Chapter 6 Exercise homework

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Todd McFarlane speaks about the future and mentioned that if he had to sell off his sculptures and other art-related products and open a large special-effects house and that made more sense at that time, he would do it. He would come about that decision through

environmental scanning.

You see in this segment that according to Larry Marder, the sports figures produced by the McFarlane Companies are so lifelike that you can tell who the player is. Based on all you have heard about the McFarlane Companies and what they do, the way Marder describes this product seems to indicate that the McFarlane Companies are using Porter's competitive strategy known as

focused differentiation.

From what has been presented in the video, it would appear that the grand strategy being implemented by the McFarlane Companies is a ______________ strategy.

growth

Larry Marder explains that the company may change what its focus is from year to year. For example, he mentions that if Todd McFarlane wants them to invest heavily in R&D in a particular year, that is what they do or if he wants them to make more money in a given year, then that is what they do. Which step of the strategic management process is this describing?

maintaining strategic control

Companies in industries where there is little cost, including time or money, necessary to enter the marketplace are most vulnerable to the threat of

new entrants.

Which of Porter's forces is influenced by the other four?

rivalry among competitors

Al Simmons, the curator and Larry Marder, the President of the McFarlane Companies, describe Todd McFarlane as being both artistic and business minded. In fact, Marder even compared McFarlane to Walt Disney—the "greatest pitch man" ever! A SWOT analysis would then identify McFarlane as a(n)

strength.

From a financial management standpoint, Todd McFarlane is a relatively debt-averse and conservative manager, which has kept the company profitable over the years. When completing a SWOT analysis, you should categorize his financial management style as a(n)

strength.

Steve Peterson, the CFO of the McFarlane Companies, talks about how Todd McFarlane's purchase of several record-making baseballs allowed the company to be more effective in the sporting figure market. The investment (of multiple millions of dollars!) could be said to have provided the McFarlane Companies a(n)

sustainable competitive advantage.

According to Larry Marder, the president of the McFarlane Companies, the company has changed and morphed and grown over the years from a company that simply produced comic books to a company that is also involved in sports figures, music videos, and major motion pictures. This movement from comics to a variety of activities is best described as

unrelated diversification.

Todd McFarlane's reluctance to allow outside investors to have control over projects is most likely related to concerns that they might not share the company's

vision.

In order for a managerial team to develop an effective strategy, they first need to assess the conditions under which the organization is operating under and existing in. There are several tools available to managers to accomplish this end. One of these tools, Porter's Five Competitive Forces, allows managers to assess the level of competitiveness within a particular industry. According to strategy expert Michael Porter, business-level strategies originate within the five primary competitive forces of threats of new entrants, bargaining power of suppliers, bargaining power of buyers, threats of substitute products or services, and rivalry among competitors. This exercise will test your knowledge of Porter's Five Competitive Forces.

Music, Glass, Internet, Investment advertisment

A useful tool in gathering information about the competitive environment to establish a grand strategy is the SWOT analysis. SWOT is an acronym for (internal) strengths, weaknesses, (external) opportunities and threats. This summary analysis provides the strategist with key information and a realistic assessment and understanding of both the internal and external environments the organization exists in. This exercise will provide you the opportunity to test your knowledge of SWOT analysis.

Strength- Programs, employees Oppertunities- Demographic, Municipal infrastructure​e Weaknesses​​- Equipment, Staffing Budget Threats- Competetors​​, banking

Todd McFarlane describes why retailers should carry his collectible items over and above his competitors' products. From a strategy viewpoint, what McFarlane is describing here is his company's

competitive advantage.

Strategic Positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It is important for managers to be aware of their company's strategic position and the effect this will have on their decisions and actions within the company. You are asked to apply your knowledge on this topic to the following case, which focuses on a top manager that failed to recognize his own company's business strategy. Read the case below and answer the questions that follow. Understanding a company's strategic positioning is an important job of employees and managers at all levels of a company. Ron Johnson, former CEO of JCPenney, would likely attest to this fact after being fired in 2013 for making severe strategic errors. Johnson was originally hired as CEO of JCPenney because of his success as Vice President of Merchandising at Target and Senior Vice President of Retail Operations at Apple, Inc. Despite Johnson's historical success, his lack of understanding of JCPenney's strategic positioning created such severe issues for the company that he was eventually removed from the company. So, what was Johnson's big mistake? Johnson attempted to drastically reinvent the JCPenney brand. On the surface, his suggestions for the company seemed logical. For example, Johnson wanted to replace JCPenney's prices with new "fair" prices. He claimed that JCPenney and other stores had historically used "fake" high prices, which were then discounted and advertised as being on sale to increase sales. In addition, Johnson wanted JCPenney to be a place in which people would "hang out." He envisioned boutiques and coffee bars and began to stock high end products in an effort toward this goal. Johnson believed that the customers at JCPenney would respond well to new honest prices and quality products, but in reality, this did away with features that customers loved, like coupons, big sales, and cheap clothes. Because customers no longer received coupons in the mail or saw big signs proclaiming Sale!, JCPenney's traditionally price sensitive customers felt like they were no longer the company's target market. JCPenney's board of directors concluded that Johnson was out of touch with the company's customers, workforce, and culture. Basically, Johnson did not fit with JCPenney and ignored the company's business strategy. Johnson was even reported saying, "we didn't test at Apple" in response to someone questioning him on why he did not perform market tests before making price changes. Johnson failed to realize that JCPenney and Apple are two very different companies with different strategic positions

Differentiation

Apple, a company with a strong product line, probably has strong bargaining power of suppliers.

F

Strategic Positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It is important for managers to be aware of their company's strategic position and the effect this will have on their decisions and actions within the company. You are asked to apply your knowledge on this topic to the following case, which focuses on a top manager that failed to recognize his own company's business strategy. Read the case below and answer the questions that follow. Understanding a company's strategic positioning is an important job of employees and managers at all levels of a company. Ron Johnson, former CEO of JCPenney, would likely attest to this fact after being fired in 2013 for making severe strategic errors. Johnson was originally hired as CEO of JCPenney because of his success as Vice President of Merchandising at Target and Senior Vice President of Retail Operations at Apple, Inc. Despite Johnson's historical success, his lack of understanding of JCPenney's strategic positioning created such severe issues for the company that he was eventually removed from the company. So, what was Johnson's big mistake? Johnson attempted to drastically reinvent the JCPenney brand. On the surface, his suggestions for the company seemed logical. For example, Johnson wanted to replace JCPenney's prices with new "fair" prices. He claimed that JCPenney and other stores had historically used "fake" high prices, which were then discounted and advertised as being on sale to increase sales. In addition, Johnson wanted JCPenney to be a place in which people would "hang out." He envisioned boutiques and coffee bars and began to stock high end products in an effort toward this goal. Johnson believed that the customers at JCPenney would respond well to new honest prices and quality products, but in reality, this did away with features that customers loved, like coupons, big sales, and cheap clothes. Because customers no longer received coupons in the mail or saw big signs proclaiming Sale!, JCPenney's traditionally price sensitive customers felt like they were no longer the company's target market. JCPenney's board of directors concluded that Johnson was out of touch with the company's customers, workforce, and culture. Basically, Johnson did not fit with JCPenney and ignored the company's business strategy. Johnson was even reported saying, "we didn't test at Apple" in response to someone questioning him on why he did not perform market tests before making price changes. Johnson failed to realize that JCPenney and Apple are two very different companies with different strategic positions

bargaining power of buyers

Strategic Positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It is important for managers to be aware of their company's strategic position and the effect this will have on their decisions and actions within the company. You are asked to apply your knowledge on this topic to the following case, which focuses on a top manager that failed to recognize his own company's business strategy. Read the case below and answer the questions that follow. Understanding a company's strategic positioning is an important job of employees and managers at all levels of a company. Ron Johnson, former CEO of JCPenney, would likely attest to this fact after being fired in 2013 for making severe strategic errors. Johnson was originally hired as CEO of JCPenney because of his success as Vice President of Merchandising at Target and Senior Vice President of Retail Operations at Apple, Inc. Despite Johnson's historical success, his lack of understanding of JCPenney's strategic positioning created such severe issues for the company that he was eventually removed from the company. So, what was Johnson's big mistake? Johnson attempted to drastically reinvent the JCPenney brand. On the surface, his suggestions for the company seemed logical. For example, Johnson wanted to replace JCPenney's prices with new "fair" prices. He claimed that JCPenney and other stores had historically used "fake" high prices, which were then discounted and advertised as being on sale to increase sales. In addition, Johnson wanted JCPenney to be a place in which people would "hang out." He envisioned boutiques and coffee bars and began to stock high end products in an effort toward this goal. Johnson believed that the customers at JCPenney would respond well to new honest prices and quality products, but in reality, this did away with features that customers loved, like coupons, big sales, and cheap clothes. Because customers no longer received coupons in the mail or saw big signs proclaiming Sale!, JCPenney's traditionally price sensitive customers felt like they were no longer the company's target market. JCPenney's board of directors concluded that Johnson was out of touch with the company's customers, workforce, and culture. Basically, Johnson did not fit with JCPenney and ignored the company's business strategy. Johnson was even reported saying, "we didn't test at Apple" in response to someone questioning him on why he did not perform market tests before making price changes. Johnson failed to realize that JCPenney and Apple are two very different companies with different strategic positions

broad needs, many customers

For domestic or regional airlines or routes, there is always the option of taking a car, bus or train. This describes which of Porter's Five Competing Forces?

threats of substitution

Strategic Positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It is important for managers to be aware of their company's strategic position and the effect this will have on their decisions and actions within the company. You are asked to apply your knowledge on this topic to the following case, which focuses on a top manager that failed to recognize his own company's business strategy. Read the case below and answer the questions that follow. Understanding a company's strategic positioning is an important job of employees and managers at all levels of a company. Ron Johnson, former CEO of JCPenney, would likely attest to this fact after being fired in 2013 for making severe strategic errors. Johnson was originally hired as CEO of JCPenney because of his success as Vice President of Merchandising at Target and Senior Vice President of Retail Operations at Apple, Inc. Despite Johnson's historical success, his lack of understanding of JCPenney's strategic positioning created such severe issues for the company that he was eventually removed from the company. So, what was Johnson's big mistake? Johnson attempted to drastically reinvent the JCPenney brand. On the surface, his suggestions for the company seemed logical. For example, Johnson wanted to replace JCPenney's prices with new "fair" prices. He claimed that JCPenney and other stores had historically used "fake" high prices, which were then discounted and advertised as being on sale to increase sales. In addition, Johnson wanted JCPenney to be a place in which people would "hang out." He envisioned boutiques and coffee bars and began to stock high end products in an effort toward this goal. Johnson believed that the customers at JCPenney would respond well to new honest prices and quality products, but in reality, this did away with features that customers loved, like coupons, big sales, and cheap clothes. Because customers no longer received coupons in the mail or saw big signs proclaiming Sale!, JCPenney's traditionally price sensitive customers felt like they were no longer the company's target market. JCPenney's board of directors concluded that Johnson was out of touch with the company's customers, workforce, and culture. Basically, Johnson did not fit with JCPenney and ignored the company's business strategy. Johnson was even reported saying, "we didn't test at Apple" in response to someone questioning him on why he did not perform market tests before making price changes. Johnson failed to realize that JCPenney and Apple are two very different companies with different strategic positions

who the company's customers are


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