Question

This exercise can improve your understanding of various strategies by giving you experience in classifying strategies. This skill will help you use the strategy-formulation tools presented in Chapter 6. Consider the following recent strategies by various firms:
1.   Amazon started producing and selling its own line of diapers.

2.   MillerCoors offers free delivery of Miller Lite in four U.S. cities for customers who order
through its online store.

3.   Sears is closing about 235 stores annually.

4.   The largest toymaker in the United States, Mattel, is struggling; therefore, it is introducing
flashier and more educative toys.

5.   German power utility E.ON SE sold its Spanish assets to Australia’s Macquarie Group and
Kuwait’s sovereign-wealth fund for $3.1 billion.

6.   Target Corporation is closing all of its 133 stores in Canada and China.

7.   Coca-Cola recently axed 1,600 white-collar jobs globally as part of a cost-cutting move.

8.   Nissan has totally revamped its Titan full-size pickup truck with new features and options and
style.

9.   General Motors just introduced a sports car version of its electric car, the Chevrolet Volt, and
is introducing an all-electric vehicle in 2017 called the Chevrolet Bolt, capable of driving 200
miles without recharging.

10.   SolarWinds acquired Pingdom, Confio, and N-Able Technologies to obtain different products
and services since the solar business has slowed as oil prices have dropped.

11.   Amazon Studios is branching out from television series to movies, with plans to begin producing and acquiring original movies for theatrical release and video streaming.

12.   ZF Friedrichshafen AG of Germany recently acquired TRW Automotive Holdings in the United
States to create the world’s second-largest auto-parts supplier behind Germany’s Robert Bosch
GmbH and ahead of Japan’s Denso Corp.

13.   Southwest Airlines recently began flying outside the United States, with flights to various
Caribbean, Central America, and Mexico destinations.

14.   Amazon is pushing aggressively into the same-day grocery delivery service with its
AmazonFresh business along the west coast of the United States.

15.   USPS has begun delivering groceries for Amazon.com within the AmazonFresh grocery-
delivery service, especially in San Francisco and other markets.

16.   USPS also recently launched Access Point, a strategy that allows customers to pick up their
packages at dry cleaners, convenience stores, and pharmacies.

17.   The huge food company General Mills recently acquired Annies' Inc. for $820 million, paying
a 37 percent premium for the firm, in order to expand its presence in the rapidly growing
organic and natural foods category.

18.   Google recently entered the hotel-booking industry by acquiring the firm called Room 77
and expanding its ties with big hotel firms such as Hilton Worldwide Holdings and Radisson Hotels that now offer virtual tours on Google. Google now allows hotels to list their rooms on their site, in effect bypassing travel search sites such as Priceline Group, Expedia, and TripAdvisor.

19.   Google recently partnered with the medical firm Novartis to develop high-tech contact lenses that monitor glucose levels and other body functions.
20.   Amazon recently entered the mobile payments business and is now competing with PayPal, ApplePay, and all charge cards.
21.   The world’s largest furniture retailer, IKEA, recently diversified into the insurance business, providing child, pregnancy, and home insurance products at its stores.
22.   Office Depot closed nearly 500 stores in the last three years.

23.   The drugmaker, Dendreon Corporation, recently filed for Chapter 11 bankruptcy. Its major
drug, Provenge, which treats prostate cancer, never gained traction in the market.

24.   Symantec Corporation, known for its antivirus software, recently split its $4.2 billion cybersecurity business away from its $2.5 billion management information business, making them two
publicly traded companies.

25.   eBay recently split into two companies, with PayPal being one and the eBay Marketplace segment being the other.

Instructions
Step 1   On a separate sheet of paper, number from 1 to 25. These numbers correspond to the strategies described.
Step 2   What type of strategy best describes the 25 actions cited?

Answer 1

Answer:

Related diversification –creating or acquiring companies producing similar products,
Unrelated diversification - creating or acquiring companies producing products that differ from current products/services-- not related to the organization
Liquidation – selling full company as a whole
Divestiture – selling certain divisions of the organization
Retrenchment – cost-cutting move or selling loss-making units of the same division ( selling units, not divisions)
product development – new /additional products /services are added(r&d involved).
1.   Amazon started producing and selling its own line of diapers.

Amazon- backward integration- diversification by e-retailer into manufacturing

2.   MillerCoors offers free delivery of Miller Lite in four U.S. cities for customers who order
through its online store.

Miller colors-market penetration – miller coors is an American brand trying to penetrate existing US market through a sales promotion strategy- free delivery, for promoting its online site. No new products or new market.

3.   Sears is closing about 235 stores annually.

Sears- Retrenchment –- stores that don’t perform well are closed

Closing some part of the business operations- so it is not liquidation

Stores (not divisions) - in divestiture, business units/ divisions are sold.

Here sears is still maintaining stores that function well

4.   The largest toymaker in the United States, Mattel, is struggling; therefore, it is introducing
flashier and more educative toys.

Mattel-– product development strategy- developing and introducing new products from its arsenal, to increase sales

5.   German power utility E.ON SE sold its Spanish assets to Australia’s Macquarie Group and
Kuwait’s sovereign-wealth fund for $3.1 billion.

GERMAN power utility E. ON - retrenchment – the company sold its loss-making European assets.

6.   Target Corporation is closing all of its 133 stores in Canada and China.

Target - - retrenchment –- stores that don’t perform well are closed

7.   Coca-Cola recently axed 1,600 white-collar jobs globally as part of a cost-cutting move.

Coca-cola - retrenchment - cost-cutting move by coke

8.  Nissan has totally revamped its Titan full-size pickup truck with new features and options and
style.

Nissan- product development (r&d involved) – new products from its assets

9.   General Motors just introduced a sports car version of its electric car, the Chevrolet Volt, and
is introducing an all-electric vehicle in 2017 called the Chevrolet Bolt, capable of driving 200
miles without recharging.

General Motors’-product development (r&d involved) – new products from its assets

10.   SolarWinds acquired Pingdom, Confio, and N-Able Technologies to obtain different products
and services since the solar business has slowed as oil prices have dropped.

Solar winds- unrelated diversification from solar business to IT industry

11.   Amazon Studios is branching out from television series to movies, with plans to begin producing and acquiring original movies for theatrical release and video streaming.

Amazon studios -related diversification into cinema industry adding new products (with new assets)using similar competencies, similar consumers

12.   ZF Friedrichshafen AG of Germany recently acquired TRW Automotive Holdings in the United
States to create the world’s second-largest auto-parts supplier behind Germany’s Robert Bosch
GmbH and ahead of Japan’s Denso Corp.

ZF Friedrichshafen - horizontal integration- the company has acquired another one in the same industry

13.   Southwest Airlines recently began flying outside the United States, with flights to various
Caribbean, Central America, and Mexico destinations.

Southwest airline- market development – selling products in or moving into additional markets

14.   Amazon is pushing aggressively into the same-day grocery delivery service with its
AmazonFresh business along the west coast of the United States.

Amazonfresh- new product- product development

15.   USPS has begun delivering groceries for Amazon.com within the AmazonFresh grocery-
delivery service, especially in San Francisco and other markets.

USPS has added additional services for its consumers through a joint venture- product development

16.   USPS also recently launched Access Point, a strategy that allows customers to pick up their
packages at dry cleaners, convenience stores, and pharmacies.

USPS has added a new product/service- access point- product development

17. The huge food company General Mills recently acquired Annies' Inc. for $820 million, paying
a 37 percent premium for the firm, in order to expand its presence in the rapidly growing
organic and natural foods category.

General mills – related diversification- the company is into food business and is venturing into related organic foods and business

18.Google recently entered the hotel-booking industry by acquiring the firm called Room 77
and expanding its ties with big hotel firms such as Hilton Worldwide Holdings and Radisson Hotels that now offer virtual tours on Google. Google now allows hotels to list their rooms on their site, in effect bypassing travel search sites such as Priceline Group, Expedia, and TripAdvisor.

Google- unrelated diversification – Google ‘s present product is online search and not into hotel booking industry which is carried both online and offline

19.   Google recently partnered with the medical firm Novartis to develop high-tech contact lenses that monitor glucose levels and other body functions.

A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity.
20.   Amazon recently entered the mobile payments business and is now competing with PayPal, ApplePay, and all charge cards.

The creation of products with new or different characteristics that offer new or additional benefits to the customer. Product development may involve modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly defined customer want or market niche.