Question: When would a company decide to change

> Discuss how the need for control over foreign operations varies with the strategy and distinctive competencies of a company. What are the implications of this relationship for the choice of entry mode?

> Are the following global standardization industries, or industries where localization is more important: bulk chemicals, pharmaceuticals, branded food products, moviemaking, television manufacture, personal computers, airline travel, and fashion retailin

> What do you think are the sources of sustained superior profitability?

> Cloud computing is still in its infancy. If business history teaches us anything, it is that events often do not turn out the way that planners thought they would. Given this, might it have been better for Microsoft do adopt a “wait and see” attitude? Wh

> If a related company begins to purchase unrelated businesses, in what ways should it change its structure or control mechanisms to manage the acquisitions?

> How prevalent has the agency problem been in corporate America during the last decade? During the late-1990s there was a boom in initial public offerings of Internet companies (dot. com companies). The boom was supported by sky high valuations often assi

> Is it ethical for a firm faced with a shortage of labor to employ illegal immigrants as labor?

> Under what conditions is it ethically defensible to outsource production to producers in the developing world who have much lower labor costs when such actions involve laying off long-term employees in the firm’s home country?

> In the 1970s and 1980s Palmisano states that IBM was organized as a classic multinational enterprise. What does this mean? Why do you think IBM was organized that way? What were the advantages of this kind of strategic orientation?

> In a public corporation, should the CEO of the company also be allowed to be the chairman of the board (as allowed for by the current law)? What problems might this give rise to?

> How might a company configure its strategy making processes to reduce the probability that managers will pursue their own self-interest at the expense of stockholders?

> Where the actions that John Thain took on personal perks and bonuses legal? Were they ethical? What does this case teach you about the difference between staying within the bounds of the law and behaving ethically?

> Discuss the accuracy of the following statement: Formal strategic planning systems are irrelevant for firms competing in high-technology industries where the pace of change is so rapid that plans are routinely made obsolete by unforeseen events.

> At the end of 2008, the financial markets were in the middle of the deepest crisis since the great depression. Losses were increasing in financial institutions by the hour as the value of their holdings of mortgage-backed securities plummeted. Given this

> When is a company likely to choose (a) Related diversification and (b) Unrelated diversification?

> Relate Cisco’s changes to its control and evaluation systems to the stages of growth in Greiner’s model.

> Identify Honeywell’s (www.honeywell.com) portfolio of businesses that can be found by exploring its Website. In how many different industries is Honeywell involved? Would you describe Honeywell as a related or unrelated diversification company? Has Honey

> Under which conditions are joint ventures a useful way to enter new industries?

> Imagine that IBM has decided to diversify into the telecommunications business to provide online “cloud computing” data services and broadband access for businesses and individuals. What method would you recommend that IBM pursue to enter this industry?

> According to the strategic choice framework introduced in this chapter, what strategy do you think IBM is pursuing today?

> What factors make it most likely that (a) Acquisitions or (b) Internal new venturing will be the preferred method to enter a new industry?

> In what ways has Samsung’s multi business model changed over time? Why did its top managers make these changes?

> Under what conditions might horizontal integration be inconsistent with the goal of maximizing profitability?

> What steps would you recommend that a company take to build mutually beneficial long-term cooperative relationships with its suppliers?

> What are the strengths of formal strategic planning? What are its weaknesses?

> What value-creation activities should a company outsource to independent suppliers? What are the risks involved in outsourcing these activities?

> Why was it profitable for GM and Ford to integrate backward into component-parts manufacturing in the past, and why are both companies now buying more of their parts from outside suppliers?

> What is the difference between a company’s internal value chain and the industry value chain? What is the relationship between vertical integration and the industry value chain?

> How has Cisco changed its structure and control systems?

> What are the advantages and disadvantages associated with these strategies?

> What is different about high-tech industries? Were all industries once high tech?

> Reread the opening case on the emerging format war for high definition DVD players. On the basis of the information contained in this case, which company do you think will most likely win this format war: Sony or Toshiba? Why?

> What is the relationship among organizational structure, control, and culture? Give some examples of when and under what conditions a mismatch among these components might arise.

> You are a manager for a major music record label. Last year, music sales declined by 10%, primarily because of very high piracy rates for CDs. Your boss has asked you to develop a strategy for reducing piracy rates. What would you suggest that the compan

> You are working for a small company that has developed an operating system for PCs that is faster and more stable than Microsoft’s Windows operating system. What strategies might the company pursue to unseat Windows and establish its own operating system

> You work for a small company that has the leading position in an embryonic market. Your boss believes that the company’s future is ensured because it has a 60% share of the market, the lowest cost structure in the industry, and the most reliable and high

> Why are standards so important in high-tech industries? What are the competitive implications of this?

> Google licenses its Android OS to phone manufacturers for free. Why would it do this?

> What do we mean by strategy? How is a business model different from a strategy?

> Apple and Google are pursuing different strategies— Apple sells the device and the OS as a bundle (the iPhone), whereas Google does not make devices and licenses its Android OS phones to other device makers. Both companies are gaining share. What does th

> Why did Apple place such emphasis on the applications that run on the iPhone? What is it trying to achieve by heavily promoting applications? Why did other companies rush to copy Apple’s strategies?

> What are the key problems in maintaining a competitive advantage in embryonic and growth industry environments? What are the dangers associated with being the leader in an industry?

> Why are industries fragmented? What are the primary ways in which companies can turn a fragmented industry into a consolidated industry?

> What kinds of strategies might: (a) A small pizza place operating in a crowded college market, and (b) A detergent manufacturer seeking to unveil new products in an established market use to strengthen their business models?

> What kind of structure, controls, and culture would you be likely to find in (a) A small manufacturing company, (b) A chain store, (c) A high-tech company, and (d) A Big Four accounting firm?

> Discuss how companies can use: (a) Product differentiation, and (b) Capacity control to manage rivalry and increase an industry’s profitability.

> What investment strategies should be made by: (a) Differentiators in a strong competitive position, and (b) Differentiators in a weak competitive position, while managing a company’s growth through the life cycle?

> How has competition changed the strategies behind the InterContinental Hotels Group’s business model over time?

> Why did Holiday Inn’s business model and strategies change over time?

> What is the value creation frontier? How does each of the four generic business models allow a company to reach this frontier?

> Why does each generic business model require a different set of business-level strategies? Give examples of pairs of companies in: (a) The computer industry; (b) The electronics industry; and (c) The fast-food industry that pursue different types of b

> What are some of the reasons companies lose control over their business models, and thus their competitive advantage, over time?

> Why is strategic-group analysis important for superior competitive positioning?

> What strategies does a company need to develop to become a broad differentiator? In what ways does this provide the company with a competitive advantage over cost leaders? Over differentiators?

> How can companies pursuing cost leadership and differentiation lose their place on the value frontier? In what ways can companies regain their competitive advantage?

> For each of the structures discussed in the chapter, outline the most suitable control systems.

> In what ways is Southwest trying to improve its competitive advantage in 2011?

> How are the four generic building blocks of competitive advantage related to each other?

> From what perspective might innovation be called “the single most important building block” of competitive advantage?

> What are the problems associated with implementing a strategy of related diversification through acquisitions?

> Over time, will the adoption of Six Sigma quality improvement processes give a company a competitive advantage, or will it be required only to achieve parity with competitors?

> What role can top management play in helping a company achieve superior efficiency, quality, innovation, and responsiveness to customers?

> What are the primary implications of the material discussed in this chapter for strategy formulation?

> Which is more important in explaining the success and failure of companies: strategizing or luck?

> Why is it important to understand the drivers of profitability, as measured by the return on invested capital?

> It is possible for a company to be the lowest-cost producer in its industry and simultaneously have an output that is the most valued by customers. Discuss this statement.

> When is a company’s competitive advantage most likely to endure over time?

> When would a company choose a matrix structure? What are the problems associated with managing this structure, and why might a product- team structure be preferable?

> How important are efficiency, quality, customer responsiveness, and innovation to McDonald’s competitive position?

> Why did McDonald’s start to lose its competitive advantage in the 2000s? What did it do to halt the erosion in its competitive position? What does this teach you about the sustainability of competitive advantage?

> How would you design a structure and control system to encourage entrepreneurship in a large, established corporation?

> Is McDonald’s pursuing a low cost strategy, or a differentiation strategy?

> Does McDonald’s have any distinctive competencies? If so, how do they impact the business?

> Discuss the Competitive Forces model with reference to what you know about the U.S. beer industry (see the Opening case). What does the model tell you about the level of competition in this industry?

> Under what environmental conditions are price wars most likely to occur in an industry? What are the implications of price wars for a company? How should a company try to deal with the threat of a price war?

> Assess the impact of macro environmental factors on the likely level of enrollment at your university over the next decade. What are the implications of these factors for the job security and salary level of your professors?

> Identify a growth industry, a mature industry, and a declining industry. For each industry, identify the following: (1) The number and size distribution of companies, (2) The nature of barriers to entry, (3) The height of barriers to entry, and (4) T

> Using the information contained in the case, conduct a five-forces analysis of the U.S. Steel industry. What conclusion can you draw from this?

> Do you think there are any strategic groups in the U.S. Steel industry? What might they be? How might the nature of competition vary from group to group?

> Why did he make these changes? Did they improve its performance? Search the Internet to find out what has happened to Liz Claiborne since these changes were made.

> How does the business model for cloud computing differ from the traditional business model used by companies such as Microsoft? What are the implications of this new business model for Microsoft’s future financial performance?

> What prompts a company to change from a global standardization to a transnational strategy, and what new implementation problems arise as it does so?

> Why is maximizing ROIC consistent with maximizing returns to stockholders?

> The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20Y5: The 20Y7 net income was $411,000, and the 20Y6 net income was $462,500. No dividends on common stock were declared between 20Y5

> Three major segments of the transportation industry are motor carriers such as YRC Worldwide, railroads such as Union Pacific, and transportation logistics services such as C.H. Robinson Worldwide, Inc. Recent financial statement information for these th

> Recent balance sheet information for two companies in the food industry, Mondelez International, Inc. and The Hershey Company, is as follows (in thousands): a. Determine the ratio of liabilities to stockholders’ equity for both compan

> Hasbro, Inc. and Mattel, Inc. are the two largest toy companies in North America. Condensed liabilities and stockholders’ equity from a recent balance sheet are shown for each company as follows (in thousands): The income from operati

> Briefly explain the difference between liquidity, solvency, and profitability analysis.

> The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: The income before income tax was $480,000 and $420,000 for the current and previous years, respectively. a. Determine the ratio of liabiliti

> The dividend yield of Suburban Propane was 10.2% in a recent year, and the dividend yield of Google was 0% in the same year. What might explain the difference between these ratios?

> a. How does the return on total assets differ from the return on stockholders’ equity? b. Which ratio is normally higher? Why?

> What do the following data, taken from a comparative balance sheet, indicate about the company’s ability to borrow additional long-term debt in the current year as compared to the preceding year? Current Year Preceding Year $1,260,

> Forte Inc. produces and sells theater set designs and costumes. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Forte Inc., which has a fiscal year ending on December 31: Year 1 Jan. 22. Purc

> In teams, select a public company that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and Exchange Commission (SEC). It includes the company’s financia

> Rodgers Industries Inc. completed its fiscal year on December 31. Near the end of the fiscal year, the company’s Internal Audit Department determined that an important internal control procedure had not been functioning properly. The head of Internal Aud

> a. Why is a high inventory turnover considered to be a positive indicator? b. Is it possible to have a high inventory turnover and a high number of days’ sales in inventory? Why?

> Marriott International, Inc., and Hyatt Hotels Corporation are two major owners and managers of lodging and resort properties in the United States. Abstracted income statement information for the two companies is as follows for a recent year (in millions

> Deere & Company manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deere’s credit division loans money to customers to finance the purchase of th

> The condensed income statements through income from operations for Amazon.com, Inc., Best Buy, Inc., and Wal-Mart Stores, Inc. for a recent fiscal year follow (in millions): 1. Prepare comparative common-sized income statements for each company. Round

> QT, Inc. and Elppa Computers, Inc. compete with each other in the personal computer market. QT assembles computers to customer orders, building and delivering a computer within four days of a customer entering an order online. Elppa, on the other hand, b