2 assignment, about 15pages total, for one assignment, i have wrote some

1. case studyThe purpose of a case analysis assignment is to provide you with an opportunity to apply concepts from class to real-world situations. The case analysis should be brief and concise, no more than four to eight pages, double spaced, plus a title page and a reference page. Please be sure to incorporate theories or concepts from class or other readings and reference them appropriately. Your Case Study Assignment is provided below:2. industry analysis paperThe fundamental assumption of this assignment is that the profit potential of any firm is a function of:(1) the industries it operates in; and(2) the competitors it opposes.Therefore, to enhance profits, executive management must understand the industry structure and competition. The profits within an industry are affected by a wide range of influences, including the macroeconomic environment, cost and demand structures of the industry, technological change and government regulation. Competitive moves and responses of incumbents also affect firm profits. Actions taken by firms to improve competitive position engender responses by other firms, and the expected sequence of actions and responses must be understood to develop an effective strategy. Reactions of rivals will depend on their goals or intent, beliefs, relative resource positions and past actions. Thus, the approach to studying the dynamics of industry structure and competitors is to focus on the key characteristics of industry structure and the individual competitive moves and countermoves by the competitive players. Using the components of a competitive analysis model (e.g., Porter, Blue Ocean) you will select two companies in an industry in which you have some interest or familiarity. In a 7-10 page paper, you will critically analyze and contrast the competitive strategy of the two companies and then develop a competitive profile for each. The competitive profile should answer the following questions:1. What is each company’s current competitive strategy (be specific)?2. What are they doing to improve their current competitive position?3. What likely moves or strategy shifts will they make?4. Where is each company most vulnerable?5. What competitive moves will provoke the greatest and most effective retaliation by each company?6. Would you recommend the continuation or modification of each company’s current strategy (support your rationale with specifics)?
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Running head: ROYAL DUTCH SHELL VS. EXXON MOBIL CORPORATION
Royal Dutch Shell vs. Exxon Mobil Corporation: Competitive Analysis
Xiao Sun
2017/10/24
City University of Seattle
1
ROYAL DUTCH SHELL VS. EXXON MOBIL CORPORATION
Abstract
This analysis paper … ….
2
ROYAL DUTCH SHELL VS. EXXON MOBIL CORPORATION
3
Royal Dutch Shell vs. Exxon Mobil Corporation: Competitive Analysis
The development of the oil industry started mainly in 1940s. At the end of the twentieth
century, there were a lot of oil companies built, such as Exxon Mobil and Royal Dutch Shell
(Lagasse, 2017). Because of the demand for oil, it became to the most popular source of energy.
However, in recent years, the price of oil has been affected by the fluctuation of the market due
to…..
Company Summary
Both Royal Dutch Shell and Exxon Mobil Corporation are the multinational oil and gas
companies. .And they are not only sell oil, but also they produce other product such as … ….
The Royal Dutch Shell is a U.K company, while Exxon Mobil is an American company. But
there also has a lot of gas stations in the U.S.A.
Royal Dutch Shell
The Shell Transport and Trading Company of the U.K and the Royal Dutch Petroleum
Company of the Netherlands were merged in 1907, and then became the Shell Company (“Our
beginnings” shell.com, 2017). At the beginning, the one in Hague was in charge of production
and manufacturing, and the other one, is in London, took charge of the transportation and storage
of products.
Exxon Mobil Corporation
Introduce (BG)
Company SWOT Analyses
The company SWOT is a very important analysis tool for companies because it can show
the lacks in an enterprise and as well as where there is space for development. From this
analysis we can intuitively compare the two companies.
ROYAL DUTCH SHELL VS. EXXON MOBIL CORPORATION
4
Royal Dutch Shell SWOT Analysis
Strengths
Weaknesses
– Strong market position and reserve base
– Violation of anti-corruption laws
– Extensive research and development
– Increasing debt
competencies
– Vertically integrated operations
Opportunities
Threats
– Planned expansion and new discoveries
– Risks associated with wide geographic
– Calculated divestitures
presence
– Rising global energy demand
– Deteriorating business environment in
– Wide geographic presence
Nigeria
– Price fluctuations
(Compiled from Royal Dutch Shell PLC SWOT Analysis, 2017)
Exxon Mobil Corporation SWOT Analysis
Strengths
Weaknesses
– Diversified geographic revenue stream
– Litigations and contingencies
– Extensive upstream and downstream
– Increasing financial leverage
operations
– Declining financial performance and capital
– Robust research and development
efficiency
capabilities
– Strong market position
ROYAL DUTCH SHELL VS. EXXON MOBIL CORPORATION
Opportunities
Threats
– Strategic acquisition and expansions
– Supply-related risks
– Rising global energy demand
– Economic conditions
– Growing demand for petrochemicals
– Environmental regulations
globally
– Challenging downstream industry
5
environment.
(Adapted from Exxon Mobil Corporation SWOT Analysis, 2017)
In these two charts, we can see that the two companies have same strengths, strong market
position and extensive R&D. This means there is a huge competition between them. But from
looking at their weaknesses, we see that both two companies have trouble with increasing debt.
Company Strategies
Company’s Current Competitive Strategies (be specific)?
What Royal Dutch Shell and Exxon Mobil Corporation to Improve Their Competitive
Positions
Likely Moves or Strategy Shifts the Companies May Make
Where Each Company is Most Vulnerable
5. What competitive moves will provoke the greatest and most effective retaliation by each
company?
Competitive Moves That Will Provoke the Greatest and Most Effective Retaliation by Each
Company / Moves that Might Bring Retaliation
ROYAL DUTCH SHELL VS. EXXON MOBIL CORPORATION
6
Recommendations
(Give some advice for these two companies)
As mentioned above,…
We had seen that Royal Dutch Shell and Exxon Mobil are both vulnerable in their level of
debt. Therefore, it seems reasonable to recommend(believe)…
Whether or not….., it would be wise for Shell to ….
If X continues with this strategy, they are likely to fail because of ….
References
ROYAL DUTCH SHELL VS. EXXON MOBIL CORPORATION
7
Exxon Mobil Corporation. (2016). Summary annual report [PDF file]. Retrieved from
http://corporate.exxonmobil.com/search?search=annual%20report
Exxon Mobil Corporation SWOT Analysis. (2017). Exxon Mobil Corporation SWOT analysis,
1-11. Retrieved from Business Source Complete
IBISWorld. (2017, Jan). Global oil & gas exploration & production. IBISWorld. Retrieved from
IBISWorld Complete database.
Lagasse, P. (2017). Oil industry. The Columbia Encyclopedia (7th ed.). New York, NY:
Columbia University Press. Retrieved from Search Credo.
MarketLine. (2017, Sep). Global oil & gas. Retrieved from Mint Global Database.
MarketLine. (2017, Aug). Global biofuel consumption. Retrieved from Mint Global Database
Royal Dutch Shell. (2016). Royal Dutch Shell plc Annual report and form 20-F [PDF file].
Retrieved from http://reports.shell.com/annual-report/2016/
Royal Dutch Shell. (2017). Royal Dutch Shell plc SWOT analysis, 1-40. Retrieved from Business
Source Complete.
Shell.com. (2017). Our beginnings. Retrieved from http://www.shell.com/about-us/who-weare/our-beginnings.html
Business Horizons (2014) 57, 289—300
Available online at www.sciencedirect.com
ScienceDirect
www.elsevier.com/locate/bushor
TEACHING CASE
HomeGrocer.com: Anatomy of a failure
Greg Fisher a,*, Suresh Kotha b
a
b
Kelley School of Business, Indiana University, 1309 E. Tenth Street, Bloomington, IN 47405-1701, U.S.A.
Michael G. Foster School of Business, University of Washington, Box 353226, Seattle, WA 98115, U.S.A.
KEYWORDS
Business models;
Entrepreneurship;
Venture financing;
Online grocery;
Merger;
Bankruptcy;
Teaching case
Abstract This case study examines the initiation, financing, development, and
failed merger of an ambitious online grocery retail venture: HomeGrocer.com. It
highlights the risks and challenges associated with developing a revolutionary venture. Even though the HomeGrocer.com team did many things right developmentally,
some key errors and unfortunate timing resulted in them expanding too quickly and
running low on cash. It also forced them to make a tough strategic decision about
whether to scale back operations and renege on their IPO commitments or merge with
a well-funded competitor, Webvan. The case discusses lessons that can be learned
from business failure.
# 2013 Kelley School of Business, Indiana University. Published by Elsevier Inc. All
rights reserved.
1. Learning from the past?
Terry Drayton, co-founder and first CEO of the now
defunct HomeGrocer.com, left the meeting with his
original management team feeling charged and hopeful. They had gathered to discuss the possibility of
reviving the online grocery business. Although the
initial iteration of HomeGrocer.com had fallen victim
to a failed merger with Webvan, a potential reincarnation was now attracting interest from investors.
The HomeGrocer.com saga began in 1998, when
Drayton and his Seattle-based team launched the
service. They raised over $440 million in capital
in multiple rounds of financing and opened eight
distribution centers in six locations throughout the
* Corresponding author
E-mail addresses: fisherg@indiana.edu (G. Fisher),
skotha@uw.edu (S. Kotha)
western United States. They made plans for more
locations and were in the midst of a fast rollout at
the time of HomeGrocer.com’s initial public offering
(IPO) on March 9, 2000. One month later, the
NASDAQ dropped 35% from its high of 5,132 and
the opportunity for a secondary round of funding
disappeared. Lacking cash to deliver on the growth
plans laid out in its IPO prospectus, HomeGrocer.
com tried to weather the financial crisis by merging
with Webvan, a California-based online grocer that
was launched in 1999.
Webvan, with its larger capital base1, took control of the merged company. To the chagrin of
HomeGrocer.com executives, Webvan’s managers
transitioned all of the distribution centers to the
1
At its 1999 peak, Webvan had a market capitalization of
$8.8 billion compared with HomeGrocer.com’s $725.5 million
at IPO.
0007-6813/$ — see front matter # 2013 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.
http://dx.doi.org/10.1016/j.bushor.2013.12.002
Electronic copy available at: http://ssrn.com/abstract=2585183
290
G. Fisher, S. Kotha
Webvan technology and created a single Webvan
brand. However, despite their efforts, the Webvan
managers burned through cash quickly while losing
money. As a result, their share price plummeted
from $26 in December 1999 to $4 at the time of the
merger (August 2000). By January 2001, the price of
Webvan shares was only 5 cents. In June 2001, less
than a year after the merger was announced,
Webvan filed for bankruptcy.
Drayton had learned a great deal from his experience at HomeGrocer.com. He strongly believed that
he and his team had done many things right and were
close to resolving the challenge of creating an online
grocery business model. As he drove home from the
meeting with his former colleagues, he wondered
what he could do differently. Reflecting on his
experience in founding HomeGrocer.com, Drayton
thought about the start-up phase, the merger decision, and the post-merger actions to try and isolate
what critical mistakes he and his team would avoid
the second time around–—if given the chance.
2. The start-up phase
Terry Drayton and Mike MacDonald founded
HomeGrocer.com, an Internet-based grocer, in
1994. Drayton had just sold Crystal Springs Water
Company, which delivered bottled water to businesses in and around Vancouver, B.C., and was looking
for something new. One cold winter’s day, Drayton’s
wife remarked that he ought to deliver groceries
instead of water so that busy moms wouldn’t have
to brave a snowstorm just to go to the store. The idea
stuck and Drayton found himself discussing it with his
friend MacDonald, president of the largest food broker in the Canadian province of British Columbia.
MacDonald was intrigued and agreed to put up some
initial capital while Drayton wrote the business plan.
MacDonald’s friend, Ken Deering, who had technology
expertise, soon joined them as vice president
of systems. The new venture would be called
HomeGrocer.com.
2.1. Initial funding
By April 1997, Drayton had raised $350,000 in seed
capital from friends and family. In search of more
funding, he and the team moved their operations to
Seattle to be in a more ‘techno-friendly’ city. This
came at a time when respected Wall Street analysts
and investment bankers were touting the Internet’s
potential ‘disintermediate’ incumbents in a number
of industry supply chains. Mary Meeker, the Morgan
Stanley stock analyst, noted (Meeker, Pearson, &
Roach, 1997, pp. 10—14):
It’s important to understand the drivers of supply
and demand, and therefore how Internetbased distribution may affect this chain and
whether there will be disintermediation. . . .
For example, Amazon.com would be classified
as a disintermediary, as it removes the inventory
chain to the bookstore (e.g., brick-and-mortar
Barnes & Noble stores) and potentially creates
better unit pricing (than the traditional stores),
better service, and so forth, while reducing the
capital tied up in inventory. It’s pretty simple–—
less overhead, more efficiency and better prices
for consumers.
These comments excited investors, fueling the
funding of many online ventures via a buoyant
venture capital (VC) industry. In May 1998, Drayton
raised $4 million in a ‘Series A’ funding round. Tom
Alberg (personal communication, November 10,
2007) of Seattle’s Madrona Ventures, an early VC
investor in HomeGrocer.com, recalled:
We had already invested in Amazon.com, so we
were beginning to see that online commerce
could work. This [venture] was much different
[in] everything from the delivery to the inventory to a whole lot of issues. . . .Nonetheless,
lots of people were frustrated with the regular
grocery stores. . .the lack of inventory sometimes and having to carry [grocery] bags out,
and parking and everything else. We thought
there was an opportunity and that it could
be a really big business. Unlike Amazon.com,
though, you can’t serve the whole country from
one warehouse initially. You’ve got to start by
building out in cities. We realized it was going
to take a lot more capital. But we were attracted by Terry’s idea of doing it in a relatively
low-capital way.
Four months later, the HomeGrocer.com team
raised another $6 million in a ‘Series B’ funding
round, with the high-profile Silicon Valley VC firm
of Kleiner Perkins Caufield & Byers as the lead investor. This was followed by a ‘Series C’ funding round.
By this time, the market was abuzz with hopes for the
Internet grocery business, and HomeGrocer.com had
attracted the attention of some well-known individuals and organizations as investors: Amazon.com; Jim
Barksdale, an early executive with Netscape and
former senior executive with Federal Express;
and John Malone, the legendary cable TV operator
and Liberty Media investor. Terry Drayton (personal
communication, February 29, 2008) recalled the dynamics of the ‘Series C’ funding round:
We went out to raise $20 million, but everybody
wanted to own more of the company, so the
Electronic copy available at: http://ssrn.com/abstract=2585183
TEACHING CASE–—HomeGrocer.com: Anatomy of a failure
round kept going up. Amazon.com insisted on
owning 35% and we had a valuation in mind so
we just had to raise way more money than we
ever intended: $52.5 million in total.
A ‘Series D’ financing round followed in April 1999
with HomeGrocer.com raising another $110 million.
Primary investors during this round of financing
included CBS Inc., the Knight-Ridder Company, Softbank Co. of Japan, and Sequoia Capital. With the
frenzy over Internet-based ventures in full swing,
Drayton raised a total of $172 million from VC
investors, even though his original business plan
only called for $15 million in VC funding followed
by an IPO to secure another $50 million in capital.
Drayton also assembled an impressive board
of advisors including Jeff Bezos, the founder of
Amazon.com; John Doerr, the high-profile VC from
Kleiner Perkins Caufield & Byers; Jim Barksdale; and
Martha Stewart.
2.2. The grocery industry
In the late 1990s, the United States grocery industry
was mature and extremely competitive; Table 1
provides an overview. In 1998, retail supermarket
sales totaled approximately $449 billion. Grocery
Table 1.
291
retailing had experienced growth in real sales during
only 4 of the previous 10 years, and net profit margins
remained thin at 1% of sales. The industry was, and
continues to be, highly fragmented.
According to 1998 reports, the United States
population growth was expected to decline. Survival
of the grocery industry would rely on cost-containment efforts, increases in economies of scale and
scope, heavy penetration of existing markets, and
greater-than-average consumer expenditures. To
increase revenues, grocers had to increase the
breadth and depth of fresh produce, meat offerings,
and organically grown items while relying on private-label products with higher margins.
2.3. The market for online groceries
Forrester Research (www.forrester.com) forecast
that the total United States Internet-retail commerce would grow from approximately $20.3 billion
in 1999 to approximately $184.5 billion in 2004,
representing a compound average growth rate
(CAGR) of over 55%. It estimated that online grocery
spending would increase at a CAGR of over 100%
during the next 5 years, from $513 million in 1999 to
$10.8 billion by 2003. Despite its size in absolute
terms, this spending was expected to represent less
Grocery industry overview, 1998
Number of employees
3.5 million
Number of grocery stores
126,000
Total grocery store sales
$449 billion
Total supermarket sales
$346.1 billion
Number of supermarkets ($2 million+ in annual sales)
30,700
Net profit after taxes, 4/98-3/99
1.03%
Typical supermarket size
40,483 sq. ft.
Number of items in a supermarket
40,333
Labor as a % of operating expense
57.5%
Average effective income tax rate (fed, state, local) 4/96-3/97
39%
Percentage of disposable income spent on food
! food-at-home
! food away-from-home
6.6%
4.2%
Weekly sales per supermarket
Weekly sales per square foot of selling area
$331,411
$9.45
Sales per customer transaction
$10.16
Sales per labor hour
$113.21
Average # of trips per week consumers make to the supermarket, 1/98
Food basket costs, % of weekly income spent on food
! Unites States
! Canada
! Japan
2.2
8.8%
10.3%
17.6%
Sources: U.S. Department of Labor, U.S. Department of Agriculture, Progressive Grocer magazine, and U.S. Census Bureau
292
Table 2.
G. Fisher, S. Kotha
The emerging online grocer industry forecasts
1999
2000
2001
2002
2003
$248
$265
$513
0.11%
$659
$473
$1,132
0.23%
$1,548
$911
$2,459
0.49%
$3,058
$1,951
$5,009
0.98%
$6,291
$4,545
$10,836
2.05%
Online Grocery Sales
Specialty
Full Service
Total Revenues
Percentage of Industry Total
Total Number of Households Buying Groceries Electronically (000s)
Specialty
Full-Service
Total
PC-Based
Other Net Devices
920
35
1,839
106
3,678
318
6,252
1,114
10,628
4,454
Total Specialty
955
1,945
3,996
7,366
15,082
PC-Based
Other Net Devices
Phone/Fax
187
6
42
327
12
42
621
35
38
1,242
124
34
2,546
495
31
Total Full Service
235
381
694
1,400
3,072
59
115
243
630
1,536
1,131
2,211
4,447
8,136
16,618
Households doing both
Total participating households
Source: Forrester Research, Inc. (www.forrester.com)
than 2% of the total United States market for grocery
products in 2003.
Forrester categorized the online grocery industry
into two segments: full-service retailers and specialty stores. Full-service retailers are those selling
a complete range of grocery products, including
perishables. Specialty stores, in contrast, offer a
limited selection of gifts, hard-to-find items, or bulk
replenishment products via the Internet. Table 2
provides a detailed breakdown of predicted electronic grocery spending in the U.S. from 1999—2003.
At that time, Forrester Research estimated that by
2003, 16 million households would buy groceries
online.
Traditional brick-and-mortar retailers were slow
to embrace the Internet as a medium for selling
groceries. Albertson’s and Hannaford Brothers were
among the few traditional grocers that experimented with an online model. A major uncertainty
for those launching online grocery ventures was if,
or when, other major chains might enter the online
space. Given their buying power, traditional retailers had the ability to source products at a lower
cost compared to new entrants. While some detractors of online grocery retailing cited many downsides to the online model–—including supply chain
complexities, consumer distrust, and technology
and payment challenges–—others were much more
positive about the prospects of selling groceries
online due to potential cost savings of the model.
Tom Alberg (personal communication, November 10,
2007) noted:
I think there have always been people who have
said, ‘‘[Online markets] will never work for
groceries. Margins are too low. How can you
purchase at the same competitive prices?’’ A lot
of which is true, but there are also online
advantages. You don’t have to have the expensive space, parking lots, and as many employees. These are huge advantages.
At the time, online grocers were not responding to
pent-up demand. Demand had to be created. Because th …
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