Exit barriers to a firm include all of the following EXCEPT
a. generic assets.
b. loyalty to employees.
c. governmental concern about job loss.
d. restrictive labor agreements.
CaseScenario1:Compliance,Inc.
Compliance, Inc., (CI) conducts clinical human and animal trials for the pharmaceutical
and biotechnology industries. Revenues are split evenly between early and late drug
development services. While the bulk of its business is conducted in Europe and the
U.S. (10 and 17 subsidiaries, respectively), CI also has subsidiaries in Africa, Latin
America, Asia, and Australia. Historically CI operated under a multidomestic strategy,
owing to the fact that the clinical testing industry was geographically fragmented to
meet the diverse needs of the many strong local pharmaceutical companies and distinct
regulatory environments. CI’s organizational structure truly reflected the autonomous
character of each country’s businesses. Many of the country managers have been with
CI for more than a decade, and have a great deal of discretion over the activities of their
home-market businesses. However, globalization of the regulatory environment (both
global and local standards), globalization of the biotechnology firms (increasing the
geographic scope of their operations), and tremendous consolidation in the
pharmaceutical industry (reducing the number of pharmaceutical industry participants
to only a handful of major global companies) caused CI to question its multidomestic
strategy. Consequently, the firm has begun its transition to a transnational strategy.
What type of organizational structure will likely be needed for CI’s transnational
strategy? What impact will this have on the location of particular value chain activities?
The intent of the owners in a whole-firm leveraged buyout may be to increase the
efficiency of the bought-out firm and resell it in 5’“8 years. This tends to make the
managers of the boughtÂout firm highÂrisk takers, since they will probably not survive
the resale and thus have little to lose.
a. True
b. False
PepsiCo’s strategy called “capital performance with a purpose” links green efforts in ll
businesses to the bottom line.
This is an example of addressing concerns in the physical segment of the general
environment.
a. True
b. False
Age structure, geographic distribution, income distribution, interest rates, and process
innovations are all elements of concern when studying the demographic segment of the
general environment.
a. True
b. False
If Southwest Airlines employees lost their high enthusiasm and commitment to the
company,
a. the airline could continue without problems because its cost leadership strategy is
dependent on its efficient internal procedures.
b. replacement employees could be hired from rival airlines that are laying off
employees easily merged into the Southwest culture.
c. there would be no impact on Southwest’s profitability because Southwest’s customers
value the low fares rather than being “entertained” by the employees.
d. Southwest would have lost one of its competitive advantages and its performance
would be threatened.
Valuable capabilities
a. allow the firm to exploit opportunities in its external environment.
b. allow the firm to neutralize threats in its internal environment.
c. allow the firm to exploit opportunities or neutralize threats in its external
environment.
d. allow the firm to neutralize opportunities in its internal environment.
Lobelia’s Nursery and Garden Resource Center has long provided high-quality, typical
types of seasonal bedding plants to customers in the Mobile, Alabama, metropolitan
area. It has traditionally competed with the other plant nurseries within a 50-mile radius
of Mobile. Recently, Lobelia has opened a branch in Fairfax, Virginia. Lobelia’s
research shows that most Fairfax nurseries have only one location. Lobelia can expect
the local Fairfax nurseries to
a. be unmotivated to respond because their market position is not threatened by a new
competitor from out-of-town.
b. respond with fierce attacks because of resource dissimilarity.
c. respond aggressively because of high market dependence.
d. take no competitive response because of the lack of mutual interdependence among
the nurseries.
The means of entry into international markets that offers the greatest control is
a. licensing.
b. acquisitions.
c. joint ventures.
d. greenfield ventures.
The primary disadvantage of the multidomestic strategy and worldwide geographic area
structure relates to limited
a. centralization.
b. coordination across divisions.
c. ability to meet local market needs.
d. potential for global efficiency.
Firms with _______ market commonality and ________ resource similarity are direct
and mutually acknowledged competitors.
a. low; high
b. low; low
c. high; high
d. high; low
The _______ is a framework firms can use to verify that they have established both
strategic and financial controls to assess their performance
a. managerial model
b. holistic control system
c. balanced scorecard
d. internal auditing system
Resources must be combined to form capabilities, as illustrated by Subway, which
linked its fresh ingredients with several other resources, including the continual training
it provides to those running the firm’s units as the foundation for customer service as a
capability.
a. True
b. False
An agency relationship exists when one or more persons (the principal or principals)
hire another person or persons
(the agent or agents) as decision-making specialists to perform a service.
a. True
b. False
A cooperative agreement between a hotel chain and a casino operator would be viewed
as a horizontal complementary strategic alliance because as separate entities, the two
firms would compete for the same customer.
a. True
b. False
Which of the following is the most strategic action by Walmart?
a. Aggressive pricing to ensure they are a price leader
b. Aggressively pricing toys and electronics during the holiday season
c. Aggressively pricing school-related items in the back-to-school season
d. Entering a new foreign market
The strategic management process is
a. a set of activities that will assure a sustainable competitive advantage and
above-average returns for the firm.
b. a decision-making activity concerned with a firm’s internal resources, capabilities,
and competencies, independent of the conditions in its external environment.
c. a process directed by top management with input from other stakeholders that seeks
to achieve above- average returns for investors through effective use of the
organization’s resources.
d. the full set of commitments, decisions, and actions required for the firm to achieve
above-average returns and strategic competitiveness.
Product differentiation refers to the
a. ability of the buyer of a product to negotiate a lower price.
b. response of incumbent firms to new entrants.
c. belief by customers that a product is unique.
d. fact that as more of a product is produced the cheaper it becomes per unit.
Resources are considered rare when they have no structural equivalent.
a. True
b. False
Describe how a differentiation strategy can help a firm earn above-average returns.
CaseScenario2:WaltDisneyCompany.
Walt Disney Company is famed for its creativity, strong global brand, and uncanny
ability to take service and experience businesses to higher levels. In the early 1990s,
then-CEO Michael Eisner looked to the fast-food industry as a way to draw additional
attention to the Disney presence outside of its theme parks-its retail chain was highly
successful and growing rapidly. A fast-food restaurant made sense from Eisner’s
perspective since Disney’s theme parks had already mastered rapid, high-volume food
preparation, and, despite somewhat undistinguished food and high prices (or perhaps
because of), all its in-park restaurants were extremely profitable. From this inspiration,
Mickey’s Kitchen was launched. The first two locations were opened in California and
in a suburb of Chicago, adjacent to existing Disney stores. Menu items included
healthy, child-oriented fare like Jumbo Dumbo burgers and even a meatless Mickey
Burger. Eisner thought that locating each restaurant next to existing Disney stores was
sure to increase foot traffic through both venues. Less than 2 years later Disney closed
down the California and Chicago stores and shuttered further expansion plans. Eisner
cited overwhelming competition from McDonalds and general oversaturation in the
fast-food industry as the primary reasons for closing down the failing Mickey’s Kitchen.
Mickey’s Kitchens was successful primarily because it was able to create a
differentiated Disney experience that drew customers away from other fast-food
restaurants such as McDonald’s.
Describe the organizational structure associated with a firm that pursues an unrelated
diversification strategy.
Describe how diversified firms can use activity sharing and transfer of core
competencies to create value.
Describe an organization with which you are familiar. Does it have a sustainable
competitive advantage?
What are the differences between downscoping and downsizing and why are each used?