Exam 2: Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Exeter Industries produces and markets several lines of food and beverage products.The company plans to expand its market to cover a new geographical area,and the first products to be introduced into this new market are three of Exeter's coffees.A meeting of the marketing committee has been called to determine the pricing and promotional strategy for the introduction of these coffees. Mark Williams,vice president of marketing,has suggested that Exeter continue its policy of premium pricing for Rich Roast Coffee in the new market."Rich Roast is a superior blend of Brazilian coffees and should have little difficulty gaining customer acceptance.The use of other promotional strategies doesn't appear necessary at this time." Carol Randolph,general sales manager,agreed with this strategy for Rich Roast but recommended a different approach for Vitality Coffee,Exeter's brand of decaffeinated coffee."Vitality is an unknown name in this region and will require a determined promotional effort to gain market share from other very competitive products.We could try penetration pricing or packaging options combined with either manufacturer's coupons or rebates.Whatever strategy we select,we should hit the market hard if we want to be successful." Dan Felton has been appointed regional sales manager for the new geographical area and is concerned about the acceptance of Mellow Roast Coffee,a blend of regular and decaffeinated coffees."This is a brand new type of coffee in this region and may just sit on the shelf unless we develop an effective advertising campaign.Pricing or packaging options will be worthless unless the product gains some visibility and the targeted customer base is made aware of the benefits of Mellow Roast.We need a good slogan like "A gentle wakeup without caffeine stress!" Required: Mark Williams has suggested the continuance of premium pricing for Rich Roast Coffee.Explain the strategic role of premium pricing,and describe the economic circumstances in the marketplace that would encourage the use of this pricing strategy.(CMA adapted)

After critical success factors (CSFs)have been identified,the next step in developing a competitive strategy is to develop relevant and reliable measures for these CSFs.These measures are important to help the organization:

During which step of value chain analysis will the company discover whether or not it has a cost advantage,and why?

The Euro is:

A firm has decided to use the balanced scorecard.Which of the following is not an advantage the company will gain by using the balanced scorecard?

The critical financial success factor of profitability can be measured by:

The declining value of the U.S.dollar relative to other currencies in recent years means that:

Studebaker Corporation,one of the earliest auto manufacturers,prospered in the late 1940's and into the 1950's.Its advertising after World War II emphasized quality of design and production.The corporation also used the stability of its work force in its advertisements,often featuring pictures of father and son working side by side in its factories. Required: A.Studebaker attempted to achieve a distinctive quality image in its advertising as a way to differentiate itself from other auto company products.Presumably,by emphasizing the design and the way the car was made,the firm was trying to impress that Studebaker would be more desirable than competitive autos.Additionally,the advertisements tried to appeal to masses hearts and not just need for transportation and this clearly is not a cost leadership issue.(Its cars were competitively priced,but the company was not a cost leader,nor did it attempt to focus on a particular segment of the auto-buying public. ) B.Given your answer in Part (A),speculate on what market factors might have caused the corporation to go into bankruptcy and cease production in the mid-1960s. B.If differentiation was the chosen answer,it follows that the stress on quality eventually led to higher cost (and prices)that made the car less competitive.In fact,this was partly the reason the company failed,but futuristic design resulted in a look the public was not ready to accept.If the students chose cost leadership as the answer,their explanation would have to be evaluated on the basis of its logic and originality.

The cause and effect relationships among critical success factors are best captured in:

In order to remain competitive in the contemporary business environment,several firms have started training their employees to stop viewing problems as strictly functional -- a marketing problem,or an accounting problem,for example.What does this trend illustrate about strategic management?

Which of the following organizations presents awards to firms that excel at execution of strategy,based on criteria such as leadership,marketing,strategic planning and process management?

One of the large auto manufacturers in the 1970s developed a sport version of its family sedan.The new version was equipped with a small V8 engine and other performance improvements.The car was called the Pirouette,because of its graceful appearance and performance.Unfortunately,there was a difficulty in servicing the vehicle.The engine was too large for the space available,and it had to be moved slightly on the engine mounts in order for one of the spark plugs to be changed. Required: Comment on the strategic competitive advantage of the Pirouette.What type of management technique was likely used in its design? What type of design approach should have been used?

Which of the following could be considered part of the value chain in a service firm?

Williams Instruments manufactures specialized surgical equipment for hospitals and clinics throughout the world.One of Williams' most popular products,comprising 40% of its revenues and 35% of its profits,is a blood pressure measuring device.Average production and sales are 400 units per month.Williams has achieved its success in the market through excellent customer service and product reliability.The manufacturing process consists primarily of assembly of components purchased from various electronic firms,plus a small amount of metalworking and finishing.The manufacturing operations cost $600 per unit.The purchased parts cost Williams $800,of which $300 is for parts which Williams could manufacture in its existing facility for $100 in materials for each unit,plus an investment in labor and equipment which would cost $175,000 per month. Also,Williams is considering outsourcing to another firm,Matrix Concepts,Inc,the marketing,distribution,and servicing for its units.This would save Williams $75,000 in monthly materials and labor costs.The cost of the contract would be $125 per product. Required: 1.Prepare a value chain analysis for Williams to assist in the decision whether to manufacture or buy the parts,and whether to contract out the marketing,distribution,and servicing of the units. 2.Should Williams continue to: (A).purchase the parts or manufacture them? (B).provide the marketing,distribution and service,or outsource this activity to Matrix? Explain your answers.

The balanced scorecard can be made more effective by developing it at a detail level so that employees:

Which of the following types of organizations can most benefit from value chain analysis?

When performing value chain analysis,which of the following should a company not take into account?

During the strengths and weaknesses portion of a firm's SWOT analysis,which of the following would not be discovered?

NAFTA and WTO refer to

SWOT analysis,a valuable analysis tool,stands for: