Questions and Answers of Exploring Strategy

An ice cream manufacturer is proposing to acquire a soup manufacturer on the basis that, first, its sales and profits will be more seasonally balanced and, second, from year to year, sales and
Has McDonald’s got the balance right between global standardization and national differentiation (see Strategy Capsule 15.3)? Should it offer its franchisees in overseas countries greater
British expatriates living in the U.S. frequently ask friends and relatives visiting from the U.K. to bring with them bars of Cadbury’s chocolate on the basis that the Cadbury’s chocolate
When Porsche decided to enter the SUV market with its luxury Cayenne model, it surprised the auto industry by locating its new assembly plant in Leipzig in Eastern Germany. Many observers believed
According to Michael Porter’s Competitive Advantage of Nations, some of the industries where British companies have an international advantage are: advertising, auctioneering of antiques and
With reference to Table 15.1, what characteristics of national resources explain the different patterns of comparative advantage for the U.S. and Japan?
With reference to Figure 15.1, identify a “sheltered industry” (one that has been subject to little penetration either by imports or foreign direct investment). Explain why the industry has
For its Zara brand, Inditex manufactures the majority of the garments sells and undertakes all of its own distribution from manufacturing plants to its directly managed retail outlets.Benetton
In Strategy Capsule 14.1, Steve Rosenbush argues that integration between media content and media distribution companies (and, specifically, between Disney and Comcast) is strategically advantageous.
A large proportion of major corporations outsource their IT function to specialist suppliers of UIT services such as IBM, EDS (now owned by Hewlett Packard), Accenture, and Cap Gemini. What
The discussion of “The Shifting Barrier between Firms and Markets” notes that the large U.S. companies account for a smaller percentage of total employment—a development that is attributed to a
The discussion of “The Shifting Boundary between Firms and Markets” argues that the developments in information and communication technology (for example, telephone and computer) during most of
In an era of budget airlines, online booking for travel, hotels, and car hire, the elimination of commissions paid by airlines, and declining demand for “package vacations” (air travel hotel
Department stores (for example, Federated Department Stores and Mays in the U.S., Selfridges and House of Fraser in the U.K.) face increasing competition from specialized chain retailers and discount
In both Europe and North America, established airlines are desperately cutting costs to compete with the increasing number of budget airlines. However, it is highly unlikely that these airlines will
Under Jacques Nasser, Ford’s response to intensifying competition in the auto industry was to acquire a stable of luxury brands and forward integrate into car rental (Hertz), car repair(Kwik Fit),
The clothing manufacturers of northern Italy are facing rapid decline as retail chains and fashion houses increasingly outsource to China and other low-cost countries. What strategies would you
In the battle for dominance of the ebook reader market, Amazon with Kindle 2 was ahead of Sony with its Reader Digital Book. Kindle 2 had the biggest number of recent titles available, but thanks to
From the evidence presented in Table 12.3, what conclusions can you draw regarding the factors that determine whether leaders or followers win out in the markets for new products?
What lessons would you draw from Dyson’s experience concerning the use of licensing by small firms to exploit innovation?
Table 12.1 shows that:(a) Patents have been more effective in protecting product innovations in drugs and medical equipment than in food or electronic components;(b) Patents are more effective in
Trevor Bayliss, a British inventor, submitted a patent application in November 1992 for a wind-up radio for use in Africa in areas where there was no electricity supply and people were too poor to
Consider an industry facing fundamental technology change (e.g. the recorded music Industry and digital technology, computer software and open-source, newspapers and the internet, automobiles and
The “resource partitioning” model argues that as industries become dominated by a few major companies whose strategies and products converge, so opportunities open for new entrants to build
Select a product that has become a dominant design for its industry (for example, the IBM PC in personal computers, McDonald’s in fast food, Harvard in MBA education, Southwest in budget airlines).
Consider the changes that have occurred in a comparatively new industry (for example, wireless communication services, wireless handsets, video game consoles, online auctions, bottled water, online
Advise a chain of movie theaters on a differentiation strategy to restore its flagging profitability. Use the value chain framework outlined in Strategy Capsule 10.2 to identify potential linkages
Sony, which once dominated the market for portable music players with its Walkman products, has been the big loser to Apple in the market for MP3 music players. Using the framework shown in Figure
The section on “Differentiation and Segmentation” notes that IKEA furnishings, Honda cars, Amazon, and Starbucks have achieved differentiation while maintaining a broad market appeal. How do
Bottled water sells at least 200 times the price of tap water, with substantial price differentials between different brands. What are the key differentiation variables that determine the price
To what extent are the seven cost drivers shown in Figure 9.1 relevant in analyzing the costs per student at your business school? What recommendations would you make to your dean for improving the
In Strategy Capsule 2.3 (Chapter 2), we observed that Ford’s profitability was low primarily because its costs were high. Using the value chain shown in Figure 9.4 and what you know about Ford
A number of industries have experienced rapidly increasing global concentration in recent years: commercial aircraft (led by Boeing and Airbus), steel (led by Mittal Steel), beer (led by SAB-Miller,
Target (the U.S. discount retailer), H&M (the Swedish fashion clothing chain) and Primark(the U.K. discount clothing chain) have pioneered “cheap chic”—combining discount store prices with
Do you believe that some mutual funds (“unit trusts” in British parlance) can deliver consistently superior returns (once adjusted for risk)? If so, what is the basis for such superior
Illy, the Italian-based supplier of quality coffee and coffee-making equipment, is launching an international chain of gourmet coffee shops. What advice would you offer Illy for how it can best build
Apple has been successful in dominating the market for both MP3 players with its iPod and for music downloads with its iTunes service. Can Apple sustain its leadership in these markets? How?
Figure 8.1 implies that stable industries, where firms have similar resources and capabilities, offer less opportunity for competitive advantage than industries where change is rapid and firms are
Draw an organizational chart for a business school that you are familiar with. Does the school operate with a matrix structure (for instance, are there functional/discipline-based departments
The examples of Apple Computer and General Motors (see section on “Functional Structure”) point to the evolution of organizational structures over the industry life cycle.During the growth phase
In 2008, Citigroup announced that its Consumer business would be split into Consumer Banking, which would continue to operate through individual national banks, and Global Cards, which would form a
Within your own organization (whether a university, company, or not-for-profit organization), which departments or activities are organized mechanistically and which organically? To what extent does
As DuPont expanded its product range (from explosives into paints, dyes, plastics, and synthetic fibers) why do you think that the functional structure (organized around manufacturing plants and
The dean of your business school wishes to upgrade the effectiveness with which the school designs and delivers its educational programs and increase the effectiveness of its graduates in their
In 2006, Disney completed its acquisition of the film animation company Pixar for$7.4 billion. The high purchase price reflected Disney’s eagerness to gain Pixar’s animation capabilities, its
Identify two sports teams: one that is rich in resources (such as talented players) but whose capabilities (as indicated by performance) have been poor; one that is resource-poor but has displayed
Apply the approach outlined in the section “Putting Resource and Capability Analysis to Work” to your own business school. Begin by identifying the resources and capabilities relevant to success
Given the profile of VW’s resources and capabilities outlined in Table 5.4 and Figure 5.7, what strategy recommendations would you offer VW?
Many companies announce in their corporate communications: “Our people are our most important resource.” In terms of the criteria listed in Figure 5.6, can employees be considered to be of the
During 1984–8, Michael Eisner, the newly installed CEO of Walt Disney Company, successfully exploited Disney’s existing resources to boost profitability (see Strategy Capsule 5.2). During the
Microsoft’s main capabilities relate to the development and marketing of complex computer software and its greatest resource is its huge installed base of its Windows operating system.Does
In recent years Google has expanded from internet search across a broad range of internet services, including email, photo management, satellite maps, digital book libraries, blogger services, and
How would you segment the restaurant market in your home town? How would you advise someone thinking of starting a new restaurant which segments might be most attractive in terms of profit potential?
During 2007–9, the Nintendo Wii established leadership over the Sony PS3 and Microsoft Xbox360 in the market for video game consoles. Unlike Sony and Microsoft, Nintendo is completely dependent
In August 2006, Rupert Murdoch’s News International announced its intention of launching a free evening newspaper, The London Paper, to challenge Associated Newspapers’ London Evening Standard
In November 2005, six of Paris’s most luxurious hotels—including George V, Le Bristol, the Ritz, and Hotel de Crillon—were fined for colluding on room rates. Regular guests showed little
HP, Canon, Lexmark, and other manufacturers of inkjet printers make most of their profits on the sales of ink cartridges. Why are cartridges more profitable than printers? If cartridges were
What do you think are key success factors in:(a) The pizza delivery industry?(b) The investment banking industry?
Wal-Mart (like Carrefour, Ahold and Metro) competes in several countries of the world, yet most shoppers choose between retailers within a radius of a few miles. For the purposes of analyzing
The leading companies in the online travel agency industry are Expedia, Travelocity (which owns Lastminute.com), Orbitz, Priceline, Cheaptickets and a host of others. The online agents compete both
With reference to Strategy Capsule 3.1, use the five forces framework to explain why the U.S. smokeless tobacco industry is so profitable (as indicated by the profitability of its dominant firm).
From Table 3.1, select a high-profit industry and a low-profit industry. From what you know of the structure of your selected industry, use the five forces framework to explain why profitability has
The major forces shaping the business environment of the fixed-line telecom industry are technology and government policy. The industry has been influenced by fiber-optics (greatly increasing
The CEO of a chain of pizza restaurants is interested in initiating a program of corporate social responsibility to be funded by a 5% levy on the company’s operating profit. The board of directors,
With regard to Strategy Capsule 2.3, what additional data would you seek and what additional cost and productivity ratios would you calculate to shed further light on the reasons for Ford’s
Nike, supplier of sports footwear and apparel, is interested in the idea that it could increase its stock market value by creating options for itself. Advise Nike on some of the actions it might take
In relation to each of the “multiple roles of strategy” outlined above, what use (if any) is Nokia’s statement of strategy as outlined in Strategy Capsule 1.7?
What is your career strategy for the next five years? To what extent does your strategy fit with your long-term goals, the characteristics of the external environment and your own strengths and
Using the structure outlined in Figure 1.5, describe the strategy of the business school you attend?
I have noted that a firm’s strategy can be described in terms of the answers to two questions:“Where are we competing?” and “How are we competing?” Applying these two questions, provide a
The discussion of the evolution of business strategy (“From Corporate Planning to Strategic Management”) established that the characteristics of a firm’s strategic plans and its strategic
In relation to the four characteristics of successful strategies (clear, consistent, long-term objectives; profound understanding of the environment; objective appraisal of resources and effective
In the motor industry, companies have followed different internationalization paths. Toyota expanded organically, establishing subsidiaries in overseas markets. Ford went on an acquisition spree,
Commenting on the Pixar acquisition (Strategy Capsule 14.1), Disney’s CEO stated: “You can accomplish a lot more as one company than you can as part of a joint venture.” Do you agree?Illustrate
A large number of studies examining the success of M&A have examined their impact on shareholder returns. Most of these studies measure changes in the market value of the merging companies from
Most of the mergers and acquisitions shown in Figure 14.1 are horizontal (i.e., they are between companies within the same sector). Some of these horizontal mergers and acquisitions are between
Would holding companies (such as Tata Group, Samsung Group, the Virgin Group, and Berkshire Hathaway) be more successful if they were converted into multidivisional corporations(such as General
Amazon.com, Inc. is under pressure to improve its profitability (between 2015 and 2017 it earned a net margin of 1.4%). Amazon is a highly diversified company engaged in online retailing in 14
The discussion of “performance management and financial control” identified two companies where the corporate HQ imposes a strong performance management system on its business units, PepsiCo and
Apply the BCG matrix to the different programs that your institution offers. (You will need to make some informed guesses about market growth rates and relative market share.) Does this analysis
Unilever—one of the world’s leading consumer goods companies—is reviewing its business portfolio in order to address the problems of unsatisfactory growth and profitability. The head of group
Amazon has diversified from online retailing into cloud computing services (Amazon Web Services), tablet computers (Amazon Fire), and the production of movies and TV shows (Amazon Studios). What
General Electric, Berkshire Hathaway, and Richard Branson’s Virgin Group each comprise a wide range of different businesses that appear to have few close technical or customer linkages? Are these
Giorgio Armani SpA is an Italian private company owned mainly by the Armani family. Most of its clothing and accessories are produced and marketed by the company (some are manufactured by outside
Tata Group is one of the India’s largest companies, employing 424,000 people in many different industries, including steel, motor vehicles, watches and jewelry, telecommunications, financial
An ice-cream manufacturer is proposing to acquire a soup manufacturer on the basis that, first, its sales and profits will be more seasonally balanced and, second, from year to year, sales and
Since 2013, McDonald’s sales have been falling. Has it got the balance right between global standardization and national differentiation (Strategy Capsule 11.2)? How much flexibility should it
British expatriates living in the United States frequently ask friends and relatives visiting from the United Kingdom to bring with them bars of Cadbury chocolate on the basis that the Cadbury
When Porsche decided to enter the SUV market with its luxury Cayenne model, it surprised the auto industry by locating its new assembly plant in Leipzig in eastern Germany. Many observers believed
According to Michael Porter’s Competitive Advantage of Nations, some of the industries where British companies have an international advantage are:advertising, auctioneering of antiques and
With reference to Table 11.1, what characteristics of national resources explain the different patterns of comparative advantage for the United States and Japan?
With reference to Figure 11.1, choose a sheltered industry—one that has been subject to little penetration either by imports or foreign direct investment. Explain why the industry has escaped
For its Zara brand, Inditex manufactures the majority of the garments it sells and undertakes all of its own distribution from manufacturing plants to its directly managed retail outlets.The Gap
Strategy Capsule 10.2 compares alternative strategies for exploiting children’s characters. Hello Kitty is owned by the Japanese company Sanrio Co. Ltd. and is exploited throughout the world
A large proportion of major corporations outsource their IT functions to specialist suppliers of IT services, such as IBM, HP, Accenture, and Capgemini. What benefits do corporations derive from
Figure 10.2 shows that during 1980–2000 large US companies accounted for a smaller percentage of total employment—a development that is attributed to “a more turbulent business environment and
Can the expanding scale and scope of large companies between the late 19th century and the 1970s be explained by factors which reduced the administrative costs of firms relative to the transaction
In the market for ride sharing services, Uber is the market leader, followed by Lyft, Curb, and Sidecar. In each overseas country where Uber operates, it faces local competitors: UK rivals include
From the evidence presented in Table 9.2, what conclusions can you draw regarding the factors that determine whether leaders or followers win out in the markets for new products?
Page 228 refers to James Dyson’s difficulties in licensing his innovative vacuum cleaner (see http://www.cdf.org/issue_journal/dyson_fills_a_vacuum.html for further information). What lessons would

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