What is Domino's Strategy and Why is It Successful?

https://qz.com/938620/dominos-dpz-stock-has-outperformed-google-goog-facebook-fb-apple-aapl-and-amazon-amzn-this-decade/

The Bad News and the Really Bad News for Retailers Fighting Amazon.com

The Bad News and the Really Bad News for Retailers Fighting Amazon.com
by: Miriam Gottfried
Mar 06, 2017
Click here to view the full article on WSJ.com

TOPICS: Competition, Strategy

SUMMARY: Amazon.com's ability to sustain its retail growth rate will determine the fate of the rest of the retail industry.

CLASSROOM APPLICATION: Students can examine the effect of Amazon's ascendance on the strategies and profits of other retailers. The article also alludes to the tradeoff between price and sales, which is due negatively sloped demand curves.

QUESTIONS: 
1. (Advanced) "Defending their turf against Amazon already comes at a steep cost. Wal-Mart managed to return to minimal sales growth in fiscal 2016, but operating margins fell to 4.7% from 5% the previous year. Conversely, Target Corp.'s operating margin climbed to 7.2%, but its sales tumbled." Does this statement imply a tradeoff between price and sales? If so, what is the source of the tradeoff?

2. (Introductory) Describe Amazon's growth rate of revenues. Are sales increasing at an increasing rate? Will the company's sales always increase at this rate?

3. (Advanced) What is the effect of the willingness of Amazon's investors to tolerate low profit margins on retailers' distribution strategies?

Reviewed By: James Dearden, Lehigh University

What happens when profits are high and barriers to entry are not?

http://www.marketwatch.com/story/cvs-takes-on-mylans-epipen-with-much-cheaper-version-of-an-alternative-2017-01-12

Entry in the market for razors

Online Upstart Harry's Razor Jumps Into Gillette's Turf
by: Saron Terlep and Khadeeja Safdar
Nov 11, 2016
Click here to view the full article on WSJ.com

TOPICS: Microeconomics

SUMMARY: When Target opened its razor aisles to online upstart Harry's Razor, Gillette paid the price. Within weeks, Harry's grabbed a 10% share of the retailer's cartridge sales and about 50% of razor handle sales.

CLASSROOM APPLICATION: Students can evaluate three issues: (1) entry into an established market, (2) whether a retailer should have multiple or single suppliers of products, and (3) the relationship between products sold by a retailer and the prices of the products.

QUESTIONS: 
1. (Advanced) Should a retailer create competition among suppliers? Alternatively, should a retailer have a dominant supplier? What are the benefits of having a sole supplier of a product? What are the benefits of having multiple suppliers?

2. (Advanced) What opportunity did Gillette create for Harry's? That is, does Gillette produce an inferior product? Does Gillette earn positive economic profit?

3. (Introductory) Do retailers like Target earn lower profits on razor blades in order to sell complementary products?

Reviewed By: James Dearden, Lehigh University

New threat from a substitute product in the diamond market

DeBeers Tries to Counter a Growing Threat: Man-Made Diamonds
by: Scott Patterson and Alex MacDonald
Nov 07, 2016
Click here to view the full article on WSJ.com

TOPICS: Innovation, Marketing

SUMMARY: A team of scientists working for De Beers is scrambling to stave off a looming threat that could tarnish the luster of natural-mined diamonds: high-quality man-made stones.

CLASSROOM APPLICATION: Students can evaluate the effect of an increase in the supply of man-made diamonds, which are imperfect substitutes for natural-mined diamonds, on the diamond market. An interesting psychological and marketing issue is the reason why despite identical physical characteristics, some people prefer natural-mined diamonds to man-made ones.

QUESTIONS: 
1. (Advanced) Lab-grown diamonds are "disrupting" the diamond industry. What is a disruptive innovation?

2. (Advanced) Why is the perception of relative scarcity important in creating consumer value of diamonds?

3. (Introductory) If man-made diamonds are physically identical to natural-mined diamonds, then why do some people prefer natural-mined diamonds?

Reviewed By: James Dearden, Lehigh University

Transfer pricing

What would determine the price ATT charges Time-Warner to stream content when the two are subsidiaries of the same parent? ATT provides a wireless network. Time-Warner produces movies and TV shows.

How does an increase in the price affect

1. ATT
2. Time-Warner
3. ATT's competitors
4. Time-Warner's competitors

Does FB have a "“virtually insurmountable competitive advantage"?

http://www.marketwatch.com/story/facebook-earnings-growth-wont-stop-70-profit-jump-expected-2016-10-31?utm_source=Quartz+Morning+Brief&utm_campaign=f7771806f8-EMAIL_CAMPAIGN_2016_11_02&utm_medium=email&utm_term=0_1ff2527dbb-f7771806f8-55459981

An analyst says so. Is he correct? Why or why not?

Amazon's strategy

Amazon.com Can't Neglect Its Retail Roots
by: Steven Russolillo
Oct 27, 2016
Click here to view the full article on WSJ.com

TOPICS: Strategy

SUMMARY: Amazon.com's success in the cloud is well documented, but it must show its core retail business can eventually be highly profitable, too.

CLASSROOM APPLICATION: The article offers a mix of strategy and conditions for entry into new markets. Turning the concept of entry into strategy, "Amazon.com Inc. boss Jeff Bezos is fond of saying 'your margin is my opportunity.'" The article also notes that fixed infrastructure costs can be a deterrence to entry. "Massive investment in Amazon's warehouse and delivery infrastructure makes its position increasingly difficult to challenge."

QUESTIONS: 
1. (Advanced) Comment on Jeff Bezos' statement 'your margin is my opportunity' and the perfect competition condition of free entry and exit.

2. (Introductory) Why is Amazon's position increasingly difficult to challenge?

3. (Advanced) "Amazon Web Services, the cloud-computing unit, will be affected by the offsetting trends of rapid growth and brutal competition that has left much of the market commoditized." What is the relationship between the perfect competition condition of identical products and the equilibrium profits in perfect competition? In the cloud computing industry, would the perfect competition conditions of zero transactions costs and complete information also be satisfied?

Reviewed By: James Dearden, Lehigh University

Talk about fast entry!

http://qz.com/771727/chinas-factories-in-shenzhen-can-copy-products-at-breakneck-speed-and-its-time-for-the-rest-of-the-world-to-get-over-it/

Does McDonald's need a new strategy?

Questions:

1. How should McDonald's respond to entry by "better burger" chains? 
2. Is this response consistent with its current strategy?
3. If the response is consistent with its current strategy, do you think the strategy positions McDonald's to have a sustained competitive advantage?
4. If the response is not consistent with its current strategy, do you think the McDonald's is revising its strategy and, if so, will the new strategy position McDonald's to have a sustained competitive advantage?

McDonald's Knows It's Losing the Burger Battle : Can It Come Back?

by: Julie Jargon
Oct 07, 2016
Click here to view the full article on WSJ.com

TOPICS: Microeconomics

SUMMARY: New, "better burger" chains are pulling in customers with gourmet, made-to-order hamburgers, a tactic McDonald's is struggling to mimic. The company is working on improved flavors and customized ordering, a goal in conflict with its need for speed and low cost.

CLASSROOM APPLICATION: Students can evaluate McDonald's burger strategy: frozen vs. fresh patties, made-to-order vs. mass burgers. The strategy about product attributes involves cost, consumer preferences, preparation time, and competitors' product attributes.

QUESTIONS: 
1. (Advanced) How does the entry of made-to-order hamburger chains affect McDonald's strategy?

2. (Advanced) What is the tradeoff McDonald's faces when deciding whether to serve fresh or frozen burgers? How do the costs of the two types of burgers, consumer preferences, and competitors' products affect the tradeoff?

3. (Introductory) Should McDonald's improve the quality of its current burgers or should it attempt to compete head to head with made-to-order burger chains?

Reviewed By: James Dearden, Lehigh University

Is Amazon integrating backward?

Amazon's Newest Ambition: Competing Directly With UPS and FedEx
by: Greg Bensinger and Laura Stevens
Sep 28, 2016
Click here to view the full article on WSJ.com

TOPICS: Microeconomics

SUMMARY: To constrain rising shipping costs, the online giant Amazon.com is building its own delivery operation, showing the extent of its ambition and also setting up a clash with the company's shipping partners.

CLASSROOM APPLICATION: Students can analyze three economics issues in Amazon's entry into the delivery business: economies of scale, barriers to entry, and delivery reliability.

QUESTIONS: 
1. (Advanced) How does Amazon help UPS and FedEx lower the cost per package delivered?

2. (Advanced) What are the barriers to entry into the delivery business?

3. (Introductory) Why is the reliability of package delivery, especially during the holiday season, important to Amazon?

Reviewed By: James Dearden, Lehigh University

Some questions

1. Why do analysts say, "Keeping packages under its own control just over longer distances could save Amazon around $3 or more on a typical delivery"?
2. What specialized investments occur when Amazon uses UPS for delivery services?

Is this an example of a threat from a substitute product?

http://money.cnn.com/2016/09/24/technology/diy-epipen-affordable-alternatives/index.html

Online shopping in rural America

E-Commerce Is a Boon for Rural America, But It Comes With a Price
by: Laura Stevens
Sep 12, 2016
Click here to view the full article on WSJ.com
Click here to view the video on WSJ.com 

TOPICS: E-Commerce

SUMMARY: E-commerce is transforming rural America by providing small-town residents with big-city conveniences and the latest products. But serving these consumers is expensive for retailers and delivery companies.

CLASSROOM APPLICATION: The article informs students the effect of the shift in shopping by rural Americans from brick-and-mortar stores to online retailers.

QUESTIONS: 
1. (Advanced) The article states that online retailers sometimes lose money on products sold to rural customers. Why would online retailers set their pricing and shipping rates that result in losses on products sold to these customers?

2. (Introductory) Which results in lower shipping costs: sales at traditional brick-and-mortar stores or sales by online retailers?

3. (Advanced) Is Wal-Mart's strategic move into groceries a response to the growth of online retailing? Are households who shop at Wal-Mart for perishable groceries more likely to purchases consumer products at the retailer?

Reviewed By: James Dearden, Lehigh University

Economies of scale in the on-demand economy

http://www.bloomberg.com/view/articles/2016-06-29/uber-isn-t-going-to-conquer-the-world

Does what Kalanick say about Uber apply to Facebook? Airbnb? Microsoft Windows? Google Chrome? Verizon cell phone service? A brand of cell phone?

Would Porter Agree?

http://pndblog.typepad.com/pndblog/2016/04/5-reasons-why-strategic-doing-beats-strategic-planning.html

How would Porter respond to each of the two quotes below?

1. "Herb Kelleher, ... held that 'strategy is overrated, simply doing stuff is underrated. We have a strategic plan. It's called doing things.' Or, as management guru Tom Peters puts it, 'the thing that keeps a business ahead of the competition is excellence in execution.'"
2. "Strategic planning too often is an episodic exercise in tinkering rather than reimagining, one in which discussions tend to focus on 'How do we do it better?' — even as the organization's leadership should be asking, 'What should we be doing?' and 'Why?'

Creating an on-demand company is not easy

http://qz.com/627605/inside-instacarts-fraught-and-misguided-quest-to-become-the-uber-of-groceries/

What should Yahoo do?

Yahoo is a great case study of organizational architecture and strategy.  Marissa Mayer, its CEO, wants to sell parts but can't decide which parts. The answers would depend on which actiivities fit together to make a stronger Yahoo and which activities are better controlled within the firm than outside of it. See

1. http://www.reuters.com/article/us-yahoo-assets-idUSKCN0W52F2 and 
2. http://www.nytimes.com/2015/12/10/technology/yahoo-alibaba-spinoff.html?_r=1.

What's wrong with vertical integration?

http://www.bloomberg.com/news/articles/2016-02-24/tesla-battles-general-motors-over-right-to-sell-cars-in-indiana reports that Indiana is considering a law that would make illegal Telsa's current vertical integration. Telsa currently produces and sells cars to consumers. All other manufacturers are required by law to sell to dealers who, in turn, sell to consumers.

Two questions:

1. Is GM trying to restrict entry?
2. Does a law that restricts vertical integration serve the public?

When did return on investment begin to measure success?

http://qz.com/569738/the-dupont-invention-that-forever-changed-how-things-work-in-the-corporate-world/

Amazon has a strategy for its retail business

This article implies that Amazon has build a moat around its competitive advantage and is about to reap the rewards from doing so.