Contemporary Strategy Analysis 10th Edition Robert M. Grant - Solutions

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3. A company achieves a competitive advantage when it provides buyers with superior value compared to rival sellers or offers the same value at a lower cost to the firm. The advantage is sustainable if it persists despite the best efforts of competitors to match or surpass this advantage.
2. The central thrust of a company’s strategy is undertaking moves to build and strengthen the company’s long-term competitive position and financial performance by competing differently from rivals and gaining a sustainable competitive advantage over them.
1. A company’s strategy is its game plan to attract and please customers, outperform
5. A best-cost provider strategy —giving customers more value for the money by satisfying their expectations on key quality features, performance, and/or service attributes while beating their price expectations. This approach is a hybrid strategy that blends elements of low-cost provider and
4. A focused differentiation strategy —concentrating on a narrow buyer segment and outcompeting rivals by offering buyers customized attributes that meet their specialized needs and tastes better than rivals’ products. Lululemon, for example, specializes in high-quality yoga clothing and the
3. A focused low-cost strategy —concentrating on a narrow buyer segment (or market niche) and outcompeting rivals by having lower costs and thus being able to serve niche members at a lower price. Private-label manufacturers of food, health and beauty products, and nutritional supplements use
2. A broad differentiation strategy —seeking to differentiate the company’s product or service from that of rivals in ways that will appeal to a broad spectrum of buyers. Successful adopters of differentiation strategies include Apple (innovative products), Johnson & Johnson in baby products
1. A low-cost provider strategy —achieving a cost-based advantage over rivals.Walmart and Southwest Airlines have earned strong market positions because of the low-cost advantages they have achieved over their rivals. Low-cost provider strategies can produce a durable competitive edge when rivals
How to achieve the company’s performance targets.
How to manage each functional piece of the business (R&D, supply chain activities, production, sales and marketing, distribution, finance, and human resources).
How to respond to changing economic and market conditions.
How to position the company in the marketplace and capitalize on attractive opportunities to grow the business.
How to compete against rivals.
How to attract and please customers.
LO 6 The three tests of a winning strategy.
LO 5 Why it is important for a company to have a viable business model that outlines the company’s customer value proposition and its profit formula.
LO 4 That a company’s strategy tends to evolve because of changing circumstances and ongoing efforts by management to improve the strategy.
LO 3 The five most basic strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage.
LO 2 The concept of a sustainable competitive advantage.
LO 1 What we mean by a company’s strategy.
For technology-based companies, building linkages across different businesses is critical to sustaining competitive advantage. Select a technology-based company that you are familiar with (possibilities might include Microsoft, HP, Apple Computer, Canon, Sony, or Finmeccanica), then identify how
Identify a poorly performing multibusiness company (examples might include Sony, Time Warner, Bombardier, Pearson, Matsushita, Dubai World, or Tyco). Using the McKinsey pentagon framework, in which stage do you perceive the greatest opportunities for value creation through restructuring? (Use the
If you were VP of strategic planning for a large multibusiness company, would you use portfolio planning techniques in your work? If so, for what purposes? If not, why not?Would your preference be to use the GE/McKinsey matrix or the BCG matrix?
Williamson’s “M-form” concept argues that the efficiency of the multidivisional firm is the result of (a) the separation of responsibilities between divisional and corporate management and (b) overcoming the “agency problem” of managers pursuing their own interests rather than those of
General Electric, Berkshire Hathaway and Richard Branson’s Virgin Group each comprise a wide range of different businesses that appear to have few close technical or customer linkages. Are these examples of unrelated diversification and do the corporate and ownership links within each of the
Giorgio Armani SpA is an Italian private company owned mainly by the Armani family.Most of its clothing and accessories are produced and marketed by the company (some are manufactured by outside contractors). For other products, notably fragrances, cosmetics, and eyewear, Armani licenses its brand
Tata Group is one of India’s largest companies, employing 203000 people in many different industries, including steel, motor vehicles, watches and jewelry, telecommunications, financial services, management consulting, food products, tea, chemicals and fertilizers, satellite TV, hotels, motor
An ice cream manufacturer is proposing to acquire a soup manufacturer on the basis that, first, its sales and profits will be more seasonally balanced and, second, from year to year, sales and profits will be less affected by variations in weather. Will this risk spreading create value for
Has McDonald’s got the balance right between global standardization and national differentiation (see Strategy Capsule 15.3)? Should it offer its franchisees in overseas countries greater initiative in introducing products that meet national preferences? Should it also allow greater flexibility
British expatriates living in the U.S. frequently ask friends and relatives visiting from the U.K. to bring with them bars of Cadbury’s chocolate on the basis that the Cadbury’s chocolate available in the U.S. (manufactured under license by Hershey’s) is inferior to “the real thing.”
When Porsche decided to enter the SUV market with its luxury Cayenne model, it surprised the auto industry by locating its new assembly plant in Leipzig in Eastern Germany. Many observers believed that Porsche should have located the plant either in Central or Eastern Europe where labor costs were
According to Michael Porter’s Competitive Advantage of Nations, some of the industries where British companies have an international advantage are: advertising, auctioneering of antiques and artwork, distilled alcoholic beverages, hand tools, and chemical preparations for gardening and
With reference to Table 15.1, what characteristics of national resources explain the different patterns of comparative advantage for the U.S. and Japan?
With reference to Figure 15.1, identify a “sheltered industry” (one that has been subject to little penetration either by imports or foreign direct investment). Explain why the industry has escaped internationalization. Explore whether there are opportunities for profitable internationalization
For its Zara brand, Inditex manufactures the majority of the garments sells and undertakes all of its own distribution from manufacturing plants to its directly managed retail outlets.Benetton outsources most of its production, and most of its retail outlets are owned and operated by franchisees.
In Strategy Capsule 14.1, Steve Rosenbush argues that integration between media content and media distribution companies (and, specifically, between Disney and Comcast) is strategically advantageous. John Kay suggests that there is little need for common ownerships between distribution channels and
A large proportion of major corporations outsource their IT function to specialist suppliers of UIT services such as IBM, EDS (now owned by Hewlett Packard), Accenture, and Cap Gemini. What transaction costs are incurred by these outsourcing arrangements and why do they arise? What are the
The discussion of “The Shifting Barrier between Firms and Markets” notes that the large U.S. companies account for a smaller percentage of total employment—a development that is attributed to a more turbulent business environment. Explain why external turbulence encourages outsourcing and
The discussion of “The Shifting Boundary between Firms and Markets” argues that the developments in information and communication technology (for example, telephone and computer) during most of the twentieth century tended to lower the costs of administration within the firm relative to the
In an era of budget airlines, online booking for travel, hotels, and car hire, the elimination of commissions paid by airlines, and declining demand for “package vacations” (air travel hotel reservations other services), is there a future for retail travel agents? What survival strategies can
Department stores (for example, Federated Department Stores and Mays in the U.S., Selfridges and House of Fraser in the U.K.) face increasing competition from specialized chain retailers and discount stores. What innovative strategies might department stores adopt to revitalize their
In both Europe and North America, established airlines are desperately cutting costs to compete with the increasing number of budget airlines. However, it is highly unlikely that these airlines will ever match the cost efficiency of Southwest, Jet Blue, or Ryanair. What opportunities are there for
Under Jacques Nasser, Ford’s response to intensifying competition in the auto industry was to acquire a stable of luxury brands and forward integrate into car rental (Hertz), car repair(Kwik Fit), and financial services. The present CEO, Alan Mulally, has moved in the opposite direction:
The clothing manufacturers of northern Italy are facing rapid decline as retail chains and fashion houses increasingly outsource to China and other low-cost countries. What strategies would you recommend to small and medium-sized Italian garment manufacturers to assist them in surviving the
In the battle for dominance of the ebook reader market, Amazon with Kindle 2 was ahead of Sony with its Reader Digital Book. Kindle 2 had the biggest number of recent titles available, but thanks to a deal with Google, Sony had a huge number of out-of-copyright titles. What are the sources of
From the evidence presented in Table 12.3, what conclusions can you draw regarding the factors that determine whether leaders or followers win out in the markets for new products?
What lessons would you draw from Dyson’s experience concerning the use of licensing by small firms to exploit innovation?
Table 12.1 shows that:(a) Patents have been more effective in protecting product innovations in drugs and medical equipment than in food or electronic components;(b) Patents are more effective in protecting product innovations than process innovations.Can you suggest reasons why?
Trevor Bayliss, a British inventor, submitted a patent application in November 1992 for a wind-up radio for use in Africa in areas where there was no electricity supply and people were too poor to afford batteries. He was excited by the prospects for radio broadcasts as a means of disseminating
Consider an industry facing fundamental technology change (e.g. the recorded music Industry and digital technology, computer software and open-source, newspapers and the internet, automobiles and alternative fuels, corporate IT services and cloud computing).Develop two alternative scenarios for the
The “resource partitioning” model argues that as industries become dominated by a few major companies whose strategies and products converge, so opportunities open for new entrants to build specialist niches. Identify an opportunity for establishing a specialist new business in an industry
Select a product that has become a dominant design for its industry (for example, the IBM PC in personal computers, McDonald’s in fast food, Harvard in MBA education, Southwest in budget airlines). What factors caused one firm’s product architecture to become dominant? Why did other firms
Consider the changes that have occurred in a comparatively new industry (for example, wireless communication services, wireless handsets, video game consoles, online auctions, bottled water, online book retailing). To what extent has the evolution of the industry followed the pattern predicted by
Advise a chain of movie theaters on a differentiation strategy to restore its flagging profitability. Use the value chain framework outlined in Strategy Capsule 10.2 to identify potential linkages between the company’s value chain and that of its customers in order to identify differentiation
Sony, which once dominated the market for portable music players with its Walkman products, has been the big loser to Apple in the market for MP3 music players. Using the framework shown in Figure 10.2, suggest opportunities for how Sony might differentiate its MP3 Walkman to increase its customer
The section on “Differentiation and Segmentation” notes that IKEA furnishings, Honda cars, Amazon, and Starbucks have achieved differentiation while maintaining a broad market appeal. How do companies achieve differentiate their products without limiting their appeal to certain market segments?
Bottled water sells at least 200 times the price of tap water, with substantial price differentials between different brands. What are the key differentiation variables that determine the price premium that can be obtained for bottled water?
To what extent are the seven cost drivers shown in Figure 9.1 relevant in analyzing the costs per student at your business school? What recommendations would you make to your dean for improving the cost efficiency of the school?
In Strategy Capsule 2.3 (Chapter 2), we observed that Ford’s profitability was low primarily because its costs were high. Using the value chain shown in Figure 9.4 and what you know about Ford (including the information in Strategy Capsule 2.3), what suggestions would you offer as to how Ford
A number of industries have experienced rapidly increasing global concentration in recent years: commercial aircraft (led by Boeing and Airbus), steel (led by Mittal Steel), beer (led by SAB-Miller, Anheuser-Busch-Inbev, and Heineken), commercial banking (led by Citigroup, HSBC, Bank of America,
Target (the U.S. discount retailer), H&M (the Swedish fashion clothing chain) and Primark(the U.K. discount clothing chain) have pioneered “cheap chic”—combining discount store prices with fashion appeal. What are the principal challenges of designing and implementing a “cheap chic”
Do you believe that some mutual funds (“unit trusts” in British parlance) can deliver consistently superior returns (once adjusted for risk)? If so, what is the basis for such superior performance and what can fund managers do to achieve superior performance?
Illy, the Italian-based supplier of quality coffee and coffee-making equipment, is launching an international chain of gourmet coffee shops. What advice would you offer Illy for how it can best build competitive advantage in the face of Starbucks’ market leadership?
Apple has been successful in dominating the market for both MP3 players with its iPod and for music downloads with its iTunes service. Can Apple sustain its leadership in these markets? How?
Figure 8.1 implies that stable industries, where firms have similar resources and capabilities, offer less opportunity for competitive advantage than industries where change is rapid and firms are heterogeneous. Think of an example of each of these two types of industry. Is there any evidence that
Draw an organizational chart for a business school that you are familiar with. Does the school operate with a matrix structure (for instance, are there functional/discipline-based departments together with units managing individual programs)? Which dimension of the matrix is more powerful, and how
The examples of Apple Computer and General Motors (see section on “Functional Structure”) point to the evolution of organizational structures over the industry life cycle.During the growth phase many companies adopt multidivisional structures, during maturity and decline many companies revert
In 2008, Citigroup announced that its Consumer business would be split into Consumer Banking, which would continue to operate through individual national banks, and Global Cards, which would form a single global business (similar to Citi’s Global Wealth Management division). On the basis of the
Within your own organization (whether a university, company, or not-for-profit organization), which departments or activities are organized mechanistically and which organically? To what extent does the mode of organization fit the different environmental contexts and technologies of the different
As DuPont expanded its product range (from explosives into paints, dyes, plastics, and synthetic fibers) why do you think that the functional structure (organized around manufacturing plants and other functions such as sales, finance and R&D) became unwieldy?Why did the multidivisional structure
The dean of your business school wishes to upgrade the effectiveness with which the school designs and delivers its educational programs and increase the effectiveness of its graduates in their subsequent careers. Advise your dean on what tools and systems of knowledge management might be deployed
In 2006, Disney completed its acquisition of the film animation company Pixar for$7.4 billion. The high purchase price reflected Disney’s eagerness to gain Pixar’s animation capabilities, its talent (animators, technologists and storytellers) and its culture of creativity.What risks does Disney
Identify two sports teams: one that is rich in resources (such as talented players) but whose capabilities (as indicated by performance) have been poor; one that is resource-poor but has displayed strong team capabilities. What clues can you offer as to the determinants of capabilities among sports
Apply the approach outlined in the section “Putting Resource and Capability Analysis to Work” to your own business school. Begin by identifying the resources and capabilities relevant to success in the market for business education, appraise the resources and capabilities of your school, then
Given the profile of VW’s resources and capabilities outlined in Table 5.4 and Figure 5.7, what strategy recommendations would you offer VW?
Many companies announce in their corporate communications: “Our people are our most important resource.” In terms of the criteria listed in Figure 5.6, can employees be considered to be of the utmost strategic importance?
During 1984–8, Michael Eisner, the newly installed CEO of Walt Disney Company, successfully exploited Disney’s existing resources to boost profitability (see Strategy Capsule 5.2). During the last eight years of Eisner’s tenure (1998–2005), however, profitability stagnated and share price
Microsoft’s main capabilities relate to the development and marketing of complex computer software and its greatest resource is its huge installed base of its Windows operating system.Does Microsoft’s entry into video game consoles indicate that its strategy is becoming divorced from its
In recent years Google has expanded from internet search across a broad range of internet services, including email, photo management, satellite maps, digital book libraries, blogger services, and telephony. To what extent has Google’s strategy been built upon a common set of resources and
How would you segment the restaurant market in your home town? How would you advise someone thinking of starting a new restaurant which segments might be most attractive in terms of profit potential?
During 2007–9, the Nintendo Wii established leadership over the Sony PS3 and Microsoft Xbox360 in the market for video game consoles. Unlike Sony and Microsoft, Nintendo is completely dependent upon the video games industry for its revenues. How might Nintendo use the competitor analysis
In August 2006, Rupert Murdoch’s News International announced its intention of launching a free evening newspaper, The London Paper, to challenge Associated Newspapers’ London Evening Standard (daily sales 390000). Given that the Evening Standard was already believed to be loss making, the new
In November 2005, six of Paris’s most luxurious hotels—including George V, Le Bristol, the Ritz, and Hotel de Crillon—were fined for colluding on room rates. Regular guests showed little concern—noting that, whatever the listed “rack rate,” it was always possible to negotiate
HP, Canon, Lexmark, and other manufacturers of inkjet printers make most of their profits on the sales of ink cartridges. Why are cartridges more profitable than printers? If cartridges were manufactured by different firms from those which make printers, would the situation be different?
What do you think are key success factors in:(a) The pizza delivery industry?(b) The investment banking industry?
Wal-Mart (like Carrefour, Ahold and Metro) competes in several countries of the world, yet most shoppers choose between retailers within a radius of a few miles. For the purposes of analyzing profitability and competitive strategy, should Wal-Mart consider the discount retailing industry to be
The leading companies in the online travel agency industry are Expedia, Travelocity (which owns Lastminute.com), Orbitz, Priceline, Cheaptickets and a host of others. The online agents compete both with traditional travel agents (American Express, Thomas Cook, Carlson) and direct online sales by
With reference to Strategy Capsule 3.1, use the five forces framework to explain why the U.S. smokeless tobacco industry is so profitable (as indicated by the profitability of its dominant firm).
From Table 3.1, select a high-profit industry and a low-profit industry. From what you know of the structure of your selected industry, use the five forces framework to explain why profitability has been either high or low.
The major forces shaping the business environment of the fixed-line telecom industry are technology and government policy. The industry has been influenced by fiber-optics (greatly increasing transmission capacity), new modes of telecommunication (wireless and internet telephony), deregulation, and
The CEO of a chain of pizza restaurants is interested in initiating a program of corporate social responsibility to be funded by a 5% levy on the company’s operating profit. The board of directors, fearing a negative shareholder reaction, is opposed to the plan. What arguments might the CEO use
With regard to Strategy Capsule 2.3, what additional data would you seek and what additional cost and productivity ratios would you calculate to shed further light on the reasons for Ford’s inferior ROCE relative to Toyota?
Nike, supplier of sports footwear and apparel, is interested in the idea that it could increase its stock market value by creating options for itself. Advise Nike on some of the actions it might take in order to generate option value.
In relation to each of the “multiple roles of strategy” outlined above, what use (if any) is Nokia’s statement of strategy as outlined in Strategy Capsule 1.7?
What is your career strategy for the next five years? To what extent does your strategy fit with your long-term goals, the characteristics of the external environment and your own strengths and weaknesses?
Using the structure outlined in Figure 1.5, describe the strategy of the business school you attend?
I have noted that a firm’s strategy can be described in terms of the answers to two questions:“Where are we competing?” and “How are we competing?” Applying these two questions, provide a concise description of Madonna’s career strategy (see Strategy Capsule 1.1).
The discussion of the evolution of business strategy (“From Corporate Planning to Strategic Management”) established that the characteristics of a firm’s strategic plans and its strategic planning process are strongly influenced by the volatility and unpredictability of its external
In relation to the four characteristics of successful strategies (clear, consistent, long-term objectives; profound understanding of the environment; objective appraisal of resources and effective implementation), assess the U.S. strategy towards Iraq during 2003–9.
In the motor industry, companies have followed different internationalization paths. Toyota expanded organically, establishing subsidiaries in overseas markets. Ford went on an acquisition spree, buying Volvo, Jaguar, Land Rover, and Mazda. General Motors has made extensive use of strategic

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Contemporary Strategy Analysis 10th Edition Robert M. Grant - Solutions

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