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These three items should help students begin to think about factors that might play a role in determining
competitive success (sustainable competitive advantage) or failure. The last bulleted item should help
students to begin to see strategic groups within the local restaurant market.
If you would like to use more informal preparation, you might simply ask students to think about
what factors might determine success or failure in your local restaurant market, and what type of
In-Class Use
You may use convenient groupings (e.g., project groups) for this exercise or simply assign students
randomly to groups of three or four students. The exercise instructions assume that ten (10) teams will
present their concepts. At two (2) minutes each, the presentations require 20 minutes. If you are
While the competing teams are developing their concepts (Step 1), you should give the Judges their
instructions. Inform Judges to listen carefully to each team’s presentation, and to evaluate them on the
basis of the likelihood that the team’s concept will result in sustainable competitive advantage. Some
factors to consider:
• Market knowledge—To what degree does the team demonstrate that they have given thoughtful
consideration to the key success factors in the local restaurant market? Do they accurately
describe the market?
Judges should take notes and then confer briefly at the end of the team presentations. You may want to
use 1st through 3rd places, with some associated prize. In the event of a deadlock among the judges, you
should cast a tiebreaker vote.
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Develop Your Career Potential
AN INDIVIDUAL SWOT ANALYSIS
Purpose
To allow students to practice the SWOT analysis technique in a contextually relevant way.
Setting It Up
Because this is a very personal exercise, it will probably not be a good in–class exercise. You will
probably have more success if this is done as a take-home assignment. In order to prepare students for the
Questions
1. In light of the SWOT analysis, what plans might you propose for yourself that will help you
maximize your strengths, exploit your opportunities, and minimize your weaknesses and threats?
Reel to Real – Biz Flix
Because they are so short, the Biz Flix videos are best used to supplement your lesson plans. They are
designed to illustrate the content rather than convey all of the chapter concepts.
Video: Field of Dreams
Segment Summary:
In the classic 1989 film Field of Dreams, Ray Kinsella (Kevin Costner) hears a voice while working in
Discussion Questions from Text:
1. If you were Ray, what would you do in this situation? Would you be more likely to take Mark’s
advice or Karin’s?
Although students’ answers will vary, they should support their response using concepts from chapter
six. In making this decision, Ray should take a strategic approach. He should consider his
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2. If Ray decides to do what his daughter Karin suggests with the field, could you call that an example
of entrepreneurship? Intrapreneurship?
Entrepreneurship is the process of entering new or established markets with new goods or services,
3. What are the risks Ray faces if he acts on Karin’s suggestion?
If he acts on Karin’s suggestion, Ray faces the risk of losing the entire farm. In the event that people
will not come to visit the field, Ray will not be able to recoup the investment that went into
Additional Discussion Questions:
1. How might Ray diversify his core business strategy in order to maximize the potential of his dream?
Students’ answers will vary. Some students will suggest that Ray focus on related diversification by
investing in businesses that are complementary to baseball. For example, he might consider investing
2. In your opinion, which positioning strategy should Ray select when developing his strategic plan for
his field of dreams?
The three positioning strategies include cost leadership, differentiation, and focus. Cost leadership
involves producing a product or service at lower costs than those of competitors. Because a $20
Reel to Real – Management Workplace
Management Workplace videos can support several in-class uses. In most cases you can build an entire
50-minute class around them. Alternatively, they can provide a springboard into a group lesson plan.
Video: Theo Chocolate
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Strategy Formulation and Execution
Summary:
When Theo Chocolate first started its production, the company offered an exotic line of dark chocolate
Discussion Questions from Text:
1. Evaluate Theo’s new strategy in light of the company’s strengths, weaknesses, opportunities, and
threats.
A SWOT analysis for Theo Chocolate begins by recognizing that Theo has a mission to be the
most loved and most ethical chocolate company in the world. Internal strengths that help the
2. Using the BCG Matrix, explain Theo’s decision to offer a classic line of chocolate bars after
having limited success with Fantasy Flavor chocolates.
Theo began as an organic chocolate maker with an exotic product line that appealed to Fair Trade
consumers and sophisticated chocolate lovers. As creative as Theo’s products were, they weren’t
3. Which of the three competitive strategies—differentiation, cost leadership, or focus—do you
think is right for Theo Chocolate? Explain.
Answers will vary, but students should recognize that Theo is banking on its organic and Fair
Trade expertise to differentiate itself from other chocolate makers and brands (differentiation
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Workplace Video Quiz
Video Segment 1
Video segment title
Strategy Formulation and Implementation
Start time (in sec)
0:00
Stop time (in sec)
2:13
Quiz Question 1
Which of the following statements from the clip best describes Theo
Chocolate’s early approach to formulating a business strategy?
Option a
“We work with a distribution system in grocery”
Option c
“Joe convinced me I should start this company with him”
Option d
None of these
Correct option
Feedback for option a
Feedback for option b
Correct. Theo Chocolate began with a desire and plan to make products
that the owners were interested in producing.
Feedback for option c
Incorrect. Theo Chocolate began with a desire and plan to make products
that the owners were interested in producing.
Quiz Question 2
Option a
The strategy failed to align with the wants and demands of mainstream
consumers
Option b
The strategy failed to excite and motivate employees
Option c
The strategy aimed to distribute chocolate bars to grocery stores
Option d
The strategy wasn’t written down
Correct option
Feedback for option a
Feedback for option c
mainstream consumers found them appealing.
Feedback for option d
a: The strategy failed to align with the wants and demands of mainstream
Quiz Question 3
Leaders at Theo Chocolate took the right steps to fix their misdirected
strategy when they:
Option a
Decided to enter the confectionary industry
Option b
Option c
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profitable opportunities in the marketplace
Option d
Moved to Seattle
Correct option
c: Reevaluated Theo’s internal strengths and weakness and searched for
profitable opportunities in the marketplace
Feedback for option a
Incorrect. The company conducted a situational analysis to determine how
it needed to change.
Video Segment 2
Video segment title
Strategy Formulation and Implementation
Start time (in sec)
2:13
Stop time (in sec)
3:51
Quiz Question 1
To make their company’s strategy more effective and profitable, managers
at Theo Chocolate had to do all the following except:
Option a
Lower the price of candy bars
Option b
Wrap chocolate bars in less exotic packaging
Option c
Produce chocolate flavors that appeal to mainstream candy eaters
Option d
Inform the public of the company’s organic standards
Correct option
Feedback for option a
Incorrect. The public already knew about the company’s standards, but did
Feedback for option b
not find the chocolates appealing.
Feedback for option c
Incorrect. The public already knew about the company’s standards, but did
not find the chocolates appealing.
Feedback for option d
Correct. The public already knew about the company’s standards, but did
not find the chocolates appealing.
Option a
Stability strategy
Option b
Growth strategy
Option c
Retrenchment strategy
Option d
All of these
Correct option
b: Growth strategy
Feedback for option a
Incorrect. A growth strategy is intended to increase profits, revenues,
market share, or the number of places in which a company does business.
Feedback for option b
Correct. A growth strategy is intended to increase profits, revenues, market
share, or the number of places in which a company does business.
Feedback for option c
Incorrect. A growth strategy is intended to increase profits, revenues,
market share, or the number of places in which a company does business.
Feedback for option c
Correct. The company conducted a situational analysis to determine how it
needed to change.
Feedback for option d
Incorrect. The company conducted a situational analysis to determine how
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Feedback for option d
Incorrect. A growth strategy is intended to increase profits, revenues,
market share, or the number of places in which a company does business.
Quiz Question 3
Theo Chocolate’s decision to revise its strategy around more familiar
mainstream chocolate bars has the following drawback:
Option a
The change weakens the company’s ability to differentiate itself from other
chocolate companies
Feedback for option b
Incorrect. The company’s decision to follow more mainstream competitors
reduces its uniqueness and may potentially reduce its competitive
advantages.
Feedback for option c
Incorrect. The company’s decision to follow more mainstream competitors
reduces its uniqueness and may potentially reduce its competitive
advantages.
Feedback for option d
reduces its uniqueness and may potentially reduce its competitive
advantages.
Video Segment 3
Example screenshot
Video segment title
Strategy Formulation and Implementation
Start time (in sec)
3:51
Stop time (in sec)
5:09
Quiz Question 1
What is Theo Chocolate’s competitive advantage within the chocolate
industry?
Option a
Option b
The company has expertise in manufacturing chocolate
Option d
All of these
Correct option
c: The company has expertise in manufacturing organic fair trade
chocolate
Feedback for option a
Incorrect. Theo Chocolate was the first American chocolate company to be
fair-trade certified.
Feedback for option b
Incorrect. Theo Chocolate was the first American chocolate company to be
fair-trade certified.
fair-trade certified.
Feedback for option d
Option b
Theo will have difficulty matching the low prices of chocolate bars mass
produced by the leading brands
Option c
The company may lose its diehard fans in Seattle and the surrounding
region
Option d
All of these
Correct option
d: All of these
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Quiz Question 2
A potential ongoing weakness of Theo Chocolate’s business strategy is:
Option a
Not enough consumers like chocolate
Feedback for option a
Incorrect. Mainstream consumers did not find much appeal in buying fair
trade chocolate.
Feedback for option b
Incorrect. Mainstream consumers did not find much appeal in buying fair
trade chocolate.
Feedback for option d
Incorrect. Mainstream consumers did not find much appeal in buying fair
Quiz Question 3
Which of the following strategy assessment tools would not apply to a
small company like Theo Chocolate, which has a single division and only a
few chocolate bar products?
Option a
SWOT analysis
Option b
Porter’s Five Competitive Forces
Option c
Porter’s generic strategies (differentiation, cost leadership, focus)
Option d
BCG matrix
Correct option
d: BCG matrix
Feedback for option b
Incorrect. The BCG matrix is a portfolio strategy that categorizes a
Feedback for option c
Incorrect. The BCG matrix is a portfolio strategy that categorizes a
Feedback for option d
Correct. The BCG matrix is a portfolio strategy that categorizes a
Video Segment 4
Video segment title
Strategy Formulation and Implementation
Start time (in sec)
5:10
Stop time (in sec)
7:09
Quiz Question 1
Which of the following hypothetical new-product ideas would fit a “related
diversification” strategy that Theo could use to expand its business?
Option a
Launch a line of Theo Chocolate women’s fragrances
Option b
Create a line of educational videos about sustainable, fair trade
manufacturing processes
Option d
All of these
manufacturing processes
Option b
The company has control over its factory and entire supply chain
Option c
Option d
Correct option
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Feedback for option a
Incorrect. In related diversification, business units share similar products,
manufacturing, marketing, technology, or cultures.
Quiz Question 2
In the segment, Vice President Debra Music discusses Theo Chocolate’s
marketing department activities, including factory tours, chocolate
sampling, and brand ambassadors, that help the company set itself apart
from competitors. Strategies planned and executed at this level of the
organization are called:
Option a
Corporate-level strategy
Option b
Industry-level strategy
Option c
Local-level strategy
Option d
Global-level strategy
Correct option
b: Industry-level strategy
Feedback for option a
Incorrect. Industry-level strategy addresses the question “How should we
Feedback for option b
Correct. Industry-level strategy addresses the question “How should we
Feedback for option c
Incorrect. Industry-level strategy addresses the question “How should we
complete in this industry?”
Feedback for option d
Incorrect. Industry-level strategy addresses the question “How should we
complete in this industry?”
Quiz Question 3
Theo Chocolate differentiates its products from competitors by:
Option a
Offering factory tours
Option b
Offering fair trade, organic products
Option c
Offering domestically grown products
Option d
Offering free product samples
Correct option
b: offering fair trade, organic products
Feedback for option a
Incorrect. Differentiation is when a company makes a product or offers a
service that is sufficiently different from a competitor’s offerings.
Feedback for option b
Correct. Differentiation is when a company makes a product or offers a
service that is sufficiently different from a competitor’s offerings.
Review Questions
1. Identify the components of a sustainable competitive advantage.
A competitive advantage is the advantage that a firm has when it uses its resources to provide greater
Feedback for option d
Incorrect. In related diversification, business units share similar products,
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2. Outline steps of the strategy-making process.
The strategy-making process has three steps:
• Assess the need for strategic change: Managers must determine if strategic change within the
3. What is a corporate-level strategy? Describe the major approaches to corporate-level strategy.
A corporate-level strategy is the overall organizational strategy that addresses the question: “What
business or businesses are we in or should we be in?” Two kinds of corporate-level strategies are:
• Portfolio strategy: a corporate-level strategy that minimizes risk by diversifying investment
4. What are the elements of the BCG matrix?
The BCG (Boston Consulting Group) matrix is a type of portfolio strategy that managers can use to
categorize their products by growth and market share. The four categories of products are:
• Star: a product with a large share of a fast-growing market. Stars would receive a
5. Identify three grand strategies and give examples of each.
The three kinds of grand strategies are:
• Growth strategy: a strategy that focuses on increasing profits, revenues, market share, or the
6. What is an industry-level strategy? What tools can companies use to develop successful industry-level
strategies?
An industry-level strategy is a corporate strategy that addresses the question, “How should we
compete in this industry?” Before determining a proper strategy, a company should first examine the
five forces that determine the overall level of competitiveness in their industry.
• Michael Porter’s five industry forces include the analysis of the character of rivalry, the threat
7. What are Porter’s five industry forces and how do they affect a company’s strategy?
Five industry forces determine an industry’s overall attractiveness to corporate investors and its
8. What is a firm-level strategy?
A firm-level strategy addresses the question, “How should we compete against a particular firm?”
Three types of firm-level strategies are:
• Direct competition: the relationship between two companies offering similar products and
9. What are the basic elements of direct competition?
Market commonality and resource similarity determine whether firms are in direct competition and
thus likely to attack each other or respond to each other’s attacks. In general, the more markets in
10. Beyond the Book: How do companies implement entrepreneurship as an internal strategy?
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Entrepreneurship is entering new or established markets with new goods or services. The five key
Additional Assignments and Activities
Out-of-Class Project: “Industry Analysis.” Divide the class into small groups. Each group should
select a company that participates in an industry that has at least three other competitors. Groups should:
In–Class Activity: “S.W.O.T.” Divide the class into small groups (around 4 students). Give each group a
different organization and have them conduct a SWOT analysis of the company, considering its internal
documentaries, and other channels that HBO owns. Read about a few of these channels and then put
together a portfolio analysis using the BCG matrix. What type of strategy would you use for each
product?
Entrepreneurial Orientation. Go to Hewlett-Packard’s company information site at
Positioning Strategies. Go to the Web site of C.L.I.A. (Cruise Lines International Association), at
to the ubiquitous nature of digital photography. (Kodak has traditionally held the highest market share in
film photography.) Assess Kodak’s strengths, weaknesses, opportunities, and threats, given the rapid
changes in the digital age.