization or adaptation. When the time came to build the Eurodisney theme park, the main criticism came from French intellectuals who were against American culture and the English language. The main points to be adapted to the new culture were: -Europeans were not used to standing in long queues and considered long queues as a bad management. People had to be entertained with video screens, films or other means. GOOGLE ALPHABET What threats does Alphabet face? Thanks to network externalities (e.g. number of users, complementary products), Google has focused on gaining a huge critical mass, which has consequently led to a larger number of customers and to the conquest of all market shares. This has advantages but also disadvantages. Google's strategy is based on unrelated diversification, which means that the company, in order to maintain its leading role in the search engine business, is expanding into other sectors, which also allows it to collect an increasing amount of data to be exploited in new ideas and new services to be offered. However, due to diversification, a large company would be perceived as non-specialized and this would lead to a loss of brand identity. In addition, Google has always been involved in high- risk and related businesses, which means that the company has to take into account the possibility of failure, losing what was invested and damaging the brand identity (Google Plus). Other issues arise from the fact that we cannot predict consumer preferences, how technology will develop and what the new frontiers will be. To all this, we must also add the strict laws to which the company is subjected, such as the data privacy law, which is a fundamental objective for Alphabet, or the antitrust law, created to prevent monopolies and damage competition, which could prevent Alphabet from expanding as much as it would like. However, the more a company grows, the more costs it will face related to coordination and communication. This is one of the problems Alphabet is facing that eliminates the benefits of economies of scale and economies of scope. Another risk is represented by market convergence: whereas previously markets were separate, now due to diversification they tend to be more similar and this means that Alphabet will increasingly face competition from companies coming from different sectors. We can therefore say that although the company is a successful company, this does not guarantee that it will remain a dominant player in the future given the uncertainty that exists. What is Google’s corporate strategy? Does Google have a clear vision of what it wants to become? Alphabet's main business strategy is based on diversification. In fact, in order to protect its main business, consisting of the search engine, Google started to expand into related activities. However, these businesses are extremely diversified and, in order to maintain its dominant position, Alphabet started to place its search engine everywhere. For instance, in an Android smartphone, the default search engine is Google. However, the more a company grows, the more costs it will face related to coordination and communication. This is one of the problems Alphabet is facing that eliminates the benefits of economies of scale and economies of scope. Another risk is represented by market convergence: whereas previously markets were separate, now due to diversification they tend to be more similar and this means that Alphabet will increasingly face competition from companies coming from different sectors. Thanks to network externalities (e.g. number of users, complementary products), Google has focused on gaining a huge critical mass, which has consequently led to a larger number of customers and to the conquest of all market shares. Being a data company, Google is able to collect, store and exploit data in the development of increasingly advanced and cutting-edge products and technologies. Alphabet's success lies in its risk-taking attitude and in its organisation made up of small teams and no hierarchy. This allows the company to explore new opportunities, to focus on new technologies such as AI and to maintain a dominant position in the market. Of course, this also has disadvantages: taking a risk also means failing and losing everything invested (Google Plus). Another strong point for the company is represented by its employees, whom Alphabet chooses extremely carefully as it looks for people with increasing, cutting-edge and creative skills. Strengths: -search engine -the ability to store a large amount of data, which is also made possible by the synchronisation between all devices, which is an advantage for both the company and its customers -free updating and the ad-focus business model, which is, however, also a disadvantage as Google's main revenue comes from advertising and competition in this field is increasing, given the entry of Facebook and Amazon who are trying to steal market share -excellent acquisition capacity -branding through which the company is able to successfully enter the unrelated business. Weaknesses: -lack of transparency about the ranking algorithm. -privacy concerns on which Europe stresses more than the US or Asia. -new technology and trends are both a plus and a minus as Google is forced to continuously invest in these new frontiers to maintain its leading position by preventing other companies from gaining market share. VIRGIN CASE What common resources and capabilities link the separate Virgin companies? Virgin is a world-renowned company with more than 300 'daughters' that are linked to the holding by subsidiary/parent relations. The main resource that all the three hundred Virgin companies share are its brand and reputation. The brand of the companies is known all-over the world and means safety and reliability. This is for sure the bigger value that the group has and shares between its “daughters”. Although at first glance the group appears to be a huge conglomerate operating in a wide variety of sectors, because of the company implements unrelated diversification as its main strategy, there are some common resources and capabilities among all of them. Indeed, the choice of a new market is strategic for Virgin. Branson said he choose new markets where all customers have been underserved or where competition is not a problem. In this manner virgin manages to be the people’s champion delivering the brand values: innovation, quality, money value. In order to succeed in this, Virgin relies on two main intangible assets: the reputation of the CEO and the brand image. The capabilities of the group reflect the personality and aptitudes of Branson (as well as Elon Musk) himself: a risk taker, a disruptor, a self-publicist, an entrepreneur, and an anti-establishment provocateur. Secondly, we have the brand, which is the group's great single resource and acts as a glue between the diverse sectors. It conveys what Virgin's values are: safety, reliability, value for money, quality, trust, customer satisfaction, innovative approach, entertainment etc. Another intangible resource is the innovation in customer experience (also a capability, customer relationship): e.g. for Virgin Atlantic for example inflight massages and limousine services for the airports. Finally, we can also mention the high quality of human resources. The excellent treatment of employees is a key element if you want to provide excellent customer service. Relational network is common in every Virgin company. In fact, they benefit from the positive results of other “sisters”, reflecting in an increase in reputation and a rise of revenues. Virgin, therefore, implements a brand extension strategy on several businesses. This, if on the one hand allows the strategic exploitation of the synergies that are created between the different businesses, on the other hand the failure of one business could contaminate the image of the brand with the consequent damage to the other businesses. What criteria should Branson apply in deciding what new diversification to pursue? Virgin is a world-renowned company with more than 300 'daughters' that are linked to the holding by subsidiary/parent relations. The main resource that all the three hundred Virgin companies share are its brand and reputation (also Branson’s one). The brand of the companies is known all-over the world and means safety and reliability. This is for sure the bigger value that the group has and shares between its “daughters”. There are some main criteria that Branson should take into consideration in order to diversify into other new sectors and be successful. Firstly, as it is difficult to have the resources and capabilities to operate in so many different sectors, it is good to invest in those sectors where profitable partnerships can be formed. Virgin could also move into businesses that are performing badly where there's the potential to create a competitive advantage thanks to its innovations and resources, attraction the critical mass and gaining market share. Other criteria could be: -choose a business that can be integrated with Virgin's values/message. -investing in start-up businesses: Branson’s skills are in building businesses from scratch, not acquiring established businesses -diversification in substitute goods/service in order to limit threats and competition. (e. g. airplane -train) -entering in businesses that have the structural characteristics conducive to good profit margins. -investing in an industry where there is a dominant, but preferably staid and sleepy, established player against which Virgin can position itself as the innovative start-up (the “David and Goliath” scenario). -consider Value creation with porter test: Attractiveness test, cost-of-entry test, best-off test.