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 was likely to have been in place under CI’s
multidomestic strategy?
Two key strategic leadership actions include
a. monitoring the hiring of key employees and focusing on growth but not learning
initiatives.
b. designing and then implementing the balanced scorecard.
c. setting appropriate financial targets and establishing an effective business level
synergy.
d. determining strategic direction and establishing balanced organizational controls.
Which industry can be LEAST described as a slow-cycle market?
a. freight railroads
b. pharmaceuticals
c. cell phone provider
d. private ownership of highways and bridges
When a new CEO is selected from outside the firm, a change of strategy is likely,
especially if the top management team is homogenous and highly cohesive.
a. True
b. False
Acquisitions to increase market power require that the firm have a(n) diversification
strategy.
a. unrelated
b. related
c. dominant-business
d. single-business
Which of the following firms would be the most likely to be a successful candidate for
acquisition and restructuring?
a. a medical practice
b. a management consulting firm that has a tradition of long term client-consultant
relationships
c. a tire manufacturer established in 1910
d. a start-up communications technology firm
A manufacturer of jewelry imitates the style of a popular and expensive brand using
manufactured stones rather than real gemstones and lesser grade metals rather than
silver and gold. The manufacturer packages the jewelry in boxes of the same color
imprinted with an almost identical logo. About 85 percent of the company’s sales
are through Internet sales. This example illustrates the competitive risk of _______ that
threatens companies that use the differentiation strategy.
a. Return
b. Reward
c. Risk
d. Revenue
Which organization has the highest market dependence?
a. a chain of rapid-service oil change shops
b. a manufacturer of chemicals for the international pharmaceutical industry
c. a regional department store having 26 locations in the Northwest
d. a company that specializes in making replacement tiles for the space shuttle
The uniqueness of a firm’s resources and capabilities is the basis for a firm’s strategy
and determines its ability to earn above-average returns under the I/O view.
a. True
b. False
McDonald’s has been able to
a. earn above-average returns.
b. achieve strategic competitiveness.
c. use the strategic management process.
d. All of these options are correct.
A firm’s mission
a. is a statement of a firm’s business in which it intends to compete and the customers it
intends to serve.
b. is an internally focused affirmation of the organization’s financial, social, and ethical
goals.
c. is mainly intended to emotionally inspire employees and other stakeholders.
d. is developed by a firm before the firm develops its vision.
Firms using a related diversification strategy may gain market power when successfully
using their related constrained or related linked strategy.
a. True
b. False