UNIVERSITI TUNKU ABDUL RAHMAN
FACULTY OF ACCOUNTANCY AND MANAGEMENT
ACADEMIC YEAR 2023/2024
TRIMESTER JAN 2024
BACHELOR OF INTERNATIONAL BUSINESS (HONS)
BACHELOR OF ACCOUNTING (HONS)
SUBJECT CODE: UKMM3013/3023
SUBJECT TITLE: STRATEGIC MANAGEMENT
TUTORIAL QUESTIONS
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Tutorial 1 (General Introduction Aspects)
1. Introduction of the course
2. Tutorial expectations and participation.
3. Explanation on the mid-trimester exam (in the form of individual assignment), group
assignment based on a case study analysis and FE.
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Tutorial 2 (Chapter 1 Hitt et al)
1. What are strategic competitiveness, strategy, competitive advantage, above-average returns,
and the strategic management process?
2. Hyper-competition is a characteristic of the current competitive landscape. Define hyper-
competition and identify its primary drivers. How can organizations survive in a hyper-
competitive environment?
Case Scenario: Palmetto.
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Palmetto was an early pioneer of personal data assistants (PDAs) and dominates that market
space (in terms of market share) with its core product, the Palmetto Pidgy. Because this product
category was entirely new to the market, Palmetto had to internally develop the hardware and
software sides of the business, and today is both a manufacturer of PDAs and a programmer
and licensor of its PDA operating system software. Recently, however, the hand-held device
maker’s performance has taken a dive as a result of slumping sales and costly inventory
problems. New large entrants are entering both the equipment and software sides of its
business, putting further pressure on margins. Management is currently considering its
options, including the break up of Palmetto into two separate, independent public companies -
one devoted to hardware, the other software.
3. What primary business strategy issues does Palmetto face?
4. What primary corporate strategy issues does Palmetto face?
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Tutorial 3 (Chapter 2 Hitt et al)
1. Identify the five forces that underlie the five forces model of competition. Explain briefly
how they affect industry profit potential.
Case Scenario: Barracuda Inc.
Barracuda Inc. is a lamp fixture manufacturer that is considering an entry strategy into the
U.S. home furnishings manufacturing industry. The existing landscape consists of many
players but none with a controlling share. There are presently 2500 home furnishings firms,
and only 600 of those have over 15 employees. Average net profit after tax is between 4 and 5%.
While the industry is still primarily comprised of single-business family-run firms that
manufacture furniture domestically, imports are increasing at a fairly rapid rate. Some of the
European imports are leaders in contemporary design. Relatively large established firms are
also diversifying into the home furnishings industry via acquisition. Supplier firms to the home
furnishings industry are in relatively concentrated industries (like lumber, steel, and textiles).
Retailers, the intermediate customer of the home furnishings industry, have been traditionally
very fragmented. Customers have many products to choose from, at many different price
points, and few home furnishing products have strong brands. Also, customers can switch
easily among high and low-priced furniture and other discretionary expenditures (spanning big
screen TVs to the choice of postponing any furniture purchase entirely).
2. Using the five-forces framework, summarize the opportunities and threats facing
Barracuda as it considers entry into the home furnishings manufacturing industry. Which
threats are greatest to current incumbents?
4. Is the furniture industry described above attractive?
5. What is value? Why is it critical for the firm to create value? How does it do so?
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Tutorial 4 (Chapter 3 Ireland et al)
Case Scenario: ERP Inc.
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ERPI is a leading provider of enterprise integration software (EIS). EIS allows a firm to
connect and integrate processes across all aspects of its business, regardless of where they are
located around the world. ERPI is a product-focused company, whereas most competitors in its
market space, like Oracle, operate as “solutions companies.” Oracle and Microsoft have begun
to devote considerable resources to the development of and acquisition of products to compete
in the EIS space. Despite these recent threats, one benefit of its product-focused strategy is that
ERPI’s proprietary product is generally recognized as being 200% to 300% better than
competitors’ software. ERPI estimates it will take 2 to 3 years for competitors to develop the
capabilities needed to bring a competing product to market. ERPI invests a considerable
percentage of its profits in basic R&D to support its core products. As evidence of this, among
its competitors the firm maintains the largest in-house programming staff dedicated solely to
the development of advanced enterprise integration software. Installation and related
consulting for EIS typically cost between $100 and $200 million, with the ERPI software
component accounting for about 20% of the installed cost (the remaining 80% is spent on the
actual installation, not counting the value of the customer’s time). ERPI’s target market
consists of the world’s largest manufacturing and industrial firms and it currently enjoys a 60
percent market share.
1. How valuable, rare, costly to imitate, and non-substitutable are ERPI’s capabilities?
2. How sustainable is ERPI’s competitive advantage?
3. Imagine that ERPI’s historic growth strategy has focused on making one sale and then
moving on to the next target company. After several years of building market share using
this approach, what new resources has ERPI developed?
4. What are the specific risks associated with using each business-level strategy?
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Tutorial 5 (Chapter 4 Hitt et al)
Case Scenario: Walt Disney Company.
Walt Disney Company is famed for its creativity, strong global brand, and uncanny ability to
take service and experience businesses to higher levels. In the early 1990s, then-CEO Michael
Eisner looked to the fast-food industry as a way to draw additional attention to the Disney
presence outside of its theme parks - its retail chain was highly successful and growing rapidly.
A fast-food restaurant made sense from Eisner’s perspective since Disney’s theme parks had
already mastered rapid, high-volume food preparation, and, despite somewhat undistinguished
food and high prices (or perhaps because of), all its in-park restaurants were extremely
profitable. From this inspiration, Mickey’s Kitchen was launched. The first two locations were
opened in California and in a suburb of Chicago, adjacent to existing Disney stores. Menu
items included healthy, child-oriented fare like Jumbo Dumbo burgers and even a meatless
Mickey Burger. Eisner thought that locating each restaurant next to existing Disney stores was
sure to increase foot traffic through both venues. Less than two years later Disney closed down
the California and Chicago stores and shuttered further expansion plans. Eisner cited
overwhelming competition from McDonalds and general over saturation in the fast-food
industry as the primary reasons for closing down the failing Mickey’s Kitchen.
1. Based on your own knowledge of Disney and the information provided in the scenario, does
Disney appear to create value in its businesses primarily through a cost-leadership or
through a differentiation strategy?
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2. What resources and value-chain activities did Disney try to leverage through the opening of
Mickey’s Kitchen?
3. Why do you think that Mickey’s Kitchen failed?
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Tutorial 6 (Chapter 5 Hitt et al)
1. Define slow-cycle, fast-cycle and standard cycle markets.
2. What are the advantages and disadvantages of being a first mover, second mover, and late
mover?
3. What is market commonality? What is resource similarity? How are these concepts
combined to identify the level of competition between two firms?
4. What are three reasons firms choose to diversify their operations?
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Tutorial 7 (Chapter 6 Hitt et al)
Case Scenario: Jewell Company.
Jewell Company (JC) is a $2 billion diversified manufacturer and marketer of simple
household items, cookware, and hardware. In the early 1950s, JC’s business consisted solely of
manufactured curtain rods that were sold through hardware stores and retailers like Sears.
Since the 1960s however, the company has diversified extensively through acquisition into such
businesses as paintbrushes, writing pens, pots and pans, and hairbrushes. Over 90 percent of
its growth can be attributed to these many small acquisitions, whose performance it improved
tremendously through aggressive restructuring and its corporate emphasis on cost-cutting and
cost controls. While JC’s sixteen different lines of business may appear quite different, they all
share the common characteristics of being staple manufactured items and sold primarily
through volume retail channels like Wal-Mart, Target, and Kmart. Because JC operates each
line of business autonomously (separate manufacturing, R&D, and selling responsibilities for
each line), it is perhaps best described as pursuing a related linked diversification strategy. The
common linkages are both internal (accounting systems, product merchandising skills, and
acquisition competency) and external (distribution channel of volume retailers). JC is presently
contemplating the acquisition of Plastico, a $3 billion U.S.-based manufacturer of flexible
plastic products like trash cans, reheatable and freezable food containers, and a broad range of
other plastic storage containers designed for home and office use. While Plastico has been
highly innovative (over 80% of its growth has come from internal new product development), it
has had difficulty controlling costs and is losing ground against powerful customers like Wal-
Mart. JC believes that the market power it wields with retailers like Wal-Mart will help it turn
Plastico’s prospects around.
1. How might JC's related diversification strategy result in economies of scope and market
power?
2. Why would the acquisition of Plastico be good for JC?
3. What difficulties might you expect JC to encounter related to its acquisition of Plastico?
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Tutorial 8 (Chapter 7 Hitt et al)
Case Scenario: Raptec
Raptec was incorporated in 1991 and went public on the Nasdaq Stock Market in 1996.
Raptec’s strategy is to become the global leader in innovative storage solutions. Raptec is an
S&P 500 and a Nasdaq Stock Market 100 member. The company’s hardware and software
solutions for eBusiness and Internet applications move, manage, and protect critical data and
digital content. Raptec operates in three principal business segments: Direct Attached Storage
(“DAS”), Storage Networking Solutions (“SNS”) and Software. These hardware and software
products are found in high-performance networks, servers, workstations, and desktops from the
world’s leading OEMs, and are sold through distribution channels to Internet service
providers, enterprises, medium and small businesses, and consumers. Since the time it went
public, Raptec has experienced rapid growth and consistently profitable operations. In early
2007, the company announced its plan to spin-off the software segment, subsequently
incorporated as Axio, Inc., in the form of a fully independent and separate company. Software
was Raptec’s most profitable and fastest growing segment. By mid-2007 Raptec had completed
the initial public offering of approximately 15% of Axio’s stock, and then distributed the
remaining Axio stock to Raptec’s stockholders in a tax-free distribution.
1. Why would a successful firm like Raptec spin off its most promising business?
2. Prior to the spin-off, how would you go about identifying the respective boundaries of the
Raptec and Axio businesses?
3. What risks does Raptec run in spinning off Axio?
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Tutorial 9 (Chapter 8 Hitt et al)
1. What are the motives for firms to pursue international diversification? What are the four
basic benefits firms can derive by moving into international markets?
2. Discuss the three international corporate-level strategies. On what factors are these
strategies based?
3. What are some global environmental trends affecting the choice of international strategies,
particularly international corporate-level strategies?
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Tutorial 10 (Chapter 9 Hitt et al)
1. Identify and define the different types of strategic alliances.
2. Describe the two strategic management approaches to managing alliances
3. Why do firms use cross-border strategic alliances?
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Tutorial 11 (Chapter 10 Hitt et al)
1. Why are many countries adopting “western” governance systems similar to those from
United States and the UK that are more shareholder friendly?
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2. What particular governance devices are helping or hindering good governance in these
countries that are changing their governance systems?
3. What would you recommend to improve the governance systems in Japan, Germany, and
China, respectively, given the governance devices described in chapter 10?
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Tutorial 12 (Chapter 11 Hitt et al)
Case Scenario: Compliance, Inc.
Compliance, Inc., (CI) conducts clinical human and animal trials for the pharmaceutical and
biotechnology industries. Revenues are split evenly between early and late drug development
services. While the bulk of its business is conducted in Europe and the U.S. (10 and 17
subsidiaries, respectively), CI also have subsidiaries in Africa, Latin America, Asia, and
Australia. Historically CI operated under a multidomestic strategy, owing to the fact that the
clinical testing industry was geographically fragmented to meet the diverse needs of the many
strong local pharmaceutical companies and distinct regulatory environments. CI’s
organizational structure truly reflected the autonomous character of each country’s businesses.
Many of the country managers have been with CI for over a decade, and have a great deal of
discretion over the activities of their home-market businesses. However, globalization of the
regulatory environment (both global and local standards), globalization of the biotechnology
firms (increasing the geographic scope of their operations), and tremendous consolidation in
the pharmaceutical industry (reducing the number of pharmaceutical industry participants to
only a handful of major global companies) caused CI to question its multidomestic strategy.
Consequently, the firm has begun its transition to a transnational strategy.
1. What type of organizational structure was likely to have been in place under CI’s
multidomestic strategy?
2. What type of organizational structure will likely be needed for its transnational strategy?
What impact will this have on the location of particular value chain activities?
3. What obstacles is CI likely to encounter as it attempts to change its structure to support the
transnational strategy?
4. What does it mean to say that strategy and structure have a reciprocal relationship?
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Tutorial 13 (Chapter 12 Hitt et al)
Case Scenario: Yepsen Timber Farms, Inc.
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Yepsen Timber Farms, Inc., (YTF) was started around 1933 by Danish immigrants. The firm’s
primary operations were timber harvesting on several thousand acres in Oregon acquired in
part under the Homestead Act, and in part through direct purchase. The firm was founded,
initially as a partnership, between brothers Mogens and John (Jack) Yepsen. The Yepson
brothers were among the first four graduates at Oregon Agricultural College (now Oregon
State University), worked for the forest service and private industry in Oregon for a number of
years, then quit their respective jobs to manage the forest they had been developing for a
number of years. While timber is considered a low-tech type business, Mogens and Jack were
very innovative from the standpoint that they established “tree farms,” that is, harvesting then
replanting acreage so that it would yield timber on a sustainable basis. At the time, and in
certain parts of the world to this day, timber lands were typically “clear cut” where all the trees
were stripped from a property, then the timber harvester simply moved to another parcel. This
practice left thousands of acres barren, and often damaged valuable animal habitats and
watershed. The brothers also introduced hybrid Pine and Douglas Fir trees that grew
considerably faster than the native forest stock. These factors allowed them to grow trees that
would be ready for market in 25 years, about half the time of that required to grow native trees.
The brothers’ idea about regeneration, care for the environment, and hybridization defined the
YTF business. Never would land be harvested faster than it could replenish itself, or in a
manner that threatened habitats or watersheds. Eventually, Mogens and Jack passed on and
their only surviving children, Marjorie, Mary Jane, Burton, and Betty inherited the property.
Two of these heirs took a strong interest in further building the portfolio of Oregon properties,
and also converted the holdings to an S-Corp. to allow for the distribution of ownership and
earnings to their own children. Under their guidance, YTF was tremendously successful and
garnered much community acclaim for its sustainable farming practices. Now, the four siblings
are in their 70s and few of their children have expressed much interest in managing the
extensive portfolio of timber holdings. Among those that have expressed an interest, some are
very knowledgeable about forestry, while others have a track record of incompetence and self-
promotion. At the same time, ownership is now spread among some 40 children, nieces,
nephews, and grandchildren of the four siblings. Many of these individuals’ only interest in
YTF is the annual dividend check they receive.
1. What culture did Mogens and Jack nurture in YTF?
2. How important is this culture to the future success of YTF?
3. What must be done to continue the viability of YTF as a sustainable timber farm?
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Tutorial (Chapter 13 Hitt et al)
Case Scenario: Fear Not.
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Wim Vijkland was trained as an engineer in the Netherlands and, after college, worked several
years in the Chinese operations of Philips Electronics and then Unilever. Between employers
he returned home for several years to complete an MBA from Tiburg University in the
southern Netherlands. His work gave him hands-on experience with overseas production, and
rich sets of contacts in Mainland China and distribution channels in Europe and the U.S. Wim
has noted that many small and mid-sized European and U.S. manufacturers are interested in
and would benefit from the low-cost Chinese production environment. Contrary to external
stereotypes, he also believes that a Chinese factory can produce products that meet the most
demanding technical and quality specifications met by manufacturers in more developed
economies. At the same time, Vijkland understands that “foreigners” are generally reluctant to
manufacture precision products in China for fear that the underlying proprietary technologies
will be bootlegged and sold to competitors or outright copied. In an attempt to capitalize on this
opportunity, Wim quit his job with Unilever and entered into a partnership with Sulin “Cathy”
Liu, a local Beijing entrepreneur with whom Wim has worked extensively in the past. Cathy
has a Ph.D. in physics from CalTech in California and an MBA from Hong Kong University of
Science and Technology. They have dubbed their partnership FearNot, and organized it as a
limited liability corporation (LLC). Their plan is to set up duty-free manufacturing zones in
which they develop mini-factories that operate under their ownership and production guidance,
while at the same time creating a firewall between the clients’ proprietary production processes
and the open Chinese market. It is the partners’ hope that this combination of intellectual
property protection and low-cost overseas production will provide U.S. and European firms an
incentive to enlist FearNot’s services.
1. What resources do Wim and Cathy bring to their venture?
2. What resources appear to be missing?
3. What should FearNot focus on in its first months of operation?
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