Strategy Exam Answers
The following shows Porter's Five Force Model and some of the factors that increase the strength of each force.
(A) low; (B) low; (C) high; (D) buyer's surplus; (E) high; (F) high
According to the strategic sourcing framework, partnerships are recommended when the firm's capability to perform the activity compared to others is (a) __________ and the strategic value of an activity is (b) __________.
(a) low, (b) high
Disruptive innovation is when a/an __(i)__ product is based on technology that has __(ii)__ and __(iii)__ relative to the incumbent product.
(i) new (ii) lower initial value (iii) lower initial price
Which of the following are cost drivers? 1. the learning curve 2. firm revenues 3. economies of scope 4. complementary products
1 & 3
Which of the following accurately describes Porter's Five Forces as it pertains to the industry of Coca-Cola and Pepsi from the Cola Wars case study: Rivalry: Constrained competition made the industry for Coca Cola and Pepsi highly profitable. Low threat of entry: Brand equity and scale economies in advertizing created high barriers to entry in this industry. Strong buyers: Bottlers of Coca-Cola and Pepsi could choose which company to work with, which gave them lots of power. Low supplier power: Assuming Coca-Cola and Pepsi's secret ingredients were commodities, those firms have low supplier power. High threat of substitutes: There are many substitutes for Cola, including beer, milk, water, and sports drinks.
1, 2 & 4
Which of the following correctly describe the difference between a global organization and a multi-domestic organization? Global organizations have customers all over the world, while multi-domestic organizations only operate in the most profitable markets. Multi-domestic organizations are focused on sensing and exploiting local opportunities, while global organizations are focused on standardization. Global organizations centralize both information and the firm's operational functions, while multi-domestic organizations are decentralized by niche market.
2 only
All of the following statements about buyer and supplier power are true, EXCEPT:
A firm working with strong suppliers and strong buyers will generate high profits.
Which of the following is NOT a critical aspect of strategy or building sustainable competitive advantage?
All of the above are critical elements of building sustainable competitive advantage
According to Strategy, the following reasons explain why Apple created the iPod EXCEPT:
Apple entered into a new industry despite its strong industry forces and existing rival firms.
Based on the exhibits 6 and 9 (below) and your knowledge of the Apple case, which of the options below offers the best advice for Apple regarding the relationship between its PC business (Macs) and its MP3 player business (iPods) in 2008?
Apple should continue to support both PCs and MP3 players, because its strengths as a differentiator, with superior value added from user interfaces to product design, offer a competitive advantage in both industries.
The following is an excerpt of a New York Times article, "Former Star Google and Uber Engineer Charged With Theft of Trade Secrets" by Mike Isaac on August 27, 2019: SAN JOSE, Calif. — Anthony Levandowski was once one of Silicon Valley's most sought after technologists. As a pioneer of self-driving car technology, he became a confidant of Larry Page, a co-founder of Google, and helped develop the search giant's autonomous vehicles. Uber wooed him to gain an edge in self-driving techniques. Venture capitalists threw their money at him. But on Tuesday, Mr. Levandowski, 39, fell far from that favored stature. Federal prosecutors charged him with 33 counts of theft and attempted theft of trade secrets from Google. At an arraignment in a federal courthouse in San Jose, Calif., a disheveled Mr. Levandowski, dressed in a blue blazer and dark brown pants and accompanied by his parents, posted $2 million bail and was ordered to wear an ankle monitor after prosecutors argued that he was a flight risk. The criminal indictment against Mr. Levandowski from the United States Attorney's Office for the Northern District of California opens a new chapter in a legal battle that has embroiled Google, its self-driving car spinoff Waymo and its rival Uber in the high-stakes contest over autonomous vehicles. The case also highlights Silicon Valley's no-holds-barred culture, where gaining an edge in new technologies versus competitors can be paramount. Based on the above article, which of the following is the most accurate statement about Google's Strategy.
B. Google uses intellectual property rights as an isolating mechanism to prevent imitation.
Which describes the best motivation for adopting matrix structures?
B. address the tension between the firm's top strategic requirements
The above figure depicts the Efficient Boundaries Model. The dashed line represents the sum of coordination and production costs. According to Transaction Cost Theory, the following is TRUE:
Beyond point c, the firm has economic incentives to bring operations in-house.
The difference between product value and market price is called:
C. the buyer's surplus
Which of the following is NOT true for firms that pursue a differentiation strategy?
Charging the same price while increasing value will always attract new customers.
All of the following can cause a Shakeout, EXCEPT:
Competition slows among industry firms
Which of is true of consistency or fit?
Consistency or fit is good for well-positioned firms following a generic strategy in stable industries
The following is an excerpt from a Reuters article "Exclusive: U.S. oil industry seeks unusual alliance with Farm Belt to fight Biden electric vehicle agenda," by Jarrett Renshaw and Stephanie Kelly from October 25, 2020: "The U.S. oil industry is seeking to forge an alliance with the nation's corn growers and biofuel producers to lobby against the Biden administration's push for electric vehicles... The effort to promote liquid fuels and combat expected federal subsidies for electric vehicles marks an unusual attempt by the petroleum industry to join with its long-time rivals, reflecting the scale of its concern over President Joe Biden's measures to combat climate change and tamp down fossil fuels. While the oil industry and biofuels producers are competitors for space in America's gas tanks, they share a desire to ensure a future for internal combustion engines. The effort also reflects the shifting political landscape in Washington. The oil industry's influence has waned since Biden replaced Donald Trump as president, but the farm belt remains a powerful political constituency. The American Fuel and Petrochemical Manufacturers (AFPM), an oil refining trade group, confirmed it has been contacting state and national representatives of the corn and biofuel industries in recent weeks to seek support for a policy that would reduce the carbon intensity of transport fuels and block efforts to provide federal subsidies for electric vehicles. That proposal would be an alternative to Biden's goal of electrifying the nation's vehicle fleet and would ensure a market for liquid fuels like gasoline and corn-based ethanol. The refining sector has previously made attempts to find common ground with their biofuel rivals, but the latest efforts have taken on an added sense of urgency given the Biden agenda." The article describes which industry force from the Value Net:
Cooperation between the firm and its competitors
Which of the following describes best the firm's goal in a competitive world?
Creating and capturing more economic value than rivals consistently over time
All of the following are elements of Porter's Diamond Model EXCEPT:
Cultural constraints
Target sells its differentiated goods more efficiently than its rivals Wal-mart or Macy's, by having the greatest difference between its gross margin ratio and the SGA ratio -- in other words, Target makes more money on every sales dollar with its "stuck in the middle" strategy. Given Target's performance, which of the following represents a good description of generic strategies? I. Competitive Advantage does not depend on being either a low-cost leader or high-value differentiator. II. What matters most in strategy is that a firm make higher profits than its competitors by maximizing the difference between value it offers to customers and the cost of delivering that value to customers. III. Generic strategies have a strong relationship to economic performance and, therefore, should be followed. IV. Generic strategies have no relationship to economic performance.
D. I, II and IV
The following are statements pulled from the websites of four firms: "Our strategy is to provide unrivaled customer service." "Our strategic intent is to always be the first mover." "Our strategy is to move from defense to industrial applications." "Our recovery and expansion strategy targets emerging markets." Which of the following sentences are TRUE about what these statements have in common:
D. these statements represent tactics and/or projects.
Each of the following is a sig of the Mature Stage of an industry, EXCEPT:
Decreased buyer experience with industry products
Assess this statement: Natural resources are necessary for national wealth.
False. Japan is the 3rd largest economy.
Which of the following is(are) TRUE about firms' entry into foreign markets?
Firms often start with exporting or licensing and eventually establish wholly-owned production activities.
McDonald's is in an industry where no country has an advantage over any other country. But, there are some opportunities for firms to develop superior global cost or value drivers. In our Framework for Global Competition, this industry is called:
Horizontally Integrated Across Borders
Which of the following statements is FALSE:
Howard Schultz is founder and former chairman/CEO of Starbucks
Based on your knowledge of the Wal-mart case, which of the following is/are TRUE: I. Because of Wal-mart's breadth of line, focus on rural locations, and brand reputation, customers faced a high cost to search for comparable alternative products sold by rival companies. II. Because of Wal-mart's breadth of line, focus on rural locations, and brand reputation, customers faced a high transition costs in terms of time and gas money to travel to a rival store. III. Wal-mart's breadth of line, focus on rural locations, and brand reputation were useful value drivers but poor isolating mechanisms, as both Target and K-Mart successfully imitated them.
I and II
Which of the following describes a disadvantage of a differentiation strategy: I. Customers not producers, determine the product's value, which is hard to predict. II. Value is always about "quality". III. Producing high-quality products undermines cost control.
I and III
Which of the following statements about Cost Drivers is/are TRUE? I. A firm can have lower costs than its rivals because its inputs in materials, labor, capital, information, or technology are cheaper. II. Learning costs is a cost driver for firms that occurs when its buyers incur costs to adopting the firm's product or service. III. In many circumstances, vertical integration can lower the cost of coordinating transactions between adjacent activities in the design and commercialization of a firm's products.
I and III
According to your knowledge of the Zara case, all of the following statements summarize Exhibit 3 (above) depicting Zara's incurred costs of manufacturing a Large Men's shirt, EXCEPT: I. Zara manufactured 60% of its products outside Spain, but it should have produced all of them in Asia to reduce costs. II. About 40% of Zara's products were manufactured in Spain to maintain control over reorders and quick changes in design. III. Zara outsourced the majority of its manufacturing to North Africa and other parts of Europe as part of its "quick response" strategy. IV. Zara's mix of outsourcing and vertical integration, including the specific countries it chose for each activity across the supply chain, helped establish the company's competitive advantage.
I only
Which of the following statements about diversification is/are TRUE? I. A diversification event involves entry into a new industry. II. Diversification is an extension of the product line within the supply chain of a firm. III. As a motivation for diversification, risk reduction is a higher priority than improving returns in each business unit.
I only
A firm is said to be forward vertically integrated when: I. It incorporates multiple activities of the industry's supply chain within its operational boundaries. II. It takes over a buyer and gets closer to consumers. III. It acquired a company that is more downstream along the supply chain. IV. It acquired a company that is more upstream along the supply chain.
I, II and III
Which of the following are reasons why Apple entered into the digital music player industry? I. the iPod accounted for a significant portion of Apple's revenues and earnings. II. the iPod created a "halo" effect that helped Apple reposition itself as a successful brand III. Apple's brand and core technologies were resources shared with the iPod business unit IV. Apple shared entrepreneurial management skills with the iPod business unit to compensate for a lack of generic management skills
I, II, and III
Which of the following is TRUE about industry concentration? I. In many industries, stronger concentration means higher profitability for that industry II. Industry concentration can be caused by large firms interacting strategically, but without cooperating, to increase profitability III. Industry concentration can be caused by tacit collusion by large firms through repeated interaction over time to increase profitability IV. Industry concentration is always caused by explicit collusion (i.e., cartels) to increase profitability, which is illegal.
I, II, and III
Based on your knowledge of the Gucci case, which of the following is/are TRUE: I. The key to making strategic repositioning work is changing almost everything, from distribution to product development, manufacturing, financial structure, pricing, etc. II. Successful repositioning comes from top-down management decisions. III. DeSole and Ford were able to enact change in an organization that had performed badly for a long time by slow, careful deliberation and by repositioning Gucci to offer higher value at higher prices, and also at higher costs. IV. Repositioning requires exploiting your most valuable assets.
I, II, and IV
The following is an excerpt from Barron's news article, "Uber Extends Worker Status to Its U.K. Drivers," by Pierre Briançon, updated on March 17, 2021: "Some 70,000 Uber drivers in the U.K. will be entitled to paid vacation and pension benefits as the ride-hailing company agreed to give them the status of workers instead of independent contractors, after losing its final appeal last month in a lawsuit filed by 35 former drivers. The U.K. Supreme Court had ruled last month that Uber drivers had a relationship of 'subordination and dependency' with the company and should be reclassified as workers—a status falling between that of self-employed and full-blown employee. The U.K. is one of Uber's largest foreign markets, accounting for more than 6% of the company's gross bookings. France's highest court last year ruled that Uber drivers were in a 'relationship of permanent legal subordination' with the company and that their independent status was "fictitious." The company's decision will be scrutinized by labor activists in the company's other big European markets, who hope it might serve as precedent. Spain, for one, is already planning legislation to classify gig economy workers as full-blown employees." This international decision in the U.K. follows a ruling last year by a judge in the U.S. State of California, who ruled that Uber and Lyft drivers are employees. An "employment relationship" between Uber or Lyft and its workers would drastically change the planning and decision-making for these firms. According to the U.S. legal system, Uber and Lyft's employees would be required to do which of the following duties, unique to employment status: act in the interests of him or herself, benefiting at the employer's expense disclose critical information relevant to the firm to the employer behave in a socially acceptable, respectful way with the employer none of the above
II and III
In the field of strategy, an industry's boundaries are determined based on: I. employees switching between companies II. technologically similar products III. highly-correlated stock prices IV. interdependent consumer markets
II and IV
Google hires "learners" through their hiring and recruiting capabilities, and Google also gives 20% time to employees to pursue their own projects on its campus in California. Which of the following statements is TRUE? I. All firms would benefit from giving employees 20% time. II. Google's strategy execution does not include complementary resources and capabilities, which is why it lacks a competitive advantage. III. Google's hiring and recruiting capabilities are more valuable when they complement the firm's other resources and capabilities, including its campus and 20% time. IV. Google has a product advantage, which is the source of its competitive advantage.
III only
Which of the following statements about organizational structures is TRUE? I. A functional organization is not effective at reducing the firm's costs. II. Matrix organizations are most appropriate for firms pursuing rapid growth and cost leadership. Ill. Customer-based organizations emerge when alternative structures cannot meet the full range of distinct client needs.
III only
The following figures (Exhibits 8 & 10) represent Starbucks's international expansion from the 1990s to 2009. Based on our class discussion and your knowledge of the case, which of the statements below is a good explanation of Starbucks's international strategy?
In order to achieve sustainable competitive advantage, Starbucks needs to slow its pace of relative store growth from the early years, and open stores with more regularity, through its transnational strategy.
The following is an excerpt from the Marketplace article "Six things you need to know about the possible Hollywood writers strike," by Ben Bergman from April 21st, 2017: "TV and movie writers are worried about the future as their payments go down while the studios' profits go up. Their union, the Writers Guild of America, is in the process of negotiating their new contract; their current contract expires May 1. The Guild is asking members to give authorization for a potential strike. Here's some background on the situation: It seems like there are more TV shows than ever. Why are writers unhappy? Paradoxically, as the number of shows has increased, writers say their earnings have decreased 23 percent in the last two years. The central problem is that TV seasons keep getting shorter. While a season used to have more than 20 episodes, today there may be 10 or fewer. But writers get paid per episode. At the same time, episodes now have much higher production values and take longer to produce. "So whereas I would write 22 episodes and it would take me a year, I have a show on Amazon now where I'm writing eight episodes, and it's going to take me nearly a year, and I'm going to paid eight episodic fees for that," said Chris Keyser, executive producer of "Tyrant" and co-chair of the writer's negotiating committee." Based on this article, what is the main factor affecting the profitability of firms producing TV and movie studios in Hollywood?
Industry factors
Based on the Wal-mart case and your knowledge of isolating mechanisms, which of the following is an example of Causal Ambiguity?
K-mart tried to copy Wal-mart's price-matching practices and failed.
All of the following are factors determining the power of buyers compared to their suppliers, EXCEPT:
Limit pricing
Which of the following is NOT true about business-level strategic planning?
Managers should prioritize short-term goals using SWOT analysis
Why do countries matter for firm Strategy? Select all that apply.
National governments frequently intervene in industries to shape the intensity and direction of investment behavior. Correct! Nations regulate economic behavior through legal sanctions that affect firm growth and profitability. Correct! Nations have unique traits determined by their geography, climate, languages, religions, history, arts, political systems, and social traditions that affect opportunities for growth and profitability of firms. Correct! The natural resources associated with a country can create advantages for indigenous firms.
The tendency of a firm over time to invest in innovations that are upwardly compatible with each other, thereby creating a relatively unique path of product and process development is called:
Path dependence
Tacit collusion occurs when firms establish and maintain strategies that produce profits above the competitive outcome. We played a "competition game" in class to simulate this using colored paper in envelopes turned into me over 3 rounds. All of the following can lead to tacit collusion, EXCEPT:
Perfect competition. When this occurs, firms compete on value and cost, which are virtually the same, driving prices down.
Which of the following describes the market position of Gucci in 2000 under De Sole & Tom Ford?
Position B
From the perspective of strategy, all of the following are reasons why regions matter EXCEPT:
Regions can lead to economies of scale by offering a large customer base.
Which of the following is NOT a source of industry disruption?
Sustaining innovations
Which of the following is NOT an important factor that affects a firm's profitability?
The CEO's salary
When applying Porter's Diamond Model to the high-performance automobile manufacturing industry in Germany, which of the following is evidence of demand conditions:
The autobahn, which has no speed limit, causes German consumers to look for cars with high performance levels.
Which of the following statements is true about Coca Cola's bottlers.
The bottling industry has strong suppliers, but also low threat of entry due to high capital costs and exclusive contracts.
Which of the following statements is FALSE?
The cost leader in an industry can be identified by finding the company with the lowest prices.
All of the following are important recent trends related to the increasing frequency of partnering EXCEPT:
The decline of outsourcing as accepted practice
In which of the following situations is a firm most likely to succeed in developing a successful new business venture?
The firm believes it can decrease costs by promoting economies of scope between its existing operations and the new venture.
Economies of scope occur when:
The total cost of producing two products is less than the sum of costs to produce them separately
The compact digital camera is fading fast. As global shipments plummet—with a consistent 16.7-percent year-on-year sales decrease since 2010—manufacturers are scrambling to adapt to a world where customers value the convenience of smartphones for quick shots they can share on social networks like Facebook and Instagram. The global compact digital camera market may shrink to as little as 9 million units shipped, compared to a unit sales peak in 2010 with over 120 million units shipped. According to this description, what is the main threat to profits in the digital camera industry, and what is the most likely impact of this threat on companies in the industry?
Threat: substitutes; Impact: forces firms to increase value and decrease price
It's the day of big announcements at Chelsea Football Club. After Frank Lampard was announced as new Chelsea manager, and the club immediately dropped him in with a surprise press conference! In the press conference, Chelsea Football Club announced that it had entered into a seven-year partnership with company Tempus Ex Machina. Tempus Ex Machina is a cutting-edge technology company revolutionising the sports and entertainment industry. Innovatively syncing sports video and data, Tempus Ex's proprietary technology enables the creation of new interactive experiences around live events. The technology is the only solution that can synchronize and deliver every available piece of data generated by every data and video vendor at a live sporting event — including every video angle, stats platform, and player tracker covering every play. Based on what you know of partnerships, which of the following is the most likely motivation behind the partnership for Chelsea Football Club:
To transfer and develop technology
The following is a hypothetical scenario. "There are 326 million wireless subscribers in the U.S. But the battle to take business away from the industry's leaders comes down to just 19 million of them. That is about how many wireless subscribers have left V Wireless and A Telecom annually over the past three years. It may seem like a lot, but most of those subscribers just go back and forth between the top carriers. The four national U.S. carriers together added only about a net 3.3 million subscribers last year and V Wireless and A Telecom accounted for all of them. The numbers show the daunting task ahead as the newly revitalized S Company and T Company gear up to take business away from the two companies that dominate the U.S. industry. The third and fourth largest U.S. wireless carriers are now better capitalized, building advanced networks, carrying the iPhone, and launching new service plans under aggressive new managers or owners. But they are taking on entrenched rivals that are doing a better job than ever of holding on to their customers. The bulk of A Telecom and V Wireless' customers are locked up in two-year contracts with penalties if they leave early. Large majorities are also on family or business plans, which tend to be more complex and harder to leave. Last year, the average percentage of contract customers to leave the carriers each month—a figure the industry calls "churn"—was just 0.91% for V Wireless and 1.08% for A Telecom, according to UBS. Subscribers occasionally try to check out, but they almost never leave." Question: Which of the following isolating mechanisms best describes how V Wireless and A Telecom are maintaining their market positions?
Transition costs
What is the best reaction in terms of Strategy to the following statement: "A firm generally chooses to expand businesses into countries that are most similar to its home country. This is because a firm is more likely to understand the language, laws, customers, and customer demands of a country similar to its own."
True. Although firms, like Starbucks, can still succeed without following this general trend.
Which of the following is a useful question for competitor analysis?
What are the key macroeconomic forces that affect profits in the industry? What are the key industry forces (e.g., powerful buyers, strong substitutes...)? What new strategic initiatives and programs have key competitors developed, if any? Correct Answer all of the above
The following is an excerpt from the above NYT article regarding American Airlines and JetBlue Airways' partnership: "A Justice Department effort to break up an alliance between American Airlines and JetBlue Airways is set to go to trial in Boston on Tuesday morning, part of a broad Biden administration push to aggressively enforce antitrust rules and promote economic competition. Under the partnership, announced in 2020 and referred to as the Northeast Alliance (NEA), American and JetBlue joined forces in Boston and New York. In those cities, the airlines share some revenue and access to airport gates and allow customers to buy trips and take part in loyalty programs at the airlines interchangeably. American, the world's largest airline by market share, and JetBlue say the alliance helps them to compete against the dominant carriers in those cities, United Airlines and Delta Air Lines. The Justice Department sued last year to stop the partnership, arguing that it is effectively a partial merger and reduces competition. 'This case is straightforward,; the Justice Department wrote this month in a legal brief describing its arguments. Referring to the alliance, it added: 'The NEA eliminates competition between the largest airline in the world and a disruptive competitor on flights to and from Boston and New York. It deprives the public of the benefits that the rivalry has brought to passengers for two decades." Based on information from the above article, in addition to what you know about partnerships from this class, which statement best describes the disadvantages to partnerships.
While a partnership may allow the two airlines to access new markets, one of the disadvantages of partnerships is that they can bring antitrust issues.
"A firm's ability to observe, learn, and adopt innovations developed by other organizations, including sources of technology" refers to which of the following?
absorptive capacity
A firm's _______________________ is a framework that displays the organizational components (interconnected actions, choices, policies, practices, or product attributes, etc.) that contribute to or detract from the firm's key cost and value drivers. This framework can be used to identify the levels of complementarity and consistency in the firm's execution of its strategy.
activity system
The following represents YSL Operating Margins (%) from the Gucci case. 2000 2001 2002 2003 2004 2005 2006 2007 Gucci 27 30 29 28 28 27 29 30 YSL 16 -75 -44 -50 -42 -41 -25 -14 YSL Beaute 8 7 7 3 4 3 5 10 Based on the above margins and your knowledge of the case, which statement(s) best describe(s) Gucci's acquisition of YSL: I. Only YSL Beaute was successful; Overall, YSL was an unprofitable acquisition. II. Although Tom Ford was critical to the turnaround of Gucci, it was likely a poor decision to make Tom Ford creative director for both Gucci and YSL. III. There were some synergies in purchasing and advertising between Gucci and YSL, but ultimately these brands competed with on another.
all of the above
Which of the following are common managerial decision-making biases?
all of the above
Which of the following are ways to estimate a customer's willingness to pay (value): I. Internal engineering (e.g, direct calculations) II. Customer perceptions (e.g., focus group interviews or surveys) III. Quantitative analysis of product attributes and purchase behavior IV. Conjoint analysis
all of the above
Which of the following expected benefits can alleviate antitrust concerns with respect to partnerships: I. an increase in the rate of industry innovation and growth II. an increase in economic growth III. the expectation of continuous new developments of technology for the industry
all of the above
Why do firms go international? I. to exploit country-specific advantages II. to exploit firm-specific advantages III. to expand and grow revenue
all of the above
Which of the following is NOT a potential disadvantage or challenge associated with partnering?
an increase in proprietary technology
According to the textbook, 3M is a multi-business firm that has successfully developed and exploited a ___________ because it has technological capabilities that serve as a foundation for growth, combined with entrepreneurial skill, which -- together -- helps 3M create economies of scope in developing new businesses.
core competence
A nationally segmented industry is one in which:
country-specific advantage and firm-specific advantage are both low
As an isolating mechanism, Wal-mart managers tied up suppliers to obtain low-cost inputs, which occurs when managers turn external resources into
dedicated assets
The misalignment of measurement, improper weighting of tasks, in compensation and incentive systems is called:
distortion
All of the following are potential contributions a new venture may make to the parent corporation, EXCEPT:
general management skills
All of the following are generally good options for organizing globally in single-business firms EXCEPT:
handling international operations under the marketing division
All of the following are indicators of an attractive market for diversification, EXCEPT:
high cost of entry
When large, dominant firms compete in many product lines across geographies and market segments, and firms innovate in Value and Cost in the same way, and at roughly the same pace, to keep up with competitors, this is called:
hypercompetition
The following is TRUE of Zara "Quick Response" Strategy:
it spans the entire value chain to achieve its competitive advantage
To qualify as a "new business" unit, it:
must compete in a unique product market
Toni & Guy is a British company that opened its first hair salon for men and women in Clapham, London, in 1963. Today, there are over 485 salons in 48 countries. The first Toni & Guy salon outside of Europe opened in Dallas, Texas. Haircut styles - like fashion or interior design - vary widely by country. Toni & Guy businesses in France can deliver the same service as Toni & Guy businesses in Dallas, Texas, with the same opportunities for cost and value drivers. Also, what Toni & Guy learns about customers in France, does not translate to customers in Japan, the US, or the UK. The minimum efficient scale for hair salons is so low that local firms remain competitive in this industry. This industry can be considered:
nationally segmented
Consistency among activities is most important for firms that are:
pursuing either cost leadership or value-based differentiation in stable industries
For which types of new businesses will the parent corporation's contributions of financial capital be most valuable?
smaller units in growing industries
The following is an excerpt from the Wal-Mart case: "In the retail industry, an estimated 8% of the items that customers came to buy were out of stock, and one-third of all goods were sold at marketed-down prices. Up-to-the-minute information about supply and demand helped Wal-Mart reduce both stock-outs and overstocking... As of late 2002, Wal-Mart remained the only source of (close to) real-time retail data for a large community of suppliers. " A key element of Wal-Mart's sustainable competitive advantage was its investment in ____Atechnology ____ called Retail Link, a ____Bcost driver _____, which provided suppliers with access to up-to-date inventory of their products on a store-to-store basis that prevented stock outs. Suppliers were required to use Retail Link, despite the substantial investments it required to implement. This represents the ____Clow/weak _____ supplier power of Wal-Mart's industry.
technology value driver low/weak
When managers are unable to identify how much performance is due to individual skill and effort ad how much is due to luck is called:
the controllability problem
Which of the following represents a key benchmark for setting a firm's financial goals? Choose all that apply.
the firm's historical performance the current performance of competitors in the industry A combination of both the firm's historical performance and its competitors' current performance
When organizing for global competition, which of the following is a unique disadvantage of the geographic structure depicted below.
the geographic structure reduces the firm's ability to benefit from economies of scale
The cost of trying to develop a capability in less time than the original firm is called a ______________. An example includes Firm A trying (but failing) to imitate rival Firm B's strong brand image in half the time it took Firm B to build it by doubling Firm A's marketing expenditures.
time-compression diseconomy
How would a supplier firm reduce the power of one of its buyers?
vertically integrate into the buyer's industry
Google as a whole is organized as a ___(i)___ organization, while the AdSense division is a ___(ii)___ organization that combines the dimensions of a geographic and a ___(iii)___ organization.
{i) functional {ii) matrix {iii) customer-based
