UNIVERSITI TUNKU ABDUL RAHMAN

ACADEMIC YEAR 2020/2021

JANUARY 2021 TRIMESTER

FINAL ASSESSMENT

UKMM3013 STRATEGIC MANAGEMENT

SATURDAY, 8 MAY 2021 TIME: 9.00 AM – 12.30 PM (3.5 HOURS)

BACHELOR OF ACCOUNTING (HONOURS)

BACHELOR OF INTERNATIONAL BUSINESS (HONOURS)

Instructions to Candidates:

REMINDER: You are reminded to read and adhere to the Final Assessment Instructions to
Candidates that has been made available through the UTAR Portal before the commencement
of Final Assessment (FA). The detailed instructions for this FA are as follows:

General

1. This Final Assessment (FA) is an Individual, time restricted assessment which

consists of FOUR (4) questions.

2. You are required to answer ALL questions, and submit the ANSWER SCRIPT
within 3.5 hours by 12.30 PM, 8 MAY 2021.

3. During the period of 3.5 hours of this FA, the examiner(s) can be reached at

(a). Microsoft Teams with Code: 6jjemx1or

(b). Email: harlina@utar.edu.my

You may use the above e-platform(s) to check with the examiner(s) if you need any
clarification on this FA question paper.

4. You may refer to any books, lecture notes, published materials, online resources etc.
when answering the questions. Proper referencing is necessary to avoid plagiarism.
The preferred referencing style is American Psychological Association (APA) /
Harvard / Chicago Manual. Candidates are reminded that Copy-and-Paste,
Consultation, Discussion and Sharing of Answers with others are STRICTLY
PROHIBITED in this FA.

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Answer Script File

5. The answer script MUST be a Microsoft Word file [Compulsory for text-based
submission to enable Turnitin Plagiarism Check] or opt for PDF and IMAGE file [for
non-text/ hand written submission], in A4 size format. Note: Please keep the file size
NOT exceeding 30MB per file.

6. Please check your Index Number generated by the Division of Examinations, Awards,
and Scholarships (DEAS). You MUST name your answer script file using the
following file name for submission:
[Course Code]_FA_[Programme Abbreviation]_[Your Index Number]

For example, if you are from the degree programme AT/BP/GE/IN, and your Index
Number is U012345UKINF, then your answer script should be named as:
UKMM3013_ FA_ AT_ U012345UKINF

Answer Script File Submission

7. Your answer script file has to be submitted to the following platform(s) before the due
time/date.

(a). Attach your answer script at WBLE

Note: Use your “1UTAR” email account to access the Google Form.
You can edit your submission before the form is closed.
AND

(b). Send your answer script to the course code email:

UKMM3013.FAM@utar.edu.my

Note: For the subject / title of your email, use the file name of your
answer script, i.e.,
UKMM3013_FA_[Programme Abbreviation]_[Your Index Number]

8. Please make sure you submit the correct, complete and final version of your answer
script and the same copy of answer script file is to be submitted to the above
platform(s). When multiple answer script files are received, the examiner will
randomly choose one for marking.

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Contents of Answer Script

9. The first page of your submission is the Final Assessment Cover Page. You MUST
use the template given and fill in the following information
 Your Programme (Abbreviation)
 Your Index Number
 Your Name
 Your Student ID

10. The second page of your submission is the Final Assessment Declaration
Statement. You MUST use the template given, and digitally sign on the form to
indicate the authenticity of your submitted work is without plagiarism.

11. Each question should be answered starting on a new page. It is recommended that the
answer to each question is limited to 1 pages or 300 words, whichever is lower.

12. For answer scripts that have text-based answers only, all texts MUST be typed and
recommended using Times New Roman characters with font size [12], with proper
spacing and alignment, except for the drawings and equations/calculations.

13. For answer scripts that require / contain drawings, equations and calculations with
short text descriptions, you can hand-write your answers on a blank paper, and then
use the

14. 22scanner apps in your smartphone (Scanner Document, CamScanner, Adobe

Scanner etc.) to take scanned copy, or you can type if necessary and include the
scanned copy taken in the Word document, as part of your submitted answers.

15. Please include a page number on each and every page of your answer script. Ensure
that each page of answer scripts is in sequence prior to online submission.

WARNING OF PLAGIARISM

Answer scripts shall be uploaded to Turnitin to check for the originality of submitted
answers. In the case of suspected plagiarism, the evidence will be submitted to the
Examination Disciplinary Committee of the University. Disciplinary action shall be taken
against any candidate who is found to have plagiarized in the answer submitted. Hence,
candidates are reminded to abide by all University Rules and Regulations and any
instructions/guidelines relating to examinations/assessments.

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Section A: Case Study 1 [Total: 50 marks]

Read the case and answer ALL questions (compulsory).

CASE 1: MCDONALD’S

On January 18, 2017, McDonald’s announced that it was introducing two new versions of the
Big Mac on a limited basis. Although such changes are necessary for the world’s largest
restaurant chain, the new offerings will be similar to the original version because they will
use frozen beef patties and a secret sauce. This is unlikely to address the shift in tastes among
consumers for fresher beef and a variety of toppings. In fact, a recent survey indicated a
serious cause for concern for the firm, finding that only 20 percent of Millennials had even
tried a Big Mac. Nevertheless, Steve Easterbrook, who took the helm of McDonald’s in
March 2015, has continued to push for changes to several of the ingredients that the firm has
been using in its products. It has removed high fructose corn syrup from its buns, changed
from the use of liquid margarine to real butter, decided to use chicken that has been raised
without antibiotics, and to make use of cage free eggs. Mike Andres, president of
McDonald’s USA, explained why the firm has decided to make these changes: “Why take a
position to defend them if consumers are saying they don’t want them?” These changes are
expected to address some of challenges that McDonald’s has been facing in many markets,
including the U.S., where it has over 14,000 of its 35,000 mostly franchised restaurants. It has
lost a lot of ground with consumers, especially Millennials, who are defecting to traditional
competitors like Burger King and Wendy’s as well as to new designer burger outlets such as
Five Guys and Shake Shack. Changing tastes are also responsible for the loss of customers
that are lining up at fast-casual chains such as Chipotle Mexican Grill and Panera Bread,
which offer customized ordering and fresh ingredients. Over the years, McDonald’s response
to this growing competition was to expand its menu with snacks, salads and new drinks.
From 33 basic items that the chain offered in 1990, the menu had grown by 2014 to 121
items. The greatly expanded menu led to a significant increase in costs and longer preparation
times. This forced the firm to increase the prices of many of its items and to take more time to
serve customers, moving it away from the attributes that it had built its reputation upon.
“McDonald’s stands for value, consistency and convenience,” said Darren Tristano, a
restaurant industry consultant. The fast-food chain has been through a similar crisis before.
Back in 2002–2003, McDonald’s had experienced a decline in performance because of
quality problems as the result of rapid expansion. At that time, the firm had brought James R.
Cantalupo back out of retirement to turn things around. He formulated a “Plan to Win,”
which has been the basis of McDonald’s strategy over the last decade. The core of the plan
was to increase sales at existing locations by improving the menu, refurbishing the outlets,
and extending hours. This time, however, such incremental steps might not be enough.

Pulling out of a Downward Spiral

Since it was founded more than fifty years ago, McDonald’s has been defining the fast food
business. It provided millions of Americans their first jobs even as it changed their eating
habits. It rose from a single outlet in a nondescript Chicago suburb to become one of the
largest chains of outlets spread around the globe. But it gradually began to run into various
problems which began to slow down its sales growth. This decline could be attributed in large
part to a drop in McDonald’s once-vaunted service and quality since its expansion in the
1990s, when headquarters stopped grading franchises for cleanliness, speed, and service. By
the end of the decade, the chain ran into more problems because of the tighter labour market.
McDonald’s began to cut back on training as it struggled hard to find new recruits, leading to
a dramatic falloff in the skills of its employees. According to a 2002 survey by market

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researcher Global Growth Group, McDonald’s came in third in average service time behind
Wendy’s and

Section A (Continued)

sandwich shop Chick-fil-A Inc. By the beginning of 2003, consumer surveys were indicating
that McDonald’s was headed for serious trouble. Measures for the service and quality of the
chain were continuing to fall, dropping far behind those of its rivals. In order to deal with its
deteriorating performance, the firm decided to bring back retired Vice-Chairman James R.
Cantalupo, 59, who had overseen McDonald’s successful international expansion in the
1980s and 1990s. Cantalupo, who had retired only a year earlier, was perceived to be the only
candidate with the necessary qualifications, despite shareholder sentiment for an outsider.
The board had felt that it needed someone who knew the company well and could move
quickly to turn things around. Cantalupo realized that McDonald’s often tended to miss the
mark on delivering the critical aspects of consistent, fast, and friendly service and an all-
around enjoyable experience for the whole family. He understood that its franchisees and
employees alike needed to be inspired as well as retrained on their role in putting the smile
back into the McDonald’s experience. When Cantalupo and his team laid out their turnaround
plan in 2003, they stressed getting the basics of service and quality right, in part by
reinstituting a tough “up or out” grading system that would kick out underperforming
franchisees. “We have to rebuild the foundation. It’s fruitless to add growth if the foundation
is weak,” said Cantalupo. In his effort to focus on the core business, Cantalupo sold off the
non-burger chains that the firm had recently acquired. He also cut back on the opening of
new outlets, focusing instead on generating more sales from existing outlets. Cantalupo
pushed McDonald’s to try to draw more customers through the introduction of new products.
The chain had a positive response to its increased emphasis on healthier foods, led by a
revamped line of fancier salads. The revamped menu was promoted through a new worldwide
ad slogan, “I’m loving it,” which was delivered by pop idol Justin Timberlake through a set
of MTV style commercials.

Striving for a Healthier Image

When Jim Skinner took over from Cantalupo in 2004, he continued to push for McDonald’s
to change its image. Skinner felt that one of his top priorities was to deal with the growing
concerns about the unhealthy image of McDonald’s, given the rise of obesity in the U.S.
These concerns were highlighted in the popular documentary Super-Size Me, made by
Morgan Spurlock. Spurlock vividly displayed the health risks that were posed by a steady
diet of food from the fast-food chain. With a rise in awareness of the high fat content of most
of the products offered by McDonald’s, the firm was also beginning to face lawsuits from
some of its loyal customers. In response to the growing health concerns, one of the first steps
taken by McDonald’s was to phase out supersizing by the end of 2004. The supersizing
option allowed customers to get a larger order of French fries and a bigger soft drink by
paying a little extra. McDonald’s also announced that it intended to start providing nutrition
information on the packaging of its products. The information will be easy to read and will
tell customers about the calories, fat, protein, carbohydrates and sodium that are in each
product. Finally, McDonald’s has also begun to remove the artery clogging trans fatty acids
from the oil that it uses to make its French fries and has recently announced plans to reduce
the sodium content in all of its products by 15 percent. But Skinner was also trying to push
out more offerings that are likely to be perceived by customers to be healthier. McDonald’s
has continued to build upon its chicken offerings using white meat with products such as
Chicken Selects. It has also placed a great deal of emphasis upon its new salad offerings.
McDonald’s has carried out extensive experiments and tests with these, deciding to use
higher quality ingredients, from a variety of lettuces and tasty cherry tomatoes to sharper

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cheeses and better cuts of meat. It offered a choice of Newman’s Own dressings, a well-
known higher-end brand. “Salads have changed the way people think of our brand,” said
Wade Thoma, vice president for menu development in the U.S.

Section A (Continued)

“It tells people that we are very serious about offering things people feel comfortable eating.”
McDonald’s has also been trying to include more fruits and vegetables in its well-known and
popular Happy Meals. It announced in 2011 that it would reduce the amount of French fries
and phase out the caramel dipping sauce that accompanied the apple slices in these meals.
The addition of fruits and vegetables has raised the firm’s operating costs, because these are
more expensive to ship and store because of their more perishable nature. “We are doing
what we can,” said Danya Proud, a spokesperson for the firm. “We have to evolve with the
times.” The rollout of new beverages, highlighted by new coffee-based drinks, represents the
chain’s biggest menu expansion in almost three decades. Under a plan to add a McCafe
section to all of its nearly 14,000 U.S. outlets, McDonald’s has been offering lattes,
cappuccinos, ice-blended frappes and fruit-based smoothies to its customers. “In many cases,
they’re now coming for the beverage, whereas before they were coming for the meal,” said
Lee Renz, an executive who was responsible for the rollout.
(Source: Dess, G. G., McNamara, G., Eisner, A. B., & Lee, S. H. (2019). Strategic Management: Text & Cases
(9th ed.). McGraw-Hill Education).

Answer ALL questions

Q1. (a) Determine ONE (1) unique McDonald’s capability. Suggest how valuable,
rare, costly to imitate, and non-substitutable capabilities are to this firm.
(15 marks)

(b) James Cantalupo could be considered as a strategic leader. Provide

recommendations on what strategic leaders must do to develop and sustain an
effective organisational structure. (10 marks)

Q2. (a) Apply Porter’s Five Forces in relation to the case. (15 marks)

(b) Due to the current situation, how would McDonald’s responds to the
pandemic. Provide some insights how McDonald’s would strategize for the
future after pandemic. (10 marks)
[Total: 50 marks]

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Section B: Case Study 2 [Total: 50 marks]

Read the case and answer ALL questions (compulsory).

CASE 2: TOYOTA MOTORS CO.

Introduction

In 1937, Kiichiro Toyoda founded the Toyota Motor Corporation, headquartered in Aichi
Prefecture, Japan. The company, now headed by Akio Toyoda, the President and
Representative Director, has a capital of around $179,399 million.

About Toyota Motors

Toyota is well-known as the most leading Japanese automobile company. By creating more
innovative car design and spending billions of dollars in advertisement a year, Toyota has
appeared in the eyes of many auto consumers worldwide. Toyota has built its reputation
globally by producing high quality vehicles at affordable prices. Toyota has reduced their
prices as compared to other automobile makers. Toyota believes that the role of purchasing
should be long term at the lowest price and no compromise on the production of quality
products.
Its primary business activities involve automotive manufacturing. As of March 2016, the
company employs around 348,977 people. Sakichi Toyoda, the founder of Toyota Industries,
set certain Guiding Principles that reflect Toyota’s organisational culture and values, and are
the basis for the corporate management philosophy. These were first revised in 1992, and
again in 1997, to support its operations in a multicultural environment. They were modified
in response to the societal changes and the company’s business structure, which support its
global vision, strategies, and operations worldwide. An example of its strategy to keep with
the changing times is the Toyota Way 2001, which focuses on CSR and customer orientation,
innovative management, and the nurturing of its employees’ creativity and teamwork, mutual
trust, and respect between labour and management. At the heart of the Toyota Way are two
pillars—continuous improvement and respect for people. These are supported by five values:
challenge, continuous improvement (kaizen), seeing for yourself (genchi genbutsu), respect,
and teamwork.

Challenges and Strategy Implementation at Toyota Motors

In 1997, Thailand, a regional hub of Toyota’s auto manufacturing industry in ASEAN, faced
an economic crisis resulting from over-investment in real estate and a liberal financing
policy.

Toyota Motor Thailand Co., Ltd. (TMT) subsequently encountered huge losses. To overcome
the crisis various actions were taken—the TMT first requested and received two capital
injections, totalling US$200 million, from Toyota Motor Corporation in Japan. However,
since the automotive market was down by about 75%, the TMT had to use a job-sharing
approach to retain its skilled, but redundant, workforce. Together with this measure, the
company observed it’s “no lay-off” policy by sending about 200 idle associates to Japan for
training, while others assisted their local dealers. To avoid further losses, TMT focused on
100% localization of parts and took advantage of export opportunities. Undertaking new
business reforms, such as online management of vehicle supply and demand and the

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formation of project teams in finance and marketing, helped boost new vehicle sales. For
dealers and suppliers, TMT granted credit lines and short-term loans.

Section B (Continued)

At the time, the former king of Thailand, Bhumibol Adulyadej, showed concern for the issues
of possible unemployment and granted a purchase order to TMT to produce a Toyota Soluna
(Vios) and prolong the working period of Thai workers. Instead of selling the vehicle, TMT
presented it to the king as a gift; the King, in turn, granted $17,518 (600,000 baht) to TMT to
help establish the Rachamongkol Rice Mill, a project spearheaded by Ninnart Chaithirapinyo,
the Vice Chairman of TMT. As an ongoing TMT-CSR activity, the mill still helps rice
farmers maintain their crop prices and benefits TMT associates and the overall community. In
brief, TMT overcame the crisis of 1997 by using Kaizen to strengthen its competitiveness and
improving communication among top management and all of its associates. In its
developmental path towards sustainability, Toyota Motors set a Global Vision. The medium-
to long-term management plan is prepared and implemented with the controlling measures as
a feedback in its management system. In the implementation process, the Toyota Way 2001
and the Toyota Code of Conduct serves as an important global guideline for daily business
operations for all employees. Toyota’s divisional organisation structure is based on varied
business operations but is linked to the traditional Japanese organisational structures. In 2013,
as a response to the safety issues and corresponding product recalls crisis of 2009, the
centralized hierarchical structure underwent significant changes to become more
decentralized.

After the re-organisation, Toyota’s new organisational structure has the following main
characteristics: global hierarchy, geographic divisions, and product-based divisions. The
company is now more capable of responding to regional market conditions and is empowered
to speedily respond to issues and to provide higher quality products. However, the increased
decision-making power of regional heads has reduced headquarters’ control over the global
organisation. Still, this organisational structure facilitates business resilience and continued
growth. A study by Wells and Orsato (2005) suggests that there is currently a shift away from
the current all-steel, internal combustion engine car, which requires automakers to
fundamentally reform their systems of production. The business challenges and the
governmental regulations to preserve the environment means cars of the future have to be
eco-friendly. This created a big challenge for auto firms that have sunk investments in the
existing traditional car manufacturing technology. In 2009, as a result of its worldwide recall-
crisis and with over 8 million vehicles addressing issues related to ‘unintended acceleration,’
Toyota had a great lesson in keeping up with its production and leveraging of quality,
durability, safety, and reliability issues. The company continued to develop innovative
models to overcome environmental regulation challenges and to add a ‘humanistic’
dimension to consumers’ image of auto companies. Its strategic direction is to go beyond
zero environmental impact and achieve a net positive impact and sustainability.
(Source: Hoffman, A., Hunger, J., Wheelan, T. and Bamford, C., 2018. Strategic Management and Business
Policy: Globalization, Innovation and Sustainability, Global Edition. 15th ed. Harlow: Pearson Education
Limited)

Answer ALL questions

Q1. (a) Using the case information, define cooperative strategy. Can you identify the
different types of corporate-level cooperative strategies that are available for
Toyota Motors to implement? (15 marks)

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(b) Multiple factors and conditions are influencing Toyota Motors Co. to use the
international strategies. Analyse FIVE (5) factors that provide a basis for
international business-level strategies. (10 marks)

Section B (Continued)

Q2. (a) Toyota Motors has encountered huge losses due to economic crisis. What
business level strategy is being used? How would Toyota Motors change this
strategy to improve its competitive position? Justify your answer.
(10 marks)

(b) Based on what you know, how would you compare the different types of
organisational structures that are used to implement the multidomestic, global
and transnational international strategies. Provide evidence from the case to
demonstrate this. (15 marks)
[Total: 50 marks]

_______________________________

This final assessment paper consists of 4 questions on 9 printed pages.