Even for companies capable of succeeding in global markets, it is critical that they
a. remain committed to and strategically competitive in their domestic market.
b. introduce many new products immediately after entering a new market.
c. acquire a local competitor in each significant foreign market.
d. develop good negotiating skills in order to take advantage of local suppliers in the
international market.
Franchising is most attractive in concentrated industries.
a. True
b. False
CaseScenario3:WaltDisneyCompany.
Walt Disney Company is famed for its creativity, strong global brand, and uncanny
ability to take service and experience businesses to a higher level. In the 1970s, the
company realized nearly 90 percent of its revenues from its cartoons and the
Disneyland theme park in Anaheim, CA. By the beginning of the twenty-first century,
Disney had not only opened up more parks and ramped up its output of animated films,
it had also diversified into many businesses well beyond its traditional core of
high-quality cartoon animation and theme parks. For instance, the Disney empire
diversified vertically and horizontally into retail (The Disney Store, since licensed to
The Children’s Place), cruise lines, theaters, motels, and the Disney Press. It also moved
into new product offerings such as sports franchises, TV networks (ABC and ESPN)
and stations, Miramax, Broadway shows (Beauty and the Beast), and vacation clubs.
International growth included EuroDisney and Hong Kong Disney and new releases of
TV shows, videos, and movies worldwide. Indeed, while many of Disney’s businesses
had some tie to Mickey Mouse, only about 28 percent of total revenues now came
directly from its parks.
What level and type of diversification best characterized Disney at the beginning of the
21st Century?
A. dominant business
B. related constrained
C. related linked
D. unrelated
______ refers to a divestiture, spin-off, or some other means of eliminating businesses
that are unrelated to a firm’s core business.
a. Downsizing
b. Hostile takeovers
c. Shakeouts
d. Downscoping
Downscoping makes management of the firm more effective because it allows the top
management team to better understand the remaining businesses.
a. True
b. False
If McDonald’s is considering growing potatoes, the step of the profit pool analysis is the
one that
a. defines the pool’s boundaries.
b. estimates the pool’s overall size.
c. estimates the size of the value-chain activity in the pool.
d. reconciles the calculations.
A major advantage of multidomestic strategies is the ability to customize for the
specific market, although this sacrifices economies of scale.
a. True
b. False
For firms in a vertical complementary alliance (such as between Toyota and its
suppliers), it is more difficult to identify the strategic center firm than in a horizontal
complementary alliance (for example, airline alliances).
a. True
b. False
It is relatively common for a firm to develop new products internally to diversify its
product lines.
a. True
b. False
In Japan, the center firm in a strategic network of vertical relationships might be
expected to undertake all of the following EXCEPT
a. reducing its transaction costs by promoting longer-term contracts with
subcontractors.
b. enabling engineers in upstream companies to have better communication with those
companies with which it has contracts for services.
c. encouraging subcontractors to modernize their facilities and providing them with
technical and financial assistance to do so.
d. decreasing communications between network members to reduce communication
costs.
A powerful CEO would oppose the appointment of a lead director on the board of
directors.
a. True
b. False
Strategic competitiveness is achieved when a firm successfully formulates and
implements a value-creating strategy.
a. True
b. False