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    Management Mistakes and SuccessesRobert F Hartley

    Kmart: From Mediocrity to Leadership to Jeopardy

    ...................................................................................... 2

    Scott Paper: Turnaround Trauma

    ...................................................................................... 2

    IBM: A Giant Falters But Then Arises

    ...................................................................................... 3

    Harley Davidson: Finally a Comeback

    ...................................................................................... 4

    The Saving and Loan Disaster: Greed Running Amuck

    ...................................................................................... 5

    Coca Colas Classic Planning Blunder

    ...................................................................................... 7

    Euro Disney: Bungling a Successful Format

    ...................................................................................... 7

    Contrast Southwest Airlines: Finding A Strategic Window of

    Opportunity

    ...................................................................................... 9

    Herman Miller: A role model disappoints

    ...................................................................................... 10

    Reebok vs Nike: Sneaker Wars

    ...................................................................................... 11

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    Kmart: From Mediocrity to Leadership to Jeopardy Replace those in the company who are incapable of accepting change

    Be aggressive, voluble and full of ideas Move aggressively and quickly in making changes Use technology to give yourself more control over your business If you dont experiment, you will never know Plans may be good but are not always implemented properly. The fault may lie

    within the organization, resource allocation or within top management itself Do not fail to delegate and develop key executives Although maintaining a centralised management structure of non-delegation

    has its faults (hinders creativity), an autocratic approach makes it easier to getthings done

    Heavy overhead can kill business Front-runners must stay sharp (the only way to go is backwards) Neglect your core business at your peril Attention to the core business does not rule out diversification can the

    resources be allocated to the diversification or will that allocation of resourceshurt the core business?

    Scott Paper: Turnaround Trauma Al Dunlap was brought in to turn a 115 year old company around (he was

    nicknamed Rambo in Pinstripes) The same day as Al Dunlap took over as CEO of Scott Paper, he invested $2

    million of his own money in the business to show his confidence that thecompany can be turned around

    On his first day Al Dunlap offered three of his former associates top jobs inthe company

    On the second day he disbanded the powerful management committee On the third day he fired none of the eleven highest ranking executives On the fourth day he destroyed four bookshelves crammed with strategic plans

    of previous administrations Some executives believe in instituting major challenges as quickly as possible

    because the organization is expecting it and it will be better prepared to make

    the adjustments needed than it ever will be again Other executives prefer to move more slowly after all the pros and cons can be

    weighed sometimes such delays can lull an organization into a sense of falsecalm and make for even more trauma when the changes eventually come

    After only two months at the job, Al Dunlap announced four major goals for the coming year:

    o Divest the company of non-strategic assetso Develop a core team of accomplished senior managerso Undertake a one-time-only global restructure to trim up the company

    (11,000 out of 25,900 positions were eliminated)o Develop new strategies for marketing

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    Bloated bureaucratic organizations are the epitome of inefficiency and waste but remedies can be overdone: dont cut off too much bone and muscle.

    The results of Dunlaps cost-cutting frenzy resulted in a rise in earnings by71% in the second quarter. In the third quarter, earnings increased by 73%.Fourth quarter earning were 159% higher than in 1993 (Dunlap took over in94)

    However, Scott Paper lost market share of 1% in the bath-tissue market and5.2% in paper towels.

    But Dunlap still said, I am still the best bargain in corporate America Slash and Burn techniques tend to bring great short-term results, but leave

    the company with longer term problems Cut the deadwood but not the bone and muscle A well-structured organization would appear to be best in many

    circumstances, but it tends to be too rigid, relying on rules and procedures andas a result is slow to adapt and change

    Some of the worst decisions in business concern buying and selling. Charisma, new blood and decisive leadership can turn around a company Strategic plans often delay change implementation it is often a vehicle for

    procrastination and blame-dilution

    IBM: A Giant Falters But Then Arises In 1993 IBM reported a $5.6bn loss for the fourth quarter of 1992 a yearly

    deficit of $4.97bn the biggest annual loss in American corporate history 42,900 jobs went in 1992 and another 25,000 were slated for termination in

    1993

    IBM got fat and complacent over the years Akers, the chairman of IBM, recognised that the company was in trouble in1991 and attempted to decentralise the business structure. He saw a crucialneed to cut fat from the organization

    Akers more radical proposal was to break up IBM and divide it into 13divisions and give each division more autonomy

    IBM was lagging behind Compaq, Sun and HP in producing affordable high-quality fast PCs. AT&T could sell a machine for $12.5 million thatoutperformed IBMs $20 million mainframe

    Louis Gerstner was appointed as CEO to replace Akers who lost the support of the Board. Gerstner was an outsider, an unusual step for IBM as they had a

    policy of promoting from within. It isnt always good to promote from within because by doing so you are

    happy with the status quo but always promoting from outside the company can play havoc with trainees who will lose faith in their career path within thecompany

    Resistance to change can be combated by good communication with participants about the forthcoming changes and by involving employees in thechange process.

    Change in a gradual fashion is much easier on staff, but abrupt changes canalso be more effective in certain circumstances (see the section on Scott Paper

    and Al Dunlap)

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    IBM was guilty of complacency, conservatism and conceit which leave noincentive to undertake aggressive and innovative acitons, causing growingdisinterest in such important facets of the business as customer relations,service, and even quality control. They also inhibit interest in developinginnovative new products that may cannibalise existing products and disruptentrenched interests

    IBM had a diminishing payoff on massive R&D expenditure and bloated costs IBM gave away the game they left microprocessors to Intel and software to

    Microsoft, preferring to concentrate on other issues In 1994, Gestner turned the company around its first profitable year since

    1990. Annual expenses were reduced by $3.5bn and its stock nearly tripled in price. Critics thought that Gerstners approach was not aggressive enough ashe discarded the idea of breaking up the company and opted for deep-cleaning and redecorating.

    People thought that he was moving too slowly, they were after an Al Dunlap

    style approach In an industry that moves at the speed of light, there is verylittle time for that (slow restructuring). IBM concentrated on R&D 1,298 patents in 1994 the most ever issued to

    one company in one year IBM was transformed into a lean and mean organization (in 1994, 185,000

    employees less than in the mid 1980s and $1.2bn of infrastructure sold off) Acting Small

    Adversity need not be forever firms can turnaround and come back over time, despite strong competition

    Harley Davidson: Finally a Comeback Harley Davidson motor cycles date back to 1903, but by 1960 it had destroyed

    all US competitors and had a 70% of the motorcycle market Despite their dominance, growth was minimal compared to the growth of the

    motor car market In 1964 Honda shook up the whole market by offering lightweight cycles and

    advertised towards the new customer. In only a few years Harley Davidsonsmarket share dropped to only 5%

    AMF (recreational equipment and bowling) bought a controlling stake inHarley Davidson in 1965

    Honda was making high quality motorcycles, Harleys quality control was

    very poor quality was going down just as fast as production was going up.50-60% of motorcycles failed quality control tests at Harley, only 5% atHonda

    Vaughan Beals bought out AMFs share in Harley and his massive lobbyingfor tariff protection by the government paid off and Harley began to buildmarket share

    Beale took a front line approach to marketing Harley he drove his Harley torallies; he helped to establish and grow the Harley Davidson Owners Group(HOGs) and spoke to them about their concerns etc

    In 1986 Harley Davidson requested that the tariffs be taken off imports oneyear earlier than planned their confidence was back

    Japanese operating costs were 30% lower than Harley Davidsons because of professional management and attention to detail

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    Beal divided each plant into profit centres, with managers assigned totalresponsibility within their particular area

    They formed quality Circles to increase employee involved in the qualitycontrol process. Quality circles are worker-managed-committees that meetregularly to talk about production problems, plan ways to improve

    productivity and quality and resolve job-related gripes The introduction of quality circles had a marked improvement on the

    productivity of Harley Davidson defects were down 70%! Harleys strong point was an unflappable base of loyal customers 92% of

    customers remained with Harley even during the bad years Harley also began to crack down on its copyright issues others were using its

    name on inferior merchandise. This helped to keep the Harley name associatedwith quality

    Harley increased its product range with 20 models by 1991 ranging from$4,500 to $15,000

    Harley honed in on a new market: Rich Urban Bikers (managers, professionalsetc) who brought the company back from the brink By 1993, Harley Davidson had a new problem: supply could not meet demand Visionary Leadership:

    o Challenge the process: be a pioneer and encourage innovation and people with ideas

    o Be enthusiastic: Inspire others through personal example to share in acommon vision

    o Help others to act: be a team player and support the efforts and talentsof others

    o Set the example: Provide a consistent model of how others should acto Celebrate achievements: Bring emotion into the workplace and rally

    hearts as well as minds You dont solve problems by throwing problems at them Harley took on the strategy of going slowly with its production, being careful

    with quality and refraining from heavy debt commitments. This raised the risk of permitting competitors to gain market share in the US and especially inEurope

    You must weigh up the risks of conservative planning versus aggressive planning

    Certainly a product has to be unique, but though most firms strive for thisdifferentiation, few achieve a mystique

    The Saving and Loan Disaster: Greed Running Amuck Sunbelt Savings Association McBirney formed an investment group that began buying small Savings and

    Loans companies and called it Sunbelt Savings Association which controlled$3.2bn

    Sunbelt was nicknamed Gunbelt because of the risks it took (loaning $125mto an inexperienced investor in his 20s who ended up losing $80m)

    Sunbelt spent millions on parties, aircraft and entertainment in the early 1980s

    When the regulatory authority began auditing all of the savings and loancompanies after a large company collapsed (due to high risk investments that

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    didnt pay off), the bulk of the savings and loan companies in the Sunbeltempire were declared insolvent. Many of the collateral properties weredeclared over-valued. Then real-estate prices plummeted.

    The government files a lawsuit against McBirney and other insider shareholders nearly $13 million in common and preferred dividends had

    been taken out in 1985 and 1986 at a time when Sunbelts capital was rapidlyevaporating

    General Discussion By 1988, 503 of the USAs 3178 thrift institutions were insolvent. Another

    629 had less capital on their books than required by law. In 1987 630 of thesecompanies had lost an estimated $7.5bn. More than half of these companieswere based in Texas

    The motivation for taking wild risks with deposits was that individualaccounts were insured up to $100,000 b the Federal Savings and LoanInsurance Corporation but even they could not cope without Congresscontributing billions of dollars

    Taxpayers eventually footed the bill

    Savings and Loans Companies had to Re-Evaluate Their Mission Determining your mission involves:

    o Assessing the environment and how it is changing or is expected tochange

    o Appraising competitive factors and how these may be changingo Weighing the particular strengths and weaknesses of the company

    Dont make mission statements too broad, but narrow definitions restrict perspectives and the grasping of different opportunities

    Leadership Issues Related to the Savings and Loan Debacle Leadership is vulnerable to abuses:

    o Overreachingo Not carefully assessing risk vs rewards in proposalso Operating beyond reasonable meanso Not keeping a tight rein on costso Failing to guide the organization with the best interests of the

    stakeholders in mind Such abuses are tempting in times of wild optimism Discipline is:

    o Controlled behaviour o Careful evaluation of actionso Quest for disciplined growtho Not being too conservative you risk missing opportunities and give

    competitors an advantage Adversity can create opportunities Any business firm faces a dynamic environment; nothing can be expected to

    remain constant. This requires some degree of adaptability

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    Coca Colas Classic Planning Blunder By the mid 1970s the Coca Cola Company was a lumbering giant, and this

    was reflected in its performance Pepsi was gaining a lot of headway the Pepsi Challenge proved time and

    again that taste testers preferred Pepsi In 1980 Robert Goizueta took over as chairman of Coca Cola and stated that

    Nothing is sacred to coke anymore in other words, changes were in the air he announced ambitious plans to diversify beyond the soft drink industry

    Marketing research still proved that taste testers preferred Pepsi so the onlylogical thing to do was to change the flavour of Coke.

    By September 1984 they produced a sweeter and less fizzy version of cokewith a soft, sticky taste the taste out-performed Pepsi in every taste test.

    Coke predicted $200 million boost in sales from New Coke 150 million people tried New Coke. Most comments were favourable. But protests mushroomed. In the first four hours, the company received about

    650 calls. By mid-May calls were coming in at a rate of 5,000 per day, inaddition to a barrage of angry letters. People were speaking of Coke as anAmerican symbol and a long-time friend.

    Company executives were worried about a consumer boycott and they decidedto re-introduce Coca Cola under the name Coca-Cola Classic and keep thenew recipe on the shelves as New Coke

    Old Cokes comeback drove the share price up to the highest level in 12 years But Coke spent $4 million and 2 years to market research 200,000

    consumers were contacted during this time The market research was flawed:

    o Participants in taste tests were not told that by picking one cola theywould lose the other

    o Only 30,000-40,000 of the taste tests conducted involved the specificformula for the new Coke

    o Preferences for sweeter products diminish with use and this was nottaken into account

    o The symbolic value of coke was not taken into account either Beware of tampering with the original image Tampering with a major product still in high demand may be risky Major changes are often better introduced without immediately discarding the

    present Sheer advertising expenditure does not guarantee effectiveness

    Euro Disney: Bungling a Successful Format Three amusement parks failed one year before Euro Disney opened just

    outside Paris in 92. Those failures did not concern Disney We are spending22bn Francs before we open the door, they only spent 700m

    Euro Disney cost a total of $4.4bn. The French Government invested $160mand other investors contributed $1.2bn

    Disneyland was already successful in Tokyo (opened 1983) By 1990, 16million people passed through the gates each year. Profits were at $150m per

    year (revenues at $988m)

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    At the end of 1992, it became clear that the numbers were not being met there was a recession and people were bringing their own food and not stayingin the hotels for many nights. Park admission prices were also very high($42.25US for adults)

    Skimming Pricing: setting prices assuming that demand will not bedetermined by price and therefore the price can be high with large profitmargins

    Penetration Pricing: Setting prices assuming that demand will increase withlower prices and decrease with higher prices and therefore there are limitationson your profit margin

    Patronage was up, but spending by each visitor was down There were a few cultural blunders made:

    o A no alcohol policy (wine is customary for lunch and dinner in France)and this discouraged visitors

    o It made mistakes with predicting the peak periods and had to lay off a

    number of staff when there were fewer visitors, but France has verystrict labour laws so they found this to be very difficulto Tour bus drivers were not catered for properly, so tour companies did

    not recommend visiting Euro Disney as much as they would haveotherwise

    Euro Disney lost $921m in the first fiscal year - $2.5m per day: non-operating costs were extraordinarily high. Efficiency and economy became thewatchwords it took 20 months to start ironing out the operational issues The English Channel Tunnel brought many Britons to France and EuroDisney Disney management failed to research the culture thoroughly enough By September 1995, Euro Disney became profitable.

    o The European banks loaned Euro Disney $500m and forgave 18months worth of interest charges and deferred all principle paymentsfor 3 years

    o The Walt Disney Company spent $750m in further investment in EuroDisney

    o The Saudi royal family invested up to $500m for a 24% stake in EuroDisney in 1994

    The turnaround ($35m in profit by 1995) was attributed to a newmarketing strategy:

    o Entry prices and prices within the park were slashedo A new high-tech attraction that mimicked a trip to the moon

    Critics saw the turnaround coming only from deals struck withcreditors to suspend debt not a sustainable situation especially when the

    payments resume in three years time Beware of cultural differences when marketing overseas Great successes often dont have staying power Financing through debt is highly risky and vulnerable

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    Contrast Southwest Airlines: Finding A Strategic Window of Opportunity Herb Kelleher, flamboyant CEO of Southwest Airlines, exploited amarket niche to grow a 4-plane airline into a 141 planes and took on the bigairlines at the same time. Kellehers local short-distance no-frills flights attracted many

    passengers because:o They were cheap (average of $58 US)o They took passengers to smaller airfields, rather than the congested

    larger fieldso Flights were frequento Good serviceo Fun (in-flight trivia contests, instructions delivered in rap and prizes

    for the passenger with the largest hole in their socks!) They were so successful that many larger airlines simply could notcompete and stopped servicing many of the short routes In many instances, Southwest was competing with car and bus travelThe traffic is already there. We take it off the highway and put it on theairplanes When Southwest entered into the Californian market, it really hurt itscompetitors they were unable to maintain certain routes which were mainfeeders to the rest of their national travel network Secrets to Southwests success are:

    o Cost containment - all aircraft are 737s so maintenance costs arereduced, 70% of Southwest aircraft have a 15 minute turnaround time

    between flights which include cleaning, servicing, unloading andloading passengers, no assigned seats, baggage was not transferred toother planes (that was the passengers responsibility), re-usable plasticcards for boarding passes, peanuts and drinks offered but no meals.

    o Employee commitment negotiated flexible work rules with theunions, high productivity meant a leaner crew (no layoffs necessarywhen times were tougher), sense of fun in the workplace (Fun is astimulant to people. They enjoy their work more and work more

    productively)o Conservative growth expansion was only undertaken when enough

    resources could be committed to go into a city with 10-12 flights a day,rather than just one or two concentrating on a few areas, rather than

    dissipating strength by trying to compete everywhere. The most powerful advantage a company can have against acompetitor is lower prices, better service and superior quality Competitive advantage can also be gained by unlocking a nichemarket:

    1. Identifiability: can those people who constitute the niche market beeasily identified?

    2. Size: Is the niche market big enough to be viable?3. Accessibility: can you promote your product or service without too

    much waste?4. Growth Potential: Does the niche market show promise for long-term

    growth?

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    5. Absence of vulnerability to competition: Is the niche market already being tapped? If so, are you competitive enough to break into themarket and capture significant market share?

    No competitive advantage is more powerful than a dedicatedworkforce

    Herman Miller: A role model disappoints Herman Miller is an office-furniture maker in Michigan and has long

    been celebrated as a model of superb employee relations and it stood at theforefront with modern environmentally friendly policies such as:

    o The company organised silver parachutes for employees who losttheir jobs in an economic downturn so that they received big cheques

    o Herman Miller limited top execs salaries to 20 times that of the lineworker (it was not uncommon to find top execs earning 100 times thatof a line worker)

    o Employees were organised into work teams and every six months bothworkers and employees would evaluate each other

    o They ensured career development prospects for employees byscrapping nepotism in the company the owners family was not evenallowed to work in the company in any capacity.

    Management kept a paternalistic relationship with employees they practiced a participative management style by involving them in management processes.

    The advantages of a participative management structure are:o People tend to be more cooperative and enthusiastic when they have

    some involvement in the planningo Better decisions are usually more common when different experiences

    and points of view are raisedo Employee development is maximised

    The disadvantages are:o Consultation takes time and many decisions are too minor to warrant

    that sort of time commitment or a decision has to be made quickly andthere is no time for commitment

    o No benefit is likely for new or untrained employees The best managers use participative techniques whenever they can,especially when the decision affects the employees but they choose their opportunities carefully In 1995 Herman Miller was a $1billion company, but sale were only$800million in 1989 so the growth was very slow profits slid from $40m inthe 80s to $4.5m in 1995. In 1992 it recorded a net loss of $3.5m its first lossever. In 1992J Kermit Campbell was named chairman and moved quickly to

    cut costs by:

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    Dictatorial Authoritative Participative Democratic

    Least MostDegree of subordinate involvement in

    planning and decision making

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    o firing several top execs, including an employee who had been with thecompany for 20 years (this type of employee treatment was unheard of at Herman Miller)

    o Closing plants in Texas and New Jersey as well as several showrooms Herman Miller was rapidly losing its reputation as the best company towork for by Campbell said, Survival is more important than maintaining a

    pristine relationship with workers Campbell announced his retirement only two months after taking the

    job. He was replaced by Michael Volkema Herman Miller started losing profits and market share because:

    o They made high quality, high cost furniture. In the past there was alarge market for such office furniture. Now consumers were turningtowards mid-quality low cost furniture

    o They changed the type of wood used for their best selling office chair on environmental grounds (the wood was at risk of becoming

    endangered) and they lost a lot of saleso They spent $11m on waste-to-energy heating and cooling which was

    environmentally friendly and could save money in the long run, but thesavings would not be as much as if they would have invested that$11m

    o They miscalculated the rise of the home office and their receptivenessto high priced office furniture

    o They didnt adapt to competitive forces Dont grow the company too fast that a high percentage would have toleave in times of difficulty (be lean and mean) Shareholder discontent is unhealthy for executives: stakeholders havethe right to agitate for drastic shake-ups when the company fortunes asreflected in the stock price show little promise of improving.

    Reebok vs Nike: Sneaker WarsReebok

    Reebok goes back to the 1890s when Joseph William Foster made the firstknown running shoes with spikes.

    In 1958 the Reebok company was formed by Fosters grandsons and in 1979,at the height of the running shoe boom, three models were introduced into theUS market. Although they were the most expensive shoes on the market,

    demand soon outgrew supply By 1981 sales were $1.5 million Reebok anticipated three major trends that would transform athletic footware:

    the aerobic exercise movement, the embracing of sports by women and thetrasference of athletic footware for street and casual wear.

    Growth exploded (especially with the introduction of the first-ever athleticshoe designed for women) and sales soared from $13 million in 1983 to $307million in 1985 sales tripled in one year, reaching $919 million in 1986. $1.4

    billion was reached by 1987 and $2.7 billion was reached by 1991 In 1993, a company publication stated that their objective, is to become the

    best, most innovative and exciting sporting goods company in the world.

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    In 1987 Nike had sales of only $900m while Reeboks was soaring at $1.4b.But Reeboks sales slowed and by 1990, Nike overtook it with $2.24b in salescompared to Reeboks $2.16b in sales. Reebok began to steadily lose ground.

    Part of the shift could be attributed to Bikes savvy advertising and to its twowell-paid endorsers: Michael Jordan and Pete Sampras. But as the mid 90sapproached, Reeboks internal flaws became more and more obvious.

    As sales increased so rapidly in the mid 80s, Fireman, who was Chairman andCEO gave up his position to a management team more experienced inhandling such a large company. While Fireman (who owned 20% of the stock)was busy building golf courses on Cape Cod, the new management team

    proved to be inept. The company went through three different top managers infive years.

    In August 1992, Fireman took charge and wasted little time in bringing in anew team and planned an aggressive thrust back into the market.

    Reebok attacked Nike on the basketball market. Jordan was retiring from

    basketball and Reebok signed up Shaquille ONeal (the next enduringsuperstar) to promote its products for $3m in 1992 Reebok advertised its new instapump shoe (using a pump instead of laces)

    very aggressively and expected $100m in sales The Just do it slogan of Nike was devastatingly effective Reebok also signed up 400 football, baseball and soccer stars for its

    advertising and promotion But these efforts did not pay off:. The Shaq Attaq shoes, aimed at teens,

    bombed the colours were wrong and the price was $130US basketballshoes fell 20%

    By 1995 operating costs soared to 32.7% of sales, exceeding the industryaverage of 27%

    Reebok signed up 3,000 athletes to wear Reeboks at the 1996 Olympics inAtlanta; NFL teams; and Rebecca Lobo (a basketball star) which blew out the

    budget Other endorsements failed: Michael Chang was on a $15m contract, but he

    never made it against Sampras and Aggassi who were both Nike endorsers andShaquille ONeal became unhappy with his $3m contract and started to look elsewhere for bigger and better money

    The Reebok company also hit distribution snags and opened a new facility inMemphis, which also cost big dollars

    There were problems at the top the turnover of top management was high,How do you attract first rate talent when theres been a history of turnover atthe top?

    There were also price-fixing charges laid by the Federal Trade Commissionand in May 1995, Reebok paid out $9.5m to settle

    Reebok also lost ground in the Foot Locker market. Footlocker (a Woolworthscompany) was the biggest retailer of sports shoes. Footlocker saw its biggestweapon as its exclusive lines but Reebok denied exclusivity to Foot Locker regarding their aerobic shoes. In contrast, Nike had been working with FootLocker and by 1995 had a dozen items sold only by the Footlocker chain.Reebok also failed to get its samples in to Footlocker on time and that virtuallyguaranteed that they would not be sold in Footlocker stores.

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    Senior management, even Presidents of firms need to become involved in thedevelopment of relationships with major customers, such as Foot Locker

    Nike Nike, founded by Bowerman and Night, began as the Blue Ribbon Shoe

    Company in 1964 and sold $8,000 mostly to high school athletic teams in itsfirst year.

    In 1972 they changed the name to Nike (the Greek goddess of victory) andduring the Olympic marathon trials Nike wearers placed 4 th through 7 th,compared to Adidas wearers who finished 1 st, 2nd and 3 rd.

    On a Sunday morning in 1975, Bowerman, a co-founder of the company, was playing around with a waffle iron and some urethane rubber. He fashioned anew type of sole with tiny studs that made it more springy. 1976 sales soaredto $14m, up from $8.3m the year before and from only $2m in 1972

    Careful research and development of new models ensured its continuing

    success they employed nearly 100 people in the R&D side of the businesswho produced more than 140 high-tech models Nike led the market with more than a 50% share In 1980 Nike went public and Night became a multimillionaire worth $300m,

    Bowerman sold most of his stock earlier and was worth only $9.5 million Nike missed the opportunity to gain a foothold in the aerobic dancing market

    which boomed in the 1980s and lost a lot of ground to Reebok who was therefirst with a shoe designed specifically for women

    In 1993, Nike did not look like a winner as share prices tumbled sales wereup only 15% and earnings just 11% - not enough for a once hot-stock

    Nike embraced the motto, Play by the rules, but be ferocious. But they were not ferocious to their customers they pampered them Nike cultivated customers while Reebok was surprisingly nonchalant Nike was also very lucky they chose athletes to endorse their products who

    became the dominant figures in their sport. The Just do it slogan really appealed to youth and really caught on Success does not guarantee continued success, as is evident from Reeboks

    rise and fall The most competent executives have vision, support of their organization and

    reasonable judgement

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