Creating customer value is the source of the firm’s potential to earn above-average
returns.
a. True
b. False
Actions that effective strategic leaders can take to develop an ethical organizational
culture include all of the following EXCEPT
a. relying on the fundamental goodness of individuals.
b. using reward systems that recognize acts of courage.
c. communicating goals that describe the firm’s ethical standards.
d. creating a work environment where individuals are treated with dignity.
A major problem with buying other companies in order to gain access to their product
lines is that the acquiring firm may lose its own ability to innovate.
a. True
b. False
Firm size, firm age, the executive’s tolerance for ambiguity, and his or her commitment
to strategic outcomes are all factors that may affect managerial discretion.
a. True
b. False
Horizontal, vertical, and related acquisitions to build market power
a. are likely to undergo regulatory review and analysis by financial markets.
b. are rarely permitted to occur across international borders.
c. typically involve a firm purchasing one of its suppliers or distributors.
d. concentrate on capturing value at more than one stage in the value chain.
All competitive advantages do not accrue to large-sized firms. A major advantage of
smaller firms is that they
a. are more likely to have organizational slack.
b. can launch competitive actions more quickly.
c. have more loyal and diverse workforces.
d. can wait for larger firms to make mistakes in introducing innovative products.
Patent laws and regulatory requirements such as required FDA (Food and Drug
Administration) approval to launch new products shield pharmaceutical companies’
positions in this slow-cycle market.
a. True
b. False
Because of the current changing competitive landscape and varying levels of
performance, an increasing number of boards of directors are turning to insiders to
succeed CEOs.
a. True
b. False
CaseScenario3:B.B.Mangler.
B.B. Mangler is a top U.S. business-to-business distributor of maintenance, repair, and
service equipment, components, and supplies such as compressors, motors, signs,
lighting and welding equipment, and hand and power tools. Customers include
contractors, service and maintenance shops, manufacturers, hotels, government, and
health care and educational facilities. Mangler’s industry is typically referred to as
MRO, an acronym for
maintenance, repair, and supplies. Mangler states its strategy as having the “capacity to
quickly offer an unmatched breadth of lowest total cost MRO solutions to business.”
Mangler’s GoMRO sourcing center for indirect spot buys locates products through its
unique database of 8,000 suppliers and 5 million products. Mangler also dominates the
North American market in terms of its sheer local physical presence. It has 388 physical
branches in the U.S. largest cities, including Puerto Rico (90 percent of sales), 184 in
Canada, and 5 in Mexico. This physical presence also has garnered Mangler a
reputation for excellent, dependable service in its target markets, which in turn
translates into a vast and loyal clientele.
Mangler’s physical locations are best an example of Mangler’s reputation among its
customers is an example of
A. a core competency.
B. a capability.
C. an intangible resource.
D. a tangible resource.
The market for corporate control serves as a means of governance when
a. the firm is overpriced in the market.
b. internal controls have failed.
c. the corporation has greatly exceeded performance expectations.
d. the top management team’s interests and the owners’ interests are aligned.
As globalization grows, adequate corporate governance is becoming an important
requirement for doing business with a foreign firms and in foreign countries.
a. True
b. False
One advantage of an unrelated diversification strategy in a developed economy is that
competitors cannot easily imitate the financial economies, whereas they can easily
replicate the value gained through the use of a related diversification strategy.
a. True
b. False
CaseScenario2:B.B.Mangler.
B.B. Mangler is a top U.S. business-to-business distributor of maintenance, repair, and
service equipment, components, and supplies such as compressors, motors, signs,
lighting and welding equipment, and hand and power tools. Its industry is typically
referred to as MRO, an acronym for maintenance, repair, and supplies. MRO products
are typically small and fairly inexpensive (such as light bulbs and washers), but often
needed on short notice. Mangler states its strategy as having the “capacity to offer an
unmatched breadth of lowest-total-cost MRO solutions to business.” Mangler’s GoMRO
sourcing center for indirect spot buys locates products through its database of 8,000
suppliers and 5 million products. Mangler has 388 physical branches in the United
States, including Puerto Rico (90 percent of sales), 184 in Canada, and 5 in Mexico.
Customers include contractors, service and maintenance shops, manufacturers, hotels,
governments, and health care and educational facilities. Mangler also provides
materials-management consulting services.
Historically, Mangler appears to have relied on its physical locations for market
presence in the United States and northern South America. What threats does the
Internet pose to its location- based strategy?
CaseScenario1:Romulac,Inc.
Romulac Inc. (RI), a subsidiary of a large successful manufacturing conglomerate,
supplies a key component in the assembly of residential cooling systems (air
conditioning units, etc.). There has been tremendous consolidation in RI’s industry, to
the point where only five suppliers of this particular component account for nearly 90
percent of U.S. industry sales. Paralleling this trend, its customers-composed of makers
of branded residential air conditioning units like Carrier and Trane-have seen similar
levels of consolidation in their own industry. Half of these firms produce all their
components in-house, while the balance purchases them from specialized component
manufacturers like RI. RI’s business is extremely capital intensive, and their 40 percent
share of the market allows them to also be the most profitable domestic player. Strong
competitors exist in Europe and Asia. Although like RI, these foreign players’
strongholds are their home regions, with negligible presence outside of the region.
Some of the larger Asian manufacturers have signaled an interest in more aggressively
pursuing the lucrative U.S. market. RI is presently considering a $400 million dollar
investment in a new plant, which will create a component that is much quieter, more
efficient, and is likely to satisfy future regulatory standards. While the core technology
for the new component is very old, RI’s engineering and design skills have allowed
them to retain their low cost advantage, even though the component will represent a
significant improvement over products currently provided by its competition.
Develop an argument as to why RI should try to be a first-mover with this new
technology.
The Dodd-Frank Wall Street Reform and Consumer Protection Act is the most
sweeping set of financial and regulatory reforms in the United States since the Great
Depression.
a. True
b. False
Managerial employment risk is the
a. risk that managers will behave opportunistically.
b. risk undertaken by managers to earn stock options.
c. managers’ risk of job loss, loss of compensation, and/or loss of reputation.
d. risk managers will not find a new top management position if they should be
dismissed.