14 Aug 47. Auto engines have become more complex over the past twenty years, partly a

47.
Auto engines have become
more complex over the past twenty years, partly as a result of environmental
concerns about exhaust contaminants. Engineers have developed two basic
approaches to solving the contaminant problem. The first emphasized the
catalytic converter, a modification of the auto exhaust system designed to
break down pollutants. The second emphasized redesign of the auto engine’s
combustion process, which adds more than twice the cost of the catalytic
converter alone. However, redesigning the combustion process usually results in
improved full efficiency.

Required:
A. Comment on the strategic advantage of redesigning the combustion process
versus simply adding a catalytic converter.
B. What
are the ethical questions, if any, that should be addressed in the above
decision?

48.
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. From just this brief description of Studebaker Corporation, which type of
competitive strategy–cost leadership ordifferentiation–would you
guess Studebaker was using? Explain your choice.

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.

49.
Many products in the
marketplace today are built from components designed and manufactured by
sub-contractors. While the extent of this practice is not well known to
consumers, manufacture and sale of multi-component units that use parts from
many different companies continues to grow.
Required:
If the assembling company is using value-chain analysis in its strategic
planning, comment on the following:
A. The
cost justification for subcontracting.
B. The
willingness of consumers to buy products they know contain subcontracted parts.

C. The
problems of quality control facing the assembling company.

50.
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 ofpremium pricing, and describe the
economic circumstances in the marketplace that would encourage the use of this
pricing strategy. (CMA adapted)

51.
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 itsdesign? What type of design
approach should have been used?

52.
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.

53.
Motorcycle engines have
become more complex over the past twenty years, partly as a result of
environmental concerns about exhaust contaminants. Engineers have developed two
basic approaches to solving the contaminant problem. The first emphasized the
catalytic converter, a modification of the auto exhaust system designed to
break down pollutants. The second emphasized redesign of the motorcycle
engine’s combustion process, which adds more than twice the cost of the
catalytic converter alone. However, redesigning the combustion process usually
results in improved full efficiency.

Required:

A. Comment
on the strategic advantage of redesigning the combustion process versus simply
adding a catalytic converter.
B. What
are the ethical questions, if any, that should be addressed in the above
decision?

54.Many
desktop and laptop computers in the marketplace today are built from components
designed and manufactured by sub-contractors. While the extent of this practice
is not well known to consumers, manufacture and sale of multi-component
computers that use parts from many different technology companies continues to
grow.
Required:
If the assembling company is using value chain analysis in its strategic
planning, comment on the following:
A. The
cost justification for subcontracting.
B. The
willingness of consumers to buy products they know contain subcontracted parts.

C. The problems of quality control
facing the assembling technology company.

55.
Levis Strauss and Co.,
maker of Levi’s familiar 501 and 505 brands of jeans, also make a
“Signature” brand that was introduced several years ago for discount
retailers such as Wal-Mart. Levi’s strategy with the new jeans was to sell a
competitively priced pair. The jeans were to be about one-half the price of the
familiar 501 and 505 jeans. To get costs down Levi’s would:

Use cheaper fabrics and materials.
Shun costly mass-market advertising.
Strictly limit the number of fits,
styles, and colors.
The Signature brand had a good first
year of sales; assume that results for the second year and later are not yet
in.
Required:

1. Assess the new strategy at Levi. What
do you think are the potential benefits and risks?
2. How will the firm’s value chain and
balanced scorecard change as a result of the new strategy?

56.
Gordon Manufacturing
produces high-end furniture products for the luxury hotel industry. Gordon has
succeeded through excellence in design, careful attention to detail in manufacturing
and in customer service, and through continuous product innovation. The
manufacturing process at Gordon begins with a close consultation with each
customer so that the finished product exactly meets the customer’s
specifications. This commonly means unique designs, special fabrics, and high
levels of manufacturing quality. In addition, Gordon believes that a key
competitive edge it has over other competitors is that it has an outstanding
design staff that is able to work with customers to come up with product
designs that go beyond the customer’s expectations.

Required:
What is the competitive strategy for Gordon Manufacturing? Explain your answer
in two or three sentences.

57.
Gordon Manufacturing
produces high-end furniture products for the luxury hotel industry. Gordon has
succeeded through excellence in design, careful attention to quality in
manufacturing and in customer service, and through continuous product
innovation. The manufacturing process at Gordon begins with a close consultation
with each customer so that the finished product exactly meets the customer’s
specifications. This commonly means unique designs, special fabrics, and high
levels of manufacturing quality. In addition, Gordon believes that a key
competitive edge it has over other competitors is that it has an outstanding
design staff that is able to work with customers to come up with product
designs that go beyond the customer’s expectations.

Anticipating
a growth in the demand for luxury hotel rooms, Gordon has expanded its
operations to include one new manufacturing plant, and by refitting some of the
older plants with newer, more efficient equipment. The installation of the new
equipment has caused some delays in filling some customer orders, and Gordon
has shifted production from those plants with the delays to other manufacturing
plants. The result has been an increase in some processing costs,
transportation costs, and delays in meeting customer order deadlines. Also, the
introduction of the new equipment has created some tensions with employees who
see the new, more efficient equipment as a potential threat to their job
security. There is also some disagreement among managers as to whether the new
equipment will improve or reduce quality.
Required:
Develop a SWOT analysis for Gordon Manufacturing. List one or more items in
each category:

58.
Gordon Manufacturing
produces high-end furniture products for the luxury hotel industry. Gordon has
succeeded through excellence in design, careful attention to quality in
manufacturing and in customer service, and through continuous product
innovation. The manufacturing process at Gordon begins with a close
consultation with each customer so that the finished product exactly meets the
customer’s specifications. This commonly means unique designs, special fabrics,
and high levels of manufacturing quality. In addition, Gordon believes that a
key competitive edge it has over other competitors is that it has an
outstanding design staff that is able to work with customers to come up with
product designs that go beyond the customer’s expectations.

Required:
Present a value chain for Gordon Manufacturing with 5-6 activities and explain
the role of each activity in the value chain.

59.
Gordon Manufacturing
produces high-end furniture products for the luxury hotel industry. Gordon has
succeeded through excellence in design, careful attention to quality in
manufacturing and in customer service, and through continuous product
innovation. The manufacturing process at Gordon begins with a close
consultation with each customer so that the finished product exactly meets the
customer’s specifications. This commonly means unique designs, special fabrics,
and high levels of manufacturing quality. In addition, Gordon believes that a key
competitive edge it has over other competitors is that it has an outstanding
design staff that is able to work with customers to come up with product
designs that go beyond the customer’s expectations.

Required:
Present a balanced scorecard for Gordon Manufacturing with 3-4 perspectives and
3-4 quantitative critical success factors ineach perspective.

47.
Auto engines have become
more complex over the past twenty years, partly as a result of environmental
concerns about exhaust contaminants. Engineers have developed two basic
approaches to solving the contaminant problem. The first emphasized the
catalytic converter, a modification of the auto exhaust system designed to
break down pollutants. The second emphasized redesign of the auto engine’s
combustion process, which adds more than twice the cost of the catalytic
converter alone. However, redesigning the combustion process usually results in
improved full efficiency. Required:
A. Comment on the strategic advantage of redesigning the combustion process
versus simply adding a catalytic converter.B. What
are the ethical questions, if any, that should be addressed in the above
decision? 48.
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. From just this brief description of Studebaker Corporation, which type of
competitive strategy–cost leadership ordifferentiation–would you
guess Studebaker was using? Explain your choice. 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. 49.
Many products in the
marketplace today are built from components designed and manufactured by
sub-contractors. While the extent of this practice is not well known to
consumers, manufacture and sale of multi-component units that use parts from
many different companies continues to grow. Required:
If the assembling company is using value-chain analysis in its strategic
planning, comment on the following:A. The
cost justification for subcontracting. B. The
willingness of consumers to buy products they know contain subcontracted parts.
C. The
problems of quality control facing the assembling company. 50.
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 ofpremium pricing, and describe the
economic circumstances in the marketplace that would encourage the use of this
pricing strategy. (CMA adapted) 51.
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 itsdesign? What type of design
approach should have been used? 52.
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.53.
Motorcycle engines have
become more complex over the past twenty years, partly as a result of
environmental concerns about exhaust contaminants. Engineers have developed two
basic approaches to solving the contaminant problem. The first emphasized the
catalytic converter, a modification of the auto exhaust system designed to
break down pollutants. The second emphasized redesign of the motorcycle
engine’s combustion process, which adds more than twice the cost of the
catalytic converter alone. However, redesigning the combustion process usually
results in improved full efficiency. Required:
A. Comment
on the strategic advantage of redesigning the combustion process versus simply
adding a catalytic converter. B. What
are the ethical questions, if any, that should be addressed in the above
decision? 54.Many
desktop and laptop computers in the marketplace today are built from components
designed and manufactured by sub-contractors. While the extent of this practice
is not well known to consumers, manufacture and sale of multi-component
computers that use parts from many different technology companies continues to
grow.Required:
If the assembling company is using value chain analysis in its strategic
planning, comment on the following:A. The
cost justification for subcontracting. B. The
willingness of consumers to buy products they know contain subcontracted parts.
C. The problems of quality control
facing the assembling technology company. 55.
Levis Strauss and Co.,
maker of Levi’s familiar 501 and 505 brands of jeans, also make a
“Signature” brand that was introduced several years ago for discount
retailers such as Wal-Mart. Levi’s strategy with the new jeans was to sell a
competitively priced pair. The jeans were to be about one-half the price of the
familiar 501 and 505 jeans. To get costs down Levi’s would: Use cheaper fabrics and materials. Shun costly mass-market advertising. Strictly limit the number of fits,
styles, and colors. The Signature brand had a good first
year of sales; assume that results for the second year and later are not yet
in. Required:
1. Assess the new strategy at Levi. What
do you think are the potential benefits and risks? 2. How will the firm’s value chain and
balanced scorecard change as a result of the new strategy? 56.
Gordon Manufacturing
produces high-end furniture products for the luxury hotel industry. Gordon has
succeeded through excellence in design, careful attention to detail in manufacturing
and in customer service, and through continuous product innovation. The
manufacturing process at Gordon begins with a close consultation with each
customer so that the finished product exactly meets the customer’s
specifications. This commonly means unique designs, special fabrics, and high
levels of manufacturing quality. In addition, Gordon believes that a key
competitive edge it has over other competitors is that it has an outstanding
design staff that is able to work with customers to come up with product
designs that go beyond the customer’s expectations. Required:
What is the competitive strategy for Gordon Manufacturing? Explain your answer
in two or three sentences.57.
Gordon Manufacturing
produces high-end furniture products for the luxury hotel industry. Gordon has
succeeded through excellence in design, careful attention to quality in
manufacturing and in customer service, and through continuous product
innovation. The manufacturing process at Gordon begins with a close consultation
with each customer so that the finished product exactly meets the customer’s
specifications. This commonly means unique designs, special fabrics, and high
levels of manufacturing quality. In addition, Gordon believes that a key
competitive edge it has over other competitors is that it has an outstanding
design staff that is able to work with customers to come up with product
designs that go beyond the customer’s expectations. Anticipating
a growth in the demand for luxury hotel rooms, Gordon has expanded its
operations to include one new manufacturing plant, and by refitting some of the
older plants with newer, more efficient equipment. The installation of the new
equipment has caused some delays in filling some customer orders, and Gordon
has shifted production from those plants with the delays to other manufacturing
plants. The result has been an increase in some processing costs,
transportation costs, and delays in meeting customer order deadlines. Also, the
introduction of the new equipment has created some tensions with employees who
see the new, more efficient equipment as a potential threat to their job
security. There is also some disagreement among managers as to whether the new
equipment will improve or reduce quality. Required:
Develop a SWOT analysis for Gordon Manufacturing. List one or more items in
each category:58.
Gordon Manufacturing
produces high-end furniture products for the luxury hotel industry. Gordon has
succeeded through excellence in design, careful attention to quality in
manufacturing and in customer service, and through continuous product
innovation. The manufacturing process at Gordon begins with a close
consultation with each customer so that the finished product exactly meets the
customer’s specifications. This commonly means unique designs, special fabrics,
and high levels of manufacturing quality. In addition, Gordon believes that a
key competitive edge it has over other competitors is that it has an
outstanding design staff that is able to work with customers to come up with
product designs that go beyond the customer’s expectations. Required:
Present a value chain for Gordon Manufacturing with 5-6 activities and explain
the role of each activity in the value chain.59.
Gordon Manufacturing
produces high-end furniture products for the luxury hotel industry. Gordon has
succeeded through excellence in design, careful attention to quality in
manufacturing and in customer service, and through continuous product
innovation. The manufacturing process at Gordon begins with a close
consultation with each customer so that the finished product exactly meets the
customer’s specifications. This commonly means unique designs, special fabrics,
and high levels of manufacturing quality. In addition, Gordon believes that a key
competitive edge it has over other competitors is that it has an outstanding
design staff that is able to work with customers to come up with product
designs that go beyond the customer’s expectations. Required:
Present a balanced scorecard for Gordon Manufacturing with 3-4 perspectives and
3-4 quantitative critical success factors ineach perspective.

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