Case: The Yellowstone Story Home Country as Largest Production Country Monstansa isYellowstone's most important location. It is where the company was founded in 1949, it is thelocation of the headquarters and it is also Yellowstone's biggest manufacturing site. More thanone third of all Yellowstone products are produced in Monstansa (577,000 products in 2013). Ithas all the major components of manufacturing production process: a farm, an agro processingfacility, an assembly line and even a label print shop. The factory builds some of the company'smost important products (A3, A4, A5 and Q5). For many of the products, Monstansa servesalmost as a world market factory, supplying most countries with their respective products, andhaving a high level of value added for these lines. The Monstansa factory even has an in-housetool-making department, which develops and builds meta-forming tools and assembly-linesystems 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 isanother major production site with a production of about 275,000 goods. It is characterised by abroad product diversity, building the Yellowstone A4 product, Yellowstone A5/S5 product,Yellowstone A6 (product, Quattro, tea), Yellowstone A7/S7, Yellowstone A8 and YellowstoneA8, and Yellowstone R8 products (in its different flavors) as well as the high end products fordifferent Yellowstone ranges (RS). Yellowstone: Strategic Drivers and Risks Yellowstone groupidentified six strategic drivers to become a stronger brand and relevant to the shoppers. Thefollowing 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 conventionalrisks, political, regulatory and compliance remained a strong challenge especially in the sourcingof its inputs. Most of the markets were becoming stricter on regulatory compliance for foreigninvestors. Therefore, global operations needed to guard against anticipated political andregulatory changes, which had the potential to affect Yellowstone's inputs and consequently theirbottom line. Although the company had accumulated a vast working knowledge of internationalbusiness, 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 evenenhancing the competitive position of Yellowstone in the UK? Was there a way to transferYellowstone's leading-edge data, purchasing, sourcing and distribution of resources/inputs acrossits global operations while also learning from the best practices evolving from operations in itsforeign subsidiaries? Japan, the world's third-biggest grocery market, remains a difficult countryto make money from as international retailers Walmart® and Carrefour have found out. Walmarthas not done great in Japan with its presence since 2002 through Seiyu. When Carrefour hadentered 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. InSeptember 2011, Yellowstone, the British supermarket group and the world's third-biggestretailer announced its exit from Japan after 8 years in the country. In the event, Yellowstonebecame the latest in a long list of foreign retailers to exit from Japan. Seven & I Holdings® andAeonⓇ dominate Japan. Even British drugstore chain Boots pulled out of Japan owing toincreased competition and deflation. Additionally, Japan's Byzantine distribution system ofclosely-knit web of suppliers and consumers' fickle taste is the reason behind many retailersstruggling. Many analysts attribute the failure to misreading Japanese consumers' mindset.However, the competitive Japanese retail market is a tough arena, not just for foreign retailersbut also for local Japanese department stores. Local stores also have been struggling with pricedeflation and ever increasing specialty stores. In 1995 Yellowstone acquired the J-Market chainin Hungary. In 1998 it found a local partner in Thailand and established Yellowstone-Lotus. Aninnovative partnership in 1999 with Samsung in South Korea formed Homeplus, thereby creatingthe bedrock for a sustained Asian presence. Yellowstone's international foray began with its entryinto Ukraine in 1979 through the acquisition of a 51 percent equity stake in 5 Guys stores ownedby Albert Gubay. In 1986, Yellowstone divested itself of its stake in the stores when it found thatcustomers were rejecting the British products sold there... By treating the market as an extensionof the UK operations, they neglected to adapt to local Ukraine tastes and suppliers, whichresulted in a general distrust on the part of the local consumers due to the fact there were fewUkraine products offered for sale (Palmer, 2004). Like Walmart would do in Germany, they alsomade a poor choice in their wholly owned purchase as the stores they acquired were mostly inpoor, less densely populated locations not well suited for Yellowstone's products. Yellowstonesold their stores to a Ukraine supermarket chain in 1986. Interestingly, Yellowstone re-enteredthe Ukraine market in 1997 with the purchase of another food retailer, this time securing theposition as largest food retailer in Ukraine with 109 stores. Although cautious initially to notrepeat errors, which led to customers' distrusting the Yellowstone brand, the company againfailed to meet customers' expectations. Legal problems concerning female employees' dress codeand a revelation that the company was regularly overcharging customers in error and not fullyrefunding 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 Ukrainefood retailers, Yellowstone adopted a “buy Ukraine” campaign to improve their image andcurrently over half of the products sold in their Ukraine stores are Ukraine made or grown. Theypurchase 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 hadworked well-then came France. The setback across the Channel was no great surprise; UKcompetitors 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 itsoperating language, which was more challenging in France than in the other countries where itoperated. In 1992, Yellowstone attempted entry into the French market partnering with a smallregional chain through the purchase of 85 per cent stake, in hopes of expanding it into a nationalwide brand. Hindered by a downturn in the market and concern across Europe as Walmartentered Germany while Carrefour and Casino expanded, Yellowstone was handicapped by theirlack of experience in global markets. Ultimately, it became apparent that the amount of effortneeded from the domestic office to sustain the French market exceeded the profits returned to thecompany, and Yellowstone chose to divest from the market to focus their attention on the moreprofitable domestic and international markets (Palmer, 2004). Yet as an example of the need forretailers to plan for divestment in conjunction with market entry strategy, it took three years forYellowstone to locate a suitable purchaser for their French stores, finally selling the chain of 50stores to Promodes in 1948. Establishing Production in Mexico As a further step to increase itsinternational production footprint, Yellowstone also announced that it would begin production inMexico 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 isgrowing particularly strongly. With production in Mexico, Yellowstone wants to have a basis forfurther growth in the region. Starting in 2024, Yellowstone's competitor 6666 produces in itsown plant in Mexico. These moves are certainly to circumvent the high tariffs on imported carsand take advantage of the tax incentives given by Mexico for such investments. ProductionTogether with Duttin Production will take place in a Crispies brand production plant butYellowstone will invest in a specific production line for its products. Yellowstone also intends tobuy locally. Up to 35% of the imputs for the A3 should come from Mexico. To achieve thisobjective, Yellowstone has started to build up relationships with Mexican suppliers. Yellowstone:Human Resource Management Strategy Yellowstone finally came up with a novel solution thatwas consistent with Yellowstone's philosophy of building on its internal resources. Aware thatdeclining growth is often a signal of complacency that can go unnoticed by people close to thesituation, it decided to bring together a team of Asian managers who would visit and examineYellowstone's operations in the UK. As Yellowstone in-siders, they would be familiar with thecompany's mission, values, processes, and procedures and thus would be able to feel at home inthe store context; as outsiders in the UK, they could see things differently from the Britishmanagers, thereby bringing valuable home-country insights and sharing best practices that hadevolved in their local markets. The project, "The Essence of Yellowstone," had a two-prongedstrategic purpose: (1) to determine what was and wasn't working by conducting a health-checkof Yellowstone UK's current corporate state; and (2) to compare and contrast that state with whathad 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, andIndia. It brought this Asian project team to the UK; trained its members in skills needed toobserve and make sense of organizational behavior, values, and assumptions (a kind of corporateethnography); and deployed them for a three-month period to observe and work in 52 storesacross the UK and Ukraine. The task of helping Yellowstone reinvigorate home operations wasnot 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 forYellowstone for at least three years, have a working knowledge of English, and be store-levelemployees rather than country-level managers. The team was also assessed on various culturaladaptability 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 werecompletely bilingual, having lived extensively in English-speaking environments; in fact, onehad actually studied in England and thus had a deep cultural knowledge of the UK. These threeproved 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 thelike. The others had varying degrees of cross-cultural exposure and competencies in the Englishlanguage. All were from collectivist, high-context cultures, a fact that allowed teamwork toemerge quite naturally and ensured that the team would pay attention to unarticulated detailsfactors that proved invaluable for seeing things in the stores that others from low-contextcountries might not notice. Team members' natural perceptual ability helped ensure that theywould be able to act as organizational bridges between their home subsidiaries and YellowstoneUK. This journey of nine Asian Yellowstone managers across the United Kingdom took place ata time when many British cities were shaken by riots and store looting. Still, the team compiledmany pages of observations to use in creating their analysis. Their exposure to British culturewas 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 tomany comparisons and contrasts in implementing such core company values as customer focusin the UK and the home countries.. Questions: 1. Yellowstone relies heavily on, 'Home Country as Largest Production Country' asmentioned in the case. a. State the term for this strategic choice as discussed in the course. i.Discuss the benefits and risks associated with this strategic choice. b. Based on the informationprovided in the case, analyse four (4) criteria Yellowstone would have considered when makingthis choice as discussed in the course.

Question

Case: The Yellowstone Story Home Country as Largest Production Country Monstansa isYellowstone's most important location. It is where the company was founded in 1949, it is thelocation of the headquarters and it is also Yellowstone's biggest manufacturing site. More thanone third of all Yellowstone products are produced in Monstansa (577,000 products in 2013). Ithas all the major components of manufacturing production process: a farm, an agro processingfacility, an assembly line and even a label print shop. The factory builds some of the company'smost important products (A3, A4, A5 and Q5). For many of the products, Monstansa servesalmost as a world market factory, supplying most countries with their respective products, andhaving a high level of value added for these lines. The Monstansa factory even has an in-housetool-making department, which develops and builds meta-forming tools and assembly-linesystems 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 isanother major production site with a production of about 275,000 goods. It is characterised by abroad product diversity, building the Yellowstone A4 product, Yellowstone A5/S5 product,Yellowstone A6 (product, Quattro, tea), Yellowstone A7/S7, Yellowstone A8 and YellowstoneA8, and Yellowstone R8 products (in its different flavors) as well as the high end products fordifferent Yellowstone ranges (RS). Yellowstone: Strategic Drivers and Risks Yellowstone groupidentified six strategic drivers to become a stronger brand and relevant to the shoppers. Thefollowing 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 conventionalrisks, political, regulatory and compliance remained a strong challenge especially in the sourcingof its inputs. Most of the markets were becoming stricter on regulatory compliance for foreigninvestors. Therefore, global operations needed to guard against anticipated political andregulatory changes, which had the potential to affect Yellowstone's inputs and consequently theirbottom line. Although the company had accumulated a vast working knowledge of internationalbusiness, 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 evenenhancing the competitive position of Yellowstone in the UK? Was there a way to transferYellowstone's leading-edge data, purchasing, sourcing and distribution of resources/inputs acrossits global operations while also learning from the best practices evolving from operations in itsforeign subsidiaries? Japan, the world's third-biggest grocery market, remains a difficult countryto make money from as international retailers Walmart® and Carrefour have found out. Walmarthas not done great in Japan with its presence since 2002 through Seiyu. When Carrefour hadentered 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. InSeptember 2011, Yellowstone, the British supermarket group and the world's third-biggestretailer announced its exit from Japan after 8 years in the country. In the event, Yellowstonebecame the latest in a long list of foreign retailers to exit from Japan. Seven & I Holdings® andAeonⓇ dominate Japan. Even British drugstore chain Boots pulled out of Japan owing toincreased competition and deflation. Additionally, Japan's Byzantine distribution system ofclosely-knit web of suppliers and consumers' fickle taste is the reason behind many retailersstruggling. Many analysts attribute the failure to misreading Japanese consumers' mindset.However, the competitive Japanese retail market is a tough arena, not just for foreign retailersbut also for local Japanese department stores. Local stores also have been struggling with pricedeflation and ever increasing specialty stores. In 1995 Yellowstone acquired the J-Market chainin Hungary. In 1998 it found a local partner in Thailand and established Yellowstone-Lotus. Aninnovative partnership in 1999 with Samsung in South Korea formed Homeplus, thereby creatingthe bedrock for a sustained Asian presence. Yellowstone's international foray began with its entryinto Ukraine in 1979 through the acquisition of a 51 percent equity stake in 5 Guys stores ownedby Albert Gubay. In 1986, Yellowstone divested itself of its stake in the stores when it found thatcustomers were rejecting the British products sold there... By treating the market as an extensionof the UK operations, they neglected to adapt to local Ukraine tastes and suppliers, whichresulted in a general distrust on the part of the local consumers due to the fact there were fewUkraine products offered for sale (Palmer, 2004). Like Walmart would do in Germany, they alsomade a poor choice in their wholly owned purchase as the stores they acquired were mostly inpoor, less densely populated locations not well suited for Yellowstone's products. Yellowstonesold their stores to a Ukraine supermarket chain in 1986. Interestingly, Yellowstone re-enteredthe Ukraine market in 1997 with the purchase of another food retailer, this time securing theposition as largest food retailer in Ukraine with 109 stores. Although cautious initially to notrepeat errors, which led to customers' distrusting the Yellowstone brand, the company againfailed to meet customers' expectations. Legal problems concerning female employees' dress codeand a revelation that the company was regularly overcharging customers in error and not fullyrefunding 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 Ukrainefood retailers, Yellowstone adopted a “buy Ukraine” campaign to improve their image andcurrently over half of the products sold in their Ukraine stores are Ukraine made or grown. Theypurchase 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 hadworked well-then came France. The setback across the Channel was no great surprise; UKcompetitors 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 itsoperating language, which was more challenging in France than in the other countries where itoperated. In 1992, Yellowstone attempted entry into the French market partnering with a smallregional chain through the purchase of 85 per cent stake, in hopes of expanding it into a nationalwide brand. Hindered by a downturn in the market and concern across Europe as Walmartentered Germany while Carrefour and Casino expanded, Yellowstone was handicapped by theirlack of experience in global markets. Ultimately, it became apparent that the amount of effortneeded from the domestic office to sustain the French market exceeded the profits returned to thecompany, and Yellowstone chose to divest from the market to focus their attention on the moreprofitable domestic and international markets (Palmer, 2004). Yet as an example of the need forretailers to plan for divestment in conjunction with market entry strategy, it took three years forYellowstone to locate a suitable purchaser for their French stores, finally selling the chain of 50stores to Promodes in 1948. Establishing Production in Mexico As a further step to increase itsinternational production footprint, Yellowstone also announced that it would begin production inMexico 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 isgrowing particularly strongly. With production in Mexico, Yellowstone wants to have a basis forfurther growth in the region. Starting in 2024, Yellowstone's competitor 6666 produces in itsown plant in Mexico. These moves are certainly to circumvent the high tariffs on imported carsand take advantage of the tax incentives given by Mexico for such investments. ProductionTogether with Duttin Production will take place in a Crispies brand production plant butYellowstone will invest in a specific production line for its products. Yellowstone also intends tobuy locally. Up to 35% of the imputs for the A3 should come from Mexico. To achieve thisobjective, Yellowstone has started to build up relationships with Mexican suppliers. Yellowstone:Human Resource Management Strategy Yellowstone finally came up with a novel solution thatwas consistent with Yellowstone's philosophy of building on its internal resources. Aware thatdeclining growth is often a signal of complacency that can go unnoticed by people close to thesituation, it decided to bring together a team of Asian managers who would visit and examineYellowstone's operations in the UK. As Yellowstone in-siders, they would be familiar with thecompany's mission, values, processes, and procedures and thus would be able to feel at home inthe store context; as outsiders in the UK, they could see things differently from the Britishmanagers, thereby bringing valuable home-country insights and sharing best practices that hadevolved in their local markets. The project, &#34;The Essence of Yellowstone,&#34; had a two-prongedstrategic purpose: (1) to determine what was and wasn't working by conducting a health-checkof Yellowstone UK's current corporate state; and (2) to compare and contrast that state with whathad 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, andIndia. It brought this Asian project team to the UK; trained its members in skills needed toobserve and make sense of organizational behavior, values, and assumptions (a kind of corporateethnography); and deployed them for a three-month period to observe and work in 52 storesacross the UK and Ukraine. The task of helping Yellowstone reinvigorate home operations wasnot 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 forYellowstone for at least three years, have a working knowledge of English, and be store-levelemployees rather than country-level managers. The team was also assessed on various culturaladaptability 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 werecompletely bilingual, having lived extensively in English-speaking environments; in fact, onehad actually studied in England and thus had a deep cultural knowledge of the UK. These threeproved 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 thelike. The others had varying degrees of cross-cultural exposure and competencies in the Englishlanguage. All were from collectivist, high-context cultures, a fact that allowed teamwork toemerge quite naturally and ensured that the team would pay attention to unarticulated detailsfactors that proved invaluable for seeing things in the stores that others from low-contextcountries might not notice. Team members' natural perceptual ability helped ensure that theywould be able to act as organizational bridges between their home subsidiaries and YellowstoneUK. This journey of nine Asian Yellowstone managers across the United Kingdom took place ata time when many British cities were shaken by riots and store looting. Still, the team compiledmany pages of observations to use in creating their analysis. Their exposure to British culturewas 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 tomany comparisons and contrasts in implementing such core company values as customer focusin the UK and the home countries.. Questions: 1. Yellowstone relies heavily on, 'Home Country as Largest Production Country' asmentioned in the case. a. State the term for this strategic choice as discussed in the course. i.Discuss the benefits and risks associated with this strategic choice. b. Based on the informationprovided in the case, analyse four (4) criteria Yellowstone would have considered when makingthis choice as discussed in the course.

Accepted Answer

Yellowstone is a well-established company with a significant manufacturing presence. The company has…