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ILLUSTRATION CAPSULE 1.1

McDonald's strategy in the Quick-Service Restaurant Industry
In 2010 while the United States faced global economic slowdown McDonald earned new sales
records with $22.7 billion revenues and $6.8 billion earnings. McDonald had 32000 restaurants
within 117 countries visited by more than 60 million customers each day. Increased of share
value in the economic meltdown situation listed McDonalds on the Dow Jones Industrial
Average. Economic uncertainty was a big problem in early 2010 but the company hold it sales
in the situation with a 4% increase in global sales with constant currencies and operating
margin risen nearly 30%. The company gets success by its well executed plan-to Win strategy
which focuses mainly on Quality rather than Quantity with "Being batter, not just bigger"
slogan. This strategy includes 5 major initiatives. First initiative was "Improved restaurant
operations" which include on the job training ranging from new crew to college level
management courses. The company trained nearly 200 potential employees annually to skilled
them as a future leader at McDonald's leadership institution. In 2010, Fortune's listed
McDonald in Top 25 Global Companies for Leader for its commitment to employee
development. Second initiative was Affordable pricing by scrutinizing administrative cost and
other corporate expenses. Its renegotiate advertizing contract with newspaper and television
and replace its owned vehicles with more fuel efficient models. But the company never
compromise with quality of product. It regularly checked the weight of chicken breasts to
ensure that suppliers don't change product specification for low cost. Third initiative was
variety of menu and beverage choices. It offers different new, healthy quick service items and
coffee. Fourth initiative was expansion of dinning opportunity which extends traditional dinning
hours. Customers wanting a mid morning coffee or afternoon snack which also help to open the
store from drive-thru hours to 24 hours. Fifth and last initiative was reinvestment and
international expansion. It opens 125 new restaurants in China and 40 new restaurants in
Russia because of their rapidly growing emerging market in 2008. The company also
refurbished its 10000 location in United States as a part of McCafe rollout.

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ILLUSTRATION CAPSULE 1.2
Sirius XM and Over-the Air Broadcast Radio: Two Contrasting Business model
Sirius XM offer its customer digital music, news, national and regional weather, traffic reports in
limited areas and talk radio program. It takes a monthly subscription fee for providing service
to customers. Over-the Air Broadcast Radio's services are music, national and local news, local
traffic reports, national and local weather and talk radio program. It takes no monthly
subscription fee. Sirius XM program only interrupt by brief and occasional ads but over-the Air
Broadcast Radio listeners often interrupt by frequent ads. Sirius XM generates revenue from
subscription fee, sales of satellite radio equipment and advertising earnings. Its cost includes
satellite-based music delivery service, programming and royalties, marketing and support
activities. Over-the Air Broadcast Radio's source of revenue is advertising sales to national and
local businesses. Its cost involve local news reporting, advertising sales operation, network
affiliate fees, programming and content royalties, commercial production activities and support
activities. Sirius XM's fixed cost associated with operating a satellite-based music delivery
service while fixed cost of -the Air Broadcast Radio associate with terrestrial broadcasting
operation. Sirius XM's mainly dependent on large number of subscriber to cover its costs and
provide attractive profits. Over-the Air Broadcast Radio needed to generate sufficient
advertising revenue to cover costs and provide attractive profits.








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ILLUSTRATION CAPSULE 2.1
Examples of Strategic VisionsHow Well Do They Measure Up?
Vision Statement of Coca-Cola:
Vision statements are presented by organizations to portray the companys future business
scope and respond to the question of where we are going. In this case Coca-Colas vision
statement act as the framework for the future that covers almost every aspects of their
business. Coca-Colas vision statement describes describing what we need to accomplish in
order to continue achieving sustainable, quality growth. Coca-Colas vision consist 6 Ps-
People,, portfolio, partners, planet, profit, and productivity. Effective elements of Coca-Colas
vision are that it is focused and flexible and makes good business sense.
Vision Statement of UBS
In UBS vision statement they have desired to be the best global financial services company.
They have focused on specific business area- wealth management, asset management,
investment banking and securities business. Through their ability to anticipate the continuously
earn their thrust from clients and shareholders.
UBS vision statement is focused and feasible but it is not forward looking and it is hard to
communicate.
Vision Statement of Walmart
Walmarts vision is very short and focused. Most importantly within one sentence it makes a
very good business sense. Though it does not provide any specific future plan of the business.








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ILLUSTRATION CAPSULE 2.2
Zappos Family Mission and Core Values
Zappos is a company that grown so quickly based on their WOW philosophy, and that
philosophy is- aligned the entire organization around one mission- to provide the best customer
service possible. Zappos have 10 core values, which are the base for Wow philosophy.
Whatever they do, they do it with emotion, so that there is an impact on customer. They
differentiate themselves by doing something unconventional and innovative. Part of being a
growing company they change constantly. It is hard for those to fit in who is not comfortable
with change. In Zappos they value being fun and being a little weird; they dont want to feel
corporate and boring. They encourage people to take risk and make mistakes as long as they
learn from them. It is important to constantly challenge and stretch for employees to grow both
personally and professionally. Zappos believes that openness and honesty creates the best
relationship by leading to trust and faith. They want to create an environment that is friendly,
warm and exciting to encourage diversity in ideas and points of view. They also believe in
working hard and putting in the extra effort to get things done. Zappos value passion because
they believe in what they are going and where they are going. No matter what happens always
be respectful to everyone.


ILLUSTRATION CAPSULE 2.3
Examples of Company Objectives
In this illustration we can see the example of some specific objective of three organization:
NORDSTROM
Nordstrom objective is to increase same store sales by 24%, expand credit revenue by $25
$35 million while also reducing associated expenses by $10$20 million as a result of
lower bad debt expenses. Continue moderate store growth by opening three new
Nordstrom stores, relocating one store and opening 17 Nordstrom Racks. Find ways to connect
with customers on a multi-channel basis, including plans for an enhanced online experience,
improved mobile shopping capabilities and better engagement with customers through
social networking.

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MICROSOFT
On a broad level to deliver end-to-end experiences that connect users to information,
communications, entertainment, and people in new and compelling ways across their lives
at home, at work, and the broadest-possible range of mobile scenarios. Given the dramatic
changes in the way people interact with technology, as ouch, gestures, handwriting, and
speech recognition become a normal part of how we control devices, focus on making
technology more accessible and simpler to use, which will create opportunities to reach
new markets and deliver new kinds of computing experiences. More specifically, grow
revenue in the PC Division slightly faster than the overall PC market fueled especially by
emerging market trends. Launch Office 2010 for the business market and promote adoption
followed by a 2011 launch of the Windows Phone 7 in the Entertainment and Devices Division.
Grow annuity revenue between 46% in the Server and Tools Business segment. Target
overall gross margin increases of 1% fueled in part by improved operational efficiency.
Operating expenses are targeted at $26.1$26.3 billion for the year with projected capital
spending at $2 billion.
McDONALDS
Reinvest $2.4 billion in the business, 50% of this will be spent on opening 1,000 new restaurants
around the world, including roughly 500 in Asia Pacific, 250 in Europe, and 150 in the U.S. The
other half will be allocated toward re-imagining the dcor and menu of over 2,000 existing
locations. Re-imagining has a direct positive impact on sales as market share increases after re-
imagining restaurants. Continue to expand refranchising; 80% of restaurants have been
refranchised and this will be augmented by 200300 restaurants in the next year. Focus on
menu choice with a balance of familiar and popular core products as well as new items to keep
products relevant.








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ILLUSTRATION CAPSULE 2.4
Corporate Governance Failure at Fannie Mae and Freddie Mac
Observations show that during the years executive compensation has become major corporate
governance failure in the financial service industry. The example of Fannie Mae illustrates the
observation. In the case of Fannie Mae the politically appointed directors did not know the ins
and outs of subprime loan strategies that leave the CEO to manipulate earnings and receive
higher compensation and packages. The Audit Committee along with Compensation Committee
was ineffective enough to let the managers to do that. Although the Audit Committee knew
about the problem, the committee was unable to investigate formally and charge against the
managers.
The compensation Committee was also inactive and ineffective so as to allow the CEO and
senior managers higher amount of compensation without difficulty. Even, Franaklin Raines, the
CEO, earn performance based compensation of $52million and a total of $90 million between
1999 and 2004.
The same thing happened in the case of Freddie Mae managers proposed Performance based
Compensation Package and then they manipulated the accounting data and impressed the
audit committee. The CEO, Richard syron received an Amount of $19.8 million during 2007
although the share price decreased from $70 to $35. During Syrons tenure the company faced
multi-million dollar scandal. Evidence shows during 2008 the two companies total amount of
assumed loss is about $100 billion. Even, the price of Freddie share reduced to $1.
However, the two companies were brought under close conservation of the US govt. and an
amount of $60 billion was funded for the bailout by April, 2009. In May, Fannie requested
another $19 billion of the proposed $200 billion. In word, the loss of the corporate governance
was really high enough to think over it with great concern.
Recommendations
The case of Fannie and Freddie left us some useful lessons. On the basis of that lessons
following recommendations are made-
The corporate governance should given top priority for the success of the organization.
The performance of the managers should be monitored and effective actions should be taken
on the basis.
Active and effective audit committee
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The compensation committee should also be active and performance of the managers should
be measured well for compensation purposes.
The board of directors should be effective and conscious to rein the behavior of the managers
and CEO.