Trader Joes Core Competencies

Question

Cover three steps: description (of case facts), evaluation (of case context and

implications), and recommendations (of specific actions relevant to the case situation).

The brief should focus, for the most part, on evaluation and recommendations. Three

pages (double-spaced, with margins, 12 pitch) is the maximum for the brief

Topic

 Core Competencies: Fit between the environment, the organization and

routines of doing business

1. Are you Sure You Have a Strategy? Hambrick and Fredrickson

2. Traders Joe

1. Is the supermarket industry structure hospitable? Why? Why not?

2. What generic strategy is Whole Foods using? Kroger? Trader Joe’s?

3. What are TJ’s arenas? Vehicles? Differentiators? Economic logic?

4. What competencies seem to support this strategy?

5. Is their strategy sustainable?

6. What should they do in the future?

Concise Sample Brief

Square D Company Jane Doe

Description [email protected]

The Square D Company is a manufacturer of electrical distribution and industrial control

equipment. Square D’s primary market is the United States; however, the company has

manufacturing and sales locations all over the world. The CEO has completed organizational

changes and must now find growth opportunities for the company.

Evaluation

Corporate: Jerre Stead implemented significant organizational changes to align the company with

its two key market sectors: construction and industry. The philosophy was working well in United

States operations. Establishing an international division was counter to the strategic business unit

philosophy. International markets varied considerably by region as well as between market

sectors. The management and growth of international operations would require a unique approach.

Industrial Controls Division: The controls division had greatly improved the systems to measure

performance. Old systems rewarded employees based on their individual performance, not their

contribution to company profits. The new system aligned incentives with the strategic intent of the

company. Cross-functional business teams were in the best position to identify strategy and set

performance goals. These teams increased communication among groups and resulted in a more

customer-focused strategy. Everyone had a stake in identifying the right goals and achieving them.

International: Operations in Europe had taken a self-centered approach over the years and were

finding it difficult to adjust to the changes in organization. The new managers were anxious to

improve the infrastructure. Mexican operations had achieved success by building a business based

on local needs. Market opportunities were available in Europe, Latin America and Asia Pacific,

but there were no coordinated efforts to identify and pursue those markets. For example, the

company was not addressing significant opportunities in worldwide construction markets.

Recommendations

 Maintain and improve successful processes. Two models exist within the company. The

“business team” model demonstrated the advantages of cross-functional teams and increased

communication. The Mexican model of developing special products for the local market was

successful in identifying the unique aspects of operating outside the U.S. The structure must

be enhanced with a mechanism for international organizations to request and receive the

technical expertise of other divisions. The international division must establish a flexible

planning system to identify unique local markets.

 Extend the new performance measurement system across all divisions. The system should be

customized for each division with some components that are standard across the company.

Transfer pricing should be removed from the internal performance calculations to provide

incentives for international operations to maximize profits for the company as a whole.

 Develop a market strategy and business investment plan for European operations. The

European management team should identify the areas where market share can be gained and

determine the level of capital investment required to be successful. Europe should base the

strategy on local market needs, using the Mexican operations as an example. Technical

experts from the other divisions should be used as product consultants.

 Use U.S. infrastructure to support international operations. Until they can increase profits,

international operations should use U.S. infrastructure and technical expertise for support. As

international operations grow, Square D can invest in infrastructure in other countries.

 Develop products to global standards. Single standards will result in new global marketing

opportunities. However, global products do not fulfill the need for some local-market products.