Accounting Question

Financial Assessment (about one page write-up + one page Financial Ratios EXHIBIT).
Evaluate the company’s past and current financial performance and assess its future financial
capacity to formulate and implement strategies. In the write-up, you will interpret the ratios and
their trends that help you figure out the financial performance of the company. The goal is to
know financial capacity of the company, i.e., how much capital (money) can the management
raise for implementing the strategy in the next five years?

The exhibit should have the financial
ratios, depending on the availability of data: Profit ratios, liquidity ratios, activity ratios, leverage
ratios, and shareholder return ratios.
For the exhibit, follow the format given in Exhibit B in the Guidelines for Case Analysis, 12
point font; no running text, except 2-3 lines of conclusions. You may use single spacing for the
exhibit. Be sure to provide ratios for at least three years (2020-2022). As mentioned above,
several websites (e.g., Yahoo Finance, Google Finance, Marketwatch, Macrotrends, and Wall
Street Journal) provide the ratios. You may use the ratios from these websites in your report but
be sure to provide the reference. As you know, it is more important to know how to interpret
these ratios than how to calculate them. Thus, do not provide any calculations for the ratios.

NOTE: Pleae read the heinkien case that is atatched (hand in case). Please view the hand in team instructions and only do part 3 (the financial assesment) which i have put above. please use Yahoo Finance, Google Finance, Marketwatch, Macrotrends, and Wall Street Journal to provide the ratios. also review the guidelines for analyzing and writing cases (exhibit B) for the format of the exhibit

STRATEGIC MANAGEMENT
GMGT 4010 HAND-IN
ASSIGNMENT
DR. PARSHOTAM DASS
January 1, 2024 – April 30, 2024
NOTICE REGARDING COPYRIGHT
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Unless otherwise stated, Copyright ©2024, Ivey Business School Foundation. Ivey Business School
is the leader in providing business case studies with a global perspective.
Table Of Contents
Future-proofing HEINEKEN: The EverGreen strategy
4
FUTURE-PROOFING HEINEKEN: THE
EVERGREEN STRATEGY
Professor Niccolò Pisani and Researcher Inès Augier prepared this case as a basis
for class discussion rather than to illustrate either effective or ineffective handling of a
business situation.
Copyright © 2023 by IMD – International Institute for Management Development, Lausanne, Switzerland
(www.imd.org). No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form
or by any means without the prior written permission of IMD.
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IMD-7-2423
v. 04.10.2023
AMSTERDAM, 8 DECEMBER 2022. As evening fell, Dolf van den Brink, CEO of HEINEKEN,
left the company’s global headquarters in Amsterdam for an offsite location. Over the
next three days, the entire executive team would gather to discuss the company’s future.
The preliminary results for 2022, presented during the recent two-day Capital Markets
Event, were positive, and the progress on the company’s key strategic pillars painted an
encouraging picture – a sign that HEINEKEN’s EverGreen strategy was in full swing. At
the same time, rising energy and food prices, as well as global inflation, were expected
to put increasing pressure on both operating costs and consumers’ purchasing power in
the months ahead. In addition, recent geopolitical and macroeconomic developments
were threatening to create a post-pandemic world characterized by high levels of
uncertainty and volatility. Finally, society was changing at a rapid pace, and with it, the
expectations of consumers and customers.
In June 2020, when van den Brink had been appointed CEO at the height of the Covid19 pandemic, he was faced with a daunting task. Not only did he need to lead the
company through an unprecedented crisis, he also needed to future-proof the
organization well beyond the end of the pandemic. In February 2021, after months of
intense exchanges with over 200 colleagues from around the world, van den Brink
unveiled the company’s new strategy, EverGreen. This multiyear plan was designed to
turn HEINEKEN into a highly adaptive organization capable of thriving in a dynamic and
fast-paced environment, while at the same time creating long-term sustainable value for
stakeholders. The strategy was underpinned by HEINEKEN’s analysis of its core
strengths, emerging macro trends and perceived opportunities – from digitalization to
sustainability.
As van den Brink made his way through the evening traffic, he thought about the upcoming
company retreat, which he felt was coming at just the right moment. The team needed to
reflect on EverGreen’s implementation while deep-diving on key strategic initiatives that, if
successfully implemented, would future-proof the company for years to come.
2
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IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
On 10 February 2021, Dolf van den Brink, HEINEKEN’s new CEO, delivered the
company’s annual results to investors and analysts in a longer-than-usual earnings call.
In addition to the standard presentation of the 2020 financial results – which had been
heavily impacted by the coronavirus pandemic – van den Brink decided to add an hour
to the call to unveil HEINEKEN’s new multiyear strategy: EverGreen. Although crisis
management had dominated much of the first year of the global health crisis, the CEO
had been adamant about “not losing sight of the need to continue investing for the
future.”1 As the call progressed, van den Brink explained his thinking:
We labeled this journey EverGreen, inspired by nature – the resilience,
this continuous sense of renewal that you find in nature. Nature is all about
growth, and the core intent of EverGreen is to deliver superior and
profitable growth in this fast-changing world. It is about finding the right
balance between continuity and change. It is about becoming aware of
both our strengths and any vulnerabilities that need to be addressed, of
the vitality of our unique culture, and of the need to boost our adaptability.
At a time when everything is accelerating, adaptability and agility are
particularly important. Lastly, this is a multiyear, multidimensional journey,
not just a one-year program. It’s not just a growth story or a cost story. It’s
both, and more.2
FROM AMSTERDAM TO THE WORLD: A BRIEF
HISTORY OF HEINEKEN
The story of HEINEKEN began in 1864 when Gerard Adriaan Heineken, a young
Dutchman from a merchant family, bought an Amsterdam brewery called De Hooiberg
(The Haystack) and began producing lager beer. In 1873, he changed the brewery’s
name to Heineken’s Bierbrouwerij Maatschappij and opened a second brewery in
Rotterdam the following year. In 1886, he developed the company’s trademark “A-yeast,”
which would remain the key ingredient in the beer he brewed. Heineken passed the
company on to his son, Henry, under whose leadership HEINEKEN boosted its largescale production and foreign exports. Henry’s successor, his son Alfred, created the
company’s iconic star logo, established an advertising department and continued the
company’s international expansion.
In 1968, HEINEKEN merged with Amstel, its largest competitor in the Netherlands. In
2008, the company acquired a share of the Scottish & Newcastle brewery in Scotland
(the other share being acquired by Carlsberg), making it the third largest brewer
worldwide behind Anheuser-Busch InBev (AB InBev) and SABMiller.3 When AB InBev
acquired SABMiller in 2016,4 capping a decade of intense consolidation in the global
beer industry, HEINEKEN became the world’s second largest beer company (see
Exhibits 1 to 3).
3
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IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
By 2021, HEINEKEN had become a truly global brewer, with 75 operating companies
and 80,000 employees worldwide.5 Its global portfolio carried over 300 brands across
more than 190 countries, and its flagship Heineken brand was one of the most valuable
beer brands in the world (see Exhibit 4). Although the company was no longer managed
by the Heineken family, Charlene de Carvalho-Heineken, Alfred Heineken’s daughter,
was a member of the board of directors of Heineken Holding N.V.
SURVIVING COVID-19: DISRUPTION AND TRANSITION
In December 2019, the novel coronavirus SARS-CoV-2, which caused the infectious
disease known as Covid-19, broke out in Wuhan, China.6 By early 2020, Covid-19 had not
only turned into an epidemic in China but had spread beyond its borders and overseas.
The world watched in disbelief as the healthcare system in Italy, the first Western nation
to be hit by the crisis, was completely overwhelmed – an omen of the difficulties that many
other nations would soon face. On 11 March 2020, the World Health Organization declared
Covid-19 a global pandemic, and within a month, over 100 countries had mandated full or
partial lockdowns to curb the spread of the virus.7 Before the end of 2020, over a million
people had died of Covid-19 worldwide.8
Disruptions to the beer industry
Covid-19 caused not only a global health crisis, but also a global economic crisis.
Containment measures, including stay-at-home orders, social distancing, curfews,
business closures and bans on international travel caused both supply and demand
shocks across industries.9 In many countries, the hospitality and tourism sectors were
virtually shut down. For the global beer industry, this meant the sudden loss of on-trade
revenue – sales through out of home channels such as bars and restaurants – which fell
by 21.7% worldwide in 2020 (Exhibits 5 and 6). Suddenly, beer companies needed to
maximize off-trade revenues, particularly supermarket sales, to offset on-trade losses.
This led to a surge in demand for packaging materials such as aluminum for beer cans,10
causing a spike in commodity prices, which in turn affected production costs.
Covid-19 also disrupted the global beer industry by accelerating its digital transformation.
As work and education moved online under lockdowns, and with widespread public fear
of exposure to the coronavirus, consumers rapidly adapted their shopping behavior.
Companies scrambled to scale up their e-commerce businesses to capture a new wave
of digital shoppers. It was expected that the digitalization trend, which had begun well
before the pandemic, would expand at a much faster pace for the foreseeable future.11
The economic fallout from the pandemic, including a recession and inflationary pressures,
also affected consumers’ purchasing power and spending behavior. Consumers were
becoming increasingly selective, seeking products that were both healthy and innovative,
and expecting brands to do more regarding social and environmental issues.12
4
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IMD-7-2423
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IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
HEINEKEN was hard-hit by the pandemic as a result of its relatively greater exposure to
the on-trade sector and stronger presence in markets with the most stringent lockdowns
such as Mexico and South Africa. In 2020, HEINEKEN’s net revenue before exceptional
items and amortization (BEIA) declined organically by 11.9% year on year, dropping to
€19.72 billion, with consolidated beer volume down by 8.1% over 2019. Despite actions
to mitigate this, the company’s operating profit (BEIA) fell by 39.8% in 2020. This was
primarily due to the company’s performance in Europe, Mexico, South Africa and
Indonesia. HEINEKEN’s net profit (BEIA) declined to almost €1.2 billion (a 54.2% drop)
in 2020, compared with €2.5 billion in 2019.
While navigating the Covid-19 crisis, HEINEKEN was also undergoing a leadership
transition. Jean-François van Boxmeer, who had led the company as CEO for 15 years,
announced in February 2020 – just before the pandemic hit with full force – that he would
step down. His successor, van den Brink, took the helm on 1 June 2020. By then, the
global landscape was vastly different. Although van den Brink was only 46 years old at
the time, he had been with the company for 22 years, having started as a management
trainee in 1998.13 Before taking over as CEO and chairman of the executive board, he
had served as president of the Asia-Pacific region and was a member of the global
executive team.14 Previously, van den Brink had headed up HEINEKEN Mexico and
HEINEKEN USA. The start of his tenure as CEO meant a return to his homeland, the
Netherlands, after 15 years living abroad.
Although van den Brink was happy to be back home and eager to lead HEINEKEN, he
was keenly aware that the Covid-19 pandemic had brought with it major disruptions, not
only for the beer industry but for society as a whole. He knew he had to steer the
company through a very different time compared with the one before his appointment.
While he sensed that great opportunities lay ahead, he was also aware he would have
to contend with many new challenges.
LAUNCHING EVERGREEN: HEINEKEN’S NEW
STRATEGY
With the difficult task of steering HEINEKEN through an unprecedented global crisis, van
den Brink also needed to look beyond recovery efforts and build a winning strategy for an
uncertain post-pandemic future. In summer 2020, the company’s leadership team worked
with over 200 internal and external stakeholders to co-create a new bottom-up company
strategy. The result was EverGreen – a bold, multiyear, multidimensional plan for
HEINEKEN to succeed and grow sustainably in a fast-changing world. The new strategy
was launched in February 2021.
The name EverGreen was inspired by “nature’s resilience and its ability to adapt and renew
itself,” and emphasized adaptability as a key element in HEINEKEN’s long-term success.
5
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A challenging start for a new CEO
The goal was to future-proof HEINEKEN in the face of emerging opportunities and
challenges, allowing it to respond quickly to external dynamics, deliver superior yet
balanced growth for sustainable, long-term value creation, and ultimately emerge from the
global health crisis stronger than ever. EverGreen was intended to guide the organization
through a long-term, multifaceted transformation while delivering on short-term financial
targets. Launching EverGreen would create a “company-wide platform to better
understand evolving trends, keep pace with changing expectations and co-create a
renewed aspiration for the future.”15 While focused on adapting to change and seizing new
opportunities, EverGreen was also about leveraging HEINEKEN’s well-established
strengths and staying true to the company’s values and heritage.
The Green Diamond
EverGreen was based on five strategic priorities that would enable HEINEKEN to
deliver long-term value creation that would be measured via the Green Diamond. The
Green Diamond was made up of four distinct quadrants – growth, profitability, capital
efficiency, and sustainability and responsibility – that altogether would form
HEINEKEN’s renewed value creation model. The company’s leadership team believed
that success in all four areas would be necessary to achieve HEINEKEN’s goals. Seen
through the lens of the Green Diamond, EverGreen targeted superior but balanced
growth – striking an equilibrium between short-term delivery and long-term
sustainability, as well as between top-line growth and overall stakeholder value
creation (see Exhibits 7 and 8).
The five strategic priorities
EverGreen was based on five strategic priorities: (1) Shape the future of beer and
beyond; (2) Productivity – Fund the growth, fuel the profit; (3) Sustainability – Raise the
bar on sustainability and responsibility; (4) Digital – Become the best connected brewer;
and (5) People – Unlock the full potential of our people. These represented the
company’s top priorities for the coming years. Each was accompanied by far-reaching
goals to strengthen and future-proof HEINEKEN, bolster its ties to customers and
consumers and create long-term value for all stakeholders.
Shape the future of beer and beyond
The first pillar revolved around delivering superior and balanced growth by making the
company more consumer- and customer-centric, and ultimately shaping the future of
beer and beyond. To capture new growth opportunities and meet the evolving needs of
consumers and customers, HEINEKEN focused on premiumization and innovation while
expanding its portfolio of brands and products. One growing consumer trend was
healthier living, which drove demand for better-for-you products (see Exhibits 9 and 10).
The company sought to broaden its beer portfolio with “LONO” (low- and non-alcoholic)
beers, flavored beers and less bitter variants. It also prioritized expanding beyond beer
into ciders, hard seltzers, canned cocktails and other beverages that would drive top-line
6
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IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
growth. To attract Generation Y consumers, HEINEKEN invested in “Y-accelerator”
brands. To persuade the emerging generation to pay premium prices, these new,
innovative offerings would need to be unique and embody values relevant to Gen Y,
including authenticity, diversity and connection. In addition, the company would continue
to expand its geographical footprint to capture new markets, as volume growth was
particularly robust in emerging markets (see Exhibits 11 and 12). Finally, HEINEKEN
focused on promoting a more digital route-to-consumer through its eB2B (online business
to business) and eD2C (online direct to consumer) platforms.
Fund the growth, fuel the profit
The second pillar involved funding growth through continuous productivity improvements
and by cultivating a cost-conscious company culture. The company’s cost base needed
to be simplified and rightsized, and a company-wide cost-cutting mentality would need
to be put in place. These measures would support HEINEKEN’s growth ambitions, offset
inflationary pressures, restore profitability, deliver operating leverage and enable it to
continuously reinvest in growth.
Raise the bar on sustainability and responsibility
The third pillar revolved around HEINEKEN’s Brew a Better World program, a new set
of ambitious commitments aimed at having a positive impact on the environment and
promoting social sustainability and responsible alcohol consumption. The company had
originally launched this program in 2009, and later revamped its sustainability and
responsibility goals to enable faster progress towards a fairer and healthier net-zero
world. The renewed goals addressed important issues ranging from climate change and
water scarcity to equity and fairness within and beyond HEINEKEN’s operating
companies, championing moderation as well as responsible choices around alcohol
consumption.
Become the best connected brewer
The fourth pillar was intended to make HEINEKEN the world’s most connected brewer
by digitalizing its business from end to end. The company’s digital transformation
focused on the company’s three most critical stakeholder groups: customers,
consumers and colleagues. HEINEKEN aimed to become the most relevant brewer for
digital-age customers and consumers by offering a seamless digital experience across
all touchpoints. This called for significant investments to ramp up the digital
transformation of the company’s entire value chain, from the front end (e-commerce,
route-to-consumer and data analytics) to the back end (streamlining and modernizing
the company’s IT infrastructure).
Unlock the full potential of people
The final pillar focused on unlocking the full potential of HEINEKEN’s employees by
investing in talent and skill-building. The company took pride in its people-centric culture,
and management believed that investing in the best talent and the right skills was crucial
7
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FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
HEINEKEN IN 2021: CRISIS RECOVERY AND BUSINESS
TRANSFORMATION
The official Covid-19 global death toll had reached 5 million about 18 months after the
pandemic started.16 There was light at the end of the tunnel, however, as vaccines had
become available in early 2021, and by November, half of the world’s population had
received at least one jab. Despite governments continuing to impose containment
measures, wide discrepancies in vaccine rollouts, ongoing supply chain disruptions,
rising inflationary pressures and changing consumer expectations, HEINEKEN managed
to deliver strong performance in 2021 while setting its EverGreen strategy in motion.
Recovery efforts
HEINEKEN made great strides in returning to pre-pandemic levels in 2021, and in some
areas even surpassed its 2019 results. The company’s net revenue grew organically by
12.2% over the previous year, to finish at €21.9 billion, driven by strong volume and
revenue per hectoliter growth. Net revenue grew organically by 25.9% in HEINEKEN’s
Africa, Middle East and Europe regions, by 17.9% in the Americas and by 8.6% in
Europe. In the Asia-Pacific region, net revenue was down by 6.1% in 2021 over 2020.
Consolidated beer volume grew organically by 4.6% compared with 2020, while volume
growth in the Heineken® brand increased by 17.4%, well ahead of 2019. Net profit
increased organically by 80.2% in 2021 compared with 2020, to reach just over €2 billion.
Operating profit was up by 43.8% year on year with a margin of 15.6%, driven by topline growth leverage, continuous cost mitigation actions and progress made in rightsizing
the company’s cost base. The company achieved gross savings of nearly €1.3 billion
and was on track to deliver €2 billion by 2023. This was accomplished through an
organizational redesign that included refocusing the main office in Amsterdam into a
strategic headquarters, shifting all operations back to the operating companies and
investments in automation. Along the way, van den Brink also had to make the difficult
decision to axe some 8,000 jobs (approximately 9% of HEINEKEN’s workforce in 2019)
as part of the company’s organizational redesign and cost-cutting efforts.17 Overall,
however, HEINEKEN’s 2021 results were encouraging.
EverGreen in motion
In the midst of recovery efforts, the company kick-started a long-term organizational
transformation with the EverGreen strategy as its centerpiece.
8
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for future-proofing HEINEKEN. Van den Brink and his team saw a clear opportunity for
the company to drive bold and agile decision making, along with continuous learning and
greater inclusion and diversity.
IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
In 2021, HEINEKEN focused on driving premiumization at scale to push growth,
championed by the Heineken brand, which experienced double-digit growth year on year
in over 60 markets. Volume sales of Heineken Silver, the company’s premium extra cold
line, more than doubled, driven by particularly strong performance in China and Vietnam.
The company continued to invest in brand-building during the second year of the
pandemic using thoughtful ad campaigns centered on the importance of togetherness,
in line with HEINEKEN’s purpose and values. These included “Home Gatherings,” “We’ll
Meet Again” and “A Lockdown Love Story,” as well as “Worth the Wait” featuring Daniel
Craig as James Bond. Additionally, 2021 was HEINEKEN’s biggest year ever for
sponsorships, which included the UEFA Champions League, Euro 2020 (which was
postponed from 2020 to 2021 due to Covid-19), Formula 1, Formula E and the 2020
Olympics in Tokyo (also postponed to 2021).
Other hero brands in HEINEKEN’s international portfolio saw strong performance in 2021
as well. They complemented the Heineken brand by addressing specific consumer
needs. They responded to trends such as environmental awareness, health
consciousness and the need for innovative flavors, and bolstered the company’s global
footprint. Amstel delivered strong growth in the Americas and in the Africa, Middle East
and Eastern European regions. Amstel Ultra, its low-carb and low-calorie line extension
aimed at health-conscious consumers, sold over one million hectoliters in Mexico and
was rolled out internationally to 11 new markets. Tiger was Asia’s number one premium
beer and was available in over 50 markets worldwide. It was successfully launched in
South America and was the fastest-growing lager brand in Nigeria, where volume sales
doubled in 2021. Birra Moretti and Lagunitas IPA also performed well, as did several
other brands, ranging from Sol to Edelweiss.
Capitalizing on worldwide consumer health and wellness trends, HEINEKEN invested
heavily in innovation within the low- and non-alcohol category. The company’s LONO
portfolio grew by over 10%, to reach 15.4 million hectoliters, against 14 million in 2020.
Heineken® Original’s no-alcohol line extension, Heineken 0.0, became the world’s topselling non-alcoholic beer brand; it was available in over 100 markets and volume sales
exceeded 2 million hectoliters in 2021, driven by strong performance in Brazil, Mexico
and the United States. Other non-alcoholic innovations introduced by HEINEKEN
included Desperados Virgin 0.0 in Europe, Lagunitas non-alcoholic IPA (IPNA) in the
US and Maltina Pineapple in Nigeria. Birra Moretti Zero, Amstel 0.0 and Amstel Oro
0.0 generated strong growth across Europe. HEINEKEN also took control of India’s
United Breweries Limited, maker of the iconic Kingfisher brand, by increasing its
shareholding from 46.5% to 61.5%. Overall, HEINEKEN achieved volume growth of
10% in premium beer for 2021, outperforming the company’s broader portfolio in terms
of growth in the majority of its markets.
HEINEKEN was also expanding its portfolio beyond beer. The company entered the hard
seltzer category, launching Pure Piraña in Mexico and New Zealand in late 2020. It
expanded the brand in 2021 to European markets, including Portugal and Austria –
9
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Shape the future of beer and beyond
where Pure Piraña became the leading seltzer brand – as well as Ireland and the
Netherlands. Additionally, HEINEKEN launched Amstel Ultra Hard Seltzer in Mexico,
Arizona Sunrise Hard Seltzer and Dos Equis Ranch Water in the United States, and
Doctor Diesel Hard Seltzer Lemonade in Russia. HEINEKEN further buttressed its
position as the world’s leading cider producer in 2021. Its cider portfolio achieved midsingle-digit volume growth to 4.9 million hectoliters, chiefly driven by the Strongbow
brand, following the post-Covid recovery in South Africa and the acquisition of the brand
in Australia. Strongbow launched its no-alcohol line extension, Strongbow Cider 0.0%,
in South Africa, backed by the “Always a Choice” ad campaign.
Fund the growth, fuel the profit
To ensure that it could achieve its goal of superior and balanced growth, HEINEKEN
focused on increasing efficiency and productivity through a systematic, company-wide
approach enabled by digitalization. To boost process transparency and agility, and to
accelerate learning and scaling across HEINEKEN’s operating companies, a
standardized tool was deployed to aggregate the company’s projects and initiatives. A
disciplined project management funnel approach was then used to bring both small and
big ideas into value realization. Over 7,500 initiatives were gathered from more than 80
operating companies.
At the end of 2020, HEINEKEN launched a large-scale productivity program targeting
€2 billion in structural gross savings by 2023, relative to the company’s 2019 cost base. In
2021 HEINEKEN streamlined its organization, rationalized its portfolio complexity, lowered
conversion and logistics costs, and phased out non-consumer-facing investments. By year
end, the company had achieved close to €1.3 billion in gross savings.
The company’s new cost-conscious mindset took hold across its subsidiaries worldwide,
several of which were improving their performance thanks to knowledge transfer
between subsidiaries. For instance, in Singapore the company saved 6% of its entire
cost base by implementing 15 initiatives adopted from operating companies in Malaysia,
Laos and Thailand. In the Netherlands, HEINEKEN cut its brewery-related repair and
maintenance costs by 19% by changing how and when maintenance was carried out, by
leveraging new technology and data, and through organizational changes. In Mexico, as
part of HEINEKEN’s green energy projects, the company began sourcing renewableonly energy for over 6,000 of its SIX stores, cutting energy costs by 3%.
In addition to the gross savings achieved through its productivity program, the company
also took drastic cost-mitigating actions in 2021 to offset the financial impact of
government-mandated lockdowns and other pandemic-related restrictions. These mainly
concerned expenses relating to marketing, sales and personnel, but the company planned
to reverse these cuts in 2022 and increase investments in brand support in other areas.
10
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IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
In April 2021, HEINEKEN launched its 2030 Brew a Better World program, a set of farreaching ambitions aimed at having a positive impact on the environment and promoting
social sustainability and responsible consumption of alcohol.
To achieve net-zero impact, HEINEKEN set ambitious goals for carbon neutrality, zero
waste and positive water impact. It aimed to decarbonize production – targeting 30%
reduction of overall emissions – by 2030 and the entire value chain by 2040.
Decarbonizing all 166 production sites would require maximizing renewable energy and
energy efficiency. To do so, HEINEKEN continued to scale up renewable electricity
solutions across its operations, building on the implementation of over 130 renewable
energy projects over the previous three years. To power the Ibadan brewery in Nigeria,
the company commissioned a solar plant capable of generating some 800 MWh
annually. In Brazil, significant progress was made towards sourcing 100% renewable
electricity and transitioning to sustainable biomass for its breweries. In Indonesia,
HEINEKEN’s breweries would be powered by 65% renewable energy by the end of 2022.
Addressing the issue of circularity, HEINEKEN committed to stop sending waste to
landfills from all production sites by 2025. It also agreed to step up implementation of
returnable packaging and to continue investing in innovations such as its Green Grip
packaging, which replaced the single-use plastic rings used in multipack cans, thus
saving 500 tons of plastic each year.
Since beer brewing was highly water intensive, HEINEKEN sought to reduce its average
water usage to 2.6 hectoliters per hectoliter (hl/hl) of beer in water-stressed areas and 2.9
hl/hl worldwide. In 2021, 23 of HEINEKEN’s 31 sites in water-stressed areas had started
watershed protection programs to fully balance the water used in production by 2030. The
company also strove to maximize water reuse and recycling in water-stressed areas. In
Malaysia, HEINEKEN’s production site worked with local stakeholders to replenish over
267% of the water it used at its respective watersheds through water-balancing activities,
including the construction of a 305-meter-long clay dike in a forest reserve and the
reforestation of one hectare of degraded peatland. Finally, in 2021 HEINEKEN committed
to the World Economic Forum’s Stakeholder Capitalism Metrics and agreed to follow the
recommendations of the Task Force on Climate-Related Financial Disclosures.
To become an equitable and more inclusive company, HEINEKEN boosted its efforts to
embrace inclusion and diversity, to create a fair and safe workplace and to improve its
impact on communities. It committed to increasing the share of women in senior
management roles to 30% by 2025 and to 40% by 2030. To enhance cultural diversity
and local leadership representation, at least 65% of country leadership teams would be
regional nationals by 2023.
Further, managers around the world would be given training in inclusive leadership
practices. In addition, by 2023, HEINEKEN would assess gender pay equity in all
countries and have action plans in place to close any remaining pay gaps. Over and
11
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Raise the bar on sustainability and responsibility
above its direct employees, the company would work towards ensuring fair living and
working standards for third parties. For instance, in Africa, HEINEKEN agreed to support
smallholder farmers by sourcing agricultural ingredients, aiming for a 50% increase in
volume by 2025 compared with 2020.
To encourage moderation and combat alcohol abuse, HEINEKEN would expand its
portfolio with more responsible options, address harmful use and champion moderate
drinking. Following the success of Heineken 0.0, the company launched over 130 nonalcoholic product line extensions. It aimed to have a non-alcoholic option for at least two
strategic brands in most of its operating companies by 2030, accounting for 90% of its
business. It would continue to cultivate local partnerships to address alcohol harm,
including the prevention of underage drinking and drunk driving in countries where it had
businesses. Finally, the company committed 10% of its brand media spend to reaching
one billion consumers through responsible consumption campaigns.
Become the best connected brewer
To become the best-connected and most relevant brewer for digital-age customers and
consumers, HEINEKEN needed to digitally transform its entire value chain and build
seamless digital interactions from the front end to the back end.
In 2021, the company made significant progress with its “Connected Brewery” program,
under which breweries would be retrofitted with digital capabilities. The aim of the
program, which had been rolled out in 2018, was to intelligently support HEINEKEN’s
brewers in their increasingly complex tasks and unlock value through insights generated
from vast amounts of data. Employees would be able to connect to brewery equipment
via a unique company-owned data layer, enabling smarter operations. As of 2021, over
115 sites were running on connected apps such as One2Improve. The app supported
brewery employees by suggesting solutions generated by an intelligent diagnostic tool
that aggregated knowledge from connected company breweries worldwide. In addition,
60 of these sites were connected to the company’s data layer, enabling algorithms –
which were scalable across all HEINEKEN breweries – to create actionable insights to
improve packaging line performance. The plan was to have all 115 sites connected by
2025.
The company also invested in analytics solutions to harness the power of data, machine
learning and artificial intelligence to make smart business decisions across the value
chain. A machine learning model supported HEINEKEN’s revenue and margin growth in
24 operating companies, helping market subsidiaries analyze how much of incremental
sales were driven by promotions, recommending strategic improvements and estimating
cannibalization of other products while a promotion was running. Its analytic models,
including promotion optimization, churn prediction and spend analysis, enabled cost
savings as well as revenue generation.
In 2021, HEINEKEN continued to streamline and rationalize its IT, moving applications
to the cloud and consolidating its ERP (enterprise resource planning) systems. It
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completed the rollout of its BASE program, making the organization more agile and
efficient by standardizing core business processes in finance, procurement, production,
logistics and sales. The company’s SHARP-X program simplified and harmonized
finance processes and made its finance function more efficient and focused on adding
value to the business. That same year, HEINEKEN began preparations for the Digital
CORE program, which would migrate all operating companies over to a lean and modern
ERP system that would play a pivotal role in data and integration. This would allow for
greater speed, scalability and easier access to data. The Digital CORE program would
build on the successes of the BASE and SHARP-X programs and replace all of the
company’s ERPs by the end of 2027.
Crucially, as part of its end-to-end digital transformation, HEINEKEN urgently needed to
build a future-fit digital route-to-consumer. Consumers had quickly adapted to lockdowns
and adjusted their shopping behavior. In response, HEINEKEN stepped up its investments
to strengthen its digital capabilities and scale its e-commerce business. Investments
focused on HEINEKEN’s eD2C platforms including Beerwulf, GLUP and Drinkies. In
Europe, Beerwulf performed strongly in 2021, primarily driven by on-trade closures during
lockdowns and sales of the Blade – a beer tap for home use. In Mexico, HEINEKEN
launched GLUP which gained traction, leveraging HEINEKEN-owned retail chains with a
value proposition to offer quick delivery to consumers’ doorsteps.
HEINEKEN also invested in its eB2B platforms in a bid to grow its customers’ businesses
as part of an omnichannel approach. In 2021, the company’s eB2B platforms were
operational in 30 markets, including Brazil, Mexico, South Africa, Nigeria, the United
Kingdom, Italy and Vietnam, and accounted for 75% of net revenue. HEINEKEN
connected with nearly 370,000 active customers in 2021, a more than threefold increase
over the previous year. The company captured €2.8 billion in digital sales value, a 130%
increase over the previous year, driven by strong growth in Mexico, Brazil, Vietnam,
Nigeria, the United Kingdom, Italy, France, Cambodia, Singapore, Egypt and Ireland.
This figure was projected to reach €10 billion by 2025. Furthermore, digitalization would
play an increasingly important role in supporting HEINEKEN’s work with farmers, for
instance in Greece, where all areas of the company’s barley sourcing program were
integrated into intelligent farming systems to boost both efficiency and effectiveness.
Unlock the full potential of people
In 2021, the health and well-being of its people remained a key priority for HEINEKEN.
The company launched a global educational campaign called #stopCovid to encourage
employees to get vaccinated, behave responsibly and stay informed in order to protect
themselves and their loved ones. It also introduced HEI-Life, a holistic framework to
enable HEINEKEN’s employees to thrive, empowering them to look after their
professional, emotional, social and physical well-being.
With the launch of EverGreen, HEINEKEN embraced its core values of passion, courage,
care and enjoyment, and renewed its purpose: “We brew the joy of true togetherness to
inspire a better world.” This marked the beginning of a long-term effort to strengthen
13
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HEINEKEN’s company culture and entailed renewed commitments to inclusion, diversity
and social sustainability. Another key element for the success of the EverGreen strategy
was having the right people in the right place, which meant strengthening and diversifying
HEINEKEN’s local talent pipeline. To do so, the company decided to revamp its Global
Talent strategy to build talent management as an asset for HEINEKEN.
HEINEKEN IN 2022: MOVING FORWARD WHILE
DEALING WITH NEW CHALLENGES
In the first nine months of 2022, HEINEKEN achieved total revenue of €25.8 billion, up
33.4% from €19.4 billion obtained in the same period of 2021. Net revenue increased
organically by 22.6%, to reach €21.3 billion in the third quarter compared with €16 billion
in 2021. There was a strong post-Covid recovery in the Asia-Pacific region as
coronavirus-related restrictions were lifted. The consolidation of United Breweries
Limited in India increased net revenues by €564 million, a 3.5% boost. While Covid-19
restrictions in China and the Russia-Ukraine war continued to cause supply chain issues
and a rise in energy and commodities costs, HEINEKEN mitigated inflationary pressures
through pricing and premiumization. Currency translation also positively impacted net
revenues by €1.2 billion (7.3%), driven primarily by the Brazilian real, the Mexican peso
and the Vietnamese dong. The company additionally saw mid-single-digit growth in
volume in Europe and the Americas.
With continued efforts to drive premiumization, premium beer sales grew by 10.2% in the
first half of 2022, driving nearly half of the company’s organic growth in overall beer
volumes. In the third quarter of 2022, premium grew organically by 15%, while overall
beer volume grew by 8.9%, despite price inflation. The company’s LONO portfolio saw
double-digit growth in over 20 markets, with Heineken 0.0 doing particularly well in Brazil
and Spain. Heineken 0.0 became the top-selling non-alcoholic beer in Brazil, Mexico and
the US. Expanding beyond beer, volume sales of HEINEKEN’s portfolio of flavored
alcoholic beverages – which included ciders, hard seltzers and innovative products –
outgrew pre-pandemic levels.
On 24 September 2022, HEINEKEN opened Southeast Asia’s largest brewery in the Ba
Ria-Vung Tau province of Vietnam, spanning an area of 40 hectares.18 Meanwhile, due
to the Russian invasion of Ukraine in February 2022, HEINEKEN – along with other
Western companies – decided to exit the Russian market, by transferring ownership of
its business without a profit. The company stopped the sales, production and advertising
of the Heineken® brand in Russia. To ensure the safety and wellbeing of its employees,
as well as to minimize the risk of nationalization, HEINEKEN continued with reduced
operations during the transition period.
In terms of digital transformation, HEINEKEN was able to accelerate the expansion of
both its eB2B and eD2C businesses. The company’s B2B platform captured €2.8 billion
in digital sales value in the first half of 2022, a nearly threefold increase year on year.
14
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IMD-7-2423
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Sales on Beerwulf, HEINEKEN’s European eD2C platform, were over 50% higher than
pre-pandemic levels, despite consumers shifting back from in-home to on-trade beer
consumption. GLUP, the company’s eD2C platform in Mexico, was also growing fast and
expanding into new locations. As a humorous publicity stunt, Heineken also launched
Virtual Heineken® Silver in the metaverse during 2022.19
Finally, as part of its climate transition plan, HEINEKEN built the African beer industry’s
largest solar plant in South Africa, thus reducing the local brewery’s carbon emissions
by 30%. It also built two new wastewater treatment plants at its breweries in Serbia and
Haiti. The company’s brewery in Meoqui, Mexico – its most efficient plant – used less
than two liters of water per liter of beer. As the world’s largest exporter of beer, with most
exports going to the US, Mexico was an important strategic location, but its beer industry
was threatened by the effects of climate change. In early August 2022, the president of
Mexico, Andrés Manuel López Obrador, called for a halt to release new licenses for beer
production in the country’s drought-stricken north – while maintaining the existing
operations intact.20 He encouraged brewers to move their breweries to the south or
southeast of Mexico, areas that were richer in water but further away from the US border.
HEINEKEN, which owned a brewing facility in Monterrey, where water shortages were
particularly acute, announced that 20% of the water used in its Monterrey plant (which
produced over three gigaliters of beer annually) would be directed to the local water and
drainage services network.21 The drought in northern Mexico brought to light the
inequality of water access between local citizens and industrialists.22 Indeed, global water
scarcity was starting to become a critical matter for beer companies, in terms not only of
production costs and supply chain continuity but also stakeholder management and
public relations.
During its Capital Markets Event – EverGreen 2025 – held on 1-2 December 2022,
HEINEKEN shared an optimistic outlook while acknowledging the uncertainty and
challenges to come. For 2022, they reconfirmed stable to slightly higher operating profit
margin (BEIA) versus 2021. For 2023, the company projected mid to high single-digit
growth in operating profit despite a more difficult global economic environment, lower
consumer confidence in developed markets, and declining volume in Europe.
HEINEKEN also expected to exceed its target of €2 billion in gross savings in 2023, in
spite of projected higher input and energy costs – particularly in Europe.
While presenting at the Capital Markets Event, van den Brink underscored that
EverGreen embodied a dual message of continuity and change:
We honor the past, the strong foundations that we’re building on, but we’re
also crystal clear on where we do need to change to stay relevant, to adapt
in a very fast-changing world, and as a growth company first and foremost,
how do we sustain growth in that new context.
In an interview following the event, van den Brink commented on some of the
organizational changes that would be needed:
15
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Historically HEINEKEN has been really biased for growth, but we didn’t
always focus as much on the productivity side. […] We want to be a growth
company, a really strong growth company, but we also really realize that
driving productivity is part of it, and not just something you do intermittently
once every five years but just as part of normal business.
He further explained that expansion well beyond HEINEKEN’s core products and
flagship brand would be necessary to continue growing:
It’s all about consumers, and different beverage types can fulfill different
needs, so beer has its way and it’s a unique beverage that speaks to
certain consumers, certain occasions, but there are other occasions and
consumer types that you can’t always satisfy with a beer.23
TOWARDS AN UNKNOWN FUTURE
With its EverGreen strategy in full swing, things looked good for HEINEKEN, and the
2022 preliminary results confirmed this. However, the future was still mired in uncertainty
and volatility, and important new challenges – from climate change to inflationary
pressures – were surfacing around the world.
Van den Brink had almost reached the location where the entire executive team was
gathering. It was time to reflect on EverGreen’s implementation while deep-diving on key
strategic initiatives that, if successfully implemented, would future-proof the company.
What were the battles that HEINEKEN would have to win to secure its future and thrive
in the years to come? Van den Brink knew there was going to be a lot to discuss with the
team in the following days.
16
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IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
Source: Statista, 2022
Exhibit 2: The world’s 10 leading brewing groups in 2020 by production volume
(in millions of hectoliters)
Source: Statista, 2022
Exhibit 3: Global market share of leading beer companies by volume sales in
2020
Source: Statista, 2022
17
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Exhibit 1: Worldwide sales of leading beer companies in 2021 (in US$ billion)
IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
Source: Statista, 2022
Exhibit 5: Worldwide revenue growth of the beer market by sales channel (2013–
2025)
Source: Statista, 2022
Exhibit 6: Worldwide volume growth of the beer market by sales channel (2013–
2025)
Source: Statista, 2022
18
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Exhibit 4: Brand value of leading beer brands worldwide in 2021 (in US$ million)
IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
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Use outside these parameters is a copyright violation.
Exhibit 7: The EverGreen strategy’s Green Diamond
Source: HEINEKEN’s official website
Exhibit 8: Dolf van den Brink’s presentation of the EverGreen strategy
Click on the image to launch the video
Source: HEINEKEN’s official website
19
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Source: Statista, 2022
Exhibit 10: Worldwide volume of the beer market by segment, from 2012 to 2025
(in millions of liters)
Source: Statista, 2022
20
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Exhibit 9: Worldwide revenue of non-alcoholic beer from 2012 to 2025 (in US$
billion)
IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
For use only in the course STRATEGIC MANAGEMENT GMGT 4010 HAND-IN ASSIGNMENT at University of Manitoba from 1/1/2024 to 4/30/2024.
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Exhibit 11: Worldwide share of beer consumption by region (2020)
Source: Statista, 2022
Exhibit 12: Worldwide annual consumption of beer by country in 2020 (in
thousands of kiloliters)
Source: Statista, 2022
21
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The authors drew on the following company resources when writing this case:
x Heineken 2022 Preliminary Results released during the two-day Capital
Markets Event held on 1 and 2 December 2022.
x Heineken 2022 Third Quarter Results, 26 October 2022.
x Heineken 2020 Full Year Results and Strategy Review Update, 10 February
2021.
x Heineken N.V. Annual Report 2021.
x Company website and press releases (www.theheinekencompany.com).
References
1 HEINEKEN, 2021. Full Year Results and Strategy Review webcast. 10 February. Retrieved
from: https://www.investis-live.com/HEINEKEN/5ff5a22c2fb49a0a001cbda0/rget
2 HEINEKEN (2021). Full Year Results and Strategy Review webcast. 10 February. Retrieved
from: https://www.investis-live.com/HEINEKEN/5ff5a22c2fb49a0a001cbda0/rget
3 Jones D., 2008. “Carlsberg, HEINEKEN Agree $15.3 Billion S&N Deal.” Reuters. Retrieved from:
https://www.reuters.com/article/us-scottishnewcastle-idUSL2338824920080125
4 Nurin, T., 2016. “It’s Final: AB InBev Closes On Deal To Buy SABMiller.” Forbes. Retrieved from:
https://www.forbes.com/sites/taranurin/2016/10/10/its-final-ab-inbev-closes-on-deal-to-buysabmiller/?sh=549f3bcf432c
5 SAP Brandvoice, 2022. “The HEINEKEN Company’s HR Transformation Puts Employees First.”
Forbes.
Retrieved
from:
https://www.forbes.com/sites/sap/2022/01/25/the-HEINEKENcompanys-hr-transformation-puts-employees-first/?sh=330b1a1434d8
6 WHO, 2021. “Timeline: WHO’s Covid-19 Response.” Retrieved from:
https://www.who.int/emergencies/diseases/novel-coronavirus-2019/interactive-timeline
7 WHO, 2021. “Timeline: WHO’s Covid-19 Response.” Retrieved from:
https://www.who.int/emergencies/diseases/novel-coronavirus-2019/interactive-timeline
8 Pérez-Peña, R., 2020. “Coronavirus Deaths Pass One Million Worldwide.” The New York Times.
Retrieved from: https://www.nytimes.com/2020/09/28/world/covid-1-million-deaths.html
Eurostat, September 2020. “Impact of Covid-19 Crisis on Services.” Retrieved from:
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Impact_of_Covid19_crisis_on_services
9
10 Morris, C. 2020. “Craft Brewers Upend Their Business Models in Fight to Stay Alive.” Fortune.
Retrieved from: https://fortune.com/2020/10/14/craft-beer-brewery-covid-businesss/
11 PwC, 2021. “Four Fault Lines Show a Fracturing Among Global Consumers.” Retrieved from:
https://www.pwc.com/gx/en/consumer-markets/consumer-insights-survey/2021/gcis-2021.pdf
22
© 2023 by IMD
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Use outside these parameters is a copyright violation.
Sources
IMD-7-2423
FUTURE-PROOFING HEINEKEN: THE EVERGREEN STRATEGY
12 PwC, 2021. “Four Fault Lines Show a Fracturing Among Global Consumers.” Retrieved from:
https://www.pwc.com/gx/en/consumer-markets/consumer-insights-survey/2021/gcis-2021.pdf
Reuters staff, 2020. “HEINEKEN CEO to Step Down, Replaced by Asia Chief.” Reuters.
Retrieved from: https://www.reuters.com/article/us-HEINEKEN-moves-idUSKBN2052DR
14
15 HEINEKEN, 2021. ‘Welcome to EverGreen’. Retrieved from:
https://www.theHEINEKENcompany.com/our-company/our-strategy
16 Ellyat, H., 2021. “Global Covid Deaths Hit 5 Million as Pandemic Takes Staggering Toll.” CNBC.
https://www.cnbc.com/2021/11/01/global-covid-deaths-hit-5-million-asRetrieved
from:
pandemic-takes-staggering-toll.html
17 Blenkinsop, P., 2021. “New CEO to Cut 8,000 Jobs as HEINEKEN Feels Pandemic Effect.”
Reuters. Retrieved from: https://www.reuters.com/business/new-ceo-cut-8000-jobs-HEINEKENfeels-pandemic-effect-2021-02-10/
HEINEKEN, 2022. Press release, 24 September. Retrieved from: https://heinekenvietnam.com.vn/en/news-events/press-release/heineken-vietnam-opens-south-east-asias-largestbrewery-in-ba-ria-vung-tau.html
18
19 Wakefield, L., 2022. “Heineken Launches Virtual Beer in Self-Mocking Metaverse ‘Joke’”. BBC.
Retrieved from: https://www.bbc.com/news/technology-60793847
20 de Haldevang, M. & Navarro, A., 2022. “Mexico Should Stop Making Beer in Drought-Plagued
North, AMLO Says.” Bloomberg. Retrieved from: https://www.bloomberg.com/news/articles/202208-08/mexico-should-stop-making-beer-in-north-on-drought-amlo-says
21 Thomas, L., 2022. “Mexican President Calls For End to Beer Production in Drought-Stricken
North.” The Drinks Business. Retrieved from:

Mexican President calls for end to beer production in drought-stricken north

Save Time On Research and Writing

Hire a Pro to Write You a 100% Plagiarism-Free Paper.

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22 Agren, D., 2022. “Mexico’s President Proposes Ban On Beer Brewing As Drought Intensifies.”
Financial Times. Retrieved from: https://www.ft.com/content/d70f9090-a7ad-4e9f-b902a3c29bade9ba
23 CNBC, 2022. “CNBC interview with our CEO, Capital Markets Event 2022”. Retrieved from:
https://www.theheinekencompany.com/newsroom/cnbc-interview-with-our-ceo-capital-marketsevent-2022/
23
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For use only in the course STRATEGIC MANAGEMENT GMGT 4010 HAND-IN ASSIGNMENT at University of Manitoba from 1/1/2024 to 4/30/2024.
Use outside these parameters is a copyright violation.
13 CNBC, 2021. “Dolf van den Brink.” Retrieved from: https://www.cnbc.com/dolf-van-den-brink/
UNIVERSITY OF MANITOBA
ASPER SCHOOL OF BUSINESS
GMGT 4010: Strategic Management
Winter 2024
GENERAL GUIDELINES FOR ANALYZING AND WRITING CASES
The objective of the Strategic Management and other courses at the Asper School of Business at
the University of Manitoba is to facilitate students develop critical thinking. According to
Michael Scriven & Richard Paul (1987), “Critical thinking is the intellectually disciplined
process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or
evaluating information gathered from, or generated by, observation, experience, reflection,
reasoning, or communication, as a guide to belief and action. In its exemplary form, it is based
on universal intellectual values that transcend subject matter divisions: clarity, accuracy,
precision, consistency, relevance, sound evidence, good reasons, depth, breadth, and fairness.”1
You may also refer to Bloom’s taxonomy2 that has various levels of learning and development of
skills: knowledge, comprehension, application, analysis, synthesis, and evaluation (available on
the Internet on numerous websites).
The purpose of these guidelines is to help students develop critical thinking through examination
of organizational cases. The case analysis should have the following sections (these sections add
to a total of 8 pages of text (plus exhibits) in the following format: Double-space, one inch (2.5
cms) margins on all sides, Times New Roman, 12 point font).
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
Executive Summary (not to exceed 1 page)
External Assessment (about 1 page)
Internal Assessment: Resources and Capabilities (about 1 page)
Internal Assessment: Financial Performance and Future Financial Capacity
(about 0.5 page)
Current Strategies (about 0.5 page)
Key Issues (about 0.5 page)
Implementable Strategic Alternatives (about 1 page)
Criteria and Evaluation of Alternatives by Criteria (about 1.5 pages)
Recommendation and its Implementation (about 0.5 page)
Limitations (of Recommendation) and their Mitigation (about 0.5 page)
Exhibits
1
Definition written for the National Council for Excellence in Critical Thinking. Cited in Elder, L. and Paul, R.
(2008), The Thinker’s Guide to Intellectual Standards, page 58. Foundation for Critical Thinking Press, Dillon
Beach, CA, USA. www.criticalthinking.org
Bloom, B.S. (ed.) (1956) Taxonomy of Educational Objectives, the classification of educational goals – Handbook
I: Cognitive Domain New York: McKay.
2
Page 1 of 19
Keep in mind that each section in the paper is important. However, coherence among various
sections is even more important. Therefore, writing a paper is an iterative process by which you
improve each section as well as coherence among various sections in subsequent steps. For
example, be sure to use the opportunities and threats you assess in the external section along with
the strengths, weaknesses, distinctive competencies and sustainable distinctive competencies you
propose in the internal assessment to suggest alternatives. These alternatives, of course, must
address the key issues of the case.
I. Executive Summary (Not to exceed 1 page)
Write the executive summary in the form of a consulting letter but do not write your name at the
end. The executive summary is a concise and persuasive summary of the report. It outlines the
recommendations that you make as well as the supporting evidence for your recommendations. It
must be concise enough to give the reader all the relevant information needed to assess your
recommendations, yet comprehensive enough to convince the reader of the thoroughness of your
analysis. It should stand on its own. If the executive summary were to become detached from the
rest of your report, it should still be able to get your message across to your reader.
An executive summary should contain, at minimum, the following:
o
o
o
o
the strategy that you recommend;
the implications of implementing your strategy, both financial and non-financial;
how you will finance any costs associated with your recommended strategy; and
the expected benefits of your recommended strategy.
Generally, more effective executive summaries are written in a persuasive tone that outlines the
context for the decision and develops a clear and coherent argument for accepting the
recommendations of the writer.
Executive summary must be one page. It must not exceed one page. Begin external assessment
with a new page.
II. External Assessment: Opportunities and Threats (about 1 page)
Strategy relates the organization to its environment. Therefore, we must understand the relevant
environment in order to determine which strategies have potential for success. Chapter Two of
Hill, Schilling, and Jones’ book provides you with concepts for this assessment.
The process of developing an external assessment consists of at least three stages:
o Stage One—the analysis that includes systematic identification and consideration of the
key aspects of the firm’s environment;
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o Stage Two—the synthesis of the key aspects into an understanding of the strategic
opportunities and threats facing the firm; and
o Stage Three—the determination of the necessary key success factors (resources and
capabilities) for any firm to successfully address those unfolding opportunities and
threats
It is the results of Stages Two and Three that are detailed and discussed in this section of the
paper. More specifically, you will focus on the three key opportunities/threats and related
key success factors for the future. Key success factors are the resources and capabilities
that will be required for any organization to take advantage of the opportunity or
neutralize the threat in the future. They will provide a link to the internal analysis, where you
would look for the required resources and capabilities in the specific firm you are studying. Keep
in mind that the external assessment is more general so as to avoid tunnel vision.
Please note, strategic opportunities and threats result from changes and discontinuities in one or
more aspects of the firm’s external environment, and not from the firm’s internal strengths or
weaknesses. An opportunity is more than a general option – it is an actual change in the
environment that signals the possibility of success if the firm can develop a strategy to take
advantage of that change. Examples include an emerging market segment, an imminent change
in government regulation, and a new technological development. Similarly, a threat is a change
in the external environment that signals possible trouble for the firm. Examples include imminent
entry of a new, powerful competitor; changes in government regulations; and decreasing
consumer preferences for a product because of its effect on the environment. Sometimes changes
in the environment can be both opportunity and threat, depending on how the firm chooses to act.
Some opportunities and threats may emerge from continuing conditions in the environment
rather than changes because of market imperfections. Also, opportunities and threats may not
have been perceived earlier because of existing mental models and blind spots. New events may
trigger new thinking, which may help actors connect the dots and perceive new opportunities and
threats.
The critical part of an external assessment is synthesis rather than identification. Thus, it is not
enough to simply list elements of the environment, for example, what comprises each of the five
forces in an industry. Rather it is important to draw out the strategic implications of each key part
of the external environment. Moreover, the assessment needs to be future-oriented because that
is the only way it can provide a strong foundation for the subsequent sections of the paper (e.g.,
for building alternatives and recommendations).
In your examination of the environment, you may use all models and concepts that are given in
Chapter 2 of the textbook such as five forces model, strategic group analysis, etc. However, the
synthesis is in the form of top three opportunities and threats.
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How to Write This Section?
In the first paragraph, define the industry succinctly by naming the industry, major business
segments, and geographical coverage of the industry. Also, do not add anything else in the first
paragraph to keep it concise. Further, keep the analysis broad (at the industry level), and do not
mention the name of the company in the external assessment section.
Then, write one paragraph on each opportunity or threat. Within each paragraph:
a. Name the opportunity and identify whether it is an opportunity or threat. Frame it
accordingly so it reads like an opportunity (which is positive) or a threat (which is
negative). Keep in mind, they should both come from the external environment so if you
have written something that is not coming from the external environment, think again; it
may not belong in this section.
b. Give positive evidence of the existence of an opportunity or threat. Absence of threat is
not sufficient to be listed as an opportunity!
c. Finally, write at least two relevant key success factors for each opportunity/threat
discussed and provide the rationale for each of the key success factors. It is possible that
some key success factors (resources and capabilities) relevant for various opportunities
and threats may be the same. For example, a product development capability may help
address a threat of intense competition at home as well as facilitate expansion to the
Asian market (an opportunity). Rather than repeating the same resource or capability for
the other opportunity or threat, think of a different resource or capability that a firm may
need in the future.
You should pay particular attention to the new key success factors that may be emerging
that could lead to competitive advantage in the future. You may look at a value chain to
figure out the possible key success factors (resources and capabilities). Avoid using the
words as follows: The firms may need “ability to cater to the changing needs of the
customers.” Avoid it because a firm may need numerous resources and capabilities to do
so. Instead, name the specific resources and capabilities such as supply chain
management, human resources management, financial resources, etc.
Further, the focus here is on the resources and capabilities rather than on strategies so you
can look for the required resources and capabilities in the Internal Assessment section.
In addition, keep in mind it is premature to make recommendations at this point.
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Do not propose the same point as an opportunity and a threat. Also, please note that each
opportunity/threat should be unique and distinct from other opportunities/threats that you have
provided.
Write three paragraphs for the external assessment, one on each opportunity or threat. Add an
exhibit to further strengthen your external assessment. The point of the exhibit is NOT to
compress as much text as possible but to clarify and support your external assessment given in
the text. Remember to refer to your exhibit in your external analysis write-up.
Note: You are expected to bring no more than three items in total for opportunities and threats. It
may mean two opportunities and one threat, or one opportunity and two threats, etc. We are
NOT asking for three opportunities and three threats—i.e., we are not asking for six items for
this section in total. We are asking for a total of three items for opportunities and threats!
If this section is shorter than one page, you may start the next section where it ends.
III. Internal Assessment: Resources & Capabilities (about 1 page)
Similar to the external assessment assignment, this part of the case write-up concentrates on the
nature of the internal environment of the company. Chapter three of Hill, Schilling, and Jones’
book and Barney’s VRIO framework (see readings on Looking Inside for Competitive
Advantage and Crown Cork and Seal example included in the course package) provides you with
concepts for this assessment.
What key strengths, weaknesses, distinctive competencies, or sustainable distinctive
competencies can it call upon and exploit for future benefit and growth? Can the firm sustain its
competitive advantage? How will the firm’s weaknesses affect its future performance? What role
will stakeholders’ preferences play in the future for this firm? How financially healthy is the
firm? These are all questions you should consider when examining the current health and
strength of the company.
You may begin with the key success factors that you identified in the external assessment to
evaluate whether the company has them, if they are rare, and hard to copy for other firms. You
should also think about the key success factors this company lacks so as to build the required
competencies.
Keep in mind that even though the facts given may be about the past or current state of the
company (as you know, facts about the future are usually not available to decision-makers!),
your task is to draw out the strategic implications of the elements mentioned above for the
future. That is the only way this assessment can provide a strong foundation for the subsequent
sections of the paper (e.g., for building alternatives and recommendations). Be sure to conduct a
VRIO analysis and Financial Analysis before writing this section.
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How to Write This Section?
The objective of an internal assessment is to determine what the company can do in the future.
(a) Definition of Business.
First, provide a definition of the business of the company in the first paragraph succinctly. Be
sure to name the business of the company, major business segments, and geography.
(b) VRIO Analysis.
Second, use Barney’s VRIO framework to uncover a firm’s key weaknesses, strengths,
distinctive competencies, and sustainable distinctive competencies. Again the critical part is not
to identify but to analyze and synthesize. As you write this section, think of top three key
strengths, weaknesses, distinctive competencies or sustainable distinctive competencies
(S/W/DC/SDC).
Write one paragraph on each of them, clearly revealing whether the selected resource/capability
is valuable, rare, and inimitable and WHY? Be sure to give the rationale in the text (not in the
exhibit). Also, address whether the firm has the organization (structure) and complementary
resources to take advantage of the resource/capability being discussed in the paragraph. Also be
sure to mention whether the resource/capability is a weakness, strength, distinctive competence,
or sustainable distinctive competence.
In the past, we have seen some students name three S/W/DC/SDCs in one paragraph. Then, in
the second paragraph, they evaluate whether or not each of them is valuable. After that, in the
third paragraph, they go on to analyze whether they are rare. Over the years, we have found that
the “bunched up” format is more confusing for the reader. Therefore, it is better to focus on one
S/W/DC/SDC in each paragraph.
A special note about weaknesses. Students often ask whether they should bring up a weakness
or not. Our response is: Bring it up if it is a strategic weakness that you think is important for the
top management to address for their strategy to be successful in the next five years. If you do
bring it up, keep it mind that you should analyze whether or not it can become strength,
distinctive competency, or sustainable distinctive competency, if the company invests in it.
Also, be sure to come up with ways to make up the weakness as part of your strategy when you
are building the strategic alternatives!
In the text, you will raise the top three items for strengths, weaknesses, distinctive
competencies, and sustainable distinctive competencies. Therefore, look at an Appendix given in
the course package after the Barney’s article on Looking Inside for Competitive Advantage.
Before writing the text for internal assessment, prepare an exhibit (similar to the one given for
the Crown Cork and Seal Company) that shows all relevant areas (not just the top three
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items) of the value-chain and whether or not they are valuable, rare, and inimitable (see Exhibit
A in this document).
We are not expecting you to provide rationale for each of the items in the exhibit. When you are
examining the value chain, you may add an activity that is relevant for the case under study or
delete an activity that is not relevant. For example, for a service firm, you may use “Operations”
rather than “Manufacturing” given in the value chain. Remember to refer to your exhibit in your
internal analysis write-up.
Note: In the text, you are expected to bring no more than three items in total for strengths,
weaknesses, distinctive competencies, and sustainable distinctive competencies. Keep in mind
two points: (1) We are NOT asking for three items for strengths, three item for weaknesses, three
items for distinctive competencies, and three items for sustainable distinctive competencies. That
is, we are not looking for a total of 12 items; we are only looking for a total of three items. (2)
The three items do not have to include one item from each category (categories being strengths,
distinctive competencies, and sustainable distinctive competencies). They could all be strengths,
distinctive competencies, or sustainable distinctive competencies. As mentioned above, students
may include strategic weaknesses as well but the total number of items must not exceed three.
IV. Internal Assessment: Financial Performance and Future Financial Capacity (about 0.5
page)
Make an overall assessment of the financial performance of the organization based on your
analysis and indicate the financial strength and future financial capacity of the firm to carrying
out possible future initiatives/strategies (Future financial capacity refers to the amount of capital
(money) the company can raise to invest in the next five years?) Can the company raise the
money that you will be using for your recommendation? If yes, how? (e.g., debt, equity). Keep in
mind the future orientation of the assessment rather than living in the past. Add an exhibit on
ratio and other financial analysis (see Exhibit B in this document) and be sure to refer to it in
your text.
V. Current Strategies and their Implementation (about 0.5 page)
In this section, analyze and evaluate the current business (Chapters 5 and 6), corporate (Chapters
9 and 10), global (Chapter 8), and major functional strategies (Chapters 4, 6 and 7), as well as
important issues related to implementation: organizational structure, control systems, culture,
and processes (see Chapter 12 in the textbook).3 You may have noticed, business strategy is key
to competitive advantage, therefore the most focus in the course and in this paper is on business
strategy. Keep the future orientation in your mind as you analyze them so your analysis and
synthesis are relevant for the next sections of this paper. These strategies represent status-quo in
the company. This section will clarify the current practice of strategic management in the
You are welcome to consult the chapters in the textbook in advance but the instructor’s expectation will be that
you will consider the chapters that have been covered up to the point of the case assignment, the midterm, or the
final exam.
3
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company so it is easier for the reader to understand how strategies will be changed when you
present the strategic alternatives in section VII. Be sure to complete Exhibit C before writing this
section and provide a succinct write up of the same in the text. Needless to say, both Exhibit C
and this section should be consistent with each other.
VI. Key Issue(s) of the Case (about 0.5 page)
In this section, you are to further zoom in on, synthesize, and clarify in a paragraph or two what
you think the firm’s key issues are in going forward successfully into the future.
There are likely three types of issues present: (1) the readily visible and pressing; (2) the more
underlying and long term; and (3) the future ones not yet impacting the firm, but identified in
your preceding sections. The visible issues are the challenges that you readily identify in reading
the case. For example, decreasing profitability in the face of increasing sales might be an issue in
a case. Other examples include diminishing market share, obsolescence of machinery, and need
to expand operations. The visible issues can often be seen as symptoms of more long term and
substantive underlying issues or problems facing the firm. For example, decreasing net margin
may be because of inefficient production, increased administrative spending, or falling market
interest in your product. The purpose of this section is to link these issues with your external and
internal observations and to summarize what it all means for the firm and its future. If there is
any ambiguity or inconsistency in the case, it is within this section that you clarify them in terms
of key issues, and set the launch point for the next section—strategic alternatives.
Be sure to structure the key issues of the case in the three categories mentioned above rather than
providing a laundry list of the key issues. Students often ask how many issues should they
identify as the key issues. Our response is that you may have 1-2 issues in each of the three
categories mentioned above and in total you may have 4-6 issues.
VII. Implementable Strategic Alternatives (about 1 page)
In this section, you should identify and develop two strategic alternatives that the firm could
pursue. They should take into account the internal and external assessment (feasibility), be
consistent with the organization’s mission (legitimacy) and should provide a way of dealing with
the key issues of the case (relevance). The alternatives should also be representative of the key
feasible, legitimate, and relevant choices that management has at the time of the decision making
without gaining the advantage of hindsight. A good set of alternatives, therefore, must involve
major differences (and real choices) rather than different variations of the same strategy.
Your two alternatives should be mutually exclusive because strategy requires commitment and
risk-taking. It involves selecting some paths and rejecting others. However, if there is a
compelling case to follow two alternatives simultaneously then combine them into a separate
“composite” alternative and compare it to another composite alternative. Keep in mind that the
alternatives need to be comparable. If one alternative is clearly superior then it is not a fair
comparison. Sometimes, students tend to come up with a weak alternative to make their
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preferred alternative look better. It is not a good practice and should be avoided. If there are
things that you would like to do irrespective of the alternatives, you may write them in this
section in a separate paragraph before describing your two alternatives.
Alternatives must be strategic (not operational) in nature and consider the usual planning horizon
for organizations, which is about five years. Any alternative that deals with the issues for the
next six months to one year and then asks the management to re-assess its situation is an
operational alternative and may be suitable for a functional-area case analysis but not for a
strategic management case analysis. For example, a marketing campaign by itself is a popular
operational (not strategic) alternative. A marketing campaign along with other functional areas
such as starting a new manufacturing plant, changes in supply chain management, introducing
new products, etc. can form the basis of a strategic alternative.
Since this course is the strategic management course, think of 4-5 strategic moves within each
alternative. These strategic moves may be in terms of business strategies and corporate strategies
terms, depending on the issues of the case. However, do not neglect consideration of other
important issues that may hinder implementation of your strategies. Therefore, consider issues of
structure, systems, processes, resources, culture, etc. when formulating alternatives, developing
criteria, evaluating alternatives, and making recommendation. For example, it is important to
think of a multilateral match of environment, strategy, structure, systems, technology, culture,
etc. before recommending a major strategic change. It is never easy to match several different
elements so creativity with a solid foundation is important for the paper. It is essential that the
paper flows from one section to another and this section is an important linchpin in building that
flow.
To help you think of the strategic alternatives, we have attached Exhibit D. You are required to
complete this form for each of the alternatives (two exhibits for the two alternatives) and
attach it with your paper and concisely describe the alternative in the text. Do not refer to the
alternatives by number. Use a short name (for example: the low-cost strategy) as an identifier.
All exhibits must also be typewritten or word-processed (not handwritten). It is a good practice
to first complete the exhibits and then summarize the alternatives in the text.
Keep in mind that the point is to strategically manage the company and thus simply selling the
company or the status quo are not acceptable alternatives. If you are recommending an alliance
or merger with a company, name the company with which to have an alliance or a merger. Also,
be sure to provide positive evidence that the target company will be interested in an alliance or a
merger.
VIII. Criteria and Evaluation of Alternatives by Criteria (about 1.5 pages)
In this section, first, you should outline and justify the three or four criteria (not more than four)
by which you will evaluate the strategic alternatives developed in the preceding section. There
should be some financial and some non-financial criteria. Financial criteria often include net
present value and payback period. Other financial criteria may be dictated by the circumstances
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of the case. For example, there may be the need to achieve a certain return on investment in order
to attract investors. Values and preferences of the managers or other stakeholders, as outlined in
internal assessment, may influence non-financial criteria. In addition to the effect on
shareholders (which may be captured in terms of profitability or net present value), another
important criterion is the effect of decisions on other stakeholders. These stakeholders may
include customers, employees, environment, government, community, etc.
Here are two criteria that are required for your case analysis: (1) Net Present Value (2) Effect
on Various Stakeholders (other than shareholders). Among the stakeholders, at least choose
customers, employees, and environment (sustainability) as stakeholders. You may also add
other stakeholders, depending on their relevance. In addition, you may choose one or two
other criteria that may be relevant to your case analysis. However, be careful to choose outputoriented criteria rather than input-oriented criteria (such as level of investment, ease of
implementation, etc.).
Further, as noted in the Implementable Strategic Alternatives section, each alternative must
be feasible, legitimate, and relevant. Thus, feasibility (taking into account external and
internal assessment), legitimacy (consistency with the organization’s mission), and relevance
(addressing key issues) cannot be used as criteria for evaluation. In addition, your strategic
alternatives should be strong enough to produce positive results within five years. If it is
impossible to get positive results of your strategy in five years, you may extend your evaluation
of the alternatives to ten years. Finally, your criteria and evaluation should be structured as
provided in Exhibit E rather than having a laundry list of criteria.
Once you have chosen the criteria by which you will assess the alternatives, you must then
evaluate each of the alternatives using (all) these criteria. Besides financial and non-financial
costs and benefits, consider risks involved in the alternatives. What financial projections and
computations need to be made will depend on your criteria (Keep in mind that you must have
some financial and some non-financial criteria).
Do not get misled by the apparent precision of the numbers in your forecasts. These numbers
may represent an average of a range of values from pessimistic to optimistic scenarios. In fact,
the numbers may change dramatically depending on your assumptions. All assumptions must be
realistic, defendable and clearly presented in the exhibits. You may comment on the sensitivity
of your findings with respect to your starting assumptions. Please remember that this is a strategy
assignment, and not an accounting one. You may thus adopt accounting procedures accordingly.
If you choose to use strictly accounting guidelines, however, feel free to do so.
There are two ways of writing this section. You may choose to write it either way:
a) Evaluate both alternatives by criterion one in the first paragraph, followed by evaluating both
alternatives by criterion two in the second paragraph and so on; or
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b) Evaluating the first alternative by all the criteria in the first paragraph, followed by evaluating
the second alternative by all the criteria in the second paragraph, and so on.
IX. Recommendation and its Implementation (about 0.5 page)
Drawn from the previous sections of the report, state your strategy recommendation, followed by
an implementation discussion. You should include a brief reiteration of the recommended
strategy and a discussion of how it meets the selected criteria. If it has not been explicitly stated
before, the recommendation should cover all relevant aspects of strategy, structure, control,
resources, culture, etc. as applicable in the case. Never recommend a combination (of two or
more alternatives) that was not proposed as a single alternative in the strategic alternatives
section and was not evaluated in comparison with the other alternative in the previous section.
The implementation discussion will describe how the recommended strategy will be translated or
made into reality. Discuss the relevant action steps, their timing, and implementation budget with
respect to the issues of structure, process, control, resources and culture. Be sure to address how
you will finance any costs/investments associated with your recommended strategy as well as its
expected benefits.
In the past, we have noticed that some students propose that their recommendation does not need
any finances or requires minimal investment. Usually, companies need to make investments and
take risks to be competitive and to meet the needs of their stakeholders. Further, they need to
invest upfront before they can generate returns. Thus, it is not a good idea to avoid making
investments in your strategy.
Please do not suggest that the company should study the issues further and then decide about its
strategies. You have been selected as a consulting company to analyze, synthesize, and make
recommendations for the company’s strategy for the next five years.
Add an exhibit on action steps, their timings, and levels of investment to support your
implementation discussion.
X. Limitations (of Recommendation) and their Mitigation (about 0.5 page)
In this section, you should discuss the implications of your recommendation as well as its
limitations. For example, are there any negative consequences to your recommended strategy?
What are other costs or risks that were not considered at the time of evaluation of alternatives?
How can they be minimized and mitigated? Is your recommended solution able to address all the
underlying issues, or does it have limitations? Do you foresee changes that will impact on your
recommendations? This section can help strengthen your strategic alternatives. For example, if
you are writing limitations that you may have control over, you may prefer to incorporate ways
of dealing with them in your alternatives. In other words, this section should represent things that
you may not have control over. Be sure to provide at least three limitations of your
recommendation and ways of mitigating each of them.
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XI. Exhibits
Keep in mind that all important points need to be brought into the text. The exhibits should be
used to support the points in the text. Do not skip any section (For example, a student who
thought of saving space referred the reader to the exhibits and did not summarize the alternatives
in the body of the text. This resulted in a huge loss for the student).
Other than the required exhibits listed below, you may not attach any more exhibits to your
paper. All attachments must be relevant, and they must be referred to in your write-up. The
conclusion and key figures (if applicable) from each exhibit should be referenced and drawn
into the text at the appropriate point; the reader should not have to flip from the text to the
exhibit in order to understand your point.
Analogously, each exhibit should include one or two lines of text at the bottom, stating its
conclusion, and demonstrating its relevance to your argument. The reader should never be left
wondering why a particular exhibit was included. The point of the exhibits is NOT to compress
as much text as possible but to clarify and support your assessments given in the main body of
the paper. Please make sure that the font in the exhibits is as mentioned below.
IMPORTANT NOTE ABOUT EXHIBITS
1. All the 11 exhibits mentioned below are required.
2. Do not attach any other exhibit.
3. Each exhibit must begin on a new page.
4. Each exhibit must be one page only (Exhibit 1 is one-half page).
Here are further details regarding each of the 11 exhibits:
o Exhibit 1: External Analysis (one-half page; double space, 12 point font; basically
mention top 3-5 major points in bullet form in not more 10 lines. In this exhibit, you
may: (a) further clarify the three opportunities/threats you raised in the External
Assessment section; (b) provide further evidence for the three opportunities/threats you
raised in the External Assessment section; c) provide three additional
opportunities/threats, their evidence, or key success factors; and/or d) analyze five forces
model, strategic group analysis, macro-environmental forces, etc. None of the items
mentioned above are required. However, this exhibit is required so simply use your
judgment to provide further information about external assessment on any aspect. You
may avoid running text, except 2-3 lines the conclusion of the exhibit).
Please note the conclusion for this exhibit and other exhibits (as noted below) is
expected to be 2-3 lines, not 2-3 sentences because sometimes a sentence can be very
long!
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o Exhibit 2: Internal (VRIO) Analysis (one page, follow the format given in Exhibit A, 12
point font; no running text, except 2-3 lines of conclusions)
o Exhibit 3: Financial Analysis: Ratio Analysis of the current (and historical situation) (one
page; double space, 12 point font). See Exhibit B. The objective is to give the numbers,
not the running text, but be sure to include 2-3 lines of conclusion of the exhibit. The
numbers should enable you to diagnose the current situation and estimate the future
financial capacity of the firm (to be given in the last paragraph of Internal Assessment
section of the paper). For the ratios, there is no need to show the calculations. Provide all
the ratios in a table for at least three years so one can see the trends.
Evaluate the company’s past and current financial performance and assess its future financial
capacity to formulate and implement strategies. In the write-up, you will interpret the ratios
and their trends that help you figure out the financial performance of the company. The goal
is to know financial capacity of the company, i.e., how much capital (money) can the
management raise for implementing the strategy in the next five years? The exhibit should
have the financial ratios, depending on the availability of data: Profit ratios, liquidity ratios,
activity ratios, leverage ratios, and shareholder return ratios. Further, you may consult the
note on “Analyzing a case study and writing a case study analysis” in Hill, Schilling, and
Jones’s book (pages C8-C12) given in 11th and 12th edition of the book. No running text in
the exhibit, except 2-3 lines of conclusions. You may use single spacing for the exhibit.
o Exhibit 4. Current Strategies and their Implementation (See Exhibit C, one page, 12 point
font, use bullet points rather than sentences here, single or double space, no need of
conclusion of exhibit)
o Exhibits 5-6: Strategic Alternative Descriptions (See Exhibit D, one page for each
alternative so you will have Exhibit 5 for the first alternative and Exhibit 6 for the second
alternative; 12 point font, use bullet points rather than sentences here; single or double
space; no need of conclusion of exhibit)
o Exhibit 7: Assumptions and Justifications (One page; 12 point font, double space).
Provide assumptions (for NPV projections as well as other decisions) and their
justifications. These assumptions may include, but are not limited to: realistic growth
rates (for revenues, costs, and expenses incurred by the firm), interest rates, income
taxation rate, exchange rates, and many others that you need to make useful projections
and make other decisions in the case. See page 24 (i.e., the last exhibit) of the Westover
Inn (A) Case also. There is no need of conclusion of this exhibit. (Please use a separate
page for this exhibit rather than providing the assumptions and justifications at the
bottom of the NPV exhibit so that you have more space. Use numbers (e.g., 1, 2, 3, …) to
cross-reference the NPV exhibit and the Assumptions and Justifications exhibit. As you
will note, in the last exhibit of the Westover Inn case, the authors provide assumptions at
the bottom. But, their justifications are in the case. However, we expect that you will
provide assumptions as well as justifications on a separate page. Be sure to use double
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space in the exhibit even though you may be tempted to use single space. We are
interested in the major assumptions and justifications and understand that you can’t
provide all the details on one page. Even though you will have two exhibits for NPV
analysis (Exhibits 8-9), you will have only one exhibit for assumptions and justifications.
o Exhibits 8-9: Strategic Alternative Net Present Value (NPV) Analysis (not more than one
page for each exhibit, i.e., maximum two pages for Exhibits 8-9; single or double space,
12 point font). Avoid running text, except 2-3 lines of conclusion. For the numbers, you
may avoid the use of decimals and/or represent the numbers in 000’s or millions to save
space. See page 24 (last exhibit) of the Case: Westover Inn (A) in the course package for
an example to use for team assignment and team exams. For individual assignment or
exam, you may use the same format or a summary format to show the financial revenues
and costs of each alternative.
o Exhibit 10: Evaluation of Alternatives by Criteria (see Exhibit E). Please indicate your
assessment of how the alternatives will impact each part of the criterion. Be sure to
discuss your assessments (along with the NPV numbers) as well as their rationales in the
“Criteria and Evaluation of Alternatives by Criteria” section of the paper. The exhibit
should not exceed one table/one-half page. Avoid running text, except 2-3 lines of
conclusion. Use 12 point font, single or double space.
o Exhibit 11: Implementation Schedule / Action Plan (one-half page, double space, 12
point font); Use bullet form and avoid running text, except 2-3 lines of conclusion. Be
sure to show the timeline, actions, and the level of investment for each step for the
normal planning horizon of strategies, which is about 5 years.
This document includes Exhibits A, B, C, D, and E.
Page 14 of 19
EXHIBIT A
VRIO ANALYSIS OF THE COMPANY
(Example: Crown Cork and Seal, from Jay Barney (Gaining and Sustaining Competitive Advantage, 1997;
Modified slightly to show more variety of competitive implications))
(Use any value chain depending on its suitability to the company you are studying. Add value chain activities and attributes that are
relevant to the case and delete those that are not. Be sure to mention in this exhibit if something is a strategic weakness and how you
plan to overcome that weakness.). Your particular company will demand special and unique treatment, but the following is intended to
serve as an illustration of the format for a fictitious company expected within the Internal Assessment Exhibit.
EXHIBIT # (INTERNAL ASSESSMENT)
Value Chain
Activities
Purchasing
Inventory
Holding
Specific Attributes Along
the Value Chain
high quality inputs
reliable supply
V
R
In
W/S/DC/SDC
O
Yes
Yes
No
No
–
Strength
Strength
Yes
Yes
Yes
Yes Yes
Yes
Yes Yes
No
–
–
Sustainable Distinctive
Competence
Sustainable Distinctive
Competence
Weakness
Yes
Design &
Engineering
Manufacturing
able to meet unexpected
orders on short notice
speciality containers for
multiple purposes
inconsistent product quality
Distribution
speedy & flexible delivery
Yes
Yes No
Distinctive Competence
Yes
Sales
Yes
–
Competitive Implication:
Likely to have
Competitive Parity
Competitive Parity
Sustainable Competitive
Advantage
Sustainable Competitive
Advantage
Competitive
Disadvantage*
Temporary Competitive
Advantage
Unrealized Sustainable
Competitive Advantage
Sustainable Competitive
Advantage
fast, reliable order
Yes Yes Yes Sustainable Distinctive No
processing
Competence
Service & Tech
speedy & competent
Yes Yes Yes Sustainable Distinctive
Support
maintenance and quality
Competence
Yes
technical advice
Use the following space for two or three lines of CONCLUSIONS concerning the company’s value chain competencies and how you
will overcome the weakness(es)*.
Page 15 of 19
EXHIBIT B
FINANCIAL ANALYSIS: RATIO ANALYSIS
Note: We have listed five types of about 25 ratios here. You may consider these and other
relevant ratios. Please provide at least 10 ratios in this exhibit covering each of the five types of
ratios mentioned here. Thus, be su…