A prominent national accounting firm runs television advertisements showing an
accountant working alone late in the office on a client’s project, while clenching a
long-stemmed rose in his teeth and grinning ecstatically. The message of the ad is that
this firm’s accountants love their work. This ad seeks to convey a sense of the
organization’s to the viewers.
a. culture
b. mission
c. vision
d. personality
The key to Southwest Airlines’ success has been its ability to continuously reduce costs
while providing customers with superior levels of differentiation such as an engaging
culture.
a. True
b. False
To implement a related linked strategy, a firm usually needs an SBU structure.
a. True
b. False
At Southwest Airlines, the complex interrelationship between its culture and human
capital adds value for customers in ways that other airlines cannot, such as jokes on
flights by flight attendants and cooperation between gate personnel and pilots.
a. True
b. False
Firms switch from a functional structure to a multidivisional structure because greater
levels of environmental complexity and uncertainty make it necessary for the firm to
develop cooperative relationships with its stakeholders.
a. True
b. False
A firm uses a corporate-level diversification strategy for a variety of reasons all of
which have to do with ways to create value.
a. True
b. False
Toyota’s Prius, the first mass-produced hybrid-electric car is an example of a radical
innovation as changed the industry by providing new functionalities for users.
a. True
b. False
The quickest and easiest way for a firm to diversify its portfolio of businesses is to
make acquisitions.
a. True
b. False
AgroPharm is searching for a top-level executive. AgroPharm has marketed its products
only to U.S. farmers and agribusinesses in the past. Now, the company plans to expand
operations to Mexico and Central America in the next 2 years. To maximize the chances
of success it is critical that the new executive
a. be of Hispanic descent.
b. have international experience.
c. possess an advanced degree in animal science.
d. have a background in managing agribusiness firms.
When consumers change phone service providers they are frequently required to
maintain service with the provider for a specified time period. This is an example of a
a. cost to a producer to exchange equipment in a facility when new technologies
emerge.
b. cost of changing the firm’s strategic group.
c. one-time cost suppliers incur when selling to a different customer.
d. one-time cost customers incur when buying from a different supplier.
In the multidivisional structure there is complete independence among the firm’s
divisions.
a. cooperative
b. matrix
c. competitive
d. SBU
Clarissa is a sales representative for a large pharmaceutical firm. While calling on one
of her major clients, the purchasing director of a hospital, the client told her confidential
information that a sales representative from a competing firm had passed on to him. The
information completely contradicts Clarissa’s firm’s understanding of the competitor’s
business strategy, and would allow Clarissa’s employer to gain many of the competitor’s
clients. What ethical implications may result from this situation?
a. There is no ethical or legal concern here for Clarissa.
b. The ethical dilemma is not Clarissa’s but her client’s, since he passed on confidential
information to her voluntarily.
c. The ethical dilemma here is the right of competitors not to reveal certain information.
d. This is an example of ethical competitor intelligence obtained as eavesdropping.
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.
What generic business strategy best describes Abrahamson’s? Why?
Describe an organization’s various stakeholders and their different interests. Under what
condition can the firm most easily satisfy all stakeholders? If the firm cannot satisfy all
stakeholders, which ones must it satisfy in order to survive?
Define the three types of innovative activity. Which is the most critical activity for U.S.
firms?
Define awareness, motivation, and ability in reference to competitive behavior.
Part 1: CaseScenario1:Syco.
Syco is a diversified company that has six primary lines of business. Fifty percent of its
revenues and 18 percent of its profits come from retailing. Most of its retail outlets are
discount department stores that serve as anchor tenants for large suburban shopping
malls. The remaining businesses are broken out as follows: Insurance accounts for 30
percent of revenues and 50 percent of profits; consumer credit card operations are 6
percent of sales and 17 percent of profits; 5 percent of revenues and 6 percent of profits
come from its stock brokerage business; commercial and residential real estate
operations generate 4 percent of sales and 8 percent of profits; finally, 5 percent of
revenues and 1 percent of profits come from its online portal business. The company’s
management states that all these businesses are essential to its competitive
future. Develop a logical argument that would lead you to describe Syco’s
diversification type as related linked and another logical argument that Syco’s
diversification type is related constrained. For both the related linked and for the related
constrained arguments, what product, technological, or distribution activities might link
these businesses together?
Part 2: Would you describe either of the logical arguments you developed in response to
Part 1 as a good corporate strategy?