Fluent Essays

follow the instruction to do the case study read the urban axes article APA citation 9B21M021 URBAN AXES: FIRST MOVER IN US EXPERIENTIAL ENTERTAINMENT Marilyn Anthony and Shreshthi Mehta wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Our goal is to publish materials of the highest quality; submit any errata to [email protected] i1v2e5y5pubs Copyright © 2021, Ivey Business School Foundation Version: 2021-03-12 In early 2017, chief financial officer Krista Paton reviewed the 2016 financial performance of her fledgling company (see Exhibit 1), Urban Axes, and could not believe the numbers. Started as a “side hustle” by Krista and partners Shaun Hurley, Stuart Jones, and Matt Paton in 2016, Urban Axes was the first axe-throwing entertainment venue in the United States. The business opened one location in Philadelphia, Pennsylvania, in September 2016, and by late December 2016 Urban Axes had already far exceeded the financial modelling that Krista had designed to identify low-, medium-, and high-performance earnings objectives. Krista and her co-founders had some big decisions to make. Given the business’s enormous early acceptance by customers, the earnings potential of Urban Axes’ unique business model, and the business’s first-mover position, what options did Urban Axes have for expansion? How quickly should the co-founders make their move? Would Urban Axes be a career bull’s eye and generate enough earnings for the partners to quit their day jobs and go all in on axe throwing? AN UNLIKELY ENTREPRENEUR In many ways, Krista, age 34, did not fit the profile of an entrepreneur. As an undergraduate, she explored many areas of interest, beginning with computer science and ending with a degree in Spanish and modern languages, with minors in international business and computer science. While an undergraduate, Krista worked nearly full-time in retail for mobile phone service provider Sprint Corporation before moving into the company’s internal audit department. Exposure to auditing led to Krista’s pursuit of a master of business administration in finance, which in turn led to her first job in the finance department of the international consumer goods corporation Procter & Gamble Company (P&G). Krista’s initial P&G position in Cincinnati, Ohio earned her recognition as a high-potential employee. A series of promotions within a variety of product lines followed, including roles as senior internal auditor, Bounty financial analyst, customer team finance manager, Canada household needs finance leader, and Gillette upstream finance and strategy manager. The promotions had involved transfers—in 2011 to Philadelphia, Pennsylvania, and in 2013 to Toronto, Ontario, Canada. Krista attributed her rapid growth at P&G to intellectual curiosity, something she felt came naturally to her. “I like to look at a question, form a hypothesis, and then collect and use data to prove or disprove those assumptions. That was a behaviour P&G really encouraged and valued in its employees.” A u th o ri ze d f o r u se o n ly b y Y u n yu a n L in in b u s2 9 0 a t C a m o su n C o lle g e f ro m 7 /5 /2 0 2 1 t o 9 /1 0 /2 0 2 1 . U se o u ts id e t h e se p a ra m e te rs is a c o p yr ig h t vi o la tio n . Page 2 9B21M021 As a high-potential woman in finance, Krista was excited to be part of a large company with rich opportunities for travel and career advancement. She also capitalized on P&G’s mentoring. Early on, she identified a senior female executive whose leadership style she admired and wanted to emulate. Her mentor was “strong and decisive, but also a very good listener. In meetings she was a little less loud and more reserved. She asked thoughtful questions, considered the information, and then made clear decisions. I thought she was everything you want a leader to be.” Thinking back on her early successes at P&G, Krista recalled telling a co-worker, “I intend to be a P&G lifer. I really like working for ‘the Man.’” However, the postings to Philadelphia and Toronto had had unintended consequences and set the stage for a reluctant entrepreneur to make a dramatic career change. A BIRTHDAY PARTY GIVES RISE TO BUSINESS OPPORTUNITY When Krista moved to Toronto in 2013, axe throwing1 as indoor experiential entertainment was just starting.2 Participants would throw axes at a wooden target and attempt to “stick” the axe for points, scoring more if they hit the bull’s eye. Krista was part of one of the first social groups to celebrate a friend’s birthday party by throwing axes together. She recalled thinking, “This was so much fun; it must exist in the United States.” She did some quick research, discovered that it did not yet exist in the United States, and said to her then-boyfriend, Matt Paton, “This would go great in Philly.” She and Matt called two friends, Shaun and Stuart, both Australians with successful careers in information technology (IT), who flew to Toronto to check out the opportunity. Shaun and Stuart immediately shared Krista’s excitement about launching axe throwing in the United States (see Exhibit 2). Krista’s first move was to contact the lead axe-throwing organization in Toronto to learn if it had plans for US expansion and would consider partnering with Krista’s group. The organization claimed that it already had US expansion plans. Krista’s enthusiasm cooled as she told herself, “What do we know about running an axe business? Let’s keep thinking about it.” Krista recalled that after an especially bad day at an unrewarding job, one of her potential partners announced to the group, “I’m doing this. Are you in or out?” The Toronto organization had not made any movement into the United States, so Krista’s friends started looking for real estate in their target Philadelphia market. Very shortly thereafter, Urban Axes was born. “We all approached Urban Axes as something we’re going to dip our toe in,” Krista recalled. The planning and supervisory responsibilities were divided among the partners. As the only woman and the only American on the founding team, Krista experienced some professional and cultural struggles. Matt, Shaun, and Stuart were all Australian men with IT backgrounds and had previously worked together. They shared a cultural outlook, an easygoing temperament, and a history as colleagues and friends. Krista jokingly described the three as “basically all the same guy.” As the only partner with a financial background, Krista tended to think differently about the business challenges and solutions. What made the partnership work, however, was a shared set of values about business integrity and a willingness to keep a dialogue going to resolve any differences. 1 Axe throwing started as a sport in 2006 in Toronto, Ontario, Canada. 2 “A Brief History of the Axe and Axe Throwing,” BATL, February 14, 2020, accessed January 25, 2021, https://batlgrounds.com/history-of-axe- throwing/#:~:text=Back\%20in\%202006\%2C\%20a\%20group,creation\%20of\%20a\%20worldwide\%20sport. A u th o ri ze d f o r u se o n ly b y Y u n yu a n L in in b u s2 9 0 a t C a m o su n C o lle g e f ro m 7 /5 /2 0 2 1 t o 9 /1 0 /2 0 2 1 . U se o u ts id e t h e se p a ra m e te rs is a c o p yr ig h t vi o la tio n . Page 3 9B21M021 Krista described their balance of power and their method for conflict resolution in the following way: At the end of the day, we have the same fundamental beliefs and goals. We recognized [that] we’re on the same side. We want to do things correctly. That was a lucky thing that we shared common values, since it is not something you can really know about someone until you work with them. A lot of times we’d say, “Let’s keep talking about it.” Eventually we’d get to a vote, which is not very Australian. Voting was rarely needed, Krista said, but it worked for the partners as the most equitable method of finalizing decisions. Gender played a conscious and important role in Urban Axes’ initial concept. In many stories and cultures, the stereotypical lumberjack wielding an axe was a strong, burly, and usually bearded man. 3 To avoid biases and to appeal to all genders, Krista served as the face of the company. In addition, the group hired a woman as their first general manager to launch the Philadelphia location and manage day-to-day operations. “We made conscious choices about me being the face of the company,” Krista stated. “We wanted Urban Axes to be inviting and approachable. We wanted to avoid the stereotype that axe throwing is only for bearded, tatted dudes in their 30s. We wanted to be welcoming to all genders and ages from the very beginning.” To reinforce this image, Urban Axes managers and staff represented a mix of genders and appearance, and were hired for personality and customer service aptitude. The positioning worked, and Urban Axes quickly attracted a broad mix of customers, from corporate events to bridesmaid celebrations. EXPERIENTIAL ENTERTAINMENT INDUSTRY While still only a small segment of the overall entertainment industry, the experiential entertainment segment was growing. The size of the location-based (or experiential) entertainment industry was expected to grow to US$17 billion4 by 2023.5 Attracted by the growth potential, many businesses that originally focused on selling only goods modified their business model to include location-based experiences. Companies such as Baskin-Robbins and Taco Bell were investing in location-based experiences via museums, hotels, and other initiatives.6 Perhaps better known in this segment were trends such as escape rooms,7 jewellery- and bead-making shops, and ceramics-decorating stores, as well as bigger brands such as Topgolf,8 Punch Bowl Social,9 and Dave & Buster’s.10 The target audience of this segment tended to be millennials, with men and women often dividing 3 Raphael Samuel and Paul Thompson, The Myths We Live By (London: Routledge, 1990), 132–136. 4 All dollar amounts are in US dollars. 5 Liquid Media Group Ltd., “Liquid Media Selects Romans from Mars to Headline YDX VR Experience across 14 Arenas,” press release, November 14, 2019, accessed January 25, 2021, https://www.globenewswire.com/news- release/2019/11/14/1947507/0/en/Liquid-Media-Selects-Romans-from-Mars-to-Headline-YDX-VR-Experience-Across-14- Arenas.html. 6 Baskin-Robbins, “Baskin-Robbins Unveils Next Generation ‘Moments’ Store Design,” press release, November 28, 2018, accessed January 25, 2021, https://news.baskinrobbins.com/news/baskin-robbins-unveils-next-generation-moments-store- design; Michelle Gross, “Taco Bell’s New Hotel ‘The Bell’ Is Now Open,” Forbes, August 8, 2019, accessed January 25, 2021, https://www.forbes.com/sites/michellegross/2019/08/08/taco-bells-new-hotel-the-bell-is-now-open/#2735a36865a3. 7 “What Is an Escape Room?,” The Escape Game, October 15, 2018, accessed January 25, 2021, https://theescapegame.com/blog/what-is-an-escape-room/. 8 Topgolf was a global sports entertainment company headquartered in the United States. Topgolf (website), accessed January 25, 2021, https://topgolf.com/us/. 9 Punch Bowl Social was a place for people to gather with friends and families to have a good time enjoying great food, drinks, and entertaining games. The company had several locations in the United States. Punch Bowl Social (website), accessed January 25, 2021, https://punchbowlsocial.com/. 10 Dave & Busters was an American restaurant and entertainment business. Dave & Buster’s (website), accessed January 25, 2021, https://www.daveandbusters.com/. A u th o ri ze d f o r u se o n ly b y Y u n yu a n L in in b u s2 9 0 a t C a m o su n C o lle g e f ro m 7 /5 /2 0 2 1 t o 9 /1 0 /2 0 2 1 . U se o u ts id e t h e se p a ra m e te rs is a c o p yr ig h t vi o la tio n . https://news.baskinrobbins.com/news/baskin-robbins-unveils-next-generation-moments-store-design https://news.baskinrobbins.com/news/baskin-robbins-unveils-next-generation-moments-store-design https://www.forbes.com/sites/michellegross/2019/08/08/taco-bells-new-hotel-the-bell-is-now-open/#2735a36865a3 https://theescapegame.com/blog/what-is-an-escape-room/ https://topgolf.com/us/ https://punchbowlsocial.com/ https://www.daveandbusters.com/ Page 4 9B21M021 by type of entertainment. The size of the location-based experiences industry was $218.6 million in 2015 and was expected to grow at a compound annual growth rate of 32.1 per cent from 2019 to 2025.11 The US Census Bureau stated that the estimated number of US millennials in 2017 was 56 million people. The data further showed that millennials were the largest generation by population in the United States Exhibit 3 shows the US census by generation in 2017.12 As the largest generation currently in the US workforce, millennials would soon reach their prime earnings years. This generation commanded an estimated annual consumer spending power of $1.3 trillion. A study by Harris Group analyzed the spending habits of millennials and discovered that 78 per cent preferred to spend money on experiences over goods.13 Spending on concert tickets, athletic events, or cultural experiences was becoming increasingly popular. The study also found that 69 per cent of millennials experienced “FOMO”—that is, fear of missing out. Millennials dedicated about 59 per cent of their income to experiences and the remaining 36 per cent to goods. With the rise in social media platforms such as Facebook, Twitter, and Instagram, it was important for millennials to maintain their social identity and regularly update their social status. Creating, sharing, and capturing pictures of memories was very important to millennials and helped them in finding like- minded individuals and creating a sense of community, especially when sharing experiences such as unique forms of entertainment.14 The rise in this trend of social media use supported the growth of businesses such as Urban Axes that offered distinctive and fun location-based experiences. The consumer price index for urban consumers in the United States was 140 in 1992, and it had risen steadily over the decades to 240 in 2016.15 This rise in the consumer price index indicated an increase in wages and standard of living. According to the 2015 American Community Survey, median household income for rural households was $52,386, about 4 per cent lower than the median for urban households, $54,296. About 13.3 per cent of people in rural areas lived in families with incomes below the official poverty thresholds. The poverty rate for people in urban areas was 16 per cent.16 This showed that the standard of living in urban areas was higher than in rural areas. Philadelphia was the most populous city in the state of Pennsylvania. The city had more than 100 colleges and more than 340,000 students, ranking fifth in the country for number of college students. Attracted by lower rents and more-affordable lifestyles, many young New Yorkers were moving from New York City to Philadelphia. According to the US Census, an average of 3,500 New Yorkers moved to Philadelphia each year between 2006 and 2010.17 11 Grand View Research, Location-Based Entertainment Market Size, Share & Trends Analysis Report by Component (Hardware, Software), by End Use (Amusement Park, 4D Films), by Technology, by Region, and Segment Forecasts, 2019 – 2025, November 2019, accessed January 25, 2021, https://www.grandviewresearch.com/industry-analysis/location-based- entertainment-market. 12 Pew Research Center, “U.S. Population by Generation (2017),” accessed March 08, 2021, www.pewresearch.org/fact- tank/2018/04/11/millennials-largest-generation-us-labor-force/. 13 Eventbrite, Millennials: Fueling the Experience Economy, accessed January 25, 2021, http://eventbrite- s3.s3.amazonaws.com/marketing/Millennials_Research/Gen_PR_Final.pdf. 14 Ibid. 15 Statista, Consumer Price Index (CPI) of All Urban Consumers in the United States from 1992 to 2019, January 2020, accessed January 25, 2021, https://www.statista.com/statistics/190974/unadjusted-consumer-price-index-of-all-urban- consumers-in-the-us-since-1992/. 16 Alemayehu Bishaw and Kirby Posey, “A Comparison of Rural and Urban America: Household Income and Poverty,” United States Census Bureau, December 8, 2016, accessed January 25, 2021, https://www.census.gov/newsroom/blogs/random- samplings/2016/12/a_comparison_of_rura.html. 17 Alfred Lubrano, “Are Flocks of New Yorkers Moving to Philadelphia (and What Does It Mean If They Are)?,” Philadelphia Inquirer, June 11, 2019, accessed January 25, 2021, https://www.inquirer.com/news/new-york-philadelphia-real-estate- curious-philly-fishtown-20190611.html. A u th o ri ze d f o r u se o n ly b y Y u n yu a n L in in b u s2 9 0 a t C a m o su n C o lle g e f ro m 7 /5 /2 0 2 1 t o 9 /1 0 /2 0 2 1 . U se o u ts id e t h e se p a ra m e te rs is a c o p yr ig h t vi o la tio n . https://www.grandviewresearch.com/industry-analysis/location-based-entertainment-market https://www.grandviewresearch.com/industry-analysis/location-based-entertainment-market http://eventbrite-s3.s3.amazonaws.com/marketing/Millennials_Research/Gen_PR_Final.pdf http://eventbrite-s3.s3.amazonaws.com/marketing/Millennials_Research/Gen_PR_Final.pdf https://www.statista.com/statistics/190974/unadjusted-consumer-price-index-of-all-urban-consumers-in-the-us-since-1992/ https://www.statista.com/statistics/190974/unadjusted-consumer-price-index-of-all-urban-consumers-in-the-us-since-1992/ https://www.census.gov/newsroom/blogs/random-samplings/2016/12/a_comparison_of_rura.html https://www.census.gov/newsroom/blogs/random-samplings/2016/12/a_comparison_of_rura.html https://www.inquirer.com/news/new-york-philadelphia-real-estate-curious-philly-fishtown-20190611.html https://www.inquirer.com/news/new-york-philadelphia-real-estate-curious-philly-fishtown-20190611.html Page 5 9B21M021 Population growth, increased consumer spending on location-based experiences, a rising consumer price index, and higher urban household income made Philadelphia an attractive market for Urban Axes. FIRST-MOVER AXE THROWER: BUILDING A BUSINESS AND A BRAND Although the partners had extensive corporate experience, they did not conduct a sophisticated market analysis or feasibility study before launching Urban Axes. According to Krista, “We weren’t giving up our day jobs—this was a side hustle. We could limit our risk. If a lot of things had gone differently, we might not be here today. If we had to personally guarantee a long- term lease, for example, that might have changed things.” According to Krista, the partners’ start-up planning process involved developing a marketing plan; detailed financial models for low-, medium-, and high-performance targets; and general operating principles derived from the team’s observations at axe- throwing venues in Toronto. They decided not to conduct market surveys of potential customers, as even their closest friends gave skeptical responses. “What we kept hearing when we ran the idea by people was ‘Really, you’re going to do that?” Krista laughingly remembered. “We’d say, ‘Trust us. You’re going to love it,’ and we were right.” Krista’s extensive finance experience proved to be invaluable preparation for building Urban Axes: It gave me a great understanding of many aspects of business. I got to see anything related to numbers, which is really everything. How much do we spend on marketing? Why did we choose those programs? Are they good investments? How does our supply chain work? I was involved with tax complexities, vendor negotiations, customer relationships—those were all things I had exposure to over the years, which gave me a very broad business understanding. The financial models that Krista built started with a base case to cover costs and make a little side money. Most of the fixed costs were predictable. The one big unpredictable variable was how many people would want to pay money to throw axes. The co-founders’ approach to risk mitigation meant that they would retain their day jobs, set limits to their capital investment exposure, build contingency plans into their business plan, and enter into an initial lease agreement that did not require a personal guarantee. THE URBAN AXES EXPERIENCE IN PHILADELPHIA For their first location, the partners selected a 6,000-square-foot former industrial building in the gentrifying neighbourhood of Kensington, Philadelphia. The site combined several key location factors: sufficient space to install multiple target lanes, a mix of commercial and residential properties, and easy access. The rough, authentic look of the space complimented axe throwing.18 Since it was situated within a residential neighbourhood, the Urban Axes site had to ensure that its hours of operation and occupancy limits both complied with zoning and met the approval of the neighbourhood association. As a novel business type, Urban Axes applied for a permit under the nightclub licensing rules. Finding an insurer willing to underwrite such an unfamiliar business posed steep challenges as well, especially since Urban Axes offered a “bring your own bottle” option that required all customers to show 18 “Urban Axes Intro,” YouTube video, 1:00, posted by “Urban Axes Philadelphia,” April 5, 2017, accessed January 25, 2021, https://www.youtube.com/watch?v=9obBKAy4wWQ. A u th o ri ze d f o r u se o n ly b y Y u n yu a n L in in b u s2 9 0 a t C a m o su n C o lle g e f ro m 7 /5 /2 0 2 1 t o 9 /1 0 /2 0 2 1 . U se o u ts id e t h e se p a ra m e te rs is a c o p yr ig h t vi o la tio n . https://www.youtube.com/watch?v=9obBKAy4wWQ Page 6 9B21M021 proof of age of 21 years or older.19 From both an insurer and a potential customer perspective, safety concerns posed an early and serious obstacle to acceptance. Mixing axes and alcohol seemed like a reckless idea. Krista’s team knew that safety had to be a top priority in the design and implementation of their plans. The customer experience was loosely based on the Canadian model, adapted to US entertainment norms. Each group of six to 12 guests received a coach to stay with them through their 2.5 hours of training and play. The training began with safety. All rules within the business were carefully designed with customer and staff safety as their number-one priority. The partners knew that any injuries would spell the end of their business. Coaches, who were hired based on personality (as no one had experience with axe throwing), demonstrated to customers how to hold and throw the axe to score points on a bull’s eye-style target that was similar to but much larger than a dartboard. The coaches’ performance became an early differentiation for Urban Axes. Coaches were trained to make the guest experience safe, unique, memorable, and fun. Training represented a significant expense for the business. Each new hire completed 60–80 hours of rules and safety training based on Urban Axes’ in-house training manual. Next, trainees “shadowed” an experienced coach and gradually assumed a larger role under their coach’s supervision before taking on their own guests. Krista noted that her three Australian partners brought their cultural values to the company structure. They designed a compensation package that was generous compared to those offered by most service industry jobs. The Urban Axes package for all staff included living wages; benefits, such as health insurance for all full-time employees; and a type of quarterly profit-sharing plan. The partners chose to invest in employees, with the goal of attracting and retaining high-quality employees, minimizing turnover, and ensuring a consistently high quality of customer experience. Originally, staff were not allowed to accept tips, though eventually tipping became optional for customers. The key to building a one-of-a-kind business was word-of-mouth marketing based on a superior customer experience. Urban Axes wanted its guests to feel just as Krista had when she went to that Toronto birthday party—that it was so much fun, you just had to do it. ENTER THE COPYCATS Urban Axes launched in September 2016, and within six months, the first competitors had set up shop in the vicinity of Philadelphia. The Urban Axes team anticipated numerous new entrants within the next six months. Urban Axes watched newcomers poach its staff, imitate its style, and engage in competitive pricing. The partners thought about what they could make proprietary about Urban Axes. As first movers, they believed they had a sustainable competitive advantage. As Krista said, “It was huge in this business. Being the first one was powerful. It gave us the opportunity to set the tone for the industry. We’ve established axe throwing as a super fun activity, very controlled, very safe. Not all our competitors have been able to set that same tone.” As for its unique attributes, Krista described Urban Axes by saying, “We’re better because operationally we’re extremely strong. Having three partners in IT, we’ve developed some tools that make us way more organized, put together, and professional than some of our competitors. Some are visible to customers, some are not—the way we book and do scheduling, for instance.” Krista’s competence in financial management added accurate forecasting and budgeting to the organization’s skill sets. With a solid handle on budgeting and financial analysis, the fledgling group was 19 Individuals aged 21 or older were allowed to consume alcohol under state law in Pennsylvania. A u th o ri ze d f o r u se o n ly b y Y u n yu a n L in in b u s2 9 0 a t C a m o su n C o lle g e f ro m 7 /5 /2 0 2 1 t o 9 /1 0 /2 0 2 1 . U se o u ts id e t h e se p a ra m e te rs is a c o p yr ig h t vi o la tio n . Page 7 9B21M021 confident they could self-fund. Their financial plan included risk mitigation to help them avoid going into debt or being compelled to trade equity for outside investors. Still, Urban Axes had to learn a lot more about its competitors. Marketing became a greater expense, pricing had to be re-examined, and the group re-evaluated the value proposition of their customer experience. As Krista summed up, “We felt the need to communicate our value proposition better and get more consumer insight.” FIRST MOVER OR FOOTNOTE? After barely four months of operations, Urban Axes’ healthy financial performance led Krista to believe that the business had enormous growth potential. But she was also aware that past achievements would not always translate into successes in the future. Krista had lived in Philadelphia and had a good understanding of the market, labour, and business laws of the state. To enter new markets in other states, the team would need to understand local regulations and evaluate demographics. The operating procedures would have to be varied by state. The company would also need to grow its organizational capacity to manage multiple locations. Krista would have to create new financial models that captured the unique challenges and opportunities of new markets. The questions she and her partners faced were many and complex: Where should Urban Axes go from here? Should the business go deeper into Philadelphia and the greater metro region to saturate a market that the partners understood? Should the business enter other regional markets that the partners were unfamiliar with? … BUS 290 Case Study S21 BUS 290 Case Assignment Instructions July / August 2021 Case Instructions • This case will be prepared individually. • You will submit a report of about 1200 to 1500 words. Submit in Word format (not Pdf or Pages). • Your main task for this case is to recommend a viable strategy for Urban Axes. Case Purchase We are using a Ivey case this term – Urban Axes. You will need to register as a student and then access the Course pack for the case. The case costs $4.50 CAD. Do NOT share your case – this is a copyright violation. I will be checking the course pack list and will only mark cases from students who have completed the case purchase. 1. Go to the Ivey Publishing website at www.iveycases.com 2. Log in to your existing account or click Register to create a new account and follow the prompts to complete the registration. If registering, choose the Student User role. 3. Click on this link or copy into your browser: https://www.iveypublishing.ca/s/ivey- coursepack/a1R5c00000FA5CoEAL/applied-business-strategy 4. Click Add to Cart. 5. You may choose to order in either print or digital format. o To order the material in digital format, check digital download and click OK. o To order a printed copy for delivery, enter the print quantity required and click OK. Please note that shipping charges will apply. 6. Go to the Shopping Cart (located at the top of the page), click Checkout, and complete the checkout process. 7. When payment has been processed successfully, an Order Confirmation will be emailed to you immediately and you will see the Order Confirmation screen. o If you ordered digital copies: Click Download your Digital Items or go to My Orders to access the file. o If you ordered printed copies: Your order will be printed and shipped within 2 to 3 business days. You can contact Ivey Publishing during business hours if there are any issues accessing the content, and you can also let me know. Ivey Publishing: e. [email protected] t. 519.661.3208 | tf. 800.649.6355 www.iveycases.com https://www.iveycases.com/ https://www.iveycases.com/Login.aspx https://www.iveycases.com/RegisterUser.aspx https://www.iveypublishing.ca/s/ivey-coursepack/a1R5c00000FA5CoEAL/applied-business-strategy https://www.iveypublishing.ca/s/ivey-coursepack/a1R5c00000FA5CoEAL/applied-business-strategy mailto:[email protected] https://www.iveycases.com/ BUS 290 Case Study S21 Case Preparation Procedure This is how to analyze the case, NOT how to write up or organize the written report. Refer to the “Preparing a Case Study: General Guidelines” (on our D2L) for greater detail on case preparation. 1. Identify the problem(s) or issue(s). a. Try to isolate this to a main problem as there may be many. b. Think about who are the main players in this case and what decisions are they faced with. c. Which will address the most symptoms of the problem d. If there is more than one problem that you wish to address you will need alternatives, recommendations and implementation plans for each problem you chose to address, so think carefully about this. 2. Analyze the case data. a. Identify the constraints or considerations given. b. Gather pertinent information (from the case) and perform analysis. i. Remember to carefully analyze the financial information and other numbers provided. ii. Consider any available information from the 4 Cs (Company, Consumer, Channel, Competition) and TREES (Technology, Regulatory, Ecological, Economic, and Social/Cultural), PESTEL, VRIO, or other environmental / assessment tools that you choose to use. iii. Consider the resources, people, and process information provided. Often problems are related to one or more of these. iv. Conduct a SWOT analysis. What do you learn from this? Hint: When you are working through the case, some particular things to consider are: • What external factors affect Urban Axes’ competitive position? How do these factors affect the strategy? You should think about using the Five Forces as a tool for the analysis. • What generic business strategy has Urban Axes chosen to pursue? • What are Urban Axes’ resources? How is Urban Axes’ strategy affected by its resources? 3. (Optional approach – recommended) Think about the criteria you will use to choose the best path forward. a. What will the “solution” have to have / provide / achieve in order for it to be appropriate? b. This may be amended to or changed once alternatives are generated. BUS 290 Case Study S21 4. Generate the alternatives / options. Some are given in the case, but you may come up with others. a. You should discuss and describe at least three alternatives. b. There should be enough detail provided so that the reader easily understands what each alternative / option entails. 5. Decide how you are going to make your decision when evaluating alternatives. a. What are the most important criteria? b. Which are less important? c. How do you know? d. What symptoms or issues affecting or affected by the problem will they solve, or aggravate? 6. Analyze and evaluate the alternatives according to the criteria you have chosen. a. Make sure that you have addressed the following considerations: i. Does the chosen alternative fit with the SWOT? (implies you have done one) ii. What are the positives and negatives of the strategy you are pursuing? 1. Here you should set out the pros and cons of each alternative in comparison to your decision criteria. You may wish to consider: • What inputs are required and at what cost? • What outputs / outcomes are achieved at what value? 7. Select the preferred alternative / option. a. Justify your choice. b. Describe or summarize how the alternative is superior to the others discussed. 8. Develop the action plan a. What are the specifics to the implementation? b. Consider resources required, timelines. Structure of the Written Report 1. Title page 2. Introduction and Summary of Key Facts that are important to your analysis 3. Data Analysis 4. Problem (Issue) Statement 5. Alternatives / Options Generation 6. Key Decision Criteria and Constraints 7. Alternative Analysis 8. Recommendations 9. Detailed Action and Implementation Plan 10. Exhibits and Calculations (if merited) Preparing A Case Study It helps to have a system when sitting down to prepare a case study as the amount of information and issues to be resolved can initially seem quite overwhelming. The following is a good way to start: This task consists of two parts: 1. A detailed reading of the case, and then 2. Analyzing the case. When you are doing the detailed reading of the case study, look for the following sections: 1. Opening paragraph: introduces the situation. 2. Background information: industry, organization, products, history, competition, financial information, and anything else of significance. 3. Specific (functional) area of interest: marketing, finance, operations, human resources, or integrated. 4. The specific problem or decision(s) to be made. 5. Alternatives open to the decision maker, which may or may not be stated in the case. 6. Conclusion: sets up the task, any constraints or limitations, and the urgency of the situation. Most, but not all case studies will follow this format. The purpose here is to thoroughly understand the situation and the decisions that will need to be made. Take your time, make notes, and keep focussed on your objectives. Analyzing the case should take the following steps: 1. Defining the issue(s) 2. Analyzing the case data 3. Generating alternatives 4. Selecting decision criteria 5. Analyzing and evaluating alternatives 6. Selecting the preferred alternative 7. Developing an action/implementation plan Defining the issue(s)/Problem Statement The problem statement should be a clear, concise statement of exactly what needs to be addressed. This is not easy to write! The work that you did in the short cycle process answered the basic questions. Now it is time to decide what the main issues to be addressed are going to be in much more detail. Asking yourself the following questions may help: 1. What appears to be the problem(s) here? 2. How do I know that this is a problem? Note that by asking this question, you will be helping to differentiate the symptoms of the problem from the problem itself. Example: while declining sales or unhappy employees are a problem to most companies, they are in fact, symptoms of underlying problems which need to addressed. 3. What are the immediate issues that need to be addressed? This helps to differentiate between issues that can be resolved within the context of the case, and those that are bigger issues that needed to addressed at a another time (preferably by someone else!). 4. Differentiate between importance and urgency for the issues identified. Some issues may appear to be urgent, but upon closer examination are relatively unimportant, while others may be far more important (relative to solving our problem) than urgent. You want to deal with important issues in order of urgency to keep focussed on your objective. Important issues are those that have a significant effect on: 1. profitability, 2. strategic direction of the company, 3. source of competitive advantage, 4. morale of the companys employees, and/or 5. customer satisfaction. The problem statement may be framed as a question, eg: What should Joe do? or How can Mr Smith improve market share? Usually the problem statement has to be re-written several times during the analysis of a case, as you peel back the layers of symptoms or causation. Analyzing Case Data In analyzing the case data, you are trying to answer the following: 1. Why or how did these issues arise? You are trying to determine cause and effect for the problems identified. You cannot solve a problem that you cannot determine the cause of! It may be helpful to think of the organization in question as consisting of the following components: 1. resources, such as materials, equipment, or supplies, and 2. people who transform these resources using 3. processes, which creates something of greater value. Now, where are the problems being caused within this framework, and why? 2. Who is affected most by this issues? You are trying to identify who are the relevant stakeholders to the situation, and who will be affected by the decisions to be made. 3. What are the constraints and opportunities implicit to this situation? It is very rare that resources are not a constraint, and allocations must be made on the assumption that not enough will be available to please everyone. 4. What do the numbers tell you? You need to take a look at the numbers given in the case study and make a judgement as to their relevance to the problem identified. Not all numbers will be immediately useful or relevant, but you need to be careful not to overlook anything. When deciding to analyze numbers, keep in mind why you are doing it, and what you intend to do with the result. Use common sense and comparisons to industry standards when making judgements as to the meaning of your answers to avoid jumping to conclusions. Generating Alternatives This section deals with different ways in which the problem can be resolved. Typically, there are many (the joke is at least three), and being creative at this stage helps. Things to remember at this stage are: 1. Be realistic! While you might be able to find a dozen alternatives, keep in mind that they should be realistic and fit within the constraints of the situation. 2. The alternatives should be mutually exclusive, that is, they cannot happen at the same time. 3. Not making a decision pending further investigation is not an acceptable decision for any case study that you will analyze. A manager can always delay making a decision to gather more information, which is not managing at all! The whole point to this exercise is to learn how to make good decisions, and having imperfect information is normal for most business decisions, not the exception. 4. Doing nothing as in not changing your strategy can be a viable alternative, provided it is being recommended for the correct reasons, as will be discussed below. 5. Avoid the meat sandwich method of providing only two other clearly undesirable alternatives to make one reasonable alternative look better by comparison. This will be painfully obvious to the reader, and just shows laziness on your part in not being able to come up with more than one decent alternative. 6. Keep in mind that any alternative chosen will need to be implemented at some point, and if serious obstacles exist to successfully doing this, then you are the one who will look bad for suggesting it. Once the alternatives have been identified, a method of evaluating them and selecting the most appropriate one needs to be used to arrive at a decision. Key Decision Criteria A very important concept to understand, they answer the question of how you are going to decide which alternative is the best one to choose. Other than choosing randomly, we will always employ some criteria in making any decision. Think about the last time that you make a purchase decision for an article of clothing. Why did you choose the article that you did? The criteria that you may have used could have been: 1. fit 2. price 3. fashion 4. colour 5. approval of friend/family 6. availability Note that any one of these criteria could appropriately finish the sentence, the brand/style that I choose to purchase must.... These criteria are also how you will define or determine that a successful purchase decision has been made. For a business situation, the key decision criteria are those things that are important to the organization making the decision, and they will be used to evaluate the suitability of each alternative recommended. Key decision criteria should be: 1. Brief, and often in point form, such as 1. improve (or at least maintain) profitability, 2. increase sales, market share, or return on investment, 3. maintain customer satisfaction, corporate image, 4. be consistent with the corporate mission or strategy, 5. within our present (or future) resources and capabilities, 6. within acceptable risk parameters, 7. ease or speed of implementation, 8. employee morale, safety, or turnover, 9. retain flexibility, and/or 10. minimize environmental impact. 2. Measurable, at least to the point of comparison, such as alternative A will improve profitability more that alternative B. 3. Be related to your problem statement, and alternatives. If you find that you are talking about something else, that is a sign of a missing alternative or key decision criteria, or a poorly formed problem statement. Students tend to find the concept of key decision criteria very confusing, so you will probably find that you re-write them more than once as you analyze the case. They are similar to constraints or limitations, but are used to evaluate alternatives. Evaluation of Alternatives If you have done the above properly, this should be straightforward. You measure the alternatives against each key decision criteria. Often you can set up a simple table with key decision criteria as columns and alternatives as rows, and write this section based on the table. Each alternative must be compared to each criteria and its suitability ranked in some way, such as met/not met, or in relation to the other alternatives, such as better than, or highest. This will be important to selecting an alternative. Another method that can be used is to list the advantages and disadvantages (pros/cons) of each alternative, and then discussing the short and long term implications of choosing each. Note that this implies that you have already predicted the most likely outcome of each of the alternatives. Some students find it helpful to consider three different levels of outcome, such as best, worst, and most likely, as another way of evaluating alternatives. Recommendation You must have one! Business people are decision-makers; this is your opportunity to practice making decisions. Give a justification for your decision (use the KDCs). Check to make sure that it is one (and only one) of your Alternatives and that it does resolve what you defined as the Problem. Structure of the Written Report Different Instructors will require different formats for case reports, but they should all have roughly the same general content. For this course, the report should have the following sections in this order: 1. Title page 2. Intro & Summary of Key Facts 3. Problem (Issue) statement - What is (are) the problem(s) that require attention? 4. Data analysis – discuss why these problems occurred. 5. Alternative Generation (a solution set) 6. Identify any key decision criteria. When several options exist –how are you going to decide between different solutions? 7. Alternative analysis – often the use of a chart or matrix is a common element here. 8. Recommendations 9. Action and Implementation Plan (not always needed – especically in short cases) 10. Exhibits (again – only if needed) Notes on Written Reports: Always remember that you will be judged by the quality of your work, which includes your written work such as case study reports. Sloppy, dis-organized, poor quality work will say more about you than you probably want said! To ensure the quality of your written work, keep the following in mind when writing your report: 1. Proof-read your work! Not just on the screen while you write it, but the hard copy after it is printed. Fix the errors before submitting. 2. Use spell checker to eliminate spelling errors 3. Use grammar checking to avoid common grammatical errors such as run on sentences. 4. Note that restating all case info is not included in the format of the case report, nor is it considered part of analysis. Anyone reading your report will be familiar with the case/ You need only to mention facts that are relevant to (and support) your analysis or recommendation as you need them. 5. If you are going to include exhibits (particularly numbers) in your report, you will need to refer to them within the body of your report, not just tack them on at the end! This reference should be in the form of supporting conclusions that you are making in your analysis. The reader should not have to guess why particular exhibits have been included, nor what they mean. If you do not plan to refer to them, then leave them out. 6. Write in a formal manner suitable for scholarly work, rather than a letter to a friend. 7. Common sense and logical thinking can do wonders for your evaluation! 8. You should expect that the computer labs printer will not be functioning in the twelve hours prior to your deadline for submission. Plan for it! 9. Proof-read your work! Have someone else read it too! (particularly if english is not your first language) This second pair of eyes will give you an objective opinion of how well your report holds together. Case Study Marking Rubric Student Name Case Study: Score 20\% - 4.0 - 5.0 3.0 - 3.9 2.0 - 2.9 0 – 1.9 Comments Presents an insightful and concise analysis of key case facts. More than two symptoms stemming from primary issue are thoroughly discussed. Analytical framework used to flesh out important details. Presents a good analysis of case facts but could be more concise. Identifies two symptom stemming from primary issue are thoroughly discussed Discussion of case facts is burdened by too much unrequired information. One symptom stemming from the issue is discussed. Little or no relevant case data presented. Symptoms not specifically identified. 20\% - 4.0 - 5.0 3.0 - 3.9 2.0 - 2.9 0 – 1.9 Identifies & demonstrates a clear & accurate understanding of a root issue or problem. Identifies & demonstrates a reasonable understanding of a root issue or problem. Identifies & demonstrates a limited understanding of a root issue or problem or has misidentified. No viable root problem was identified 20\% - 4.0 - 5.0 3.0 - 3.9 2.0 -2.9 0 – 1.9 Generates a viable set of at least three solutions to the issues that were identified Generates a solution set that has at least one strong option, but others that not plausible Only presents one solution to the identified problems(s) and even that is not fully explained No viable solutions identified 15\% - 4.0 - 5.0 3.0 -3.9 2.0 – 2.9 0 – 1.9 Presents an insightful, articulate and thorough analysis of identified solutions. Selection criteria/process is thorough Presents a good analysis of at least one solution but others need to be more thoroughly examined. Selection criteria &/or process are present but required work. Only presents analysis of one solution, where other options could be analysed. No selection criteria or process present. No viable analysis or selection criteria presented 15\% - 4.0 - 5.0 3.0 - 3.9 2.0 - 2.9 0 – 1.9 Excellent job. Presents a focussed and rational view; Solution is well defended and rationale for disregarding other options is provided. Implementation is outlined. Good to very good job. While the solution is defended, it could be more robust. There is no explanation of why other solutions were discarded. Implementation mentioned but not outlined. The solution is presented but the rationale for adoption is not fully articulated. Implementation is not discussed. No viable solution selected or defended 10\% - 4.0 - 5.0 3.0 - 3.9 2.0 - 2.9 0 – 1.9 Demonstrates clarity in writing. Free of grammar & spelling errors. Key formatting elements present (title page etc) Occasional grammar or spelling errors but still provides a clear presentation of ideas. Most formatting elements & conclusion present and acceptable Unfocussed or contains many grammar spelling errors. Little logical flow to the presentation. Some formatting elements or conclusion missing Most formatting incorrect; missing conclusion, poor grammar Total 100\% - Total Score: - Maximum Score 5.00 Percentage 0\% Analyze key case facts, identifying the actors and symptoms resulting from the primary problem/issue Identify The Primary Problem or Issue Generate Solution Alternatives Identify selection criteria. Analyze & Evaluate Alternatives. Select & Defend Solution Discuss implementation Formatting, Presentation, Grammar & Conclusion/Wrap- up Blank