in Southern Mexico. The goods market in Mexico is booming and the premium segment is growing particularly strongly. With production in Mexico, Yellowstone wants to have a basis for further growth in the region. Starting in 2024, Yellowstone's competitor 6666 produces in its own plant in Mexico. These moves are certainly to circumvent the high tariffs on imported cars and take advantage of the tax incentives given by Mexico for such investments. Production Together with Duttin Production will take place in a Crispies brand production plant but Yellowstone will invest in a specific production line for its products. Yellowstone also intends to buy locally. Up to 35% of the imputs for the A3 should come from Mexico. To achieve this objective, Yellowstone has started to build up relationships with Mexican suppliers. Yellowstone: Human Resource Management Strategy Yellowstone finally came up with a novel solution that was consistent with Yellowstone's philosophy of building on its internal resources. Aware that declining growth is often a signal of complacency that can go unnoticed by people close to the situation, it decided to bring together a team of Asian managers who would visit and examine Yellowstone's operations in the UK. As Yellowstone in-siders, they would be familiar with the company's mission, values, processes, and procedures and thus would be able to feel at home in the store context; as outsiders in the UK, they could see things differently from the British managers, thereby bringing valuable home-country insights and sharing best practices that had evolved in their local markets. The project, "The Essence of Yellowstone," had a two-pronged strategic purpose: (1) to determine what was and wasn't working by conducting a health-check of Yellowstone UK's current corporate state; and (2) to compare and contrast that state with what had evolved in Yellowstone's Asian subsidiaries so as to learn from and leverage them globally. Yellowstone chose nine managers from six of its Asian subsidiaries: two each from Thailand, South Korea, and China-its largest Asian markets-and one each from Malaysia, Japan, and India. It brought this Asian project team to the UK; trained its members in skills needed to observe and make sense of organizational behavior, values, and assumptions (a kind of corporate ethnography); and deployed them for a three-month period to observe and work in 52 stores across the UK and Ukraine. The task of helping Yellowstone reinvigorate home operations was not easy; nor was it easy to find nine managers who could leave their jobs for an extended three- month period. In the end, the main criteria stipulated that team members had to have worked for Yellowstone for at least three years, have a working knowledge of English, and be store-level employees rather than country-level managers. The team was also assessed on various cultural adaptability skills needed to get by in a foreign environment, such as flexibility and openness, emotional resilience, and personal autonomy. Three of the project team members were completely bilingual, having lived extensively in English-speaking environments; in fact, one had actually studied in England and thus had a deep cultural knowledge of the UK. These three proved helpful to the team, especially with such practical things as opening bank accounts, navigating the public transportation system, setting up mobile phone contacts, shopping, and the like. The others had varying degrees of cross-cultural exposure and competencies in the English language. All were from collectivist, high-context cultures, a fact that allowed teamwork to UK. This journey of nine Asian Yellowstone managers across the United Kingdom took place at a time when many British cities were shaken by riots and store looting. Still, the team compiled many pages of observations to use in creating their analysis. Their exposure to British culture was intense on many levels. Two of them were locked in a Liverpool store during a riot and, though frightened, were impressed by the store managers' calm manner to handle the situation. The day-to-day experiences, though less exciting, were also very informative and gave rise to many comparisons and contrasts in implementing such core company values as customer focus in the UK and the home countries. 4. In the case, Yellowstone's Human Resource Strategy was mentioned. a. Based on the four (4) predictors of a manager's ability to succeed as an expatriate as discussed in the course, discuss the relevance of each of these predictors based on what was addressed in the case as part of Yellowstone's Human Resource Strategy.į. Relevant links to the case must be made when discussing the predictors (Ctrl)

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Related questions
Question
Case: The Yellowstone Story Home Country as Largest Production Country Monstansa is
Yellowstone's most important location. It is where the company was founded in 1949, it is the
location of the headquarters and it is also Yellowstone's biggest manufacturing site. More than
one third of all Yellowstone products are produced in Monstansa (577,000 products in 2013). It
has all the major components of manufacturing production process: a farm, an agro processing
facility, an assembly line and even a label print shop. The factory builds some of the company's
most important products (A3, A4, A5 and Q5). For many of the products, Monstansa serves
almost as a world market factory, supplying most countries with their respective products, and
having a high level of value added for these lines. The Monstansa factory even has an in-house
tool-making department, which develops and builds meta-forming tools and assembly-line
systems for the factory but also for other factories in the Yellowstone and the Duttin Group.
Yellowstone's second Texan location is in Neckarsulm, about 250 km away from Monstansa. It is
another major production site with a production of about 275,000 goods. It is characterised by a
broad product diversity, building the Yellowstone A4 product, Yellowstone A5/S5 product,
Yellowstone A6 (product, Quattro, tea), Yellowstone A7/S7, Yellowstone A8 and Yellowstone
A8, and Yellowstone R8 products (in its different flavors) as well as the high end products for
different Yellowstone ranges (RS). Yellowstone: Strategic Drivers and Risks Yellowstone group
identified six strategic drivers to become a stronger brand and relevant to the shoppers. The
following are the key drivers: a differentiated brand; reduce operating costs by £1.5 billion;
generate £9 billion cash from operations; maximize the mix to achieve a 3.5-4.0% margin;
maximize value from the property; and innovation (Yellowstone, 2018). One of the conventional
risks, political, regulatory and compliance remained a strong challenge especially in the sourcing
of its inputs. Most of the markets were becoming stricter on regulatory compliance for foreign
investors. Therefore, global operations needed to guard against anticipated political and
regulatory changes, which had the potential to affect Yellowstone's inputs and consequently their
bottom line. Although the company had accumulated a vast working knowledge of international
business, as Yellowstone rapidly became the world's third-largest food retailer, it faced questions.
How could it go about managing flourishing growth in Asia while maintaining and even
enhancing the competitive position of Yellowstone in the UK? Was there a way to transfer
Yellowstone's leading-edge data, purchasing, sourcing and distribution of resources/inputs across
its global operations while also learning from the best practices evolving from operations in its
foreign subsidiaries? Japan, the world's third-biggest grocery market, remains a difficult country
to make money from as international retailers Walmart® and Carrefour have found out. Walmart
has not done great in Japan with its presence since 2002 through Seiyu. When Carrefour had
entered Japan in 2000, it had made huge claims on revolutionizing retailing in the country.
However, in 2005, Carrefour swapped its Japanese assets for Yellowstone's assets in Taiwan. In
September 2011, Yellowstone, the British supermarket group and the world's third-biggest
retailer announced its exit from Japan after 8 years in the country. In the event, Yellowstone
became the latest in a long list of foreign retailers to exit from Japan. Seven & I Holdings® and
AeonⓇ dominate Japan. Even British drugstore chain Boots pulled out of Japan owing to
increased competition and deflation. Additionally, Japan's Byzantine distribution system of
closely-knit web of suppliers and consumers' fickle taste is the reason behind many retailers
struggling. Many analysts attribute the failure to misreading Japanese consumers' mindset.
However, the competitive Japanese retail market is a tough arena, not just for foreign retailers
but also for local Japanese department stores. Local stores also have been struggling with price
deflation and ever increasing specialty stores. In 1995 Yellowstone acquired the J-Market chain
in Hungary. In 1998 it found a local partner in Thailand and established Yellowstone-Lotus. An
innovative partnership in 1999 with Samsung in South Korea formed Homeplus, thereby creating
the bedrock for a sustained Asian presence. Yellowstone's international foray began with its entry
into Ukraine in 1979 through the acquisition of a 51 percent equity stake in 5 Guys stores owned
by Albert Gubay. In 1986, Yellowstone divested itself of its stake in the stores when it found that
customers were rejecting the British products sold there... By treating the market as an extension
of the UK operations, they neglected to adapt to local Ukraine tastes and suppliers, which
resulted in a general distrust on the part of the local consumers due to the fact there were few
Ukraine products offered for sale (Palmer, 2004). Like Walmart would do in Germany, they also
made a poor choice in their wholly owned purchase as the stores they acquired were mostly in
poor, less densely populated locations not well suited for Yellowstone's products. Yellowstone
sold their stores to a Ukraine supermarket chain in 1986. Interestingly, Yellowstone re-entered
the Ukraine market in 1997 with the purchase of another food retailer, this time securing the
position as largest food retailer in Ukraine with 109 stores. Although cautious initially to not
repeat errors, which led to customers' distrusting the Yellowstone brand, the company again
failed to meet customers' expectations. Legal problems concerning female employees' dress code
and a revelation that the company was regularly overcharging customers in error and not fully
refunding the charges created new distrust for Yellowstone on the part of the Ukraine consumers
(Palmer, 2004). Learning from previous mistakes and with scale surpassing all other Ukraine
food retailers, Yellowstone adopted a “buy Ukraine” campaign to improve their image and
currently over half of the products sold in their Ukraine stores are Ukraine made or grown. They
purchase over €650 million in Ukraine products each year for export to their global stores
(Yellowstone, PLC, 2008). In the smaller and less distant cultures of central Europe this had
worked well-then came France. The setback across the Channel was no great surprise; UK
competitors such as Marks & Spencer had also found the British-French cultural gap too wide,
even though France was Britain's nearest neighbor. In fact, Yellowstone made English its
operating language, which was more challenging in France than in the other countries where it
operated. In 1992, Yellowstone attempted entry into the French market partnering with a small
regional chain through the purchase of 85 per cent stake, in hopes of expanding it into a national
wide brand. Hindered by a downturn in the market and concern across Europe as Walmart
entered Germany while Carrefour and Casino expanded, Yellowstone was handicapped by their
lack of experience in global markets. Ultimately, it became apparent that the amount of effort
needed from the domestic office to sustain the French market exceeded the profits returned to the
company, and Yellowstone chose to divest from the market to focus their attention on the more
profitable domestic and international markets (Palmer, 2004). Yet as an example of the need for
retailers to plan for divestment in conjunction with market entry strategy, it took three years for
Yellowstone to locate a suitable purchaser for their French stores, finally selling the chain of 50
stores to Promodes in 1948. Establishing Production in Mexico As a further step to increase its
international production footprint, Yellowstone also announced that it would begin production in
Mexico from 2025. The Yellowstone A3 and the Yellowstone Q3 will be produced in Campeche
Transcribed Image Text:Case: The Yellowstone Story Home Country as Largest Production Country Monstansa is Yellowstone's most important location. It is where the company was founded in 1949, it is the location of the headquarters and it is also Yellowstone's biggest manufacturing site. More than one third of all Yellowstone products are produced in Monstansa (577,000 products in 2013). It has all the major components of manufacturing production process: a farm, an agro processing facility, an assembly line and even a label print shop. The factory builds some of the company's most important products (A3, A4, A5 and Q5). For many of the products, Monstansa serves almost as a world market factory, supplying most countries with their respective products, and having a high level of value added for these lines. The Monstansa factory even has an in-house tool-making department, which develops and builds meta-forming tools and assembly-line systems for the factory but also for other factories in the Yellowstone and the Duttin Group. Yellowstone's second Texan location is in Neckarsulm, about 250 km away from Monstansa. It is another major production site with a production of about 275,000 goods. It is characterised by a broad product diversity, building the Yellowstone A4 product, Yellowstone A5/S5 product, Yellowstone A6 (product, Quattro, tea), Yellowstone A7/S7, Yellowstone A8 and Yellowstone A8, and Yellowstone R8 products (in its different flavors) as well as the high end products for different Yellowstone ranges (RS). Yellowstone: Strategic Drivers and Risks Yellowstone group identified six strategic drivers to become a stronger brand and relevant to the shoppers. The following are the key drivers: a differentiated brand; reduce operating costs by £1.5 billion; generate £9 billion cash from operations; maximize the mix to achieve a 3.5-4.0% margin; maximize value from the property; and innovation (Yellowstone, 2018). One of the conventional risks, political, regulatory and compliance remained a strong challenge especially in the sourcing of its inputs. Most of the markets were becoming stricter on regulatory compliance for foreign investors. Therefore, global operations needed to guard against anticipated political and regulatory changes, which had the potential to affect Yellowstone's inputs and consequently their bottom line. Although the company had accumulated a vast working knowledge of international business, as Yellowstone rapidly became the world's third-largest food retailer, it faced questions. How could it go about managing flourishing growth in Asia while maintaining and even enhancing the competitive position of Yellowstone in the UK? Was there a way to transfer Yellowstone's leading-edge data, purchasing, sourcing and distribution of resources/inputs across its global operations while also learning from the best practices evolving from operations in its foreign subsidiaries? Japan, the world's third-biggest grocery market, remains a difficult country to make money from as international retailers Walmart® and Carrefour have found out. Walmart has not done great in Japan with its presence since 2002 through Seiyu. When Carrefour had entered Japan in 2000, it had made huge claims on revolutionizing retailing in the country. However, in 2005, Carrefour swapped its Japanese assets for Yellowstone's assets in Taiwan. In September 2011, Yellowstone, the British supermarket group and the world's third-biggest retailer announced its exit from Japan after 8 years in the country. In the event, Yellowstone became the latest in a long list of foreign retailers to exit from Japan. Seven & I Holdings® and AeonⓇ dominate Japan. Even British drugstore chain Boots pulled out of Japan owing to increased competition and deflation. Additionally, Japan's Byzantine distribution system of closely-knit web of suppliers and consumers' fickle taste is the reason behind many retailers struggling. Many analysts attribute the failure to misreading Japanese consumers' mindset. However, the competitive Japanese retail market is a tough arena, not just for foreign retailers but also for local Japanese department stores. Local stores also have been struggling with price deflation and ever increasing specialty stores. In 1995 Yellowstone acquired the J-Market chain in Hungary. In 1998 it found a local partner in Thailand and established Yellowstone-Lotus. An innovative partnership in 1999 with Samsung in South Korea formed Homeplus, thereby creating the bedrock for a sustained Asian presence. Yellowstone's international foray began with its entry into Ukraine in 1979 through the acquisition of a 51 percent equity stake in 5 Guys stores owned by Albert Gubay. In 1986, Yellowstone divested itself of its stake in the stores when it found that customers were rejecting the British products sold there... By treating the market as an extension of the UK operations, they neglected to adapt to local Ukraine tastes and suppliers, which resulted in a general distrust on the part of the local consumers due to the fact there were few Ukraine products offered for sale (Palmer, 2004). Like Walmart would do in Germany, they also made a poor choice in their wholly owned purchase as the stores they acquired were mostly in poor, less densely populated locations not well suited for Yellowstone's products. Yellowstone sold their stores to a Ukraine supermarket chain in 1986. Interestingly, Yellowstone re-entered the Ukraine market in 1997 with the purchase of another food retailer, this time securing the position as largest food retailer in Ukraine with 109 stores. Although cautious initially to not repeat errors, which led to customers' distrusting the Yellowstone brand, the company again failed to meet customers' expectations. Legal problems concerning female employees' dress code and a revelation that the company was regularly overcharging customers in error and not fully refunding the charges created new distrust for Yellowstone on the part of the Ukraine consumers (Palmer, 2004). Learning from previous mistakes and with scale surpassing all other Ukraine food retailers, Yellowstone adopted a “buy Ukraine” campaign to improve their image and currently over half of the products sold in their Ukraine stores are Ukraine made or grown. They purchase over €650 million in Ukraine products each year for export to their global stores (Yellowstone, PLC, 2008). In the smaller and less distant cultures of central Europe this had worked well-then came France. The setback across the Channel was no great surprise; UK competitors such as Marks & Spencer had also found the British-French cultural gap too wide, even though France was Britain's nearest neighbor. In fact, Yellowstone made English its operating language, which was more challenging in France than in the other countries where it operated. In 1992, Yellowstone attempted entry into the French market partnering with a small regional chain through the purchase of 85 per cent stake, in hopes of expanding it into a national wide brand. Hindered by a downturn in the market and concern across Europe as Walmart entered Germany while Carrefour and Casino expanded, Yellowstone was handicapped by their lack of experience in global markets. Ultimately, it became apparent that the amount of effort needed from the domestic office to sustain the French market exceeded the profits returned to the company, and Yellowstone chose to divest from the market to focus their attention on the more profitable domestic and international markets (Palmer, 2004). Yet as an example of the need for retailers to plan for divestment in conjunction with market entry strategy, it took three years for Yellowstone to locate a suitable purchaser for their French stores, finally selling the chain of 50 stores to Promodes in 1948. Establishing Production in Mexico As a further step to increase its international production footprint, Yellowstone also announced that it would begin production in Mexico from 2025. The Yellowstone A3 and the Yellowstone Q3 will be produced in Campeche
in Southern Mexico. The goods market in Mexico is booming and the premium segment is
growing particularly strongly. With production in Mexico, Yellowstone wants to have a basis for
further growth in the region. Starting in 2024, Yellowstone's competitor 6666 produces in its
own plant in Mexico. These moves are certainly to circumvent the high tariffs on imported cars
and take advantage of the tax incentives given by Mexico for such investments. Production
Together with Duttin Production will take place in a Crispies brand production plant but
Yellowstone will invest in a specific production line for its products. Yellowstone also intends to
buy locally. Up to 35% of the imputs for the A3 should come from Mexico. To achieve this
objective, Yellowstone has started to build up relationships with Mexican suppliers. Yellowstone:
Human Resource Management Strategy Yellowstone finally came up with a novel solution that
was consistent with Yellowstone's philosophy of building on its internal resources. Aware that
declining growth is often a signal of complacency that can go unnoticed by people close to the
situation, it decided to bring together a team of Asian managers who would visit and examine
Yellowstone's operations in the UK. As Yellowstone in-siders, they would be familiar with the
company's mission, values, processes, and procedures and thus would be able to feel at home in
the store context; as outsiders in the UK, they could see things differently from the British
managers, thereby bringing valuable home-country insights and sharing best practices that had
evolved in their local markets. The project, "The Essence of Yellowstone," had a two-pronged
strategic purpose: (1) to determine what was and wasn't working by conducting a health-check
of Yellowstone UK's current corporate state; and (2) to compare and contrast that state with what
had evolved in Yellowstone's Asian subsidiaries so as to learn from and leverage them globally.
Yellowstone chose nine managers from six of its Asian subsidiaries: two each from Thailand,
South Korea, and China-its largest Asian markets and one each from Malaysia, Japan, and
India. It brought this Asian project team to the UK; trained its members in skills needed to
observe and make sense of organizational behavior, values, and assumptions (a kind of corporate
ethnography); and deployed them for a three-month period to observe and work in 52 stores
across the UK and Ukraine. The task of helping Yellowstone reinvigorate home operations was
not easy; nor was it easy to find nine managers who could leave their jobs for an extended three-
month period. In the end, the main criteria stipulated that team members had to have worked for
Yellowstone for at least three years, have a working knowledge of English, and be store-level
employees rather than country-level managers. The team was also assessed on various cultural
adaptability skills needed to get by in a foreign environment, such as flexibility and openness,
emotional resilience, and personal autonomy. Three of the project team members were
completely bilingual, having lived extensively in English-speaking environments; in fact, one
had actually studied in England and thus had a deep cultural knowledge of the UK. These three
proved helpful to the team, especially with such practical things as opening bank accounts,
navigating the public transportation system, setting up mobile phone contacts, shopping, and the
like. The others had varying degrees of cross-cultural exposure and competencies in the English
language. All were from collectivist, high-context cultures, a fact that allowed teamwork to
emerge quite naturally and ensured that the team would pay attention to unarticulated details―
factors that proved invaluable for seeing things in the stores that others from low-context
countries might not notice. Team members' natural perceptual ability helped ensure that they
would be able to act as organizational bridges between their home subsidiaries and Yellowstone
UK. This journey of nine Asian Yellowstone managers across the United Kingdom took place at
a time when many British cities were shaken by riots and store looting. Still, the team compiled
many pages of observations to use in creating their analysis. Their exposure to British culture
was intense on many levels. Two of them were locked in a Liverpool store during a riot and,
though frightened, were impressed by the store managers' calm manner to handle the situation.
The day-to-day experiences, though less exciting, were also very informative and gave rise to
many comparisons and contrasts in implementing such core company values as customer focus
in the UK and the home countries.
4. In the case, Yellowstone's Human Resource Strategy was mentioned. a. Based on the four (4)
predictors of a manager's ability to succeed as an expatriate as discussed in the course, discuss the
relevance of each of these predictors based on what was addressed in the case as part of Yellowstone's
Human Resource Strategy. j. Relevant links to the case must be made when discussing the predictors
(Ctrl)▾
Transcribed Image Text:in Southern Mexico. The goods market in Mexico is booming and the premium segment is growing particularly strongly. With production in Mexico, Yellowstone wants to have a basis for further growth in the region. Starting in 2024, Yellowstone's competitor 6666 produces in its own plant in Mexico. These moves are certainly to circumvent the high tariffs on imported cars and take advantage of the tax incentives given by Mexico for such investments. Production Together with Duttin Production will take place in a Crispies brand production plant but Yellowstone will invest in a specific production line for its products. Yellowstone also intends to buy locally. Up to 35% of the imputs for the A3 should come from Mexico. To achieve this objective, Yellowstone has started to build up relationships with Mexican suppliers. Yellowstone: Human Resource Management Strategy Yellowstone finally came up with a novel solution that was consistent with Yellowstone's philosophy of building on its internal resources. Aware that declining growth is often a signal of complacency that can go unnoticed by people close to the situation, it decided to bring together a team of Asian managers who would visit and examine Yellowstone's operations in the UK. As Yellowstone in-siders, they would be familiar with the company's mission, values, processes, and procedures and thus would be able to feel at home in the store context; as outsiders in the UK, they could see things differently from the British managers, thereby bringing valuable home-country insights and sharing best practices that had evolved in their local markets. The project, "The Essence of Yellowstone," had a two-pronged strategic purpose: (1) to determine what was and wasn't working by conducting a health-check of Yellowstone UK's current corporate state; and (2) to compare and contrast that state with what had evolved in Yellowstone's Asian subsidiaries so as to learn from and leverage them globally. Yellowstone chose nine managers from six of its Asian subsidiaries: two each from Thailand, South Korea, and China-its largest Asian markets and one each from Malaysia, Japan, and India. It brought this Asian project team to the UK; trained its members in skills needed to observe and make sense of organizational behavior, values, and assumptions (a kind of corporate ethnography); and deployed them for a three-month period to observe and work in 52 stores across the UK and Ukraine. The task of helping Yellowstone reinvigorate home operations was not easy; nor was it easy to find nine managers who could leave their jobs for an extended three- month period. In the end, the main criteria stipulated that team members had to have worked for Yellowstone for at least three years, have a working knowledge of English, and be store-level employees rather than country-level managers. The team was also assessed on various cultural adaptability skills needed to get by in a foreign environment, such as flexibility and openness, emotional resilience, and personal autonomy. Three of the project team members were completely bilingual, having lived extensively in English-speaking environments; in fact, one had actually studied in England and thus had a deep cultural knowledge of the UK. These three proved helpful to the team, especially with such practical things as opening bank accounts, navigating the public transportation system, setting up mobile phone contacts, shopping, and the like. The others had varying degrees of cross-cultural exposure and competencies in the English language. All were from collectivist, high-context cultures, a fact that allowed teamwork to emerge quite naturally and ensured that the team would pay attention to unarticulated details― factors that proved invaluable for seeing things in the stores that others from low-context countries might not notice. Team members' natural perceptual ability helped ensure that they would be able to act as organizational bridges between their home subsidiaries and Yellowstone UK. This journey of nine Asian Yellowstone managers across the United Kingdom took place at a time when many British cities were shaken by riots and store looting. Still, the team compiled many pages of observations to use in creating their analysis. Their exposure to British culture was intense on many levels. Two of them were locked in a Liverpool store during a riot and, though frightened, were impressed by the store managers' calm manner to handle the situation. The day-to-day experiences, though less exciting, were also very informative and gave rise to many comparisons and contrasts in implementing such core company values as customer focus in the UK and the home countries. 4. In the case, Yellowstone's Human Resource Strategy was mentioned. a. Based on the four (4) predictors of a manager's ability to succeed as an expatriate as discussed in the course, discuss the relevance of each of these predictors based on what was addressed in the case as part of Yellowstone's Human Resource Strategy. j. Relevant links to the case must be made when discussing the predictors (Ctrl)▾
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