1 Introduction

Question 1

Key questions at the outset:

Answer 1

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What are the objectives of a firm? (Positive)
What should be the objectives of a firm? (Normative

Question 2

Strong trend: Maximize Shareholder Value

Answer 2

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-From the positive side:
Many firms name shareholder value maximization as their key target
-From a normative side:
Some indication that shareholder value maximization leads to efficient choices for the economy as a whole

Question 3

CSR at Whole Foods Market

Answer 3

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-biggest supermarket chain for
organic food in the world
-1978 in a garage in Austin, Texas
-Few, expensive organic shops with small (often specialized) product selection
-2007: 20 consecutive years ranked on Fortune List “Best 100 Companies to Work for” (rank in 2017: 58)
-Acquisition by Amazon announced on 16 June 2017 for 13.7 billion US-$
-91,000 employees in USA, Canada and UK with yearly sales of 12.9 billion US-$

Question 4

Corporate Culture at Whole Foods Market

Answer 4

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• Employee-orientated work culture with open communication
• Employee Health, satisfaction as a fundamental value
• Innovative and egalitarian work environment
• Organizational structure is based on teams
• Teams at every level of the organizations
• High autonomy of the teams/storescreating a strong entrepreneurial culture
• Teams were interdependent and strive for the same goals

Question 5

CSR whole foods market

Answer 5

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Autonomy/participation in decision making
 Hiring Vote: team decides (after trial period of 30 days)
on recruitment of candidate
 Employees decide on benefit package
 Transparency and measurement
 Salaries as well as company figures transparent to every employee
 Healthy dose of competition among teams of employees to “create a culture of excellence”

Question 6

Amazon

Answer 6

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• 1995 by Jeff Bezos as online bookstore
• algorithm to determine the best time and price to offer products
• Amazon Prime 2005
• 2007 Amazon fresh

Question 7

Corp. Culture at Amazon

Answer 7

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Main goal: „being the most customer-centric company on the earth“
-Data as the center of corporate culture
-Small teams (two Pizza rule)
-Competitive, demanding work environment
-High degree of staff supervision
-Time taken by workers to complete a task is constantly measured, notification if it takes too long

Question 8

Aquisition of Whole Foods by Amazon

Answer 8

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Less responsibility, autonomy of the store teams centralization of main decisions
 Culture of low prices instead of quality
 Adaption of Amazon’s culture of supervision Employees could get fired
if performance falls below specific values
 Adaption of Amazon’s culture of data
 Employees experience the adjustment as challenging, stressful

Question 9

How to create more value along the value chain than competitors?

Answer 9

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Configure the value chain differently
 Perform activities in the value chain more effectively
To do the latter: Build up
 Specific resources and  Capabilities
that other firms lack
Important:
 It should not be easily possible for other firms to duplicate or acquire these resources or capabilities

Question 10

Value Chain

Answer 10

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Question 11

Resources

Answer 11

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things that a firm “has”)
 Firm-specific assets such as patents or trademarks  Brand name reputation
 Installed base (e.g. network externalities)
 Organizational culture
 Workers with specific human capital

Question 12

Capabitlities/Core competencies

Answer 12

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things that a firm “can do”)
 Activities that a firm does especially well compared with other firms
 Might reside within special functions or are linked to particular technologies
 Typically valuable across multiple products or markets
 Often tacit - i.e. difficult to pin down exactly or reduce to procedure guides (also linked to particular work norms, organizational culture)