Corporate governance revolves around the relationship between which two parties?
a. shareholders and the board of directors
b. shareholders and managers
c. the board of directors and managers
d. None of the these options are correct.
Problems associated with acquisitions include all of the following EXCEPT
a. managers overly focused on acquisitions.
b. integration difficulties.
c. large or extraordinary debt.
d. excessive time spent on the due diligence process.
In a large number of family owned firms, ownership and managerial control are not
separated.
a. True
b. False
Competitor intelligence is
a. legally or illegally gained data about competitors’ internal strategic processes and
competitive decisions.
b. strategic information gained from industrial espionage targeting international
competitors.
c. the data that the firm gathers to understand competitors’ objectives, strategies,
assumptions, and capabilities.
d. illegal to gather under the Sarbanes-Oxley Act.
A second mover
a. is typically ineffective in its response to the first mover.
b. attempts to provide a product with greater customer value than the first mover’s
product.
c. usually incurs higher expenses than the first mover since it must engage in reverse
engineering.
d. typically has a higher survival rate than first movers which typically take greater
risks.
Coca Cola and PepsiCo compete across a number of products (e.g., soft drinks, bottled
water) and geographic markets (U.S. and foreign markets) indicating that both
companies have market commonality.
a. True
b. False
An alliance can be used to test whether the partners would benefit from a future merger.
a. True
b. False
One criterion for a resource or capability to be a source of competitive advantage is that
it must allow the firm to perform a value-creating activity that competitors cannot
perform.
a. True
b. False
The integrated cost leadership/differentiation strategy is superior to the other
business-level strategies.
a. True
b. False
Refuge Nursing Homes, Inc., (RNH) has been highly profitable in the past 10 years,
providing its investors higher returns than those earned by its direct competitors’
investors. RNH has a reputation for providing high-paying managerial and
hourly-employee jobs. However, recent investigations have revealed that the nursing
home residents have been provided substandard care, including non-nutritious and
unappetizing meals, non-functional medical equipment, and inadequate patient-care
staffing. Which statement best describes the situation?
a. RNH has been earning below-average returns, so it has had to prioritize the demands
of its various stakeholders.
b. RNH has prioritized the demands of capital market stakeholders over the demands of
product market stakeholders.
c. RNH has earned above-average returns and so has satisfied the needs of all relevant
stakeholders.
d. RNH has been attempting to minimally satisfy the demands of all of its stakeholders.
For a retail business dependent on drive-in customers, the major cost disadvantage
independent of scale would be if
a. favorable locations are not available.
b. other competitors have proprietary product technology.
c. access to raw materials is difficult.
d. other competitors have government subsidies.
Which of the following is NOT a typical disadvantage of licensing?
a. little control over the marketing of the products
b. licensees may develop a competitive product after the license expires
c. lower potential returns than the use of exporting or strategic alliances
d. incompatibility of the licensing partners
In the cost minimization approach to managing competitive strategies, the relationship
between the firms is based on trust of the other partner.
a. True
b. False
New entrants to an industry are more likely when
a. it is difficult to gain access to distribution channels.
b. economies of scale in the industry are high.
c. product differentiation in the industry is low.
d. capital requirements in the industry are high.
Monitoring by shareholders is usually accomplished through
a. management consultants.
b. government auditors.
c. the firm’s top managers.
d. the board of directors.
Strategic control focuses on the content of strategic actions rather than their outcomes.
a. True
b. False
The separation of the positions of CEO and chairperson of the board of directors
reduces the power of the CEO
over firm governance practices.
a. True
b. False
Discuss the methods an organization can use to facilitate cross-functional integration.
Discuss how the managerial succession process and the composition of the top
management team interact to affect strategy.
Discuss the benefits and risks of acquiring another firm to gain access to innovations.
Explain the relationship of the strategic management process to organizational ethics.
CaseScenario1:Syco.
Syco is a diversified company that has six primary lines of business. Fifty percent of its
revenues and 18 percent of its profits come from retailing. Most of its retail outlets are
discount department stores that serve as anchor tenants for large suburban shopping
malls. The remaining businesses are broken out as follows: Insurance accounts for 30
percent of revenues and 50 percent of profits; consumer credit card operations are 6
percent of sales and 17 percent of profits; 5 percent of revenues and 6 percent of profits
come from its stock brokerage business; commercial and residential real estate
operations generate 4 percent of sales and 8 percent of profits; finally, 5 percent of
revenues and 1 percent of profits come from its online portal business. The company’s
management states that all these businesses are essential to its competitive future.
Why might there be so much variability among the proportion of sales versus
profitability contributed by each of the businesses? Does this mean that Syco is more
successful in its insurance business than in its retail business?
CaseScenario1:NorningInternational
Norning International (NI) states that both its past successes and future growth
strategies are based on an evolving network of wholly owned businesses and joint
ventures around its core competency in glass making. Through their alliances and
owned divisions they compete in four global business sectors: Specialty Glass and
Materials (including materials for HDTV and LCD displays), Consumer Housewares
(including microwavable dishware), Laboratory Sciences Products and Services (test
tubes, testing equipment, and drug trials testing), and Communications (fiber optics and
related technologies). Per the company’s annual report, “binding all four sectors
together is the glue of a commitment to leading edge glass making technologies, shared
resources, and dedication to total quality.” Each sector is composed of divisions,
subsidiaries, and alliances. However, the central role played by alliances is
demonstrated by the fact that the combined revenue of its 30-some alliances is more
than double that of NI on its own. Most of the alliances provide NI with access to
particular geographic markets, industries, or channels, although an increasing number
of alliances involve both market access and technological development.
NI appears to be managing a large number of alliances. What criteria should it use to
exit particular alliances?
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.
Is Walmart a competitor or a customer of Plasco?
CaseScenario1:TheBoyandGirlClubs.
The Boys and Girls Clubs (BGC) is a national non-profit organization geared toward
providing America’s youth with the tools and skills they need to become healthy adults,
responsible citizens, and effective leaders. By bringing parents, neighbors, educators,
and civic leaders together with our youth, BGC believes it can instill these crucial life
lessons at an age when they’re most needed. The national organization is headquartered
in Atlanta, GA, and serves as a service hub for over 3,700 club locations around the
United States. Each local club is directed by a volunteer board of directors and staffed
by professional youth development workers (usually including an executive director, a
program director, and an arts director) and many volunteers who just enjoy working
with young people and want to make a difference in their lives. While affiliated with the
national center, each local BGC is locally funded.
How are the various facets of the general environment (Table 2.1 in Strategic
Management) likely to be important for BGC?
What is a firm’s strategic group? What effect does the strategic group have on the firm?