Case Study : The Global Financial Crisis

In the United States, the food retail industry is absolutely massive. According to Statista, this industry brings in nearly 5.27 trillion dollars annually and 594.4 billion of that is from grocery store sales. In this market, the 20-ton gorilla in the room is Walmart, racking in nearly 20% of the entire market at around 118 billion dollars in 2013 according to the Harvard Business School case study. Following Walmart, Kroger and Costco own the biggest next largest slices bringing in 76 billion and 71 billion respectively. In this highly competitive market that has some of the smallest margins of any industry it can be tough to get ahead and even tougher to grow. However, Trader Joe’s has managed to pierce what was once a very small world

Trader Joe's faces several threats to its business, as competitors try to invade the company’s niche and attempt to imitate the company’s core strategies. The supermarket industry itself faces a major threat, as larger chains such as grocery retailers Wal-Mart and Tesco have begun to open small-format stores that mimic the Trader Joe's approach. This invasion results in additional cost pressure for incumbents like Trader Joe’s, which had to let go employees in order to become more cost competitive.

It has been said that U.S. food spending is increasing, but unfortunately, supermarkets are not making what they should be. Between the alternative grocery methods, and other such societal shifts, this has caused some supermarket chains to have to focus on their more profitable stores, and exit from the less profitable areas. Even though such value-oriented grocers as Walmart are making it very difficult for conventional supermarkets to compete based on price, Publix continues to lead in the supermarket industry where they made $548 per square foot annually. In addition, Publix’s net earnings in the beginning of 2010 were up to $996 million, compared to $877.3 million in the previous year (Mujtaba & Johnson).

The financial crisis of 2007-2009 resulted from a variety of external factors and market incentives, in combination with the housing price bubble in the United States. When high levels of bank and consumer leverage appeared, rising consumption caused increasingly risky lending, shown in the laxity in the standard of securities ' screening and riskier mortgages. As a consequence, the high default rate of these risky subprime mortgages incurred the burst of the housing bubble and increased defaults. Finally, liquidity rapidly shrank in the United States, giving rise to the financial crisis which later spread worldwide (Thakor, 2015). However, in the beginning of the era in which this chain of events took place, deregulation was widely practiced, as the regulations and restrictions of the economic and business markets were regarded as barriers to further development (Orhangazi, 2014). Expanded deregulation primarily influenced the factors leading to the crisis. The aim of this paper is to discuss whether or not deregulation was the main underlying reason for the 2007/08 financial crisis. I will argue that deregulation was the underlying cause due to the fact that the most important origins of the crisis — the explosion of financial innovation, leverage, securitisation, shadow banking and human greed — were based on deregulation. My argument is presented in three stages. The first section examines deregulation policies which resulted in the expansion of financial innovation and

The financial crisis that happened during 2007-09 was considered the worst financial crisis in the world since the great depression in the 1930s. It leads to a series of banking failures and also prolonged recession, which have affected millions of Americans and paralyzed the whole financial system. Although it was happened a long time ago, the side effects are still having implications for the economy now. This has become an enormously common topic among economists, hence it plays an extremely important role in the economy. There are many questions that were asked about the financial crisis, one of the most common question that dragged attention was ’’How did the government (Federal Reserve) contributed to the financial crisis?’’

The financial crisis that put our economy on a downhill rocky road is known as the Great Recession of 2008. The U.S. Governments resolution to one the biggest panics was revolved around multiple bailout and fiscal measures. The fight to pull our weakening economy out of a dark hole left the American people with hope of advancing what gets thrown their way. The many bailout programs implemented by the U.S. Government can only hold the economy together for so long until were up to our knees in debt.

G. Industry Analysis – The supermarket and grocery store industry is maintaining throughout the economic crisis that America is currently experiencing. As stated by the Market Report of “Grocery Stores”, “The industry fared well during the economic recession of the late 2000s, as more Americans chose to eat at home rather than go out. During this time grocery stores focused on providing economical food choices for cash-strapped consumers.” However, as the economy continues to improve, more people may choose to eat out which could cause the industry to marginally suffer. Additionally, Supermarketnews.com states, “…the 75

There are a few changes in the social environment that created challenges for Bob’s Supermarket. The introduction of high powered competition and the recession had a negative impact on the grocery store. Customers were more likely to eat lower cost meals at home vs at restaurants however, “Consumers favored stores that were known for deep-discounts,” (Parnell, 2014, p. 403). The new stores caused commoditization of products offered by the store because of the extremely lower prices. Consumers were really looking for lower prices during the recession (Parnell, 2014).

Changes in the economic environment caused changes in the social environment for consumers. Bob’s supermarket was hit especially hard by these changes “Some organizations in an industry are hit harder by economic forces than others,” (Parnell, 2014, p.63). The company tried to keep cost low with low wages, no advertising, and diy construction projects while offering differentiators like in store butchers and ready to eat combos. Bob’s Supermarket low cost differentiated strategic approach took a hit during times when consumers were looking to find deals. This caused problems for the company because they have already maxed out their potential to cut cost through efficiency, employee pay, and frugality. They were even getting charged more

To understand the incidents that occurred in the two-thousand eight Financial Crisis one must understand what a mortgage is. Someone who wants to buy a house will often borrow hundreds to thousands of dollars from a bank. In return, that bank receives a piece of paper, called a mortgage. The bank often sells the mortgage to a third party. When an individual agrees to a mortgage, they are agreeing to pay back their loan in portions plus interest to whomever holds the mortgage. If the borrower does not repay the lender, the property will be taken back by whomever holds the mortgage; it is then sold to cover the debt. This process is known as foreclosure. If the borrower stops paying it 's called a default. A default is when a debtor is

In the case regarding Bob’s Supermarket, several economic and social environment challenges were observed. First, the opening of Wal-Mart Supercenters in 1995 created major competition for Bob’s Supermarket. Immediate impact was felt in dropped sales and store closing. The Hope, Indiana store was force to close when Wal-Mart opened a Supercenter in Columbus, Indiana. The store layout of Bob’s Supermarket was customer unfriendly. Some store had old ice machines located in the front and outdated fixtures located inside the store. In addition, Bob’s Supermarket made the decision to not sale alcoholic beverages.

In the case study, Bob’s Supermarket was a small, family-owned grocer. Many of Bob’s potential customers relied heavily on discount retailers such as Wal-Mart for their grocery needs, and many of those that did not shop at Wal-Mart shopped at Kroger or Aldi (Parnell, 2014). These competitors are large, well-resourced companies that have purchasing and distribution economies of scale. Unable to compete on price, Bob’s struggled to find any type of competitive advantage. Bob’s did experience some level of success with its fresh-cut meat and ready-to-eat food products. However, economic conditions had the potential to make consumers more price sensitive. Political, legal, and economic forces all coalesced into a rise in the federally enforced

Ager and Roberto’s case study on the sphinx-like strategic initiative pursued by the grocery retailer Trader Joe’s, both expounds and upends the strategic tool-kit crafted by Jared Harris and Michael Lenox. For this very reason, Trader Joe’s story encapsulates what –to this writer–could well be called the credo or capstone of strategy: if competitors can nimbly replicate a firm’s course of action; that precept did not hold a formidable competitive advantage. In the year 2013, when the case finalizes its analysis of the grocery industry, Trader Joe’s has set the precedent for unparalleled CAGR (for the grocery industry) and consumers’ demand for continued store expansions. The axiomatic challenge faced by Trader Joes is quite the opposite than that of its competitors, struggling for margins and shutting down stores across the United States. Trader Joe’s must devise a way to appease the overwhelming demand that exists for the retailer, while maintaining its fundamental values that gave rise to its success.

Beginning in March 2001, America soon fell into another recession that lasted eight months and ended in November of that same year. 2001 also happened to be the year 9/11 occurred which fueled the low confidence in the economic industry. The decline in services and employment after the attack made it inevitable that there is a recession underway. The recession of 2001 came during the introduction to the new electronic age when the technology industry was in full effect but little did the economy know that would play a major role in its downfall.

1. An international bank loaned money to an emerging country a few years ago. Because of the nonpayment of interest due on this loan, the bank is now negotiating with the borrower to exchange the loan for Brady bonds. The Brady bonds that would be issued would be either par bonds or discount bonds with the same time to maturity.