John Deere CEO Samuel Allen aims toincrease total sales to $50 billion by 2018, with half coming from outside theU.S. and Canada, up from 39 percent today. In the last few years, the companyhas finally begun to make significant gains in Brazil and other countries whereits rivals mainly Agco and CNH Global of Amsterdam, which makes Case and NewHolland have deeper roots. Twenty years ago, Deere had two tractor factoriesoutside the U.S. Today it has nine, in Germany, India, China, Mexico, andBrazil. Last year in Europe, Deere introduced more than 100 products. Nearlyhalf of Deere’s 61,300 full-time employees work outside the U.S.

Replicatingits domestic success overseas hasn’t been easy for Deere. For years, tractorsit designed for the Great Plains were too big or otherwise unsuitable foroverseas growers, who have to contend with smaller plots, roadway driving, anduneven terrain. You can’t go with a German tractor and conquer the world or aU.S. tractor and conquer the world, says Markwart von Pentz, who manages Deere’ssales outside the U.S. You have to design to the requirements of the market.European farmers tend to want more speed and turning ability, while ricegrowers in India prefer compact vehicles that won’t sink in paddies.

Onekey to Deere’s global expansion is the 8R tractor line, the first the companydesigned for farmers worldwide. The 8R is still too big for some places. India,for example, but it is suited to the growing number of large farms outsideNorth America. A base 8R is about 20 feet long, with a narrow snout juttingfrom a boxy, 11-foot-high cab. Depending on which attachments it carries, an 8Rcan weigh more than 30,000 pounds. Allen likes to boast that its technology hasmore lines of software code than a space shuttle.

Deere’s global ambitions areimportant not just to the company and its shareholders but also to the world.To feed a population expected to hit 9 billion by 2050, food production mustincrease by 60 percent, according to the United Nations Food and AgricultureOrganization. With arable land available, Brazil, Russia, India, and China haveemerged as new agricultural powers. But even they lack enough acres to meetdemand. Advances in seed, fertilizer, and pesticide technology must workhand-in-hand with tractors and other equipment to help farmers squeeze every lastbushel of yield from their fields. World tractor unit sales are expected togrow about 1.8 percent a year through 2015, to about 1.4 million; higher pricesand the mix of products may push revenue up about 5 percent, says consultingfirm AlixPartners.

Deere started developing the 8R in2006. After interviewing growers around the world, the company in 2009introduced the 8R with bigger cabs and easier-to-use displays. Even as the 8Rmade its debut, Deere was working on the next version, in part to meet stricteremissions standards in some countries. The company interviewed 1,500 customers.Many spoke of a labor shortage as the world’s population shifts to urban areas,putting a bigger premium on automated machinery.

Last year, Deere reconfigured theWaterloo tractor assembly line to be less linear. Major modules engines and front axles in the northeastcorner of the plant, transmissions and rear axles in the northwest are puttogether separately so that a mistake in either area won’t halt assemblyaltogether.

From March 2011 to March 2012,Deere says, customers ordered more than 7,800 different configurations of the8R. On average, each configuration was built only 1.5 times. More than half the8Rs were built just once, for a single customer. Thus, the global tractor: Onesize does not fit all, from Kansas to Kazakhstan.

 Please discuss the following two Questions:

1.What are the business reasons behind John Deere’s offshoring of tractorproduction from the U.S. to other countries?

2.How can offshoring production be good operations management? Can it be badoperations management?

  

Locate and review an article related to topics covered in this unit (e.g., business alliances, building alliances, healthcare alliances, strategic alliances in health care, healthcare acquisitions, or healthcare mergers). The article you select must be at least two pages in length, and no more than five years old. 

Write a summary of the article. Include the following: 

Purpose for the article, 

How research was conducted (if any), 

The results, and other pertinent information, 

How the article relates to what you are learning in this unit.

The meaning or implications of the article’s contents, as well as any flaws you find in the article, and 

o What could have made the article better? 

o Was any information left out? 

o Could the author expand on the results? 

The relation of the article to your professional or personal life. 

Your review must be at least three pages in length, not counting cover page and reference page. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations per APA guidelines.

References 

Betbeze, P. (2015). CEO exchange: Different problems, shared solutions for survival. Health Leaders Media. Retrieved from http://healthleadersmedia.com/page-1/LED-321075/CEO-Exchange-Different-Problems-Shared-Solutions-for-Survival 

Healthcare Finance. (2015). Healthcare mergers and acquisitions in 2015: Running list. Retrieved from http://www.healthcarefinancenews.com/slideshow/healthcare-mergers-and-acquisitions-2015-running-list?p=0 

Leavitt, M., & McKeown, R. (2013). Finding allies, building alliances: 8 elements that bring—and keep—people together. San Francisco, CA: Jossey-Bass. 

Smith, A. (1776). An Inquiry Into the Nature and Causes of the Wealth of Nation [Online Library of Liberty version]. Retrieved from http://files.libertyfund.org/files/220/Smith_0141-02_EBk_v6.0.pdf 

Terhune, C. (2012). HealthCare partners to be bought by DaVita in $4.42-billion deal. Los Angeles Times. Retrieved from http://articles.latimes.com/2012/may/22/business/la-fi-davita-healthcare-partners-20120522  

Text Book:

Maccoby, M., Norman, C., Norman, C. J., & Margolies, R. (2014). Transforming health care leadership: A systems guide to improve patient care, decrease costs, and improve population health. San Francisco, CA: Jossey-Bass. 

Evaluating a Company’s External Environment
CH3

 

1    
Which of the following is not among the factors that determine whether competitive rivalry among industry members is strong, moderate, or weak?
    A)
Whether buyer demand for the product is growing rapidly or slowly
    B)
Whether customers’ costs to switch brands is low or high
    C)
How active industry rivals are in initiating fresh competitive moves and in using the various weapons of competition to improve their market standing and business performance
    D)
Whether there are few or many rival sellers and whether there are big differences in their sizes and competitive capabilities
    E)
Whether industry members are vertically integrated and whether the industry is characterized by significant scale economies and rapid technological change
    

 
2    
The rivalry among competing sellers in an industry intensifies
    A)
when buyer demand for the product is growing rapidly.
    B)
when customers are brand loyal and their costs to switch to competing brands or substitute products are relatively high.
    C)
when buyer demand is strong and sellers have little or no excess capacity and only minimal inventories.
    D)
as the number of rivals increases and as they become more equal in size and competitive capability.
    E)
when the products of rival sellers are highly differentiated products and the industry consists of so many rivals that any one company’s actions have little direct impact on rivals’ business.
    

 
3    
Competitive pressures associated with the threat of new entrants grow stronger when
    A)
buyer demand is growing slowly and the pool of entry candidates is small.
    B)
the number of customers for the industry’s product is large and the product offerings of rival sellers are strongly differentiated.
    C)
Existing industry members are looking to expand their market reach by entering product segments or geographic areas where they do not have a presence yet.
    D)
there are not many competitors already in the industry, their products are highly differentiated, and buyers are brand loyal.
    E)
a small percentage of companies in the industry are currently earning above-average profits, entry barriers are high, and buyers are not brand loyal.
    

 
4    
Which of the following conditions generally raise the barriers to entering an industry?
    A)
Low levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industry
    B)
Rapid market growth, low buyer switching costs, and weak brand preferences and customer loyalty
    C)
Product offerings that are pretty much standardized from rival to rival
    D)
High capital requirements, and difficulties in building a network of distributors-retailers and securing adequate space on retailers’ shelves,
    E)
The industry is not characterized by scale economies and/or sizable learning/experience curve effects and few firms in the industry hold key patents and/or possess significant proprietary technology not readily available to a newcomer
    

 
5    
Competitive pressures stemming from substitute products are weaker when
    A)
buyers don’t believe substitute products have equal or better features, and buyers’ costs of switching to substitutes are relatively high.
    B)
the industry consists of a relatively large number of rival sellers that are fairly equal in size and similar in competitive capability.
    C)
entry barriers are moderately high but by no means prohibitive and there is a fairly small pool of entry candidates.
    D)
a number of customers buy in large volumes and are in a strong bargaining position to win concessions from sellers.
    E)
buyer loyalty to the products they are currently purchasing buyers’ costs of switching to substitutes are relatively low.
    

 
6    
Which of the following is not a factor in determining whether the suppliers to an industry are a source of strong, moderate, or weak competitive pressures?
    A)
Whether certain needed inputs are in short supply and whether the item being supplied is a standard commodity that is readily available from many suppliers at the going market price
    B)
Whether it is difficult or costly for industry members to switch their purchases from one supplier to another or to switch to attractive substitute inputs
    C)
Whether industry members are major customers of suppliers and whether suppliers’ sales to members of this one industry constitute a big percentage of their total sales
    D)
Whether the industry supply chain is global or mostly national, whether suppliers have a wide or narrow product line, and whether industry members place orders frequently or infrequently with suppliers
    E)
Whether certain suppliers provide a differentiated input that enhances the performance or quality of the industry’s product
    

 
7    
Whether the buyers of an industry’s product have strong or weak bargaining leverage over the terms and conditions of sale depends on
    A)
how often that sellers alter their prices, how sensitive buyers are to price differences among sellers, whether the item being purchased is a good or a service, and whether buyers buy frequently or infrequently.
    B)
the frequency with which rival firms change strategies and the amount of advertising that sellers utilize.
    C)
whether all buyers have the same degree of negotiating power, whether the item carries a high or low price tag, and whether there are many or few collaborative partnerships between sellers and buyers.
    D)
whether buyers purchase in relatively large or small quantities, and how well informed buyers are about sellers’ prices, products, and costs.
    E)
whether buyer demand is seasonal or year-round, whether entry barriers are high or low, and whether competitive pressures from substitutes are strong or weak.
    

 
8    
The task of driving forces analysis is to
    A)
identify all the underlying factors that can cause industry and company profitability to rise or fall in the years ahead.
    B)
predict what new forces of competitive and market change will emerge next.
    C)
determine which of the five competitive forces is the biggest driver of industry change and to assess the impact on the company.
    D)
identify which companies are being driven to move from one strategic group to another strategic group.
    E)
determine how the collective impact of the driving forces will change market demand, competition and industry profitability.
    

 
9    
Strategic group mapping is a helpful analytical tool for
    A)
assessing why competitive pressures and driving forces usually impact the biggest strategic groups more so than the smaller groups.
    B)
determining which companies have how big a competitive advantage and how good their prospects are for increasing their market shares.
    C)
determining which company is the most profitable in the industry and why it is doing so well.
    D)
revealing the market positions of key industry competitors.
    E)
pinpointing which of the five competitive forces is the strongest and which is the weakest.
    

 
10    
An industry’s key success factors
    A)
can best be determined by studying the strategies of those companies in the industry’s best strategic group and those in the worst strategic group.
    B)
are so important to competitive success that all firms in the industry must pay close attention to them or risk becoming an industry laggard or failure.
    C)
are mainly a function of an industry’s macro-environment and dominant economic features.
    D)
can best be determined by identifying the similarities in the strategies of rival companies—those strategy elements that are most commonly found in the strategies of rivals can be considered key success factors.
    E)
usually relate to technology and manufacturing-related capabilities and rarely to distribution or marketing capabilities.

 

 

Crafting and executing strategy 9e
What Is Strategy and Why Is It Important?
CH1

 

 

1    
Which of the following statements about a company’s strategy is true?
    A)
Crafting an excellent strategy is more important than executing it well.
    B)
The objective of a well-crafted strategy is not merely temporary competitive success and profits in the short run, but rather the sort of lasting success that can support growth and secure the company’s future over the long
    C)
A company’s strategy deals with whether the revenue-cost-profit economics of its business model demonstrate the viability of the business enterprise as a whole.
    D)
Masterful strategies come partly (maybe mostly) by doing things in much the same way as the industry leader but then being better than the leader in one particular area that counts heavily with buyers.
    E)
Whether a company’s strategy is ethical or not does not matter a lot because most customers and most suppliers are relatively unconcerned whether a company they do business with engages in sleazy practices or turns a blind eye to below-board behavior on the part of its employees.
    

 
2    
Competing differently from rivals—doing what competitors don’t do or, even better, doing what they can’t do is referred to as its
    A)
strategic offensive for becoming a market leader.
    B)
business model.
    C)
long-term strategic direction.
    D)
mission statement.
    E)
strategy.
    

 
3    
Which one of the following is not related to actions and approaches that comprise a company’s strategy?
    A)
How to attract and please customers.
    B)
How to prove to shareholders that the company’s business model is viable
    C)
How to compete against rivals.
    D)
How to capitalize on attractive opportunities to grow the business.
    E)
How to achieve the company’s performance targets.
    

 
4    
A company achieves sustainable competitive advantage when
    A)
it has a low-cost business model.
    B)
it is able to increase shareholder value.
    C)
sufficient numbers of buyers believe the company has demonstrated a commitment to environmental sustainability.
    D)
it is consistently able to achieve both its strategic and financial objectives.
    E)
when it provide buyers with lasting reasons to prefer its products or services over those of competitors.
    

 
5    
Which one of the following is not something to look for in identifying a company’s strategy?
    A)
Its actions to enter new geographic or product markets or exit existing ones and its actions to form strategic alliances and collaborative partnerships
    B)
Its actions to merge with or acquire another company in order to strengthen the company’s business position
    C)
Its actions to capture emerging market opportunities and defend against external threats to the company’s business prospects
    D)
The company’s actions to validate and improve upon its business model
    E)
The actions and approaches that define how a company manages such functions as R&D, production, sales and marketing, and finance
    

 
6    
Company strategies evolve because
    A)
it is a bad idea to do too much strategizing until a company has been in business long enough to know what strategies will work best.
    B)
most managers like to develop the strategy in bits and pieces rather than all at once.
    C)
of changing circumstances and ongoing management efforts to improve the strategy
    D)
many managers are conservative, preferring to carefully contemplate the best responses to new developments and avoiding the risks associated with developing a complete strategy too quickly.
    E)
a strategy does not really transition to a well-crafted stage until a company has been trying to execute it for a number of years and has learned what works and what doesn’t.
    

 
7    
A company’s business model
    A)
determines whether its strategy will be ethical or not and meet government regulations.
    B)
is management’s storyline for how the strategy will result in achieving sustainable competitive advantage and delivering superior customer satisfaction over the long-term.
    C)
is management’s blueprint for delivering a valuable product or service to customers in a manner that will generate revenues sufficient to cover costs and yield an attractive profit
    D)
identifies how the company plans to outmaneuver and outcompete key rivals and become a market leader.
    E)
sets forth the actions and approaches that it will rely on to earn the best profit margins in the industry.
    

 
8    
A winning strategy is one that
    A)
makes the company a market leader, is ethically and socially responsible, and maximizes profits.
    B)
is highly profitable and boosts the company’s market share.
    C)
passes the profitability test, the ethics and social responsibility test, the customer satisfaction test, and the shareholder wealth test.
    D)
fits the company’s internal and external situation, builds sustainable competitive advantage, and boosts company performance.
    E)
passes the ethical standards test, the competitive advantage test, and the profitability test.
    

 
9    
Crafting and executing strategy are top-priority managerial tasks because
    A)
how managers go about the tasks of crafting and executing strategy sends a message to shareholders and the entire investment community regarding “what it is we are trying to do and how we plan to achieve our objectives.”
    B)
the company is unlikely to be profitable unless senior executives have a clear answer to “where are we headed, how do we plan to get there, and when do we expect to arrive?”
    C)
how well a company performs and the degree of market success it enjoys are directly attributable to the caliber of its strategy and the proficiency with which the strategy is executed.
    D)
without clear guidance as to what the company’s business model and strategy are, managerial decision-making is likely to be haphazard and inconsistent.
    E)
a company cannot hope to be a market leader if all it does is respond to changing market conditions, new technologies, new opportunities, and threatening moves on the part of competitors.
    

 
10    
The most trustworthy signs of a well-managed company are
    A)
a strong emphasis on offensive strategies rather than defensive strategies.
    B)
a strategy matched to fast-evolving market conditions and bigger profit margins than rivals and a steady upward trend in net income.
    C)
attractive bottom-line performance and a proven business model.
    D)
good strategy and good strategy execution.
    E)
having a profitable business model, a willingness to change the company’s business model whenever circumstances warrant, and having a sustainable competitive advantage.
    
    

 

Corporate Strategy: Diversification and the Multibusiness Company
CH8
Your Results:
The  answer for each question is indicated by a  .

 

1    
A company becomes a prime candidate for diversifying under the following circumstances _______________________
    A)
When it spots opportunities for expanding into industries whose technologies and products complement its present business.
    B)
When it has a powerful and well-known brand name that can be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such business.
    C)
When diversifying into additional businesses opens new avenues for reducing costs via cross-business sharing or transfer of competitively valuable resources and capabilities.
    D)
When can leverage its collection of resources and capabilities by expanding into businesses where these resources and capabilities are valuable assets.
    E)
All of these.
    

 
2    
To judge whether a particular diversification move has good potential for building added shareholder value, the move should pass the following tests:
    A)
the attractiveness test, the barrier-to-entry test, and the growth test.
    B)
the strategic fit test, the resource fit test, and the profitability test.
    C)
the barrier-to-entry test, the growth test, and the shareholder value test.
    D)
the attractiveness test, the cost-of-entry test, and the better-off test.
    E)
the resource fit test, the strategic fit test, the profitability test, and the shareholder value test.
    

 
3    
The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves
    A)
evaluating whether the diversification move will produce a 1 + 1 = 3 outcome such that the company’s different businesses perform better together than apart and the whole ends up being greater than the sum of the parts.
    B)
assessing whether the diversification move will make the company better off by increasing its resource strengths and competitive capabilities.
    C)
evaluating whether the diversification move will make the company better off by making it less subject to the bargaining power of customers and/or suppliers.
    D)
assessing whether the diversification move will make the company better off by increasing its profit margins and returns on investment.
    E)
All of these.
    

 
4    
Which of the following is not accurate as concerns entering a new business via acquisition, internal start-up, or a joint venture?
    A)
The big dilemma of entering an industry via acquisition of an existing company is whether to pay a premium price for a successful company or to buy a struggling company at a bargain price.
    B)
Acquisition is generally the most profitable way to enter a new industry, tends to be more suitable for an unrelated diversification strategy than a related diversification strategy, and usually requires less capital than entering an industry via internal start-up.
    C)
Acquisition is the most popular means of diversifying into another industry, has the advantage of being quicker than trying to launch a brand-new operation, and offers an effective way to hurdle entry barriers.
    D)
Joint ventures are an attractive way to enter new businesses when the opportunity is too complex, uneconomical, or risky for one company to pursue alone, when the opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own, and/or when it aids entry into a foreign market.
    E)
The big drawbacks to entering a new industry via internal start-up include the costs of overcoming entry barriers, building an organization from the ground up, and the extra time it takes to build a strong and profitable competitive position.
    

 
5    
The strategic appeal of related diversification is that
    A)
it allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities.
    B)
it is less capital intensive than unrelated diversification because related diversification emphasizes getting into cash cow businesses (as opposed to cash hog businesses).
    C)
it involves diversifying into industries having the same kinds of key success factors.
    D)
it is less risky than unrelated diversification because it avoids the acquisition of cash hog businesses.
    E)
it facilitates the achievement of greater economies of scale since the company only enters those businesses that serve the same types of buyer groups and/or buyer needs.
    

 
6    
Economies of scope
    A)
stem from the cost-saving efficiencies of scattering a company’s manufacturing/assembly plants over a wider geographic area.
    B)
have to do with the cost-saving efficiencies of operating across a bigger portion of an industry’s total value chain.
    C)
stem from cost-saving strategic fits along the value chains of related multiple businesses.
    D)
refer to the cost-savings that flow from being able to combine the value chains of different businesses into a single value chain.
    E)
are like economies of scale and arise from being able to lower costs via a larger volume operation.
    

 
7    
The defining characteristic of unrelated diversification (as opposed to related diversification) is
    A)
the presence of cross-business resource fit (whereas the defining characteristic of related diversification is the presence of cross-business strategic fit).
    B)
that the value chains of different businesses are so dissimilar that no competitively valuable cross-business relationships are present (in other words, the value chains of a company’s businesses offer no opportunities to benefit from skills or technology transfer across businesses, economies of scope, cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities).
    C)
the presence of cross-business strategic fit (whereas the defining characteristic of related diversification is the presence of cross-business resource fit).
    D)
that the company’s businesses are in different industries.
    E)
the presence of cross-business financial fit.
    

 
8    
Calculating quantitative attractiveness ratings for the industries a company has diversified into involves
    A)
determining the strength of the five competitive forces in each industry, calculating the ability of the company to overcome or contend successfully with each force, and obtaining overall measures of the firm’s ability to compete successfully in each of its industries.
    B)
determining each industry’s average profit margins, calculating how far the firm’s profit margins are above/below the industry averages, and then using these values to draw conclusions about industry attractiveness.
    C)
rating the attractiveness of each industry’s strategic and resource fits, summing the attractiveness scores, and determining whether the overall scores for the industries as a group are appealing or not.
    D)
selecting a set of industry attractiveness measures, weighting the importance of each measure (with the sum of the weights adding to 1.0), rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group.
    E)
identifying each industry’s average price, rating the difficulty of charging an above-average price in each industry, and deciding whether the company’s prospects for being able to charge above-average prices make the industry attractive or unattractive.
    

 
9    
The 9-cell industry attractiveness-competitive strength matrix
    A)
is a valuable tool for ranking a company’s different businesses from best to worst based on strategic fit.
    B)
shows which of a diversified company’s businesses have good/poor resource fit.
    C)
indicates which businesses have the highest/lowest economies of scale and which have the highest/lowest economies of scope.
    D)
uses quantitative measures of industry attractiveness and competitive strength to plot each business’s location on the matrix—the thesis underlying the matrix is that there are good reasons to concentrate the company’s resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to invest minimally or even divest those businesses with relatively weak competitive positions in industries with relatively low attractiveness.
    E)
pinpoints which of a diversified company’s businesses are resource-rich cash cows and which are resource-poor cash hogs.
    

 
10    
Once a firm has diversified and established itself in several different businesses, then its main strategic alternatives include all but which one of the following?
    A)
Broadening the firm’s business scope by diversifying into additional businesses.
    B)
Shifting from a multi-country to a global strategy.
    C)
Restructuring the company’s business line-up with a combination of divestitures and new acquisitions to put a whole new face on the company’s business makeup.
    D)
Pursuing multinational diversification and striving to globalize the operations of several of the company’s business units.
    E)
Divesting some businesses and retrenching to a narrower base of business operations