HW 2 2-42: Value Chain; Strategy Map; Role in Corporate Alliances A recent report of the consulting firm

HW 2

2-42: Value Chain; Strategy Map; Role in Corporate Alliances A recent report of the consulting firm McKinsey & Company indicates that about one-half of all corporate alliances fail. These alliances are partnerships in which two corporations jointly participate in one or more of the activities in the industry value chain. A good example, provided by Robert S. Kaplan and David Norton (founders of the balanced scorecard and strategy map) is the alliance between the European pharmaceutical company, Solvay, and U.S.-based Quintiles, a company that specializes in the conduct of clinical trials for testing potential new drugs. Solvay's strategy is to employ its research-driven organization to develop and market new drugs. One of the steps in Solvay's value chain is to complete the testing required by the U.S. Food and Drug Administration. Rather than divert its operations from research, Solvay has partnered with Quintiles. Realizing that they both benefit from the success and growth of Solvay's products, the two companies have developed a joint strategy map and identified the critical drivers for the joint success of the alliance.

Required Considering the Solvay-Quintiles collaboration, we know that about $50 \%$ of such alliances fail. Explain briefly how you think the strategy map and value-chain analysis can help this alliance to succeed.

2-44: Strategy; Sustainability Seventh Generation, Inc. (SGI) manufactures environmentally friendly cleaning products, including laundry detergent, soap, and all-purpose cleaners. Prior to 2008, SGI would not do business with Walmart, because of the perception of a poor environmental record at the large retailer. In 2008, SGI realized that, despite the perception of Walmart's environmental record, it was important to partner with the big retailer in order to have the largest possible impact on consumers-to bring environmentally friendly products into the mainstream. In August 2010, the partnership was arranged and SGI's products started to appear in Walmart's stores. While most cleaning products sold at Walmart are offered at a lower price than SGI's products, the difference is not significant, and the Walmart prices compare well to SGI product prices at supermarkets where these products are also sold.

Required Is this partnership a good strategy for (a) Walmart? (b) Seventh Generation, Inc.? Explain why or why not.

2-56: Balanced Scorecard; Strategy Map The following are critical success factors for Dell Inc.

- Product manufacturing time

- Customer perception of order-taking convenience and accuracy

- Revenue growth

- Selling expense to sales ratio

- Number of new manufacturing processes developed

- Order processing time

- Raw materials inventory

- Training dollars per employee

- Number of emerging technologies evaluated

- Customer retention

- Manufacturing defects

- Number of new manufacturing processes under development

- Customer satisfaction with speed of service

- Gross margin

- Operating cost ratio

Required

Using the four BSC perspectives (learning and growth, internal processes, customer, and financial), sort these CSFs into the appropriate perspective.
Create a simple strategy map for Dell Inc.

Solution: (1) We get:

Learning and Growth