Project #68660 - Business Policy and Strategy

This is a test that is pretty self explanatory. For this class we used the book STRATEGIC MANAGEMENT by Frank T. Rothaermel and if you can find it, it would be ideal to answer the questions using that book. All in all, I just want the questions answered in a simplistic way that is not to suffisitecated but that still gets to the point. It is a take home exam so please refrain from using many sources or to much specific information from websites. I think you guys understand what I'm trying to get at. Here it is:


Part A: Short Essay Questions (choose 4)


Answer four of the following questions in 200 words or less for each question. You may use bullets when appropriate. Each question is worth 10% of the exam grade.


1.    A key aspect of business strategy is how to build and maintain competitive advantage through strategic use of resources and capabilities. What is the relationship between a company’s strategy and its resources and capabilities? Use examples to explain.


2.    “Weak leadership can wreck the soundest strategy; forceful execution of even a poor plan can often bring victory.” This quote is from Sun Tzu’s The Art of War, written in 476 BC. How applicable do you think this quote is to modern corporate leadership?


3.    Using a company of your choice as an example, explain how a company’s strategy, structure and culture are related. What are the benefits and possible risks of this relationship?


4.    Imagine that a new product becomes available to the public tomorrow—a personal transportation device that can move individuals or cargo from place to place instantly (just like Star Trek). Industries such as airlines, auto manufacturing, railroads, and delivery services would face a severe crisis. What advice would you give the firms in those industries? What strategies should they pursue, and why?


5.    Assume that Yum! Brands (parent company of Kentucky Fried Chicken, Pizza Hut, Taco Bell, and other restaurants) has acquired Starbucks. The major objectives of the acquisition are to benefit from Starbucks’ management expertise and to achieve synergies. What problems do you think might occur? What steps would you advise Yum! Brands’ management to take to make the acquisition successful?


Part B: Case Scenarios (choose two)


This part of the exam consists of three short case scenarios followed by three questions each. You should choose two scenarios. Respond to the questions in 500 words or less for each scenario (not for each question). You may use bullets when appropriate. Each scenario is worth 30% of the exam grade.



Case Scenario 1: Fixtures Inc.


Fixtures Inc. is a New York-based lamp fixture manufacturer that is considering an entry strategy into the U.S. home furnishings manufacturing industry. The existing landscape consists of many players but none with a controlling share. There are presently 2500 home furnishing manufacturing firms in the U.S., and only 600 of those have over 15 employees. Average net profit after tax is between 4 and 5%. While the industry is still primarily comprised of single-business family-run firms which manufacture furniture domestically, imports are increasing at a fairly rapid rate. Some of the European imports are leaders in contemporary design. Relatively large established firms are also diversifying into the home furnishings industry via acquisition.

Supplier firms to the home furnishings industry are in relatively concentrated industries (like lumber and textiles). Retailers, the intermediate customer of the home furnishings industry, have been traditionally very fragmented, but concentration is increasing with the emergence of national chains such as Pottery Barn and Crate & Barrel. Customers have many products to choose from, at many different price points, and few home furnishing products have strong brands. Also, customers can switch easily among high and low-priced furniture and other discretionary expenditures (spanning big screen TVs to the choice of postponing any furniture purchase entirely).


  • Using the five forces framework, summarize the conditions facing Fixtures as it considers entry into the home furnishings manufacturing industry. Be sure to define the industry that you are analyzing and be consistent in your analysis.


  • Are conditions in the industry becoming more or less attractive for new entrants? Why?


  • What is your recommendation to Fixtures regarding entering the industry?




Case Scenario 2: Heartvalve Inc.


Heartvalve Inc. is a designer and manufacturer of replacement heart valves based in Illinois. While a relatively small company in the medical devices field, it has established a worldwide reputation as the provider of choice high-quality, leading-edge artificial heart valves. Most of its products are sold to large regional hospital systems and research hospitals. Specialty heart centers are another emerging, but fast-growing, market for its valves.

While Heartvalve would like to grow quickly, its growth is constrained by the need to finance larger production runs and then carry this additional inventory. For products like those of Heartvalve, vendors typically do not collect payment until the unit is actually used in surgery. Moreover, heart valves are usually required on short notice, which means that they must be either onsite or inventoried at a nearby location. If nearby, then transport of the unit to a hospital or heart center occurs within a matter of hours, and sometimes minutes. For this reason, accelerated growth would require Heartvalve to both finance increased production of its heart valves and also carry inventory that is sitting on its customers’ shelves. In fact, inventory-carrying cost is its single largest cost outside of research and development.

While profitable growth is necessary if Heartvalve is to continue extending its competitive advantage through increasingly greater investments in basic heart valve R&D, it is not clear that the company can internally support all these increased financial commitments (R&D, manufacturing, and inventory). Doc Watson, the CEO of Heartvalve, is considering an outside contractor, EdFex, to handle the inventorying, warehousing, and delivery of its valves. EdFex has secure, high-tech warehouses in most major population centers around the country, and can ensure delivery of a product to these markets from its warehouses in less than one hour.


  • What value-chain activities appear to underlie Heartvalve’s competitive advantage?


  • Why might an outsourcing arrangement with EdFex be attractive to Heartvalve?


  • What are the implications of an EdFex outsourcing arrangement for the capabilities underlying Heartvalve’s competitive advantage?




Case Scenario 3: Jewell Company


Jewell Company (JC) is a diversified manufacturer and marketer of simple household items, cookware, and hardware with $3 billion in annual revenues. In the early 1950s, JC’s business consisted solely of manufactured curtain rods that were sold through hardware stores and retailers like Sears. Since the 1960s however, the company has diversified extensively through acquisition into such businesses as paintbrushes, writing pens, pots and pans, and hairbrushes. Over 90 percent of its growth can be attributed to these many small acquisitions, whose performance it improved tremendously through aggressive restructuring and its corporate emphasis on cost-cutting and cost controls.

While JC’s sixteen different lines of business have separate brands and appear quite different, they all share the common characteristics of being staple manufactured items that are sold primarily through volume retail channels like Walmart, Target, and Kmart. Although JC operates each line of business autonomously (separate manufacturing, R&D, and selling responsibilities for each line), its businesses have linkages that are both internal (accounting systems, product merchandising skills, and acquisition competency) and external (distribution channels).

JC is presently contemplating the acquisition of Plastico, a U.S.-based manufacturer with $2.5 billion in annual revenues. Plastico makes flexible plastic products like trash cans, reheatable and freezable food containers, and a broad range of other plastic storage containers designed for home and office use. While Plastico has been highly innovative (over 80% of its growth has come from internal new product development), it has had difficulty controlling costs and negotiating prices with powerful customers like Walmart. JC believes that the market power it wields with retailers like Walmart will help it turn Plastico’s prospects around.


  • How might JC’s diversification strategy create value (regardless of the Plastico acquisition)?


  • Why might the acquisition of Plastico be good for JC?


  • What difficulties might you expect JC to encounter related to its acquisition of Plastico?

Subject Business
Due By (Pacific Time) 04/29/2015 03:00 pm
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