MGMT 490 Chapter 6

How has vertical integration aided the organization in building competitive advantage?

All of these choices are correct: Owning the distribution, sales, and servicing of the vehicles improves the customer experience. Closer relationships between engineering and manufacturing give Tesla greater control over product design. In-house manufacturing of key components and new parts that require frequent updates has enabled the company to learn quickly and launch new versions faster.

You are advising Hoffmann-LaRoche, which has set up Roche Partnering to manage more than 190 alliances in the healthcare industry. What is the greatest risk that might cause those alliances to be unstable or break apart?

Anticipated gains may fail to materialize for Roche Partnering due to an overly optimistic view of the synergies.

An example of a company that does not use blue-ocean market strategy is

Walmart's logistics and distribution in the retail industry.

Bonobos's Guideshop store concept allows men to have a personalized shopping experience, where they can try on clothing in any size or color, and then have it delivered the next day to their home or office. This fashion retail concept is a good example of

an offensive strategy to seek uncharted waters and compete in blue oceans.

Merger and acquisition strategies

are often driven by such strategic objectives as to expand a company's geographic coverage or extend its business into new product categories.

Strategic alliances are more likely to be long lasting when they involve

collaboration with suppliers or distribution allies, or when both parties conclude that continued collaboration is in their mutual interests.

Strategic alliances are more likely to be long-lasting when they involve

collaboration with suppliers or distribution allies, or when both parties conclude that continued collaboration is in their mutual interests.

In some cases, backward vertical integration can increase efficiency by

coordinating production flows and preventing bottlenecks.

All the following are signals to would-be challengers that retaliation is likely except

creating collaborative relationships with other industry leaders to block new entrants.

A company that has greater success in managing its strategic alliance can credit all of the following, except

creating organizational learning barriers across boundaries.

The potential advantages of Tesla's backward vertical integration strategy include

enhancement of Tesla's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage.

Vertical integration does not involve

expanding a firm's range of product and service segments within its product or service market.

In the face of strong competition from Amazon, Walmart's 2016 acquisition of Jet. com was driven by a strategic objective, such as

expanding its geographic coverage or extending its business into new product categories.

Expanding along the value chain into products and services that are closer to the end user is called

forward vertical integration.

Mergers and acquisitions

frequently do not produce the hoped-for outcomes.

A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships to

help master new technologies and build new expertise and competencies, establish a stronger beachhead for participating in the target industry, and open up broader opportunities in the target industry.

A blue-ocean strategy

involves abandoning efforts to beat out competitors in existing markets and instead invent a new industry or new market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand.

The primary objective of deploying a defensive strategy is to

lower the risk of being attacked, to weaken the impact of any attack that occurs, and to influence challengers to aim their efforts at other rivals.

The best targets for offensive-minded firms to challenge are

market leaders that are vulnerable.

Late-mover advantages (or first-mover disadvantages) are not likely to arise when

opportunities exist for a blue-ocean strategy to invent a new industry or distinctive market segment that creates altogether new demand.

Compared to vertical integration or horizontal mergers/acquisitions strategies, the principal advantages of joint venture partnerships and alliances include

potential resource pooling and risk sharing, more adaptive response capabilities, and greater speed of deployment.

The concept of blue-ocean strategies does not refer to

pursuing offensive strategies that involve a preemptive strike to secure an advantageous position in a mature market segment.

Horizontal scope refers to the

range of product and service segments that a firm can serve within its focal market.

First-mover advantages are unlikely to be present when

rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first-mover's products with more attractive next-version products.

A company that fails to manage its strategic alliance probably has

refrained from making commitments to its partners and ensured they do the same.

Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if it

reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users.

Samsung Group's ecosystem of over 1,300 partnerships that enable productive activities, from global procurement to local marketing to collaborative R&D, is considered to have been

successful in creating strategic alliances.

Conditions that create first-mover advantages include all of the following except

the costs of pioneering are high relative to the benefits accrued.

A strategy of vertical integration can have substantial drawbacks, including

the environmental costs of coordinating operations across vertical chain activities.

First-mover disadvantages (or late-mover advantages) rarely arise when

the market response is strong and the pioneer gains a monopoly position that enables it to recover its investment.

Because the timing of a strategic move can be just as important as the choice of move to make, a company's best option with respect to timing of an action is

to carefully weigh the first-mover advantages against the first-mover disadvantages and act accordingly.

A strategic disadvantage of vertical integration is

to impair a company's flexibility in accommodating shifting buyer preferences.

To fend off a competitive attack, defensive-minded companies

use innovation and intellectual property protection to obtain product line exclusivity to force competitors to use other distributors.

The extent to which a firm engages in the various value chain activities, from initial activities all the way to after-sales activities, is called

vertical scope.

When is outsourcing not beneficial?

when internal control over an activity is deemed essential

Which statement about establishing the technical standard in an industry is true?

Establishing a technical standard is an experience-based advantage that can grow over time.

What might be considered to be a major drawback of employing an outsourcing strategy?

It can hollow out a firm's own capabilities and cause it to lose touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success.

Why do mergers and acquisitions sometimes fail to produce anticipated results?

Key employees at the acquired company can quickly become disenchanted and leave.

Bumble, a digital dating site where women make the first move, specifically uses which strategic weapon in its offensive arsenal?

Launching a preemptive strike to capture an industry's limited resources or capture a rare opportunity

What value chain segments has Tesla chosen to enter and perform internally?

Tesla has chosen vertical integration both backward and forward in the value chain to achieve multiple strategic goals. From component manufacturing like batteries, all the way through owning the distribution sales and servicing network.

Has vertical integration strengthened its market position?

Yes. Tesla's vertical integration strategy has enabled it to quickly roll out innovative new products and launch the network that is required for widespread vehicle adaption.

When buyer preferences shift, a vertically integrated company

may have difficulty adjusting its product lines to meet new demand.

Maria, the owner/CEO of a local HR recruiting and staffing company, is considering a strategic alliance with Patricia, the owner/CEO of a local payroll company. What would not likely be a consideration for Maria and Patricia with respect to whether the proposed alliance could become successful and realize its intended benefits?

minimizing the amount of resources that the partners commit to the alliance

Outsourcing strategies can offer such advantages as

obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure.