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a. intensive training programs to improve employee efficiency

b. strong capability in new product development.
c. rapid and timely deliveries to customers.
d. procurement systems focused on finding the highest quality raw materials.

a. The cost of the marble will be expensive because of the bargaining power of the
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.
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.
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.
a. common, easy to imitate.
b. easy to imitate, difficult to implement.
c. rare, costly to imitate.
d. easy to implement, costly to imitate.
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.

a. analyze a firm's external environment for value-creating opportunities
b. concentrate on a firm's internal environment without exercising concern about the
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
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

Which of the following is/ are always true?

a. 1 & 3
c. 1, 2, & 4
b. 4 only
d.2 & 4

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
a. bargaining power of suppliers
b. rivalry among existing firms
c. threat of new entrants
d. threat of substitutions
a. higher competition within the industry
b. increasing threat of substitute
c. increasing threat of new entrant
d. increasing power of supplier

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
a. Powerful buyers
b. High threat of substitute products
c. High bargaining power for suppliers
d. High exit barriers
a. The experience curve.
b. Economies of scale.
c. Customization
d. Bulk buying raw materials
a. to consider how organizational strategy should take account of changes in the outside
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


1. .

4. True
6. False
7. True

Short-paragraph questions: Explain briefly.

The objective of GDPEST analysis is to examine the macro-environmental factors that
affect a business. The analysis considers the political, economic, social and technological
aspects and how they affect the business environment. Political considers the extent of
government involvement in issues such as labor laws and tax rates among others.
Economic factors include inflation, economic growth and interest rates among others.
Social factors that affect a business entity include population growth rate and religion.
Technological aspects entail the level of automation and technology incentives.

b. Value chain analysis& enhanced value-chain analysis (5 PTS)

Value chain refers to the full range of activities that take place from the conception to
delivery of the product. It includes those processes as design, production, marketing
and delivery. Value chain analysis and enhanced value-chain analysis are the process
that seeks to add value to each of the stage in the value chain so that the product may
have a competitive advantage in the market. The above processes should be so
efficient and quality that the customer becomes willing to pay more than the actual
value employed to produce them. The difference constitutes the profit. Value chain
analysis seeks to ensure that there is effective communication between those in
charge of the various stages so that the product gets to the customers in the most
efficient way possible.


Forward integration is a form of vertical integration in which the supplier chooses to

engage in distribution. They may choose to carry this out to have more control over the
prices of their products among others. The above step may lock out other businesses from
the chain. It may reduce the levels of profit for the company as the supplier will now sell
at lower prices in order to be competent and remain in the business. On the other hand,
the clients might still choose to remain loyal to the company if it can offer better quality
services than the supplier.
3. Preparations in anticipation for the disruptions have to take place in prior. The
organization can build up a reservoir of supplies in preparation so that the supply remains
constant. The organization must also have alternative sources of supply so that rely on the
single source for its needs. The organization should also have risk management strategies
to mitigate the impact of any disruption.

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.
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.


Strategy Document, the 1992 Version:

Increase our market share from 40% to 50%

Regain product-development leadership position.
Increase sales closings by 50%.

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.

Given 3Ms higher overhead, we cannot compete in a price-competitive business without

a technological advantage.
Our vision: Incremental product or process improvements will not solve this problem. We
plan to transform the industry through several technological advances. At the heart of this
transformation will be a move from analog to digital printing-and-storage technology. In
addition, the quality and economics of the final product will be improved using new film
and adhesive technologies. The strategy we propose draws on diverse areas of 3M.
First, we propose a quantum change in Global Fleet Graphics production system that will
allow us to deliver products much more quickly and at a competitive price. Rather than
focus on cost reduction through incremental process changes, we have tried to rethink the
entire way we produce fleet graphics. We have contacted numerous R&D areas at both
the corporate and divisional levels to locate appropriate and adaptable technologies. The
search has resulted in a radical plan for a new, more flexible, lower cost graphicsproduction system.
Many graphics will be produced and stored digitally. We will convert manual, analog,
silk-screen printing into digital form by scanning the art and cleaning it up on a computer
screen. We will then be able to send it digitally anywhere in the world. Global Fleet
Graphics will create a central repository of images that can be electronically transmitted
to production facilities worldwide. IT estimates that the system will cost $3 million and
be operational in 24 months.
The repository dramatically decreases product delivery time from as much as four weeks
to as little as three hours. It also drastically reduces inventory.
Second, we propose development of a new generation of patented technologies and
products to differentiate our offerings from competitors. Three such products are already
in the works. We are in the late stages of developing adhesives and films that can cover
windows but allow people to see out. Only the final product-definition and design work
still need to be done; design should be completed in five months. Manufacturing has
begun to work on production facilities to ensure adequate capacity worldwide.
In addition, we are now close to answering our customers need for graphics that can be
applied to many nontraditional surfaces (such as corrugated truck sidings) and flexing
surfaces (such as European trucks with canvas sides). Films for these applications already
exist in our labsLast but not least, new adhesives will make graphics easier to install. The
Adhesives Division has a product that remains tacky for a time so that graphics can be
positioned and repositioned. When the placement is correct, a second adhesive system is
activated to bond the graphics in place. The repositioning capacity decreases installation
time by 30%, resulting in substantial cost savings. Third, we need to upgrade our sales
and marketing staffs skills to match their capabilities with the technology-driven
strategy. We will put substantial effort into field testing and marketing. Technical,
marketing, and sales personnel will field-test the new products both domestically and

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.


Read the 2 strategy definitions of 3M. Answer the following questions:

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.
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.
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.
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.
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.