BE THE MANAGER [LO 6-1, 6-2] group of investors in your city is considering opening a new upscale supermarket to com- pete with the major supermarket chains that are currently dominating the city’s marketplace. They have called you in to help them deter- mine what kind of upscale super- market they should open. In other words, how can they best develop a competitive advantage against existing supermarket chains? Questions 1.List the supermarket chains in your city, and identify theirstrengths and weaknesses. 2.What business-level strategiesare these supermarkets currently pursuing? 3.What kind of supermarket would do best against the competition? What kind of business-level strategy should it pursue?
In Nadella’s first year, Microsoft stock rose 14 percent, and sales increased 12 percent. The new CEO, unlike his predecessor Steve Ballmer, is popular with investors, venture capitalists, and startups. Even employees like Nadella, sur- prising for a chief executive who signed off on the largest layoffs in Microsoft’s history—18,000 job cuts were announced last July. Staff say they appreciate Nadella’s strategy shifts and attempts to make the com- pany leaner and less bureaucratic. The big issue Nadella faces is how to generate more revenue with new software and features, such as cloud subscriptions and free apps replacing pricey Windows and Office licenses. Revenue is pro- jected to increase 8.6 percent, to $94.3 billion, this fiscal year, slow- ing from last year’s double-digit growth, according to data com- piled by Bloomberg. “He’s hit all the low-hanging fruit—that said, these things were not easy to do,” says Brad Silverberg, a venture capitalist and former Microsoft executive. “Where there are execution issues, we will address them,” Nadella said on a conference call in January. “Where there are mac- roeconomic issues, we will weather them.” Microsoft declined to make Nadella available for an interview. Windows, which once domi- nated computing and ran on more than 90 percent of computing devices, now runs on 11 percent of computers and gadgets, accord- ing to a report from Sanford C. Bernstein. Nadella and Windows chief Terry Myerson are looking at ways to update the software. Nadella uses the Power BI dash- board to track and compile huge amounts of information on product usage and financial performance to see what works and what doesn’t, says James Phillips, general man- ager of the product. Nadella also measures and coordinates executive performance with metrics from the dashboard. “Satya has been leading the charge for everyone in the com- pany to be more data-oriented,” says Chief Strategy Officer Mark Penn. Microsoft’s quarterly earnings report in January highlights the hurdles Nadella faces. While cloud software sales to businesses more than doubled in the quarter that ended Dec. 31, sales of traditional Office and Windows software to companies fell short of analysts’ estimates. Windows sales to per- sonal computer makers who put the program on their machines dropped 13 percent. In total, profit declined 11 percent from the previous year, to $5.86 billion, while sales rose 8 percent, to $26.5 billion. Revenue is being hurt by fluctu- ating currencies, while the Chinese government is investigating Micro- soft over alleged anticompetitive practices and seeking to end pur- chases of its software. The govern- ment of Russian President Vladimir Putin says it wants to reduce reli- ance on Microsoft. Internally, Nadella and his execu- tives make the point whenever they can that the day could come when new and younger generations of computer and software users might not use its products. At one board meeting last year, Windows chief Myerson showed a slide with pic- tures of students using Apple Macs and iPads, according to Microsoft spokesman Peter Wootton. In 2014, Nadella told employees at a town hall that they should skip meetings if they don’t really need
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- Mary Kovach