Toyota and its suppliers have a relationship in which Toyota encourages suppliers to
modernize their facilities and provides them with technical and financial assistance to
do so. It also promotes longer-term contracts with suppliers and enables engineers in the
supplier companies to have better communication with Toyota. This is an example of
a(n)
a. worldwide product divisional structure.
b. functional structure.
c. SBU multidivisional structure.
d. strategic network.
A simple structure is an organizational form in which the owner-manager makes all
major decisions directly and monitors all activities, while the staff merely serves as an
extension of the manager’s supervisory authority.
a. True
b. False
Firms implementing the multidomestic strategy often attempt to isolate themselves
from global competitive forces by establishing protected market positions or by
competing in industry segments that are most affected by differences among local
countries.
a. True
b. False
Large diversified businesses often face what is known as the “conglomerate discount.”
This discount means that investors
a. understand that the financial efficiencies of this strategy automatically make these
stocks worth more than their current market valuation.
b. believe that the value of conglomerates is less than the value of the sum of their parts.
c. increase the expected future earnings of conglomerates.
d. have found that over time, conglomerates earn more than the component companies
would have earned independently.
Firms in slow-cycle markets can use alliances to enter restricted markets or to establish
franchises in new markets.
a. True
b. False
The CEO of Transector, Inc., set a 6.5 percent rate-of-return target for all divisions for
the past year. Now, at the end of the year, three of Transector’s seven divisions have not
met this rate-of-return goal. The division managers of these three under-performing
divisions have all secretly contacted executive-placement firms to investigate openings
at other firms, because they know their future at Transector is in jeopardy as financial
performance is all- important at Transector. Transector probably uses the _______
structure.
a. competitive form of the multidivisional
b. SBU form of the multidivisional
c. worldwide geographic area
d. distributed strategic network
Firms are likely to imitate the actions of a competitor that is noted for risky, complex,
and unpredictable behavior because this is a way to imitate unobservable core
competencies.
a. True
b. False
Private synergy
a. occurs in most related acquisitions and allows firms to see increased returns.
b. is frequently achieved in conglomerates.
c. is not easy for competitors to understand and imitate.
d. is assessed by managers during the due diligence process.
Product market stakeholders include
a. suppliers.
b. shareholders.
c. employees.
d. the firm’s chief executive officer.
An unrelated diversification strategy can create value through two types of financial
economies: (1) efficient internal capital allocations, and (2) purchasing other firms,
restructuring their assets, and selling them.
a. True
b. False
A major reason outsourcing is effective is that
a. it increases the innovative potential of the firm.
b. few firms possess superior capability in all primary and support activities.
c. it permits unlimited access to capital resources.
d. competitors do not have access to the same external sources.
CaseScenario1:BlastFurnace,Inc.,(BFI)
Blast Furnace, Inc., (BFI) provides customized development of automated rich-media
applications, and scalable solutions that allow media and entertainment companies, as
well as enterprises and government organizations, to deploy, manage, and distribute
video content on IP-based networks. The company was founded in 1997 and went
public in 2004; its stock trades on the NASDAQ under the ticker BLST. While
providing solutions to a variety of firms and industries in North America, BFI has
experienced its fastest growth with the security products that it designs and sells to the
U.S. government and U.S. government agencies. This growth is based on its propriety
VUE software, which is a complete identification solution for capturing, analyzing, and
managing multi-biometric information. Proprietary analysis algorithms aggregate and
cross-compare multiple biometrics to increase accuracy and lessen dependence on
single identification techniques. Additionally, specialized encoding techniques reduce
file size and increase analysis and response times. VUE supports a wide range of
applications ranging from ID issuance and verification to gated entry screening for
border patrol, airports, government buildings, and corporations. Essentially, VUE is
able to sift through massive amounts of digitized multimedia files to create a unified ID
dossier of an individual and then identify those individuals rapidly anywhere in the
data. Such a capability is of great interest to security organizations, particularly since
the World Trade Center bombing, because it allows the user to identify suspects within
minutes on a real-time basis anywhere digitized media is being created (like that created
by the hidden and visible surveillance cameras in airline terminals, banks, ATMs, and
other public locations). Once a suspect is entered into the system, the software is
capable of scanning all data sources automatically and without stop. For two years, BFI
has had this market to itself but now two new entrants, a Belgian start-up and the
subsidiary of a Finnish telecom firm, are staking out positions in large non-U.S. markets
like Europe and Asia. BFI’s management fears that if it limits its efforts to North
America, then these aggressive
competitors may eventually develop strongholds in other markets from which they can
launch successful attacks on
BFI’s home turf.Assume that BFI has chosen international expansion. How quickly
should it move?
Which activities would you recommend BFI to internationalize first?
The aircraft industry has long been dominated by two large aircraft manufacturers,
Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus
aggressively compete for orders from airlines. What effect will these conditions have on
the domestic airline industry?
a. It will make the airline industry more attractive because of decreased supplier power.
b. It will make the airline industry less attractive because of decreased supplier power.
c. It will make the airline industry more attractive because of increased supplier power.
d. It will make the airline industry more attractive because of a new entrant.