Strategic Management – Midterm Exam

Exam Instructions:

 

There are five essay exam questions below. Select three of them to answer.

 

Each question starts with an abstract of an article in Business Week Magazine. Copy and paste the link into your browser to access the full article.

 

Question 1

 

1. Please read the article below by copying and pasting the link into your web browser.

 

Sony’s TV Business Keeps Fading to Red (http://www.businessweek.com/magazine/sonys-tv-business-keeps-fading-to-red-08042011.html?chan=magazine+technology+channel_news+-

+companies+%26amp%3b+industries		)
Reviewer: Charles Newman
Abstract
Two months ago, Sony optimistically		predicted it would sell 27 million TV sets this year; on July 28, it slashed
the figure to 22 million and issued	a profit warning. The television business, Sony’s biggest revenue generator,
is forecast to lose a billion dollars	this year—following seven straight years of red ink. (PHG )Royal Philips
Electronics and several other longtime		rivals have called it quits, saying they can’t compete as prices tumble
into commodity territory. But Sony Chief Executive			Officer Howard Stringer considers the TV unit vital to
helping sell products that work with the company’s			sets, including Blu-ray players and its popular PlayStation
game consoles.

 

On Aug. 1, Sony said it would not divest its TV business and the next day announced that a reorganization of the unit is in the works. There’s little fat left to cut. Stringer already has eliminated 30,000 jobs, entered into joint manufacturing ventures with rivals and shed assets.

 

Sony’s widescreen woes aren’t unique. Most major manufacturers are sitting on six- to 10-weeks’ inventory as consumers show scant interest in the latest features such as sets with Internet connectivity or those that can show movies in 3D, says (IHS) IHS iSuppli analyst Riddhi Patel. Not helping matters is the slew of smaller-screen devices such as iPads and iPhones that are competing for consumers’ disposable income.

 

Discussion Questions

 

1. Discuss the structural characteristics of the television manufacturing industry using the Five Competitive Forces (Porter) framework. To help you answer this question here is a link to further information TV-Manufacturing-Wars-March2010 (http://www.marconipacific.com/TV-Manufacturing-Wars-March2010.pdf). Feel free to find and cite other information sources as well.

 

2. Discuss the Sony strategy using the Resource-Based View of the Firm framework.

3. Discuss the Sony strategy using the Competitive Advantage (Porter) framework.

 

 

Question 2

 

Please read the articles below by copying and pasting the link into your web browser.

 

Walmart’s Rocky Path from Bricks to Clicks (http://www.businessweek.com/magazine/walmarts-rocky-path-from-bricks-to-clicks-07212011.html)

 

Reviewer: Charles Newman Abstract

 

Walmart.com’s sales are less than a fifth of Amazon.com, but a new division, @WalmartLabs, is experimenting

 

with social media and mobile apps. Since Wal-Mart Stores first ventured into cyberspace 15 years ago, the

 

Bentonville, Ark., company has struggled online. Early on, Walmart.com featured a clunky digital version of

 

the greeter who welcomes shoppers at each store. Walmart.com still doesn’t excel at features that are

 

commonplace on other major e-commerce sites, such as personalization and recommendations.

 

The company doesn’t disclose its online sales, but analysts say Walmart.com does about $6 billion a year in

 

business, less than 2 percent of total sales and well below Amazon.com’s $34 billion in 2010 retail revenue. For

 

a long time, Wal-Mart’s poor online performance didn’t much matter. The retailer built hundreds of

Supercenters every year in the late 1990s, and profits soared. Over the past two years, however, the company

 

has cut its new U.S. store development by half. Sales at domestic Wal-Marts open for at least a year have

 

declined in each of the last eight quarters. Over that time e-commerce has exploded, even among the lower-income households that are Wal-Mart’s core customers.

 

Chief Executive Officer Mike Duke has recently focused his company’s considerable firepower (and an $11 billion cash hoard) on improving its use of the Web. He bought a Chinese online merchant, is testing home delivery of fresh groceries ordered online in San Jose, and most significantly, has created @WalmartLabs. Run by Silicon Valley veterans Venky Harinarayan and Anand Rajaraman, the division is charged with bringing

Wal-Mart up to speed with innovations such as smartphone payment	technology, mobile	shopping applications,
and Twitter-influenced product selection for stores. It’s an ambitious	attempt at a technological makeover, but
still might not be enough. One goal of @WalmartLabs is to use social media and mobile		apps to get shoppers to

spend more at Wal-Mart’s physical stores. One-third of Wal-Mart customers own a smartphone, and the company is investing in tools for them. The plans for increasing online sales are more vague. The

@WalmartLabs division		is testing an app that allows	Facebook users to give gifts without	ever clicking away
from the social network.
Discussion	Questions
1. Discuss	the structural	characteristics of the online	retail Industry, from the point of view	of the Five

Competitive Forces (Porter) framework. To help you answer this question here is a link to further information Online Retail — Industry Overview(http://web.streetauthority.com/cmnts/pt/2005/03-10.asp). Feel free to find and cite other information sources as well.

 

2.Discuss the Wal-Mart online strategy, from the perspective of the Resource Based View of the Firm framework.

 

3.Discuss the Wal-Mart online strategy, from the perspective of the Competitive Advantage (Porter) framework.

Question 3

 

Please read the articles below by copying and pasting the link into your web browser. Citigroup Hopes Small Really Is

 

Beautiful(http://www.businessweek.com/magazine/content/10_48/b4205061118307.htm?chan=magazine+chan nel_news+-+markets+%2B+finance)

Reviewer: Charles Newman

 

Abstract

 

The Bloomberg Businessweek article “Citigroup Hopes Small Really Is Beautiful” (Nov. 22-Nov. 28, 2010) discusses how Citigroup is expanding in small business lending. It is targeting U.S. companies with less than $20 million in annual sales and plans to hire about 200 bankers by the end of 2011 to court them. That would bring the number of small business bankers to about 500. Expanding the bank’s focus to include doctors, restaurants, and cabinet makers alongside Coca- Cola and wealthy individuals won’t be easy. It’s totally different and requires a good deal of monitoring.

 

The four largest banks by assets have been criticized by some entrepreneurs for tightening credit to small business after taking a combined $140 billion of federal bailout money. A record 41 percent of small business owners say they cannot get adequate financing. Banks with less than $10 billion in assets make 56 percent of the country’s small business loans. Larger banks are now trying to muscle in as losses stay high on home loans and commercial mortgages.

 

Discussion Questions

 

1. Discuss the structural characteristics of the banking industry from the point of view of the Five Competitive Forces (Porter)(http://www.12manage.com/methods_porter_five_forces.html ) framework. To help you answer this question here is a link to further information The Industry Handbook: The Banking Industry

(http://www.investopedia.com/features/industryhandbook/banking.asp. Feel free to find and cite other information sources as well.)

 

2.  Discuss the Citibank strategy from the perspective of theBCG Matrix (http://www.quickmba.com/strategy/matrix/bcg/ ) framework.

 

3.  Discuss the Citibank strategy from the perspective of the Competitive Advantage (Porter) (http://www.12manage.com/methods_porter_competitive_advantage.html ) framework.

 

 

Question 4

 

Please read the articles below by copying and pasting the link into your web browser. United and Continental Reach for the

 

Sky(http://www.businessweek.com/magazine/content/10_20/b4178019955335.htm?chan=magazine+channel_n ews+-+companies+%2B+industries)

 

Reviewer: Charles Newman

 

Abstract

 

The Bloomberg Businessweek article “United and Continental Reach for the Sky” (May 17, 2010) discusses the merger of United Airlines and Continental. The U.S. aviation history is littered with the debris of airline mergers. Jeff Smisek, the CEO to be of the combined airline, will have to figure out a way to generate profits at

the combined carrier after annual losses at UAL and Continental in each of the past two years. He will have to navigate a tough U.S. antitrust review and work with restive unions that had demanded the ouster of United CEO Glenn Tilton, who is staying on as nonexecutive chairman of the combined carrier.

 

Key to Smisek’s	success will be his ability to realize $1.2 billion		in combined cost savings and new revenue,
while funneling	additional traffic from the expanded United-Continental domestic network into its more
lucrative international routes. Just managing the sheer logistics		of the combined airlines will		be a huge
undertaking. Traditionally, the key task has been harmonizing		work rules and consolidating		union seniority		lists
into a single worker roster. Smisek must also convince regulators			that the Continental-United marriage		will	not
significantly reduce competition. Some industry insiders believe			regulators may force route divestitures		or the
sale of some of United and Continental’s takeoff and landing slots at coveted airports in the New York and
Washington areas.

 

Discussion Questions

 

1. Discuss the structural characteristics of the airline industry from the point of view of the Porter Five Forces framework. To help you answer this question here is a link to further information The Industry Handbook: The Airline Industry (http://www.investopedia.com/features/industryhandbook/airline.asp ) . Feel free to find and cite other information sources as well.

 

2. Discuss the United-Continental merger from the perspective of theAcquisition Integration Approaches(http://www.12manage.com/methods_haspeslagh_acquisition_integration_approaches.html ) framework.

 

3. Discuss the United-Continental merger from the perspective of the Competitive Advantage (Porter) (http://www.12manage.com/methods_porter_competitive_advantage.html) framework.

 

 

Question 5
Please read the articles below by copying and pasting the link	into your web browser.
Revenge of the Cable
Guys(http://www.businessweek.com/magazine/content/10_12/b4171038593210.htm?chan=magazine+channel_
top+stories)
Reviewer: Charles Newman
Abstract
Once upon a time, not long ago, a bunch of small companies in Silicon Valley thought the future		of television
was theirs. Soon, the thinking went, TV would be everywhere,	including laptops and cell phones. The network
suits and the cable guys just didn’t have the digital chops to make it happen. Fueled with venture		money, tech
companies with names like Boxee, Roku, and Sezmi pursued their dream of untethering viewers		from their TV
sets – and owning a piece of the advertising revenue.

 

As the big picture comes into focus though, it looks like the cable guys are playing the lead roles, using the $12 billion they pay content providers each year as leverage. The cable guys came up with a quick fix, so that you don’t have to be a geek to get it: Viewers can watch shows for free, but only if they’re cable subscribers. However, unless most of the pay TV and content players band together, this idea, called TV Everywhere, wouldn’t work; viewers could simply flock to sites that don’t require a cable subscription.

 

Comcast’s service is the furthest along and provides a window on where TV Everywhere is headed, according

 

to the Bloomberg BusinessWeek article, “Revenge of the Cable Guys” (March 22, 2010). Only subscribers who