The Enron employee who reported the financial manipulations at the company to her
superiors can be considered to have engaged in
a. managerial opportunism.
b. white-collar crime.
c. vindictive disloyalty.
d. an act of courage.
Which of the following is NOT an external event that reveals the “dark side” of core
capabilities?
a. A new competitor figures out a better way to serve the firm’s customers.
b. New technologies emerge and replace those used by the firm.
c. A firm changes its focus to a new core competence.
d. Political or social events shift the foundation of current core capabilities.
Dragonfly Publishers of children’s books has purchased White Rabbit, another publisher
of children’s books. Both companies’ books are sold to the same retail stores and
schools. Their content is different, since Dragonfly produces children’s literature,
whereas White Rabbit focuses on child-level scientific and nature topics. Which of the
following statements is probably TRUE about this acquisition?
a. This is a horizontal acquisition.
b. This is an example of virtual integration.
c. Dragonfly is beginning to build a conglomerate.
d. Economies of scope are unlikely to result from this acquisition.
Broadly, the Dodd-Frank Wall Street Reform and Consumer Protection Act seeks to
a. align financial institutions’ actions with society’s interests.
b. increase the number of foreign firms listing on U.S. stock exchanges.
c. require CEOs to attest to the accuracy of their companies’ financial reports.
d. increase consumer protection in pharmaceutical products.
Contract manufacturers who manage their customers’ entire product line, and offer
services ranging from inventory management to delivery and after-sales services are
prime examples of vertical integration.
a. True
b. False
Compared to intangible resources, tangible resources are ________ constrained because
they are ________ to leverage.
b. Sony and Apple
c. Dell and Microsoft
d. Coca-Cola and PepsiCo
The development of the original personal computer (PC) was a(n) _______ innovation
at the time, whereas adding a different kind of whitening agent to a soap detergent in an
example of a(n) _______ innovation.
a. incremental; radical
b. radical; incremental
c. concentric; radical
d. radical; concentric
The use of high levels of debt in acquisitions has contributed to
a. the increase in above-average returns earned by acquiring firms.
b. an increased risk of bankruptcy for acquiring firms.
c. the confidence of the stock market in firms issuing junk bonds.
d. an increase in investments that have long-term payoffs.
Which of the following is an advantage associated with greenfield ventures?
a. governmental support and subsidies in the host country
b. the lower cost of this type of venture
c. the level of control over the firm’s operations
d. the lower level of risks involved
Working in multiple international markets can provide firms with perhaps even in terms
of
a. location advantages; larger markets.
b. research and development activities; larger markets.
c. new learning opportunities; research and development activities.
d. economies of scale and learning; larger markets.
Which of the following is NOT a factor that determines the amount of a manager’s
decision discretion?
a. characteristics of the manager
b. characteristics of the organization
c. cohesiveness of the board of directors
d. the external environmental
44. The ______ dimension of relationships with customers is particularly important for
social networking sites such as Facebook and MySpace.
a. reach
Why might an outsourcing arrangement with EdFex be attractive to Heartsong?
Discuss the difference between strategic controls and financial controls.
Research shows that
a. a written code of ethics
b. a statement in the firm’s mission statement
c. a speech on ethics by the CEO of the company
d. a value-based culture
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.
Based on your own knowledge of Disney and the information provided in the scenario,
does Disney appear to create value in its businesses primarily through a cost leadership
or through a differentiation strategy?
CaseScenario2:ERPInc
ERP, Inc., (ERPI) is a leading provider of enterprise integration software (EIS). EIS
essentially allows a firm to connect and integrate processes across all aspects of its
business. To fuel its dramatic growth, ERPI has focused its organization entirely on
product development (software programming for a suite of EIS products) and selling
(making the sale and then moving onto a new target) while outsourcing the installation
and consulting aspects to the world’s largest accounting firms. This also makes ERPI
basically a “product company,” whereas most competitors like Oracle and PeopleSoft in
its market space operate as ‘solutions companies.” One benefit of this focused strategy
is that ERPI’s product is generally recognized as being 200 percent to 300 percent better
than competitors’ software, and thus adopters are thus likely to have a 1- to 2-year
advantage. In further contrast to the competition, ERPI has used its partnerships with
the accounting firms to deliver a turn-key solution, and has focused this solution on a
market comprised of the world’s largest, global manufacturers and consumer product
companies. The accounting firms, in turn, coordinate a comprehensive collection of
hardware, operating systems, and complementary software firms. Installation and
related consulting for EIS typically cost between $100 and $200 million, with the ERPI
software component accounting for only about 20 percent of the installed cost (the
remaining 80 percent is spent on the actual installation, not counting the value of the
customer’s time). To incentivize the accounting firms to help sell its product (since, at
least initially, the accounting firms had better reputations and controlled access to the
target customers), ERPI told its partners that it will never enter the installations and
consulting side of the business (aside from installation and consulting that ERPI does as
part of its software support). Dangling such a large carrot in front of the accounting
firms provided the continuing benefit of encouraging their continued support of ERPI
with their customers.
Given that software systems like EIS are very complex, and quality is largely a function
of the related installation and consulting processes, how can ERPI control quality and
ultimately protect the reputation of its product (and its name) when it has ultimately
outsourced installation to its partners?
Define outsourcing. Why do organizations outsource?