Strategic Management Practice Test - Flashcards

Q: A good example of a company\'s strategic objective is \"to grow top-line growth from $72 billion to $130 billion in four years.\"

F, that\'s a financial objective

Q: Of these options, which is the best definition of sustainable competitive advantage?

\"loyal and enthusiastic customer base, resistant to allure of rivals\"

Q: An industry-driving forces analysis is most likely to show what sort of conclusion below

\"consumer adoption of internet-based interfaces for smartphones will be critical in the future\"

question

according to collins, the visionary companies were successful because more than the comparison group, they tried hard to train and promote managers, leaders, and potential CEOs from within the company

answer

T

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A company's vision should not focus primarily on the profitability of the company

answer

T

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Strategic groups analysis usually includes consideration of a company's suppliers

answer

F, displays different markets or competitive positions that rival firms occupy in the industry, cluster of rivals have similar competitive approaches and market positions

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According to Collins, the visionary companies were successful because more than rivals they tried a lot of stuff and kept what works

answer

T

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A "balanced scorecard" refers to the need for a company's revenues to equal or exceed costs.

answer

F, balance of financial and strategic objectives

question

A good example of a company's strategic objective is "to grow top-line growth from $72 billion to $130 billion in four years."

answer

F, that's a financial objective

question

The value chain analysis is a tool that helps a company determine where in its value-adding process it produces more net value than its rivals produce.

answer

T

question

You can determine whether a company has sustainable competitive advantage if you have at least 5-10 years of sales data for that company.

answer

False, SCA necessitates having 1. sufficiently large # of customers 2. lasting preference over rivals despite their efforts 3. superior long-term profits (may take 5-10yrs, recognized after, associated w/ above average industry profits, Comparison with a clear group of relevant rivals)

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Visionary companies according to BtL tend to have lower prices than rivals.

answer

F

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A company's industry typically accounts for more than 60% of a company's performance?

answer

F

question

Ben ; Jerry's emphasized which one of the four building blocks of competitive advantage?

answer

- Quality vs. efficiency, customer responsiveness, innovation

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A meaningful and well-communicated strategic vision, mission, and core values should should have what 4 things

answer

1. good tool for winning the enthusiasm and support of employees to make it a reality 2. a beacon for lower-level managers to align their departmental missions 3. aids decision-making at all levels 4. distinguish the company's purpose from that of rivals

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Starbucks CEO's pushing to reinvigorate Starbucks despite anticipated decline in profit rate or stock price is reflective of what B2L attitude

answer

A company is about more than short-term profits

question

Compared to its industry rivals, Mystic Monks Coffee Co. is best described by which basic competitive position

answer

Focused differentiator

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Of these options, which is the best definition of sustainable competitive advantage?

answer

"loyal and enthusiastic customer base, resistant to allure of rivals"

question

In the five forces analysis for Coca Cola, you find that the company has created substantial barriers to entry. Which of the following is least likely be a barrier to entry in the five forces framework?

answer

- innovative beverages with great taste and popular flavor profiles vs. international presence in more countries than in the UN, Strong and well-recognized brand that people love and trust, exclusive contracts with convenience stores..., large network of local bottling plants to distribute traditional and new products - Five forces: substitutes, rivals, suppliers, buyers, and potential new entrants

question

An industry-driving forces analysis is most likely to show what sort of conclusion below

answer

"consumer adoption of internet-based interfaces for smartphones will be critical in the future"

question

VRIN/VRIO

answer

valuable, rare, inimitable, nonsubstitutable, organization

question

what is chipotle's basic competitive position

answer

focused differentiator moving to greater geographic coverage and new formats

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what is the most surprising or unusual result of the carbonated soft drink industry being highly consolidated with 3 major rivals dominating the market

answer

1. rivals have generally refrained from raising prices on basic cola beverages other insights: companies compete for many of the same distribution channels seeking to lock in customers; hard for new entrants to reach the same scale as incumbents; much of the competitive activity is around new product development, testing, and deployment to combat the influence of substitutes; long-term contracts and vertical integration create exclusivity and reduce supplier power

question

SWOT analysis of cases

answer

strength: high quality food, popularity among broad consumer base, efficient food processing to serve many customers weakness: simple menu may be perceived as too narrow opportunities: using the efficient Chipotle food serving model and brand reputation to transfer success ; affect onto other cuisine restaurants threats: the process is imitable by competitors most pressing competitive challenge: Chipotle must maintain its competitive advantage by being innovative enough to differentiate from imitators, while maintaining its highly efficient food serving model

question

describe core ideology according to B2L chap 11

answer

- values + purpose - fundamental reason for an organization's existence - words over content - guide and inspire, not differentiate - exciting internally, not necessarily externally - cannot be installed, there must be a predisposition to them - not core competance

question

envisioned future according to B2L chap 11

answer

BHAGS (10-30 yrs) + vivid description of what achievement of BHAGS looks like

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creating alignment

answer

new alignments for progress while preserving the core (creative) while eliminating misalignment (analytic)

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the purpose of competitive strategies

answer

giving buyer what they perceive to be a better value compared to the offering of rival sellers

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competitive strategy definition

answer

game plan/efforts to - please customers - strengthen market position - counter rivals' maneuvers - respond to market conditions - achieve competitive advantage

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distinguishing factors of competitive strategies

answer

1. broad vs. narrow market 2. low costs vs differentiation

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5 generic company strategies

answer

1. low cost provider (broad) 2. broad differentiation 3. focused low cost 4. focused differentiation 5. best cost provider

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when to use each strategy

answer

1. low cost provider (broad) - price sensitive buyer market 2. broad differentiation - buyer needs and preferences too diverse to be fully satisfied by 1 standard 5. best cost provider - value conscious buyers are willing to pay more

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low cost provider strategy only works when what two conditions are met

answer

1. prices cut ; size of cost advantage 2. added volume results in higher total profit despite lower margins

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3 pitfalls of low cost provider

answer

1. overly aggressive 2. easily copied 3. too fixated on cost

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when to be a low cost provider

answer

- price competition among rival sellers is vigorous - rival seller offers the same products and are readily available - few options for differentiation - buyers incur loss if they switch sellers - majority of sales are from few, high volume sellers - newcomers typically introduce low prices to attract customers and build a base

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how to revamp a low cost provider's value chain

answer

1. direct sales force 2. sell online

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2 characteristics of cost drivers

answer

1. hard to eliminate 2. causes other costs to rise

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benefits of broad differentiation strategy

answer

- commands premium - higher buyer loyalty

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necessary conditions for broad differentiation strategy

answer

cost of differentiation < extra price of product

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3 main angles of pursuing differentiation

answer

- design and performance - innovativeness - reliability i.e. Coach

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3 ways to deliver superior value

answer

1. include attributes that lower buyer cost 2. tangible features that improve product performance 3. intangible features that enhance buyer satisfaction

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cost efficient value chains

answer

- capture all EOC - operate at full capacity - substitute lower cost inputs w/o sacrificing quality - use bargaining for supplier concessions - be aware of outsourcing and vertical integration advantages

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3 features of uniqueness driver

answer

1. signature features 2. lowers buyer costs 3. reputation and loyalty stem

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how to manage uniqueness drivers

answer

- seek quality inputs - invest in R&D - use HR to improve skills/expertise of personnel - use lots of market and brand building activities - pursue continuous quality improvements

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pitfalls of broad differentiation

answer

- if easily copied - attributes unique but not valuable - overspending erodes profitability - charging too high of a premium - being timid and not differentiating

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trader joe's and popchips company strategies

answer

focused differentiation

question

private labels and Aravind eyecare company strategies

answer

focused low costs

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when to use a focused strategy

answer

- target market is big enough to make profits - industry leaders have chosen not to compete - too costly for multi-segment competitors

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pitfalls of focused strategies

answer

- competitors will learn to effectively match consumer tastes - consumer tastes change and become more general - segment attracts competing companies

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describe best cost provider

answer

low cost + differentiation - must be able to incorporate attractive/ upscale attributes at low costs

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best cost provider is contingent on

answer

1. superior, efficient value chain configuration 2. efficient value chain activities 3. core competencies that allow low cost incorporation of attributes

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when to use best cost provider

answer

- product differentiation is the norms - during recessions - products can be medium quality, low price, or high quality and slighter higher than low price

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summarize what a company's competitive strategy should be

answer

matched to internal situation and predicated on leveraging its collection of competitively valuable resouces and competencies

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2 ways to maximize the cvp formula

answer

1. increase value 2. decrease costs

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describe Coach's company strategy

answer

- "Broader and broader market, multi-channel differentiation" - best cost in come cases - accessible, affordable luxury, quarterly portfolio changes, reliability, quality and customer service guarantee

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describe people express's company strategy

answer

- focused low cost moving to broad low cost provider air travel like commodity - complacent existing differentiators did a lot of extra - seat miles flown and labor productivity were key to the volume related cost reductions - sought repetition on short, nontraditional routes - used a low price high volume strategy to fill seats - minimized variety and complexity

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what is the learning effects

answer

average costs decrease

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what does a no variety average cost curve look like

answer

negative exponential curve

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what does the customization average cost curve look like

answer

u-shape because tailoring to customer needs

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describe People Express's human capital model

answer

- selective - high responsibility - strong incentives for good behavior

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describe people express's organizational model

answer

- self-managing teams - minimal hierarchy - job rotation - stock ownership - simple ops, planes, and airports

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pitfalls of people express

answer

- moving to broad low cost - putting efficiency before customer responsiveness - legacy airlines began to directly compete - deviation from low cost with acquisition of Frontier, business class, assigned seats, amenities, longer routes to major airports, - low customer resonse and quality

question

what are ways to pursue and Offensive strategy

answer

- attack rival weaknesses - offer a good or better product at a lower price - be more innovative - leap frog competitors with technology - adopt new ideas and improve existing - attack rivals' profitable market segments - capture unoccupied territory - use hit and run/guerrilla tactics - make preemptive strikes

question

examples of Offensive preemptive strikes

answer

- secure best distributors - moving to a favorable site - tie up suppliers

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4 dimensions of scope

answer

1. geographic- market presence 2. product line- breadth of product and service offerings 3. scale- mix of business 4. scope- range of activities performed internally

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when to use an Offensive strategy

answer

1. opportunity for profitable market share 2. no choice 3. benefits can be reaped

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Who to target with offensive strategies

answer

1. vulnerable market leaders 2. runner-up firms with known weaknesses 3. drowning enterprises 4. small and local firms with limited capabilities

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two forms of defensive strategy

answer

1. blocking challengers 2. signaling likelihood of strong retaliation

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how to defensively block challengers

answer

- new features/ models - fill niches by broadening product line - maintain economy priced models - announce new products/ price changes - volume discounts and better financing terms

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how to defensively signal a strong retaliation

answer

- announce commitment to maintaining market share - policy of term/price matching - maintain war chest of cash and marketable securities - strong counters to weak competitor moves

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blue ocean strategies

answer

discover/ invent a new industry segment that creates altogether new demand, generating profits and dumping on competitors

question

examples of blue ocean strategy

answer

cirque de soleil, eBay, Starbucks, Dollar General, FedEx

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4 advantages of being a 1st mover

answer

1. pioneering builds reputation with buyers 2. absolute cost advantages 3. loyal 1st time customers become repeat customers 4. preemptive strikes are difficult to imitate

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4 advantages of being a late mover

answer

1. pioneering cost ; imitation 2. primitive 1st mover product can be below customer expectations 3. potential buyers are skeptical of a brand new product 4. rapid change allows for fast followers and leap frogging

question

what is an example of a fast follower

answer

Fox news following CNN

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questions to consider when deciding between offensive and defensive strategies

answer

1. is market take off dependent on currently unavailable complementary products/services? 2. is new infrastructure require before buyer demand can surge? 3. will buyers need new skills, behaviors, or pay high switching costs? 4. are influential competitors in a position to delay or derail first movers?

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horizontal scope ; integration

answer

range of product and service segments served i.e. acquisitions or new biz dev

question

vertical scope ; integration

answer

extent to which value chain is engaged

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5 objectives of Mergers and Acquisitions (horizontal)

answer

1. extension into new product categories 2. more cost-efficient ops via combo 3. expand geographic coverage 4. quick access to new tech/complementary resources and capabilities 5. lead industry convergence

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what type of integration goes forward or backwards

answer

vertical

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risks of Mergers and Acquisitions (horizontal)

answer

- small costs savings - late or no competitive gains - member resistance w/in organization - no employee/manager behavior change - dissatisfied employees leave - mistaken decisions on what to leave/keep

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backward integration

answer

closer to suppliers must be able to: 1. achieve same EOC as outside suppliers 2. match/ beat outside supplier efficiency while maintain quality

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best two reasons for vertical integration

answer

1. strengthen competitive position 2. boost profitability

question

when to vertically integrate

answer

1. suppliers have large profit margins 2. supplied item is a major cost component 3. technology is easily matched 4. powerful suppliers frequently increase prices

question

The Mystic Monk Coffee business was founded primarily to:

answer

Raise funds for ambitious and impressive new monastery facilities

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Robin Hood's business model produced short-term profits, but was not sustainable.

answer

T

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Sustainable competitive advantage usually requires all of the following except:

answer

e. Producing more revenues and profits each year than the previous year

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A company's business model sets forth at least two very important concepts. These are:

answer

profit formula and customer value proposition

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In the intro to Built to Last, Collins suggests all of the following are true about his argument except:

answer

The findings are understandably limited to only U.S. for-profit corporations

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Robin Hood's organization was very selective about who could join as a member.

answer

False

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In the intro to Built to Last, Collins suggests all of the following are true about his argument except:

answer

visionary companies need to be in business for the money first, values second

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In the intro to Built to Last, Collins suggests all of the following are true about his argument

answer

a.the findings have been useful for nonprofits and non-U.S. companies alike b. core values change never or very rarely, while products change more frequently c. there are many visionary companies out there, not just those in the book d. leaders and managers find it more inspiring to create or work for a visionary company

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1. The most important relationship between a company's core values and mission is:

answer

Core values are beliefs or principles, while mission describes the best day's behavior

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According to his argument in Built to Last, Collins would say that Ben & Jerry's charismatic leaders caused the company to do well.

answer

False

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Ben ; Jerry's core values and mission blends three concerns. From this list, the best summary is:

answer

Great product, financial success for all stakeholders, and a better society

question

The Ben & Jerry's shared prosperity business model ran into financial problems in the 1990s. Which of the following is the best explanation of the choices listed

answer

. distribution was too restricted

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Ben ; Jerry's would most likely reward you as a manager for many things. Which would be least appreciated?

answer

found a cheaper way to source brownies

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Coca Cola and Pepsi responded to the American public's declining consumption of sugary carbonated soft drinks in various ways. One or the other company tried the following

answer

a. Purchasing or building their own juice brands b. Developing bottled water and flavored water brands NOT Discontinuing sugary beverages d. Introducing diet versions of popular sugary drinks e. Acquiring fast food distribution outlets outright or through long-term contracts

question

Using the 5 forces definition, substitutes for carbonated soft drinks include tea, coffee, juice, and bottled water, but not wine or beer.

answer

False

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When the bargaining power of customers of an industry increases, potential profits for existing competitors in the industry will tend to:

answer

Decline

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When conducting an external analysis, the term "key success factors" most accurately refers to:

answer

product attributes, organizational capabilities, or intangible assets with greatest impact on success in the market

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If a strategic groups map shows that your company is in a crowded cluster of capable rivals, you may wish to:

answer

ALL: a. Signal in a legal way to rivals to keep prices high and avoid price wars b. Move to the lower cost group c. Move to the differentiation group d. Figure out a way to move into the white spaces, away from close rivals

question

According to ESM chapter 5 and the case on Coach, which of the following best characterizes Coach's competitive positioning relative to its luxury brand rivals:

answer

Broader and broader market, multi-channel differentiation

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To succeed, companies should generally pursue best-cost provider status as their ideal positioning.

answer

F

question

When pursuing low cost there are three well-known mistakes.

answer

a. Overly aggressive price reductions decreases profitability b. Using a cost-cutting approach that rivals can imitate easily c. Seeking cost-cutting too zealously at the expense of features demanded by the market

question

There are only two main ways to attain low cost. Circle the correct description of these two ways.

answer

Perform essential value chain activities more cost-effectively than rivals, and eliminate or bypass some cost-producing aspects of the overall value chain

question

Toyota's Lexus line of cars is positioned to steal customers away from certain rivals, according to the ESM chapter. Describe the Lexus general positioning and explain how it competes effectively against at least two specific rivals

answer

- Best cost provider - designed w/ high-performance/upscale features comparable to Mercedes, BMW, Audi, etc. - transfer high quality and low cost supply chain and assembly know-how to incorporate features at low cost - underprice Mercedes and BMW' - separate dealers to provide high customer service

question

According to the case, when the airline was in its startup phase, which of the following types of recruits were the best fit for People Express Airlines as "Customer Service Managers"?

answer

Teachers, social workers, and nurses

question

People Express Airlines' initial competitive position is broad market differentiation, as opposed to focused or low cost.

answer

F

question

All of the following helped People Express Airlines reduce costs

answer

a. Using the same kind of plane to reduce maintenance costs and standardize logistics b. Using less traveled airports to obtain cheaper gate fees, gate access, and better schedules d. Eliminating first class seats, or charging extra for baggage, snacks and drinks e. Selling generic tickets for the cabin as a whole, not a specific reserved seat NOT c. Paying entry-level employees much lower overall compensation than rivals

question

People Express proved vulnerable to rivals at the end of its life. Which of the following was not a major reason that it failed.

answer

a. Rivals selectively matched the company's low prices on key routes b. It was hard to recruit enough of the right sort of person to work at the company c. It strayed from its emphasis on simplicity NOT d. Government regulations and fuel prices put them at a disadvantage e. Rivals launched frequent flier loyalty programs

question

The People Express human capital model emphasized cross-utilization and teamwork. Why?

answer

c. Higher labor productivity d. Lower training costs and speed up training

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why forward integrate

answer

1. gain better access to end users 2. improve market visibility 3. include purchasing experience as a differentiating feature

question

5 benefits of forward integration and the World Wide Web

answer

direct selling and internet retailing 1. lower distribution costs 2. relative cost advantage 3. higher profit margins 4. lower buyer price 5. online purchase preference

question

danger of forward integration via the World Wide Web

answer

channel conflict and signals weak commitment to dealers

question

pitfalls of vertical integration

answer

1. high specialized capital investments 2. high overall business risk 3. high resistance to new technology 4. low flexibility in accommodating shifting buyer preferences 5. capacity matching issues among integrate in-house manufacturing units 6. may require development of new and different skills/ business capabilities

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why outsource

answer

1. cheaper 2. non-crucial component 3. improves organization flexibility and speeds time to market 4. decreased risk exposure to changing technology and buyer preferences 5. concentrate on core business and competencies

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strategic alliance

answer

formal agreement to work collaboratively towards a common objective

question

partnership/joint venture

answer

type of alliance that establishes independent but jointly owned entity

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what is shared in strategic alliances

answer

- risk - control - dependency - resources

question

motives for strategic alliances

answer

1. expedite development of new tech. & products 2. overcome tech/manufacturing expertise deficit 3. bring toegher peronnel for new skills and capabilities 4. improve supply chain efficiency 5. higher economies of Scale 6. acquire and improve market access via joint marketing agreements

question

when strategic alliances are successful

answer

strong companies are working together, not solving weaknesses 1. partners don't directly compete 2. trusting relationship established 3. mutual long term interest

question

when strategic alliances fail

answer

1. diverging objectives and priorities 2. inability to work well together 3. changing market conditions 4. more attractive tech paths 5. marketplace rivalry

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achilles's heel of strategic alliances

answer

becoming too dependent on the other party

question

NUCOR

answer

strategy was to acquire when the market was to making them very strong in the recovery, they also diversified their offerings

question

Mondavi

answer

strategic alliances combining new and old world technologies, debate on whether or not to grow their own grapes, owner promoted wine education

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why international strategies

answer

1. access to new markets 2. lower costs and enhanced competitiveness 3. exploit core competencies 4. access to resources and capabilities in foreign markets 5. spread business risk across a wider market

question

factors shaping international strategy choice

answer

1. cross country differences: match local tastes and preferences or standardize for lower cost (major/common dilemma) 2. location-based cost advantage opportunities: when operating costs and profitability are significantly impacted by location of production, distribution and customer service 3. risks of adverse exchange rates shifting: shuffles which countries are low cost and which have the upper hand; benefits when other country's economy is weak, disadvantage when their economy is strong 4. gvt. policy impact on business climate: sometimes gvt. goal is to boost economy, other times gvt. wants to discourage imports

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political risks of international strategy

answer

unstable/weak gvts.; hostile leaders elected

question

economic risks of international strategy

answer

threat of privacy, intellectual property protection, inflation rates, deficit spending

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health tension of international strategy

answer

pressure for cost reductions vs. pressure for local responsiveness

question

international market entry strategies

answer

1. export 2. licensing 3. franchising 4. foreign subsidiaries 5. alliance and joint venture

question

3 main types of international strategies

answer

1. multidomestic "think local, act local" 2. global " think global, act global" 3. transnational "think global, act local"

question

multidomestic strategy

answer

vary products and approach to respond to cross country difference with strategy coming from managers with first hand local experience

question

global strategy

answer

same approach for all countries, great for standardized industries, strategy comes from HQ

question

transnational

answer

same strategic approach with local customization of products, with local managers adapting the global strategy to their particular regions

question

Tata motors

answer

nearly 60% of revenues generated outside of india, joint ventures with chrysler, fiat, and mercedes, not ideal macroeconomic conditions, commericial vehicle strategy was to focus on customer service, with a commitment to quality and the lowest total cost of owndership

question

4 distinct facets of diversified strategy

answer

1. picking new industries and entry means 2. leveraging cross-business value chains for competitive advantage 3. establishing investment priorities and delegating corporate resources in business units 4. initiatives to boost combined performances of corporation's collection of businesses

question

when to diversify

answer

if a single business company encounters diminished market opportunities or current sales are stagnate

question

what does the success of diversification depend on

answer

added shareholder value

question

3 tests of added shareholder value

answer

1. industry attractiveness 2. cost-of-entry 3. better off

question

added shareholder value

answer

value that shareholders cannot capture on their own by spreading their investments across the stocks of companies in different industries

question

industry attractiveness test

answer

the industry to be entered through diversification must offer an opportunity for profits and return on investment that is equal to or better than that of the company's present business(es)

question

1+1=3 effect

answer

value created from diversification that is more than merely purchasing stock

question

3 approaches to added shareholder value

answer

1. diversification 2. internal development 3. joint venture

question

describe when to use diversification approach to added shareholder value ; its challenge

answer

quick with low entry barriers, the focus is on positioning; challenge is that you can take on expensive companies that are established or failing organizations that are cheap

question

describe when to use the internal development approach to added shareholder value

answer

existing in-house skills and resources, ample time, internal entry costs and acquisition, no large competitors, maintain supply-demand balance, slow/ineffective incumbent responses

question

describe when to use the joint venture approach to create added shareholder value ; its challenge

answer

it is complex, uneconomical/risky for one company; broader range of know-how and competencies; challenge could be conflicting interests, least durable

question

related diversification

answer

when value chains have competitively valuable cross-business interactions

question

unrelated diversification

answer

dissimilar activities without competitively valuable cross-business relationships

question

strategic fit

answer

when value chains of different business present opportunities for skill transfer, cost-sharing, brand-sharing

question

economies of scope

answer

cost reductions from strategic fit across related value chains of a business

question

when is there a competitive advantage from cost savings

answer

the greater the cross-business economies associated with the cost-saving strategic fit, the greater the potential for a related diversification strategy to yield a competitive advantage based on lower costs than rivals

question

conditions of strategic fit

answer

1. added shareholder value from strategic fit cannot be replicated with diversified stocks 2. can only happen through related diversification 3. benefit is not automatic, must be captured internally in order to materialize.

question

what does unrelated diversification focus itself on rather that valuable cross-businesses

answer

earnings increase

question

how do conglomerates almost always pursue unrelated diversification

answer

acquisition

question

what kind of entities are attractive to conglomerates for acquisition

answer

- high growth ; low capital - undervalued and cheap - struggling and in need of operations help

question

3 keys to successful unrelated diversification

answer

1. identify and acquire high earnings and ROI companies 2. negotiate favorable prices 3. oversee/parent other companies to perform better (problem-solving, strategy, etc)

question

2 challenges to unrelated diversification

answer

1. high managerial demands 2. low potential for gaining a competitive advantage

question

describe challenge of high managerial demands for unrelated diversification

answer

many subsidiaries in many industries, it's hard to pick business unit heads to drive performance, approving business unit strategic proposals, stumbles are hard to address

question

2 ways to address challenge of high managerial demands for unrelated diversification

answer

1. manage by the numbers 2. rely on business-level managers

question

why is there low potential for gaining a competitive advantage

answer

because there's no 1+1=3 effect

question

what are bad reasons to pursue unrelated diversification

answer

1. risk reduction ( NO ADDED SHAREHOLDER VALUE) 2. growth (not likely to be profitable) 3. earnings stabilization (no evidence this happens) 4. managerial motives (high manager pay but low SH value)

question

is it possible to pursue both related and unrelated diversification?

answer

yes, customize it

question

6 ways to evaluate a diversified company strategy

answer

1. industry attractiveness 2. business-unit competitive strength 3. competitive value of strategic fit 4. evaluating a resource fit 5. ranking business units ; prioritizing resource allocation 6. crafting new strategic moves

question

what to consider when evaluating industry attractiveness

answer

market size ; growth rate; competition; emerging opportunities ; threats; cross-industry strategic fit (if unrelated; resource requirements; seasonal and cyclical factors; social, political, environmental and regulatory factors; industry profitability; risks

question

what are key factors to consider when scoring industry attractiveness

answer

1. selecting the appropriate weights 2. sufficient knowledge to rate the industry on each attractiveness measure

question

what are key factors to consider when evaluating business- unit competitive strength

answer

market share; costs relative to competitor costs; products/services that satisfy buyer expectations; strategic fit with sibling businesses; number and caliber of strategic alliances and collaborative partnerships; brand images and reputation; competitively valuable capabilities; profitability relative to competitors

question

3 opportunities that arise from competitive value of strategic fit

answer

1. combine some activity performance 2. skill, technology or intellectual capital transfer 3. share well-respected brand name

question

what to ask to evaluate competitive value of strategic fit

answer

what competitive value is generated? can cost-savings be realized? will sales grow?

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consider when evaluating a resource fit

answer

1. if individual businesses strengthen mix of resources and capabilities 2. if parent company's resources are sufficient to add customer value supporting business

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what to consider when evaluating a financial resource fit

answer

1. internal capital market 2. portfolio approach

question

summary questions for evaluating financial resource fit

answer

do businesses contribute to performance targets? can parent fund and maintain good credibility?

question

internal capital market

answer

add value by shifting capital from business units and generating free cash flow to those need it; no reliance on equity issues or borrowing

question

high ICM --> high financial resource fit =

answer

low dependence on external financial resources

question

portfolio approach

answer

difference business have different cash flows and investment characteristics

question

describe cash hogs

answer

Strategic Business Unit of a larger diversified company that its internal cash flows are inadequate to fully fund its needs for working capital and new capital investment; Parent company has to continually pump in capital to feed the hog.

question

Strategic options for a Company that has cash hog SBUs:

answer

1. Aggressively invest in cash hogs that have potential for rapid growth or high profitability 2. Divest cash hogs lacking attractive growth or profit potential

question

don't divest from cash hogs if

answer

1. valuable strategic fit with other businesses 2. modest outside financing required relative to what's available 3. it has potential

question

questions to ask of non-financial resource fit

answer

1. does it have/can it develop necessary resources and capabilities 2. are the resources being spread too thinly

question

how can resources be spread too thinly

answer

- acquisition sprees - low resource depth to transfer skills and competencies

question

which sbu's should receive priority in terms of resource allocation

answer

those with high profit and growth; high strategic and resource fit

question

resource fit

answer

exhibited when its businesses add to a company's overall mix of resources and capabilities and when the parent company has sufficient resources to support its entire group of businesses without spreading itself too thin

question

options when crafting new strategic moves

answer

1. stick with the existing business line-up 2. broaden scope with new acquisitions 3. divest and focus corporate resources on a narrower base 4. corporate restructuring

question

corporate restructuring

answer

to divest and acquire to enhance strategic value

question

when to use corporate restructuring

answer

too many slow-growth, low margin businesses; too many competitively weak business; high debts with high interests; disappointing acquisitions

question

what is corporate strategy

answer

The overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals

question

what is corporate strategy about if not "knowing the business"

answer

managing a portfolio

question

when did the first conglomerates arise

answer

19th century

question

when did the anti-trust movement occur

answer

early 20th century

question

before 1975 conglomerates were...

answer

favored

question

after 1975 conglomerates were...

answer

not favored

question

why diversify

answer

defend against cyclicality and inflation; reduce firm-level fluctuations; create and ICM to borrow from itself; control industry supply chain; vertical integration to control key resource; take advantage of money making opportunities

question

what happened in the 1960's and 70's

answer

conglomerate wave

question

what happened around 1975

answer

conglomerates shown not to have good returns, high debt, conglomerate SBU's were less successful than focused competitors, hard to evaluate, managers built empires but overestimated abilities, lead to divestments and failures

question

what does BCG matrix measure

answer

industry growth rate and market share

question

4 categories of BCG matrix

answer

1. stars 2. question marks 3. cash cows 4. dogs

question

describe a BCG matrix star and what to do with them

answer

high relative market shares, fast growing indisustry; aggressive investments to support continued growth and consolidate firms competitive positions

question

describe a BCG matrix question mark and what to do with them

answer

low market share in a fast growing industry; selective investments or divest if the firms are weak, have uncertain prospects and low strategic fit

question

describe a BCG matrix cash cow and what to do with them

answer

high relative market shares in a low growth industry; investments sufficient to maintaining competitive position, surplus to nourish stars and question marks

question

describe a BCG matrix dog and what to do with them

answer

low market share in a low growth industry, divesture, harvesting, liquidation, and industry exit

question

core competency framework

answer

keep a simple, related portfolio; diversification must add value; competencies should overlap; should meet industry attractiveness test, cost of entry, and better off test

question

disney case

answer

- diverse in industries: media, leisure, and entertainment - almost all ratios except the current ratio are growing - very successful recent acquisition of Marvel (Avengers)

question

business ethics

answer

application of general ethical principles to the actions and decisions of business and the conduct of the personnel

question

what are the 3 main causes of unethical behavior

answer

1. overzealous pursuit of wealth and selfish interests (i.e. someone from Dell sentenced to 11 years in prison) 2. heavy manager performance pressure (i.e. atm manufacturer Diebold ; olympus cameras) 3. culture values profitability and performance over ethical behavior ( i.e. Enron's rank and yank)

question

common perspective on ethical behavior before high profile scandals

answer

the business of business is business, not ethics

question

common perspective on ethical behavior after high profile scandals

answer

unethical behavior is costly and hard to repair, ethical conduct is good business

question

types of costs of unethical behavior

answer

1. visible 2. internal 3. intangible/less visible

question

examples of visible costs of unethical behavior

answer

government fines; civil penalties/ lawsuits from those harmed; low stock price and dividends

question

example of internal costs of unethical behavior

answer

legal and investigative; remedial ethics training for corrective actions; ensuring future compliance

question

example of intangible/less visible costs from unethical behavior

answer

customer defections; low productivity; reputation loss; low employee morale, higher turnover and cynicism; high recruiting costs; stricter regulations

question

3 schools of thought on business ethics

answer

1. ethical universalism 2. ethical relativism 3. integrative social contracts

question

ethical universalism

answer

- same ethical standards regardless of local traditions/norms - i.e. honesty, trustworthiness, respecting rights, and golden rule may make up a common moral agreement across nations

question

ethical relativism and its challenge

answer

local traditions and customs decide right & wrong leading to divergent moral standards; danger is that there is little moral basis for a company-wide code

question

integrative social contracts

answer

universal norms are 1st order; with influence from 2nd order cultural norms

question

what is an example of integrative social contract use

answer

when a company believes in equal opportunity but allows for pictures to be attached to resumes in europe

question

corporate social responsibility

answer

company's duty to operate honorably, provide good working conditions, encourage diversity, be a good environmental steward, and actively better the community

question

CSR programs commonly involve

answer

- efforts to employ ethical strategy and operations - charitable contribution, community service support, broader philanthropic initiatives, and outreach to the disadvantaged - actions to protect the environment and minimize adverse impact - work environment that enhances quality of life for employees - cultivating a diverse workforce

question

CSR stratey

answer

specific combination of socially beneficial activities a company supports with its time, money, and other resources

question

the triple bottome line

answer

people (social), planet (environment), and profit (economic)

question

sustainable business practices

answer

- meets needs of the present without compromising the future - i.e. general electric operations carbon footprint

question

environmental sustainability

answer

- deliberate actions to protect the environment - i.e. unilever cutting water, plastic and responsible tea sourcing

question

CSR with generic agendas can be successful

answer

false

question

when does CSR yield competitive advantage

answer

- when social benefits and customer needs are fulfilled - i.e. Toyota Prius

question

how does CSR yield competitive advantage

answer

1. increased buyer patronages 2. lower risk of reputation- damaging incidents i.e. Nike is still struggling to repair its reputation 3. internal issues such as recruiting, retention, and training; along with operational efficiency i.e. Starbucks, J;J helps employees stop smoking to decrease health care costs 4. SH benefits (higher earnings per share, profitability, and contract winning) (35-45% increase in stock prices).

question

describe SH benefits from CSR

answer

- positive but small correlation with good corporate behavior and performance - 2% incidences where CSR efforts harmed SH value

question

Ethical behavior

answer

consistent with societal expectations and judgments of right or wrong, not materially different from expectations of individuals

question

how is business ethical behavior different from that of individuals

answer

1. scale and scope 2. varying nature of impact 2. power not equivalent

question

describe idea of corporations being created by society for a purpose

answer

1. engine of social and economic value 2. comes with rights and responsibilities 3. stewardships of resources and deployment of motives

question

4 big areas of CSR to balance

answer

1. economic returns 2. legal compliance 3. ethical performance 4. philanthropic/prosocial activities

question

corporate citizenship

answer

- emphasizes the goal of exceeding, not just meeting society's needs - meets the needs of organization's current stakeholders without endangering society's ability to do the same later - a strategic imperative that has been incredibly productive in recent years

question

Frog's leap VRIN analysis

answer

- value: customers pay more and they have 2x the life of other vineyards - rarity: land is limited and no other vineyards are LEED certified - imitability: difficult to acquire land - non- substitutability: not really, focused on Green, fellowship of the frog

question

about the frog's leap case

answer

- above premium wine industry average margins b/c responsive to requests but lower than peer group - most buyers don't think of wine as an envrionmental purchase but green wine buyers are growing - huge pioneering first mover cost - owner John Williams is also a wine maker - solar power, dry farming, composting - green conferences, clubs, gatherings - high operating growth but slow steady growth, not fast increase in sales

question

3 types of CSR

answer

1. Philanthropic/Compliance (1st Gen) 2. Citizenship/ Stakeholder (2nd Gen) 3. Modern/Integrated Sustainability (3rd Stage)

question

describe Philanthropic/Compliance (1st Gen) CSR

answer

- corporate responsibilities are priority - "old school" - donations unrelated to core business - extolled compliance with laws - prized ethical behavior of company and employees - "if all companies conduct business responsibly, society's better off"

question

describe Citizenship/ Stakeholder (2nd Gen) CSR

answer

- emphasized stakeholder well-being - more strategic philanthropic approach - integrate decision making around mission to purposefully make everyone better off - "our business takes care of all of our stakeholders"

question

why pursue Citizenship/ Stakeholder (2nd Gen)

answer

1. company's have responsibilities beyond profit 2. solve important social problems they may have helped create 3. broader constituency than stockholders 4. impacts beyond marketplace transactions 5. human values

question

describe Modern/Integrate Sustainability (3rd Stage) CSR

answer

- emphasizes sustainability integration - more innovation and constant improvement - leadership rather than compliance within a narrow sphere of influence - convention pushing - long-term, global - "companies will lead the way to a healthier, more sustainable society and world

question

patagonia's mission

answer

build the best product, cause no unnecessary harm, use business to inspire and implement solutions to environmental crisis

question

patagonia

answer

environmental stewardship allows care for customers, employees, and suppliers lead to profit

question

patagonia governance

answer

- few large shareholders "family firm" model - founder (Chounard) continues involvement with firm - strong corporate culture - bold and innovative firms (donate 1% of revenue)

question

patagonia products

answer

- quality: build and take care of product, no throwaway consumerism - low environmental impactL dig into materials and supply chain; new solutions - innovation: new materials and products; pioneer new markets like organic cotton - production and logistics: carefully choose partners; long-term relationships; new suppliers for new capabilities; be a good partner - synergies around environmental messages and customer care levels - human resources: "fit" important; serious playfulness; brutal results honesty; frequent best company to work for; less than 5% turnover; would run through walls for CEO -value beyond accounting profits

question

key learning points for implementing strategy

answer

- almost all implementation is about people - apply continuous pressure - dictates organizational pressure - corporate culture is consciously designed - "what does my area have to do to implement its part of the strategic plan and what should I do to get these things accomplished efficiently"

question

top 8 managerial tasks

answer

1. building an organization with the capabilities, people, and structure needed to successfully execute the strategy 2. allocating resources to strategy-critical activities 3. instituting strategy-supportive policies and procedures 4. striving for continuous improvement in processes and activities 5. installing information and operating systems 6. using rewards and incentives to promotes better strategy execution 7. instilling corporate culture with good strategy execution 8. leading the strategy execution process

question

3 steps to building an organization with the capabilities, people, and structure needed to successfully execute the strategy

answer

1. staffing the organization 2. acquiring, developing and strengthening key resources and capabilities 3. matching organization structure to the strategy

question

describe staffing the organization

answer

1. building managerial talent with skilled execution and good results; an influential critical mass 2. recruiting and retaining a capable work-force by: a) screening and evaluating applications for culture fit; b) continuous training programs; c) challenging/interesting projects for employees; d) job rotations; e) retain high performers with rewards; f) coaching average performers to be better and weeding out under-performers - i.e. SW Airlines

question

ways of acquiring, developing and strengthening key resources and capabilities

answer

1. internal development 2. mergers and acquisitions 3. collaborative partnerships

question

toyota production system

answer

incorporates just-in-time delivery, developing people to think of ways to improve production, anyone can stop the line if they see a defect, only deal with defects when they occur, 5 why's, no wasting time

question

when to acquire, develop and strengthen key resources and capabilities through mergers and acquisitions

answer

1. market opportunity can quickly slip away 2. industry conditions are rapidly changing - i.e. Newell Rubbermaid

question

ways of using of collaborative partnerships when acquiring, developing and strengthening key resources and capabilities

answer

1. outsource the function/activity requiring new capabilities 2. collaborate with a complementary firm via a joint venture or strategic alliance 3. partnership for the purpose of learning (HAS TO BE MUTUAL CAN BE DANGEROUS IF NOT)

question

3 types of organizational structures

answer

1. functional/departmental 2. multidivisional/divisional 3. matrix

question

functional/departmental organizational structures

answer

when operations are geographically scattered; i.e. a technical instruments manufacturer

question

multidivisional/divisional organizational structures

answer

organizes value chain activities for each product to become its own profit center; i.e. a diversified building materials company

question

matrix organizational structures

answer

specifies dual reporting relationships for various value-creating building blocks i.e. Marketing for plumbing fixtures may report to MVP of corporate

question

2 ways of thinking about organizational structure and decision making

answer

1. decentralized 2. centralized

question

decentralized decision making and its challenge

answer

decisions are in the hands of people closest to and most knowledgable about the situation; the challenge is in figuring out how to control empowered employees

question

centralized decision making

answer

when the frontline lacks the time, wisdom and inclination to make decisions, higher ups do and this makes it easy to hold people accountable; the challenge is slow change and impractical for scattered organizations

question

how to aid the facilitation of collaborations with external partners and strategic allies

answer

network structures which link independent organizations for a common undertaking

question

example of a network structure

answer

ducati and its parts suppliers

question

what should allocation of resources to strategy-critical activities be based on

answer

strategic priorities; i.e. Honda prioritized innovation so it focused resources on R&D

question

3 things you should do when instituting strategy-supportive policies and procedures

answer

1) help enforce consistency when performing activities 2) support the change program with top-down executive guidance 3) promote a work climate that facilitates good execution the way McDonald's and Nordstrom do "provide enough boundaries, and then empower people to excel within those boundaries"

question

3 ways to strive for continuous improvement in processes and activities

answer

1) business process reengineering 2) total quality management 3) six sigma

question

business process reengineering

answer

pulling critical activities from different departments into one department or cross-functional unit; i.e. the way GE significantly decreased lead time and productivity with their order processing

question

total quality management

answer

continuous improvement in every way possible; kaizen

question

six sigma

answer

- statistics-based requiring less that 3.4 defects per million - not good for creative departments but could be implemented for ambidextrous companies where creativity is still important - i.e. whirlpool: uses sign sigma in all of its manufacturing facilities and instilled a culture based on six sigma and lean manufacturing skills and capabilities --> operational excellence

question

six sigmas DMAIC for improvement

answer

design, measure, analyze, improve, control

question

3 fundamental concepts of six sigma

answer

1. all work is process 2. all processes have variability 3. all processes create data that explain that variability

question

installing information and operating systems need to cover data on

answer

1. customers 2. operations 3. employee 4. supplier/partner/ally 5. financial performance - i.e. FedEx

question

what is the most powerful tool for encouraging employee commitment

answer

using rewards and incentives to promote better strategy execution

question

6 guidelines for designing monetary incentive systems

answer

1. make the performance payoff a major, not minor piece of total compensation 2. have incentives for everyone, not just top management 3. administer reward system with scrupulous objectivity and fairness 4. tie performance outcomes directly to good strategy execution and financial performance 5. performance targets should be set and aimed at achieving outs the individual or team can personally affect 6. minimize lead time between the outcome and the reward

question

6 appoaches for nonmonetary incentives

answer

1. attractive perks and fringe benefits (insurance, tuition reimbursement, etc.) 2. adopt promotions from within policies 3. act on employee suggestions 4. create a genuinely caring and respectful work atmosphere 5. share information with everyone, practice broad disclosure 6. have attractive office spaces and facilities

question

corporate culture

answer

internal work climate shaped by core values, beliefs, and business principles - i.e. Nordstrom (centered on delivering exceptional service to customer: respond to unreasonable requests, promotes with heroic acts)

question

what is the challenge of high performance cultures

answer

inspiring loyalty and dedication

question

what is W.L. Gore and Associates and example of

answer

corporate culture that has no traditional organization charts, no chains of command, nor predetermined channels of communication; direct communication and accountability within multi-disciplinary teams

question

adaptive cultures

answer

support and encourage change

question

describe types of unhealthy corporate cultures

answer

1. politicized 2. change-resistant (Sears, GM, Kodak) 3. insular/inwardly focused 4. unethical and greed-driven (Enron ; Tyco) 5. incompatible subcultures

question

4 steps to changing a problem culture

answer

1. top management must identify the problem 2. manager must clearly define the new culture and its goals 3. convince 4. execute

question

key to making a compelling case for culture change

answer

1. citing reasons the current strategy is not working well and why the new strategy will be better 2. quickly follow with action

question

what are the strong substantive culture-changing actions that signal commitment to the changes

answer

1. replacing key executives 2. promoting advocates of the change 3. appointing outsiders who fit the new mold 4. carefully screening out people who don't fit 5. have mandatory culture-training 6. reward those who change and hit those who don't in their pocket books 7. revise your policies and procedures

question

what is an example of symbolic culture changing actions

answer

Nucor execs fly coach to save money

question

keys to leading the strategy execution process

answer

1. staying on top of how well things are going (i.e. Amazon's CEO checks in regularly) 2. putting constructive pressure on organizational units "what adjustments are needed and what adjustments to make"

question

how to put constructive pressure on organizational units

answer

1. treat employees with dignity and respect 2. encourage employees to use initiative and creativity 3. setting stretch objectives 4. focus attention on continuous improvement 5. using full range of motivational techniques and compensation incentives to promote high performers 6. celebrate all successes

question

herman miller case

answer

- mission: to design and build a better world - prioritized social needs, the internal customer, and a green initiative - strategy is a mix of product and market development - adopted toyota production system for manufacturing quality and efficiency - 2013 living office introduced the open floor plan - after 9/11 had to change lifelong employment to a social contract - employee benefits: flexible spending accounts, insurance, gym memberships, massages, etc - most compensation was contingent on company performance - cross functional teams based on product development - 16 paid volunteers hours a year - future: high demand for ergonomic furniture, telecommuting, and continued cost advantage (high variable and low fixed costs) - disadvantage: fluctuating industry - consumers are willing to pay premium for socially responsible products

question

whole foods case

answer

- overall strategy: focused differentiation - 8 core values: sell high quality natural and organic products; satisfy and delight customers; support team member excellence and happiness; create wealth through profits and growth; serve and support local and global communities; practice and advance environmental stewardship; maintain ongoing win-win supplier partnerships; promote stakeholder health through healthy eating education - declaration of interdependence: the document laid out the 5 original core values and acknowledged other stakeholders - decentralized leadership with teams within teams, teams are autonomous enough to do whatever they have to do to get the job done, members have to interview with the team and be trained for knowledgable, friendly service; teams regularly participate in operational decisions; gain-sharing; open-book policy - challenges: strict regulation and distributions

question

what is the major difference between business process reengineering vs. total quality management and six sigma

answer

BPR is for quantum gains (30-50%) while TQM and six sigma are for incremental progress; 1st BPR then follow up with TQM and six sigma

question

When should a company diversify?

answer

a. Industry to be entered offers higher profits than current businesses b. All the businesses together will be better off, not worse off c. Cost of entry is worth the profits to be made d. Existing opportunities for existing businesses decline e. ALL OF THE ABOVE

question

T or F: Related diversification is generally viewed more favorably today than unrelated diversification.

answer

true

question

"Strategic fit" best refers to

answer

Value chains of different businesses allow skill transfer, cost sharing, or brand sharing

question

Success at unrelated diversification depends on which of the following:

answer

Recruiting top talent to run each business unit prudently

question

If a company has a supplier code of conduct and audits suppliers in various countries using the same code of conduct, this practice is most consistent with:

answer

Ethical universalism

question

T or F: The "triple bottom line" emphasizes interconnected economic, social, and environmental metrics of success.

answer

T

question

The "business case" for corporate social responsibility emphasizes all of the following EXCEPT:

answer

The business of business is business, then there will be profits left over for charity

question

There are several well-known causes of unethical behavior unique to the corporate setting, EXCEPT:

answer

Weak moral training in school

question

Apple has a supplier code of conduct and audits suppliers in various countries using this code. This practice most clearly illustrates:

answer

Ethical universalism

question

T or F: The "triple bottom line" emphasizes cost controls, effective marketing, and human capital metrics of success.

answer

F

question

According to the case, Patagonia is a successful business primarily because of:

answer

Entrepreneurial culture

question

T or F: The ad slogan "Don't buy this coat unless you need to" would fit at Patagonia.

answer

T

question

Patagonia's product life cycle initiative emphasized primarily:

answer

a. Reducing the amount of waste and extra material used b. Repairing products for free wherever possible c. Reusing products by swapping them or repurposing them d. Pay for products to be returned to the company for recycling e. ALL OF THE ABOVE

question

Give an example of how Patagonia's environmental commitments translate into human resources.

answer

Paid sabbaticals ? company allows them 2 months leave to work with an environmental org. of their choice $2,000 subsidy for purchasing a hybrid car Bail payment to employees arrested for peaceful protest Organic and mostly vegetarian options for the staff

question

According to the case, Whole Foods Market is a successful business primarily because of:

answer

Quality

question

T or F: Whole Foods Market is profitable, but not as profitable as other grocery store companies.

answer

F

question

The strong social and environmental mission around natural foods produces which of the following for Whole Foods:

answer

a. Loyal customers b. Motivated employees c. Critics who say that the company is "too corporate" d. Enthusiastic suppliers e. ALL OF THE ABOVE

question

In the case, Whole Foods was experiencing difficulties from rapid growth. In which area was this most extreme?

answer

e. Same-store sales growth slowed

question

Whole Foods practiced self-directed teams in its stores. What is this and what is it supposed to accomplish?

answer

They are empowered to do whatever they have to do to get the work done and don't spend a lot of time trying to get back to the chief

question

Whole Foods practiced open book management. What is this and what is it supposed to accomplish?

answer

Teams would be highly competitive and intensely focused on financial performance, which could serve as a basis for financial compensation, teams with the best performance could participate in gain-sharing (which was less frequent as budgets got tighter), "high-trust organization", people could see how much everyone is getting paid, Mackey decreased his own pay

question

The history of Mondavi and Tata generally show that strategic partnerships can pay off

answer

T

question

A five forces analysis of the People Express case would show that barriers to entry for the airline industry in 1980 were very high relative to 1975

answer

F

question

In formulating strategy, it is important to anticipate how rivals will respond to your next move. People Express did a good job anticipating how legacy carriers like AA would response when PE moved into large AA hub cities in 1984

answer

F

question

The PE and Nucor human capital models both emphasized teamwork, team incentives, profit sharing, and fewer, more productive employees. We can conclude that this human capital model is common for companies pursuing low cost

answer

F

question

imagine starbucks just announced it was acquiring its first coffee plantation to grow specialty coffe in Columbia. This is an example of vertical integration backward into the industry value chain

answer

T

question

a company's business model include its customer value proposition. imagine you work at Coach and are asked to summarize the value proposition. Are you right to say "all the quality you'll ever need, in classic and enduring fashions, at a price you can afford"

answer

T

question

The decline of PE proves that changes in scale and scope are usually a bad idea for a company

answer

F

question

Our cases generally show that first movers tend to build sustainable competitive advantage

answer

F

question

Coca cola since 1980 has pursued a "blue ocean" strategy successfully

answer

F

question

nucor's high-tech mini-mill approach shows that technology and a motivated workforce can alleviate the problem that "variation increases costs"

answer

T

question

tata motors shows that a company can do both differentiation and low-cost at the same time, provided its brands are not competing directly in the same market

answer

t

question

robert mondavi's wine company vertically integrated more and more over its history to control its grape juice because large suppliers kept raising prices

answer

f

question

acquiring access to unfamiliar markets is a good motive for a joint venture or acquisition

answer

t

question

good defensive moves can often be the basis of sustainable competitive advantage

answer

F

question

a company has an apparent excess of cash and marketable securities. Defensive strategy suggests that this money should be invested right away in productive projects or returned to share holders

answer

F

question

which of the following was the least important PESTEL factor for contributing to the rise of Tata Motors in india

answer

important: indian gvt policed subsidizing diesel fuel; rise of well-educated, tech-savvy middle class in India; strategic joint ventures with important international partners; growing domestic indian demand for trucks, coaches and small cars not important: united states and european demand for ultra cheap cars

question

by 2010, tata had developed the economy car called "nano" for india. it was sold as the cheapest car in the wold. Tata then tried to decide if the Nano would succeed in other markets. If they decide to make the nano cars in india and then export them with only minor customization to buyers in Nigeria and Europe, which description best characterizes this approach

answer

International: building volume with low-local responsiveness

question

the four building blocks of competitive advantage in order of People Express

answer

efficiency, customer responsiveness, quality, innovation

question

all of the following helped people express reduce costs early in its life except

answer

help: using same planes, using less traveled airports, no first class seats/charging for extra bags/snacks & drinks, generic tickets vs. reserved seats didn't happen: paying entry-level employees much lower overall compensation than rivals

question

at nucor, which of the following was least important to lowering costs

answer

acquiring companies during downturn because they were spending money

question

recently, coca cola announced it would make a nutritious fortified milk drink. Thinking about timing and positioning, which description below best characterizes this move by coca cola

answer

defensive b/c blocking rivals and reacting to market trends

question

there are many ways to select a target for an offensive attack. which of the following is not generally seen as a good targeting method

answer

bad: attack a strong differentiator's home territory good: attack a market leader's weakness, go after struggling or failing rivals, dominate smaller firms with limited capacity, use the best-cost approach

question

an offensive move attempts to gain new customers or increase the loyalty of customers. which of the following was the main approach used by PE in its first 3 years of existence

answer

capture unoccupied of less contested markets

question

mondavi pursued many defensive strategies to block challengers. Which of the following was not one that it pursuied

answer

all of these used: announce new products or price changes, broaden product line to fill vacant niches, introduce new features on existing models or varieties, add new models of varieties

question

according to the case, when the airline was in its startup phase, which of the following types of recruits were the best fit for PE's customer service managers

answer

teachers, social workers, and nurses

question

PE proved vulnerable to rivals at the end of its life. Which of the following was not a major reason that it failed

answer

new government regulations put them at a disadvantage reasons: rivals selectively matched the company's low prices on key routes, hard to recruit enough of the right people, strayed from emphasis on simplicity, rivals launched frequent flier programs

question

in the royal dutch shell case, the company encountered several challenges that forced a reconsideration of its international approach, what steps did the company take to turn things around

answer

engage stakeholders in discussions more proactively and analyze country by country expectations of the company

question

there are only two reliable ways to attain low cost. what is the best description

answer

perform essential value chain activities more cost-effectively than rivals and eliminate or bypass some cost-producing aspects of the overall value chain

question

according to ESM chapter 5 ; the coach case, which of the following descriptions best characterizes coach's competitive positioning relative to all baggage and accessory rivals

answer

broader market, mult-channel differentiation

question

many of our cases have pursued mergers, acquisitions, and joint ventures that expand the scope of the firm over time. which statement is generally not a problem with changing the firms's scope

answer

first mover is generally the winner problem: cultures clash and key people leave, estimates of cost saving are usually not fulfilled, added complexity of the firm can add costs

question

the cost-of-entry

answer

the cost to enter the target industry must not be so high as to erode the potential for good profitability

question

better off test

answer

diversifying into a new business must offer potential for existing businesses and old businesses to perform better under a single entity

question

better off test

answer

diversifying into a new business must offer potential for existing businesses and old businesses to perform better under a single entity

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