Business Finance Homework Help

Please respond to the following two peers to the following questions

Recognizing the Need for Change

Rita McGrath, Columbia Business School professor and author of the article, “Transient Advantage,” discusses several traps that can blind a company to the need for imminent changes to their strategy to preserve competitive advantage. These traps, discussed in the second half of the article, include: the first-mover trap, the superiority trap, the quality trap, the hostage-resources trap, the white space trap, the empire-building trap, and the sporadic-innovation trap.

Locate and post a link to an article in The Wall Street Journal, or another reputable source, about a company that fell victim to one or more of these traps.

• Identify the trap(s) and discuss why you believe the company’s management missed the warning signs.
• What were the impacts that resulted from falling for the trap(s)?
• Drawing on the guidance offered by Sherman in Chapter 6, what could they have done differently to avoid the trap(s)?
• 1.Stephen Gilderdale
  

  Dear Professor Sturtevant and classmates.This week I have chosen Thomas Cook, who were a travel agent based in the UK. I say were, as they went out of business in 2019 due to bankruptcy.Identify the trap(s) and discuss why you believe the company’s management missed the warning signs.The travel industry and specifically the travel agent business started to struggle as the advent of booking holidays online becomes quicker and easier, this of course was compounded by the like of Airbnb that became cheaper than hotels. This lead to Thomas Cook taking on too much debt and no longer being competitive for holidaymakers (Startup Talk, 1).I would suggest that Thomas Cook fell into “The sporadic-innovation trap” as Rita Gunther McGrath would describe (2). They understood the market was moving, and in an attempt to save the business, they took out larger loans and accrued more debt (Hancock, 3); this was the attempt of the CEO to become more than a travel agent but to also own the hotels and plane to support customers holidays. A spending spree resulted in a debt of £1.9 billion GBP or $2.64 billion USD, and eventually, the creditors lost faith and pulled the funding, which in turn resulted in bankruptcy (Kinder, 4).What were the impacts that resulted from falling for the trap(s)?Let’s start with people. For customers who were on holiday at the time, it was a disaster. They were stuck as Thomas Cook’s planes were grounded and hotels were asking customers to pay for their stay, they had already paid Thomas Cook (BBC, 5)! People did not know when and how they would get home.For employees, all 21,000 lost their jobs (Dmitracova, 6), devastating families and callusing long term damage for many.For the UK government, there was a bill of £156 million GBP and huge impacts to the insurance firms. There was also a ripple through the UK travel industry. Consumers worried about the impact of the competition of Thomas Cook and could more businesses be at risk; therefore customers cash also at risk.Drawing on the guidance offered by Sherman in Chapter 6, what could they have done differently to avoid the trap(s)?From the six generally applied strategy formulas (Sherman, 7) I would suggest that Thomas Cook needed to reduce the size of the business and to understand where value could be added to a customer taking a holiday instead of trying to own the end to end trip, this is what caused Thomas Cook a problem. The question is

  • Should they have been an airline?
  • Should they have been a hotel chain?
  • Should they have offered packages from the above and added additional services that customers wanted?

  I think the answer is that each of the above three are demanding industries, and competition is tight with small margin. It is a hard question without knowing more…There is no doubt that the CEO needed to decide on a strategy and own it and create meaningful differentiation (Sherman, 7) to allow the business to determine where the future could have been profitable and avoid the regret that has taken place.Many thanks.Stephen.

  1. Startup Talk. 2020. Reasons Behind The Thomas Cook Bankruptcy Case | Thomas Cook Case Study. https://startuptalky.com/case-study-thomas-cook/
  2. Rita Gunther McGrath. 2013. Transient Advantage
  3. Alice Hancock. Top trio who oversaw Thomas Cook’s rise and fall https://www.ft.com/content/1b1abb78-e089-11e9-9743-db5a370481bc
  4. Tabby Kinder. 2020. Thomas Cook collapse to cost UK government £156m. https://www.ft.com/content/7cb4153a-6916-11ea-800d-da70cff6e4d3
  5. BBC. 2019. Thomas Cook customers say they were ‘held hostage’ at Tunisian hotel. https://www.bbc.co.uk/news/uk-49787563
  6. Olesya Dmitracova. 2019. Thomas Cook is no more – what now for its 21,000 staff? https://www.independent.co.uk/news/business/news/thomas-cook-news-collapse-employees-jobs-staff-latest-a9116816.html
  7. Leonard Sherman. 2017. If You’re in a Dogfight, Become a Cat!: Strategies for Long-Term Growth
  8. .Richard Bode

• Rita McGrath, Columbia Business School professor and author of the article, “Transient Advantage,” discusses several traps that can blind a company to the need for imminent changes to their strategy to preserve competitive advantage. These traps, discussed in the second half of the article, include: the first-mover trap, the superiority trap, the quality trap, the hostage-resources trap, the white space trap, the empire-building trap, and the sporadic-innovation trap.Locate and post a link to an article in The Wall Street Journal, or another reputable source, about a company that fell victim to one or more of these traps.Good Afternoon Professor and Classmates,I have chosen a 2017 article from Forbes discussing how Radio Shacks narrow focus lead to their downfall. Radio Shack began in the 1920s and quickly became the US’s go-to store for electronics until the 2000’s when they were overtaken by stores like Best Buy, Walmart and Amazon (Rashid, 1). While each of these stores sell electronics, they appeal to a much broader customer base by selling a wide array of products Radio Shack did not. Their diversity of products allows them to keep prices low as they can make up for it elsewhere. Radio Shack continued to exclusively sell specialty electronics, kept prices high and, at times, increased prices. Radio Shack did not see the need to “invest in improving their established offerings” thus succumbing to the superiority trap and filing for bankruptcy (McGrath, 2). As Rashid explains, Radio Shack tried to remain competitive by entering into the “satellite, cable and cell phone space” and establishing the “store within a store” technique but by that time its competitors were already too far ahead (1). Radio Shack’s most appropriate and logical response would have been a radical reposition of its consumer value proposition (Sherman, 3). As a specialty electronics store, Radio Shack could have focused more on a customer base that used electronics for hobby rather than offering products consumers can buy anywhere (Pichhi, 4). As technology continued to advance, more people were becoming interested in how technology works and were learning to build computers. Radio Shack’s unique specialty electronics status could have been an opportunity to capitalize on the growing DIY market and offer a customer experience focused on building technology.

  Overperformers	Leaders Walmart Amazon Best Buy
  Followers Radio Shack	Laggards

  References:

  1. Brian Rashid. 2017. The Complications That Led To Radio Shack Declaring Bankruptcy For A Second Time In Two Years. https://www.forbes.com/sites/brianrashid/2017/04/08/the-complications-that-lead-to-radioshack-declaring-bankruptcy-for-a-second-time-in-two-years/?sh=2986120c1303
  2. Rita McGrath. 2013. Transient Advantage. Harvard Business Review
  3. Leonard Sherman. 2017. If You’re in a Dogfight, Become a Cat!
  4. Aimee Picchi. 2019. 5 Mistakes that Doomed Radio Shack. https://www.cbsnews.com/news/5-mistakes-that-doome…