CaseScenario3:Bunnywac.
Bunnywac is a global producer and seller of batteries for consumer electronics products
(radios, flashlights, toys, etc.), and competes primarily with its larger rivals by
providing battery products equal in performance at a lower price. The worldwide
battery industry suffers from issues of overcapacity and commoditization, brand
segmentation and proliferation, the growing strength of global retailers, and the
low-cost threat of new entrants from Asia. Thus, the ability to provide dependable
batteries at a very low cost is essential to survival in this industry. Bunnywac has grown
quickly into one of the leading players in the battery industry primary through
horizontal acquisitions financed by a recent successful IPO, and is now counted among
the top four companies in North and Latin America. Its presence in Europe and Latin
America is negligible. While its market presence and brand is generally strong and
market share is growing, Bunnywac has entered into an alliance to obtain the core
technologies of its batteries. Bunnywac does not actually own the technology that
makes its batteries work. This approach has provided Bunnywac a cost advantage since
it has not had to invest in basic R&D and has very little R&D infrastructure.
This technology is licensed from Mats (which has 200 engineers dedicated to moving
the technology forward), one of Japan’s largest technology-based holding companies
(like Sharp or Canon). Mats also sells batteries under the Pandemonium brand and
commands over 50 percent of the market share of Asian countries. Mats’ market share
in other global markets is negligible and its efforts at growing its branded battery share
in the North America, Latin America, and Europe has been severely frustrated in recent
years. While Mats is very large compared to Bunnywac, the battery technology and
battery business are relatively tiny relative to Mats’ other technology-based businesses.
Bunnywac’s decade-long licensing agreement with Mats for the essential battery
technology expires in 1 year; there are no obvious substitute providers of this
technology.
What should Bunnywac’s strategy be with regard to the lapsing technology contract?
A. vertical business-level complementary strategic alliance
B. horizontal business-level complementary strategic alliance
C. competition-reducing business-level strategic alliance
D. competition response business-level strategic alliance
Average returns are returns in excess of what an investor expects to earn from other
investments with a similar amount of risk.
a. True
b. False
Global warming and energy consumption trends are aspects of the _______ segment of
the general environment that firms should monitor.
a. extensive financial assets
b. transformational leadership
c. high-quality human capital
d. an ethical organizational culture
Organizational controls guide the use of strategy, indicate how to compare actual results
with expected results, and suggest corrective actions to take when the difference is
unacceptable.
a. True
b. False
The increased use of the market for corporate control has decreased the sophistication
and variety of managerial defense tactics that are used in takeovers.
a. True
b. False
Capabilities are usually developed separately from specific functional areas such as
manufacturing, R&D, and marketing.
a. True
b. False
An entrepreneur is investigating starting a company that provides tax advice to small
companies. In order to position his company differently from the existing competitors,
the entrepreneur must
a. analyze the reach, richness, and affiliation the company must have with its customers.
b. provide tax advice either in a different manner or provide a different kind of tax
service than competitors.
c. offer tax advice at a price lower than the cheapest competitor.
d. offer tax advice at a higher quality than the best competitor.
A merger is defined as a strategy in which one firm purchases controlling interest in
another firm.
a. True
b. False
Eavesdropping by the NSA on average Americans is ethical because it is a
governmental organization instead of a for-profit company.
a. True
b. False
Functional structures work best for firms for all of the following strategies EXCEPT
a. cost leadership strategy.
b. differentiation strategy.
c. related constrained diversification strategy.
d. single or dominant business corporate strategy.
The resource-based view of the firm
a. emphasizes that it is difficult to develop and sustain a competitive advantage based
on resources
b. argues that the industry environment has a stronger influence on firms’ ability to
implement strategies successfully than does the competitor environment
c. calls for firms to focus on their homogeneous capabilities to compete against their
d. suggests that vision and mission are closely linked to sustainable competitive
advantage.
A innovation developed through autonomous strategic behavior will probably take the
firm into new markets not addressed by its current strategy.
a. True
b. False
Strategic fit among many activities (in an activity map) is fundamental to
a. the development of core competencies for a firm.
b. the breadth of competitive scope for a firm.
c. sustainability of a firm’s competitive advantage.
d. the integrity of the firm’s value chain.