Case Study Description of Shareholder Activists at Friendly Ice Cream (A2)
The A1 and A2 versions of the "Shareholder Activists at Friendly Ice Cream (A)" split the original A case into two parts. The A1 case ends as activists Sardar Biglari and Phil Cooley prepare to meet with CEO Don Smith at Friendly's headquarters in September 2006. The A2 case resumes the story just after the meeting and details Biglari's and Friendly's actions from that point on. The A1 and A2 cases are provided for instructors who wish more flexibility in the teaching plan. These cases do not omit or abridge any information contained in the original A case. Two activist investors, one a founder and one a hedge fund manager, seek to improve board oversight at a chain restaurant company. Prestley Blake founded Friendly Ice Cream in 1935 with his brother and the two created a chain of full-service restaurants. In 1979 they sold the business and retired. In 2000, Blake became concerned that Friendly's CEO, who owned approximately 10% of Friendly and also owned a larger percentage of another restaurant company, was shifting expenses between the businesses in a way detrimental to Friendly shareholders, but personally advantageous to the CEO. Further, Blake believed that Friendly's board of directors was not meeting their fiduciary obligations to shareholders by properly overseeing the activities of the CEO and that the directors had conflicts of interest because they were involved with the CEO's non-Friendly business activities. In 2003, Blake filed a lawsuit against the CEO and the company. In 2006, Sardar Biglari, a hedge fund manager who had invested in Friendly, entered into negotiations with Friendly for him to join the board of directors to help improve the management of the business. When these negotiations failed, Biglari launched a proxy fight against Friendly in 2007. While these two activist investors shared similar objectives, they worked independently and chose different strategies.
Authors :: Fabrizio Ferri, V.G. Narayanan, James Weber
Swot Analysis of "Shareholder Activists at Friendly Ice Cream (A2)" written by Fabrizio Ferri, V.G. Narayanan, James Weber includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Friendly Friendly's facing as an external strategic factors. Some of the topics covered in Shareholder Activists at Friendly Ice Cream (A2) case study are - Strategic Management Strategies, Business law, Collaboration, Corporate communications, Entrepreneurship, Ethics, Financial management, Negotiations, Regulation and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Shareholder Activists at Friendly Ice Cream (A2) casestudy better are - – central banks are concerned over increasing inflation, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings,
wage bills are increasing, increasing energy prices, etc
Introduction to SWOT Analysis of Shareholder Activists at Friendly Ice Cream (A2)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Shareholder Activists at Friendly Ice Cream (A2) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Friendly Friendly's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Friendly Friendly's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Shareholder Activists at Friendly Ice Cream (A2) can be done for the following purposes –
1. Strategic planning using facts provided in Shareholder Activists at Friendly Ice Cream (A2) case study
2. Improving business portfolio management of Friendly Friendly's
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Friendly Friendly's
Strengths Shareholder Activists at Friendly Ice Cream (A2) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Friendly Friendly's in Shareholder Activists at Friendly Ice Cream (A2) Harvard Business Review case study are -
Diverse revenue streams
– Friendly Friendly's is present in almost all the verticals within the industry. This has provided firm in Shareholder Activists at Friendly Ice Cream (A2) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Friendly Friendly's is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Fabrizio Ferri, V.G. Narayanan, James Weber can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Friendly Friendly's in the sector have low bargaining power. Shareholder Activists at Friendly Ice Cream (A2) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Friendly Friendly's to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Shareholder Activists at Friendly Ice Cream (A2) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Learning organization
- Friendly Friendly's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Friendly Friendly's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Shareholder Activists at Friendly Ice Cream (A2) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Friendly Friendly's are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Highly skilled collaborators
– Friendly Friendly's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Shareholder Activists at Friendly Ice Cream (A2) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– Shareholder Activists at Friendly Ice Cream (A2) firm has clearly differentiated products in the market place. This has enabled Friendly Friendly's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Friendly Friendly's to invest into research and development (R&D) and innovation.
Strong track record of project management
– Friendly Friendly's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Friendly Friendly's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Shareholder Activists at Friendly Ice Cream (A2) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Successful track record of launching new products
– Friendly Friendly's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Friendly Friendly's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Effective Research and Development (R&D)
– Friendly Friendly's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Shareholder Activists at Friendly Ice Cream (A2) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Shareholder Activists at Friendly Ice Cream (A2) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shareholder Activists at Friendly Ice Cream (A2) are -
High cash cycle compare to competitors
Friendly Friendly's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Shareholder Activists at Friendly Ice Cream (A2), it seems that the employees of Friendly Friendly's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Shareholder Activists at Friendly Ice Cream (A2) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Friendly Friendly's has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Shareholder Activists at Friendly Ice Cream (A2), it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Friendly Friendly's supply chain. Even after few cautionary changes mentioned in the HBR case study - Shareholder Activists at Friendly Ice Cream (A2), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Friendly Friendly's vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Fabrizio Ferri, V.G. Narayanan, James Weber suggests that, Friendly Friendly's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow decision making process
– As mentioned earlier in the report, Friendly Friendly's has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Friendly Friendly's even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Low market penetration in new markets
– Outside its home market of Friendly Friendly's, firm in the HBR case study Shareholder Activists at Friendly Ice Cream (A2) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Friendly Friendly's products
– To increase the profitability and margins on the products, Friendly Friendly's needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Friendly Friendly's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Friendly Friendly's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Shareholder Activists at Friendly Ice Cream (A2) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Shareholder Activists at Friendly Ice Cream (A2) are -
Creating value in data economy
– The success of analytics program of Friendly Friendly's has opened avenues for new revenue streams for the organization in the industry. This can help Friendly Friendly's to build a more holistic ecosystem as suggested in the Shareholder Activists at Friendly Ice Cream (A2) case study. Friendly Friendly's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Friendly Friendly's to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Friendly Friendly's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Friendly Friendly's in the consumer business. Now Friendly Friendly's can target international markets with far fewer capital restrictions requirements than the existing system.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Friendly Friendly's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Friendly Friendly's can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Friendly Friendly's is facing challenges because of the dominance of functional experts in the organization. Shareholder Activists at Friendly Ice Cream (A2) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– Friendly Friendly's can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Friendly Friendly's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Friendly Friendly's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Buying journey improvements
– Friendly Friendly's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Shareholder Activists at Friendly Ice Cream (A2) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Friendly Friendly's has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Shareholder Activists at Friendly Ice Cream (A2) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Friendly Friendly's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Friendly Friendly's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Shareholder Activists at Friendly Ice Cream (A2), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Shareholder Activists at Friendly Ice Cream (A2) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Shareholder Activists at Friendly Ice Cream (A2) are -
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Friendly Friendly's business can come under increasing regulations regarding data privacy, data security, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Friendly Friendly's in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Friendly Friendly's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Regulatory challenges
– Friendly Friendly's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Increasing wage structure of Friendly Friendly's
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Friendly Friendly's.
Consumer confidence and its impact on Friendly Friendly's demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Friendly Friendly's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Friendly Friendly's.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Friendly Friendly's in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High dependence on third party suppliers
– Friendly Friendly's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology acceleration in Forth Industrial Revolution
– Friendly Friendly's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Friendly Friendly's needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Shareholder Activists at Friendly Ice Cream (A2), Friendly Friendly's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Weighted SWOT Analysis of Shareholder Activists at Friendly Ice Cream (A2) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Shareholder Activists at Friendly Ice Cream (A2) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Shareholder Activists at Friendly Ice Cream (A2) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Shareholder Activists at Friendly Ice Cream (A2) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Shareholder Activists at Friendly Ice Cream (A2) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Friendly Friendly's needs to make to build a sustainable competitive advantage.
