Research suggests that institutional activism may not have a strong direct effect on firm
performance but may indirectly influence the targeted firm’s strategic decisions,
including those concerned with international diversification and innovation.
a. True
b. False
The board of directors for TundraPro, Inc., is searching for a new CEO. The firm is in
need of new direction after suffering several years of declining performance and
increasingly demoralized management and employees. The board has decided it needs a
CEO who can be a transformational leader. To this specific end, the board needs to
identify applicants who have
a. high levels of honesty, trustworthiness, and integrity.
b. high emotional intelligence.
c. Both A and B are correct.
d. low tolerance for ambiguity.
Firms using the differentiation strategy need to respond quickly to environmental
opportunities and threats. The structural features that are best for these requirements are
centralization, specialization, and many rules and procedures.
a. True
b. False
The ______ phase is probably the single most important determinant of shareholder
value creation in mergers and acquisitions.
a. pre-acquisition negotiations
b. pre-acquisition due diligence
c. post-acquisition integration
d. post-acquisition restructuring
Mutual forbearance is
a. illegal in the United States.
b. a type of competition-reducing strategy.
c. a variety of risk-sharing by firms in highly fragmented industries.
d. exercised when alliance partners refrain from opportunistic behaviors.
Specialty Steel, Inc., needs a particular type of brick to line its kilns in order to safely
achieve the high temperatures needed for the unusually strong steel it produces. The
clay to make this brick is very rare and only two brick plants in the United States make
this type of brick. Specialty Steel has decided to buy one of these brick plants. This is
an example of
a. backward integration.
b. forward integration.
c. horizontal integration.
d. virtual integration.
Implementing the multidomestic strategy requires decentralization to
a. facilitate the tailoring of products to the demand in local markets.
b. develop economies of scale.
c. achieve economies of scope.
d. reduce bureaucracy and speed up decision making.
Rewarding those who use proper channels and procedures to report observed
wrongdoings is an example of an action that should be taken by a strategic leader to
develop an ethical organizational culture.
a. True
b. False
Exit barriers are especially low in the airline industry as aircraft are not particularly
specialized and can easily be sold to other airlines, air cargo companies, the military, or
even to wealthy individuals who want to own a private jet.
a. True
b. False
Carl has just graduated with a management degree. He has a good understanding of his
personal strengths and weaknesses and knows he would fit best in a stable
organizational environment. In his job search, Carl should target firms in slow-cycle
markets.
a. True
b. False
Operational relatedness is created by of
a. sharing; core competencies.
b. sharing; activities.
c. transferring; core competencies.
d. transferring; activities.
Describe and discuss the four activities of the external environmental analysis process.
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.
How can a small player like Zig be such a successful competitor against a large,
established firm like Plasco?
Discuss the effect of the separation of ownership and control in the modern corporation.
How does corporate governance foster ethical strategic decisions and how important is
this to top-level executives?
Describe the additional risks undertaken by firms pursuing a focus strategy.
CaseScenario3:Abrahamson’Jewelers.
Through its sole location in an affluent suburb of San Francisco, Abrahamson’s Jewelers
has established a strong niche market in the upscale jewelry store segment.
Abrahamson’s was founded in 1871 and is currently owned and operated by John
Wickersham, who bought the firm from its namesake founders in 1985. Wickersham
joined the firm as a trainee out of high school, completed his gemology training, and
several years later took ownership with the financial help of his parents. That debt has
long been paid off and business has thrived. When he first acquired the business,
Abrahamson’s offered a full range of jewelry and gift items from watches to wedding
sets to silverware to clocks. This broad range of products was mirrored by a broad price
range-$10,000 Rolex watches were sold next to $50 Seiko watches. While some jewelry
was custom designed and manufactured, most of the products were “case ready,”
meaning they were sourced from large jewelry and silver manufacturers from around
the world. Over the last 15 years, 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. 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 moreover, Abrahamson’s floor
space has doubled, and clients are intensely loyal to the good taste, design skills, and
personal service level provided by Mr. Wickersham.
While Abrahamson’s is doing well, Mr. Wickersham would like to grow his business
beyond the present location. He believes that growth may bring greater profitability, as
well as employment avenues for his only child, who will soon be finishing high school.
What recommendations do you have for Mr. Wickersham regarding his growth choices?