Remember that a case study is a puzzle to be solved, so before reading and discussing the specific case questions below, develop your proposed solution by following these five steps:

Read the case study to identify the key issues and underlying issues. These issues are the principles and concepts of the course module which apply to the situation described in the case study.

Record the facts from the case study which are relevant to the principles and concepts of the module. The case may have extraneous information not relevant to the current course module. Your ability to differentiate between relevant and irrelevant information is an important aspect of case analysis, as it will inform the focus of your answers.

Describe in some detail the actions that would address or correct the situation.

Complete this initial analysis and then read the discussion questions. Typically, you will already have the answers to the questions but with a broader consideration. At this point, you can add the details and/or analytical tools required to solve the case.

The disastrous explosions at BPs Texas City refinery and its Macondo oil well in the Gulf of Mexico have drawn attention to the organizational structure and management system created at BP by former CEO John Browne.

Discuss to what extent Brownes new model created the conditions for these accidents and was this model appropriate to the industry in which BP competed?

What structure is used in your organization and is this model appropriate to the industry in which you work?

Discuss the concepts, principles, and theories from your textbook. Cite your textbooks and cite any other sources if appropriate.

Your initial post should address all components of the question with a 500 word limit.

the case

Case 1: Peloton Interactive, Inc.: Creating New Market Space in the Hon1e Fitness Sector. Page 337. During the early months of 2021, Peloton Interactive Inc. was continuing to ride the craze it had unleashed for its internet-connected, exercise bikes and treadmills supported by streamed instructorled classes. Fueled by a surging demand for home exercise equipment during the COVID-19 pandemic, its revenues had almost tripled during the second half of 2020 (as compared with the year-ago period). Its stock market valuation stood at $34.7 billion on March 12, 2021, an increase of 366% since its market debut on September 25, 2019. Eight years after co-founding Peloton with $327,000 raised from Kickstarter, CEO John Foley had joined the ranks of America's billionaires. (Exhibit 1 outlines Foley's pre-Peloton career.) However, surging demand was imposing severe growing pains. By March 2021, limited manufacturing capacity at Peloton's Taiwan plant and shipping delays had extended customers' wait times to over 10 weeks. Peloton attempted to boost supply by adding manufacturing capacity it acquired a leading US competitor, Precor, for $422 million at the end of 2020, and by airfreighting its Taiwan-manufactured bikes. The additional costs incurred were squeezing Peloton's margins. More serious was the potential loss of customers to Peloton's many competitors. These competitors included established providers of exercise equipment such as Life Fitness and Technogym, suppliers of home fitness apps (including those from Apple, Google, and Nike), startup imitators such as Echelon Fit, and fitness studios, which were reopening their doors as COVID-19 restrictions were being loosened. In a post-COVID world, Peloton's ability to sustain its growth would depend upon whether its "first-of-its-kind subscription platform that seamlessly combines the best equipment, proprietary networked software, and world-class streaming content" supported by its vertically integrated business system truly offered a superior user experience that rivals could not emulate.

Peloton Interactive: A Brief History: John Foley outlined the origins of Peloton as follows: I founded Peloton in 2012 to solve a challenge in my own life. My wife, Jill, and I knew great fitness experiences made us feel like better versions of ourselves, but there were countless barriers to working out regularly. We loved going to boutique studio fitness classes like cycling, running, boot camp, and yoga. We were addicted to the fast-paced energy, the motivational instructors, the thoughtful programming, and the way exercising with a group pushed us harder. These classes left us feeling energized, refreshed, stronger, and ready to take on anything. However, with demanding jobs and two small children at home, just getting to the gym became harder and harder. Classes with our favorite instructors sold out quickly and were prohibitively expensive. We also had to acconrn10date someone else's schedule at someone else's location. And we were often left without time, without options, and without the feeling of "being our better selves" that we sought. I figured that there must be a way to make these workouts more convenient, more affordable, and more accessible. There had to be a way to bring fantastic, high-energy, instructor-led group fitness into the home, to be experienced on my time, any time I wanted. And my hunch was that if I could make it possible, others would want it as well. Initially, Foley believed that "to re-create the intensity of an in-class experience while allowing riders to compete and benchmark against other riders," a software application would suffice. However, he soon realized that an interactive, community-based, software platform streaming inspirational classes needed to be integrated with a custom-designed bike capable of delivering the sensory and emotional workout expe- rience he envisaged. Moreover, communicating this integrated experience and making it hassle-free would also require exclusive retail showrooms and a dedicated delivery and installation service. To create Peloton, we needed to build what we believed to be the best indoor bike on the market, recruit the best instructors in the world, and engineer a state-of-the-art software platform to tie it all together. Against prevailing conventional wisdom, and despite countless investor conference rooms full of very smart skeptics, we were determined for Peloton to build a vertically-integrated platform to deliver a seamless end-to-end experience as physically rewarding and addictive as attending a live, instudio class. Peloton's vertical integration would extend from the design of the bike and the production of software and streamed content, through to retail showrooms and its own delivery and installation service. However, this capital-intensive, vertically integrated business model did not appeal to venture capitalists: "... for some potential investors the vision felt too far-fetched, that we were trying to be too much. However, my co-founders and I could see what needed to be done not only to fill a gap in the marketplace, but also to create an entirely new category and so we kept going."In the absence of venture capital interest, Foley and his co-founders raised $327,000 on Kickstarter in 2013. In the following year, Tiger Global invested $10 million. In May 2014, the company launched its Peloton Bike at $1995 together with a $39 per month subscription service. The bike featured a 21-inch, high-definition touchscreen offering live and on-demand classes from Peloton's New York studio, a variety of user metrics, and a leaderboard comparing the user's performance to that of other spinners either currently taking the class or having taken the class previously. It also opened its first retail showroom in Short Hills shopping mall, New Jersey. Since then, Peloton has expanded its offerings and its geographical scope: 2015 : Peloton Digital offered as a standalone fitness app for $29.49 a month. Live and recorded video and audio workouts expanded to include walking, nmning, yoga, strength training, floor exercises, and meditation. 2016: Moves into new corporate headquarters in West 25th Street, NYC; holds first "Homecoming"- m embers converge on NYC to meet in-person with instructors and one another. 2017: Introduces upgraded version of Peloton Bike for commercial customers, priced at $3000; contracts with Westin Hotels to supply Peloton bikes for use in guest rooms. 2018: Launch of Peloton Tread priced at $4295; expands into Canada and the United Kingdom. 2019: Expands into Germany; opens London fitness programming hub to pro- duce content for the European market; acquires its primary Taiwanese bike manufacturing partner for $47.4 million. 2020: Launches The Bike+ with 24-inch rotating screen, hi-fi sound, and upgraded software for $2495; original Peloton Bike reduced to $1895. Pelo- ton Digital greatly expands content for floor-based exercises- including classes in strength-building, yoga, and Pilates. Acquires Precor, a US-based supplier of exercise equipment and services with the intention of making Precor responsible for developing Peloton's business with commercial cus- tomers including hotels, apartment buildings, colleges, and corporate gyms. The acquisition includes Precor's two US plants with 625,000 square feet of manufacturing space.

Peloton's Business: In its first annual report as a public company, Peloton described its business as follows: Peloton is the largest interactive fitness platform in the world with a loyal community of over 3.1 million Members as ofJune 30, 2020. We pioneered connected, technologyenabled fitness, and the streaming of immersive, instructor-led boutique classes to our Members anytime, anywhere. We make fitness entertaining, approachable, effective, and convenient, while fostering social connections that encourage our Members to be the best versions of themselves.

We are an innovation company at the nexus offitness,technology, and media. We have disrupted the fitness industry by developing a first-of-its-kind subscription platform that seamlessly combines the best equipment, proprietary networked software, and world-class streaming digital fitness and wellness content, creating a product that our Members love. Driven by our Members-first mindset, we built a vertically integrated platform that ensures a best-in-class, end-to-end experience. We have a direct-to-consumer multi- channel sales platform, including 95 showrooms as ofJune 30, 2020, with knowledge- able sales specialists, a high-touch delivery service, and helpful Member support teams.

Our world-class instructors teach classes across a variety of fitness and wellness disciplines, including indoor cycling, indoor/outdoor running, and walking, bootcamp, yoga, strength training, stretching, and meditation. We produce hundreds of original programs per month and maintain a vast and constantly updated library of thousands of original fitness and wellness programs. We make it easy for Members to find a class that fits their interests based on class type, instructor, music genre, length, available equipment, area of physical focus, and level of difficulty. Peloton was at pains to emphasize its identity as a "technology company" that meshed "the physical and digital worlds to create a completely new, immersive, and connected fitness experience." At the same time, Peloton acknowledged that: We are also: a media company that creates engaging-to-the-point-of-addictive original programming with the best instructors in the world. an interactive software company that motivates our Members to achieve their goals. a product design company that develops beautiful and intuitive equipment that anticipates the needs of our Members. a social connection company that enables our community to support one another. a direct-to-consumer, multi-channel retail company that facilitates a seamless cus- tomer journey. an apparel company that allows Members to display their passion for Peloton. a logistics company that provides high-touch delivery, set up, and service for our Members. However, the key to creating Peloton's overall user experience was the integration of these individual activities. At the heart of this integration was Peloton's unified design of its hardware and content: The hardware. In terms of mechanics, Peloton's exercise bike features a carbon steel frame, a near-silent belt drive, and magnetic resistance- n one of which are unusual among high-end exercise bikes. However, it is its interactive connec- tivity that most distinguishes it from competitors-including its patented leader- board allowing comparison and competition with other users. Like the bike, the Peloton treadmill emphasizes ergonomics and compactness, but its audiovisual streaming performance is the key differentiator. Content. Peloton uses its members' data to understand their workout habits and optimize classes in terms of type, length, music, and instructor characteristics. With over 40 instructors at the beginning of 2021, Peloton offers live classes from its three production studios in New York City and one in London. The instructors play a critical role, they are "... not only authorities in their respective areas of fitness, but also relatable, magnetic personalities who inspire passionate followings. We offer a diverse cast of instructors that allows us to appeal to a broad audience of Members."Peloton's content library comprises thousands of classes that vary in length, difficulty, and fitness preferences ranging from fun and flexible to structured and highly technical. They are hosted and streamed by third-party cloud providers. In providing this integrated, technology-based, interactive experience, John Foley argues that Peloton has created a new market: No one is doing what we're doing, anywhere in the world combining the best software, hardware, content, and experience in one place. We created the category and we're confident about the quality and uniqueness of the Peloton experience, so we spend a lot more time thinking about how we can continue to innovate and deliver the best possible experience to our members globally than focusing on competition. Evidence of the distinctiveness of Peloton's positioning is provided by the fact that the great majority of Peloton users had not previously owned a home exercise machine and that they remain ve1y loyal to Peloton. In the final quarter of 2020, its average churn rate (subscription cancellations, net of reactivations, as a percentage of total subscriptions) was 0.76%- about onethird of the average for gym subscriptions. Customer loyalty is also indicated by Peloton's Net Promoter Score- a measure of customer's likelihood of recommending a brand to others. Peloton's is one of the highest recorded for a consumer brand, exceeding that of both Apple and Netflix. The Market for Fitness: Peloton perceives itself as competing in the "global fitness industry," which, according to the Global Wellness Institute, took in expenditures of nearly $600 billion.11 Peloton's estimate of its potential market is shown in Figure 1.