3.
a. The cost of the marble will be expensive because of the bargaining power of the
supplier.
b. The cost of the marble will be moderate because of the bargaining power of the buyer.
c. The cost of the marble will be moderate because of economies of scale.
d. The cost of the marble will be expensive because of the high strategic stakes involved.
4.
a. access to distribution channels is hard to gain.
b. economies of scale in the industry are high.
c. product differentiation in the industry is low.
d. capital requirements in the industry are high.
5.
a. the integrated cost leadership/differentiation strategy.
b. either of the focus strategies.
c. the cost-leadership strategy.
d. any of the strategies except the focused differentiation strategy.
6.
a. common, easy to imitate.
b. easy to imitate, difficult to implement.
c. rare, costly to imitate.
d. easy to implement, costly to imitate.
7.
a. the activities most likely to be imitated by competitors.
b. involved in a product's physical creation, its distribution, and its service after the sale.
c. the activities involved when companies are initially established.
d. the activities that the top management team most values.
7
a. analyze a firm's external environment for value-creating opportunities
b. concentrate on a firm's internal environment without exercising concern about the
actions
of those companies with which the firm competes.
c. understand the parts of the firm's organization that create value and those that do not.
d. determine how long an opportunity in a firm's external environment can be expected to
last.
8
a. A competitive advantage
b. Competitive parity
c. To create an entry barrier for new veterinary practices providing boarding
d. To reduce the power of suppliers
9
1
2
3
4
10
a. there are higher fixed costs
c. there are few switching costs
b. rivals compete on different dimensions
d. firms cannot exit the market easily
11
a. bargaining power of suppliers
b. rivalry among existing firms
c. threat of new entrants
d. threat of substitutions
12
a. higher competition within the industry
b. increasing threat of substitute
c. increasing threat of new entrant
d. increasing power of supplier
13
a. Increasing competition within the industry
b. increasing threat of substitute
c. increasing entry barrier and lowering threat of new entrant
d. increasing power of buyers
14
a. Powerful buyers
b. High threat of substitute products
c. High bargaining power for suppliers
d. High exit barriers
15
a. The experience curve.
b. Economies of scale.
c. Customization
d. Bulk buying raw materials
16
a. to consider how organizational strategy should take account of changes in the outside
world
b. to determine strengths of the company
c. to determine the external factors most likely to impact upon the organization
d. to identify potential influences (e.g. trends about consumers) on the future of the
organization
4. True
5.
False
6. False
7. True
8.
True
2.
4.
Organizational boundary is a term that distinguishes a firm from another separate but
closely related entity. Location is the physical geographical position a firm
where a firm is situated. Value added activities are a series of events done to a product or
service in the chain to increase the level of its satisfaction to the customer. A firm must
assess its position before engaging in value-added activities.
5.
The essence of strategic positioning is choosing what not to do. An organization has
chooses a strategy to use in marketing itself while ignoring others. For example, it is
impossible for a company compete on prices while also delivering the best quality. In
choosing what not to do, the company is guarding against imitation from rivals. A
strategic position is not sustainable unless there is trade off with other positions.
1.
vs.
Strategy Document, the Recent Version
Global Fleet Graphics makes premium, durable graphic-marking systems for buildings,
signs, vehicles, and heavy equipment. The corporate logos and graphics we see on fleets
of package delivery trucks, tractor trailers, and airplanes are typical examples.
Fleet Graphics now faces more demanding customers and more aggressive competitors
than it has in previous years. Customers want design flexibility and larger graphics
without higher cost. Some customers want easy-to-remove products, while others want
durable ones. Bus operators want graphics that cover the windows yet still allow
passengers to see out. Total sales of graphic materials have increased, but sales of
traditional, painted graphics have declined due to their high cost. 3M has 40% of the
market and for some years has been the technological leader.
Fleet Graphics faces three major competitors: AmeriGraphics, GraphDesign, and
FleetGlobal. AmeriGraphics has begun to expand its product line by using our older
technologies as the patents expire. Its global share has grown from 10% in 1982 to
16% today. GraphDesign uses direct distribution and new manufacturing capability to
compete on price but has experienced quality problems. Its market share has dropped
from 18% to 15% in the last ten years. The quality of FleetGlobals products is
comparable to ours, but they sell at a lower price. Its share has grown from 24% in 1982
to 28%today.
In short, we are losing our patent advantages at the same time that we face three strong
competitors that are using low-cost strategies.
Without radical changes, Fleet Graphics will not be profitable in the near future. We can
expect rapid price erosion once all competitors bring very similar products to market.
overseas. Simultaneously, we will develop and test modifications to the product as well
as produce sales and other supporting documentation.
Before we launch the new products, sales, marketing, and technical-service personnel
will train all sales reps in how to use and sell the new technology. Training will include
both technical and communication skills related to calling on top-level executives: reps
will receive intensive training in how to talk those customers language, and they will
also be able to handle technical questions on their own. Training will begin one year from
now, and we expect it to take six months.
To summarize, Global Fleet Graphics has drawn on diverse technological skills at 3M to
create a proposal for transforming its business. What has been a hard-copy, analog,
design-materials business will become a more fully global, digital, electronic-imaging
and repository business. Combining new films with new adhesives will create substantial
value and reduce overall cost in both the manufacturing and application of graphics. By
these means, Global Fleet Graphics will maintain and enhance its profitability and its
industry leadership.
We believe that this new graphics system will radically transform the industry in a
manner consistent with 3Ms overall corporate strategyregaining technological
advantage on both the product and process fronts. The competition may duplicate some
parts of this strategy (for example, the electronic storage of graphic images), but that will
take time. We should have an advantage for several years even in those areas. Other areas
have patent protection, and our advantages can be sustained for a decade or more.
6. The new strategy document is likely to be successful for a number of reasons. The
company has properly assessed its position in the market with relation to those of its
competitors. It has properly documented its strengths and weaknesses as well as those of
the competitors. In addition, the company has placed concrete steps to lift itself from the
current situation to a better one. Some of the items it will require for this new phase are
already available. These include films for application of graphics on non-traditional
surfaces. The company has also matched the plans with the financial budget required to
execute it. For example, to create central repository for images, the company has already
budgeted $3M.
7.
The first strategy document is not specific in its description. Firstly, it is not bound by
time. It talks of increasing market share from 40% to 50% but does not give the time
span. It makes the vision hard to evaluate. Second, the strategy document does not spell
out how it will go about achieving the targets. There are no clear strategies on how to
regain the product-development leadership position or the lost market share. The above
make the strategy unachievable.
8
The company plans to produce and store its imagers digitally. It has plans to convert the
manual, analogue screen into a digital form. The process will th8en enable it to send them
digitally to any part of the world. The process will reduce the delivery time from weeks to
a few hours. It will give them an advantage of their competitors. The company has also
been able to meet their clients need for adhesives and films that cover the windows but
still allow people to see out. The company has also been able to answer their clients
request for graphics that can be installed on non-traditional surfaces and flexing surfaces.
The films to make this work possible already exist in the company labs.
9.
The company is facing three strong competitors, some of whom are selling the same
products at cheaper prices. With time, it fears it will lose its customers to these new
entrants. The company has also been losing its patents advantages to other companies
such as Amerigraphics as these patents expire. The competitors have higher overhead
advantages and they are unable to compete with them based on prices. The competitors
have adopted some strategies that may make it unprofitable in the near future.
10.
The company plans to introduce a central repository for images from which they can be
sent digitally to any production center in the world. The process will shorten the duration
required to get their wares to the clients from weeks to a matter of hours. It has the
potential to become the organizations core competence. The company also has plans to
develop new generation patented technologies and products to distinguish its products
from those of the rivals. That will reduce the earlier scenarios where the rivals adopted
and used their techniques. The invention to place their graphics on untraditional surfaces
will also increase to the number of customers they serve. It will in turn increase their
profitability. The adhesives department has also invented a product that remains tacky
and allows the graphic to be positioned and repositioned. The same will reduce the
installation time and thus reduce the costs.