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Policy Final Exam
Hengesh
| Question | Answer |
|---|---|
| What is a fragmented industry? Give an example. | An industry that contains many relatively small competitors with no or few leaders in each market. Example: Pizza. |
| What is a strategy for surviving in a fragmented market? | Acquisition! |
| How can value be created in a company that is purely global? | Value is created by the salespeople. You train them how to communicate and sell your product/service to the consumer in their market rather than changing the product/service to cater to each specific market. Cost leadership is usually the way to go. |
| What's the best entry mode for a company pursuing a global strategy? | Exporting, strategic alliances, acquisition. |
| When does licensing make the most sense for a multinational company? | When you're looking to minimize risk, you don't have the resources for large capital expenditure, when you're looking to receive a fixed % of sales. |
| When should forward vertical integration be implemented? | Few quality distributors are available, distributors are expensive or unreliable, industry is expected to grow significantly, you company has enough resources and stability to manage its own distribution channel. |
| When are joint ventures a good thing? Why? | When you are in need of different skill sets to accomplish goals, when trying to get access to new markets that are otherwise difficult to enter, when you are looking to diversify risk on a risky venture. |
| Discuss the timeline between between acquisitions, joint ventures, and internal ventures. | ?????? |
| Why do acquisitions fail? | Clash of company culture. |
| Pros and cons of tall vs. flat organizations. | Tall - pro: clarity and managerial control, con: info takes long to travel, Flat - pro: more flexible and adaptable, con: limited by size. 6-10 employees |
| Discuss common reward systems, such as balanced scorecard. | Variable pay, bonuses, profit sharing, stock options, group based reward systems, recognition programs. |
| When should you build, buy, ally? | Build when you want to protect IPR. Buy when the timing is critical, you have the cash, and the price is right. Ally when you don't have the money or someone else has the IPR. |
| Describe a complementary asset. | An intangible asset that give you a competitive advantage, such as a patent. |
| What does excess capacity lead to? | Substantial drop in price of the product. |
| Describe a common pricing strategy. | Loss-leader, psychological, product bundling, dynamic, premium, freemium. |
| Describe what does NOT allow a company to reduce unit cost. | Increasing volume. This spreads out fixed costs over more products, but does not necessarily decrease unit cost. |
| Describe an advantage of a strategic alliance. | Gaining capabilities, easier to access target markets, share financial risk, overcoming political obstacle, gain competitive advantage via synergy. |
| Describe the positives and negatives of alliance with global competitors. | Positive: we can gain a presence in geographic areas that would otherwise have high costs and other barriers to entry. Negative: they may find out what we do best, break away from the alliance, and leapfrog us in our strongest markets. |
| When is backward vertical integration advantageous? | When external suppliers are expensive or unreliable, there are few suppliers but many competitors, the industry is expanding rapidly, the price of inputs are unstable, your company has the resources to manage its own supply chain. |
| When are long term contracts with suppliers preferable over vertical integration? | When it would cost more to manage your own distribution channel or supply chain than to pay external suppliers/distributors. When vertical integration would violate antitrust laws. When your company does not want to expand its scope that much. |
| When are new internal ventures the preferred strategy? | When our company has the IPR, the time, and the money to produce. When we are okay with bearing risk and we have good access to the market we're entering or further penetrating. |
| What are the pros and cons of a matrix strategy? | Pro: for a large company, increases accountability Con: Expensive and complicated |
| What is an advantage and disadvantage of the balanced scorecard? | Advantage: you can have financial and non-financial objectives on there. Disadvantage: ? |
| What were two major takeaways from Jack Welch's interview? | 1. Skip level meetings: go past your reports and talk to the low level workers to gather info about the department. 2. The worst thing a leader can to is give dishonestly positive reviews. It's much better to be honest, even when it's tough. |
| What benefits will strong branding bring? | Less money needed to be spent on promotion, easier to form strategic alliances with desirable companies, less susceptible to new entrants to the industry, advantage over competitors. |
| What and why should something be outsourced? | Training, payroll, generic activities. It can cost A LOT less time and money to outsource menial tasks such as these. |
| Describe the causes of corporate decline. | Arrogance and complacency. "We are so good that no one could possibly compete with us." |
| Talk about coopetition ups and downs. | Positive: gaining capabilities and assets that you would not otherwise have, as well as access to a target market you may not have yet penetrated. Negative: competitor cleaning information that allows them to leapfrog you later on. |
| Reverse engineering vs. reverse innovation. | Reverse innovation is when a company removes product features in order to drive down the cost to build. Reverse engineering is when a cpm any dissects a competitor's product to find out how to make it and what it costs. |
| Describe a taper supply strategy. | Use backwards vertical integration (owning the supply chain) but rely on outside market firms for some intermediate goods components that it would not be cost effective to produce internally. |
| From the Cisco video, describe the 3 options and and driving reasons for those options for managers. | Innovation, Motivation, and Vision. |
| Describe corporate level strategy. | Where to compete, big picture. (Build, Buy, Ally) |
| Describe business level strategy. | How to compete. (Differentiation, Cost Leadership, Integration) |
| Describe functional level strategy. | How to implement. |
| Describe 3 concepts from the Corning glass video that we discussed this semester. | Coopetition, 4 building blocks, value creation |
| Outline general manager strategies. Outline functional areas and actions. (For the essay) | ... |
| Inventory Turn? | 10 times per year is a good goal. |
| 4 Characteristics of Public Firms | 1. Limited liability for investors 2. Transferability of investors interest 3. Legal personality 4. Separation of ownership and control. |
| Who is a good example of a mechanistic organization? | MacDonalds |
| What is the max number of employees limited in a flat structure? | 6-10 |
| What is globalization? | The process of integration and exchange between different countries and peoples worldwide. |
| What to remember about the operational dashboard? | Bookings in back log are priority one. |
| In a fragmented market, why is horizontal integration a good strategy? | You're taking a mouth out of the trough. |
| Corporate Diversification Chart | Dogs, Cows, Stars, Question Marks |
| Things to remember for the big essay. | 2 10 net 30 strategy to increase gross margin, target for on time shipments is 90 percent, Inventory is like bananas, outsource training and payroll, if you have excess capacity lease a building instead of buying, tall or flat structure, matrix. |
| Other things to remember for the big essay. | Indirect or direct sales, gross margin needs to be 30-40%, declining revenue is terrible (downsize, decrease selling price, or something), know when to standardize and when to localize. Teach your sales people how to sell the product you are offering. |
| What are the 4 Global Strategies? | Global-Standardization, International, Multinational, Localization |
| 2 Factors for Global Strategies. | Cost reduction pressure, Local responsiveness pressure |
| How do each of the 4 global strategies relate to the 2 factors? | Global = high C, low L. International = low C, low L. Multinational = high C, high L. Localization = low C, high L. |
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