Case Study Description of Shareholder Activists at Friendly Ice Cream (A1)
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 (A1)" 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 (A1) case study are - Strategic Management Strategies, Corporate communications, Ethics, Financial management, Regulation and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Shareholder Activists at Friendly Ice Cream (A1) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization,
geopolitical disruptions, technology disruption, etc
Introduction to SWOT Analysis of Shareholder Activists at Friendly Ice Cream (A1)
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 (A1) 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 (A1) can be done for the following purposes –
1. Strategic planning using facts provided in Shareholder Activists at Friendly Ice Cream (A1) 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 (A1) | 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 (A1) Harvard Business Review case study are -
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 (A1) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Friendly Friendly's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Friendly Friendly's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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 (A1) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
High switching costs
– The high switching costs that Friendly Friendly's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
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 (A1) 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Friendly Friendly's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Friendly Friendly's has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Strategy & Execution field
– Friendly Friendly's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Friendly Friendly's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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 (A1) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Friendly Friendly's is one of the most innovative firm in sector. Manager in Shareholder Activists at Friendly Ice Cream (A1) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Friendly Friendly's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Shareholder Activists at Friendly Ice Cream (A1) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shareholder Activists at Friendly Ice Cream (A1) are -
Increasing silos among functional specialists
– The organizational structure of Friendly Friendly's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Friendly Friendly's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Friendly Friendly's to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Shareholder Activists at Friendly Ice Cream (A1), 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.
No frontier risks strategy
– After analyzing the HBR case study Shareholder Activists at Friendly Ice Cream (A1), 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 operating costs
– Compare to the competitors, firm in the HBR case study Shareholder Activists at Friendly Ice Cream (A1) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Friendly Friendly's 's lucrative customers.
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.
Aligning sales with marketing
– It come across in the case study Shareholder Activists at Friendly Ice Cream (A1) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Shareholder Activists at Friendly Ice Cream (A1) can leverage the sales team experience to cultivate customer relationships as Friendly Friendly's is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Friendly Friendly's needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Products dominated business model
– Even though Friendly Friendly's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Shareholder Activists at Friendly Ice Cream (A1) should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Friendly Friendly's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Shareholder Activists at Friendly Ice Cream (A1) 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Friendly Friendly's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Shareholder Activists at Friendly Ice Cream (A1) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Shareholder Activists at Friendly Ice Cream (A1) | 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 (A1) are -
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 (A1), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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 (A1) - 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Friendly Friendly's can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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.
Loyalty marketing
– Friendly Friendly's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Learning at scale
– Online learning technologies has now opened space for Friendly Friendly's to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 (A1) 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Friendly Friendly's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Friendly Friendly's to increase its market reach. Friendly Friendly's will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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 (A1) 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.
Building a culture of innovation
– managers at Friendly Friendly's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Threats Shareholder Activists at Friendly Ice Cream (A1) 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 (A1) are -
Shortening product life cycle
– it is one of the major threat that Friendly Friendly's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 (A1), 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 .
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.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Friendly Friendly's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Friendly Friendly's can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Shareholder Activists at Friendly Ice Cream (A1) .
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.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Friendly Friendly's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
Environmental challenges
– Friendly Friendly's needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Friendly Friendly's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Weighted SWOT Analysis of Shareholder Activists at Friendly Ice Cream (A1) 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 (A1) 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 (A1) 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 (A1) 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 (A1) 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.
