Chap 6 MC

Often companies employ a blend of the franchising and chaining model, with some locations owned by franchisees and others owned by the corporation. Which of these is a recent example of this blended model and the implications the structure can have on a stakeholder group? a. McDonald's announced plans to increase the minimum wage of its workers at 1,500 corporate-owned stores, but the decision had no impact on the workers at 40,000 independent stores. b. Macy's opens "Macy's Backstage" stores in New York City to sell discount clothing, expanding its brand. c. Abercrombie & Fitch announces plans to close its chain stores and completely close one of its brand name chains, Gilly Hicks. d. Starbucks continues its international expansion with new stores in India.

a. McDonald's announced plans to increase the minimum wage of its workers at 1,500 corporate-owned stores, but the decision had no impact on the workers at 40,000 independent stores.

Keesha works as a marketing manager for a running shoe company. She has been tasked with implementing a market development strategy. What first step could she take? a. Research the market segments of individuals who might purchase running shoes and compare it to the demographics of the stores existing customers. Identify any customer segments the company is not currently serving. b. Work with the R&D team to identify several product innovations and enhancements that would make the running shoes more attractive to existing customers. Develop marketing materials promoting these new features and benefits. c. Create a discounting program for repeat customers of the shoes. Market the coupon through emails to the existing customer database and on social media. d. Identify a competitor shoe from a start-up that is reaching an older customer demographic. Work with the R&D team to create a new shoe that will also serve this new market.

a. Research the market segments of individuals who might purchase running shoes and compare it to the demographics of the stores existing customers. Identify any customer segments the company is not currently serving.

The problem of excess capacity in a mature industry is often caused by competitive factors. Which of these represents an effective capacity control strategy? a. The 12 nations of OPEC gather regularly to discuss oil production across the globe. Their decisions and announcements drive crude oil capacity and prices even for non-member countries. b. Homebuilders reacting to increased demand purchased additional inventory of residential development just before the Great Recession, when the housing market was undercut by the sub-prime mortgage crisis. c. The Big Three automakers are reluctant to increase capacity for automobile manufacturing, despite signals of increased demand and a shortage of some models at dealerships. d. QVC and HSN utilize limited quantity sales for short time-frames to spur increased sales by artificially reducing the quantity of product available.

a. The 12 nations of OPEC gather regularly to discuss oil production across the globe. Their decisions and announcements drive crude oil capacity and prices even for non-member countries.

Which of these industries have the most factors that indicate it is in a severe decline? a. The wired telecommunications industry has a mature infrastructure and nearly all of the companies operating in the industry offer the same services to the same customers. The industry projects annual growth at -0.5% through 2018. b. The brewing industry in the U.S. used to be dominated by two major players, Anheuser-Busch and MillerCoors, but in recent years the industry has given rise to more than 2,000 craft breweries, aided by technology advancements that make brewing more cost effective and accessible to entrepreneurs. c. The airline industry has cyclical periods of growth and contraction based on the nature of the economy, the price of fuel and concerns about security and travel. Regardless of the phase in the cycle, profit margins for airlines also vacillate d. The healthcare industry is burdened by regulations and controls on reimbursement rates from the government and insurance companies. This creates strain on profitability. At the same time, technological advances require constant investment in new medical devices and equipment.

a. The wired telecommunications industry has a mature infrastructure and nearly all of the companies operating in the industry offer the same services to the same customers. The industry projects annual growth at -0.5% through 2018.

When companies enter an industry during the embryonic stage of that industry and then seek to grow with the industry to serve the mass market, this is known as: a. crossing the competitive chasm. b. growth through acquisition. c. expansion through franchising. d. market penetration.

a. crossing the competitive chasm

A group of strategies designed to moderate the intensity of competition within a mature industry among existing companies within that industry is known as: a. managing rivalry. b. deterring entry. c. price competition. d. strategic commitments

a. managing rivalry.

For companies to successfully implement a divestment strategy they must: a. recognize the signs of an industry's decline earlier than their competitors to divest while the company still has something to offer. b. have a dominant position in terms of economies of scale, offering the best production processes and lowest cost structure to prospective buyers. c. identify the portion of the industry that is not in decline and configure its business to serve those customers. d. create a value innovation to consolidate the industry as it breaks apart.

a. recognize the signs of an industry's decline earlier than their competitors to divest while the company still has something to offer.

Companies can also consolidate a fragmented industry through horizontal acquisition. What is horizontal acquisition? a. Diversifying a business by expanding into other industries by purchasing companies already operating in that business. b. Acquiring competitors in an industry to combine into a single, larger enterprise to build a more compelling national brand. c. Seeking new investors among private equity firms and angel investors to infuse capital in a company and scale up. d. Working with franchisees to open locations across the country quickly.

b. Acquiring competitors in an industry to combine into a single, larger enterprise to build a more compelling national brand.

Social media has become an excellent tool for organizations to spread the word about their products and causes. Which of these demonstrates the viral model of infection at work on a social media platform? a. A blackout in the stadium during the Super Bowl in 2013 led Oreo to author a tweet that was shared more than 20,000 times on social media. b. During a video campaign on social media that included numerous celebrities and thousands of submitted videos of people dumping buckets of water over their head, the ALS Association raised more than $220 million. c. The Got Milk? Campaign launched in the 1990s featured celebrities with milk mustaches, achieving near 90% awareness of the campaign. d. Best Buy develops "Connected Home" sections in 400 of its stores, allowing customers to experience the ways they can automate their homes.

b. During a video campaign on social media that included numerous celebrities and thousands of submitted videos of people dumping buckets of water over their head, the ALS Association raised more than $220 million.

Craig is a product development manager for a home appliance company. Recently, a start-up has begun developing appliances with built-in technology features, such as WiFi connections to smartphone apps that track your refrigerator stock in staple items. Which of these strategies can Craig implement in his functional role to deter this rival before they gain traction in the industry? a. Focus only on the core product line and develop ways to reduce production cost, which will improve profitability and equip us for a future price war. b. Move up the launch date for a new line of tech-connected appliances his team has been working on in recent months. c. Start selling parts of the business off to competitors, offering your production equipment and processes to rivals. d. Announce that you are consolidating your operations into fewer plants and reducing your overall production of appliances in the hopes that other appliance companies follow suit to create a scarcity and increase long-term demand.

b. Move up the launch date for a new line of tech-connected appliances his team has been working on in recent months.

Several strategies for mature industries have the potential to result in anti-trust violations that could result court action if not implemented correctly. Each of these strategies must be undertaken ethically and legally to avoid these kinds of repercussions. Which describes a potentially illegal implementation? a. Price Signaling: Outokumpu, a stainless steel mill company, announces its prices on stainless steel each month on its website and through press releases. b. Price Leadership: Apple collaborates with ebook publishers to raise prices on millions of titles offered through the iBooks store. c. Coordination Capacity Control: The association for manufacturers of air conditioning and heating units publishes total sales for the industry on a regular basis. d. Limit Price: The airline industry determines its pricing through similar methodologies - fuel consumption, plane size, route demand, flight capacity. This results in similar prices for plane tickets among the major airlines.

b. Price Leadership: Apple collaborates with ebook publishers to raise prices on millions of titles offered through the iBooks store.

An industry moves from the embryonic stage to the growth stage when a mass market starts to develop for its product. What three things spur a mass market to emerge? a. An influential lead adopter endorses the product, a leader from a different industry enters the market and the industry consolidates through chaining. b. Technology advances to make the product easier to use, complementary products are developed and the industry finds ways to reduce the cost of the product and lower prices. c. A pioneering company gets a large influx of capital, inflation falls to lower the cost of the product and the industry starts to grow through franchising. d. The government provides incentives for people to buy the product, advertising makes more people aware of the product, and distribution is highly specialized with products available in only select markets.

b. Technology advances to make the product easier to use, complementary products are developed and the industry finds ways to reduce the cost of the product and lower prices.

Organizations can experience a high return on investment if they are able to consolidate a fragmented industry. This is known as: a. Leadership strategy b. Value innovation c. Market penetration d. Product proliferation

b. Value innovation

Non-price competition is a group of market strategies that companies utilize to manage rivalry without price cutting and price wars. To employ one of these strategies, a company must: a. be focused on signaling to competitors where they plan to set prices so that others can follow suit. b. define its differentiation through products or market segments. c. monitor the market and preempt its competitors when ramping up production to gain first-mover advantage. d. secure alliances with a distributor network and a supplier base that offer exclusivity, leaving competitors without access to the preferred stakeholders in these categories.

b. define its differentiation through products or market segments.

Joaquin is part of the team developing strategies for new wearable technology that integrates smartphone and fitness tracker tools. To accelerate customer demand he is seeking to demonstrate the product's relative advantage. He should: a. offer customers a 30-day, no obligation demo period for the product so they can try it out. b. educate customers about the ways in which the new device replaces several products in among their personal gadgets and show how the consolidated product saves them money and helps them achieve their fitness goals. c. create a series of online videos showing customers the steps for configuring the device, making the technology more accessible. d. Work out merchandising agreements to have the products appear in the technology sections of all of the major retail outlets.

b. educate customers about the ways in which the new device replaces several products in among their personal gadgets and show how the consolidated product saves them money and helps them achieve their fitness goals.

Companies utilize strategies that deter entry into their mature industries because: a. new entrants in an industry do not have anything useful to offer to customers. b. new entrants in an industry can generate additional competitive forces that may cause a company to lose customers, lose profitability and reduce the return on investment. c. new entrants always offer lower priced goods and undercut industry profitability. d. new entrants exist because they use technology better and pioneer innovations that disrupt the industry.

b. new entrants in an industry can generate additional competitive forces that may cause a company to lose customers, lose profitability and reduce the return on investment.

Adaya works for a start-up software company with an innovative product in an embryonic industry. She has been asked to suggest a strategy for developing a mass market for the company. Which of these strategies should she recommend? a. A strategy for developing a new product to increase the company's product portfolio to two service lines. b. A strategy to signal the pricing of the new product to competitors and put up barriers to entry for new companies. c. A strategy to increase the efficiency of the product, lowering its cost and price to consumers. d. A strategy to acquire other software companies with similar products to consolidate the industry.

c. A strategy to increase the efficiency of the product, lowering its cost and price to consumers.

After a company has developed a value innovation in a fragmented industry, it often needs to scale up quickly. Which of these is a strategy for growing a business with multiple corporate-owned locations? a. Franchising b. Licensing c. Chaining d. Rapid deployment

c. Chaining

Which of these is not true of a fragmented industry: a. It is composed of a large number of small and medium-sized companies. b. It often is a group of locally focused companies with brand loyalty. c. It features companies that enjoy the benefits of economies of scale as they grow. d. It often has low barriers to entry and a steady stream of new entrants.

c. It features companies that enjoy the benefits of economies of scale as they grow.

The passenger railroad industry in the United States has been in decline for the last several decades. For example, Amtrak is sustained for most of its operations by taxpayer subsidies. There is one exception - the Northeast corridor, which serves Boston, Philadelphia, New York City and Washington, D.C. Identify the strategy passenger rail companies are using here and what other parts of the country might also utilize this same strategy. a. Harvest strategy; Large parts of the plain states could serve a demand for rail customers because there is considerable distance between the cities there and a lot of commercial enterprises across those cities. b. Divestment strategy; The south could benefit from this strategy, collecting revenues from the last remaining rail passengers traveling among cities in Georgia, Alabama and Mississippi. c. Niche strategy; Southern California could also have rail passenger lines connecting densely populated cities with strong commercial ties in a region of the country with heavy car traffic. d. Divestment strategy; The Northwest states could collaborate to build a rail system connecting them to Alaska to serve customers traveling from the "lower 48" north through Canada.

c. Niche strategy; Southern California could also have rail passenger lines connecting densely populated cities with strong commercial ties in a region of the country with heavy car traffic.

In a mature industry, a company can employ several potential strategies to compete with existing companies in the industry. Which of these is a strategy that it seeks to manage rivalry? a. utilize a strategy of growing its market presence through multiple corporate-owned locations. b. develop a strategy to serve a part of the market that is declining slower than other segments. c. employ a strategy to identify a new market for the company's existing products. d. implement a strategy to create a price structure that is not attractive to potential entrants.

c. employ a strategy to identify a new market for the company's existing products

A company that wishes to exit a declining industry and makes decisions to optimize cash flow in the short term is using a: a. niche strategy. b. divestment strategy. c. harvest strategy. d. leadership strategy.

c. harvest strategy.

A mature industry is one that: a. contains several pioneering companies in the process of transitioning to the mass market. b. includes a single, dominant company operating as a near-monopoly. c. is dominated by a small number of large companies but may also have specialized medium-sized and small companies. d. has not had a new entrant within the last decade.

c. is dominated by a small number of large companies but may also have specialized medium-sized and small companies.

A company in a declining industry employs several tactics as part of its current strategy, including slashing prices, ramping up marketing and acquiring smaller businesses. This company is executing a: a. divestment strategy. b. market penetration strategy. c. leadership strategy. d. price limit strategy.

c. leadership strategy.

As a customer group, innovators are: a. risk averse and afraid to try new things. b. interested in weighing the benefits of new technology against the costs. c. skilled in technology and able to experiment with systems that have glitches and failures. d. conservative and interested in maintaining the status quo.

c. skilled in technology and able to experiment with systems that have glitches and failures.

Marguerite has developed a restaurant concept featuring her grandmother's recipe for fried ice cream and opens a walk-up window mini-store specializing in the dessert. The concept is profitable and gains a lot of media attention. She wants to open up additional locations, but doesn't have a lot of start-up capital. Which of these consolidation strategies for fragmented industries could she utilize? a. Hub-and-spoke distribution b. Chaining c. Self-service d. Franchising

d. Franchising

Social media has become an excellent strategy for start-up companies with little access to capital to spread the word about their innovative products. Using video and customer testimonials and encouraging others to share their experiences with the product, companies can generate third-party endorsement of their products and services. This is an example of what strategy? a. Relative advantage b. Complexity c. Trialability d. Observability

d. Observability

A strategy that involves developing new products to serve every niche and segment of the marketplace to prevent start-up companies from entering an industry is known as: a. Limit price strategy b. Technology upgrading strategy c. Strategic commitment strategy d. Product proliferation strategy

d. Product proliferation strategy

An industry shows signs of decline when: a. the number of companies competing in the industry grows rapidly. b. just a few companies are able to achieve the economies of scale necessary for companies to be profitable in the industry. c. only innovators and early adopters are purchasing the company's products. d. demand for its products falls because a technology makes the industry's product obsolete.

d. demand for its products falls because a technology makes the industry's product obsolete.

In the market demand S-shaped growth curve, the early majority is: a. the least important customer segment for a growing company and industry. b. the group of customers that drive replacement demand for a product. c. the group of customers most likely to try new technology before it has been proven useful or stable. d. the group of customers who begin purchasing a product at the beginning of an industry's transition from embryonic to growing.

d. the group of customers who begin purchasing a product at the beginning of an industry's transition from embryonic to growing.