Guidelines and case study are attached !
MGT 415 – Strategic Management Fall 2022 Written Case Analysis: Zipline: The World’s Largest Drone Delivery Network PLEASE NOTE: 1. Restrict yourselves to the contents given in the case, i.e. you are not expected to look outside of the case for additional information. In other words, assume that what’s given in the case is all that you know about this company. 2. The final exam must be completed in approximately 7 pages, using single spacing, 1” margins, font Times New Roman 11). The number of pages is strictly a guideline – suggested to give you an idea about the amount you need to write in order to give a good, comprehensive answer. You will, however, be graded solely on the quality of your answers and not on the length of the response. 3. Please DO NOT cut-and-paste ANY information or Exhibit from the case, including from any of the Exhibits. It will be scratched out and you will get no credit for it. If needed, create your own Excel sheets / tables / graphs to illustrate your point of view. 4. This exam is worth a total of 30% points. The exam is due by 11:59 am on 12/11/22, emailed directly to ______________Due to the strict time-line for submission of grades, there is no provision for extension of deadline or for late submission. Any papers submitted after the deadline will get an automatic F, so please be cognizant of the timing. EXAM QUESTIONS: 1. Based on your understanding of the case, conduct a SWOT analysis of Zipline. List 5-6 of each (strengths, weaknesses, opportunities, threats), and explain each point in a sentence or two (5 points, to be covered in 1 to 1-1/2 pages) 2. Which business-level strategy is Zipline using ? (you may refer to Table 5-5 on page 144 of your textbook that shows the 4 different kinds of business-level strategies. Also read the Instructor Note on this topic on Blackboard). Provide clear justification for your positioning. Identify at least three examples from the case study to support your positioning. (5 points, to be covered in approx. 1 page) 3. Conduct a Porter’s 5-forces analysis of the “Drone Delivery Industry,” which is the industry that Zipline operates in. Discuss each force, key factors that impact each force, and the strength of the force. Based on your analysis, opine on the “long term profit potential” of the industry. You may want to refer to pages 73-77 of your text to review the 5-forces model. Also read the Instructor Note on this topic posted on Blackboard (8 points; approx. 2 to 2-1/2 pages) 4. Study Exhibit 11 (“Zipline Milestones”) and Exhibit 12 (“Overview of Competitors’ Drone Operations”). In about 200-250 words, for each Exhibit, give your analysis and summary opinion. In other words, what is the takeaway for you from these two Exhibits? (5 points, approx. 1 page) 5. Analyze the global expansion strategy of Zipline (focus specially on pages 8-11 of the case). What would you recommend to the CEO in terms of specific strategic steps to take over the next 1-3 years? Given the historical performance of the company, I am looking for your recommendations for specific action steps that the company should take in terms of global expansion over the next 3 years. Support your analysis with data / examples from the case. (7 points; about 600-750 words) Zipline: The World’s Largest Drone Delivery Network 9 -721-366 R E V : J A N U A R Y 5 , 2 0 2 1 Professor Tarun Khanna and Senior Researcher George Gonzalez (California Research Center) prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2020, 2021 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545- 7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. T A R U N K H A N N A G E O R G E G O N Z A L E Z Zipline: The World’s Largest Drone Delivery Network If you think about DoorDash and Instacart, they are using a 3,000-pound gas combustion vehicle driven by a human to deliver something that weighs only two to five pounds. That’s completely insane. Somebody is going to build the first automated logistics network and it’s going to be a $100 billion company. — Keller Rinaudo, founder and CEO of Zipline In September 2020, Keller Rinaudo, CEO and cofounder of the automated logistics startup Zipline rejoiced as he watched the company’s custom-built drone (known as a Zip) return to the fulfillment center in North Carolina after making a delivery at the Novant Huntersville Medical Center. Technologically this was not a big step for Zipline. Since its founding in 2014, Zipline had flown tens of thousands of missions in Rwanda and Ghana, delivering vaccines, blood, and medical products to hard-to-reach clinics. In the process Rinaudo and his team had developed an autonomous drone- powered logistics system to transport lifesaving supplies faster while reducing waste. This was, however, the first time the California-based company had helped save a life on American soil. Zipline operated the world’s largest autonomous logistics network, delivering to 2,500 healthcare locations that served 25 million people. Its drones had flown close to 4 million miles, completing 65,000 deliveries, and transporting more than half of Rwanda’s blood supply.1 The company had 300 employees across San Francisco, North Carolina, Rwanda, and Ghana. It had raised $233 million through a Series D round and was valued at $1.2 billion.2 In September, the company signed a deal with global retailer Walmart to begin testing on-demand drone deliveries. Zipline was soaring. As Rinaudo looked back on the company’s history, he thought about the next chapter. Should Zipline focus on expanding within the U.S. and other developed nations with established healthcare operations and regulatory bodies? Or should the company continue to grow rapidly in developing countries? When should the company consider expanding its delivery use cases beyond healthcare? Large companies, such as Amazon, Google, FedEx, and UPS, were investing in the space, but had yet to integrate drones as part of their everyday operations. Rinaudo believed Zipline had a three-to-four- year head start due to its years of experience making automated drone deliveries to real-world customers. How could Zipline ascend to the next level and become a new kind of global logistics company? Do N ot C op y or P os t This document is authorized for educator review use only by Mohinder Dugal, Western Connecticut State University until Oct 2023. Copying or posting is an infringement of copyright.
[email protected] or 617.783.7860 721-366 Zipline: The World’s Largest Drone Delivery Network 2 The Zipline Journey In 2012, Harvard graduate and former professional rock climber Keller Rinaudo began his entrepreneurial career by launching Romotive—a smartphone-controlled robotics company. He launched two Kickstarter projects that received over $280,000 in backing and raised $6.5 million in seed funding, but wanted the company to focus on a bigger market and a more mission-driven problem. The company went through a difficult transition as the other co-founders left, and Keller decided that Romotive should pivot. In 2014, robotics expert Keenan Wyrobek, software engineer Ryan Oksenhorn, and transportation consultant and Harvard classmate Will Hetzler joined Rinaudo to launch Zipline and refocus the company on healthcare logistics. Wyrobek recalled: I had spent seven years on ROS, Robot Operating System, which I created as a Ph.D. student at Stanford. Keller reached out to me and said he was at an inflection point with his company, where it could become a consumer electronics company; or change its focus to something new that was more impactful. I was exploring similar questions at that point of my life. Keller and I both have family in public health, so we went to talk to our contacts in Central America and Africa. They soon learned that millions of children and hundreds of thousands of pregnant mothers died every year due to a lack of access to blood.3 Rinaudo was inspired to take action after reading through medical logs he described as a “databases of death.”4 Wyrobek noted, “That’s when we decided to build what has become Zipline today.” Over the following years, the team reached out to several countries to explore potential logistics partnerships. Wyrobek explained: We started to work with five countries, but we were a company of only 12 people. We weren’t moving ahead effectively, so we had to pare down to two—Tanzania and Rwanda. Tanzania was the frontrunner. Everything about the deal was working well, even the political support, but the healthcare supply chain was not very well organized and it proved too much of a challenge. So, we had to pull out of that deal. Rwandan Blood Supply The team shifted its focus to Rwanda and collaborated with the government and local healthcare organizations to find ways to increase timely access to emergency blood supplies. Rinaudo explained the opportunity: “Blood is challenging because it has a very short shelf life and it is hard to predict demand before patients need it.” Every year, over 45,000 units of blood were collected in the country.5 Red blood cells had a refrigerated shelf life of 42 days; platelets lasted only five days; plasma and cryoprecipitate could be frozen for one year.6 He continued, “You are always trading off waste against access. To solve waste you want to keep the blood centralized. If you want to have lots of access, you keep lots of medicine at clinics. But if it expires it wastes a lot of money.”7 In 2014, there were over 170,000 cases of maternal mortality in Sub-Saharan Africa and the leading cause was hemorrhage.8 Rwanda had a population of 11 million, with almost half living under the poverty line.9 The country had five national hospitals, 36 district hospitals, over 400 sector level health centers, and 45,000 health care workers serving villages.10 (See Exhibit 1 for map of Rwandan hospital locations.) The country’s terrain consisted of mountains and valleys across over 10,000 square miles. Brittany Hume Charm, Zipline’s head of global health, described the state of Rwanda’s blood supply chain at the time: The blood system had been decentralized, so they had one regional blood bank in each of their five regions. Whenever hospitals needed blood, they would drive to the nearest regional blood bank. The blood bank might not have the products that the hospital Do N ot C op y or P os t This document is authorized for educator review use only by Mohinder Dugal, Western Connecticut State University until Oct 2023. Copying or posting is an infringement of copyright.
[email protected] or 617.783.7860 Zipline: The World’s Largest Drone Delivery Network 721-366 3 actually needed. There are some blood types that are rarer than others and each different blood product has different storage requirements—some need to be frozen, others need to be held at 2 to 8 degrees Celsius, and some need to be kept warm and agitated. At the time, about 43,000 units of blood were collected from 450 collection sites and distributed to five regional blood centers.11 The cost to collect and store one unit of blood was roughly $80.12 Some medical products were distributed once every few months and medical staff at rural clinics had to make trips to the closest city via ground transport for emergency supplies. Via automobile, it often took over three hours to travel between Kigali, the capital of Rwanda, and a rural clinic; paying a delivery driver could cost from $6 to $12 per ground delivery.13 Healthcare workers usually drove to the capital to get medical supplies a few times per week. Additionally, in Rwanda, almost 90% of blood transfusions were used for emergencies.14 Rinaudo added, “Sometimes it’s impossible to get out to these hospitals and health clinics […] it’s always unpredictable and unreliable.”15 Drones were selected as the delivery mechanism due to the local road conditions and distances. “Our contract with Rwanda didn’t even mention drones,” said Wyrobek. “Drones were just the best way to solve the logistical problem of delivering supplies in that environment.”16 Drone Dilemmas Selecting drones as the delivery mechanism became the first of many technology-related decisions. The Zipline team’s next step was to find a drone manufacturer. Wyrobek recalled: I figured we could buy a drone made