Full HSC Business Studies CASE Studies PDF

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BAND 6 Very detailed case study summaries for Business Studies HSC 19.5/20 Rank 1 internals...

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=Case Studies (Try to stick to big businesses)

Operations Syllabus Dot Point

Case Study

Role of Operations Strategic role of operations management

IKEA engages in cost leadership through its aim to price products at a minimum of 20% below competitors at all times, 50% being the goal. This is achieved partly due to control over design, manufacture, distribution and selling within a vertically integrated supply chain. Investments in leading edge technology e.g. automation, as well as Ready-to-assemble (RTA), flat-packed furniture and ‘self-serve warehouses’ contribute to cost savings. Savings → lower price for consumers → more demand → economies of scale. E.g. LACK side table incorporates ‘Board-on-Board’ materials → easier to manufacture, cheaper to transport → 40% price reduction. IKEA is a self-developed and strictly private label - 9500 product line differentiated from competitors via price. Product/service differentiation comes in the form of the opportunity for consumers to take home furniture on shopping day, without a waiting period. Value-add services (e.g. ‘picking service’, ‘assembly service’) available for customers to customise shopping experience according to financial capacities → appeals to a wide market.

Goods and/or services in different industries Interdependence with other key business functions

CASE STUDY: Interdependence with other key business functions and Apple Apple cut production of the iWatch and iPhone X due to lower demands. This shows that marketing and operations are closely linked. If the demand is less, production for it will decrease (otherwise there are too many stocks of it). Case Study: Tokyo Olympics

Operations + Marketing: Marketing advertisements such as TV, radio in order to attract more viewers/attendees → Increase sales revenue to break even for the expenses incurred from building stadium Operations + Finance: Need to develop budgets/estimates, need to determine estimate of revenue from tickets and sponsors, → Getting loans and finances settled to build the stadium so that operations can happen Operations + Human Resources: Need to hire casuals, need to contract builders, such that operations can occur( building stadium) New product or service design and development (Telstra)

The telecommunications giant Telstra is constantly innovating their new goods and services. After being one of the pioneers of the 4G network in Australia, Telstra is hard at work building its 5G network, having switched on over 200 5G sites since August 2018. Telstra intends to launch 5G in 25 cities in 2019, including all major regional cities in Australia. This will bring Telstra 5G to a total of 35 cities.

Influences Influences: Globalisation (Supply chain management and the global chain) Nike

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Qantas ●

Fully integrated into the global economy – with more than 985 stores worldwide Outsourced the production and manufacturing their shoes to China ○ Lower the cost of production and to reduce the cost of labour Delivers to 44 countries worldwide with the growth of e-commerce internationally ○ Meets the international demand – crucial for maintain the brand on a global scale Nike doesn’t own any physical factories – makes the moving of production across countries more efficient. Allows Nike to concentrate on marketing and promotion only – greater flexibility in operations ○ Controversy: revealed that products were sourced through sweatshops under harsh conditions. Claims it has little control over subcontracted factories Will lead to less staff that are more skilled (increases training costs and wages) Newer planes have greater capacity and are more efficient e.g. A380 generates ½ the noise, uses less fuel and carries more passengers Training staff to use technology can be expensive (spends $300 million a year on training) e.g. shifting reservation system onto Amadeus required training 10 000 staff

Influences: Quality Herschel

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Influences: Cost-based competition Dominoes

Herschel must make sure that their products meet the quality standards that they advertised “the finest Quality” As the only form of advertising the business uses is social media and does not have many physical stores, Herschel must ensure their products are of high standards to retain customer loyalty. Adopted a guarantee of “we stand behind the quality of our products with a comprehensive warranty program - our guarantee is that every Herschel supply item us free of material and manufacturing defects”. Adopting quality inspections throughout the production process. To ensure the integrity of Herschel supply products, they have implemented strict quality control standards and have partnered with trusted distributors and retailers around the world. o Ensures that customers receive exceptional service and quality products, along with a limited lifetime warranty on most products.

DOMINOES: ● Franchisee that provides pizzas and other food items ● Sells products at low price ● Bulk buys raw materials reduces input costs of their products ● Achieves economies of scale to reduce cost per unit by producing large numbers of pizzas ● Reduce labour costs by utilising technology such as online orders or ordering over the phone with incentives such as extra discounts

Influence: Government Policies Influence: Legal Regulations Google

GOOGLE: ● Google and Youtube required to pay USD$170 million for breaching children’s privacy laws ● Collecting information and behavioural data on children to sell to advertisers to make targeted advertising and to track children across the internet ● Breaching Children’s Online Privacy Protection Act (COPPA) Rule ● Tries to get around the law by claiming that all users are of age 13 and above

CSR: Environmental Sustainability Adidas x Parley

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Adidas has introduced a product line Adidas x Parley in which training wear is made of at least 75% upcycled plastic trash. In 2018 Adidas produced more than five million pairs of shoes containing recycled plastic waste It is produced with low energy and low water printing process. Parley for the Oceans is an organisation which focuses on conserving the ocean and ensuring it’s preserved for future generations. They address major threats towards the oceans, which is the most important ecosystem of our planet. From June 8-16, for every km you run Adidas will make a $1 contribution to the Parley Ocean School to educate youth about the issue and inspire action against it. To stop plastic from polluting the oceans, Adidas will shift entirely to recycled polyester by 2024. They plan on doing this by ensuring they keep up with the Parley x Adidas partnership.

Processes Transformed Resources Qantas

MATERIALS – o Fuel o target in 2009 was to improve fuel efficiency by 1.5% per year to 2020 o reduce our fuel consumption and improve our operating efficiency. Fuel reduction is dependent on; o the aircraft type; o weight of the aircraft; o Investing in lighter equipment and material, for example lightweight galley equipment and baggage containers. o flying time; o weather and airport conditions; and o other operational and technical requirements. o Has decreased since June 2014 o From 4496 to 3899 million $ being spent - Which is 13% o Always looking for new suppliers o Buy a vast range of goods and services

Strategies Performance Objective: Quality

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Sony and Panasonic

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NPSDD Woolworths

Supply Chain Management Gelato Messina

Sony and Panasonic are the world’s leading electronics brands. The consumer electronics market features numerous other, less expensive and lower quality brands such as Samsung, LG, and Philips. Sony and Panasonic invest huge amounts of money in research and development (R&D) and create innovative products that lead change in the consumer electronic market. This means that the price of their products needs to cover the investment in innovative designs and products. In a crowded market, businesses have to decide whether to offer high-quality products at a high price or lower? The trade-off for a business is how much to invest in input and transformation processes that create high-quality products against how to make products at a low cost so that they can be sold at a low price

WOOLWORTHS ● An Australian supermarket chain that introduces new products/service to remain competitive in the market ● Approx. 34% of total grocery market (ABC, 2017) ● E.g. self service checkouts, pet insurance , credit cards, own product lines, MetroGo (2019) Gelato Messina (Sourcing) ● Backward vertical integration → more control over supply chain ● Owns Jersey Cow Milk Farm + Hazelnut Farm + Strawberry ● Sustained quality → high in cream content + full of favour ● They choose what to feed + treat cows → according to what kind of milk they want

Amazon Amazon ● Efficient SCM → fast delivery → own logistics ● Outsourced inventory management → 82% of sales, conducted by third party sellers ● Amazon’s own warehouses are strategically placed and stocked, moving closer and closer to main metropolitan areas and city centres

Nike: Influences: Globalisation – Strategies: Outsourcing

Technology - leadingedge, established

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Automated and robotic warehouse solutions

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Nike has fully integrated into the global economy, with more than 985 stores worldwide. Nike has outsourced the production and manufacturing of their shoes to China, to lower the cost of production and to reduce the cost of labour to $8 a shoe with $23 total production cost. As an additional benefit, Nike does not own any physical factories, which makes the moving of production across countries more efficient. This also allows for the business to concentrate on marketing and promotion only, allowing for greater flexibility in Nike’s operation

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With the growth of e-commerce internationally, Nike has met its demands, delivering to over 44 countries worldwide. Meeting the demand internationally is crucial in creating and maintaining its branding on a global scale.

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Despite Nike’s success globally, it has been under fire after it was revealed that its products were sourced through “sweatshops”, which involved harsh conditions. Sweatshops are known for their poor working environment, and the limited pay given to the employees. However, Nike claims that it has little control over subcontracted factories.

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Nike’s main competitors include Reebok and Adidas, who are also successful international companies. Nike remains ahead as the market leader due to its cost efficient marketing, as well as other factors such as effective marketing, research and development. Strategies such as celebrity endorsements, and sponsorships, i.e. football clubs, all play a role in the successful marketing within the operations of Nike. As teams go to play internationally, Nike is advertised as the leading provider for sportswear, for professional athletes. Nike’s global success is reflected upon its globalisation, and its ability to cater for a wide range of customer bases.

ADIDAS AND REEBOK ● Adidas, a German multinational corporation manufacturing sportswear as well as parent company of Reebok, an American footwear and apparel company ● Use of 3D machine to manufacture shoes

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Use of liquid as innovative material instead of rubber State of the art machinery and software Replaces moulds that are expensive, reducing costs Speed - Performance objective Flexibility in product development

Marketing Syllabus Dot Point

Case Study

Role of marketing management Products – goods and/or services – branding – packaging Coca Cola

Branding: Coca Cola has built up their brand over many years Share a coke campaign utilised 150 popular names so that a large portion of customers could connect with the beverage. They experienced an increase in sales, that summer they sold over 250 Million bottles and cans with the named can design. Since then it has reached more than 70 countries throughout the world. Before launching the campaign, Coca Cola researched how the teenage and young adult segment of the population felt about the company. They discovered that many Australians felt like Coca Cola did not see eye to eye with them, hence how having them put first names on coke cans helped remedy this situation. Through market research, Coca Cola also discovered that their products were becoming too familiar and predictable for consumers. By adding an element of surprise and mysticism to their products, Coca Cola was able to bring back the novelty of buying Coca Cola. Influences

Consumer Laws → Deceptive and Misleading Advertising

NUROFEN (manufacturer → Reckitt Benckiser) ● Situation: ○ ‘New formula’ claimed to target specific pain (back pain, migraine, tension headache and/or period pain) → in actuality contained same active ingredients and did the same thing ■ Ingredient: 342mg Ibuprofen lysine ○ Set at a price premium to regular Nurofen ○ Misleading representation on website ● Consequences: ○ Fined $6m (consumer watchdog* appeal; “$1.7m was inadequate”) ■ On grounds of ACCC saying products were inherently misleading → consumers needed to buy multiple products to achieve adequate pain relief ● Resolution: ○ Nurofen changed packaging to accurately depict pain range *consumer watchdog → “Consumer Watchdog is a nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics.” (from About) PADDLE POP (UNILEVER) AND SAKATAS (SMITHS) ● Situation: ○ Misconduct in labelling/packaging marketing ○ Claimed that these products were a healthy option for school canteens to supply to children, when they were not ○ Mislead customers that products “meet school canteen guidelines” even through food product aren’t healthy using logo ○ Disclaimers considered not sufficiently prominent to correct misleading representations created by the logos ● Consequences: ○ $10,8000 penalty ● Resolution: ○ ACCC provided infringement notice where companies paid penalty of $10,8000 for breaching consumer protection laws

Price Discrimination

APPLE (+ Adobe, Nintendo, Lenovo, → tech companies) ● Situation:

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Market Segmentation (Geographic Segmentation) Global Marketing - Standardisation - Global branding - Customisation

Factors influencing customer choice - Psychological - Sociocultural - Economic

Markup in Australia compared to America Charging more for same products, both physically (e.g. phones) and digitally (i.e. music, software) ■ Evidence: AC/DC’s complete collection for $299.99 in AUS vs $149 in USD ○ Brings concern of deliberate engagement in strategy of stonewalling [refusing to communicate/cooperate with] the Australian Parliament → IT companies in particular Consequences: ○ Arising need to make reforms to copyright law, disability law, consumer law and competition law ○ Need in ensuring trade agreements, in particular, Trans-Pacific Partnership doesn’t harm Australian consumer interests and what prices they pay Resolution (effect on marketing): ○ Need in providing reason for price differences (differences between markets) → supporting evidence/information too i.e. difference features etc

MACCAs Global Branding - Iconic arch logo that is very well recognised - 88% of surveyed people can recognise the arch - Globally - Red & Yellow are the colours commonly associated with McDonalds, in Europe brand colours are dark green and yellow to respect their culture of environmental preservation Standardisation - Menu items that are common across various countries - Such as the big mac, fries, happy meal etc Customisation - Unique menu items based off the country that the maccas is in to appeal to local tastes along with meet dietary requirements - E.g ebi burger in japan, angus burger in australia, poutine in canada, BMW Sociocultural - Deliberate distinctions between its 1,3,5,7 series to cater towards consumers of different income levels - The higher the number, the bigger and often more feature packed, and more expensive

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Government

Branding, Packaging and Labelling: ALDI

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1 often more budget, 3 targeted to most ppl (with a bit of money) 7 series targeted to rich $$$ ppl Psychological - M-Series cars to cater towards enthusiasts - X-Series for ppl that like driving off road (or families that need a bigger car)

Aldi uses product packaging to differentiate itself from competitors as the law allows for competitive advertising, while utilising distinctive features of established brands as a springboard for their products. Aldi can escape liability by choosing a sufficiently different name for their product. Quote: "Chips are often coloured according to flavours, cereal boxes are generally rectangular, mustard bottles are yellow and cola flavoured beverages have red labelling," the spokesperson said. Those cues helped customers to navigate the supermarket but were "never used to mislead customers". Those claims can provide additional legal protection to brand owners but are notoriously difficult to establish, because the court must be satisfied the rival brand engaged in misrepresentation. Justice Katzmann found that while Aldi's hair care line might "remind" consumers of the more expensive product, and was intended to do so, shoppers would not think Aldi's budget products came from or were associated with the luxury brand.

Finance Financial Management

QANTAS – FINANCIAL GOAL: Higher share prices and lowering cost – STRATEGY: higher share prices through the distribution of $200 million in dividends. Also lowering costs through phasing out of older, less efficient aircrafts – BARRIERS: there are delays with the aircraft replacements for the renewal program WOOLWORTHS – FINANCIAL GOAL: unlocking value in their portfolio and accelerating innovation in our Drinks business (Growth) – STRATEGY: merging of their drinks and hospitality business (Endeavour Drinks and ALH group – BARRIERS: Big W turnaround program – may affect share prices when unsuccessful APPLE – Apple spends a large portion of its funds into new technologies and R&D – meaning profits initially will be negatively affected but generally pays off in the long term

Influences Influence of Government ASIC

Global Market influences economic outlook, availability of funds, interest rates

ASIC: BMW · BMW Australia Finance will refund millions of dollars’ worth of loans (approx. $77 m) to thousands of customers after it was found to have breached responsible lending provisions · In response to an investigation by ASIC Company Taxation: Google · Google accounts for about ½ of Australia’s digital ad spend but most of the $4.2 billion of revenue collected here doesn’t get taxed · Much of the top line revenue goes to a Google company based in Singapore, where tax is 10% rather than 30% in Australia Shifts revenue to low taxing jurisdictions (Singapore) gives the Australian Tax Office (ATO) the ability to impose a 40% tax on profits shifted from Australia to a lower taxing country APPLE ● Multinational technology company impacted by Coronavirus ● Apple’s stocks fallen nearly 19% from its record high ● China accounting for majority of Apple’s revenue where there’s decreased demands for Apple products due to Coronavirus, dramatically decreasing Apple’s revenue ● Disruption of production of Apple products in China further incurring loss onto Apple ● Poor economic outlook resulted in Apple closing all of their stores outside of Ch...