PART 1 of the assignment: you
need to provide an updated BUSINESS & CORPORATE STRATEGY, specifically the
changes you want to make to increase the company performance of the corporation
Compass Minerals.
Content
The business and corporate strategic plan should describe
three strategic initiatives that you, as the CEO of Compass Minerals, like to
design and implement to improve firm performance. These plans could relate to,
but not limited to:
Improving
business functions: changing particular value chain processes to be
more efficient or effective
Repositioning:
moving to a different price/value point within the industry to attract a
different segment or avoid competition
Horizontal
integration: merging or acquiring an existing competitor to create
business synergies or setting up a new unit targeting a different segment
Vertical
(dis)integration: expanding into the territory of current suppliers or
customers to improve business performance or outsourcing certain activities.
Diversifying:
moving into a new industry to reap the advantages of being active in
multiple industries or divesting activities and refocusing on the core
industry
These plans relate to the various models and motivations
from modules 5 to 7, (Strategic Management: Concepts and Cases (4th edition)
by Dyer, Godfrey, Jensen and Bryce.)
For each initiative, it should outline three aspects:
The
motivation: explain how this initiative can improve firm performance (or
prevent losses) by relating it to reasons we have studied in this course.
Example:
“better positioning our product for the growing Gen Z segment”
or “reducing coordination issues and ensuring sufficient supply by
vertical integration”.
The
implementation: describe how it could be implemented within the
corporation and be as precise as possible.
Example:
“the firm should acquire company X by purchasing all its shares, and
then fully integrate it”.
The
cost-benefit analysis: include an estimate of the potential benefits
(preferably a financial value related to revenues or profits), the costs
of implementation, the major risks of this initiative, and an
estimate of the potential losses if the initiative is unsuccessful.
Example:
“By vertically integrating, the firm can reduce the costs of
supplies and increase the profit margin by 3%, or $30 million annually.
Supplier X’s market value is $100 million, so the firm can acquire
it for $120 million, which means the payback time is 4 years. Yet, there
is a risk of integration: it reduces incentives to be efficient and there
are cultural differences between the two. If the integration fails, it
should be possible to sell Supplier X to a competitor or spin it off
for $80 million, which means an estimated loss of $40 million.”
PART 2 of the assignment, you
need to provide an (updated) international strategy, specifically about the
initiatives you have to take advantage of international opportunities.
Content
The international strategic plan should describe how you, as
the CEO of Compass Minerals, like to take advantage of international business
opportunities by designing and implementing an international strategy. These
initiatives could relate to, but are not limited to:
Decomposing
the value chain by relocating certain business processes to better
locations
Entering
(or leaving) foreign markets, including market choices and entry (exit)
modes
Designing
an international product strategy based upon the need for local adaptation
and standardization.
These plans relate to the various models and motivations
from modules 8 and 9 from the book, (Strategic Management: Concepts and
Cases (4th edition) by Dyer, Godfrey, Jensen and Bryce.)
For each initiative, it should outline three aspects:
The
motivation: explain how this initiative can improve firm performance (or
prevent losses) by relating it to reasons we have studied in this course.
Example:
“Expanding abroad offers a major opportunity to serve new customer
markets” or “Relocating manufacturing in a country with low
labor costs will reduce operational expenses.”
The
implementation: describe how it could be implemented within the
corporation and be as precise as possible.
Example:
“We should expand to the United Kingdom because it has a similar
cultural and socio-political environment. Given the high level of
competition already present, we should enter the UK through a joint
venture, ideally with Partner firm X that is already active there”.
The
cost-benefit analysis: include an estimate of the potential benefits
(preferably a financial value related to revenues or profits), the costs
of implementation, the major risks of this initiative, and an estimate of
the potential losses if the initiative is unsuccessful.
Example:
“Compared to the United States, the United Kingdom has only 20% of
the population. Moreover, the average income of a Brit is about 65% of
the average income of an American. This means that, if we are equally
successful the UK as in the USA, the UK profits will be 13% of our
current USA profits. Setting up the joint venture is costly. Assuming
that we need the same amount of assets, we would need to invest equal to
13% of our current total assets of $500 million, or $65 million. But
because this is a joint venture, we will only receive half of these
profits (6.5%) and only need to invest half of the money ($32.5 million).
There is a risk that our product does not appeal to the UK market. In
that case, we probably need to shut down operations and cannot recover
any of the investment.”
This is a rubric for the assignment:
Part 1:
1.)
Content: Originality and motivation – The
initiatives present significant changes to the current business and corporate
strategy to address key challenges and opportunities.
2.)
Content: Implementation – The initiatives
provide detailed implementation plans in line with the current strategic
context.
3.)
Content: Evaluation – The initiatives give
information on their expected performance implications (cost-benefit analysis),
upfront investments, key risks, and potential losses.
Part 2:
1.)
Content: Originality and motivation – The
initiatives present significant changes to the current international strategy
to address key challenges and opportunities.
2.)
Content: Implementation – The initiatives
provide detailed implementation plans in line with the current strategic
context.
3.)
Content: Evaluation – The initiatives give
information on their expected performance implications (cost-benefit analysis),
upfront investments, key risks, and potential losses.
