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IPODERAC: Finding the Path Towards Sustainability
Francisco Layrisse Villamizar , Gerardo Fernández Lozano Product Number: 9B12M066 Publication Date: 07/24/2012 Revised Date: 08/16/2012 Length: 14 pages Product Type: Case (Field) Source: Ivey Since 1966, the Rehabilitation Institute of Puebla Civil Association (IPODERAC) had dedicated itself to providing a home and education for children who had been abandoned in the streets of Mexico. Using an educational model based on the concept of personal development through honourable work, IPODERAC had successfully combined its desire to be financially self-sufficient with its goal of teaching educational values, responsibility, and discipline to the children in its care, thus enabling them to develop a sense of belonging and some useful life skills. This case explores the inception and long evolution of IPODERAC’s educational model, as well as the organization’s constant search for production projects that would enable it to generate income. After meeting this goal, IPODERAC also faced the ongoing challenge of maintaining its business units without deviating from its institutional mission. By April 2009, IPODERAC had all but obtained self-sufficiency; however, given the national financial crisis and the emergence of the swine flu epidemic, IPODERAC’s main source of income (the sale of gourmet cheeses) had suddenly diminished. This crisis affected the stability of the institution, and new proposals for diversification were needed to strengthen IPODERAC’s financial sustainability and avoid similar pitfalls in the future. Learning Objective: This case presents the opportunity to:  Identify common mistakes made by entrepreneurs when starting their business.  Analyze a business portfolio with diverse units using the BCG matrix (i.e., product lifecycles based on four categories: dogs, cash cows, stars, and question marks).  Explore the concept of mission drift. Use SWOT (strengths, weaknesses, opportunities, and threats) analysis to determine IPODERAC’s future. Some of the concepts that will be approached in the case are:  Business criteria for the creation of a business.  Self-sustainability in a non-governmental organization (NGO).  Socially inclusive business.  Production projects in an NGO and their limitations.  Differences between a company and a self-sustaining NGO.  Business portfolio management. Home > Browse Catalogue > IPODERAC: Finding the Path Towards Sustainability Add to Cart Save to Favourites

IPODERAC: Finding the Path Towards Sustainability
Francisco Layrisse Villamizar , Gerardo Fernández Lozano Product Number: 9B12M066 Publication Date: 07/24/2012 Revised Date: 08/16/2012 Length: 14 pages Product Type: Case (Field)

Source: Ivey Since 1966, the Rehabilitation Institute of Puebla Civil Association (IPODERAC) had dedicated itself to providing a home and education for children who had been abandoned in the streets of Mexico. Using an educational model based on the concept of personal development through honourable work, IPODERAC had successfully combined its desire to be financially self-sufficient with its goal of teaching educational values, responsibility, and discipline to the children in its care, thus enabling them to develop a sense of belonging and some useful life skills. This case explores the inception and long evolution of IPODERAC’s educational model, as well as the organization’s constant search for production projects that would enable it to generate income. After meeting this goal, IPODERAC also faced the ongoing challenge of maintaining its business units without deviating from its institutional mission. By April 2009, IPODERAC had all but obtained self-sufficiency; however, given the national financial crisis and the emergence of the swine flu epidemic, IPODERAC’s main source of income (the sale of gourmet cheeses) had suddenly diminished. This crisis affected the stability of the institution, and new proposals for diversification were needed to strengthen IPODERAC’s financial sustainability and avoid similar pitfalls in the future. Learning Objective: This case presents the opportunity to:  Identify common mistakes made by entrepreneurs when starting their business.  Analyze a business portfolio with diverse units using the BCG matrix (i.e., product lifecycles based on four categories: dogs, cash cows, stars, and question marks).  Explore the concept of mission drift. Use SWOT (strengths, weaknesses, opportunities, and threats) analysis to determine IPODERAC’s future. Some of the concepts that will be approached in the case are:  Business criteria for the creation of a business.  Self-sustainability in a non-governmental organization (NGO).  Socially inclusive business.  Production projects in an NGO and their limitations.  Differences between a company and a self-sustaining NGO.  Business portfolio management.

 

Learning Objective
To identify and analyze the entrepreneurial, managerial, and organizational challenges of a nonprofit achieving financial viability

Setting
Mexico; 30 employees; $400,000 revenues; 1998-1998

IPODERAC, Atlixco, Mexico How do you support a home for 72 orphans/street kids in Atlixco, Mexico? Well, if you are IPODERAC (Puebla Institute of Rehabilitation) the answer is obvious. Goats. Or, more precisely goats' milk cheese and goats' milk soap. IPODERAC initially got into goat raising as a training program for its boys. But, it soon became apparent that raising goats, like the rabbits and other ventures that preceded the goats, required more attention, if they were to be profitable, or at least revenue generating. So, with the help of a retired Nestle executive a cheese production "factory" was established. The quality was great, but the sales and marketing efforts needed assistance. Enter teams from the Haas IBD program, financially supported by my good friend Surry Roberts. (Surry and I go way back and have travelled a bit of the world together. But, that's another story. Surry has also sent IBD teams to the Czech Republic and Zimbabwe, but these too are other stories. Surry trekked across the Australian outback on a camel, but that's his story.)

For about 5 years, each May, a team of IBD consultants worked on some aspect or other of the organization's strategy, operations or marketing. One team even uncovered efforts to defraud the organization, by a customer, and eventually managed to recover a significant amount of the fraudulently transferred funds. See the story of one team's project in journal format.(http://www.berkeley.edu/news/media/students/2002/mexico/about.html )

A Harvard case, somewhat dated now, has also been written about IPODERAC. The people behind IPODERAC, including the former Managing Director, Agustin Landa, are making a huge difference in the lives of these abandoned or orphaned kids.
McDonald’s Corporation is one of the most popular and valuable brands in the fast food industry. McDonald’s is undoubtedly a corporation of tremendous magnitude, with outlets in over 30,000 sites in 121 countries, serving over 35 million customers a day and earning profits of over $2 billion annually. McDonald's has successfully used a differentiated market segmentation strategy by targeting the family unit and particularly children with their "Happy Meals" and prices. McDonald's has traditionally offered lower prices than other hamburger chains, thus gaining the patronage of larger-size families. The location of its outlets has been instrumental in making McDonald's so successful. It was the first hamburger chain to expand into the suburbs and into the crowded downtown areas of large urban cities (Greco & Michman, 1995). On the other hand, Wendy’s, which had no real intention to be a national chain, began to operate in 1969 as a single unit in downtown Columbus, Ohio. A second unit quickly followed on the opposite side of the city. The next step in the development of the company was the opening of the first franchise in Indianapolis, Indiana, in 1972, which was followed by many more Wendy’s restaurants within and outside the United States. Wendy's has positioned itself as an adult-oriented fast-food hamburger chain and has attracted the largest proportion of female customers. Geographic segmentation is precarious in many large markets. In the late 1980s, Wendy's tried to broaden its base of targeted consumers by focusing on weekend and dinner markets and opened restaurants in Sears and even in supermarkets (Greco & Michman, 1995). Wendy’s market intensity in the US is estimated at 61,055 people per unit. Comparatively, McDonald's has one restaurant for every 22,000 persons. Innovation took place when McDonald's developed the concept of the assembly-line hamburger with french fries and when Wendy's became the first hamburger chain to offer a salad bar and baked potatoes nationwide. McDonald's, in an effort to compete in small-town markets, emphasizes a smaller cafe-style restaurant in total square feet than units located in metropolitan and suburban areas (Greco & Michman, 1995). An interesting comparison between the two companies is that McDonald's has the third most recognized brand name in the world, whereas Wendy’s is barely known outside the US. Another intriguing aspect of the hamburger war between these two companies is advertising. Wendy’s has the second highest advertising awareness

among the US fast food service restaurants in spite of the fact that McDonald's, which is in the number one position, outspends Wendy’s by a proportion of five to one. However, outside the US, unlike McDonald's the promotional marketing abroad for Wendy's has been rather limited due to lack of economies of scale in advertising. The minimum scale required to launch a national advertising program is 25 stores per country. So far, in the global market only a few countries are meeting the Wendy's standard required to launch national advertising campaigns.

While McDonald's expanded one store at a time, Wendy's preferred to unfold in blocks (Carrada-Bravo, 2003). Between the two, it can be safely deduced that McDonald’s seem to be on the top of the race. This could be attributed to the different strategies that the fast-food chain pattern in response to their customers in different geographic locations. McDonald's success in world markets has been attributed to its tradition of adapting to the conditions of local demand like serving a non-beef hamburger in India and Saudi Arabia, while offering a teriyaki burger in Japan, and falafel in Egypt. Another important aspect of McDonald's strategy in world markets is its program to develop local suppliers like in Brazil where they invested a significant amount of resources into helping farmers master the cultivation of potatoes (Carrada-Bravo, 2003). McDonald’s success is largely a result of articulation of its product and services with changing social and cultural conditions in the United States and then a global economy that enabled the fast-food industry to thrive and made McDonald’s triumph possible.

2.

In a BCG matrix on two divisions of the company, the electronics division appears in the upper right quadrant

of the matrix while the appliance division appears in the lower left quadrant of the matrix. This means that the electronics division has a relatively high market share as well as a high market growth rate, and will be highly profitable and generate a lot of cash, but at the same time will also mean that they will require a lot of cash both to finance working capital and to build capacity. On the other hand, the appliance division has a low relative market share, low market growth rate, and inherently unprofitable seeming to possess no future, though their cash requirements are low. The electronic division has a large market share in the fast growing industry. This division may generate cash, but because of factors such as the rapid growth of the market, these require investment so that it will maintain their lead. The appliance division has a small market share for an industry that has already been around for many years. The division may not require substantial cash, but it ties up capital that could be utilized somewhere else. Unless it could be proven that this division has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share. In the given situation, if we pattern it strategically according to the BCG model, the company should direct monetary support to the electronics division, since they often need more cash than they can generate and should consider disposing of the appliance division. However, the company should not largely rely on the findings of the BCG matrix and should consult other measurements before doing anything drastic. Funding more cash for the

appliance division, instead of disposing it as the BCG matrix strategy would advice, may turn the business around and do more good than harm. It must also be remembered that the nature of the product being sold is not one which customers would need or want to buy daily. The small market share of the appliance division could just be momentary. Other measurements that could be used by the company aside from the BCG matrix are the GE/McKinsey matrix, and the Directional Policy matrix mix. These portfolio models are useful diagnostic tools but more formal and detailed planning mechanisms are required to evolve and evaluate detailed strategies. Consideration of the product life cycle and the various portfolio models is essential when examining the implications of strategic windows for an organization. All these tools and methods give reasonably good indicators of when a strategic window is about to close (Proctor, 2000).

3.

A company who has made the strategic decision to acquire another company has two possible

implementation strategies for this decision. The first is to merge the acquired company into the other company. The result of this strategy will be one company containing the elements of both companies. This could be done either through assimilation or integration. This strategy of assimilation and integration is best to use when acquiring somewhat related firms wherein an acquirer is much more likely to prefer either integration or assimilation as the mode of merging and acculturation. However, integration can present a high degree of conflict within the two merged organizations. In assimilation, the company being acquired changes its culture and adopts that of the company acquiring the; the acquirer does not change. Assimilation requires cooperation and acceptance of change from members of the acquired company (Harrison, et al, 2001). A positive aspect of this is that during the contact with the acquirer, members of the acquired firm resolve the conflict by willingly giving up their own identity and taking on that of the acquirer. Overall, the acquired firm will be absorbed into the acquirer and will cease to exist not only as a legal entity but also as a cultural one. In integration, the acquired firm maintains most, if not all, of the cultural and organizational elements that provide it with its unique identity. The strength and success of this strategy is related to the desire to maintain culture. The acquirer allows its acquisition some degree of freedom and independence to maintain its culture even though it has become a legal and financial part of the parent company. Both firms change some, but not all, of their culture and adopt some elements from the other firm's culture. Contact between the two firms remains cordial, which further allows for, and encourages, exchange of various organizational and cultural elements. The second possible implementation strategy for a merger is for the parent company to operate the acquired company as a separate business entity. Separation as a mode of merging two organizations or companies involves an attempt by the acquired firm to remain separate from the parent company by retaining all its cultural elements and

practices. In separation, members of the acquired organization refuse to assimilate with the acquirer at any level. They have a strong culture that they want to maintain and want to function as a separate entity under the umbrella of the parent company (Malekzadeh & Nahavandi, 1993). Separation, therefore, requires minimal contact and exchange between the firms and this makes it good for both companies. Minimal supervision is needed to be done by the parent company on the acquired company. Because of the desire to remain separate, and the rejection of the parent company’s cultural and organizational elements and practices, separation engenders a fair amount of conflict and is likely to be difficult to implement. This is one major drawback of this kind of implementation in a merger. This strategy would work best for two companies which are partially or totally unrelated to each other. Since the two firms are unrelated, the acquirer does not have specific expertise in the management, operations, or technology of its acquisitions. Therefore, it would be more appropriate for the acquisition to be given as high degree of autonomy and independence in order for the merger to succeed.

4.

According to their official website, Altria is a family of companies which is committed to reducing the

environmental impact of its activities and promoting the sustainability of the natural resources upon which it depends. The companies which comprise Altria are Kraft, Philip Morris International, and Philip Morris. This strategy of Altria committed to managing environmental impact of its business activities is actually a strategic initiative which has an ulterior motive. Behind this lies a reason related to the overall marketing plan of the company. The Philip Morris Company, in November 2001, decided to change its corporate name to Altria Group LLC. As the biggest tobacco company in the world, in addition to being the owner of Kraft Foods, Inc. and the Miller Brewing Company, the decision makers at Philip Morris concluded that the name change would serve to differentiate the parent company from its tobacco units, which are involved in numerous lawsuits. The name Philip Morris is so strongly associated with tobacco products that it now serves as a brand equity liability among the growing number of consumers who object to corporations' involvement with tobacco and alcohol products. In this light, the name change makes good sense when one considers the potential public relations advantages it could bring to the company (Kimmel, 2004). Altria's commitment to the environment could be characterized as one that is intended to create or have an impact on the company's relationships with its various stakeholders, however indirectly. It serves to deter customer’s notions that the company is largely a producer of tobacco and alcohol products. It aims to make consumers see and realize that the company has other positive environmental pursuits in mind. However, these environmental pursuits of the company, although strategically used as a public relations campaign, is also true and performed by the company. Environmental factors and considerations are external triggers on the marketing of a company (McCall & Stone, 2004). Companies would therefore do their utmost not to upset environmentalist groups or environmental

policies so as not to have their marketing power affected. Companies like Altria have to protect consumer health and safety in order for the consumers to continue buying their products. What better way than to provide a website which details the environmental pursuits of the company. The real strategic reason for the company’s environmental initiatives is that it is intended to shape consumers attitudes positively toward the tobacco manufacturer. This is some sort of public relation campaign on the part of Altria. Although these activities represent the most common forms of public relations, it might be considered virtually any corporate decision that becomes known to the public as capable of having an impact on a company's relationships with its various stakeholders, however indirectly.

McDonald’*s Ruth Jack BUSN412 Business Policy July 27, 2009 CASE ANALYSIS McDonald’s COMPANY NAME: McDonald’s INDUSTRY: Fast Food Industry. COMPANY WEBSITE: (www.mcdonalds.com) COMPANY BACKGROUND: SWOT ANALYSIS: Strengths: McDonald’s has established itself as a global brand with 31,000 restaurants in over 119 countries (McDonald's). This company has global appeal. Even while the economy is deteriorating all around us in this country, McDonald’s boasts a $23.5 billion in revenue with 60% of it generated from restaurants outside the United States (Ellis, 2009). A major strength of McDonald’s is that the company casts its net wide to attract as many demographics as possible. They have been successful in this feat with the Happy Meal© for children and now with their new McCafe line they seem to be giving Starbucks some competition (Tancer, 2008). Weaknesses: One of the major battles that McDonald’s is trying to overcome is its unhealthy image. The company has done its best to incorporate healthy items on its menu; such as including fruits in its Happy Meals replacing fries, and offering salads and healthy wraps (McDonald's). The public sentiment still seems to be one of slight disdain; this is plainly displayed in the 2004 documentary Supersize Me by Morgan Spurlock (Super size Me). Opportunities: Right now McDonalds is only in 119 countries serving 47 million customers a day (McDonald's). The world’s population as it stands right now is close to 7 billion strong (U.S. and World Population). This number of customers stated above is but a mere fraction of the world’s population, which means there is room for growth and expansion. The company has already proven that it can enter foreign markets; it just needs to expand more. Threats: The threats to this company have been growing and growing since its conception. This market is already saturated with competitors such as Wendy’s and Burger King offering just as good of a product. WOT ANALYSIS: STRENGTHS: Jim Skinner had to clean up a big mess after the 2003 slump, and did so by

coming up with a strategy to turn everything around. His strategy had to consist of staying competitive with the numerous other fast-food restaurants popping up all over the world. In order to maintain this, they had to reorganize the way they presented themselves to the community. Jim Skinner did so by cleaning up the customer service, cleaning up and modernizing the physical buildings, and changing the menu to the changing tastes of their customers. McDonald’s also introduced their slogan “I’m Loving It” to reach out to the younger customers. The advertising is very much targeted toward teens and young adults. (Dess, Case 40) WEAKNESSES: The first weakness was the changing of three different CEOs in only one year. These were unexpected changes, but all had to be dealt with by the newest CEO Jim Skinner, and directly after McDonald’s first ever quarterly loss in 2003. The second weakness is an issue with trying to find Running Head: MARKETING SWOT Analysis Answer 1. The company so selected for the sake of carrying upon SWOT Analysis is McDonalds. The company is found to run its food outlets all around the globe. It basically deals in fast-foods. The customers serve to be the main aspect for the company. It used to collect feedback from the customers on a regular basis. The SWOT Analysis is the tool that is used from the point of developing pertinent knowledge about company’s position in the market. From this, it can improve the weak areas and can strengthen the strong aspects more and more. The information regarding company’s SWOT Analysis can be derived from Company’s website, annual reports, books, articles and journals. All these prove to be effective from the point of developing knowledge about its strength, weakness, threats and opportunities (McDonald’s Corporation: The Past, Present, and Future, n.d.). The strength of the company is that it is operating in accordance with various cultures. It serves to be a socially responsible company and actively work for community’s betterment. It is also placed on a great position under Fortune ranking list. The weaknesses linked with the company are that it failed to move towards pizza market. In addition to this, it needs to capitalize on the trend towards organic foods as well. The changing preferences of the customers also pose a problem in front of the company. The company understands customer’s value in business and that is why asking them regularly for more improvements. The health of the customers is taken into account with due effect and this makes it high (McDonalds, 2011). It serves to be the opportunities for the company. The threats are that the company faces intense competition and this makes things impossible. At the same time, it is also important to see to it that all these things need to be considered from the point of indentifying company’s actual position. The SWOT Analysis related to the company can Problem Statement The problem McDonald's is facing now is developing new strategies in order to sustain a competitive advantage in a market that is quickly evolving and maturing, with new players gaining market share, and growth in healthier eating trends. The fast food sales are relatively

flat, but more businesses are gaining market share, so in order for McDonald's to counter this, they must stay innovative and further diversify their business to sustain their competitive advantage. They are facing the problem of having the "cheap and greasy" image, which is now being countered by businesses such as Subway. The evolution of fast food is causing McDonald's to rethink their overall strategy, introducing new products, and reshaping their image. Situational Analysis and alternatives The "cheap and greasy" image that McDonald's has had forever is now plaguing them. The bright colors seem to emphasize this cheap image, with the red and yellow combination. Maybe a branding and packaging alteration would help to slightly increase the gourmet appeal of the restaurant. There have been several companies that have done this in the past, such as Dairy Queen with the "Grill and Chill" logos and Taco Bell with the color changes from darker browns and yellows to brighter purples and blues. There is an apparent need to offer healthier foods, which McDonald's has tried to satisfy with their gourmet salads and wraps, but there is a need to introduce more non-burger products. Some ideas are boneless hot wings or maybe a few deli items such as a deli chicken sandwich. As trends move away from burgers to healthier alternatives, it seems almost necessary to add such items to the menu, and it seems to be fairly feasible with Runza and Wendy's doing it already. With the introduction of the McCafe, maybe more Panera Bread-type items would be a good idea, such as bagels and other sandwiches with deli meats. Company Overview: The McDonald’s Corporation was born from brothers Richard and Maurice McDonald from a single drive-in restaurant in San Bernardino, California in 1948 to the largest food service organization in the world.. In the past 52 week period, McDonald’s stock value has risen from 43.74 up to 63.69, showing that even today McDonald’s continues to flourish and be successful (Yahoo Finance). The company's mission is to leverage the unique talents, strengths, and assets of our diversity in order to be the world's best quick-service restaurant experience (McDonalds.com, 2008). SWOT Analysis Strengths, Weaknesses, Opportunities, Threats of the McDonald’s Corporation Strengths: Brand equity- positive associations created through the yellow arches. Ever since we are young children we are taught to love McDonald’s, with their “happy meals,” playscapes, and hamburgers. Marketing techniques used with childhood customers stay with the person as McDonald’s keeps these same customers when they grow into adults—stay successful as a business. Currently maintains 42% of US Hamburger business- Burgers are so popular that McDonald’s is a household name, people all over the world see the commercials, this domination of the hamburger business gives McDonald’s a huge advantage over the rest of the market. (McSpotlight Press). Successful “brand name” items- for example: Fries, Happy Meal, Big Mac, and Egg

McMuffin- these items are well-known and McDonald’s utilizes them in their marketing techniques. These meals are ingrained into the consumers mind gives McDonald’s a big advantage Spread market overseas- international success has made McDonald’s a famous brand name all over the world. Balance Sheet Success- financial assets continue to rise each year as.

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