2 Ramon Silva is a Spanish property developer, who has made a considerable fortune from the increasing numbers of

Europeans looking to buy new homes and apartments in the coastal regions of Mediterranean Spain. His frequent

contact with property buyers has made him aware of their need for low cost hotel accommodation during the lengthy

period between finding a property to buy and when they actually move into their new home. These would-be property

owners are looking for inexpensive hotels in the same locations as tourists looking for cheap holiday accommodation.

Closer investigation of the market for inexpensive or budget hotel accommodation has convinced Ramon of the

opportunity to offer something really different to his potential customers. He has the advantage of having no

preconceived idea of what his chain of hotels might look like. The overall picture for the budget hotel industry is not

encouraging with the industry suffering from low growth and consequent overcapacity. There are two distinct market

segments in the budget hotel industry; firstly, no-star and one-star hotels, whose average price per room is between

30 and 45 euros. Customers are simply attracted by the low price. The second segment is the service provided by

two-star hotels with an average price of 100 euros a night. These more expensive hotels attract customers by offering

a better sleeping environment than the no-star and one-star hotels. Customers therefore have to choose between low

prices and getting a poor night’s sleep owing to noise and inferior beds or paying more for an untroubled night’s sleep.

Ramon quickly deduced that a hotel chain that can offer a better price/quality combination could be a winner.

The two-star hotels typically offer a full range of services including restaurants, bars and lounges, all of which are

costly to operate. The low price budget hotels offer simple overnight accommodation with cheaply furnished rooms

and staffed by part-time receptionists. Ramon is convinced that considerable cost savings are available through better

room design, construction and furniture and a more effective use of hotel staff. He feels that through offering hotel

franchises under the ‘La Familia Amable’ (‘The Friendly Family’) group name, he could recruit husband and wife teams

to own and operate them. The couples, with suitable training, could offer most of the services provided in a two-star

hotel, and create a friendly, family atmosphere – hence the company name. He is sure he can offer the customer twostar

hotel value at budget prices. He is confident that the value-for-money option he offers would need little marketing

promotion to launch it and achieve rapid growth.

Required:

(a) Provide Ramon with a brief report, using strategic models where appropriate, showing where his proposed

hotel service can add value to the customer’s experience. (12 marks)

Churchill Ice Cream has to date made two unsuccessful attempts to become an international company.

(d) What reasons would you suggest to explain this failure of Churchill Ice Cream to become an international

company? (5 marks)

(b) What are the advantages and disadvantages of using franchising to develop La Familia Amable budget hotel

chain? (8 marks)

3 Mark Howe, Managing Director of Auto Direct, is a victim of his own success. Mark has created an innovative way

of selling cars to the public which takes advantage of the greater freedom given to independent car distributors to

market cars more aggressively within the European Union. This reduces the traditional control and interference of the

automobile manufacturers, some of whom own their distributors. He has opened a number of showrooms in the

London region and by 2004 Auto Direct had 20 outlets in and around London. The concept is deceptively simple;

Mark buys cars from wherever he can source them most cheaply and has access to all of the leading volume car

models. He then concentrates on selling the cars to the public, leaving servicing and repair work to other specialist

garages. He offers a classic high volume/low margin business model.

Mark now wants to develop this business model onto a national and eventually an international basis. His immediate

plans are to grow the number of outlets by 50% each year for the next three years. Such growth will place

considerable strain on the existing organisation and staff. Each showroom has its own management team, sales

personnel and administration. Currently the 20 showrooms are grouped into a Northern and Southern Sales Division

with a small head office team for each division. Auto Direct now employs 250 people.

Mark now needs to communicate the next three-year phase of the company’s ambitious growth plans to staff and is

anxious to get an understanding of staff attitudes towards the company and its growth plans. He is aware that you

are a consultant used to advising firms on the changes associated with rapid growth and the way to generate positive

staff attitudes to change.

Required:

(a) Using appropriate strategies for managing change provide Mark with a brief report on how he can best create

a positive staff response to the proposed growth plans. (12 marks)

3 Joe Lawson is founder and Managing Director of Lawson Engineering, a medium sized, privately owned family

business specialising in the design and manufacture of precision engineering products. Its customers are major

industrial customers in the aerospace, automotive and chemical industries, many of which are globally recognised

companies. Lawson prides itself on the long-term relationships it has built up with these high profile customers. The

strength of these relationships is built on Lawson’s worldwide reputation for engineering excellence, which has

tangible recognition in its gaining prestigious international awards for product and process innovation and quality

performance. Lawson Engineering is a company name well known in its chosen international markets. Its reputation

has been enhanced by the awarding of a significant number of worldwide patents for the highly innovative products

it has designed. This in turn reflects the commitment to recruiting highly skilled engineers, facilitating positive staff

development and investing in significant research and development.

Its products command premium prices and are key to the superior performance of its customers’ products. Lawson

Engineering has also established long-term relationships with its main suppliers, particularly those making the exotic

materials built into their advanced products. Such relationships are crucial in research and development projects,

some of which take a number of years to come to fruition. Joe Lawson epitomises the ‘can do’ philosophy of the

company, always willing to take on the complex engineering challenges presented by his demanding customers.

Lawson Engineering now faces problems caused by its own success. Its current location, premises and facilities are

inadequate to allow the continued growth of the company. Joe is faced with the need to fund a new, expensive,

purpose-built facility on a new industrial estate. Although successful against a number of performance criteria, Lawson

Engineering’s performance against traditional financial measures has been relatively modest and unlikely to impress

the financial backers Joe wants to provide the necessary long-term capital.

Joe has become aware of the increasing attention paid to the intangible resources of a firm in a business. He

understands that you, as a strategy consultant, can advise him on the best way to show that his business should be

judged on the complete range of assets it possesses.

Required:

(a) Using models where appropriate, provide Joe with a resource analysis showing why the company’s intangible

resources and related capabilities should be taken into account when assessing Lawson Engineering’s case

for financial support. (12 marks)

(b) What research techniques could Mark use to get an accurate assessment of staff attitudes to the proposed

changes? (8 marks)

(b) What are the advantages and disadvantages of using a balanced scorecard to better assess the overall

performance of Lawson Engineering? (8 marks)

4 Chris Jones is Managing Director of Supaserve, a medium-sized supermarket chain faced with intense competition

from larger competitors in their core food and drink markets. They are also finding it hard to respond to these

competitors moving into the sale of clothing and household goods. Supaserve has a reputation for friendly customer

care and is looking at the feasibility of introducing an online shopping service, from which customers can order goods

from the comfort of their home and have them delivered, for a small charge, to their home.

Chris recognises that the move to develop an online shopping service will require significant investment in new

technology and support systems. He hopes a significant proportion of existing and most importantly, new customers,

will be attracted to the new service.

Required:

(a) What bases for segmenting this new market would you recommend and what criteria will help determine

whether this segment is sufficiently attractive to commit to the necessary investment? (10 marks)

(b) Assess the likely strategic impact of the new customer delivery system on Supaserve’s activities and its ability

to differentiate itself from its competitors. (10 marks)

4 Graham Smith is Operations Director of Catering Food Services (CFS) a ￡1·5 billion UK based distributor of foods to

professional catering organisations. It has 30 trading units spread across the country from which it can supply a

complete range of fresh, chilled and frozen food products. Its customers range from major fast food chains, catering

services for the armed forces down to individual restaurants and cafes. Wholesale food distribution is very much a

price driven service, in which it is very difficult to differentiate CFS’s service from its competitors.

Graham is very aware of the Government’s growing interest in promoting good corporate environmental practices and

encouraging companies to achieve the international quality standard for environmentally responsible operations. CFS

operates a fleet of 1,000 lorries and each lorry produces the equivalent of its own weight in pollutants over the course

of a year without the installation of expensive pollution control systems. Graham is also aware that his larger

customers are looking to their distributors to become more environmentally responsible and the ‘greening’ of their

supply chain is becoming a real issue. Unfortunately his concern with developing a company-wide environmental

management strategy is not shared by his fellow managers responsible for the key distribution functions including

purchasing, logistics, warehousing and transportation. They argued that time spent on corporate responsibility issues

was time wasted and simply added to costs.

Graham has decided to propose the appointment of a project manager to develop and implement a company

environmental strategy including the achievement of the international quality standard. The person appointed must

have the necessary project management skills to see the project through to successful conclusion.

You have been appointed project manager for CFS’s ‘environmentally aware’ project.

Required:

(a) What are the key project management skills that are necessary in achieving company-wide commitment in

CFS to achieve the desired environmental strategy? (15 marks)