Chapter 1 the woodworking industry answer key

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Chapter 1

C2. Hal’s Woodworking

Hal Donovan started an ordinary hardware store, named Hal’s Hardware in Sandusky, Ohio, in

1978. He had been working during his summer vacations from college for a long-established

hardware store and decided he liked the business. Hal’s Hardware developed an excellent reputation as a friendly neighborhood store. The store managers are all active in the community

and the store regularly sponsors youth sports teams and supports local charities. When hired,

salespeople go through a comprehensive training program that includes skill training in the

areas of the store in which they will work (plumbing, electrical, power tools, flooring, garden, and

so on), and they are trained in customer service skills. As a result of this focus on service, Hal’s

Hardware became a community gathering place.

Hal offers classes and workshops for the homeowner and hobbyist three evenings each

month and regularly schedules seminars for professional customers on weekday mornings.

Many of these workshops and seminars are underwritten and taught by manufacturers to promote their products, but an increasing number are being created by Hal’s Hardware staff

members.

In recent years, Hal has become more and more worried that the business is no longer

growing. The store is facing increasing competition from hardware chains such as Home Depot

and Lowe’s. These national chains have opened many new stores, and they are larger, carry

more items, and offer lower prices on some items. The competition is fierce; for example, Hal’s

Hardware closed its lumber department because of this competition. The national chains buy

lumber in such large quantities that they can offer far lower prices. Hal was unable to earn a

profit when matching the large competitors’prices, and the lumber operations consumed a large

amount of store space.

Hal was worried that this sort of problem could develop in other departments, so he began

looking for ways to add value to the customer experience, especially in ways that the national

chains were not willing or able to do. For example, Hal believes that most people want to try

out a new power tool in person before they spend hundreds of dollars on a purchase. Thus,

Hal’s Hardware created a tool demonstration area staffed with salespeople who are experts in

power tool operation. For each major type of power tool (drills, power saws, joiners, grinding

tools, and so on), Hal created a small booklet of hints for using that type of tool. Hal’s salespeople give these booklets to customers as free handouts. They also sell Hal’s own low-cost

instructional DVDs.

Hal’s Hardware currently has a Web site that includes information about the company and

some store information, such as directions to the store and hours of operation. Hal is thinking

about expanding the Web site to include online shopping. He is hoping that customers might

find the Web site to be a useful way to order items, see whether items are in stock at the store,

and comparison shop among different brands of a particular item. Hal is also hopeful that the

Web site can reach customers who are not located near the store.

Hal has been talking with Sarah Johnson, his most senior store manager, about his idea for

adding online sales to the Web site. Sarah has been with the company for 20 years and has

organized a number of the classes held on Saturday afternoons in the tool demonstration area.

After hearing Hal’s ideas, she explains that she is concerned about online competition as much

as local competition. Some of the tool manufacturing companies that supply Hal’s Hardware are

talking about selling directly to customers on their Web sites. None of the major suppliers has

done this yet, but Sarah is worried that it could occur in the future. The store also faces competition from companies that sell online or through the Amazon.com Web site.

Sarah tells Hal that she’s concerned that going online with their entire product line might

not make any sense because the competition for common tools is likely to be just as fierce

online as it is in the store now. She has noticed that there seems to be a solid core of customers who are interested in serious woodworking and who show up for a lot of the classes.

These customers buy some of the best, and most expensive, tools that the store sells. Many

times, she finds that she has to special order tools for these customers when they are working

on a specific project.

Sarah suggests to Hal that they might want to take the business in a different direction

online and sell just the high-end specialty tools to dedicated woodworkers and cabinetmakers.

These items yield higher margins than the regular tools. Furthermore, the salespeople who Hal

has hired are eager to develop videos and instruction booklets that would appeal to this more

skilled and specialized audience. Sarah suggests that they call the new online business Hal’s

Woodworking to distinguish it from the general hardware store business.

Required:

1. Conduct a SWOT analysis for the new Hal’s Woodworking online business. You can use

the information in the case narrative, your personal knowledge of the retail hardware and

tool industry, and information you obtain by following the Web Links or doing independent

searches of the Web as you conduct your analysis. You should create a diagram similar

to Figure 1-12 to summarize your SWOT analysis results.

2. Based on your SWOT analysis, write a report of about 400 words that includes a summary of your assumptions and a list of recommendations for Hal’s Woodworking. The

recommendations should be specific and should address the content that the Web site

should include, the features that Hal should make available on the site, and how Hal’s

Woodworking might overcome any of the weaknesses or threats you identified in the

SWOT analysis.

Chapter 2

C2. Portable Fun Instruments

Yash Gupta is the founder and president of Portable Fun Instruments (PFI), a company that has

had great success in the handheld game market. Its first products were dedicated handheld

devices that each offered a specific game, such as backgammon, checkers, or chess. As the

power of microprocessors for handheld devices grew, and the size and cost of those microprocessors shrank, PFI was able to build better and more complex games into its devices.

Today, PFI offers a wide variety of dedicated handheld devices on which users can play

card games, adventure games, and sports simulations, and solve various kinds of puzzles. Most

of the elements in the game displays are graphics, not words. This helps PFI sell the devices in

many different markets around the world without having to build separate interfaces for each

language. PFI’s game devices have retail prices that range between $20 and $40, but the

retailers and distributors buy them from PFI for prices that range between $4 and $18.

PFI is profitable because Yash has worked hard to keep development and production costs

low. Most of the programming is done in Bangalore, India, and the devices are built in production facilities located in Xixiang, China, and Penang, Malaysia. Although Yash has been

successful in controlling production costs, he worries about continuing to operate the company

with a long-term strategy that requires PFI to build a new physical device for each sale. The

large retail chains that have become PFI’s main customers are always asking for discounts and

reduced prices on new orders, and production costs are creeping upward even though the facilities are located in some of the lowest-cost areas in the world.

Yash wants to explore the potential PFI has for moving its games to other platforms. PFI

has translated some of its games to run on smart phones, but the results have been disappointing. Until recently, most smart phone users have been businesspeople who use their smart

phones for e-mail, appointments, address books, travel expenses, and other data-management

functions. These users are not avid game players, and sales of PFI’s games for these platforms

have not been strong.

Some of PFI’s marketing team members have been telling Yash about the success of

Apple’s iPhone and the online store for software that runs on that phone (called Applications for

iPhone). Apple shares the revenue earned from software sales on its site with the developers of

that software. Other team members have mentioned Google’s Android operating system for

smart phones built by a variety of manufacturers. Software for those phones sells in the Android

Marketplace, which operates in much the same way as Apple’s software store, sharing revenue

with software providers.

Yash has hired you as a consultant to investigate the Apple iPhone and Android Marketplace as options for selling versions of PFI’s games that will work on smart phones.

Required:

1. Use the links in the Web Links for this case, your favorite search engine, and resources in

your library to learn more about Android and Apple as program delivery systems for smart

phones. Prepare a 300-word executive summary for Yash that describes each delivery

system you identify and outlines the current or likely near-term availability of each system

for content providers such as PFI.

2. Prepare a report for Yash and the PFI executive team in which you outline and analyze

the strengths and weaknesses of each content delivery system you have identified. Your

report should conclude with a specific recommendation regarding the suitability of each

content delivery system for PFI’s games. This report should be about 300 words in length.

Chapter 3

C1. Lonely Planet

In 1972, Tony and Maureen Wheeler were newlyweds who decided to have one last adventurous travel experience before settling down. Their trip was an overland trek from London to

Australia through Asia. So many other travelers asked them about their experiences that they

sat down at their kitchen table and wrote a book titled Across Asia on the Cheap. They published the book themselves and were surprised by how many copies they sold. More than three

decades and 60 million books later, their publishing enterprise has turned out to be one of the

most successful in history.

The Wheelers’publishing company, Lonely Planet, has grown rapidly, with typical annual

sales increases of 15 percent or more. In 2007, BBC Worldwide purchased a 75 percent ownership interest in the company and purchased the rest of the company’s stock in 2011. Lonely

Planet TV now produces a variety of travel and documentary programs that appear on cable

networks throughout the world. As a BBC subsidiary, the company does not release sales figures, but industry analysts estimate current annual revenues to be about $110 million. Lonely

Planet publishes more than 600 titles and holds a 20 percent share of the travel guide market.

The company has more than 450 employees in its U.K., U.S., French, and Australian offices

performing editorial, production, graphic design, and marketing tasks. Travel guide content is

written by a network of more than 200 contract authors in more than 20 countries. These

authors are knowledgeable about everything from visa regulations to hotel prices to the names

of the hottest new entertainment spots. The combined expertise of the in-house staff and the incountry authors has kept Lonely Planet ahead of its competitors for many years.

Lonely Planet also offers travel services that include a phone card, hotel and hostel roombooking, airplane tickets, European rail travel reservations and tickets, package tours, and travel

insurance. These services are sold by telephone and on the Lonely Planet Web site.

The Web site has won numerous awards, including the Society of American Travel Writers

Silver Award and a spot on Time magazine’s“Fifty Best Web Sites”list. The site was launched

in 1994 and includes an online store in which Lonely Planet publications are sold. However, the

site’s main draws are its comprehensive collection of information about travel destinations and

its online discussion area, the Thorn Tree, which has nearly a half million registered users. The

company has had trouble turning any of this information into a source of revenue generation.

Despite its excellent Web site and its use of new technologies, most of Lonely Planet’s

revenues are still generated by book sales. The typical production cycle of a travel guide is

about eight months long. This is the time it takes to commission authors, conduct research,

work through several drafts of writing and editing, select photos, create the physical book, and

print it. This production cycle causes new books to be almost a year out of date by the time they

are published. Only the most popular titles are revised annually. Other titles are on two-, three-,

or four-year revision cycles. The time delay in publication means that many details in the guides

are outdated or wrong; restaurants and hotels close (or move), exchange rates and visa regulations change, and once-hot night spots are abandoned by fickle clientele.

Lonely Planet publications are well researched and of high quality, but the writers do not

work continually because the books are not published continually. The Web site often has information that is more current than the published travel guides.

The site’s online shop does offer some custom guides, which are parts of its existing travel

guides packaged in different ways, and it does let customers buy specific chapters from its

books, but it still is largely focused on selling books, although the site does offer PDF files that

can be downloaded to mobile devices. Lonely Planet has adopted some new technologies, but

has not used them to change its revenue model in any major way or to make basic changes in

the production of its main product, the travel guides.

Required:

1. Review the company’s offerings for Apple iPhone and iPad products and for Android

smart phones (Trippy). Evaluate those products and identify opportunities for other

products or services that the company could offer for mobile devices that would take

advantage of Internet technologies (including wireless technologies for mobile devices)

and address customers’concerns about the timeliness and currency of information in

the printed travel guides.

2. Prepare a report in which you analyze the marketing channel conflicts and cannibalization

issues that Lonely Planet faces as it is currently operating. Suggest solutions that might

reduce the revenue losses or operational frictions that result from these issues.

3. Many loyal Lonely Planet customers carry their travel guides (which can be several

hundred pages thick) with them as they travel around the world. In many cases, these

customers do not use large portions of the travel guides. Also, Internet access can be a

problem for many of these customers while they are traveling. Describe a digital product

(or products) other than the PDFs of book chapters it currently offers that might address

this customer concern and also yield additional revenue for Lonely Planet. Your answer

here could build on ideas that you developed in your solution to Requirement 1.

Chapter 4

C1. Oxfam

For more than 60 years, Oxfam has worked through and with its donors, staff, project partners,

and project participants to overcome poverty and injustice around the world. Early in World

War II, Greece was occupied by the German army. Allied forces created a naval blockade

around Greece to prevent further German expansion; however, the blockade caused Greek

civilians to suffer severe shortages of food and medicine. In response to this humanitarian crisis,

a number of Famine Relief Committees were formed by people in Great Britain to ship emergency supplies through the Allied blockade.

Most of these committees ceased operations after the war ended and the Greek crisis

subsided; however, one of them, the Oxford Committee for Famine Relief, saw a continuing

humanitarian need throughout post-war Europe and expanded its operations to provide aid there

and in later years, the rest of the world. The Committee eventually became known by its abbreviated telegraph address, Oxfam, and the name was formally adopted in 1965.

Oxfam’s growth was due to many dedicated volunteers and donors who continued and

expanded their financial support of the organization. In the 1960s, Oxfam began to generate

significant revenues from its retail stores. These shops, located throughout Great Britain, accept

donations of goods and handcrafted items from overseas for resale. Today, those stores number more than 800 and are staffed by more than 20,000 volunteers. The British organization has

joined with 15 other charitable organizations to become an international confederation devoted

to ending poverty and injustice with operations in 98 countries and annual program expenditures

of more than $900 million. Oxfam often deals with humanitarian disasters that are beyond the

scope of its resources. In these cases, the organization provides aid by mobilizing an international lobbying staff that has contacts with key aid agencies based in other countries, governments in the affected area, and the United Nations.

In 1996, Oxfam opened a Web site to provide information about its efforts to supporters and

potential donors. The Web site included detailed reports on Oxfam’s work, past and present,

and allows site visitors to make donations to the organization. Although Oxfam gladly accepts

any donations, it encourages supporters to commit to a continuing relationship by making regular donations. In exchange, it provides regular updates about its activities on the Web site and

through an e-mailed monthly newsletter. The Web site includes a sign-up page for the e-mail

newsletter, which goes out to several hundred thousand supporters. When supporters sign up

for the newsletter, they can choose to receive other e-mails from Oxfam. The supporters who

have opted in constitute the Oxfam opt-in e-mail list.

Oxfam has been involved in relief work in Sudan since the 1970s, when it provided help to

Ugandan refugees in the southern part of the country. In its recent work there, it has set up

sanitary facilities and provided clean drinking water in camps that house thousands of displaced

people fleeing pro-government Arab militias. The need in Sudan rapidly exceeded Oxfam’s

capacity and it decided to use e-mail to mobilize support for the project.

Oxfam planned an e-mail campaign that would send three e-mails in HTML format to supporters on its existing opt-in e-mail list over a six-week period. The first e-mail included a photo

of children in one of the camps. The text of the e-mail message described Oxfam’s efforts to

provide clean water to the displaced people living in the Sudanese camps. The e-mail included

links in two places that took recipients to a Web page that had been created specifically to

receive visitors responding to that e-mail message. The Web page allowed visitors to make a

donation and asked them to provide their e-mail addresses, which would be used to send

updates on the Sudan project. A second e-mail was sent two weeks later to addresses on the

list that had not yet responded. This second e-mail included a video file that played automatically when the e-mail was opened. The video conveyed the message that Oxfam had delivered

$300,000 in aid to the camps but that more help was urgently needed in the region. This second

e-mail included three links that led to the Web page created for the first e-mail. Two weeks later,

a final e-mail was sent to addresses on the list that had not responded to either of the first two

e-mails. This third e-mail included an audio recording in which Oxfam’s executive director made

a plea for the cause. The e-mail also included text that provided examples of which aid items

could be provided for specific donation amounts.

Oxfam’s three-part e-mail campaign was considered a success by direct marketing standards. The first e-mail was opened by 32 percent of recipients and had a click-through rate of

8 percent. The second e-mail had similar, but somewhat higher, results (33 percent opened,

10 percent clicked-through). Ninety percent of those who opened the e-mail watched the video.

The third e-mail continued the slightly increasing trends for opening and attention (34 percent

opened, and 94 percent listened to the audio), but the click-through rate was much higher than

the previous two e-mails (14 percent). Also, the dollar amount of donations increased with each

subsequent e-mailing. The e-mail campaign raised more than $450,000 in its six-week period.

Oxfam coordinated this e-mail effort with other awareness activities it was conducting in the

same time period. The organization sent letters to supporters who had not provided e-mail

addresses and ran ads in two newspapers (The Independent and The Guardian) that carried

messages similar to those in the e-mails.

Required:

1. Oxfam used its existing opt-in e-mail list only for this campaign; it did not purchase (or

borrow from other charitable organizations) any additional e-mail addresses. Evaluate this

decision. In about 200 words, explain the advantages and disadvantages of acquiring

other e-mail addresses for a campaign of this nature.

2. For this campaign, Oxfam chose to use e-mails that contained HTML, audio, and video

elements rather than using plain-text e-mails. In about 100 words, describe the advantages and disadvantages of using formats other than plain-text in this type of e-mail campaign. Be sure to identify any specific trade-offs that Oxfam faced in deciding not to use

plain-text e-mail.

3. Oxfam used HTML in the first e-mail, video in the second, and audio in the third. Evaluate

the use of different e-mail formats for this type of message and consider the sequencing

of the formats that Oxfam used in this campaign. In about 300 words, summarize the

considerations that would affect a decision to use a particular sequence of e-mail formats

in a campaign such as this and evaluate the sequence that Oxfam used.

4. A manager at Oxfam might be tempted to conclude that the sequence of formats used in

the e-mail messages was related to the increase in donations over the six weeks of the

campaign. In about 100 words, present at least two reasons why this would be an incorrect conclusion.

5. If Oxfam were to undertake a similar emergency fund-raising effort today, it might use

social media. In about 300 words, describe how Oxfam could use Facebook, Google+,

and Twitter in combination with its existing online resources to enhance or replace the

e-mail campaign described in the case.