According to Peter Drucker,the primary goal of innovation is to
a. promote social well being.
b. increase the number of jobs.
c. create wealth.
d. support national economies.
There are three variations of the multidivisional structure.
a. True
b. False
The balanced scorecard’s perspective on learning and growth is intended to improve the
firm’s ability to innovate.
a. True
b. False
Acquisitions are the most common cooperative strategy used in standard-cycle markets.
a. True
b. False
Which of the following is TRUE of Walmart?
a. Walmart has an unusual amount of flexibility for a large firm.
b. Walmart’s success is largely due to the fact it has little market commonality with
other industry firms.
c. Decision-making responsibility is centered at its Arkansas headquarters, which
allows the firm to respond quickly to competitive attacks.
d. Walmart’s advantage lies in its ability to “think big.”
Products developed through _______ are often offered at lower prices without as many
features than products developed through.
a. innovation;
b. imitation; invention.
c. imitation; innovation.
d. innovation; invention.
An acquisition occurs when one firm buys a controlling or 100 percent interest in
another firm and the acquired firm becomes a subsidiary business.
a. True
b. False
Unrelated diversified firms become overdiversified with a smaller number of business
units than do firms using an related diversification strategy.
a. True
b. False
In Japan, the principal source of the active monitoring of large companies comes from
a. boards of directors.
b. stock brokerage companies.
c. the government.
d. banks.
______ provides the firm with new and up-to-date skill sets, which allow it to adapt to
its environment as it encounters changes.
a. Strategic flexibility
b. Continuous learning
c. Knowledge
a. True
b. False
A U.S. manufacturer of pigments for household paint that exports about 40 percent of
its production to European markets will find its sales will be harmed by a weak dollar.
a. True
b. False
Moving into international markets is a particularly attractive strategy to firms whose
domestic markets
a. demand a differentiation strategy for success.
b. are limited in opportunities for growth.
c. have developed unfriendly business attitudes toward the industry.
d. have too much regulation.
A major U.S. manufacturer of children’s toys believes its main competitive advantage
lies in its continuing development of innovative toys and games. The company is facing
increasing competition on price, and it is strongly considering outsourcing to offshore
firms as a means of reducing costs. The LAST function this firm should consider
outsourcing is a. operations.
b. research and development.
c. supply-chain management.
d. distribution.
Several members of the board of directors of American Textile Products (ATP) have
proposed creating the position of lead director. What circumstances would most likely
have initiated this proposal?
a. ATP has been the initiator of several hostile takeovers in the last 2 years.
b. The board has been successful in reducing the percentage of CEO pay that is
composed of stock options.
c. The CEO/chairperson of the board has been suspected of opportunistic behavior.
d. The firm is traded on the New York Stock Exchange and must change its corporate
governance to comply with the NYSE’s new rules.
The essence of entrepreneurship is to capture most of the existing markets from less
aggressive and innovative competitors.
a. True
b. False
Fluctuation in the value of different currencies is a major economic risk associated with
international diversification.
a. True
b. False
________ is an important influence in Japanese corporate governance structures.
a. Innovation
b. Consensus
c. Competition
d. Individualism
What is the effect of a firm’s low performance on the pursuit of diversification?
CaseScenario2:Plasco.
Plasco is a $3 billion U.S.-based manufacturer of flexible plastic products like trash
cans, reheatable and freezable food containers, and a broad range of other plastic
storage containers designed for home and office use. Historically, Plasco has been the
category killer for most of its products and has devoted tremendous resources to new
product development on an ongoing basis-this research intensity has allowed the
company to release, on average, a new product every day over the past 5 years. Despite
its past strength and high brand awareness, Plasco’s profitability has been eroded by
dramatic increases in the cost of plastic resin, the primary input into its plastic products.
Moreover, the retail channel has experienced rapid consolidation resulting in a shift in
the balance of power from branded manufacturers like Plasco, to strong retailers like
Walmart, who in turn have been unwilling to help Plasco absorb the higher resin costs.
Enhancing Walmart’s power is the fact that it can always turn to alternative
high-volume sources of consumer plastic products like Sterlite. Further hampering
Plasco’s recovery is the emergence of feisty little foreign competitors like Zig
Industries, a $250 million Israeli firm that has begun to take part of Plasco’s market
share in plastic toolboxes. Ironically, Plasco was the first company to offer plastic
toolboxes some 20 years ago. This innovation changed the market dramatically and
Plasco’s first mover strategy rewarded it with a rapidly growing new segment and a
dominant market position. Today, Plasco’s toolboxes are viewed as rather boring, while
Zig’s products are ingeniously designed to catch the customer’s eye in the aisle (better
merchandising the product) and capture their interest (and pocketbook) with many new
and novel features. Zig is also able to provide this new line of toolboxes at between 10
percent to 15 percent less than Plasco.
Although Plasco was the first mover in plastic toolboxes several years ago, its
competitor Zig has gained market share by building brand loyalty to its boxes, which
are viewed as more attractive and have novel features. The characteristics of this market
are most similar to a standard-cycle market.
CaseScenario1:Abramson’Jewelers.
Abramson’s Jewelers has established a strong niche market in the upscale jewelry store
segment. Abramson’s was founded in 1871, and its current single-store location is
owned and operated by John Wickersham, who bought the firm from its namesake
founders in 1985. Over the last 15 years, Mr. Wickersham has narrowed the company’s
product offering considerably to focus only on high-end watches like Rolex and Piaget,
custom jewelry, and estate jewelry. Mr. Wickersham stresses that this is an appropriate
focus for his business since each of the products lends itself to relationship selling, and
price rarely comes into the discussion. Despite the narrower offering, Abramson’s floor
space has doubled, and clients are intensely loyal to the good taste, design skills, and
personal service level provided by Mr. Wickersham. After evaluating several expansion
options, Mr. Wickersham has decided to open another store in a neighboring city. While
it is likely that some of his existing customers may begin doing business at the other
location, thus lowering sales volume at the original store, Mr. Wickersham sees this as a
desirable increase in the level of service and convenience he can provide his existing
clientele. At the same time, he believes that he will be able to grow the overall business
faster with two locations. He has identified another reputable gemologist, Jill Diamond,
to run the other store and is now considering how to compensate her.What are the
advantages and disadvantages of paying the new manager primarily on new store sales
growth?
CaseScenario1:TheWaltDisneyCompany
The Walt Disney Company was founded as a cartoon studio in 1923 by Walt Disney
and his brother Roy with a
$500 loan from an uncle. In the early 1920s, cartoonist Walt Disney visited New York
to pitch his idea for a cartoon rabbit called Waldo. During that trip, through a
complicated series of events, Disney lost the rights to develop Waldo. On the train-ride
back to California he spoke with his wife about the importance of coming home with
some alternative character. “I can’t come back to our office and tell them I’ve lost
Waldo,” he bemoaned. This hardship inspired Disney to develop a new character,
Mickey Mouse, and release the world’s first fully- synchronized sound cartoon,
“Steamboat Willie” (starring, of course, Mickey Mouse). Disney’s creative genius was
now coupled with a fierce instinct to protect and control his creative output. Never
again would he lose “Waldo.” Consequently, the Walt Disney Company was pushed by
Walt to tirelessly create timeless and universal entertainment, consistently innovate and
take risks to deliver that entertainment, stress a vision of being the provider of choice of
quality family entertainment, and maintain rigorous control over the quality of
customers’ experiences with Disney products and its image. Such a personal passion for
control led the Walt Disney Company into theme parks because Disney did not want
Mickey’s reputation sullied by the dirty, cheap theme parks that littered the land during
those days. All films had to be new and of the highest quality animation (taking a
minimum of five years to create, including hand-painted backgrounds); sequel films
were not tolerated. Walt’s vision and risk taking propensity led him in the early 1960s to
buy 43,000 acres in Florida (now Walt Disney World), betting the company’s future on a
high-risk, uncertain venture. Amidst such a flurry of activity, Walt Disney died just
before Christmas 1966, and the company was literally stopped dead in its tracks. Walt
Disney’s blueprint was being followed to the letter, but no further (Walt Disney World
opened in 1971). No “new” creations were undertaken until 1982, when the company
finally launched such businesses as the Disney Channel, Touchstone, and their home
video business. Had it not been for the appointment of Michael Eisner as Disney’s new
CEO in 1984, the company would likely not have survived its perilous financial
situation and stifled creativity. Eisner returned the company to its roots of family
entertainment and values of quality, fairness, creativity, entrepreneurialism, and
teamwork.What value-creating legacy did Walt Disney leave to the Walt Disney
Company?
How do focused differentiation and focused cost leadership strategies differ from their
non-focused counterparts?
Describe the three strategic approaches used to produce and manage innovation:
internal corporate venturing, cooperative strategies, and acquisitions.
What is an LBO and what have been the results of such activities?
Describe and discuss the resource-based model of above-average returns.
Explain why it is important for organizations to analyze and understand the external
environment.