Dalhousie University Hillberg & Berk Case Study Analysis This is a case study of business strategy class, you need to find the Hillberg & Berk case study i

Dalhousie University Hillberg & Berk Case Study Analysis This is a case study of business strategy class, you need to find the Hillberg & Berk case study in the case PDF file, and the case should around 5 pages, and all these questions must be answered, especially the part that take up 60% of the assigenmet, and need to be detailed. Value chain analysis, internal resources and core competencies and vrio analysis must be mentioned. “”Brief outline and explanation of the key problems, decisions or issues and why they are important (2.5%). • Further discussion and focus on what you see as 1-2 of the priority issues facing the company (7.5%). • Analyze these key strategic issues and support your analysis with the concepts, frameworks and other course materials (60%). This analysis should be broken down into: o Value Chain Analysis (company & industry) o Internal Resources & Capabilities o Core Competencies and VRIO analysis • A SWOT analysis of Hillberg & (5%). • A discussion of any obstacles or challenges the company may face (5%). • Discussion and analysis of a minimum of 2 options the organization has to address each of the key issues identified. Your discussion of the options should be based on your previous analysis and be inclusive of the advantages and disadvantages for the company (10%). • A set of clearly defined and actionable recommendations that Hillberg & Berk should pursue which link to your discussion and analysis (7.5%). • Formatting, citations and Writing (2.5%). “” PLEASE READ THIS PART CAREFULLY. 1.
Summer 2020
Florence Tarrant
MGMT 4001
Dalhousie University
Summer 2020
Florence Tarrant
MGMT 4001
Dalhousie University
Table of Contents
EADS/Airbus: Vision 2020………………………………………………………………………………………………….5
OrganiGram: Navigating the Cannabis Industry with Grey Knowledge……………………………………25
Big Boss Cement Inc.: Stirring Up Industry Competition in the Philippines………………………………35
Strong Tie Ltd…………………………………………………………………………………………………………………45
Hillberg & Berk: Aiming to Sparkle in the Designer Jewellery Business…………………………………..51
Wooden Bakery: Should It Enter the U.S. Market?……………………………………………………………….61
Product Portfolio Planning at Estonia’s Saku Brewery………………………………………………………….75
Brooks Sports: Competing against the Giants……………………………………………………………………..97
Top Cloud-Agri Technology Co., Ltd.: Digital Business Model…………………………………………….113
2.
EADS/AIRBUS: VISION 20201
Rosi Ji, Thorsten Knauer, Momo Schäfer, Friedrich Sommer and Jil Wehlmann wrote this case solely to provide material for class
discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may
have disguised certain names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.
Copyright © 2014, Richard Ivey School of Business Foundation
Version: 2014-05-02
On December 5, 2012, EADS announced to the media the upcoming changes to its shareholding structure
and governance.2 But despite EADS’s success in reducing governmental influence on its management, the
firm continued to face problems and challenges that needed further consideration. The planned merger
with BAE Systems, which had failed only two months earlier, had delayed EADS’s goal of becoming the
world’s biggest aerospace and defence company.3 Thus, the chief executive officer (CEO), Tom Enders,
and the management team needed to determine the company’s next steps to pursue this goal of becoming
the worldwide leader in air and space platforms and systems.
In the course of pursuing this goal, EADS’s management had already worked out a program called Vision
2020, which defined the company’s challenges, responsibilities and strategic goals. But was this program
still feasible? Would it be enough? Airbus played a critical role in EADS’s business.4 With its
contribution of two-thirds of the company’s revenue in the past year, Airbus had functioned as EADS’s
primary source of success. The firm’s high dependency on that revenue seemed to increase the impact
that might result from the current production issues at Airbus.5 Additionally, Eurocopter had also been
facing production and quality issues.6 As if these problems were not enough, Enders also needed to
consider the current corruption investigation, which once again (as it did after the 2007 corruption
scandal) was casting a shadow over the defence industry.7
ABOUT EADS N.V.
Historical Background
The idea of an integrated European aerospace company began in the 1990s and was intended as a
response to the consolidation process taking place in the U.S. aerospace industry.8 European governments
and defence-industry executives agreed that a fragmented European aerospace industry could no longer
be competitive in the world market.9
The international merger plan started with the intention by the four “Airbus countries” — France,
Germany, Spain and Great Britain — to form the integrated European Aerospace and Defence Company
(EADC).10 The integration of Airbus’s production activities into one independent Airbus company was
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Use outside these parameters is a copyright violation.
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seen as a first step toward the merger. However, when the individual countries focused on their national
consolidation strategies, the goal of an international aerospace company was temporarily set aside. When
the defence arm of General Electric Corporation in the United States was put up for sale in December
1998, British Aerospace plc (BAE) decided against a planned merger with German DaimlerChrysler
Aerospace AG11 (DASA) and instead merged with the defence arm of General Electric Corporation to
form BAE Systems in January 1999. Shortly afterward, representatives of Germany and France started the
negotiations that led to the signing of an agreement to merge DASA and the French Aérospatiale-Matra in
October 1999. The merger was joined by Spanish Construcciones Aeronáuticas S.A. (CASA) in
December 1999, and the merger formation process continued until it was finalized in February 2000, with
the official merger occurring July 10, 2000, launching the European Aeronautic Defence and Space
Company (EADS). Since that time, EADS N.V.12 had become the world’s second largest aerospace
company with revenues of €49.1 billion in 2011 and more than 130,000 employees in 47 countries around
the world.13
Business Segments
EADS united four major companies: Airbus, Astrium, Cassidian and Eurocopter, which enabled it to be
active in the fields of aeronautics, space, defence and security.14
Airbus
Airbus was founded in 1970 under the name Airbus Industries, as a temporary consortium of European
aviation companies from Germany, France, Spain and Great Britain.15 The consortium was formed with
the aim of competing with large U.S. aircraft manufacturers, such as Boeing and Lockheed Martin.
Although Airbus Industries’ business situation improved after several difficult years, the situation
continued to remain complicated. Aircraft development and manufacture was a money-consuming
business; moreover, the involvement of different companies and countries and the resulting conflicts led
to inefficiencies and delays in the company’s production process, making business even more costly. In
the 1990s, the involved governments faced high unemployment rates and therefore needed to reduce their
spending in the companies. Although the integration of the company’s production activities into one
independent company failed in its first attempt, the situation was simplified by the formation of EADS,
which merged three of the four partner Airbus Industries’ companies. After the merger, EADS owned 80
per cent of Airbus. The transfer of the production assets of BAE Systems in return for 20 per cent of
shares led to the newly formed company, Airbus SAS — an EADS joint company with BAE Systems.
After EADS bought BAE’s shares in July 2006 for €2.75 billion, Airbus became a fully owned EADS
subsidiary.
By 2012, Airbus was a leading manufacturer of commercial and military transport aircraft, and its
revenues of €33.1 billion in 2011 made it EADS’s largest division. Airbus’s commercial planes varied
from the 100-seat single-aisle A318 to the largest airplane worldwide, the more than 500-seat A380. At
that time, Airbus covered almost half of all commercial aircraft orders worldwide. Airbus’s military
division, with attributable revenue of €2.5billion in 2011, offered tanker, transport and mission aircraft.16
Although revenues and orders had both been high over the past few years, Airbus continued to face
serious problems.17 The production of the A380 was delayed due to issues with the wiring inside the
aircraft and with the software used by different production facilities.18 These problems had caused a twoyear delay for delivery of the first aircraft, leading to a rapid decline in EADS’s share prices in June 2006.
Additionally, production and development costs had grown to €11 billion from the planned €8.8 billion.
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Use outside these parameters is a copyright violation.
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Astrium
Astrium resulted in May 2000 from the fusion of the Franco-British company Matra-Marconi Space,
DASA’s space division, Dornier Satellitensysteme GmbH,20 and the Space Infrastructure unit.21 It was a
wholly owned subsidiary of EADS, with three main fields of activity: Astrium Space Transportation,
Astrium Satellites and Astrium Services. In 2011, Astrium employed approximately 18,000 people in five
countries and generated revenues of €5.0 billion, making it the leading European space company and
number three worldwide. Astrium’s main growth drivers were services, export and institutional business.
Its key profit drivers were services growth and cost efficiencies.22
Cassidian
Cassidian was the defence and security division of EADS, offering solutions for armed forces and private
securities under the mission statement: “We support the people whose mission is to protect the world.”23
In 2011, Cassidian achieved revenues of €5.8 billion and had approximately 28,000 employees in 23
countries.24 Cassidian’s most popular product was the Eurofighter, a twin-engine multi-role combat
aircraft. It had been developed and produced by a consortium of EADS, BAE and Alenia Aermacchi
(Italy), in which EADS held the greatest share (46 per cent), with Cassidian as the responsible division.25
The key growth drivers of the Cassidian division were its focus on profitable products and further costreduction measures.
Eurocopter
Eurocopter was the fourth division of EADS and the world’s leading helicopter manufacturer in the civil
sector with a wide product range in civilian and military products.26 It was formed in 1992 through an
international merger of the helicopter divisions of Aerospatiale-Matra (France) and DaimlerChrysler
Aerospace (Germany).27 Through successive integration, Eurocopter had become Europe’s leading fully
integrated aeronautical group.28 In 2011, the company achieved revenues of €5.4 billion and employed
more than 20,000 people around the world.29 Although Eurocopter’s turnover had steadily grown over the
past few years, the company had recently faced some problems.30 For example, shortly after the discovery
of cracks in the wings of the Airbus A380, Eurocopter also discovered cracks in the rotors of its EC135
and the military version, EC635, in May 2012. In June 2012, six employees of Eurocopter died during a
test flight of a new Cougar AS532 AL in the French Alps. In addition, Eurocopter had dealt with safety
issues related to its civilian helicopter Puma EC225. After emergency landings in May, October and
November 2012, the problem was located in the main gearbox vertical shaft, and fixing it took
approximately three months.31 With the Puma being the most used helicopter for the supply to oil and gas
platforms, Eurocopter also faced an image problem as a consequence. For Eurocopter, the key growth
drivers were commercial demand and services; its key profit drivers were production ramp-up and
services.32
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Use outside these parameters is a copyright violation.
The problems, unfortunately, did not end with delivery of the A380. In January 2012, cracks were
discovered on the wings of an A380, leading to a detailed visual inspection and repair costs of €105
million, which, it was announced, would be borne by Airbus.19
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The 2009 economic and financial crisis hit EADS hard. Nevertheless, financial development was
satisfactory in the following years because EADS recovered well, even overachieving its goals. The
company’s past financial statements can be found in Exhibit 1. EADS management was satisfied that
during the first nine months of 2012 the performance improvement trend was confirmed, and the targeted
numbers were mainly achieved.33 In spite of such good reviews, however, management could not ignore
that, in 2012, for the first time in 10 years, Boeing raced past Airbus in commercial performance.34
Revenues were especially influenced by Airbus, contributing around two-thirds of EADS’s total revenues,
which left the group vulnerable to the fluctuations of the civil-aviation market (see financial development
of EADS Group and the business segments in Exhibit 2). In line with the positive financial development
and the market recovery, the ratings of EADS rose again (see Exhibit 3).
BUSINESS ENVIRONMENT
The Industry
EADS benefited from an increased need for mobility resulting in annual growth rates of 5 per cent in air
traffic. In 2011, the world was affected by a barrage of shocks, such as the Japanese earthquake and
tsunami and the Eurozone’s financial turbulence. As a consequence, global economic growth, one of the
key drivers for air traffic, slowed in 2011.35 The growth in global gross domestic product (GDP) was
highly correlated with air traffic growth rates, measured in available seat kilometres. Additionally, air
traffic had proven remarkably resilient to external shocks in the previous few decades. Despite the 9/11
attack, SARS,36 and the financial crisis, worldwide annual air traffic had increased by 53 per cent since
2000. In the long term, the highest growth potential for air traffic would exist in the emerging markets. In
2010, Brazil, Russia, India and China accounted for 69 per cent of the world’s population, and from 2011
to 2030, these countries were forecast to generate 56 per cent of the world’s economic growth.37 The
National Intelligence Council (NIC) predicted that Brazil, Russia, India and China would collectively
match the original G-7’s share of global GDP by 2040—2050.38 Similarly, defence spending grew in such
regions as South America (+5.8 per cent), the Middle East (+2.5 per cent) and Oceania (+1.4 per cent),
whereas defence expenditures had declined in the United States and Europe.39 Additionally, a gap was
widening between the United States and Europe.40 The United States spent twice as much as Europe on
military equipment and six times as much on its military research and development (R&D) in 2010,
representing 43 per cent of the world’s defence spending.
Emerging markets not only stimulated the economy but they could also lead to increased competition. As
emerging countries built up their local industries, competition would increase in the fields of airlines and
aircraft manufacturing. China, Brazil and Russia were nurturing aircraft manufacturing industries with
additional developmental progress in such countries as India, South Korea and Turkey.41 Enders offered a
prediction as to which nation would be able to produce a competitor for EADS: “The entry barriers to
building large commercial aircraft are high, but if one country has the financial and industrial wherewithal
to join the exclusive Airbus-Boeing club, it’s China.”42 Louis Gallois, the former CEO of EADS,
predicted that manufacturers from China, Russia, Canada and Brazil would eventually break the large
commercial aircraft manufacturing duopoly between Airbus and Boeing.43 Entry barriers to the
commercial aircraft manufacturing industry primarily comprised capital intensiveness and essential
technology.44 EADS’s biggest competitors were Boeing, Lockheed Martin, BAE Systems, Embraer and
Bombardier (see Exhibit 4).
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Use outside these parameters is a copyright violation.
Financials
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The commercial aircraft manufacturing market was dominated by Boeing and Airbus.45 All companies in
this industry faced high fixed costs and high exit barriers.46 The airlines, which were the customers of
aircraft manufacturers, were dependent on the aircraft manufacturers, as they had no other choice but to
purchase commercial jets. As no viable substitute for air transportation existed, air transport was expected
to remain the primary means of moving people over long distances.47
Because of the immense capital and production requirements and the necessary expertise in the military
strike fighter aircraft market, the threat of new entrants was very low, whereas rivalry among competitors
was extremely high. Indeed, governments were currently the only buyers, but, compared with the nondefence market, their relative bargaining power was reduced, mainly as a result of the aircraft sector’s
political influence. Despite diminishing budgets in Europe and decreased spending in the United States,
the global defence market was still expected to grow over the short term.48
Following the 2008 recession, order levels were rising again in the helicopter sector and were anticipated
to grow strongly in the next couple of years.49 As relatively high energy prices were leading to
exploration activity, the oil and gas sector was driving demand. Corporate and private helicopters served
not only oil and gas exploration services but also offshore transport, emergency medical services and law
enforcement operations. The United States and Europe accounted for 60 per cent of global demand in the
commercial rotorcraft market, and China was expected to offer significant new opportunities, with the
opening up of low-altitude airspace for civilian helicopter use.50 From 2011 to 2020, it was estimated that
manufacturers would deliver 18,000 rotorcrafts worldwide, worth the equivalent of US$80 billion.
The space industry was strongly driven by national interests and institutional activities. The European
Space Agency (ESA) represented European interests. The European space industry generated 78 per cent
of its revenues in Europe, whereas 22 per cent were generated through export. The industry had remained
robust, despite increased competition in the launcher segment. Technological advances in satellite
communications, satellite navigation and imaging had led to multiple innovations and new space-related
service industries.51
Key Markets
EADS’s market focus could be separated into three main geographical pillars: Europe, North America
and the emerging markets. As a European company with its headquarters located in the Dutch city of
Leiden, EADS generated 42 per cent of its revenues in Europe.52 As a result, EADS’s revenue was
significantly supported both by European airlines, such as Lufthansa and Air France, which were two of
Airbus’s major customers, and by Astrium’s and Cassidian’s strong market positions in the European
countries. Immediately after recovering from the global economic crisis in 2011, the European economy
was struck by the euro crisis, which led to a down-ranking of several European countries and thus,
negatively affected growth predictions. Additionally, defence spending in Europe was declining, leading
to a decrease in demand for defence products.53
The second key market for EADS was North America, home to Airbus’s biggest competitor, Boeing.
Eurocopter was a leading supplier of civilian helicopters in the United States, and Airbus supplied several
major U.S. airlines, leasing companies and private operators.54 Despite the economic crisis, the U.S.
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