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International Strategy

Undergraduate or graduate capstone course in strategy or international management course.

Faced with increased competition at home, Sainsbury's decided to expand its international operations by entering Egypt. Sainsbury's initially created a joint venture with an Egyptian food retailer, but quickly increased its commitment by opening over 100 stores in Egypt. Sainsbury's dream of capturing the Egyptian food market faded as quickly as it was started. Due to declining profits, Sainsbury's eliminated its exposure in Egypt by selling its interests to its Egyptian partner. Sainsbury's first developing-country venture could be regarded as an object lesson in how not to operate. The company failed to properly investigate its market and its partners, and showed insensitivity to local conditions. Moreover, entering the Egyptian consumer business sector may have been ill-advised. Egypt, with a low gross domestic product (GDP) per head of about $1,300 and a population of 65 million, while having growth potential, is a daunting market. Why a poor and frequently disorganized country was perceived as having excellent growth potential was not addressed by Sainsbury's in its headlong rush to invest. The case should be interesting for students because it highlights a situation where a firm's international expansion efforts failed after the firm had success expanding internationally previously. Numerous reasons are presented in the case for Sainsbury's failure. The case highlights the multiplicity of issues which a company faces when it “goes global.” While Sainsbury's withdrew from Egypt, the case affords students the opportunity to evaluate whether they would have made the same decision by providing a discussion of the alternatives suggested by Sainsbury's Chairman.

The Sainsbury's case is capable of addressing several important teaching objectives: the case is an appropriate vehicle to demonstrate what can happen to a firm as it expands globally; students will gain more knowledge concerning why companies expand into foreign markets and the impact of cross-country differences in market conditions; the case presents the multifaceted complexities involved in globalization efforts and issues faced by companies concerned with global competition and global strategy; students should apply the concepts and tools of industry and competitive analysis; students should gain a better understand how to manage globally; students should gain an understanding of the challenges of globalization and global competition; students should gain a better understanding of the evolution of strategy as industry conditions change and new opportunities arise. As with any case study, students should learn to translate good analysis into appropriate recommendations for action.

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The case study outlines the strategic, marketing, and branding challenges faced by Gap, a brand within the Gap Inc. house of brands. The case contains a summary of Gap's history, which illustrates the driving forces behind Gap's previous growth, its status as an American iconic brand, and its struggle to stay relevant. This sets the stage for Gap's rebranding exercise, which included an attempt at changing their iconic logo. This case provides students with the opportunity to learn about brand life cycles and the implications of a logo change for brand equity, brand associations, and brand positioning.

This research is based on published sources.

The case can be used in courses in strategic brand management, retailing, fashion marketing, marketing communication, or corporate communication at the graduate or advanced undergraduate level. The case will be particularly useful for those who already understand branding and consumer behavior, but who may not have learned anything about rebranding or strategic brand management. It is not suitable for undergraduates who have not studied branding at all.

The learning objectives aim to provide an understanding of the changing nature of consumer payments and the impact upon both businesses and consumers. This can be achieved by examining the case through the lens of stakeholder theory, which posits that businesses are “responsible … to ‘those groups and individuals who can affect or be affected by their actions.’” Collectively, those groups and individuals are known as stakeholders and they commonly include “customers, employees, suppliers, communities and financiers.” In addition to creating value for the owners, businesses should also consider how they can create value for each of their other stakeholders (Freeman et al., 2010, p. 9). In addition, consistent with the theory of management control systems (Chenhall, 2003), the automatic processing of cashless transactions enables businesses to more efficiently record their earnings, commission payments (if applicable) and monitor cash collections. As all data are captured in an electronic format, they can easily understand their sales and profitability through user-friendly and visually appealing dashboards. This, in turn, enables them to obtain a more accurate and timely view of their business and they can appropriately adjust their operations and strategy as a result of this information. Finally, cashless payments enable more accurate and efficient reporting of information to taxing authorities, which decreases the possibility that the affected parties would underreport income and underpay taxes. This is similarly consistent with the theory of management control systems (Chenhall, 2003) because the improved systems of financial reporting assure compliance with tax laws and regulations.

This case was developed using both primary and secondary data sources. The authors interviewed the participants in London and the secondary data collection used relevant sources from appropriate literature and the popular press.

In London, consumer transactions were as plentiful as the eight million people who lived there. While cash was considered “king” in retail, cash payments dropped by 15% across the UK in 2017, and debit and credit cards became the predominant payment method (Kollewe, 2018). Cash represented only 40% of customer payments and was expected to drop to 21% by 2026 (Lyons et al., 2018). This was likely driven by contactless payments whereby consumers preferred the speed and ease of being able to “tap and go.” As businesses were charged fees to accept credit card payments, many expected that small businesses would insist on cash for small transactions. Instead, some banished cash completely. Insights from two London businesses helped explain why some were dropping cash and completely embracing cards.

This case can be used in a variety of undergraduate level courses to discuss trends in customer payment methods and the decisions of some businesses to completely abandon cash. Some example courses and suggested supporting materials include the following: • Consumer behavior • Entrepreneurial finance • Survey of accounting • Introduction to financial accounting.

The case traces the development of Lululemon Athletica (Lulu) from founder Chip Wilson's first post-yoga euphoria in 1997 through the sale of all his shares in 2015. Officially founded in 1998, Lulu was built on the foundation of its “miracle” figure-enhancing yoga pants made from a proprietary stretch fiber. The case outlines Wilson's early experience in technical performance wear, which gave him the expertise needed to launch the Lululemon brand with its premium-priced, fashion-designed product line targeted at upscale women. The case also highlights the retailing and promotion approach that drove Lulu's first decade of success. The snapshot of how the Lulu brand cult was born and diffused provides the backdrop for assessing whether the brand has already hit its peak or whether it can sustain the explosive growth that effectively created the athleisure category. To aid in this determination, the case presents two competitors as comparative foils (Under Armour and Athleta) to contextualize Lulu's growth prospects.

The Lululemon case highlights the importance of the competitive frame of reference when positioning a brand and describes how this may differ for the three competitors. The case also allows for a discussion of the challenges of maintaining the congruence of a retail brand with a diverse product line. This struggle is unique to retailers who must fit ever-varied product assortments (not just a single product line) under the umbrella of a single brand proposition, and is particularly relevant to vertically integrated brands such as Lululemon.

At three o'clock in the morning on September 10, 2001, Thierry Hautillac, a risk arbitrageur, learns of the final agreement between Pinault-Printemps-Redoute SA (“PPR”) and LVMH Moët Hennessy Louis Vuitton SA (“LVMH”). After a contest for control of Gucci lasting over two years, PPR has emerged as the winner. PPR and LVMH have agreed for PPR to buy about half of LVMH's stock in Gucci for $94 per share, for Gucci to pay an extraordinary dividend of $7 per share, and for PPR to give a two and a half year put option with a strike price of $101.50 to the public shareholders in Gucci. The primary task for the student in this case is to recommend a course of action for Hautillac: should he sell his 2% holding of Gucci shares when the market opens, continue to hold his shares, or buy more shares? The student must estimate the risky arbitrage returns from each of these choices. As a basis for this decision, the student must value the terms of payment and consider what the Gucci stock price will do upon the market's open. The student must determine the intrinsic value of Gucci using a DCF model as well as information on peer firms and transactions. The student must consider potential synergies between Gucci and PPR and between Gucci and LVMH. The student must assess the likelihood of a higher bid, using analysis of price changes at earlier events in the contest for clues.