The competitive actions and responses in _______ markets are designed to seek large
market shares, to gain customer loyalty through brand names, and to carefully control
the firm’s operations in order to consistently provide the same positive experience for
customers.
a. standard-cycle
b. fast-cycle
c. slow-cycle
d. intermediate-cycle
An SBU structure consists of at least three levels: the top level, the corporate
headquarters; the next level, the strategic business units (SBUs); and the final level,
SBU divisions.
a. True
b. False
Which of the following is NOT one of the three main restructuring strategies?
a. realigning
b. downsizing
c. downscoping
d. leveraged buyouts
Research evidence suggests that horizontal acquisitions result in higher performance
when the firms have similar strategies, assets, and capabilities.
a. True
b. False
The _________ diversification strategy creates value in two ways. First, since the core
competence has already been developed in one business, the firm does not have to
allocate resources to develop it. Second, since the resource is intangible, competitors
cannot easily imitate it.
a. related constrained
b. unrelated
c. related linked
d. dominant business
Synergistic strategic alliances such as the Renault-Nissan alliance discussed in the
Opening Case focus on economies of scope by sharing their resources and capabilities
to develop manufacturing platforms that can be used to Renault or Nissan cars.
a. True
b. False
CaseScenario3:JewellCompany.
Jewell Company (JC) is a $2 billion diversified manufacturer and marketer of simple
household items, cookware, and hardware. While JC’s 16 different lines of business
may appear quite different, they all share the common characteristics of being staple
manufactured items and sold primarily through volume retail channels such as Walmart,
Target, and Kmart. Because JC operates each line of business autonomously (separate
manufacturing, R&D, and selling responsibilities for each line), it is perhaps best
described as pursuing a related linked diversification strategy. The common linkages are
both internal (accounting systems, product merchandising skills, and acquisition
competency are centralized in the corporate office) and external (distribution channel of
volume retailers). Despite this partial centralization of the divisions’ operations, each
business is run entirely separately. To keep the managers focused on their respective
businesses, they are paid a base salary but can earn up to three times that salary in
bonuses based on meeting divisional performance targets. An additional, but smaller,
part of their compensation is derived from stock options.
What is the corporate structural form used by Jewell?
A. functional
B. cooperative M-Form
C. SBU M-Form
D. competitive M-Form
In the television show MadMen,Don Draper is in charge of the creative department at
an advertising agency. He appears to spend most of his time drinking and relaxing, but
occasionally he has a flash of insight that leads to a new ad campaign. He provides
which valuable intangible resource?a. trust
b. ideas
c. brand name
d. capacity to innovate
A risk of the differentiation strategy is that the firm’s means of differentiation may
eventually not provide value for which customers are willing to pay.
a. True
b. False
CaseScenario1:Abramson’Jewelers.
Abramson’s Jewelers has established a strong niche market in the upscale jewelry store
segment. Abramson’s was founded in 1871, and its current single-store location is
owned and operated by John Wickersham, who bought the firm from its namesake
founders in 1985. Over the last 15 years, Mr. Wickersham has narrowed the company’s
product offering considerably to focus only on high-end watches like Rolex and Piaget,
custom jewelry, and estate jewelry. Mr. Wickersham stresses that this is an appropriate
focus for his business since each of the products lends itself to relationship selling, and
price rarely comes into the discussion. Despite the narrower offering, Abramson’s floor
space has doubled, and clients are intensely loyal to the good taste, design skills, and
personal service level provided by Mr. Wickersham. After evaluating several expansion
options, Mr. Wickersham has decided to open another store in a neighboring city. While
it is likely that some of his existing customers may begin doing business at the other
location, thus lowering sales volume at the original store, Mr. Wickersham sees this as a
desirable increase in the level of service and convenience he can provide his existing
clientele. At the same time, he believes that he will be able to grow the overall business
faster with two locations. He has identified another reputable gemologist, Jill Diamond,
to run the other store and is now considering how to compensate her.What are the
advantages and disadvantages of paying the new manager primarily cash pay?
What are the differences between tangible and intangible resources? Which category of
resources is more valuable to the firm?
CaseScenario3:Abrahamson’Jewelers.
Through its sole location in an affluent suburb of San Francisco, Abrahamson’s Jewelers
has established a strong niche market in the upscale jewelry store segment.
Abrahamson’s was founded in 1871 and is currently owned and operated by John
Wickersham, who bought the firm from its namesake founders in 1985. Wickersham
joined the firm as a trainee out of high school, completed his gemology training, and
several years later took ownership with the financial help of his parents. That debt has
long been paid off and business has thrived. When he first acquired the business,
Abrahamson’s offered a full range of jewelry and gift items from watches to wedding
sets to silverware to clocks. This broad range of products was mirrored by a broad price
range-$10,000 Rolex watches were sold next to $50 Seiko watches. While some jewelry
was custom designed and manufactured, most of the products were “case ready,”
meaning they were sourced from large jewelry and silver manufacturers from around
the world. Over the last 15 years, Wickersham has narrowed the company’s product
offering considerably to focus only on high-end watches like Rolex and Piaget, custom
jewelry, and estate jewelry. Wickersham stresses that this is an appropriate focus for his
business since each of the products lends itself to relationship selling, and price rarely
comes into the discussion. Despite the narrower offering moreover, Abrahamson’s floor
space has doubled, and clients are intensely loyal to the good taste, design skills, and
personal service level provided by Mr. Wickersham.
Would you recommend that Mr. Wickersham embark on an Internet sales strategy for
his company?
CaseScenario1:Abramson’Jewelers.
Abramson’s Jewelers has established a strong niche market in the upscale jewelry store
segment. Abramson’s was founded in 1871, and its current single-store location is
owned and operated by John Wickersham, who bought the firm from its namesake
founders in 1985. Over the last 15 years, Mr. Wickersham has narrowed the company’s
product offering considerably to focus only on high-end watches like Rolex and Piaget,
custom jewelry, and estate jewelry. Mr. Wickersham stresses that this is an appropriate
focus for his business since each of the products lends itself to relationship selling, and
price rarely comes into the discussion. Despite the narrower offering, Abramson’s floor
space has doubled, and clients are intensely loyal to the good taste, design skills, and
personal service level provided by Mr. Wickersham. After evaluating several expansion
options, Mr. Wickersham has decided to open another store in a neighboring city. While
it is likely that some of his existing customers may begin doing business at the other
location, thus lowering sales volume at the original store, Mr. Wickersham sees this as a
desirable increase in the level of service and convenience he can provide his existing
clientele. At the same time, he believes that he will be able to grow the overall business
faster with two locations. He has identified another reputable gemologist, Jill Diamond,
to run the other store and is now considering how to compensate her.
What compensation structure would you recommend?
CaseScenario2:JewellCompany.
Jewell Company (JC) is a $2 billion diversified manufacturer and marketer of simple
household items, cookware, and hardware. In the early 1950s, JC’s business consisted
solely of manufactured curtain rods that were sold through hardware stores and retailers
like Sears. Since the 1960s however, the company has diversified extensively through
acquisition into such businesses as paintbrushes, writing pens, pots and pans, and
hairbrushes. Over 90 percent of its growth can be attributed to these many small
acquisitions, whose performance it improved tremendously through aggressive
restructuring and its corporate emphasis on cost-cutting and cost controls. While JC’s
sixteen different lines of business may appear quite different, they all share the common
characteristics of being staple manufactured items and sold primarily through volume
retail channels like Walmart, Target, and Kmart. Because JC operates each line of
business autonomously (separate manufacturing, R&D, and selling responsibilities for
each line), it is perhaps best described as pursuing a related linked diversification
strategy. The common linkages are both internal (accounting systems, product
merchandising skills, and acquisition competency) and external (distribution channel of
volume retailers). JC is presently contemplating the acquisition of Plastico, 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. While Plastico has been highly innovative (over 80 percent of
its growth has come from internal new product development), it has had difficulty
controlling costs and is losing ground against powerful customers like Walmart. JC
believes that the market power it wields with retailers like Walmart will help it turn
Plastico’s prospects around.
Why would the acquisition of Plastico be good for JC?