Ichido was founded by Bingrong Tsai, and grew from one store in 1999 in Shanghai’s Xuhui District to 115 stores in Mainland China as of June 2017. Tsai had been in the bakery industry for more than 30 years. He first spent eight years in Japan starting 1984, then worked in three bakery companies in Shanghai over six years from 1992 to 1998, and then started his own business, Ichido, in 1999. Ichido had revenues of more than CNY 300 million in 2016.
Ichido was mainly focused in the Shanghai market (i.e., approximately 100 out of 115 stores were in Shanghai), and the company's revenue model was based on the sale of bakery products (breads, croissants, rolls, etc.) until 2012. Due to fierce competition in the bakery industry in China, different consumption preferences among different generations of consumers, and other changes in the industry (such as retail formats, the growth of ecommerce, etc.), Tsai realized the need to change the business model. He initiated a brand transformation in 2012, when he separated the business into 6 brands in order to better serve different target customers. These included ICHIGO, a store format developed for the Shanghai metro that targeted daily commuters in the subway system; ICHI Bakery Blue, a high-end bakery that mainly produced authentic French handmade breads with natural yeast; ICHI Bakery Orange, a family-style bakery aimed at communities in residential neighborhoods; ICHI Table, a light-meal restaurant providing fare for daily light meals and weekend brunches; ICHI Sweets, a French patisserie that served light luxury desserts and afternoon teas; and ICHI Bonbons, a premium chocolate outlet. At the same time, Ichido starting selling its products on e-commerce platforms in 2016 and running businesses on third-party platforms such as Tmall and JD in order to become an omni-channel player.
Based on the advice of his advisors, Tsai decided to strengthen the management team. However, since most of the management team members were recent recruits (who joined in 2016 or 2017) and came from unrelated industries such as electronics, it took time for them to understand the specific challenges of the bakery business.
Currently, Tsai had an expansion plan according to which ICHIGO would be the main focus of growth, aiming for 50 new metro stores by the end of 2017. Tsai also considered raising external funding to finance growth.
This case is designed to stimulate in-depth discussion based on the two questions: i) How should Tsai expand Ichido to achieve growth? This question requires students to think about the challenges faced by Ichido’s management team, and which of the retail brands should be prioritized for growth and which cities/regions should Tsai and his team focus on; and ii) Should Tsai seek financing from a strategic investor or from a pure financial investor?
Driving by several internal and external challenges, Jiangsu Huabo Industrial Group Co., Ltd. (“Huabo Group”), a leading provincial distributor of mobile phones incorporated in 2001, have been exploring how to transform its offline distributing business into an online platform from 2013. In April 2014, Huabo Group incubated a new startup, Jiangsu PhoneWin Logistics Management Co., Ltd. (“PhoneWin”), by bringing together offline logistics services (PhoneWin Logistics) and an online platform (51dh.com.cn). Different with large established e-commerce platforms such as Taobao.com and JD.com focusing on individual customers in first- and second-tier cities at that time, PhoneWin was created to exploit opportunities to serve small stores in smaller towns and villages. The basic operation model is: When the small mobile phone stores in rural markets placed their orders on 51dh.com.cn, PhoneWin Logistics would deliver the phones before 4:00 p.m. the next day. By November 11, 2015, PhoneWin has expanded into 13 provinces across China, built partnerships with over 300 suppliers of mobile phones, and had over 80,000 small stores registered on its platform. In October 2015, it completed Series A funding of ￥120 million. However, two Chinese e-business giants, Taobao.com and JD.com, have started to expand their penetration in rural markets, which is becoming an inevitable threat to companies like PhoneWin. As an early entrant in this market, how can PhoneWin compete against such powerful giants? Will it be able to sustain its revenue and profit growth in the coming years?
mobile phone distributor
E-commerce in rural areas
O2O(Online To Offline)
In environments with widespread corruption, most business leaders hesitate to take a firm stand against corruption. However, research conducted in Egypt, Zimbabwe, and India shows that organizations should view building a strong ethical reputation in such environments as an opportunity to differentiate themselves. To do this, companies can follow four steps. First, frame their ethical behavior in a way that resonates with as wide a network of stakeholders as possible. Second, understand that there are gradations of corruption. Third, acquire a fine-grained understanding of their stakeholders. Fourth, strategically build partnerships with high-status individuals and organizations, a tactic referred to as “reputation borrowing.”
Academy of Management Annual Meeting Proceedings
Increasing attention is being paid to how hybrid organizations handle the tensions between contending institutional logics. However, intra-logic tensions regarding the decoupling of the internal components of the incumbent logics, the resultant organizational crises and how these crises are resolved, are understudied. This study explores how the Chinese and Indian Railways tackle organizational crises by reframing and recombining the means and ends components of contending logics. Based on comprehensive archival, interview and textual analyses, we find that the two railways maintained or shifted the incumbent logic to address organizational crises through remedial, manipulation, compromise and complementation strategies. We specify the mechanisms underlying each strategy, present a unified model and discuss the implications for research on hybrid organizations and crisis management.
We study how ethical behaviour by firms leads to ethical reputation building. Based on our in-depth studies of two firms in India and Zimbabwe that resisted corruption and survived for extended time periods, we propose that in addition to behaving ethically, firms need to elicit favourable responses from a critical mass of stakeholders from both strong and weak tie networks in order for their ethical reputations to diffuse quickly and widely. We find that the strength of stakeholder responses to ethical behaviour is moderated by firm level and contextual factors: high status affiliations, industry characteristics, the nature of corruption resisted, the presence of a plural press, the potential for collective action, and the presence of an independent judiciary. These antecedents also influence the pattern of stakeholder resource commitments that firms are able to enjoy as a result of having built ethical reputations.
International Journal of Emerging Markets
The purpose of this paper is to contribute to the literature on institutional complexity by highlighting patterns of strategic behaviors of SMEs in institutional environments undergoing large scale transitions.
The paper uses five in-depth case studies of medium-sized enterprises in the Yangtze River Delta region to study their behaviors over the 2000-2012 period during which the institutional landscape in China underwent major changes.
The authors find that when institutional complexity is high, i.e., when neither the planned economy nor the market economy logic dominates, the role of organizational filters is more pronounced. In this situation, firm-level characteristics – its revenues and profitability, its competitive position and future prospects – play a dominant role in determining the nature of the strategic decisions and actions the firm undertakes.
The findings provide a nuanced perspective on strategic behaviors under institutional complexity. The qualitative research design offers rich insights but limited generalizability.
The findings offer practical insights to SME leaders in terms of exercising caution in undertaking unrelated diversification during periods of transition from planned to market economies.
The authors apply the concepts of institutional complexity and organizational filters in a context of large scale institutional transitions to study the strategic behaviors of SMEs over a 12 year period.
Small Business Economics
This paper examines the drivers of IPO performance of 783 SMEs in China between 2009 and 2012 that were listed on the SME and Growth Enterprise Boards. The study finds that firms that had prior venture capital (VC) investment did not perform better than those that did not. Among VC-invested firms, ventures (1) with strong VC control rights relative to those of the largest block shareholder, (2) with former ownership affiliation between the VC and the underwriter, and (3) that paid higher IPO fees had a negative long-term performance. The negative relationship between VC-underwriter ownership affiliation and long-term performance decreases as the reputation of the underwriter increases.
Corporate Governance: The international journal of business in society
The purpose of this study is to explore the regulatory framework in China and the extent to which Chinese multinationals have implemented and disclosed their anti-bribery and corruption (ABC) compliance practices. This is done against the backdrop of the evolving international ABC compliance standards.
This study is based on detailed reviews of the ABC compliance standards of international organizations; legislation passed by the USA, the UK and Chinese Governments; seven semi-structured interviews with leading experts in the field; and comparisons of ABC program disclosures of four Chinese with four best-in-class western multinational corporations.
A high level of convergence was found in the ABC standards published by the international organizations. Several positive features were found in the Chinese ABC regulatory frameworks but our findings indicate that there is minimal disclosure around ABC compliance program practices. This paper shows that a transparent disclosure would represent an easy win for Chinese multinational corporations and contribute to raising their reputations internationally.
While there are numerous studies in the law literature on ABC compliance standards and the extent to which they are effective in achieving their objectives, this is an emergent area in management research, to which our study makes a contribution. Future research could explore how other emerging economies are tackling this important issue.
By proactively adopting ABC compliance practices, corporations can seize the ethical high ground and build solid reputations with their stakeholders.
It is believed that this study is the first academic study that compares Chinese and international ABC standards.